Providing M&A and PE deal insights
Contents Foreword 3 Introduction 5 Half yearly deal snapshot 6 M&A deal round up 7 PE deal round up 11 IPO snapshot 13 Sector insight 15 Regulatory insight 18 Deal list 25 2
Foreword Dealtracker We have come to the middle of a turbulent year in India s Corporate World. We called this the Year of the M&A at the beginning of 2012 and predicted that volumes of M&A will grow though values will remain subdued. The first half has shown a significant growth in M&A with the number of deals increasing from 508 to 544 while values have dropped from $ 35.4 to 28.3 Billion as expected. We foresee continued growth in M&As in the remaining half of 2012 with robust activity across sectors and we expect continued level of dealmaking in the active sectors of IT/ITES, Pharma and Healthcare, Auto components, Media, Telecom and Financial Services. Private Equity (PE) continues to increase deal making efforts inspite of the overall economic environment and the difficult exit situation. We have seen a robust increase in volumes of PE deals from 195 to 218 transactions but a fall in values indicating that average deal sizes have dropped. We see continued activity in PE space driven by the long term potential of the Indian economy since investors are looking at the medium term and PEs to focus on the consumption story more than infrastructure story given the policy related issues that plague the infrastructure industries. We saw a clear reversal of trend in 2007 where outbound deals overtook inbound deals and saw a reversal in 2011. The trend continues in the first half with Inbound Deals dominating the cross border activity both in value and volume. We expect this trend to continue in the second half but forecast the gap to narrow with increased outbound activity by India Inc given the economic uncertainties and policy/procedural hassles of doing business in India. Harish HV Partner- India Leadership Team 3
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Introduction Dealtracker We are pleased to present the Half-yearly Deal Tracker which captures the deal activity in India in the 1 st 6 months of 2012 (January to June), our analysis and trends as well insights around deal activity. This edition includes a special feature around deal trends and outlook in the healthcare and e-commerce sector as well as implications of GAAR (General Anti-Avoidance Regulations) on the M&A and PE deals. As we take stock of the half-way mark, we clearly see deal momentum continuing in 2012 with 544 deals as compared to 508 deals in 2011. However, the economic headwinds in Europe, overall tightening of liquidity in the market and the impact of the recent Tax Regulations have impacted the value of deals. healthcare, e-commerce and non-banking financial services sector attracted PE and VC investments. Some of the large deal included Advent s investment in Care Hospital, Olympus Capital s investment in DM Healthcare, Accel Partners investment in Flipkart and Warburg Pincus investment into Future Capital. Government s intervention on policy issues, especially, Tax Regulations and FDI in sectors like retail, aviation etc will play a role in driving large transactions, especially, inbound deals. India s growth story remains intact and we hope to see deal momentum rebounding in 2nd half of 2012. Happy reading! Deal value in H1/12 was US$ 28.3 Billion, which declined by 20% compared to H1/11. H1/12 witnessed US$ 14.4 Billion of domestic internal mergers and restructuring driven by Sesa Sterlite and TechMahindra Satyam mergers. If we exclude the domestic internal mergers and restructuring, deal value in H1/12 declined by 60% over H1/11. Larger M&A deals in 2012 included HSBC s acquisition of RBS, Sesa Sterlite merger, TechMahindra-Satyam merger, Piramal s acquisition of Decision Resources Group. In the Private Equity space, investor interest appears to be focused on the domestic consumption story and companies in Raja Lahiri Partner, Transaction Advisory Services 5
Half yearly deal snapshot Deal Snapshot Highlights Deal summary Volume Value in billion First half H1 2010 H1 2011 H1 2012 H1 2010 H1 2011 H1 2012 Inbound 44 58 77 5.4 20.5 4.9 Outbound 108 87 48 17.9 6.0 2.1 Cross border 152 145 125 23.3 26.5 7.0 Domestic 137 83 158 5.6 3.4 3.1 M&A 289 228 283 28.9 29.9 10.1 Internal mergers & restructuring 96 85 43 0.0-14.4 Total M&A 385 313 326 28.9 29.9 24.6 Private equity 125 195 218 3.0 5.5 3.8 Grand Total 510 508 544 31.8 35.4 28.3 Half Yearly Trend H1 12 The 1 st half of 2012 witnessed M&A of US$ 24.6 billion which has been the lowest in the last 3 years and about 19% down compared to 1 st half of 2011 Internal mergers and restructuring deals have gained momentum over the years. The first 6 months of 2012 have seen a number of large and historic restructuring deals like Sesa Goa - Vedanta, Tech Mahindra Satyam and UB Scottish & New Castle India A long awaited acquisition of RBS's retail and commercial banking business in India by HSBC was also seen during this period. Other key deals in the first half have been Piramal Group's acquisition of Decision Resources Group, US and Mitsui Sumitomo Insurance s investment into Max New York Life Insurance Private Equity deal value was US$ 3.8 Billion) in 1 st half of 2012 which was about 45% down in value terms compared to 1 st half of 2011. Domestic 39% Crossborder 61% Inbound 70% Outbound 30% The key PE deals in 1 st half of 2012 included Morgan Stanley s investment in Continuum Energy, Accel and Tiger Global s investment in Flipkart and Temasek s investment into Godrej Consumer Sectors like healthcare and internet space appears to be sectors liked by some of the players and these sectors continues to attract good investor interest Note: Above represented M&A deals (excluding internal mergers and restructuring) 6
Value in US$ billion Number of deals M&A Sector Break Up M&A deal round up Continent Inbound Dealtracker Continent Outbound 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 - Banking & Financial Services 24% IT & ITeS 19% H1 10 US$ 28.8 bn 139 17.4 Others 30% 150 11.4 Pharma, Healthcare & Biotech 12% Telecom 8% Media, Entertainment & Publishing 7% Note: Above represented M&A deals (excluding internal mergers and restructuring) Europe 55.2% Africa 0.12% Australia 0.4% North America 20.4% South America 0.4% Asia 23.5% M&A trends (excluding Internal merger & restructuring) 96 2.5 H2 10 US$ 9.9bn 118 7.4 H1 11 US$ 29.8 bn 17.9 99 128 121 11.9 H2 11 US$ 14.3 bn 6.9 7.4 Europe 48.6% 146 150 North America 38.5% South Asia America Africa Australia 6.9% 0.93% 1.2% 3.9% H1 12 US$ 10.1 bn Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Value Volume 3.9 133 6.2 160 140 120 100 80 60 40 20 0 7
Top M&A deals( excluding internal merger & restructuring) M&A deal round up Top internal merger & restructuring deals Acquirer Target US$ mn Hongkong and Shanghai Banking Corporation - UK The Royal Bank of Scotland - retail & commercial banking businesses in india Piramal Healthcare Decision Resources Group - USA 680 Piramal Healthcare Vodafone Essar 618 Mitsui Sumitomo Insurance Company - Japan Max New York Life Insurance Company TV18 Broadcast Eenadu Television Network 395 1,895 530 Acquirer Target US$ mn Sesa Goa Ltd (Sesa Sterlite) Sterlite Industries Vedanta Aluminium The Madras Aluminium Company Cairn India 12,769* Tech Mahindra Satyam Computer Services Ltd. 1,400 United Breweries Scottish & Newcastle India 77 Empee Sugars & Chemicals Empee Distilleries 26 Watson Pharmaceuticals Inc - USA Ascent Pharmahealth Ltd - (division of Strides Acrolab) 393 Binani Industries 3B - fibreglass - Belgium 360 Top M&A deals (excluding internal merger & restructuring) accounted for 48% of the Total M&A (excluding Internal merger & restructuring) deal values. * Sesa Goa and Vedanta internal merger & restructuring deal has been considered as a single deal Top 4 internal merger & restructuring deals accounted for 99% of the total Internal merger & restructuring deal values. 8
Top M&A deals in top sectors Metals & Mining Acquirer : Sesa Goa Target : Sterlite Industries, Vedanta Aluminium The Madras Aluminium Company Cairn India US$ 12,769 mn Acquirer : Vedanta Aluminium Target : Raykal Aluminium US$ 40 mn Top M&A deals by sector Banking & Financial Services Acquirer : HSBC Target : RBS - retail & commercial banking businesses in India US$ 1,895 mn Acquirer : Mitsui Sumitomo Insurance Target : Max New York Life Insurance US$ 530 mn Although the Eurozone is less optimistic about the growth prospects of their own economies a large proportion of businesses within Europe are actively seeking opportunities abroad and expanding into higher growth markets such as the BRIC economies. Following the financial crisis of 2008, the flow of economic power from west to east has undoubtedly sped up. It is therefore encouraging that enterprising corporates in mature markets appreciate that M&A remains a vital strategic tool to enable them to benefit from these trends. Acquirer : Jindal Steel & Power Target : Gujarat NRE Coking Coal Ltd - Australian arm US$ 25 mn Acquirer : Nippon Life Insurance Target : Reliance Capital Asset Management US$ 290 mn Munesh Khanna, Senior Partner, M&A 9
Top M&A deals in top sectors IT & ITeS Acquirer : Tech Mahindra Target : Satyam Computer Services US$ 1,400 mn Top M&A deals by sector Pharma, Healthcare & Biotech Acquirer : Piramal Healthcare Target : Decision Resources Group US$ 680 mn Acquirer : Ybrant Digital Target : PriceGrabber, LowerMyBills ClassesUSA.com US$ 175 mn Acquirer : Watson Pharmaceuticals Inc Target : Ascent Pharmahealth US$ 393 mn Acquirer : NTT Communications Target : Netmagic Solutions Acquirer : Radiant Life Care Target : Guru Harkishan Hospital US$ 128mn US$ 77 mn 10
Value in US$ billion Number of deals PE deal round up Top PE Deals Investor Investee US$ mn Morgan Stanley PE Continuum Wind Energy 210 Accel Partners and Tiger Global Flipkart Online Services 150 Temasek Holdings Godrej Consumer Products 137 APG - Pension Fund Lemon Tree Hotels 130 General Atlantic Fourcee Infrastructure Equipments 125 Advent PE CARE Hospital 105 Olympus Capital DM Healthcare Pvt Ltd 100 GIC Vasan Healthcare 100 Morgan Stanley PE Sheth Developer's Mumbai Project 90 Warburg Pincus Future Capital Holdings 84 PE Sector Break Up Others 38% Power & Energy 9% Pharma, Healthcare & Biotech 16% IT & ITeS 14% Banking & Financial Services Real 13% Estate 10% Dealtracker PE Quarterly & Half yearly Trends 140 120 100 80 60 40 59 H1 10 US$ 3.0 bn 1.6 1.4 66 1.7 58 H2 10 US$ 3.3 bn 70 1.6 H1 11 US$ 5.5 bn H2 11 120 US$ 3.2 bn 2.6 2.9 75 90 88 1.9 1.4 120 H1 12 US$ 3.8 bn 2.1 98 1.7 3.5 3.0 2.5 2.0 1.5 1.0 20 0.5 0 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 0.0 Volume Value 11
Top PE deals in top sectors Pharma, Healthcare & Biotech Investor: Advent International Investee : CARE Hospital US$ 105 mn Top PE deals by sector IT & ITeS Investor: Accel Partners and Tiger Global Investee : Flipkart Online Services US$ 150 mn Banking & Financial Services Investor: Warburg Pincus Investee : Future Capital Holdings US$ 84 mn Investor: Olympus Capital Investee : DM Healthcare US$ 100 mn Investor: Sequoia Capital Investee : Just Dial US$ 61 mn Investor: Warburg Pincus Investee : AU Financiers US$ 50 mn Investor: GIC Investee : Vasan Healthcare US$ 100 mn Investor: ebay Inc., Norwest Venture Partners, Matrix India Fund, Warburg Pincus Investee : Quikr India US$ 32 mn Investor: NYLIM Jacob Ballas Investee : Religare Finvest US$ 40 mn 12
Value in USD million Number of deals IPO snapshot Dealtracker IPO's IPO half yearly Trend Volume & Value Investor US$ mn MCX India 132.7 6,000.0 5,649 50 Tribhovandas Bhimji Zaveri 40.0 Speciality Restaurants 35.2 National Building Construction 25.4 5,000.0 4,000.0 3,325 27 35 45 40 35 30 MT Educare 19.8 BCB Finance 5.8 3,000.0 2,000.0 15 2,317 14 16 25 20 15 Monarch Health Services 4.8 Olympic Cards 4.7 1,000.0 0.0 8 2 672 531 10 268 H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 10 5 0 Value Volume 13
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Sector Insight 15
Pharma, Healthcare & Biotech Sector Insight Dealtracker Private Equity focus back on multi-specialty healthcare? The first half of 2012 has seen some of the largest private equity investments in the healthcare delivery sector. Three $100 million deals (GIC's investment in Vasan Healthcare, Advent Private Equity's investment in Care Hospitals and Olympus Capital's investment in DM Healthcare), a Rs 100 crore + investment by Orbimed and Ascent Capital in KIMS Trivandrum and a Rs 100 crore investment by Sequoia Capital in Moolchand Healthcare has really raised the question "Are Multi-Speciality Hospitals back in business as far as PE investments are concerned?". Vasan Healthcare of course is the largest chain of eye-care surgical centres in the country, whereas Care Hospitals, KIMS Trivandrum, DM Healthcare and Moolchand Healthcare are all multi-specialty healthcare operators. Vasan Healthcare, as already highlighted, focuses on single specialty care (ophthalmic surgeries). Single specialty healthcare (eye care, dental, day-surgeries, birthing etc) has been of huge interest for PE funds in the last few years due to better return on capital parameters and greater scalability. The only reported PE investments in multi-specialty hospitals in all of 2011 were in Apollo Hospitals and Vaatsalya Healthcare, both of which cannot be taken as representative Apollo being the largest Indian healthcare operator in terms of market capitalization and Vaatsalya Healthcare being differentiated because of its focus on primary and secondary care in the rural and semi-urban areas. So what has changed in 2012? We take a closer look at these transactions to understand what is likely to have been the driving factor behind these deals. Care Hospitals is among the largest chain of multi-specialty hospitals in the country with a strong presence in several non-metro cities such as Bhubaneshwar, Raipur, Nagpur, Surat and Vishakapatnam. DM Healthcare and KIMS Trivandrum have significant presence in Kerala and GCC, with the added attraction of being able to capitalize on medical tourism from the GCC region into Kerala. Moolchand Healthcare is located in the heart of Delhi, which is considered to be the most lucrative healthcare delivery market in the country, and has demonstrated an ability to add beds and operate more efficiently than several operators in the region. It is however important to note that there is a shortage of healthcare franchises that are operating to scale and profitably and can absorb the amount of capital that PE funds typically look to deploy in this space. Given that, we believe the level of activity in the multi-specialty hospitals space is likely to shift towards strategic deals, with some PE-led buyouts continuing to happen. Mahad Narayanamoni, Partner, Corporate Finance 16
Fund and Investee company services Technical excellence and distinctive client services Target profiling Industry/Market scans Assistance with potential target identification Investee Company health check Promoter and Company background checks Financial and Operational Diligences Technology reviews Social & Environmental diligence Other Strategic Services Investing in a Company Managing the Fund Structuring Fund Formation Audit & tax services Deal structuring Estate/wealth planning Investor structuring Compensation & benefits Assurance Tax Advisory Operations and Process efficiency advisory/ reviews Corporate Governance Compliance with regulations SOX, Clause 49 etc Compensation planning HR audits Social and Environmental /CSR reviews Developing MIS/ Reporting Assistance with monitoring accounting Board reconstitution advisory Managing the Portfolio Company Exiting the Investment Preparation of Information Memorandum sale document Exit options advisory Reverse Due Diligences Sell Side Advisory IPO readiness reviews and assistance Reporting Accountant services Financial Statement Conversions IFRS/ US GAAP Tax Structuring Investment structuring Assistance with price negotiations Commercial assessments Deal and Tax structuring Valuation Services Merger Integration M&A Advisory and Support Opening Balance Sheet Audits HR/ Personnel Strategy Advisory Change Management ESOP Services Closing the Investment 17
Regulatory insight 18
GAAR: A dynamic move in the right direction? Internationally, tax avoidance has been recognized as an area of concern and several countries have expressed concern over tax evasion and avoidance. This is also evident from the fact that most of the nations have legislated or are legislating doctrine of General Anti-Avoidance Regulations (GAAR) in their tax code or strengthening their existing code. Tax payers across the world arrange their business/ affairs in a way that gives them maximum tax advantage. On one hand, tax authorities look through these transactions carrying reduction in tax liability with jaundiced eye while taxpayers label those as genuine tax planning. This difference in approach and outlook becomes the subject matter of debate and turns into protracted litigation. Regulatory insight The main premise of invoking GAAR is that any transaction or step in a transaction which has one of its main purposes i.e. the obtaining of a tax benefit, should be disregarded, or dealt with in such a manner so as to protect the right of the revenue to taxes. In addition to obtaining the tax benefit, the transaction: creates rights and obligations which are not ordinarily created between persons dealing at arm s length; or results directly or indirectly in the misuse of the provisions of the Act; or lacks commercial substance or is deemed to lack commercial substance, in whole or in part; or is entered into in such a manner which are not ordinarily be employed for bonafide purposes. Introduction of GAAR in India GAAR is now contained in the current Income Tax Act. The Direct Taxes Code Bill 2010 (DTC )proposed to implement the GAAR for the first time in domestic legislation. Given the postponement of DTC, GAAR as part of tax reforms was introduced through this year's budget. The Finance Minister has deferred its applicability by a year to 1st April, 2013. GAAR is introduced to counter aggressive tax avoidance schemes, while ensuring that it is used only in appropriate cases, by enabling a review by a GAAR panel (known as Approving Panel). Scope of provisions GAAR to tax an impermissible avoidance arrangement which may be a step, a part or whole of an arrangement herein referred to as transaction. In other words, once the tax benefit test is satisfied, the arrangement needs to satisfy at least one of the above four additional tests. Some of important terms used are as explained below. Tax benefit means a reduction, avoidance or deferral of, or an increase in a refund of tax under the Income Tax Act ( ITA or the Act ) a reduction, avoidance or deferral of, or an increase in a refund of tax for a Tax Treaty a reduction in tax bases including increase in loss 19
GAAR: A dynamic move in the right direction? Regulatory insight Lack of commercial substance: An arrangement will be deemed to lack commercial substance if 1. the substance or effect of the arrangement as a whole, is inconsistent with, or differs significantly from, the form of its individual steps or a part; or 2. it involves or includes round trip financing; (the ordinary meaning of the word 'roundtripping' is 'a journey to place and back again) an accommodating party ; elements that have effect of offsetting or cancelling each other; or a transaction which is conducted through one or more persons and disguises the value, location, source, ownership or control of fund which is subject matter of such transaction; or 3. it involves the location of an asset or of a transaction or of the place of residence of any party which is without any substantial commercial purpose other than obtaining tax benefit for a party. Consequences if GAAR triggered: Once treated as an impermissible avoidance arrangement, look through is permitted by: disregarding or combining any step of the arrangement ignoring the arrangement for the purpose of taxation law disregarding or combining any party to the arrangement reallocating expenses and income between the parties to the arrangement relocating place of residence of a party, or location of a transaction or situs of an asset to a place other than provided in the arrangement considering or looking through the arrangement by disregarding any corporate structure re-characterizing equity into debt, capital into revenue etc. If a transaction is regarded as an impermissible avoidance transaction, it could be disregarded, combined with any other step in the transaction or re-characterized, or the parties to the transaction could be disregarded as separate persons and treated as one. The provisions are drafted in a manner to permit the application of principles relating to lifting corporate veil, substance over form test, economic substance test, and thin capitalization rules such as re-characterisation of debt into equity or vice versa. It is provided that GAAR shall be applied in accordance with such guidelines and subject to such conditions and the manner as may be prescribed. The Finance Minister had announced that a Committee was constituted under the Chairmanship of the Director General of Income Tax (International Taxation) to give recommendations for formulating the rules and guidelines for implementation of GAAR and to suggest safeguards so that these provisions are not applied indiscriminately. 20
GAAR: A dynamic move in the right direction? Regulatory insight The Committee has recently, made certain recommendations for incorporating in the guidelines to be prescribed. These recommendations are open for consultation and feedback from the stakeholders. Summarily, these recommendations include setting a monetary threshold, prescribing statutory forms for reference for invoking GAAR, approving panel be provided the secretariat staff along with appropriate budgetary and infrastructure support by the Central Board of Direct Taxes, including a detailed note explaining provisions of GAAR and illustrations for scope of GAAR. Till the time we see a final version of guidelines, the applicability of GAAR will continue to be a surprise. Impact of GAAR on Mergers and Acquisitions (M&A): Taxpayers, domestic and foreign, will witness a paradigm shift in empowerment and approach of tax authorities in India towards taxation of transactions, structures and arrangements. GAAR may impact cross border deals, investments into India by foreign institutional investors and private equity funds, domestic transactions, even within two units of one conglomerate., These provisions are substantially overriding in nature and would impact all restructuring and acquisitions. GAAR provisions expressly clarify that the holding period of a structure or arrangement and the fact that it provides a legitimate exit route for investors is not relevant for the purpose of determining commercial substance. Some of the emerging concerns are mentioned below which are becoming boost dampener for M&A market. 1. Wide scope: Under the present provisions, while a transaction as a whole may be a bonafide one, however the tax authorities can invoke GAAR if any of the steps on a standalone basis are undertaken to obtain a tax benefit. Consequently, even genuine business transactions might fall on the wrong side of GAAR. In fact, it seems that while taking all commercial decisions and determining the manner of their implementation, the tax implications of these provisions would play a pivotal role. 2. GAAR vs. Treaty provisions: GAAR would apply to a taxpayer irrespective of the fact that the treaty provisions are more beneficial. It may be noted that a unilateral enactment of a new domestic tax law which is contrary to an existing treaty, without an amendment in treaty could possibly be regarded as violation of international law and is generally known as treaty override. It may be relevant to note that according to rules of legislative interpretation, specific legislation overrides general legislation. Therefore, an argument may be taken that change of a domestic law generally, which could be the case with GAAR, may not affect the treaty. However, in the absence of an anti-avoidance provision under the treaty, the reaction of India s treaty partner countries needs to be observed. 21
GAAR: A dynamic move in the right direction? Regulatory insight It may be noted while the limited treaty override provisions are theoretically in line with substance over form rule or economic substance rule (as envisaged under the OECD commentary and global practice for anti-avoidance measures), it is unclear as to how such interplay between the tax treaty provisions and the domestic override provisions would be balanced by the tax administration. For instance, if a particular transaction is eligible for tax treaty relief (especially in where the tax treaty already has a limitation of benefit clause), could the domestic anti-avoidance rules still be invoked by the revenue to pierce the corporate veil and deny tax treaty relief? 3. Wide powers of tax authorities: The language of GAAR as it stands today, provide tax authorities powers to invoke GAAR by using any one of the criterion which are vast as well as ambiguous. Thus there is need to lay down more objective criteria and specific administrative guidelines for invoking GAAR and determining the tax consequences in cases where GAAR is invoked and to establish a reasonable level of accountability for the tax authorities. 4. GAAR vs. SAAR: There are varied international precedents when it comes to the interaction between general and special anti-abuse provisions, with some jurisdictions ruling out applicability of general anti avoidance measures in cases where more specific anti-abuse provisions have been applied such as Germany. The approach of OECD countries is different, with common law countries espousing a view that the existence of special anti-avoidance measures cannot preclude overarching general anti-avoidance rules. On interplay between SAAR and GAAR, the Committee's recommendation is that under normal circumstances, where SAAR is applicable, GAAR should not be invoked. However, in an exceptional case where SAAR is defeated, applicability of GAAR provisions can be checked. 5. Approach to AAR: All taxpayers, resident as well as non-resident, can approach the Authority for Advance Ruling to know whether an arrangement to be undertaken was permissible under GAAR. This move should take care of some of the emerging concerns relating to uncertainty as it provides opportunity for a more comprehensive consideration of proposed transaction well in advance. Conclusion For a foreign investor a country s tax regime is very significant factor if not a decisive factor. Today businesses are looking at inorganic growth to achieve better economies of scale, synergy and competency in form of business reorganizations. Therefore the tax policies of the government need to be critically framed as to achieve the purpose of tax reform and also being positive to business environment of the country. Worldwide, GAAR has been criticized and supported equally by international tax experts. The rule of law requires law to be certain and predictable, such that law abiding citizens are aware of what is permitted and what is prohibited. While the concept of GAAR may as such be against this principle, to some extent, GAAR is important, since it is not humanly possible to make laws for each and every tax avoidance tool used by a creative taxpayer. 22
GAAR: A dynamic move in the right direction? Regulatory insight The success of GAAR lies in its judicious, selective and sensible implementation. In the Indian context, considering the aggression of tax administration in some cases, the introduction of GAAR may be worrisome to a tax payer unless implemented in the balanced manner with adequate safeguards for protecting the taxpayer. Tax payers would keenly await draft subordinate legislation, which law makers expect would be open for public debate. The intent of the Indian lawmakers to legislate GAAR is progressive in so far as tax policy decisions are directed. However, an important question is whether, in the current context, the introduction of GAAR is well timed, or still a premature effort towards alignment with internationally accepted principles of anti-avoidance. Anshu Khanna, Partner, Walker, Chandiok & Co. 23
About Grant Thornton India LLP Grant Thornton India LLP is a member firm within Grant Thornton International Ltd. The firm is one of the oldest and most prestigious accountancy firms in the country. Today, it has grown to be one of the largest accountancy and advisory firms in India with nearly 1,100 professional staff in New Delhi, Bengaluru, Chandigarh, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai and Pune, and affiliate arrangements in most of the major towns and cities across the country. Focus Sectors and Segments Grant Thornton India LLP has extensive experience across industries and businesses of different sizes. The firm runs focused practice group in the following industries, sectors and market segments : - Technology - Healthcare &Life Sciences - Real estate - Infrastructure - Public Sector - International Standards - Cross- border transactions - Indo US Business Sector - Indo- UK Business Sector - Indo African business sector Service Areas The firm s core service areas are as follows - Assurance - Audit - IFRS - US GAAP - XBRL Taxation - Compliance & Outsourcing - Direct tax - Indirect tax - Transfer Pricing - US Tax This document captures the list of deals announced based on information available in the public domain and based on public announcements. Grant Thornton India LLP does not take any responsibility for the information, any errors or any decision by the reader based on this information. This document should not be relied upon as a substitute for detailed advise and hence, we do not accept responsibility for any loss as a result of relying on the material contained herein. Further, our analysis of the deal values are based on publicly available information and based on appropriate assumptions (wherever necessary). Hence, if different assumptions were to be applied, the outcomes and results would be different. Advisory Business Risk Corporate Social Responsibility Forensic & Investigations Government & Infrastructure Healthcare &Life Sciences Leadership Consulting Mergers & Acquisitions Transaction Advisory Valuation Please contact us at contact@in.gt.com if you would like to receive the list of deals. We would be delighted to receive your feedback! contact@in.gt.com Dealtracker Editorial team: Ankita Arora, Karthik Vishwanathan 24
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