Sunday, November 15, 1998
today's calendar
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B U S I N E S S | Sunday, November 15, 1998 |
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spotlight today's calendar |
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Government to issue
clarification on buyback Indian
pavilion bags |
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International Trade Fair
inaugurated FIPB
clears Rs 1500 crore FDI proposals |
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Goindwal
fails to develop as industrial town Companies
Bill not to be withdrawn CII
condemns US ‘entity list’ |
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Government to issue clarification on buyback NEW DELHI, Nov 14 (PTI) — The government will shortly issue clarifications and notifications relating to buyback of shares by corporates and other amendments in the companies ordinance 1998, Department of company Affairs (DCA) Secretary TS Krishnamurthy said today. “We will look into the suggestion by industry and legal experts on the ordinance issued by the government last month and issue necessary clarifications in the companies act”, Mr Krishnamurthy said chairing the seminar on corporate law organised by the Associated Chambers of Commerce and Industry (Assocham) here. “We are hopeful to introduce the Bill relating to the ordinance in the Companies Act in the winter session of the Parliament,” he said. DCA Secretary also said in the next Budget session of parliament the government will reintroduce the companies Bill 1997 with amendments after taking views of the parliamentary committee. On buyback of shares guidelines, he said the government would soon clarify definition of securities and also clarifications on whether a company can come out with a issues before 24 months. The government in the ordinance had permitted companies to purchase its own shares or other specified securities and had also stated that after completion of buy back a company cannot further issue securities within a period of two years. On issues relating to the tax implication of buyback of shares, Mr Krishnamurthy said it relates to the Central Board of Direct Taxes (CBDT) and the Finance Ministry and the CBDT is looking into the matter closely. Corporates have been concerned on accounting treatment after buyback in their balance sheets and tax liability and whether the income of the shareholders from buyback would be taken for calculating capital gains tax. On the inter corporate investment he said, the government would take views of the (RBI) to decide on the interest rate below which corporates cannot lend. The ordinance has stated that the loans shall not be made at the interest lower than the prevailing bank rate. On the companies Bill, he said it will create atmosphere for better corporate governance along with various checks and balances specially for fly-by-night corporates. On the other changes in the Companies Act which the government is considering is increasing the turnover limit of deemed limited company from the current level of Rs 10 crore to Rs 25 crore. Meanwhile, the ordinance on buyback of shares and inter-corporate investment today came under severe attack from the industry and legal experts. These experts said the government have left many grey areas in the ordinance which need to be modified for better corporate governance and transparency. “The ordinance has not made clear the definition of capital and debt and is very necessary before the companies go for buyback” said LVV Iyer, Vice-president (Legal) of Nagarjuna Fertilisers Ltd. He said the government should make clarification on preference and paid-up capital of a company and also long and short term debt. These issues were deliberated during a corporate law seminar here organised by Associated Chamber of Commerce and Industry (Assocham). Company Law Board (CLB) Chairman S Balasubramanian said norms relating to fixations of limits for inter-corporate investments and debt-equity ratios should not form a part of the act but should be flexible enough so that these could be applied on the basis of company’s requirements. He said debt-equity ratio
is not uniform for all industries and this has also been
recognised by financial institutions. |
International Trade Fair inaugurated NEW DELHI, Nov 14 — Asia’s one of the most popular trade fairs, the India International Trade Fair (IITF), got underway here today with the Union Finance Minister, Mr Yashwant Sinha, deputing for an indisposed President, inaugurating the 14-day jamboree by reading out Mr K.R.Narayanan’s inaugural address. Mr Narayanan advised the Indian industry to go in for technological upgradation to achieve greater efficiency and competitiveness in the international market. He said only quality products and use of latest technology could establish the India brand name in the world markets. Mr Narayanan said trade and industry had a great role in in addressing the problem of poverty, unemployment and income disparities in the country and this could be achieved by developing sound and efficient technologies for the masses. The Union Commerce Minister, Mr Ramakrishna Hegde, in his speech struck a sombre note in the colourful ceremony by disclosing that the exports during the current year have not increased as expected. He however, sought to cheer the audience by saying that the Commerce Ministry was hopeful that the new initiatives for enhancing the competiveness of India’s exports would pay dividends and it would be able to achieve an export growth of 15 per cent. “I am confident that the Indian trade and industry would respond adequately to the situation”, he added. He said exports during 1997-98 were valued at $33,980 million, registering a growth of 2.64 per cent in dollar terms though in rupee terms, the growth was 7.45 per cent. Mr Hegde said the country’s economic fundamentals were strong as it had low current account deficit, low percentage of short-term debt in proportion to its total debt, adequate foreign exchange reserves, and lower external debt. He said the initiatives taken by the Government had started showing results. The industry slow-down has been somewhat halted and the manufacturing sector has grown by 7.4 per cent powering an overall industrial production to a growth of 6.1 per cent. Other sectors were also showing marginal improvement, he added. However, there were some areas of concern, such as poor infrastructure facilities and the sub optimal efficiency in use of resources. A viable solution to these problem lies primarily in increase of in direct foreign investment in key areas and stress on improvement of physical infrastructure, health and education through practical and result oriented policies and plans, he added. Mr Hegde mentioned that the organisers of the fair, the India Trade Promotion Organisation, has been playing a valuable role in export promotion through the medium of fairs and buyers-sellers meets in India and abroad. The fairs serve to project both the country’s capabilities and attainments and its business objectives. The display profile at IITF’98 covers the entire gamut of industrial activity. The main themes dwell on the export potential of the small scale industries, the innovations in building technologies and the ever growing market for consumer durables. There is also a toy show. A G-77 Trade Fair and
Summit is also being held simultaneously highlighting the
business opportunities among member nations. |
Indian pavilion bags gold medal DUBAI, Nov 14 (PTI) — The Indian pavilion which showcased the best of Indian products at the Baghdad International Fair (BIF), has bagged the gold medal for being the best pavilion. The Indian companies also won orders for items such as agriculture pumps, diesel engines, baby food, automotive parts, sports goods and optical instruments. Some more contracts are expected to be signed between Indian and Iraqi companies for supply of the same products, a release of the Indian Embassy in Baghdad said. The Indian pavilion, which displayed products of 74 companies, was visited by Vice-President of Iraq Taha Yassin Ramadhan and several key ministers. The medal was presented to
Director of Indian Pavilion by Minister of Trade in
Baghdad Dr Mohammed Mehdi Saleh on November 10 on the
conclusion of the fair. This year 24 Indian companies
displayed their wares at the fair which was twice the
level last year. |
Mr Kishan S. Rana, a former Ambassador to Germany, was in Chandigarh on Wednesday to attend a CII seminar. Comparing cultural and personality traits of different people, he made interesting observations based on Richard D. Lewis’s book “When Cultures Collide”. An introvert person is patient, quiet, likes privacy, plans methodically, doing one thing at a time, while an extrovert is impatient, talkative, inquisitive and plans, several things at once. A “linear-active person is unemotional, follows procedures, likes fixed agenda, uses memos, respects officialdom, dislikes losing face and confronts with logic. A multi-active person is emotional, pulls strings, inter-links everything, rarely writes memos, seeks the top official, has ready excuses and confronts emotionally. The former rarely interrupts, separates social and professional life, accepts favours reluctantly and gets information from databases, reference books. The latter, however, frequently interrupts, interweaves social and professional life, seeks favours and gets first-hand information. Having closely watched Germans at work, Mr Rana tells industrialists interested in doing business with Germans what they like and what they don’t. Germans admire thoroughness, professionalism, technical data over artistic style. They have long attention span and expect the same from their partners. Punctuality is seen as an indication of reliability. Hierarchy is important, as also “personal space” of each person. Admire a German’s car or house or other property, as appropriate. Titles must be used — a “doctor” is never called “mister” — and to call a “Professor” a “doctor” is inappropriate. Mr Rana also lists some “don’ts”. Germans get upset over bluntness. They are embarrassed over criticism of themselves. Their logic is hard to derail by head-on methods; better seek common ground, and build on this. Jokes in business are not appreciated, but over beer or at social events, they love humour. Their self-image is of honesty, reliability, sincerity; naturally they admire this in others as well. Unlike Americans, Germans reserve first names for special friends. Shaking hands each time shows mutual respect. — TNS Man of business A Business Tribune reader writes: “If you are a man of business, come to the man of business, only in the hours of business, solely for the matters of business, quickly transact your business, then go about your business, leaving him to attend to his own business.” The reader, Lieut-Col Gurcharan Singh, sends his gems of thought in Hindi too: Samajh samajh kar Fashion capital? It may come as a surprise to New York and Paris, but New Delhi has been chosen as the global headquarters of the new-born organisation of international fashion institutes which will set a uniform global standard in fashion education. The International Foundation for Fashion Technology Institutes (IFFTI) was formally constituted here, after three days of deliberations, with the signing of a Memorandum of Understanding (MoU) by 16 leading institutes from nine countries and Hong Kong. India, considered to be a late entrant to the field of fashion industry, has been selected as the global headquarters of the IFFTI. “The headquarters will be situated at the NIFT (National Institute of fashion Technology) campus in New Delhi,” said Shyamal Ghosh, the first chairman of the new global body. Ghosh, Textile Ministry secretary, is also chairman of the NIFT, the country’s leading fashion educational institute and one of the founding members of IFFTI. New Delhi has been chosen as a part of the effort of the global leaders in the fashion industry to encourage developing nations. “The participants at the conference were highly impressed with the NIFT here. They saw in India an emerging leader of the global fashion industry,” Ghosh told IANS. BBC turn-on SATELLITE television viewers in Europe have been seeing naked women rather than newscasters when tuning in to the British Broadcasting Corporation’s staid World Service this week. The frequency normally bringing in the BBC’s 24-hour news service apparently was switched by accident to a network called the Eros Channel. In mid-afternoon, Eros was carrying advertisements for the services of ladies with names like “Chloe of Capetown” and giving their phone numbers. But by mid-evening, the programming grew hotter and the women were displaying their wares. — Reuters Pizza, not sex HUNGER has overtaken sex when it comes to the prime questions that a million callers have asked a Belgian toll-free scouting service to help them with in the past five months. Scoot, an interactive information service accessible by phone or via the Internet, said in a statement the bulk of callers asked, “Where can I get a pizza tonight?”, with the next most popular topics being travel destinations and party locations. Only 1.7 per cent of the
calls to Scoot, a 650 million Belgian franc venture
between Freepages Group PLC and Dutch media group VNU,
were on sex or eroticism, falling far short of searches
using Internet-only search engines. —
Reuters
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FIPB clears Rs 1500 crore FDI proposals NEW DELHI, Nov 14 (PTI) — Foreign Investment Promotion Board (FIPB) today cleared 30 foreign direct investment (FDI) proposals worth Rs 1500 crore including two mega projects by Ispat Telecom Ltd, Aes Power and Mercedes Benz. The board has cleared the $ 800 million (Rs 3450 crore) satellite project of the Mittal promoted Ispat Group to launch, operate, and maintain an Indian owned satellite for telecom services, FIPB sources said. The project envisages a FDI of Rs 675 crore by Ispat Groups Overseas Affiliates and Associates, constituting 49 per cent equity. Mittals would hold the remaining 51 per cent stake in the project, which will also enter into manufacture of telecom equipment. FIPB sources said the approval was subject to other conditions like clearance and licence from other ministries. It will also have to be cleared by the Cabinet Committee on Foreign Investment (CCFI). This is the fourth mega satellite project for global mobile personal communication systems cleared by FIPB. Earlier, the board had cleared similar proposals by Reliance Telecom, Hindustan Technologies and Aces. FIPB also cleared a proposal by Aes Power Corporation to bring in Rs 510 crore FDI to take 49 per cent stake in Orissa power generation corporation (OPGC). Aes Power would invest in OPGC through its wholly-owned subsidiary Aes India. FIPB sources said Aes had supported its proposal with a board resolution from OPGC allowing Aes to take stake in the company. OGPC was created by trifurcating Orissa State Electricity Board as part of its restructuring. Another significant proposal cleared today is that of Mercedes Benz to increase its stake in its Indian joint venture with Tatas. The board cleared the proposal by the German automaker to increase their stake in Mercedes Benz India Ltd (MBIL) to 86 per cent from existing 81.32 per cent by bringing in an additional equity of Rs 150 crore. With the infusion, Mercedes Benz equity in MBIL would increase to Rs 516 crore from Rs 366 crore. The total paid-up capital would increase from Rs 450 crore to Rs 600 crore. The remaining stake in MBIL, which manufactures Mercedes Benz cars in India, is held by Tatas. This is the second time Benz is increasing its stake in the Indian joint venture at the cost of Tatas. The board also cleared
proposals by two Italian companies to set up automobile
component manufacturing facility for Fiat cars in India. |
Daewoo plan rejected NEW DELHI, Nov 14 (UNI) — The Foreign Investment Promotion Board (FIPB) today rejected Daewoo Corporation’s Electronic Arm’s proposal to import and market car stereos in India. The proposal was rejected as it involved only trading and no manufacturing was proposed by Rico Daewoo Precision Industries, the Daewoo Corporation Arm, FIPB sources told UNI here. The proposal was rejected
at the behest of the Commerce Ministry which stated that
no equity investment was being made in India and neither
was the technology being brought in. |
Goindwal fails to develop as
industrial town TARN TARAN, Nov 14 — BHEL had set up an industrial valves plant, at Goindwal with the initial capital investment of Rs 3 crore and it was raised to Rs 5 crore in 1997-98. The current level of production turnover exceeds Rs 11 crore. BHEL has adopted nearby Hansawala village. The area lacks basic infrastructural facilities. It is difficult for any industrial house to sustain. This is one of the main reasons of sickness in the industrial complex. Roads are in bad shape, bus service to and from Amritsar, Jalandhar and Kapurthala is very poor. Very often pilgrims are found stranded on the roadsides. There is no incentive for entrepreneurs to set up industry though it was accorded the “first nucleus industrial complex” status. Goindwal could not develop because of half-hearted approach of the government and the local bodies. Some entrepreneurs who had come here after 1984 riots in hope to begin a new life feel dejected. Basic amenities like medical, education and transportation are woefully inadequate. As a result, the area is unable to attract skilled workmen. There is a proposal to set
up a thermal power plant at Goindwal from a private
investor, and this has raised some hopes. |
Companies Bill not to be withdrawn NEW DELHI, Nov 14 (UNI) — The government will not withdraw the Companies Bill and is working towards enacting the Bill, though slightly changed, in the Budget session of Parliament, Department of Company Affairs Secretary T.S. Krishnamurthy said today. The department is presently in the process of implementing certain changes in the Bill pursuant to discussions with the standing committee, “we will be moving the Bill in Parliament some time in the winter session, so all the necessary changes would be made in a couple of weeks,” Mr Krishnamurthy said here while addressing a seminar organised by Assocham. The government, he said, has taken a firm decision to go ahead with the Companies Bill and it would not be withdrawn. “In fact, we would be bringing out certain changes in the Bill following our discussions with the standing committee. But it will go ahead and will hopefully be enacted during the budget session of parliament.” “We have no cobwebs in our minds and want the Bill to go through to help promote economic growth.” Deliberating on the changes being introduced in the Bill, Mr Krishnamurthy said the changes have been brought about to accord certain degree of accountability to freedom. Violations of Company Law would attract penal consequences, he said adding that the department is also looking at clarifying that this provision would be applicable to violations of SEBI law as well. “When the Companies Act is framed, contravention of SEBI law as well as the Company Law would both attract penal consequences, we will take up with the Law Ministry this point and clarify it in the Bill.” The Bill would also provide for stringent action against companies which do not file their annual returns. “Even listed companies do not file their annual returns in time and some times, for years together, the Bill would provide certain stringent provisions in this regard, another provision is being looked into whereby, the names of such erring companies would be struck out.” With regard to companies which fail to fulfil the promises made during the time of floating an issue, the Bill provides for disqualification of the board of directors. Such stringent measures are the need of the hour, he added. Speaking on the occasion, Company Law Board Chairman S. Balasubramanian called for having a single regulatory authority. “Today, we have various regulating agencies, so people are not aware as to whom to approach. The multiplicity of regulatory agencies is posing problems for both the corporates and the investors and this needs to be addressed fast.” The government, he said,
is working towards this, “but the earlier it is
done, the better”. |
CII condemns US ‘entity list’ NEW DELHI, Nov 14 (PTI) — The Confederation of Indian Industry (CII) today condemned the United States for issuing an ‘entity list’, saying it was uncalled for, untimely and harmful to Indo-US business relations. “The release of entity list soon after partial lifting of the US sanctions reflects inconsistency of US policy towards India and particularly, Indian industry,” CII President Rajesh V Shah said in a statement here. The United States last night named 40 Indian entities along with 200 subordinate units which would be covered under export restrictions. The Commerce Department published a huge list naming government agencies, government-affiliated firms and private companies as well as military entities believed to be involved in India’s nuclear, missile and military programmes. The list also identified 46 entities and 100 subordinate units of Pakistan which come under the restrictions. The Indian and Pakistani entities would be covered by the Glenn Amendment sanctions which bar American companies from exporting to them any item which could be useful for both peaceful purposes or for nuclear and missile proliferation or for other military purposes. The publication of the entities list had a wide impact and created confusion about US strategy towards India, Shah said. “The CII, which worked consistently to strengthen Indo-US economic and business cooperation, was deeply distressed by this action of the US Government against Indian industry and Indo-US business partnership,” Shah said. He said the ‘entity
list’ along with the US decision to continue with
the denial of World Bank and International Financial
Institutions financing of infrastructure projects would
make the going tough for India. |
Re-possession Q: Should the executing court entertain the application by the tenant U/s 14 of the Kerala Rent Act for getting back possession of reconstructed building? Ans: Kerala H.C. in George v Narayani (1887(1) R.C.J. 575) was dealing with this issue. The Act does not provide for any loss of right in the tenant merely because he did not voluntarily surrendered the building. Of course, by that process, he might delay the reconstruction of he building by the landlord and hence would be kept out of possession, a longer time than what would have been required if he had surrendered the building within the time stipulated in the order for eviction. The H.C. added, at best he would be precluded from complaining that the landlord had not adhered to the time schedule for reconstruction fixed by the order for eviction. By compelling the landlord to recover possession in execution of the order for eviction, the tenant does not lose his right to have the option to have the reconstructed building allotted to him on fair rent. Since the District Court had denied the tenant a right vested in him statutorily and recognised by the very order for eviction on the basis of a ground that is not available on the scheme of the Act, the District Court has clearly acted illegally and outside its jurisdiction in interfering with the order of the Executing Court and denying the tenant the right to have the reconstructed building allotted to him on the ground that the tenant had not complied with the condition imposed by the order for eviction and had not surrendered the old building voluntarily. The H.C. thus held that
all that the Executing Court order can do is to order
delivery of the building by the landlord to the tenant,
not only from the landlord who has reconstructed the
building but also from anyone who has been put in
possession by the landlord subsequently in derogation of
the order for eviction, leaving the parties to approach
the Rent Control Court U/s 11(4) (ii) of the Act to have
the rent determined for the reconstructed building. In
that way, the H.C. allowed the petition.
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Q: I was 65, in September last. I have been submitting my I. Tax returns even after my retirement from Govt./Private service. My tax liability during this period never exceeded Rs 5000/-. But for assessment year ‘98-99 senior citizens above 65 years of age are exempted from payment of I. Tax upto Rs 10,000/-. Since I fall in this category, should I submit I. Tax return even now? Please clarify. — G.S. Toor, Mandi Mullanpur Ludhiana. Ans: On the facts stated by you, the net tax payable by you is Nil because of your being a senior citizen, but nevertheless there is a taxable income. Hence, to avoid any problem at a future stage it is advised that you should continue to file your Income-tax returns. Moreover, it is very likely that you may be coming within the purview of one of the economic indicators as per the policy of the government. Q: I am a Central Govt. employee. I underwent heart by-pass surgery. I paid Rs 1,50,000/- as medical expenses. Rs 90,000/- has been re-imbursed to me by my department. Please let me know if I can claim exemption of IT on the remaining amount i.e. Rs 60,000/- under Section 80D. If so, please let me know as to what documents are required to be attached with IT Return. — Veekaas, Shimla-4. Ans: On the facts stated by you the deduction u/s 80D will not be available to you. Please remember that the deduction u/s 80D is permissible only in respect of medical insurance premium paid by a person. Q: I give below my income particulars pertaining to the year 1997-98: 1-4-98 to 31-3-1998. 1. Total pension Rs
62619.00 (without standard deduction) I shall feel highly grateful if you kindly calculate my tax liability. — Madan Mohan Lall, Chandigarh. Ans: On the facts stated by you from your pension income you are eligible to a standard deduction of Rs 20,000 for the Assessment year 98-99. However, this standard deduction will get increased to a higher amount for the Assessment year 1999-2000. Out of the interest income if the interest income is from bank mutual fund, etc. you will be eligible to claim deduction u/s 80L to the tune of Rs 15,000. Likewise, from your rental income as shown by you it is not clear as to whether you have claimed any deduction in respect of repairs. Please remember that you are eligible to claim 1/5th of the repairs from the total rent received by you. The quantum of deduction in respect of repaies has been increased to 1/4th for the Assessment year 1999-2000. As you are a senior citizen the net tax payable by you on the facts stated by you will be Nil. You will therefore be eligible to claim a refund in respect of the tax deducted at source. To claim the refund, just file your Income-tax return with all the relevant papers and details. Q: Maruti DX 800 has been won by me in the competition “know your country” series sponsored by the Hindustan Times in connection with celebration of Fifty Years of Independence of our country. Kindly clarify if I am required to pay any Income-tax. If so, how much? I may add that the car has been won in the competition on merits and not by way of lucky draw. — Surinder Kumar Marwaha, New Delhi. Ans: The amount will become taxable in your hand. From this amount the sum of Rs 5,000 will be deducted on account of casual income. Thus, on the balance amount of the competition amount so won by you whether in cash or in kind would be liable to Income tax. Your other income will be added with this amount and then whatever tax is payable on that income the same will have to be paid by you. Q: I invested Rs 10,000/- in March, 1991 for the purchase of 1000 units of Canpep under Can Bank Mutual Fund. I availed 20 per cent income-tax rebate u/s 88. The units were encashed in the M/O August, 1997. I received Rs 10850/- after deduction of Rs 2,000/- income-tax at source. Kindly suggest me, how much amount out of Rs 10850/- I Should add to my income for the year 1998-99 after applying inflation index. — Parshotan Dass, Bassi Pathanan. Ans: In respect of investment in the Unit, etc. in which you have availed tax rebate @ 20 per cent such investments are not to be included in your income when the principal amount is received. However, in respect of the payment now received by you i.e. the net amount received together with the tax deducted at source thereon would be treated as the sale proceeds of the said investment. This will be liable to payment of tax on capital gains. The resultant surplus will be treated as long-term capital gain. Apparently on the facts stated, you will not be required to pay any tax on capital gains because after taking into account the impact of cost inflation index, there will be virtually no liability to tax on your long-term capital gains in respect of the units sold by you. Even if there is no tax
liability please file your Income-tax return together
with your other income. The tax which has been deducted
at source by the mutual fund will either be adjusted
against the tax payable if any for the current year or if
there is no other income or the total income is below the
exemption limit you will be able to claim refund in
respect of the tax deducted at source by the mutual fund
only after filing Income-tax return. |
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| Gold steady NEW DELHI, Nov 14 (PTI) — In an otherwise steady bullion market today, silver prices declined on fresh arrivals and closed with losses. Standard gold and ornaments were held unchanged at Rs 4340 and Rs 4190 per 10 gram respectively on scattered small trading activities. The quotations: Silver .999 (ready) 7500, delivery 7510, coins buyer 10,700 and seller 10,900. Standard gold 4340, ornaments 4190 and sovereign 3750. Ipca Lab HMT Natural foods |
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