The issue of publication of consolidated or standalone results by listed companies is not for SEBI alone to look at but the views of several others including the RBI and the Institute of Chartered Accountants of India (ICAI) will have to be sought, according to U K Sinha, Chairman, Securities and Exchange Board of India (SEBI).
He said the tax relief for mutual fund-linked retirement plans, announced by the Finance Minister Arun Jaitley in the Budget, would be within the overall Sec 80C limit of Rs 1.50 lakh and no additional tax relief window will be available for such investment.
Speaking about companies with subsidiaries giving prominence to consolidated rather than standalone results on the basis of which EPS, PE ratio, dividend payout, etc, were decided, he said the “requirement for consolidated statement is in the interest of the investor”. That is why it was prescribed. He was speaking with newspersons in Coimbatore on Friday night following a meeting on the role of capital markets in SME funding.
Referring to the issue of calculating EPS and share PE ratio based on standalone results, Sinha said “the whole question has to be studied not alone by SEBI” but by the ICAI, by the RBI, as “we have to go into an area where everybody is comfortable that this is something which is doable”.
On the Budget announcement that International Financial Reporting Standards (IFRS) will come into force from 2016, he felt that “what we have in India is quite reasonable”. In keeping with global trends, the next step was to migrate to IFRS.
Asked whether mutual fund-linked retirement plans would have be a separate tax exemption window or whether they would be clubbed with other investments under Sec 80 C for tax relief as the Finance Minister Arun Jaitley said pension funds and MF-linked retirement plans would have uniform tax treatment, he said “it will all be covered in the exemption criteria of Rs 1.50 lakh” and the Central Board of Direct Taxes (CBDT) could issue a notification as and when any MF wanted to launch a retirement scheme for the tax treatment.
Asked about the two issues limiting the listing of SMEs on the SME platform of stock exchanges — the minimum lot size of Rs 1 lakh and three-year market making requirement, which appears to put off merchant bankers — the SEBI Chairman said when the platform was started, the
requirement was not up to this extent. But it was later found that the scheme did not succeed.
He said “SEBI will have to balance” the market feedback and the need to protect the interests of small investors. Apart from Coimbatore, SEBI would hold talks with the SME sector in a few more places. He said “we are not averse to making certain changes in that”. But at this stage he did not want to commit himself as to what would be those changes.
Replying to a question as to how many SMEs from Coimbatore had evinced an interest in getting listed on the SME platform of the exchanges, Sinha said one issue was the fear of losing control over a family-owned company if it goes public, which he termed as “the fear of the unknown”.
Getting listed was not an easy decision for any promoter and they had to be prepared for it. The purpose (of the meeting) was to create that awareness. He said “a lot of people were excited” about the new platform and the dialogue among the parties involved would be “ongoing”. He said after 10 years of effort, 68 SMEs had been listed and the feedback would be “evaluated closely”.