What is the Employees Provident Fund Organisation (EPFO)
Financial analysts at Reliance Securities and Mehta Equities have both issued a ‘Subscribe’ rating to the Indian Renewable Energy Development Agency (IREDA)’s Initial Public Offering (IPO), which opens on November 21. The IPO boasts a total issue size of Rs 2,150 crore, with a price band set at Rs 30-32 per share. Analysts are optimistic about IREDA’s prospects, considering factors like its robust growth track record, improvements in asset quality, and attractive valuations.
Financial Performance Highlights: IREDA has demonstrated substantial growth, with Assets Under Management (AUM) witnessing a remarkable 41% Year-over-Year increase as of September 2023. Fiscal years 2022 and 2023 show robust growth of 22% and 39%, respectively, accompanied by an impressive 83% and 36% growth in net profit. Despite valuation considerations at the upper price band, analysts believe the IPO presents a promising investment opportunity.
Strategic Positioning in Renewable Energy: As the largest pure-play green financing Non-Banking Financial Company (NBFC) in India, IREDA is strategically positioned to capitalize on the government’s ambitious renewable energy targets for 2030. The company’s nodal agency status and diverse financial products enhance its ability to seize opportunities in the growing renewable energy sector.
Solid Financial Metrics: IREDA’s financial performance includes a 58% Compound Annual Growth Rate (CAGR) in net profit from FY21 to FY23. The Capital-to-Risk Weighted Asset Ratio (CRAR) stood at 21.22% as of March 31, 2022, indicating a strong financial position. Total revenue witnessed a notable 21.7% increase, reaching Rs 3,481.9 crore in FY23.
Ownership Structure Changes Post-IPO: Following the IPO, the government’s stake in IREDA is expected to decrease from 100% to 75%, while the public stake is projected to increase to 25%, marking a significant shift in the company’s ownership structure.
Investors are urged to consider the potential for both short-term and long-term gains, aligning with the government’s initiatives to promote the Renewable Energy sector and achieve net zero emission targets by 2030.
What is the Employees Provident Fund Organisation (EPFO)
In September 2023, the Employees’ Provident Fund Organization (EPFO) witnessed a substantial increase in its membership, with a net addition of 17.21 lakh members, as revealed by the latest payroll data. This marks a month-on-month growth of 21,475 members compared to August 2023 and a significant year-on-year increase of 38,262 members from September 2022.
Youth Dominance in Workforce Entry: Among the 8.92 lakh new members enrolled in September, nearly 59% belong to the age group of 18-25 years, indicating a youth-dominated influx into the organized workforce. This surge underscores the trend of young, first-time job seekers entering the job market.
Steady Decline in Exits: The data also highlights a declining trend in EPFO exits since June 2023. In September 2023, exits decreased by 12.17%, with approximately 3.64 lakh members leaving the EPFO. Interestingly, around 11.93 lakh members exited but later rejoined, choosing to transfer their accumulations instead of opting for final settlement.
Gender Dynamics: Out of the total new members, 2.26 lakh are female, constituting a notable portion of the workforce. The month witnessed a net addition of around 3.30 lakh female members, emphasizing a positive trend in female workforce participation.
Regional and Industry Insights: Maharashtra, Tamil Nadu, Karnataka, Gujarat, and Haryana led in net member addition, accounting for 57.42% of the total growth. Maharashtra, in particular, contributed significantly with a 20.42% increase. Industry-wise, sectors like sugar, courier services, iron and steel, hospitals, and travel agencies experienced noteworthy growth.
Provisional Data and Continuous Updates: The EPFO emphasizes that the payroll data is provisional, given the ongoing nature of data generation and continuous employee record updates. Since April 2018, EPFO has consistently released monthly payroll data covering the period from September 2017 onwards.
This robust growth in EPFO membership reflects a dynamic and evolving landscape in India’s organized workforce, with a notable influx of young talent and a steady rise in female participation.
In pursuit of Prime Minister Narendra Modi’s ambitious goal to elevate India into a $5 trillion economy by 2030, a pivotal factor emerges – achieving $2 trillion in total exports. For this vision to materialize, the often-overlooked yet critical element of seamless cross-border payments, particularly for Micro, Small, and Medium Enterprises (MSMEs), takes center stage.
Democratizing Global Trade for MSMEs
The digital revolution has transformed the landscape of international trade, breaking down barriers that traditionally favored corporate giants. Today, MSMEs can leverage B2B and B2C eCommerce platforms, facilitated by technological advancements and supportive government policies. This shift allows smaller businesses to integrate into global supply chains, contributing significantly to India’s export growth. In the fiscal year 2022-23, MSME products accounted for a substantial 43.6% of the country’s total exports.
Overcoming Financial Maze: Challenges in Cross-Border Payments
Traditionally, navigating cross-border low-value payments has been akin to traversing a financial maze, laden with challenges. The reliance on correspondent banking relationships and SWIFT for secure communications often results in slow and costly international wire transfers. Payment service providers (PSPs) offer alternatives with lower fees and quicker transfers, yet MSMEs face persistent challenges, particularly in emerging markets like India. Issues are exacerbated by intermediary currencies, introducing layers of complexity to transactions.
Charting the Path Forward
To empower India’s exports and aid MSMEs in achieving the formidable $2 trillion export target, addressing these challenges in cross-border payments is imperative. Streamlining processes, reducing costs, and fostering a supportive financial ecosystem are essential steps towards ensuring that small and medium-sized enterprises can seamlessly participate in and contribute to the global trade landscape.
n a recent update, the Goods and Services Tax Network (GSTN) has rolled out a significant change concerning the reversal of Input Tax Credit (ITC) for suppliers who fail to file GSTR 3B. The conversation between fictional characters, Arjuna and Krishna, sheds light on the press release and Rule 37(A) issued on November 14, 2023.
Clarification on ITC Reversal Requirement:
Arjuna seeks clarification from Krishna regarding the new requirement for taxpayers to reverse ITC due to defaults or non-compliance by their suppliers in filing GSTR 3B.
Press Release and Rule 37(A) Overview:
Krishna explains that the department issued a press release on November 14, 2023, emphasizing the need for taxpayers to reverse ITC claimed when their suppliers fail to file GSTR 3B, as outlined in Rule 37(A) of the CGST Act.
Simplified Explanation:
Breaking down the press release and Rule 37(A), Krishna simplifies the concept. Taxpayers who have claimed ITC for invoices and debit notes reported by their suppliers in GSTR 1/IFF returns face a reversal obligation if the suppliers haven’t filed their GSTR 3B returns for those transactions by September 30th, post the financial year when the credit was claimed. The reversal must be completed in the GSTR 3B return before November 30, 2023, ensuring compliance with the new mandate. Immediate attention and action are crucial for taxpayers to adhere to this regulatory change and avoid penalties.
In a proactive move to alleviate the mounting burden of litigation faced by both the government and taxpayers, the income tax department has set ambitious targets for the resolution of appeals. With 285 appeal units spread across India, the department aims to streamline the appeal resolution process and has mandated each unit to submit a comprehensive report card to the board by January. This initiative precedes the finalization of measures slated for announcement in the upcoming budget.
Lingering Challenge of Appeals:
Recent data reveals a concerning trend where the disposal of appeals lags significantly behind the influx of fresh appeals filed annually. To counter this, the government is poised to introduce measures in the budget aimed at curbing litigation and enhancing efficiency in the appeal resolution process.
Escalating Appeal Backlog:
As of March 31, 2023, the number of pending appeals has risen to 5.16 lakhs from 4.96 lakhs recorded on March 31, 2022. Notably, more than 2.8 lakhs appeals have been pending for over three years, contributing to the persistent challenge faced by the income tax department.
Enforcing Rigorous Targets:
To expedite the disposal of appeals, the tax department has instituted strict targets for its officers. Each appeal unit is tasked with resolving a minimum of 450 appeals for the fiscal year 2024. Moreover, these units are mandated to dispose of all cases pending as of April 1, 2023, involving demands of ₹50 crore and above. Additionally, there is a compulsory resolution of all appeals filed prior to April 2020, especially if the demand exceeds ₹10 lakh. This strategic approach aims to address the backlog effectively and enhance the overall efficiency of the appeal resolution process.
DSP Mutual Fund has unveiled its latest offering, the DSP Banking & Financial Services Fund (DSP BFSF), an open-ended scheme designed to provide investors with a gateway to the long-term structural opportunities within the banking and financial services domain. The fund extends its focus beyond traditional banks, encompassing key sectors such as NBFCs, Housing Finance Companies, Life Insurance, Non-Life Insurance, AMC, Exchanges & Depositories.
Riding the Growth Wave:
The Banking and Financial Services sector in India has showcased remarkable growth, consistently outperforming the broader Nifty 50 Index over 10-year periods. Despite a brief underperformance since September 2019, the sector’s potential for a reversal, coupled with attractive valuations and robust balance sheets, presents a compelling investment opportunity. The Nifty Financial Services TRI has demonstrated over 12% returns in 90% of times over a 7+ year timeframe.
Strategic Approach:
DSP BFSF adopts a stock-specific approach that prioritizes business fundamentals over market outlook, boasting a high active share compared to the benchmark. The fund also offers flexibility for global investments, allowing the Fund Manager to tap into fundamentally sound businesses internationally.
Asset Allocation:
Under normal circumstances, DSP BFSF maintains an asset allocation between 80% to 100% in equity and equity-related securities of companies in the Banking and Financial services sector. It further allocates up to 20% in equity and equity-related securities of other companies, up to 20% in debt and money market instruments, and up to 10% in units issued by REITs and InvITs.
Subscription Details:
The New Fund Offer for DSP BFSF opens for subscription on November 20th, 2023, and concludes on December 4th, 2023.
CEO’s Perspective:
Kalpen Parekh, MD & CEO of DSP Mutual Fund, expresses optimism about the venture, emphasizing the sector’s substantial profits, diverse business additions, and favorable valuations, making it an opportune time for investors. The launch aligns with the fund’s strategy of raising capital in sectors with enduring growth potential during periods of price consolidation or correction.
In a landmark decision on October 16, the Supreme Court dismissed the plea of telecommunication companies, including Bharti Airtel and Vodafone Idea, seeking to categorize license fees paid post-July 1999 as revenue expenditure. The apex court upheld the Income Tax Department’s stance that such payments, linked to Adjusted Gross Revenue (AGR), are essentially toward license fees and do not qualify as revenue expenditure.
Background of the Case: The legal dispute, spanning over a decade, between the income tax department and telecommunication companies reached its conclusion with the recent Supreme Court ruling. Notably, the Delhi High Court had previously ruled in favor of the telecom firms, asserting that license fees should be considered a part of revenue under the AGR scheme, hence not qualifying as capital expenditure.
SC’s Verdict and Income Tax Department’s Contention: The Supreme Court, however, sided with the Income Tax Department, emphasizing that the annual payments tied to Adjusted Gross Revenue are explicitly directed at license fees. The court rejected the argument that the mode of payment, based on annual gross revenue, should determine its classification as revenue expenditure. Instead, it deemed the license fee payments as capital expenditure.
Resolution of a Decade-Old Litigation: This decision marks the culmination of a prolonged legal battle between the tax authorities and telecom giants. The Supreme Court’s verdict stands in contrast to the earlier stance of the Delhi High Court, settling the debate on whether license fees should be treated as capital or revenue expenditure. The clarity provided by the apex court brings finality to this complex issue.
The National Small Industries Corporation Ltd. (NSIC) is seeking applications for the position of Chairman-cum-Managing Director through the Search-cum-Selection Committee (SCSC). This announcement supersedes the previous advertisement dated 27.09.2022.
Position Details:
Scale of Pay: Schedule ‘B,’ ranging from Rs. 1,80,000 to Rs. 3,20,000/- (Revised).
Application Deadline: 14.08.2023, by 15:00 hours.
About NSIC: NSIC, a Central Public Sector Enterprise (CPSE) under the Ministry of Micro, Small and Medium Enterprises, is wholly owned by the Government of India. The corporate office is located in Okhla, New Delhi, with authorized and paid-up capital of Rs. 535 crores and Rs. 532.99 crores, respectively, as of March 31, 2023.
Eligibility Criteria: Interested officers are required to apply afresh based on the new ‘Job Description.’ Applications submitted in response to the earlier circular (dated 27.09.2022) will not be considered.
Application Process:
Eligible candidates should submit their applications by 15:00 hours on 14.08.2023.
Use the prescribed proforma available on the Ministry of MSME and NSIC websites.
Include necessary documents: attested copies of CR dossiers/APAR for the last ten years, cadre clearance, vigilance clearance/integrity certificate, and a statement detailing any major or minor penalties imposed in the last decade.
Widespread Circulation: To ensure broad dissemination, kindly circulate this vacancy information among various offices, entities, and public sector enterprises under the Ministry/Department. Host the circular on the Ministry’s/Department’s website.
Traders often face the challenge of maintaining the right amount of money in their brokerage accounts. While saving bank accounts offer some interest, it is unattractive. To address this issue, savvy traders park their funds into liquid Exchange Traded Funds (ETFs).
What are Liquid ETFs?
Liquid ETFs invest in debt instruments that mature overnight. They offer attractive returns and provide the liquidity to trade seamlessly. Gains are either paid as dividends or credited as fractional units.
Advantages of Liquid ETFs
No credit risk: They invest in tri-party repo on government securities and treasury bills.
Attractive returns: They provide returns in line with money market interest rates.
No duration risk: Money is redeployed daily.
Saves time and costs: No need to transfer money from bank to brokerage account.
How to Invest in Liquid ETFs
Liquid ETFs can be bought and sold like any other stock on a stock exchange. Most brokers offer margin as high as 90% on these units.
Conclusion
Investing in liquid ETFs can be very attractive for traders planning for a short break. They save time, costs, and provide peace of mind.
The past six months witnessed a significant surge in financial markets, propelled by heightened investor enthusiasm. However, this rapid ascent has led to inflated valuations, particularly in mid and small-cap stocks. Consequently, there has been a 7-8% correction in index levels, with some stocks experiencing more substantial declines. The benchmark Nifty 50 recorded its worst month in 2023, losing nearly 3% in October. Given the recent rally and increased market volatility, investors are advised to exercise caution, especially in small-cap allocations.
Volatility as a Constant in Investments
Volatility remains an ever-present factor in the investment landscape, influenced by various macroeconomic factors. Despite recent corrections, the possibility of a 5-10% further drop cannot be discounted. Recognizing this unpredictability, savvy investors are reassessing their portfolios to manage risks while identifying opportunities.
Shift Towards Large Caps: Stability Amidst Turbulence
In response to market instability, a growing strategy involves reallocating investments toward large-cap stocks. Large caps, having underperformed compared to mid and small caps in recent years, present relatively more reasonable valuations. Investors often turn to the stability, global reach, and established business models of large-cap companies during turbulent market phases. The current trend suggests that large caps might serve as a sanctuary, providing stability in uncertain times.
Mutual Funds: A Strategic Approach
Amidst market shifts, mutual funds continue to be a favored choice for diversification and professional management. October saw a surge in net SIP additions, reaching a record high. SIPs, constituting a larger share of inflows, indicate a structural shift. The resurgence of large-cap funds aligns with broader market recovery. Balanced advantage funds and multi-asset funds emerge as strategic choices to navigate market challenges.
Balanced Advantage Funds: Dynamic Asset Allocation for Risk Mitigation
These funds offer flexibility in dynamically allocating assets between equity and debt, allowing adjustments based on market conditions. As market volatility increases, these funds can strategically shift to a more conservative approach, safeguarding investors’ capital.
Multi-Asset Funds: Diversification Across Asset Classes
Multi-asset funds take diversification a step further by investing in various asset classes, including equities, debt, and sometimes alternative investments like gold. In the current environment, with geopolitical concerns impacting markets, these funds provide unique advantages. They offer exposure to assets like gold, historically acting as a hedge during adverse events.
Gold as a Hedge in Multi-Asset Funds
Gold, a traditional safe-haven asset, tends to rise during financial market turbulence. Multi-asset funds, with allocations to gold, provide a strategic advantage. In times of uncertainty, gold serves as a hedge against adverse event risks, enhancing the overall resilience of the investment portfolio.
