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Spice to invest 100 cr in infrastructure upgradation RBI likely to cut interest rates
IOC net at Rs 2,751 cr |
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Market likely to lose momentum
No tax on recovery of excess payment
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Spice to invest 100 cr in infrastructure upgradation New Delhi, November 2 Besides, the company, which has combined subscriber base of over 8,00,000 in the both the circles, is looking at positioning itself as a complete infocomm solution providers and diversifying into other areas of convergence. “We are looking at various areas of convergence and looking at new areas such as cable telephony. Basically, we are exploring the opportunities in areas which allows us to provide better value propositions”, Chief Executive Officer of Spice Telecom Mr Dilip Modi told The Tribune in an exclusive interview. “We are definitely not going function as stand-alone commodity player and looking at geographical expansion in the infocomm area”, Mr Modi said. The Spice Telecom grew from Rs 486.7 crore in 2001-02 to an estimated Rs 550 crore in 2002-03. According to company estimates, the company’s subscriber base has grown by 17 per cent in Karnataka while it has registered 45 per cent growth in its Punjab subscriber base. Mr Modi said that the primary focus of the company is that “its competencies are not held back in a competitive environment”. “To this effect, we have aggressive investment plans in
infrastructure in the both circles. While in Punjab we plan to pump in an amount of Rs 100 crore, in Karnataka we plan to invest another Rs 75 crore in infrastructure upgradation”, he said. He also said that company was working out elaborate plans for major upgradations in the pre-paid platform. All the investment will made from internal accruals and there are no plans to raise funds from the capital market in the short to medium term. “There are not IPO plans as of now”, he said adding that the diversification and investment in
infrastructure was necessary as both Punjab and Karnataka were among fastest growing cellular markets in the country. Spice Telecom is a 51:49 joint venture between Spice Corp (India) — flagship company of Dr B.K. Modi Group, and Distacom of Hong Kong. The 29-year-old CEO of Spice Telecom is also the Chairman of the Cellular Operators Association of India (COAI), the apex body of the GSM cellular operators in the country. On the current developments in the cellular industry in India, Mr Modi said that the decision of the government to adopt unified licensing regime is “disheartening” and there cannot be different entry conditions for different players. “We are not afraid of competition and we have never said we are afraid of competition. All that we are saying is that do not have a policy which leads to unhealthy consolidation. Three players should become six and it should be the other way round”, Mr Modi said. Clearly airing his disappointment over the government’s decision to adopt the limited unified licensing regime as recommended by the Telecom Regulatory Authority of India (TRAI), he said that “we need to do some out of the box thinking”. “It is very critical that policy does not stifle competition and instead encourage competition to bring about innovation”, he said. He cautioned that the policy environment should not create a “dichotomy” in the market. “Do we want the number of players to be reduced or increased”, he asked. He said that the very fact that both the government, the TDSAT and the TRAI has recommended penalties on WLL operators who had violated the license conditions, is a recognition that it was an offence. “The concept of penalty in the limited unification system appears to legitimise the offenders”, Mr Modi said. He said that it is now well acknowledged that teledensity in the country will primarily be driven by mobile telephony. “We (early entrants in cellular telephony) have made our contribution in making mobility the main driver of teledensity. It is only fair that the policy environment takes into account the concerns of the existing cellular operators”, he said. Mr Modi said that the present conditions do not allow fair play to the older cellular operators adding that the limited unification policy does not address this issue in totality. “The complete unification policy would have allowed all players to seamless integrate its operations and effectively this would led to a situation where the entire country could have become on local telephone zone”, he said. Mr Modi, any policy should not carry the danger of becoming beneficial to only a few players as this would reduce pressure on service providers to reduce prices. “The policy ambience should create enough motivation for players to innovate, reduce costs and reduce tariffs. Otherwise, the consumers could get adversely affected”, he said.
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RBI likely to cut interest rates New Delhi, November 2 RBI Governor, Y.V. Reddy, who will unveil his first Credit Policy after taking charge as the Governor of the central bank in August this year, would have to do a tough balancing act of continuing with the bias towards a soft interest regime while ensuring that it does not lead to higher inflation and lower savings rate more so because of this being the election year. Banking industry sources that a further cut in the bank rate (rate at which RBI disburses funds to the commercial banks) was very much in the offing. A further cut in the bank rate would reduce the cost of funds for the commercial banks, which in turn could translate into lower lending rates for borrowers. Presently, the bank rate stands at 6 per cent. Banking sector analysts said that there was enough scope for a further reduction in the bank rate as it was still higher by as much as one per cent than the prevailing bench-mark 10-year gilt yields. Currently, 10-year gilts are trading at around 5 per cent. Effectively, this means that returns of commercial banks from parking funds in government securities is still lower than their cost of borrowing from the RBI. Analysts said that Mr Reddy may look to correct this anomaly by announcing a cut in the bank rate and the banking industry was expecting a reduction in the range of 0.25 per cent ( 25 basis points) to 0.50 per cent (50 basis points). In addition, the banking industry is not expecting a further cut in the Repo rate. The Repo rate is the rate as which the RBI borrows funds from the commercial banks. In an ideal situation, the Repo rates and the bank rates should move in a close band. Currently, the Repo rate is 4.50 per cent after the RBI reduced it by 0.50 per cent in August this year and is much higher than the prevailing bank rate. Furthermore, banking industry sources say, a further cut in the Repo rate without a proportionate reduction in the savings rate would make fund management for banks unsustainable. A savings rate cut would mean that commercial banks reducing the rates of return for depositors on fixed deposits a politically sensitive issue in an election year. A floating Repo rate within a pre-defined Fband was however, a possibility, sources said. The tricky issue, however, was that of the Cash Reserve Ratio (CRR). A cut in the CRR rate infuses excess liquidity in the system and increases the lendable resource pool of banks as they are required to park less amount of money with the RBI. Presently, the CRR is 4.5 per cent. Analysts said a further cut in the CRR would mean that more funds will be available with banks for lending. However, enough caution needs to maintained to ensure that the inflation rate does not overshoot due to excess liquidity in banks. We should not have a situation where banks are flush with funds and corporates are not taking any. A 0.25 per cent cut in CRR would infuse around Rs 25,000 crore in the pool of lendable resources. If they lie idle with banks without appropriate fiscal policies of the government to spur demand, then it could have adverse inflationary tendencies as credit offtake would be low, a Delhi based banker said.
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IOC net at Rs 2,751 cr
New Delhi, November 2 The profit before tax is Rs 3,624 crore for the first half of the current year. Viewed against an inventory loss of Rs 768 crore during the first half of 2003-04 as against an inventory gain of Rs 1,747 crore for the corresponding period in the previous financial year, the Corporation’s profits after tax for the current half-year were affected only to the extent of Rs 388 crore.
Larsen & Toubro Larsen & Toubro has posted a net profit of Rs 71.03 crore for the second quarter ended September 30, 2003 as compared to Rs 42.18 crore for the similar quarter last year, an increase of 68.39 per cent. The profit for the quarter is after absorbing the impact of the long term wage settlement for establishments based at Mumbai, the company said while announcing the results here today. Total income (net of excise) has increased from Rs 1970.38 crore in the SQ-02 to Rs 2628.06 crore in the quarter ended September 30, 2003.
Tata Tea Tata Tea, the tea major under the Tata Group, today reported a 14 per cent growth in the net profit to Rs 34.96 crore for the second
quarter ended September 30, 2003, as compared to Rs 30.78 crore in the corresponding period last year. The company reported a 7 per cent increase in income from operations to Rs 205.20 crore as against Rs 190.57 crore in the same period last year.
Orchid Chem The net profit of Orchid Chemicals and Pharmaceuticals rose by 153 per cent to touch Rs 7.3 crore in the quarter ended September 30 this fiscal as against Rs 2.89 crore in the same quarter the previous fiscal. The turnover and operating income during the quarter touched Rs 161.83 crore as against Rs 111.33 crore in the same period last fiscal, registering an increase of 45 per cent.
Bajaj Tempo Bajaj Tempo, the leading automobiles manufacturers, has successfully carried the positive trend of registering impressive growth in turnover to H1 of current financial year 2003-04. The company which had recorded a remarkable 31 per cent increase in turnover for the financial year ended March 31, 2003, and a 36 per cent growth for the quarter ended 30th June 2003. Hindustan Sanitary Hindustran Sanitaryware and Industries has announced its results for the second quarter ending September 30 2003. The major highlights of the results are an impressive increase of 58 per cent in the operating profit to Rs 12.86 crore over Rs 8.12 crore for the corresponding period last year. The total income for the quarter ended marked a jump of 23 per cent at Rs 65.50 crore from Rs 53.37 crore last year.
— Agencies
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by J.C. Anand
Market likely to lose momentum The second quarter results clearly indicate that the industry and the corporate sectors are doing very well. The Sensex crossed 4900 points when the market closed last week. Tisco’s net profits is up by 101 per cent, Tata Motors’ net profit is higher by 251.5 per cent, Maruti’s half year profit (ended September 30) stands at Rs 244. 28 crore as against Rs 43.08 crore last year for the corresponding period. Larsen & Toubro’s net profit for the quarter is higher at Rs 124.62 crore (as against Rs 50.88 crore for the corresponding period last year). BPCL’s second quarter net profit has moved up by 47 per cent. ABB’s net profit is higher by 21 per cent. M & M has posted 25 per cent increase in net profit for the quarter. DSCL’s net profit is higher at Rs 13.70 crore as against Rs 10.26 crore Nestle’s net profit is up by 15.1 per cent. H. Lever’s operating margins have, however, dipped and its net profit (before exceptional income) is lower by 2.8 per cent for the quarters when compared with the results for the corresponding period last year). Both Clariant and BASF have done well: BASF’s quarterly result indicates 22.85 per cent increase in the net profit. The textile sector companies have, however, not done well. The quarterly results of both Vardhman group companies are not encouraging. This is largely due to increase in the size of their equity capital: due to conversion of loans taken from financial institutions into equity shares on account of default in payment of loans. But both the companies have very sound position and trustworthy management. This year’s profitability may, however, be affected. GTN Spinning and Patspin have also indicated set back in profitability in their quarterly results. When the corporate sector is doing so well and the analysts are of the opinion that the annual results will be much better than those of the previous year then why am : I recommending profit-booking? I believe that the stock market is likely to lose momentum; now that almost all the major companies have announced results their results, the stock market is likely to move downward or go flat. I believe that the market has touched its peak for the time-being, and during the next few months the market is likely to remain depressed or go flat. Even in the case of sound scrips, profit-taking can be valid. These scrips can be picked up when the market goes low. This strategy had an additional advantage; any shares purchased or picked up as rights with effect from March 1, 2003 to March 31, 2004 will not be subject to long-term capital gains tax. This, however, does not apply shares which do not earn eligibility for long-term capital tax. In this column last fortnight, I had recommended one share — Nahar Industrial Enterprises — for investment. Last week, following good quarterly results, this scrip touched upper freeze at Rs 18.55. This scrip is good for investment and appreciation at this price. The company is likely to declare dividend next year and is expected to appreciate in market prices.
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by R.N. Lakhotia No tax on recovery of excess payment
Q:
I am a Punjab Government employee. I have received over payment w.e.f. 1/3/01 to 30/6/03. The Income Tax for the said period has already been paid by me. Now I am paying recovery w.e.f. 1/7/03 on instalments. Please let me know that whether I will have to pay again tax on the recovery or not. — Suresh Sharma, Una
Ans: The question of making payment again on the recovery made does not arise. This is especially because of the fact that you have already suffered tax in the past; thus; no separate income tax is to be recovered from you at the time of recovery for overpayment made to you. VRS benefits Q: I was a bank employee and taken Voluntary Retirement on 30-12-2000. I was paid Rs. 9,64,080 as advance salary on VRS. We have claimed relief u/s 89/(1) of the Income-Tax Act, 1961 by apportioning the relief is available same for three years. After exempting the exempted portion u/s 10(10) (C)/9,64,080-5,00,000=4,64,080/- if the unexpired portion of member’s service is more than three years. We have filed the return for the Assessment Year 2001-2002 and claim the exemption under Section 89(1) as per our Bank’s instructions. We have received the refund for Rs. 38937/- under Section 89(1) on 20-9-2001 by the Income-tax Officer, Ambala (Haryana). Now the Commissioner Panchkula issued notice to all the bank employees who have taken VRS approximately 60 to file the return again u/s 148 for the Assessment Year 2001-2002 and issued notice why the deduction u/s 89(1) is not allowed. My query is: (1) Whether the
Commissioner Panchkula is justified not to allow us exemption u/s 89(1) after obtaining the exemption u/s 10 (10) (c). (2) If he is right what’s is the course of action we should adopt. — Ram Chand, Jandli
Ans: Generally speaking, the maximum exemption of the amount
received in respect of VRS is Rs 5 lakh. You can claim relief under section 89 (1) in respect of arrear salary now received. Thus, if the total
amount received by you on VRS does not constitute any payment in respect of arrears due now received then you will not be in a position to claim the relief under section 89 (1). However, if the payment received at the time of VRS comprises of payment towards VRS as also payment of the arrear salary then definitely it is within your powers to claim exemption under section 10 to the extent of Rs 5 lakh on account of VRS payment while on the other hand you will also be eligible to claim relief under section 89 (1) in respect of the arrear salary payment received by you.
Bank interest Q:
The following are my questions:- 1. How one can take rebate on savings and how much amount. Please answer the questions for my daughter as Punjab Government employee. 2. Is rebate allowed at 15 per cent or 20 per cent and at how much amount as salary income is 1,50,000 and bank interest income is 13000 for F.Y. 2003-04. 3. Is she can earn interest on GPF and PPF on Rs 82,000 or she can deposit upto 70,000 in both G.P.F. and P.P.F. Accounts. 4. Standard deduction is allowed at Rs 1,50,000 or at Rs 1,63,000. 5. Salary income per month is Rs 12500 and her monthly expenses are between Rs 1500 to 2000. Is there any binding to spend minimum amount of her salary. — L.S. Arora, Bathinda
Ans: To enable oneself to claim the tax rebate related to savings and investments for the financial year 2003-04 the total amount which can be contributed for the tax rebate as per section 88 is to the tune of Rs 1,00,000. Out of this amount Rs 30,000 should be invested exclusively in infrastructure bonds etc. while the remaining Rs 70,000 can be invested either in PF, PPF, etc. The tax rebate would be allowed @ 20 per cent in case the gross salary income does not exceed Rs 1,50,000 while the amount rebate would get reduced to 15% in case the gross total income exceeds Rs 1,50,000. The bank interest received would also form part of your gross total income. A person can deposit Rs 70,000 in GPF as well as in PPF accounts. However, the maximum tax rebate would get restricted to Rs 70,000 only. To arrive at the gross total income the standard deduction available to the salaried employee would be deducted. There is no binding to spend minimum amount of salary by a tax payer. However, on facts and circumstances only it can be ascertained as to what reasonable expenses have to be incurred by a person from out of the salary income. In the case of your daughter if she is dependant on you, she may not spend any amount out of her salary income.
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New Delhi, November 2
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