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Monday,
February 24, 2003, Chandigarh, India  
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Budget to spring surprises
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SBI awards trophies
Damages to consumers should be adequate
Will Budget cheer up sensex
Hold Jindal Strips shares now
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Budget to spring surprises
New Delhi, February 23 “Critics say it will be a soft budget in the wake of assembly elections due in several states this year and general elections next year, but he is going to surprise all by announcing far-reaching reform measures to push up investment,” official sources told PTI. While he is likely to adhere to broad contours of the Kelkar Panel recommendations on indirect tax reforms, the big-bang approach suggested for direct tax reforms might not be implemented, the sources said implying the tax sops for small savings and housing loans besides standard deductions are there to stay. The proposal to abolish dividend tax, capital gains tax and Minimum Alternate Tax might be implemented giving positive signals to the industry at a time when there is revival in the manufacturing sector. Sources said though the revenue loss could be a few thousand crore, the feel-good factor generated by it would bring in much more revenue with the industrial revival. The sources said excise duty on consumer durables and automobiles might be reduced by partially implementing the roadmap laid out by the Kelkar panel to phase out special additional duty in the next three years. On Customs duty, the Kelkar panel proposal which along the lines of the roadmap set out in the last budget to move on to two rate structure of 10 per cent of raw materials and 20 per cent for finished products in two years would be implemented. Accordingly, the average customs duty on finished products is likely to be brought down by 5 per cent from 30 per cent to 25 per cent and that of raw materials to 15 per cent, the sources said. These reductions in excise and customs duty and the abolition of capital gains tax and dividend tax might result in revenue loss of Rs 5,000 crore, the sources said, adding these could be made up by the buoyancy in revenue besides bringing in more services into the tax net. The 5 per cent reduction in corporate tax from 35 per cent to 30 per cent suggested by the Kelkar panel might have to wait for one more year as the Government could ill-afford to provide only sops without additional revenue generation efforts by lifting the tax exemptions.
PTI
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SBI awards trophies
Chandigarh, February 23 The others also honoured were: Mr L. C. Hans, Mr S. K. Sethi, Mr Ravi Bansal, Mr Arun Aggarwal, Mr K. R. Sharma, Mr O. P. Gambhir, Mr Narinder Singh, Mr Harjit Singh, Mr P. C. Sharma,Mr K. C. Kanthwal, Mr S. K. Kapur, Mr R. B. Sehgal and Mr Hans Raj.
TNS
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co
by Pushpa Girimaji Damages to consumers should be adequate In a damning indictment of lower consumer courts for their miserly computation of compensation for human suffering and misery, the apex consumer court has suggested that these courts put themselves in the shoes of the complainant, while calculating damages in such cases. Substantially enhancing the compensation awarded by the Gujarat State Commission in two cases, the apex consumer court has sent a clear signal to these quasi judicial bodies at the state and the district level to exercise the jurisdiction vested in them by law and ensure that the damages awarded by them compensate the consumer adequately. The first case pertains to the injury and permanent disability suffered by a consumer following an accident while in an elevator. Ashok Kumar Arora, who ran his business in a shop situated on the second floor of Kamdhenu Market, Ahmedabad, had suffered fractures in both his legs when the rope of the lift installed in the market snapped and the lift cabin went hurling down. For seven months, Arora was incapacitated and subsequently he was certified as suffering from 29.5 per cent permanent disability. In response to his complaint against the elevator company , East India Elevator Ltd and the partner of Jawahar Construction company that developed and managed the market, the State Commission awarded Rs 50,000. Of this, Rs 29,400 was meant to compensate the complainant for the loss of earning for seven months, calculated at the rate of Rs 4,200 per month. In addition, it calculated medical expenses amounting to Rs 4,368, travelling expenses incurred by the complainant to travel to his home town Rohtak during this period and back, Rs 4,000 as costs and Rs 10,000 towards physical and mental suffering, adding up to Rs 50,000. And it was the compensation of Rs 10,000 awarded towards physical and mental suffering that came in for severe criticism from the apex consumer court. Said the commission: “Judicial propriety restrains us from commenting on the lack of proper exercise of jurisdiction by the state commission. Complainant had both his legs fractured. He suffered pain and was unable to perform his normal work and suffered permanent disability. For all this to award Rs 10,000 is certainly adding insult to injury". Saying that the state commission should have put itself in the condition of the complainant while computing the compensation, the National Commission said the award of Rs 10,000 was too paltry a sum. It also pointed out that the interest should have been calculated from the day the complainant suffered the injury. “We feel sad that the state commission failed to exercise the jurisdiction vested in it by law" the commission said, while enhancing the compensation to Rs 2.5 lakh along with interest at the rate of 12 per cent calculated from October 17, 1992 (the day Arora met with the accident) till the date of payment. It also awarded costs assessed at Rs 5,000. (FA NO 276 of 1999) In the second case, after coming to the conclusion that 31-year old Hitesh Kotak's death was caused by medical negligence, the state commission had calculated the compensation at Rs 50,000 on the ground that though Hitesh was drawing a monthly salary of Rs 4,061, because of his cardiac condition, he may not have lived as long as a person of normal health. Dismissing such a conclusion as baseless, the National Commission came down heavily on the state commission for putting such a small price on Hitesh's life. Saying that there was every possibility of Hitesh enjoying better prospects and earning much more if he had survived, the National Commission said a proper compensation would be Rs 5 lakh, along with 10 per cent interest. Out of this amount, Rs 1.50 lakh each will be paid to the widow of the deceased and his mother. The balance of Rs 2 lakh will be kept in a fixed deposit in a nationalised bank in the name of his minor child, the commission said. The raison d'etre of these consumer courts is to compensate the consumer for any loss or suffering caused on account of the negligence of the manufacturer or the service provider. However, the quantification of damages by the consumer courts in most cases has remained too conservative and low to meet the ends of justice, thereby defeating the very purpose of these courts. The Supreme Court, in the case of Lucknow Development Authority Vs M.K. Gupta, had said the compensation awarded should serve the dual purpose of recompensing the individual while simultaneously bringing about a qualitative change in the attitude of the service providers and manufacturers . For that to happen, the computation of compensation has to be liberal, just and fair. In some earlier cases too, the National Commission has criticised the state commissions for their non-liberal computation of compensation and emphasised that it should recompense the complainant adequately for the loss or injury suffered. Hopefully, these two orders of the apex consumer court will bring about an attitudinal change in the consumer courts at the state and the district level. |
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Will Budget cheer up sensex Almost every analyst and all financial papers expect Budget to be friendly to the stock market. Dividend income is likely to be free in the hands of shareholders. Long-term capital gain tax may also be removed. But the question is whether the Budget will up the stock market? I have doubts about it. In spite of the possibility that the Budget will be friendly to the stock market. response if not likely to be duphoric. The first reason is that the market has already discounted - these two concessions- (tax free dividend income and removal of tax on long-term capital gain) and taken them for certain. The second reason is that the corporate sector may have to pay more in terms of tax than at present, due to expected change in the depreciation rates, etc. In the Kelkar report also this aspect of making the corporate sector to pay more in the form of taxes had been embodied. But the most important factor for not expecting the market to cheer up is the looming shadow of US attack on Iraq, expected by the middle of March. Long-term investors as well as speculators would not like to make commitments before final decision is taken by the USA. It is not surprising that so far there has not been any pre-Budget buoyancy in the market. It is possible that the Budget may be friendly to the service sector as well as to the middle class. In spite of adverse economic situation, the Budget may not accept Kelkar report of removing exemptions for tax relief at present available under Sections 10, 80 and 88 of the Income Tax Act. Because of the compulsions of the election year, this will be
politician's Budget rather than the economists. During the next financial year, in addition to the elections of Vidhan Sabhas in some states, the Lok Sabha elections are likely to be held in February, 2004. Many Tata group companies are expected to gain substantially from the proposed buybackoffer of the Tata Sons shares. Though the Tata Sons management was to buy to back up to 20 per cent of the shares held by shareholders, it is now expected that the company is planning to buy back only 10 per cent of its shares held by the shareholders. Tisco and Telco hold 12,375 shares. Tata Chemicals hold, 10,237 shares, Tata Power has 4,572 shares. Indian Hotels and Tata Tea also have shares of Tata Sons but in lesser number. Tisco, Telco and Tata Chemicals are excellent investments for appreciation as well as safety. Tata Chemicals is not only solid in its fundamentals but also gives good net dividend return of about 7 per cent annually. At present it is quoted around Rs 62. The Securities Appellate Tribunal (SAT) has now given its verdict on the appeal made by the clariant to make an open offer for 20 per cent stake of the shareholders of Colour Chem. According to the SAT order, the investors will be paid 15 per cent annually to only those shareholders who held Colour Chem shares on or before March 22, 1998 as the reference date. According to the data, the offer price works out to be around Rs. 310-315. Interest from the offer price will be around Rs. 230 per share. |
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Hold Jindal Strips shares now Q: I hold shares of Jindal Strips. Should I hold or sell? Please advise. —Hardev Khosla, Patiala Jindal Strips produces 4 lakh tonne of stainless steel a year. Jindal Strips is weighing the option of demerging its various subsidiaries including Jindal Steel & Alloys. The objective behind this is to create a focused stainless steel company. The company has a few investment subsidiaries which would be hived off into separate entities. The demerged companies would operate as stand-alone units. This move is necessary as a large amount of net worth was locked in various companies and the group is of the view that Jindal Strips should concentrate on manufacturing activities alone. The main objective behind the effort to create a focused steel company is to get a better refinancing rate for its high cost debts. The company’s high cost debts including working capital stands at around Rs 700 crore at an interest rate of 9.75 per cent. Their plan is to bring down the rate to 6.75-7 per cent. By the end of the year, the company hopes to save 40-50 per cent on interest cost alone. By next year, the company is expected to have a capacity of half a million tonnes. For the fiscal ended March 2002 sales were Rs 1279.2 crore, PBIDT was 20.1 per cent, net profit was Rs 28.4 crore and the EPS was Rs 14.3. For the quarter ended September 2002 sales were Rs 441.9 crore, PBIDT was 18.7 per cent and net profit was Rs 26 crore. One could hold on to the shares of this company for now and review the same six months down the line. Q: What is your opinion about the prospects of Vashisti Detergents? — Hareesh Rai, Solan Vashisti Detergents Ltd was incorporated in 1988 as Tata Vashisti Detergents, jointly by Tomco and Maharashtra Petroleum Corporation to manufacture toiletries, soaps, detergent cakes and powders, fatty acids, linear alkyl benzene, sulphorates and alpha olefin sulphorates. It acquired its present name in December 1994, when Hindustan Lever Ltd (HLL) took over Tomco and annexed the latter’s stake in the company. The company is into the business of manufacturing detergent powders, detergent cakes and toilet soaps on contract for HLL including leading brand like Lux, Hamam, Rin and Surf. It is a promoter of this company and has a stake of more than 30 per cent in it. The company has a long term 100 per cent selling agreement with HLL. The company has a manufacturing facility at Chiplun, Maharashtra, a notified backward area. For the fiscal ended March 2002 sales were Rs 161 crore, PBIDT was 7.1 per cent net profit was Rs 3.9 crore and the EPS was Rs 0.8. For the quarter ended September 2002 sales were Rs 10.7 crore, PBIDT was 24 per cent and net profit was Rs 0.8 crore. Overall, the prospects for this company appear satisfactory, albeit unexceptional. 
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