Types of Directors under Companies Act 2013

1. Women Director - As per second proviso to section 149(1), at least one women director shall be on board of such class or classes of companies as may be prescribed.

Rule 3 of Companies (Appointment and Qualification of Directors) Rules, 2014 provides that following class of companies shall appoint at least one woman director - 
a) Every Listed Company
b) Every other public company having - 
     i) paid up share capital of Rs 100 crore or more or
     ii) turnover of Rs 300 crore or more

2. Resident Director - As per section 149(3), every company shall have at least one director who stayed in India for a total period of not less than 182 days in the previous calender year.

3. Independent Director - As per section 149(4), every listed public company shall have at least one-third of the total number of directors as independent directors.

According to Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014, following class of companies shall have at least 2 Independent Directors:
a) Public Companies having paid up share capital of Rs 10 crore or more or
b) Public Companies having turnover of Rs 100 crore or more or
c) Public Companies having in aggregate outstanding loans, debentures and deposits exceeding Rs 50 crore.

4. Small Shareholders Director - According to section 151, a listed company may have one director elected by such small shareholders.
Here Small Shareholders means a shareholder holding shares of nominal value of not more than Rs 20,000 or such other sum prescribed.

The Companies (Appointment and Qualification of Directors) Rules, 2014 provides for the procedure for appointment of small shareholders director according to which:
i) A Listed company may upon notice from not less than
a) 1000 small shareholders or
b) 1/10th of the total number of such shareholders
whichever is lower
have a small shareholders director elected by small shareholders.

5. Additional Director - As per section 161(1),
a) The articles of a company may confer its Board of Directors the power to appoint any person as an additional director at any time.
b) A person, who fails to get appointed as a director in a general meeting, cannot be appointed as additional director.
c) Additional director shall hold office upto next Annual General Meeting (AGM) or the last date on which AGM should have been held whichever is earlier.

6. Alternate Director - As per section 161(2),
i) The Board of Directors of a company may, if so authorised by its articles or by a resolution passed by the company in general meeting, appoint a person to act as alternate director in place of another director (original director) during his absence for a period of not less than 3 months from India.
ii) A person who is holding any alternate directorship for any other director in the company cannot be considered for appointment as above.
iii) No person can be appointed as alternate director for independent director until he is qualified to be appointed as independent director.
iv) An alternate director shall not hold office for a period longer than that permissible to the original director in whose place he is appointed and shall vacate the office if and when the original director returns to India.
v) If the term of office of the original director is determined before he returns to India, any provision for the automatic re-appointment of retiring directors in default of another appointment shall apply to original, and not to the alternate director.

7. Nominee Director - As per section 161(3), subject to articles of a company, the Board may appoint any person as a director nominated by an institution in pursuance of the provisions of any law for the time being in force or of any agreement or by the Central Government or the State Government by virtue of its shareholding in a Government company.

8. Executive Director - As per Rule 2(1)(k) of the Companies (Specification of definitions details) Rules 2014, Executive Director means a whole time director as defined in section 2(94) of Companies Act 2013.
As per section 2(94) of Companies Act 2013, whole time director includes a director in the whole time employment of the company.

9. Managing Director - As per section 2(54), managing director means a director who, by virtue of the articles of a company or an agreement passed with the company or a resolution passed in its general meeting or by its Board of Directors, is entrusted with substantial powers of management of the affairs of the company and includes a director occupying the position of managing director, by whatever name called.    

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How to Determine Residential Status under Income Tax Act

1. Residential Status of Individual
As per section 6(1) of Income Tax Act, if an Individual satisfies any of the following conditions, then he is said to be Resident in India.
Condition 1 - He has been in India during the previous year for a total period of 182 days or more, or

Condition 2 - He has been in India during the 4 years immediately preceding the previous year for a total period of 365 days or more and has been in India for at least 60 days in the previous year. 

If both conditions are not satisfied, then he is a non-resident.

Exceptions
The following category of Individuals will be treated as resident in India only if the period of their stay during the relevant previous year amounts to 182 days. It means the condition of 60 days or more in previous year and total period of 365 days in preceding 4 years is not applicable to following type of persons:
(i) Indian citizens, who leave India during the previous year as a member of the crew of an Indian Ship or for purposes of employment outside India, or
(ii) Indian citizens or person of Indian origin engaged outside India in an employment or a business or profession or in any other vocation, who comes on a visit to India in any previous year.

According to Rule 126 of Income Tax Rules, 1962, for the purposes of section 6(1), in case of Individual, being a citizen of India and a member of the crew of a ship, the period or periods of stay in India shall, in respect of eligible voyage, not include the following period:
Period commencing from the date entered into the Continuous Discharge Certificate in respect of joining the ship by the said individual for the eligible voyage and the period ending on the date entered into the Continuous Discharge Certificate in respect of signing off by that individual from the ship in respect of such voyage.  
Eligible Voyage means a voyage undertaken by a ship engaged in the carriage of passengers or freight in International Traffic where 
i) for the voyage having originated from any port in India, has its destination any port outside India and
ii) for the voyage having originated from any port outside India, has its destination any port in India.

Resident and Ordinarily Resident/ Resident but not Ordinarily Resident
Only Individual and HUF can be resident but not ordinarily resident in India. All other classes of assessee can be either resident or non-resident.
If any of the following conditions is satisfied, then such person is deemed to be Not Ordinarily Resident:
i) If such Individual has been non-resident for 9 years out of previous 10 years preceding the relevant previous year. or
ii) If such Individual has during the 7 previous years preceding the relevant previous year been in India for a period of 729 days or less.

2. Residential Status of HUF
If Karta of resident  HUF satisfies both the following additional conditions, then resident HUF will be Resident and Not Ordinarily Resident:
i) If such Individual has been non-resident for 9 years out of previous 10 years preceding the relevant previous year. or

ii) If such Individual has during the 7 previous years preceding the relevant previous year been in India for a period of 729 days or less.

3. Residential Status of Firms and Association of Persons (AOP)
i) A firm or AOP is resident in India if control or management of its affairs is situated wholly or partially in India.
ii) A firm or AOP is non-resident if control or management of its affairs is situated wholly outside India.

4. Residential Status of Companies
A company would be resident in India in any previous year, if-
(i) it is an Indian Company or
(ii) its place of effective management (POEM), in that year, is in India.
POEM - to mean a place where key management and commercial decisions that are necessary for the conduct of business of an entity as a whole are, in substance made.

5. Residential Status of Local Authorities and Artificial Judicial Persons
i) Local authorities and artificial judicial persons would be resident in India if the control and management of its affairs is situated wholly or partly in India.
ii) Local authorities and artificial judicial persons would be non-resident if the control and management of its affairs is situated wholly outside India.

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Economic Reforms Introduced in 1991

Introduction
In 1991, India met with an economic crises relating to its external debt - the government was not able to make repayments on its borrowings from abroad, foreign exchange reserves, which we generally maintain to import petrol and other important items, dropped to levels that were not sufficient for even a fortnight. The crisis was further compounded by rising prices of essential goods. All these led the government to introduce new set of policy measures which changed the direction of our developmental strategies.

Background
The origin of financial crisis can be traced from the inefficient management of the Indian Economy in the mid 1980s. We know that for implementing various policies and its general administration, the government generate funds from various sources such as taxation, running of public enterprises etc. When Expenditure is more than Income, the government borrows to finance the deficit from banks and also from public and also from international financial institutions.   
The continuing spending on development programmes of the government did not generate additional revenue. Moreover the government was not able to generate sufficiently from internal sources such as taxation. When the government was spending a large share of its income on areas which do not provide immediate returns such as social sector and defence, there was a need to utilise rest of the revenue in highly efficient manner. At times, our foreign exchange, borrowed from other countries and international financial institutions were spent on meeting consumption needs. 
In the late 1980s, government expenditure began to exceed its revenue by such large margins that meeting the expenditure through borrowings become unsustainable.
India approached the International Bank for Reconstruction and Development (IBRD), popularly known as World Bank and the International Monetary Fund (IMF) and received $7 billion as loan to manage the crisis. For availing the loan, these international agencies expected India to liberalise and open the economy by removing restrictions on the private sector, reduce the role of government in many areas and remove trade restrictions between India and other countries.
India agreed the conditionalities of World Bank and IMF and announced the New Economic Policy (NEP). The NEP consisted of wide ranging economic reforms. The set of policies can be broadly classified into two groups: the stabilisation measures and the structural reform measures. Stabilisation Measures are short term measures, intended to correct some of the weaknesses that have developed in the balance of payments and to bring inflation under control. On the other hand, Structural Reforms are long term measures, aimed at improving efficiency of the economy and increasing its international competitiveness by removing the rigidities in various segments of Indian Economy.    

Liberalisation
Liberalisation was introduced to put an end to these restrictions and open various sectors of the economy. Though a few liberalisation measures were introduced in 1980s in areas of industrial licensing, export-import policy, technology upgradation, fiscal policy and foreign investment, reform policies initiated in 1991 were comprehensive. 
Reforms Introduced in 1991 under Liberlisation:
i) Deregulation of Industrial Sector
ii) Financial Sector Reforms
iii) Tax Reforms
iv) Foreign Exchange Reforms
v) Trade and Investment Policy Reforms


Privatisation
It implies shedding of the ownership or management of a government owned enterprise. Government Companies are owned in two ways (i) by withdrawal of the government from ownership and management of the public sector companies and or (ii) by outright sale of public sector companies.
Privatisation of  public sector enterprises by selling off part of the equity of PSEs to the public is known as disinvestment. The government has also made attempts to improve the efficiency of PSUs by giving them autonomy in taking managerial decisions. For instance some PSUs have been granted special status as maharatnas, navratnas and miniratnas.  


Globalisation
Although Globalisation is generally understood to mean integration of the economy of the country with the world economy, it is a complex phenomenon. It is an outcome of the set of various policies that are aimed at transforming the world towards greater integration and interdependence. Globalisation attempts to establish links in such a way that happenings in India can be influenced by events happening miles away. It is turning the world into one whole or creating a borderless world.

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Legal Protection To Consumers

The Indian legal framework consists of a number of regulations which provide protection to consumers. Some of these regulations are as under:

1. The Consumer Protection Act, 1986 - The Consumer Protection Act, 1986 seeks to protect and promote the interests of consumers. The Act provides safeguards to consumers against defective goods, deficient services, unfair trade practices, and other forms of their exploitation. The Act provides for the setting up of a three tier machinery, consisting of District forums, State Commissions and the National Commission. It also provides for the formation of consumer protection councils in every District and State and at the apex level. 
Website - https://consumerhelpline.gov.in

2. The Contract Act, 1982 - The Act lays down the conditions in which the promises made by parties to a contract will be binding on each other. The Act also specifies the remedies available to parties in case of breach of contract.

3. The Sale of Goods Act, 1930 - The Act provides some safeguards and reliefs to the buyers of the goods in case the goods purchased do not comply with express or implied conditions or warranties.

4. The Essential Commodities Act, 1955 - The Act aims at controlling production, supply and distribution of essential commodities, checking inflationary trend in their prices and ensuring equal distribution of essential commodities. The Act also provides for action against anti-social activities of profiteers, hoarders and black-marketers.

5. The Agricultural Produce (Grading and Marking) Act, 1937 - The Act prescribes grade standards for agricultural commodities and livestock products. The Act stipulates the conditions which govern the use of standards and lays down the procedure for grading, marking and packing of agricultural produce. The quality mark provided under the Act is known as AGMARK, an acronym for Agricultural Marketing. 

6. The Prevention of Food Adulteration Act, 1954 - The Act aims to check adulteration of food articles and ensure their purity so as to maintain public health.

7. The Standards of Weights and Measures Act, 1976 - The provisions of this Act are applicable in case of those goods which are sold or distributes by weight, measure or number. It provides protection to consumers against malpractice of under-weight or under-measure.

8. The Trade Marks Act, 1999 - This Act has repealed and replaces the Trade and Merchandise Act, 1958. The Act prevents the use of fraudulent marks on products and thus, provides protection to the consumers against such products.

9. The Competition Act, 2002 - This Act has repeated and replaces the Monopolies and Restrictive Trade Practices Act, 1969. The Act provides protection to the consumers in case of practices adopted by business firms which hamper competition in the market.

10. The Bureau of Indian Standards Act, 1986 - The Bureau of Indian Standards has been set up under the Act. The Bureau has two major activities: formulation of quality standards for goods and their certification through the BIS certification scheme. Manufacturers are permitted to use the ISI mark on their products only after ensuring that the goods conform to the prescribed quality standards. 

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Birth of Punjab National Bank

Founding Fathers

1. Sardar Dyal Singh Majithia - A western educated social reformist, Majithia founded the Tribune Newspaper and was part of PNB's first Board of Directors.

2. Lala Harkishen Lal - He had a passion for establishing commercial enterprises. One of the first directors of PNB, he also started the People's Bank and Bharat Insurance.

3. Lala Lajpat Rai - A well known freedom fighter, Lala Lajpat Rai was known as Punjab Kesari and was on third of the nationalist triumvirate Lal Bal Pal, the other two being Bal Gangadhar Tilak and Bipin Chandra Pal. Lala Lajpat Rai was one of the main founders of PNB and also part of the Bank's Board at one point.

4. Kali Prasona Roy - One of the first directors of PNB, he was an eminent Bengali pleader and has been chairman of the reception committee of the Indian National Congress at its Lahore session in 1900.

5. EC Jessawala - A well known Parsi merchant and a partner in the Jamshedji & Co. business house in the Lahore, Jessawala was one of the bank's first seven directors.

6. Lala Lal Chand - One of the founders of DAV College, Lala Lalchand was also a member of PNB's first board of directors. 

7. Lala Prabhu Dayal - A leading merchant and philanthropist in Multan, Lala Prabhu Dayal was also on PNB's first board of directors.

8. Bakshi Jaishi Ram - A civil lawyer and on of the bank's first seven directors. 

9. Lala Dholan Dass - A banker and merchant in Amritsar, Dholan Dass was also one of  PNB's first directors.

History
PNB was founded in the year 1894 at Lahore (presently in Pakistan) as an off-shoot of the Swadeshi Movement. With a common missionary zeal they set about establishing a national bank, the first one with Indian Capital - owned, managed and operated by the Indians for the benefit of Indians. The Lion of Punjab, Lala Lajpat Rai, was actively associated with the management of the Bank in its formative years.

The Bank made steady progress right from its inception. It has shown resilience to tide over many crisis. 

It survived the most critical period in its history - the Partition of 1947 - when it was uprooted from its major area of operations. It was the farsightedness of the management that the registered office of the Bank was shifted from Lahore to Delhi in June 1947 - even before the announcement of the Partition.

With the passage of time the Bank grew to strength spreading its wings from one corner of the country to another. Some smaller banks like, The Bhagwan Dass Bank Limited, Universal Bank of India, The Bharat Bank Limited, The Indo-Commercial Bank Limited, The Hindustan Commercial Bank Limited and The Nedungadi Bank was brought within its fold.

PNB has the privilege of maintaining accounts of the illustrious national leaders like Mahatma Gandhi, Shri Jawahar Lal Nehru, Shri Lal Bahadur Shastri, Shrimati Indira Gandhi besides the account of the famous Jalianwala Bagh Committee.     

Nationalisation of fourteen major banks on 19th July, 1969 was a major step for the banking industry. PNB was one amongst these. As a result, banking was given a new direction and thrust.

The banks were expected to reach people in every nook and corner, meet their needs and work for their economic upliftment. Removal of poverty and regional imbalances were accorded a high priority.

PNB has always responded enthusiastically to the nation's needs. It has been earnestly engaged in th task of national development. In the process, the bank has emerged as a major nationalised bank.

Timeline of PNB
1894 - PNB is incorporated on May 19 in Lahore.

1895 - The bank opens for business on 12th April, at Lahore's Ganpatrai Road

1900 - PNB opens branch in Rawalpindi

1904 - PNB establishes branches in Karachi and Peshawar

1939 - PNB acquires Bhagwan Dass Bank Limited

1947 - Partition of India. PNB's head office is shifted from Lahore to Delhi, but the bank continues operations in Pakistan

1961 - Indo-Commercial Bank Limited (established in 1933) merged into PNB. The bank also acquires Universal Bank of India

1965 - Pakistan government seizes all offices of Indian banks in Pakistan, following the Indo-Pak war, including PNB's office there.

1969 - PNB among 14 major banks nationalised by the Indian government on July 19.

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Classification of Financial Markets

In Financial Market, there are two markets namely Money Market and Capital Market and in Capital Market, there is primary market and secondary market. Let me explain you in detail about the Financial Market.

1. Money Market - The money market is a market for short term funds which deals in monetary assets whose period of maturity is upto one year. It is a market where low risk, unsecured and short term debt instruments that are highly liquid are issued and actively traded everyday. It has no physical location but is an activity conducted over the telephone.

Money Market Instruments

a) Treasury Bill - A treasury bill is basically an instrument of short-term borrowing by the Government of India maturing in less than one year. They are also known as zero coupon bonds issued by the Reserve Bank of India on behalf of Central Government to meet its short term requirement of funds.

Example: Suppose an investor purchases a 91 days Treasury bill with a face value of Rs 1,00,000/- for Rs 96,000/-. By holding the bill until the maturity date, the investor receives Rs 1,00,000/-. The difference of Rs 4,000/- between the proceeds received at maturity and the amount paid to purchase the bill represents the interest received by him.

b) Commercial Paper - Commercial Paper is a short term unsecured promissory note, negotiable and transferable by endorsement and delivery with a fixed maturity period. It is issued by large and creditworthy companies to raise short term funds at lower rates of interest than market rates. It usually has a maturity period of 15 days to one year.

Example: Suppose a company needs long term finance to buy some machinery. In order to raise the long term funds in the capital market the company will have to incur floatation costs (costs associated with floating of an issue are brokerage, commissions, printing of applications and advertising etc). Funds raised through commercial paper are used to meet the floatation costs. This is known as Bridge Financing.

c) Call Money - Call money is short term finance repayable on demand with a maturity of one day to fifteen days, used for inter-bank transactions. Commercial banks have to maintain a minimum cash balance known as cash reserve ratio. The RBI changes the cash reserve ratio from time to time which  in turn affects the amount of fund available to be given as loans by commercial banks. Call Money is a method by which banks borrow from each other to be able to maintain the cash reserve ratio.

d) Certificate of Deposit - Certificates of Deposits are unsecured, negotiable, short term instruments in bearer form, issued by commercial bank and development financial institutions. They can be issued to individuals, corporations and companies during periods of tight liquidity when the deposit growth of banks is slow but the demand for credit is high.

e) Commercial Bill - A commercial bill is a bill of exchange used to finance the working capital requirements of business firms. It is a short term, negotiable, self-liquidating instrument which is used to finance the credit sales of firms. When goods are sold on credit, the buyer becomes liable to make payment on a specific date in future. The seller could wait till the specified date or make use of a bill of exchange.

2. Capital Market - The term capital market refers to facilities and institutional arrangements through which long term funds, both debt and equity are raised and invested. It consists of a series of channels through which savings of the community are made available for industrial and commercial enterprises and for the public in general. The Capital Market consists of development banks, commercial banks and stock exchanges. An ideal capital market is one where finance is available at reasonable cost. Capital Market consist of Primary Market and Secondary Market.

a) Primary Market - The primary market is also known as the new issues market. It deals with new securities being issued for the first time. The essential function of a primary market is to facilitate the transfer of investible funds from savers to enterprises or to expand existing ones through issue of securities for the first time. A company can raise capital through primary market in the form of equity shares, preference shares, debentures, loans and deposits.

Methods of Raising Capital through Primary Market

i) Offer through Prospectus - Offer through prospectus is the most popular method of raising funds by public companies in the primary market. This involves inviting subscription from the public through issue of prospectus. A prospectus makes a direct appeal to investors to raise capital, through an advertisement in newspapers and magazines.

ii) Offer for Sale - Under this method securities are not issued directly to the public but are offered for sale through intermediaries like issuing houses or stock brokers. In this case a company sells securities at an agreed price to brokers who in turn resell them to the investing public.

iii) Private Placement - Private placement is the allotment of securities by a company to institutional investors and some selected individuals like HNIs (High Net Worth Individuals). It helps to raise capital more quickly than a public issue.

iv) Rights Issue - This is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. The shareholders are offered the 'right' to buy new shares in proportion to the number of shares they already possess.

v) e-IPOs - A company proposing to issue capital to the public through the on-line system of the stock exchange has to enter into an agreement with the stock exchange. This is called an Initial Public Offer (IPO). SEBI registered brokers have to be appointed for the purpose of accepting applications and placing orders with the company.

b) Secondary Market - The secondary market is also known as the stock market or stock exchange. It is a market for the purchase and sale of existing securities. It helps existing investors to disinvest and fresh investors to enter the market. It also provides liquidity and marketability to existing securities. It also contributes to economic growth by channelising funds towards the most productive investments through the process of disinvestment and reinvestment.

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How Government Earn and Spend

How Government Income (Approximate Figures)

1. 19% comes from Borrowing (Central Government borrow money through Market Loans, Treasury Bills, Bonds, Securities issued to Internal Financial Institutions, National Small Savings Fund, State Provident Fund, Reserve Funds & Deposits etc.)

2. 16% comes from Income Tax paid by Taxpayers including individuals, companies, HUF, partnership firms etc.

3. 9% comes from Custom Duty paid on Imports of goods.

4. 24% comes from Indirect Taxes (Good & Services Tax etc)

5. 19% comes from Corporate Tax (Corporate Tax in India is levied on both Domestic & Foreign Companies. Presently Corporate Tax in India for Domestic Companies are 30%, in case Domestic Companies Turnover is upto Rs 50 crores in Financial Year 2017-18 then tax rate is 25%, Corporate Tax For Foreign Companies is 40%.)
   
6. 13% comes from other sources like Disinvestment, Dividends received from Government Companies, Reserve Bank of India etc.


How Government Expenditure (Approximate Figures)

1. 29% is allocated to State Government for expenditure, growth in the state.

2. 21% is allocated for Central Government Schemes which are announce for the betterment of people living in the country and growth of the country.

3. 10% is allocated for subsidies given by Central Government. (Subsidies means amount given by Central Government on behalf of consumers like gas subsidy etc.)

4. 9% is allocated for Defence Sector for purchase of equipments, aircrafts, missiles etc.

5. 18% is allocated for Interest on borrowings.

6. 13% is given for Other Expenditure.


Fiscal Deficit = Total Expenditure - Total Income
Fiscal Deficit means when Central Governments expenditure exceeds income. It is a situation of Fiscal Deficit. Currently, India's Fiscal Deficit stood at 3.2% of GDP in FY 2018.

Following are the previous years Fiscal Deficit and Growth Rate Figures.
Year       Fiscal Deficit      Growth Rate
2008-09      6.0%                       8.5%
2009-10      6.4%                      10.3%
2010-11      4.9%                       6.6%
2011-12      2.7%                       5.5%
2012-13      4.8%                       6.4%
2013-14      4.4%                       7.5%

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Indian Rupees against US Dollar at Record low - Reasons and Effects

First of all we have to understand that how the rate of Indian Rupee is determined against US Dollar or any other currency, then only we can understand that why the Indian Rupee is at record low against US Dollar.

Determination of Rate is basically a game of Demand and Supply means how much is the demand (to pay) and supply (to receive) for US dollars against Indian Rupee. During the time of Export to USA, the Indian Bank receive US dollars as payment and the Indian Bank convert the US dollars at the rate prevailing on the date when amount received and credit the amount in the account of Exporter, this creates supply of US dollar as Indian Bank receive US dollar. During the time of Import to USA, the Indian Bank pay US dollars to the exporter in United States at the rate prevailing at the time of payment for imports, this creates demand of US dollar as Indian Bank have to pay US dollars. 

Currently, Indian Exports were up 14.32% year on year in July,2018 at $25.77 billion while imports clocked at $43.79 billion, an increase of 28.8% resulting in trade deficit of $18.02 billion. This is the highest monthly deficit since May 2013 when it stood at $19.1 billion. The sharp rise in India's imports is attributed to the $12.35 billion of Oil Imports, up by 57.4%, followed by higher purchases of electronics and gold. Imports of electronics rose 26.4% on year last month at $5.1 billion while gold imports up by 40.9% at $2.9 billion. Non-Oil and Non-Gold Imports in July valued at $28.47 billion has recorded a positive growth of 18.42%.
Major Commodity segments that showed positive growth in exports are engineering goods which increase 9.1%, petroleum products at 30.1%, gems & jewellery at 24.6%, organic & inorganic chemicals at 19.9% and drug and pharmaceuticals at 2.2%.

One more factor affecting the Rupee against US dollar is the depreciation in the currency of Turkey currency Lira which has depreciated more than 40% against US dollar this year due to Turkey's President's influence on economy, his repeated calls on lowering interest rate against inflation in double digits and worsening ties with United States. 

RBI's foreign exchange reserves stood at $402.70 billion in the week ended on August 3,2018. RBI stated position that it does not seek to target a particular level for rupee's exchange rate and against the US dollar and uses its reserves to ease volatility in the currency market.

Effect of weak Indian rupee against US dollar
1. Fuel prices will rise as mostly the fuel is imported from outside India. 
2. Laptop, smartphones and other electronic goods which are manufactured outside India and get assembled or directly imported into will become costlier.
3. Educational loans for overeas study will become costlier as you have to pay more Indian rupees against same amount of US dollars.
4. Exporters will be benefited as they earn more dollars for goods they sell overseas while Importers will be hit as they have to pay more for foreign goods.
5. Remittances for Non-Resident Indian will be on rise as their relatives in India receive more Indian rupees against same amount of US dollar.


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Highlights of RERA [Real Estate (Regulatory and Development) Act, 2016]

What is RERA (Real Estate Regulatory Act) ?
The Real Estate (Regulatory and Development) Act, 2016 is an Act passed by Indian parliament to protect the interest of home buyers and also boost investment in real estate sector. Under this Act,central and state government notify their own rules under the Act on the basis of rules framed under the Central Act. This Act came into force on May 1,2016.

Why RERA ?
In the past, home buyers have complained that real estate transactions are loopsided and in favour of real estate developers. RERA aim to create a more equitable and fair transaction between the seller and the buyer of property. The RERA will give the real estate market its first regulator. The Real Estate Act makes it mandatory for each state and union territory, to form its own regulator and frame the rule that govern the functioning of regulator. 

How RERA will protect the home buyers ?
1. Enforcing timely delivery of projects 
In case of project delays, buyers have the right to -
a) Seek withdrawal of booking (the developer is liable to refund the entire amount along with interest).
b) Go ahead with project (with the condition that developer will pay interest for every month of delay until the property is ready for possession). The maximum time for refunding the buyer's investment is within 45 days of it becoming due.

2. Facility to check RERA registration number
All builders have to mandatorily register their projects under RERA with respective state regulatory authority and obtain a registration number for every project. Without RERA registration, developers are not allowed to sell their project. The project details, construction progress, commencement/occupation and other certificates, sales details, etc must be updated on single-point window i.e RERA portal, at regular intervals.

3. Financial safety via an escrow account
Home buyers investment can be considered safe, as RERA obliges developers to deposit at least 70% of the buyers money received for a particular project into an escrow account. This prevents the developer from rolling these funds into other projects. The rolling of funds was a major reason for project delays in the past.

4. Ability to verify the builder's track record
Buyers can now opt for properties from reputed developers who are complying with RERA norms and have a good track record and financial stability which can be verified by buyers.

5. Transparency in advertisement and marketing collaterals
Developers can now promote a project only after registering it with RERA. The unique RERA registration number has to be published with every advertisement/brochure or in any kind of project promotion at all.

6. Clarity on Carpet Area
The hitherto conventional practice of developers charging home buyers on the basis of the super built-up area no longer works. Under RERA, the quoted price has to be mandatorily based on the carpet area of the property.

7. Strict Norms on building changes
Around 2/3rd of the buyers consent in a particular project is necessary in case the developer intends to modify the building or layout plans/ specifications/ liabilities in the project.

8. Booking Amount cannot exceed 10%
Developers can only take 10% of the total property cost as a booking amount while the sale agreement is drafted at later stages. RERA prohibits developers to accept more than this. If guilty of charging more than 10%, the developer potentially invites penalty of imprisonment of upto 3 years.

9. Brokers must be registered under RERA, too
As service providers to real estate consumers, property brokers are also liable for all deliverables committed by the developers they represent. Hence, they must register themselves with their respective state Regulatory Authorities.

10. At long last, a reliable redressal mechanism
RERA provides a strong redressal mechanism to consumers by imposing a penalty on brokers/developers for any breach of obligation. Home buyers can file complaints against developers/brokers which will mandatorily be resolved in a span of 60 days from the date of the complaint.

11. Structural defects must be addressed
In case of issues within the building or apartment, such as inefficient plumbing, visible cracks, etc. In the initial five years after possession, developers are liable to rectify the defect in less than 30 days or else give compensation to the buyer.

12. Availability of land title documents
These vitally important documents were, more often than not, inaccessible to buyers before RERA. Now, they can scrutinize documents related to a project's land title ownership on the RERA website.

13. Goodbye to soft/ pre-launches
RERA has put a complete halt to soft launches, pre-launches and any other interpretations of selling something which doesn't exit as yet. 

Overall, RERA is a boon to the home buyers. While the progress of RERA implementation across states, barring a few, is going at a pace slower than predicted, it is definitely regaining the trust of home buyers by consolidating the sector and plucking out unscrupulous real estate players.

Source - The Hindustan Times               

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What is Private Equity and PE Funds?

1. Private Equity is capital not listed on a public exchange. Private Equity is composed of funds and investors that directly invest in private companies, or that engage in buyouts of public companies. Institutional and retail investors provide the capital for private equity and the capital can be utilized to fund new technology, make new acquisitions, expand working capital.

2. Private Equity Funds invest in mature businesses, they are not early stage investors and do not invest in the stock markets either. The major foreign PE funds investing in India are registered as foreign portfolio investors.Indian PE funds are registered as category II Alternative Investment Funds. They do not invest directly in the market but can invest in a company before an IPO.

3. How Private Equity Investments Create Value?

Private Equity firms perform two critical functions:

a) deal origination/ transaction execution

b) portfolio oversight

Deal origination involves creating, maintaining and developing relationships merger and acquisitions (M&A) intermediaries, investment banks and similar transaction professionals to secure both high-quantity and high-quality deal flow. Deal flow refers to prospective acquisition candidates referred to private equity professionals for investment review. Some firm hire internal staff to proactively identify and reach out to company owners to generate transaction leads. In a competitive M&A landscape, sourcing proprietary deals can hep ensure that the funds raised are successfully deployed and invested.

4. In 2017, funds operating in India set new records, with investments in excess of $26 billion and exits from investments at $16 billion. The first half of 2018 saw a slight slowing of investment run rate but the exits topped all records, with the aid of Flipkart - Walmart deal, to touch $26 billion. Even without Flipkart, 2018 has seen $11 billion worth of PE exits already.

5. By one estimate, more than 100 funds, old and new, are trying to raise an estimated $15 billion India- centric PE funds right now. Many are inspired by China model and how the country has bunch of independent home grown PE funds and home grown investors.

6. Terms used in private equity:-

a) Limited Partner - Investor who puts money in a fund

b) General Partner - The entity that sets up a fund and manages it

c) Operating Partner - The one who manage the assets

d) Carry or Carried Interest - Share of profit on an investment paid to the manager, in excess of his contribution to the fund

e) Dry Powder - Amount not invested in a fund and still available for investing

f) Deal - Investing fund's money into a company's shares or other instruments

g) Exit - When a fund sells its investment in a company, usually after holding it for 5-7 years or more

h) Hurdle Rate - The return that funds should generate for limited partners so that general partners or fund managers can take home their incentive in the form of the carried interest. The hurdle rate is often set between 8% and 13%

7. Major Private Equity Players in India

a) Foreign - TPG, KKR, Blackstone, Carlyle, Apollo, Warburg Pincus, Bain

b) Indian Startups - Multiples, Everstone, Kedaara, True North

c) Sponsored PEs - Aditya Birla PE, Tata Capital PE, Motilal Oswal PE, Kotak PE, Mahindra Partners

8. Top 5 Exits of 2018

a) Target - Flipkart, Exits - GIC, Kalaari Capital, Tiger Global, IDG Ventures India, Accel India, Premji Invest, SoftBank Corp, Sofina, Naspers, others, Value - $16,000 mn Route - Strategic Sale

b) Target - Intelenet Global Services, Exits - Blackstone, Value - $1000 mn, Route - Strategic Sale

c) Target - Global Logic, Exits - Apax Partners, Value - $960 mn, Route - Secondary Sale

d) Target - Indus Towers, Exits - Providence, Value - $451 mn, Route - Strategic Sale

e) Target - Flipkart, Exits - Tiger Global, IDG Ventures, Accel India, Iconiq Capital, DST Global, Value - $350 mn, Route - Buy Back

9. Top 5 Investments of 2018

a) Company - Global Logic, Funds - GIC Pvt Ltd, Azim Premji Foundation, PI Opportunities, KKR, Carmignac, Gestion SA, OMERS Administration, Value - $1743 mn 

b) Company - Paytm E-Commerce, Funds - Alibaba Group Holding Ltd, SoftBank Vision Fund LP, Value - $350 mn

c) Company - Helathium Medtech, Funds - Apax Partners India Advisers Pvt Ltd, Value - $350 mn

d) Company - Future Retail, Fund - Premji Invest, Value - $254 mn

e) Company - RattanIndia Finance, Funds - Lone Star Global Acquisitions Ltd, Value - $199 mn 

10. There is now growing awareness among Indian business families about new ways of investing their money. While the larger ones like Aditya Birla or Piramal end up starting up their own PE initiatives, there are other who manages their funds through family offices and these have started putting their faith in private equity funds. Last year, India registered PE funds, which are category II Alternative Investment Funds, were allowed to make pre-IPO investments in companies.

Source :- Investopedia, The Economic Times

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E-Commerce Draft Policy - India

Data Localisation Measures

1. Various social media and e-commerce companies that have their head office outside India like Google, Facebook, Amazon that generate user data through ecommerce platforms, social media and search engines have to store data exclusively in India.

2. Government of India to have access to data stored in India for national security and public policy subject to privacy and consent rules.

3. Government of India to incentivise domestic data storage in India, provide data infrastructure, make domestic data storage more economically attractive.

India First Measures

1. Limited Inventory based B2C model for online sale of locally produced goods to be allowed, as long as-
 a) "Made in India" products are sold on the platform.
 b) The founder or promoter is resident Indian.
 c) The company is controlled by Indian management and foreign equity does not exceed 49%.   

2. Government of India to promote businesses in India through preferential treatment for digital products created within India and custom duties on electronic transmissions.

3. Government of India to help e-commerce companies to raise funds locally and incentivise investments by large Indian companies in startups.

4. Government of India to empower the Indian e-commerce entrepreneur by allowing founders to have control over their e-commerce business despite having small shareholding.  

Measures to Support Micro, Small and Medium Enterprises (MSME's)

1. Establishing an e-commerce retail platform in public-private partnership (PPP) mode exclusively for MSME vendors and suppliers.

2. Implementing pilot initiatives for online sale of products from small industry clusters such as Moradabad, Ludhiana, Aurangabad and Meerut.

3. Reexamining the TCS provisions in GST which impose additional burden on SME's.

Measures on Press Note 3

1. Government to create a separate wing in the Directorate of Enforcement to handle grievances related to implementation of Press Note 3.

2. The e-commerce companies not able to benefit the group companies of the e-commerce marketplace. This is likely to have impact on companies such as Amazon since it holds a stake in some of its seller entities.

3. Deep discounts given by e-commerce companies are to be wiped out as Government of India proposes to introduce a sunset clause for differential pricing strategies.

How will payments be monitored ?

1. A centralised agency for KYC data to be setup to reduce the KYC cost for individual operators and burden on the consumer.

2. A social credit database to be setup through PPP to facilitate digital lending.

How will the Sector be Regulated ?

1. A single legislation will address all aspects of e-commerce industry.

2. A single regulator would be setup to consider Foreign Direct Investment (FDI) issues and consumer protection among other issues.

3. Competition Commission of India (CCI) will examine the entry barriers and anti-competitive practices.

4. There will be more scrutiny of merger and acquisitions that may disrupt the competition.

Source : The Economic Times


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Vodafone Idea Merger Analysis

1. British telecom Vodafone and Aditya Birla Group company Idea Cellular announced the merger of their operations, creating the largest mobile operator by customer (38.6 percent) and revenue (40.1 percent). The joint entity will have about 430 million subscribers. The debt of merged entity will be Rs 1,25,000 crore. The Revenue of merged entity will be Rs 63,000 crore. The Average Revenue per user (ARPU) of merged entity is between Rs 100 to Rs 102 (These figures are as on 30th June 2018) .

2. The merged entity "Vodafone Idea Limited" will be headed by Kumar Mangalam Birla as chairman and Vodafone will have its nominee as the Chief Financial Officer (CFO), its Vittorio Colao. 

3. The all share merger for both partners excludes Vodafone's 42 percent stake in Indus Towers Limited and will be effected through issuing new shares in Idea to Vodafone and result in Vodafone deconsolidating Vodafone India.

4. Vodafone will own 45.9 percent in the new company after transferring 4.9 percent to Aditya Birla Group for Rs 3,874 crore in cash. Idea will hold 26 percent of the new company while the rest will be hold by public shareholders. Idea and Vodafone said the merged entity will be jointly controlled by Vodafone and the Aditya Birla Group as per shareholder's agreement.

5. With 222 million customers, Vodafone enjoys market share of 26.40 percent. Idea has 25.04 percent with 211 million customers in wireless subscriber base as on March 2018 according to TRAI data.

6. Aggressive entry of Reliance Jio has launched a big price war. With its free services, Jio has upset the big players. The Vodafone  Idea will only add fuel to the fire. Since the merged entity will have more resources, the telecom price war is going to be messier.

7. Though the consolidated entities would fight for price war for a year or two, prices are going to be increased in long term. With fewer players in the telecom industry, there is higher chances of consensus on prices.

8. Overall consolidation in the debt ridden telecom industry will lead to better financial health and sustainability of companies. Since the consolidation will leave only 3 players in telecom industry, there will be less competition and bigger revenues.   

9. The transaction is subject to necessary approval from SEBI, Department of Telecom, RBI etc. "Upon amalgamation becoming effective, the entire business of Vodafone India Limited and Vodafone Mobile Services Limited, excluding Vodafone India Limited's investment in Indus Towers Limited, its international network assets and information technology platforms, will vest in the company.  

10. Vodafone India has 17 circles with 4G capability, covering 90 percent of the company's total revenues and 94 percent of mobile data revenues. Also it has the largest voice and data traffic usage within the Vodafone Group. Idea is trying to attract premium 4G customers, having launched services in seven circles so far. Idea's wireless broadband network is spread across 17 circles with a population of over 880 million, with 50 percent of this population already covered. 

11. The two companies agreed to merge their companies with a swap ratio of 1:1. This means every Idea share you hold will be exchanged with a new share in the merged entity. However, independent valuation of the two businesses suggests Vodafone's business is worth more. The assessment suggests that Vodafone's India business is worth Rs 82,800 crore, while Idea's business is valued at Rs 72,200 crore. 

12. Vodafone India (Rs 3926.34 crore in cash) and Idea Cellular (Rs 3322.44 crore by way of Bank Guarantee) have paid the Department of Telecommunications (DOT) Rs 7,268 crore that was sought as a key condition for approving their merger, thereby clearing the final obstacle in the largest merger in the sector which will create India's biggest telecom operator.

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