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| Monday,
January 22, 2001, Chandigarh, India   
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What hinders investment in real estate
Cut tax burden on industry
ONGC eyes stake in Bathinda refinery |
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| Surfers allege poor Internet
service FEROZEPORE, Jan 21 — Unlike the mobile services segment where Spice enjoys complete monopoly in this region, there is a war-like situation as far as the Internet Service Providers are concerned. VSNL, Glide and Satyam have already entered the fray. DoT has also decided to jump into the arena with a plan to set up “Internet dhabas” which will offer free Internet access in rural blocks and 1,500 hours of free access per annum in the urban areas. State Bank of Patiala offers VRS
Advisers soon for privatisation Q: Our is a registered partnership firm who had purchased a factory in the government approved industrial area in the financial year 1991-92 for Rs 1,50,000 which includes transfer charges also. Machinery costing about Rs 1,75,000 was installed there. Now we are going to sell that factory for Rs 8 lakh excluding machinery. Rs 1,75,000 will have to be incurred as stamp duty and brokerage etc. for transfer purposes.
Hughes: tomorrow’s
Infy FII inflows, good results trigger
rally Why tycoons need gurus Test to detect schizophrenia Costliest bike
by Bajaj Auto
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What hinders investment in real estate REAL estate business in India has come a long way since independence. The country’s fiscal policy, then having more than 92 per cent (101 per cent after adding surcharge) rate of income tax upon the initial slab of a few lakhs of rupees of income, was a major hindrance in the way of investors. There was a little scope, even if one had the capacity to invest, for investing in the real estate under those conditions. With black money piling up with a few rich and tax evaders, the real estate trade couldn’t flourish under those faulty anti-investor policies. Investments in the agriculture sector, by a few rich, that too, to save taxes, were, however being witnessed. Till 1984, when the real estate had a sudden upward jerk as a result of large-scale migration of population due to politically motivated communal riots, the real estate trade was at low ebb. Taking the example of Chandigarh, for discussion purpose, the average rate of residential property here in early 60s was merely Rs 12-15 per square yard. Thereafter, an old one kanal (500 Sq Yds) house in Chandigarh, which was being valued at Rs 2.25 lakh in early 80s jumped to Rs 10 lakh in the late 80s. The boom in the trade was sudden and unprecedented. Despite the migration factor, the reforms in the income tax structure also added to the investors’ interest in the trade. With financiers and speculators entering the arena, the business of real estate touched new heights, thereafter, when the same one kanal house (old) proposition touched as high as Rs 60 lakh in the mid 90s. Underworld’s control over the overall trade and industry is clearly being witnessed, especially, in the high-profiled film industry where large quantum of money is involved. In Delhi, Mumbai, Calcutta and Chennai, the underworld has also shown its involvement in the real estate trade. However, the investment of the underworld in the trade created a feeling of insecurity among the consumers and the investors, thus hampering the trade. Real estate pundits have based their judgements about trend predictions of the real estate business in the country or various factors and logics viz, stable government, political situation and sluggish trend in the overall trade and industry. There exist a few other factors governing the trend of the trade. The government policies, like unjustified stamp duty, complicated transfer of property policies, cumbersome documentation and anti-investor law structure, contribute a lot in hampering the proper development of the trade. Although each of the above factors requires a detailed illustration, but the discussion on the subject of real estate trend will remain incomplete without a passing reference to all of these. There existing rate of stamp duty, in view of the present day value of the real estate, is not only unjustified but also leaves its telling effect on the economy of the country. In addition to the generation of a huge quantity of black money by way of under value and under hand sales it also amounts to large-scale tax evasion. Investor friendly policies, like the implementation of simplified and reformed Rent Act, which will provide affordable accommodation on competitive rates and a Uniform Apartment Act in the country to provide an infrastructure to lure the investor to invest in the real estate, are need of the hour. In addition to all this, there is also a need to formulate and provide a simplified and improved transfer of property procedure to the consumer. A policy, to encourage the private developers and colonisers rather than to float its own government-sponsored housing schemes, to provide affordable and quality accommodation at competitive rates to the consumer, should also be envisaged with a provision to closely watch the interest of the consumer. This will bring out huge quantum of black money to be directly involved in the development of the country. The spare money with the government housing agencies may be further utilised for other public utility and development projects.
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Cut tax
burden on industry BUDGET making exercise is in full swing. The first noticeable factor of the last few Budgets of the present Finance Minister is that taxes have gone up. During Dr Manmohan Singh’s tenure IT rates went down from 56 to 40 per cent corporate tax from 51.75 to 46 per cent and additional resource mobilisation (ARM) was Rs 2,324 crore. During Mr Chidambaram’s period (1996-97, 1997-98) IT rates were reduced from 40 to 30 per cent, corporate tax from 46 to 35 per cent and ARM was only Rs 912 crore. In Mr Sinha’s two Budgets IT rates have gone up from 30 to 34 per cent. Corporate tax up from 35 to 38.5 per cent and ARM has been at Rs 11,580 crore. What is the upshot? The most difficult time for the industry has fallen in Mr Sinha’s tenure due to imports. That demands reduction of tax burden on the industry. Even apart from higher taxes there is a pressure on the industry to deposit more duty by keeping the Modvat claims pending for availment later. Importers are asked to deposit full duty although they are entitled for lesser duty under the DEPB scheme. Revenue officials are getting squeezed between pressures from Delhi and the cash-strapped industry. This window dressing is certainly against the prudential norms and should be avoided. Service tax has a potential of about Rs 1,40,000 crore. Against this collection has been only Rs 5,690 crore between 1994-95 and 1998-99. The government is thinking of broad basing this from current 25 services to 40 which is justified especially in view of the coming VAT regime. Low revenue realisation is due to faulty duty structure of excise and Customs. Custom tariff alone has 103 exemptions, each exemptions has large number of entries which are individual exemptions by themselves. Even one notification runs into 81 pages. Such irrational structure results in loss of revenue and breeds corruption. So duty structure should be rationalised. Budget should not overlook the fact that cost of production of our industry is higher due to interest cost, price of power, fragmented market and undue tax burden of states as well. Our industry is getting severe beating in competition due to these factors. This certainly demands softer fiscal treatment. In competition China matters the most. It has registered double digit growth for two decades. In comparison India and China have administered interest rates, both have large fiscal deficits, both have bank problems and both have large NPA’s. Where is the catch then? Real interest rate in China has averaged 1.4 per cent during 1980-90 decade. It fell to 0 per cent in 1991 and continuing. In our case average was 8 per cent in 80s and 6.3 per cent in 1991. So we have to reduce the cost of capital to make the industry competitive. In bank lending loans up to Rs 5 lakh can be raised without offering collateral security. This has remained only hypothetical as no bank is following this provision. This should be made effective and this limit should be raised to Rs 20 lakh to cover tiny sector. Section 54-EA of the Income Tax Act provides for the exemption from capital gains tax on transfer of long term capital asset in case of investment in specified bonds belonging to the PSES and financial institutions. This Act should be amended to include sick SSI units when they sell their assets.
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ONGC eyes stake in Bathinda refinery DEHRA DUN: The Oil and Natural Gas Corporation (ONGC) is interested in picking up a stake in the Bathinda refinery. According to a senior official here negotiations are going on with Hindustan Petroleum Corporation Ltd (HPCL) to become a partner in the nine-million tonne refinery on the condition that ONGC is offered a part in the marketing rights. The company wants to make a foray into marketing but since it was not possible to venture into marketing directly, it would not mind investing in the refinery. The official pointed out that any investment in the refinery alone would not be a profitable proposition. Although nothing has been finalised as yet but the company is eyeing a 10 to 20 per cent stake in the Rs 9,806 crore refinery to be commissioned in 2006-07. It is also looking for a similar interest in marketing rights for the products generated from the refinery. However, the Ministry of Petroleum feels that ONGC should concentrate on its original role of crude exploration. But officials of ONGC are of the view that keeping in mind the huge losses incurred in exploration, it is time for the ONGC to go ahead in the marketing sector for compensating the losses. Most of the private companies in India are involved in exploration, refinery as well as marketing. However, PHCL officials are in no hurry to shake hands with ONGC as the Cabinet Committee on Economic Affairs (CCEA) has already granted permission to HPCL to go alone the setting up the project with an initial investment of Rs 300 crore on construction works and a separate power station. A French company, Totalfina, and Saudi company Aramco have both refused to invest in this project after signing an agreement with HPCL. A German company in the oil sector and the Punjab State Industrial Development Corporation had come up earlier to get 26 per cent share in the refinery but no further negotiations with the HPCL have come up. ONGC officials claim that they have the financial as well as technical expertise to go ahead with the project. Since the CCEA has granted permission to HPCL to induct a partner at any stage of the project, ONGC is hopeful that its proposal will be accepted in the near future.
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Surfers allege poor Internet
service FEROZEPORE, Jan 21 — Unlike the mobile services segment where Spice enjoys complete monopoly in this region, there is a war-like situation as far as the Internet Service Providers are concerned. VSNL, Glide and Satyam have already entered the fray. DoT has also decided to jump into the arena with a plan to set up “Internet dhabas” which will offer free Internet access in rural blocks and 1,500 hours of free access per annum in the urban areas. VSNL took the lead by providing Internet services in this remote and border area. With a VSNL gateway opening at Jalandhar, Net lovers started surfing at local call charges. But they are sore over the unsatisfactory service and poor connectivity. Although VSNL has provided two numbers 172226 and 172227 which the Net users can dial to surf of the Net but they are hardly able to establish connection. Ms Archana Chowdhry, Centre Head, Aptech, complained that they have not been able to establish connection for the past one month. She added that as they were working on Internet-based curriculum, students as well as instructors were facing difficulties. Mr Sunil Monga of NIIT says that business is suffering as the Internet is the basic requirement for all courses. Mr Sanjay Mittal, head of NIFD and ET&T, Ferozepore, said that he was even contemplating the idea of slapping a case after it was clear that who was at the fault, DoT or VSNL? When contacted, the VSNL authorities at Jalandhar asserted that as their system was transparent and open there was no fault on their part but the problem persisted with the D0T, Ferozepore, where the exchange was old which did not supported the data transmission system and was not synchronised. Mr M.S. Puri, GM, VSNL, told The Tribune that the users have to rely upon the telephone lines as it was the only media to get connection so the problem was with those lines and they are nowhere in the picture. He admitted that the complaints about the poor connectivity were pouring in from this area and said that he was getting daily feedback and VSNL will leave no stone unturned to satisfy the customers. DoT officials here brushed off the allegations that the fault is with their exchange and in turn charge the ISP with the poor access and connectivity. |
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State Bank of Patiala offers VRS PATIALA, Jan 21 — The State Bank of Patiala will introduce voluntary retirement scheme for its staff from February 20. The scheme will remain open till March 2. This was stated by Mr Amitabha Guha, Chief General Manager of the bank, while inaugurating seven-day banking of the personal banking branch here today. The extended business hours for customers will be 10 a.m. to 4 p.m. on week days, 10 a.m. to 1 p.m. on Saturdays and 10 a.m. to 4 p.m. on Sundays. Mr Guha said that bank is launching 12 hours’ banking shortly at the Bhupindra Nagar branch here. The bank has fully computerised 227 branches and drawn a plan to have 260 fully computerised branches by the year-end. |
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Advisers soon for privatisation THE legal consultants to process and advise the government on privatising four international airports in Delhi, Mumbai, Chennai and Kolkata will be appointed shortly. But it will take at least 2-3 years before the proposal becomes a reality. The aviation analysts, airline and tourism officials are of the view that this exercise should have been taken earlier than the plans for disinvestment in Air India and Indian Airlines began. The AAI needs speedier upgradation than the two national carriers. “Had the AAI been effective the incidences like death of a girl under the wheel of an escalator and delay in flights through fog would not have taken place”, said three experts. Even after the privatisation, the trouble-makers ATCs will continue to function under the dictates of the AAI. The ATCs like pilots, have been responsible for many avoidable incidents. The privatisation of four airlines will, however, come about in phases. After undertaking a detailed study of flight movements, passenger traffic and slot allotments, a comprehensive traffic plan will be formulated. Security of passengers, safety of aircraft and regulatory procedures are also likely to be dealt with in the first phase. In phase II, the consultants will advise about commercial contracts, bilateral agreements, navigational charges, parking and landings fees in addition to stipulations concerning to flights overflying Indian air-space. The phase III will pertain to bidding. The process for bidding and procedures for bidding are likely to be the same as fixed for the two national carriers. The experts, who are aware of the functioning of international airports abroad, opine that there should be one agency which should overlook the functions at the airport.
Low fares Indian Airlines is cashing in on low fares judging from the rush on the flights on both domestic and international sectors. On December 23, IA uplifted 28858 passengers. This was a new record. The following day, the airline picked up 26682 passengers. Despite threats by pilots work-to-rule, the Indian Airlines is functioning smoothly. Weather does however interfere with its operations but the airline has been operating its flights on schedule. The national carrier’s boom has continued even in January but its main rival, Jet Airways, is not perturbed at all. |
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Q: Our is a registered partnership firm who had purchased a factory in the government approved industrial area in the financial year 1991-92 for Rs 1,50,000 which includes transfer charges also. Machinery costing about Rs 1,75,000 was installed there. Now we are going to sell that factory for Rs 8 lakh excluding machinery. Rs 1,75,000 will have to be incurred as stamp duty and brokerage etc. for transfer purposes. Kindly inform what will be the capital gain. How much we will have to invest u/s 54EA or 54EB any other section to save the income tax? How the interest accrued on the
above said investments made in the specified assets will be treated for income tax purposes. I understand that interest received by the firm will be taxable where no rebate u/s 88 can be claimed by the firm. Kindly suggest how the tax can be saved. What will be the status of the firm after the factory and machinery is entirely sold? Can the firm continue or will it stand dissolved. — Rakesh Kumar, Kotkapura Ans: In case of your partnership firm on industrial land on which no depreciation is permissible to arrive at the long-term capital gains from the sale price you have to deduct the cost price as also stamp duty, brokerage, etc. The benefit of long-term capital gains could also be available to you. For saving tax on capital gains you can take advantage of new section 54EC whereby the long-term capital gains have to be invested for 3 years in designated bonds only. The provision of section 54EA and 54EB are not applicable right now. Q: My wife is serving as Lecturer in Engineering College, Bathinda. In the year 2000-2001, she is likely to get Rs 1,17,550 on a/c of arrear of pay revision for the period August, 1996 to March 2000. Can she have option to split up the amount of year in respective years. Her gross salary were s 41,444, 79,560, 94806 and 1,00,214 in the year 1996-97, 1997-98, 1998-99, 1999-2000 respectively. Saving for GPF, NSC, PPF, ULIP, ICICI bonds etc were Rs 5,180, 28,590, 52,213, 69,970 in the year 1996-97, 1997-98, 1998-99, 1999-2000 respectively. Amount of arrear being splitted up is Rs 12,160, 27,176, 31,862 and 46,352 in the year 1996-97, 1997-98, 1998-99, 1999-2000 respectively. Kindly advise on the following: a) What is procedure/formalities to get the benefit of splitting up of the arrears from the employer. b) Whether it is compulsory to file revised income tax return to the IT department. If yes, whether the employer is bound to issue revised Form 16 for previous years so as she can file IT return. c) If half of the arrears is deposited in GPF, can she get the benefit of rebate in respect GPF, can she get the benefit of rebate in respect GPF contribution in the previous years. — A.P. Singh, Bathinda Ans: Your wife can take advantage of the provisions of section 89(1) for claiming relief in respect of arrears of salary. The salary for different years received in arrears can be taxed in separate year. Thus, the amount of salary can be splitted for different financial years to which such arrear salary pertains. The employer will be competent to grant you the splitting benefit. If you deposit any amount from out of the arrear salary in GPF etc during the current year you cannot get any tax benefit or tax rebate for the earlier years. |
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Hughes: tomorrow’s Infy THE craze for Infy has always put me off and while our clients have made good money on delivery based trading at this counter, actually investing into this scrip at the kind of ridiculous P/E multiples it has traded at in the past was never really an option we ever recommended. I would much rather concentrate on promising stars on the horizon and tomorrow’s “Infy’s” like Hughes Software and HCL Tech. Notwithstanding a falling market, it does seem that some discerning fund managers (a breed facing extinction?) have actually bought into the shares of Hughes Software Systems Limited (HSSL) following its recent declaration of excellent Q3 results. HSSL has been assessed at SEI-CMM Level 4 for all its development centres and all projects and has been an ISO 9001 company since 1996. HSSL is a subsidiary of Hughes Network Systems a unit of Hughes Electronics Corporation. During Q3, HSSL recorded a record PAT of Rs. 18.40 crore, a 40 per cent QoQ increase and a 101 per cent YoY increase. It has also notched up a record total income of Rs. 58.93 crore, a 24 per cent QoQ increase and a 91 per cent YoY increase. A bifurcation of the total income indicates that the net sales for the quarter was Rs. 56.33 crore while other income was Rs. 2.60 crore. |
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FII inflows, good results trigger rally The stock market is doing well and the Sensex moved up by 157.88 points (3.91 per cent) last week. For the first four days, the upward movement was slow but due to large purchases by FIIs in the last trading session on Friday the index moved up by 81 points. Excellent results came from Wipro, Sonata and HCL Technologies. Wipro’s third quarter results were better than market expectations. Its net profit was Rs 188.8 crore as against Rs 89.9 crore during the corresponding period last year. Sonata Software’s net profit for 9 months is Rs 250.52 million as against Rs 160.09 million (up by 56.48 per cent). HCL Technologies’s net profit for the 6 month period was higher by 176 per cent. Some old economy shares have also done very well. The net profit of Vikas WSP for the third quarter was Rs 2843.68 lakh as against Rs 1892.83 lakh, registering 50.23 per cent gain. Tamil Nadu Newsprint has announced a net profit of Rs 20.30 crore (as against Rs 1.03 crore) for the quarter ended 31 December, 2000. ITC-Bhadrachalam has announced a net profit of Rs 10.51 crore for the third quarter as against a net loss of Rs 3.56 crore during the corresponding period last year. Vanavil Dyes has also reported a higher net profit of Rs 1.37 crore (as against Rs 1.17 crore) for the third quarter ended 31 December 2000. This company paid a dividend of 40 per cent last year but it is not quoting in Rs 32-33 range. There is little possibility of this company’s price moving down, and at its present market price it yields more than 12 per cent return. The speciality chemicals scrips are no doubt quoting at very low market prices but Vanavil Dyes has more than maintained its market rating. Even other speciality chemicals scrips like BASF, Clariant and Colour-Chem have great potential for upsurge and are good investments for long term investors. Larsen & Toubro, which has been having a lean time in the stock market for quite some time due to its poor second quarter results, is expected to announce excellent results for its third quarter. In anticipation of the announcement of its results, the company’s scrip has moved up from Rs 195 to Rs 234 during the last week. In case, the results fall below expectations, the scrip’s market price will plummet. But if the results are up to expectations the scrip is unlikely to make any big gains, for the market has already discounted them. In any case, this blue-chip company has great future and no long-term investor is likely to suffer any losses; on the other hand it may reward them handsomely. A very large number of B-2 scrips are likely to be promoted to B-1 category on the BSE. On scrip — Aksh Optifibre — which is at present in B-2 list is a strong candidate for promotion to B-1 list, and its market price is likely to go up. It is, even otherwise, a good investment for the investors for it is the largest producer of optical fibre and has received substantial orders from domestic as well as foreign companies. Except for some profit-booking in some scrips, the market is expected to keep its forward march in small but steady steps. |
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Why tycoons need
gurus LONDON: It’s easy to be cynical about management gurus.
According to a ‘Thinkers 50’ survey by management website
FTdynamo.com, the stars of the burgeoning executive speaking circuit can earn $ 100,000 a day, putting them among the highest hourly earners on the
planet. Deliciously, even anti-guru Scott Adams, creator of the cynical Dilbert cartoon, clears $ 15,000 for telling corporate audiences not to believe a word more orthodox colleagues say. Is it worth it? Most people would be sceptical. As the survey suggests, apparently ‘new’ ideas often turn out to be old ones in trendy (sometimes even non-existent) new clothes. Some are short-lived fads, and others are dubious or just plain wrong — they can’t all be right, after all. But the issue is more complicated — and interesting — than that. Start from the fact that gurus past and present are hugely influential, if often at an unconscious level. Every large manufacturing company owes something to the thinking of FW Taylor and Henry Ford II, for instance. To paraphrase the father of modern macroeconomics, John Maynard Keynes, every company is in thrall to some defunct management theorist. This conventional wisdom may be ‘free’, but that doesn’t necessarily make it a bargain. Indeed, breaking out of the prison of past ideas may be cheap at any price. As Polaroid inventor Edwin Land once put it, moving forward is often due less to a blinding stroke of genius than ‘a sudden cessation of stupidity ... not having a new thought, but stopping having an old one’. Some gurus (eg Tom Peters, No 5 on the list) fall into this category. If the most influential thinkers are impeccable humanists, how come so many of their consulting clients run companies that are oppressive to work in? One answer may be that the cacophony of competing guru sales pitches makes it hard to concentrate for long on any one. One short-term change programme succeeds another before the first has had a chance to prove itself. Some companies have as many as 10 or 12 going on at the same time. Disillusion with one idea creates a market for an equal and opposite reaction. The downsizing abuses carried out in the name of re-engineering, for instance, were followed by a wave of books with titles like Healing the Wounds. Test to detect
schizophrenia LONDON: Scientists have revealed they can detect differences in levels of the brain chemical dopamine — closely linked to schizophrenia — in individuals’ blood streams. The researchers claim the test is sufficiently accurate to pinpoint whether that blood came from a schizophrenic or a healthy individual. “We were able to differentiate between blood taken from 14 schizophrenics and a group of 10 people who were unaffected by the disease,” said Prof Sara Fuchs of the Weizmann Institute in Israel. “However, we have to make sure this is a reliable indicator of the disease before we can go any further, and have now launched trials on a much bigger sample.’ At present, diagnoses of schizophrenia are based on observations of patients’ behaviour. Typically, they feel their lives are being controlled, and their thoughts directed by others. They hear voices and can form delusions about the world around them. Just 1 per cent of the population suffer from the condition, which is known to involve the activity of dopamine, a chemical involved in communications between nerve cells. Dopamine locks on to receptor molecules on brain cells and directs their behaviour. The more dopamine receptor cells that a person has, the more likely that person is to have developed schizophrenia, researchers have found. Costliest bike
by Bajaj Auto PUNE: Bajaj Auto has launched India’s costliest motor cycle “Eliminator” and said it would unveil three new models in the segment by the end of this fiscal. The company has targeted to sell 15,000 units of the motor cycle, priced at Rs 84,000 ex-showroom all over India and has features like disc brakes, five speed gear transmission and would be powered with a four-stroke engine. It has the longest wheelbase of 1,245 mm and lowest saddle height of 845 mm in the country. The “Eliminator” will be manufactured at the company’s Waluj plant near Aurangabad in technical collaboration with Kawasaki Heavy Industries of Japan.
— PTI |
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