Investment Valuation in India

In the largest e-commerce deal in India so far, homegrown e-retailer and marketplace owner Flipkart has acquired online fashion retailer Myntra in an estimated Rs 2,000 crore deal.  Flipkart has been good at replicating established models and strategies. Flipkart founders - Bansals- were ex-Amazon employees and started Flipkart selling books online - just what Amazon did in its early days. Even in case of acquisition of Myntra, the strategy is the same as that of why Facebook acquired WhatsApp - kill competition. Fashion & Apparel has the largest potential in the e-commerce space and India is set to become the largest E-commerce market in the world - in terms of volume. As the urban (metro, Tier I and Tier II) population is getting more awareness and is getting exposed to E-commerce, India is slowly increasing its online spend. Apparel has been slow (it all began with books, to gift items to electronics - and now apparel) but has huge potential. Myntra has been a forerunner...

Setting off of unabsorbed losses and unabsorbed depreciation during Amalgamation The setting off of unabsorbed losses and unabsorbed depreciation of the amalgamating company by the amalgamated company is allowed only in limited cases as envisaged in Sec 72(A) of Income Tax Act in order to encourage revival of sick units. The setting off, however, is allowed only if the following conditions are fulfilled: a) the amalgamated company was not a financially viable company immediately before amalgamation b) the amalgamation was in the public interest c) such other conditions as the central government may specify by notification in the official gazette to ensure that benefits under this section is available only to facilitate rehabilitation or revival of the business of the amalgamating company Carry forward of unabsorbed depreciation is allowed only if: a) during the previous year relevant to the assessment year, the business of the amalgamating company was carrie...

ARBITRAGE in a MERGER TRANSACTION When a merger or takeover is announced, arbitrageurs sell short the stock of the acquiring company, and take a long position (buy) in the stock of the target company. Because of the risk that the transaction may not be completed, the price of the target stock may not immediately rise to the full offer price. So arbitrageurs may gain as the price of the target stock rises toward the offer price. Indeed, the target may resist, driving its price even above the initial offer price. Another possibility is that another firm may make a competing bid at a richer price. An example will illustrate the arbitrage operation. When a tender is announced, the price will rise toward the offer price. For example, bidder B selling at Rs. 100 may offer Rs.60 for target T, now selling at Rs.40 (a 50 percent premium). After the offer is announced, the arbitrage firm (A) may short B and go long in T. The position of the hedge depends on price levels after the announcement. ...