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| Monday, March 5, 2001, Chandigarh, India   
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After Balco, IPCL in firing-line
FIIs pumped 1819 cr in Feb
Thomas Cook can give decent returns |
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Infotech sector unaffected by Budget
Taxpayer
feels let down
Privatisation to improve IA, AI
Q. I am a Punjab Government employee and getting Rs 250 per month as a fixed medical allowance. As per a Central Board of Direct Taxes (CBDT) circular, may I entitle to exemption in income-tax up to Rs 5,000 annually against outdoor medical treatment. Please reply.
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After Balco, IPCL in firing-line
New Delhi, March 4 High level teams of IPCL and the Indian Oil Corporation were closeted with the senior officials of the Department of Disinvestment here working out the final details of transfer of the Baroda unit to IOC even when the Balco deal was being fiercely debated in Parliament last week, official sources said. IPCL has already received approval of the shareholders at its Extra Ordinary General Meeting in Baroda last week where the management had assured investors that the funds realised through the deal would be spent on revamping the other two units of the company. However, unlike the Balco deal, IPCL disinvestment is not likely to come under as much fire since it would only be a transfer of assets from one public sector undertaking to another. For the government, on its part, it would meet part of the disinvestment target set for the current financial year by Finance Minister Yashwant Sinha. Besides, the outline defined by IPCL Chairman and Managing Director Ashok Chawla to utilise the proceeds for redeeming the debts of the company, goes well with Mr Sinha’s discourse in the Budget speech about restructuring of the PSU's through disinvestment. The Cabinet had decided to hand over the IPCL Baroda plant to IOC at a negotiated price after the government received such a request from the oil firm. It made business sense for IOC to buy out the IPCL unit since it was located next to its facility in Baroda. Shourie evidence to pin down Jogi
Disinvestment Minister Arun Shourie has released a documentary evidence challenging Chhattisgarh Chief Minister Ajit Jogi’s contention in the State Assembly that his government was not consulted over the Balco disinvestment deal. Mr Shourie told
UNI that Secretary, Department of Disinvestment Pradip Baijal had written at least seven letters to the Chhattisgarh Government since September 12, 2000. These letters, he said, were addressed by Mr Baijal first to the Chief Secretary of the Madhya Pradesh Government and then to the Chief Secretary of the Chhattisgarh Government. Copies of these letters were also sent to the State Home Secretary, the Bilaspur Commissioner and the Collector of Korba where Balco has its mines and five manufacturing plants. One of the letters was also sent to the Sarguja district collector. While the first of this series of letters was sent on September 12, 2000, the Centre-State correspondence continued through October 27, November 3, November 8 and November 15 last year. “We kept receiving letters from the State Government wanting
themselves to be kept informed about the progress of the disinvestment process so that there was no disinformation in the region. None of the letters received from the State ever showed their disapproval,” Mr Shourie said. When asked whether Mr Jogi was personally consulted on Balco, Mr Shourie said the Centre kept the State Government fully informed over the issue. “What kind of consultations Mr Jogi wants for himself when the officials of my department were in touch with officials in the State Government. None of the correspondence from his officials ever indicated that we are not getting their cooperation,” he said. UNI
Strike hits production
Thousands of employees went on strike for a second day on Sunday against the government's move to privatise Bharat Aluminium Company (Balco), the first big sale in a decade of reforms. "Around 4,500 workers are on strike and are camping outside the plant. Only some supervisors are inside the premises. There is no production," Makahan Lal Razak, Secretary of the Balco Bachao Sangharsh Samity, or the Save Balco Society, told Reuters on phone from Korba where the aluminium smelter is located. Police Superintendent S.R.P. Kalluri said the strike was peaceful but the police was ready to meet any eventuality. Trucks carrying bauxite were stranded outside the complex and federal industrial security force personnel were guarding vital installations of the plant, a union leader said. A Balco spokesman said the production had been hampered by the strike and about 100 employees were trying to keep the smelter and the alumina plant running in Korba.
Reuters
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FIIs pumped 1819 cr in Feb
Mumbai, March 4 On February 28, the day of the Budget, FIIs were net buyers in equities at
Rs. 156.4 crore ($ 33.6 mn) and in debt at Rs 21.5 crore ($ 4.6 mn), according to data available with the
SEBI. The BSE sensitive index rose by 177.36 points on the last day of the month with the Finance Minister announcing various market-friendly Budget proposals. However, the SEBI data on mutual funds for February shows that they were net sellers in equities at Rs 1199.12 crore while remaining net buyers in debt at Rs 649.36 crore. On February 14, FIIs purchased and sold equities of Rs 606.4 crore and Rs 206.6 crore respectively, thus turning into net buyers at Rs 399.8 crore ($ 85.9 mn), the highest for the month. The foreign funds were also net buyers worth Rs 288.2 crore ($ 61.9 mn) on February 19 and Rs 260.8 crore ($ 56 mn) on the first day of the month. FIIs offloaded equities of Rs 329.9 crore as against purchases of Rs 133.2 crore on February 8, to remain net sellers worth Rs 196.7 crore ($ 42.2 mn).
PTI
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Thomas Cook can give decent returns Q: Please comment on the future prospects of Elder Pharmaceuticals. Should I continue to stay invested in this scrip? — Gagan Vishal, Chandigarh Elder Pharma Limited (EPL), which forayed into the capital market in the year 2000 has launched several new pharma products in recent times and its current activities are concentrated towards expansion of the reach of these products. In fact, this is how the company has managed to record good growth in turnover. For the quarter ended December 2000 the sales were Rs 42.6 crore, OPM per cent was 13.1 and net profit was Rs 2.1 crore, EPS was Rs 4.6. Elder Pharmaceuticals comes across as a company with fair fundamentals and given its range of future plans its prospects also appear encouraging. In view of these factors a hold is recommended in this scrip. Q: Please advise me whether I should stay invested in Thomas Cook. — Rituraj Devidayal, Haryana Thomas Cook India Limited (TCIL) operates at 46 locations across 15 cities in India. Besides, TCIL’s plans also include a foray into the insurance sector. The company has initiated steps to spread its operations in Mauritius, Seychelles, Burma and other SAARC countries. On the financial front, its track record has been satisfactory. The net profit were Rs 18 crore and EPS therefrom amounted to Rs 12 crore, respectively. For the quarter ended September 2000 the sales were Rs 19.5 crore and net profit stood at Rs 3.6 crore. Considering the fact that the company is able to leverage its profits in travel-related services by introducing new products, existing shareholders of the company could expect decent gains by holding on to this scrip in the medium to long term. Q: Please comment on the investment prospects of Hotel Leela Venture. — Shyam Sahay, Faridabad Hotel Leela Venture (HLV) has ambitious expansion plans that include setting up properties in cities other than its existing locations. During the year that ended in December 2000, the net profit were Rs 33.8 crore and OPM per cent therefrom was Rs 45.4 and the net profit were Rs 5.2 crore. In view of these factors, an investment in this scrip is not recommended.
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Infotech sector unaffected by Budget THE Budget proposals of the Finance Minister for the financial year 2001-02 have been greatly welcomed by the industry but it is a very complicated and clever Budget. Its impact on various sectors of industry has to be analysed to identify sectors which have gained and are good for long-term investments and sectors which have not been so fortunate. Changes have been made both through modifications in customs and excise duties and by inserting or amending various sections of the existing laws. Needless to repeat what has been said in general that is the best Budget that Yashwant Sinha has introduced in the Parliament so far. The Infotech sector remains largely unaffected and no additional tax liability (as had been expected) has been imposed. In fact, the definition of software exports has been widened. It is surprising that the steep fall on March 2 on the stock exchange, which brought down the Sensex by 178 points, should have come in this sector. All the major Infotech scrips lost 13 to 15.5 per cent in their market prices. The Budget proposals should not be blamed for it. In fact, the sellers were the FIIs. There were rumours that some of the US companies have cut down their orders to the Infotech companies in India. The rumours were denied yet there was no respite for these scrips. It is, however, a fact that there is a definite slow-down in the USA economy and the FIIs, apprehensive of its impact on the Infotech companies in USA and in India, have turned sellers. The automobile sector has gained by reduction in excise duties but the larger piece of the cake has gone to the two-wheelers where excise duty has been cut to 16 per cent. TVS Suzuki, Hero Honda, and Bajaj Auto are expected to improve their net profits. The pharma sector has also gained in a number of ways: Intention to reduce price controls on drugs, extension of weighted deduction on R & D expenditure to biotechnology, clinical trials, filing patents, and tax exemption on R & D income. The 10 per cent customs surcharge has been removed. All the multinational and many of the Indian pharma companies will benefit. The best choices for long-term investment are: Wockhardt, Sun Pharma, Glaxo, Novarties and Hoechst. FMCG companies have in general gained except for ITC. Since excise duty has been waived on all food preparations, Hindustan Lever (with Kissan brand products), and Nestle India are the major gainers. As import duty on tea and coffee has been doubled, the Indian tea companies, particularly Tata Tea, gain as the fear of low-priced tea imports has been dispelled. The Budget is neutral on cement. Even though excise duty has reduced, the railway freight rates have gone up. Soda ash industry is a loser due to reduction in the custom duty on the imports. Tata chemicals and other soda ash companies are the losers. The recent fire in some sections of the Tata Chemicals plant makes the company a double loser. Imposition of counter-veiling duty on imported liquor should benefit the liquor industry. Minor gains accrue for the steel industry. Sugar industry would gain as the PDS issue price of sugar has been recommended to be close to the prevailing market price. What makes the industry very happy is the reduction in the dividend distribution tax from 20 per cent to 10 per cent. The larger the dividend pay-out packet a company has, the greater are the gains. Hindustan Lever, Nestle, Novarties are some of the obvious gainers. As the Budget is geared to push up infrastructural development, Larsen and Toubro, Cement companies, Tisco, ABB, Opti-fibre companies like Sterlite Opti and Aksh Opti would gain. The Budget is bad for those who depend on income from interest from banks. Deduction under Section 80 L has been reduced from Rs 12,000 to Rs 9000 as exemption. Interest rates on postal saving schemes and provident fund have also been reduced by 1 to 1.5 per cent. Now interest rate on public provident fund would be 9.5 per cent. For individual tax-payers, the last date of filing Income Tax return has been extended from June 30 to July 31. A number of loopholes, which allowed the corporate and individual taxpayers to evade tax, have been plugged. Exemption for long-term capital gains on sale of shares and securities has been broadened by providing them with another option of investing of primary public issues with a lock-in period of one year from the date of investment. Service Tax has been extended to 14 other new services. What is not clear is whether this would apply also to internet service providers and other online information services. In case these services are brought within the service tax net, many of the Infotech companies will have to bear this burden. |
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Taxpayer feels let
down New Delhi, March 4 The removal of all surcharges, barring the two per cent Gujarat quake levy, from the income tax rate has been welcomed but in financial terms it means little gains. The personal IT rate stands at 10 per cent for those with incomes between Rs 50,000 and Rs 60,000, 20.4 per cent against the earlier 22.4 per cent for the income slab between Rs 60,000 and Rs 150,000 and 30.6 per cent instead of 35.7 per cent for the highest tax bracket of over Rs 150,000. In actual terms it means that a person who was paying Rs 4480 as tax on an income of Rs 75,000 would now pay Rs 4080, which is a saving of Rs 400. At the income level of Rs 150,000 the difference is significant as the tax payable now is 19,380 instead of 21,280, which is a saving of Rs 1900. The marginal gain in income tax is more than made up by the steep reduction in the interest rates on small savings and provident fund contributions, which is between 1 to 1.5 per cent. The only positive point in the recent Budget is that the Finance Minister has not implemented the proposed tax on provident fund withdrawals. Retired personnel and those dependent on small savings would be hit the most from the reduction in the interest rates. Their incomes would come down effectively. Another nasty blow to their savings plan is the Finance Minister’s decision to deduct tax at source on income from interest on time deposits if such income exceeds Rs 2,500. Earlier the tax was deducted at source on income from interest on time deposits only if such income exceeded Rs 10,000 in respect of deposits with a bank or housing finance company and Rs 5,000 in other cases. Several fixed deposits were divided in such a way that the income from them never exceeded Rs 10,000 and they were not taxable. While the new step would hit people who avoid paying taxes, for the honest saver it would mean additional work. Getting a refund from the income tax department is not an easy job. The problems don’t end here. After two rounds of bank rate cuts in a fortnight, the RBI is contemplating a further cut in the savings account rate by half a per cent. The savings rate account at present is pegged at 4 per cent. The only administered rate in the banking system was cut by half a per cent last year too. The Post Office savings rate has already come down to 3.5 per cent following the small savings rate cut. The RBI may prefer to keep the bank savings rate at par with Post Office rates.  |
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Privatisation to improve IA, AI THE privatisation of Air India and Indian Airlines and four international airports will surely improve efficiency and air safety. There will be no interference from politicians and bureaucrats. The private managements will be able to apply all important norms unlike in government supported organisations. Pilots and engineers will no longer be lax in their duties and functions. The pilots will have to rigidly adhere to laid-down procedures of the International Civil Aviation organisation (ICAO). There are instances when executive pilots have performed administrative work in office and then flown to avail themselves of heavy perks admissible to pilots while flying. There have again been instances when pilots with minor lapses have been punished while commanders with major incidents have gone scot-free because of their connections with politicians and bureaucrats. The private managements, wanting to steady their airlines in operation will adhere to one rule to all. Does the ageing fleet contribute to the risk factor? Some engineers say there is no age limit for a plane. They argue that when the life of a certain component is over, it is replaced or overhauled. Maintenance on schedule keep the plane in fine fettle. There are again many instances when costly spare parts have not been fitted in aircraft for which the requisition was made. They have been fitted in some other aircraft for “consideration”. This kind of corruption is rampant in Indian civil aviation even now. According to pilots and retired engineers, the renaissance of the civil aviation will be possible only when the DGCA becomes a body, controlled by efficient incumbents. The “head” should be one who knows intricacies of flying. When Denzil Keeler was adviser in the DGCA, proper and appropriate checks were administered on pilots and commanders. The experts say that along with the DGCA, the functioning of the AAI should also be improved. Even if four international airports in Delhi, Mumbai, Chennai and Kolkata go private, there are 100 odd airports for the AAI to control and manage. Many of these 100 airports lack in basic facilities. There are some, which have no X-ray machine for check-in baggage. Goa, for example, has become a tourist resort but the airport is devoid of many essential facilities. For a long time, there was no restaurant and roof of the newly constructed building could not be repaired for many months. |
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R.N. Lakhotia Q. I am a Punjab Government employee and getting Rs 250 per month as a fixed medical allowance. As per a Central Board of Direct Taxes (CBDT) circular, may I entitle to exemption in income-tax up to Rs 5,000 annually against outdoor medical treatment. Please reply. — Ram Kishan, Hoshiarpur On the facts stated by you, the entire medical allowance received by you will be fully taxable under the Income-Tax Law, irrespective of the fact that you have actually spent the entire medical allowance. Under the Income-Tax Law, the reimbursement of medical expenses is exempt to the extent of Rs 15,000 p.a. but medical allowance becomes fully taxable. Q: I shall be highly obliged if you would kindly clarify whether the bank employees are eligible for tax exemption up to Rs 5 lakh on VRS under Sec. 10, 10C, Rule 2B (A) of Income-Tax Act, 1956. — D.K. Malhotra, Patiala The bank employees are also eligible for tax exemption to the maximum extent of Rs 5 lakh in respect of VRS received by them. Q: 1. I purchased a plot measuring 200 sq. yds. from Improvement Trust in Punjab in 1978 for Rs 30,000. The plot remained vacant for a long time. I immigrated to foreign country to join my son settled there and am still residing there but I hold Indian Passport and have still not acquired foreign nationality. 2. I constructed a house on this plot in 1993 and spent approx. Rs 5 lakh. Now I want to sell this house for a sum of Rs 15 lakh. What will be my i) Tax liability by way of capital gain? ii) Is it obligatory on the part of the purchaser to pay the tax on the above in case the seller is NRI? iii) Is any tax other than capital gains applicable to NRIs? iv) What is the procedure for transfer of funds from sale proceeds of property in India to foreign country? — Kartik Sharma, Mansa On the facts stated by you the liability in respect of tax on capital gains will be calculated by applying the concept of Cost Inflation Index to save income-tax. It would be worthwhile if you calculate your costs separately in respect of land and separately in respect of the construction amount. By separate calculation of the cost after application of cost inflation index, your tax liability will be substantially reduced. The net capital gain after deducting the same from cost price as per cost inflation index will be liable to income-tax i.e. the tax on capital gains @ 20 per cent. If you want to completely do away with capital gains tax you can invest the entire portion of long-term capital gains in investments as are specified as per Section 54 EC of the Income-Tax Act, 1961. There is no separate calculation of tax in respect of NRIs. It is not obligatory on the part of the purchaser to pay the tax where the seller is NRI. It is not possible for you to transfer your funds in respect of sale proceeds of the property to a foreign country unless permitted under
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Blink to avoid eye strain on computer Computer vision syndrome is really just looking at a particular distance for a prolonged period of time with little or no rest for the eyes. Other factors affecting eye health include glare caused by poor lighting and reflections off the screen, and decreased eye lubrication due to insufficient blinking, which can trigger a burning of the eyes. There are steps people can take to help themselves. One suggestion? Blink the eyes every so often to spread the thick lubricating tears across the surface of the eye. People who wear multifocal lenses are at special risk for eye strain if their lenses aren’t in ‘sync’ with their computer screen. Everyone should give their eyes a rest from PC-gazing every now and then. The American Academy of Ophthalmology offers these additional tips:
Longterm computer use has never been linked to serious eye damage. Reuters Honour for Sinha The 101-year-old German Asia Pacific Business Association, known by its German acronym OAV, has set aside tradition in inviting Sinha as the First Asian guest of honour at the 81st “Ostasiatisches Libesmahl” (festive dinner) in the north German port city of Hamburg this Friday.
PTI High heels’ power All women linked fashionable footwear with sexuality, status and power, even when they reached their seventies, the random survey of women registered with an Oxfordshire family doctor practice found. The survey appeared to show that women prefer to put up with pain and risk serious long-term foot problems rather than wear less sexy shoes, the British paper said yesterday. However, only one woman in three said she really liked wearing high heels, but one in 10 said she would wear uncomfortable shoes if they looked good. More than 80 per cent said they would not be prepared to change their preferred shoe styles to improve a foot problem.
DPA Patients vs profits The action filed by 39 of the world's leading firms led by Britain's GlaxoSmithKline is seen as a landmark in the ability of the developing world to import or make generic versions of medicines developed and patented by the drug firms. For aid and charity organisations, the case is a fundamental test of whether powerful pharmaceutical firms will put profits ahead of lives as the developing world struggles to deal with an AIDS catastrophe and rising poverty. "This case has got much wider implications than dealing with a staggeringly large public health crisis. It's about the pharmaceutical companies belligerently and aggressively defending their monopolies around the world," said Belinda Coote, Regional Director of London-based
charity Oxfam. Seven days of high court hearings in the capital Pretoria will determine whether South Africa can enforce legislation that would enable its health minister to consider shopping around for the cheapest drugs available, particularly antiretroviral drugs used to treat HIV-AIDS. Pretoria insists its Medicines and Related Substances Control Amendment Act is fundamental to its constitutional duty to provide health care to millions marginalised under apartheid. With more than four million South Africans already living with HIV-AIDS, observers are waiting to see if Pretoria declares the extent of the epidemic a national emergency, which would allow them to legally import massive quantities of generics.
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Inflation dips Computers in schools |
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