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Monday,
January 20, 2003, Chandigarh, India  
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Flats in demand near Shimla
Tisco good for long term Infosys/Wipro Banking sector Tisco Coming fortnight PREPARING FOR RETIREMENT
Templeton India Pension Plan
Tax liability
Set up system to monitor drugs |
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Flats in demand near Shimla Shimla Even the easy availability of housing loans at reasonable rates of interest has failed to give a fillip to the real estate business. On an average only 500 to 600 property transactions take place within the city limits annually. The main reason is the unavailability of suitable land within the municipal limits. Consequently, most of the construction has been taking place in the outskirts of the city like New Shimla, Matiana, Pantha Ghati, Tutu, Hira Nagar, Kuftadhar, Kachi Ghati and Dhalli. On average 2200 to 2500 property sale deeds are registered in these areas annually. The Congress Government had merged some of these areas in the Municipal Corporation to check haphazard growth but the present government reversed the decision and instead constituted three Nagar Panchayats. These areas are bereft of basic civic amenities and as such hold no attraction for those who want to invest in property. The biggest factor affecting the real estate prices is the Tenancy Act. According to estimates about 25 per cent of Himachalis living in the urban areas are among those who were not eligible to buy land in the rural areas. While land in the urban areas is scarce, the prospective builders were debarred from acquiring land in the rural areas. During the eighties and nineties when terrorism was at its peak in Punjab, a lot of benami land transactions had taken place. Non-Himachalis used General Power of Attorney and “irrevocable will” to effect land transactions by circumventing the Tenancy Act. A few years back the government even banned the execution of General Power of Attorney and even will in the name of a non-agriculturist. Non-agriculturists mostly acquired build-up flats on the sale or purchase of which there was no restriction with the situation improving in Punjab, many of them disposed of whatever property they had managed to acquire. As a result the property prices in the areas like New Shimla which peaked during the days of terrorism came down subsequently. The prices have been by and large stable over the past three to four years. There has been only marginal increase. Unlike plains, the prices vary sharply from one colony to other like whether it was a hilly terrain, rock, sliding, connected by road and had open view. There was no way to have an exact assessment of the value as no land was sold in auctions. The value was grossly understated in the state deeds to save stamp duty and other charges. Besides 12 per cent stamp duty, 2 per cent registration fee, 2 per cent additional charges are to be paid to the local corporation on every sale deed. In all total charges came to 16 per cent which was too high and offered a big incentive for under valuation of property. On an average the value was being understated in sale deed to the extent of 60 to 75 per cent, particularly in the suburbs where most of the transactions were taking place. In the outer areas, the official market price ranges from Rs 10,000 to Rs 15,000 per biswa (37.55 sqm) whereas the actual price is Rs 60,000 to Rs 1 lakh per biswa depending on the site and location. In the areas close to Kusumpati, Sanjauli, Chakkar, the official market value is Rs 20,000 to Rs 30,000 per biswa where the actual rate is three to four times. Most of the needy people are buying flats the rates of which range from Rs 1,000 to Rs 1,500 per sq ft of the built-up area depending on the site, quality of construction and road connectivity. In hills the fact whether a flat is located on the cold shady aspect or the sunny side of the hill also matters a lot. While hardly any property is available in the heart of the town around the Mall and Lower Bazar, Lakkar Bazar and Chaura Maidan areas, the flats available in Chhota Shimla, New Shimla, Kaithu, Chakkar and Sanjauli, Kaliston are quite costly. On an average the prices of a two-room flat range from Rs 7 lakh to Rs 11 lakh. Similarly the three-room flats are available for Rs 11 to Rs 14 lakh each. The property dealer feel that besides amending the Land Tenancy Act, to at least allow the bona fide non-agriculturists to acquire land in the rural areas, improving basic amenities like water supply and roads and reducing the stamp duty to 8 per cent from the present 16 per cent can improve the situation. More importantly, the Town and Country Planning Department should have a long-term plan so that frequent changes in land use and building laws does not affect construction activity on acquired plots. The government should develop plots in the peripheral areas to ease congestion in the main town and ensure planned growth of the suburbs.
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Tisco good for long term Bargain hunting in select Sensex stocks helped in the recovery at the bourses last week. The 30-share BSE Sensex gained 11.40 points whereas the S&P CNX Nifty rose by 6.25 points to close at 1,086.50. Corporate result declared last week were a mixed bag with strong ones from Ranbaxy Laboratories, ITC and HDFC Bank whereas Wipro and ACC failed to meet the analysts’ expectations. Banking and steel continued their uptrend on the back of re-rating of the banking sector following the passage of the Securitisation Bill that paves the way for the recovery of sticky assets and hike in steel prices.
Infosys/Wipro
Software bellwether, Infosys, made a strong recovery this week on the back of frentic purchases by FIIs. Buying in the counter was attributed to the fact that the company’s billing rates had stabilised and there was heavy topline growth. The fall in the price on Infosys was because of the unwinding of heavy positions that investors had built up before the announcement of the results. Wipro, on the other hand, lost ground after the company announced the disappointing third quarter results. In the third quarter, it recorded a 3.75 per cent jump in the net profit. The scrip lost close to 3 per cent last week to close at Rs 1,530.
Banking sector
Since the passing of the Securitisation Bill in November, the banking sector has been on a roll. The Bill has paved a way for the upward re-rating of banking stocks. The SBI closed at its four-day high of Rs 293.65. In addition of the Bill, expectations of strong third quarter results and strong credit offtake had the counter buzzing last week. It gained 2.45 per cent for last week. Other banking stocks such as HDFC Bank, IDBI Bank, PNB, Union Bank of India were also in much demand on the back of strong third-quarter results. According to the market sources, there is still steam left in the public sector banks where a small recovery of the estimated NPAs worth Rs 1,00,000 crore through the Bill will help these banks’ post big profits.
Tisco
Rising steel prices and an ease of the restrictions being imposed by the USA on steel imports kept the steel scrips in demand last week. Tisco gained 2.5 per cent for the week to Rs 153.45. Long-term investors can add Tisco to their folio since Tisco is the best-placed scrip in the steel sector to ride the current upswing due to its low-cost advantage and better product mix. The company’s profitability is also slated to improve on the back of higher volume cold-rolled steel sales and better realisations.
Coming fortnight
The market, which failed to close above the 3,380 resistance level, should correct from the current levels. There is an engulfing bull formation on the weekly chart of the Sensex, but the pattern has formed on low volumes. Though an engulfing bull formation is a bullish pattern, the formation on low volumes nullifies its significance. Unless the index closes above the 3420 level, the chances of any breakout on the upside are low. The focus in the coming days is going to shift to the Budget and the stocks will move keeping in view the sops expected in the Budget.
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Templeton India Pension Plan Ludhiana According to surveys conducted by independent organisations, by the year 2016, the number of elderly people in the world is expected to touch 113 million, out of which 9 per cent will be Indians. With the number of elderly and their life expectancy increasing, planning for retirement has become a serious business. Retirement is something that everyone should plan during his or her earning years to take full advantage of the effect of compounding of money. Compounding becomes even more important when you take into account the inflation that is increasing the overall cost of living. An approximate amount required by a person after retirement can be calculated fairly accurately by taking into account future needs, lifestyle, cash flows and health.
Templeton India Pension Plan While insurance-linked retirement plan is on way to save for the post retirement phase of one's life, diversification is a key to good retirement planning and one must take into consideration growth-linked funds such as the Templeton India Pension Plan (formerly Pioneer ITI Pension Plan) which is an option to explore by a conservative investors. Unlike many balanced funds, which have larger allocation to equities than to debt, this pension plan is a balanced fund with a tilt towards debt. The Templeton India Pension Plan generally allocates around 60 per cent funds to debt and 40 per cent funds to equities.
An open-end tax saving scheme Templeton plan is an open-ended tax saving scheme, where all investments are eligible for a 20 per cent tax rebate under Section 88 of the Income Tax Act. While, the fund charges no entry load, investors must bear in mind that the pension plan has a mandatory three-year lock-in period.
Good performance so far Going by the past performance of the Templeton plan, investors can hope for returns of around 12.5 per cent. The pension plan has a track record of regular dividend payout from inception in March, 1997, till December 31, 2002.
How is it different? The Templeton plan (TIPP), was India's first pension fund in the private sector aimed at helping you save for your retirement in a convenient and flexible manner. TIPP invests in a mix of high quality debt instruments and equities to ensure relative stability of your investment and to deliver superior returns in comparison to traditional tax-saving instruments.
Performance snapshot Compounded and annualised with the dividends declared assumed to be reinvested, during the last one year, TIPP (Growth) gave a return of 12.96 per cent, while in the last three years the cumulative returns were 9.57 per cent, in the last five years 11.73 per cent, which since inception has worked out to be 12.50 per cent. Similarly the TIPP (Dividend) gave returns of 13 per cent during the first year, while its performance was the same as TIPP (Growth) in the remaining periods.
Sound financial backing Templeton in India is a subsidiary of the Franklin Templeton Investments which is one of the largest financial services groups in the world based at San Mateo, USA. The group has $257.7 billion in assets under management globally (as of December 31, 2002). It has over 50 years of experience in international investment management with offices in over 28 countries, which service over10 million unit holders. In India Franklin Templeton has set up offices in 34 locations and manages Rs 9,443.87 crore in assets and an investor base of 8.75 lakh as of the last year ending.
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by R.N. Lakhotia Tax liability Q: I am working as Medical Officer in the state service and a regular assessee. I purchased MEP 92 for Rs 10,000. Now on redemption in April, 2002, I have received Rs 12,830 in cash and Rs 2,040 has been deducted as T.D.S. Now kindly let me know: My income-tax liability in the case, if any. Whether the amount of 2040 can be adjusted by my D.D.O. in the income-tax calculation for 2002-2003 (Financial Year). Dr R.K. Singh, Phagwara Ans: The sum of Rs 10,000 will be added to your income. Over and above that amount it would be long-term capital gains. The tax deducted at source will be adjusted against the tax payable on taxable income. Your DDO is not competent to give you the credit for the tax deducted by the mutual fund. Rent receipt Q: I and my wife is working in different government departments and living in the same house which was constructed by me after getting loan from my department. My question is whether I can issue rent receipt to my wife? How much amount of rent receipt I have to issue, if my wife’s basic pay is 6400 p.m. and getting Rs 960 p.m. towards HRA? What is the tax impact on my income if I am getting gross salary as per detail given below: Gross income 1,73,828. HBA intt. (-) 5,000. Standard deductions 25,000. HBA recovery 16,992. LIC 10,000. NSC intt. 400. CPF 15,000. K.R. Garg, Ludhiana Ans: You can issue rent receipt to your wife for which she can get deduction from her HRA. The quantum of rent will depend on the prevailing rent in the area. The exempted HRA will be minimum of the actual amount of HRA, excess of rent over 10 per cent of salary, 40 per cent of salary. In your case, the interest on housing loan will be deducted. You will enjoy tax rebate on LIC, CPF, accrued NSC interest and then net tax payable will be arrived at. Leave Encashment Q: “The amount received as “Leave Encashment” after retirement is tax exempted up to Rs 2.40 lakh or 3 lakh for the financial year 2002-03.” Kanwar R.S., Patiala Ans: The exempt amount of leave encashment for A.Y. 2003-04 is Rs 3 lakh. Loan for plot Q: I would like to know (i) whether the plot purchased for residential purpose is a part of housing property or not? I have purchased a plot by taking loan from ICICI Home Finance Ltd. Please tell if the amount paid towards principal is eligible for rebate u/s 88 (5) (XV) & Sec 88 5)? Whether the interest paid towards home loan (purchase of the plot) is covered under loss from house property and is eligible for rebate u/s 24? — Harvinder Singh, Patiala Ans: The plot purchased for residential purpose is a part of house property. Tax rebate is not permissible on merely payment made to purchase a plot. Similarly, interest paid towards purchase of the plot alone is also not eligible for tax deduction. |
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by Pushpa Girimaji Set up system to monitor drugs The continuing debate over the safety of the drug nimesulide is a pointer to the absence of an effective system of pharmacovigilance in the country to monitor adverse drug reactions (ADR) in general and to conduct independent post-marketing surveillance and safety evaluation of new drugs in particular. In the USA, where the Federal Drug Administration’s Safety Information and Adverse Event Reporting Programme, “Med Watch” “ serves both health care professionals as well as consumers and encourages both to report problems with drugs and medical devices, it is believed that adverse drug reaction is the fourth leading cause of death. It is estimated that about 6.7 per cent of hospitalised patients have serious drug reactions, with a fatality rate of 0.32 per cent. This works out to nearly 22 lakh serious adverse drug reactions in hospitalised patients, causing about 1 lakh deaths annually. In addition, an estimated 3.5 lakh ADRs occur in nursing homes in the USA every year. Explaining the need for a comprehensive ADR reporting system, the Centre for Drug Evaluation and Research at the Food and Drug Administration, the USA, says most new drugs are approved with an average 1,500 patient exposures and usually for only relatively short periods of time. However, some drugs cause serious ADRs at very low frequencies and will require many more exposures to detect the reaction. “For example, bromfenac was a non-steroidal anti-inflammatory agent that was removed from the market in 1998, less than 1 year after it was introduced. Bromfenac caused serious hepatotoxicity in only 1 in 20,000 patients taking it for more than 10 days. To reliably detect the toxic effects of a drug with a 1 in 20,000 adverse drug reaction frequency, the new drug application database would have to include 100,000 patient exposures. A drug that is tested in a few thousand people may have an excellent safety profile in those few thousand patients. However, within a short time after entering the market, the drug may be administered to several million patients. That means that for drugs that cause rare toxicity, their toxicity can only be detected after, not before, marketing”. Dr Vasantha Muthuswamy, Senior Deputy Director General, Indian Council of Medical Research (ICMR), makes the same point when she emphasises the urgent need for a comprehensive system of pharmacovigilance covering the entire country and laments that so far post-marketing surveillance of drugs in India has been left entirely to pharmaceutical companies. In fact for the first time in the country, the ICMR conducted a nationwide survey spanning over four years and encompassing 12 regional centres to detect ADRs in commonly used drugs. The study, involving 85,000 patients, found 4,800 patients ( 6-7 per cent) having adverse reactions to various drugs. The highest percentage of adverse drug reaction - liver toxicity- was reported in 80 per cent of the patients taking anti-tuberculosis drugs. Anti-epilepsy drugs, anti-inflammatory drugs, steroids, certain antibiotics were some of the other medicines to which adverse reactions were reported in varying percentages. Besides helping the ICMR evaluate the safety of some of these drugs, the study, conducted from 1996-2000, also highlighted the urgent need for continuous monitoring of drugs. As a result of the study, the ICMR is now looking into whether certain herbal preparations could reduce the toxicity of anti-tuberculosis drugs. Following the thalidomide disaster in 1962, the WHO established an international system for monitoring adverse drug reactions using information derived from pharmacovigilance centres around the world. The WHO Collaborating Centre for International Drug Monitoring at Uppsala, Sweden , now maintains a database of almost 2 million reports of suspected ADRs. Over 60 countries participate in the programme. Even though India, too, set up a national pharamacovigilance centre in the Department of Pharmacology, All-Indian Institute of Medical Sciences, as part of the WHO programme, the Centre’s role in reporting ADRs has been limited and has not extended to a full-fledged pharmacovigilance mechanism encompassing the entire country. Now, following the ICMR study and the experience gained by them in collecting and collating data from different regions in the country, discussions are on between the ICMR and the Drug Controller of India to set up, with the help of WHO, a national-level monitoring mechanism with a network of regional centres connecting hospitals and health practitioners in the government as well as the private sector. However, it may well take about two years for such a system to be in place, says Dr Vasantha Muthuswamy. An extensive national network for monitoring adverse drug reactions is most essential because drug reactions may vary not just from one country to another , but from one region to another within the country, due to differences in diet, disease pattern, traditional local remedies and genetics. Differences in compositions, excipients and even manufacturers could vary the ADR pattern. For these reasons and the fact that the complete safety profile of a new drug is defined only after it is in use in the market, we need to set up a competent system of pharmacovigilance with utmost urgency. |
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Cellular unity Union Bank |
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Inflation rises FII net buyers |
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Moreover, the land use and building laws are changed every now and then and one is not sure whether construction will be allowed on the land or not. There have been number of cases where the people purchased plots for housing purposes but cannot start construction as, by the time, they arranged finances, either the land use was changed or construction was banned in the area. Moreover, the basic infrastructure facilities like water, proper roads and power supply is also lacking most of the areas.