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Friday,
January 3, 2003, Chandigarh, India  
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Oriental to limit third-party cover
ONGC may float IPO by 2004
Jindal Strips to hive off arms into separate companies
Use of fly ash to be made mandatory UTI Investor Service to allot PAN cards |
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BSNL broadband project on Jan 26
‘Gasohol’ to cost less: Naik
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Oriental to limit third-party cover Chandigarh, January 2 Talking to TNS here today, Mr A.K. Dass, Regional Manager, Oriental Insurance Co. Ltd., disclosed that the company had incurred over Rs 700 crore loss just in the business of TP motor vehicle insurance in 2001-02. The claims percentage to premium had increased from 222.30 per cent in 2001-02 to 352.34 per cent in 2001-02, resulting in heavy losses to the company. So the company has now decided to dissuade the customers from taking third party cover. Officials have been instructed not to provide any TP insurance for commercial vehicles older than five years. Since due to social obligations and government instructions, the company is not in a position either to increase the premium rates proportionately or to wind up the TP claim policy, so it has decided to ‘tighten’ the conditions. Third party claims would be now accepted only at the branch level by branch officials, not agents, in rare circumstances. General Insurance Companies’ decision to increase premium rates had attracted the wrath of truck operators and taxi driver unions across the country last year. Mr Dass claims that instead of focusing on the growth of policies and premiums, the company is now focusing on ‘profitable business’ and to acquire more profitable fire, marine and engineering premiums. The management has also decided to tie-up with banks and financial institutions for selling products. VRS for development officials is also in the pipeline and could be announced anytime. He claims despite stiff competition from private players, the company has improved its performance by cutting down administrative expenses. The company has also pulled back from the loss making machinery break down and electronic insurance policies, and strictly adhere to the IRDA guidelines in case of mediclaim policy. In case of pending claims in courts, the management is encouraging operating offices to take up more and more cases to Lok Adalat and other conciliatory forums, to cut down outgo on interest and legal expenses. The company is expected to settle at least one lakh claims outside the courts by the end of the current fiscal. The management has also decided, said Mr Dass, to close down loss making branches including Pathankot branch in Punjab. Regarding the performance of the Chandigarh region, which included Punjab and UT region, Mr Dass said, “After incurring net losses worth Rs 8.25 crore during last year, the region is set to achieve Rs 2 crore profit this year. We have already achieved above 10 per cent growth in premium collection by December end.” |
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ONGC may float IPO by 2004 New Delhi, January 2 “This is over and above the capital expenditure of Rs 46,500 crore. Moreover, there have been continued reports on increase in royalty and this, as and when it happens, will involve additional expenditure”, Mr Raha said. In addition, he said if the ONGC makes a major find in any of the oil and gas blocks, it will have to invest heavily on development of the oil fields. Mr Raha said all these planned and unplanned developments would involve a massive investment and the corporation could go the market “this year or the year thereafter”. He, however, refused to divulge the nature of the instrument for raising resources from the market. “It could be debt or equity”, he said. Mr Raha also said that the ONGC board would meet at the end of this month to consider the interim dividend. “The board will meet to discuss interim dividend”, he said adding that the decision to pay interim dividend was taken after discussing the matter with the Ministry of Finance. Prime Minister Atal Behari Vajpayee will deliver the keynote address at the fifth biennial Petrotech conference to be held in New Delhi from January 9 to 12. Mr Vajpayee will address the conference on January 10. Mr Raha said Petrotech 2003 had been themed as “Global Cooperation for Hydrocarbon Technology” and it would be formally opened by Minister for Petroleum and Natural Gas, Mr Ram Naik. The 10-month-old standoff between British Gas (BG) and state-owned ONGC over the operatorship of the Panna-Mukta and Tapti oil and gas fields is heading for a resolution with the British firm agreeing to involve Indian
partners in financial decisions. Meanwhile, the ONGC today said it was hopeful of acquiring 25 per cent stake of Canadian Talisman Energy in the Greater Nile oil project in Sudan by the month-end. |
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Jindal Strips to hive off arms into
New Delhi, January 2 JSL which has hired global consultants Ernst & Young and law firm Amarchand and Mangaldas and Shroff A. Shroff & Co to carry out the restructuring will consider the demerger issue at its next board meeting likely to be held by end of this month, company sources told PTI here. Sources said the objective of restructuring is to position JSL as a focussed steel manufacturing entity and delineate from all investment activities and create a balanced capital structure for getting better refinancing rated for its high-cost debt. Stating that a large part (Rs 229 crore) of JSL’s networth of about Rs 475 crore as on March 31, 2002 was invested in these subsidiaries, sources said this move will enhance JSL’s financial muscle making it easier for it to get better refinancing deals on a higher networth. Earlier, JSL had also demerged its subsidiary Brahmaputra Capital and Financial Services. JSL is also likely to finalise a buyer for its majority stake in US cold rolling joint venture, Massilon Stainless Inc by the end of this month, sources said. The company’s marketing operation in the US would remain unaffected by this selloff as the US market is very important, they added. JSL has been trying to exit Massilon’s manufacturing operations since the last one year due to the restrictive trade practices in steel imposed by the US Government by which a US company buying steel has to give preference to a company whose majority stake is held by an American. Earlier, the company also explored the option of diluting its majority stake in favour of a strategic partner. As part of its financial restructuring, JSL has also trimmed its high cost debt and has brought down the interest cost upto 9.75 per cent which it is now attempting to bring down to 6.0-7.0 per cent by end of fiscal, they added. PTI
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Use of fly ash to be made mandatory
New Delhi, January 2 Draft Fly Ash Amendment Rules were notified last month and the statutory period of 60 days for raising objections and making suggestions in this regard expires this week. The Fly Ash Rules notified in September 1999 are being amended to make it compulsory for all agencies engaged in the construction of buildings within a radius of 100 km from coal or lignite based thermal power plants to use fly ash bricks or blocks or tiles. Beginning with a minimum of 25 per cent of fly ash products, the new rules require 100 per cent use of fly ash products in due course as per the schedule specified. This applies to all construction agencies such as housing boards and private builders of apartments, hotels, resorts and cottages . The state governments will be the enforcing authorities for the new rules while it was the State Pollution Control Boards in the original rules. While the 1999 rules only required the manufacturers of clay bricks or tiles or blocks within a radius of 50 km from thermal power plants to mix at least 25 per cent of ash, the new rules put the onus of use of fly ash on the user agencies. The distance stipulation for manufacturers has also been enhanced to 100 km in the new rules. The defaulting manufacturers will be penalised with the termination of lease on land and clay mining. The Delhi High Court is seized of a public interest litigation seeking enforcement of Fly Ash Rules and the next hearing is on February 26, 2003. UNI
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UTI Investor Service to allot PAN cards
New Delhi, January 2 The move to outsource services follows defective and delayed issue of PAN cards for which the department has received a flak from tax payers. The Finance Ministry has already sent to the UTI a Letter of Intent (LoI) and a Memorandum of Understanding for the purpose would be signed soon, a senior Finance Ministry official told PTI. Stating that the move was part of the efforts to tone up tax administration in the light of the Kelkar panel report, the official said Finance Minister Jaswant Singh gave the final nod to the proposal on the new year eve. PAN cards that have already been issued will be valid and those who have not received it so far, will be issued the new cards by UTI Investor Service Limited within 10 days, the official said. PTI
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LETTERS In your issue dated December 30, Manoj Kumar has referred to Kelkar Committee proposals and stated that most salaried employees will benefit from their implementation. I regret to say that this claim does not appear to be correct. I have taken a simple example of a senior citizen whose total annual income is Rs 2.5 lakh, comprising pension — Rs 2.2 lakh, bank interest — Rs 0.2 lakh, and dividend income — Rs 0.1 lakh. Under the existing tax laws, he is entitled to the following deductions from his taxable income — standard deduction — Rs 0.25 lakh and exemption of interest income — Rs. 0.12 lakh. With these deductions, his net taxable income is Rs 2.13 lakh. On this income, the tax payable is Rs 37,900. However, he is entitled to the following deductions from the tax payable: Deduction under S.88 — Rs 15,000, and deduction under S.88 B as a senior citizen — Rs 15,000, together totalling Rs 30,000. The tax payable is Rs 8,295, including a surcharge of 5 per cent. Under the Kelkar Committee proposals, dividend income will be exempt from tax, but not the interest income. The total annual income of the same individual for tax purposes will thus be Rs 2.4 lakh. The first Rs 1.5 lakh will be exempt from income tax. Therefore, tax will be payable on the balance Rs 90,000. This comes to Rs 18,000. In the example, the senior citizen will be poorer by Rs 10,000 or so annually if the Kelkar Committee proposals are accepted. T.S. BROCA, S.A.S. Nagar II Dr Vijay Kelkar has tabled his revised report on restructuring direct and indirect tax system of the country. I agree with the views of Mr S.S. Johl expressed in “Tax: on farmers to open Pandora’s box”. Proposals regarding taxing agriculture income are not welcomed by the farming community. I think before venturing into a new era of agriculture taxation, it would be wise to move step by step by taxing the non-agriculture income of people living in rural areas first. There are a number of shopkeepers, transporters, contractors, marriage-palace owners, money-lenders and other services providers in rural areas who are evading tax since a long time. In this way, the nation loses a lot of tax revenue. In this era of falling interest rate, nobody wants to block his money in long-term saving schemes to save tax. So availing housing loan is considered as the best investment to minimise tax liability. Deduction regarding housing loan should not be withdrawn abruptly. Commitments already made should be honoured by the government. ANAND BANSAL (Prof),
III For quite a long time now, we’ve been hearing with much ado about the tax reports submitted by Mr Vijay Kelkar, Adviser to the Finance Minister. The government, it seems, will be hit the hardest by the proposals, if accepted. A raised exemption limit will eject a larger percentage out of the tax net. Eliminating tax rebate schemes will result in investment coming down to a low, for a majority of persons invest just to save tax. Studies reveal that most investments are made during the months of February-March. Financial institutions might have to prune down their schemes, especially the ones like tax-saving bonds (designed specially for tax saving purposes). Although the report suggests to retain the rebate for senior citizens, it would be of limited use. Most of the persons above 65 years are retired personnel and their annual income is much below the exemption limit. Nevertheless, retaining the rebate for physically handicapped persons is a welcome step. The report further suggests a cut in the Corporate Tax and completely abolishing the Wealth Tax. Experts point out that tax collection will fall, as the rich will be taxed less. They, however, say that the middle class will be taxed more. Mohit Jhangiani,
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BSNL broadband project on Jan 26
New Delhi, January 2 In order to access the broadband services, the customers will be provided with a next generation customer premise equipment which shall ensure that voice and broadband services are simultaneously multiplexed on the
existing copper loop and that these value added services are provided without disrupting the existing telephony services.
UNI |
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‘Gasohol’ to cost less: Naik
Mumbai, January 2 “In order to encourage the ethanol-based industry in our country, the Union Finance Minister has agreed to provide a 30 paise rebate on ethanol blended petrol. We are seeking a similar rebate from states on sales tax as well”, Union Minister for Petroleum and Natural Gas Ram Naik said.
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