Merger to form one of the largest food Giant:Heinz and Kraft

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Anjani Sinha, MBA 2014-16, Vinod Gupta School of Management, IIT Kharagpur.


 

On the 25th of March, 2015, The Hindu published news about  H.J. Heinz Co.  buying Kraft Foods, creating one of the largest food and beverage companies in the world with annual revenue in excess of $28 billion.

This deal was actually handled by Berkshire Hathway and the company that owns Brazilian investment firm 3G capital. The Kraft Heinz Company would be new company emerging from the 10 billion investments. Due to the merger Kraft’s share has shot up by 14% percent. This venture has actually united two massive organizations and would definitely benefit the stakeholders. Some of the formalities for the merger are yet to be done. The merger is yet another specimen of the finest business decisions that Berksire Hathway has been taking under Warren Buffet.

But, we cannot neglect the various challenges that the new company would be facing. First ,there is a tremendous change in the consumer taste. Second, Kraft has been under customer apprehension due to  some controversies over the freshness of the food. Standard and Poor, world’s largest credit rating agency has also placed Kraft Heinz Co. on watch. This might be a pointer to the shareholder about the ambiguity in the success of the merger.

References:

http://www.thehindu.com/business/heinz-to-buy-kraft-foods-in-billiondollar-deal/article7032087.ece#comments

http://www.wsj.com/articles/kraft-foods-h-j-heinz-to-merge-1427278332

 

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Future of Luxury mobiles in India

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Anjani Sinha, MBA 2014-16, Vinod Gupta School of Management, IIT Kharagpur.


 

On the 5th of April, 2015, The Economic Times published news about the Luxury brands such as Vertu, Mobiado and Lamborghini haven’t been able to fully tap the buying potential of that ‘quintessential high heeled consumers in  India.

India is a potential market for big brands but there are several hindrances like regulatory issues, lack of retail environment, tax issues ,after sales services and failures . Mobiado launch was planned in March last year, but got withheld due to legal issues . Sale of Lamborghini cells have also been put on hold.

Vartu , another luxury phone player  has been able doing pretty well in India. The sales are between 300 to 500 pieces per year. Like Vartu many such companies are trying to position their products in the luxury segment. The major problem with these goods is the perception of the Indian Buyers. Indian buyers need value for money .With the emergence of many players, who are competing to tap the affluent customers, would be really difficult. Partnering with the retail chains or online shopping can help in expanding the customer base .But, it can never guarantee the success. Indian market of 1.252 Billion is still far behind China and US to cater to such luxury brands.

References:

http://economictimes.indiatimes.com/tech/hardware/luxury-phone-brands-like-vertu-mobiado-fail-to-tap-well-heeled-consumers-in-india/articleshow/46751720.cms?intenttarget=no&utm_source=newsletter&utm_medium=email&utm_campaign=Dailynewsletter&ncode=0c140e3fa482aa4b69ea1025b7443a4b

http://luxuriousphone.blogspot.in/

 

 

 

 

 

Retrospective taxation driving away foreign Investors

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Anjani Sinha, MBA 2014-16, Vinod Gupta School of Management, IIT Kharagpur.


 

On the 12th of March, 2015, The Business Today published news about the Income tax department ,which sent a 20,495 crore tax demand notice to Cairn India .This tax is in lieu with their failure to deduct the withholding tax on the alleged capital gains made during 2006 and 2007, by the erstwhile promoter Cairn Energy. There had been a transaction of CUHL (Cairn UK Holding Limited) transferring shares of CIHL (Cairn India Holding Limited) to Cairn India to facilitate reorganization of the subsidiary group in 2006-2007.

Cairn claims that it was fully compliant with all the income tax laws, and had completed all the tax procedures in 2006-07.If Cairn has a reasonable claim, it is highly exasperating on our part to refuse logical investment, and drive away foreign investors.

Cairn is yet another company to enter the league of other multinational firms like Vodafone Group and Royal Dutch Shell, to face tax demand owing to a retrospective tax law. Retrospective taxation (policy which is to take effect on a case that took place even before the law was passed) has always been a debatable topic .These laws as unjust and should be forbidden by any constitution .Retrospective tax laws would discourage future investors and restoring investors trust should be a priority for India.

 

References:

http://businesstoday.intoday.in/story/cairn-india-receives-rs-20495-crore-tax-demand/1/216893.html

http://www.moneycontrol.com/news-topic/retrospective-tax/

http://legal-dictionary.thefreedictionary.com/retrospective

Sukanya Samriddhi Scheme akin to PPF

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Anjani Sinha, MBA 2014-16, Vinod Gupta School of Management, IIT Kharagpur.


 

On the 28 of February, 2015, The Business Today published news of Sukanya Samriddhi Scheme .This scheme will encourage people to save for their daughters’ education and marriage .It would enable parents to open accounts in the name of their girl child up to the age of 10 years. Post office and some commercial bank are providing this facility .The cap for the deposit is 1.5 lakh with a minimum of Rs.1000 every year.

Some people are taking this as an opportunity to save taxes .The reason behind such a thought has come from the fact that the scheme has been exempted from income tax. Also, the interest of 9.1% offered is higher as compared to the 8.7% on normal Public Provident Fund.

But, on further analysis, we will observe that the scheme is not so effective in tax exemption. The scheme will not benefit the 30% bracket tax payers. Other schemes like the Employee provident Fund, Life Insurance Premium equally meet the 1.5 lakh limit. Other instruments like National Saving Certificate, and expenses on children tuition fee are already part of 80C.

This scheme is very similar to PPF providing higher interest rates but very less flexibility. There is no online mode of payment .In present scenario, where net banking has become essential, such a payment mode will not fascinate many.

Clause of withdrawal ,seems to be very rigid .The account holder cannot withdraw the amount before the girl child turns 18 .Only a partial withdrawal of 50% would be allowed ,in case of  financial requirement.

So, overall this scheme does not seem to be an extraordinary one!!!!

References:

  1. http://businesstoday.intoday.in/story/union-budget-2015-16-sukanya-samridhhi-yojna-is-tax-free/1/216315.html
  2. http://www.business-standard.com/budget/article/sukanya-samriddhi-not-really-helpful-in-tax-saving-115030200328_1.html
  3. http://www.bemoneyaware.com/blog/sukanya-samriddhi-account/

Quality should not be compromised: Alibaba

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Anjani Sinha, MBA 2014-16, Vinod Gupta School of Management, IIT Kharagpur


 

On the 10th of January, 2015, The Economic Times published news of “China Quality Watchdogs tells Alibaba fakes threaten China’s reputation.” China is on the verge of launching its Initial public Offering in U.S. The company’s CEO , Jack Ma ,said he was working closely with the product quality watchdogs to stop the counterfeits.

As per my opinion, in this counterfeit game, China’s reputation is at a greater stake than Jack Ma’s. The investors are also in dilemma on how to react to this situation. The CEO claims that company has been taking measures against the problems. But this news is definitely going affect Alibaba’s share price. Removal of 90 million product listing in the name of breach, right before the release of the IPO, might be a theatrical.

No warning about the pirated goods would also provoke the investors, who have eventually lost trust in Alibaba .If the company was really bothered about its stakeholders; these corrective measures should have been taken long back. Fooling the shareholders would not be an easy task for Jack Ma.

 

References:

http://www.globaltimes.cn/content/906944.shtml

http://blogs.wsj.com/digits/2014/09/03/alibaba-teams-up-with-u-k-business-body-to-fight-fakes/