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Monday,
April 7, 2003, Chandigarh, India  
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Residential
rents fall marginally
Invest in high
dividend-paying stocks WelcomHeritage
eyes J&K properties
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Asian
women make a mark in Britain Inflation
zooms to 5.99 pc
Violations
of BIS Act attract imprisonment
Tisco, Nifty good
buys for appreciation
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Residential rents fall marginally CHANDIGARH: Though the demand for houses has substantially increased over the years, rents have not gone up proportionately. Say market observers, the residential rents have rather marginally declined during the past five years, especially in the northern sectors. With the slashing of the interest rates on home loans, continued tax exemptions on such loans, people are making efforts to have their own house, thus affecting the rents. Mr Amarjit Singh Sethi of the Chandigarh Property Dealers Association, says,‘‘ With the amendment in the Apartments Act and building of housing society flats, the property rents have declined by 15 to 20 per cent almost in all sectors". Since in some sectors like 15, 21, 23 one may have to pay higher rent, if one wants to have a house in these sectors. In 1997, one had to pay up to Rs 12,000 per month to have one kanal kothi in sector 8 or 11 on rent, now one can have it for Rs 9,000 to Rs 10,000 easily. Similarly, he says, a 7.5 marla house with 2-bed rooms, one dining cum drawing rooms, kitchen and bathroom, can be found for Rs 5,000 to Rs 6,000. During 1995-97, that house would fetch Rs 6,000 to Rs 7,000. House owners admit that there was a time when people queue once they gave an advertisement of ‘‘To Let’’ in the newspaper, now they had to wait for a week or even for a month to get a tenant. In fact, they say, with the development of housing colonies in the southern sectors, and Modern Complex, in Mani Majra, tenants are able to choose a good house. Impact of easy house loans
Mr Y.K. Sharma, Manager, SBI, agrees that the decline in the interest rate over the past few years, has encouraged more and more people to buy their own house. In early, nineties, the couples in the age group of 35-40 years usually could not think to own a house but now the working couples even in the age group of 30-35 years are eager to build their own house. Cut in the interest rates has definitely affected the demand of houses available for rent. Bankers admit that as most of the persons are making houses by taking loans as they are always eager to give a portion of their house on rent. In case of a reliable tenant like a bank employee or an executive officer of an MNC, they will not hesitate to offer semi-furnished two bed room, one dining-cum-drawing room set for Rs 3,500 to Rs 3,700 in the central sectors. Lowest rent of NRIs' houses
Mr Ram Dev, Chairman, Citizen Welfare Committee, Sector 42, who has been residing here since early 50s, says,‘‘ There are hundreds of houses in the city, especially in sectors like 11,15, 18, 22, whose owners have settled abroad. They visit once a year to meet their relatives and to collect the rent. Tenants in their houses are paying paltry rent of Rs 500 to Rs 1,000 even for a three-bed room set. Since, the owners do not have time to get their properties vacated, the tenants are living there with pleasure.’’ Further, he says, during eighties and early nineties, businessmen of Ludhiana, Amritsar and other towns had purchased houses due to fear of terrorism. They had also to given their houses on rent for smaller amount varying from Rs 1,500 to Rs 2,000. With the housing sector boom the rents had sky-rocketed during early 90s, but the prices have stabilised now. In the southern sectors, says Mr Ram Dev, one can easily get a three bed-room set for Rs 3,500 to Rs 4,000, where a number of houses are still lying vacant. These include Pushpac, IAS Officers, Indian Express and Advocates societies. In sector 40 to 48, 50, 55, 61 good houses are easily available on rent. Since businessmen from the neighbouring states had purchased houses here, expecting to cash in increase in property prices, but with stagnant prices, they have no option except to give these on rent. Classified ads play a role
Unlike metros and cities such as Noida and Gurgaon, where the house owners and tenants have to pay hefty amount to the property dealers to enter into an agreement, the classified advertisements in newspapers here play a greater role in the market. Property dealers admit that tenants and house owners find it more convenient to depend on the newspapers and to choose the house independently. Says Ms Reeta Sharma, a landlady in Sector 40: ‘‘ It is cheaper to give an advertisement in the newspaper, whenever I have to give my first and second floors on rent. I usually prefer small families, a working couple with transferable job. I do not mind in giving my two bed room set for lower rent up to Rs 3,000, if the family is good. They should be reliable, trustworthy who can help me in case of emergency.’’ Market observers were expecting an increase in property rents in the city, after the recent decision of the Chandigarh administration to amend the East Punjab Urban Rent Restriction Act, 1949. As per the amendment the Act will not be applicable to the properties with monthly rental of Rs 1,500 or more. However, says Mr Sethi, ‘‘ Adamant tenants residing in houses for decades have ignored the notices issued by their landlords. House owners residing in other cities or countries are unable to vacate their houses so they have to take lower rents.’’ Property dealers say the residential rents are unlike to increase substantially in the near future. Further, the availability of houses on rent in the neighbouring Panchkula and SAS Nagar will continue to suppress the rents. However, with the boom in the service sector or with the development of IT Park or biotechnology sector, the rents may witness an upward trend, they say. |
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Invest in high dividend-paying stocks FINANCE Minister Jaswant Singh made two big announcements related to equity investments while presenting the Budget for the year 2003-04. First, he made equity dividends completely tax free in the hands of investor. Second, he went one step forward by exempting from tax long term capital gains earned from equity investments starting March 1, 2003 (long term denotes profit arisen on account of scrips sold after a period of one year) . These two measures make "high yielding dividend paying stocks" very attractive for moderate risk takers in view of very low valuations in the current market scenario. Investors shall be receiving expected dividends as well as may witness capital appreciation in the long run once the market sentiment improves. Both of these are tax free and hence may be a boon for high income tax bracket tax payers. Moreover with interest rate on one year fixed deposit of SBI ruling at low level of just 5.5 per cent and with investors shying away from the present uncertainty in the equity market and with no other better option to invest, these tax free high yielding dividend paying stocks can be a very good alternative. However, investors must keep in mind some basic some basic principles while filtering dividend paying stocks. Firstly they must ensure that the company in which they are going to invest must have either a consistent or growing dividend paying track record for the last five years. Secondly the promoters of the company must have a high percentage of share holding so that the promoters must announce a high dividend payout ratio. Thirdly the stock of the company must enjoy ample liquidity on the exchanges. Fourthly the company must have come out with good financial numbers in recent quarters. Fifthly the future business conditions are favourable. Sixthly the investor must check the face value of the stock of the company since many of the scrips have gone into split mode in these years. Seventhly the investor must take into consideration the book closure announcement date for declaration of dividends. Investors can consider some of the stocks which fulfill the above mentioned criteria like Chambal Fertilizers, Tata Chem, Gujarat Heavy Chemicals, Bank of India, Bank of Punjab, Cholamandlam Inv. & Fin., Kesoram Inds, Mahavir Spinning, Shipping Corp. Chambal Fertilizers has shown a consistent dividend track record ranging from 14 per cent to 15 per cent since 1998-99 with net profit rising 37.78 crores to 76.85 crores on the back of increase in sales from 604.37 crores to 642.64 crores for the quarter ending December 2002 in comparison to quarter ending December 2001. With ample liquidity in the exchange and current price at 13.95 the yield comes out to above 10.75 per cent. Tata Chemicals which has taken Hind Lever Chemicals in its fold recently is another good dividend yielding stock at Rs 58 with low down side risk. It has maintained its dividend track record of 50 per cent for the last five years thereby dividend yield coming to 8.62 per cent. It has shown good fourth quarter results with net profit rising 20.42 per cent on the back of sales rising by 30.61 per cent. Gujarat Heavy Chemicals which has good dividend track record has announced a dividend of 25 per cent for the year 2001-02. Currently trading at Rs. 18, the dividend yield comes out to 13.89 per cent. Its net profit has climbed by 12.9 per cent with sales rising by 26.56 per cent for the quarter ending December 2002. It has also comfortable liquidity position on the exchanges. Bank of India which has been in the mist of bull run of the banking stocks is a good pick at Rs 30 for long term investors. With dividend at 25 per cent for the year 2001-02 the yield stands at 8.33 per cent. Its revenue has grown by 15.15 per cent resulting an increase in profits by 26.89 per cent for the quarter ending December 2002. Apart from dividend the investors can take advantage of capital appreciation also on account of its good volatility on the bourses. Other banking stocks like Bank of Baroda and Oriental Bank of Commerce can also be accumulated only after they undergo correction in their price level since they have experienced a decent run up on the stock exchanges. Both these stocks are hefty dividend paying stocks with excellent results and huge liquidity. Among private sector banking stocks Bank of Punjab is a safe bet. With dividend at 13 per cent and entry price at Rs 13 the yield comes out to 10 per cent. The stock has a tendency to touch Rs 18 atleast once in a year. Apart from dividend yield of 10 per cent the investors have a chance to capture capital appreciation of 38 per cent also. Among financial services stocks Cholamandlam Investment & Finance, a south Indian based company which announced a dividend rate of 50 per cent for 2001-02 has shown an increase in profits by 60.98 per cent with revenue rising by 6.73 per cent for the quarter ending December 2002. With entry price at Rs 35 the dividend yield stands at 14.29 per cent. However, the investor will have to compromise the higher return with low liquidity as promoters are holding 49.09 per cent of equity. Currently PSU stocks are in limelight. With HPCL and BPCL on disinvestments drive, other PSU stocks like Shipping Corp of India may get spurt in valuation. With entry price at Rs. 50 the dividend yield comes out to 7 per cent as it has paid a dividend of 35 per cent for the year 2001-02. Textile companies like Mahavir Spinning have shown signs of bottoming out on account of revival in the industry. With dividend consistently at 42 per cent and entry price at 50 the dividend yield stands at 8.4 per cent. Moreover, the company has shown very good results with net profits galloping by 59.64 per cent with sales rising by 19.20 per cent for the quarter ending December 2002 and this trend is expected to continue in the coming quarter also. Inspite of uncertainty created by the US-Iraq war, investors can move into the above stocks at the first opportunity without much downside risk. |
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WelcomHeritage eyes J&K properties New Delhi, April 6 WelcomHeritage, a joint venture between ITC Hotels Ltd. and Marudhar Hotels owned by former maharaja Gaj Singh of Jodhpur, currently manages 27 heritage properties in different parts of the country. “We are planning to increase the number of hotels in our chain to 30 by June this year and 50 by the end of 2004,” said Rakesh Mathur, president of WelcomHeritage. “Currently, we are looking at five heritage properties in southern India and three in Jammu and Kashmir. A decision on these properties will be taken soon. We have also identified properties in Gujarat and Darjeeling,” Mathur told IANS. WelcomHeritage contains within its fold palaces and forts, ancestral mansions and resorts, each a residence as well as a living symbol of India's regal past. The group's properties are spread over Rajasthan, Himachal Pradesh, Uttaranchal, Madhya Pradesh and Jammu and Kashmir. These include the chain's flagship, the majestic Umaid Bhawan Palace at Jodhpur. WelcomHeritage last week signed up its 27th property in the hill station of Mussoorie in Uttaranchal. It has brought into its fold the royal family of Kasmanda's summer retreat, one of the oldest buildings with a chequered history since 1836. The group, which plans forays into areas that are rich in history but have not been touched by the heritage hospitality market, works through management and franchise contracts with heritage building owners. Mathur said with the arrival of overseas tourists plunging due to geopolitical uncertainties, the chain was eyeing more domestic travellers and corporate houses, which are showing increased interest in heritage hotels. “Last year, we witnessed a growth of 70 per cent in domestic travellers even as the arrival of international travellers fell sharply. We hope the domestic travellers segment will continue to grow rapidly in the years ahead. “We have also been able to attract corporate houses which prefer heritage destinations for dealer conferences, launches and board meetings,” he said. WelcomHeritage managed to post losses of 9 per cent last year in comparison to the industry's losses of over 20 per cent as it concentrated on domestic travellers to boost business, Mathur added. He said increasingly heritage property owners in India were realising that their legacies could be converted into productive assets by attracting operational and marketing support. Mathur said the chain would soon unveil measures to tap the overseas markets like the Middle East, Japan, Australia and central Asian countries which offer huge potential for the heritage hospitality market.
IANS
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Asian women make a mark in Britain
London, April 6 Six years ago, Honey set up a school teaching modern Indian dance and acting and followed it up with an agency for professional dancers. Honey's Dance Academy now has nine dance schools across London. Through the agency, Diva Entertainment, she has choreographed shows and supplied dancers for productions from Bollywood- as more and more Indian producers are preferring to shoot their films in scenic locales here. “I started the dance school while I was studying for a masters degree in public relations. I had a 10,000 pounds study loan and I had a 3,000 pounds overdraft from the bank, Honey says. “I paid these off in the school's first year and the business has been growing by about 200 per cent a year ever since”, adding that her success is a result of hard work and determination. “A positive attitude is vital and ‘impossible’ is a word I don't recognise.” After years working in recruitment, Shernaz Engineer, also short-listed for the award says, “I realised that the only way to make the most of her talents was to run my own company”. She set up recruitment company Verity Group in 1993. Shernaz, 53, says: “I was one of the first people from an ethnic minority to work in a High Street agency. I was often sent to failing branches to turn them around, but they promoted me only so far. “I was told my face didn't fit, so I left and set up on my own.” With no backing from the banks, Shernaz, who lives in central London, found a private investor willing to put up £ 30,000. She says: “I paid this back within two years and the company now has a turnover of about £ 5 million a year. It is so much more fun running your own company because any stress is of your own making. “Today you don't see as much prejudice as I experienced. If an Asian woman has a good idea and is willing to work hard, there is no reason why she can't succeed.” Asian people run about 80,000 businesses in Britain while women start one in three new companies and a million firms are owned by women. The Asian Women of Achievement Awards were set up four years ago by entrepreneur Pinky Lilani and former Saatchi and Saatchi director Munir Samji.
PTI |
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Inflation zooms to 5.99 pc
New Delhi, April 6 The wholesale price index-based inflation rate was higher by 4.33 per cent against 1.63 per cent during the corresponding week last year. Major movement was seen in the index for fuel, power, light and lubricants which climbed by as much as 1.9 per cent to finish at 256.3. This was primarily due to higher prices of naptha (14 per cent), furnace oil (10 per cent), light diesel oil (nine per cent), petrol and high-speed diesel oil (four per cent each) and bitumen (two per cent). The Wholesale Price Index for all commodities for the week rose by 0.5 per cent to 171.6.
UNI
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by Pushpa Girimaji Violations of BIS Act attract imprisonment FINALLY, the government has brought back certain essential household electrical items under mandatory quality control and added 17 more important electrical accessories and protection devices to the list of those that come under compulsory quality certification. As per the notification issued under Section 14 of the Bureau of Indian Standards (BIS) Act on February 17 this year, bulbs (tungsten filament general services lamps), switches for domestic and similar purposes, lamp switches for domestic and similar purposes, electric irons, stoves, radiators and immersion water heaters come under compulsory ISI certification with immediate effect. These items were earlier under mandatory quality control under the Essential Commodities Act. In addition, the government has introduced compulsory quality certification for 17 more items. For these goods, however, manufacturers have been given six
months (from the date of notification) to obtain the ISI certification. These include PVC insulated and elastometer insulated cables for working voltages upto and including 1100 Volts, self-ballasted lamps for general lighting purposes, circuit breakers for over current protection for household and similar installations, residual current operated circuit breakers for household and similar users, low voltage and high voltage fuses, low voltage switchgear and control gear and AC Watt-hour meters. Keeping in mind the need to protect consumers from substandard and hazardous electrical goods, the government had declared certain electrical appliances and accessories such as plugs and sockets, switches and bulbs as essential commodities under Section 2 of the Essential Commodities (EC) Act and had brought them under mandatory ISI quality certification through quality control orders issued under the Act.. However, on February 15 last year, the ministry of consumer affairs had removed these items from the list of essential commodities and thereby from the purview of the Essential commodities Act. Consequent to this, new quality control orders were required to be issued ensure that these goods continued to be sold only with the ISI mark. In addition, the government was also required to bring certain other essential electrical items including cables under quality control. In fact the Parliamentary Standing Committee had commented on the risk involved in using substandard cables and wires and had strongly recommended that cables and wires be also brought under mandatory certification. Subsequently in its thirteenth report (Action taken report) presented to the Lok Sabha on December 19, 2001, the Committee had expressed its displeasure at the delay on the part of the government in acting on it Now finally, the department of industrial policy and promotion (DIPP), Ministry of Commerce and industry, has notified the Electrical Wires, Cables, Appliances and Protection Devices and Accessories (Quality Control) Order, 2003, bringing altogether 24 essential electrical goods under mandatory quality control. In other words, these goods cannot be sold without the ISI mark. Hopefully, this time, the order will not undergo any more changes. I say this because in the last 26 years, it has been altered several times. In 1976, for example, when the government first notified the Household Electrical Appliances (Quality control) order, 55 electrical goods were brought under compulsory quality control. The order was to come into effect from November that year, but in October, the government reduced the number of goods in the list to 41 and subsequently in 1981, to 40. Then in 1988, the government issued the Electrical Appliances (quality control) Order, requiring only seven essential items out of the 40 to get the ISI seal from the BIS as a pre-condition to sale. However, since switches, plugs and sockets were not under the Essential Commodities Act, the Delhi High Court struck down the applicability of the order to these three, forcing the government to bring them under the Act in 1991 and issue a fresh order in 1993. Nine years hence, changes in the EC Act once again required fresh orders to be issued. Now that the new order has once again made ISI mark mandatory for seven items and 17 more items would come under mandatory certification in another four months, consumers would do well to look for the ISI mark before purchasing them. The new Order says that “No person shall by himself or through any person on his behalf manufacture or store for sale, sell or distribute any electrical wires, cables, appliances, protection devices and accessories, which do not conform to the Specified Standards and do not bear the Standard Mark of the Bureau of Indian Standards on obtaining certification marks license. As per the order all those electrical goods that do not conform to the specified standards should be deformed and sold as scrap by manufacturers. It also says that all manufacturers of electrical wires, cables, appliances, protection devices and accessories, who do not already have the license to use the ISI mark shall apply to the Bureau of Indian Standards within 45 days of the issue of the order. It is now for the BIS and the department of industries in the state governments and Union Territories, to strictly enforce the order. Violations of the Order issued under the BIS Act attract imprisonment for a term that may extend to one year or fine which may extend to Rs 50,000 or both.
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by J. C. Anand Tisco, Nifty good buys for appreciation IT appears that the worst is over for the stock market. The Iraq war is nearing its end though in a mild form the Iraqis may continue to resist invaders. The market is poised for a rise. Many factors favour substantial upsurge in the stock market. The Budget is very favourable with no tax on dividend income in the hands of the shareholders and no long-term capital gains tax on sale of equity shares purchased after March 1, 2003. The bank interest rates are so low that the investors would turn to the market rather than putting their surplus funds in the savings bank accounts (at 3.5 per cent interest) or going in for fixed deposits of the banks (at not more than 6 to 7 per cent interest). The yield from bank interest is taxable though some relief is available under Section 80L of the Income Tax Act. Putting money in the Post Office Small Saving Schemes is tied down for a long period of time and yet the yield is taxable. Another form of investment is the purchase of Reserve Bank of India five-year bonds at 6.5 per cent interest, which is tax-free. But these bonds are not tradable and, with high inflation rates (nearly 6 per cent), these bonds are not now very attractive. Those who have just retired from service have a facility to invest in 7 per cent tax free bank deposit scheme, sponsored by the State Bank of India. Its redemption period is three years from the date of investment. Those investors who are interested in 7 per cent net return can turn to the stock market and invest in equity shares like Nahar Spinning (quoting around Rs 65 for its Rs 10 face value share) and in Tata Chemicals shares (which are quoting around Rs 69 per share at its Rs 10 face value share). Both these companies paid 50 per cent dividend last year and are expected to repeat the same dividend this year. The net return would be little over 7 per cent and tax free in the hands of the shareholders. Both these shares had been recommended in this column earlier. Tata Chemicals, which had been quoted at Rs 60 that time, is now quoting around Rs 69 per share. Nahar Spinning has also scope for appreciation and is expected to move to Rs 70 in a few months’ time. UTI Master share is another investment, which would give to the investors a net return of around 9 per cent and would be tax-free. At present it is quoting around Rs 10.45 and the dividend of 10 per cent (the same paid last year) is expected to be declared in October this year. Its redemption date is also in October 2003. However, it is expected to be converted into an open-ended scheme and those shareholders who want to go in for redemption would be paid back at a NAV of the share at that time, which is expected to be (after the payment of dividend) around Rs 11 per share. Those who are interested in appreciation in shares may invest in Tisco, Reliance Industries and Bank of India. These companies have good prospects for appreciation in the market price of their scrips and would also give moderate return in the form of dividend on the invested money. Those who are interested in high appreciation can invest in Nifty futures.
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