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| Monday, February
26, 2001, Chandigarh, India   
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Drug firms seek research push from Budget WTO boost likely for
horticulture
Amazon fall was predicted by Indian analyst IPCL to sell GE Plastics stake
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| Tax holiday to Tata Steel withdrawn Patna, February 25 In what could well be termed as a tough fiscal decision that might have far-reaching fallout on its industrialisation plan, the Jharkhand government has withdrawn the controversial eight-year tax holiday extended in “utter haste” to the new cold rolling mill (CRM) of the corporate colossus Tata Steel. Proposal to dump foodgrains into
sea
Air fares expected to come
down
Rs 1 crore loss daily due
to power shutdown Q. I had taken a loan of Rs 1,42,000 from my employer, i.e. Punjab Government in Sept 1994 and repayment of its principal amount started from 10/94 @ Rs. 1250 p.m. As per the rules the principal amount will be recovered first and the interest thereafter. At present my whole recovery/deducation is going towards the principal amount. What investors expect from the
Budget?
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Drug firms seek research push from Budget Mumbai, February 25 The success of companies like Ranbaxy Laboratories, Cipla, Dr. Reddy’s Laboratories and Lupin shows the potential of the domestic pharmaceutical industry to become a locomotive of growth like the nation’s booming infotech sector, industry officials say. “Companies will be encouraged to do research in India because we have a cheap, educated and technically qualified workforce,” said Shahina Mukadam, analyst with DBS Securities. The industry also hopes Finance Minister Yashwant Sinha will slash the number of drugs subject to government price control and relax foreign investment restrictions when he announces the 2001/02 (April-March) Budget on Wednesday. The drug industry has long been irked by the government’s strict control over the prices of more than 70 drugs to make them affordable to the masses. Multinational companies like Glaxo India, Hoechst Marion Roussel and E Merck India Ltd, which have large portions of their turnover from products under price control, will mainly benefit from any relaxation. Government sources indicated earlier this month a new drug policy was ready for Cabinet consideration. “We are looking beyond the normal fiscal arithmetic and would like a comprehensive package with a stable policy agenda,” said Ajit Dangi, Director General of the Organisation of Pharmaceutical Producers of India representing multinationals. R&D DRIVE It also wants the 10-year tax exemption on income derived from R&D to be extended to companies which are not exclusively engaged in research and development. “We are asking for a full tax exemption for 10 years on revenue from royalties and licensing of intellectual property, provided they are invested in research and development,” D.S. Brar, Ranbaxy’s chief, said recently. Steps may also be taken to increase foreign funding of Indian drug research. President K.R. Narayanan told Parliament on Monday the government was considering allowing foreign multinationals to set up fully-owned research subsidiaries without approval from the Foreign Investment Promotion Board. Ranbaxy’s Brar said a big push in R&D would help Indian companies tap the $7 billion-$10 billion global market for drugs coming off patent in the next 10 years. Thus far most Indian companies have thrived by making copies, using slightly different processes, of products under patent abroad. With product patents expected to come into full force in India by 2005, as required by World Trade Organisation commitments, Indian companies hope to flourish by grabbing the market for generic drugs, or those whose patents have lapsed. TARIFF WALLS “The Indian drug industry is producing almost 85 per cent of the basic drug requirement of the country and it is necessary to see that it is not affected by cheaper imports,” the Indian Drug Manufacturers’ Association said in its request to the government. Drug manufacturers also want excise duties to be lowered progressively for bulk drugs, intermediates and raw materials, but to remain high on ready-to-take products.
Reuters
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WTO boost likely for
horticulture New Delhi, February 25 The northern states Punjab, Haryana and Himachal Pradesh, which produce vegetables and fruits in large quantities would be the major gainers. And, the government’s policy of encouraging cold storage facilities would provide an impetus in strengthening the competitive edge in the global trade. The Economic Survey has given clear indications of the government’s move towards this sector in the coming Budget. “Export of processed agro-products would be the key to import export realisation, which is possible only if the domestic policies allow unrestricted movement, storage and liberal trade regime,” the pre-Budget document said. The strategic tie-up between Frick India, one of the oldest industrial refrigeration firms in the country, and Bonar Engineers, the leading techonology house in this sector in the USA, is expected to provide an impetus to the growth of horticulture and floriculture industry in the country. And, this technology would help the farmer to reap the benefits as he would have to choice to sell the produce at the right price without worrying about its quality. “The new cold storage facilities built by the entrepreneurs using the new technology would increase the shelf life of the products from days to months. This would not only help the farmers to get the right price, the consumers would also benifit as the prices would come down,” Mr Gurmit Singh, Managing Director of Frick India, told The Tribune. Mr Henry B Boner, President of Bonar, said the new technology would reduce the loss. “At present, 30 to 40 per cent of the produce gets lost due to poor storage facility, reduces the quality and this makes the country’s products internationally unacceptable.” Indian agri exports constitute over 14 per cent of the countrys total exports, accounting for Rs 7135 crore during 1999-2000. This meagre export figure is despite the fact that India is the second largest producer of horticulture products. While India is the second largest producer of vegetables, the country accounts for 10 per cent of the world production for fruit crops. The Economic Survey said the country agri-exports face certain constraints that arise from conflicting domestic
policies, relating to production, storage, distribution, food security, pricing concern. “Unwillingness to decide on basic minimum quantities for export makes Indian supply sources unreliable. Higher domestic prices in comparision to international prices of products of bulk exports make our exports commercially less competitive,” the Survey said. Mr Gurmit Singh said the company is expecting major boom in this sector and the existing ones may also think of adopting the new technology. “The Punjab, Himachal Pradesh region could be a major market for the cold storages as horticulture and floriculture are picking up,” he said. The Minister of State for Commerce, Mr Omar Abdullah, said the major criteria to decide the acceptance or otherwise of food products world wide would depend on quality parameters and hence implementation of quality management systems training to farmers and exporters would be of vital importance particularly in the context of the WTO agreements. The Commerce Secretary, Mr Prabir Sengupta, said the success of India’s effort in expanding its existing markets and penetrating new ones would depend on rapid adoption of technologies for post harvest processing and value-addition. |
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Amazon fall was predicted by Indian analyst London, February 25 London’s Sunday Telegraph newspaper quotes Suria’s comments on Amazon where he says, “In 1999, Amazon was a growth story. In 2000, it became a credit story and in 2001, it’s a distress story. The party is over.” A scathing report by Chennai-born Ravi Suria, who heads convertible bond research at Lehman Brothers, a New York investment bank, is said to have prompted the meltdown in Amazon dotcom’s share price, which plummeted 26 percent in just one day last June. The newspaper, which devoted an entire page to Suria’s assessment of Amazon, says he published a second damning report on the company last October, which also gave shares another pummeling. Suria’s warnings that Amazon is facing a credit squeeze has been described as “hogwash” and “silly” by the company, which also says his assumptions are “chock full of basic arithmetic errors.” The newspaper says Suria graduated with an electrical engineering degree from India before moving to America in 1991 where he completed masters in business administration (MBA) in finance. His interests include squash, chomping cigars and visiting jazz clubs. He also reads science fiction, drinks Belgian beer and is reluctant to speak to journalists. “Suria’s message seems to be that his analysis does the talking”, the newspaper
concludes. IANS
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IPCL to sell GE Plastics stake New Delhi, February 25 IPCL and GE Plastics of Netherland recently signed an agreement for the purpose, IPCL Chief Executive Ashok Chawla told PTI. Reliance Petro loss In the wake of the January 26 earthquake in Gujarat, Reliance Petroleum Limited is believed to have suffered a production loss of one lakh tonnes of LPG at its Jamnagar Refinery where its secondary cracking unit is yet to recommence operations. Even after a month of the disaster, RPL’s 27 million tonne refinery’s Fluidised Catalytic Cracking Unit is still under startup and its operations are yet to begin, informed sources said. The sources, however, said that the unit, which produces mainly LPG and other light distilates, may restart operations in a day or two. BAT counter-offer British tobacco giant BAT Plc said today it was considering the issue of making a counter offer for 20 per cent stake in Hyderabad-based Virginia Sultan Tobacco (VST) Ltd and a final decision would be taken on this issue by March 10. A spokesperson of BAT, which is also the single largest shareholder in ITC, told PTI from London that no decision had been taken on the question of making a counter offer for 20 per cent stake in VST. “It is under consideration and a decision is expected around March 10,” she said while declining to give any further details. Essar gets nod The Essar group has finally got a clean financial chit from the government to take equity in $ 300 million oil field along with Oil and Natural Gas Corporation. The committee of secretaries reviewed the case after doubts were raised about the Essar group’s financial health for taking up 50 per cent stake in the oil field in Ratnagiri, official sources told PTI today. Birla: no stake hike S.K. Birla has said he has no plans to increase his stake in any of his group companies despite recent reports of huge cornering of shares in B.K. Birla flagship Kesoram Industries by a Dubai-based NRI recently. The Rs 2000 crore S.K. Birla group has in its stable five companies — Mysore Cements, Cimmco Birla, Birla VXL, Siddhartha Soya and Saurashtra Chemicals. DSQ centres DSQ Software said today it would set up two development centres in 2001 besides opening up a marketing subsidiary in Malaysia in April to undertake sales and support activities. “We will set up two development centres in 2001 - one in Hyderabad and the other in Japan as part of our efforts to serve the domestic and Asian markets”, Rajesh Puri, Regional Manager, North, told PTI.
Tax holiday to Tata Steel withdrawn Patna, February 25 The Babu Lal Marandi government also announced on Friday to re-examine the “dubious” order earlier approving the sales tax exemption to the steel major’s Rs 1,300 crore CRM. It is believed that in the wake of an expected joint attack by the opposition in the ensuing Budget Session of the Jharkhand Assembly, the government has rendered a jolt to the Tatas to stay clear of the controversy. It announced that the Commissioner of the Commercial Taxes, Mr Amit Khare would review the decision and probe into the tax exemption order by the Joint Commissioner. |
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Proposal to dump
foodgrains into sea New Delhi, February 25 The proposal has been made by the Parliamentary Standing Committee on Consumer Affairs, Food and Public Distribution. It has recommended that in case the government is unable to plan for disposal of rotten foodgrains, it is suggested that it may take a practical approach to clear the storage space even by throwing the foodgrains into deep sea or otherwise before the onset of the rabi season. Although the stocks of foodgrains with the Food Corporation of India are stored and maintained on scientific lines, some quantity of foodgrains get damaged due to natural calamities, labour problems and their non-acceptance by the state governments. Such foodgrains are categorised as Feed 1, Feed 11, Feed 111, fit for industrial use or manure. There is a set procedure for disposal of various categories of foodgrains, unfit for human consumption, to the licensed dealers registered with the FCI to ensure that these stocks are utilised appropriately. At presently stocks meant for dumping are first offered to the state governments and in case no response is received within 10 days, these are arranged to be dumpted either on the premises of the FCI or even outside the municipal limits at the expense of the FCI through a committee appointed for the purpose. |
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K.R. Wadhwaney Air fares expected to come down The year 2001 is vital for the civil aviation industry in the country. Apart from disinvestment in two national airlines, Air India and Indian Airlines, and privatisation of four international airports, there will be many foreign carriers initiating operations ex-India. United Airlines of America will reintroduce its operations. The UA officials have surveyed the Indian skies and they predict the weather is favourable to uplift sizeable traffic on the India-US sector. Cathay Pacific will begin operations shortly. It is optimistic that it will cash in on its high reputation and inflight service on board the flights to pick up traffic on the Delhi-Hong Kong sector which, according to aviation analysts, is very lucrative. The operation of flight by Cathay Pacific will compel its rivals to improve its services to woo the passengers. Delta Air has already started daily flight from Mumbai to New York. Canada 3000 will also operate flights ex-India shortly. There are some other carriers awaiting clearance from the Civil Aviation Ministry. The more the merrier is the slogan of airline operators. As the capacity increases, the fares may come down. If the fares are not reduced, the airlines will be compelled to offer higher quantum of discounts through IATA-approved agents and GSAs (General Sales Agents) to woo passengers. Some new operators are also likely on the domestic skies. They have already submitted their papers for clearance to the Directorate-General of Civil Aviation. The new carriers have already recruited staff and they are determined to offer competition to the leaders. TWA bankrupt Trans World Airline (TWA), one of the affluent carriers in world in 1970s and 1980s, has turned bankrupt. There was time when it represented the future. Now it has been sold off. TWA will soon vanish. But many flight attendants talk about the airline eloquently. “It was a sheer pride to walk through an airport in a TWA uniform, getting on a jumbo jet and going to different destinations”, said flight attendants, who worked with zeal in the airline for years. Similar will be the plight of the Air India flight attendants when government-sponsored ‘Maharaja’ becomes private entity. It will lose the same flavour that TWA has lost. The flight attendants will feel the same way as TWA cabin-crew feels. New aircraft Alliance Air, a subsidiary on Indian Airlines, will shortly have another aircraft to augment its operations. As the aircraft joins the fleet before the end of March, the Alliance Air will have revised schedule of operations. More aircraft are expected before June. All these aircraft will be within the stipulated age limit of 15 years. They will replace the ageing fleet. Airlines has been in an upbeat mood although three pilots have switched over to Singapore Airline. The airline is said to have enough of cushion to depend upon other pilots. |
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Rs 1 crore loss daily due
to power shutdown The lean flow of 11,000 cusecs received at the Nangal Dam on February 14 has led to the shutdown of electricity production at the hydel power houses of Ganguwal and Nakkian. This has resulted in a loss of about 34 lakh units of power daily and loss of Rs 1 crore a day in revenue. The shutdown has come hardly 10 days after the Thein Dam power-house stopped generation. It is not clear how the PSEB will tide over the situation, particularly when a commitment to deliver 100 MW power (or 36 lakh units daily) to Haryana, made by Punjab’s CM also needs to be honoured. The combined water requirement of the two hydel channels — the Nangal Hydel Channel (NHC) and the Anandpur Sahib Hydel Channel (APSHC) — is put at 21,000 cusecs. When the flow available at the Nangal Dam is more than 21,000 cusecs there is no problem and the regulation of flow meets the requirement of both hydel channels. During the “lean flow” period when the water available at the Nangal Dam falls below the critical figure of 21,000 cusecs, a problem arises as to how much water be allowed in each hydel channel. The operation of the Nangal Hydel Power Houses is with BBMB and power produced is fed into the grid made available to the partner states in a “fixed ration”. But the two power houses located on the 34 km long APS hydel channel (at Ganguwal and Nakkian) having an installed capacity of 134 MW and the “firm power capacity” of 119 MW at 100 per cent load factor and power production capacity of 900 million every year, are operated by PSEB and the entire production of these units is available for use in Punjab. During the lean flow week starting from 14.2.2001, the BBMB adopted the following regulation pattern. (i) Direct release of 500 cusecs into the Sutlej from the total flow of 11,000 cusecs received. (ii) The balace flow of 10,500 cusecs into the Nangal Hydel Channel. (iii) The flow into the APS Hydel stopped altogether, thus “shutting down” of production at the Ganguwal and Nakkian Power Houses of the PSEB. This has resulted in aggravating the existing shortage in the system opereated by the PSEB. At present there is a keen demand for power by the state’s tubewells for irrigating the growing wheat crop as the rains have been scarce this year. With the stoppage of flow into the APS Hydel Channel, it would be difficult for the PSEB to keep the water level in the 34 km long hydel “constant” and the falling level in the hydel channel may result in many “slips” of the lining and endangering the stability of the intake structure. Hence there is need for rationalising the regulation pattern to be adopted at the Nangal Dam to prevent damage to the channel. While planning the APSHP the above situation was duly considered by the planners and in one of the memorandums approved by the Hydel Committee (headed by the Minister of Power, Punjab) it was decided that in such a situation Punjab would insist on carrying its share of waters through the APS hydel channel instead of it being routed through the Nangal Hydel Channel. It was on this account the “Control of the Head Regulator of the APS Hydel Channel” was not transferred to the BBMB but entrusted to the PSEB so as to safeguard the interest of the APSHP. Hence, it is not known why the PSEB did not excercise its “right” and let the situation develop without even a “protest”. When every drop of water available at the Nangal Dam is better required to flow into the hydel channels and produce electricity, why BBMB has made a “direct release” of 500 cusecs is hard to understand. There are some “Teakages” through the gates and also through the “damaged roof slab of the silt ejector”, located in the extreme left bay, but the “leakages” are not as large as 500 cusecs. So this aspect needs to be looked into. It would better for the BBMB to adopt a 50:50 pattern and operate both hydel channels keeping only one unit each operating at the power
houses of the PSEB and BBMB. This is based on the water flow normally let into the Bhakra Main Line and the Sirhind Canal off-taking from the Ropar headworks. |
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R.N. Lakhotia Q. I had taken a loan of Rs 1,42,000 from my employer, i.e. Punjab Government in Sept 1994 and repayment of its principal amount started from 10/94 @ Rs. 1250 p.m. As per the rules the principal amount will be recovered first and the interest thereafter. At present my whole recovery/deducation is going towards the principal amount. Please clarify whether I can claim the rebate on the accrued interest or I would claim the rebate on interest at the time of deduction of interest. — Harjit Kumar, Manimajra The tax deducation in respect of accrued interest on loan in respect of loan taken but interest not paid will still be available to you. You should, however, obtain a certificate from your employer pertaining to the amount of accrued interest on the loan on a yearly basis. As per this certificate you can claim the benefit of deduction from your salary income. This tax benefit can be given by your employer itself. It is not necessary that you must actually make payment of the interest during the year to claim the tax benefit. Q: I have some long-term capital loss carried over from Asst. Year 1999-2000. During the Asst. Year 2000-2001, long-term capital gain has accrued to me in some capital assets and long-term capital loss in some capital assets. Please confirm (1) Brought forward loss will be set off only if the net result of all transaction of the Asst. Year 2000-2001 is capital gain. or (2) The capital gain accrued during the Asst. Year 2000-2001 in some assets will first be set off against the brought forward long-term capital loss and the remaining brought forward capital loss remaining unadjusted plus the long-term capital loss incurred during the Asst. Year 2000-2001 will be carried over. — Gomti Gupta, Ludhiana While computing capital gain/loss in respect of assessment year 2000-2001, in the first stage the calculation will be made of the capital gain and loss of this year and thereafter the next capital gain will be allowed to be adjusted against the previous year’s capital loss. The net capital loss after adjustment will be carried forward in subsequent years. |
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J.C. Anand What investors expect from the Budget? The Budget proposals will be
placed before the Lok Sabha on February 28 and in the pre-Budget week the sensex may remain range-bound around the 4100-4244 points. I do not expect the market to move down any further. Last week the sensex lost 208.16 points (4.80 per cent) when it closed at 4122.16 points last Friday. There may be a little improvement in the market this week. The pre-Budget Economic Survey for 2000-2001 makes a dismal reading. The index of industrial production is down at 5.7 per cent (from 6.5 per cent), the index of agricultural production indicates a negative growth of 3.5 per cent and the GDP (gross national product) is estimated at 6.1 per cent (from 6.4 per cent). Inflation rate is expected to be at 6.5 to 7 per cent, but there can be higher inflation, especially “later in summer” (as the Survey states). It was a difficult year due to high petroleum prices, the Gujarat
earthquake and the erratic monsoon. Considering these factors, the economy has still managed to attain the GDP growth rate of 6.4 per cent. What has unnerved the market is that the Survey has called for strong measures to stabalise the economy and to raise the growth rate. A rumour that a prominent broker was finding payment difficulties added to the nervousness of the operators. The readers of this column are aware that I have been alerting the investors and the traders all along to the slowdown of the economy and the need for caution. In fact, the Survey has confirmed the forebodings of a difficult year for the stock market that had been made in this column. The Budget proposals are not likely to make any additions to the direct taxes on personal and corporate incomes. Even the dividend tax may be slightly lowered on the corporate sector and some present exemption limit on personal income may be even extended from Rs 50,000 to Rs 60,000. In view of the fact that there would be elections to the Vidhan Sabha in a number of states in 2001, the Union Government is unlikely to raise direct taxes. In case any increase is to be made, it is likely to be reserved for the supplementary budget to be placed before the Lok Sabha in September-October. The Budget proposals are, however, likely to cut down much of the “relief” now available to the tax-payers under Sections 10, 80 and 88. A determined effort will be made to broaden the size of tax-payers and to propose heavy penalties for the tax evaders. The main focus of the budget proposals will be on withdrawal or on watering down subsidies on many items. Probably a VRS may be offered to downsize the bureaucracy with a view to reducing government expenditure on services in government departments. Interest rates are likely to be cut down on provident fund and saving schemes. Another disturbing development last week was on the mindless opposition to the government proposal to sell Bharat Aluminium company to Sterlite Industries. The Opposition parties do not realise that this opposition is more to embarrass the government then to the inrtinsic merit of the proposal. Their opposition would serve as a road-block to the disinvestment policy in respect of PSUs and harm the economy in the long run. In case, this proposal is withdrawn, it would harm the reforms in the economy and keep away both the FIIs and the multinationals from making investments in the Indian economy. The stock market may have to suffer the consequences. Last week, ABB announced good results with its net profit moving up by 45 per cent. The company has declared a dividend of 50 per cent. The merger proposal between Glaxo and Smith Kline Pharma has now been approved by the
management of the two companies, and the shareholders of Smithkline Pharma will be allotted the shares of Glaxo in the ratio of one share of Glaxo for two shares of Smithkline Pharma. Glaxo is likely to report better results in 2001 and later years. It is a safe and rewarding investment for long-term investors. Today the market is likely to recover a part of the losses but the market is expected to move within a narrow range this week. |
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New PSB Chairman CS exam result Oil field Contracts Cyber vegetables Optique centre IA awards given LML showroom |
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