[aaykarbhavan] Business standard news updates 25-2-2014

Independent directors reject Essar Energy's delisting move

BS REPORTER Mumbai, 24 February The Ruia family's efforts to make London- listed Essar Energy private received a severe blow on Monday, with a five- member independent board committee rejecting the move. The committee said the move " clearly undervalued the company and its long- term growth prospects". The decision of the committee, comprising five members whom the company's board considers free from conflicts of interest with regard to the proposal, is seen as a shot in the arm for minority shareholders, who had termed the possible offer by Essar Global Funds Ltd ( EGFL) " opportunistic". EGFL has the option of revising the price in its final offer by March 14. Essar Energy had last week said EGFL had made a possible offer of 70 pence a share for the 22 per cent stake it did not already own in the company. The Ruia brothers, who hold a controlling stake in Essar Energy, are beneficiaries of EGFL. Essar Energy's assets include the Stanlow oil refinery in Northwest England, besides power stations and oil refining facilities in India. It raised £1.3 billion by listing its shares on the London Stock Exchange ( LSE) at 420 pence apiece in 2010. Since then, the stock has fallen significantly. It closed at 64.55 pence on LSE on Friday. "The independent committee is unanimous in its conclusion and is fully committed to safeguarding the interests of minority shareholders," Philip Aiken, the committee's chairman, said in a statement. The company said it had also appointed Greenhill & Co to act as an independent financial advisor, alongside JPMorgan Cazenove. Minority investors like Henderson Global Investors and Standard Life were vocal about their displeasure with the proposed offer, which, they felt, undervalued the company. "Essar Global's potential attempt to buy out the minority shareholders in Essar Energy, capitalising on a technically depressed share price, is a calculated attempt to deprive minority shareholders of the substantial future upside in Essar Energy's valuation," David Cumming, head of equities, Standard Life Investments, said in a statement. "We look to the Essar Energy board to protect minority interests and not break commitments outlined to investors. This potential bid is an example of cynical opportunism and should not be allowed to proceed," Cumming said in the statement issued last week. Turn to Page 22 > Ruias' possible offer price undervalues firm: Panel Essar Energy had last week said EGFL had made a possible offer of 70 pence a share for the 22% stake it did not already own in the company

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Independent

directors Essar Energy, following its listing, has faced many challenges in its Indian operations, especially with a ' policy paralysis' bringing down economic growth to a decade's low of below five per cent. The latest challenge came in January, when the Union coal ministry threatened to cancel the mining rights owned by numerous industrial groups. This put fresh concerns for the company's already mothballed power plants. The minority shareholders, however, feel that the worst is behind the company and, if they sell at the current offer price, they might lose on an upside in valuation.   Personal I-T mop-up surges (in %) and personal income tax collection is ₹ 451,005 crore and ₹ 306,466 crore, respectively. "The only way fiscal consolidation can take place is revenue augmentation. That will happen with increase in personal VRISHTI BENIWAL New Delhi, 24 February While the economic slowdown hit corporation tax collection this year, personal income tax helped the government get the much- needed revenue. The growth in the latter category was aided by the massive exercise in sending notices to persons who'd high- value transactions but did not file their I- T returns. Corporation tax collections rose only about 10 per cent this year. That from personal income tax is up by about 20 per cent, show the Revised Estimates ( RE) in the interim Budget documents. In 2014- 15, personal income tax receipts are projected to grow 27 per cent, against 14.5 per cent growth expected in corporate tax collection. "For the past two- three years, personal income tax is showing a better growth. The drive against stop- filers and non- filers this year has helped further. It is being scaled up and that will help improve tax revenue," adepartment official told Business Standard. Last year, the finance ministry sent notices to 1.2 million Permanent Account Number (PAN) holders who'd not filed their returns. The exercise resulted in 536,220 people filing returns and paying selfassessment tax of ₹ 1,018 crore and advance tax of ₹ 898 crore. The department has now identified another 2.17 million potential non- filers. It has sent letters to 50,000 of these in the first batch and more will be sent during the year. Another official said a reason corporate collections took abeating was battered manufacturing, which shrank the profit margins of India Inc. Personal income tax, on the other hand, mainly comprises salary income and as wages increased because of high inflation, so did the collections from this category. According to the RE, corporate tax receipts will be ₹ 393,667 crore this year, a shortfall of ₹ 25,843 from the Budget Estimate ( BE). Personal income tax receipts will fall short of the income tax receipts, made possible with the IT network created by the department. The scope of leakage has been reduced," said Devendra Pant, chief economist, India Ratings. The 10 per cent surcharge on persons with annual income above ₹ 1 crore also contributed this year. There were 42,800 people with such income and they contributed 20 per cent to the total personal income tax collections. SHORING UP ( tax collection in ~ cr) '12- 13 ' 13- 14 ' 13- 14 ' 14- 15 Actual ( BE) ( RE) Shortfall ( BE) Increase Corporation tax 356,326 419,520 393,677 25,843 451,005 14.56 Income tax 201,486 247,639 241,691 5,948 306,466 26.80 Wealth tax 845 950 950 0 950 0.00 Total direct tax 558,657 668,109 636,318 31,791 758,421 19.19 GOING AFTER THE NON- FILERS

 

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CS A Rengarajan

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