Few takers make infrastructure trusts a less than inviting option

For infrastructure projects which are under construction, raising funds through infrastructure trusts (InvIT) via private placement is a viable option; however, it is not taking off in a big way as most investors remain wary of incomplete projects. There are projects worth Rs 4-5 lakh crore in the infrastructure space but barring one — MEP Infrastructure Developers — none are exploring this option to raise funds thus far.

Jayant Mhaiskar, vice chairman and managing director, MEP Infrastructure Developers, said, “This route will allow us to bring in equity for the purpose of future bidding. We are looking to see if we can club our hybrid annuity projects as a part of it as well, which will make the offer size bigger,” he said. The company is targeting to make the offer in financial year 2017-2018.

Industry experts say that this could be a good way for the developers to raise funds to be able to bid for future projects. High leverage levels have restrained the infrastructure developers from taking on new projects in the last few years, as the focus is on debt repayments.

In roads sector alone there are 166 projects under BOT toll, annuity and hybrid annuity model that are under construction having a project cost of over R1.65 lakh crore, according to data sourced from ratings agency ICRA. In power sector, according to Central Electricity Authority (CEA) around 50,000 megawatt of thermal power capacity will come up by 2022 having a cost of between R2.5-R3.5 lakh crore. This is at the rate of R5-7 crore per megawatt depending on the landed cost.

InvIT through private placement makes for a lucrative option for raising funds by the concessionaires scouting for equity for new projects, which is hard to come by as banks and investors remain wary of lending to greenfield infrastructure projects. Unlike a public InvIT, where only operational and revenue generating assets can be put in the trust structure, under construction assets can be put in InvIT through private placement.

 

A public InvIT is where the units will be offered through initial public offering and will have retail participation as well, while a private placement will have financial institutions and body corporate subscribing to the issue and not retail investors.

Though a private placement InvIT would be somewhat similar to raising funds from a private equity fund, there are significant tax benefits for unit holders in a private placement InvIT.

Bhairav Dalal, partner, PwC India explained to FE that the dividend distribution tax (DDT) is nil in InvIT on the dividend distributed by the trust to the unit holders, while it is as high as 20% for investors in a PE fund. In case where there is an interest component of income to be distributed by trust to the unit holders, it would attract withholding tax at the rate of just 5%, while this could be anywhere in the range of 10%-20% in a PE fund depending on the country the investors are based.

However, Dalal said that the risks involved with infrastructure assets in India outweigh the tax benefits. “The investors are not ready to take the equity risk involved in a green field project. Risks associated with land acquisition, right of way etc is not something that investors want to get involved with”.

Samir Kanabar, partner (tax and regulatory services), EY points out that the investors of this instrument will largely be global pension funds, university funds, superannuation funds who want a consistent flow of income. “Funds are keen to invest as they like infrastructure as an asset class and government has eased out regulations and tax related to InvIT. It is now for industry players to operationalise InvIT by providing clarity of continuous and stable return to investors,” he said.

Given the high demand for funds for bidding of new infrastructure projects, SEBI had relaxed the InvIT norms in November to allow the concessionaires to raise funds even through under construction projects.

Government falls way short of renovation and maintenance targets

The renovation and modernisation of ailing thermal power plants under the 12th Five Year Plan has been severely affected by poor financial condition of state utilities as a mere 4,702.26 MW capacity could be modernised against the planned target of around 30,000 MW for the period 2012-17.

Higher project cost of more than 1.5-2.0 crore/MW made companies apprehensive to go ahead with the renovation and maintenance (R&M) exercise, said a person directly involved in the R&M exercise. The poor financial conditions of utilities on account of higher outstanding from the discoms had been another cause of concern, the person said.

State utilities undertook modernisation or life extension for 15 power units of around 2,230 MW capacity, while the central utilities modernised or took life extension for 17 power units or 2,472.26 MW capacity as of December 31, 2016, as per the Central Electricity Authority Report.

 

Power minister Piyush Goyal said recently that companies should now focus on replacement of old plants with energy efficient technologies rather than looking for renovation and modernisation of plants that are over 25 years old.

In December 2015, the environment ministry had brought new norms for coal-based power stations to cut down emissions of particulate matter (PM10), sulphur dioxide (SO2) and oxides of nitrogen (NOx) and improve the ambient air quality around power plants. The ministry had for the first time fixed SOx and NOx norms for power stations and mandated that plants adhere to these guidelines by 2017 end.

NTPC director technical AK Jha told FE that renovation and modernisation of old power plants should not be seen in isolation. R&M is not a target in itself, rather the ultimate objective should be to meet the demand and supply criteria at an affordable price adhering to the environmental norms.

Companies would look at these projects only if it makes business sense. Falling plant load factors, large outstandings with discoms, and higher costs will play an important part in companies’ decision to go for the life extension, renovation or modernisation of plants.

These exercises should also be seen in the context of falling renewable — wind and solar — power project cost and tariffs, Jha said.

Of the total projects completed, NTPC alone completed around 2,255 MW of power capacity under the life extension and R&M plan for 2012-17.

Kameswara Rao, leader, energy practice at PwC, said, “It is an ideal time for utilities to undertake renovation and modernisation of power plants, as there are no power shortages now, which earlier dissuaded them from any prolonged shutdown. Also, these old power plants are inefficient and place more burden on use of coal and water. They need to invest in renovating facilities to meet new environmental norms.”

“Another challenge for old plants earlier was that of raising bank finances, but utilities now have stronger balance sheets post UDAY. Besides, the government has not only addressed the coal supply issues, but now allows state governments to utilise coal in other state-owned or private generation projects to maintain production levels and lower costs,” Rao said.

Sylvester Stallone and the Human Growth Hormone

If you watched the RAMBO and ROCKY arrangement then you would know who Sylvester Stallone is. In any case, if not, then you ought to realize that he is an aging actor whose utilization and recommendation of HGH to the general population even caught the attention of the United States Congress in one of their hearings regarding HGH. Here is one of statement of his regarding HGH:  “Human Growth Hormone to me is so important for a feeling of prosperity when you get more established, everyone more established than 40 would be shrewd to investigate HGH because it enhances the quality of your life to such an extent. Mark my words for it.”

Image result for Sylvester Stallone and the Human Growth Hormone

It is said that the usage of HGH injections is costlier and painful with symptoms. Be that as it may, it is the fast activator of the human growth hormone. I thus let you have a decent guidance for utilizing the injections for the stimulation of growth hormone in the body. HGH injections are said to be required during the time spent stimulating the anterior flap of the pituitary gland to deliver the hormone that is essential for growth. The activities of the injections vary starting with one brand then onto the next. The advantages, dosages and reactions of these sort of injections will be explained here as a reference for the reader.

Injections available in the market:

  1. HGH Plus I and II
  2. RAW
  3. DECO

Apart from these injections there are many more non-prescription HGH injections available in the market. HGH in addition to contains almost all of the L arrangement amino acids that are required for the growth of the human body. All the growth factors are incorporated into this injection. RAW is another injections that will be sufficient for those searching a best HGH injection. It is available both as pills and also in injection. These injections are available only when an authorized prescription is delivered. Deco is also the same sort of injection.

Advantages of these injections:

  • These injections normally work, and create the stimulation required for the hormone.
  • It helps in the growth of the muscles.
  • It fortifies the bone and keep from Osteoporosis.
  • It helps in the secretion of the Somatotropin
  • It a few times helps in the release of the blocked hormone in the pituitary gland.
  • Increase the level of sexual functions
  • Increases the vitality level in the body
  • Increases the level of Insulin like Growth factor of sort I and II.

Draw backs of HGH injections:

The injections are always painful and especially these sorts of injections will be more painful physically as it will rejuvenate the body. It is realized that the injection will cause damage to the liver and overabundance dosage will be fatal to the liver and for the life. It will cause extreme pains in the joints. There are a few concerns about the cause of cancer while utilizing these injections. The reasons for the reactions are they are mainly made up of manufactured chemicals that will help in the stimulation procedure.

Demonetisation effect to spill over to next quarter: RBI Deputy Governor Viral Acharya

With the latest GDP data failing to register any negative blip at all to the surprise of most analysts, expectations were that the impact of the note ban order by Prime Minister Narendra Modi announced on November 8 last, that caused shortage of currency notes in the financial system, would be seen in the next quarter has been affirmed by the Reserve Bank of India (RBI). Speaking on the subject today, RBI Deputy Governor Viral Acharya said, “Effects of demonetisation to spill over to the next quarter in some segments.”

 

However, Acharya added that recovery was going on apace and the system per se would get back to its original state soon. The Deputy Governor added, “Remonetisation pace quick, should be completed in 2-3 months.”

While the fight against black money is going on in the wake of the demonetisation drive, Acharya highlighted a key gain for the Indian economy that has come through the note ban order by the government. One of the key goals of the ban on Rs 500 and Rs 1000 currency notes was to move the Indian economy to a less-cash status and that seems to have happened even though the sudden surge towards digital payments by the people has reduced as the cash component in the system increased as RBI pumped in notes to get back to the pre-November 8 period and thereby end the cash crunch situation that led people to stand in long, snaking lines at bank ATMs. He said, “Level of cash in circulation to be less in post-demonetisation era.”

December GDP data revealed on February shows 7% yoy growth versus 7.4% in September, and with GVA at 6.6% versus September’s 6.7%. However, this shocked the economists as statistics that had been coming through other sources had painted a darker scenario. Data for sales of cars, two-wheelers and commercial vehicles had contracted both in November and December and the same was the case with sales of consumer staples, cement and steel. What is more, CSO kept GDP growth forecast for the current financial year at 7.1%.

PM Modi government’s strategic oil reserve move: 5 things you need to know about the pact between India and UAE PM Modi government’s strategic oil reserve move: 5 things you need to know about the pact between India and UAE

PM Narendra Modi-led Union Cabinet has cleared numerous pacts including a Definitive Agreement on Oil Storage and Management between ISPRL and ADNOC of UAE. After PM Modi ended his assembly election campaign in Varanasi, there was a flurry of activities found where the cabinet cleared many other pacts too including a Rs 4,500 crore project in order to revive 50 unserved and underserved airports, airstrips and a MoU between India and Portugal on cooperation in the field of IT & E, MoU on Renewable Energy. This came after PM Modi spent 3 days and addressed a number of rallies ahead of the assembly elections. The Cabinet has now approved the signing of Definitive Agreement on Oil Storage and Management between ISPRL, and ADNOC of UAE.

This move by the government seems to be aimed towards boosting India’s energy security. For this, the union cabinet gave post facto approval for signing of an agreement. This will ensure a strategic storage flow in for crude oil, from a government firm in Abu Dhabi for meeting unexpected future exigencies. The crude oil which will be stored, a majority of it will be used purely for strategic purposes, while some of it will be utilised for the commercial purpose. Here is everything you need to know about the PM Modi government’s strategic oil reserve move.

Govt approves oil storage pact with ADNOC. Here are 5 things you should know about the pact:

1. The Cabinet, on March 6, approved a pact on oil storage and management between Indian Strategic Petroleum Reserve (ISPRL) and Abu Dhabi National Oil Company (ADNOC) of UAE.

2. The agreement dictates that ADNOC will fill up 0.81 MMT or 5,860,000 million barrels of crude oil at ISPRL storage facility at Mangalore, Karnataka.

3. According to an official statement, the ex-post facto approval for signing of the definitive agreement was approved by the Cabinet chaired by Prime Minister Narendra Modi.

4. The official statement also said: “Out of the crude stored, some part will be used for the commercial purpose of ADNOC, while a major part will be purely for strategic purposes. The signing of the agreement will augment India’s energy security.”

Union Budget 2017: 5 things that can help you save money

Post the demonetisation phase, people had lots of expectations from the Union Budget. The budget to some extent matched the expectations of the common man.

Budget 2017, budget, arun jaitley, finance bill, savings, employees, income tax department, income tax act

Some of the budget proposals can surely impact the savings of a common man, like while planning to buy or sell one’s property or any financial asset, paying rent to landlord above Rs 50000. Moreover, they will have a direct impact on one’s salary because of the reduced income tax rates.

Here are five Budget proposals which can help you save money.

Reduction in income tax rates:
Reduction in the tax rate from 10% to 5% for the income tax slab of Rs 2.5 lakh to Rs 5 lakh will have a positive impact on employees’ saving. After this amendment, employees can save more in their pocket, especially those whose income is below Rs 50 lakh. This amendment will help you in saving up to Rs 12500 every financial year.

 

Increasing option under Section 54EC

The Finance Minister in his budget has announced that you will get more options under Section 54EC. Currently, where people can invest up to Rs 50 lakh in capital gains bonds from NHAI and REC to save LTCG’s tax only, the government has now proposed to widen the scope of the section for sectors which will help in raising the fund by issuing of bonds eligible for exemption under section 54EC of I-T Act. The proposed amendment of section 54EC will provide that an investment in any bond which is redeemable after 3 years, has been notified by the Government in this behalf will now also be eligible for exemption under I-T Act. However, the cap remains unchanged at Rs 50 lakh. The amendment will effect from 1 April 2018.

Incentives for promoting investment in immovable property
With a view to promote the real-estate sector and to make it more attractive for investment, the government wants to amend the section 2 (42A) of the I-T Act in order to reduce the period of holding from the existing 3 years to 2 years in case of immovable property, being land or building or both, to qualify as long-term capital asset. It is a good move for employees because taxation under long-term capital gains is calculated at 20% after indexation, get much favorable tax treatment comparing to short-term capital gains where tax treatment is done on marginal income tax rate. This amendment will take effect from 1st April 2018.

Change in base year from 1981 to 2001
In order to change the base year for computation of capital gains, an amendment of section 55 of the Act is proposed so as to provide that the cost of acquisition of an asset acquired before 01.04.2001 will be allowed to be taken as a fair market value(FMV) as on 1st April 2001 and the cost of improvement will include only those capital expenses which are incurred after 01.04.2001. Consequential amendment in section 48 has also been proposed so as to align the provisions relating to cost inflation index to the proposed base year. It means that if you purchased a property in 1987, after the amendment you can either consider your actual purchase price or the FMV in the year 2001 as your acquisition cost. This will limit the tax payment on appreciation in the price of the property till 2001. Hence, your capital gains tax liability will get decreased. Currently, the cost of inflation index for the FY 2016-17 is 1125. These amendments will take effect from 1st April 2018.

 

Personal Tax Slabs After Budget 2017: How Will Your Tax Come Down?
 Deduction of TDS of 5% for rent above Rs 50000

In order to increase the scope of TDS, the government has amended certain clause to insert a new section of 194-IB in the I-T Act. This section concludes that an individual or a HUF (other than those who are covered under 44AB of the Act), responsible for paying any income by way of rent exceeding Rs.50000 for a month or part of month during the previous year, will have to deduct an amount equal to 5% from the total rent as income-tax. The following amendment will take effect from 1st June 2017.

If you are paying rent of more than Rs 50,000 per month, then in such a case you need to deduct TDS of 5%. This means to say, if the rent is Rs 100,000, you will pay Rs 95,000 and deposit the TDS of Rs 5000 with IT department. TDS can be deposited once in a year which can help in some way around.

Rs 2,349.79 crore deficit budget presented in Assam Assembly

Assam Finance Minister Himanta Biswa Sarma today presented a Rs 2,349.79 crore deficit Budget for the state for 2017-18 financial year and merged the Plan and non-Plan heads. Considering the Budgetary estimates of the next fiscal only, the year will result in a projected deficit of Rs 367.19 crore, Sarma said in Assembly while presenting the Budget.

"After adding the receipt of Rs 1,62,580.51 crore under Public account and Rs 100 crore under Contingency fund, the aggregate receipts amount to Rs 2,47,412.67 crore," Sarma said in his Budget speech.

“This, together with the opening deficit of Rs 1,982.60 crore, will lead to a budget deficit of Rs 2,349.79 crore at the end of the financial year 2017-18,” he added. The Budget estimates of 2017-18 show a receipt of Rs 84,732.16 crore under consolidated fund of the state, of which Rs 70,719.61 crore is on Revenue account and the remaining Rs 14,012.55 crore is under Capital account.

“After adding the receipt of Rs 1,62,580.51 crore under Public account and Rs 100 crore under Contingency fund, the aggregate receipts amount to Rs 2,47,412.67 crore,” Sarma said in his Budget speech.

Against the income, the total expenditure from the consolidated fund of the state in next fiscal is estimated at Rs 85,922.69 crore, of which Rs 68,319.45 crore is on Revenue account and Rs 17,603.24 crore is on Capital account.

“Taking into account the expenditure of Rs 1,61,757.17 crore under Public account and Rs 100 crore under Contingency fund, the aggregate expenditure for the year is estimated at Rs 2,47,779.86 crore,” the Finance Minister said.

On restructuring the Budget, he said in the House that the Plan and non-Plan heads have been merged and the estimates have been made through Capital and Revenue heads.

“All employees who were earlier drawing salaries from Plan head will join those who were earlier drawing their salaries from non-Plan and now all salaries are bucketed under the head Establishment Expenditure.

“Thus the systemic discrimination in the budgeting of salaries of some categories of employees like Muster Roll and Work Charged employees has been drawn to a close with this budget and I am happy to announce that everyone will now receive their salaries and wages regularly,” Sarma said.

Toshiba may delay chip auction after widening sale to majority stake: Source

A man walks past the logo of Toshiba displayed at the company’s headquarters in Tokyo on February 14, 2017.

Behrouz Mehri | AFP | Getty Images

Toshiba may delay the sale of its prized flash-memory chip unit after the conglomerate said it would consider selling most, even all, of the marquee business, a person with direct knowledge of the matter said.

“It’s moving in that direction (of a delay),” the source said late on Wednesday, on condition of anonymity as the discussions weren’t public. As Toshiba’s plans for the sale have changed, “the bidders are having various thoughts.”

The TVs-to-nuclear conglomerate is scrambling for cash to stay in business as a multi-billion-dollar hole has emerged in recent months in its nuclear business.

 A man walks past the logo of Toshiba displayed at the company's headquarters in Tokyo on February 14, 2017.

Toshiba shares sank 9 percent on Wednesday after the company said it would book a $6.3 billion hit to its U.S. nuclear unit and would consider selling more than the originally planned stake of less than 20 percent of the flash-memory chip business.

Changing the rules of the chip auction, which sources have said has generated bids of 200-400 billion yen ($1.8-$3.5 billion), could push the sale beyond Toshiba’s planned deadline of the March 31 end of the business year, the source said.

Loosening the deadline would ease concerns about trying to hurry any antitrust reviews, increasing the number of potential buyers and potentially improving the offers, he said.

Toshiba has accepted that it may remain in negative net worth through the end of the business year, the source said, which could see its shares demoted to the second section of the Tokyo Stock Exchange. As a result, the source said, it would have to convince its lenders to keep the funds coming.

The result could also be a rethink of the whole auction as some bidders may now want management rights or have other responses to Toshiba throwing open the bidding to include a majority stake, he said.

The change of direction by Toshiba – facing a March 27 deadline to avoid a delisting – has prompted investors to question whether the company would have a long-term future without control of the unit and could well shake up the bevy of suitors interested in a piece of the world’s biggest NAND chip producer after Samsung Electronics.

“Usually in a corporate turnaround plan, the company would keep its most competitive business after selling non-performing businesses,” said Masayuki Kubota, chief strategist at Rakuten Securities

Singapore’s DBS reports fall in Q4 net profit, increases allowances for bad loans

Singapore’s top lender DBS Group said Thursday that its fourth quarter 2016 net profit fell after it set aside 87 percent more money for bad loans coming mainly from the oil and gas industry.

:The DBS Group Holdings Ltd. logo is displayed atop the company's DBS Asia Hub building in Singapore, on Thursday, Feb. 9, 2012.

The bank’s net profit in the fourth quarter of 2016 fell nearly 9 percent from the year-earlier period to S$913 million ($644 million), the bank said in an earnings release before the Singapore market opens. It set aside S$462 million ($326 million) in provisions for the quarter, up from S$247 million ($174 million) a year ago.

Full-year earnings came in at S$4.24 billion ($3 billion), falling 2 percent from a year earlier “as a stronger operating performance was offset by higher allowances.”

After three consecutive days of decline, DBS shares opened 0.4 percent higher on Thursday morning. Its smaller rivals, Oversea-Chinese Banking Corp (OCBC) and United Overseas Bank (UOB), opened 0.1 percent higher and flat, respectively.

In the quarter, net interest income fell 2 percent to S$1.82 billion ($1.3 billion) as the net interest margin fell 13 basis points to 1.71 percent. Non-interest income rose 19 percent to S$952 million ($671 million).

The non-performing loan rate climbed to 1.4 percent, up from 0.9 percent in the year-earlier quarter.

“A significant part of the increase in non-performing loans and specific allowances for the full year and fourth quarter was due to stresses in the oil and gas support services sector,” the bank said in the release.

5 Ways to Settle Your Credit Scores and Pay Off Loan Faster

Desperate times call for desperate measures. Thus, no one will blame you if you turn towards taking a loan in order to overcome a financial difficulty. However, loans are like boomerang. First, it’ll help you, but it’ll come back and become the problem itself.

Image result for 5 Ways to Settle Your Credit Scores and Pay Off Loan Faster

It’s true that paying loans is a hassle, but you must never delay paying it. The longer you settle your account, the bigger you’ll have to pay. If you’re struggling to put your loan behind you, you might want to consider the following tips:

  1. Round up the amount.

While you can compute for the exact amount you have to pay monthly, you can also try rounding up the sum. If you have to pay $236, you can round it to $250 or $300. This way, you’ll end up with an extra. Keep this extra money. You can use these savings in times of emergency. For example, if you’ll end up with spending money on other matters, you can tap into the savings to pay off your loan for the month.

You can also take this tip to another level and add another $50 every time you allot money for paying your loans.

  1. Pay bi-weekly or bi-monthly.

If you don’t have enough funds to pay the loan in bulk, you can always pay bi-weekly or bi-monthly. This way, you can accumulate less interest, and pay extra payment that could eliminate some months off the estimated timeframe.

When you decide to do this, make sure that you discuss it in length with the lender. Some of them do not accept this arrangement and even get penalties in doing so. If this is the case, you can just set aside money bi-weekly and bi-monthly and still pay on schedule.

  1. Pay one month in advance.

The purpose of paying one month in advance is the same as that of the previous two. You can settle your loan faster and prepare for at least a month of emergency. To make this possible, you can use the money you get from your income tax return or from your 13th-month payment.

  1. Earn extra income.

When your expenses get higher, it’s natural to look for extra income. It might sound like a hassle, but it’s necessary. It does not have to be a permanent work. You can take a part-time job until you have fully settled your account. It’s better if you work extra hours than to skip paying your loan. This way, you will not have to suffer from penalties.

  1. Let go of your asset.

Let’s assume that you have gotten car title loans in Moreno Valley, and end up with the responsibility of having to pay for it for several years to come. On one hand, you can work extra hours. On the other, you can just let go of your car. The latter will only work if you have no longer use for the car itself, of course. In making the decision, you have to weigh the pros and cons carefully.

Conclusion

Settling a loan is never pleasant. That is why it’s better to be done with it as soon as possible. The most important thing that you have to remember is to never skip a month. If things come to worst, your last resort is to ask assistance from your friends and family.