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Monday, April 22, 2002, Chandigarh,
India  
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Youths embrace high-power bikes
Restore 20 pc tax rebate on savings: CII
Safeguard public against unsafe water |
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Pension
Market depressed despite good results
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Youths embrace high-power bikes Ludhiana Mr Rahul Prabhakar, Sales Manager at one of the leading Bajaj showrooms, here says, “The sale of scooters have drastically declined though we are still selling a good number of scooters especially in the rural market. The chetak models, priced at Rs 24,100 and Rs 25,365 are still preferred by the lower middle class due to low price and small maintenance cost. However, the young boys, who want to assert themselves in their friend circle, and want to make a statement about their young personality, are purchasing high powered bikes.’’ The market observers say that it is not due to any love for money value — high average and speed, but the ‘hobby to look different in their village, town or circle’ that landlords, big industrialists, buy Royal Enfield, Eliminator or other high value and high power bikes. One of the big landlords, near Jagraon, who had purchased an Eliminator bike, said, “I wanted to give the costliest bike to my son-in-law in the marriage of my daughter. I think he would enjoy that bike.” Mr Prabhakar admits that though the sales volumes in this higher segment is not too high so far, but the company has offered the consumers a choice to purchase about Rs 90,000 bike, Eliminator. However, he says, the middle class youth especially those in marketing and jobs, are mostly buying Boxer AT and CT models, priced at Rs 32,015 and Rs 35,125 respectively. This is the segment where Hero Honda is selling its Splendor and Passion models priced at around Rs 38,000 and Rs 43,000 respectively. In fact, the young couples and bachelors are going for bikes for their good average and speed. Mr Sandeep Verma, a young photographer, who had recently purchased a Hero Honda, passion model for Rs 44,000, says,‘‘ There is virtually no comparison between a scooter and bike. Besides, it is economical in the long run, as the average of bike is more than 60kmpl as compared to about 40 kmpl average of any scooter. Further it would fetch good market value even if I decide to sell it in future.” He admit that moreover, it helps make a good impression on girls when you have a motorcycle. His friend Neeraj Arora, a businessman dealing in shoes, says, “I have purchased the Bajaj Croma bike due to its established brand name, easy financing and better sales service. I feel more assertive and young in comparison to a scooter rider.” The market experts admit that it is the lean period for the sale of bikes as well as scooters. They say that the sales usually pick up at the end of financial year or during festival season, when the companies offer some discounts or freebies. Mr Inderjit Bhalla, Chief Sales Executive at a Kinetic showroom here says,
‘‘At present the sales of Kinetic scooters as well bikes are just normal. The company is going to launch here its new model Nova against Hero Activa, newly launched scooter. The sale of recently launched 97 cc, 4 stroke, Challenger ( Rs 41, 801 ex-showroom price ) has started increasing in recent months. The Kinetic GF 125, the only 4-stroke, 4-valve engine motorcycle has various additional features including self starting. Most of its buyers are landlords and sons of businessmen.’’ Despite increasing heat of the competition, the Hero Hondas is still trying to hold the 100 cc market through Splendor and Passion priced at Rs 38,500 and Rs 43,960 respectively. The dealers say that the Hero Honda bikes are more preferred by educated urban youth and executives to the ruralities, where the financiers are not ready to take risks due to fluctuating and difficulty to calculate agriculture incomes. The customers say that the manufacturers would have to share the profits with consumers, instead of just relying on advertising campaign. The entry of Chinese bikes, which could force them to cut down prices, may have been stalled by higher duties for the time being, but it cannot be postponed forever. They would have to come up with more fuel efficient and cheap models, that are still determining factors to boost sales. CHANDIGARH: Style and economy offered by the motorcycle manufacturing companies is what has given a fillip to the motorbike segment. With this, the market today is witnessing the entry of a large number of innovative models, the latest ones being- Dawn (100cc 4 stroke) by Hero Honda, Cruiser Thunderbird (350cc 4 stroke) by Royal Enfield, Pulsar (150 cc and 180 cc) by Bajaj and various others. According to Mr Manjot Gill, Sales Incharge, TVS, “Today, the motorcycle market is dynamic and demand for change has compelled the manufacturers to do constant research and development of new models with sleeker looks and features to meet the expectations of the buyers”. It is primarily those between age groups of 16 years and 40 years who form the major user segment for motorbikes. Preferences differ — a majority voting for looks. Talking about the most popular models of the company, Mr Gill said that MAX 100 (Rs 29,990 ex-showroom Chandigarh) and Fiero (150cc) are among the most popular models of TVS. The reasons- economy in case of MAX and power and looks in case of
Fiero. Hero Honda which claims 47 per cent of the market share has two best sellers—Splendor-the four stroke bike (100cc) and CBZ (156cc) that have captured the market for quite long, once again due to looks and fuel economy. While the ex-showroom Chandigarh price of Splendor is 41,144,that of CBZ is Rs 53,520. Other popular bikes by the company are Passion -a hot favourite because of the style, look and fuel economy it offers. Says Brij Inder Singh, Sales Manager, Hero Honda, “Despite the price differentials between motorcycles and scooters not being too high, having a motorcycle gives one the feeling of upgradation”. He also attributes the growth of this segment to the initiatives being taken by the companies including more introductions in the economy class bikes and easy financing facilities. Users share similar views. Akshaye Bannerjee who is passionate about motorbikes thinks that while for students it is primarily looks which matter, once one gets experienced, the importance of control, acceleration and long ride comfort — in nut shell power and to an extent looks are equally important. “The bike you own is a reflection of your personality”, he says. Mr Navneet Mehra, Regional Manager, Kinetic (which holds 9 per cent of the market share in the region) agrees that it is looks that are the priority for most users when it comes to purchasing a bike. He says that Challenger (100cc- Rs 40,000) and GF125 cc (Rs 49,900- self start, four valve technology)- both a blend of style and fuel economy are among the company’s most popular models today.
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Restore 20 pc tax rebate on savings: CII New Delhi, April 21 In its post-Budget memorandum to the Finance Ministry, CII said the 20 per cent tax rebate on savings for persons earning income between Rs 1.5 and five lakh under Section 88B of Income Tax Act should be restored. “Reduction in rebate to 10 per cent will act as a disincentive for saving. This will also have an adverse impact on availability of long-term capital which comes through payment of LIC premiums, investment in infrastructure bonds and public provident funds,” it said. CII also demanded restoration of dividend tax levied on corporates rather than imposing it on recipients of dividends. “Companies can continue with 10 per cent tax on dividend and in addition companies can withhold tax at 20 per cent of dividend and remit the balance to the shareholders,” it said. Mutual funds should not be subject to withholding tax to avoid a cascading effect while foreign institutional investors should be taxed at a flat 10 per cent, CII said. “Small investors should be provided some exemption limit (Rs 2,500),” it added. CII favours continuance of the deduction available on account of Minimum Alternate Tax if a company does not provide for losses and depreciation. It also asked the Centre to restore the 100 per cent depreciation allowance to units sourcing energy from non-conventional energy sources. The reduction in the rate to 60 per cent would adversely impact the energy sources and private investments in the sector, CII said. Reduction in fiscal incentives available to exporters under Section 10A and 10B should be restricted to this year otherwise it would hamper exports and long term tax planning, it said. CII also said the budget provision for taxing receipts in the nature of “non-compete fees” under the head of profits was against the rules of taxation.
PTI
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Safeguard public against unsafe water While travelling on Indian Airlines last month, Mr K.M.Sahni was surprised to find that the ‘natural mineral water’ supplied to passengers carried no mandatory ISI seal. As per the Prevention of Food Adulteration Rules (6th amendment), 2000, no person can manufacture, sell or exhibit for sale, packaged drinking water or mineral water without the certification mark from the Bureau of Indian Standards(BIS). And as the Director General of BIS, Mr Sahni knows this only too well. Promptly on his return, Mr Sahni checked up the records and found that Raigarh Foods was licensed by the BIS to carry its ISI seal only for packaged drinking water and not for natural mineral water. The manufacturer was thus violating the PFA rules by selling 1.5 litre bottles of ‘natural mineral water’ under the brand name of Aquazeal without the ISI mark. Mr Sahni immediately brought this matter to the notice of the Indian Airlines Chairman as well as the Public Health Department, government of Maharashtra, requesting suitable action. The Maharashtra state enforcement agency is yet to respond to his letter, dated March 20, 2002. The Indian Airlines, in its reply, said all concerned departments had been instructed to exercise due care while receiving and accepting supplies. It also asked the manufacturer for an explanation and sent a copy of his reply to the BIS. According to the manufacturer, he had used in his supplies to the Indian Airlines, labels which had been “wrongly printed” as natural mineral water. Saying that there was no intention to cheat Indian Airlines, the manufacturer said corrective action had been taken and from March 28, 2002, new labels showing the ISI mark and ‘packaged drinking water’ with the relevant IS number were being used. It’s now over a year since packed or bottled drinking water and natural mineral water came under compulsory ISI certification - the notifications issued for the purpose on September 29, 2000 by the Health Ministry under the PFA Act came into effect from March 29,2001. Yet, violations of the law continue. Last month, for example, the BIS officials conducted along with the police, ‘search and seizure’ operations at a water processing unit in Lajpatnagar, South Delhi and found the manufacturer refilling and supplying 20-litre bottles under the brand name of a BIS licensee. In other words, he was marketing fakes by collecting and refilling brands of other manufacturers . They also found caps of one litre bottles, indicating that he was also bottling without the ISI seal, one-litre bottles. BIS officials say that unauthorised refilling of 20-litre cans of well-known manufacturers by unscrupulous elements is becoming common. Another ‘search and seizure’ operation in Gopalpuri in East Delhi in January this year revealed use of the ISI seal on water bottles without authorisation from the BIS. Here, the manufacturer was using on his ‘Everest’ brand of 20-litre cans and 250 ml cups, the words “as per ISI specification” and using the ISI logo, thus flouting the PFA Act as well as the BIS Act. Similarly in NOIDA (Uttar Pradesh) neighbouring Delhi, BIS officials came across 20-litre cans being readied for sale without the ISI mark. BIS officials say that they have been taking action against those misusing the BIS mark in several parts of the country, but the state health (PFA) authorities need to crack down on those units that are producing bottled water without the relevant license from the BIS. There are no accurate estimates on the number of units manufacturing packed drinking and mineral water in the country. Rough estimates, however, put the number anywhere between 1000 and 4000. But the BIS, which is to issue the quality seal , has only over 430 licensees (425 for drinking water and 5 for mineral water). And complaints of sale of bottled water without the ISI quality seal are coming from different states. In this context, a petition filed by a consumer in Tamil Nadu, said to be the largest market for bottled water, assumes significance. In her petition, Ms Vanishree Gnaneswaran has sought a directive from the Madras High Court to the Central and State governments to enforce the provisions of the PFA Act against those manufacturing or selling packed drinking water without the ISI seal. Saying that absence of stringent enforcement of the law defeated its very purpose, which was to safeguard the public against unsafe and sub-standard water, the petition prayed for the court’s intervention in the matter. In these hot summer months, as the mercury level shoots up, so also the sales graph of branded and bottled drinking water manufacturers. And violations of the law by those who have not got the ISI seal will also go up during the season, unless the state law enforcement agencies swing into action and ensure stringent compliance of the law . Meanwhile, consumers need to check at the time of purchase , whether the bottle carries an ISI mark. Do not buy bottles that say “As per ISI standard or mark”. Always ensure that the seal on the bottle is intact and check the ‘best before’ date. Crush the empty bottle before discarding it.
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HOW I STARTED Khanna A postgraduate in Zoology, Mr Tarlochan Singh had started production of cattle feed in 1978 through indigenous technology. Within a decade, he was producing more than 2000 bags per day. Once again, this entrepreneur has now introduced a new range of feed supplements — Neutrijoule, Neutripro and others — supplements in concentrated forms to increase fat and milk production, in association with a Bangalore based company. At present these are imported from Netherlands. Sharing his experiences, he says: Initial phase Our family had migrated from Pakistan. My father was the first person in the region to start a soap factory. Initially, I wanted to become a government officer, and did M.Sc ( Zoology) in 1971 from Meerut
University. Then I worked for at least four years to clear the Punjab Civil Service exams, but I could not get through so I tried to go abroad. Somehow I could not succeed here also. After much thinking and deliberations with friends, I came to the conclusion that I should start something innovative to make a name and money. During that period, the Verka was establishing a Rs 2 crore cattle feed plant. This idea impressed me and I decided to try my hands without any knowledge in the field.
Beginning of the present career I started my experiments to make cattle feed in 1978 by modifying an old oil expeller myself. The work was started on the family plot with an initial investment of just Rs 10,000. Later I took some guidance from experts in this area, and further modified the manufacturing process with the help of an Engineer friend. In the beginning, I used to try different formulations of the raw material, and would supply the prepared cattle field to the milk producers of the area. On the basis of their feedback, I made several changes and developed the final product.
Major achievements By 1980, I purchased two industrial sheds and started production on large scale under Makhan brand name. The idea clicked the market due to high quality and lower price as compared to traditional feeding. I was unable to meet the burgeoning demand. By 1989, I had to set up another plant. I started advertising on radio and in regional language newspapers. At one time, I was producing more than 2000 bags of cattle feed every day and developed a network of about 200 dealers in Punjab, Haryana, Himachal Pradesh, J& K and even in some parts of Gujarat.
Any setbacks I expanded my business without giving due attention to the payments in the regional market. I was shocked when by 90s, number of persons started producing low quality cattle feed under my brand name. But I was unable to do anything due to lack of any support from the government. Now the cattle feed production has spread over to the rural and small towns. I feel that the government should make ISI certification compulsory for all the manufacturers. In fact, the studies of the PAU have also shown that some of the dubious producers are using low quality and pesticide-afflicted raw material, leading to cancerous and other diseases among public due to poisoning of the milk.
Diversification of the business About four years ago, I attended an international workshop on animal food supplements in Thailand, and was highly impressed by some products of Holland’s Provimi company. I convinced the Vetcare company of Bangalore to import these products in India. Now I am supplying these products — Neutrijoule, dry fat to increase milk fat; Provisacc, live yeast culture to improve the digestion of high yielding animals; Calpjell, a calcium supplement and Neutripro, to increase milk production. These products are already used in all the developed countries, but have been introduced for the first time in India. There is great potential in this area. (As told to Manoj Kumar)
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R.N. Lakhotia Pension Q: I am 62 years old defence pensioner. My total pension income from March, 2001 to Feb., 2002 is Rs 104808. This includes Rs 21,660 as 5th P.C. arrears for pension revision received by me during April, 2001. There is no other income for me. I have purchased NSC of Rs 5,000 and paid LIC annual premium of Rs 4,998 for my son who is not tax payer. Please state my tax liabilities, can this arrears be distributed. — Gurdial Singh, Ambala City Ans: From your gross pension amount you will receive the benefit of standard deduction of Rs 30,000. The net salary income would then be Rs 74,808. Income-tax thereon comes to Rs 3,962. From this amount tax rebate would be Rs 1,998. The net tax payable would be Rs 1,964. On this amount surcharge payable would be Rs 39. Thus, the total income-tax & SC payable would be Rs 2,003. As per S. 89 (1) you can distribute the arrear in different years.
Purchase of flat Q: I have recently purchased residential flat of rupees six lakh in New Delhi. I have paid Rs 78,000 towards registration fee for getting registry of flat in my own name. Please inform whether registration fee is exempted from tax. If so kindly inform the extent of eligible amount for tax exemption and under which section rebate is granted. Secondly, please intimate whether the principal amount of rupees six lakh paid towards the cost of the residential flat is eligible for any tax rebate and under which section. — Rakesh Kapoor, Amritsar Ans: Payment towards cost of the House Property would include Registration fee for the flat. You would get tax rebate u/s 88 of the Income-Tax Act, 1961 @ 20 per cent on Rs 20,000 (being the maximum sum eligible for rebate). No tax rebate would be permissible on Rs 6 lakh.
Housing loan Q: 1. Provision contained in sub clause (vi) of sub section (2) of Section 17 regarding Free or Concessional Interest Loan, interalia states that perks value in respect of concessional housing loans interest will be taken at simple 10 per cent p.a. calculated on monthly products less interest actually paid by the employee and for other loans difference of simple interest @ 13 per cent less interest actually paid by employees will be taken as perks value. I wish to seek clarification whether the new privisions will apply only to loans taken on or after 01.04.2001 or also to loans taken before 01.04.2001. 2. In our office, we are getting reimbursement of expenses incurred by us for entertaining our clients and such expenses are paid to the debit of P&L A/c Business Development Expenses. Whether such expenses will now be taxable as entertainment expenses under the new provisions. I may clarify that earlier these expenses were not taxable. — J.S. Sethi, Jalandhar Ans: The provisions regarding perquisite in the form of interest-free loans would be applicable even in respect of loans taken earlier. Even under the new provisions, the reimbursement of entertainment expenditure would not be subjected to Income-tax provided necessary paper work and formalities are completed as mentioned in Notification No. 940 dated 25.9.2001 i.e. newly revised Rule 3.
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Market depressed despite good results The corporate sector declared good results during the last fortnight but Sensex is down from 3480 points to 3364 points. Hero Honda has declared excellent results with a rise of 83 per cent in its operating profit. Its OPM (operating profit margin) moved up to 19 per cent. Its net profit has doubled to Rs 152 crore. It declared a total dividend of 850 per cent for third accounting year. Mastek, Infosys Technologies and Wipro have declared good results. Mastek’s IIIrd quarter result indicates that its net profit has moved to Rs 7.5 crore as against merely Rs 3.0 lakh (in the corresponding period last year ). Infosys’ net profit is up by 30 per cent. It has declared the total dividend for the year of Rs 20 for a share of Rs 5 face value. Wipro’s net profit has also soared by 32 per cent with a 12 per cent rise in turn-over for accounting year 2001-2002. Hindustan Lever’s net profit is higher but its turn-over has dropped by nearly 10 per cent. Its net profit has been buffeted by exceptional income of Rs 74.7 crore (as against Rs 22.6 crore) by the sale of seeds business. If this extra-ordinary increase is excluded, the net profit would indicate a growth of only 11.6 per cent. When the corporate results are good, why should the market indices go down and the market sentiment should get depressed? There are two broad reasons for this. The first is the continuing Lok Sabha stalemate over discussion on Modi’s role in Gujarat. It appears that this stalemate may continue even in this week atleast for a few more days. The second explanation is that despite good results by companies, the future projections are dismal indicating slower growth even in the Information Technology sector. Both Infosys and Wipro’s management have indicated that the operating margin are declining and there is a growing competition in business and the domestic demand is very low. It is not surprising that after initial spurt in the market price of Infosys, it has now been moving down. Wipro market price fell by 10 per cent after the declaration of its results. Other Information Technology shares too have lost market support. Hindustan Lever’s share came down in the market from Rs 2229 to Rs 2205. The cumulative effect of these two factors has been that market price of even multinational pharma shares has declined. Glaxo which had climbed up by 39 points to Rs 446 per share, is now fluctuating around Rs 415. The same is true of Novartis and Pfizer. I have no doubt that at the present market rates, these pharma shares will climb up significantly during the current fortnight. Investment in these shares is recommended. |
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