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| Monday, June 4, 2001, Chandigarh, India   
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Moody’s sees ‘slippage’ in India’s reform effort Escorts
hopes to lead tractor race SEBI code
of ethics for stock exchanges Grape
cultivation in Punjab rises |
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CII
career fair ends
Avoid
trading in June
Q: I have purchased a shop for Rs 10 lakh in the name of my wife and son. The cost has been financed from my retirement dues. I have gifted away this shop to my wife and son. Kindly advice the manner in which, I am to show this in my income tax return, so that at a later stage income if any from this shop could be assessed in the hands of my wife and my son. My wife has no other source of income and the son is still studying.
Damanis
hike VST offer price to Rs 151
No need
to appoint sales agents
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Moody’s sees ‘slippage’ in India’s reform effort
New York, June 3 Moody’s said it has seen “slippage” in the government’s reform effort, but declined to say whether a ratings change can be expected. And Standard & Poor’s (S&P) said it was still worried about the size of the budget deficit. A day earlier, competing rating agency Fitch lowered its ratings outlook on India’s sovereign debt to negative from stable, citing worries about fiscal policy, privatisation and deterioration in the country’s foreign investment climate. Since June 1998, Moddy’s has rated India BA2, two notches below investment grade. In October, 1999, the agency placed a positive outlook on the rating, reflecting optimism that the government would reform its Budget and enact other reforms. “There’s been a lot of slippage since then,” said Kristin Lindow, lead India analyst at Moody’s. We do discuss whether the ratting is appropriate given the risks we see and whether the positive outlook is still warranted. But as of this moment, we have not decided to change that,” she said. Adding to India’s problems is a dispute between Enron Corp and a local utility. “The dispute indicates that India’s government may not be willing to live up to its contractual obligations,” Lindow said. “As a consequence, this would further deter foreign direct investment from coming into the country.” Since October 1998, S&P has rated India’s foreign currency debt at BB. The outlook has been stable since October of last year. “Our rating is constrained by India’s large fiscal deficit and large government debt,” said Joydeep Mukherji, India analyst for S&P. The combined deficit of the state and Union Governments amounts to about 10 per cent of GDP, Mukherji noted. And India’s combined government debt is approaching 70 per cent of GDP, he said. “Those are high numbers and that’s why the rating is so low,” Mukherji said. Meanwhile, investors are left to figure out for themselves what’s in store for India, considering the positive outlook given by Moody’s, Fitch’s negative view and the stable outlook given by S&P. Fitch currently rates India’s foreign currency obligations at BB-plus, which is one notch above the ratings given to India by both Moody’s and Standard & Poor’s. The rupee fell close to a lifetime low on Friday following the Fitch ratings announcement, but recovered to end little changed on the day. Indian stocks also fell. Analysts in India said the factors cited by Fitch were not new and had been discounted by markets.
Reuters
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Escorts hopes to lead tractor race
New Delhi, June 3 Escorts finished third among more than a dozen Indian tractor makers in the financial year ended March, with a 19.1 per cent share. Punjab Tractors Ltd was marginally ahead with 19.4 per cent while the market leader, Mahindra & Mahindra Ltd, was well ahead with a 33.5-per cent slice. Mr Rakesh Chopra, Agri-machinery group Head at Escorts, told Reuters that the company’s ranking was due to its almost negligible presence in the South. “We have a 5 per cent market share in the South while Mahindra has a 54 per cent share in the 40,000-tractor market,” he said. Mr Chopra said Escorts’s share of the market was unevenly spread with about 30 per cent concentrated in half the country and a mere 7 per cent share in the other half. “I clearly didn’t have the products for the markets where I had a 7 per cent market share. Since I have the products now why shouldn’t I progress to the over 30 per cent share, which is my natural market share for the other products.” The Escorts group, owned by the Nanda family, has interests spanning agri-machinery, auto parts, telecom, health, software and financial services. Associate firm Escorts Tractors also manufactured tractors in partnership with New Holland, Italian automaker Fiat’s tractor unit. But they parted ways in 1997 and Escorts merged the two units. Mr Chopra said the firm expected to sell over 47,000 tractors in the current fiscal to achieve a 22 per cent market share and 25 per cent in the next year. The firm is also focusing on reducing costs and a programme to improve sourcing, with the help of Andersen Consulting which helped it save nearly Rs 6,000 a tractor in costs.
Reuters
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SEBI code of ethics for stock exchanges Ludhiana, June 3 The code will be applicable on all officials of the rank of General Manager and above. Securities for this code will not include mutual fund units and government securities. SEBI has directed all stock exchanges to set up an ethics committee in each exchange for overseeing the implementation of the code under the Governing Board. Not more than 40 per cent of the members of this committee will be elected directors and functionaries who will promote greater awareness and understanding of ethical responsibilities. The directors and functionaries will not use their position to get favours from the executive or administrative staff of the exchange, suppliers of the exchange or any listed company at the exchange. SEBI has prohibited the elected office bearers — of the exchange from proprietary trades in securities, directly or indirectly, during the period of holding office. SEBI has also directed the functionaries to disclose on a periodic basis as determined by the exchange (which could be monthly), all their dealings in securities, directly or indirectly to the governing body, ethics committee and designated compliance officer. The dealings in securities will also be subject to trading restrictions for securities about which functionaries in the exchange may have non-public price sensitive information. SEBI has emphasised that all transactions must be of an investment nature and not speculative in nature. Towards this end, all securities purchased must be held for a minimum period of 60 days before they are sold. However, in specific circumstances, sale can be effected anytime by obtaining pre-clearance from the compliance officer or any other designated authority who will be empowered to waive this condition after recording in writing his satisfaction in this regard. SEBI has laid down that directors (other than elected office-bearers as per clause 2) of the exchange will disclose on a periodic basis, their proprietary trading, directly or indirectly to the ethics committee. All Directors will disclose on a period basis, the trading conducted by firms and corporate entities in which they hold 20 per cent or more beneficial interest of hold a controlling interest to the ethics committee. Regarding the role of the President and the chairman of stock exchange, SEBI has observed that the president and Directors will not interfere in the day functioning of the exchange and will limit their role to decision making on policy issues. They will not be involved in the function of appointment and promotion of the employees unless specifically so decided by the governing body. It has pointed out that the ethics committee will lay down procedures for the implementation of the code and prescribe reporting formats for the disclosures required under the code. The ethics committee may designate a senior officer of the exchange as compliance officer for executing the requirements laid down by it. Mr R.C. Singal, President, Ludhiana Stock Exchange, said the Board of Directors of the exchange would meet soon to form the ethics committee to implement the
code.
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Grape cultivation in Punjab rises Chandigarh, June 3 Though the increase is about 80 to 100 hectares a year, yet it has marked the reversal of earlier trend of farmers deciding to discontinue grapes cultivation in the state because of the lack of market support. This year, nearly 1,400 hectares in Bathinda, Mansa, Ferozepore, Faridkot and Muktsar are under grapes cultivation. In spite of the introduction of the Israeli techniques, changing weather continues to be the major deterrent for those diversifying to horticulture in general and grapes in particular. For examples dust storms, squalls and even moderate to heavy rain in May are detrimental to Perlette, the main variety of grapes grown in the state. This early maturing variety gets ready by the middle of May. Subsidy offered by the Punjab Horticulture Department for the introduction of the Israeli technique was perhaps the turning point. Each year, the department covers about 500 acres of grapevines under the scheme offering to each farmer a subsidy of Rs 1,400 per acre. “We provide to the farmers not only technical know-how but also “g acid”, a growth hormone, for treating the berries. Besides, we provide them plastic combs to regulate the size of the fruit bunches,” says Dr Jagtar Singh Mann, Director, Horticulture, Punjab. “The main drawbacks of Perlette variety, which is otherwise early maturing, has been that it bears heavy fruit because of which quality suffers. Besides, the bunches, too large in number, are small in size and ripening of the berries too is not uniform. Further, most of the berries remain sour as the sweetness content varied between 10 and 12 per cent. Also because of a large number of bunches size of berries also remained small. “In 1995 when Dr Bazak visited Punjab, he demonstrated us the new technology. Now in January, we prune the grapevines to ensure that it should have 60 to 80 bunches. At the time of fruition, we comb the bunches to make sure that nearly 60 to 75 per cent of flowers are pruned leaving 100 to 125 flowers in each bunch. At the 4 mm stage, the bunches are given ‘g acid’ treatment. The treatment is repeated after six days. In between girdling is done. As a result of this treatment, the average size of the berry becomes normal and its sweetness content goes up to 18 to 21 per cent. It ripens uniformly and becomes golden yellow to become marketable and even exportable. “The results are encouraging. Though beauty seedless and Flame seedless are the new varieties that have been introduced, still 80 to 90 per cent of the total areas is still under Perlette variety,” Dr Mann said maintaining that on an average with remain remaining hospitable, the average yield from an acre is about 12 tonnes giving the farmer anything between Rs 70,000 to Rs 1 lakh. Initially, good quality grapes sell for Rs 12 to Rs 15 a kilo but now the price is come down to Rs 8 to 10 a kilo. The farmers, however, want the state government to abolish octroi on grapes. At present, any consignment up to 20 quintal of grape is exempt from payment of octroi. But larger consignments are charged octroi. Since Punjab is the only grapes growing state in this part of the country, the farmers have entire region for marketing their produce. The Punjab Agro Industries Corporation has discontinued procurement of grapes but it still provides cardboard cartons to the farmers at subsidised rates. The grape growers want that their demand for plastic crates should be met by the Department of Horticulture as the present supply was far from adequate. He also want the state to make available vans with pre-cooling facilities so that they can straightway market their produce from their grapevines. The other major demand of grape growers has been crop insurance. The Punjab Horticulture Department organised the state grapes show at Bathinda a few days ago which attracted nearly 3700 entries. Besides grapes, even wines, chutneys, pickles, jams and juices made from grapes were entered the show. Bathinda was adjudge the best district.
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CII career fair ends New Delhi, June 3 Seminars on fashion designing, hospitality, retailing, public relations, information technology, film production, etc were held in concurrent sessions. Among those who addressed the seminars included Dr Sarita Kalia of Ebony Retail Holdings, Mr Dilip Cherian of Perfect Relations,Mr Suhel Seth of Equus Advertising, Ms Usha Albuquerque of Career Smart, Mr Ravi Khanna of Aptech and Mr E Sivakashi of National Institute of Fashion Technology, a release said. Among the exhibitors were AIMA, NIIT, Edurite Technologies, Webcom Technologies, Bajaj Capital Business School, IT&T Limited, Hero Corporate services Limited, Skyline Business School etc. Alternatives 2001, is the fourth in the series of such fairs being organised by the CII and
was being presented in collaboration with Education Times. While Netvaristy.com were the event sponsors, Amity was the Principal Sponsor
and Career Launcher, Hero MindMine and E-Academy were the co-sponsors, the release
said. |
rc
by J. C. Anand Avoid trading in June Long term investments are made largely for appreciation as well as for good dividend returns. The term long-term investment implies that the investment will be normally retained at least for a year, if not more if it is held to be gainful. But for making good long-term investment, the investor has to select well-managed companies with good fundamentals and growth prospects. Another requirement is that these shares should have good liquidity and market capitalisation. Some long-term investments are made largely for excellent dividend return with only will prospects of appreciation. In this column, many shares have been recommended in the past with both objectives in mind. For example, Canfin Homes (recommended at Rs 17 with dividend of 22 per cent), GNFC at Rs 18 with dividend of 24 per cent) Vanavil Dyes (at Rs 30 with 40 per cent dividend) were recommend for good dividend return last year. These companies have not only maintained their position but have raised their dividend returns and recorded appreciation in market prices by more than 20 per cent. Some shares recommended in this column for handsome appreciation last year were Aksh Opti, Sterlite (now split into two companies), Global Tele and Vikas WSP. Only Vikas WSP has disappointed the investors but its fundamentals have improved vastly and it is likely to soar very high within a year or so. Some internal disputes among the promoters have been responsible for its sluggish market rating. The investors should retain this scrip without any fear of any further fall in the market price and should expect hefty rise in the months to come. It is, however, important not only to “identify good scrips” for long-term investment but also to choose “proper timing” for making these investments. Wrong timing for investment even in excellent scribes leads to losses and miscalculations. Proper timings for investments is the key to good returns in the stock market. I am placing great stress on proper timing because I am anxious to caution the investors (and even bull traders) that the month of June is not proper for investments and trading. The market has to go down throughout the month. The current month of June marks the end of the era. All deferred positions taken after May 15 will have to be liquidated by July 2. About 414 scrips accounting for 95 per cent of trading volume will be brought within the orbit of rolling settlement. No one knows how the market will react to these changes. Options trading has now been started (since June1, 2001) in Index on the BSE. Full details regarding options trading in equity shares has not been fully worked out as yet; or, at least it has not been spelt out. The Flls are now the sellers with no institutional buyers in sight. The UTI has to pay out dividend on US-64 units in July and it has to manage sufficient funds for it. No trader is anxious to build up any substantial position in the market at this time. So the market in June will be sluggish and bearish; at best it will stay flat. Sluggish market in a sluggish economy. Here are some good scrips for your watch-list. Pick them up when the market is low and these shares are quoting at lower rates. Framatone Connectors OEN is one excellent scrip for long-term investment. The company is now 61.5 per cent subsidiary of FCI France, which is a global market leader in connectors. With an equity capital of RS 5.27 crore, it has free reserves of Rs 46.27. crore. (including Rs 16.8 crore as share premium reserve) EPS is Rs 23.44 for the year closing 31-12-2000. The book value is Rs 97.83. The company has raised its dividend to 25 per cent from 20 per cent. The company is a leader in telecommunication switches and connectors and has also made substantial supplies to the Defence department. On the debit side, it has low liquidity and market capitalisation and it would take some time for good appreciation. But it has no risk of downward movement and it is a sure bonus candidate. It may be picked up at the right time. Its in quoting around Rs 118 at present. Other shares for your Watch list are: Larsen and Toubro, Aksh Opti, Reliance Industries, Reliance Petro, Glexo and Novartis. US-64 units are likely to recommend a dividend between Rs 12.50 to Rs 13 this year and the new sale price in July is likely to be the same as the dividend rate. |
ty
by R. N. Lakhotia Q: I have purchased a shop for Rs 10 lakh in the name of my wife and son. The cost has been financed from my retirement dues. I have gifted away this shop to my wife and son. Kindly advice the manner in which, I am to show this in my income tax return, so that at a later stage income if any from this shop could be assessed in the hands of my wife and my son. My wife has no other source of income and the son is still studying. — K. Lall, Patiala Ans: On the facts stated by you even when you gift the shop to your son and your wife the portion of the shop gifted to the son if results into any income by way to rent the same will be treated as income belonging to your son. However, in respect of rental income received by your wife in respect of said shop, the same will be clubbed or added with your income in terms of Section 64 of the Income Tax Act, 1961 because as per this section direct or indirect transfer to the spouse and the income resulting thereon will be added in the hands of the person transferring the amount. Hence, the income if any received from the property let-out by your wife will be treated as your income and has to be included in the taxable income of yours. Q:
I (female) am agent of LIC of India and my commission during income year 2000-2001 i.e. assessment year 2001-2002 is expected to be received by me as under: First year commission: Rs 55.000 Renewal commission : Rs 28,000 Bonus commission Ist yr. commn: Rs 22,000. Total: Rs 1,05,000 Because of special rebate of Income Tax of Rs 5000 to all female assesses and also as per circular No. 648 dated 30.3.1993 printed in 201 ITR (ST) issued by CBDT and any further instructions issued regarding Adhoc Rebate allowed to LIC agents for the expenses incurred for collecting business without maintaining account books and without supporting vouchers for getting ad hoc rebate from Income Tax. Please explain and calculate my Income Tax liability. — Alka, Jalandhar Ans: As per circular No. 648 dated March 30, 1993, the benefit of ad hoc deduction will not be available to the LIC agents who have earned total commission of more than Rs 60,000 during the year. The admissibility of deduction to such agents will be based on the actual expenditure incurred by such agents. You will, however, be eligible to claim tax rebate of Rs 5,000 U/S 88C on account of being a woman tax payer. Q: The following points regarding the senior citizen and the Income Tax need your clarification: (i) Is it necessary for a senior citizen to obtain the Income Tax Number even when his income does not exceed Rs 120000? (ii) Does owing a telephone alone makes it mandatory for him to submit annual Income Tax Return? (iii) In case he goes abroad for a few months on a return-ticket sent by his well-wisher abroad, what shall be his position regarding the Income Tax? (iv) In case a senior citizen owns a car, a telephone, has been abroad, but his income from all sources does not exceed the taxable limit, is he liable to submit the income tax return? — Prof. A.P. Sharma, Patiala Ans: For a senior citizen, it is not compulsory to file income-tax return as per economic indicator in case he is occupying requisite property or owns a telephone. If the senior citizen goes abroad for a few months but the expenditure on such travel has been met by some other person then also he is not required to file income-tax return. If, however, the senior citizen has a car, then even if his income is much below the exemption limit he will be required to file the IT return. |
cr
Damanis hike VST offer price to Rs 151 New Delhi, June 3 Today was the last day by which both Brightstar and Russell Credit, which is a wholly-owned subsidiary of ITC, could have made any changes to their open offer. The earlier offer by Brightstar was for acquiring 20 per cent stake in VST at Rs 118 per share. Kinetic: The Kinetic group has targeted to achieve an over 47 per cent growth in sales at Rs 1,150 crore in this fiscal from its twin two-wheeler companies. Kinetic Engineering Ltd (KEL), expects to generate an over 53 per cent rise at about Rs 550 crore, while Kinetic Motor Company (KMCL), has set a sales target of Rs 600 crore during 2001-02, a jump of about 42 per cent over the previous fiscal, a senior Kinetic official said. During 2000-01, KEL had posted a 20 per cent rise in sales at Rs 357.5 crore and a profit of Rs 16.58 crore, up 10.2 per cent over the previous fiscal. Hind Lever: Hindustan Lever (HLL) is considering various options for potentially sick joint venture company Lever Johnson (consumer products) Ltd, including whether to continue with the JV, due to the latter’s dismal financial performance. The JV company deals in floor cleaners, insect control and air care products and became potentially sick in 2000. Ranbaxy Laboratories has taken initiatives to expand its markets in China in line with its plans to explore overseas markets up from current 29 major cities to a total 50, official sources said. The focus would be on achieving entry into 500 to 1000 hospitals by the year end. This would be achieved by improving systems, increasing productivity, while realising product registrations that were already in the pipeline, Ranbaxy said in its annual report.
PTI |
co
by K. R. Wadhwaney No need to appoint sales agents For the past 20-25 years, Air India has been suffering losses and adverse publicity because of widespread bunglings by general sales agents (GSAs) and consolidators worldwide. New York, London, Dubai and several other stations have been known trouble spots for AI. When the GSAs have been questioned for their unscrupulous handling, they have quietly declared themselves insolvent to deny payment to the national carrier. Many directors, regional directors and others have been fired by Air India for their alleged connivance with the GSAs. Some regional directors have sought voluntary retirement instead of facing humiliation. Every airline operates through agents as it is not allowed to offer discount or commission to the passengers. International Air Transport Association (IATA) agent gets 9 per cent commission and the GSA 12 per cent in addition to several other facilities, including over-riding commission. The concept of appointing the GSAs in off-line areas is understandable. Foreign carriers appointing GSAs in this country is understandable because they cannot afford to have huge establishments here. But why Air India should have two or more GSAs in Delhi and Mumbai when it has an ‘army’ of sales officers, who are getting fat salaries. What are the functions of sales officers? They do precious little for their own airline and promote their own interests. Many of them succeed in securing postings abroad by building contacts with politicians and bureaucrats connected with civil aviation ministry. The latest trouble in Air India has been brewing for the past more than eight months. The disinvestment scheme has aggravated the situation. This is because politicians and bureaucrats have not been on the same wave-length. They keep shifting their stand. Yet this storm would have remained a storm in tea-cup if Managing Director Michael Mascrenhas had carried out the ministry’s orders instead of defying them. V.K. Verma, who stayed on leave for six months after he was charge-sheeted, should have been allowed to rejoin as Commercial Director, as suggested by the ministry, instead of placing him in an insignificant department. Verma, like Mascrenhas, wears a pleasant disposition. But he is sharp and shrewd. He knows how to utilise his contacts, built through sports. Any one, who has qualified from sports units, like, RSCB and SAI, is a hard nut to crack. When Verma joined Air India, his understanding of aviation matters was negligible. Now he can rub shoulders with any one. |
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Inflation dips KNA Intl SBP new rates FII buyers CMA office-bearers |
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