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Monday,
May 21, 2001, Chandigarh, India  
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Plan panel seeks 90,000 cr via selloff
Buy Gillette, IDBI Bank for long term
LIC for overseas operations G Tech to import
degradable plastic Conference
on farm strategies |
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SSIs need help to face WTO challenge Reforms
may attract more FIIs Staff urge banks
to pay arrears WagonR beats Matiz
Old economy scrips record moderate gains
Bangalore to have international airport
Q: 1. I have a deep Discount Bond of “Sardar Sarovar Narmada Nigam Ltd.” issue price 3600 and whose face value is Rs. 1,11,000 which are to be matured in 20/4. What net amount I will get after deducting the income tax.
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Plan panel seeks 90,000 cr via selloff New Delhi, May 20 Beginning with the target of Rs 12,000 crore during the current financial year, the plan panel has set a goal of Rs 15,000 crore for the first year of the Tenth Five Year Plan i.e. 2002-03. As per the Tenth Plan draft approach paper circulated by the Commission, sell-off proceeds equalling as much as one per cent of GDP should be mobilised as part of efforts to bolster non-tax revenue to finance the ambitious investment plans for attaining a GDP growth of 8 per cent. During the Tenth Plan period alone, the commission has suggested mobilisation of Rs 78,000 crore notwithstanding the fact that only Rs 10,380 crore could be mobilised during the last four years. Commenting on the dismal state of the Public Sector Undertakings, with regard to the idle capacity stock, the commission said, “operational autonomy of public enterprises has been discussed, and even attempted, in some cases for many years now, but to no avail. “Complete privatisation of all the non-strategic public enterprises within a specified time period appears to hold the best promise in this regard,” it said adding that the disinvestment process should be accelerated to yield upto Rs 17,000 crore per year on an average over the first three years of the Tenth Plan. The commission in its approach paper mooted three measures including greater emphasis on completion of partially completed or ongoing projects and rapid privatisation of PSEs particularly those working under-capacity, to take better advantage of the idle capital stock. Idle capacity in the public infrastructural investment, it said, was primarily on account of the tendency to launch too many projects without the requisite financial provision or management capability leading to a tardy pace of completion and sometimes even abandonment. “Although completion of such projects and upgradation of existing capital assets may be more efficient than launching new projects, it would require a moratorium on launching new projects until at least a minimum number of partially completed projects are brought to completion,” it said. As a step
forward the commission also suggested that it would be desirable to move from the present system of annual commitment of funds to a three-year rolling-in system, whereby firm commitment of resources will be made for a two-year period with an indicative commitment for the third year. However, in cases where idle capacity has occurred on account of financial and managerial problems preventing investment, the commission said that mere infusion of fresh funds was unlikely to solve the problems and in such cases complete privatisation seemed the best alternative.
PTI |
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Buy Gillette, IDBI Bank for long term In the last few months, while watching CNBC, we have learnt of the global meltdown of the securities. The pink papers’ doomsday forecasts have also stared us in the face day after day. Oh, my God! We thought of shifting our funds to fixed deposits in the banks but are the FDs safe? In this kind of economic crisis, even a bank can go bust. (We know the case of Madhavpura Co-operative Bank). Feelings like this have been with us at lease five times in the last nine years during which I have invested in the equities. Each time I felt like giving up investing in equities. It was obvious that the stock market was only for the gamblers, but, invariably, while I had those dark thoughts, the markets would bounce back. This made me learn an important lesson that when markets crash and there is despair all round, the markets throw up several bargains, which can be potential multi-baggers. The present market crash has also hit hard some stocks, which, if bought at the current level for two to three years, can offer excellent returns to the investors. Gillette, once a darling of investors, has fallen out of favour because of its skewed merger ratio with Duracell and Wilkinson Sword. The scrip has been battered from its yearly high of Rs 2,420 to the current level of Rs 475. Gillette, India’s existing business of shaving systems, I believe, will continue to grow at 30 per cent or more, with a substantial improvement in margins. Growth will come on the back of improved blade sales. Duracell should be able to clock a significant bottomline with the shift from dry cells to alkaline batteries in India, as is the pattern the world over. The stock which has already come off its yearly low of Rs 300, touched a couple of weeks back, currently trades at around the Rs 475 level and I think it is still an attractive price to pay for a company which has the near monopoly of the shaving systems the world over. The other scrip, which looks grossly under-priced, is IDBI Bank. The bank’s performance till date has kept most of the investors at bay and not much has happened to the financials in the last year too (in fact the bank may on Monday declare minimal profits for a full year due to one time technology cost and NPA write off). The bank’s new Managing Director Gunit Chaddha is busy making changes in the management structure, technology and the focus of the bank. The team now consists of bigwigs in the banking industry, including a former chief financial officer of ANZ Grindlays. Vineet Kohli, a former treasurer of Stanchart, Janak Deasi, and a former media head of ANZ Grindlays, Ajay Bimbhet. The bank is aggressively pursuing retail deposits, which currently stand at 28 per cent of its total deposits. The bank hopes to bring up this figure to 50 per cent in the next 18 to 24 months. On the asset side, the retail clients contribute a meagre 5 per cent to the total assets. Meanwhile, Mr
V.N. Dhiri, an ex-President of the Ludhiana Stock Exchange, said during an informal chat that many brokers and investors had lost their shirts in the recent meltdown of the technology stocks. The markets were still in an uncertain region. He said that the shares to buy on declines were Gujarat Ambuja Cement, Hughes Software Systems, Hughes
Tele.com, Reliance Petroleum and Tata Engineering. The shares to sell now were Punjab Tractors (due to a recession in the tractor industry) and second-rung software stocks like Silverline Industries. |
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LIC for overseas operations
Kolkata, May 20 The LIC Chairman said the three foreign operations based in London, Fiji and Mauritius, would be revamped either through the joint venture route or on its own. For the London outfit, LIC is scouting for a joint venture partner, Bajpai said. Besides these overseas
centres, LIC is also planning to set up a subsidiary in Nepal as a joint venture arrangement with Vishal Group of companies, with the Indian arm holding 51 per cent stake. Talking about LIC’s investments in the Indian economy, Bajpai said that with a total balance sheet size of Rs 1,95,000 crore, the corporation had
invested an amount of Rs 1,30,000 crore. Out of these investments, 20 per cent had been given to the corporate sector and 50 per cent to government debt. The balance had been used by the corporation for its various expansion plans.
PTI |
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G Tech to import
degradable plastic Chandigarh, May 20 The company has recently given a presentation to the UT Administration and the Uttar Pradesh Government regarding the products. Based on a survey in the market, several recommendations have been given to the government, an official of the company said. Product applications will include agricultural films, garbage bags, retail shopping bags, garment bags, plastic boxes, golf tees and one-time plastic packing products. At the first stage, the company plans to target carrier and garbage disposal bags, agricultural films and bags and one-time package like wrapper used on seats of new cars. During the second phase, the thrust will be on food application starting from liquor pouches, milk pouches, bread packing, PET bottles and other food packing. "For food application, we will do the necessary tests", said the official. Medical applications will be laid stress in the third
stage. This will include blood bags, disposable syringes, etc. The recommendations by the company include ban on non-degradable carrier bags; revision of tax and incentives; promotions and exemption from import duty on degradable plastics. The degradable material will be environment friendly, made of natural and food grade materials. The final degraded residue is non-toxic in nature. |
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Conference
on farm strategies New Delhi, May 20 Prime Minister, Atal Behari Vajpayee will
inaugurate a conference of Chief Ministers tomorrow to work out the agriculture strategies and food management policy. To be addressed among others by Agriculture Minister, Nitish Kumar, Food Minister, Shanta Kumar, Minister for Commerce and Industry, Mr Murasoli Maran and Finance Minister, Yashwant Sinha, the conference is likely to throw up some radical changes in the agriculture policy. The conference is being held in the backdrop of the latest exim policy which has opened up the country’s market for liberal imports. The Centre will seek to convince the states that the agreement on agriculture at the WTO does not require any change in the subsidy policy or the PDS regime. Steps to ensure that there is complete safeguard of food security and rural employment of people would be discussed. Strategies to make agriculture exports lucrative will also be discussed. Several proposals from the Food Ministry will also be discussed. Mr Shanta Kumar has proposed that the process of procurement should be decentralised and state governments should be asked to take up the job. |
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SSIs need help to face WTO challenge THE resolve of the Punjab Chief Minister to help the SSI units face WTO challenge is indeed commendable, provided it is a resolve and not a mirage. If past is any indication, it seems to be the latter rather than the former. Even election-eve soft pronouncements are not bad if they mean business. The setting up of special cell is a routine political statement. Even a separate ministry for the SSI sector at the Centre has failed to come to terms with the situation. It is a bad reflection on state government if it does not discuss issues, hurting industry in the state advisory board whose meeting is called merely once or twice during five-year term of the government. Seriousness demands at least quarterly meeting of this apex advisory body. The Chief Ministers of other states are putting pressure on the Central Government to resolve the problems of the SSI sector. Setting up an SSI wing under the supervision of a senior functionary is less than even eyewash. In today’s context, even Chief Ministers find it difficult to get the issues resolved by interacting with Central Ministers. One precedent on Punjab is worth quoting. Late Surinder
Nath, during his term as Governor in 1991, found the industry of Punjab in dire straits in dealing with banks. He convened a meeting with the Finance Minister and accompanied industry’s delegation to him. The matter was resolved within one month. Any approach less than this is futile. The list of grievances is not long if taken in proper perspective. Punjab has the intensive and extensive concentration of SSI units. Finance, Central Excise, Power and Sales Tax are the constant irritants affecting the smooth running of smaller units. Banks are charging exorbitant interest rates which range from 3 to 4 per cent above
PLR. This is due to erroneous performance data as applied to SSI units and it is the same as for larger units although their working conditions are vastly different. To obtain bank credit is almost impossible, despite Nayak Committee’s recommendations being in force since long. This requires Chief Minister’s efforts along with Finance Minister. Even the performance of the PFC under the administrative control of the Punjab Government is far from satisfactory. The state government even made up its mind to wind up the PFC. Now, the Chief Minister announces that 1 per cent concession on credit to tiny units shall be available from the PFC. It is a common perception that if somebody goes to the PFC close-fisted, he can hope to return in a similar posture. Go open-fisted and return open-fisted. If any concrete evidence is required, nearly 24 cases financed by the PFC cannot pass through the public gauge. People have been crying hoarse on this but in vain. What will the separate SSI wing do under such circumstances? The role of the PSEB in destabilising SSI units is well known. Under the pretext of revenue garnering, false cases are allegedly framed to extract undue revenue. If proof is required then see the decisions of consumer courts vis-a-vis
PSEB. All cases are decided against the board. The industry cannot go to courts due to the direction of Supreme Court and the PSEB rules supreme in such a situation. To face the WTO challenge, the industry wants radical changes. A unit makes a request to reduce its load by 25 per cent to replace two obsolete machines with one. He is asked to get supply at 66kv, an impossible act. If any unit falls sick, the entreprenuer is rendered incapacitated by the PSEB for future efforts. The Punjab Government expects the SSI units to take up the WTO challenge when it itself is offering an environment when the SSI units cannot withstand mutual competition. Octroi rates are different in districts. To further compound the matter, octroi on power with different rates has been put in place. The Punjab Government expects the SSI units to upgrade technology. See its own attitude. An auto parts institute was set up in Ludhiana under
UNDP. The Punjab Government is expected to give grant to this centre. For the past 3 years or so, no grant has been given to this centre and it is languishing. On sales tax rates, the lesser said, the better it is. Smaller units, for instance those dealing in waste yarn, are subjected to multiple sales tax regime, making devastating effect on their business. Despite Taxation Minister’s efforts to sort out the issue, nothing has happened. The Central Government is increasing the price of furnace oil and other similar fuels irrationally. State Governments’ interference is required in the matter. When the SSI sector is facing such tough competition due to WTO agreement, politicians have to replace alluring
rhetoric's with firm deeds. |
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Reforms
may attract more FIIs Ludhiana, May 20 Disclosing this Mr
R.C. Singal, President, LSE said here yesterday that now this was a case of too much funds chasing too small number of players. As a result the badla rates which used to be as high as 21 to 27 per cent per annum about a year ago are now placed at a 7 to 8 per cent per annum only. In view of this badla financers may have to look for other areas to invest their surplus funds. Seventeen scrips allowed badla trade at the exchange — Bank of Punjab,
IFCI, Mahavir Spinning, Nahar Exports, Oswal Chem and Fertilizers, Penta Soft, Reliance Capital, Reliance
Petro, Reliance Industries, GBI Silverline Ind., Satyam Computers, Telco,
TISCO, Zee Telefilm, Vardhmaan Polytex and ICICI Ltd. Mr Singal opines that the ban on badla may affect the financer advisability. But FIIs are likely to invest more in India keeping in view the capital market reforms. Because options trading is allowed in most of global markets. After July 2, the volatility is likely to increase as investors and brokers will have to square the deal the same day under the rolling settlement or they will have to give or take delivery. The daily turn over at LSE at present is Rs 40 crore on average. The exchange has its connectivity with the National Stock Exchange and the Bombay Stock Exchange. The daily business of LSE fell down in the end of March when Income Tax Department officials conducted surveys and the brokers kept the business suspended for a week. The business fell to Rs 10 crore daily. |
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Staff urge banks
to pay arrears Chandigarh May 20 Mr
V.K. Sharma, Senior Vice- President of the Indian Bank Employees Union, said the wage settlement for officers and employees was signed in December,1999 and March, 2000, respectively. While the managements of 52 commercial banks have cleared the arrears of employees, the three banks have not paid the dues. He said the payment of arrears had been held back by the managements of banks for so long and such an attitude of the banks was not acceptable to the employees. These banks have paid
ex-gratia of Rs 900 crore to employees who opted for voluntary retirement but arrears to the serving employees and officers had not been paid. |
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WagonR beats Matiz New Delhi, May 20 Suzuki’s WagonR has been ranked 21st among top 182 models while Matiz is in the 27th place in terms of vehicle quality, vehicle appeal, dealer service and ownership costs, according to a recent survey by BBC’s Top Gear and JD power for the UK market. “Suzuki WagonR just misses the top 20. The WagonR’s comfortable cabin is practical and built quality is superb. It is cheap to run, reliable and easy going,” the survey said. The top five models — Toyota Lexus LS400, Toyota
Yaris, Lexus GS-300, Rover 75 and Lexus IS-200 — have yet to test the Indian terrains. However, Indian consumers are not totally naive about some of the top 20 models, including the newly launched Mercedes-Benz E-class (ranked eighth) and Mercedes-Benz C-class (ranked eleventh).
PTI |
Bangalore to have international airport AFTER many hiccups, Bangalore will have an international airport. The airport, with ultra modern facilities and amenities will be operational from 2004. It will be an important hub for flights operating from southern India. The Karnataka Government will soon select the consortium to build the airport in Davanahalli, 40 kilometres from
Bangalore. The government delegation, led by Chief Minister S.M. Krishna, will visit the USA to invite investment. Bangalore Airport Managing Director K. Jairaj and aviation experts are optimistic that the airport, as the designs reveal, will be much better than many international airports. The airport will be constructed on 4,300 acres. The authorities have already secured 1,000 acres. Negotiations are in the progress for acquiring another 1,700 acres within a month. Two international consortiums have already been chosen. The bids from them are under consideration by an expert committee, which includes members from the Airports Authority of India. The consortium will hold 74 per cent of the equity, while the rest will be held by the state government. According to Karnataka Government, all formalities will be completed by December this year and work will start early next year. The project is delayed by four years but it is worth waiting. The delay in the project is because of little rapport between politicians and bureaucrats. Designer dead: Tupolev spent five years on the design of TU-144, which had an inaugural flight in 1968. The aircraft however, went out of operation in 1973 when it crashed in the Paris airshow in 1973. An additional flight: Air India will now have 13 international flights out of Hyderabad to cater to the needs of passenger traffic from Andhra Pradesh. Overhead expenses: The Civil Aviation Minister Sharad Yadav and his ministry are not on the same wave-length. He says one thing and the bureaucrat another. This has raised needless controversy in Air India where an official, who was charge-sheeted and on leave for six months, has been reappointed as Commercial Director. The ‘suggestive orders’ were issued by the ministry. The official has joined but he has not been allotted Commercial Director’s portfolio. |
R.N. Lakhotia Q: 1. I have a deep Discount Bond of “Sardar Sarovar Narmada Nigam Ltd.” issue price 3600 and whose face value is Rs. 1,11,000 which are to be matured in 20/4. What net amount I will get after deducting the income tax. 2. Can one get income tax rebate against producing a house rent receipt for the financial year 2000-2001.
— Ashok Bhanot, Jalandhar Cantt. Ans: The maturity amount of Rs. 1,11,000 in respect of deep discount bond will be treated as your income after deducting the amount invested, namely Rs. 3,600. If this bond is sold before the date of maturity then the amount received will be treated as long-term capital gain. You can get a deduction u/s 80GG in respect of rent paid by you. For claiming this deduction you are required to submit Form No. 10BA alongwith your income-tax return. Q: Please give me how much tax rebate and standard deduction is allowed to working women for F.Y. 2000-2001 & A.Y. 2001-2002 under which sections. — L.S. Arora, Bathinda Ans: For a working lady in respect of financial year 2000-2001, standard deduction is permissible as per Section 16 of the Income-tax Act, 1961. The deduction is @ 1/3rd% of the salary in respect of income upto Rs. 1 lakh subject to maximum of Rs. 25,000. In case the salary exceeds Rs. 1 lakh, the standard deduction would be Rs. 20,000. Besides, as per section 88C, the women tax payer will be allowed tax rebate to the tune of Rs. 5,000. The deduction for financial year 2001-2002 has increased. Q: Please clarify with an example whether commuted portion of a pension should be included/excluded for calculating taxable pension of a pensioner. — Vijay Kashyap, Mukerian. Ans:
The commuted pension would be exempted u/s 10(10A) of the Income-tax Act, 1961 which provides that for the Central Govt. employees commutation of pension received under the Civil Pensions (Commutation) Rules of the Central Government or any other similar scheme would be exempted under Income Tax. Besides, any payment in commutation of pension received under any scheme of any other employer would be exempted to the extent it does not exceed (A) in a case when the employee receive any gratuity the commuted value of 1/3rd of the pension which he is normally entitled to receive and (B) in other case, the commuted value of 1/2 of superannuation. Similarly, the commuted value of the pension in full will be exempted if received from a fund set up by the LIC under the pension scheme. |
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