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July 16, 2000, Chandigarh, India   
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Punjab to spend 100 crore on IT development Maruti to reduce production costs Spinfed or ‘Spindead’ Hero Honda net up Shifting of polluting
industries held up |
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IT institute opens in Chandigarh
NEW DELHI, July 15 — The North Indian states today competed with one another in highlighting their respective areas to woo the IT entrepreneurs and projected the problems in the states to catch the attention of the Centre. The Punjab Minister for Local Government, Labour and Employment, Mr Balramji Dass Tandon said the state proposes to spend Rs 100 crore for development of IT over the next three years. The Chief Minister of Himachal Pradesh, Mr Prem Kumar Dhumal, said the state plans to generate about one lakh jobs by expanding e-commerce and e-governance by 2010. The Haryana Chief Minister, Mr Om Prakash Chautala, urged the Centre to grant Rs 50 crore for implementation of the IT policy in the state. Addressing the first conference of Information Technology Minister, Mr Tandon said Punjab has decided to be an active partner in Centre’s resolve to make India the IT super power. He said the state has drawn up a four-fold strategy to use it for maximum benefit of the people. Under the strategy, technology would be used for giving the public cost-effective services, promoting IT industry for economic growth, generating new jobs and earning more revenue to the state. He said priority would be given to application of IT in basic infrastruture areas like communication, manpower development, quality education, Internet connectivity and convergence of technologies and software exports. A software development town with the help of Mahindra and Mahindra was being set up by Punjab Electronic Corporation is being set up at Mohali, near Chandigarh, he said. The Himachal Pradesh Chief Minister said “the state government will set up a software technology park, earth station and data connectivity facility at Shimla at a cost of Rs 7.80 crore.” Seeking for a central assistance of Rs 5.30 crore to set up the IT park, he said the state government could provide facilities for setting up Rs 51 crore world class institute of Information Technology at Shimla for the benefit of northern states. The state had drawn up a two-pronged
strategy for e-governance with National Informatic Centre (NIC) providing necessary assistance to popularise the scheme. A Rs 7.10 crore project plan had been prepared to link the state capital with district headquarters through Internet. “Having the best optical fibre cable” network in the state, Himachal Pradesh has the advantage of expanding this mode of communication,” he said. Requesting the Centre to allow the state to use the inter-district connectivity up to 2-mbps bandwidth free of cost for initial two years for popularising the e-governance, the Chief Minister also said the private investors should be given substantial subsidy for using the communication network in the first five years. The Haryana Town and Country Planning Minister, Mr Dhirpal Singh, who read out the speech of the Chief Minister, said the state was creating high quality infrastructure to facilitate investments in the state and has drawn up plans for introducing computer literacy and imparting professional skills at various levels in schools and higher education. Mr Dhirpal Singh urged the Centre to set up STPI offices and earth stations at Gurgaon and Manesar to facilitate gateway
provisions. The Minister said that Haryana would soon have a state-level wide area network called HARNET. The optical fibre-based connectivity up to district and tehsil-level had already been created by the Department of Telecommunications. He urged the Prime Minister to take a policy decision to allow free use of this connectivity to states. “Haryana had a mandate to make IT penetration more intensive and remove all teething troubles for e-commerce to take roots in the country. Bulk of responsibility in this regard lies at the doors of the Centre, which had already initiated steps for creating an atmosphere of comfort in this regard,” he added.
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Maruti to reduce production costs NEW DELHI, July 15 (PTI) — Maruti Udyog has targeted to cut production costs by about Rs 90 crore in 2000-2001 by implementing value engineering methods, MUL Managing Director Jagdish Khattar said
today." The cost reduction target of MUL through value engineering in the current fiscal has been pegged at Rs 90 crore, 450 per cent more higher than the previous year’s savings of Rs 20 crore,” Khattar said at a seminar on Enhancing Competitiveness through Value Engineering’ here. Emphasising on the urgent need for cutting costs of products while enhancing their quality, he said the company, an equal venture between the Indian Government and Suzuki Motor Corporation of Japan, has generated 250 value engineering proposals in the first quarter of 2000-2001. Speaking at the seminar, the Director (Engineering) of BHEL M.K. Mittal said during 1999-2000, the company achieved savings of Rs 22 crore in the development of products, services and systems by adopting various value engineering measures. “We have introduced two cylinder designs for turbines which save about 25 per cent in material besides saving space in power stations,” Mittal said, adding that value engineering applied to structurals of boilers and condensers have also resulted in substantial savings for the company.
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Spinfed or ‘Spindead’ CHANDIGARH, July 15 — The Cooperative Spinning Mills’
Federation (Spinfed) which once administered seven mills is now left with just three, which too are gasping for
breath. Their cumulative loss is Rs 62.12 crore and cash loss Rs 18.65 crore, as on February 28 last. At a review taken by the Punjab Chief Minister, Mr Parkash Singh Badal, last week, it was suggested the Spinfed office be “closed” and 87-odd officials adjusted in the existing three spinning mills and the new sugar mill being set up by Markfed at Malout. It was in 1980s that seven spinning mills were set up at Abohar, Mansa, Malout,
Kotkapura,Tappa, Goindwal Sahib and Bathinda at an investment of Rs 85 crore. Funds were provided through government share capital and term loans from financial institutions. The present “operational” mills are: Abohar, Bathinda and Goindwal Sahib. The other four are under liquidation and closed for a long time. An interesting aspect of the review was that while identifying factors contributing to the closure of the mills and failure of the Spinfed the effort to “protect” and “defend” Spinfed officials who have been there for a long time. The plea being they should not be “sacrificed at the altar of wrong doings of others who remained unidentified and unpunished”. And also: “It should be our bounden duty to take care of the future of officials (87) who devoted the best period of their life to this organisation”. What went wrong, where and why? Was any attempt ever made to improve housekeeping of these mills, fix accountability and take steps to ward off avoidable and unavoidable losses? When textile industry was in recession(1998-99), cooperative spinning mills suffered a stroke. Spinfed was paralysed. It could not withstand market pressures or competition. Obsolescent machinery added to mills’ inefficiency. Opportunities to make right deals at the right time were repeatedly missed may it be in purchase of raw material or sale of yarn. Cotton has been cheaper in international market than in domestic markets. While private mills took advantage and imported cotton (eight lakh bales till December 1999) to reduce their costs, Spinfed did not. Domestic cotton price ruled high despite good crop projections and carry over stock. But resource crunch of Spinfed did not allow it to take advantage of the given situation. The state’s share capital is Rs 5.43 crore, while, member mills’ contribution is Rs 55.20 lakh. With four mills closed, the burden is now on three mills. Again Abohar mill stopped its contributions in April 1998. Only Bathinda and Goindwal are left to bear the
burden. The monthly establishment expenditure of the apex body is Rs 12 lakh. Consequently, the review meeting was convinced that Spinfed has outlived its utility. It was difficult to sustain it any longer. With the three operational mills already facing crisis, the future of Spinfed is “dead”. The liquidation of Tappa mill was over in September 1999. It is continuing for Mansa, Malout and Kotkapura. Liquidators are yet to settle financial liabilities of the institutions involved. The state’s high powered committee (set up in August 1999) has recommended one-time settlement of three mills’ outstanding term loans. These mills have some other liabilities as
well. The committee decided that the finance department should adjust, through book transfer, Rs 5.62 crore payable by three mills to other departments and government should write-off Rs 18.74 crore on account of payment due to it as unsecured creditors as well as government investment in share capital of the mills. Regarding payment of unsecured creditors, other than the government, the committee has decided that these may remain as unprovided for. This sum is Rs 16.66 crore. The tentative realisable value of the three mills is, Mansa: Rs 3.87 crore; Malout: Rs 2.68 crore and Kotkapura: Rs 2.06 crore. Both Spinfed and Markfed are designated “special purpose vehicle” to dispose of the mills. While bid for Kotkapura has been accepted (Rs 2,01,11,000) for Mansa and Malout fresh tenders are to be called. In a nut-shell, the review considered the proposal to “close” the corporate office, expeditiously dispose off all three mills and workers paid Rs 4.58 crore as terminal benefit. The last date of payment was February 22. Delay was likely to render the process null and void. Even employees of Barnala mill are to be paid terminal benefit of Rs 2.79 crore. Their last date was June 8. Even as a controversy over disposal off these mills dogs the government, it is proposed that the remaining three “operational” mills be also disposed off in their present running condition after their assets are discharged by the financial institutions on one time settlement of their dues. |
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Hero Honda net up NEW DELHI, July 15 (PTI) — Hero Honda Motors Ltd has posted a 60 per cent jump in the net profit to Rs 60.30 crore on a turnover of Rs 728.26 crore in the first quarter of 2000-01 against 37.80 crore in the same period last fiscal. The total sales of the company increased by 57 per cent from Rs 463,07 crore in 1999-2000 during the period, a company release said here today. Motorcycles sales of the company grew by 48 per cent to 2.40 lakh units in April-June this year from 1.61 lakh in the corresponding period of 1999-2000. |
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Shifting of polluting
industries held up CHANDIGARH, July 15 — The shifting of pollution generating industries from the populated areas of Ludhiana, Amritsar, Jalandhar and other cities has been held up. The Punjab Pollution Control Board has issued
instructions to about 1500 units of Punjab. Ludhiana is the most affected city because of industrial pollution. Most of the electroplating units, dying units, pickling units, etc. are located in some of the populated areas in this city. A spokesman of the board said the industrial units graded as “red” was to be shifted from the populated areas. But as no alternative sites had been provided the relocation of these has been delayed. The board was keeping a watch on such industries and trying its best to minimise the pollution level till these were shifted to non-populated areas. Mr Ramesh Inder Singh, Secretary, Industries Department, Punjab, said today that the land had already been acquired in Amritsar and Jalandhar for setting up notified industrial focal points. These focal points would be at a safe distance from the populated areas. Moreover, as far as location of new units is concerned, these as per the instructions of the Union Government, could only be set up at least a distance of 20 km from the municipal limit of a town. As far as Ludhiana was concerned, the industrial focal point was ready there but allotment of plots had been held up due to some legal problems. Efforts were being made to set up the industrial focal points in Amritsar and Jalandhar at the earliest to facilitate the shifting of polluting units from the populated areas. Meanwhile, Prof Jagir Singh Bhullar, Chief Parliamentary
Secretary, who has held a meeting with the industrialists of Amritsar on this issue told TNS that first infrastructure would have to be provided at the industrial focal points to motivate the industrialists. During the course of meeting, the industrialists pointed out that there was no facility of communication, road network, drainage, power and water at the places earmarked for the shifting.
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IT institute opens in Chandigarh CHANDIGARH, July 15 — Compu College, a high technology institute specialising in advanced software solution forays into the Indian high end IT education and training field, in collaboration with the Electronics Corporation of Punjab. The college will impart latest cost effective courseware designed by Information Technology specialists from Canada and America in accordance with the international standards. According to Mr Anuraj Sandhu, Sr Vice-President, Canam World Group, the college will provide complete career resources for enhancing workable skills for rewarding placements through their course structure. The institute will be assisted by Manpower Plus, Canada in providing career orientation and placement counselling, thereby opening new vistas of opportunities for its students in America, Canada, Australia and Germany. It has already administrative wings in Chandigarh, Bangalore and Delhi and is in the process of franchising in all major cities of India. |
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by Praful R. Desai Sufficient cause Q: Did the tenant have sufficient ground not to deposit arrears even after the order of the Court? If not, is the eviction order passed proper? Ans: Kerala HC in Davy v Indu (2000 (1) RCJ 36 J) held thus: The question that was required to be seen in the case Sankaran Pillai v V.P. Venguduswami (JT 1999 (5) 385) was, what does the expression ‘sufficient cause’ mean in S:11 (4) of Act? The SC in that case observed that it is no doubt true that the expression ‘sufficient cause’ is to be liberally construed to do substantial justice between the parties. But the expression ‘sufficient cause’ necessarily implies an element of sincerity, bonafide and reasonableness. It has to be shown by the tenants who has not deposited the rent within time, as directed by the controller, that non-deposit of the rent was beyond the control and there was no element of negligence or inaction or lack of bonafides on his part in not depositing the rent within time. In that case also the tenant did not deposit the rent on or before the date fixed by the court. When the order of eviction was passed, no application was moved by the tenant for revoking the order striking out defence. The tenant deposited the amount before the Appellate Authority. But it was held that the tenant’s subsequent deposit of the arrears of rent before the Appellate Authority being requirement of law for hearing the appeal on merits cannot be treated as bonafide deposit. The authoritative pronouncement of the SC also militates against accepting the contention of the petitioner. It is also pertinent to point out that the petitioner had already been evicted on 16.7.1999. Under these circumstances, the HC held that it is not inclined to accept the contentions of the petitioner and added, it is not impressed that it is a fit case to interfere under the revisional jurisdiction of this court. Consequently, the HC dismissed the revision petition. |
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by A.N. Shanbhag Q: Please refer to Q. 1 of your article in The Tribune dated 30.01.2000 regarding P.P.F. You have proceeded on the presumption that the account was opened in the financial year 90-91. You have written that the first withdrawal can be made in the seventh year after the opening of the account but in the 19th line of your reply against ‘withdrawal’ you have written 1991+5=1996 and the first withdrawal has been shown due in the financial year 1996-97 instead of 97-98. Please clarify. — Man Mohan Lal, Ludhiana A: The account has been opened in 90-91. This is the first year. 91-92 is the second year and then 96-97 is the seventh year. Therefore the first withdrawl can be made in FY 96-97. Now, 1991+5=1996 and the first withdrawal can be made in FY 96-97. Yes, I understand your confusion because, I myself was likewise confused until I derived the formula and said ‘Eureka’. I only said Eureka but did not do anything else. Q: 1. I have deposited Rs 1,50,000 in the name of my wife, in U.T.I. scheme (monthly) where interest earned is total tax free. The amount deposited from my retirement benefits. My wife is housewife with no other source of income. My question is: If my wife deposits this tax free income in the private finance company, of which I am one of the five partners, will it be clubbed with my income or not? It is not to be clubbed with my income. 2. I have gifted some money after 1.10.98 to my married daughter and another gift amount to my daughter-in-law. My daughter is in Sangrur (employed) and my daughter-in-law is housewife, is at Delhi where my son is employed. My question is: Whether income of above gift will be clubbed with my income or not? 3. I have deposited Rs 1 lakh in the name of my wife out of my retirement benefit in finance company. The interest we earned will be clubbed with my income. My question is whether interest so earned will be income of my wife or it will also be clubbed with my income. — Er. Dilbagh Singh Basra, Kot Gobind Pur A: God! It is difficult to understand what you desire to ask. I wish you had got your letter edited properly. Nonetheless, I shall make an honest attempt — 1. Purchasing the units in the name of the wife by applying your own funds means that you are using her as a namelender and this is a ‘benami transaction’. This is illegal. The units squarely belongs to you and you will have to treat in as such. It can be made legal by gifting the money to the wife to enable her purchase the units in her own name. But much of its utility is lost because of the clubbing provision which means that the income will be added to your income for income tax and its value will be added to your wealth for wealth tax. Yes, this was tax-free when it was earned and therefore, though it is clubbed in your hands, it remains tax-free. Fortunately, the income on income is not clubbable. In other words, once you have paid tax on the income of your wife (through your own funds), or not paid it because it was tax-free, it becomes her own asset. Any income earned on this asset is not required to be clubbed in your hands. 2.
The income on gifts to your daughter is not clubbable in your hands. The daughter-in-law is a different story. Her income is clubbable in your hands. 3. The first point above covers the answer to this query. Q: I am in tax bracket of 30 per cent I invested Rs 10,000 in Kothari Tax Shield-95 and enjoyed tax rebate of 20 per cent i.e., Rs 2000 only. On redemption I received Rs 14,860 on 08.04.99. You are requested to tell me how much income tax should I pay on the redemption amount of Rs 14,860 FY 99-00. — Vidya Gupta, Ambala City A: Cost inflation index for FY 94-95 was 259 and for FY 99-00 was 389. The indexed cost is Rs 15,109 (=10000x389/259). You have earns a capital loss of Rs 159. Q: 1. Is benefit of indexation of cost applicable to the amount deposited in the Nationalised Bank for seven years under 54EB i.e. Rs 70,000 deposited after seven years will fetch 1,44,200 after 7 years on maturity. 2. Is it your repurchase units of UTI software fund. 3.
Should we hold the units of UTI GSFC fund. — M.L. Gupta, Yamunanagar A: God! It is difficult to understand what you desire to ask. I wish you got your letter edited properly. Nonetheless, I shall make an honest attempt to answer your first question which makes a little sense. The bank interest is taxable whenever you receive it and it is also taxable on accrual basis. If you have chosen a cumulative option (which you shall not have) the tax is payable on the interest earned by you and redeposited in the account. Therefore, you are required to pay tax on this amount out of your pocket, even if you have not received the interest. Bad! Who advised you to adopt such an atrocious strategy? Investment in UTI/MF growth schemes is a different story. Here there is no fixed interest or dividend paid or payable and therefore, it attracts the provisions of capital gains.
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by Pushpa Girimaji Need for enforcing Essential Commodities Act THIS week, let’s look at the problem of petrol and diesel adulteration and to what extent they hurt the interests of consumers. It’s of course common knowledge that petrol and diesel are being adulterated with kerosene. But what is not generally known is that it is also being adulterated with solvent, naphtha, raffinate and slop. And like adulterated food which can harm those consuming it, adulterated fuel can damage automobile engine, besides contributing to environmental pollution. But how widespread is the menace? At a recent meeting of Secretaries and Ministers of Food and Civil Supplies from all the states and Union Territories called by the Centre, Gujarat Government hazarded a guess. According to the Gujarat Food and Civil Supplies Minister, Mr Ashok Bhatt, as a direct consequence of the government’s efforts at curbing adulteration of petrol, the sale of this fuel in the state had gone up in the last one year by as much as 19 per cent (Rs 27.53 crore worth of petrol). In other words, roughly that was the percentage of petrol that was being adulterated. (I do not know if this percentage takes into account the possible hike in consumption as a result of increase in the number of automobiles in the state.) Gujarat is perhaps the only state which has taken the job of prevention of adulteration of motor fuel in all seriousness. Last year the state government had systematically tackled diversion of kerosene from the public distribution system to petrol pumps for adulteration and more recently, the state government has taken up cudgels against solvent manufacturers. According to Mr Bhatt, eight petrochemical units were found to have supplied 3.14 crore litres of solvent worth Rs 42.9 crore to various petrol pumps in the state. Obviously, adulteration is big business! The Minister’s statement reveals not only the enormity of the problem, but also the impact of stringent enforcement of laws by the concerned authorities. In fact, there is no dearth of laws, rules and regulations to enforce quality control in so far as petroleum products are concerned. Besides the Marketing Discipline Guidelines under which oil companies can take action against their dealers for malpractice and irregularities, the Ministry of Food and Civil Supplies is also vested with powers to tackle adulteration of motor spirit and high speed diesel under different control orders issued by the government under the Essential Commodities Act. More recently, following reports that petrol and diesel were being adulterated with naphtha, solvent, raffinate and slop, the Ministry of Petroleum and Natural Gas has armed the enforcement agencies with two more orders: The Naphtha (Acquisition, sale, storage and prevention of use in automobiles) Order 2000 and the solvent, raffinate and slop (Acquisition, sale, storage and prevention of use in automobiles) order 2000. Soon after he took charge as the Union Minister for Petroleum and Natural Gas, Mr Ram Naik had expressed grave concern over the large scale adulteration of petrol and diesel and promised to take all necessary preventive steps. The two recent orders passed by the Ministry and the recent conference of Food and Civil Supplies Ministers are all part of this agenda. But all these rules, regulations and orders would be meaningless if the state governments did not enforce them. And this is where consumers need to pressure the state governments to act. A study on distribution and diversion of kerosene, conducted by Tata Economic Consultancy Services in 1995 for the Indian Oil Corporation, showed that on an average about 20-30 per cent of the kerosene meant for public distribution system was diverted for purposes like adulteration of petrol and diesel at petrol pumps, for industrial uses and for sale in the black market. In other words, what the survey revealed was that out of 900,000 kilolitres of kerosene supplied to the states every month, about 225,000 kilolitres were diverted. And out of this, anywhere between 30-70 per cent of the fuel was utilised for adulterating petrol and diesel. While in states like UP and Bihar, the percentage was 55-70, in West Bengal and Maharashtra, it was assessed at 45-55 per cent. More recently, during the first week of December, public sector oil companies launched a special vigilance drive at their retail outlets. Besides 129 cases of suspected adulteration, 18 cases of tampering of sales of the department of weights and measures put on petrol/diesel dispensing units were detected. Checks were also carried in petrol depots and tank trucks of oil companies and irregularities were detected in 123 tank trucks and 44 depot terminals. These are again facts which call for concerted efforts at eliminating malpractice in the distribution and sale of automobile fuel. So demand from oil companies as well as State Food and Civil Supplies Departments, stringent enforcement of the law. Ask for information on what is being done to prevent adulteration of petrol. You have every right to demand quality product and get it.
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From Ashok Kumar in Mumbai Cement companies bank on infrastructure THE last weekend was spent in Hyderabad or “Cyberabad” as I prefer calling it these days, given the number of cyber companies foraying into the market with an IPO on a weekly basis. To continue, my better half and I flew off together (on Jet Airways, not Indian Airlines, please) to make a company visit. Since we are in the process of compiling a research report on the company, it would not be feasible for me to disclose its name now, but surely, we can discuss it in the near future. It was there that our host, the promoter of an — you guessed it — IT company, talked to us about his personal stockholdings and sought professional advise. We found that his investments were skewed in favour of cement companies, and I promised to mail out a cement industry snapshot that me better half had compiled recently. Here are a few excerpts: The cement industry is now beginning to look up once again primarily thanks to the positive thrust provided by the government’s decision to improve housing and infrastructure. During the year 1999-2000, the industry as a whole had to grapple with excess capacity accompanied with a marginal growth in demand and consequently lower profits. To put an end to poor valuations, cash rich cement companies favoured takeover and acquisition activities, which in turn helped these companies to enhance their capacities without contributing further to the oversupply situation. India Cement Ltd’s (ICL) hostile bid on Raasi Cement Ltd had initiated this trend of takeovers in the market; these in turn substantially increased the market capitalisation of the industry. Tight market conditions have forced the players in the industry to restructure operations thereby concentrating on their areas of core competence. Like the A.V. Birla Group has streamlined its cement business in the most optimal manner. India Cements is moving out of unrelated areas, to concentrate on its cement business. Similarly, L&T has also disposed off its shipping division. Almost all companies have put in place programmes to cut costs. Announcing VRS schemes has become a common feature for most of the companies engaged in the cement business. Considering the glut in the cement industry, some of the Indian players have opted for value addition in their product profiles. For instance, ready-mix concrete is steadily gaining popularity in cities such as
Mumbai, Delhi, Calcutta, Bangalore and Chennai. Furthermore, companies like Madras Cement, ACC and L&T are even popularising products such as blended cement. The medium to long-term prospects of the cement industry appears fairly bright in the sense that creation of newer capacities has slowed down. A distinct weariness displayed by financial institutions to fund the cement industry should also go a long way in keeping a check of sorts on further capacity additions. The industry is banking on the infrastructure development to take off. Once it does, the excess capacity will be absorbed and prices are bound to improve. Else, the stalemate will continue. Next week, we will take a closer look at some of the leading players engaged in the segment.
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Ind-Swift Indian Bank STG NHPC
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