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Monday, April 8, 2002, Chandigarh, India  
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Used cars
business to flourish
Produce
hybrid seeds instead of traditional
Ask refund
for defective fabric |
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Tax
rebate
Weak
year for equity segment
Multinational
scrips rise in lean market
Reduce
petrol prices
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Used cars business to flourish The entry of a large number of new cars in the market has increased the supply of used cars. So has the demand. Foreseeing a substantial expansion in the market for the second hand cars, the market is witnessing the entry of organised players in the business. Why used cars? “Every consumer wants to upgrade — from two wheeler to a car, or from an entry level car to a premium car. The low price differential between the second hand car and two wheeler makes used car an automatic choice for a consumer”, said Mr Vikram Mehtani Regional Manager, Maruti Udyog Ltd. First-time buyers for used cars could be people who want to graduate from two-wheelers to cars. Usually, the people, those with a salary of Rs 20,000 to 25,000 per month, small businessmen, traders etc. It could also be a second car in the family, car for a college student in the family or for commercial applications. “Usually people buy used cars to save money or because they want a certain model of car that they would not be able to afford brand new”, said Mr Mehtani. It could be even businessmen who want to upgrade to premium cars, which can be imported as well, said he. Organised
sector coming up The second hand car business that was dominated by the unorganised sector, even till two-three months back in the region, witnessed slight decline following easy financing schemes launched by various private banks. Now, with MUL and Berkeley Auto Mall here — which buy old cars and sell them after reconditioning, it is the organised sector that has caught the attention of the buyer. “In case one buys a second hand car from a company, the reliability is more, both in terms of quality and price. Moreover, we undertake the responsibility of title of the car — which dealers in the unorganised sector will not take. While today the market is still dominated by the unorganised sector, the coming days will see organised sector holding a major share of used car market”, said Mr Ranjiv Dahuja, Director, Berkeley Auto Mall. Old cars, which are bought by the companies, have to undergo a thorough check up after which they are re-conditioned. Maruti, for instance, does not accept a car that is more than four years old. Not only does the customer get a warranty on these cars, he is also given benefits like a few free services. “This makes the buyer sure that he is getting true value for his money with minimum hazzles”, said Mr Vikram Joshi, Executive Director, Joshi Auto Zone . Those in the unorganised sector admit shifting of the customers to the organised sector. “The entry of these companies has affected our market. Though these companies have recently entered, the customers prefer checking up with them “, said Mr Raja of Raja Cars, Sector 19. Prices of used cars According to Mr Dahuja, Director, Berkeley Auto Mall, a Maruti 800 series 1997 model (AC_, after refurbishing is priced at around Rs 1,30,000; Matiz 2000 model (SD) — Rs 2,30,000; Santro 1999 (LE) — Rs 2,30, 000; Honda City 1999 (1.5 cc) Rs 5,00,000; Lancer 1999 — Rs 6,90,000 and Baleno 2000 model —Rs 5,50,000. In case of MUL, Mr Joshi said that a 1998 model Zen would cost around Rs 1,90,000; Esteem 1998 — Rs 2,30,000 and Maruti 800, 1998 model — Rs 1,20,000. Prices will vary according to the condition of the car. The old car is sold after adding refurbishing costs and margins. In case of unorganised sector, the difference between the price the seller quotes and the price at which one buys can be substantial if one negotiates- which gives the customer reason enough to consider a reliable source of purchase- the organised sector. Finance availability Availability of loans for used cars is comparatively easier now. “Earlier there were problems, like the bank wanted the car to be first transferred in the name of the buyer before financing (which means the buyer pays money to seller first). However, now since we have our own business we make the relevant adjustments and loan facilities are also available, said Mr Dahuja. Interest rates vary between 17 per cent to 20 per cent per annum. Why these companies entered used car business Berkeley, which started used car business around two months ago, is also into financing. “No doubt, loan facilities have made purchasing a new car easier, but even then, the price factor can not be ignored by the customer. However, we expect the used car market in the coming years to increase at a much faster pace, following which we took the decision to enter this segment”, said Mr Dahuja. At True Value, one can buy and sell only old Maruti cars. According to Maruti officials, the idea of getting into this business is to create a life long bonding with the customer, who once buys a Maruti will upgrade further to a Maruti only. “They can also buy another second hand car from us only. This will strengthen our relationship with our customers”, said Mr Vikram Mehtani. Scope The new companies that have entered into the used car business say the scope of this segment is tremendous. According to sources, MUL is also considering to buy cars — that are even 8 years old under True Value. The unorganised sector, however, does not see much of scope. “Cars have become affordable and in the coming days, with increasing competition, companies will definitely come up with attractive schemes for their customers thereby making the customer buy new product instead of a used one”, said Mr Manjit Singh, President, Car Dealers Association, Chandigarh who is into the business for the last more than 15 years.
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Inflation
steady New Delhi, April 7 |
by Pushpa Girimaji Ask refund for defective fabric It’s not just the cosmetics industry that promises to prevent wrinkles. Even the textile industry does it. While the former looks at your face, the latter, the clothes that you wear. However, in both cases, manufacturer can get hauled up for unfair trade practice if the promise does not match the performance. Recently I received an interesting query from a consumer about a wrinkle-resistant cotton fabric that he had purchased. Now that we are well into summer and cotton is the fabric of choice, I thought I should bring up this issue. Well, the consumer found the manufacturer’s claim about the fabric being wrinkle-resistant misleading. He, therefore, wanted to know if he could go to a consumer forum for redress, as he had paid a steep price for the fabric. He also wanted to know more about wrinkle resistant fabrics and whether it is possible to cross-check the claims made by a manufacturer at the time of purchase. Cotton, a natural fibre, has certain inherent superior qualities like sweat absorption and heat transmission that makes it an ideal fabric for summer. Cotton fabrics are hydrophilic and, therefore, absorb sweat. It also conducts heat from the body to the outside very fast, thus keeping the wearer relatively cool and comfortable. Cotton also has a high wet strength , thus making it durable. However, it has a few negative qualities. One of them is that the fabric gets crushed easily. It also shrinks. Cotton is also susceptible to mildew, caused by fungi, if kept inside a wardrobe when still damp or stored for a long time in warm and humid weather. Earlier, cotton was blended with certain other fibres like polyester to overcome some of these disadvantages, but more recently, with the advancement in technologies, various finishes are applied to improve the quality of cotton fabrics. Wrinkle-resistant finish is one of them. There are several wrinkle-resistance finishes. For example, certain synthetic resins are applied to the fabric during the process of dyeing or soon after dyeing to make the fibres resilient and resistant to crushing or creasing. Lately, scientists are talking of citric acid as a natural alternative to formaldehyde-based chemicals used for the treatment. Cotton fabrics that have undergone wrinkle-resistance treatment are labeled wrinkle-free or wrinkle resistant. Even terms such as easy care, durable press, permanent press, are used. However, depending on the quality of the fibres and the finishing process, the extent of resistance to wrinkling may vary. Manufacturers who use these labels should, therefore, specify or explain what they mean by the term. Does it mean that the fabric does not need ironing at all, even after a wash? Or does it require light pressing? Is it completely crush proof? And will this quality last till the life of the fabric or remain only for a certain number of washing cycles? The consumer has a right to such information. Of course if the claim on the label turns out to be false, then it constitutes an unfair trade practice. Such fabrics can also be termed as “defective” as per the definition of “defect” in the Consumer Protection Act. In such cases, the first option is to approach the retailer or the manufacturer for a refund of the amount paid plus stitching charges if it has been tailored. You can also demand reimbursement of money spent on travelling to the retailer. If they fail to respond, then one can go to the consumer forum. Another option is to contact a consumer group and file a class action suit, which is a common complaint on behalf of all those who have purchased the fabric. In such cases it is best to get the fabric tested or seek the opinion of experts. If the case is strong, the complainants can demand that the manufacturer issue an advertisement asking all those who have bought the fabric to approach their retailer for a refund. In fact many years ago, an Ahmedabad-based consumer group, the Consumer Education and Research Centre did just that when it found, following tests, that the manufacturer had made a false claim on the composition of the pant length on the label. Now I come to the last question of the consumer -about cross-checking the claims at the time of purchase. Well, certain claims are easy to check, but not all. The fabric, for example, may claim that it is pre-shrunk. Unless you soak it in water, you will not know whether this claim is true. Similarly you can crush a wrinkle-resistant fabric in your hand to see how it behaves, but you will still not know how it looks after laundering. Then there is also the problem of imitation or fake brands. So the best option is to always buy from retailers who have a good track record of respecting consumer rights. Always collect cash receipt for any purchase made and ensure that it has all the relevant details of purchase besides the name and address of the retailer. And preserve the cash receipt because you never know when you may need it. |
by R.N. Lakhotia Tax rebate Q: My friend a lady aged 75 is a pensioner getting Rs 92,000 yearly pension and getting salary she is working Rs 49,000. Please let me know the rebate i.e., how much standard deduction she will get? (1) Standard deduction on salary and pension will be separate or after adding salary and pension? (2) How much is the rebate on interest for a lady senior citizen? Interest from various sources is about 50,000. She is suffering from acute Arthritis and Angina. Can she get some rebate money spent on medicines? — Usha, Ludhiana Ans: The tax rebate permissible on pension and salary income will be calculated after adding both the amounts. Hence, Rs 30,000 would be the amount of standard deduction permissible in respect of pension income as well as salary income. The tax deduction for exemption in respect of bank interest in Rs 9,000. Your friend will not be eligible for deduction or rebate in respect of expenditure incurred by her on medicines. As she is senior citizen she will enjoy the tax rebate u/s 88 to the extent of Rs 15,000. On the facts stated by you she will not be required to pay any income-tax but she must file her income-tax return as the net taxable income exceeds Rs 50,000.
Standard deduction Q: Please clarify the standard deduction applicable in my case as I am a Central Government Pensioner w.e.f. 01 June 2001. Contribution towards my total income is partly from salary and partly from pension and is as under — (i) Salary from March to May 2001 = 3x15000 = 45000 (ii) Pension from June 2001 to Feb 2002 = 58000 Total income 2001-02 = 1,03,000 Please calculate my tax liability for the benefit of similar cases stating the standard deduction applicable. Further I have deposited Rs 10,000 as premium (yearly) for Jeewan Suraksha Policy and Rs 5800 as donation to religious institutions. — Harmit Singh, Chandigarh Ans: On the salary and pension amount taken together amounting to Rs 1,03,000 you will be eligible for a standard deduction @ 33 Rs 3rd per cent but limited to Rs 30,000. Thus, the balance taxable salary and pension will be Rs 73,000. From this amount Rs 10,000 will be deducted in full in respect of your contribution for Jeevan Shuraksha Policy u/s 88CCC of the Income-Tax Act, 1961. Thus, the net taxable income of yours will be Rs 63,000. Income-tax will be payable on this amount which will be @ 10 per cent on income between Rs 50,000 to Rs 60,000 and @ 20 per cent on income between Rs 60,000 to Rs 63,000. Thus, the net tax payable by you will come to Rs 1,600. You will not get any tax deduction on donation to a religious institution because the exemption is permissible only on donations made to a recognised charitable institution u/s 80G of the Income-tax Act, 1961. |
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by Ashok Kumar Weak year for equity segment As the new financial year dawns, one starts compiling statistics pertaining to the year gone by. The financial year 2001-02 must surely rank among the worst for the equity segment of the primary market. Of the handful of IPOs that somehow made it to the market, the high-profile one was that of Bharti Tele-Ventures. Now, if such fundamentally unsound issues are expected to revive the ailing primary market, God bless us all. Expectedly, its share price is now headed to where it belongs. At the time of its IPO, I had predicted on CNBC that the share price of this company would plummet below Rs 40 very quickly and continue its slide even thereafter. Now, while we wait for the primary market figures for the fiscal that just passed by, let us flashback to year 2000-2001. Given that the market got into the decline mode at the beginning of 2000-2001 itself, the collection figures for that financial year seem relatively quite high. One only needs to reflect over the general market sentiment to comprehend what is being suggested here. For the record, the collection figures stood at Rs 2,479 crore in 2000-2001 as compared to Rs 2,975 crore in 1999-2000. As a result of the lower equity mop-ups, the share of debt in total public issue mobilisation rose consistently to 63 per cent in 2000-01 from 25 per cent in 1995-96, 60 per cent in 1996-97, 63 per cent in 1997-98, reached a peak 94 per cent in 1998-99 and 61 per cent in 1999-2000. Notably, a closer look at the statistics suggests that close to 80 per cent of the mopping-ups in the equity segment of the primary market was from the now melted ICE sector. Now, notwithstanding the general erosion of investor sentiment, how was the mop up figure so high in 2000-01? The answer is simple — the smart primary market run of 1999-2000 had fuelled pricing limits and those who finally made it to the market in 2000-01 made their IPOs at obscenely high prices thus enhancing the mop-up aggregate. A close-up on the number of IPOs gives an altogether different hues to the comparative picture. Resultantly, the losses on IPOs made in 2000-01 exceeded that on IPOs made in 1999-00. If one were an optimist, the underlying message here would be — the pricing of IPOs made in the current financial year would be a lot saner. And if that fuels investor enthusiasm, chances are, greed will take over again and the following year might witness yet another round of ridiculous pricing. At the moment though, all this remains pure conjecture. What about the road ahead? Well, Mr Yashwant Sinha and Mr Bimal Jalan, visionaries as they are, have spotted an economic revival which unfortunately we, mere mortals are unable to spot. Perhaps it has something to do with the battering we all received on February 28 from the former visionary. But then, wasn’t it the economy that took the brunt of the visionary’s nightmare Budget? Mind you, this is not to say that our markets will not fare well during the current fiscal. They seem to have a life of their own, blissfully ignorant of the nation’s economic realities. Just a gentle reminder — the last two major stock market rallies had absolutely nothing to do with the economy or any visionary. It just required orchestration by two notorious market operators, one, dead and gone, the other, alive and kicking, and well, perhaps buying too. He too is a visionary of sorts, you see. |
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by J.C. Anand Multinational scrips rise in lean market The stock market had a rather lean time last week. The Sensex was 3500.10 points on Monday last week and stood at almost the same figure at 3500.57 points at the close of the market on Friday. The market did not respond to the announcement of a good export trade policy of the government. Nor did the market respond to the opening of the new financial year. There were a number of reasons why the markets failed to move up. It appears that the change in trading cycle from T-5 to T-3 was not liked by the market. In fact, the traders generally took to one-day trading. They sell off in the evening what they had purchased in the morning. Long-term delivery-based transactions were generally avoided. The power crisis in UP and Madhya Pradesh deepened and it was feared that the continuing communal violence in Gujarat and the power crisis in some states would slow down industrial growth. Long-term investors are also very unhappy at the new taxation policy of the Union Government, which provides for taxing dividend income in the hand of the investors at their income tax rating slabs. Some financial dailies had reported that Union Government was considering some revision of taxing dividend income as proposed in the Budget. It, however, appears that no substantial change is likely to take place except exemption for tax deduction at source by the companies in the case of shareholders, who are non-tax payers. Another factor responsible for the lean market last week was the fear that the information technology companies may not be able to maintain their growth rate during the fourth quarter and in the new financial year. But the top information technology companies would maintain high profitability at least for the next one or two years though the growth rates would be slacken. An interesting feature, however, was a substantial rise in the market prices of some of many multinational scrips. As had been indicated in this column, the multinational pharma shares have started moving up. Glaxo SmithKline scrip has also moved up from Rs 347 to Rs 377 per scrip. Novartis closed at Rs 285 from Rs 246. Aventis & Pfizer too have made gains. It is expected that these scrips would continue to rise during the next three years in spite of profit booking at regular intervals. Glaxo SmithKline is also introducing some new drugs relating to dermatology and diarrhoea, which had been launched by its parent company last year. BASF and Clariant also did well in the market. Colgate also moved up on the market rumour that the company might announce buy-back of shares shortly. TVS Electronics did not announce good results and lowered its dividend rate to 7.5 per cent but it is still quoting very high on good prospects this year. It has entered recently into an agreement with a top multinational company of Britain to expand its range of products. Moreover some profit-taking may be in order. ABB has declared good results and is likely to improve its working this year due to healthy order-book. I expect Larsen & Toubro and Moser Bare to move up during this fortnight. |
Reduce petrol prices The rate of petrol should not be more than Rs 18 to 20 per
litre. There are some reasons that petrol prices should come down. 1. Reliance Petroleum is ready to sell petrol at much lower rates than the present market price. 2. Dismantling of the administrative price mechanism
(APM). 3. The Central Government is loosening its control over petrol companies and make them free to sell petrol in market. The price of a barrel (156
litres) of crude oil in the international market is about $ 25 (about Rs 1,200). The net cost of crude is about Rs 8 per
litre. Its refining, transport and other charges would be around Rs 5 per
litre. The pure petrol rates come out to be about Rs 13 to 15 per litre. The APM from the government collects Rs 26,000 to 30,000 crore every year for its oil pool on the plea that whenever the international price of crude oil is increased, this fund would be used to meet the contingency. The government must decide to dismantle APM and reduce petrol
prices. M.L. Garg,, Chandigarh
Release pension It is to apprise that a deputation of Punjab pensioners had approached the State Bank of India BSL branch,
Sundernagar, Himachal Pradesh, thrice for the payment of old-age allowance at the age of 65/75 years sanctioned by the Punjab Government in his notification dated 22.11.2001. The branch is not releasing the payment with a plea that a copy of the notification has not reached them. The non-availability of the copy of notification till date is a great surprise. Apparently, the bank authorities have no sympathy towards the senior
citizens. Rajinder Parshad, Sundernagar (HP) |
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LUDHIANA: While a
majority of farmers in Punjab and Haryana are struggling to dispose of
their wheat in mandis at a marginally increased price as compared to
last year, Mr Jagjit Singh Hara, a progressive farmer, here is all
smiles as he would sell the hybrid seeds of wheat and other crops to
different companies at a much higher price than the minimum support
price fixed by the government.
