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New Delhi, April 3 India will have to shift from domestic market to exports. This will not only improve the competitiveness of the economy but also create millions of new employment opportunities in the industrial and service sector, says Mr Kwang-Ro Kim, Managing Director, LG Electronics India Pvt. Ltd. (LGEIL).
Direct sellers’ body chief wants black sheep out
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In love with City Beautiful
LIC to unveil new products in May
Aviation Notes
INVESTOR GUIDANCE
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LG boss lays emphasis on exports
New Delhi, April 3 Mr Kim, credited to have founded LG in India, is said to have build up the company right from a scratch. Today, LG is into home appliances segment with an annual turnover of over Rs 5,000 crore, all within a short span of seven years. At a time, when a number of multinationals failed to make a dent in the "price conscious" Indian market, LG emerged as one of the market leaders in the consumer durables segment. The products include colour televisions, refrigerators, washing machines, air-conditioners, mobile handsets, monitors and other electronic products. In an interview with The Tribune, Mr Kim said: "Our aim is to become number one preference of customers, employees and other stakeholders. The simple strategy is to manufacture world-class products at a reasonable price and provide a conducive working environment to its employees, dealers and vendors." LG has so far invested over Rs 600 crore in India. It is investing about Rs 100 crore annually, and has recently set up a new plant in Pune. He claimed the company was offering direct employment to nearly 2,000 persons and indirect employment to over 25,000 in India. To create employment for millions of youth in India he has a simple solution: "The thrust should be on exports, exclusively. The government will have to invest in infrastructure and create legal framework, which will attract investment and promote exports. Subsequently, there will be a shift of population from the agriculture sector to the industrial and service sector." He claimed in 1947 at the time of India's Independence, the standard of living in Korea was almost equivalent to that of this country. But by focusing on exports, the small economy has created millions of jobs for the people and have raised their standard of living. "You can double the GDP growth rate by targeting the domestic market. Rather, the country will have to produce for the world markets at a cheaper rate," he says. Regarding the performance of the company, he says LG's annual turnover was expected to cross Rs 7,000 crore during the current calendar year. "We are expecting in the next three years our annual turnover will exceed Rs 20,000 crore. The business volumes are growing at over 50 per cent in some product segments as against our expectation of 25," he said proudly. Mr Kim claimed under the LG brand, the company was offering a wide range of products for all segments of the consumers. It also aimed to increase exports from $ 40 million during last year to over $70 million this year. The world- class working environment has encouraged, he claimed, some other Indian companies as well to follow LG. Our emphasis is on basics and to set up efficient systems, says Mr Kim." We have almost Indianised the company by empowering the Indian employees and making them accountable towards company objectives. We have a commitment towards the Indian market and long-lasting relationship with customers and employees that is of foremost value." Interestingly, there are only seven Koreans in the company, and Indian managers and employees handle almost every work. To a question on what the company was doing as a socially responsible corporate citizen, he said apart from sponsoring cricket matches and relief work during the Bhuj quake and Kargil war, LG is also involved in community work. " We are working for the empowerment of villagers in neighbouring 24 villagers." Commenting on the economic reforms in India, the Managing Director of the LG said: "Indian economy has done very well as compared to China. We feel that its democratic and legal framework, efficient labour force and vast market are the main attractions for the investors. But I fail to understand, while treating exporters, how the government can differentiate between the entrepreneurs working in special economic zone, export promotion zones and other areas." It should create a level playing field for all exporters, he added. |
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Direct sellers’ body chief wants black sheep out
New Delhi, April 3 "The need for separate legislation has been felt because the existing laws have proved to be inadequate to prevent such fake companies in the first place. They come into play only when the fraud has been committed. What we need is a stringent deterrent to protect consumer interests and also the reputation of the direct selling industry,” chairman of IDSA, Mr William S Pinckney said. The IDSA is an apex body of direct selling companies. Presently, there are 13 IDSA approved members companies in the country. These include AMC Cookware, Amway India, Avon, Forever Living, Herbalife, Hindustan Lever Network, LB Publishers, Lotus Learning, Modicare, Oriflame, Quantum International, Surinder India and Mr Pinckney said that the existing laws do not act as a deterrent. “Unrelated laws should not be applied, which has happened in a few instances. We strongly feel there is a need of effective law to check direct selling frauds if the full potential of direct selling industry is to be realised,” he said. According to a survey conducted by the IDSA, the total size of the direct selling industry in India is estimated at Rs 2,311 crore in 2002-03, an increase of 34 per cent over the previous year. Worldwide, the direct selling industry is estimated to be around $ 85 billion. In India, lack of clarity about the industry and presence of unscrupulous players are primarily behind people's reluctance to become distributors, the IDSA said. "The increasing popularity of direct selling has led to the emergence of fraud schemes and operators who masquerade themselves as genuine direct selling companies offering independent business opportunities. These are pyramid schemes, where operators sell `products' that are often gimmicks. The lure of money and short-term gains attracted many people to such schemes -- only to realise that they have been cheated. It is because of such scheme that the entire direct selling industry
is viewed with suspicion," he said. |
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Jaswant promises to lower taxes
New Delhi, April 3 Neither “worried nor elated” over the rise in rupee value, Singh has left it to the Reserve Bank of India to deal with the situation. In an exclusive 45-minute interview to PTI, the Finance Minister spoke on a wide range of issues like the thrust on reforms if the NDA is voted back to power, inflation and prospects of double-digit economic growth and ruled out tax on farmers. Appearing exuberant over the Central Statistical Organisation figures of 10.4 per cent growth in the third quarter of the fiscal year that had just ended, Singh said fiscal deficit would also be lower than 4.8 per cent as projected in the interim budget. Dismissing opposition criticism that the 10.4 growth rate was a jugglery of figures, he said CSO was not an arm of the Finance Ministry. “Its an old organisation and has done sterling services. We can’t start deriding an establishment in the heat and dust of electoral battle.” “I have not juggled with figures. It is not Finance Ministry’s figure,” he said appealing to the opposition parties not to equate economic growth with government. They should also take pride in the fact that the economy was growing at a higher rate. Asked what would be his next budget like, Singh said the reforms would cover areas like fiscal consolidation, management of state finances, continued reform of the financial sector,
manufacturing, infrastructure and social sectors. “We are committed to further rationalising and simplifying taxes and tariffs,” he said. He did not agree with the opposition description of the direct and indirect tax concessions before announcement of elections as “giveaways”. “I am astonished with the term they are still being considered as giveaways. I am sharing the revenue with the citizens of India. I am not giving it away,” Singh said adding the improvement in revenue collections on account of the concessions would be known next week when the figures for the whole year would be available. The Minister said by easing the tax burden, revenue does not suffer. Asked whether this philosophy of lowering tax rates would continue in the next budget, he said “yes”. Asserting that inflation would remain “benign” and that the latest figures showed it had come down to 4.13 per cent, Singh ridiculed suggestions that rupee was being manipulated to keep price levels low. Praising the Reserve Bank for excellent job in the present situation, he said “due attention was being paid on the management of exchange rate. We have foreign exchange reserves of 110 billion dollars. Management of reserves (by RBI) was exemplary.” About appreciating rupee, he said “it is a matter we are paying attention to.” “Neither elation nor despair,” he said when asked if the government was worried or happy over hardening of rupee. Refuting the opposition criticism that the double-digit growth in one quarter (third quarter) would not be representative of the whole year, Singh said the year consists of only four quarters and the peak so far has been achieved in the third quarter. “I have no doubt that the country is well set on the path of a GDP which will be in excess of 8 per cent. Now that we have exceeded 10.4 per cent, in the fourth quarter it has been a good rabi crop and services sector and manufacturing sectors have done well. “With this, the growth rate projections of 7.5-8.1 per cent will merit a reorientation.” On the bullish capital market, he said it only reflected the strong fundamentals of the economy. In the last 12-18 months the economy was on the roll and this is being reflected in the capital market as well. Hence, it would not be correct to describe it as a bubble. “I do not, (however), count on daily fluctuations of the market”. Singh maintained that Disinvestment Minister Arun Shourie’s proposal to mop up Rs 100,000 crore every year through sell off of PSUs was “extremely feasible”.
— PTI |
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In love with City Beautiful
Chandigarh, April 3 The company, which is into manufacturing needles for the last 150 years, has three of its plants located in Asia. One in China and two in Chandigarh, India. The company already has a 45-year-old knitting needle plant here in City Beautiful and another one was inaugurated yesterday. The new plant will manufacture sewing machine needles. Chandigarh has impressed Dr Lindher no end and he makes no bones about it. “Chandigarh is quite an European city and that is why we are here in this part of India, producing needles,” he says. “The people are good, climate is salubrious, the location of the city is excellent and there are no traffic bottlenecks. Even the power supply is also not a matter of much concern,” he says and quickly adds that this comment of his will not be liked by the people of other states. The chairman says that due to low manufacturing costs in India, the company will gain substantially in the world market. “This does not mean that we are compromising on quality. The manpower, no doubt, is cheap but additional training is imparted to them and till now they have not failed us globally. Their level is much above the average industrial worker’s level and the service provided by them is excellent,” he says. Up until 1980, the company produced knitting and warp knitting machine needles, only. Today, it produces a whole array of needle products, including the knitting, sewing, felting and tufting ones at its plants located offshore. Over 80 per cent of production is exported and the market is spread over 150 countries. Dr Lindher says the upheaval in the steel prices worldwide has not affected them because of the sheer volume of the finished product (needles) that can be made from the raw material. “Further, it’s the quality of the finished goods that is of more importance to us rather than the raw material’s price, he says. The biggest challenge that lies before us is to maintain high quality and retain profitability,” he adds. |
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LIC to unveil new products in May
Mumbai, April 3 The asset base is expected to touch Rs 3,40,000 crore and would achieve 150 per cent solvency margin for the test fiscal. “The company has shown a 12 per cent rise in issuing new policies, taking cumulative policy base past the 16 crore mark”, LIC chairman S.B. Mathur told reporters on the sidelines of a seminar on “Mumbai — global financial power house for India”, organised by Mumbai Education Trust here today. The sales performance of single premium and short-term policies is much lower and LIC has tried to make up for it by focussing on sale of unit-linked insurance policies after January 2004, he said adding, LIC sold 1,40,000 unit-linked policies earning a premium of Rs 300 crore. “The performance of Varishta Pension Bima Yojana has been satisfactory and earned a premium income of Rs 5,700 crore”, he added. The corporation is planning to launch new insurance products including those with unit-linked features in May”, he said. Life Insurance Corporation of India (LIC) will also actively bid in ICICI Bank's public issue to retain its current holding in expanded capital and aggressively participate in Initial Public Offerings (IPO) slated to hit the capital markets in 2004-05. LIC's stake in ICICI Bank stood at 7.8 per cent as on December 31, 2003.
— PTI |
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Aviation Notes
PENNY-wise pound foolish. This sadly continues to be the Airports Authority of India’s (AAI) practice at the Indira Gandhi International Airport (IGIA). Despite repeated complaints by tourists, Indian and foreign, the ‘precious paper’ is still in short supply at majority of toilets (terminal II). What is most deplorable is that the ‘valuable commodity’ is stocked by Safai karamacharis in their pockets and is provided to passengers only when demanded.
The AAI airport director in particular and other senior officials keep talking aloud for making improvement at the IGIA, but this age-old evil remains unattended to. When asked, officials have the temerity to say that attendants are allowed to stock ‘valuable paper’ to prevent pilferage. The rub of the airport is that, if there is pilferage, it is done by staff members and not by tourists. Similarly, there are appalling facilities for disabled passengers and senior citizens at both terminals. This is contrary to the concept prevailing in other countries, where disabled persons and senior citizens are accorded warm welcome. Such passengers (arriving and departing) are received with meticulous attention and escorted in and out of the airport with care. Here, unfortunately, it is a nightmare for such passengers, particularly disabled persons. The survey reveals that flooring is non-conducive for people with restricted mobility. Toilets lack in specifications while eatable counters and drinking water area are virtually inaccessible for physically-impaired persons. There are several glaring gaps in facilitation for physically-impaired persons at the airport. Only when facilities for disabled persons and others are upgraded, the airport can wear the tag of friendly ambience. Despite increase in crime from murder to thefts, there is little awakening at the airport. Touts unauthorised cabwallah still rule the roost. They continue to harass passengers. Wide-scale corruption exists from money changing to making a phone call. It is a pity that it should happen at Capital’s international airport.
Code sharing Unfazed by private airlines going international, Indian Airlines is negotiating with Sri Lankan Airlines on several inter-line arrangements, including increase in code-sharing. Now IA offers a daily Airbus A-300 connection from Chennai to Colombo. Its code sharing arrangement with the Sri Lankan Airlines will offer 60 flights a week from several points, including Delhi. During the last one decade, Sri Lankan Airlines has made tremendous progress. It is a tiny country but its aviation operations, including tourism, are a story of rags-to-riches. Its in-flight service is excellent and its plans to augment, ‘duty-free’ sales are refreshing. Colombo, for example, is one of the few countries, where the scheme of pick three liquor bottles and pay for two is in operation. The scheme is said to be a grand success. The Indian Airline does not get due support from its mentor (Government), but its mood continues to be upbeat. “We will be leaders whatever facilities may be offered to private operators” is the oft-repeated slogan of the IA officials. There is every possibility of the airline showing operating profit of about Rs 16 crore as against the operating loss of Rs 134.73 crore during 2002-03. The airline, however, estimates a net loss of Rs 41.25 crore for the year ending on March 31, 2004 as against the net loss of Rs 196.56 crore in the last fiscal. This amply proves that financial health of the national carrier is picking up. As there is substantial gain in capacity utilisation and the number of passenger carried, the airline officials feel that the mood should be: Don’t worry, be happy regardless of the competition. |
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INVESTOR GUIDANCE by A.N. Shanbhag Q: I am a Punjab Government employee and draw fixed medical allowance of Rs 250 per month. I have came to know that Department of Revenue, Central Board of Direct Taxes , vide their Circular Number 13/2002(F.No. 275/192/2002-IT(B) Dated 23-12-2002 excluded this fixed Medical Allowance from the definition of “Salary” from the F.Y. 2002-03, under the Section 17 prescribed in the proviso below Section 17(2) (vi). Is it true? — Ravinder A: I request you to read the abovementioned circular once again carefully. It nowhere deals with fixed medical allowance. VRS payments
Q: I am working in public sector financial institutions. The institution has just introduced VRS for its employees. It is mentioned in the Scheme “all payments under the Scheme shall be subject to deduction of tax at source, as per IT Act 1961, wherever applicable. The voluntary retirement amount payable to the employees will be exempt up to Rs. 5 lakh from income tax as per current IT Laws”. Apart from the payment of ex gratia under the Scheme, employees will receive other payments, such as PF, Gratuity, leave encashment up to 10 months. As I know, gratuity up to the ceiling of Rs. 3.50 lakh and leave encashment up to 10 months are tax exempt. Would you kindly inform whether leave encashment up to 10 months under the Scheme will be exempted from deduction of IT at source, as per current IT laws. I presume that gratuity payment up to Rs. 3.50 lakh is tax exempt. — Basudeb Sadhukhan A: Sec. 10(10C) exempts any amount received or receivable by an employee at the time of his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or a scheme of voluntary separation, to the extent such amount does not exceed Rs.5 lakh. Sec. 10(10AA) exempts specified amount from leave encashment at the time of his retirement whether on superannuation or otherwise; In my opinion, voluntary retirement is covered by retirement whether on superannuation or otherwise. All the same, many experts feel that CBDT will do well to issue a circular to thwart harassment of the retiring employees by the
ITOs.
Provident Fund
Payment of accumulated balance in RPF is taxable under of rule 9(1) of Schedule-IV(A) to the ITA, unless the employee renders continuous service with his employer for 5 years or the discontinuance is due to causes beyond control of the employee. This balance is also exempt if it is transferred to the employee’s individual account in any RPF maintained by his new employer or by the PF commissioner. Service under his former employer or employers shall be included in computing the total period of continuous service.
Gratuity
Any death-cum-retirement gratuity received under the pension rules (or any similar scheme) by employees of Central or state government, any local authority or defence and civil services is wholly exempt. Gratuity received under the Payment of Gratuity Act, 1972 is exempt up to a limit of gratuity paid at the rate of 15 days (last drawn) salary per year of completed service or part thereof in excess of 6 months or Rs. 3,50,000 whichever is less, provided the employee has put in continuous service of 5 years. In the case of employees of other statutory corporations and employees in the private sector to whom the Payment of Gratuity Act is not applicable, the exempt amount would be the least of the following : — Actual amount of gratuity. — Half month’s salary for number of years of service calculated on the basis of average salary for the last 10 months. — Rs. 3,50,000.
Leave Encashment
Encashment of privilege leave not availed of during the tenure of employment is taxed as salary. However, leave salary paid to legal heirs of a deceased employee is not liable to tax. Cash equivalent of leave salary payable to a government employee in respect of leave to his credit at the time of his retirement on superannuation or otherwise, is free from tax. For other employees, this exemption is subject to the least of — a) 10 months average salary (calculated on the basis of the salary during 10 months preceding the employees’ retirement on superannuation or otherwise). b) The amount of leave encashment actually received. c) Rs. 3 lakh. (Notification 123/2002 dt 31.5.02). |
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In video: Economic growth to exceed
8.1 pc, says Jaswant Singh. 
