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Tuesday,
February 25, 2003, Chandigarh, India  
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Tata Tele to take over Connect
COAI against TRAI’s recommendations
Govt allays fears on FDI in print media
BUDGET-2003
SBI to cut gross, net NPAs
FICCI for infrastructure status to housing sector
Exempt rural units from VAT: KVIC |
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Dabur sues Ranbaxy
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Tata Tele to take over Connect Chandigarh, February 24 According to industry sources, Tata Teleservices is going to take over Connect soon. A large number of employees has already resigned from the company. Some have been asked to make arrangement for themselves as Tata Teleservices has asked the management to downsize the employees’ strength by 25 per cent. The sources disclosed that after the entry of Reliance Infocomm in the limited mobility field and
announcement of free incoming calls by cellular operators, Connect was facing negative growth in the subscription base. Though no official from the Tata Telecom was available to confirm the talks, the sources confirmed that recently officials from the company had visited the company office here. Officials of Connect had made presentations before them about the company projects, services and future plans. During the past six months, a section of Connect subscribers has shifted to BSNL, Spice and AirTel. The company has failed to make investments, even to provide SMS service easily available on the CDMA networks worldwide. Further, the payment of inter-connectivity charges likely to be announced soon and increase in the call rates and monthly rentals from April 1 will further erode its viability. The company is finding it difficult to meet the operating expenses with around Rs 100 crore annual revenue. Mr Ashwani Gupta, CEO, Punjab operations, has already left the company to join HoneyBell, a hardware company. HFCL had purchased the WLL licence from the Essar group by paying about Rs 300 crore in 2000. It had invested about Rs 1,100 crore in Punjab in wireline and wireless services, covering almost all major towns. In October last year, it had crossed 1 lakh connections in the Punjab and Chandigarh circle. However, said insiders, the company had failed to touch even the break-even point. It had not made any major investment during the current financial year due to doubts about the long-term viability of the project. Since HFCL has only one circle to provide WLL services, the management has come to a decision that ‘being a small fish’ it can not survive in the face of huge investments of RIL, Bharti and BSNL. BSNL is also likely to start WLL services by April end. Ms Rasmi Mehta, Head, Corporate Relations, HFCL, at Delhi, admitted, “The company was in talk with the Tata Teleservices about two years ago to sell the licence in Punjab. But at present, there are no such plans, rather we are reconsolidating the brand by right-sizing the staff”.
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COAI against TRAI’s recommendations
New Delhi, February 24 “The regulator has not addressed crucial issues such as need and timing while giving its views on the subject,” Director-General of COAI, T.V. Ramachandran told PTI here. He said that COAI would soon write to TRAI and the Department of Telecom (DOT) and raise these issues. COAI has said that with regard to “need” for introduction of new licences, it was amply evident that there was an “oversupply” of mobile services in the country and the tariffs were also the lowest in the world. “Hence we feel that there is no need for new players in the market at this point of time,” Ramachandran said. On the issue of timing for new licences, Ramachandran said the crucial question that should have been answered by TRAI was whether the market would bear any new operators. Ramachandran said telecom regulator should have gone into issues like whether the economic viability of the telecom sector would improve with more players. “Even the existing players are facing huge accumulated losses. Will the health of the new operators also not get adversely affected,” Ramachandran said. Last week, telecom regulator TRAI came out with its view on introduction of additional players in the sector where it raised the issue of prevailing spectrum constraints. TRAI said induction of additional mobile service providers in various service areas could be considered if there was adequate availability of spectrum for existing players and for new players, if allowed. “TRAI is in favour of open competition in different segments of telecom market and has recommended accordingly to the government in respect of different services. However, in respect to the cellular mobile services there has to be a clear view on the quantum of additional spectrum, which could be allocated to cellular services,” TRAI had said. In the same breath, TRAI had admitted that delay in allotment of frequency of operations to the fourth cellular operator and the pending unsatisfied demand of additional spectrum, indicated a prevailing spectrum constraint even to existing cellular operators. TRAI said that while examining the possibility of inducting additional cellular players in various service areas, the issues such as spectrum needed to be first addressed indepth.
PTI
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Govt allays fears on FDI in print media New Delhi, February 24 Replying to questions in the Rajya Sabha Information and Broadcasting Minister Ravi Shankar Prasad said the policy for FDI in print media had been formulated in such a way that the ownership control and editorial control remained with the Indian partners. He categorically denied that the Centre had taken the decision in this regard against the wishes of the newspaper industry. He added that the widest possible discussion had taken place and there was a great demand for allowing FDI in print media. When a member asked how would the government ensure that the foreign partner did not assert his terms and conditions, thereby affecting Indian interests, he said it was true that the government had no control over news content but the clause which specifies that editorial control will be in the hands of Indian partners and presence of 75 per cent Indians as directors was enough safeguard in this regard. He said the government had allowed maximum of 26 per cent investment while in case of speciality magazines like on sports and science, the 74 per cent of investment was allowed. Meanwhile, the Centre had cleared two proposals for publication of foreign magazines in India with proper safeguards in place. The Minister informed the Rajya Sabha that the government had also received five proposals for FDI in newspapers which will be decided after taking up these on case to case basis. In reply to another supplementary, the Minister said that the Centre will be consulting mediapersons and industry connected with the News Agencies in order to ascertain if the 1956 policy needed a detailed review given the rapid technological and other changes noticed in the meantime. It may be recalled that the policy in force since 1956 required that the foreign News agencies distributed news in this country only through the Indian News Agencies. In reply to another question the minister said that the Doordarshan and All India Radio would make every effort to improve the quality of their programmes and take up aggressive marketing to step up revenues. The Minister said Doordarshan and AIR could not always be concerned about profit motives like private players as they happened to be official broadcasters of the nation with a reach of 89 per cent and had the responsibility of providing relevant information to the people, even if those events were noprofit-making ventures.
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BUDGET-2003
New Delhi, February 24 The Insurance Regulatory and Development Authority has developed a “standardised” pension policy and sought complete tax exemption on it, as a majority of the population in the unorganised sector is out of the tax net, official sources told PTI here today. IRDA has already conveyed to the LIC and all private players about the policy, which is likely to be launched in April, the sources said. The new pension policy is likely to be priced at a premium as low as Rs 100 annually and may be indexed with the inflation rate. The government is also planning to bring in two new Bills on social security of which one will be for the unorganised sector. This will enable the Employees Provident Fund Organisation to come up with pension schemes for the economically weaker sections. An announcement on these Bills is expected in the Budget. Meanwhile, IRDA has also asked the Finance Ministry to reduce the tax rate on policyholders’ surplus from 12.5 per cent to 3 per cent as suggested by the Eradi Committee. IRDA Chairman N. Rangachary said last week that a high tax rate of 12.5 per cent was relevant when the personal income tax rates were as high as 60 per cent. The income tax rates had come down over the years to a maximum 30 per cent but the tax rate on shareholders’ surplus is yet to be reduced. In a letter to the Finance Minister’s Adviser Vijay Kelkar, IRDA had also proposed that the Centre could come up with tax-saving long-term 30-year bonds exclusively for pension funds. Instead of meeting the entire social security Bill, the government could partially compensate the interest obligation on these bonds, Rangachary said, expressing concern over the strain that insurance companies were facing in the wake of the falling interest rates and rising longevity of Indians. IRDA has also asked the government to exempt the funds that can be set aside for building a catastrophe fund. In the absence of a tax sop, insurers are unwilling to build the fund which could have been utilised in meeting claims in the event of natural calamities like earthquake. The proposed fund can also provide a cushion to Indian insurers in the event of a war, when the reinsurance becomes costly.
PTI
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SBI to cut gross, net NPAs
Panaji, February 24 “At present gross and net NPAs of the bank are pegged at 11.41 per cent and 4.67 per cent respectively and we plan to bring them down to level of international standards by March 2005 through recoveries, upgrading of assets and writing off”, SBI Chief General Manager of Mumbai circle B. Behera told reporters here. The asset classification norms would also change from 180 days to 90 days with effect from April 2003, he said, adding the Mumbai circle has already served 126 notices aggregating Rs 1,176 crore under the Securitisation Act. Properties of six industrial groups worth Rs 40 crore, including a hotel in Nasik belonging to Soni Tourism, have been seized by the bank in the Mumbai circle, which covers Maharashtra (800 branches) and Goa (51 branches), Behera said. Meanwhile, SBI sources said the bank was considering to rope in multinational financial consultants to act as recovery agents, initially for Mumbai circle, whose gross and net NPAs stood at 16.57 per cent and 7.35 per cent respectively. It was also considering involvement of local bodies and NGOs for recovering small loans of upto Rs 25,000. The circle has one-time settlement schemes amounting to Rs 100 crore in the pipeline.
PTI
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FICCI for infrastructure status to housing sector New Delhi, February 24 Further, there is also a need to enlarge the scope of infrastructure to include sites, establishment of townships, water purification facilities, pipelines and sewerage systems, FICCI added. According to FICCI, despite positive
developments in the housing sector, it has not been given the desired impetus. The federation said today that while the exemption (under section 80 IA and 80 IB) for most infrastructure projects is seven to 10 years, it is not so in case of mass housing projects . “Considering the time required in planning and execution of large housing projects, the time limit of this exemption should be extended to 10 years”. In fact, industrial units are given exemption on tax on profits for the specified years after start of commercial production whereas housing projects have been specified to be completed with in short time frame. The developer has a time limit of maximum 2.5 years; which is a very short duration for identification of land, obtaining all statutory permissions and completion of construction, the Federation pointed out. FICCI also recommended that in order to make housing loans affordable, the Housing Finance Institutions should provide long-term housing loans of 15 to 20 year tenor. Further, in order to reduce the interest burden, housing finance should be granted the same fiscal concessions as are available for infrastructure financing.
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Exempt rural units from VAT: KVIC Bir (Hisar), February 24 Officials told TNS that the commission had forwarded a request in writing to the government. “Implementation of VAT will put an additional burden on these units in the rural areas which are already facing threats of competition from big industrial houses and MNCs. Posing a threat to their survival. It will also act as a hindrance to the aim of employment generation particularly in the rural areas”, said an official. Under KVIC Rural Employment Generation Programme, more than 1,600 units, which have generated direct employment for more than 50,000 people, have already been set up in various villages in Haryana. The programme helps individuals, firms, trusts and companies procure finance for projects up to Rs 25 lakh. Explaining the problem, Mr Ved Prakash, who has set up a coolers manufacturing unit in Bir village in Hisar said: “The problems we face begin from procuring of raw materials, to marketing. Currently, we get an exemption up to Rs 10,000 due to which we are able to offer our products at competitive rates. The threats come from large players and multinationals in the industry, that are able to manage lower prices due to high volumes of production. If VAT is implemented, the benefit of exemption will no longer remain and we will also have to pay additional tax, which will make it difficult for us even to cover costs”. Owners of these units, which employ on an average 15-20 persons per unit feel that additional taxation burden will make such schemes redundant. “Even today employment generation is one of the major issues especially in rural India. But if one sets up a unit and is not even able to survive, there will be no point introducing such programmes for social benefit at all”, Mr Suresh Goyal of Mukesh Pottery Art Udyog, in Hisar, for which he took a loan of Rs 9.80 lakh, said. The KVIC helps in procuring finance and also provides margin money between 10 per cent and 30 per cent by way of middle end subsidy. During 2000-01, as many as 511 units were set up and these units had manufactured goods worth Rs 5,696.42 lakh, an official said. By December, 2002, the number of units established under this programme were 615. The commission also conducted awareness camps, workshops with banks, etc to spread the benefits of the programme to maximum number of people in “rural areas.”
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Dabur sues Ranbaxy
New Delhi, February 24 Issuing notice to Ranbaxy, Justice Manmohan Sarin asked the company to file reply on a suit by Dabur seeking to restrain it from airing TV advertisement which allegedly depicts Pepfiz superior than Dabur’s product. Dabur objected to the commercial in which a father complaining to his daughter about a stomach problem was offered by her a green pearl, allegedly depicting pudin hara pearl, from a deceptively similar bottle of Hajmola and at the end the product was replaced by Pepfiz. The advertisement of Pepfiz claims to relieve a person of three stomach ailments (gas, ache and indigestion) and allegedly compares it with Dabur’s which has got separate preparation for different problems. PTI
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