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Thursday,
May 30, 2002, Chandigarh, India   
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Troop
buildup-cost factored in Budget
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Stock markets to revive soon: Bajpai
Uco Bank
net up 400 pc
Amul ice
cream to enter West Asia Gold
shoots up to 5,400 LML’s
new motor cycles next month
I-flex
IPO in June
Companies
less willing to borrow from banks
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Troop
buildup-cost factored in Budget New Delhi, May 29 “The troops mobilisation has been there since December when we were preparing the Budget. It is not a new situation. It has been factored in the Budget,” Mr Sinha told newspersons here today. The Finance Minister, however, refused to hazard a guess on the possible impact of the overall growth rate of the economy because of the expenditure incurred on troop mobilisation. Earlier, inaugurating the 18th All-India Conference of Chief Commissioners and Director Generals of Income Tax, Mr Sinha send a strong message to the Income Tax Department to step up seizures, surveys and inquiries to track down the evaders. “The department should go beyond the one by six criteria to unearth tax evasion,” he said. The Finance Minister suggested that Income Tax officials could resort to additional methods such as searching ownerships of bank lockers and looking at listings in yellow page directories. He, however, cautioned that Income Tax officials should take utmost care that assessees were not subjected to any harassment. “Be firm but polite”, he told the large number of top tax officials present at the meeting. Regretting that there was a 1 per cent slippage in the fiscal deficit in 2001-02 primarily because of revenue shortfall, Mr Sinha said he would not like to have the reputation of being an unpopular Finance Minister because of taking harsh measures and at the same time suffer the ignominy of shortfall in revenues. “I am not in the popularity contest”, Mr Sinha said adding that a “dream Budget” had come to be regarded as one in which there were large give-aways. However, such budgets had not led to any revenue increase or growth. Mr Sinha also suggested ways to liquidate the mounting tax arrears for which he said he was often criticised in Parliament.
Tax collection
The Finance Minister stated that the main plank for increasing revenue this year would be to emphasis Direct Taxes and Excise collection, as the custom duties were to be progressively lowered in the next few years. He said no effort should be spared to increase the tax base as collections cannot be increased by asking those who are already paying their share to increase it further. “They could look at yellow pages to rope in more companies like private nursing homes as pointed out by the CAG. They can find out who has bank lockers. There are other pieces of information they can look at,” Mr Sinha said.
Scrutiny of IT files
He stressed on scrutiny of income tax files and asked the tax authorities not to hesitate to search people’s houses and offices where there is valid information of tax evasion. “Substantial evasion is taking place still now. There is a need for an efficient intelligence system. Wherever there is a valid information for carrying out searches, please don’t hesitate to do so,” he told the taxmen. He also pointed to slackness on the part of taxmen in the areas of Tax Deduction at Source (TDS), saying “if tax is not collected at source, often it is not collected at all.” On tax exemptions, he said “We have removed some exemptions. With moderate tax rates, we have to do away with exemptions. This is a trend which must be continued in the future Budget making process.” The Finance Minister asked the I-T department to fix targets at the commissioner levels so that the overall tax targets could be met and Direct Tax collections increased by 32 per cent during 2002-03. Sinha also asked Income Tax Commissioners to meet assessees at least once in a quarter to improve awareness and tax compliance.
He said the government would look into the difficulties that assessees are facing with the one-page income tax filing form ‘Saral’. On tax arrears, Sinha asked tax authorities to take up the issue with legal authorities to dispose of cases faster.
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Maruti Udyog to be privatised today New Delhi, May 29 Suzuki will call on the Disinvestment Minister Arun Shourie on Thursday morning. The privatised Maruti, in which the Japanese partner will increase its stake from 50 per cent to 54.2 per cent after the rights issue, would also have its first Board meeting tomorrow, sources said. The meeting will decide on reconstitution of the Board after the rights issue as the government, it is understood, will withdraw all its Directors except two part-time officials. The government has currently four full-time Directors. In the reconstituted Board, Heavy Industry Ministry officials Pradeep Kumar and K.K. Jaswal are likely to be nominated as part-time Directors. The government has decided to disinvest its stake in MUL through a two-stage process beginning with reduction of its equity to 45.4 per cent from 49.7 per cent for a premium of Rs 1,000 crore to give the majority stake to Suzuki Motor Corporation by not subscribing to a Rs 400 crore rights issue. Thereafter, the government will offload its remaining equity through public offer in two tranches by April, 2004. Resignation a formality Managing Director of Maruti Udyog Jagdish Khattar today tendered his resignation to the government but he is likely to be renominated to the post by Suzuki Motor Corporation tomorrow after the Japanese partner acquires the stake in the car-making joint venture. “I have resigned as the MD... I have sent my papers to the government which had nominated me on the Board,” Khattar told PTI after he met the Disinvestment Minister Arun Shourie this afternoon. The resignation is a mere formality, as Japanese auto giant Suzuki which is in the process of acquiring management control in MUL has decided to nominate Jagdish Khattar as head of the company’s operations. The company in a letter to the Department of Heavy Industries said it had decided to nominate him as the Managing Director of MUL from the closing date of the rights issue.
PTI
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Stock markets to revive soon: Bajpai
Mumbai, May 29 Many companies have lined up initial public offerings (IPO) to raise funds helping a substantial revival of the market, Bajpai said addressing a seminar jointly organised by the Bombay Stock Exchange and All-India Association of Industries here. Notwithstanding the impact of geo-political developments, opportunities of growth are emerging in the market, the SEBI Chief said adding the valuation of many stocks was low and “there is potential in secondary market to make profits”. Seeking better interaction among the capital market participants, he said SEBI will like to reduce the regulatory burden to the minimum. The entire process should be geared for results and the self regulatory organisations like stock exchanges should leave behind rules and norms that have lost their relevance, Bajpai added. On the influence of global developments on domestic markets, he said “in the borderless and boundaryless world, Indian markets will be impacted by various social and geo-political developments”.
PTI
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Uco Bank net up 400 pc Chandigarh, May 29 The bank’s deposit stood at Rs 26,849 crore and advances at Rs 13,402 crore against the target of Rs 23,882 crore and Rs 11,465 crore respectively. The bank’s operating profit jumped by more than 122 per cent to Rs 476 crore against Rs 214 crore made last year. The net profit has shown a growth of nearly 400 per cent from Rs 33 crore last year to Rs 164 crore in March, 2002. This impressive growth in net profit would have been still higher but for the additional provisions of Rs 145 crore made by the bank towards VRS and salary arrears. Its Housing Loan Scheme knows as “Uco Shelter” has been given a complete new look, at the same time offering one of the lowest interest of only 10.25 per cent. Indian Overseas Bank
Mumbai Total income rose from Rs 817.72 crore in MQ-01 to Rs 1086.16 crore in MQ-02.
UNI |
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Amul ice cream to enter West Asia New Delhi, May 29 "After successfully launching our ice cream in Singapore, we have decided to enter the vast West Asia market," said Mr R.S. Khanna, Assistant General Manager (North zone) of GCMMF. "We have received very encouraging feedback from there. In the first phase, we will export Amul ice cream to Dubai from next month. We plan to cover the entire Gulf region over the next few years," Mr Khanna told IANS. GCMMF already exports Amul brand products like butter, cheese, milk, infant food, milk powder, dairy whitener and condensed milk to United Arab Emirates, Bahrain, Oman, Kuwait, Saudi Arabia, the USA, Singapore and Britain.
IANS
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Gold shoots up to 5,400 Mumbai, May 29 Gold rose by Rs 70 per 10 grams to Rs 5,400 from the overnight closing levels of Rs 5,330. Ten tola gold bar (.999 purity) also hardened to Rs 63,300 from Rs 62,500. In the international market, Hong Kong gold opened higher at $323.00/323.50 an ounce as against $321.00/321.50 previously and at London gold started higher at $325.20 as against $320.20 previously. Following are today’s closing rates with previous rates in brackets: Ready silver .999 (per kilo) Rs 8,280 (Rs 8,220), standard gold (10 gram) Rs 5,400 (Rs 5,330) and 10-tola gold bar (.999 purity) Rs 63,300 (Rs 62,500).
PTI
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LML’s new motor cycles next month
New Delhi, May 29 With the launch of new bikes, the company will make a foray into the large commuter segment, that accounts for about 260,000 vehicles a month. LML Managing director Deepak Singhania said the company will initially introduce two products in the mid-segment. One of the two bikes would be a variant of the existing Energy FX with a lower price tag while the other would be a refreshing change in product category, he said.
UNI
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Companies less willing to borrow from banks What is the connection between stock markets and the banking sector in India, sir?, enquired one of my students at a prominent management institute. “Well, for starters, scams, I replied jocularly." After all
had not Manmohan Singh, the so-called father of Indian economic liberalisation written off the infamous banking scam of the early nineties as nothing more than a systems failure ? The development of developing countries is by and large linked to institutional credit and in the recent years commercial banks have been recognised as institutions that can play a dynamic role in accelerating economic development. What are the core competencies of banks as opposed to other financial intermediaries? Basically their efficient provision of liquidity and safety to depositors, the monitoring of loans and purveying payment services like credit cards. Financial innovation, the declining costs of
securitisation and the increasing knowledge and experience of market participants has caused securities issuance to displace bank lending as the major source of capital for large corporations. Furthermore, technological progress has brought down costs and have squeezed interest rate margins. Leading banks have, thus, been laying less emphasis on lending and relying increasingly on fee-based income. Deregulation is causing financial intermediaries to blur divides, cross-sell products and become customer-centric rather than product-centric. Technology has led to the introduction of many innovations including web-enabled solutions further reducing costs and improving service delivery. The broadest theme that investors in banking stocks should be looking at is a continuing squeeze on loan margins and increasing income from fees and services. Balance sheet size will decline in importance over time. There currently are 24 public sector banks, 20 private sector banks, 2,084 urban co-operative banks of which 51 are scheduled and 6 all-India financial institutions in the country. Banks are often among the first in line to suffer when an economy falls prey to a slowdown. Nevertheless, banking and financial institutions stocks have been buzzing with activity off late. Though credit offtake has remained subdued, a rise in foreign direct investment in the banking sector to 49 per cent and expectations of various tax sops in the coming Budget seem to have enthused markets. Banks are flush with deposits at this point of time. They have more money with them than they can possibly lend, with very few good borrowers, and virtually no new projects. It is against this backdrop that the RBI had lopped off 50 basis points from the bank rate, bringing it to 6.5 per cent, the lowest in 28 years and slashed the CRR by a sharp 200 basis points — in two tranches — to 5.5 per cent. In sunny times, lowering interest rates will spark a flurry of action among companies eager to borrow money cheaply. But in these testing times the verdict was almost unanimous: the cuts, although welcome, would probably do little to resurrect credit demand in a slumping economy. The additional release of funds in the hands of banks will directly go to fund further fiscal deficit of a recklessly spendthrift government. The industry anyway is not going to borrow more from banks because there are no new projects. The problem, it seems, lies in shriveling demand — investment and consumer demand. A stalling economy is making companies less willing to borrow and consumers reluctant to spend. So, where do the excess funds lying with the banks and institutions land up ? Almost inevitably, the stock market. Little wonder then that our markets are beset with Big Bulls and New Bulls ! While I must sign off here, we will certainly take this discussion on the Indian banking sector further next week. |
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Munjal Showa Maharashtra bank Diabetes GIC House Fin FDI in plantations |
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