Alibaba, Saudi Aramco and CSR
What’s happening this week?
Looks like 2019 = IPOs… Remember the India’s hit IRCTC IPO — Markets rejoiced on that one! Read more about Alibaba and Saudi Aramco’s market entry.
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Alibaba’s flying carpet heads home… The Chinese Internet Giant — Alibaba — completed its listing in Hong Kong, raising $12.9 billion — making it the biggest share sale in Hong Kong since 2010. Well, this is a secondary share sale — since Alibaba is already a public company and raised $25 billion in 2014 — when it was listed on the New York Stock Exchange — creating a record.
The name is Aramco, Saudi Aramco… the largest IPO — EVER?! The most profitable company is planning to go public — seeking a valuation of $1.5 to 2 trillion. The company is planning to offer 1–2% of its shares — raising around $20–40 billion. A deal above $25 billion would set a new record — overtaking Alibaba group — making it the biggest IPO ever!
Talk the Talk… There was a lot of chatter around IPOs anticipated — Lyft IPO-ed in March, Airbnb is expected to debut the markets next year; and yes the WeWork story. Well, let’s leave it for another time — we’ll come back to it — Promise!
IPOs are exciting, and some were an absolute hit — remember India’s hit IRCTC IPO. Markets rejoiced on that one! Gains from stocks are realized as Capital Gain– it can be further classified:
Its taxability varies accordingly.
Sharing the wealth pie… is CSR — Corporate Social Responsibility. Let’s take it from the top! Over 5 years ago in 2013–14 — India was the first country to mandate specific spends on CSR based on income or profit for corporate entities.
Numbers talking… companies have reportedly contributed nearly INR 50,000 crore towards CSR since its mandate was introduced — making it an average of INR 10,000 crore/year. However, the PSUs have underspent their CSR funds by 43% for FY 2018… uh-oh!
Consequences… violation of CSR ruled could have landed company officials in jail for up to 3 years, and/or a penalty of INR 50,000 to 25 Lakh. FM Nirmala Sitharaman soon clarified — a violation of CSR norms will be treated as a civil offense and not as a criminal offense. Phew?
The Umbrella… of projects covers poverty alleviation, safe drinking water, sanitation, education, and health. Broadening horizons… The government has also expanded the basket of ‘CSR eligible spending’ — so a company can now use its CSR funds on incubators funded by any PSU, agency or central or state government.
Around the world… Countries like the US, Britain or Europe, the CSR regulations follow a ‘philosophical’ approach of ‘doing well by doing good’. Essentially corporates are required to report on specific projects either in the home country or abroad — as socially aware corporate citizens.
CSR Red Carpet… No Kidding. To recognize the efforts of companies for utilizing marked funds towards CSR, last month the first-ever National CSR awards were presented by the President of India — Ram Nath Kovind. Across 3 categories the jury recommended 19 winners and 19 honorable mentions — like Edelwisee Financial Services, Tata Steel, Nalco, and the list goes on. Wohoo!
Joining hands… There are various effective and innovative CSR initiatives. Amongst the most recent is Piramal Group setting up Tribal Health Collaborative with Bill & Melinda Gates. It is aimed at improving health and nutrition in high-burden and tribal districts — an effort to achieve Sustainable Development Goals (SGD) 3 by 2030. It will be set up under Piramal Foundation — its CSR arm.
Socially conscious enough?!