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Why only Rana Kapoor and not someone else?#BusinessTitBits

Akhilesh Bhargava

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The suspense over the continuity of the flamboyant Rana Kapoor, as the managing director/CEO of Yes Bank, is finally over. In a decisive move, which was seen to be coming, the Reserve Bank has informed Yes Bank that Rana Kapoor can continue as its CEO, only until 31st January, 2019. This entire saga of wait and watch over his continuity as MD of Yes Bank, started when in June 2018, the shareholders of the Bank approved his reappointment as its MD/CEO and sent it to the RBI, for its ratification/approval. The Reserve Bank, in a cryptic letter dt.31.8.2018 approved his appointment, but only until further instructions. It resulted in a suspense, because the reasons for such a reply by RBI were not clear and nor was it sure as to what would the further instructions of the Reserve Bank in the matter of renewal of Rana Kapoor’s appointment be. The RBI has now made its mind clear. Rana Kapoor remains the MD/CEO of Yes Bank until 31.1.2019 only and the bank needs to immediately appoint his successor. The question is why only him ? Mr. Akhilesh Bhargava, Business Editor of HW Business and Finance shares his insights on the matter.

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Business Tit-Bits

Is the Jet rescue plan a hogwash?

Akhilesh Bhargava

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The debt-ridden Jet Airways, which was once India’s largest private sector airline, has declared a massive quarterly loss again and its market share has fallen and it has become a fringe player. It is also dealing with a host of other problems and its promoter Naresh Goyal is not willing to let go of his company in favour of another investor. Its largest lender, SBI has come up with a revival plan that involves converting debt into equity and this will ensure that Naresh Goyal’s stake in the company comes down to 20% and he will lose effective control over it which has to be approved by shareholders at their next meeting. What is important, however, is that Naresh Goyal should not be given to managing the airline like in case of Kingfisher Airlines back in 2011and a new management must emerge to take control. All these factors must be clearly included in the restructuring plan.

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Business Tit-Bits

Has Anil Ambani exited?

Akhilesh Bhargava

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The entire controversy around the sale of shares of the Anil Ambani Group companies by Edelweiss and L&T Finance revolves around the fact that Anil Ambani had taken huge loans by pledging his company shares for loans taken from these NBFCs. Since the market cap of the shares of his group companies has fallen drastically over the last couple of weeks, these NBFCs were forced to sell his shares to protect their interest since he could not meet the terms and conditions of the pledge and did not have further shares to pledge with them. Anil Ambani is not alone and other corporates have also done the same and a staggering 2 lakh crore ₹ worth of shares have been pledged with NBFCs. Such pledges of shares, in reality, represent the promoters losing control of their company and SEBI must realise this and act accordingly.

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Business Tit-Bits

PM Sir, be fair in tax for MSMEs

Akhilesh Bhargava

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The toughest time for MSMEs is the Jan to March quarter where they need all their resources to conduct business efficiently. This coincides with the most intense recovery pressures from various tax departments which hampers the MSMEs cashflows and ability to conduct business. Even in the case of bonafide cases where there are interpretation issues, the tax department demands 20% of the disputed amount which causes difficulty to the taxpayer. Even if the taxpayer does not have the ability to make the payment, coercive measures are used to recover the money. While on the other hand when it comes to refund, the IT authorities do not show any urgency and refunds are delayed, very often on purpose to meet their collection targets. The whole system is rigged in such a way that it is squarely against the small taxpayer who suffers the most. Hence we request the PM and FM to not kill the goose that lays the eggs and destroy the MSME that provides jobs and taxes.

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