Would legislation forcing to appoint women directors on board serve the purpose?

As per the provisions of Section 149 of Companies Act 2013 and compliance with Clause 49 of listing agreement it has been mandatory to appoint at least one woman director on board latest by 31^st March 2015. There has been research by BNY Mellon, the wealth and asset management firm, that economic power and corporate governance policy of an organization are the key factors which give shape to gender diversity on the board of an organization. Research has been made after studying data collected from a sample of 1002 companies from the Forbes Global 2000 list of 2013 which included businesses from 41 countries on 6 continents. It has been found that majority of corporations believe that placing of a women director on board by way of legislation will not serve the purpose of socially as well as economically empowering women. Placing of woman directors on board by the fear of complying legislation will not even lead to compromise of board’s formation but will also create hurdles for the women who are deserving candidates for the position. Countries which have highest levels of female economic power are Australia followed by Norway and Denmark whereas United States ranks 6^th and Britain ranks 9^th.

Spectrum allocation to Telecommunication companies to hamper their growth in the near future

Aggressive bidding in the telecommunication spectrum allocation hampered Telecommunication growth. TRAI estimates that to cover the losses and liquidity crises companies may have to increase their call rates by 6 to 7 paise per minute which is in contradiction to the figure provided by government that is 1.3 paise per minute. The prices of spectrum were higher than the price recommended by TRAI by an average of 20%. The difference in the calculations are arising as government has not considered cost of capital employed by such companies.

Government created a scenario which forced the companies to bid aggressively which resulted in:

1.      Fall in the operating margins for the ensuing fiscals.

2.      Non up gradation of infrastructure resulting in poor services to consumers as a consequence of liquidity crunch.

3.      Debt portfolio of Telecom companies to increase to over Rs 350,000 crores after auction.

4.      Telecom companies to introduce differential pricing for the use of internet, thus defeating the notion of freedom of media and speech by disrupting the concept of Internet Neutrality in the country.      

MAT to be applicable on FIIs and FPIs

The Income Tax department has issued demand notices of MAT to around 100 FIIs and more than 50 FPIs. Department has been reopening cases as it believes that income has escaped the assessment in the previous years based on decision given by Authority of Advance Ruling a quasi-judicial body, in the favour of government stating that MAT shall be applicable to FIIs and FPIs. FPIs are currently paying 15% tax on capital gains for less than 12 months and no tax on long term capital gains as the same are STT paid. Investors are treating issuance of such notices as retrospective action on the part of government however the government has exempted applicability of MAT from the FY 16-17. IT department believes that FPIs are required to maintain accounts under the Act and hence liable to pay tax on book profits. Finance Minister Mr. Arun Jaitely comments on the recent development that there has been no retrospective applicability of MAT and every demand of tax is not tax terrorism and opposite of tax terrorism doesn’t mean tax haven. Finance Minister also feels that FIIs and FPIs cannot escape their moral duty to pay tax on the grounds of tax terrorism.

Earn salary and enjoy privileges of an owner

The service industry has seen a tremendous rise in the trend where the entrepreneurs joining an organization are also involved in purchasing some stake of the organization upfront. The benefit of taking part in the equity shareholding is that a person who is working for the organization earns his emoluments for the services offered by him and also enjoy the benefit of wealth creation as and when the share of the company scales up in the market. The major benefit of the practice is that the employee who has been working to earn his pay-scale will now have degree of independence in taking the decisions. An example of Centrum Wealth Management will make the things crystal. The employees who are also shareholders in the Centrum Wealth Management sometimes save money by travelling by auto-rickshaw instead of cabs in order to save some money to the organization. Many working as such believe that there is no hesitation in saying that their wealth has been created due to the stock options held by them in the organization. Karan Bhagat who is MD and CEO of IIFL Wealth Management is also holding equity shares in the company which have a current value of around Rs 90 crores. Such a tremendous increase in the wealth creation has encouraged many to take this road. There are types of options available to an employee of the organization brief of which are as follows:

a.          MSOP (Management Stock Options Plans): Management Stock Options Plans help key management personnel, mostly CEOs, get an upfront stake in the company.

b.        SOP (Stock Option Plans): Most CEOs also have a normal sweat equity plan alongside where more options to buy shares are vested with them on a certain date that can be exercised later.  

c.                  SAR (Stock Appreciation Rights): Every year, some equity shares are allotted but only to the extent of appreciation of value between grant and exercise date.

d.       Warrants: Some firms used warrants convertible in future to vest shares with employees at the time of joining.

e.                 Full Value Shadow Equity: An employee is assumed to hold the equity shares and at some agreed point an employer virtually buys back the equity paying the current listed price of price determined by valuation under an agreed scheme.

f.                 Phantom Equity: Actual equity shares granted but an employee is assumed to hold an agreed amount of shares and is paid a bonus equivalent to the increase in the share price of valuation.

Coal blocks allocation starts with a bang

Government of India is happy to see aggressive mood of the industrialists in the bidding and is expecting to cover the loss of Rs 1.86 lakh crores as estimated by CAG. For instance Reliance Cement’s bid of Rs 1,402 per tonne which has been more than the base price by nine times. Also in the case of Talabira – I block GMR energy bid for Rs 402 per tonne which is four times the base price of Rs 100 per tonne. Such an enthusiasm in the bidding process has encouraged the government and has given hope that the amount of revenue to be generated from such bidding to be more than the loss estimated by CAG. 

Export demand declines but the trade deficit reduces

There has been significant decline in the exports due to slump global market demand. The industry has witnessed decline of around 11% YoY in the exports. The poor economic conditions in European Union and Japan has resulted majorly in the decline of exports. Despite of lower exports in the current fiscal year the trade deficit has reduced to 11-month low of 8.3% due to lower crude prices. The contraction in the demand for non-oil merchandise is a bad indicator. There has been rise in the gold, non-oil merchandise and non-gold imports and reduction in the exports of non-oil merchandise will result in the reduction of trade surplus in the service sector which rose from $ 6.3 billion to $7.6 billion in a year. Government of India needs to introduce radical changes in the Union Budget and foreign trade policy to support the export sector as the Indian exports have been hovering around a figure of $ 300 billion since 2011-12.

E-Commerce industries’ roping in candidates in campus placements increased

Recently there has been growth in the trend of campus placements with most of the recruitments being made by huge e-commerce establishments such as Flipkart, Amazon, Snapdeal, Ola Cabs, Myntra, etc. from leading B-Schools such as IIM Lucknow, Shillong, J&K, Jamanlal Institute of Management, SP Jain Institute of Management, Xavier School of Management, etc. Offers from e-commerce companies has gone up by more than 120% as compared to last year. The e-commerce companies’ jobs mainly constitutes of operations management, merchant acquisitions and product management. Many HR experts have compared the boom in the e-commerce job industry to that of IT industries i.e. increase in operations would result in larger recruitments. E-commerce industries’ jobs are not only attracting fresher’s group but also experienced managers. For instance online clothing website Myntra itself appointed more than 10 lakh persons who have been earlier working at firms like McKinsey, BCG, ATKearney, etc. The exposure that these e-commerce establishments are providing and the pay scale in double digit has been successful in attracting many young as well as experienced MBAs in the industry.