Business Today 3 December 2017

Commodity prices have risen sharply in the past year and a half. Global zinc prices have more than doubled. Aluminium prices have shot up, and so have copper prices. Crude oil, which had plunged to $26-27 a barrel in early 2016, has crossed $60 a barrel. With commodity prices on a roll, Anil Agarwal is raking it in. He is the world’s second-biggest producer of zinc, and has significant interests in aluminium, copper and oil (through Cairn). He is ramping up production and all his businesses are throwing up cash like never before. Call it the commodity cycle or call it luck, Anil Agarwal is ideally poised in the current market conditions. But a few years ago, things were going wrong for him. Global oil prices had started softening in…

NPAs P.12 GST: LOWER TAXES AHEAD P.13 GOOGLE TAX: MORE CONFUSION P.16 EASE OF DOING BUSINESS: INDIA NEEDS TO WORK HARDER For decades, new generation private banks were considered shining examples of asset quality management. That’s no longer the case. Skeletons are now tumbling out of their closets too as stress in the economy impacts India Inc.'s ability to repay loans. The biggest contributors to their rising non-performing assets, or NPAs, include steel, power and road & construction sectors. There is also the issue of regulations. The Reserve Bank of India, or RBI, recently gave banks a list of dozen-odd accounts with exposure of more than ₹40,000 crore for NPA provisioning. But bankers say only 10 per cent of these are actually NPAs. Due to this, large private banks such…

This year, India's largest car maker, Maruti Suzuki, is the second best performing stock among automobile companies in the world. In the last 12 months, its share price has risen nearly 52 per cent. After another stellar set of financials for the second quarter – revenues up 7.1 per cent, profits up 3.4 per cent – the stock hit an all-time high of ₹8,370.45. The company is on a high. Consumers are queuing up for its cars like never before. Yet, T. Suzuki, Chief Executive Officer of the parent company Suzuki Motor Corp, struck a note of caution by admitting that the results do not offer much comfort. Why? Suzuki thinks Maruti may end up being flat-footed should electric mobility suddenly take off in the country. The government is planning to…

Bowing to pressure from traders and perhaps with the sentiment in poll-bound Gujarat, the GST Council at its 23rd meeting in Guwahati, removed 178 items – including most consumer goods – from the 28 per cent peak bracket. Just 50 items are left in the list that includes luxury, sin goods and white goods. Since restaurants were not passing on benefits to customers, it lowered the rate on all restaurants from 18 per cent to 5 per cent, but without input tax credit benefits. The rate cut would mean a ₹20,000 crore hit on the exchequer in a fiscal. It’s the first major step to bring some clarity to the GST structure. Hopefully, this could well be the precursor to more such moves that make GST easier for traders and…

A flawed telecom story is unfolding at the Anil Ambani-controlled Reliance Communications. In the face of dire need to pare its ₹44,345 crore debt, the telco has repeatedly missed chances to clinch deals for its major key verticals – wireless telecom deal with Aircel, towers deal with Brookfield Infrastructure Group, and potential buyers for its real estate (in Delhi and Mumbai), undersea cable and optic fiber businesses. In the most recent proposal, RCom wants to pay ₹27,000 crore to lenders from the sale of its real estate and towers segments, and convert debt of ₹7,000 crore into 51 per cent of the company’s equity. This, however, would leave control with the lenders. Banks have long resisted the idea of taking control of RCom fearing they won’t be able to sell assets…

₹ 140 CRORE The ITAT ruled that the payments to Google Ireland were royalties and, hence, ₹140 crore tax was due. Uncertainty over taxation of income from digital businesses of multinational companies is back in headlines. When the government announced an equalisation levy on what was earned from advertisements on websites of non-resident companies, it was assumed that the matter ended there. Recently, however, the Income Tax Appellate Tribunal (ITAT) in Bangalore told Google India to pay tax on distribution fee paid to Google Ireland for booking ads for the latter’s Adword program. The ITAT ruled that the payments to Google Ireland were royalties and, hence, ₹140 crore tax was due. Though Google is certain to appeal in the High Court against the decision, the ITAT order has compounded existing ambiguities on…