Recent Interview : Pubished


‘Start saving early’

BL RESEARCH BUREAU

29-May-2011

The habit of savings is best developed when young says Mr Pavan Kumar, Founder and Managing Director of Corporate Professionals, a merchant banking firm. In an interview with Business Line, he shares his experience and learnings from investing.

What are your top financial goals?

One, after I retire I should be able to earn sufficient income on my savings. Two, I should also have sufficient funds for my children’s education. I should also have ample amount of money for taking care of medical expenses and treatment, if any. And last, but not the least, is to plan my retirement depending on whatever liabilities I currently have or will have in future.

How has your idea about money changed with time?

Well, I am from a middle class family and used to live in a small town of Kasganj. Initially, I struggled a lot for my studies as well. I have thus realised the value of money very well. So, while initially money meant a means to fulfil basic needs of life, it later turned to luxurious needs. But the focus now is on saving money for building a better future.

Tell us about your most successful investment, one which made the most money for you?

My most valuable investment is in real estate. Whenever and wherever I have invested in real estate, it has given me a good return as compared to equity investments.

One mistake in investing or saving that you regret?

Most of us invest in equities and mutual funds but we always do one mistake – we marry our stocks when the market is going up. This is at a variance to the basic concept of equity, which requires us to sell them when the market is going up and buy when the market is going down. My biggest investment mistake was that I didn’t encash my equity investments when the market was at its peak.

How do you plan your investments – do you seek professional advice or do your own research?

I always plan my investments after doing proper research work and reading the market thoroughly.

I also listen to others but invest only after testing all the perimeters.

What has been your most important learning experience so far?

My most important learning is that one should start saving as early as possible. We shouldn’t worry about how much we can save, but should try to create the habit. Savings by way of investing in SIPs is good. Also, everyone should start investing in medical and other insurance policies when they are young. Doing this at a young age makes these instruments cost effective and helps in increasing your savings as well.

Tell us about books or investment guru that inspired you to think out of the box?

Warren Buffet has always inspired me, as he’s always had a different approach to investments.

What’s the amount of wealth you hope to retire with? How are you creating this corpus?

Honestly, there is no limit to one’s greed for money. But one should hope to create a corpus such that they aren’t dependent on anyone. As such there is no fixed amount of wealth that I am expecting at the time of my retirement. But I am investing in real estate, and equities, such that their value grows with the time.

How do you plan your investments to beat inflation?

Well, my investments are basically into the real estate, equities and fixed income, such that a combination of their returns will help me in beating the inflation.

What’s your message on savings and investing to young people just starting out on their career?

Create a habit for saving. Start with medical insurance at a young age itself. Also start SIPs early on, as it will always help you in beating inflation.

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Online Version of Published Interview

Print Version of Published Interview

Mon, 30 May 2011

Moves afoot to remove veil over corporate structuring

The move would be the surest way to ensure transparency in operations from the promoter firm down to its remotest subsidiary. “It is a very smart move. Companies can’t argue with this since all that the government is asking for is transparency. It would restrict rampant intra-group activities,”

Pavan Kumar Vijay

Concerned over the complex ways in which companies structure their operations and route funds from one subsidiary firm to the other, the ministry of corporate affairs (MCA) has come up with a unique solution to the vexed issue. It is considering directing companies to clearly chart out their various subsidiaries and layered subsidiaries in a ‘family tree’ format in their annual reports.

Also, companies would be required to spell out the movement of funds, if any, from one subsidiary to the other. This would give investors and government agencies a clear picture of the overall financial health of such group firms0

Layered subsidiaries refer to subsidiaries of subsidiaries, which makes it practically impossible for the government and its inspection agencies to detect the source of funds. As per the extant Companies Act there is no restriction on the number of such layered subsidiaries making it easier for companies to route funds from tax havens such as Mauritius and Cayman Islands. “Often investors are not in the loop as to how many layered subsidiaries companies have. As per current practice, companies often list out their various subsidiaries, but investors would not know how many of those are layered subsidiaries,” a government source said.

Legal experts and industry captains welcomed the government’s move. President of CII B Muthuraman told FE that the ministry’s step would create transparency in the operations of companies and benefit all stakeholders. Expressing a similar view, company law expert Pavan K Vijay who is also managing director of Corporate Professionals, said that the move would be the surest way to ensure transparency in operations from the promoter firm down to its remotest subsidiary. “It is a very smart move. Companies can’t argue with this since all that the government is asking for is transparency. It would restrict rampant intra-group activities,” he said.

The MCA is also hoping that once the eXtensible Business Reporting Language (XBRL) comes into effect keeping a tab on such layered subsidiaries would also become easier. XBRL is a company software language that reads and analyses company data in a systematic way.

Earlier this month , the MCA issued a circular mandating companies to start reporting their balance sheets and profit and loss account in this format by September 30 this year. “Once companies start reporting in XBRL format it would easily analayse the number of layered subsidiaries. It would be a good step,” the government source said.

The issue of layered subsidiaries first came to light when the Rs 8,000-crore Satyam scam erupted in January 2009. Its tainted chairman B Ramalinga Raju set up a multitude of layered subsidiaries to route funds from overseas destinations. The Enforcement Directorate (ED) and the Serious Fraud Investigations Office (SFIO) are still trying to locate the source of funds. Apart from that investigative agencies are currently investigating how some telecom firms had raised funds through their chain of subsidiaries overseas and routed them back to the country to buy spectrum. “The issue of a multiple chain of subsidiaries is very worrying. A system is required where investors would know exactly the number of such layered subsidiaries,” the government source added.

The parliamentary standing committee on finance headed by Yashwat Sinha had earlier proposed that the number of such layered subsidiaries should be capped. However, the MCA did not accept the recommendation fearing that it could impinge upon companies’ freedom to structure their operations for financial purposes. The ministry is trying to find a common ground between the PSC’s proposal and industry’s concerns.

MCA’s solution of a ‘family tree’ format for listing out layered subsidiaries comes at the backdrop of the North Block working on set of measures to curb the menace of black money. Last week the government set up a panel headed by chairman of Central Board of Direct Taxes Sudhir Chandra to examine ways to tighten regulations surrounding black money. The panel would submit its recommendations within six months. “Issues of black money laundering, beneficial ownership and money laundering are all inter-connected,” the source said.

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Online Version of Interview Published in : Financial Express

Print Version of Interview Published in : Financial Express

Revival & Rehabilitation of Sick Companies – A Paradigm Shift


The Companies Bill, 2009 has made a paradigm shift by addressing the pitfalls of SICA, 1985 and aligning the Indian Law relating to “Revival and Rehabilitation of  Sick Companies” on lines of the global bankruptcy laws. This article has analyzed the relevant provisions of the Companies Bill, 2009 relating thereto.

Click Read Full Article here

Article Publised in Chartered Secretary September 2010


October 5, 2010
Article Publised in Chartered Secretary September 2010

(September 2010 | Chartered Secretary)
AN INSIGHT OF THE TRAC RECOMMENDATIONS AND DRAFT TAKEOVER REGULATIONS, 2010

– by Pavan Kumar Vijay, Past President, ICSI

Managing Director, Corporate Professionals Capital Private Limited & Founder TakeoverCode.com
Introduction

The trend of Mergers and Acquisitions (M&As) as an itinerary for the growth of corporate world can be traced back from twentieth century. However, with the liberalization and globalization of Indian economy, the importance of M&A for inorganic growth has become more relevant for systematic growth of the capital market. This new weapon in the armory of corporate though proved to be beneficial but soon the predators with huge disposable wealth started exploiting this opportunity to the prejudice of retail investor. This created a need for some regulation to protect the interest of investors so that the process of takeover and mergers, of widely held companies, is used to develop the capital market and not to sabotage it. In the year 1992, with the enactment of Securities and Exchange Board of India Act, 1992, the SEBI was established as regulatory body to promote and develop securities market and to protect the interest of investors in securities market. Thereafter, in the year 1994, SEBI formulated the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1994 so that process of takeover is carried out in a fair and transparent manner. After a time gap, a need was felt to review the Regulations to make the regulatory framework more comprehensive and equitable. Thus, SEBI appointed a committee headed by Justice P. N. Bhagwati to analyze the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1994 and to suggest the appropriate changes.

In the year 1997, SEBI Takeover Code has been rechristened by enacting SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 substituting SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1994. These regulations also have been amended a number of times to address the changing circumstances and needs of corporate sector and various clarifications, orders and judgments have been given to simplify the complexities involved in these regulations. Thus, a need was felt to review the SEBI Takeover Regulations to remove the ambiguities involved in the Regulations which have been one of the major causes of defiance with the Regulations and to bring it at par with the global practices so as to create a level playing field.

Accordingly, in September 2009, market watchdog SEBI constituted a multi-disciplinary expert committee, Takeover Regulations Advisory Committee (TRAC) under the chairmanship of Sh. C. Achuthan, the former Chairman of Securities Appellate Tribunal, with a terms of reference to examine the existing Takeover Regulations and to suggest suitable amendments, as deemed fit. It also invited the suggestions from the Indian corporate, professional bodies and public at large. After a detailed analysis and considering the views of regulators, corporate bodies and public comments for about 9 months, the Committee on July 19, 2010 has released its much awaited report suggesting changes in the rules of game of takeover with a draft of new Takeover Regulations for the public comments. The Report is comprehensive enough detailing the Key Recommendations; Deliberations and Rationale along with Draft text of the proposed Takeover Regulations. The Committee felt it is appropriate to rewrite the entire Regulations to incorporate all clarifications given in various orders and judgements and to remove all possible ambiguity and issues in the Existing Regulations which are already amended a number of times since 1997.

The Committee has framed the Regulations keeping in view the interest of public shareholders on one side and that of the Strategic Investors, Private Equity Players, Target Company and Promoters on the other side. While some of the recommendations which are in favour of the general shareholders have become the concern for the Corporate and Strategic Investors, a few of them may be seen as not in the interest of small shareholders. In this Article, the recommendations of the Committee have been analyzed on the basis of major heads dealing with the Definitions, Triggering Limit for Open Offer and Open Offer Process, Exemptions and Disclosures Requirements.

Overview of the Recommendations

  • More clarity in the language of various definition;
  • Inclusion of various judicial decisions in the Regulations itself to remove the ambiguity and reduce future litigation;
  • Insertion of SEBI’s administrative views in the Regulations;
  • Effective protection for the small shareholders;
  • More Opportunities for Institutional Investors;
  • At par with Global Practices prevalent for M&As;
  • Simplification in the provisions relating to consolidation of holding;
  • Scrub out of Non Compete Fee.

To Download Full Article Click here
For any query feel free to refer www.takeovercode.com or write to pkvijay@indiacp.com  

 

Takeovercode.com has been selected in Top 100 Small Business of the Year 2010 by Franchising world Magazine.


Pavan Kumar Vijay

Pavan Kumar Vijay, Founder, Takeover Code

Takeover Code shines out with its innovative solutions in legal consultancy for solving the intricacies of Takeover Code regulations.

Franchise India Media (FIM): Tell us something about takeovercode.com. What is your modus-operandi?
Pavan Kumar Vijay (PKV): Takeovercode is a revolutionary innovation for the solutions of complexities involved in the Takeover Regulation. This portal has been developed for providing online solutions to the intricacies of takeover code, 1997.

Advanced search engines to facilitate you with a variety of search options, brief and summarizing synopsis of all legal judgements of Takeover Regulations, up to date minute inventory of all open offers with concise synopsis, exclusive zone for the execution of the each assignment and personalised sections are the key highlights of takeovercode.com.

Basically, it is based on “80:20 Theory” which says professionals should devote 80% of their precious time on intellectual works and spend only 20% on the procedural and manual works whereas the practical scenario is quite opposite. Our model will reduce the procedural and manual work and provide an aid in preparing acquisition strategies.

FIM: Where did you get the funding from?
PKV : The entire funding for starting the company as well as for converting it into successful business ventures was financed from our own funds. We did not borrow money from outside sources.

FIM: How long did it take you to break even?
PKV : It has been more than 2 years since the launch of takeovercode.com and during this period, we have crossed the stage of break even.

FIM: What is the biggest challenge you have faced so far and what was the strategy you implemented to deal with it?
PKV : The biggest challenge that I had faced in the past was to influence my team as well as the outside corporate world about the use of Information Technology in the legal sphere also which will help in the implementation of 80:20 theory i.e. devotion of 80% of the precious time on intellectual works and spending only 20% of the time on the procedural and manual works.

FIM: How was the experience of hiring first employee, building a team for takeovercode.com?
PKV : The idea being new was previously viewed by the professionals as a threat to them and required huge efforts to convince them but not anymore. The success of this venture has removed all doubts and it is being well acclaimed by all. Today, my team comprises of all young and dynamic professionals from the legal and financial fields such Company Secretaries, Chartered Accountants.

FIM: What have been the key marketing and brand building strategies for your business?
PKV : Albeit, the concept of our business model being new and innovative required huge marketing efforts to educate the investors about the laws as well as the online solutions, nonetheless, our first step towards the launch of Takeovercode.com has given us an opportunity to be established as a brand .

FIM: What is the growth plan in the next three years?
PKV : To make it an innovative business model rendering services through the blend of Techno and Legal Sphere i.e. to provide services in every sphere in which the organization is involved through the utilization of Information Technology.