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Monday,
June 16, 2003, Chandigarh, India  
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Reconstruction
of Iraq: odds against India Inc Delayed
rains boon for tourism industry
US-64
bonds catch fancy of banks, PFs |
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Inflation
declines to 5.44 pc FIIs net
buyers in equities New
saral forms on IT website Graphic: Wholesale
price index
FIIs
active investors in stock market
Consumer
courts come to students’ rescue
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Reconstruction of Iraq: odds against India Inc Indian companies are expecting nearly $ 10 billion
business in Iraq as it is estimated that the reconstruction of Iraq
would involve a total investment of $ 100 billion. With the established
credentials of Indian enterprises in various fields, the country can
play a role in infrastructure, telecom, and related spheres. Indian
exporters of food products are not very optimistic about the future of
exports to Iraq. The appointment of former Cargill senior executive Dan
Amstutz, in charge of agricultural reconstruction in Iraq, is being
viewed as a threat to allow imports only from US and its allies who are
surplus in agricultural products. Oxfam has already reacted to the
Amstutz appointment and has expressed concern over the promotion of the
US interests in Iraq. The Oxfam policy director, Mr Kevin Watkins, has
said, “putting Dan Amstutz in charge of agricultural reconstruction in
Iraq is like putting Saddam Hussein in the chair of human rights
commission. The guy is uniquely well-placed to advance commercial
interests of American grain companies and bust open the Iraqi market-but
singular ill-equipped to lead a reconstruction effort in the developing
country.” It is unfortunate that Indian exports have become costlier
with the rupee strengthening against the US dollar. Earlier when one US
dollar was equal to Rs 49, the exports were lucrative, but today the US
dollar is equal to Rs 46.80 and this situation has made exports
costlier. In addition, the government has hiked the price of the grain
to Rs 600 per tonne on an average for the exporters. This needs to be
reduced to become competitive in the global market. After the initial
doubts whether India would participate significantly in rebuilding Iraq,
India Inc has launched a fresh offensive of sorts. Prima facie the odds
appear stacked against Indian companies as the initial reconstruction contracts have all gone to US MNCs like Kellogg Brown and Root, a
subsidiary of Halliburton, and Bechtel. The former has got the contract
of extinguishing fire from oil wells estimated at $ 600 million and the
latter has got a $ 680 million deal to rebuild Iraq’s war-devastated
infrastructure like roads, water supplies and ports. India can only hope
to get sub-contracts, if suitably placed and the government’s policy
coincides. The Ministry of External Affairs has not yet decided on the
government’s strategy to do business with Iraq. Moreover, there are
indications that Washington will start involving the UN in a far more
comprehensive manner now. In a recent meeting at the CII national
security adviser Brijesh Mishra had indicated that New Delhi would
handle the Iraq issue through UN, and not the US. In view of the
government policy, representatives from about 100 companies, including
Oil India Corporation, Bharat Heavy Electrical Engineers India, Ircon,
Essar, Kirloskar, Larsen & Toubro, Mahindra & Mahindra and Nicco
Corporation, which met a FICCI headquarters, decided to postpone the
visit of the proposed delegation to the US. It was felt that the
environment in Iraq was hostile and there was no law and order despite
the US claim that peace prevails. The basic requirement is the money
which is badly required to rebuild Iraq. The current aid from USAID is a
very small part in the entire process. Unless mechanism is evolved,
which is currently pending with the UN, major opportunities will not
come to the fore. We may, therefore, have to wait and watch.
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Delayed
rains boon for tourism industry Shimla, June 15 People from the plains are making a beeline to various summer resorts like Shimla,
Manali, Chail and Dalhousie. Hotels in most of the tourists towns are packed to capacity. Traffic jams have become a common feature on the main roads, particularly in Shimla and
Manali. The state capital has had a fair share of tourist influx despite water crisis. Local hoteliers maintain that a good part of tourist traffic was diverted to Manali and other places because of reports of water shortage in the media. Mr Umesh
Akre, vice-president of the state hotel association, said many hotels had made adequate arrangements to deal with the water problem. Tankers had been deployed to carry water. The decision of the government to remove all roadside signboards had also affected the business of hotels located at some distance from the main town. In the absence of signboards, the tourists were at the mercy of the touts. The hotels owners who had been giving commission to the touts got more business. The fact that India remained free from the dreaded SARS disease, which caused havoc in countries like China, Malaysia and Thailand, also helped the tourism industry. A part of the tourist traffic to
SARS-affected countries was diverted to India. As a result, the hill state attracted more foreign tourists than the previous years. The number of foreign tourists to Manali increased by about 20 per cent and many of them also visited the Lahaul valley. The percentage of high-end domestic tourist, who usually preferred to go to Singapore, Thailand or other countries, also increased because of
SARS. Another factor was the resumption of LTC (leave travel concession) facility by many states. It has been a good year for the tourism industry.
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US-64 bonds catch fancy of banks, PFs
New Delhi, June 15 “Banks, insurance companies and provident and pension funds will lap it up considering the relatively high effective return and 5-year maturity period,” banking sources told PTI on the eve of its trading in NSE. At present, there is no sovereign guaranteed paper offering so much return with average yield on government securities ranging below 6 per cent. Banks, which are flushed with cash and are eyeing attractive options in parking their funds, are looking forward to buy US-64 bonds even with a slight premium. Similar is the case with insurers which are looking towards a high return debt papers with at least 5-year maturity period. After the decision to stop further investment in Special Deposit Scheme, provident funds are also looking at instruments offering relatively high return in order to sustain near 9 per cent return to their members. High-networth individuals are also eyeing at the bonds offering an effective return of over 10 per cent. Mutual funds and dealers in government securities does not seem to be too much enthused about the bonds, which were offered in exchange of US-64 units in May. “We are more interested in liquid stocks. We do not hold on to a debt paper like banks and insurance companies,” PNB Gilts managing director I.D. Singh said. Debt oriented mutual funds are also looking towards liquid government and corporate debt papers instead of the illiquid US-64 bonds. “We do not have much interest in the US-64 bonds,” an official of Standard Chartered Mutual Fund said. The fund recently launched a medium term plan which would invest 75-90 per cent in corporate debt papers. Contrary to fears of a low return, the US-64 bonds offer 6.75 per cent tax-free return and has come as a boon to small investors. Many have retained them after government offered guarantee to repay the full amount in time. The cash outgo for US-64 redemption was less than Rs 2,000 crore as against Rs 6,500 crore budgeted this year. Most of the large investors opted for the 6.75 per cent tax-free bonds investing about Rs 10,000 crore on an aggregate.
PTI
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Inflation
declines
to 5.44 pc
New Delhi, June 15 The Wholesale Price Index-based rate of inflation fell 0.21 per cent from 5.65 per cent during the previous week. However, it was much higher than 1.93 per cent during the corresponding week of last year. The rate of inflation was maintaining an upward trend since mid-December and hit a two-year high of 6.49 per cent during the week ending April 12, mainly due to a surge in international oil prices. The end of Iraq war, however, pulled down petroleum prices which led to the fall in inflation rate.
UNI
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FIIs net buyers in equities
Mumbai, June 15 Mutual funds (MFs), on the other hand, netted outflows in equities at Rs 22.57 crore and recorded net purchases of Rs 446.1 crore in debt market, according to the data available with SEBI here. FIIs were net buyers in equities for four days and netted their highest inflow of the trading week at Rs 167.6 crore ($ 35.6 crore) on June 9, it said. They also netted purchases at Rs 130.7 crore ($ 27.8 mn) on June 12 while registering net outflows of Rs 42.8 crore ($ 9.1 mn) on the earlier day.
PTI
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New saral forms on IT website Chandigarh, June 15 Talking to TNS, Mr Vijay Khanna, Chief Commissioner, Income Tax, North Western Region, today disclosed that a notification regarding the extended date of filing income returns to September 30 would be issued soon. The department is making all efforts, he said, to simplify the process of filing income tax returns. There would be no long queues as the arrangements are being made to organise special campaigns to file returns. The last date for the companies, filing TDS has been already extended to September 30. The new saral form is a single page form that would be read by the computers. While the income tax department had tried to introduce a return form (Form No 3) last year, with 20 pages, the assessee was supposed to provide comprehensive information about his salary, income from house rent, property, capital gains, losses, investments, interest from bank accounts. The assesses were asked to fill up information in 11 pages and there were detailed guidelines in 9 pages. They were asked to provide information about credit cards, expenditure on education of children, name of schools, expenditure on vehicles owned by self/ dependent family members, foreign travel, expenditure in access of Rs 50,000, investments in immovable properties, movable assets in access of Rs 1 lakh during the financial year. However, after criticism by the opposition parties, the government had withdrawn that form and had asked the assesses to provide the information on previous saral forms. Now this form ( Form no 2D) has also been replaced now by the ‘Naya Saral’ form ( Form No 2E), said a senior official in the Income Tax Department, North Western Region here. He disclosed that one could down- load it from ‘‘income taxdelhi.nic.in’’ website or from ‘‘taxindiaonline.com’’ where he would require acrobat Adobe to download it. The Naya Saral form, he said, was just a single page form with a 32 point questionnaire, in which the assessee would have to fill in information about his address, phone number, PAN and bank account number. Though they had to provide almost the same information as was asked in the previous form, yet they have been exempted from the unnecessary
details. They would have to provide the details of their incomes from salary (form 16), property rent and other sources. Despite a smaller version of the previous form, the assesses would have to provide details about the taxes paid to the local authority and annual value of
property. The official claimed that from this year onward, the income tax assesses would get their refund electronically in their bank accounts. A senior official of the department said, ‘‘We are making all efforts to process all the income tax returns through networked computers. The network is likely to be connected with the treasury branches of the bank, and the refunds would be automatically transferred to their accounts.’’ He said the assesses would have to quote the PAN no in the Saral form for the proper processing of returns. However, the returns would be accepted even if they had applied for the PAN. In that case, he said, they would have to quote the receipt number of the PAN application as well.
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by J.C. Anand FIIs active investors in stock market During the last week the market moved up on all the working days excepting one when some profit booking was done. Investors in the stock market cannot expect better conditions than are available to them at this time. Dividends received by them are not subject to tax in their hand. Any investment made in BSE-500-Index shares during the calendar year 2003-2004 through a recognised stock broker will not be subject to any long-term capital gain tax if these shares are held for at least one year or more from the date of purchase. A Distinguished Chartered Accountant is of the view that this would be applicable not only during this calendar year but also during the current financial year i.e., up to March 31, 2004. The corporate sector is very generous in announcing high dividends, even though the companies have to pay some tax on the pay-out account on dividends. The companies may have to pay tax but the promoters too have large holdings in the equity shares of the companies are gainers as shareholders. The FIIs are now active investors in the Indian stock market. The interest rates offered by the banks on the saving-bank and fixed deposits are so low and unattractive that a wise investor would put his money in the stock market than place it in the bank. There are quite a large number of companies which are well-managed and have growth prospects and yet their net dividend yield is higher than the fixed deposit rates offered by the banks. In this column, I have been generally recommending long-term investment in scrips which provide higher dividend return and have prospects for appreciation. Some of the shares recommended were: Canfin Home (around Rs 18), GNFC (around Rs 19), Tata Chemicals (around Rs 56), Nahar Spinning (around Rs 64-65), Mahavir Spinning (around Rs 58), Mastershare (around Rs 10-25), Tata Investment Corporation (around Rs 74), etc. During the last week ABB, Alstom Projects, Siemens India galloped on prospects of higher business and profits in power sector. Even after some profit-taking, the market price of these shares was substantially higher than it has been during the earlier fortnight. Hikal Chemicals, which normally moved around Rs 120-130 (for its Rs 10 face value share), closed at Rs 200 (with upper freeze) last Friday on the expectation that the company would get USFDA approval for its pharma plant. The Britannia industries announced a dividend of Rs 100 per cent on its equity shares and also decided to buy-back up to the maximum 25 lakh shares from the market at a price not exceeding Rs 650 per share. This also led to some rise in the market price of the scrip. Hindustan Lever has revised its earlier proposal regarding bonus debentures due to the changes in tax laws made in the Finance Act 2003 and has now recommended special dividend of Rs 1.76 per share relating to bonus debentures and a final dividend of Rs 2.65 per share. The Board of Directors of Larsen & Toubro has once again put off its decision on the demerger of its cement business at its meeting on Saturday. The board has not yet decided the date of next meeting. However, financial institutions, which have around 40 per cent of holding in the equity capital of the company, are anxious to get the highest possible return from the “demerger”. The Birla group is also anxious to raise its buy-back offer for the shares of the company. Those who are holding L&T share should sit tight over their holding because there are definite prospects for appreciation. |
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by Pushpa Girimaji Consumer courts come to students’ rescue This is that time of the year when students who have completed their schooling and are applying for admission to various colleges are on tenterhooks. As they scan newspapers and websites to choose the right course and the right college and wonder whether they will eventually secure admission in the college of their choice, parents worry over the admission fee of colleges. Another area of anxiety is the genuineness of the claims made by educational institutions about their courses, affiliations and recognition. Of concern is also the refund rules of colleges and universities: for instance, after securing admission in one college, if a student wants to move to another, will the college return the fee paid?. To allay such anxieties and fears and ensure a fair deal to the students, the Department of Education, Universities, Directorate of Technical Education, should come together and step up their efforts to ensure that (a). The advertisements and brochures issued by colleges and institutes do not in any way make false or misleading claims about the usefulness of the courses offered, their affiliations and recognition; (b) The process of admission is kept absolutely fair and transparent and is completed in accordance with the relevant rules and regulations; and (c) Every college/institute follows a fair and clear-cut refund policy, so that the students who initially take admission in a particular college and then move on to another college of their choice get back their money. It should, in fact, become mandatory for all application forms to mention the refund rules. It would be good if universities appointed ombudsmen during this period to address the complaints of students and parents on some of these issues and provide quick redress. It should also become mandatory for all colleges and institutes advertising their courses during this period to get these approved by the ombudsman. This would prevent the publication of false and misleading advertisements. It may be mentioned that where universities have failed, consumer courts have stepped in to protect their rights — be it with regard to misleading advertisements, unfair admission policies or refund rules. In fact, the apex consumer court has clearly held that universities and institutes imparting education come within the arena of consumer jurisdiction and students and parents have every right to seek redress against unfair trade practices, besides deficient services rendered by colleges and universities. At one time, the Monopolies and Restrictive Trade Practices Commission used to take cognizance of false and misleading advertisements issued by educational institutions and pass ‘cease and desist’ orders against them. However in the last few years, consumer courts had increasingly come to the aid of parents. Here are three important verdicts of consumer courts on the issues pertaining to college admissions. In the case of Bhupesh Khurana Vs Vishwa Buddha Parishad (OP NO 168 of 1994), the National Consumer Disputes Redressal Commission awarded compensation to 12 students who were victims of misleading advertisements issued by the institute, giving impression that its college was affiliated to Magadh University and its BDS course was recognised by the Dental Council of India. Besides asking the institute to refund the admission fee, the apex consumer court directed that each student be paid Rs 20,000 as compensation. The court also made clear in this case that educational institutions and universities were liable for deficient service under the Consumer Protection Act. Similarly, the order of the National Commission in the case of M.Ravindranath Vs The Principal, Mercy College, Palakkad, (RP NO 658 of 1007) threw open, for the first time, the process of admission in educational institutions to the scrutiny of consumer courts. Here, the complaint was that the college had denied the complainant’s daughter, admission to the B.Sc (Maths), but had given seats to the students who had scored less than her. On examination of the admission list, the District Consumer Forum found that the college had not followed university rules pertaining to admission and had allotted seats to the students who were below the complainant’s daughter in the merit list ranking.. Holding the college guilty of deficient service, it directed the college to pay Rs 18,000 as compensation. This order of the District Forum was upheld by the National Commission. Abel Pacheo Gracias VS the Principal, Bharatiya Vidyapith College of Engineering, is one of the oldest cases filed before the consumer courts. The dispute here was over the refusal of the college to fully refund the fees paid by a student, who subsequently joined IIT, Kharagpur. The contention of the college was that the rules framed by the Director of Technical Education required students to file applications for refund 15 days prior to the last date of admission and the student had not complied with it. The parent, however, pointed out that this condition could not be met as the results of the Joint Entrance Examination had been declared late that year. The Maharashtra State Commission directed the college to refund the full amount with 12 per cent interest. |
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