DLF sells hotel arm Adone for Rs 567 cr to cut mammoth debt

NEW DELHI, June 12: Realty major, DLF, has sold its entire stake in its subsidiary Adone Hotels and Hospitality to a Kolkata-based consortium Avani Projects and Square Four Housing & Infrastructure for Rs 567 crore.

The realty giant is trying hard to reduce its mounting debt, which stood at Rs 22,725 crore as on March 31, 2012. It could manage to reduce debt by a meagre Rs 33 crore in January-March quarter this year.

"The company's wholly-owned subsidiary, DLF Hotel Holdings Ltd, has divested its entire shareholding in Adone Hotels and Hospitality Ltd (Adone) for Rs 567 crore," DLF said in a statement.

Adone's properties, which include land parcels in Chennai, Mysore, Kolkata and Thiruvananthapuram for hotel developments, were sold to a consortium of Avani Projects and Square Four Housing & Infrastructure Pvt Ltd, it added.

"As a result, Adone and its wholly owned subsidiary, Marla Real Estate Pvt Ltd, have ceased to exist as subsidiaries of the company (DLF)," the statement said.

DLF Hotel Holdings was started as a joint venture with hospitality chain Hilton International. In December 2011, DLF had bought out 26 per cent stake of Hilton JV.

The company said the sale of the shareholding was done in line with DLF's stated objective of divesting its non-strategic assets, the company said.

DLF has raised about Rs 1,774 crore in last fiscal through divestments of non-core assets, including plots and IT parks. The divestments proceeds has reached Rs 4,844 crore till date.

The overall target of divestment of non-core assets of Rs 10,000 crore would be achieved in the medium term.

Economy to turnaround in current fiscal: Pranab

NEW DELHI, June 11: Dismissing concerns that India's growth rate may drop below 6.5 percent, Finance Minister Pranab Mukherjee has said 2012-13 would be the turnaround year for the economy.

Addressing a conference of top officials of the Income Tax Department in New Delhi on Monday, he said steps are being taken to put India back on path of high economic growth.

"We are taking all necessary steps to ensure that we come back to the path of the targeted GDP growth. Of course it will take some time...but from this year we expect to make a turn around," Mukherjee said.

In the Budget 2012-13, the government had pegged 2012-13 GDP growth at 7.6 percent (plus, minus 0.25 percent).

Following a disappointing economic growth of nine-year low of 6.5 percent in 2011-12, there have been concerns that India's expansion rate this fiscal may slip further.

Mukherjee said that after the 2008 economic crisis, the GDP growth slipped to 6.7 percent in 2008-09, but bounced back to 8.4 percent in the following two financial years.

Highlighting the positives in the economy, Mukherjee said interest rate cycle has been reversed and there is growth in mining sector, turnaround in investment growth rate and there are predictions of normal monsoon, besides decline in crude oil prices.

"All these factors should help in recovery of domestic growth momentum," he added.

On direct tax collection target of Rs 5.70 lakh crore for the current fiscal, he said it was achievable.

"I do feel this target is moderate and can be achieved," he said while asking the tax officials to work relentlessly to improve tax collection.

In 2011-12, the direct collection at 4.95 lakh crore was marginally down from the revised target of 5.05 lakh crore.

Mukherjee said that while renewed growth momentum will help improve direct collection, there are several challenges before the I-T Department.

He expressed concern over decline in tax-GDP ratio and asked the officials to reverse the trend. The tax-GDP ratio has dropped to 10.5 percent in 2011-12, from 12 percent in 2007-08.

Mukherjee said the Direct Tax Code (DTC) Bill will be introduced in Parliament in the forthcoming Monsoon Session and would be affected from next fiscal.

"I am hoping that DTC will be effective from April 1, 2013," he said, adding that the time has come for the I-T Department to prepare itself for the transition from the Income Tax Act, 1961 to the new direct tax regime.

The Finance Minister further said the department has been striving to check the menace of black money and tax evasion, which eat into the vitals of the economy and pose threats to national security through linkages to money-laundering and terrorism.

He said the government has commissioned a study on unaccounted income and wealth and it is likely to be completed in September.

Also, a report of a committee on strengthening of existing laws relating to black money is being examined by the government.

"I hope that these two studies will help in identifying the gaps in present legislative and administrative framework and shall help us in checking the menace of black money through an effective policy response," Mukherjee added.

He also said introduction on the Benami Transactions (Prohibition) Act, 2011, currently being scrutinised by a Parliamentary Standing Committee, will further help in our resolve to reduce the menace of black money.

Amid undeclared assets held by Indians abroad being a matter of intense debate recently, Mukherjee said that to encourage and facilitate real time exchange of information on cross-border transactions with other jurisdictions, India has set up 8 more Income Tax Overseas Units (ITOUs).

After a comprehensive review of the existing network, steps are being taken to augment the reach of the ITOUs in more jurisdictions, he added.

Enlarged network of ITOUs, with an enabling legislative framework in the form of Double Taxation Avoidance Agreement (DTAA) and Tax Information Exchange Agreement (TIEAS), will help in receiving valuable information in future, he said.

On promoting voluntary compliance of tax laws and role of children, Mukherjee said there was a need to educate them on the importance of taxes for the nation building process.

He said the I-T Department has partnered with NCERT to introduce information in this regard in school textbooks.

He, however, expressed concern over rising litigation with tax payers and amount locked up in appeals before CIT (A), ITAT and different courts.

A whopping over Rs 4.36 lakh crore was locked in about 2.59 lakh cases as on 31st December 2011.

The main reason for pendency of cases before CIT (A), he said, appears to be slower disposal rate vis-a-vis the pace of cases being filed. On an average, it takes about one and half years to dispose of a case.

"The Department needs to ensure that after proposed cadre restructuring sufficient manpower is deployed to reduce the time taken for disposal of appeals and that it is not more than six months" he added.

Mukherjee said he has been directing the I-T Department to reduce all avoidable litigation with the taxpayers as well as with employees.

"I have also asked CBDT to ensure that no charge sheets are filed on the last date of retirement," Mukherjee said.