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Sunday,
October
5, 2003,
Chandigarh, India  
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Investment
not linked to abolition of quotas,
says Oswal Bank
credit cards elude prospective clients FDA orders
seizure of Cadbury chocolates Income tax
rules amended Dhindsa
for Indo-Oman ventures in banking Selling
IOC business can kill company
Approach
broker for bonds’ price |
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Smarter
look for IA air hostesses
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Investment not linked to abolition of quotas, New Delhi, October 4 “The Vardhman Group intends to invest Rs 1,000 crore in the next five years in the textile business”, Chairman of the Vardhman Group S P Oswal told The Tribune in an exclusive interview. Mr Oswal, however, noted that the investment plan was not necessarily linked to the abolition of quotas by 2004 as mandated by the World Trade Organisation (WTO). “I believe that the group has very modern machine-park and can face competition in the market. We have been undertaking investments in the past both for setting up our fabric business and modernisation and expansion of spinning business. However, for the future, we do not have any direct investment plan related to abolition of quotas”, he said. The Vardhman Group, which started off as a yarn manufacturing unit in 1965 under the entrepreneurship of late Lala Rattan Chand Oswal in Ludhiana, diversified into weaving business in 1990 and eventually set up its fabric processing plant at Baddi, Himachal Pradesh. The plant at Baddi currently has a processing capacity of 30 million metres per annum. Presently, the group portfolio includes manufacturing and marketing of yarns, fabrics, sewing threads, fibre and alloy steel. Mr Oswal was very bullish on the growth of the company and said in the current fiscal it expects to clock a topline figure of Rs 2000 crore. In 2002-03, the Group recorded a turnover of Rs 1764 crore. “By 2007 we anticipate a turnover of Rs 3000 crore”. He, however, ruled out entering the garmenting business in the near future. “We do not believe that there has to be total integration in the garment business to become competitive globally. Textile material suppliers and garment manufacturers can forge profitable alliances to boost export of garments. Therefore, we do not have any immediate plan to have a meaningful foray in the garment business”. He said that the present size of the Vardhman group’s operations in textile material such as spinning, weaving and processing is quite large and “also offers further opportunities for growth and diversification to support the garment industry”. Mr Oswal, who is a leading voice of the country’s textile industry, said that the recent textile package announced by the government was “at variance with the proposals mooted by the industry”. “Still it is a bold initiative on the part of the government to resurrect the ailing textile mills under the heavy burden of interest liability caused by higher rate of interest negotiated on the loans taken prior to the regime of softer interest rates. The scheme no doubt will alleviate the burden and help many mills to turn corner. This will save huge assets from becoming sick and non-viable”. Mr Oswal said that the it has been assured in the scheme that the healthy units will also be given assistance to enable them invest more and become more competitive. “The industry is looking forward to a more pragmatic scheme under this so that the good units do have more investible surplus to execute the schemes which will be needed more when we are faced with competition after quotas are abolished towards the end of 2004”. At same time, Mr Oswal believes that abolition of quotas should present the Indian textile industry with a “huge opportunity. The imperatives are that we carry out internal reforms speedily in order to help the industry become competitive”. Of particular importance was reforms in the power sector and efforts should be made to bring down the cost of power at par with the international price line. Moreover, he was of the opinion that the absence of labour reforms have “to a large measure inhibited the scale of operations in the garment industry”. Mr Oswal said that the textile economy was likely to grow at the rate of 6 to 8 per cent and exports of textile and clothing may go up to $ 30 billion from the present level of $ 13 billion and many international outlets would sell global brands with a Made in India label. Nevertheless, the emergence of a globally acceptable homegrown Indian brand “still appears a distant
possibility. “Brand building is a costly exercise and there are not many mills in India which can support such huge costs on a recurring basis. But as the size of operations increase in the garment business, we could envisage the emergence of such brands”, he said. He maintains that with the narrowing down of the disparities in fiscal levies between the mill sector and the power loom sector, the mill sector was likely to become more competitive. Disagreeing with reports that the cost of fabric produced by large spinning mills have become cheaper than that produced by the powerloom sector, Mr Oswal said the cost in the mill sector is bound to be higher because of high cost of capital and labour. “However, the quality of the fabric produced by the mill sector is definitely superior”, he observed.
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Bank credit cards elude prospective clients Chandigarh, October 4 The direct marketing agents, who approach customers on the behalf of banks, say customers, would always promise that credit cards would be delivered within days once they fill up the forms. But in majority of the cases, their forms would be rejected, despite the fact that they were in the above middle income group possessing even a car and own accommodation. The bank officials admit that there is no transparent criteria to issue credit cards due to involvement of multiple agencies. The forms for credit cards are generally filled up by the direct marketing agents (DMAs) and sales teams (DSTs). The verification of residence and income is done by another agency, and card is issued by the headquarters after completion of processing. They say about 40 per cent of the applications are rejected at the final stage. Says R.K. Sharma, an official working with a government department, “I was shocked when my application form was rejected by the HSBC, though I am getting about Rs 20,000 salary per month, and have a good house and a car as well. I felt humiliated and embarrassed before my colleagues, when I received the rejection letter.” He adds though he had no desire to get the credit card, yet the agent insisted on filling the form assuring that credit card would be delivered within few days. The SBI Credit recently rejected the application of Mr Surinder Kapoor, retired chief engineer, Haryana, who is getting good pension, keeping saving account and FDs with the bank. Customers allege that they are often called by the marketing agents of banks on their mobile phone during odd hours. The Citibank, SBI Cards, PNB, ICICI and HDFC are the main players in the credit card market. The Standard Chartered Bank and ABN Amro Bank are the new
entrants. Some of the banks are even offering free credit cards at least for a year to their customers taking housing or personal loans. But they would charge from Rs 250 to Rs 750 per annum for offering credit cards. The interest rate on the amount used from the credit cards varies from 31 per cent to 36 per cent. Mr Vishal Arora, team coordinator, SBI Cards, says, “Unlike private banks we have not given contract to any private parties. Our own agents approach the customers and fill up the forms. The final decision about the credit worthiness of the customer is taken by our office at Gurgaon, but we do not issue credit cards to 4th class employees, agriculturalists, young people, and avoid advocates, journalists, politicians and policemen.” Ms Usha Ahuja, an officer of the Punjab National Bank, dealing with credit cards, says that the their bank is issuing about 1000 credit cards every month in the city. Since bank is offering these credit cards free of cost to certain categories, it has attracted good response. The customer can avail free credit up to 45 days and about 2.75 per cent monthly interest afterwards, she adds. She agrees that banks should avoid approaching the customers unless they are sure about their credit worthiness.
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FDA orders seizure of Cadbury chocolates
Mumbai, October 4 However, the company denied the charge and maintained that its chocolates were of good quality and free from infestation. “We have asked officials to seize the product from across the state,” FDA Commissioner Uttam Khobragade told mediapersons here today. The FDA swung into action after aggrieved consumers from suburban Andheri in north-west Mumbai lodged a complaint regarding the presence of worm from a packet bought in the locality. The said packet had been manufactured from a plant at Talegaon, near Pune. A press release issued by Cadbury said “the company has since checked the factory samples of this batch and has found them to be of good quality and free of infestation. The company, therefore, reiterates that its products leaving the factory is of good quality”. “Cadbury chocolates reach out to 6,50,000 retailers directly and indirectly. In spite of every care being taken at the manufacturing stage, chocolate is a food product that requires specific care and attention in storage”, he said. “The company provides retailers with storage dispensers and visi-coolers to give adequate product protection. Additionally, every Cadbury product label mentions the care instruction. We believe by and large retailers follow the operating instructions and adhere to the required storage conditions”, it said. “However, chocolates are susceptible to infestation if they are stored near grains and cereals or in unhygienic conditions”, it added.
— PTI
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Income tax rules amended
New Delhi, October 4 The amended rule 37C provides for furnishing of a declaration to be filed by a buyer in Form No. 27C in duplicate to the person responsible for collecting tax if the goods specified in the section are to be utilised for the purposes of manufacturing, processing or producing articles or things and not for trading purposes. The declaration shall be delivered by the collector of tax to the CCIT or CIT on or before the 7th day of the month next following the month in which the declaration is furnished to the tax collector. A new rule 37CA has been inserted to provide that the sums collected shall be paid to the credit of the Central Government within one week from the last day of the month in which the collection is made. The certificate of tax collection at source shall be furnished by the collector of tax in Form No. 27D within a period of one month from the end of the month during which the amount is debited to the account of the buyer or the payment is received from the buyer, as the case may be. In cases where more than one TCS certificate is required to be issued to a buyer in respect of the period ending on the 30th of September and thereafter ending on the 31st of March in a financial year, the person collecting tax may on the request of the buyer issue within one month from the end of any of such periods, a consolidated certificate in Form No. 27D. The notification and the Forms are available on the website of the Ministry of Finance (finmin.nic.in).
— UNI
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Dhindsa for Indo-Oman ventures in banking New Delhi, October 4 Mr Dhindsa, who laid the foundation stone of the biggest joint venture fertiliser plant during his recent visit to Muscat, said “It is one of the first gas-based projects conceived in Oman. This is also the only overseas venture wherein the Indian Government has made the long-term commitment of purchasing the urea produced over a 15-year period.” The fertiliser plant is a joint collaboration of Iffco, Kribhco and Oman oil company with a total investment of Rs 4,500 crore. The Indian sponsors (Iffco-Kribhco) together hold 50 per cent equity and the remaining 50 per cent by Oman. The business community in Oman lauded the efforts of Mr Dhindsa in setting up the project which would be completed in 2005. Mr Dhindsa had also called upon the Deputy Minister of Oman Sayyaid Fahd Bin and delivered a message from Prime Minister Atal Bihari Vajpayee for his Majesty Sultan Qaboos. Mr Dhindsa was accompanied by an Indian delegation, including the Chairman Kribhco C. P. Yadav, Managing Director Iffco Udhay Shankar Awasthi and senior officials of his ministry. He also attended a function at an Indian school to mark the birth anniversary of Mahatma Gandhi. He also visited a gurdwara in Muscat where a ‘siropa’ was presented to him.
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Selling IOC business can kill company
New Delhi, October 4 Splitting IOC into two is an option the government was mulling to bring competition in oil marketing after plans to sell HPCL and BPCL were blocked by the Supreme Court, Disinvestment Minister Arun Shourie had announced yesterday after a meeting of the Cabinet Committee on Disinvestment (CCD) here. However, IOC insiders said “snatching” more than 9,000 petrol stations would “bleed” the country’s largest refinery to death. “We acquired IBP Co Ltd for a price which some say was exorbitant, to complement our refining capacity. Now if you take away the network through which we sell our 48 million tonnes of products then the company is doomed,” they say. For IOC, with more than 48 per cent market share, petrol and diesel retailing contributed 40 per cent of profit while standalone refineries do not make sound commercial proposition. The state-of-the-art MRPL, under Aditya Birla Group, was on the verge of being declared sick mainly because it did not have the retail network to sell the 9.69 million tonnes of annual production. And now MRPL was starting to look up after ONGC, its new owner, decided to put a chain of petrol stations to sell its products, sources said. Sources said worldover oil companies were moving towards vertical integration by having presence in the entire hydrocarbon value chain, right from oil exploration and production to refining to downstream retailing and value-added products like petrochemicals. Indian firms including IOC were moving towards vertical integration. IOC had already moved into E&P and was setting up a petrochemicals complex. “Now to hive off marketing business and sell that to a strategic partner will kill all that,” they said.
— PTI
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Approach broker for bonds’ price Q: Please inform (1) Where can I find the current value of US 64 Bonds. I purchased Economic Times but could not find it. I have accepted all the Bonds in lieu of my US 64 Units. (2) What has happened to Essar Oil Debentures. Unfortunately, I happen to have invested about Rs 90,000 and at the age of 67 years, it is quite a shock. But the share prices of Essar Oil seem to be going up. I also have some shares. and lastly (3) Which is a reliable source of information for selecting Income funds. In order to distribute the risk, I would like to put Rs.20,000 each in 5 or 6 Income funds. — Dr. S. D. Limaye, A: 1. Please approach a share broker. 2. Yes, you are right. The share prices have risen substantially and the company is a defunk one. Something shady appears to be going on. I hope SEBI takes up the matter for scrutiny. 3. These are very strong baskets. You need not worry about spreading the risk. Housing loan Q: I had taken a housing loan of Rs 5,00,000 in January 2002 for purchase of our flat at the rate of interest @ 11.5. This rate of interest now come down to 10pc and the tenure of the loan is 15 years. I feel any interest paid on a loan adds to the cost of the property. In the present and near future scenario expected in the real estate market of Bombay (particularly for old buildings above 25 to 30 years, even though they are very good), this should be avoided / minimised if one can afford it. As a business man, I have a current account which has floating inflow and outflow of money. I am thinking of putting Rs 6,00,000 as a fixed deposit for one year or more @ 5.5pc 6pc interest offered by the bank. Against this fixed deposit, my bank will give me 90pc loan for which they will charge me 2pc over and above the interest rate paid by them on my fixed deposit with them. This would mean an extra cost of only 2pc to me (though I will be actually paying them 7.5 to 8pc interest, but my F.D. will be earning 5.5/ 6pc interest. By taking this loan, I will repay my high
interest loan, thus minimising the addition to the cost of my property as
will as my financial liabilities. Could you please advise ; a. If this is the right approach b. Is there any restriction on the nature of the use of the loan I will take against F.D c. Whether I can write-off the entire interest (7.5 / 8pc) paid by me in my IT returns. I am fully aware that the rate of interest earned by me on my fixed deposit is taxable. This would mean the net cost to me will be 2pc plus the tax payable on the interest earned by me on my fixed deposit. — P. K. Jethi A: a) Sorry, I do not think it is a right approach. If you prepay the housing loan using your funds rather than buying a bank FD and taking a loan against it, you will save the entire 11pc. b) There is no restriction on the bank loan taken against your own FD. c) Yes, your reading is absolutely correct. What I suggest is — Since the rates have come down substantially, take a fresh housing loan from a bank or housing finance company to pay off the first loan. You will not lose the benefit you are currently enjoying on the interest and repayment of the loan. I would like you to take a loan even if you have enough funds to settle it. The tax concessions make it worthwhile to take a loan and invest your funds elsewhere. However, premature settlement attracts a penalty. You will have to examine whether the interest saved makes it worthwhile to pay the penalty. Relief bond Q: The New Series of Relief Bonds (8pc) are available. Is the interest of these Bonds eligible for deduction under section 80L. If yes, upto Rs 12,000 or Rs 15,000. — Narendra Agarwal, A: The scheme is not covered u/s 80L.
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Smarter look for IA air hostesses THE uniform of the Indian Airlines (IA) air hostesses has raised more controversies than the cabin crew attire in any other carrier worldwide. Many years ago, the airlines hostesses were provided blouses which they termed ‘see-through’. Some senior hostesses refused to wear these in protest. They were warned and a few defiant ones even grounded. A national daily, under the helm of B.G. Verghese, supported the cause of the hostesses. The airlines management did not appreciate it and threatened to file a suit against the newspaper. The paper refused to get browbeaten by the legal notices. Correspondence ensued. Eventually, the airlines officialdom realised that it was pointless to compel the hostesses to wear the blouses which were not to their liking, as they tended to compromise their dignity, self-respect and honour. Soon, the management withdrew the legal case against the newspaper and also withdrew the blouses. There are many world-class Indian designers who can produce befitting dresses in keeping with the dignity of the hostesses on board the flights. The Pakistan International Airline (PIA) hostesses, for example, wear their national dress ‘Salwar-Kameez’ and they look highly dignified and smart in those outfits. The Indian Airlines, under the stewardship of the Mr Sunil Arora, is flying high and its image is showing improvement. It is in keeping with this trend that the authorities have switched off French Television (FTV) channel for dressing up air hostesses. It is worthwhile probing as to whose brainwave it was of passing on the contract to FTV. The dress contract has now been rightly given to the Cottage Emporium, which is a thoroughly professional unit to choose well-known and competent designers. The Cottage Emporium, a government undertaking, with renowned designers, will be able to provide dresses to hostesses, who will look bright, smart and dignified. According to regular travellers, hostesses’ dress is important but much more important is ‘service with smile’. Dress and looks are vital but much more vital is to please passengers with pleasant service. There are many, like Prabha Rani, who have more than 20 years of experience to guide the airlines bosses, what is befitting for air hostesses and what is not. The independent survey conducted recently has preferred IA to other carriers on domestic circuit. It being the case, the management should endeavour to provide better facilities and motivation so that hostesses enhance their quality of service to bring further laurels to the airlines. Hostesses are the key to success of the airlines. One section in which the national carrier continues to be deficient is the quality of snacks and food on board the flights. Even on short-haul operations, the snack service can be carried out in style. It is not what is served but how stylishly it is served. Style, decor, cutlery and willing service are important to satisfy the whims and fancies of passengers belonging to different walks of life and background. The effective meal deal is very important. The sense of flexibility is also vital. Many leading hoteliers have jumped to the flight kitchen area. It is a lucrative business for them but the IA in particular should choose the best. The better the service, the more will be the passenger load.
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Multi-million dollar business conglomerate, the Vardhman Group has
plans to invest Rs 1,000 crore in its textile business over the next
five years but does not intend to foray into the garmenting business
in the immediate future.
In
video: India plans to sell shares in IOC. (
