The IPL and my blogs!!!

It is IPL time and I have again decided to post something. It has been 4 years since I posted!!! I had nothing specific to write tonight. For multiple reasons, I have been in an ‘introspection’ mode for the last few days and one of the things I decided was to resume blogging. While I have not made up my mind on how often I would post, I have decided to write on varied topics like the few posts that currently exist. Having decided this, I did not want to push this to another day, another week or however long it took to find a topic to post on. So here is a post to restart…..

IPL-4: Really??? When did it start??

I actually have no interest in IPL-4… it is not because the games are not interesting.. It is because I believe one enjoys a tournament when he/she has a team that he/she is cheering for!! In IPL-4, I am unable to determine my loyalties… I am a big fan of some players like Rahul Dravid, Uttappa… but cannot relate myself to Rajasthan Royals or to Pune Warriors…. I love Bangalore… but I cannot relate to a single player in the RCB team!!! I don’t know if this is a problem faced by people other than me…..

I would actually want to observe how fans react when a player who they thought was their own is a cause for ‘their own team’ being defeated in front of them. Just imagine… RCB losing to Royals in Bangalore thanks to a quick fire 50 by Rahul Dravid or RCB losing to Pune Warriors in Bangalore due to Robin Uttappa or RCB beating Mumbai Indians in Mumbai thanks to 5 for by Zaheer Khan!! This can happen to most teams….

Looking at it from a player’s perspective…. Do you think US$ 500,000 (Rs 2.25 crores) is an astronomical figure to motivate Dravid to play against his heart?? I am sure (for a person who is so passionate about his game)… his home team, home state, city matter quite a bit…. It may be a tad easier for someone like Gautham Gambhir where the amount involved is very high…. Nevertheless it is not easy… Money alone cannot motive them to get the best out of them…..

From my assessment (I could be way off the mark here because IPL is more about entertainment, money and glamour and less about cricket, passion and sense of belonging)… The current system of pooling all players and auctioning them like cows is not a good practice from whichever side you look at it… except the money angle!! It is not easy for fans to determine loyalties…. Not easy for players to motivate themselves…. The only motivation would be the money!!! This is quite a sad state… Again fortifies my belief that IPL is more like Bollywood (ie entertainment) and less of cricket…. Does this answer my perennial doubt of why many filmstars are interested in IPL teams?? May be...

Mumbai Indians/Chennai Super Kings are probably the exceptions of sorts thanks to Sachin still being in the team and thanks to Dhoni being seen as a part of the whistle podu gang for 3 years now…. But they do have their share of misfortune - Zaheer Khan in RCB and the likes.

I just hope the auction of players which happened in January never happens again…. One of the most important components which made the world cup games and the victory sweet was the heavy patriotism involved… That is absent here in IPL… Watch IPL - be confused about loyalties and have mixed feelings at the end of the game…… I am better off watching a good movie…... Here comes the IPL and films together again………….

Been really long....

It has been more than 9 months since i published a post! It is not that i did not have views on any matter... there were more than what i could have ever asked for!!! :-) It is just that i was caught up in too many things... the biggest one being the change in job!! It is not easy when you decide to quit an organisation which has been your home (mind you not the second home) for 6 years....

The other reason probably was that i was enjoying changing my status on facebook to convey my thoughts and views!!

Anyways... i was just chatting with a good friend and realised that i needed to pick up a few things that i had dropped in the last few months (including reading and blogging!!)

Here i am.....

Thats a Joke!

Sharad Pawar has disclosed that he has a stake in RCB.... This is one of the most absurd things that I could have heard. Holding a few thousand shares in the holding company may technically give him a stake in RCB... But one must realize that going by the above... all shares holders of United Spirits Limited (USL), of which Royal Challengers Sports Private Ltd (RCSPL) is a wholly-owned subsidiary hold stake in an IPL team.

I really don’t understand what Sharad Pawar is achieving by telling the media that "he is disclosing that he has a stake in RCB".

And we have leading media houses which are carrying headlines in their news channels and websites which read as "Pawar admits ownership link to Bangalore team"!!!! What a misleading headline that is!

Can we have a list of all politicians who hold shares in Deccan Chronicle, GMR, India Cements?? All of them have stakes in IPL teams!! :-)

This is media sensationalizing news at its best! In any case, I maintain what i have always been saying "There is more than that what meets the eyes when it comes to IPL."

Dividing our country....

I came across an excellent article on the subject (go to http://news.in.msn.com/national/article.aspx?cp-documentid=3596943). The summary of the article as putforth by the auother himself is

"Congress general secretary Rahul Gandhi is known for his frank talk. But sometimes he fails to gauge the implications of his `frank comments’. By saying that commandos from Bihar and Uttar Pradesh saved Mumbai, Rahul is speaking the same divisive language of the Sena – dividing India on the lines of language and region"

I could not agree more with the views in the article. It has been articulated extremly well and has been very well written as well.

It is a quite a dangerous situation we are in!!!

The Master returns

I am back here after a long time! There is a reason for me coming back. And the reason is the excitement created by the news of Micheal Schumacher returning to Formula 1!! Though there is a sense of pain about what happened to Massa, the fact that his life is out of danger and the news of Schumi coming back has made me look forward to August 23!

For people who are not aware of what i am talking about, Felipe Massa crashed during the qualifying session of the last race at Hungary and has been ruled out of the rest of the F1 season. That leaves Ferrari with only one car. It was clear that Ferrari would find a driver to replace Massa. But the driver they have chosen has come as a big surprise!

Micheal Schumacher, the seven-time world champion is set to return to the circuit after a 3 year break. He had announced his retirement in 2006. But how difficult would it be for him to get back to F1 given that he is 40+ and the fact that he has not raced for 3 years now. Not too difficult according to Eddie Jordan. Jordan, who gave Schumacher his F1 debut in 1991 says "Whether 20 or 40, I'm not sure it will make a huge difference to his reactions. Perhaps he may be a Milli-second away, but then he was a Milli-second better than anyone else."!!!!

Schumi still needs to satisfy the technical requirements of the super licence after almost three years out of the cockpit. As a consultant during the design stage he is not unfamiliar with the set-up of the 2009 Ferrari. Even if he were, Schumacher would pick it up in a lap says Kevin Garside, Chief Sports Writer at Telegraph.

I am now waiting for August 23 at Valencia......

YesX4!!!

I am posting a blog after a really long time….. I am back to write about my experience in taking a tough decision! The decision to choose my new car….I had been putting off this decision for more than a year citing various reasons. Firstly, I saw no reason to change my car since I was (and I still am) very very happy with my Wagon R!! As things stand today, I don’t think I will sell that car!

Anyways, I was faced with the tough choice of deciding the car I had to buy. The problem was to decide on a budget… trust me that’s the first thing you would have to do when you want to buy a car. The problem you would face there would be that for every number you decide you find another better vehicle just a couple of lakhs away!

After seeing cars in the over Rs 10 lakh range (Corolla, Jetta, Octavia, Laura, etc)… I decided that I would buy an ‘under-Rs 10 lakh car’. That left me with the choice of the all new Honda city, Fiat Linea, Ford Fiesta, Chevy Optra and the other GM cars. I decided against buy any of the GM/Ford cars given the service levels.

I checked out the Fiat Linea and was very impressed with the car when I saw it first. I think it a very nice car. But again I was not impressed with the service levels again… I was always very clear in my mind that I wanted a Petrol car (firstly because I don’t enjoy driving diesel cars and also see my earlier post… I don’t believe that diesel will always remain cheap). The only Linea on display and test drive was a Diesel… I had clearly indicated to the showroom guys that I was very keen on a Petrol. They had informed me that they would call me the day they get the Petrol car…. Mind you they have not called me back till date (more than a month since I visited them!!)….. just shows the level of customer service.

I narrowed down my search and decided to choose between the All new Honda City and surprise surprise… the Maruti Suzuki SX4….. I had never given SX4 a thought… the minute I test drove the car… the car was in race with the All new Honda City. It was a real tough decision… since the Honda City is an awesome car with such a great predecessors…. But end of the day… SX4 won the race comfortably….

I am now a proud owner of a Maruti Suzuki SX4…. The car is simply superb and a great VFM car (like most Marutis)... Also, one of the other reasons was my comfort level with Maruti cars…. I am back to where I belong after flirting with the idea of buying other cars ………

Await the details of the rationale behind my decision of choosing the SX4 over the All New Honda City in my next post……..

I subsidize a Merc owner!!!

Have you ever wondered why Diesel costs lesser than Petrol in India?? Is it because it is cheaper to produce? Or is there more Diesel than Petrol in the world?? No… the answer can be found elsewhere! Diesel has traditionally been priced lower than petrol to keep costs in general low (ie inflation low).

Diesel is used for transportation by road (both people and goods). Diesel is used by Indian Railways. Diesel is also used a lot by farmers for running all the irrigation equipment like tractors, pumps, crushers, etc.

Diesel is the most subsidized fuel in India. For instance, Fortune 500 company Indian Oil Corporation is losing Rs 243 crore daily of which diesel’s share is Rs 127 crore, followed by kerosene at Rs 75 crore, LPG (Rs 11 crore) and finally petrol (Rs 11 crore). This is also due to the fact that diesel accounts for more than 40% of India’s petroleum product consumption. But the crux of the matter is that companies are making huge losses by selling diesel at the current prices.

The under recoveries per litre of Diesel is higher than the under recovery on a litre of petrol. The above fact is also evident from the fact that Reliance Petroleum is exporting its diesel, since it cannot afford to sell it at a loss locally like the oil Public Sector Undertakings (read as HP, BP, IOC, IBP, etc). Shell for instance sells diesel and petrol at almost the same price in India.

A quick look at the diesel and petrol prices in two leading economies (US and UK) reveal a different picture all together.

United States: It would be interesting to note that since September 2004, the price of diesel fuel has been generally higher than the price of regular gasoline (petrol) all year round in the United States of America. As on September 1, 2008 a gallon of diesel was priced at US$ 4.12 and a gallon of gasoline was priced at US$ 3.68. (Source: Energy Information Administration – Official energy statistics of the US Government).

United Kingdom: As on date a litre of diesel is priced around GBP 1.24 and a litre of petrol is priced around GBP 1.12. (Source: www.petrolprices.com)

It is true that high diesel prices create inflationary conditions. So, if the government really wants to subsidise diesel… cant there be a better way whereby only the deserving get the subsidy?? The point I am trying to make is why should the government subsidise a person owning a car costing more than Rs 20 lakhs or even Rs 8 lakhs?? It is funny that a person owning a Maruti 800 or a Tata Nano in future would be subsidized lesser than a person owning a fancy SUV say a Audi Q7 or a Mercedes!!!

By looking at other countries which subsidies fuel used for public transport and farm equipment, the Indian government can learn a thing or two. For instance, in Ireland, businesses are allowed to claim back the 100% of the VAT on diesel but nothing for normal petrol while in Portugal, the amounts are 50% for diesel and 0% for petrol.

Or the Government could consider selling diesel for cars and diesel in cities at a different price (Dual pricing as it is called). But in case of duel pricing, our black marketers or innovative Indians, could end up with plans for obtaining the public transport diesel for private consumption or worse start buying trucks as caravans for private use!!!

Dual pricing is something I have been speaking with all of my friends. Anyone who has discussed petrol price with me will have heard me talk of dual pricing. It is heartening to see a press report which suggests that the PM wants to introduce dual pricing.

Untill any of the above happens; I will continue to subsidise the running expenses of a rich kid owning a diesel car which costs more than my petrol car!!!

Long way ahead... but not full distance

There is enough written about the Bengaluru International Airport in the press, blogs, etc. Most of the articles, blogs that I have come across or rather all of the blogs which have been selected by newspapers have contained criticisms about BIA. It was ridiculous to read some one complaining about the kind of trolley at BIA (I have seen the same trolleys at other airports).

My take on BIA… it is a wonderful airport but it is small. I think we have come a long way from the HAL airport but not gone the full distance!! If any person was expecting the airport to be like Changi or Heathrow from the day it started operations… I guess the problem lies with the expectations. For a beginning… this is a good airport. The only problem is that the airport is small.


I think the road from Jakkur to BIA is as good as it can be. I have traveled more than thrice to the airport till date and I have not taken more than 90 minutes anytime…. I once traveled all the way from my house (in Banashankari) which was estimated to take more than 2 and half hours according to TOI. The critics had written off the airport before it even opened…. All those people seem to have gone into hiding now!!

I also traveled by the Volvo bus last week…. And it took one hour to reach Infantry Road. It was a pleasant experience.

I dint want to write about the airport being good until I had experience more than once. Also, I wanted to write only after the excitement of the new airport vanishing. Both of them have happened now and the airport still looks good for me! People who want to complain can find a reason to complain about everything in life…………

Where will we finally land............

The delay in opening of the BIAL has only given more time for the debate on whether to close the HAL airport or not to continue. It is surprising that this question has cropped up and is being debated publicly a few months before the opening of BIAL when the decision to close the HAL airport and make BIAL the only airport in Bangalore was take a few years back.

The most common reason cited by people who are fighting to keep the HAL airport is the lack of infrastructure and the difficulty in getting to BIAL. It is not a case of Devanhalli or BIAL becoming farther to the city in the last few months... the distance has been the same since the time construction on BIAL began. The NGOs, airline companies, frequent flier, businessmen who are now against the closure of HAL airport could have fought from the past few years to put the right infrastructure in place. Instead of filing a PIL now, instead of having website surveys now, instead of having online petitions now... the same people could have taken some actions earlier to force the government to create quality infrastructure to get to the airport.

Be that as it may, the ground reality is that we don’t have quality infrastructure in place to ensure that we get to BIAL in a reasonable time. It needs to be acknowledged that it could take nearly 3 hours to get the airport from areas such as JP Nagar, Electronic City, Bannergatta Road, Rajarajeshwari nagar, etc. The other reasons given to keep the HAL airport open are the feasibility of Low Cost Carriers (LCCs) operating from BIAL, the infrastructure at HAL airport being rendered redundant, the revenue loss for HAL!

Understandably, BIAL is against keeping the HAL airport open since closing of the HAL airport is one of the terms and conditions of the agreement signed by the Government. Also, I understand that BIAL's under development fees and other revenue calculations are based on the assumption that BIAL will be the only operational airport for commercial and cargo flights.

In my view, the arguments of LCCs making losses and HAL losing out on revenue are not worth considering. When somebody is running a business and there are some external factors (including government policies) which make the business less profitable… I don’t think the businessman can cry foul… instead he would need to come up with creative solutions to stay in business. I don’t think HAL airport can be kept open so that LCCs can break even nor can it kept open to ensure that HAL makes the Rs 300 crores that it has been earning annually.

As regards, the other reasons for keeping the HAL airport open ie BIAL rendering the infrastructure at HAL redundant; it may be worth while to examine the option of making the HAL airport an airport which is open for charter aircrafts. We have a lot of companies which now want to get into the business of providing charter aircrafts. Further, the HAL airport can be used by companies owning small aircrafts to offer pick-up and drop services to BIAL. There are many ways of using up the infrastructure created at HAL airport.


Now I come to the last reason and strongest reason for keeping the HAL airport open which is the lack of quality infrastructure to get to BIAL. I think this is a fair ask. But the government is also required to adhere to the agreement with BIAL. Hence, there is a requirement to balance the two.

In my view, the best way to achieve this would be to keep the HAL airport open only till the road to BIAL gets ready and for HAL to enter into a revenue sharing agreement with BIAL for the said period. The revenue share would ensure that BIAL is not worse off by letting HAL operate the airport, HAL would also not be worse off since it makes some money and the public at large would also not be worse off. I think this could possibly be a solution acceptable to all.

The most important reason why I am against keeping the HAL airport open is as long as we have the HAL airport open, the work on the road to BIAL will never be done on fast track. We react in panic situations well.

A classic example of what I am stating above is BIAL itself…. If the HAL airport had not reached its full capacity… I don’t think Bengaluru would have ever had a swanky new international airport in such short time… we would have managed to continue with the HAL airport!!!

Its Ballot all the way............

Since the time the FM finished presenting his budget. I have been pondering since then one proposal... farmer loan waiver costing Rs 60,000. This proposal makes sense only when i look at it from two perspectives... the first, from the perspective the farmer who gets the waiver and second, from the perspective of the parties in the UPA government which have instantly won a huge vote bank.

The more i think about this proposal, the more downsides i note. Isn't this move a disincentive for farmers to be honest in repayments? How would a farmer who repaid the loan by taking pains to save money, cutting down on his meals feel?? Shouldn't the farmers who repaid honestly be also given the money back??

Mind you, I am not against the Government helping the poor farmers. I am against the way of helping them. I am against rewarding the defaulting farmers and leaving out the farmers who were prompt in repayment. I am sure there would have been honest farmers who would have sold parcels of land to repay loans. Why should only the farmers who borrowed be benefited? Why shouldn't this amount be given as a one time grant to all farmers? The farmers who have borrowed can use it to repay the loans and the other can have this as a saving. That way you incentivize the honest farmer do not do any harm to the farmer with a loan.

This loan waiver scheme is akin to the VDIS scheme. The scheme in my view encourages farmers not to repay just like a VDIS encourages black money. Farmers don't repay with a hope of getting a wavier once in five years or so. There is no economic sense in farmer loan wavier. There is only political sense. I am sure the Finance Minister would not have taken this step had this not been his last budget. T

his move is clearly done only with an eye on the ballot. I am sure the farmers loan waiver will be something which Ms Sonia Gandhi and her team will talk about in all their election speeches!!

Free On Board.......

The proposed issue of bonus shares has been approved by the Board of Reliance Power and the Company will seek the shareholders approval through a postal ballot shortly. Some of the issues that i had rasied have been addressed. I have discussed below the current status of the issues i had highlighted.

1. Legal framework

I have extracted below the response given by Reliance Power to the stock exchanges in response to some of the questions raised by BSE:

"The proposed Bonus Issue will be made by the Company in accordance with the applicable provisions of the Articles of Association and the Listing Agreement and subject to the approval of Shareholders. The Promoters of the Company have indicated to waive their entitlement for the said bonus shares in accordance with law and in the broader interest of protecting and enhancing value for over 4 million institutional and retail investors of the Company. Accordingly no bonus shares will be issued and allotted to the Promoters."

This issues appears settled though i would want to know what resoultions they would pass, which sections of the Companies Act they would rely on, etc.

2. How will he chose the eligible investors?

I have extracted below the response given by Reliance Power to the stock exchanges in response to some of the questions raised by BSE:

"Bonus Shares will be issued as above to all Members (excluding Promoters) who are identified as Shareholders of the Company on the Record Date, which shall be fixed by the Company in consultation with the Stock Exchanges and in compliance with provisions of the Listing Agreement."

It is clear that the company is yet to decide on the eligible investors list and they would be depend on the record date. Fixing of the record date assumes importance given the discussions in my earlier post.

3. Will the shareholders actually profit or will it be a perception??

This would depend on the listing price post-bonus. We will have to wait and watch!!

4. How will it impact Reliance Energy Limited??

This issue has been addressed and has been addressed well. Anil Ambani proposes to transfer shares free of cost to REL to maintain the 45% shareholding that REL has in Reliance Power. This is a welcome move as far as the shareholder of REL (including me) are concerned.

The most important aspect would be the "Record Date". The "gift" (if it can be called so) of shares by ADAG group companies to REL would open up discussions on a few more tax and legal issues!! This is a space worth watching and i would continue to keep on eye on this.

Unconventional Power!!!

There are many things unconventional about Reliance Power's IPO and the happenings thereafter... the largest IPO, largest collection, largest refund, largest family of shareholders and to top it all... trading below the offer price from the day of listing!! Anil Ambani has now come up with another unconventional idea.... he has announced his plan to compensate investors with "free" bonus shares for the losses suffered!!

The Board of Reliance Power is meeting on February 24, 2008 to consider allotment of free bonus shares for all its shareholders other than the promoters as one of the measures to help curtail the losses incurred by its investors. This is the probably the first time a company is attempting to do something like this. This comes with its own share of issues:

1. Legal framework

In my opinion, a company has to allot bonus shares to all shareholders (of a particular class) and a company cannot allot bonus shares only to one group of shareholders (of a particular class). A shareholder can renounce his right to participate in a "rights issue", a shareholder may chose not to participate in a "buy-back offer", a shareholder may chose not to participate in a "open offer", I don’t think a shareholder can renounce his right to get bonus shares - Though a set of people argue that there is nothing in the law which prohibits a shareholder from renouncing his bonus shares. The moot question here is, are bonus shares optional?? The answer I think is "no".

Hence, it would be interesting to see how ADAG addresses this. He may get the promoters to renounce the bonus shares or get them to gift some of their shares to the investors.

2. How will he chose the eligible investors?

The second and a more important question is, how will Anil Ambani choose the investors who are eligible for the bonus shares?? Let us assume he chooses the list of shareholders who were allotted shares as a part of the IPO, then he would end up giving "free" shares to even people who have sold their shares at a profit (remember… there were trades on the first day at prices greater than Rs 430). Alternatively, let us assume he chooses today as a cut-off date and allots shares to all shareholders who hold shares today, then he would end up giving "free" shares to people who have purchased shares at less than Rs 430 and end up not giving "free" shares to people who sold shares at a loss between the day of listing and today (at a price less than Rs 430).

3. Will the shareholders actually profit or will it be a perception??

Finally, it would be interesting to watch if the shareholders will actually make any money. The EPS of the company (when it starts to make profits!!) will be lower after considering the fresh shares. Hence, the price should correct and go down a little. In my opinion, the share will not trade at the same price after the "free" shares are distributed and therefore ADAG may not compensate the shareholders by much (an investor holding 10 shares while the price is Rs 400 is not worse off compared to an investor holding 16 when the price is Rs 250).

4. How will it impact Reliance Energy Limited??

As per the press release from Reliance Power - "the promoters have indicated that they will accept the dilution of the promoter group's shareholding in Reliance Power in the broader interest of protecting investors". As per the offer documents, the post-IPO holding of the promoter group would be around 89% and Reliance Energy Limited owns almost 45% of the company (post-IPO). The above statement would mean that Reliance Energy Limited has indicated that it is accepting the dilution. Doesn't this require the approval of the shareholders of REL? Isn't this move to dilute a holding in Reliance Power detrimental to the shareholders of REL? Wouldn’t this affect the valuation of REL?

The Reliance Power Board is meeting on February 24, 2008 to consider options to reduce the cost of acquisition of the shares and help the investors cut their losses. One of the proposals being considered is the issue of “free” bonus shares discussed above. The top brass and the legal team of ADAG will really have to “POWER ON” their brains to achieve the above… else the Street will “POWER OFF” all future issues of ADAG.

Powerful tool.....

I have got a response to my RTI application.... I now know the amount that the State Government spent to run the assembly sessions. My application has been forwarded to other departments for the balance information (ie cost of the swearing in ceremony, setting up new offices, etc)........ I now believe filing applications under the RTI Act is a powerful tool..... We should start using it to make our netas and babus more accountable!!

One done... one to go!

As discussed in my below blog, i had decided to file applications under the RTI requesting for information on amount spent by the State Government. I have already filed 2 applications under the RTI and i am currently working on the PIL!!

New CM to Former CM in a week......

Just when it was time for the media to transition from calling Yeddyurappa a "new CM" to calling him a "CM"... he has become the "former CM". I was driving in front of Vidhana Soudha about an hour after the swearing in ceremony last week and I happened to take a few pictures to show what a mess the road was.... but by the time I could post this blog... the whole state appears to be in a mess!!!

All this is due to one person... Deve Gowda. I am really curious to know the expenditure incurred on having a swearing in ceremony, running the government for 7 days, changing all office name board, etc. All these expenses have been incurred only because of Deve Gowda. All these expenses have been incurred with our money (ie tax payers money). Had he (ie JDS) not changed his stand, Yeddy would not have been sworn in nor would he have resigned.

It is criminal to make the State incur expenses of this magnitude for ones personal whims and fancies especially when the roads, infrastructure is in such pathetic state.

I am seriously exploring options to get the above expense details using the RTI and thereafter explore the option of filing a PIL requiring the government to recover these expenses from Deve Gowda. Anybody willing to support me in this cause is welcome.

Dilemma in case of road accidents……

I have always been in a dilemma - whether or not to get down and help - when I have witnessed a road accident. On a few occasions I have got down to help and see if the person involved in accident is an acquaintance.

Early this morning, I was driving back home after filling fuel for my car. I was driving down the Tyagarajanagar police station road. Suddenly an ASI of police (traffic) drove out of the police station in his white bullet and another guy was approaching the police station on his pulsar from the opposite direction and he was driving quite fast.

Within seconds, the ASI and the guy on pulsar collided right in front of the police station and I braked suddenly. Luckily, I was atleast 10 feel away from where they collided. The ASI fell on the ground and the guy on pulsar managed to regain his balance and drove past me in the same speed. I saw the ASI on the ground and his walkie-talkie was thrown off and landed right in front of my car. I got down, picked up the walkie-talkie and helped the ASI stand on his feet.

The first few words from the cop shocked me beyond belief. I had expected a thank you or silence at the most! To my surprise, the ASI started shouting at me and asked why I was driving so fast and why I was careless!!! Just then 3-4 other policemen and policewomen (there is a women’s police station next door) came out and all of them thought I had hit the ASI!!

Thankfully, two elderly gentlemen who were walking by informed that I had not hit the ASI and that it was another guy on another bike. It was only after that, one of the other cops took his bike and started chasing the biker who had actually hit the ASI.

I have been wondering ever since as to whether I did the right thing in getting down! But for the two elderly gentlemen, I could have been in serious mess. If this could happen to me when I got down helping a policeman, I just can’t imagine what my fate would have been had I got down to help any other motorist who was knocked down on the road!! This incident will surely make me think twice before I get off to help an accident victim the next time…..

Kudos to PC and his entire team!!!!

I am recovering from a fortnight of very hectic work of preparation and filing of the return of income for various corporate tax payers. It also included one 36 hour marathon effort!! But one thing I told myself at the end of the filing season on October 31 (after filing more than 2 dozen returns) was “Well done and thank you Mr FM and your team!”

Mr P Chidambaram and his entire team deserve a pat on their back for the e-filing process! One will understand and appreciate the achievement only if he goes through the e-filing format (ITR – 6) prescribed. After handling more than 2 dozen returns, I dint come across any single logical error or mistake worht menting in the entire format. The efforts in drafting the FAQs provided in connection with the e-filing process are also commendable.

Collating various forms, obtaining various signatures, making photo-copies of all annexures are now a thing of the past. While I was doing my articles, the toughest part was collating the documents for the return, filling the return, making copies and filing. The worst part was for our office support staff to stand in a serpentine queue to file the return before 6 pm on the last day! Today, none of those are needed!

Under the new scheme, a return can literally be filed anytime – anywhere! We had cases where the person signing the return was not even in the same city and the returns were digitally signed and uploaded!!

The website (http://www.incometaxindiaefiling.gov.in/) allows every tax payer to have a log-in, upload retruns, view the status of his earlier years return. Add to this the fact that the entire software was provided free of cost. Mr PC, the entire income tax department and the CBDT deserves a huge applause for this!! This in my opinion is an achievement which every Indian needs to be proud of!

Wait for Budget '08

This is a follow-up to my earlier post on the taxability of Hutch-Vodafone sale. I came across this new article in the Financial Express which states that "Budget ‘08 may tax cross-border M&As" (Ref: http://www.financialexpress.com/news/Budget-08-may-tax-crossborder-MAs/229055/). According to this article, the income-tax department has decided to treat the tax notice on Vodafone-Hutch as a test case and that taxing the movement of cross-border capital will, therefore, be key to the revenue department’s exercise in the run up to the next Budget.

The Government is seeking to amend the tax laws to bring future cross-border M&A under Indian tax net, but it will be interesting to see how the Vodafone-Hutch transaction is brought under the tax net in India. Or will it be more interesting to see if the present Government will last till Budget '08??

I understand that the Bombay HC has adjourned the hearing on Vodafone writ petition to the 29th of October.

Amidst closely following developments on the above, I also happened to catch the end of one of the best Grand Prix championships. It actually was the most closely fought Grand Prix championship in the last 21 years.

Taxing issues....

After a fortnight of uncertainty, mud slinging, et al, the state has come under President's rule. The State will now be run by the Governor. We have a lot of Chartered Accountant who run companies, we now have a Chartered Accountant who is running a state! Politicians are out and babus are in......

I have decided not to fill my blog about state politics, because by the time I type a few lines and publish it, the entire situation would have changed.

I turn my attention to another issue which has been running in my mind. It is the writ petition filed by Vodafone Essar against a show cause notice issued by the Income Tax Department in India.

For those of you who are not aware of what I am talking about, here it goes…..

Vodafone International Holdings BV, a Dutch company, acquired the entire share capital of CGP Investments from Hutchison Telecommunications International Limited (both entities registered in Cayman Island). CGP owns stakes in twelve companies including Indian and Foreign companies, which in turn hold shares in Vodafone Essar.

According to Vodafone Essar, Vodafone, CGP Investments as well as HTIL are registered and function outside India, therefore any gain on CGP investments' shares cannot be considered to have accrued in India and hence not taxable in India.

The IT Department’s contention is that the ultimate subject matter of transfer is a asset situate in India. Hence, it is an income which has its source in India and hence Hutchison is liable to pay tax in India. The IT Department has issued a notice to Vodafone Essar on August 6, asking them to show cause as to why HTIL is not liable to tax and why the same cannot be recovered from them as an agent of HTIL.

As a tax practitioner, I know the legal merits of the contention of Vodafone and HTIL. They may end up not paying any tax on the above transaction.

According to public reports, Hutch's gain before tax is likely to be nearly USD 9 billion (Ref: http://www.moneycontrol.com/india/news/business/hutch-completes-call-vodafone/280353) Even considering the current dollar rate the pre tax gain is a staggering Rs 36,000 crores!! Apply the tax rate, applicable to long term capital gains earned by non-residents (ie tax rate including surcharge and cess) the tax payable exceeds Rs 8,000 crores!!! This collection alone can replace the higher education cess introduced on all taxes!!

I just want an answer to the below question from any body other than a tax expert:

“Can a company make a profit of Rs 36,000 crores by selling a business entirely built and operated in India and not pay a single Rupee of tax to the Indian Government?”