The Tribune, Chandigarh, India

Satyam merger not before June: Mahindra

Davos, January 31
The Mahindras today said Satyam Computers (now Mahindra Satyam) would be merged with Tech Mahindra after the settlement of accounts of the new entity, expected to be completed by June this year.

"(Why) we cannot merge these (Mahindra Satyam and Tech Mahindra) now is because we do not have accounts settled. The moment we get the accounts settled, we can set the time frame," Mahindra & Mahindra Vice-Chairman Anand Mahindra told PTI here on the sidelines of the World Economic Forum here.

He said at present a “forensic auditing” of Mahindra Satyam was being conducted by KPMG and the accounts were likely to be finalised by June.

Forensic auditing is an accounting exercise for gathering proof for probing a fraud. Satyam founder B Ramalinga Raju early last year had admitted to committing a multi-crore accounting fraud in the company.

Explaining the reasons for the forensic auditing, he said: "Because they have to go back and go on a trail." Tech Mahindra had acquired Hyderabad-based Satyam in June last year for about Rs 2,890 crore after its founder Ramalinga Raju admitted to committing a multi-crore accounting fraud. Subsequently, the company was renamed Mahindra Satyam.

Asked if the Satyam brand would be retained after the proposed merger, Mahindra said: "There is no decision right now. However, we are very happy with the choice we had made to keep the Satyam name and marry with the Mahindra name." On turning around Mahindra Satyam, he said: "As far as we are concerned, the definition of turnaround will come when accounts are finalised (by June)."

Mahindra said after his group's takeover of Satyam, it had been able to steer the troubled firm to stability.

"Ever since we took over, there is no haemorrhage. A number of new logos (customers) have been added. Whatever we had envisioned, there has been no unexpected or unpleasant surprises in terms of clients (loss)," he said.

"One big law suit of $ 1 billion by UPAID has been settled for $ 70 million only. This was a very big sword hanging over the company," Mahindra added.

On the class action suits faced by Satyam in the US, he said: "Any large company (would face)... They will be settled." Asked if Mahindra Satyam would move ahead with SEZ plans, he said: "Though we have rationalised a lot of the facilities, SEZs, we are unlikely to give (them) up because of the tax (benefits ) for the IT companies." — PTI

Corporate Results
Good sales drive Leyland profit to 455 pc

New Delhi, January 31
Ashok Leyland today reported a 455 per cent jump in the net profit for the quarter ended December at Rs 104.63 crore on the back of robust sales growth.

The automobile manufacturer had registered a net profit of Rs 18.86 crore in the same quarter a year ago. Sales revenue was up 81 per cent at Rs 1,815.53 crore against Rs 1,004.49 crore in the corresponding period the previous fiscal.

Suzlon Energy p

Good sales, a cut in working capital costs and $ 370-million from stake sale in Germany's Hansen helped wind turbine maker Suzlon Energy post Rs 14.1 crore net profit in third quarter, a senior company official said.

Suzlon Energy had posted a loss of Rs 64.87 crore in the year-ago period.

Suzlon logged a consolidated revenue of Rs 5,590 crore in the third quarter this fiscal against Rs 6,922 crore in the year-ago period.

Gitanjali Gems p

Gitanjali Gems has posted 39 per cent jump in net profit at Rs 41 crore in the third quarter of 2009-10. The company's jewellery sales turnover rose by 60 per cent to Rs 1,098 crore in Q3 FY 10, a release said.

For the nine-month period ended December, 2009, the company's jewellery sales turnover increased by 43 per cent to Rs 2,703 crore as compared to Rs 1,892 crore in the year-ago period, the statement said.

The net profit for the period stood at Rs 139 crore as compared to Rs 120 crore in the year-ago period, an increase of 16 per cent.

Parsvnath p

Parsvnath Developers reported a robust jump of over four-fold in the consolidated net profit at Rs 24.90 crore for third quarter ended December. The real estate developer had a consolidated net profit of Rs 5.42 crore during October-December quarter a year earlier, it said.

On a standalone basis, the company's net profit stood at Rs 32.66 crore against Rs 5.33 crore of the year ago quarter.

RCom p

Reliance Communications said its consolidated net profit declined by 19.34 per cent to Rs 1,164.82 crore for the third quarter of 2009-10. The company had a consolidated net profit of Rs 1,444.17 crore for the same quarter last fiscal. — PTI

15 US banks fail in Jan

New York, January 31
American banks are falling by the day, with 15 entities closing shops in January, even as the economy grew at its fastest pace in six years in the fourth quarter.

In an indication that the country's banking sector remains shaky, six banks were closed down by the authorities on January 29 while five were shut on January 22.

Bank failures, especially small and medium ones, are rising due to high unemployment levels, which is resulting in increased defaults.

The six entities shut down were American Marine Bank, First Regional Bank, Community Bank and Trust, Marshall Bank, Florida Community Bank and First National Bank of Georgia, according to the Federal Deposit Insurance Corporation (FDIC).

These failures will cost the FDIC, which insures deposits at over 8,000 US banks, as much as $1.86 billion.

Among them, the collapse of First Regional Bank alone is expected to cost $ 825.5 million.

A whopping 169 banks have gone belly up since the collapse of the financial services major Lehman Brothers in September, 2008, that triggered one of the worst financial meltdown in decades.

Interestingly, the American economy is expanding at a faster rate. In the last three months of 2009, the US GDP grew 5.7 per cent, much higher than 2.2 per cent expansion recorded in the September quarter last year. — PTI

Pen that talks

New Delhi, January 31
Bhopal’s Aadarsh Publishers today launched a “Talking Pen”, a device that can read out the written word as it moves across a page, priced at Rs 7,000.

The pens, which are fitted with multimedia print reading technology, will be imported from Hong Kong. “We are introducing this concept for the first time in the country and aim to sell about 1 lakh units in the first year,” Aadarsh director Manish Rajoria said.

The product was targeted at educational institutes, differently abled students, as it could help them learn faster and also retain the information longer, he added.

The pen is equipped with an in-built speaker, camera and a 2GB memory card. The pen, however, reads only those books that have the MPR code. — PTI

NTPC biggest m-cap loser

Mumbai, January 31
Eight out of the 10-most valued firms saw their market capitalisation tumble by Rs 85,000 crore till date in 2010, as the stock markets witnessed a downslide.

While, NTPC lost the most (Rs 17,686 crore) from its valuation, the second most valued firm ONGC saw its market capitalisation decline by Rs 16,629 crore in January.

At the end of Friday's trade, market capitalisation of NTPC and ONGC stood at Rs 1,76,658.98 crore and Rs 2,35,232.92 crore, respectively.

RIL, numero-uno on the list of top-10 firms, witnessed the value erosion of Rs 15,809 crore from its m-cap. RIL's valuation stood at Rs 3,42,231.27 crore.

Meanwhile, two state-run companies — NMDC and BHEL — together added Rs 29,633 crore to their valuation during the month ended January 31.

The country's largest iron ore producer NMDC jumped to the third spot from the fifth after adding a major chunk of Rs 29,616.31 crore to its valuation during the month on government's stake divestment plans.

NMDC, whose valuation at the end of Friday's trade stood at Rs 1,97,204.18 crore, has filed draft prospectus for a follow-on-public offer with Sebi for diluting 8.38 per cent government stake.

Besides, BHEL saw its valuation rising by a meagre Rs 17 crore to Rs 1,17,800.54 crore during January. — PTI

Tax Advice
Tax relief can be claimed on pay commission arrears
by SC Vasudeva

Q. I am a Central Govt. employee. After the implementation of 6th pay commission, I got arrears in December, 2009. A TDS @30 per cent was deducted from these arrears. Can I claim tax relief on the arrears of previous years, because my total income was still in 20 per cent tax bracket during 2006-2009? Can revised IT returns be filled for the years 2006-2009? Which form I have to use? — Dr VK Kukreja

A. You can claim a relief under Section 89 of the Act in respect of the arrears which were received due to implementation of the 6th Pay Commission. You will have to file Form 10E along with your tax return for the purposes of claiming such a relief.

Q. I am working in the Haryana government. The pay of employees have fixed in the new pay scale from January 1, 2006, in June, 2009, and the 40 per cent arrear has been paid from January 1, 06, to December 31, 08, in October, 2009. The office has deducted the income tax at the time of making the arrear for the last three year. Kindly let me know whether there are some rules for deduction of the income tax for the arrear for 3 years. — Raman Garg

A. You are entitled to claim a relief under Section 89 of the Act in respect of the arrears received in October, 2009. You should make a claim thereof in your income tax return by filing Form 10E along with your return for claiming the relief under the section.

Tax on gratuity

Q. I need your help on the issue of applicability of tax on the payment of gratuity. I had worked in BSNL from October 22, 2001, to September 1, 2007, and quit my job. Now I have applied for gratuity entitled to me as per rules. The department calculated the gratuity as per details below: Last pay drawn — Rs 24,677 Gratuity payment — 24677/26 *15*6 —Rs 85,410 — approximately.

Now, the accounts officer said to me that gratuity is taxable so 30 per cent tax will be deducted from it. Please clarify whether the gratuity to which I am entitled is taxable, if yes please also throw light on the applicable section of the Income-Tax Act.

My friend had also resigned from the same company but from a lower post, his gratuity was Rs.42,000 but no tax has been deducted from his amount. When I asked this from the officer, he said the amount of my friend was less so it was not taxable.

Please help me in clarifying how income tax is applicable on gratuity and guide me how to proceed further. — Ravinder Singh

A. The facts in the query do not indicate whether the payment of gratuity has been received under the Payment of Gratuity Act 1972 or it is on the basis of a scheme applicable to employees who are not covered within the provisions of the Act. In case the gratuity has been received under the provisions of the Payment of Gratuity Act 1972, the same is exempt from tax on the following basis:

15 days’ salary based on last drawn salary for each year of service.

Rs. 3,50,000. Actual amount received. The least of the above is exempt from tax.

In case the gratuity has been received which is not covered by the provisions of the Act, least of the following amounts will be exempt from tax: Rs.3,50,000. Half month’s average salary for each completed year of service. Actual amount received.

The gratuity amount in your case being less than Rs.3,50,000, the same should be exempt from tax. You may approach the accounts officer and draw his kind attention to the provisions of section 10(iii) of the Income-tax Act 1961 (the Act).

Loss in mutual fund

Q. I am a regular income-tax assessee. For claiming deduction under Section 80-C, I had invested Rs.30,000 in State Bank of India’s Magnum Tax-Gain Scheme 93 in March, 2006. Now in January, 2010, I had sold all units, then allotted to me and received Rs.22,100 only after deduction of S.T.T. Thus I suffered a loss of Rs.7,900/- on an investment of Rs 30,000.

Please advise if this loss can be adjusted against my annual income which is derived from retirement pension and bank interest only. — RK Aggarwal

A. The loss suffered by you is a capital loss which will be carried forward for a period of eight years. This being a long-term capital loss can be adjusted against a long-term capital gain within the period of eight years. The above loss is not adjustable against your income from pension and bank interest.

Wind mills

Q. Our company has set up two wind mills for generation of power at an approximated cost of Rs.9 crore per mill in September, 2009, and is also planning to set up two more mills in March, 2010, at the same cost. As per Income Tax Act, 1961, the normal depreciation rate on wind mill is 80 per cent. Your opinion is required whether additional depreciation @20 per cent can be claimed u/s 32(1)(iia) of the Income Tax Act, 1961 on wind mills. — PN Bhatia

A. The additional depreciation as provided in section 32(1)(iia) of the Act is allowable in respect of any new machinery or plant which is acquired or installed after March 31, 2005, by an assessee engaged in the business of manufacture or production of any article or thing. The term manufacture has not been defined by the Act. However, the Direct Taxes Code contains a definition of the term ‘manufacture’ as under:

“manufacture, with its grammatical variations, means a change in a non-living physical object or article or thing, resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use; or bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure.”

The above definition is based on the interpretation of the term ‘manufacture’ by the Supreme Court in various cases. In view of the above definition and the interpretation of the term “manufacture or production” by the Supreme Court, the issue raised by you is debatable. It is bound to involve litigation which may go up to Supreme Court. Any claim in this regard may be made after taking into account cost of litigation.

Market Update
Global cues hit sentiments
by Lalit Batra

Benchmark indices, last week, witnessed a deeper cut led by heavy offloading in interest rate sensitive stocks. Fear over China’s bid to cool down its economy coupled with US President Barack Obama’s decision to put restrictions on banks hit trader’s and investors mood. Also, the decision of the RBI to hike CRR (Cash reserve ratio) dampened the mood on Dalal Street. Finally, last week, the BSE Sensex lost 3.1 per cent and NSE Nifty lost 3 per cent.

Meanwhile, US President Barack Obama stunned markets last week by unveiling new rules for US banks that will potentially restrict their size and prohibit them from certain business activities. The US market recoiled on the concern that banks could begin to restrict lending activities just as the global economy was recovering from a deep recession.

The market seems to be oversold at this level although any upward trigger will depend on the global market due to lack of immediate domestic triggers (Budget is still four weeks away). The 5000 level for the Nifty will remain a key resistance. The outlook currently remains downward biased, however, any positive indicators for the market domestically or internationally may witness significant upward correction.

Deccan Chronicle

Deccan Chronicle Holdings Ltd. is engaged principally in the business of printing and publishing newspapers. Deccan Chronicle is the largest circulated English daily in South India and the fourth largest in the country.

Healthy margins

Deccan Chronicle’s margins from the newspaper business are easily the envy of its peers. The company’s margins on a standalone basis are miles ahead of its peers like Jagran Prakashan and Hindustan Times. This is the indicator of the strong competitive advantages the company enjoys on its home turf. This is due to the fact that the company’s dominant position ensures that it gets the best advertisement rates. The companys advertisement revenues have grown on compounded basis by around 90 per cent between 2003 and 2009.

Given the above facts, investors may keep a watch on the stock which is currently trading around the Rs. 150 mark and can buy on its decline with a medium term perspective.