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Tuesday,
March 5, 2002, Chandigarh, India  
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NEWS ANALYSIS Single
excise rate to make Budget simpler Bharti
starts basic services in Delhi Indo-Pak
trade grows despite tension |
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Truckers
suffer 300 cr loss in violence Punjab-TAFE
campus for city 4 pc
duty hits cycle units hard
Reliance
to import $ 3.9 b worth crude oil
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NEWS ANALYSIS New Delhi, March 4 India’s largest ever merger will create a financial powerhouse that stands to gain on several fronts. To begin with Reliance Petroleum Limited’s (RPL) assets have been valued at Rs 21,000 crore which would be funded out of the creation of equity with a current market value of Rs 11,000 crore. This represents a straight benefit of Rs 10,000 crore to the shareholders of RIL. It has been decided that for every 11 shares of RPL, the company would give one share of RIL. The 1:11 swap ratio has been based on the market rate of the scrips. On the last closing a RPL share was valued at Rs 28.60 while that of RIL closed at Rs 322.15. India’s largest private sector company in terms of sales at Rs 58,000 crore, which would have a wide spectrum of goods to offer from petrochemicals, power, textiles, oil and gas exploration, refining and marketing would also have the world’s highest number of shareholders at 35 lakh. The company that rode to new heights on the basis of its Vimal brand of textiles would now become a predominantly energy company with textiles contributing less than one per cent to the total group turnover. Refining and marketing would form 58 per cent of RIL’s business in the future while its core business of petrochemicals would constitute only 40 per cent. After the merger, which has to be cleared by the court and the shareholders, RIL would become the country’s largest exporter with a turnover of $ 2.2 billion . Its contribution to the total indirect tax revenues of the central government would form 10 per cent. While retaining the same Board of Directors, the new entity would draw on the advantages enjoyed by the RPL as a result of it being a greenfield project. RPL enjoys a seven year tax holiday and this benefit would now be available for RIL. Another gain would result from the savings made on internal purchases. As a petrochemicals company Reliance used to source much of its raw materials from RPL and had to pay heavy sales tax. It would save several crores of rupees due to the merger. The sound financial standing of RIL would also generate a few crores for the new entity. Compared to RPL, RIL’s financial rating of AAA would enable it to secure cheaper loans. Presently RPL has a debt of Rs 7,000 to 8000 crore. Under the new arrangement, RIL can refinance the entire debt and saving on interest rates which could range between half a per cent to one per cent. The company has also set aside 12 per cent equity for strategic sale to investors or sale in the international market through ADR and GDR. This again would bring in heavy funds. Apart from the financial gains, the mega merger would give the company enough clout in the world market to bid for projects. According to Anil Ambani there will be substantial leverage to fund future investments and acquisitions and other growth opportunities in the domestic and international market. All this will be done without any recourse to the Reliance Industries’ balance sheet and the benefits will flow to the Reliance shareholders. Reliance group now has four companies under its fold. Apart from the flagship RIL, it has floated Reliance Infocom, Reliance Telecommunications and Reliance Capital. The group would contribute almost three per cent of India’s GDP.
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Single excise rate to make Budget simpler New Delhi, March 4 “Had it not been for revenue consideration, I would have liked to move faster in cleaning up the excise and customs”, Mr Sinha said while speaking at a post-Budget meeting organised by the CII here. He said that the process to start compressing and subsuming the rates would begin next year, with Part B of the Budget speech would be reduced to just one page or even a paragraph. On the direct tax front, the Finance Minister said that an opportunity was missed in 1997 when the tax rates were reduced but the proposals did not deal with exemptions. He said a detailed exercise would be carried out in the next Budget to push up excise rates of items enjoying full exemptions and those at the 8 per cent slab to the Cenvat rate of 16 per cent. Mr Sinha said that while households’ savings continued to be good, these were being wiped out by public sector dissavings. On taxing dividends at the hands of recipients and the 5 per cent surcharge, the Finance Minister said that he would rather focus on fundamentals than chase the ephemeral fee good factor. “I will be no more be merchant of the feel good factor”, he said. Expressing optimism at the outlook for the economy, the Finance Minister said that there were already signs of a recovery in the global markets and its positive impact on export demand will help improve the industrial situation. Mr Sinha said that with the imposition of 5 per cent surcharge on the rest of the economy, it would not be equitable to leave out companies in Free Trade Zones from contributing to national
security. Therefore, the reduction in benefits available under Section 10A and 10 B of the Income Tax was justified. On the adverse impact of the reduction in rates of RBI relief bonds following the 50 basis point interest rate reduction on retired persons, Mr Sinha said that the government was also encouraging the growth of retail debt market for government securities to provide a sage and liquid avenue for investments. The Finance Minister agreed with the opinion that second generation reforms were not limited to measures under the purview of the Finance Ministries. Most of these reforms had to be taken forward by other Central Ministries as well as the states.
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Bharti starts basic services in Delhi
New Delhi, March 4 “We are targeting the high-end users comprising commercial entities in the Central part of the Capital and residents in the high-income colonies of South Delhi,” Sunil Mittal, Group Chairman and Managing Director of Bharti, told reporters here. The group has committed an investment of Rs 250 crore in the first phase, Mittal said adding during the first year of roll out, about 400 km of optical fibre network would be laid to be followed by another 700 kms network in the second year. “The investment will serve the high-end users and on back of that, we shall roll out a large network covering other parts of Delhi,” Mittal said. The company has been allotted two series of 7-digit telephone numbers beginning with 85 and 86. Bharti would be offering the services at same rates being charged by Mahanagar Telephone Nigam Ltd (MTNL). Asked about the turnover targets, Mittal said “in the first full year of operations, we are targeting 5 per cent of MTNL’s market share translating into a turnover of about Rs 100 crore.”
PTI
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Indo-Pak trade grows despite tension
Islamabad, March 4 Pakistan officials said exports to India went up by 7.38 per cent and imports from New Delhi during the first half increased by 17.87 per cent. Pakistan’s total exports to India during the year 2000-01 stood at $ 55.397 million, whereas total imports from India during the same period stood at $ 235.86 million, daily Dawn reported. Quoting official documents, the report said Pakistan’s total export to India during the first six months (July-December) of the current financial year stood at Rs 1.802 billion against Rs 1.678 billion during the same period last year. On the other hand, imports from India surged by 17.87 per cent to Rs 6.383 billion during July-December period of the current fiscal against Rs 5.415 billion during the same period last fiscal year. However, imports from India slightly declined by 2.2 per cent to Rs 1.014 billion during December, 2001 from Rs 1.037 billion during the same month of 2000, the report said. Commodities whose imports declined included, sugar, cardamoms, oil-cake and residue of Soyabeans.
PTI
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Truckers suffer 300 cr loss in violence New Delhi, March 4 “On the whole, according to IFTRT estimates, the truckers have so far lost Rs 300 crore in Gujarat due to ongoing fixed cost, asset loss and suspension of business activities,’’ Chief Coordinator of IFTRT S P Singh said in a release here. In different parts of Gujarat, more than 90 loaded trucks had been burnt or looted by mobs and eight drivers and conductors had been killed. This amounts to Rs 1,100 per day, per truck. As trucks remain immobilised, the resultant daily saving is Rs 200 to Rs 250 per truck under the head route expenses. The report said an estimated 2 lakh trucks pass through the state daily, and 1.5 lakhs of national permit holder trucks daily come to or pass through the state, carrying approximately 3.5 million tonnes of goods a day. Trucks from other states had started avoiding the Gujarat route, which otherwise handles about 200,000 trucks for intra-state operations and 150,000 national permit holders every day. In all, about 3.5 million tonnes of goods and lubricants are moved daily.
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Punjab-TAFE campus for city Chandigarh, March 4 Sounds familiar? Well, it is a fairly common problem in India. But a visiting delegation from western Australia may have a solution to the problem. Äll this may happen because of lack of adequate communication between the education institutions and the industry”, says Mr John
Kobelke, Minister for Consumer and Employment Protection and Training, Australia, who heads the 10-member delegation. “A constant interaction between the training institutes and the industry is most essential”, he said during the course of an interaction with TNS here today. “There is no point in producing professionals who are not required by the industry. In Australia, we have evolved a system for constant interaction with the industry which helps us to regularly update our curricula and courses. “We are here to share our experiences and offer our expertise to India. Since we know that Punjab is one of the most progressive states and people here like to go in for higher education, we decided to begin from Chandigarh”, he said. Mr Kobelke said 70 per cent of the students trained in Australia secured employment within three months of completing their training. This was so because the courses were constantly updated and remained relevant to the requirements of the industry. The visit has been organised by the
PHDCCI. The delegation consists of Mr Ian Hill, Dr Barry Bannister, Mr Malcom Goff, Mr Geof
Gale, Mr Peter Mahler, Mr Neil
Fernandes, Mr Jeo Argese, Mr S. Barrerra and Ms Sonia Grinceri. The visiting delegation today discussed with the Punjab government the possibility of setting up a joint TAFE campus at Chandigarh for teaching and training students in the latest courses as per the requirements of the
industry. TAFE stands for Technical and Future Education and expertise in this regard is being offered by the
delegation. The issue was discussed at a meeting the delegation had with officials of the Technical Education in Punjab. It also interacted with representatives of the industry of the region.
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4 pc duty hits cycle units hard This year’s Budget has given a jolt to the bicycle industry of Punjab. A levy of 4 per cent by way of Central Excise has been imposed. When it comes to actuals the burden will be many times more. The bicycle industry is highly sensitive to price since poorest of the poor are its users. In fact the bicycle industry is the hub of Punjab’s industrial economy. Bicycle and parts production is worth about Rs 3,000 crore. Out of this Rs 1,000 crore go as export. Small manufacturers enjoy excise exemption upto the sale of Rs 1 crore. So on the net the revenue to the government will hardly exceed Rs 50 crore. For various reasons this revenue may turn into negative. Despite increases in input costs like steel, rubber, yarn and power tariff, cycle manufactures are keeping the price of bicycle under check through innovative means. Whenever, the increase was more than Rs 20-25 per cycle the sale declined sharply. Some times the increase in price had to be withdrawn or moderated. The increase due to excise levy will result in heavy decline in sale of cycle and its parts. This will impact the sale of steel and other inputs. So additional revenue of Rs 50 crore from cycle will trigger another wave to give heavy revenue loss to the exchequer. The bicycle industry is already under threat from China. It is no secret that Chinese products are much cheaper. Our exporters are beaten up in the export market due to this. Then the threat of clandestine imports from China is looming large. This new levy will break the resolve of cycle manufacturers to face China’s threat. Ever since the announcement of excise levy, cycle units are lying closed. A chamber has written letters to all leading MPs belonging to all parties for
intervention. Apart from other factors the cycle industry is highly labour intensive. Other sectors of the industry directly dependent on this industry too are high labour intensive. So slowdown of the already recession-hit cycle industry of Punjab will spell doom to the state’s economy. The state government, too, has to be active half its due influence.
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Reliance to import $ 3.9 b worth crude oil
New Delhi, March 4 The government’s oil economy budget has put RPL’s import bill, at an average base price of $ 18.09 a barrel, at $ 3.933 billion for the next fiscal. With the upper case scenario of crude oil prices averaging $ 23.38 per barrel for the whole year (April-March), RPL’s imports will cost $ 5.082 billion. Seventeen PSU oil refineries will need 47.245 million tonnes of crude oil for which they would have to shell out $ 6.265 billion (at $ 18.09 a barrel average price) while the joint venture Mangalore Refinery and Petrochemicals will import 9.648 million of crude oil for $ 1.280 billion in 2002-03.
PTI
Accept mutilated currency notes: RBI NEW DELHI: The RBI has directed all bank branches to accept soiled and mutilated notes from the public. The RBI Regional Director held a meeting with officials of commercial banks here and asked them to identify their branches in the city which would provide exchange facility of such notes and display boards prominently to this effect, a press note by the bank said today.
UNI
Escotel launches
SMS game Hi-Lo CHANDIGARH: Escotel, has announced the launch of SMS Game Hi-Lo for its customers through a tie-up with Nazara Technologies. In Hi-Lo, the customer has to guess the secret number between 1 and 99. He gets 5 guesses to find the number. With every guess he gets a cue which tells him whether the number is lower or higher than his guess. The customer gets points for every correct guess — 5 points for guessing the correct number in Ist guess, 2 points for getting it right in 2nd guess, 3 points in 3rd guess, 2 points in 4th guess and 1 point in 5th guess. The player can make as many attempts as desired. There are exciting prizes to be won to with this simple and interesting game. Prizes range from Swarovski-studded Pashmina shawls and diamond jewellery to pearl necklaces.
TNS
IDBI to clean up balance sheet NEW
DELHI: IDBI will clean up its balance sheet considerably and increase its capital adequacy ratio by about 2 per cent to 17.5 per cent after the Budget proposal to convert outstanding debt worth Rs 2,083 crore into capital. “We will be able to clean up our balance sheet. The CAR is expected to go up to 17.5 per cent this fiscal as against 15.83 per cent in 2001-02,” IDBI chairman P.P. Vora told PTI here today. The Budget provided that IDBI’s Rs 2,083 crore debt — Rs 973 crore from World Bank and another Rs 1,110 crore from National Industrial Credit (Long Term Operations) Fund — be converted into equity or Tier-I capital.
PTI
Flour millers for uniform taxation AMBALA:
The Haryana Roller Flour Mills Association has demanded that there should be uniform taxation and they should be allowed to purchase grains directly from farmers. Talking to mediapersons, president of the Association, C.P. Gupta, said the flour milling industry is reeling under crisis because of the differences of taxes and fees with Delhi, UP, Punjab and Chandigarh. “Due to this difference a number of flour mills have closed down, a few have been taken over by financial corporation and others are heading towards sickness,” he said. Among others, Mr Vinod Kapoor, Mr Ajay Gupta, Mr Hem Raj, Mr Naresh Garg, Mr Subhash Chander and Mr Rakesh Goel were present. The millers said the Punjab Government has exempted all flour milling industry from paying of purchase/sales tax, market fees and cess as was applicable before. “How can the industry in Haryana burdened with 8 per cent liability considering tax, market fee and cess can be expected to compete with their counterparts of Delhi, UP and Punjab?” they asked.
TNS
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