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Sunday,
May 5, 2002, Chandigarh, India  
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Co-op
banks should adhere to G-secs norms: RBI In the
wonderland of investment Are
contact lenses better than glasses?
Compassionate
grounds
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Indal
net profit at 117.10 cr
Flying
clubs lack facilities
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Co-op banks should adhere to G-secs norms: RBI
Mumbai, May 4 This follows the recent Rs 150 crore G-sec scam of Nagpur District Central Co-operative Bank and five broking firms, including Navi-Mumbai based Home Trade Ltd. RBI, referring to the April 20, 2002, circular said urban co-operative banks (UCBs) should not undertake any purchase or sale transactions with broking firms or other intermediaries on principal-to-principal basis. UCBs should seek a scheduled commercial bank, a primary dealer (PD) or a financial institution (FI) as a counter-party for their transactions and preference should be for direct deals with these entities. It would be desirable to check prices from banks or PDs with whom UCBs may be maintaining constituent subsidiary general ledger account (CSGL). The apex bank said if the deal was put through with the help of broker, the role of broker should be restricted to that of bringing two parties together. “Under no circumstances, the bank should give power of attorney or any other authorisation to brokers/intermediaries to deal on their behalf in the money and securities market” RBI pointed out. Brokers registered with National and Bombay Stock Exchanges and Over the Counter Exchange of India should be utilised for acting as intermediary, it said. RBI said a disproportionate part of the business should not be transacted with or through one or a few brokers. A limit of 5 per cent of total transactions (both purchases and sales) entered into by the bank during a year should be treated as aggregate upper contract limit for each of the approved brokers. Brokers should not be used in the settlement process at all. CSGL accounts should be used for holding securities and such accounts must be maintained in the same bank with whom the cast account is maintained. For all transactions, delivery versus payment must be insisted upon by the UCBs and this must be monitored to see that delivery takes place on settlement day. UCBs should take advantage of non-competitive bidding facility provided to them for acquiring G-secs in primary auctions conducted by the apex bank.
PTI
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In the wonderland of investment Q:
A company has not paid salary since April 2001. The company has been registered with BIFR and there are no chances of any further payment of salary if and when a new management takes over the company. Initially, the company prepared salary sheet and deducted tax at source and paid tax to tax authorities but no salary was paid. Company while preparing accounts has provided for salary in the books of accounts. How should the salary certificate and the related Form-16 be given by the employer and how should the employees treat it in their income tax return? — Naren Y. Gupte A: Unfortunately, the ITA does not cater for such situations. It merely states that — Tax is required to be paid on salary due from an employer (or a previous employer) whether received or not, received in advance though not due and also on arrears of salary received. I sincerely hope that the authorities take a note of hardships caused by such harsh legislations which obviously are not in touch with the realities.
Q:
I am working for a public sector undertaking. My company has taken up my flat for lease and pays me around Rs 9,000 per month as rent. I am staying in the flat. That is what we call at self lease facility. At the same time, a house rent recovery of Rs 900 per month is charged and deducted from our salary. I am paying an interest of Rs 1,15,000 per annum to the bank towards house property but the loan was taken much before 1.4.99. Please let me know — 1. Is the entire lease rent received by me taxable in my hands? 2. If yes, can I deduct the rent recovered from me and pay tax on the rest of the amount? 3. Will this be treated as perk? Will I have to pay additional tax on the same amount? 4. Can I claim rebate u/s 88 on capital repayment portion of the monthly instalment I pay the bank? 5. How much can I claim as loss from housing property on account of the interest paid to the bank? Is it Rs 30,000 only because the loan was taken prior to 1.4.99? — Jairam A: This is an interesting case. You are landlord of a house and also a tenant of the same house. For computing its annual value, should the flat be considered as self-occupied or let-out? Of course it is let-out. You cannot pay rent to yourself. 1. You receive rent as a landlord. This rent is fully taxable. 2. You are staying in company-leased flat. This has a perk value on which you have to pay tax. 3. The rent recovered from you cannot be deducted from the lease rent received by you for tax purpose. It will be taken cognisance of while determining your perk value. 4. The Sec 88 rebate is possible both on self-occupied and let out flats. 5. The interest is deductible in full since the flat is let out.
Q:
I was served with a re-assessment notice for asstt. yr. 1996-97 on 30th March, 2000. Earlier assessment had been done u/s 143(I) (a) for this year. I again filed the same return under protest on April 28, 2000. As this re-asstt. has to be processed u/s 143(3) as per the law the notice u/s 143(2) has been served on me on Oct 9, 2001, but after the expiry of the statutory 12 months time-limit on service of notice u/s 143(2) after filing of the return. Is not this notice u/s 143(2) invalid as per the provisions of the law? — Charanjit Kaur A: Sec 143 which deals with demand or refund of tax on the basis of returns filed by the assessee has been amended w.e.f. 1.6.99. Notice u/s 143(2) can be issued by the ITO on the assessee before the expiry of 12 months from the end of the month in which the return is furnished. From the facts given by you, in your case, this period appears to have expired on 30.4.01. Then again he is required to ask you either to attend his office on a specified date or to produce or cause to be produced there any evidence on which you may rely in support of the return. Having not complied with this requirement, I strongly feel that the case is time barred. If the Assessing Officer completes the assessment without giving any opportunity to the assessee, such assessment would be bad in law AAA CIT v Suresh Chandra Gupta [1988] 173ITR487 (Raj).
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Are contact lenses better than glasses? Chandigarh, May 4 At women who wear glasses" This telling observation was made by Dorothy Parker almost a century ago. But at that time, there was no alternative to wearing glasses for those whose eyesight was weak. But now times have changed. Innovative and better technology has become available. People have become aware of their looks and want to look better. Little wonder, the use of contact lenses in preference to the old fashioned pair of glasses is becoming more and more popular with each passing year. In the west, contact lenses have found a very wide acceptance and development of newer and better contact lenses has become a multi-million dollar industry. In India too, awareness is growing. There are now about eight lakh users of contact lenses. In order to further widen its base, the well-known multinational company, Bausch & Lomb has launched a national marketing drive covering the top 60 cities of India to promote its contact lenses. It is doing a co-branded promotion with HLL's Fair and Lovely in the top 16 cities including Chandigarh. For this, they have initiated a free trial for contact
lenses and are having scratch coupons etc for people who buy the lenses. The scratch coupons come with an assured prize, which ranges from Fair and Lovely under-eye cream to winning the lens
itself (worth Rs 1400). They put up posters, banners etc at optometry outlets, and at shopping malls having a high footfall rate. In addition to this, the contest is being promoted through Lakme Parlours in the city and all prizes etc are co-branded by B&L and Fair and Lovely. This year, Bausch & Lomb completes 150 years of Eyecare. "We are committed to our vision of helping people see, look and feel better through innovative technology and design", says Mr Subhash Chopra, General Manager, Marketing, B&L. "In line with this vision, we are working towards creating an eye care revolution in India". Eyecare awareness in India is very low. One of the indicators of this is the Vision Correction Awareness rate, i.e. people who have an eye problem and aware of it. This stands at just 17 per cent of the population. Paradoxically, there is another 17 per cent population that does not even know about their weak eyesight. This means that for every one India who knows that he has weak eyesight, there is one more who does not. That is not all. Out of 4.5 crore blind people in the world, 25 per cent are in India. A majority of this is because of refractive error and cataract, which are preventable or correctable. Mr Chopra however agrees that contact lenses are not only more expensive but also require meticulous maintenance as compared to the glasses.
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by Praful R. Desai Compassionate grounds Q: Is it appropriate to disturb the state of affairs when respondent was appointed on compassionate ground and is in service for more than five years? Ans: The SC was considering this point in Union of India v K.P. Tiwari [2002-I-LLJ.672] as under. The respondent applied for employment with the appellant on compassionate ground on the grounds that his father died in harness and his family was in dire circumstances. He also indicated that his elder brother, who is an employee of the Madhya Pradesh Electricity Board is residing separately. However, the appellants having rejected the application made by the respondent, the matter was carried to the Central Administrative Tribunal, Jabalpur Bench, Jabalpur. The Tribunal in the first instance merely directed to consider the case of the respondent afresh for appointment on compassionate grounds in relaxation of the educational qualification on merits and the matter was disposed of. Thereafter, the said order was reviewed by another application when the various circumstances of the death of the father of the respondent, brother being in employment and living separately not supporting the family of the respondent, were considered and the matter had been pending consideration for a long time and in view of the special circumstances directed that the respondent be provided with an employment within one month from the date of the receipt of the order. During the pendency of these proceedings by an order made on 1.10.96, the respondent has already been provided with an employment subject to the result of these appeals. It is unnecessary in this case, in the opinion of the SC, to examine either question of law or fact arising in the matter. Suffice to say, observed the SC, that the respondent has been appointed now and has been in service for more than five years. The SC held that it would be appropriate not to disturb that state of affairs by making any other order resulting in uprooting the respondent from his livelihood. In that view of the matter, the SC declined to interfere with the order made by the HC. The appeals were accordingly dismissed. |
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by Ashok Kumar Nerolac shares a good pick Q: Should I buy Goodlass
Nerolac? — M. Kehar Singh, Haryana Ans: The country’s second largest paint company, Goodlass Nerolac Paints (GNPL) performance over the last months, reveals its constant endeavour at cutting costs to expand margins. The company has a 14 per cent share of the decorative market, which comprises 70 per cent of the Rs 10,000 paints industry. The company has a 43 per cent share of the industrial paints segment. Until two years back, the company had almost all of its revenues in the industrial paints segment accruing from sales to the automotive segment. Over the last two years, it has branched out into the general industrial segment too. Paint demand in FY 2002 is estimated to have slowed down to around 7 per cent - 8 per cent as against 11 per cent - 12 per cent growth last year. However, being one of the key suppliers of automotive paints to domestic majors like Telco and Maruti and multinationals like Mitsubishi, we were expecting a higher sales growth given the rise in auto sales in recent months. The scrip is currently trading at a discount to its book value. For the fiscal ended March 2001 sales were Rs 596.7 crore, PBIDT was 10.0 per cent, net profit was Rs 22.6 crore and the EPS was Rs 14.1. For the quarter ended December 2001 sales were Rs 155.6 crore, PBIDT was 10.9 per cent and net profit was Rs 6.7 crore. As the future seems to be more colourful, investors can buy the stock.
Q: I have invested in Bharat Forge. What should I do? — Kunal Sharma, Patna Ans: Bharat Forge (BFL) is the largest manufacturer of forges in India with tie-ups with Rockwell International, US, Lemmerze-Werke and Muller-Weingarten, Germany and Metalart and Nissho Iwai, Japan. Its product profile includes steel forgings, machined components, finished crankshafts, assembly and sub-assembly of industrial machinery/hydraulic and mechanical presses and precision forgings. The Indian automotive industry contributes 80 per cent of BFL’s revenues. With a capacity of 102,000 tpa, BFL is currently operating at around 50 per cent capacity. Emerging from the slowdown, BFL is in a position to cater to the increased demand. Besides, in line with its plan to be a global vendor, BFL’s capacity provides it with tremendous scope for scalability. Besides having a wide product portfolio (BFL manufactures precision forgings and forgings of 15 to 250 kg), among user industries, it supplies to most of the segments including medium and heavy commercial vehicles, light commercial vehicles, multi utility vehicles and tractors. For the fiscal ended March 2001 sales were Rs 468.5 crore, PBIDT was 28.3 per cent, net profit was Rs 32.7 crore and the EPS was Rs 8. For the quarter ended December 2001 sales were Rs 111.3 crore, PBIDT was 27.3 per cent and net profit was Rs 6.3 crore. Investors already holding the stock should keep it and forget it for now, looking at it as a value investment with a long term perspective. New investors can defer fresh exposures at current levels and buy into the stock on declines.
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Indal net profit at 117.10 cr Kolkata, May 4 The financial results for the year ended March 31, 2002 showed a net profit of Rs 117.10 crore and exports for the year stood at Rs 349.20 crore for the period.
Indo Gulf Indo Gulf Corporation Ltd, an Aditya Birla group company, today posted a net profit of Rs 2,962.40 million for the fiscal ended March 31, 2002 as compared to Rs 2,516.70 million for corresponding period last fiscal. The board of directors also recommended a dividend of Rs 2.60 per share aggregating to Rs 585.5 million.
Chambal Fertilisers Chambal Fertilisers & Chemicals Ltd today posted a net profit of Rs 771.80 million for the financial year ended March 31, 2002 compared to that of Rs 1,161.60 million for the corresponding period previous fiscal. On equity shares, the board of directors has recommended a dividend of 15 per cent.
Agencies
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by K.R. Wadhwaney Flying clubs lack facilities As predicted, it is now certain that there will be no disinvestment in Air India and Indian
Airlines. If the disinvestment has been grounded, so is the plan for augmenting fleet in two airlines. The two carriers will continue to slog as there is acute paucity of funds and shortage of aircraft. The plan to do away with ageing aircraft cannot be implemented because, if ageing aircraft are grounded, two carriers would not be able to maintain even their existing schedule. The twin schemes of disinvestment and augmentation of fleet have not been achieved because Mr Shah Nawaz Hussain says one thing while his more influential politicians say another. The new Secretary Aviation K. Roy Paul, belongs to the Bihar cadre but there is not much rapport between politicians and bureaucracy. The outcome is that the aviation industry is stagnating.
Mushroom growth While Flying Club in Delhi has been closed because of Safdarjung Airport’s close proximity to the Prime Minister’s residence, there is mushrooming growth of flying clubs in other centres, including at Mumbai. The aviation clubs are devoid of facilities but they assure pupils of commercial licence as also jobs in Indian and foreign airlines. They demand Rs 10 lakh from each candidate. Hundreds of qualified commercial licence holders are lying unemployed throughout the country. Such has become their plight that many have even opted for ground jobs for negligible salaries. But these fly-by-night aviation clubs are doing roaring business because checks by the Directorate-General of Civil Aviation are lax. Corruption in the aviation sector has become so widespread that several litigations are pending: On the written protest, lodged by the American Flight Academy, that Rs 5 lakh was demanded by a very senior government official, the case is now pending with CAT. This case is as shocking as touts using the Civil Aviation Minister’s residence, office and also his name in offering jobs of hostesses and others to gullible candidates.
Peace in Air India Peace has descended at Nariman Point’s Air India office as Commercial Director V.K. Verma has been exonerated by the Metropolitan Magistrate of the 22nd Court (Andheri). The court has, in its judgement, said the official did not forge medical certificate and that the case should be closed. |
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Pricing punch The grapevine is abuzz with rumours that a prominent IT company that intends to foray into the markets shortly has been advised to price its issue very aggressively. Why ? Simply because the retail segment has dried up leaving only institutional investors to carry the cross.
Theatrical rebound The buzz of a sharp spurt in revenues for a media company better known for its dome theatre in India’s leading metro is getting louder. Could it be a FII placement in the offing ? Watch this space.
Winning run The buzz in the business capital’s cocktail circuit is that the overwhelming box office response to India’s recent Oscar award nominated film has prompted its production house to contemplate making an IPO later this year. Seems the company wants to extend its winning run to the capital market. |
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Hafed IDBI Bank RBI direction |
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