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| Sunday, November 26, 2000, Chandigarh, India   
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Decision on SBI foreign insurance partner
soon PNB to enter insurance Government may split
PSEB Canam gets ISO 9002 Collaboration new mantra in corporate
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Two good picks: Mastek & Mascot Systems
Q: We are registered as a dealer under the provisions of the Haryana General Sales Tax Act, 1973 and the Central Sales Tax Act, 1956.
‘Big firms should move civil courts’
Apprenticeship
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Decision on SBI foreign insurance partner soon THIRUVANANTHAPURAM, Nov 25 (UNI) — The State Bank of India (SBI) will decide, within a couple of weeks, its foreign partner in the proposed insurance company in the joint sector. With the SBI deciding to enter the insurance sector, it had shortlisted three foreign insurance companies for joint participation in the venture. The final partner would be decided in two weeks time, SBI Chairman Janki Ballabh told newsmen here today. He said the SBI would have 74 per cent of the equity, leaving the remaining 26 per cent to the foreign partner, in the proposed insurance company. Replying to a question, Mr Ballabh said there was a proposal to launch a IT joint venture which would, to begin with, undertake in-house IT requirements of the bank. The joint venture would be launched with a leading IT company. Asked about reports that negotiations were being continued with Microsoft, he said: “We are working out the details. Nothing has been finalised so far.’’ Mr Ballabh, who took over as Chairman of SBI early this month, said the bank had not yet finalised its Voluntary Retirement Scheme (VRS). However, a final decision on the matter would be taken within a month. Asked to comment on the proposed disinvestment in nationalised banks, Mr Ballabh said though his bank was not included in the scheme, he would say that ‘’It is a step in the right direction.’’ It would give opportunity for banks to raise more resources and function in a commercially viable manner. The government could not indefinitely support the banks. Referring to the ‘’India millennium deposit,’’ he said out of the $ 5.5 billion ( approx. Rs 26,000 crore) mobilised through the scheme, the biggest of 60 per cent of the contribution came from the Gulf countries. Asked if the India millennium deposit was a safe bet in terms of the interest rate offered, Mr Ballabh said the interest rate of 8.5 per cent offered was not at all higher and it was only “reasonable.’’ This was because the deposit was for a period of five years. |
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PNB to enter insurance NEW
DELHI, Nov 25 — Punjab National Bank, which launched its international credit card in association with the Hongkong and Shanghai Banking Corporation Ltd (HSBC), today said it is planning to enter the life and non-life insurance business. The PNB chairman and managing director, Mr S.S. Kohli, said the bank is entering into strategic alliance with a joint venture being set up by Zurish Financial Services and the Hero Group for entering into both life and non-life insurance business. “PNB is participating in the joint venture as a strategic investor and will be taking up 15 per cent of the equity in both life and non-life insurance companies,” Mr Kohli said. Zurich Financial Services is a world leader in financial services business with an asset base of over $ 440 billion. The Hero Group is a leading industrial house of long standing. Mr Kohli said the alliance will help the bank to expand the range of products and also enable the bank to move towards universal banking. The PNB CMD said the card holders would have free credit period upto 48 days without any finance charges being levied. The card has been initially in 14 cities and would be accepted at over 18 million merchant establishments and have round the clock access to cash at more than five lakh ATMs in India and abroad. The card comes with the complete range of benefits that are offered to HSBC’s credit card customers. The card holders will have accident insurance cover against loss of life form air accident upto Rs 10 lakh for gold card holders and Rs six lakh for classic card holders. In case of other accidents the gold card holders will have insurance cover of Rs three lakh and the classic card holder will be covered upto Rs 2 lakh, he added. |
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Government may split
PSEB LIKE many other states Punjab too is thinking to unbundle PSEB into three parts, generation, transmission and distribution. This step is preparatory to privatisation of power sector. It has also decided to have State Electricity Regulatory Commission
(SERC). Will these steps solve the power problem of the state? Splitting of PSEB will create more problems. This policy step in layman’s language is like putting old wine in three bottles rather than one. This will add to the administrative cost which is already very high. Work culture will remain the same. The three units with complete independence will find it hard to co-ordinate. Each unit will become unaccountable with responsibility of mismanagement shifted to the other
unit. SERC is a right step in the wrong environment. It has to fix tariff. When parameters for fixing tariff are controlled by political considerations SERC will hardly be able to do justice to the consumers who cross subsidise the major segment of power consumers. Until policy of supplying free power is withdrawn Punjab’s power scenario cannot improve. State government’s argument may be that on unbundling it is just following other states and Centre’s implied direction. Before that Punjab Government has to reply the moot question. Centre decided to charge Rs 50 per HP from agriculture sector about a decade ago. Thereafter, Punjab has signed MoU with Centre to charge for the power and water. Don’t put cart before the horse. First thing should be done first for the others to follow. There are other off shoots of free power and water. With this policy in place Punjab’s future development is in a way mortgaged. Only recently Chairman of World Bank visited the country. State after state was vying with each other to extract maximum possible aid from World Bank. Punjab was among those few unfortunate states who could not even signal its intention for getting aid. On the other hand World Bank’s sanctioned loan of about Rs 1,000 crores could not be disbursed due to the provision of free power and water. Can any state prosper without such soft loans required for the development of infrastructure so essential for economic growth. When power has taken a heavy till of industrial development free water has not lagged behind. Municipal Corporation, Ludhiana is cutting the quantum of water it supplies. Supply of mid-day water has been stopped on the plea that water table is going down. Plea is right but its genesis lies elsewhere. Free water simply means that waste as much as possible. This is adding to the problem of sinking water level. It is a fact that it is becoming difficult to run PSEB with widening gap in the revenue collection. Free power is one drag on revenue. Rampant power theft is another which is becoming giant sized. Present Chairman is doing his mighty best to check this menace but his efforts are proving only peripheral. Main reason is again the umbrella of free power under the stock of which power is being utilised for non agricultural purposes. With this scenario PSEB is trying to snatch as much as possible from other consumers. Recently it levied fuel surcharge of 6 paisa with no visible justification. It is also resorting to all possible means to garner revenue from commercial sector. This in turn is making industry unviable. PSEB is already unbundled with one member each for generation, transmission and distribution. Are these members incompetent to handle? If so what is the guarantee that by putting separate chairman for each wing things will improve.
Canam gets ISO 9002 CHANDIGARH, Nov 25 — Canam Consultants Limited, a company specialising in Canadian and Australian immigration as well as international education consulting is the first immigration consulting company in India to receive the ISO-9002 certification. This certification is awarded to Canam for maintaining its cost effective quality services that exceed industry standards and meet its principle objective of customer satisfaction and welfare. According to Mr S. Grewal, Sr Vice President, due to the presence of a large number of fly by night operators the Immigration Industry has always been seen with uncertainty. This made it imperative for Canam to process its documentation as per ISO-9002 standards so as to maintain ethical business practices and ensure value for money services to their clients. Mr Anuraj Sandhu, Sr Vice President, manpower plus, Canada, said that even though one assessed himself on the point system and qualified objectively by securing 70 points or more did not mean that an applicant would be approved for immigration. The reason for the high rate of rejection of well qualified self-applicants is understanding the High Commission’s assessment procedures. Canam has already processed a large number of applications with no case rejection yet. The company is fast expanding with the launching of its multiple offices in India and in South East Asia. |
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Collaboration new mantra in corporate
world GURGAON, Nov 25 — Collaboration will be the new mantra of the firms in order to survive and do well in the face of stiff global competition in the future. This was the view expressed here by Dr Jagadish Seth, who is an internationally acclaimed expert on business management, during the course of a two day international conference on “Customer Relationship Management” (CRM) in the campus of Management Development Institute (MDI), which concluded today. Addressing newsmen, Dr Seth, who is the Charles H. Kelistadt Professor of Marketing at Emory University, expressed the view that collaboration will be the new buzz word in the corporate world resorted to by the firms in their own mutual interest and also to reduce the edge of competition from outside. Minimisation of concentration will facilitate the firms to concentrate on their basic business activities. In response to a specific question with regard to Indian economy, he said that in the coming times this country will have great future and scope in processed food front. On account of the change in the dynamics and shift in values and attitude on
account of influx of technology culture the industrialised countries like the USA were showing inclination for production of goods which yielded high returns. They were showing preference for outsourcing their demands for processed food. The fact that agriculture is still the main determinant of its economy, India should be looking to capitalise on changing scenario, he added. Dwelling further on how he saw things in the global economy, he said on account of the paradigm shifts, India will be well advised to keep a tab on the developments in countries like Mexico, Brazil and Argentina. India is likely to compete with these developing economies. He pointed out that recently the USA was sourcing orange juice from Brazil. He said that the country was doing the right thing of giving emphasis on business management simultaneously with information technology (IT) sector. |
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Dhariwal Woollen
Mills revives GURDASPUR, Nov 25 — Dhariwal Woollen Mills which has been declared sick by BIFR long ago has been revived. Mr Vinod Khanna actor turned MP talking to newsmen here today said that the Central Government has sanctioned Rs 200 crore package in this regard.
Mr Khanna said that package included that all liabilities of the mill will be waived off. The mill will be made independent of British India Corporation. The latest machinery will be installed to modernise the working of the mill. Staff quarters and factory premises will be retained. |
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Two good picks: Mastek & Mascot Systems IN this time and age where ‘New Economy’ is the name of the game, matters like corporate governance assume greater significance and it is here that transparency becomes a crucial parameter in evaluating the intrinsic strength of a company. One company among the software majors that comes to mind is Mastek. Now, Mastek has been a fairly consistent performer over the past three years and it is only in the last couple of quarters that its growth rate has slipped up, primarily because of the loss of a major customer. Now, Mastek is by no means either the first or the last company to have lost a major customer, but the way its management squared up and took the blows upfront suggests that it is company with character. In my opinion, this setback is a temporary one and although the company’s management has been candid enough to admit that it will be one more quarter before the customer loss impact will be minimized, my guess is that the company will not only do that but also bounce back sharply within six months. Needless to say, this is one company our research team tracks closely. Talking about tracking companies, Mascot System Limited (MSL) is a company that has attracted the attention of our team. MSL is a subsidiary of Mastech Systems Corporation, which, in turn, is a 100 per cent subsidiary of the US-based, Nasdaq-listed iGATE Capital. MSL has hitherto primarily been engaged in the business of providing offshore software delivery services to clients of iGATE Capital using its offshore development centres (ODCs) in Bangalore, Chennai and Pune. Currently, customs solutions contribute 43 per cent of MSL’s revenue while 20 per cent comes from application maintenance outsourcing. Notably, e-business solutions contributed to around 11 per cent in 1999 and this segment is expected to contribute significantly in the years to come. The company’s e-business is involved in strategic consulting, design development and implementation of business applications over the net, web enabling existing legacy systems, which is expected to be a major growth driver in the near future. Now, while acquisitions can be a double-edged sword especially for Indian companies without the requisite level of experience in the field, MSL has a distinctive advantage in the form of its holding company, iGATE, which enjoys a successful track-record as far as acquisitions are concerned. On the financial front, MSL’s track-record has been fairly good with its turnover in the post-restructuring growing at an impressive CAGR of 68 per cent over the past three years. The company’s bottomline has risen sharply to Rs 24.37 crore during 1999 and the same is expected to further multiply to around Rs 49.54 crore for 2000-01. Provided these projections materialise, which, from the looks of it, does not seem unlikely, the EPS would stand at around 28 which suggests that the forward P/E on the current price of around Rs 280 would be around 10 times. That, it seems has impressed Avinash. So here we are, the team was impressed with the quantitative appeal of Mascot Systems, and I am impressed with the qualitative appeal of Mastek. Take your pick. |
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by A.K. Sachdeva Q: We are registered as a dealer under the provisions of the Haryana General Sales Tax Act, 1973 and the Central Sales Tax Act, 1956. We buy goods from within the State on payment of 10 per cent sales tax leviable at the first stage of sale. Some times these goods are sold to Ex-Haryana parties in the course of inter-state trade or commerce when 4 per cent Central Sales Tax is realised from the buyers against forms ‘C’ as prescribed under sub-section (4) of Section 8 of the Central Sales Tax Act, 1956. The question therefore is whether we are entitled to the refund of the excess amount of tax paid at the first stage? If so what is the procedure laid down in law for claiming refund? Kindly advise in the matter with reference to the statutory provisions in this context. — Mamta Enterprises, Hisar Ans: Rule 24-A of the Haryana General Sales Tax Rules, 1975 provides for refund of tax paid on goods at the first stage of sale in certain cases. It, inter alia, lays down “a registered dealer may reduce the amount of tax paid under the Act at the first stage of sale of goods purchased by him, from the amount of tax payable by him on such goods or goods manufactured or processed therefrom, when sold within the State or in the course of inter-State trade of commerce, or in the course of export outside the territory of India”. It is further stated in this rule “when the tax paid at the first stage exceeds the tax payable, the amount of excess tax...” shall be refundable to the dealer. The payment of 10 per cent sales tax at the first point would naturally result in excess payment in the event of the tax paid goods sold in the course of inter-State trade of commerce as the rate of tax under the Central Sales Tax Act, 1956 against form ‘C’ indisputably is just 4 per cent. Therefore you are entitled to the benefit of refund of the excess amount of tax in terms of clause (ii) of sub-rule (1) of rule 24-A of the Haryana General Sales Tax Rules. 1975. As far as procedure for claiming refund is concerned, you are obliged to make an application in form ST-33 alongwith certificates in form ST-14 in proof of the payment of tax by the selling registered dealer at the first stage. This applicaiton is supposed to be submitted to the assessing authority at the time of filing the relevant returns. Clause (c) of sub-rule (1) of rule 35 of the Haryana General Sales Tax Rules, 1975 further requires the disposal of the refund application within a period of thirty days. Q:
Last week a consignment of goods was purchased by us from Delhi which was being carried to Haryana alongwith requisite documents such as bill of sale, goods receipt and a challan in form ST-38 (inward) when it was intercepted and detained by an Excise and Taxation Officer. The point raised for seizure of the consignment as stated in the notice is that one of the column relating to serial number of bill was found blank. Penalty proceedings have been initiated under sub-section (6) of Section 37 of the Haryana General Sales Tax Act, 1973 despite the fact that we have had no intention to evade the payment of tax. Kindly advise. — S.K. Batra, Ambala Ans:
Simply because one of the columns of form ST-38 is found blank it does not lead to evasion of tax under the provisions of the Haryana General Sales Tax Act, 1973 more particularly when the mistake has been committed by the consignor residing outside the State for which a consignee cannot be possibly proceeded against. In any event this is a mistake of technical nature which does not constitute a valid basis for initiation of penalty proceedings under sub-section (6) of Section 37 of the Haryana General Sales Tax Act, 1973. It is therefore advisiable that the queriest should file an objection in writing before the checking officer substantiating his plea that no evasion of tax was involved in the transaction. |
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‘Big firms should move civil courts’ A recent order of the National Commission should discourage large companies from invoking the jurisdiction of the consumer courts to settle their commercial disputes. While dismissing an original petition filed by the Bombay Dyeing and Manufacturing Company against Union Bank of India (OP No 66 of 2000) on a dispute pertaining to lead bank charges, the National Commission said the entire purpose behind setting up of the consumer court was to provide quick, easy and affordable justice to common people who could not otherwise enforce their rights before a court of law . A large number of complaints had been filed before these consumer courts at all levels and the arrears of the cases pending disposal were mounting every day. One of the reasons for such mounting arrears was that large commercial organisations sought the jurisdiction of the consumer courts to settle their commercial disputes. Saying that the dispute here was between two big commercial organisations about the legitimacy of certain bank charges levied by UBI as the lead bank of the Consortium that provided credit facilities to the complainant, the National Commission said the case involved highly disputed questions of facts. Observed the Commission: “There is no reason why the big companies should abandon the remedy provided by the Civil Court and seek justice from the consumer courts by-passing the civil courts altogether. This will have the effect of clogging the wheels of justice in the consumer courts and common people are subjected to unreasonable delay in getting their cases heard”. The Commission also said the company may come within the meaning of ‘consumer’ under the Act, and banking, under the definition of ‘service’. But that did not mean that all commercial disputes between a bank and a large company must be decided by consumer courts. This Order of the Commission should really bring cheer to consumers who complain of delays in adjudication of cases filed before these courts.. . It should also force the Union Ministry of Consumer Affairs to amend the CP Act at the earliest to keep out such cases from the consumer courts. While defining “consumer” as a person who buys any goods or hires or avails of any service, the CP Act specifically excludes those who buy goods for resale or for commercial purpose. In other words, the law ensures that big traders and business houses do not utilize the consumer courts for settling their trade disputes in respect of goods. However, the Act does not exclude those who hire or avail of services for commercial purposes. To be more precise, while under 2(1) (d)(i) , the Act draws a clear distinction between goods purchased for personal use and those for commercial purpose, it does not draw a similar distinction under 2(1)(d) (ii) between services hired for personal use and those for commercial purpose. This has resulted in an increasing number of large industries and business houses utilising the consumer courts for redress against deficient services provided by banks, insurance companies, transporters and electricity boards. Many of these complaints involve large amounts of money and elaborate hearings and are a strain on the meagre financial and infrastructural resources of the consumer courts, which do not charge any court fee. These cases also contribute in so small measure to the delays which have become the bane of these quasi-judicial bodies . Besides, the very purpose of this law is to provide inexpensive and easy access to justice to individual consumers who cannot afford to pay court fee or engage a lawyer to fight long and expensive legal battles in a civil court. Given this context, the lack of distinction between services hired for personal use and commercial purpose is certainly an aberration and needs to be set right. In fact, while examining Section 2 (1) (d) (i) in the case of Laxmi Engineering Works vs PSG Industrial Institute (CA no 4193 of 1995), the Supreme court observed that the Act revolved round the consumer and was designed to protect his or her interest. It therefore provided for business to consumer disputes and not for business to business disputes. The same objective should apply in case of services too. Coming back to the National Commission’s order in the Bombay Dyeing case, the apex consumer court also pointed out two other reasons why it was not a proper case to be heard by the Commission. There were several complicated questions of fact and law that would require elaborate arguments and possibly evidence to answer questions like whether a lead bank charges require to be paid or not, if so at what rate, whether it could be imposed unilaterally, whether it could be imposed retrospectively, the role of statutory auditors, etc. Besides, the complainant had sought an interim order restraining the bank from debiting lead bank charges. The Commission had no power under the CP Act to pass any interim order on an original petition filed before it. |
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Apprenticeship Q:
Is the order to treat the employee as a regular lineman sustainable? Ans:
S.C. in Executive Engineer, Shimla Electrical Division No. II H.P.S.E.B. Shimla v Presiding Officer, H.P. Labour Court (2000-II-LLJ-1132) was considering this point. Respondent No. 2 who was admittedly sent for apprenticeship training as a Lineman in 1982, successfully completed the said training in 1985. Admittedly, he is not a Matriculate but he has read up to class VIII standard. So far as his claim to be appointed as a T-Mate is concerned, there is no dispute between the parties that as per the existing recruitment rules, on expiry of six years, i.e. by 1991, respondent No. 2 could have become an Assistant Lineman on available vacancy and within a further period of four years, he would have become a regular Lineman in 1995. The Labour Court, before whom the dispute was raised, has directed the appellant-Board to treat him as regular Lineman only by 15.10.96. In the peculiar facts and circumstances of the case, the S.C. found no reason to interfere with the decision of the H.C. upholding the said award in the writ petition. Respondent No. 2 fairly stated that though the Labour Court has recommended and left it to the appellant-Board to give earlier promotion with all other incidental benefits, respondent No. 2 is satisfied if he is treated as regular Lineman w.e.f. 15.10.1996 as directed by the Labour Court. The S.C. thus recorded this statement and closed the proceedings. The appellate-Board will now work out all the monetary benefits available to respondent No. 2, pursuant to the present judgement, within four months from today and the same will be made available to respondent No. 2. In that way the appeal was disposed of and vacated the interim stay granted earlier. |
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