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Monday,
March 18, 2002, Chandigarh, India  
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options in life insurance HOW I STARTED Time ripe
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Q. We are registered as a dealer under the provisions of the Punjab General Sales Tax Act, 1948 and the Central Sales Tax Act, 1956. For the assessment year 1998-99 we did file our periodical returns with the assessing authority claiming certain deductions from the gross turnover, inter alia, on account of sales to registered dealers against declarations in form ST-22.
Keep an
eye on biotechnology stocks Hero
Honda, Bajaj bike sales rev up Nokia
unveils latest phones
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More options in life insurance LUDHIANA: The advertising campaign launched by private insurance companies, that have recently entered the life insurance business, have increased mass awareness about different insurance products. With the increase in the competition, investors are no more dependent on the monopoly of the LIC. A number of banks and private companies are entering to launch life insurance instruments. HDFC and ICICI have already started their operations in the region. Insurance experts point out that despite recent cuts in the interest rates and tax exemptions on paying insurance premium, the insurance market is witnessing an exponential growth. Interestingly, officials at the LIC divisional offices in Ludhiana claim that the entry of private partners has increased their business due to enhanced public awareness. The LIC's total business, they claim, has increased by over 100 per cent over the past one year. Mr Bhagwan Singh Makkar, a leading agent with the LIC, points out that there is a wide range of policies available depending upon the customers' need, age and capacity to pay premium in the long run. The customers are sometime confused over the alluring offers but they should take a policy only if they have a regular income and are willing to invest for a long period. In the changed economic scenario, the life insurance is no more an instrument to save tax, but a planned policy to save money for future needs and to cover risk in life. A salaried class person in the age group of 25-30 should take an endowment policy to save tax and to ensure a good amount at the time of retirement. One of such policies is Jeevan Mitra. By paying an annual amount of about Rs 5,200 for a 20 year-one lakh policy, one can take triple accident risk cover and four times disability cover. He can also take a pension policy to avail Rs 10,000 tax benefit under the IT Act and ensured pension. A businessman, who requires money frequently may opt for a money-back policy. It provides risk cover and gives fixed amount at specific intervals. Regarding children's money back policy, Mr Makkar says,‘‘ one can take a policy at the time of child's birth to spend money on his education. In case of a new born child, for a Rs 1 lakh policy, one will have to pay an annual premium of Rs 5,305 for 18 years. The family will get 20 per cent of the policy amount after the child acquires an age of 18 and 20 years, and 30 per cent each on acquiring 22 and 24 years of age. It will also cover life risk for the child.’’ Cautioning the investors, Major S.S. Khosla (retd), another leading LIC agent, says,‘‘before taking any policy one should study the detailed guidelines of the policy as some agents will not generally disclose all necessary information to woo customers. The insurance policies do not provide secured returns any more. In some policies, if they fail to regularly pay their premiums for consecutive three years, their whole investment would elapse. In case of their failure to pay regularly up to a certain period, they will lose insurance cover, and their amount to a great extent.’’ He says the government has proposed to decrease income tax benefits from 20 per cent to 10 per cent for persons whose annual income is more than Rs 1.50 lakh and no exemption for those whose annual income is more than Rs 5 lakh from the next financial year. Besides, there is a proposal to introduce 5 per cent service tax on insurance premiums that will be finally passed on to the investors. The agents dealing with different insurance companies say the investors can now invest with HDFC, ICICI or LIC. The other players, including SBI have to still offer their policies. Mr Surinder Gupta of Navrang Lifemax, working for the ICICI insurance, claims, ‘‘ICICI policies have an edge for the long-term investors as the company is giving compound interest against simple interest of the LIC. For a 20-year endowment policy, ICICI Pru Save 'n' Protect, the annual premium is relatively lower. Further one can avail accident benefit and disability benefit with a marginal premium of Rs 270 per annum. The investors will also get 20 per cent exemptions under the IT Act Section 88 for investment up to Rs 60,000 and tax-free bonus.’’ Mr Gupta admits LIC agents usually give 40-45 per cent discount in the first instalment of premium out of their commission but they do not give discount at further stage. Defending their policy, he says,‘‘ these discounts are not legal, and we do offer services like collecting premiums from customers' residence, but the LIC agents do not provide any service once they have sold the policy.’’ Ms Charu Mittal, an agent with the HDFC Standard Life, agrees that LIC's money back policy has relatively lower premium than HDFC's. ‘‘But the HDFC offers additional benefits for critical illness and accidental death after paying a marginal additional premium. Moreover, the affluent and busy customers want to avoid tardy and cumbersome procedures of the LIC, and are ready to pay little bit higher premium for better service. The credibility of HDFC and its partner Standard Life Assurance Company, Europe's largest mutual life company, are well known at least to the urban investors which are our target.’’ Referring to the winds of change, Mr Rakesh Thakur, an LIC agent, says, ‘‘the LIC agents are geared up to face the competition. The Jeevan Surbhi, a money-back policy, and the newly introduced Jeevan Mitra, an endowment policy, are no match to private sector policies. If one does not take rebate, we also provide required services without any additional charge.’’ The new Bima Kiran policy provides in-built accident benefit and extended term cover after maturity in addition to risk cover during the term. The Jeevan Surabhi offers early payment of survival benefits and money-back facility. Financial experts maintain that one should take up any policy only after considering various factors such as future saving capacity, financial needs, professional risk and customer services of the company.
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HOW I STARTED LUDHIANA: A graduate of Rampur, UP, in 1977 rebelled against the wishes of his father, a landlord, and started a small shop to sell building material. His dream was to establish himself as an independent businessman, and today this determined entrepreneur is Mr Satish Kumar Sharma, Managing Director, Showman Associates. He has exhibited products of thousands of companies in Punjab over the past five years and is a leading name in show business. Mr Satish Sharma proudly claims that he gives more than Rs 1 crore annual advertising business to media in the region and is determined to set up a mini-trade centre on the outskirts of Ludhiana soon, on the pattern of Pragati Maidan. Sharing his experiences, he says: Initial phase in career After doing BA in 1976, my father wanted me to work on family’s agriculture land but my desire was to set up my own business. So I decided to set up a building material shop in 1977, and in 1981 I came to Ludhiana to try my luck in mentha cultivation. Though I made a lot of money in this business but due to slump in the market in early 90s, I suffered huge losses. I was even forced to sell property and had to start again. For the next few years, I gained experience with the Trade Authority of India in organising various exhibitions under different banners. How did I start my present career? After gaining good exposure in exhibition line, I found that there was no significant player in the state, who could hold well-managed exhibitions of consumer goods and new technologies on large scale. After the opening up of economy in 1991, I observed that big international companies were launching their new products in the region but there was no platform in big cities like Ludhiana. So in 1996, I decided to set up Showman Associates Pvt. Ltd, a fully exhibition organising company. What is my experience in this business? Theme-based exhibition is emerging as a huge market. Since Punjab is one of the richest states, companies want to come to Ludhiana and other towns to boost sale of their products. We provide them professional individual service to display their products at the minimum cost. I organise every year 10-15 exclusive exhibitions of building material, interior and exterior, knitting, dyeing and sewing technologies, automobile, information technologies and many more. Due to enormous response of consumers and companies, Knit Vision, Career Vision, Auto Vision and Life Style exhibitions have become an annual feature. Secret of success I firmly believe in personal satisfaction of the exhibitors and visitors by bringing latest technology and products in the concerned field. We provide companies service from unloading of machines at the port to reach here and return back safely with full satisfaction. Our marketing team in New Delhi and at other cities take care of bureaucratic hassles. What are my future plans? My immediate plan is to set up a world class mini trade centre on the outskirts of city, like Pragati Maidan in Delhi. I am looking for suitable financial institutions and government support to execute this plan. Other plans include to organise exhibitions on medical instruments, printing technology and a suiting and shirting exhibition in Delhi. (As told to MK)
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Time ripe for investment The market staged a recovery from lower levels, albeit on low volumes, after plunging last week on account of political tensions arising from the Ayodhya imbroglio. The barometer, Bombay Stock Exchange (BSE), in the last three sessions, gained 81.88 points from a low of 3,535.80 on Tuesday to 3617.88 on Friday. For the week, the sensex lost 39.09 points from previous week’s close of 3,656.77. The toned down version of the puja by the VHP on March 15 outside the government-acquired land at Ayodhya prompted a general recovery in the market after the crisis had dissipated without any major fallout. Marketmen expect a firm trend on the bourses next week. The general view is that the activity in the market will continue to be stock or sector specific. Software stocks like Wipro, Infosys Technologies and Hughes Software, which had rallied sharply in the previous week, came under pressure last week. After an announcement from Merrill Lynch that Moody’s downgraded Nortel could be an adverse development for Infosys and Wipro which provide services to Nortel. The downgrade of Nortel stemmed from concerns over weaker than anticipated demand and liquidity from Nortel’s customers. This has resulted in a material cut back in the customers’ spending plans. Tech stocks were buoyant earlier on hopes of a fresh flow of orders following indications that the US economy was on a recovery path.
Zee Telefilms The scrip of the media major gained 10.5 per cent to settle at Rs 171.15 last week, which is a 52-week high for the stock. The rally in Zee Tele was accompanied by a surge in trading volumes late in the week. The Zee group recently launched an online lottery under Playwin Infrawest and since the results of the draw will be announced only on the Zee TV, the channel will get mileage out of it. The acquisition of control over film production and TV software firm Padmalaya Telefilms, which marks Zee’s entry into the South, has also gone well with analysts. Zee announced last week its acquisition of a controlling 64 per cent stake in the media company. Earlier, Zee acquired control over music channel ETC Networks.
Private sector banks Private sector banks hogged the limelight last week on continued optimism that foreign banks may acquire strategic stake in them. The major gainers were Karnataka Bank (up by 33 per cent) and Karur Vysya Bank (gained 17.8 per cent to Rs 400.75). Marketmen are optimistic over the private sector banks as they make strong candidates for acquisition by foreign banks. The Budget has further fuelled this optimism as the government has allowed foreign banks to set up subsidiaries in India. Analysts say this will trigger bectic merger and acquisition activity in the banking sector. There has been talk for sometime that leading foreign banks like Citibank, HSBC, Standard Chartered Bank, ABN Amro Bank and ING are examining the possibility of operating in India through subsidiaries and they may look at acquisition of stakes in existing private sector banks for the purpose. Yashwant Sinha also said in the Budget speech that the 10 per cent voting rights restriction on foreign holding would be relaxed. Earlier, the RBI said in a clarification that 49 per cent FDI through the automatic route was permissible in private banks. However, if foreign banks adopt the subsidiary route they will be required to adhere to requirements like 40 per cent priority sector lending target and 25 per cent rural branch network target. The government is yet to issue detailed guidelines on these issues.
Coming fortnight From the investment point of view the market seems ripe for investment. At present the market trades at a P/E of 12.1 to prospective earnings and continues to be attractively priced. Given other options, viz alternate investment instrument like debt where the earning yield is close to bond yield, this is a pointer to the fact that all possible risks are already factored in the market’s valuations and any downside from here on will be purely sentimental and event driven.
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by A. K. Sachdeva Q. We are registered as a dealer under the provisions of the Punjab General Sales Tax Act, 1948 and the Central Sales Tax Act, 1956. For the assessment year 1998-99 we did file our periodical returns with the assessing authority claiming certain deductions from the gross turnover, inter alia, on account of sales to registered dealers against declarations in form ST-22. While examining the returns so furnished, the assessing authority alleges that deductions involving sales to a registered dealer are not genuinely claimed as the transactions so effected existed on papers only. The assessing authority further points out that no transfer of property in goods took place in respect of those transactions. Our submission, however, is that the allegations levelled by the revenue that the claim of deductions is not genuine are absolutely false and incorrect as the goods sold to the buying registered dealers were dispatched by us under goods receipt issued by the transporters and that the payments received were duly accounted for in the account books. However, the assessing authority still feels dissatisfied with our pleas and proposes to levy tax on these transactions in dispute. Kindly enlighten us on this issue. Akshita Trading Co., Ludhiana Ans. According to well-established principles of law laid down by the Punjab and Haryana High Court on identical facts in a number of cases, it is obligatory for the assessing authority before rejecting the claim of statutory deductions to place before the assessee sought to be proceeded against the relevant material he wants to use against him. It is not open to the assessing authority to take recourse in such cases to guess work and surmises. It has not been clarified in the question as to whether the assessing authority has proposed rejection of the deductions on the basis of some evidence and that whether such material has been confronted to the assessee or not. It is imperative for the assessing authority to follow while proceeding against the assessee the principles of natural justice before any final decision in the case is arrival at. The assessee can, therefore, bring all these facts to the notice of the assessing authority also inviting his attention to the case laws on the issue so that appropriate opportunity of being heard to the assessee in the matter could be availed of. Reference in this context may be made to the decision a Division Bench of the high court that came to be delivered in the case of Pahar Chand and Sons v. The State of Punjab (1972) 30 STC 211 (P&H) as also the Judgement by the same High Court in the case of Devinder Kumar Kewal Kumar v. The State (1972) 30 STC 352.
Q. Kindly let us advise in the context of the provisions of the Haryana General Sales Tax Act, 1973 as to whether a registered dealer filing the revised returns and paying differential amount of tax under the sales tax laws can be called upon to deposit the interest under sub-section (5) of section 25 of the Haryana General Sales Tax Act, 1973 from the due date of filing the original returns to the date of actual payment. Ram Avatar Gupta, Hansi Ans. It is only when there is a short-payment or non-payment of self-assessed amount of tax that the assessee can be held liable to pay interest under the provisions of sub-section (5) of section 25 of the Haryana General Sales Tax Act, 1973. However, such a situation does not arise, where an assessee on discovering some mistake or error furnishes a return revising the original one and pays the tax representing the difference between the amount of tax due as per the original return and the revised version of the returns. Therefore, no interest having regard to the facts of the case can be levied upon the assessee on the differential amount of tax that became payable as per the revised returns holding him to have defaulted in payment of the tax due as per the returns.
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by Ashok Kumar Keep an eye on biotechnology stocks Biotechnology has been recognised as the next big thing after IT, which will put India on the world map. The share market too has sensed the opportunities offered by biotechnology companies. Investors are now bidding up prices of any company with a biotech tag. Not surprisingly, many companies are re-christening themselves with a biotech tag and many are being floated to fleece gullible investors at an opportune future date. Indian biotechnology companies, especially those that are listed, are very different from their US counterparts, US biotech companies are predominantly research-based and many are still to show positive bottomline numbers. In India, many research based biotech firms are unlisted, though some of them are considering tapping the market. Select companies are predominantly in the pharmaceuticals sector; a number of biotechnology companies are involved in agricultural research too. Most Indian companies that are getting into agro-based biotechnology have been associated with the sector for some time. A majority of them have been involved with producing hybrid seeds. As the dust settles after the software and dotcom rush that ended, in most cases, on an unpleasant note, entrepreneurs have started gearing up for the next surge which is expected to be in the biotechnology (BT) sector. Traditional research used by companies is expensive because of its empirical nature — it’s like shooting in the dark. BT on the other hand is empirical as well as rationale. The site of the unicorn in sci-fi movies has always baffled us. Could such creatures exist? Or is there a possibility of creating such a creature? Well, research is ongoing in a large scale to understand the building blocks of the human body, which has so far been elusive to us. This study can help us understand the possible characteristics of the human body. This is the study of biotechnology. World population is fast reaching alarming levels, more so in developing countries like India. The world population is expected to double to approximately 10 billion people by 2030 AD with an ever increasing mouth-count and not much cultivatable land expected to be available, the only way out would be to cut down on losses and improve productivity. Biotechnological innovations will help in increasing crop yields without the use of additional land. It will also help in reducing the dependence on pesticides that could endanger the environment. Let us try and understand biotechnology in brief. Cells are the units, which make up the body. These are made up of deoxyribonucleic acid (DNA) molecules, which consist of nucleotides. A specific sequence of these is called genes. There are approximately 1-lakh genes that contain at least 3.1 million letters, which contain relevant information of a particular individual. Combination of DNA from two different individuals (or organisms) helps in creating a new being. But this is a long and tedious process as the number of genes are too many. However biotechnology helps us in combining DNA of different life forms to get the desired species. Biotechnology uses proteins, enzymes, antibodies and other substances that are produced naturally in the human body. Biotechnology medicines will help in producing proteins which will help in fighting diseases and infection and also will help in carrying out specific functions like controlling blood sugar levels in the body as well as aiding in complete human growth. Biotechnology vaccines that would contain certain antigens, when injected into the human body would help in fighting various viruses. Biotechnological diagnostics would be used in detecting various diseases and genetic conditions in the human body. Gene therapy is used to treat hereditary genetic disorders. We shall continue on this topic next week. Till then, take care and more importantly, tread cautiously on the market front. But do start keeping an eye out for the right biotech stocks. |
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Hero Honda, Bajaj bike
sales rev up
New Delhi, March 17 A total of 38.1 lakh two-wheelers were sold during April-February 2001-02 as against 32.9 lakh units in the same period last year, data compiled by the Society of Indian Automobile Manufacturers (SIAM) showed. All motor cycle makers like Hero Honda and Bajaj Auto continued to be on overdrive as total sales in the segment shot up by 36.6 per cent year-on-year to 2.6 lakh units from 1.9 lakh units. Hero Honda Motors led the pack posting a 38.3 per cent rise at 12.7 lakh motor cycles over 9.23 lakh units in the year-ago period. Bajaj Auto also notched up an impressive 31.2 per cent increase in sales at 6.33 lakh units (4.82 lakh units during April-February, 2000-01). Sales of TVS Motor Company grew 23 per cent to 3.93 lakh motor cycles (3.19 lakh units) while that of Yamaha Motor Company went up by 48.3 per cent to 1.93 lakh motorcycles (1.3 lakh units) during the review period. Royal Enfield Motors and new entrant LML Ltd witnessed a 9.4 per cent and 59.1 per cent rise at 20,593 and 42,115 motor cycles, respectively. Another recent player in the motor cycle segment, Kinetic Engineering sold 40,280 units. In the scooter segment, Bajaj Auto and TVS Motor Company were the only exceptions as total sales fell by 1.1 per cent to 7.89 lakh units during April-February, 2001-02, from 7.98 units in the same period last year.
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Nokia unveils latest phones Melbourne, March 17 “We have launched five new phones with exciting new communication possibilities like MMS, interactive games, music and download applications with Java and polyphonic sounds,” Robert Anderson, Senior Vice-president, Asia-Pacific told reporters here. Unveiling the new products — 7210, 3510, 9210i, 6310i and 3315 — Anderson said “as the industry moves beyond voice to more data and services-driven, the new series of products will make capturing of images and transacting the business possible with the convergence of telecom and IT.” The company, however, clarified that MMS related services were dependent on the network as well as on the compatibility of the devices used and the content formats supported.
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LUDHIANA: A graduate
of Rampur, UP, in 1977 rebelled against the wishes of his father, a
landlord, and started a small shop to sell building material. His dream
was to establish himself as an independent businessman, and today this
determined entrepreneur is Mr Satish Kumar Sharma, Managing Director,
Showman Associates. He has exhibited products of thousands of companies
in Punjab over the past five years and is a leading name in show
business.
