TRACKPAD

In a major boost to country’s LNG requirement at a cheaper price, Qatar based natural gas major RasGas has given its nod to adjust its long-term 7.5 mta special purchase agreement (SPA), which was signed in 1999 with Petronet LNG, a government of India enterprise. Subsequent to this adjustment, original purchase price has now been dragged to half of the price mutually agreed to earlier. Importantly India’s biggest importer of LNG, Petronet LNG earlier had agreed to buy LNG from Qatar for US$12-13 per mBtu but now it will buy it for just US$6-7 per mBtu. As per the new contract, revised deal starts from January 1 of this year and will end in 2028. In another significant move, as per the new deal penalty fee for Petronet’s lower off-take has also been waived off. Importantly, Petronet has just off took 68 per cent of the agreed volume, last year. Petronet will now take and pay for the difference during the term of the contract.Commenting on this event, RasGas CEO, Hamad Mubarak Al-Muhannadi, stated that “these positive developments, including the new SPA, demonstrate the strength of our long term relationship with Petronet and commitment to growing sales into India to meet its expanding clean energy needs”.  Petronet CEO, Mr. Prabhat Singh, stated that “these developments highlight both parties confidence in the Indian market and our commitment to LNG as a cleaner, more efficient source of energy”. Petronet LNG owns and operates receiving terminals at Dahej, Gujarat, which is to expand to receive up to 15 mta, and has commissioned a second 5 mta receiving terminal at Kochi in Kerala. It receives RasGas’ LNG on the chartered carriers Disha, Rahi and Aseem.

To curb circulation of black money and widening of tax base government is taking various initiatives at regular interval. In line with that to collect information of certain types of transactions from third parties in a non-intrusive manner now it is mandatory under Rule 114B of the Income-tax Rules to quote PAN where ever transactions exceed a specified limit. In case of transactions of sale or purchase of goods and services, PAN will be required to be quoted, irrespective of the mode of payment if the transaction exceeds Rs 2 lakhs.

To bring a balance between burden of compliance on legitimate transactions and the need to capture information relating to transactions of higher value, Government has amended Rule 114B to enhance the monetary limits of certain transactions which require quoting of PAN.

CBDT Issues Instructions For Scrutiny Assessment Proceeding

Income Tax Department is trying to bring more transparency into its scrutiny procedures and for this, Central Board of Direct Taxes (CBDT) has issued instructions to the assessing officers to be more specific in enquires made in the scrutiny cases. The directions are comprehensive and cover cases selected through Computer Aided Scrutiny Selection (CASS) for limited scrutiny. This is done for verification of information contained in Annual Information Return (AIR) or received through Central Information Branch, or complete scrutiny of the cases.  As per the instructions, assessing officers have been advised to inform the person under tax net forthwith of the reasons for limited scrutiny, confine enquiries on the specific points for which the case has been selected and conclude the proceedings expeditiously in a limited number of hearings.

Also in a significant development, cases that are selected for limited scrutiny can only be converted to complete scrutiny with the approval of the Principal Commissioner or Commissioner of Income tax if the potential income escaping assessment exceeds a certain monetary limit. The Department has also initiated a pilot project for carrying out an e-mail based scrutiny assessment in select cases of non-corporate charges at Delhi, Mumbai, Bengaluru, Ahmedabad and Chennai and through this pilot, it is not required for a taxpayer to visit the offices of the Department while moving towards paperless scrutiny assessment proceedings. CBDT has also directed all its officers to mention e-mail address and phone numbers to facilitate electronic interface of the taxpayer with the Department.
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Zydus Group, one of the leading players in the animal health business, through its division Zydus Animal Health, has announced a strategic acquisition of select brands of Zoetis, a global animal health company. It has also acquired manufacturing operations of the company located in Haridwar. This acquisition will definitely help Zydus to expand its animal health business in India and gain access to manufacturing operations of Zoetis which has also been catering to global markets. As a result of this acquisition, Zydus gains access to a wide range of nutrition as well as therapeutic products which have a combined turnover of Rs. 171 crore. Zydus Animal Health is a market leader in various therapeutic segments which include antibacterials, NSAIDs, antimastitis, tonics and poultry vaccines amongst others in India. Zydus Animal Health has introduced the highest number of 'First in India'products in keeping with its mission to provide innovative solutions that improve animal health and farm productivity.

Texmaco Rail & Engineering one of India’s leading freight car manufacturers and diversified engineering company has acquired a 55 per cent stake in Mumbai-based Bright Power Projects (India).  Last year, Texmaco Rail had signed a non-binding term sheet with Bright Power to acquire a 76 per cent stake in the company for $15 million (Rs 100 crore). However, the terms of the agreement were amended and Texmaco secured 55 per cent stake in Bright Power. Pursuant to the acquisition, Bright Power has become a wholly-owned subsidiary of the Texmaco with effect from January 04, 2016. Established in 1994, Bright Power is an EPC company specialising in over head electrification solutions for the railways. The company clocked a net turnover of Rs 78 crore and a net profit of Rs 6 crore for the financial year ended March 2015. The company has a current order book of about Rs. 600 crore.

Educomp lenders may go for strategic debt restructuring

According to some media reports, lenders to digital education provider Educomp Solutions are thinking of conversion of debt to a majority equity holding under the strategic debt restructuring (SDR) scheme. The bankers are likely to meet during the second week of January to discuss the issue of whether to invoke SDR or not.

The SDR option, introduced by the Reserve Bank of India (RBI) in June last year, allows banks to convert part of their debt to majority equity in a defaulting firm, allowing them to take operational control. Earlier the company had gone for corporate debt restructuring (CDR). The CDR package had become essential due to the large debt the company had amassed, which could not be serviced with its earnings. As of September quarter, the total consolidated debt of the company was at Rs 3,056.99 crore.

In Q2FY16, company reported consolidated net loss of Rs128.61 crore as compared to net loss of Rs567.20 crore in the same quarter a year ago. This is the 11 consecutive quarters when the company has posted loss.