Saturday, May 31, 2008

'There is still much to do and lots of grey areas regarding tax implications of IPL.'

Taxing times for IPL?

The taxman is again on the prowl and this time the target seems to be the multi-million dollar Indian Premier League (IPL).While the Punjab Government is reportedly giving a "re-look" at the free security and entertainment tax exemption granted to Punjab Cricket Association (PCA) for hosting IPL matches, the Eden Gardens is the only stadium where the IPL is paying entertainment tax. And the income-tax department is supposedly looking at the income and expenses relating to players, cheerleaders, coaches, and even the moolah spent on ads.
Looks like the IPL matches, which have become a symbol of the innovative sports world, have attracted a lot of curiosity from those in charge of the coffers! Mr Aseem Chawla, Partner (Tax Practice Group), Amarchand Mangaldas, New Delhi, says, "One of the significant tax challenges with regard to ascertainment of taxability of team owners is due to the inherent nature of tradability of players in this format of game. Much would depend on how the contracts between the IPL and the team owners are interpreted by the tax authorities."

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Thursday, May 29, 2008

'Many problems may arise when applying a technical theory to practical situations'

Achieving perfect hedge effectiveness tough

Thanks to the hullabaloo surrounding derivatives and accounting rules, the phrase ‘successful hedging’ is fast becoming an oxymoron. Losses, even if notional, on account of hedges seem to suggest that it creates more damage than good. Is it really so difficult? An expert and author stands up in defence. “No, having a hedge is not at all difficult. In fact most companies hedge their risk, that is, they take actions to mitigate or offset the risk that arise from their activities. It is often extremely difficult to achieve perfect hedge effectiveness from an accounting perspective,” says Ms Pooja Gupta, author of Financial Instruments Standards: A Guide on IAS 32, IAS 39 and IFRS 7 ( http://www.tatamcgrawhill.com/ ), published recently.

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'Given the cultural uniqueness, M&A has been slow to take off in India'

In investment banking, you either score a century or a duck

Starting with an M&A deal for MaFoi Consultants in May 2004, the list of ‘representative transactions’ in http://www.vedacorp.com/ shows the Landmark-Trent deal concluded last month, as the latest. Having closed transactions aggregating over $500 million in value across industries, Veda, a Chennai-based boutique investment bank, continues ‘to manage marquee transactions& #8217; in venture capital (VC), private equity (PE) and mergers and acquisitions (M&A) for emerging corporates and established groups in the manufacturing, technology, consumer products and services domains.
“We started as a boutique firm. Today, we are close to a 20 member team and no longer a boutique in the strict sense,” says Mr C. Venkat Subramanyam, Founder Director, Veda Corporate Advisors Pvt. Ltd, during a recent lunch-hour interaction in Business Line.

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Monday, May 26, 2008

'Amar Chitra Katha has traditionally focussed on Indian mythology and history'

Multi-platform push to comics

You wouldn't normally expect someone educated at the Massachusetts Institute of Technology (MIT), with a Masters from the Sloan School of Management and from the School of Engineering, and a former Associate Partner at McKinsey & Company, New York, to be reading comics. But that's just what Samir Patil, CEO and Co-Founder, ACK Media, Mumbai, is doing for a living.
His company, ACK Media or Amar Chitra Katha Pvt Ltd (www.ack-media.com), is into entertainment and education for young audiences.

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Sunday, May 25, 2008

'Any government will need to raise a certain amount of revenue to meet its spending plans'

Should we be taxed for using the environment?

Countries such as the Netherlands, Portugal, and Finland have brought in differentiations into their car registration taxes so as to encourage buyers to opt for the `cleanest' car models. Indeed, taking into account congestion, pollution, and the fact that such green tax revenues allow other taxes to be cut - it seems quite a feasible option for the governments across the world. With over 80 per cent people in the world still aspiring to own their cars, mostly in Asia, the next few decades will be challenging for both carmakers as well as the environment-keepers. The stewardship of the natural environment is the responsibility of everyone. But do we practise what we preach? Speaking on this central theme, Mr David F. Williams of KPMG's Tax Business School in the UK shares a few thoughts with Business Line.

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Monday, May 19, 2008

'Value-addition activities have been given a preferential treatment in the new policy.'

Pain points that the mining policy strikes at

Experts are touting the new Mining Policy, 2008 as something for everyone. After a long-drawn-out period (over two years), the new policy has seen the light of day. “The policy provides for a paradigm shift from the traditional conservationist approach to an ‘appropriate-use of resource’ approach,” says Nabin Ballodia, Director, KPMG India. How does the policy balance national and economic interests? Is it too open? Will it be tra nsparent?
To answers questions like these, Business Line interacted with Mr Ballodia. He answers the first query by saying that, overall, the new mining policy is expected to instil confidence in the investors — both local and international. Excerpts from the e-mail interaction:

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'Spammers don’t discriminate and therefore every organisation faces problems with unwanted e-mail'

SaaS way to e-mail security

Are social networking, IM (instant messaging), and Web-e-mails to be shunned in organisations? “The easiest thing to do would be to simply prevent employees using these kinds of tools but I don’t think this is very practical in today’s organisations,” says Jonathan Wilkinson, Business Development Manager, APAC, Hosted Security, Websense Inc, Australia.
New employees entering the workplace have grown up using these kinds of technologies and preventing access could impact employee satisfaction and even discourage fresh talent from joining the company, he reasons, during a recent interaction with eWorld.

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Thursday, May 15, 2008

'Many foreign banks are present in India. What role do they play?'

Anti-money laundering readiness of Indian banks

While the US woke up to the necessity of anti-money laundering preparedness (or the lack of it) after September 2001, there are concerns that it might take our very own 9/11 to learn it the ‘hard way’. “In India, one of the functions of the Financial Intelligence Unit (FIU) is to review suspicious transactions reported by the banks.
However, this is not systemised and these reports are mostly a few months old, when they are up for review within the bank,” says Mr Sarabjeet Singh, a Partner in the Risk Practice at BMR Advisors ( http://www.bmradvisors.com/ ).

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'Equitas in Latin means ‘equitable’ in English, that is, fair and transparent'

How much does it cost to deliver and collect one rupee of microfinance?

The next big players in the economy, especially at the bottom of the pyramid, could well be the microfinance organisations. Reason: They provide the last-mile financial connectivity for people, and are equipped with the granular data about the beneficiaries.
“We are looking at launching a few additional products such as educational loan (seasonal) and loan for the purchase of gold,” says Mr P. N. Vasudevan, promoter and Managing Director, Equitas Micro Finance Company India (P) Ltd, Chennai, talking recently to Business Line, during a lunch-hour interaction, about his plans on the anvil.

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Monday, May 12, 2008

'The rationale of the industrial revolution was scale and standardisation'

‘Co-create experience with individual customers’

A positive aspect of management education in India is the significant increase in the number of universities and institutes offering management programmes with participation from the private and autonomous colleges and institutes, say C.K. Prahalad and M.S. Krishnan, authors of The New Age of Innovation ( http://www.tatamcgrawhill.com/).

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'Children are natural entrepreneurs, because entrepreneurship is a human being’s natural state.'

Earn the income you want from work you love

Wealth is not an accident, avers Phil Laut ( http://www.phillaut.com/), author of Money Is My Friend ( http://www.jaicobooks.com/ ). Money exists to express your purpose and your values, he explains. “If you think that wealth will corrupt you, then you are corrupt already with little means to express this,” Phil reasons, in the course of a recent e-mail interaction with Business Line.
His definition of ‘financial freedom’ is simple. It is the result of being able to earn the income you want from work you love, says Phil. His book, which he self-published in 1979, ‘after rejections from a half dozen major publishers,’ has since sold ‘more than 4 lakh copies.’ It talks about ‘the four laws of wealth’ to describe the interaction between a person’s thinking and financial results. Specifically, the laws describe this interaction related to earning, spending, saving and investing — the complete spectrum of economic activity.

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'Business is not about one man, but how one man builds teams around him'

‘Tough times to build cohesive teams’

If you were to pass by R. Ram Kumar at a neighbourhood temple, you would likely take him for a pious, young devotee searching for profound meaning. While he may be all that, Kumar is also a founder and director of Gemini Communication Ltd, founder-cum-chairman of Gemini Traze RFID Pvt Ltd, and director of Pointred Telecom Pvt Ltd.
During a recent meeting with him, one happened to hear the tale of how in 1992 he founded Gemini Hitech Computer Co, to design and manufacture monochrome monitors for computers in a car-shed. “Those were the early days of computer industry in India. An ideal platform for launching a small-scale business,” Kumar narrated, sitting across a lunch with eWorld.

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'Inflation is after all an index and is a basket of many commodities or services.'

Easy to toss inflation blame on hoarders

Prices of vegetables have shot through the roof in the past dew days. Not even fruits have been spared. Even the wealthy has not been let off from the bite of inflation. May be the effects of the fuel price hike. No, no…surely some hoarders must be storing the goods, or else how can goods suddenly become so expensive overnight?
Disagrees Dr Sunil Rongala, who holds a PhD in international economics from Claremont, California. “People, who are searching for a guinea pig to put the blame on, usually float these sorts of ‘hoarders and middlemen’ conspiracies. For one, hoarders are faceless and it’s usually very easy to put the blame on faceless people,” he tells Business Line.

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Thursday, May 8, 2008

'There are lots of challenges for the seller in today’s market'

Check assets before you put them up for sale

Do you check things before you sell them? Perhaps, sometimes. Maybe our day-to-day activities do not require such exercise but more and more number of corporates should be well off doing just that, before they sell some assets. That’s what is called ‘vendor due diligence,’ or VDD in short.
“Vendor due diligence is a due diligence review commissioned by a seller or vendor on a business or assets being offered for sale. The scope of this exercise is determined by the vendor and usually comprises financial, tax, commercial and operational due diligence,” says Mr Ashish Singhal, Associate Director (Transaction Support Group), Ernst & Young India.

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'Ambush marketers are thieves and “free riders” that usurp value created by others for personal commercial gain'

Should we legislate on ambush marketing?

Can a non-sponsor purchase and use advertising space around tournament venues without any official association with the event? Without any legislation to avoid such sticky issues, we might be well headed for bigger showdowns as India readies itself to play host to ICC Cricket World Cup in 2011 and before that, Commonwealth Games in 2010, says Nandan Kamath, Director of sports consulting company GoSports...
“That said.. there really isn’t a black-and-white moral or ethical argument against ambush marketing. The case for legislation must be made on rational economic grounds in the public interest and in the specific Indian context. The case for legislation seems a strong one, especially from the perspective that the Indian sports ecosystem needs a catalyst that large-format events can provide,” Kamath said in an e-mail interview with Brand Line.

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Monday, May 5, 2008

'Creative management is a form of management associated with sustainable self-organisation'

‘Creative ideas generally emerge tacitly, when people are relaxed’

What are the attributes of a creative manager? “Openness, perceptiveness, flexibility, responsiveness, involvement, a capacity and willingness to draw out the creativity in others, a focus on possibilities, the potential of networking and other opportunities rather than procedure,” says Jane Henry, editor of Creative Management and Development ( http://www.sagepublications.com/). Facilitation and communication skills help, and so does a participative and inclusive style of management, she adds.
Henry heads the Centre for Human Resources and Change Management at the Open University School of Management in Milton Keynes, UK. A chartered psychologist with extensive consultancy experience, she is also the author of several books. Her research looks at ways in which organisations can develop their creativity and innovation and how individuals with different styles can best enhance their development over time.

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'Market risks can't be avoided, but have to be managed'

All about currency derivatives

Indian companies have, in recent times, grabbed headlines for all the wrong reasons. Swaps, options, exotic derivatives, structured product.the list is endless. As a shareholder, one has seen companies booking losses owing to `currency derivatives'. Naturally, everybody is petrified at the mention of currency derivatives.
Business Line sent some posers to Mr M. Sitarama Murty, former Managing Director of State Bank of Mysore. An expert in forex and money markets, he worked in SBI, Paris, during the critical years of 1990-93. Before that Mr Murthy headed the International Division of State Bank of Hyderabad at Chennai for more than six years (1984-90).

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'It is essential that people get to office feeling like they want to'

‘The basic valuation principles always hold’

Recently, we had occasion to listen to Thyagesh Baba, the infectiously brisk director of Spark Capital, when he spoke rapidly about a variety of topics — ranging from the innards of his industry to the attributes of the right entrepreneur, from the tales of financial tsunami to his dream of owning a private jet — during lunch at Business Line.
For instance, we asked Baba, as we called him, “What are the tools for business valuation that are hot these days, and what are the tools that have fallen by the way side?”
Basic valuation principles always hold — multiples of cash, earnings, book/asset value, he said. “The ‘in flavour’ performance parameters that drive these valuation metrics — growth, RoE, ‘eyeballs’, among others — have kept changing to suit situations and specific industries,” he added.

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Thursday, May 1, 2008

'In India debt has not been a crucial method of funding PE deals.'

PE deal space in India could benefit from sub-prime crisis

FedEx, Apple, Cisco, Genentech and Microsoft are not just household names, they share a common lineage: That of private equity (PE) funding. Little-known companies then, these entrepreneurs wanted to raise capital but found no support.
But on the way came across the ‘gentlemen’ who obliged. In exchange, a stake was all that was asked for. The rest, as they say, is history. But that was years ago. Today, the situation is a bit different, especially with the sub-prime contagion that has taken out some of the well-known firms across Wall Street. Liquidity is clearly not as easy as it used to be.
Will Indian companies and their promoters have a torrid time in searching for the ‘deal’ that could possibly change things? Not likely, if you go by numbers, says Mr Vikram Utamsingh, Executive Director and Head — Private Equity Group, KPMG.

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