New Delhi, June 26
Encouraged by the success of the Deccan Air, the low cost, no frills airlines launched in South India recently, the Bangalore-based liquor baron Vijay Mallya is also getting ready to launch a low-cost carrier by this year-end.

Mr Mallya, who met Minister of State for Civil Aviation today to discuss the modalities, is expected to file an application for scheduled operations within the country by the next week. The UB group is already involved in aviation as a non-scheduled operator with a charter flight permit.

The UB group plans to induct eight jets in its first year of operations. However the group is evaluating various options that would include whether the aircrafts are bought outright or leased.

It is hoping to start operations with the Airbus aircraft. The company is looking at introducing A-320 aircrafts with a seating capacity of 150 to 175 passengers with Rs 150 crore being the initial project outlay.

The Bangalore-based Air-Deccan is currently the only airline in the low-cost space. The model is becoming very popular internationally with scores of new airlines emerging in almost every market in the world.

Presently, the UB group operates an HS-125 aircraft and a helicopter, apart from which Mr Mallya also owns a Boeing 727 and a Gulfstream G2 which are registered abroad.

He was also involved in an airline venture in the Maldives which used floatplanes for island-hopping. In fact, UB Air began flying as an air-taxi operator with a 15-seater Dornier operating between Bangalore and Mangalore in 1990.

Srinagar, June 26
Several big industrial houses have shown their keenness to invest in Jammu and Kashmir, and the state has already received investment proposals of over Rs 1,200 crore during the last one year.

An official spokesman said that during the last one year, 40 projects have come up at Samba and Bari Brahmana Industrial Estates near Jammu with a total investment of Rs. 103 crore, generating employment for 3,100 persons. Of these, 22 projects have been commissioned at the Industrial Growth Centre (IGC), Samba, at an investment of Rs.55 crore and 18 at Bari Brahmana with an investment of Rs 48 crore. Thirty more projects are at various stages of implementation with an investment of Rs. 56 crore.

To meet the growing demand of the entrepreneurs for allotment of land, an additional 156 acres have been acquired for the development of the second phase of prestigious industrial growth centre at Samba as the existing centre is totally sold out. The government has also identified additional land for acquisition for development of new industrial areas close to Kathua.

The projects that have come up at the IGC manufacture products like paints, leather, packaging material, cement, steel, tyres, textiles and chemicals. The leading industrial groups like Berger Paints, United Phosphorous and Bharat Boxes have established their units.

In addition, some leading pharmaceutical companies including Cadilla, Glenmark and Medley Pharmaceuticals have submitted proposals for establishing their factories in the state.

AVIATION NOTES

by K.R. Wad

China a wonderful ‘holiday hub’

INDIANS, for a change, have taken to tourism in a big way. Aware that ‘see India’ is as costly, if not costlier, as travelling abroad, they are visiting in groups to Nepal, Malaysia, Thailand, Dubai and Singapore.

China is on sell for the tourists. It offers very cheap fares as also comfortable lodging and board facilities to the tourists. Trade Wings’ Avinash Anand, for example, is taking a group of tourists for the seven-day holiday trip at the cost of about Rs 30,000 each. Those who have had a privilege to visit China feel that China is a wonderful ‘holiday hub’. The air and road facilities there are seen to be believed, according to visitors.

Whatever may be security hazards in the United States post September 11, 2001 terrorist attacks, it is till a popular destination for Indians. The USA has recently launched a travel awareness campaign to educate visitors, vacationers and traders. Conceding that the security bandobast at airports has been aggressively tightened, the CBP Commissioner Robert Bonner said: “The agency’s role is to protect the nation from terrorists while, at the same time, assist and support the movement of visitors”. The United States always has the welcome mat out to visitors.

According to CBP, most travellers will have a digital photo and two finger-prints taken by the officer. This will only add a few seconds to the interview. Be sure to follow the instructions of the CBP officer.

Many Indian tourists have, of late, complained that interviews and other formalities cause irritations and often questions are as irrelevant as they used to be asked decades ago at Indian airports by the immigration officers. In India, the system has been simplified, while in the USA, the system has been rendered complex. One terrorist attack has brought about enormous change in body language of Americans, posted at airports.

Jet Airways Chief

Jet Airways chairman Naresh Goyal has been elected to the Board of Governors of the International Air Transport Association (IATA) for a two-year term until June 2006. This is the first time the private carrier’s official has been elected to the IATA’s Board of Governors.

Jet Airways has a fleet comprising 33 classic and Next-Generation Boeing 737-400/700/800/900 aircraft and eight modern ATR 72-500 tarbo-prop aircraft. The airline operates over 255 flights daily to 43 destinations, including two international destinations to Colombo and Kathmandu. Along with Nepal Tourism Board, Jet Airways has launched promotional tours to Himalayan kingdom.

Air-India Express

Air India Express, like Air-India Charters, will be new subsidiary company to be christened in April 2005. This is what the Minister of State for Civil Aviation Praful Patel has reiterated. “This will cater to the needs of the low budget travellers keeping in mind the number of people travel to the Gulf for employment”, said Patel.

INVESTORS GUIDANCE

by A.N. Shanbhag

Encash deep discount bonds

Q: As you may be aware that SSNNL (a Gujarat PSU) intends to early redeem their Deep Discount Bonds although they do not enjoy any call option as per terms of issue. For the purpose SSNNL has called for a meeting to push through a special resolution with consent of 75 per cent of the Bond Holders. In this regard, kindly clarify on the following:

Is Deep Discount Bond issued in the form of Promisory Notes not a Negotiable Instrument?

Can the promisor take a unilateral decision to pay less than the promised amount and get discharged from liability by paying a lower sum than that mentioned in the Promisory Note? As we know, the terms and conditions of a negotiable instrument can not be altered except with the mutual consent of all the parties to the instrument. Each Bond being a separate Promisory Note, does this rule not apply to every single Deep Discount Bond independently?

Does a holder, who has not consented to any proposed change, get affected by the fact that majority of other holders of similar bonds have consented for the proposed change?

— G. K. Kochhar

Ans: I feel that the promises given under some certain circumstances do not remain promises when the circumstances change radically. If someone files a public interest litigation against the company and make the state government of Gujarat a co-obligant, he may win the case but lose the money. Leave alone SSNNL, most of the state governments are defunct and are in no position to bear this heavy burden of interest. In any case, the law appears to be on the side of the company. If it were not so, UTI would not have been allowed to foreclose some of its schemes which carried promised returns.

I strongly recommend that the holders of these Deep Discount Bonds should vote for the proposal and collect cash now instead of waiting for maturity and lose not only the principal but also the deep discount.

ULIP a growth scheme

Q: My ULIP of UTI matured during 2003-04 and UTI sent me cheque of payment alongwith calculation sheet showing LTCG and STCG. Is STCG which includes bonus paid by UTI in july 2003 and in November 2003 on maturity, taxable. I understand that income from UTI is not taxable. In case taxable then at which rate .

— T.C. Jain

A: ULIP has become a pure-growth scheme and therefore, for the purpose of taxes, the provisions of capital gains, long-term as well as short-term will be applicable.

PPF accounts

Q: I have a Four PPF A/c. mine, my wife’s, my daughter’s and of my minor son. I have certain plans to deposit Rs. 70,000 in first three A/c during current F.Y.

I have my HUF too, filing regularly IT returns. From last FY there were taxable income and need arose to make deposit in PPF to take benefit of Sec 88 Rebate.

I intend to deposit from my HUF Bank A/C directly in my minor son’s PPF Deposit A/c Rs 70,000. My stand with SBI Santacruz West Branch is that this action is perfectly legal and they should accept deposit in my minor son’s A/c irrespective of the fact that, with clubbing provisions I have completed deposit in my individual capacity maximum permissible amount of Rs 70,000, which bankers are refusing to accept.

I understand that Section 88(2)(v) read with Section 88(4)(a) of Income Tax act, deposit made by a HUF, directly in the A/c of Co-partners is eligible for tax rebates. Even PPF Scheme Rule 9 confirms it ( Vide page 23 of A.N. Dureja’s book on PPF Scheme.)

Therefore I summarise as under, which please confirm whether correct view ?

In minor’s PPF A/C., Three category of the person can deposit the amount, i.e. father, mother and HUF where he is a member.

While HUF can deposit amount directly in minor a/c and claim tax rebates and all agencies operating PPF Scheme are bound to accept deposit.

Is it an obstacle when father and natural guardian operate minor’s A/c in individual capacity?

Can each person separately (including minor — may be more than one ) can deposit Rs 70,000 in each of PPF Deposit A/c ( purely for investment point of view and not for claiming rebate u/s 88) including HUF as separate legal entity.

In my case, can deposits be made in total five PPF Deposit A/c.

(i.e. Three adult members, one minor son and one HUF).

— Vijay Mehta

A: The ceiling on contribution to your minor children’s PPF accounts, irrespective of the source of contribution aggregated with your account can be only Rs 70,000.

Company shares

Q: I am having shares of following companies. I was away on foreign assignment for four years. Meanwhile the said shares are neither quoted/traded nor any information is available about companies. Kindly guide me how I can dispose them off/ can book losses against them. I had checked with one or two share brokers but they were not in a position to sell them.

Parekh Micro Electronics India Ltd — 500 shares

Niwas Spinning Mills Ltd Sholapur — 1025 shares

Premco Global Ltd Mumbai — 200 shares

Asia Pack Ltd , Udaipur —100 shares

Alpine Industries (Alpine Solvex), Indore — 800 shares

Walker India Ltd Mumbai — 500 shares

— Vilas Buch

A: I am afraid, I am not in a position to be of assistance to you. You cannot book the losses unless someone buys the shares and there are no buyers. Even if there are buyers, you may find it difficult to transfer these shares in the name of the buyer. Every member of the community of shareholders suffer from such dud shares and the government is doing nothing to rescue such investors.

New Delhi, June 26
McDowell and Company, part of liquor major UB Group, has said it posted record profit before tax last fiscal at Rs 39.05 crore, an increase of 34 per cent over the previous year’s Rs 29.06 crore, and declared a dividend of 20 per cent for its shareholders.