Startups that raised funds from angel investors face tax scrutiny
The so-called angel tax may not be quite dead yet. Although the income tax department has been instructed not to harass startups unduly, those that raised funds from angel investors through rights offers rather than via private placements in the past few years are coming under scrutiny along with their investors, said people aware of the matter. Tax officials have started questioning some startups on their fundraising methods. While notices haven’t been issued yet, that could change, said the people cited above. Some startups had opted for rights offers because of the complexities involved in the private placement method, they said. “Under the Companies Act, private placement is a cumbersome process when compared to a rights issue and several startups had opted for the latter,” said Amit Maheshwari, partner, Ashok Maheshwari & Associates LLP.
Signs of revival in realty sector: New schemes will do well, say experts
In an investor call with analysts, the country’s largest realty firm, DLF, said the firm would be debt free by 2018-19 — a plan hinged on its massive inventory of Rs 150 billion. In the last two months of 2017, the firm has been able to make sales of Rs 6.6 billion of its residential properties. “We don’t see an issue in achieving this (paying off debt),” Saurabh Chawla, the firm’s group chief financial officer, said in the call. DLF believes both the commercial and residential segments are witnessing revival.“Buyers are looking for apartments in the super luxury, luxury and premium segments.
Bankruptcy rules for individuals may be delayed due to workload of DRTs
Bankruptcy provisions for individuals and proprietorship firms, among others, under the Insolvency and Bankruptcy Code (IBC), are unlikely to be put into effect anytime soon due to a heavy workload on debt recovery tribunals (DRTs). Also, the notification of the rules on cross-border insolvency could be delayed further in the absence of e-courts, according to official sources. The government planned to notify the bankruptcy provisions last year itself. Among the issues being examined by a high-power committee on the IBC is whether or not to notify the bankruptcy and cross-border insolvency regulations.
CBI books Rotomac promoter over Rs 37-billion loan fraud
The Central Bureau of Investigation (CBI) has booked Kanpur-based businessman Vikram Kothari, his wife and son in connection with the alleged swindling of Rs 36.95 billion of loan funds advanced by a consortium of seven banks to his company Rotomac Global. The scam has surfaced in the backdrop of Rs 114 billion alleged fraud reported by Punjab National Bank, involving billionaire Nirav Modi and his uncle, Mehul Choksi. Rotomac Global was given loans worth Rs 29.19 billion from 2008 onwards by a consortium of banks led by Bank of India which have swelled to Rs 36.95 billion including the accrued interest, because of repeated defaults on payment, the officials said. The principal exposure of the banks with regards to the loan is Bank of India Rs 7.54 billion, Bank of Baroda Rs 4.56 billion, Overseas Bank of India Rs 7.71 billion, Union Bank of India Rs 4.58 billion , Allahabad Bank Rs 3.30 billion, Bank of Maharashtra Rs 0.49 billion and Oriental Bank of Commerce Rs 0.97 billion, they said.
Bad loan resolution: Banking on RBI’s new framework
The major problem with tackling the NPA issue is that you are ‘damned if you do and damned if you don’t’. This is the challenge RBI or the government faces when it announces any measures to put things in order. When the Insolvency and Bankruptcy Code (IBC) was not there, the lament was that nothing effective was being done, and that there was some modicum of courage missing in the system. Once it came in, the reality hit the corporate sector that if default issues were not resolved, then they would have to pay for it with the ultimate threat being of liquidation. This had the Corporates complaining that it was too harsh. Escape routes, however, did exist, with various prevailing schemes of RBI being in force such as CDR, SDR, S4A, etc. Such measures helped to kick the can.
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