THE TIMES OF INDIA, MUMBAIFRIDAY, AUGUST 19, 201620 TIMES BUSINESS

Lubna.Kably@timesgroup.com

Innovations are springing out of the inbox, leading to disruptions across sectors. Digital idea exchange plat-forms, innovation contests and cross-functional brainstorming ses-

sions are helping employees don the inno-vator’s hat. Encouraged by recognition and rewards, employees — cutting across ages, levels of seniority and industrial sectors — are working towards developing a new or improved solution or product. Here’s the story of some: PwC’s Concept Cradle: Annual innovation contests prompt employees of PwC, a net-work of affiliated professional services firms across 100 countries, to offer out-of-the-box solutions, which can be deployed to meet client needs.The Aha! Moment: Client interactions often spark an idea. Such interactions led the consultancy team at PwC India to realise that while cloud technology enables com-panies to connect with their customers via mobile apps, the going isn’t easy and costs can escalate. Vijay Kannan, a senior-level consultant in his mid-forties, and his team developed the ‘Digital Foundation Platform (DFP)’ through which a mobile app can be updated at a faster pace. App users don’t have to wait for months for a newer version. “After the launch of their first app, cor-porates often run into roadblocks. A typ-ical development cycle can take any-where from a few weeks to a few months,” says Kannan.

DFP was one of the five ideas selected at the India lev-el in the ‘Global Innovation Challenge’ contest for 2015-16. Kannan got a chance to compete with innovators from other PwC-affiliated firms and found a place in the top 30 global list. DFP has been pilot-ed with one of PwC’s clients in India and the plan is to utilise PwC’s world-wide network to take it to the global market. Another recent innovation, the web-based platform Prudence developed by the forensic practice team, has been deployed in-house. It enables clients to keep track of PwC’s progress during due-diligence man-dates of third parties. Vedanta Says Eureka: Vedanta, the diversified group engaged in mining and exploration, recently launched ‘Eureka’, a web-based

employee idea exchange platform to incu-bate in-house innovation. The company has a Rs 200-crore corpus to fund select ideas.Value In Waste: With ‘zero waste’ in mind, Eliakim Tshiningayamwe, a technical manager from a group company in Namib-ia, proposed making use of stockpiles of marginal ore, a waste product. “The target is to process marginal ore and recover zinc, which would boost profits. Eureka helps in collaboration between R&D and process teams across locations,” says Tshiningay-amwe. The company has introduced a quarterly chairman’s award — a trophy and citation for the best innovation and an annual award.

“Sustainability is at the heart of our business. High-efficiency technology and safe practices ensure maximum recovery as well as zero waste. Eureka helps create the discourse on this,” says Ajay Kumar

Dixit, CEO (power) at Vedanta. Other ideas include recovery of cobalt and copper from slag and conversion of fly ash into geo-pol-ymer cement.

Until recently, the hierarchical manu-facturing and service sector in India frowned upon a bottom-up approach to-wards innovation. A more open culture in the tech sector enabled Infosys, Wipro, HCL and others to nurture in-house innovation. But now the engine of internal crowd-sourc-ing of disruptions is revving up in non-tech sectors as well.

One may not easily associate innovation with a law firm, but Nishith Desai Associ-ates (NDA) has set up a ‘disruptive practic-es group’ which tracks futuristic trends such as drones or driverless cars. Thus it is forearmed with sound perspective and can deliver innovative solutions to its cli-ents, besides achieving leadership in new practice areas. “Emerging technology brings with it new legal and tax problems requiring innovative solutions. A clear assertive statement based on in-depth re-search from our law firm on the legality of Bitcoins stopped the RBI from barring them,” says Prateek Bagaria, a 28-year-old legal associate with the firm.

The law firm helped shape the Bitcoin policy in 2013. It also enabled FII invest-ments in Bitcoin companies in India by providing investment-structuring solutions and is now assisting this sector to develop a self-regulatory regime. NDA recently helped the government to set up an investment structure for the $6-billion National Invest-ment and Infrastructure Fund, considered

to be a first of its kind in the world.At Marico, an FMCG company, ‘Mar-

Val’, a multi-pronged module ranging from jam sessions to niche think tanks, in one instance led to a packaging de-

sign innovation. “Periodical thematic innovation jam ses-sions bring ideas to the table

from our employees across the globe. The winners are select-ed by an Innovation Council,

says Ashutosh Telang, chief HR officer. Over the last

two years, the jam ses-sions have resulted

in over 2,000 ideas.Companies

having realized the value of em-

ployee-sourced innovation are supporting these initiatives. “We treat our innovators as ‘special people’ regardless of the com-mercial success of certain ideas,” says NDA founder Nishith Desai.

Shyamal Mukherjee, strategy leader at PwC India, says, “Innovation is critical means of staying in the game. It will have a significant impact on the way we do busi-ness over the next few years.”

Top-Down Cheer For Bottom-Up Innovation

Country RankSwitzerland 1Sweden 2UK 3US 4Finland 5

INNOVATION INDEX

China 25Russia 43South Africa 54India 66Brazil 69

Open and supportive managements are helping ideas to bubble up from the bottom, and this in-house innovation surge is not restricted to the technology sector

Illustration: Ram

BRICS Rank

Mumbai: Franchise and ro-yalty fees received by Sub-way Systems India, a groupcompany of the internatio-nal fast food chain, cannot besubject to value-added tax(VAT) in Maharashtra, ac-cording to a recent order ofthe Bombay high court.

Subway India enters intofranchise agreements withthird party restaurants (ie,franchisees), permitting themto operate sandwich shops bydisplaying the trademark‘Subway’. In return, SubwayIndia receives a one-time fran-chise fee paid on signing of theagreement and weekly royal-ty payments linked with therestaurant’s turnover.

Maharashtra state exciseauthorities sought to imposeVAT on such income on thegrounds that Subway Indiahad transferred the ‘right touse’ its trademark to the fran-chisees. Subway India’s con-tention was that the franchiseagreements did not result in a‘sale’ or transfer of the ‘right

to use’ the trademark. Thecompany was already payingservice tax on income recei-ved under the agreements.

Even while the writ peti-tion filed by the company, chal-lenging the constitutional va-lidity of VAT levy, was pen-ding before the high court, thecompany was served show-cause notices aggregating to aVAT demand of Rs 5.3 crorefor the years 2006 to 2009.

“This favourable order,setting aside imposition ofVAT, will also help other simi-

lar transactions that have be-en subject to both service taxand VAT liability. Apart fromfast food chains, educationaland vocational institutionspopularly operate under afranchise model,” says NihalKothari, executive director atKhaitan and Co, a law firmwhich represented Subway.

“Bombay high court haslaid down the principles formaking a distinction betwe-en a ‘permissive use’ and‘transfer of right to use’,”adds Kothari.

No VAT payable by Subwayon franchise fees in Maha: HC

Upholds That There Was No Trademark SaleLubna.Kably@timesgroup.com

FAST FOOD, EDU CHAINS TO BENEFITThe HC upheld that Subway

India could not be subject to VAT because there was no transfer of ‘right to use’ trademark

Rights of the franchisee to display the name ‘Subway’ or use the dress code ended on termination of agreement

Franchisees did not enjoy any exclusivity as other outlets could be set up in the same area

Franchisees also did not get the right to sub-franchise the business

The HC’s ruling is expected to benefit fast food & educational chains in Maharashtra

Bengaluru: The world’s lar-gest private equity managerBlackstone’s Indian real esta-te joint venture Embassy Offi-ce Parks will invest $750 mil-lion, or around Rs 5,000 crore,in the next three years as tech-nology services boost officespace absorption in citiessuch as Bengaluru, Hydera-bad, Chennai and Pune.

The equal joint venture bet-ween Blackstone and propertydeveloper Embassy Group willbuild an additional 16.5 millionsq ft of office supply across the-se four cities, mostly throughdebt-financing, Mike Holland,CEO, Embassy Office Parks,told TOI. Robust demand andsupply constraints have seenvacancy levels dipping to just4.1% in Bengaluru and 5% inPune. This stands in stark cont-rasts to Delhi and Mumbaiwhere vacancies are at 32% and19.5% respectively amid a supp-ly glut, data showed.

Embassy Office Parks cur-rently operates a leased port-folio of 20 million sq ft andplans to almost double this inthe next three to five years,making it probably the biggestongoing capex programme inIndian commercial real estate.More than 2.3 lakh people —mostly from MNCs and well-funded Indian startups —work from the company’s cur-rent office portfolio at present.

“The big landlords willwant to optimize their returnsin markets like Bengaluru, Pu-ne and Chennai which has tightinventories leading to a run-upin rentals,” Holland said.“Bengaluru is maintaining themomentum after record ab-sorption last year, while Chen-nai and Pune will benefit fromlimited upcoming supplies,” headded. MNC occupiers will ha-ve their eyes on Hyderabadwhich has the biggest upco-ming supply among the fourabove mentioned cities.

Blackstone JVto put $750m

into officespace market

Avik Das & Boby Kurian TNN

The investment willbe over the next 3 yrsas tech servicesboost office spaceabsorption in citieslike B’luru, H’bad,Chennai and Pune

New Delhi: Users of Relian-ce Jio Infocomm’s test servi-ces have complained aboutnetwork congestion, whilemaking calls to non-Jio num-bers, the company has said.In most cases such calls takethree-to-four attempts to con-nect, and in some cases theydo not connect at all.

The company has said in-cumbent telecom operators —mainly Airtel, Vodafone andIdea — are not providing suffi-cient number of points of in-terconnects (PoIs) to get thecalls through. PoIs help con-nect and terminate calls fromone telecom operator to anot-her. “There are over 1.8 crorefailed calls per day to thesenetworks,” a Jio spokesper-son said, adding, “less than4% of the required ports in the

first year have been released”.However, the Cellular Ope-

rators Association of India(COAI) has denied any role inchoking the network of Reli-ance Jio and has claimed thatit has been given interconnec-tion facility for 1.5 crore custo-mers. COAI also claimed thatReliance Jio has 30 lakh custo-

mers, up from 15 lakh disclo-sed by parent Reliance Indu-stries, while announcing itsquarterly results on July 15.

“We understand fromvarious reports that Relian-ce Jio has 3 million users onits network. Our memberoperators have given themsufficient number of portsto support up to 15 millionusers. We await the launch

of their commercial servi-ces,” Rajan S Mathews, DG ofCOAI, said. Airtel, Vodafoneand Idea didn’t answer to aquestionnaire sent by TOI.

A spokesperson for Reli-ance Jio refuted COAI’s con-tention. “It is grossly incor-rect to suggest that sufficientnumber of ports have been gi-ven to support 15 millionusers. This is reflected in theexperience in the field whereover 65% of calls to networksof the top-three operators arefailing today,” he said. “Thecontinued denial and delay inthe provision of PoIs by thedominant incumbent telecomservice providers is unlawful,and actionable for appropria-te legal action, as prescribedin the licence agreement/app-licable regulations,” Jio hassaid in a complaint to telecomregulator Trai.

Rel Jio claims existingtelcos choking its calls

TIMES NEWS NETWORK

‘1.8CR FAILEDCALLS A DAY’

Bengaluru: The Central Bo-ard of Excise and Customs(CBEC) will chair a meetingthis week with e-commercecompanies over their appre-hensions about the Goods andServices Tax (GST) and to fi-ne-tune and improve the law.

While e-tailers have bro-adly welcomed the govern-ment’s effort to implementthe GST, clauses such as taxat source, which would im-pact small scale sellers andincrease compliance bur-den, have been bothering the-se companies.

According to the tax headof a top e-commerce firm, ma-jor pain points also include fi-ling tax forms before buyinggoods more than Rs 5,000 in se-lect states. The companies are

trying hard to convince the go-vernment to do away with the-se rules in the final GST law.“The government’s intent tobring GST is welcome but so-me clauses seem to have notbeen looked at carefully. Wehave already provided feed-back on major pain points forus and the meeting is expectedto deliberate further on these

issues. If these clauses remainin the final law, then a lot of in-frastructure spends will be al-located to comply with thenorms which we would ideal-ly like to invest in developingthe market,” the person quo-ted earlier said.

According to this execu-tive, consumers buying go-ods over Rs 5,000 have to filla tax form first before recei-ving the goods.

CBEC to meete-tailers on GSTroll-out concerns

Digbijay.Mishra@timesgroup.com

PAIN POINTS

New Delhi: The valuationreport from a registered va-luer will not be questioned bythe income tax departmentfor disclosures made underthe domestic black moneycompliance scheme, theCBDT clarified on Thursday.

“The valuer is expected tofurnish a true and correct va-luation report in accordancewith accepted principles of va-luation. In case of any misre-presentation, appropriate ac-tion as per law shall be takenagainst the registered valuer,”said the fifth set of FAQs.

CBDT had received repre-sentations from stakeholdersto provide an option to valuethe immovable property on

the basis of the registered va-lue. “After due consideration,the rules have been amendedto provide that where acquisi-tion of an immovable proper-ty is evidenced by a registereddeed, an option shall be avai-lable with the declarant to de-clare the fair market value ofsuch property by applying thecost inflation index to stampduty value of property,” theFAQs said. AGENCIES

I-T dept won’t questionregistered valuer’s report

The clarification isfor disclosuresmade under thedomestic blackmoney compliancescheme