New Delhi, August 25
The Comptroller and Auditor-General (CAG) today criticised the previous NDA Government for undervaluation of a number of PSUs, including Balco and VSNL, where equity was disinvested.

“Audit examination reveals instances of far too conservative assumptions made by the global advisers in seven out of nine PSUs... The assumptions had the potential of adversely impacting the business valuation, based on which the reserve price was fixed for disinvestment,” the CAG said in a report on disinvestment during 1999-2003.

“Audit noticed a general trend in the disinvestment of PSUs that a majority of bidders, who had initially submitted expression of interest, withdrew during due diligence limiting the competition,” the report tabled in Parliament said.

It said 48 out of the 70 parties interested in becoming strategic partners had withdrawn and only in two cases (IBP and IPCL) more than two financial bids were received indicating that the competitive tension generated in the process was not encouraging enough to have maximised the value of stake under disinvestment.

The CAG attributed the lack of adequate interest among the prospective investors to the failure of global advisers, who were unable to generate adequate competition at the bidding stage.

“The government also contributed to this situation by delaying crucial decisions, affecting the financial health of the PSUs,” it said.

The report also said the exercise of asset valuation did not appear to have been undertaken with due seriousness in as much as the valuers were generally not given enough time and core and non-core assets had not been segregated before valuation.

According to the CAG, there were inconsistencies in computation of equity value of the companies that were disinvested.

The methodology followed for asset valuation did not appear to be beneficial as the valuation was done without adequately considering all properties.

In case of Modern Foods, certain core assets like leasehold land and plant and machinery and in case of Balco leasehold land housing the plant and township were not valued under the asset valuation methodology.

The CAG also pointed out that the companies like Balco, VSNL, Paradeep Phosphates and IPCL did not have a clear title to allreal estate, land and buildings in their possession which would have made it impossible for the value of these assets to be accounted for, while fixing the reserve price.

“Crucial decisions having substantial financial implication were taken after inviting expression of interest from prospective bidders in the case of VSNL, PPL and IPCL,” it said.

The CAG also pointed out that the delay in demerging 773.13 acres surplus land of VSNL has not been carried out till date though the company was sold way back in 2002.

“In the case of CMC, PPL, IPCL, IBP and Modern Foods, the government had put options while in Balco and VSNL the strategic partners had call option. In the case of Hindustan Teleprinters, no such option was incorporated,” the CAG said.

The report also criticised the government for including a post- closing adjustment clause under which the strategic partners could claim compensation from the government for liabilities arising out of the information that was not disclosed earlier.

In the case of Modern Foods, the buyer had claimed Rs 17.48 crore as compensation and the government has already paid Rs 12.64 crore to it. The claims of Balco, Hindustan Teleprinters and Paradeep Phosphates were still under consideration of the government. — PTI

New Delhi, August 25
The multinational companies (MNCs) working in India have learnt, it seems, how to evade taxes in a soft country by conniving with corrupt taxmen and exploiting the loopholes in tax laws.

In a revealing fact, which is already accepted as a truth in the power corridors of national Capital, the government has accepted that every fifth MNC working in India is engaged in evasion of direct taxes, including income tax and corporate tax.

“Evasion of direct tax was detected in 411 MNCs out of 1,915 such companies assessed during financial year 2005-06, which works out to be 21.46 per cent,” Minister of State for Finance S.S. Palanimanickam today informed the Lok Sabha.

It implies that one out of every five foreign companies working here are evading taxes.

The Finance Ministry has admitted that a large number of MNCs are involved in tax evasion. In fact, these companies have mastered the art of evading taxes by engaging famous chartered accountants and law firms — who guide them in benefiting from the loopholes in age-old tax laws.

The delay in decision in the court cases, which can go up to decades, have further compounded the situation.

In fact, the total arrear demand in respect of the companies under the jurisdiction of the Directorate of Income Tax (International Taxation) was Rs 6,385.09 crore as on April 1, 2006.

Although tax officials would issue notices to the companies from time to time, but official sources said, the slow progress in the judicial system and lack of adequate manpower was adversely affecting revenue collection from such tax evading companies.

Notably, the Appellate Tribunal for Foreign Exchange recently upheld the orders passed by the Special Director of Enforcement, which imposed penalty on 10 MNCs.

It included big names like Ericsson India (Rs 15 crore), Sony India (Rs 5 crore), Nokia India (P) Ltd (Rs 5 crore), Fuji Bank (Rs 1 crore), Motorola India (P) Ltd (Rs 1 crore), Samsung Corporation (Rs 1 crore), Bank of Tokyo Mitsubishi (Rs 5.5 crore) and Deutche Bank ( Rs 25 lakh).

Giving this information to the MPs in Parliament, Finance Minister P. Chidambaram stated: “These companies had paid salaries and given perquisites to their expatriate employees abroad without RBI permission.”

New Delhi, August 25
Finance Minister P. Chidambaram today admitted that there was delay in issuing of income tax refunds in some cases. This is despite the streamlining of procedure for issuing of refunds and by comprehensive computerisation programme of the Income Tax Department, Mr Chidambaram said in the Lok Sabha.

Some delay was caused due to a shortage of manpower, he said, adding that in some cases verification of taxes paid or deducted was required causing delay in issuing of the refund till the verification process was over.

However, the department had put in place an effective mechanism for the redress of grievances relating to delay in refund, he said.

The Income Tax Act provided for interest for delayed refund, the Finance Minister said, adding that the present rate of interest was 6 pc. — PTI

New Delhi, August 25
Mr Anil Dhirubhai Ambani tops the list of India’s business icons for the country’s youth who find him flamboyant, high profile and closer to their age, while steel magnet L.N. Mittal is next on their mind with Mr Mukesh Ambani further back, an India Today opinion poll has said.

Interestingly, country’s most respected business leaders Narayana Murthy and Ratan Tata barely register on the radar of today’s youngsters as they find them too old to relate with.

Mr Anil Ambani has left behind several other corporate giants like Azim Premji, Anand Mahindra and Rahul Bajaj in the youth icon poll.

Today’s youngsters, obsessed with wealth and success, do not symbolise their icons with strong moral values but with young age and dynamism. — UNI

Kolkata, August 25
Hindustan Motors is planning major diversification into the auto components sector from its Uttarpara factory in West Bengal.

Managing Director of Hindustan Motors R. Santhanam said here today that on the identified surplus land measuring 314 acres at Uttarpara, the company planned to set up an integrated township comprising an IT park, an auto-ancillary park and real estate projects.

The company planned to invest around Rs 100 crore in the auto ancillary sector, which would be raised from developing the IT park and real estate projects.

Mr Santhanam said the proposed auto ancillary park had the potential of evolving as a major export base due to proximity to the Haldia port.

The diversification into the auto components sector would envisage developing modern and large-sized automotive forgings, castings and stampings centre within the area.

Asked whether HM would set up separate subsidiaries for these three different projects, he said that these would be treated as independent units.

Mr Santhanam said that the company would also aim at sustaining the existing vehicle business by expanding the range and upgrading technology.

The company would have to pay Rs 10 crore to the West Bengal Government for sale of the surplus land. — PTI

Mumbai, August 25
Market regulator SEBI has suspended the certificate of registration of two brokers of the Pune Stock Exchange (PSE) for a period of 15 days for irregular transactions in the scrip of Home Trade Ltd during the period November 1999 to December 2001.

The brokers were P L Pushpa Lakshmi Credit and Capital Pvt Ltd and Trimity Investments and Financial Services Pvt Ltd.

The order shall come into effect on expiry of 21 days from the date of receipt of this order by the broker, SEBI whole-time member G. Anantharaman said.

The broker indulged in circular trading and price manipulation along with some other members of the PSE, contributing more than 90 per cent of the volume in the scrip of Home Trade, SEBI observed. The transactions by the broker were not genuine and made only for the purpose of creating artificial price and volume, SEBI further said. — PTI

Kolkata, August 25
The Ruia group has proposed to set up a shipyard at Jellingham in Haldia in West Bengal’s East Midnapore district at an estimated investment of Rs 3,000 crore.

Ruia group Chairman P.K. Ruia told reporters here that the proposed shipyard was to come up on land lying idle and in the possession of Burn Standard.

He said that the Ruia group was in talks with Burn Standard, which was willing to sell the land to them. Mr Ruia said the group needed 2,000 acres for the project and added that it was available with Burn Standard.

The group, he said, had approached the West Bengal Government for facilitating the transfer of this land to them, failing which it would go to the Kolkata Port Trust.

The proposed shipyard, he claimed, would be the largest in South Asia.

Mr Ruia said that the project would give direct employment to 16,000 persons. — PTI

New Delhi, August 25
The government today said an investor protection fund is proposed to be set up with amounts collected by SEBI by way of fines and penalties.

Currently, fines and penalties collected by SEBI are credited to the Consolidated Fund of India as required under the Securities Contracts (Regulations) Act, 1956, the SEBI Act, 1992, and the Depositories Act, 1996, Finance Minister P. Chidambaram told the Lok Sabha in a written reply.

The IPF could be established after the relevant laws were amended, permitting credit of these amounts to the IPF, he said. While the broad objective of the IPF would be protection of investors in securities, the specific objectives would be determined in consultation with SEBI, the Finance Minister said.

The Investor Education and Protection Fund was set up under the Companies Act and was administered by the Company Affairs Ministry while the IPF was proposed to be set up under the aegis of SEBI under the security laws.

No budgetary allocation had been made for the IPF so far as it was to be set up with amounts collected by SEBI by way of fines and penalties, he said. The IPF was proposed in the Budget 2006-07. — PTI

New Delhi, August 25
A poser by CPM member Sitaram Yechury on whether BSNL and MTNL are deliberately not setting up towers to favour private companies left Communications Minister Dayanidhi Maran seething with anger.

“It is wrong. This will demoralise employees of BSNL and MTNL. They are doing a good job,” an agitated Maran said replying to supplementaries in the Rajya Sabha.

Mr Yechury said he had been told by MTNL and BSNL unions that the two state-owned companies were deliberately not setting up additional towers.

Reacting to Mr Maran’s remarks, he said “I take strong objection to this.” The member said Left parties were involved in running of BSNL and MTNL unions and his query would not demoralise workers. “I am not yielding,” Mr Maran said and asked Mr Yechury to bring any specific case to his notice.

Mr Yechury’s party colleagues also joined in seeking details about charges.

“What is this answer?,” remarked an agitated CPM member Brinda Karat on Mr Maran’s reply on the issue.

Mr Maran attributed the dropping of calls and occasional lack of clarity to huge demand for BSNL phones. He said the state-owned company planned to add 63.5 million lines in the next few years which would be more than the combined expansion plans of the private companies. — PTI

Kolkata, August 25
Two leading city-based leasing companies Magma Leasing Limited and Shrachi Infrastructure Finance Limited would merge to form a new entity, Magma Shrachi Finance Limited. Stock swap between the two firms would be one Magma share for three Shrachi shares, Magma Leasing Managing Director Sanjay Chamria told reporters here today. As on March 31, combined assets under management of the two firms was Rs 4,500 crore and total business was Rs 2,500 crore. — PTI