Tag: MCA

A future yardstick or just another buzz word?, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


BY: Harsh kumar

Businesses around the world are moving towards a more actionable and measurable sustainable development approach through Environment, Social, and Governance (ESG) reporting. It seems to be an attractive proposition for investors who prefer more environmentally, socially responsible companies over just profit-making organisations. ESG, according to various reports, could potentially facilitate more corporate accountability in terms of its performance.

According to a survey by rating agency CRISIL, over 80% of issuers and institutional investors intend to integrate ESG in their decision-making.

“Investor community not just looks at investment opportunities but also considers risks associated during the recovery as well as structured exit from an investment. Sectors that lack long term sustained growth may find it difficult to secure equity and quasi-equity investments since we all know that equity is costlier to debt. New ideas and investment opportunities without long term vision will find fewer investors,”Inderjeet Singh, director at Deloitte India.

Regulatory bodies and government institutions are continuing to encourage ESG reporting, with Securities and Exchange Board of India stating that a Business Responsibility and Sustainability Report (BRSR) will be mandatory from FY23 for the top 1000 listed companies, by market capitalization. SEBI said that this would replace the existing Business Responsibility Report (BRR).

ETCFO discussed with Inderjeet Singh, about the challenges, strategies and the pivotal role technology plays in ESG investing. Here are the edited excerpts of the interview:

Q. What strategic decisions have companies made that will bring sustainability?

Investors and regulators have both worked towards mainstreaming sustainability into businesses during the past decade. A transition to sustainable business approaches is becoming visible across sectors. There are the following strategic decisions that various companies have taken:

  • Companies have started measuring their specific energy consumption, specific water consumption and environmental footprint. These are some of the most critical parameters which have a direct bearing on the long term business sustenance
  • Several businesses have introduced the “cost of carbon” into their investment evaluation processes, thereby ensuring all new investments (including business expansion) is based on the principles of decarbonization. There are companies in power generation business with decision of capacity addition only through renewable sources of energy
  • Some companies are even considering disinvestments or removing highly polluting businesses from their portfolio
  • Several medium to large businesses have embarked upon the journey of non-financial disclosures to obtain feedback from stakeholders, as such disclosures act as channels to resonate with society and its expectation
  • Environment inclusiveness has become an integral part of business continuity and the same has been appended into the corporate risk register of companies
  • SEBI (LODR amendments of 2021) have also introduced mandatory BRSR compliance from FY 2022, which will further improve sustainability and allied disclosures across the value chain

Q. Do organisations think ESG investing is the way forward for long term strategy and decision making or do they think of it as just another buzzword in the industry? If yes, please tell us major challenges which organisations and investors are facing in adopting ESG reporting.Yes. Indeed ESG performance has become a yardstick for investment decisions among the investor community. There are multiple challenges that may play out differently among specific sectors such as:

  • Highly competitive businesses operate at a thin margin wherein cost optimization is the operational ask, unless a large number of players transition out to more sustainable operations, the sector continues to operate as business as usual. Policy & regulatory interventions along with additional benefits such as subsidies, tax holidays etc. may be required to support it.
  • Investor community not just looks at investment opportunities but also considers risks associated during the recovery as well as structured exit from an investment. Sectors that lack long term sustained growth may find it difficult to secure equity and quasi-equity investments since we all know that equity is costlier to debt. New ideas and investments opportunities without long term vision will find fewer investors
  • Access to technology at a reasonable cost is also one of the key challenges in developing countries, which may hamper the economic growth in several countries. India can leverage population dividends to its advantage across sectors by further strengthening its readiness against leading ESG practices. Skipping Euro V and introducing Euro VI has resulted in access to global automotive technologies for Indian customers

Q.As one of the biggest consultancy firms, please tell us how we can leverage technology and data for ESG implementation?

Technology will be an enabler for ESG implementation. The material elements/indicators for disclosure are required to be continuously monitored by the companies making regular disclosures. It is important that a digital interface for data collection, monitoring, analysis and course correction is easily accessible to decision-makers/compliance officials within a company.

Several SaaS (Software as a Service) players are offering data capture and management solutions across the ESG value chain. Even the reporting requirements from companies to MCA require uploading of ESG performance data in xRBL format, which may help evaluate the performance of listed companies by SEBI / MCA over a period of time.

The ease of access to data, performance measurement, sector benchmarking and identification of champions; all of this is practically going to be facilitated through digitization. Digitization will remove bias and bring objectivity into the long term decision-making process.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

NCLT orders freeze of Venugopal Dhoot, Videocon’s senior management’s assets, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


It may not end for defaulting promoters with losing their companies. Their assets are at risk too.

The National Company Law Tribunal (NCLT) has ordered a countrywide search and freeze of the assets of Venugopal Dhoot, his wife, his company and the firm’s chief financial officer as well as company secretary.

The order was in response to a petition filed by the Ministry of Corporate Affairs (MCA) against the bankrupt group. The MCA’s move comes in the wake of banks being able to recover only 4% of their admitted claims of Rs 64,838 crore under the bankruptcy process.

The government had approached the tribunal under Section 241 and 242 of the Companies Act, which empowers the MCA to act if there is a fraud, misfeasance or persistent negligence.

Notices to be served

Responding to the petition, the tribunal has instructed the MCA to serve notices to disclose on affidavit moveable and immovable properties/assets, including bank accounts, owned by them in India or anywhere in the world. It also
directed the Central Depository Services (CDSL) and National Securities Depository (NSDL) to freeze all securities held by the respondent, which include the Dhoots, the company and senior management.

The Central Board of Direct Taxes has also been asked to disclose the information it has in its possession of all the respondents.

Bank accounts, lockers to be frozen

The Indian Banks Association has been directed to facilitate disclosures of the details of the bank accounts, lockers owned by the respondents and such bank accounts and lockers also be frozen with immediate effect.

Finally, the MCA has been instructed to write to state governments and Union Territories to identify and disclose all details of immovable properties held by the respondents.

Despite receiving a bid for only 4% of the admitted debt, which was close to the liquidation value, lenders had agreed to sell Videocon to Twin Star, a Vedanta company.

Unlike enforcement authorities that have sweeping powers, banks under insolvency can only pursue assets of the company that has gone bankrupt. The sale was, however, stalled as the appellate tribunal granted a stay following an appeal from Bank of Maharashtra — a dissenting creditor. In its order on Wednesday, the NCLT said, “This bench is

surprised with the manner in which the financial institution has come forward to grant loans to a sinking ship and again come forward to file petition under Section 7 of IBC and again supports this petition. This certainly rises the eyebrows of the common man in the public.”

Personal guarantees

In July, banks had approached the National Company Law Tribunal for invoking personal guarantees of promoters of 17 defaulting companies.

The defaulting promoters include those of Punj Lloyd, Amtek Auto, ABG Shipyard, Videocon, Varun Shipping, and Lanco, according to reports.

Armed with a Supreme Court order, banks are looking to invoke personal guarantees of tycoons from Venugopal Dhoot to Kapil Wadhawan to recover unpaid loans from their delinquent firms



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

‘Bad bank’ is legally born, as NARCL gets incorporated with Corporate Affairs Ministry

Banking & Finance

[ad_1]

Read More/Less


The much-awaited bad bank — National Asset Reconstruction Company Ltd (NARCL) — has been incorporated, with the Corporate Affairs Ministry giving legal recognition few days back.

The NARCL — announced in this year’s Budget — will next approach the Reserve Bank of India for obtaining licence as an Asset Reconstruction Company (ARC).

“Registrar of Companies (RoC) Mumbai has given the registration for incorporation of NARCL. The other formalities are now being taken up,” sources close to the development said.

The capital structure will have a component of both equity and debt, they added. Public sector banks led by Canara Bank (which is likely to have 12 per cent stake) are expected to hold controlling stake in NARCL.

The other banks that are expected to pump in capital include State Bank of India, Bank of Baroda, Bank of India and IDBI Bank.

NARCL may eventually get capitalised about ₹7,000 crore.

The government will not have any direct equity contribution to NARCL. It will guarantee the security receipts issued by NARCL, which will buy the bad loans from banks. The Centre has earmarked ₹31,000 crore for the guarantees.

22 assets identified

Already, PSBs have identified 22 assets (stressed consortium loans of over ₹500 crore) worth about ₹82,500 crore that will be transferred to the bad bank in phases. In the long run, stressed assets worth as much as ₹2-lakh crore are expected to be transferred to NARCL.

The NARCL is expected to stick to the existing industry practice of paying 15 per cent in cash and 85 per cent in security receipts.

Proposed in the Budget

It maybe recalled that this year’s Budget had proposed the setting up of an ARC along with an asset management company (AMC) (to be called India debt management company) to take over the stressed debt of banks. The AMC will be controlled by the private sector and would help around the stressed assets for recovery.

A bad bank is basically an entity that houses the bad loans (non-performing assets) of a bank and will resolve or liquidate bad debt (stressed debt) to recover as much money as it can.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

Life after LIBOR: MCA shows the way on corporate financial reporting

Banking & Finance

[ad_1]

Read More/Less


Corporate India and the financial sector, including banks, now have guidance on financial reporting of the transactions undertaken with new interest rate benchmarks that are to replace the London Interbank Offered Rate (LIBOR) at the end of this year. The Ministry of Corporate Affairs (MCA) has effected amendments to several accounting standards to cover the International Accounting Standards Board’s Phase 2 amendments, Interest Rate Benchmark Reform finalised in August last year.

These changes to existing Indian accounting standards are expected to smoothen financial reporting under the replacements for LIBOR.

LIBOR was a favourite benchmark and an estimate of the rate at which big banks in London lent to each other. Every day, bankers got borrowing costs for each of the LIBOR’s five currencies — US dollar, British pound sterling, Japanese yen, Swiss franc and the euro — for periods ranging from overnight to a year.

SeveralA diversity of candidates recommended by the central banks of the US, Japan, Switzerland, UK and the EU are going to replace LIBOR as the benchmark rates, said experts in the financial sector. A major issue in the transition is that LIBOR is based on an average of bank lending rate. However, the replacement rates are based on the actual overnight money market transactions.

Replacement rates

Central banks around the world have established their own replacement rates. In the case of the dollar, it is the secured overnight financing (SOFR), while it is the sterling overnight index average (SONIA) for the pound; the Tokyo overnight average rate (TONAR) for the yen; the Swiss average rate overnight (SARON) for the Swiss franc and the Euro short term rate (ESTR) for the euro.

Sandip Khetan, Partner and National Leader, Financial Accounting Advisory Services (FAAS) at EY India said: “MCA has issued Interest rate Benchmark Reform – Phase 2 Amendments and has consequently made amendments to IND AS 109, IND AS 107, IND AS 104 and IND AS 116 (Indian accounting standards). We recommend that entities complete their assessment of the accounting implications of the scenarios they expect to encounter as they transition from LIBORs to RFRs and accelerate their programmes to implement the new requirements. Where the Phase 2 amendments introduce new areas of judgment, entities need to ensure they have appropriate accounting policies and governance in place.”

Prateek Aggarwal,Partner, Nangia & Co LLP said the amendments made by MCA to various Indian Accounting Standards pertains to the the changes required in the relevant standards post Phase 2 of Interest Rate Benchmark Reforms and also due to the issuance of Conceptual Framework for Financial Reporting under Indian Accounting Standards.they believe the changes made by MCA are in line with the earlier recommendations by ICAI.

“Some of these Guidance/disclosures will enable users of financial statements to understand the effect of these changes, e.g. interest rate benchmark reform changes require an entity to disclose information about the nature and extent of risks to which the entity is exposed arising from financial instruments subject to interest rate benchmark reform and how the entity manages these risks and the entity‘s progress in completing the transition to alternative benchmark rates,” he said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,

MCA advises investors to verify status of Nidhi companies before investment

Banking & Finance

[ad_1]

Read More/Less


Corporate Affairs Ministry (MCA) has sounded a note of caution to investors looking to invest or investing their hard earned money in Nidhi companies. Investors are advised to verify the antecedents/status of a Nidhi company before becoming a member and investing in such companies, the MCA has said in an official release.

In particular, the investors need to verify the declaration of their status as a Nidhi Company by the Central government, it added.

Under the amended Companies Act 2013 and the Nidhi Rules 2014, companies need to get themselves updated (those companies which were earlier declared as Nidhi company under the Companies Act 1956) or declared as Nidhi company (those companies which were incorporated as Nidhi company after April 1, 2014) by applying to the MCA in form NDH-4.

While examining the applications in form NDH-4, it has been observed by the Central Government that these companies have not been complying with the provisions of the rules in-toto. This has resulted in rejection of applications filed by the companies for declaration since they have not been found fit to be declared as Nidhi Company, the release added.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,