Monopoly of LIC, GIC to go: Sinha

HAZARIBAGH (Bihar), Aug 8 (PTI) — Union Finance Minister Yashwant Sinha today asserted that India was “fully prepared to meet the challenges arising out of sweeping sanctions imposed by the USA and other countries in the aftermath of the Pokhran nuclear explosions.

“Our country has squared up to the challenges on the economic front”, Sinha said while inaugurating a three-day “Bima Jagriti Mahotsava” organised by the Life Insurance Corporation and the General Insurance Corporation of India.

He said: “Even after economic sanctions, India has not bowed to any foreign pressure”.

“Even America has now been forced to have second thoughts on its decision,” the Finance Minister added.

Stressing the need for providing “more and more” coverage to people living in rural areas, Sinha said the Centre was fully determined to allow the private sector to enter the insurance industry.

Expressing the firm resolve of his ministry to make insurance sector “more competitive” the Finance Minister said he wanted “to break monopoly” of the LIC and the GIC.

The Centre was also keen on providing protection to farmers by giving them crop insurance cover for which a special scheme would soon be launched covering 24 states in the first phase.

Sinha asked insurance companies to launch more beneficial schemes involving low premium and larger benefits.

He said experts should start the exercise for formulating such schemes keeping in view the country’s requirements.

The Finance Minister said the LIC and the GIC were doing “good business” in foreign countries and efforts were on to expand their base.

LIC Chairman, G. Krishnamoorthy said the LIC had charted out a comprehensive five-year plan to provide Rs 30,000 crore for speeding up development works, including the construction of roads and expanding rail network.

Krishnamoorthy said his company would spend Rs 1400 crore for “health-oriented schemes” by providing aid to hospitals and constructing cancer centres at Kochi.

LIC had already come forward with an assistance of Rs 9.404 crore for improving power generation and supply, he said.

The Finance Minister released a commemorative album of LIC and GIC and also launched social security schemes for 2000 weavers in Chhotanagpur.

Punjab hopes for 12 p.c. growth
Tribune News Service

MUKTSAR, Aug 8 — Punjab Chief Minister Parkash Singh Badal said today that Punjab is all set to achieve the industrial growth rate of 12 per cent against the present level of 10 per cent through rapid industrialisation and manifold incentives given to the rural industry.

Addressing a gathering after laying the foundation stone of an Industrial focal point here today, Mr Badal said Punjab had the best available infrastructure, quality power at reasonable rates and “A” class facilities for setting up of units in rural focal points. The state’s export figures had touched Rs 3,700 crore during the current year against Rs 2,500 crore last year.

Mr Badal said the Muktsar area had been completely cleared of the waterlogging problem which had hampered agricultural and industrial activities in the past years. He said the government had implemented a project of Rs 200 crore to remove waterlogging.

The Chief Minister said canal water and drinking water projects would be commissioned in the area by next year at a cost of Rs 300 crore.

Mr Sukhbir Singh Badal, Union Minister of State for Industries, said projects like the Bathinda oil Refinery, the fertilizer plant at Sangrur , the HMT tractor factory at Mohali and Ambuja cement plant were being set up.

Mr Sucha Singh Langah, Minister for Industries, said 12 units of PSIDC were in an advanced stage of construction.

Capt Narinder Singh, Managing Director, Punjab Small Industries and Export Corporation, said the PSIEC will set up 21 industrial focal points in the current financial year.

‘City’ feels heat as car war hots up

Good days seem to be over for Honda Siel cars as its ‘City’ model has finally started feeling the heat in the luxury segment with sales dropping by around 45 per cent during July 1998 over the previous month.

Maruti Udyog continued to lead, managing to offload as many as 1,886 Esteem cars during the month as against 1,722 the previous month, according to the latest industry estimates.

Daewoo Motors India Limited and Mahindra Ford were the only other car makers in the category to have recorded positive growths during the period. Daewoo officials attribute the growth to the Rs 1.3 lakh price correction which was announced earlier this year. “The sales have been on the upswing ever since.”

Daewoo managed to sell as many as 875 Cielos as against 851 units in June, Cielo sales in July 1997 stood at 817 units. Mahindra Ford sold as many as 414 Escort cars over 368 in the previous month However, this is a major drop from 1,051 vehicles in the same month the previous year.

During the month, General Motors India Limited sold around 342 Opel Astra cars, which was a slight drop from the previous month’s 351 units.

All the other manufacturers put together — Hindustan Motors, Telco, Pal-Peugeot and Mercedes Benz — could manage to sell only 150 vehicles during July 1998 as against 521 in July 1997. (UNI)

Corporate vision

Justice M.N. Venkatachaliah has said that new technologies are racing ahead of social controls, leaving their legal structures trailing behind.

“The new technologies and rapid changes they bring about create new economic forces — some or all of which may require social regulatory intervention.”

“Law is a notorious laggard. It catches up late,” said Justice Venkatachaliah, former Chief Justice of India and now Chairperson of the National Human Rights Commission.

He was addressing a gathering in New Delhi on last Wednesday night on “Corporate vision for 21st century” organised by the Institute of Company Secretaries of India (ICSI).

Snippets

Wealth is just a means to an end.If this is not understood, he said, the rich will soon find themselves imprisoned by their own wealth in their private fortresses guarded by private armies.

“Their children go to school and play with armed guards. If wordly goods are intended as a source of happiness, the only way which it could be enjoyed is, as with happiness, by sharing.” (UNI)

Fazilka juttis

Sukhbir Singh Badal, Union Minister of State for Industry, visited Fazilka on Friday last to purchase juttis. Sources close to the minister confided that Sukhbir was on a private visit and had especially come to purchase the famous embroidered tilla Punjabi juttis.

Badal junior purchased about one dozen pairs of juttis from Indra Market where there is a row of jutti shops. The entire Badal family is fond of tilla juttis made in Fazilka by talented cobblers who are descendants of famous jutti makers of Kasur in Pakistan. A large number of politicians, including the late Giani Zail Singh, Darbara Singh and Beant Singh used to purchase juttis from Fazilka. (Our Correspondent).

Bajaj Auto

Bajaj Auto Limited has been charged with indulging in unfair trade practices for selling its scooters. The case in this regard will come up for hearing at the Monopolies and Restrictive Trade Practices Commission (MRTPC) in New Delhi on Monday.

Complainant Sunil Lal has sought “cease and desist orders” against the auto major for its “Bajaj monsoon festival” stating that the prospective customers are likely to be cheated and defrauded from the scheme.

The complaint has been filed, apart from the auto major, against 10 Uttar Pradesh-based Bajaj distributor/outlets under Section 36-B (A) of the MRTP Act, 1969.

The complainant has also asked for a direction to the respondents to forthwith refund the additional amount charged from gullible purchasers. (UNI)

Nick Leeson

Remember Nick Leeson? The former futures trader whose deals in Singapore brought down Britain’s oldest merchant Bank — Barings — is seriously ill with cancer.

“We can confirm that he is in the prison hospital and is seriously ill,” A British High Commission spokesman told Reuters in Singapore.

Leeson (31) is serving a six and a half years jail term for fraud that began in December 1995. “His lawyer is in the process of applying for early release on medical and compassionate grounds so that he can be close to his family.” the spokesman said. (Reuters)

PNB gets ISO 9002

CHANDIGARH, Aug 8 — Lt.-Gen (retd) B.K.N. Chhibber today inaugurated the Sector 16 branch of Punjab National Bank which has received ISO 9002 accreditation from the Bureau of India Standards. This is the first ISO 9002 branch of PNB in the region.

The Governor said a bank should be alive to the problems of its customers because they are its real marketing agents. The bank should endeavour to further improve the standards.

Mr R.P. Gupta, Zonal Manager, Northern Zone, PNB, said 19 branches of the bank in the northern zone have been computerised and seven days working has been started in 10 branches.

Mr Gupta presented a draft for over Rs 2.19 lakh being the voluntary contribution of one-day salary of Chandigarh employees of the bank for the Prime Minister’s Relief Fund.

IVP Ltd net rises 51 pc

Tribune News Service
CHANDIGARH, Aug 8 — IVP Limited recorded sales of Rs 139 crore compared to Rs 65 crore for the same period last year, showing an improvement of 113 per cent. The gross profit before tax and depreciation was Rs 4.78 crore compared to Rs 3.22 crore for the same period last year, showing an improvement of 48 per cent. The net profit was Rs 2.93 crore as compared to Rs 1.94 crore for the corresponding period last year, showing an improvement of 51 per cent. The annualised EPS was Rs 11.3 compared to Rs 8.1 for the previous year.

Exemption to NBFCs

MUMBAI, Aug 8 (PTI) — The non-banking finance companies (NBFCs) that do not accept or hold public deposits need not file returns with the RBI. Announcing this the RBI today said the focus of regulation of NBFCs in the new policy declared earlier this year had shifted to public deposits and hence, the NBFCs not accepting or holding public deposits were no longer required to furnish their returns.

However, auditors of such companies are required to furnish to the Central Bank “exception reports” if the company had violated any of the provisions of the RBI Act or specific directions issued by the regulator, the RBI said.

Pakistan avoids default

LAHORE, Aug 8 (PTI) — Pakistan avoided a loan default by paying $ 40 million to the World Bank (WB) and Asian Development Bank (ADB) with Kuwait bailing it out. Pakistan used part of the $ 250 million financial assistance from Kuwait to repay the loan, reports here said today. More assistance is on way with Islamic Development Bank (IDB) alone pledging $ 1.5 billion support, giving Pakistan two to three months’ breathing time, The ‘Nation’ said.

Pakistan paid $ 40 million yesterday as interest on the loan outstandings from the multilateral agencies, the paper said adding that the only way out from the economic crisis was a moratorium.

Raasi holding ‘transferred’ before ICL bid

MUMBAI, Aug 8 (PTI) — Sri Vishnu Cement Ltd (SVCL) Chairman B.V. Raju has clarified that Raasi Cement Ltd’s (RCL) holding in SVCL was transferred to nine other group companies much before India Cements Ltd (ICL) made an open bid on March 2, 1998, and successfully gained control of RCL.

Dr Raju, in a statement last night said the transaction involving the transfer of 39.49 per cent of SVCL shares held by RCL during his tenure as Chairman took place during September-December, 1997.

The transaction took place at the price of Rs 10 which was at a premium over the then ruling market price of around Rs 7 and also higher than the one recommended by an independent valuer, he said.

The transaction was not taken as a knee-jerk reaction to the open offer to RCL shareholders as is being made out now, he asserted and further clarified that the board meetings were attended by the nominees of financial institutions when the transfer was approved.

ICL has objected to the transfer saying it was “faulty” and lodged a complaint with Securities and Exchange Board of India (Sebi).

Dr Raju and Kalahastheeswar Finance Pvt Ltd, in concert with the nine group companies, have made an open offer to shareholders of SVCL on August 5.

Yesterday, Dr Raju along with Udayan Bose, Managing Director of Lazard Creditcapital, manager to the open offer, met Sebi Chairman D.R. Mehta, where a hearing on the issue of the transfer was fixed for August 20.

Dr Raju explained that the nine companies had only come together for the purpose of signing the non-disposal undertaking required by financial institutions.

The nine companies were advised by legal experts that jointly signing such an undertaking would be construed as persons acting in concert and trigger the Sebi code and hence, the open offer to comply with Sebi regulations.

The offer would also enable the acquirers to consolidate their holdings in SVCL, Dr Raju said.

‘States should take over airports’

MUMBAI, Aug 8 (PTI) — Civil Aviation Minister Ananth Kumar today said that India was for globalisation and liberalisation “as per the country’s needs and not steered or monitored by world financial institutions”.

“One should not have apprehensions about India as we have opened up for foreign investments in various sectors, specially in infrastructure sector, including the aviation”, he said while addressing a seminar on “the emerging civil aviation scenario” to commemorate 50 years of international operations by Air-India.

Mr Kumar welcomed foreign equity participation in modernisation of airports and said his ministry would shortly make Guwahati, Thiruvananthapuram, Hyderabad, Bangalore and Ahmedabad as international airports.

He said state governments could take over the management of small airports in the country through private participation.

He, however, did not agree with the International Air Transport Association (IATA) President Sir Harry Tirvengadum that small airlines would be marginalised by mega carriers and said these airlines would have a greater role to play in the development of the country.

Earlier in his address, Sir Harry, Chief Executive of Air Afrique, said to survive, the small airlines needed to privatise quickly, move away from government control and run them as a commercial enterprise, develop new strategies, accept the role of feeder carriers only or forge an alliance with a strong and willing airline.

IATA Senior Director of Corporate Policy John Meredith, who addressed in place of IATA Director General Pierre Jeanniot on the state of the air transport industry, said there was likely to be a fall in the net profit of world airlines this year mainly due to Asian crisis where the carriers could not reduce their capacity quickly.

He said the net profits were likely to be around $ 3.9 billion compared to $ 4.5 billion in 1997.

As industry re-structuring continued, IATA remained actively involved in efforts to improve airline safety, decrease airline costs, increase airline revenue and service, he said.

Director-General of Civil Aviation H.S. Khola in his address on “ensuring safety standards in India’s liberalised civil aviation environment” said as many as 80 out of 90 international airlines flying into or over India had agreed to adhere to the directive marking it mandatory for aircraft to instal traffic collision avoidance system (TCAS) by the year end.

Tata proposal to be taken up on Aug 17

MUMBAI, Aug 8 (PTI) — The Foreign Investment Promotion Board (FIPB) will take up the Rs 1,475 crore Tata Airline proposal on August 17.

Civil Aviation Minister Ananth Kumar told newsmen today that the FIPB had decided to meet on a Monday in view of the holidays on two consecutive Saturdays (due to Raksha Bandhan today and Independence Day on August 15).

Civil Aviation Secretary P.V. Jayakrishnan, who was present at the Air-India seminar to commemorate 50 years of international operations, said his ministry would send its comments by next week.

Asked about the Tata Bangalore airport project, Mr Jayakrishnan said the next meeting with the Tatas would be held only after discussions with the Defence Ministry.

On July 10, the FIPB had deferred by four weeks a decision on the Tatas’ proposal to set up a domestic airline with 40 per cent foreign equity following a request by the Civil Aviation Ministry.

New MAIT strategy
Tribune News Service

NEW DELHI, Aug 8 — The Manufacturers’ Association of Information Technology (MAIT), the apex body of information technology hardware manufacturers, has proposed the adoption of a twin strategy of an IT Plex/IT Design concept.

The IT Plex/IT Design concept is based on the successful Singapore, Chinese and Philippines models of setting up manufacturing bases to serve both domestic and export markets.

The IT Plex concept includes hassle-free infrastructure which houses a fully empowered government representative to handle statutory issues and electronic self-assesment customs clearance procedures.

This twin strategy is expected to increase the inflow of foreign investment by at least $ 500 million and achieve exports worth $ 15 billion by the year 2005.

Exporters let down
From Our Correspondent

AMRITSAR, Aug 8 — Rice exporters here have described the new export policy as “totally unrealistic”, which gave little incentive to boost exports.

The vice-president of the All-India Rice Exporters Association, Mr Ravinder Chatha said here today that there was no substantial relief announced by the Commerce Minister and small benefits would not lead to the growth in exports.

Mr Chatha, while advocating payment of cash incentives, said the government’s half-hearted measures would prove counter-productive and would be unable to reverse the 17 per cent negative growth achieved during the first three months. He urged the government to issue instructions to the state government to enforce export guidelines. The parallel policies adopted by the state government were proving a hurdle and rice exporters had to encounter various agencies which were working at cross purposes, he added.

Mr Chatha demanded setting up of commerce ministry cells at every state capital to coordinate export efforts.

by R.N. Lakhotia

Q: I am a trader with annual sales of around Rs 12 lakh. Kindly advise the latest Income-tax law regarding filing of return — A.Y. 1998-99-

1. Shall I have to get my accounts audited?

2. Shall I have to pay Income-tax on 5 per cent of my sales?

3. Any other applicable law.

— Tarlok Singh, Banikhet (U.P.)

Ans: As per the newly inserted Section 44AF to the Income Tax Act, 1961, a retail trader with annual turnover of less than Rs 40 lakh can opt for taxation based on the concept of presumptive income from business of retail trade. The question of getting the accounts audited does not arise as your turnover is less than Rs 40 lakh. It is not compulsory for you to maintain books of account. If, however, you find that your net taxable profit is less than 5 per cent, then you will have to maintain your books of account and pay tax as per the profit as per accounts.

Q: I am a divorcee and during proceeding of divorce I was awarded a sum of Rs 1,37,000 against the dowry by the lower court judge. Kindly let me know whether the above amount is liable for payment of income-tax or not.

— Randeep Kaur, Pinjore

Ans: Dowry amount received consequent to divorce is not liable to Income-tax.

Q: I am working in H.P. State Electricity Board and likely to receive following amounts during the financial year 1997-98.

(1) Medical reimbursement bills on general treatment in respect of self & my wife. — Rs 15,000

(2) Interest on Maharashtra Krishna Valley Development Corporation Infrastructural Bonds for Rs 10,000. — Rs 1,750

(3) Interest on Hudco Bonds amounting to Rs 10,000 — Rs 1,500

Kindly advise whether medical reimbursement bills amount of Rs 15,000 is exempt for Income-tax purpose or not? Should I consider the interest amounts of Rs 1,750 and Rs 1,500 under Sec. 80-L for Income-tax purpose?

— Er. R.D. Sandhu, Girinagar (H.P.)

Ans: The reimbursement received by you in respect of medical expenses is exempt from Income-tax to the maximum extent of Rs 10,000 in one financial year. Hence in your case such reimbursement is received of an amount of Rs 15,000, the sum of Rs 5,000 would be liable to Income-tax. As regards interests on Maharashtra Krishna Valley Development Bonds and Hudco bonds the same would be exempt u/s 80L of the Income Tax Act. However, please read the offer document with reference to Maharashtra Krishna Valley Development Bond.

Q: My income from pension is not taxable. If I invest my income from agriculture in fixed deposits then to what limit the exemption on the interest that accrues is available?

— Pritam Sood, Moga

Ans: The income from pension will not be taxable, if the pension income together with other incomes does not exceed maximum exempted limit under Income-tax. Thus, if you are having pension income up to Rs 60,000 per annum and no other income then there will be no liability to Income-tax. The investment made by you in bank fixed deposit out of agricultural income will be exempted from Income-tax like any other bank fixed deposit interest income, etc. subject to a maximum deduction of Rs 12,000 in one financial year as per Section 80 of the Income-tax Act, 1961.

by A.K. Sachdeva

Q: We are registered as a dealer under the Haryana General Sales Tax Act, 1973, as also under the Central Sales Tax Act, 1956, and engaged in the business of electronic goods. During the assessment year 1997-98, a customer from Delhi came to our place of business and purchased a stereo on payment of price in cash. Bill of sale against this transaction was issued to the customer indicating, inter alia, his address of Delhi wherein central sales tax was also realised. However, now the assessing authority points out that this transaction is nothing but a local sale on which local sales tax was payable. According to the assessing authority, payment of tax under the central sales tax on this transaction of sale is not in conformity with the provisions of law. Kindly advise.

— Parshotam Lal Arora

Simply because a person from a place situated outside the state comes to the place of business of a dealer residing in Haryana for the purpose of buying certain goods and carries the goods so purchased to the other state on his own does not mean that the transaction will be governed by the provisions of the Central Sales Tax Act, 1956. As stated by the queriest that the goods were taken delivered of in Haryana on payment of the price, it is clear that this transaction simply constituted a sale within the state. It appears that the movement of goods from Haryana to Delhi did not take place as a result of agreement of sale between the parties and therefore the transaction cannot be regarded as a sale in the course of inter-state trade or commerce within the meaning of section 3 of the Central Sales Tax Act, 1956. The fact that the address of the buyer of Delhi was mentioned in the bill of sale is also irrelevant for the purpose of ascertaining the true nature of the transaction. having regard to these facts the assessing authority seems to be justified in coming to the conclusion that the transaction is assessable to tax only under the Haryana General Sales Tax Act, 1973 being a local sale.

Q: We are given to understand that the Supreme Court has recently held in the context of the Central Sales Tax Act, 1956 that no interest becomes leviable in the event of default in payment of sales tax on inter-state sales. Kindly advise in detail as to whether a registered dealer who does not pay tax as per returns on inter-state sales conducted by him cannot be called upon to pay interest on delayed payment?

— Krishana Udyog

Interpreting the provisions of Section 9(2) of the Central Sales Tax Act, 1956, a Division Bench of the Supreme Court has held in the case of India Carbon Ltd v. State of Assam, Civil Appeals Nos 2156 to 2167 of 1993 and others, (1997) 106 STC 460 that the provisions in the latter part of section 9(2) of the Central Sales Tax Act, 1956 can be employed by the sales tax authorities of the State only if the Central Act makes a substantive provision in the Central Act requiring the payment of interest on central sales tax. There being no provision in the Central Act requiring the payment of interest of central sales tax, the sales tax authorities of the state, cannot, for the purpose of collecting and enforcing payment of central sales tax, charge interest thereon. It was further ruled interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in this behalf.

by Praful R. Desai

Q: In case, suit for protection is filed during exemption period from application of Act to a building, whether merely because exemption period expired during pending of suit, is the civil courts’ jurisdiction to adjudicate the dispute is ousted?

Ans: The S.C. in the case of Shri Kishan v Manoj Kumar (1998 (1) C.C.C. 188) was, expressing the view thus.

A suit for eviction was filed during period of exemption of 10 years granted U/s. 1(3) of the Haryana Urban (Control) of Rent and Eviction Act, 1973. This exemption period came to an end during pendency of suit. The tenant contended that the civil court lost its jurisdiction and decree passed thereafter was a nullity and he would be entitled to protection of S.13(1).

In the opinion of the S.C., S.13(1) does not expressly refer to execution of a decree for possession. The purpose for which the exemption is granted statutorily U/s.13(1) is to encourage construction of new buildings. That purpose would be defeated if the owner of the building is deprived of his right to get possession of the building unless he gets a decree within a period of ten years from the date of its completion.

The S.C. felt that the logical consequence of the arguments of the appellants if accepted would be that even if a decree is obtained by the landlord within 10 years from its completion, it cannot be executed after the expiry of the said period of 10 years. This argument of the appellants cannot be accepted, in the considered opinion of the S.C., as otherwise the purpose of exemption would get defeated.

With the result, the S.C. held that S.13 does not make any reference to a decree passed in a civil suit. When a suit is validly instituted and the rights of parties which had crystallised on the date of the suit are determined by the decree in that suit the execution thereof cannot be stopped by the provisions of S.13 of the Act.

In that way, the appeal was dismissed.

Tatra engines
NEW DELHI, Aug 8 (PTI) — Czech truck major Tatra is mulling the idea of manufacturing engines for its range of heavy commercial vehicles in India, a top company official said. “We are considering production of our engines in India as there is possibility of sourcing several engine components within the country itself,” said Lt Gen (Retd) Ris Kahlon, Managing Director of Tatra India, the 50:50 joint venture between the Czech firm and the UK-based Venus Udyog.

Kirloskar Elec
MUMBAI, Aug 8 (PTI) — Credit Analysis and Research Limited (CARE) has downgraded its fixed deposit (FD) and non-convertible debenture (NCD) ratings of Kirloskar Electric Company Limited (KECL) and Schematic Finance Limited. The rating assigned to KECL’s 18-month NCD issue of Rs 15 crore has been revised to AA- from AA and its long term NCD issue of six-year tenor and FD programme to AA- from AA.

Crisil
MUMBAI, Aug 8 (PTI) — The Crisil has downgraded the rating of the non-convertible debenture (NCD) issues of Orient Ceramics and Industries Limited, Murudeshwar Ceramics Limited and Bell Ceramics Limited and the partly convertible debenture programme of SPL Limited. The Rs 7.2 crore NCD programme of Orient has been downgraded from “A” to “BBB” reflecting the increased risk profile of the company given the difficult business conditions of the industry, according to a release.

Wockhardt
Tribune News Service
CHANDIGARH, Aug 8 — Wockhardt Ltd has rechristened its BioAgro Division “Biostadt Agrisciences”. The key elements of business like manufacturing, marketing, distribution etc will be headed by Mr D.K. Chopra. Biostadt Agrisciences, in addition to domestic agro business, will look after international business, especially in South-East Asian countries.

Video magazine
From Our Correspondent
PANCHKULA, Aug 8 — Haryana Today, a weekly video magazine was launched here today. It’s a joint venture of some local journnalists according to the managing editor of the magazine, Mr Vipin Garg.