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Industrial output to grow by 6.3 pc: CMIE
Have Tatas hit a rough patch?
Banks to further cut lending rates
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Warren Buffett tops philanthropists’ list
Citigroup to sell NikkoCiti
Top 10 Cos gain 14k cr in a week
Dunlop suspends work at Sahaganj unit
Market Update
Tax Advice
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Industrial output to grow by 6.3 pc: CMIE
Mumbai, November 30 “Sharp downward revision in forecasts of electricity, textiles, cement, commercial vehicles, machinery, fertilisers, crude oil, petroleum products, man-made fibres and PVC pipes and tubes have pulled down our forecast for overall industrial production growth from 8.3 per cent to 6.3 per cent,” CMIE said in its monthly report here. Poor performance of the IIP in the first half and the new stress seen in select industries led to a substantial downward revision in our forecast for FY'09, CMIE said. Some industries, such as textiles, face poor export demand and others like commercial vehicles face demand constraints arising out of high interest rates. Some industries also face adverse conditions because of fresh supply constraints, it said. Petroleum refining have supply constraints as scheduled commissioning of new capacities are postponed. “We have scaled down our forecast in the fact of a stark contradiction. While the IIP grew by a meagre 4.9 per cent in the first half of FY'09, the inflation-adjusted sales of manufacturing companies recorded an excellent growth in output of 12 per cent,” CMIE said. “We always held the view that the quality of the IIP has deteriorated sharply in recent times. Our forecast, hitherto, were based on our understanding of the corporate world and with a hope that the official IIP would eventually correct itself to reflect what the corporate financial results imply," it said. CMIE still believes that this would happen, but it would be too late to correct IIP for FY'09 sufficiently. CMIE expects the mining sector to grow by 7.5 per cent in FY'09. “Delay in the commencement of production from Reliance Industries' KG-DWN-98/3 block brings down our forecast for crude oil production,” CMIE said. Production of food and food products could decline by 0.5 per cent in FY'09 because of a sharp fall of 14.6 per cent expected in sugar production due to lower availability of sugarcane. Yet, the industry faces excess supplies, it said. Paper and paper products industry is expected to report a meagre 2.2 per cent rise in production in FY'09 due to major capacity constraints. The industry is believed to be working at over 115 per cent capacity this year. CMIE expects the chemical products group to record an 8.3 per cent growth in production in FY'09 as compared to 10.6 per cent growth in FY'08. The fertiliser production is expected to remain flat in FY'09 because of the unavailability of natural gas and basic raw materials. Production of man-made fibres would also decline as low demand is making producers cut output, CMIE said.
— PTI |
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Have Tatas hit a rough patch?
Mumbai, November 30 Even as the group, led by charismatic Ratan Tata, was busy tackling the impact of the global slowdown and cutting costs and hunting for resources to fund their global trophies like Jaguar and Land Rover, it has now been hit by terror attack at its landmark property - the Taj Hotel - in Mumbai. While the group continues to hog the media space, for about a year now, it is mostly for the wrong reasons - be it the Nano controversy, plant closures and layoffs in the steel and auto businesses, terror attacks at the Taj hotel and Ratan Tata’s resultant criticism of the government. This is in sharp contrast to the things till less than a year ago, when Tata was being termed as the face of India Inc in the global arena, the takeover tycoon and overall an undisputed corporate leader of the country with a presence in businesses ranging from making salt packs priced at a few rupees to luxury cars worth lakhs. A few weeks ago, Ratan Tata wrote to the chiefs of all group companies, asking them to cut costs in the wake of the ongoing financial crisis. In the letter, Tata had asked them to defer non-strategic acquisitions and go slow on expansion plans, apart from cutting costs. Moreover, the financial turmoil has taken a toll on many Tata group firms with a number of them witnessing sharp falls in market capitalisation. Further, promoters and bankers had to chip in to salvage Tata Motors’ rights issue, which elicited a poor response from the market. The rights issue was initiated to fund loans taken for the multi-billion dollar acquisition of British iconic brands Jaguar and Land Rover. Adding to the woes, the credit ratings of Tata Motors and Tata Steel were cut by global rating agencies like Moody’s. On slowing demand, Tata Motors shut its commercial vehicle plant at Jamshedpur for the second time this month. In addition, the company has reportedly laid off about 3,000 temporary staff at its Pimpri plant primarily on account of falling sales. Meanwhile, accolades were showered on Ratan Tata earlier this year, with an international publication describing him as one of the biggest brains in business. Further, US magazine Time had named Ratan Tata among the 100 most influential people in the world.
— PTI |
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Banks to further cut lending rates
New Delhi, November 30 Banks have already started reducing the deposit rates and with more liquidity infusion by the Reserve Bank there would be more scope for cutting lending rates to spur demand, said a senior banker. Banks have started assessing asset liability situation in the light of the cuts in deposit rate coming into effect from next week, he said. Another senior banker said further cut in benchmark prime lending rate (BPLR) in between 25-50 basis points by various banks is likely to be announced in December. In the first round, several public sector banks have reduced their BPLR by 75 basis points following an appeal by finance minister P Chidambaram. Chidambaram had said lowering of lending rates by the state-owned banks would also put competitive pressure on their private sector counterparts to announce similar cuts. The reduction of interest rates by the PSU banks follows a number of steps taken by the RBI to inject into the banking system Rs 2,70,000 crore since October.
— PTI |
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Warren Buffett tops philanthropists’ list
New York, November 30 On the third spot is George Kaiser and billionaire investor George Soros at the fourth, while former chief executive of Hilton Hotels William Barron Hilton stands at the fifth position. “Many of America’s ultra-rich continued to give big donations to charity in 2008, despite the worst financial crisis in decades. In the past year, seven philanthropists gave north of $200 million and nine gave more than $100 million to causes ranging from wilderness preservation to fighting malaria. Warren Buffett and Bill Gates remain far and away the biggest givers overall,” the magazine said. For the 2004-08 period, Buffett gave away $40,655 million while Bill and Melinda Gates donated $2,625 million. Kaiser and Soros gave away $2,377 million and $2,214 million, respectively, during the same period. Further, Hilton donated $1,700 million from 2004-08. The list has been compiled using data from the magazine - The Chronicle of Philanthropy and Center on Philanthropy at Indiana University.
— PTI |
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Citigroup to sell NikkoCiti
New York, November 30 Citigroup, which is headed by Indian American Vikram Pandit, received a massive $20 billion bailout package from the US government as its stocks dropped by as low as 60 percent last week. Quoting two people familiar with the matter, The Wall Street Journal said the bidding process to sell off NikkoCiti Trust and Banking Corp was expected to begin tomorrow. Japan's large trust banks, such as Mitsubishi UFJ Trust and Banking Corp, and Sumitomo Trust and Banking Co, are expected to be among its bidders, the report said. NikkoCiti activities include the delivery and settlement of securities and the calculation of investment trust unit prices.
— IANS |
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Top 10 Cos gain 14k cr in a week
Mumbai, November 30 Meanwhile, the past week witnessed a shuffling in the elite club with state-run MMTC and NMDC losing their position to private sector new entrants in the coveted club - TCS and HUL. MMTC and NMDC together lost nearly Rs 14,000 crore. Besides, SBI dropped to the sixth place losing out its position to IT major Infosys, while state-run BHEL managed to regain the seventh position. The combined market capitalisation of the country’s top 10 firms, comprising six private sector and four public sector entities, saw an addition of Rs 14,424 crore last week, rising to Rs 96,46,77.48 crore from the previous week’s Rs 95,02,53.4 crore. TCS, which made it to the ninth place, at the end of Friday’s trade saw its market capitalisation at Rs 54,611 crore, while FMCG major Hindustan Unilever’s valuation stood at Rs 52,186 crore. MMTC, which lost Rs 7,282 crore last week, saw its market value dropping to Rs 50,029 crore, while mining giant NMDC witnessed a value erosion of Rs 6,621 crore to Rs 49,896 crore.
— PTI |
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Dunlop suspends work at Sahaganj unit
Kolkata, November 30 The ailing company’s latest decision comes 13 days after it temporarily suspended production at the unit citing lack of demand due to the global economic downturn, and asked workers to accept a monthly subsistence allowance of Rs 2,000 till resumption of operations. However, the management and the trade unions failed to reach an agreement on the subsistence allowance and other pending issues even after several rounds of talks. — IANS
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Market Update Markets shrugged off terror attacks on Mumbai, India’s financial capital, last week on the expectations that he Reserve Bank of India (RBI) would again cut interest rates to shore up a faltering economy. The sentiment though remained cautious due to selling by foreign funds and concerns about the weakening domestic and global economy. The other factors that lifted the market, last week, were a surprise steep rate cut announced by China’s central bank, US measures to prop up Citigroup, the beleaguered US bank, better than expected gross domestic product data and lower inflation data. The Senses gained two per cent last week to close at 9,092 and Nifty moved up by 62 points to close the week at 2,755. It is widely believed that falling inflation will support a soft monetary policy adopted by the RBI. Inflation based on the wholesale price index (WPI) rose 8.84 per cent in the 12 months to 15 November, 2008, a tad below the previous week’s annual rise of 8.9 per cent. The markets seem to have bottomed out at least in the short run but the political uncertainty ahead of state elections (Delhi, Mizoram, Rajasthan, Chattisgarh and Madhya Pradesh) will continue to weigh on the market. The results of all five states are expected on December 8, 2008, after which market may get some direction. Meanwhile, investors may start accumulation fundamentally strong stocks as we are remined about the Jewish wisdom folktale involving King Solomon: “This too shall pass”. NIIT Tech
Investors with three years horizon may buy the stock of NIIT tech limited (NTL), small cap IT stock, as the dividend yield, future prospects and cash and equivalents on the company’s books make it an attractive buy at the current levels of Rs 53. NTL is a mid-size IT solutions company that was spun-off from NIIT in 2004. The company has offerings across industries like banking and financial services (BFS), insurance, travel & transportation, retail and manufacturing. The insurance and travel & transportation segments. The stock is currently trading at the dividend yield of more than 10 per cent that is almost equivalent to the risk free return that some of the banks are giving on a fixed deposit for a period of three years. Besides, this the company has close of Rs 23 per share of cash or its equivalent on its books, which is about 40 per cent of the current market price. While this attractive valuation is our foremost reason for recommending the stock, there is some inherent strength that NTL’s business possesses that will see the company grow profitably in the future, short-term disruptions notwithstanding. The only invest concern that we foresee is the cut in the tech spending that the corporate might undertake in the coming couple of years due
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Tax Advice Q. I came to know from some previous columns that professional work done by a senior citizen is exempt from income tax. Work done by a handicapped and widow women were also said to be exempt. I am a senior citizen aged 74 years and is doing the same type of work as was doing while in government job. I am engaged as consultant in a private firm doing consultancy services for civil engineering works and material testing labs. They sometimes make me payment. Is that amount exempt from tax may please be clarified? — Resham Singh, Chandigarh A. There is no such provision in the Act that exempts the professional charges received by a senior citizen. In case the payment received towards the consultancy charges and the other income earned by you exceeds the maximum amount not chargeable to tax, you would be required to file a Return of Income and pay tax on the total income so computed. I may add that the maximum amount not chargeable to tax for a senior citizen for the assessment year 2009-10 (financial year 2008-09) is Rs 2,25,000. Tax rebate
Q. My sources of income are from pension and interest on fixed deposits (MIS). I will complete 65 years of age on January 4, 2009. Please clarify if I am eligible for tax rebates of senior citizen (65 years and above) for the financial year 2008-09 (assessment year 2010-11). — Gurdev Singh, H.P. A. Yes, you would be entitled to claim the status of a senior citizen for assessment year 2010-11. Revision of pension
Q. I am a retired Government official and after implementation of the sixth pay commission, I have become entitled for the amount of arrears due to revision of pension w.e.f. January 1, 2006. Now that arrears calculated so for is about Rs. 74,000 and a sum of Rs.29,600 (i.e. 40% of total Rs.74,000) will be paid during financial year 2008-09 and balance (60% of Rs.74,000) i.e. Rs.44,400 will be paid during next financial year 2009-10. I am now told that balance 60% to be paid (i.e. Rs. 44,400) during the year 2009-10 will also be accounted in the income for the year 2008-09 and income tax calculated accordingly by accounting for total amount of Rs.74,000 irrespective of the fact that part (60%) is to be paid, will actually be paid during the year 2009-10. You are requested to clarify the position and advise quoting authority/rule position. — Gurdev Singh, Jalandhar A. The income from salary is chargeable to tax on due basis. Accordingly, in case the amount of arrear of Rs 74,000 have become due to you, the tax will have to be computed on the total salary income including, the amount of arrears. I may add that you would be entitled to seek a relief under Section 89 of the Income-tax Act 1961 (the Act). Consultancy fee
Q. I worked with a private company for 39 years and after attaining the age of 58 years I have been retired from the company. I got all the dues from like provident fund, and gratuity etc. Now, the company has further asked me to continue with the job that I have been doing. Could you please let me know the details of benefits that I am legally entitled after attaining the age of 58 years i.e. am I entitled for the benefit of gratuity, PF etc.? — R.K Wadhwa, Jalandhar A.
The benefit of gratuity and provident fund etc. would depend on the terms of employment. Normally, the persons who retire are retained by the companies as consultants. In such a case, the benefit of provident fund and gratuity is not available as such consultancy fee is taken as a professional fee on which tax at the rate of 10 per cent plus applicable surcharge and education cess is deductible at source. |
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