Mumbai : The Tata group said there have been preliminary discussions on the acquisition of struggling Jet Airways but it has not made any formal proposal for buying out the 51 per cent stake held by the Naresh Goyal family in the airline which has accumulated losses of over Rs 12,000 crore till the September 2018 quarter.
While the board of Tata Sons, the holding company of the group, discussed the acquisition of the airline, sources said both the parties are going slow as the broad contours of the deal, especially on the continuance of Goyal on Jet board after the takeover and other issues, have not been thrashed out.
Indicating that they are moving cautiously, Tata Sons issued a statement after the board meet, saying, “Over the last few days there has been growing speculation in the print and electronic media about Tata’s interest in Jet Airways. We would like to clarify that any such discussions have been preliminary. No proposal has been made.”
Jet Airways said in a stock exchange filing, “Reports (on merger of Vistara with Jet) is purely speculative in nature and that there are no discussions or decisions by the Board, which would require a disclosure.”
Sources said Tata Sons Chairman N Chandrasekaran had a preliminary discussion and an understanding over the broad contours of the deal with Jet Airways promoter Naresh Goyal for a possible share swap agreement between the Tata and its foreign joint venture partner Singapore International Airlines, Vistara, and also exit of Abu Dhabi based carrier Etihad that holds 24 per cent in Jet Airways.
Sources aware of the talks said that Tatas would definitely want a non-compete clause that bars Goyal and family from entering aviation business for a substantial period of time. However, sources say Goyal might have reservations over exiting the airline that he has created over 25 years and made it as a formidable brand in full service space and agree to a non-compete clause and complete exit.
The Tatas are looking at dilution of Goyal’s shareholding which is currently 51 per cent. A possible preferential allotment of shares might be looked at triggering an open offer as cash strapped Jet needs equity infusion on an immediate basis. “Liquidity continues to be worrisome, and Jet Airways earnings are most levered to oil prices and rupee depreciation. A potential entry of a strategic buyer would address the current liquidity crunch. Jet’s liquidity concerns are unlikely to dissuade a well-capitalised group like Tata, which has a track record of mega acquisitions. A prospective deal may involve a notable control premium,” said a report by Edelweiss equity research.
However, Jet Airways acquisition will not come cheap for the Tatas as the airline has accumulated losses of Rs 10,772 crore till FY18 with another reported loss of Rs 2,620.46 crore till the first half of FY18/19. Its other liabilities stack up to a staggering Rs 11,000 crore. It has immediate vendor payments that are stretched and lease rentals that are due. The airline has 16,000 employees .
Aviation analysts say it is the immediate scale that an acquisition of Jet Airways by Tatas will give to a fledgling Vistara that the Tatas are eyeing along with slots, that are at a premium for expanding Indian carriers as most of the metro airports are slot constrained restricting expansion of the airlines. “It is a billion dollar deal for the Tatas,” said an investment banker who has background in cutting out aviation deals in the Indian aviation market. Tatas have already accumulated losses of Rs 2,100 crore on account of both its airlines — Vistara and budget carrier AirAsia. It might not have the appetite to take over huge losses of Jet.
“It is all in the structuring of the deal. There are a lot of complications and also regulatory compliance issues in a deal such as Tata-Jet Airways. It will take time for the final proposal to be put on table,” said a person familiar with the ongoing discussions.
Jet’s share closed at Rs 346.85, up 8 per cent from its previous close of Thursday. The stock continued its four day rally, soaring 43.3 per cent over the past four days on the deal buzz with Tatas.
CBDT identifies 20.4 million non-filers, asks I-T dept to take action
New Delhi :The Central Board of Direct Taxes (CBDT) has directed the Income-Tax Department to initiate penalty proceedings by June 30 against non-filers and ‘drop filers’ of tax returns.
According to the non-filer monitoring system (NMS) of the I-T department, data for 20.4 million non-filers has been obtained between 2013 and 2017, of which 2.5 million are those who are inconsistent — popularly known as ‘dropped filers’.
“We are issuing notices in all the non-filer/dropped filer cases across the country, and proceedings shall be initiated accordingly in the relevant cases,” said an assessing officer.
Typically, the penalty for non-filing is pursued under Section 271F of the Income Tax Act, and that for late filing under Section 234. If an assessee files returns after the due date of August 31 but before December 31, it will attract a penalty of Rs 5,000. For those who file returns after December 31, the penalty rises to Rs 10,000. However, there is an exemption for small taxpayers — if the total income does not exceed Rs 5 lakh per annum, the maximum penalty will be Rs 1,000.
The tax department has initiated action based on the NMS database, which has identified such non-filers and dropped filers. The said data has been shared with assessing officers. This information may be acted upon as efficiently as possible to widen the tax base, said the officer cited above.
chart The NMS data shows a sharp increase in non-filers since 2013. In 2014, the number of non-filers was 1.22 million, which surged to 6.75 million in 2015.
The number of dropped filers in FY18 stood at 2.52 million, down from 2.83 million in FY17.
“If the existing database is acted upon, coupled with optimum tax administration, and if legislative impetus — such as periodical review of provisions related to exemption, deductions, tax incentives, tax collection from the third parties, and taxing new areas such as digital economy — is provided, there will be considerable increase in the tax base,” said a senior tax official.
An assessing officer can initiate proceedings for prosecution from three months to two years, along with a fine. The period could be extended if the taxable income exceeds Rs 25 lakh.
RBI releases draft framework for regulatory sandbox to help fintech space
Mumbai :The Reserve Bank of India (RBI) released a draft ‘Enabling Framework for Regulatory Sandbox’ in order to support the country’s rapidly growing fintech space.
The sandbox will begin the testing process with 10-12 selected entities focusing on financial inclusion, payments and lending, digital KYC, etc. The cohorts (end-to-end sandbox process) may run for varying time periods, but should ordinarily be completed within six months, said the RBI.
A regulatory sandbox usually refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may (or may not) permit certain regulatory relaxations for the limited purpose of the testing.
The regulatory sandbox would be within a well-defined space and duration where the RBI will provide the requisite regulatory guidance, so as to increase efficiency, manage risks, and create new opportunities for consumers.
The draft guidelines highlight the clear principles and role of the proposed regulatory sandbox, its pros and cons, the reasons for setting up the regulatory sandbox and expectations of the RBI from the sandbox. The central bank has invited comments on the draft guidelines from stakeholders by May 8.
The draft framework was released on the recommendation of an inter-regulatory working group set up by the RBI in July 2016 to review the regulatory framework and respond to the dynamics of the rapidly evolving fintech scenario.
The target applicants for entry to the regulatory sandbox are fintech firms which meet the eligibility conditions prescribed for start-ups by the government. The entity also needs to have a minimum net worth of ~50 lakh, according to its latest audited balance sheet.
The RBI said that it shall bear no liability arising from the regulatory sandbox process and any liability arising from the experiment will be borne by the applicant as a sandbox entity.
The focus of the regulatory sandbox will be to encourage innovations where there is absence of governing regulations or a need to temporarily ease regulations for enabling the proposed innovation or the proposed innovation shows promise of easing/effecting delivery of financial services in a significant way.
The applicants should highlight how it would address an existing gap in the financial system through its product/service and demonstrate that there is a relevant regulatory barrier in its deployment.
The guidelines listed out the various entities that can apply for the sandbox process as well as the ones that won’t be eligible for the sandbox.
Mallya asks SBI to disclose ‘legal fees’ spent to recover funds
New Delhi: Fugitive businessman Vijay Mallya on Friday urged Indian media to file an RTI against the State Bank of India (SBI) to ascertain how much money it has spent on the legal fees of the lawyers while recovering money from him in the United Kingdom.
“Whilst media love sensational headlines, why doesn’t anybody ask the PSU State Bank of India under RTI on how much they are spending on legal fees trying to recover money from me in the United Kingdom (UK) when I have offered 100 per cent payback in India,” Mallya tweeted.
To further substantiate his point, he said: “Assets belonging to me in the UK were sold and the costs of sale were almost 50 per cent of value. The remaining assets yet to be sold won’t cover legal costs. So what’s this all about? To enrich UK Lawyers?”
He also demanded an answer from the public sector bank on the same lines.
Mallya also accused the SBI Lawyers representing SBI in the UK of “making presentations on their accomplishments against him” at the “cost of Indian taxpayers’ money.”
Mallya is facing trial for alleged fraud and money laundering amounting to Rs 9,000 crore.
On April 8, a United Kingdom court had denied permission to the liquor baron to appeal against his extradition order to India to face trial for alleged fraud and money laundering amounting to Rs 9,000 crore.
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