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| Monday, June 12, 2000, Chandigarh, India   
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WB loan to boost cement sector |
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New taxes to hit industry
growth
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WB loan to boost cement sector LAST week, some important developments took place which are likely to have great long-term impact on industry ad the corporate sector. The first is the news that the World Bank has approved $ 516 million loan to India for the national highway development. This had been blocked earlier due to the opposition of the USA and the economic sanctions imposed by that country and some other developed countries. The second development is the launching of Index trading by the Bombay Stock Exchange. The third is the judicial order for splitting the Microsoft into two separate companies. Each development needs further analysis. The sanctioning of loan by the World Bank holds the promise that other loans frozen by the World Bank would also be released soon. This would invigorate the economy and open up immense opportunities for the corporate sector for growth and profitability. This week, the stock market is also expected to welcome this development by raise in the market indexes. The ambitious Rs 54,000 crore national road development project would create demand for cement and open up immense opportunities for road-building sector of industry. Cement companies, and particularly Larsen & Toubro, are expected to gain from this development. The Government of India is expected to promulgate an ordinance shortly for raising funds for road-building by imposing cess on petrol and diesel. The second development, namely Index trading, may take some time to expend but it provides a new avenue for speculators to move into big speculation. The National Stock Exchange is also commencing trading on S&P CNX Nifty futures. It is not easy to say whether Index trading would dilute trading on the stock exchange. It is, however, possible to say that the small traders would stick to the stock exchange trading because of two factors: unfamiliarity with the norms and problems of Index trading and large contract money for minimum trading (which is Rs 12.5 lakh). Large traders, mostly located in Mumbai, are expected to play the game in Index and derivative trading. The third factor relating to the possible splitting of Microsoft is expected to depress export demand for our software in the USA. It is, however, quite possible that some compromise might be patched up between the USA government and Microsoft, as there are rumours of a move by the USA government for out-of-court settlement. For a short term, however, this development is likely to affect the market valuation of the software companies. Tata Infotech has already reported that there is a lower overseas demand for software and related services. Its net profit is down by 74 per cent. This slow-down in exports might be hit further by the Microsoft split order. Mark Mobius, a respected market expert, expects heavy fall on NASDAQ as well as in the “new economy” scrips. Last week, Vikas WSP was
hit by profit-taking by traders and came down by from Rs
589 per share to Rs 429. It base now hit the lower freeze
band and may even go down further. This is a very good
scrip and there is nothing fundamentally bad about it. In
case it goes lower than Rs 350, it may again be picked up
for long-term investment. |
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NEW DELHI, June 11 (PTI) — Income Tax (IT) authorities have raided the premises of six Chartered Accountants and unearthed a hawala racket believed to be running into several crores of rupees, IT sources said here today. The sources said the department was tipped off about the racket in which these Chartered Accountants were allegedly involved in helping some businessmen to convert their hawala money into white. The sources said during the searches on the premises in various parts including Sainik Farms, Prashant Vihar and Shahadra here, the IT officials came across a number of sensitive documents indicating the modus operandi of various companies. Claiming that early indications pointed towards transaction worth several crores of rupees, they said the department was scrutinising a large number of documents seized from the premises and was ascertaining whether the money transaction related to hawala. Significantly, the raids were conducted prior to implementation of FEMA Bill on June 1 and so the case might be pursued under FERA. According to sources, at least 40 companies were colluding with the chartered accountants who used to fish for prospective customers willing to convert their hawala money. The sources said four types of people were involved in the scandal, person requiring to make the entry (businessman possessing hawala money), person who gives the entry (Firm owner), middle men (Chartered Accountants) and the person who does the documentation (Broker). The sources said these companies along with the Chartered Accountants made back-dated “accommodation entries” and showed purchases of shares in the name of the person willing to convert his black money into white. The IT sources said after making the back-dated entry of shares purchase, the same were re-sold through a broker back to any of the sister concern of that company. In certain instances, fictitious companies were shown on papers, which never existed on the ground, against whom the shares were shown as re-sold, the sources said. The IT department were also trying to trace the illegal money and the accounts maintained by various companies involved in the scam. The IT sources said the scam was only a tip of the iceberg and an estimate showed some more Chartered Accountants were involved in this whole affair of making “back-dated entries”. They said the information was being gathered and a close watch was being kept on the suspected people. The IT department said
that the Chartered Accountants made a good commission
from the person wanting to convert their hawala money
into white. |
J&K
gets two
power projects Srinagar, June 11 — A long-pending demand of Jammu and Kashmir has finally been fulfilled with the Central government agreeing to transfer two massive hydro-electric projects to the northern state. The state has been authorised to work on Baghliar and Sawlakote projects on the river Chenab. The two projects have the assessed capacity of generating 1,050 megawatts of power. The National Hydro-Electric Power Corporation (NHPC), a central government agency working on hydro-electric projects across the country, will work on seven other projects in the state, including Uri II, Kishenganga, Bursar and Akhrdu. The NHPC will invest Rs. 160 billion in these projects having an assessed capacity of 2,778 MW. Two of these projects, Bursar and Akhrdu, are of 1,000 MW capacity each. Kishenganga’s capacity is 330 MW and URI II 280 MW. Others are small projects, with Sewa II’s capacity pegged at 120 mw, Chutuk at 18 MW and Nimo Buzgo at 30 MW. The NHPC, which took 17 years to complete the 690 MW Salal project, hopes to commission the first project — Kishenganga — in five years’ time while all the other projects would be completed in seven years. “No, there won’t be jumping of deadline,” Union Power Minister P.R. Kumaramangalam told reporters here after the signing of the agreement between the Central and the state governments. Chief Minister Farooq Abdullah said he was satisfied with the agreement. “Let’s face facts. We didn’t have the money to commission the projects. They have to help. It is better to have something than having nothing at all. We are not having money. That is a fact and there is no escape from the fact,” he said. The state will get all the power produced by projects that it will commission. It will get 12 per cent power free from the electricity generated by the NHPC, as has been the practice in the past. A new feature is that in the future projects, the NHPC would give 15 per cent extra power to the state as generation cost and also meet the winter needs of Jammu and Kashmir when the level of water in glacier-fed streams, which otherwise have the potential to generate 15,000 MW of power, goes down. In due course, the state will get the NHPC power projects transferred to it. This has been agreed to in principle by the Central and state governments although it is not part of the agreement. Ajit Kumar, Principal
Secretary for Power, told IANS: “The agreement will
benefit the state a great deal”. The state is facing
an acute shortage of power. It could not build its
projects because of shortage of funds. — IANS |
New taxes
to
hit industry growth ROHTAK, June 10 — By imposing new taxes on industries only, the government will kill the goose that is laying the golden eggs, feels the Faridabad Small Industries Association (FSIA). The FSIA spokesman, Mr Rajiv Chawla said when the Chautala government declared its new industrial policy last year, industrialists had seen a ray of hope. But the recent imposition of taxes by the government were contrary to its declared intentions and have belied the hopes of the industry. Besides the imposition of Local Area Development Tax, the local bodies have also levied fresh taxes like Fire Tax and increased House tax, license fee, etc for the industries. The government, he said, is also planning to introduce Forms ST-38 for monitoring movement of goods, though it had earlier last year abolished some of the forms. Pointing out the differences in recently announced sales tax rates under the uniform sales tax policy, Chawla said many plastic goods and packing material in Haryana have been put in 12 per cent slab while the tax rates for the same items in Delhi were 4 per cent . He has urged the authorities to bring it at par with Delhi as in the case of automobiles. The industries,
specially the small and tiny units, were bitter at the
government decision to lower the limit of HT connection
from 70 kw to 50 kw. The decision has suddenly put an
additional burden of more than Rs 3 lakh on the affected
units. |
Govt to reduce stake in IDBI NEW DELHI, June 11 (PTI) — The government will reduce its stake in IDBI from 72 per cent to 58 per cent by converting a portion of its equity into convertible preference issue. “The restructuring of IDBI’s capital base is being done by converting 24.70 crore equity into three year redeemable preference share at an interest rate of 13 per cent per annum,” IDBI Chief General Manager M.M. Haque told PTI. The government has notified the preference share issue after getting the Finance Ministry’s approval, he said. With the restructuring, IDBI’s capital base will shrink from Rs 673.09 crore to Rs 432.39 crore, Haque, who took over as the Chief General Manager last month, said. Experts said the move was aimed at boosting the sagging share holder value of the institution. IDBI, which came out with its initial public offering (IPO) at over Rs 120 per share, is currently trading at below Rs 50. The government currently hold 48,55,80,000 shares constituting 72.14 per cent in the financial institution. Individuals, who hold 7,31,66,731 shares comprising 10.87 per cent is the second largest shareholder in IDBI. Earlier, prior to its
IPO in 1995, IDBI had resorted to preference share
capital. The preference share capital constituting Rs 170
crore was redeemed before the fiscal 1996. |
Markfed
eyes UK,
USA for exports CHANDIGARH, June 11 — Markfed has reported a 60 per cent increase in its exports during 1999-2000 and raised the target for the current year by 30 per cent. To achieve the target, Markfed has chalked out on aggressive marketing plan to capture the markets in Canada, the USA and the UK, particularly in cities with maximum Indians, particularly Punjabis. A Markfed team including Cooperation Minister Ranjit Singh Brahmpura, Mr K.S. Janjua, Financial Commissioner (Coop.), Mr D.S. Bains, MD, and Chief Manager, International Trade (Markfed), is going on a business trip to these countries in the third week of June. The team will also attend an International Grains Council conference being held at Ragina (Canada) on the invitation of the Canadian Embassy to promote the sale of its Sohna products, including “Sarson Ka Saag” and Basmati rice. Mr Bains said that last year Markfed established its contacts in some cities of these countries and now planning has been done for aggressive marketing in these countries. Various Punjabi food festivals will be organised at Vancouver, Toronto, Chicago, Los Angeles and London, Mr Bains said in a statement here today. Markfed’s Basmati plant is exporting over 500 MTs of rice and Markfed Canneries exports over 12 lakh cans of sarson-ka-saag, chatpata channa, maah ki dal and other ethnic foods. Markfed plans to appoint sales and distribution agents so that a supply chain is maintained on a consistent basis. A large advertisement
campaign is being launched on the media. A prominent
advertising agency of Delhi has been selected and the
media blitz will start by the end of July, 2000, over TV
& radio and in newspapers. Similar advertisements
will be carried in foreign countries. |
Harshad trial from June 13 MUMBAI, June 11 (PTI) — A local court would hear day-to-day trial from June 13 in a complaint filed by Enforcement Directorate (ED) against (Big bull) Harshad Mehta and five others for allegedly using $ 6 lakh in the securities scam that rocked the nation seven years ago. However, both the sides have urged the court not to conduct day-to-day trial in view of pendency of other cases. While ED contended in an application that it was busy with several other cases, Harshad too submitted that he was facing many complaints in special courts trying the securities scam. Although the court has ordered conduct of day-to-day trial from June 13 in view of Supreme Court’s suggestion to expedite the hearing, it would on the same day decide on their plea for the trial in a phased manner. Turning down the bail plea of Harshad’s associate Jivraj Java, the Supreme Court had ordered the lower court to expedite trial. ED is now contemplating
to move the apex court, urging that the trial be
conducted in regular course and not on a day-to-day basis
because Jivraj had already secured permission of Mumbai
High Court to visit Dubai for three months on a business
tour, Public Prosecutor Arun Gupte told PTI. |
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Q: I am an employee of Punjab Government. Last month I took loan from my Department. For house repair. Is this loan deductible for tax rebate under any clause? — Bhim Singh Singlu, Dhuri Ans: The loan taken to repair your house will not be eligible for tax rebate. However, the interest if any paid by you for such loan would be allowed as a deduction u/s 24 of the Income-tax Act, 1961 and this interest amount will be deducted from your total income of the year. Even your employer can give this benefit of interest payment while deducting Income-tax at source on your salary income. Q: I am working in corporation and tax payee and my taxable income is Rs. 1,35,000 per annum. I intend to purchase a new car and for purchasing the same PAN No. is essential and also income notice was served to the buyer from where fund was arranged for car. Earlier I received my salary in cash from the office but now it being paid through cheque. I have two saving account one with my wife and second with my mother and having Rs. 80,000 in balance. I have made two committee Rs 1500 p.m. for 14 months which is last on February 2000 and both committee will give me 40,000 I have also given 50,000 cash to my friend as a friendship. I intend to purchase the car on cash down payment. If I collect the whole payment and deposit the same in saving account. Whether income tax official can ask me for the payment deposit in the bank. Please suggest what procedure should be adopted to that income tax official remain far away. My per month salary is Rs. 10,000. I think to purchase the new car through finance and got Rs One lakh finance from the financier on zero interest loan and balance Rs one lakh cash from my saving account. As per financier, per month instalment have to be made 8333. Is it logical to give 8333 per month instalment from my net salary 9300. Please suggest what procedure should be adopted so that reasonable answer to be given to income tax official for their queries. Please suggest at the earliest if possible. — Nand Arora Ans: As you are a salaried employee and you intend to take the car on lease finance please remember that the payment made by you towards lease rent or interest, etc. will not be allowed any deduction to you while computing your income from salary. The onus to prove the source of financing the funding of the car lies on you. Hence, it is your duty to explain to the tax officials the full source of making finance available for purchase of the car. As you are having the requisite source for buying the car but the source of the fund is scattered from different sources. It is, therefore, recommended to you that you should prepare a chart of different funds available from different sources and give these details to the tax department along with the return of income to prove your investment in the car. If in your situation, your wife is working and she has substantial withdrawal to prove about the source of making household expenditure, then there is no problem on your making payment of this big instalment amount. It is perfectly in order if you receive cheque from your brother-in-law/father-in-law as a gift or as part finance of the loan to you. It is even suggested that while you file your Income-tax return just enclose details of the sources of funding of the car. Q: I am in medical profession, providing Anaesthesia services to various Nursing Homes, on call. Out of these, from one hospital I get Rs 5000 per month fixed salary & from rest I get fees per case. My total earning amounts to about 1,50,000 per year. I request you to answer my following queries:- (1) Which records and accounts I am supposed to maintain? (2) Can I have standard deduction from the salary I am getting & how much? (3) Upto which date I have to file I. tax return? — Dr. P.K. Sharma, Ambala City. Ans: Standard deduction
will be permissible to you on your salary income of Rs
5,000 per month. Thus, from your total salary of Rs
60,000 during the year standard deduction which will be
permissible would Rs. 20,000. You are required to
maintain cash book, ledger and carbon copies of the bills
duly numbered wherever such bills or receipts are issued
by you. The compulsory maintenance of books of account by
professional persons is as per Rule/6F of the Income-tax
Rules. As per this rule the books of account are required
to be maintained where the gross receipts of the
profession exceeds Rs. 60,000 in any one of the 3 years
preceding the previous year or exceed Rs. 60,000 during
the current year. The last date of filing the Income-tax
return for you is August 31, 2000. |
sti
Bharat Petroleum has strong fundamentals Q: Do you advise a hold in Vikrant Tyres? Ans: Vikrant Tyres (VTL) has been a beneficiary of its management control changing hands and being vested on JK Industries, with effect from May 1997. Following the same, this hitherto loss-making company posted a turnaround notwithstanding the fact that the auto industry was still reeling, under recessionary pressure. Following the implementation of a series of restructuring programmes, the company recorded a turnaround in its bottomlines. Moreover, the aggressive focus of company on the replacement segment paid off too and in fact proved to be its major growth area thereby enabling it to bypass the recession gripping the auto industry. Currently, JK Tyres and VTL have a joint market share of more than 20 per cent. The company has also drawn up a modernisation plan involving an outlay of Rs. 273 crore. The company is also entering into a tie-up with Continental AG of Germany, the fourth largest tyre manufacturer in the world, for steel radials for trucks and buses. The facility for this is scheduled to be ready by October this year. Moreover, to further reduce costs, the distribution network of both the companies is being synergised, as the management has no plans to withdraw the Vikrant band. Overall, the long term prospects of the company appear fair and existing shareholders could hold on. Q: Kindly throw some light on the future prospects of Fujitsu-ICIM. Ans: Seemingly buoyed by restructuring and a change of its accounting year, Fujitsu-ICIM now appears poised on the comeback trail and the same is apparent from the fact that the company’s systems division is now showing signs of becoming cash positive, which will enable the company to cut down on short term loans. Moreover, the company is now focussing on a select clientele and is offering higher value services like systems integration. Besides the company has also brought about a reduction in manpower through a VRS programme. Its subsidiary ICIL has further established offices in Singapore, Hong Kong, Germany, and Japan. Its export prowess was proved when, Nasscom ranked ICIL the thirteenth largest exporter of software from India. Further, ICIL has a SEL level 3 certification, which signifies that its quality controls are at the defined level, where the standard processes for developing, and maintaining software across and organisation are documented. SEL Level 3 is the third stage among the 5 stages which signify the growth of quality management in a software unit. (SEL Level 5 is the highest level). The company’s shareholders would gain directly if either ICIL is merged into Fujitsu-ICIM or if it divests some of its holding through a further placement or public issue of shares of ICIL. Overall, the prospects of this company appear to be looking up. Q: Please comment on the prospects of BPCL. Do you advise investment in this scrip? Ans: Bharat Petroleum Corporation (BPCL) is India’s second largest oil company in terms of market share and has a vast network spread all over the country. The company’s range of activities is also inclusive of manufacturing and marketing of petrochemicals such as benzene, toluene, LAB feedback. It has also recently commenced with the manufacture of MTBE, an additive for unleaded gasoline. BPCL plans to invest more than Rs. 4,342 crore during the Ninth Plan period on several major projects. A diesel hydro-desulphurisation unit at BPCL’s existing refinery is being put up to meet the stringent limit on sulphur content in HSD. A project terminal at Bina, at a cost of Rs. 463.40 crore is being set up to develop and establish marketing facilities for rail/road transportation of products from the propose 6-mln tpa Central India Refinery at Bina in Madhya Pradesh. BPCL recognises its responsibility towards reducing automotive emission levels. The refinery is the only in the country that produces methyl tertiary butyl ether (MTBE), which is used as an octane booster in place of tetraethyl lead. The MTBE output is utilised for production of unleaded petrol for consumers in Mumbai. The refinery has received ISO 9002 certification from Det Norske Veritas, Netherlands. It has also received the ‘Award of Merit’ from the national Safety Council, US, for the year 1996. BPCL also enjoys strong marketing infrastructure which includes coastal and inland storage facilities. To put in a nutshell, BPCL is a company with sound fundamentals with encouraging future prospects. Existing shareholders would do well to stay invested.
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Inflation zooms NEW DELHI, June 11 (PTI) — Annual rate of inflation shot up to 6.59 per cent for the week ended May 27, as primary food article prices continued an upward climb for the second consecutive week. The rate of inflation, based on wholesale price Index, rose by 0.29 percentage points during the week to 6.59 per cent (Provisional) from 6.30 per cent (P) in the previous week. Compared to this, inflation rate was 3.11 per cent a year ago. SBP
scheme CHANDIGARH, June 11 — The State Bank of Patiala, Sector 32 branch has launched a finance scheme for providing loans for the construction and purchase of a new house besides repair and extension of houses — named “tatkal Housing Loan Finance Scheme”. Rado watch NEW DELHI, June 11 (PTI) — Swiss watch maker Rado Watch Company, a 100 per cent arm of the $ 5.9 billion Swatch Group, will double its sales outlets and introduce new watches in India by 2000-end, a company official has said. Mascot Systems BANGALORE, June 11 (PTI) — Mascot Systems Ltd., a leading provider of IT application solutions world-wide and a subsidiary of Igate Capital Inc., is scheduled to make its debut on the Indian stock exchanges tomorrow. The company will be listing on the Bangalore, Bombay and National Stock exchanges. Vital Commn. MUMBAI, June 11 (PTI) — Delhi-based Vital Communications Ltd (VCL), which has recently tied-up with US-based NetGuru, is set to launch its Internet Service Provider (ISP) services next month, and is also planning to launch three portals by July-end. ABB
payment PANIPAT, June 11 —
The Haryana Bijli Utpadan Nigam will not make any more
payment to Asea Brown Bowri (ABB), till the job of
refurbishment in Panipat thermal power station is
completed. The job was given four years ago to ABB to
increase the capacity of four units of the power station.
ABB was assigned this job after an open tender in which
BHEL was also a participant. |
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