Tag: GST

FMCG Q4 FY18: Sector Expectations – The Hope Of Sustained Recovery

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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It’s that time of the year again, analysts making calls to companies, distribution agents, sharpening pencils, updating excels and tweaking estimates to prepare for the quarterly earnings. For companies in the FMCG Sector, the task is a little more difficult than the others, because comparison of performance with prior quarters would be iffy due to the various distortions in the base variable.

FMCG sector earnings were most impacted by demonetisation & Goods and Services Tax (GST) related hiccups last year. GST rates for a large swathe of daily consumption items were revised lower in November 2017, so Q4 FY 18 will have the first full quarter impact of lowered prices and higher off-take.

In the previous quarter things started to look up. Almost every consumer company reported better-than-expected results coming off a very favorable demonetisation base. Margins improved due to benign raw material costs and GST uncertainty of the first half of 2018 was finding its feet again.

Most importantly, there was a heightened sense of optimism in the management commentary post earnings. For instance, Hindustan Unilever, in their Q3 earnings statement said “Expect gradual recovery in demand to continue” vs “In a challenging business environment, we delivered strong overall performance” just a quarter ago. Hence, the key expectation from the FMCG sector, in this quarter, is sustained recovery and positive management commentary.

As for the numbers, the sector, as a whole, is likely to see mid-single digit volume growth in the upcoming quarter. Additional GST rate cuts in November 2017 led to price cuts across products that may further increase off-take and aid volume growth. Post demonetisation and GST drubbing, the distribution channels seem to have recovered, especially wholesale & army canteen stores.

The industry seems to have sized up the scale & limitations of its fiercest competitor in recent times, Patanjali. That’s visible in HUL, GCPL & Dabur’s improvement performance in the areas they were most affected.

All eyes are on the margins for the FMCG sector this quarter. There may be some divergence between food and home and personal care companies.

For companies like Dabur, Emami, Marico and Britannia, who do have small exposure to the Middle-East and North African (MENA) region, the Street expects some improvement in reported results from the international business given a favorable base.

However, the big question that begets answering is, what price are investors paying for this increased optimism? At 45X FY19E, the sector does trade at elevated valuations, but if these companies meet the Street’s expectations with a hope for some more in the future, there’s no reason for investors to worry about the top dollar they’re paying for growth, opportunity and quality of management.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India to meet its clean energy target before time

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Emphasising on the need to transform the ongoing solar energy progress in India into a social movement, Union Science and Technology Minister Harsh Vardhan on Saturday said the country would meet its renewable target of 175 GW, including 100 GW of solar, before the stipulated time frame of 2022.

“We have set an ambitious target for generation of clean energy including solar and the centre has been working towards its goal, the minister said. “The solar energy progress has started becoming into a social movement. The country will meet its renewable target before the stipulated time.”

He emphasised on harnessing more technology and innovations that are emerging in the solar energy field.

“Solar tariff has come down from Rs 18 a unit to Rs 2.50 per unit because the solar energy movement has been unprecedented,” said Harsh Vardhan. “We have to transform the solar initiatives into a social movement.”

Every house must become solar power generating house, said Harsh Vardhan, who is also the Minister for Environment, Forest and Climate Change.

Asked about the Central government’s thrust on big-ticket solar projects while rooftop solar not getting prominence, he said:

“The centre has been providing subsidy for roof-top solar and the state government should take up this project. State must popularise roof top solar and make it a movement.”

Responding to query on taxes being impose on solar equipment under Goods and Services Tax regime, he said the GST Council would take appropriate decision for the betterment of the sector and the country as a whole.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Hotel majors eye aggressive expansion in India

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The hotel industry, which has been in a state of flux due to the introduction of goods and services tax (GST) and demonetisation, finally seems to be turning the corner.

Not only are tourism and domestic travel expected to surge, a raft of global and domestic hotel powerhouses such as Hilton and Radisson are planning to aggressively expand in India. These developments will help offset the rough patch the industry due to the two reforms by the government. Tariffs and occupancy in hotels have taken a severe knock in the past one year.

The Radisson Hotel Group is planning to increase its total portfolio of hotels in India to 200 by 2022. The group is also looking to grow its regional footprint. The hotel chain has about 90 hotels in India at the moment.

Hilton Worldwide is also bullish on the Indian market. The hotel chain expects both occupancy as well as better room tariffs to drive revenue going forward. Occupancy rate stands at around 70% level for the hotels it runs in India.

To cash-in on the increasing demand, InterContinental Hotels is set to open 100 to 150 hotels over the next 10 years. The hotel major is also looking to bring several of its global brands such as Indigo and Kimpton to India.

Other than global hotel chains, domestic players such as ITC and Leela are also aggressively investing to make the most of this tourism wave.

Leela Palaces Hotels and Resorts is expecting to clock a 15% topline growth in FY19. Expansion of existing properties and new hotel additions in India and  overseas markets are expected to drive sales growth for the group. These aggressive expansion plans are also expected to aid job creation in India.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Indian market—Thy name is uncertainty

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Indian equity market faces a lot of uncertainty in 2018 related to macro, earnings and politics. This makes it very hard to take a concrete view on the market over the next few months. We expect a moderate 8-10% upside for the market in 2018, in case the key macro variables were to turn favourable over the next few months and earnings were to meet with the Street’s high expectations.

The Indian market at 17.3X FY19 earnings has limited scope for re-rating in the context of rising global bond yields and domestic macro and political uncertainties and the market’s current high valuations (despite the recent moderate correction) do not fully capture the deterioration in the macro over the past six months.

It is also possible that the macro factors worsen further, which will weigh on market multiples resulting in low to negative returns for 2018. The bond market seems suitably concerned about the weak macro, as can be seen in the sharp increase (about 125 bps based on 10-year G-Sec yields) in bond yields over the past six months. Earnings yields have barely budged over the same period. The equity market perhaps expects; (1) an improvement in the macro-economic conditions after the deterioration over the past six months, (2) strong 20% increase in FY19 earnings for the market and (3) favourable outcomes of state and general elections over the next Nine to 15 months.

The macro-economic variables are simply too uncertain—things could improve or worsen from current levels. The Indian market will have to contend with three big macro-economic variables over the next few months — GST revenues, inflation and crude oil prices.

If GST revenues fail to pick up over the next few months to match the government’s overall target of Rs 1.1-1.15 trillion per month for FY19, the bond market concerns about fiscal slippages and government borrowing for FY19 may increase leading to higher bond yields. However, if GST revenues pick up meaningfully, then bond yields may cool off. Current monthly GST revenues at Rs 860-900 billion are meaningfully lower than the required monthly run rate for FY19.

If inflation was to surprise negatively (higher than expectations) as a result of weak monsoon and steep increases in kharif MSPs, the RBI may be forced to raise rates, which would be a big negative surprise for the market. We (and the Street) expect inflation to taper down in second half of 2018, which would obviate the need for rate increases by the RBI.

If crude oil prices move up to $70/barrel (or higher), we would see further pressure on current account deficit  (CAD)/BoP and the rupee. We expect India’s FY19 CAD to be around $75 billion at $70/barrel crude oil price, which will exceed Foreign Direct Investment (FDI) inflows and bank deposits (around $50 billion per annum typically) meaningfully leaving the BoP exposed to volatile debt and equity FPI flows. However, if crude prices cool off to $60/barrel, CAD/BoP will be more manageable with CAD at around $60 billion.

Earnings uncertainty has increased over the past few weeks following the recent negative developments in the banking system and global trade. We currently expect net profits of the market (Nifty-50 Index) to grow 25% in FY19. However, we see downside risks to our earnings forecasts for banks and metals and mining sectors in case; (1) loan-loss provisions will remain high through FY19 for banks due to further slippages and increase in non-performing assets (NPAs) and (2) global commodity prices will decline as a result of restrictive trade practices by the major economies. We note that banks account for about 45% of incremental profits of the Nifty-50 Index for FY19 and the metals and mining sector another 12%. The next few weeks will provide more clarity on the earnings of banks for FY19.

If the PNB scam turns out to be an isolated incident and there are no fresh untoward incidents, we could see restoration of normal operations in the banking system over the next few weeks. Also, the favourable resolution of ongoing National Company Law Tribunal 1 (NCLT) cases over the next three to six weeks could restore confidence of investors, leading to a re-rating in the multiples of the private ‘corporate’ banks and even PSU banks.

However, any fresh reports of malfeasance in banks could result in further government action against banks, which could affect lending and the fledging economic recovery.

Lastly, the Indian market will have to contend with uncertain politics by the end of this year as the three BJP-ruled states of Chhattisgarh, Madhya Pradesh and Rajasthan going for elections.

It is possible that even the general elections may be advanced to end of 2018/early 2019, which could provide another source of uncertainty to the market over the next few months, as the market will start focusing on the outcome of the general elections three to four months before the elections.

It remains to be seen whether the BJP can repeat its performance of  the 2014 general elections when it won 159 of the 171 seats in Chhattisgarh, Gujarat, Madhya Pradesh, Rajasthan and Uttar Pradesh. These states contributed significantly to the party’s majority in Lok Sabha.

Sanjeev Prasad, Institutional Equities, Kotak Securities Limited. Views are personal

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

New ITR forms notified; how does it affect you?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The new Income Tax Return (ITR) forms for the assessment year 2018-19 were notified today by the Central Board of Direct Taxes that mandated salaried class assessees to provide their salary breakup and businessmen their GST number and turnover.

The policy-making body of the tax department said some fields have been “rationalised” in the latest forms and that there is no change in the manner of filing the ITRs as compared to last year.

All the seven ITRs are to be filed electronically except for some category of taxpayers, the Central Board of Direct Taxes (CBDT) said in a statement.

The most basic, ITR-1 or Sahaj is to be filled by the salaried class of taxpayers, which was used by 3 crore taxpayers during the last financial year.

The form this time seeks an assessees salary details in separate fields and in a breakup format such as allowances that are not exempt, value of perquisites, profit in lieu of salary and deductions claimed under section 16.

These details are provided in the Form 16 of a salaried employee and a senior tax official said that these are now meant to be mentioned in the ITR for clarity of deductions.

The CBDT said the ITR-1 can be filed by an individual who “is resident other than not ordinarily resident and having income of up to Rs 50 lakh and who is receiving income from salary, one house property or other interest income”.

“Further, the parts relating to salary and house property have been rationalised and furnishing of basic details of salary (as available in Form 16) and income from house property have been mandated,” CBDT spokesperson Surabhi Ahluwalia said.

The ITR-2 has “also been rationalised” for individuals and HUFs (Hindu Undivided Families) having income under any head other than business or profession.

“The individuals and HUFs having income under the head business or profession shall file either ITR-3 or ITR-4 in presumptive income cases,” the statement said.

Under the ITR-4, assessees who have presumptive income from business and profession will have to furnish their GST registration number and its turnover.

In case of non-resident taxpayers, the requirement of furnishing details of “any one” foreign bank account has been continued like the last time for the purpose of credit of refund, it said.

Further, the statement said, the requirement of furnishing details of cash deposit made during a specified period (in the wake of the note ban of 2016) as provided in ITR form for the Assessment Year 2017-18 has been “done away with” this time.

Space has also been provided in forms to either mention the 12-digit Aadhaar number or the 28-digit enrollment Aadhaar ID, as was the case in last years’ forms.

The CBDT said that individual taxpayers of 80 years or more at any time during the previous year or an individual or HUF whose income does not exceed Rs 5 lakh and who has not claimed any refund, can file ITR in the paper form, using the ITR-1 or ITR-4.

The new ITRs have been uploaded on the official website of the department–www.incometaxindia.gov.in.

The last date for filing the ITR is July 31.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Grievance redressal mechanism set up for GST portal glitches

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government said it had set up a grievance redressal mechanism to address difficulties faced by taxpayers due to technical glitches on the Goods and Services Tax portal.

Under the new mechanism, if any taxpayer was unable to file any form or return due to a technical glitch by the due date, he or she would be allowed to do so within a stipulated time period.

In case any taxpayers could not complete the process of filing TRAN-1 (transitional credit form) in time due to the IT glitch, he or she would be allowed to complete the process by April 30.

The filing of GSTR 3B return for such TRAN-1 will have to be completed by May 31, the Finance Ministry said.

It added that the Goods and Services Tax (GST) Council has delegated powers to an IT-Grievance Redressal Committee to approve and recommend steps to be taken to redress the grievances and provide relief to the taxpayers.

The taxpayers would have to approach field officers/nodal officers where there was a demonstrable glitch on the common portal due to which the due process could not be completed.

“The IT Grievance Redressal Committee shall examine and approve the solutions as may be necessary for an identified issue,” an official statement said.

The relief could be in the nature of allowing filing of any form or return, or amending any form or return already filed, it said.

“The decision relating to filing of TRAN-1 will benefit 17,573 taxpayers who will consequently be able to avail of Rs 2,582.98 crore as Central GST credit and Rs 1,112.77 crore as State GST credit,” the statement said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

‘Over 17 lakh e-way bills generated in 3 days’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Over 17 lakh e-way bills for inter-state movement of goods have been generated by businesses and transporters since the launch of the GST anti-evasion measure on April 1, an official said today.

The number of e-way bills generated on its platform has been steadily rising with 2.59 lakh bills on April 1, followed by about 6.5 lakh and 8.15 lakh bills in the subsequent two days.

Among states, Gujarat tops the list of e-way bill generation with 3.6 lakh bills generated during April 1-3, followed by Karnataka at 2.65 lakh bills.

Karnataka is the only state which has also launch e-way bill for intra-state movement of goods, along with inter-state.

“Going by the trend, the total number of e-way bills generation is likely to touch 9 lakh today. On a daily basis, we are expecting a 5-10 per cent increase in the generation of bills,” an official told PTI.

From April 1, transporters of goods worth over Rs 50,000 have been mandated to generate an e-way bill, which would be required to be presented to a GST inspector, if asked.

This is being touted as an anti-evasion measure and would help boost tax collections by clamping down on trade that currently happens on cash basis.

The GST Council, last month, decided on a staggered roll out of the e-way bill starting with inter-state from April 1 and intra-state from April 15.

The official said a decision on which states should be in the first phase of intra-state roll out would be decided after stabilisation of the current e-way bill system for movement of goods from one state to another.

“We are seeing an uptrend in e-way bill generation. Once the number of such bill generation plateaus, a decision on intra-state launch would be taken,” the official added.

Abhishek Jain, Partner at EY, said the e-way bill roll out has been smooth, in line with the government’s promise of setting in motion a stabilised system.

“The strategy of the government to introduce inter-state e-way bills in phase 1 and intra-state in later phases has worked out pretty well,” Jain said.

The e-way bill provision of the goods and services tax (GST) was first introduced on February 1. However, its implementation was put on hold after the system developed glitches in generating permits.

With several states also starting to generate intra-state e-way bills on the portal, the system developed a snag.

Since then, the platform has been made more robust so that it can handle as many as 75 lakh inter-state e-way bills daily without any glitch.

“Second innings of e-way bills is having a smooth run, and overall response from trade and industry is encouraging. In the last couple of days, not even a single grievance has come in on the technology front,” AMRG & Associates Partner, Rajat Mohan, said.

Data retrieved from e-way bills would also support the government build analytics around tax collections on a real-time basis, Mohan added.

The implementation of the nationwide e-way bill mechanism under GST regime is being done by GST Network in association with the National Informatics Centre (NIC).

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Demonetisation, GST led to formalisation of economy, says Jaitley

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Demonetisation and the Goods and Services Tax (GST) led to higher formalisation of economy resulting in higher direct tax revenue and greater number of income tax return filings, said, Finance Minister, Arun Jaitley.

“The impact of demonetisation and GST implementation has resulted into higher formalisation of economy. This is further substantiated by filing of more than one crore (new) income tax returns by tax payers during FY 2017-18 in comparison to FY 2016-17,” Jaitley tweeted.

According to the data released by the Finance Ministry, 6.84 crore returns were filed during 2017-18, significantly higher than 5.43 crore filed in the previous fiscal.

“Direct tax collections for FY 17-18 has been Rs 10,02,607 crore (18 per cent higher than previous year),” Jaitley added.

“The data reveals the efficiency of the tax department and a rise in the number of honest tax payers. This historical revenue receipt is a factual testimony of accountable governance under Prime Minister Narendra Modi,” he said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow