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January 2022

Jan 19
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Landmarks Happened for Hospitality Industry in India

By Hospitality No Comments

Landmarks For Hospitality Industry in India

It is no news that the hospitality industry in India has been weathering the covid storm and is critically passing through a critical, unprecedented phase.

This has been specially made arduous for the industry to cope ever since the Covid-19 pandemic has come into the picture. The hospitality sector in India specifically saw a large loss of revenue.

To put the assertion in terms of statics, the RevPAR (Revenue per available room) for the industry had seen a massive decline during the first three quarters of the financial year 2020.

growth of hospitality industry in india
Even though the pandemic led to the ravaged hospitality sector in India, the silver lining that came with it cannot have been missed or ignored. But what kind of silver lining was offered during the Covid-19 you ask?

The odious pandemic had offered an incredible opportunity to the hospitality sector to fine-tune and ensure operational efficiency.

Such operational efficiency of the highest standards could have been achieved in the important departments such as HR, finance, engineering housekeeping, beverage, and food. This could have been efficiently achieved through the best-in-class training and stringent adherence to all brand standards.

hospitality sector in india
Given the fact that covid had presented various opportunities for the sector, one can state that the hospitality sector in 2020 and 2021 had achieved many milestones and landmarks. This was made possible through many innovative products that led to the reshaping of the hospitality industry.

The government has been sagaciously working for the advancement of the hospitality sector in India. The Maharashtra government had effectively conferred ‘industry’ status to the state’s hospitality sector. This was a major step in the revival and the renewal of the sector in the state.

The industry status emphatically allows the hospitality establishments in the state to be levied electricity charges and rates, property tax, water charges, development tax, increased carpet ratio, and non-agricultural tax at industrial rates.

This efficiently results in a reduction of the operating costs for the hospitality players in the state that provides impetus to the battered sector in the state. In fact, it is highly expected that the government will significantly reduce industrial tariffs which will further boost the industry in the state.

tourism and hospitality industry in india
Another landmark decision that was taken by the government in the financial year 2021 was that it had significantly reduced pre-establishment licenses for the sector from 70 to 10. Given the cumbersome licensing hassle that the establishment has to go through, which effectively affects its efficiency, such a step is welcomed by the hospitality sector.

Given, what all is being achieved in the state of Maharashtra, other states are bound to take cognizance of what is being done and follow the suit. This could definitely be the harbinger of change for the industry which will have a significant impact on its fortunes, which at the moment are faltering.

Talk about the technology integrated economy in India and the hospitality sector has been making a sagacious use of the same. A landmark that had been easy to achieve by the hospitality sector was the integration of Smart In-room Technologies Smart in-room technology.

This certain technology has taken the hospitality industry by storm. With a high percentage of over 20% of hotels worldwide already on board, this top-notch innovation in the hotel industry in India will certainly lead to the reinvigoration and reshaping of the hospitality sector in India in the next decade or so.

Gone are the days when lounging in the hotel meant services available at your disposal, any time and any day with no need of serf service. Self-Serve Tech Serf Service Technology has made an imprint on the hospitality sector.

The hospitality industry has emphatically come a long way when it effectively comes to automation of services, and it is here for all the good purposes. Thus, with automation integrated hospitality sector, automated check-ins and checkout options are now the norms.

Though the phenomenon has been long due, one can effectively state that the arrival of covid has fastened the process of transformation from manual services to automated services.

But one might ask what is the most efficient and beneficial innovation or landmark that has been integrated into the industry? The answer to that has to be the use of robots in the Hospitality Industry. This is an area where a lot of innovations have taken place and has huge potential to boost the industry.

Given the fact that the Indian hospitality sector will be contesting against the world hospitality sector and will face stiff competition more than ever, it is absolutely no wonder that technological innovations are now ruling the roost in the industry.

This will emphatically help the industry to stand out in a sea of competition. In fact, a series of robots have been introduced by the HOSPITALITY INNOVATIONS. Today 11 introduced a series of robots tailored for the hospitality industry.

It is no news that India is one of the fastest-growing travel & tourism (T&T) economies in the world. This is mainly due to its immense, diverse landscape and rich heritage. Its cultural diversity emphatically and significantly attracts tourists from across the country and the world.

impact of covid-19 on hospitality industry in india

However, if one closely scrutinizes the sector, it might not be hard to notice that the sector has still not tapped into its full potential.

This is especially true for leisure tourism, which lacks mainly due to the lack of good quality hotel infrastructure in the country and low technological advancement of the same.

But, given the aforementioned technological advancement that has been achieved by the sector, one can argue that the hospitality sector is on the road to advancement and improvement which is much needed by the industry.

Though, highly capital intensive and the high cost of capital makes investment in the sector quite cumbersome and unattractive, the government’s efforts to attract the same are needed in the industry.

It is to be noted that the sector is a major contributor to the country’s GDP growth and consequently employment, thus its revival is of the essence and required.

To make the sector more appealing and easier to work in granting infrastructure-lending (infra) status to the sector, which is in fact a long-pending request by key stakeholders, will be a first step on the path of growth.

Thus, will the government take cognizance of the fact that work is needed in the most crucial sector in India? I guess we’ll have to wait and see.

 

Tags related to this article:

growth of hospitality industry in India, hospitality sector in India, Indian hospitality services, tourism and hospitality industry in India, hospitality business in India, tourism & hospitality industry in India, about hospitality industry in India, impact of covid-19 on hospitality industry in India, hospitality industry in India after covid-19, hospitality industry in India.

Jan 19
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Is Government’s Arrival in The Indian Telecom sector a Boon or a Curse for It?

By Telecom No Comments

Analysis of Government Arrival in The Indian Telecom Sector

Something has been committed by the Indian telecom sector that no analysts or experts had anticipated. Well, many might anticipate or might be concocting certain political blunders, this instant, the action is too complex and strategic.

The Indian government, in a recent turn of surprising events, has entered the telecom sector by picking up a stake in a telecom operator. This certain telecom operator was on the verge of a collapse just a few months ago that had wreaked havoc in the sector.

Thus, given the debilitating circumstances under which the government has come to rescue, a certain message by the government should be made clear.

Through such a takeover, the government has proved that it solemnly wouldn’t want the Indian telecom sector to become a duopoly. Here it is to be noted that the duopoly players could have been the Reliance Jio and the Airtel.

indian telecom sectorHaving stated the government’s response to the dying ambitions of the Vodafone, how did the market take the news? The market response, at best, can be described as disappointing and averse. This has been corroborated through Vodafone Idea’s shares dipping by as much as 19% in early trade after the brutal announcement was made.

This clearly suggests the market’s subdued enthusiasm over the government’s entry as a shareholder in the market.
But what could have led to such an averse and spooky behavior that was displayed by the market yesterday?

It is to be noted that the market is emphatically asking a single question: was there really a need for the government to take over yet another telecom?

History bears testimony to the fact that government-led organizations’ are a euphemism that is used for an unattractive, unprofitable, and low on efficiency organization. Thus, various questions are being raised on the government’s ability to steer the ship of Vodafone Idea.

This also comes after the government-run BSNL performance that hasn’t gone up the ladder of success for quite some time now.

telecom industry in indiaAre such fears unwarranted?

  1. But are such biased fears unwarranted? Many analysts would like to argue that this does not have to be the case. This is specifically due to the fact that such pessimism is unwarranted if the government will not meddle with the management of the Vodafone Idea.
  2. In fact, many experts will also like to present the opinion that perhaps such a takeover will actually prove to be useful for the stakeholders.
  3. This can be beneficial for both Vodafone Idea and BSNL MTNL’s subscriber base and the investors as a whole. There is a sound argument that if the two entities namely the BSNL and the Vodafone are merged, this could prove to be a timely profitable venture, especially with the arrival of the 5G era in the country.
  4. The pair can make a great match given BSNL’s pan India wired coverage and the Vodafone Idea’s wireless coverage. This could optimistically complement well each other and assist both the giants to make a competitive pair in the sector, giving the competition to the rivals Reliance Jio and Airtel.
  5. What can materialize into a successful story is the realization of synergy gains that can be due to the act of asset sharing agreement on 2G, 4G & later 5G.this could emphatically prove to be successful as the two companies will have an effective chance to leverage each of their assets and use their customer base to expand.
  6. This will emphatically and significantly help Vodafone to clear off its balance sheet and avoid the interest costs by effectively and strategically clearing the path for its profitability.
  7. However, it is to be noted that everything is easier in the theory than on the ground level. This too is true for the situation of Vodafone in the telecom sector.
  8. It might be delightful to narrate the synergy gain analysis, but it is quite easier said than done. With the government having a seat at the management table, things can go fairly south, quite quickly, just as it had been anticipated to go up.
  9. Where many are of the opinion that the government’s takeover can be a worse remedy for a dying Vodafone, very few have their faith in the government’s ability to turn the enterprise into a profitable venture.
  10. The government doesn’t only face the problem of a dying dream but also of different cultures that need to be integrated if the government wants to amalgamate an Indian company and a global company culture.
    telecommunication sector in india
  11. It is to be noted that the telecom sector in India has come a long way since 1991. The 1990s are the times that remind us of the Monopoly of state-run MTNL, BSNL, that had captured the market.
  12. Such a scenario can be seen playing out even today with the threat of Reliance -Jio and Airtel to capture the market burgeoning every day. Though, many might argue that since JIO’s inception Data prices have plummeted but given that it might be heading towards the monopoly position, such graces can in no time vanish.
  13. Certain legality issue that has come to the fore, with the government’s involvement in the sect
    or. It refers to the government’s role as a regulator and as a buyer and provider of service in the same sector.
  14. With the government governing the sector with its laws and regulations and also acting in the capacity of being an investor in the two largest telecom giants, can it be trusted to play fair and square? Certain analyst
  15. indian telecommunication servicesand experts have cast their doubts on the issue of the government playing two roles at once in a sector.
  16. Many fear that with increased inefficiency, the sector will also witness undue advantage through policies to nurture the same. Maybe the government will act responsibly, and the precedent will be set. But can such a motive be positively achieved; one has no choice but to be a bit dicey about it.
                                         But who will be responsible for the funding?
  17. Given the aforementioned fears and doubts that linger upon the leadership of the government, another unsettling fact has to be Vodafone’s urgent requirement for funds to expand its network capabilities for the 5G era.
  18. Though the recent tariff hikes might have eased the arduous nature of the problem, this is a temporary solution for the short-term cash flow crunch. Given, Vodafone’s odious conditions, it sure needs more than just a short-term CAPEX boost.
  19. Thus, before Vodafone is made a success story, its empty hollow coffers of opportunities need to be filled with conviction, Capex, and strategy.
  20. Will the government be able to work in the favor of the Vodafone Idea’s stakeholders and investors? Perhaps, it is something we’ll have to wait and watch, as the next few months will prove to be highly critical for the telco’s future.

 

Tags related to this article:

telecom industry in India, telecommunication industry in India, Indian telecom service, Indian telecom operators, Indian telecom sector, telecommunication sector in India, future of telecom industry in India, Indian telecommunication services, Indian telecom authority, factors affecting telecom industry in India

Jan 19
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IPO or M&A? How Venture Capital Shapes a Startup’s Future.

By Corporate Law No Comments

Understanding Venture Capital Funding Process

Startups are the new burgeoning fashion of the finance world. It is no news that varied startups in the economy have taken the economy by storm.

With many registering high profits,  IPO the startup culture in various economies, in the west and the east have been blooming. With millions of ventures sprouting in the economy, its funding process garners importance and has drawn itself into a heated debate.

venture capital

The heated debate around the topic is due to the fact that entrepreneurs rarely know who will ultimately own their startups. There are various ways a startup is funded in the economy. A startup that is effectively funded by Venture capitalists, tends to work with the same group of partners.

This usually leads to a faster exit that is sought after by the investors by selling the company to a larger one. In contrast, to the VCs, startups that are emphatically funded by a VC, exit potentially through a splashy IPO is demanded.

It is no news that funds are strategically required to sustain the fledgling business or to ramp up the output. Therefore, a cash injection, from any source, can go a long way in sustaining a business much longer or launching a critical, new product in the market.

ipo in india

However, it has been found through various studies that the founders usually don’t put much thought into what alternate funding mechanisms have to offer. Thus, they effectively fail to recognize the importance of scrutinizing and examining investors’ relationships that might eventually find themselves relinquishing their ventures to a much larger profit-mongering acquirer.

Thus, strategically knowing the details of what actually is at stake with both outcomes is important and imperative.
The main rationale that runs behind the reluctant attitude of the founders not to get to know the alternatives is that many founders are mostly interested in the amount of funding and whether the venture capital is well known or not.

Thus, decisions are made on the basis of popularity and amount of funding, which according to many analysts is a wasteful approach.

According to the study, it has seen found that of the 16 percent of the startups that have been acquired, the main motivator of investment and negotiation of like-mindedness in business to ensure stable returns and not what such kind of investing have to offer both the parties.

Such kinds of relationships in businesses have been termed “focused successes” because they effectively deliver a venture mostly to a well-resourced owner.

venture capital funding process

It is to be noted that going for such an approach usually leads to repercussions in the form of pressure that the founders will have to yield to coordinate with the plans of an aligned investor group. in fact, any many cases, it has been witnessed that the founders have to effectively give up control of the startup’s vision.

This can be due to the demand of the investors that lead to founders taking a step back altogether after a larger company takes possession. With such uncanny and unwarranted behaviors, it is usually seen that such businesses fall apart.

On the other hand, one can also effectively argue that venture capitalists who don’t strategically or effectively work closely together tend to actually hold on to startups longer.

Thus, the tradeoff for the founders is emphatically between the infringement of the power in the startup and the investors who might outlive their utility in the venture.

According to the reports, if an investor clings to a startup for a longer time, it is usually four and a half years on average.

entrepreneurs and ventures capitalists

Though one might argue that becoming a publicly-traded company can actually bring about more attention, profits and can effectively retain the original management team, the high risks of failure for such ventures that are backed by such syndicates is a fact that cannot be ignored.

Thus, as aforementioned, though for most entrepreneurs, it might be just about the term sheet or how much equity they can retain from such investing, usually, the structure of the alternatives, which is a kind of hidden variable, has huge implications.

Though the degree of collaboration between two parties gives off mixed signals, there are instances that such investments might actually prove much more beneficial than the repercussions aforementioned. The pool of investors might help the firm pool together resources and provide hefty, important connections within an industry.

This might seem like a promising opportunity that many firms or startups might want to explore. On the other hand, we also witness a more diverse investor group that might be willing to give founders more leeway in decision-making.

Whatever be the case, founders need to understand and interpret the pros and cons of such investment relationships and who they get in bed with. Such decision-making is mainly motivated by their solemn take on their companies and what they aspire for the same, which should be made clear before committing to various popular VC funds.

Though, a quick cash injection might seem enticing, ultimately, the structure of relationships matters, which most probably is overlooked.

 

Terms related to the article:

venture capital, initial public offering, IPO in India, startup future in India, the procedure of initial public offering, IPO news India, IPO initial public offering, venture capital funding process, entrepreneurs and ventures capitalists, entrepreneur and venture capitalist, investment capitalist, understanding venture capital

Jan 19
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Future-Amazon: Delhi high court stays arbitration proceedings in Singapore Tribunal till February 1

By Cases No Comments

future amazon dispute
Future amazon dispute doesn’t seem to settle. This has been made clear through a recent turn of events where a two-judge bench of the Delhi High Court, in a significant move has stayed the arbitration proceedings between Amazon and the Future group.

It is to be noted that the proceedings were being conducted before the Singapore Arbitration Tribunal, which has been halted until further orders.

The appeal by the Future group was being heard by the two-judge bench headed by high court’s Chief Justice DN Patel. The appeal was strategically and effectively made after a serious setback had been born by the Kishore Biyani-led companies before a single-judge bench.

It is worthy of mention here that the larger bench of the high court has emphatically observed that the prima facie case is effectively in favor of the Future group.

Here the high court has noted that there is a prima facie case that has been made out in the favor of appellants. Moreover, if the case is to be scrutinized, it can be stated that the balance of convenience is tipping heavily in favor of the appellants.

future retail supreme court hearing
This aforementioned reason and rationality have led the high court to effectively agree to hear the appeal. Thus, on serious merits, the Delhi high court has stayed the proceedings till February 1. While the government has acted on the Singapore front, the Delhi high court has also emphatically stayed the single judge’s order that had dismissed the Future group’s idea.

To talk about the rationale which has been quoted by the high court, “interest of justice” has been cited as the main reason for such a stay. It has been empathically observed that it would be blatantly butchering the interest of justice, if a stay was not granted as aforementioned the balance of convenience also tends to lean in favor of the Future group.

One can highly admire the swiftness and conviction with which the Future group is moving to file its appeal before the courts. This shows a sense of urgency and importance in the actions of the Future group that is going the last mile to defeat Amazon’s stubbornness or rather a solemn pledge to destroy its functioning and chances of survival.

This fact can be corroborated by the fact that the appeal before a larger bench of the Delhi High Court was filed by the future group within a day from a single-judge dismissing.

It is to be noted that the single bench had dismissed the Future’s plea seeking a direction for the Singapore tribunal to hear the conglomerate’s application for arbitration termination on priority.

future amazon proceedings
The drama surrounding the Future- Amazon dispute dates to the issue of Future Retail Ltd entering into a strategic asset sale deal with the Reliance Industries led by Ambani. This was vehemently contested by Amazon which has led to an odious and crippling stay on the asset sale deal, which remains in place to date.

The main factor that had led the future group to contest against Amazon was brought about by the stay that was put in place by the competition commission of India that had suspended its earlier approval to the investment deal between Amazon and the Future Coupons Pvt Ltd.

This has led the Future, time and again, during the course of its hearing, to seek a direction for the tribunal to at least hear its case on arbitration termination first.

This has been countered by Amazon yet again which has argued on the grounds that despite CCI’s approval, the arbitration clause and agreements survive and proceedings cannot effectively and emphatically be terminated.

The main reason for the same is that it has been recognized by the CCI as well that the proceedings of arbitration are effectively independent and different from each other.

On top of this, Amazon has issued a clarification that the Singapore tribunal has not strategically or blatantly refused to hear the termination application. In fact, it has been agreed to accommodate the same after the scheduled agenda that has been set out for January 5 to 7 is categorically over.

reliance future amazon dispute
The odious history: revisited.

As aforementioned, the legal battle that is long drawn is due to the asset scale discrepancy between Future and Reliance that was contested by Amazon. But what effectively was the main factor that empowers Amazon to contest the deal?

It is to be noted that it was claimed by Amazon that its deal with Future Coupons effectively prevents Future Retail too, in the capacity of being a related party, from effectively and strategically entering into any agreements with certain entities that are competitive in nature to Amazon.

This also included the Mukesh Dhirubhai Ambani group which was involved in the asset sale with the future group. Thus, Future Retail claimed that it was not bound by the deal between Amazon and Future Retail’s promoter firm.

This had led to the halt in the asset sale deal between India’s two leading retailers which was stayed by the emergency arbitrator in October 2020. But is there any end to this corporate legal drama any soon? Guess, we’ll have to wait and watch.

Jan 19
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pharma innovation

Fueling Pharma Innovation: Govt’s Draft R&D Policy to Welcome, Inclusive Step Forward

By Other No Comments

Fueling Pharma Innovation

The Indian pharma sector garners much attention during the odious times of the detestable pandemic. with low investments in the sector, one can witness declining utility of the same.

The Indian pharma sector hence needs to discover and create a pipeline of new molecules that will effectively help the sector become a fully original innovation-driven industry.

innovation pharmaceuticalsThe pharma industry can be developed on the facets of innovation that involve a considerable level of risk. The risk in the sector is due to the fact that innovation demands the cost of technology and the cost of long gestation period.

With the aforementioned costs comes the cost of new capabilities and even the cost of failure. Factoring in all the costs that might be incurred, the cost of setting up an innovative pharma sector is incredibly high.

Therefore, given the humongous cost, the risk-taking that needs to be inculcated in the process can only be achieved within an enabling ecosystem.

innovation in pharmaceutical industry
Given the immense costs mentioned above, it is to be noted that funding will definitely be one of the biggest and prime drivers of innovative R&D in the pharma sector. Given that investors have a huge potential to build an impressive ecosystem, another stakeholder that has an important role is the government, startup and tech entrepreneurs and regulators, academia, private funders, etc.

This is apparent due to the fact that most major and innovative discovery in the pharma sector has been made through government spending.

We are quite aware of the fact that some of the biggest and most influential historic pharma discoveries made around the world have successfully succeeded in a large part due to the continued government funding.

the pharma innovationThus, given the government’s increased and necessary involvement in the innovative development of the sector, some thought should be put into the restoration of policy incentives. These efforts can be attributed to the weighted education in R&D expenditure and patent box.

On top of enhanced education and inculcation of skill sets in the workers, the government can also emphatically incentivize the right kind of projects with real potential to succeed and which have the right amount of capacity that will definitely have a significant role to play in the future.

On the other hand, private equity funding and private spending through venture capitalists, etc. too can prove beneficial for the development of the aforementioned, innovative ecosystem. Given that healthcare and pharma assets have been presumed as enticing by the private lenders, one can positively expect great enthusiasm amongst the private investors.

pharmaceutical innovations

It is to be noted here that investing in assets from the early discovery stage might be beneficial for the investors compared to late-stage acquisition as these can contribute immensely to the R&D successes.

Thus to quantify the gist of the argument stated above, it can be emphatically stated that with the right kind of government or private support, academia, or start-ups, the pharma sector in India can grow to newer heights in efficiently and effectively identifying the unmet patient needs in the sector.

This can be possible due to thorough research in concentrated sectors which can help in better conditionalities of the sector, given its vital role in the pandemic.

Having talked about the need of the sector, one cannot emphatically deny the contributions of the government and academia throughout the years to make the pharma sector a possibility. It is no news that funding is required for the innovative R&D constitutes which is a central pillar for the innovative industry that the R&D is.

To provide policy support, the landmark Indian Patents Act of the year 1970 was enacted to turn things around for the Indian pharma sector. It is to be noted that this effectively and efficiently has assisted in the genesis of the effective Active Pharmaceutical Ingredients (API) and generic formulations.

Thus one can argue that the policy support through the government has greatly facilitated innovation and efficiency in the pharma sector. In fact, the road to spectacular discovery in the sector has been opened through the regulatory landscape that effectively lays down unambiguous timelines and accountabilities that sagaciously support clinical trials in the country.

Talking about the industry-academia contribution towards the pharma sector, one can state that not much has been achieved. But the same is prevalent around the world such as in Israel, the United States, Japan, and others. These countries can staunchly corroborate the fact that corporate academia does play a phenomenal pivotal role leading to spectacular pharmaceutical innovation in the industry.

innovative business ideas in pharmaMentioning the requisite role of the policymakers in the industry, the Creation of innovation hubs in the country, through motivating the right talent is always an overlooked, but important aspect that needs to be scrutinized.

There is an immediate need for try facilitation of a national hub for the aforementioned aspects of the government to coexist and facilitate synergy.

Taking all these factors into consideration, the recent draft of the R&D policy is under consideration. Such a formidable step is heartedly welcome and an inclusive move by the government of India.

It is also emphatically a much-needed realistic view and address of the present-day and future requirements of the country battered by the pandemic.

It is, in fact, yet another step towards the mutually responsive partnership that is bound to be formed between the government and the pharma industry. Thus, will the R&D policy be able to bring around the change? It is something we’ll have to wait and watch

 

Terms related to the article:

innovation pharmaceuticals, innovation pharma, pharma innovation, innovation in pharmaceutical industry, the pharma innovation, pharmaceutical innovations, innovative business ideas in pharma, innovative ideas in  pharmaceutical industry, innovation in pharmaceutical technology

Jan 19
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corporate insolvency resolution process

Effect of Committee of Creditors Approval in Corporate Insolvency

By Corporate Law, Banking No Comments

Corporate Insolvency Resolution Process for Creditors Approval

Insolvency and Bankruptcy Code that came into effect in the financial year 2016, has been the most effective code for the insolvency creditors for proceedings in India.

One can even state that the invention of the code has been revolutionary for the banking sector, given, the state of haphazard and the industry finds itself in. it can also be maintained that with the advent of the code, the industry saw the demise of the laws for liquidation and insolvency in the Indian bankruptcy regime.

But given that even the IBC brings to the table the option for liquidation, how exactly is the code different from the prior process of liquidation?

It is to be noted that the crux of the code encapsulates effective objectives like maximizing the value of assets of a corporate which were barely recoverable under the arcane laws and emphatically ease the businesses by effectively minimizing the financial risk in business.

Thus, it can be effectively stated that the code significantly improves the condition of the financially distressed company by recovering its value through its effective time-bound manner of work. Even though the IBC helps in the recovery of payments from the defaulter, its main focus is on the relief of the creditors of the company.

corporate insolvency resolutionIt is worth mentioning here that under the Corporate Insolvency Resolution Process, the creditors have placed ion the pinnacle of utmost importance. Thus, given its newfound, enhanced role, the committee of creditors has been emphatically seen playing a major role in the regime of insolvency.

In fact, If the procedure is to be believed, the committee of creditors wields the utmost power and is effectively considered the supreme decision-making body in the Corporate Insolvency Resolution Process. Thus, one cannot help but note here that the effective decisions by the committee will affect the resolution of the insolvency of the corporate debtor.

corporate insolvencyUnder particular regulation 21 of the code, the committee of creditors finds the seed of its formation. According to the code, the committee of creditors shall emphatically and strategically comprise all the financial creditors of the corporate debtor.

To remove the barrier and the arbitrariness of distinction, the code also effectively makes a clear distinction between the financial creditors and the operational creditors. If a financial creditor is to be solemnly described, it effectively means anyone to whom the debt along with interest is owed. On the other hand, an operational creditor is one who has debts related to the supply of services and goods.

committee of creditorsThe power-wielding committee of creditors

As aforementioned, the committee of creditors is described as the supreme decision-making body. Thus, all the major or humungous decisions about the company are effectively taken with the approval of the committee.

Therefore, one can state that the committee of creditors has a humungous authority to affect the insolvency process. This is also due to the fact that the committee can call the shots on sensitive topics like whether or not to restore the corporate debtor by strategically accepting any resolution plan.

In fact, it is worth mentioning here that the committee of creditors has the supreme power of approving the proposed resolution plan. This strongly indicates the fact that the committee has an undue influence on the insolvency process, which will be tackled on its whims and decisions, thus, deciding the fate and the regular functioning of the corporate debtor.

In fact, it is also worth mentioning here that the committee of creditors also enjoys the authority to approach the adjudicating authority. This can be done in the case of any foul play event that can be detected by the committee. This emphasizes the fact that the conditions of foul play and what determines it will be emphatically be decided by the committee, which surely puts humungous, undue power in the hands of the committee to sway the decision-making in the insolvency process.

corporate restructuring and insolvencyThe authority can also be effectively evaluated from the fact that the co9mmitee can also choose to proceed with the liquidation of the corporate debtor by not approving any resolution plan.

Thus, in a gist, it can be stated that the insolvency process depends heavily on the commercial wisdom of the committee while taking any decision for the corporate debtor.

This is because it is staunchly believed that the committee of creditors has better knowledge to mediate and analyze the debilitated situation of the company.

Thus, one can effectively argue that the committed creditors have been vested with immense powers under the insolvency and bankruptcy code,2016.

With immense power bestowed on one committee, it can be stated that effects on the resolution of a company under distress can be immense and humungous.

bankruptcy creditors committee

With even a little whimsical attitude, one can conjure that it will have a negative impact on the financial health of the company that will nonetheless affect the process of insolvency in due course. But on the other hand, one can also maintain that if the creditors can take absolute control of the management of the corporate debtor, important decisions and the resolutions plan can be passed in a timely, swift manner which can help recover a larger value of the assets and will thus ease the financial risk in a company.

Thus, if the power is to be used sagaciously and prudently, one can expect such creditor-in-control model management to usher the banking sector into a stronger bankruptcy regime in India.

 

Terms related to the article:

innovation pharmaceuticals, innovation pharma, pharma innovation, innovation in pharmaceutical industry, the pharma innovation, pharmaceutical innovations, innovative business ideas in pharma, innovative ideas in pharmaceutical industry, innovation in pharmaceutical technology, the corporate insolvency resolution process

Jan 19
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Cryptocurrency regulation laws

Cryptocurrency Regulation Laws in India and Abroad

By cryptocurrency No Comments

Cryptocurrency Regulation Laws Around the World

It is no news that the cryptocurrency community around the world and especially in India is ever increasing. One might call it enticement of humungous profits or rather no relations, but one cannot deny the fact that the contentious asset’s admirers community is here to stay.

But with the governments around the world trying to regulate digital assets, the community is every now and then seen sweltering with tension whenever there is the mere mention of regulation.

Recently, in India, whenever Parliament has been in session, the cryptocurrency community has been abuzz with nervousness and anxiety.

The anxiety is due to the pressing questions that lie will the law on cryptocurrencies be finally passed? If yes, will it ban the private currencies in India?

While there are few chances that one can exactly pinpoint when such laws will be passed in the parliament, there are even little chances to assume that will the crypto law in India will be passed in Parliament.

What especially incites the anxiety of an investor is the fact that it is unclear what form the regulation will ultimately take place in India?

regulation of cryptocurrencyQuite interestingly, India is not the only country that is in the race to regulate contentious digital assets. Given the difference in policymaking in different countries, the groupings emphatically have their own ways of regulating cryptocurrencies.

But it is safe to say that India has so far been among the most closed to cryptocurrencies. Going by the media reports, there is little reason to believe that the cryptocurrency will not be tabled in the parliament in India.

Amongst various other countries, the United Kingdom does not effectively have comprehensive legislation on cryptocurrency regulation. Under the current regulatory system, the Financial Conduct Authority effectively grants licenses to authorized cryptocurrency-related businesses.

It is to be noted that all the cryptocurrency-related businesses that seek a license from the FCA, have to stringently comply with the strategic set of rules that have been laid out.

cryptocurrency regulation in india

In fact, it is to be noted that the rules are all the more stringent for those companies that emphatically and effectively deal with crypto futures and options trading.

It is worthy of mentioning here that the UK is also concerned with its crypto taxation policy. All the businesses that effectively engage in crypto trading or crypto exchanges fall under corporate tax rules.

Thus, it can be argued that the UK taxes gains from cryptocurrency trading are treated equally as any gains from any other currency trading.

Unlike the UK, US and India, have a dual legislative system. Here the central government, as well as the State Governments, have the effective powers to legislate.

Thus, due to the dual legislative attribute, the regulations regarding cryptocurrencies usually vary across States. This is especially true for the US. But looking at the bigger picture, the country, overall, has been increasingly in favor of allowing all cryptocurrency activities.

New York, in recent times, is increasingly becoming the poster child for a favorable legislative environment. It was in 2016 when New York had effectively and emphatically launched a framework for licensing cryptocurrency business. Under the recent system, companies that are strategically looking forward to transmitting, or selling, or holding cryptocurrencies need to obtain a license from the New York State Department of Financial Services.

crypto regulation indiaHaving talked about the US and the UK, it would be a gross error to not indulge in the subject of crypto regulations in the European Union. In comparison to the UK and the US, Legislation in the European Union is a complicated matter. This is due to the fact that some topics are being dealt with by the Union and some by the member states.

As a matter of fact, cryptocurrencies have been regulated by each country in the EU. Most opted for the framework for the regulation of the cryptocurrency that has come to the fore is the soft-touch regulatory framework.

Though a consolidated framework is on the way, for a while soft touch, the bifurcated regulatory framework is at play.
China, on the other hand, has held a long grudge against the cryptocurrency holders and the ones dealing with cryptocurrencies. One can state that cryptocurrency has been such a roller-coaster ride.

Whereat first, it was witnessed that the Chinese government was quite welcoming but in recent times, it has effectively become the most restricted crypto-markets in the world. Given the fact that China constitutes about 75% of all crypto-mining in the world, such an antagonistic stance gains importance for crypto regulators around the world.

In June 2021, the crypto regulators saw the banning of the mining of cryptocurrencies. This effectively led to about a 40% fall in global mining operations.

Talking about India, the spectators have usually witnessed India’s conservative approach towards cryptocurrencies, with high chances of banning the private contentious digital asset.

With glaring news of the RBI trying to ban the cryptocurrency, the private investors might witness a change from private crypto trading to regulated CBDC trading in the country.

It is to be noted that the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is effectively listed for introduction in Parliament’s Winter Session.

The bill effectively seeks to create a facilitative framework for the creation of the offline digital currency to be issued by the apex bank of India.

Given the RBI’s antagonistic attitude towards cryptocurrency, the Indian government is trying to follow the dual path of looking to strictly control or even ban cryptocurrencies.

On the other hand, it is also trying to encourage the use of blockchain technologies which have immense potential for the economy.

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Jan 19
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corporate social responsibility in india

Corporate Social Responsibility Regime in India

By Corporate Law One Comment

Importance of Corporate Social Responsibility

Capitalization has been a contentious topic for decades. With various social civilizations tilting towards the socialistic regime, the corporate world’s faster growth has been hard to miss.

With the mixed economy shenanigans and advantages, harmony between the public and the private sector is needed. With various high profits that accrue to the capitalistic economies, condemnations in the form of wage discrepancies and violations, corporations have to commit themselves to not sever the neutrality line between the socialists and themselves.

With the need to maintain harmony, the adoption of Corporate Social Responsibility becomes a pressing need for corporations.

It is to be noted if Corporate social responsibility is to be deconstructed, in simpler words, it means a concept that effectively tries to instill a sense of social responsibility amongst various corporations in the economy. Well, the need for corporate social responsibility comes from the fact that society essentially is of the opinion that it emphatically funds or contributes to the businesses of corporations in one way or the other.

importance of corporate social responsibilityThis provides impetus to the growth of most businesses. Thus, given the pertinent argument, corporations that in some way or the other benefit from the society should effectively recognize and realize such contribution through their share.

Thus, it can be maintained that CSR strategically nurtures a businesses’ sense of responsibility towards society.

 

Though around the world the activity of CSR is voluntary, India is one of the first few nations that had legalized mandate CSR in the year 2014.

CSR is all wonderful for society and the world, but do the corporations, whose sole motive is profits, find any utility in conducting such activity? As a matter of fact, there are various advantages for the well-established corporations that carry out their social responsibilities.

One of the advantages that the company enjoys when it fully discharges its responsibility is a good repute amongst the citizens and are normally considered and regarded as virtuous corporates amongst citizens.

It is no news, that in India, moral policing plays a huge role in determining the popularity and the fate of anything and everything.

Thus, conducting social responsibility adds brownie points for the corporations working in India.
Other than enjoying popularity amongst the masses, the corporations also can use the opportunity to make positive contributions towards cultural, social, economic, and environmental issues that are increasingly prevalent in society.

importance of corporate social responsibility

As a matter of fact, it cannot most certainly be denied that healthy corporate employee relationship leads to increased efficiency in the organization. Indulging in CSR activities presents an opportunity for the corporations to strengthen their bond with the employees.

But the key growth factor that does not lend the property or reluctance to the law is change. Though CSR was effectively mandated under the law by bringing amendments to the Companies Act of 2013, the provisions strategically regulating CSR activities of companies have been evolving with time.

What makes the act for the company less of a liability is the fact that the amendments caused to CSR were particularly aimed at mostly motivating the companies to develop a genuine desire to take up a social cause and not burden them with social work.

Thus, one can attribute the mild curtailment of freedom as the main driver of the success of CSR.
It is to be noted that prior to the Companies act of 2013, CSR activities in India were merely seen as a philanthropic activity.

But with the change in 2013, that saw replacement in the Companies Act of 1956, CSR activities become the work of every organization.

But this gives rise to a pertinent question what really is the role of the corporate social responsibility committee in India? It is to be noted that the committee works to formulate and effectively recommend to the board the amount of expenditure to be incurred on the activities.

Alternatively, it also assists in monitoring the Corporate Social Responsibility Policy of the company from time to time.

The board of the companies usually approves the Corporate Social Responsibility Policy. The board also strategically ensures that the activities are effectively included in the Corporate Social Responsibility Policy of the company and are in fact undertaken solemnly by the company.

In order to emphatically counter any discrepancy, the board also ensures that the company spends, every financial year.

The criteria are that at least 2% of the average net profits of the company that are made during the three immediately preceding financial years should be used for CSR activities.

Thus, in totality, one can maintain that the CSR activities in India are worked out efficiently under a system that solemnly ensures that the system is worked out in a proper manner.

In fact, given the higher scope of the policy, amendments were made in If the company fails to spend such amount, the financial year 2019.

In order to inculcate the responsibility in various corporations in India, the newer amendment has suggested that if any amount that is remaining unspent, shall emphatically be transferred by the company within a period of thirty days.

This should be transferred to a special account to be opened by the company, which will be effectively called the Unspent Corporate Social Responsibility Account.

socialThus, in recent years the government has been trying to incorporate responsibility amongst the corporations and making it arduous for them to skip their social responsibility.

The CSR has a high potential for the future, will the government be able to make any fruitful gains out of it, is something we’ll have to wait and scrutinize.

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Jan 19
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corporate compliance laws

Corporate Compliance Relaxations by MCA, and Other Agencies Due to Covid 19 Scenario

By Corporate Law No Comments

Relaxation of Corporate Compliance Laws Due to covid 19

Where many might agree to disagree on various range of topics, many will strongly agree on the fact that the global outbreak of coronavirus was a one. The pandemic has ruthlessly brought about unexpected restrictions in the economy in the form of blanket lockdown, that has curtailed the freedom of the citizens around the world.

The same is true not only for the general public but also for the corporate sector across the world, which has been dying under the weight of the pandemic mayhem. India serves as a prime example of extreme steps that are taken for the curtailment of the pandemic.

This included 3-month long blanket lockdown in the economy that had emphatically ordered all establishments, except the essential services to temporarily close down their physical offices. This has presented a humongous problem for the employees who are finding it arduous to coordinate.

corporate compliance issues

This is effectively and significantly due to the lack of office facilities, and how long the companies are taking an immense amount of time to face difficulties in undertaking timely compliances of various applicable laws.

Having mentioned the mayhem in the economy and the resultant lockdowns and precautions, it needs to be stated that the government has temporarily relaxed quite a number of compliance requirements. This has especially been embraced for the corporate sector that is having a hard time adjusting to the new normal.

corporate compliance policySome of the major relaxations that have been put in force by the securities and exchange board of India include exemptions from the cumbersome periodic filing requirements for select listed entities under the SEBI.

Thus, the extension of time has been provided for compilations as SEBI has extended the last date for the conduct of meetings. SEBI, in order to offload the burden of the executives, has also exempted the board of directors from observing the maximum stipulated time gap of 120 days between any two meetings.

It is to be noted that such time constraints had to follow under Regulations 17(2) and 18(2)(a) of the LODR respectively. Thus, in order to relax the norms, in view of the lingering pandemic, that can be described as uncertain and unpredictable at the best, one can expect the continuation of such exemptions for a while longer.

Along with the aforementioned relaxations that have been made by the SEBI, it has generously also provided relaxations to holders of 25% or perhaps more shares.

These could also include voting rights and to the promoters of listed entities. The aforementioned parties have been granted exemption from filing disclosure of their voting rights and aggregate shareholding.

It is to be noted that promoters were to be given their fair share of exemptions by not having the compulsion to promote along with the person acting in concert from filing the declaration on a yearly basis
But had only SEBI introduced certain restrictions and had the government not introduced any in the view of the welfare of the society and the employees in the economy?

corporate compliance program

It is to be noted that the Ministry of Corporate Affairs has emphatically issued a notice whereby it has clearly and strongly inserted a new sub-rule under Rule 4 of the Companies Rule of 2014. It has provided for the relaxation in holding board meetings.

This has been done to relax the compulsion of holding a meeting in the physical presence of directors under Section 173 (2).

In addition to the aforementioned, restrictions, the ministry had also come up with several important relief measures. These have been emphatically introduced to address the glaring threat that has been posted by the COVID-19. The compliance burden had been reduced through the moratorium freeze on the payments which was quite crucial for the people in the economy.

This is due to the pertinent and imperative fact that people’s economic and financial standing in society has been crippled by the pandemic. thus, this has led the government to graciously take the moratorium freeze with it for as long as it can.

Though the government might have taken care of the corporations in the financials, the government has not forgotten about corporate social responsibility. Though the government has taken an altered stance on corporate social responsibility, it has been clarified that the spending of CSR funds for the pandemic should be continued.

In fact, the government has maintained that positively and significantly making contributions to the PM-CARES Fund is quite well an eligible CSR activity. The government has strongly maintained that such funds will be judiciously used for the promotion of health care which will effectively include preventive health care and sanitation disasters in the medical system.

It is to be noted that given the wrath that has been inflicted on the corporations, such acts and exemptions will empathically allow them to avoid penalties. This can be delayed on the account of unavoidable delays in meeting their regulatory compliances. Though it is a fact that companies will have to eventually comply with such regulatory requirements until then such a breather can be enjoyed.

 

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Jan 19
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upi platforms in india

Concerns Related to Digital Lending Apps in India or UPI Platform and Data Protection

By Banking No Comments

Digital Lending Apps or UPI Platforms in India

UPI platforms in India or digital lending apps may be a burgeoning business in the economy and is turning out to be a boon for financial inclusion. But given the haze concerning the regulations and its increasing popularity amongst the masses, it has become a regulatory bane for UPI .

With the rates of fraudulent apps on the rise targeting the innocent masses, the Reserve Bank of India is still increasingly finding it difficult to effectively weed out the fraudulent loan apps from the plethora of financial apps out there.

What makes it more difficult is the craze around the burgeoning BNPL sector which is attracting borrowers. The immense ease of borrowing that is being offered via Unified Payments Interface, is causing havoc in the economy with customers being lured by fraudulent apps.

It is to be noted that the customers are being offered credit instantly by just scanning a QR code. What more? The fraudulent apps are offering ridiculously easy credit at no or minimal interest. Thus, one can quite fathom the approachability of loan borrowing through UPI platforms in India and RBI’s Delima to counter such discrepancy.

While, as it has been established that the facility has been fast gaining acceptance, one can emphatically maintain that UPI credit is actually operating in a regulatory grey area. This is due to the significant fact that UPI is a product that is not allowed by the regulator i.e. there are no regulations regulating the ominous digital lending business.

digital lending apps in indiabut then how is UPI functioning with no regulations by the authorities? UPI is essentially a digital lending arrangement between a non-banking financial company and a fintech firm. It can also be a relationship between a firm and a bank, or any other regulated entity.

It is worthy of mentioning here that the fintech firm effectively acts as a sourcing agent. Thus, it merely acts as a front-end for customers, while the actual task of lending is undertaken from the balance sheet of the regulated lenders.

sensitive personal data
It is to be noted that UPI is managed by the National Payments Corporation of India. This effectively is an umbrella entity that has been set up by the apex bank to enable a digital payments system in India.

In 2018, according to the UPI 2.0 that was launched, platforms were allowed to be linked to overdraft accounts. This meant that credit through UPI was emphatically not allowed unless a customer avails of an overdraft facility. This facility was to be availed on the current bank account or savings account which was linked to the UPI.

But, quite interestingly, if the situation and functioning of most fintech firms are to be scrutinized, it can be seen that these firms offer UPI credit as a service that does not have any such specific, aforementioned requirements for customers. Though many senior executives allege and emphasize the fact that specifically offering UPI credit through an overdraft facility is not a serious compulsion, one cannot make sense of the ambiguity that looms large on the lending sector.

According to the reports, it has also been observed that not many customers, necessarily had opted for linking their bank accounts with an overdraft facility. This is merely due to the fact that the individuals who effectively and conveniently opt for short-term loans online, actually find it arduous to avail themselves through an overdraft facility.

But why is it so? It is emphatically due to a pertinent fact that the customers are stringently required by banks to pledge their overdraft loan against collateral. Moreover, given the fact that UPI services are being availed mostly by the new-to-credit accounts with low balances, they may not even get approval for an overdraft facility.

Thus, given the fact that such requirement of linking the UPI ids to an overdraft account, one can argue that this can potentially lead to slower growth for fintech firms that significantly and effectively offer easy credit in the economy to the new to credit and low on balance customers.

Though, given the alternate credit systems in India, including the credit card, UPI seems to be efficiently appreciable and easy to use. But encountering the unregulated status of the same, concerns about data protection surface. With easy money and low interest, far from the scrutiny of the banks and authority, the UPI system seems quite enticing.

But with high chances of misuse of personal information, the system is damned to fail and perish. For easy comprehension of the law and regulation, the RBI will have to clear the air around the issue of linkage of the accounts.

This view gains all the more traction due to the growing appeal of the UPI platforms in India due to its exemplary services. Where a plastic credit card might arrive in 15-20 working days at a customer’s doorstep, the customer can use a UPI credit line within 15 minutes to avail of the services.

what are the benefits of digital lending appsThus, in totality given India’s ascendence towards the UPI system and digital banking, stringent and stricter laws are required to monitor the same. With the increasing population falling in for the enticement of the easy scheme, the regulatory authorities need to step in to protect consumer interest through the enactment of effective data protection laws.

 

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