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IT companies prefer Kolkata to Gurgaon
NTPC plays down risks in prospectus
Inflation rises to 7.87 per cent
Kingfisher flights by early 2005
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Asians drive through Chicago
Tax distortions hit MP
Printing exhibition draws visitors
Tax advice
Gift from kin not taxable
Hike in US interest rates cause of concern
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IT companies prefer Kolkata to Gurgaon
Chennai, September 26 In an exclusive interview to The Tribune, West Bengal IT Minister. Manabendra Mukherjee, who is here to attend Connect 2004 – an IT conference, said, “Many IT companies, including some MNCs who have bases in Gurgaon are flocking to Kolkata.” “Out of the total IT revenue generated in the country five per cent is generated from Kolkata at present. It was only three per cent a year ago. Within the next few years it will be 15 percent,” he said. He said companies like IBM, TCS, Cognizant, Price Waterhouse Coopers, Atos Origin, Skytech, Wipro Technology, Wipro Spectramind and GE Capital – many of which have their bases in Gurgaon have expanded their operations by starting new units in Kolkata. MNCs like HSBC and AIG USA and Indian IT majors like ITC Infotech and Satyam have also taken land in the IT park at New Town, adjoining the metropolis, to locate their next development centre in Kolkata, he said. He said talks were going on with the US IT giant Microsoft, which had short-listed Kolkata as their next destination in India and negotiations were also on with Infosys. Mr. Mukherjee said at present 205 IT companies were operating in Kolkata employing 21,000 professionals. He said real estate major DLF constructions was building the largest IT park in the country in New Town which would have an floor area of 1.3 million sq ft. He felt instead of Gurgaon, Bangalore or Hyderabad, which witnessed IT revolutions during the past few years, it was cities like Kolkata, Chennai and Pune, which would be the ultimate destinations for IT companies in India because of the facilities these cities offer. Mr. Mukherjee said West Bengal is the only state, which had amended the relevant law and declared IT and ITES as a public utility services. This means strikes are banned in IT and ITES companies in a state ruled by Marxists and known for militant trade unionism.
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NTPC plays down risks in prospectus
New Delhi, September 26 The risks listed by the company in the prospectus include the weak financial position of the SEBs which account for nearly all of the company’s sales of power and the increased competition because of the Electricity Act. The NTPC sold around 99 per cent of its power to SEBs in 2001-02, 2002-03 and 2003-04 and is obliged to supply power to them in accordance with the terms of allocation letters issued by the government for each of the power stations, the company said in the prospectus. “The financial performance of the SEBs has deteriorated significantly over the last decade. The estimated commercial losses of the SEBs in fiscal 2002 (without taking subsidies into account) were approximately Rs 33,000 crore.” However, company CMD C.P. Jain said since the tripartite agreement signed among the RBI, the Centre and state governments, the company had recovered its entire dues through issuance of bonds. However, the bonds to the tune of Rs 16,41070 crore carrying a tax-free interest of 8.5 per cent per annum will start maturing only from October, 2006. The agreement also binds SEBs to issue letters of credit (LCs) to secure their payment to the NTPC, Mr Jain said. The company can open the LC if there is any sign of default by SEBs and alter the quantity of power supplied to the board in accordance with the change in the amount of payment by the boards, Mr Jain disclosed. However, the prospectus warns the investors, “We cannot assure you that the SEBs will always be required to or be able to establish LCs to secure their payments to us. There could, for example, be a change in government policy that might lead to a change in the requirement to establish LCs.” On the Electricity Act-induced competition, Mr Jain said it would only make the NTPC only stronger. The prospectus, however, says large Indian business houses such as Tata and Reliance, which have a presence in the Indian power sector, may seek to expand their operations in the sector. “We could also face competition from power generators who may have access to cheaper source of fuel than we do.” The prospectus also talks of other risks like future capital expenditure to the tune of Rs 80,500 crore during the remaining period of the Tenth and Eleventh Five Year Plans, the adverse impact of CERC’s new tariff regulations on the company’s operations and of the unbundling of SEBs, uncertainty of fuel supply. The IPO through the book-building route, for which the company has fixed the price band at Rs 52 to Rs 62 for share of the face value of Rs 10, will open on October 7 and close on October 14. It is likely to be listed on bourses in the first week of November. The company will sell 86.6 crore shares of Rs 10 face value each through the book-building route. That way, the price band of Rs 52 to Rs 62 will enable the company to raise Rs 4,330 crore at the floor price and Rs 5,369 crore at the maximum offer price.
— UNI
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Inflation rises to 7.87 per cent
New Delhi, September 26 It was 7.81 per cent in the previous week and 4.59 per cent during the corresponding week of the previous year. The inflation rate has risen despite the RBI's recent move to increase the cash reserve ratio (CRR). The RBI had hiked the CRR by 0.25 per cent to 4.75 per cent, effective September 18, and by another 0.25 per cent to 5 per cent of net demand and time liabilities of banks with effect from October 2, which is expected to suck out Rs 8,000 crore excess liquidity. The wholesale price index (WPI) for all commodities for the week ended July 17 has been revised upward to 186.6 as against 184.7, while the inflation rate was firmed up to 7.61 per cent from 6.52 per cent for the period. While the indices for fuel, power, light and lubricants remained intact at its previous week's level of 281.0 points, the index for primary articles that comprises mass-consumption products, declined by 0.3 per cent to 193.9 from 194.4 for the previous week. The index for manufactured products, which has the highest weightage of 63.75 per cent for calculating point to point inflation, increased by 0.2 per cent to 167 from 166.7 points for the previous week due to increased prices of food products, textile and machinery.
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Re appreciation key to problem
New Delhi, September 26 The government has already slashed duties on petroleum, steel and reduced base price of edible oils while the RBI has raised Cash Reserve Ratio to rein in inflation.
— PTI
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Kingfisher flights by early 2005
Kolkata, September 26 Announcing this here today at the 53rd annual convention of the Travel Agents Association of India, the UB group chairman, Mr Vijay Mallya, said it would be a low cost airline with pricing of tickets 25 to 30 per cent lower than that of conventional carriers. UB group would invest Rs 150 crore initially to run the airline, he said. "We will start operations with four new leased aircraft. Subsequently, four fully owned aircraft will be added by the end of 2005. In 2006, we will add another eight to have a fleet of 16 aircraft," Mr Mallya said. He said 15 per cent of the seats in any flight would be offered at a special excursion price which would be equal to AC II-tier train fare.
— PTI
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Asians drive through Chicago
Chicago, September 26 There are also more doctors, engineers, scientists, accountants and economists driving taxis in Chicago than in any other US city, with the exception of Washington DC, a survey has found. “They are highly qualified persons but the qualifications are different,” says Jack Nichols, manager of Flash Cab Company that operates 560 cabs. “If they are doctors back in Pakistan, there are not necessarily licensed to be a doctor here. If they are an accountant (in their native country), accounting practices here are different.” In 1990, 34 per cent of Chicago taxi drivers were foreign born. By 2000 that figure had jumped to 59 percent. “I’d say the biggest group in Chicago is Pakistani,” says John Mohberg, president of the Checker Taxi Association that has 1,200 cabs and 3,000 drivers. “Though right after 9/11 there was some apprehension among drivers, I’ve seen no long-term effect.” Many immigrants turn to taxi driving when faced with difficulty in getting their degrees recognised in the US, and in some cases because of the language barrier, says Richard Kaye, a labour economist with the Illinois Department of Employment Security. Among them is Vijay Kalhon, who has a master’s degree from Delhi University. He drives a cab owned by an Indian American but plans eventually to get teacher certification. “The best part is I am my own boss and can work flexible hours,” Kalhon says. According to the Illinois Department of Employment Security, the median income for a taxi driver is around $ 22,000 a year, assuming a 40-hour workweek and 52 weeks a year. Mohammed Khan, another Indian American cab driver, said a better estimate would be between $ 24,000 and $36,000 a year. “If you are young and can work hard, you can make more. “No one comes in and says, ‘I am going to do this permanently,” says Khan, “but the freedom of being by yourself catches hold of you.” But now cab drivers like Khan are facing another problem. Khan says fuel prices, taxes and other costs have increased dramatically since the last fare hike in 2000. Khan and fellow cabbies have petitioned the City of Chicago to hike fares.
— IANS
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Tax distortions hit MP
Bhopal, September 26 The PHDCCI president, Mr Ravi Wig, told a press conference here yesterday that the industries based in the state would be able to take up the global challenges only if immediate measures were taken to correct the taxation distortions and provide a level playing field.
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Printing exhibition draws visitors
Chandigarh, September 26 This machine automates the plate-making process, removes the need for any film and gives a speed of 13 plates per hour. For the printing units, this means faster speeds, no downtime, superior quality and no wastage of ink and paper as the plates come pre-punched and colour registration becomes much easier. Visitors to the exhibition evinced a keen interest in a unique paper manufactured by Du Pont, that cannot be torn, is water- and chemical-resistant and anything printed on its does not fade. The product Tyvek, is expected to replace kraft paper used in paper bags, conventional tags and labels used by large companies and in banners, signage and posters among others. Companies like Alfa Therm Ltd have on display products that can help save electricity and bring down energy costs for printing and packaging units. For the signage industry, Ess Dee Nutek Infinities has signage solutions and a large format printer on display for signage professionals. The exhibition concludes tomorrow.
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by Lalit Batra Hike in US interest rates cause of concern
MARKETS, finally corrected after touching a four-month high during the middle of last week. The Sensex lost 33 points for the last week to close at 5527, where as Nifty lost 12 points to close at 1730.
The much-awaited meeting of Federal Reserve raised the US interest rate by 25 basis points to 1.75 per cent. The hike in interest could be a cause of concern for the Indian stock market as FII money that has been pouring into the market could change course back to the USA. Another cause of concern is inflation, which is raising its head again. Another important event is the new tax rules that come into force on Friday. Turnover tax will replace long-term capital gains tax. Short-term capital gains tax will be applicable at a uniform 10 per cent as compared to the prevailing 10-30 per cent. Turnover tax on delivery-based trades will be levied at 0.15 per cent to be shared equally between buyer and seller. On non-delivery-based trades, turnover tax will be applied at 1.5 basis points. It will be applicable at 1 basis point in the futures and options segment. Investors willing a long-term investment can continue to invest on staggered basis in fundamentally strong companies where as short-term traders should exercise some caution due to rising inflation and crude oil prices.
NTPC The NTPC is slated to come out with its initial public offering (IPO) of 86.58 crore shares in the second week of October. The issue will be open for subscription from October 7 to 14. The price band for the public issue has been pegged at Rs 52.62. The NTPC is not just another PSU but one of the ‘navratnas’ — the nine profitable PSUs — allowed greater strategic and operational autonomy. The NTPC plans to use the money
accrued through the IPO in an aggressive expansion plan, involving the addition of 9,370 MW of generation capacity by March, 2007. The NTPC is the largest power generating company in India. As on March 31, 2004, its installed capacity represented approximately 19.1 per cent of India’s total installed capacity, and it contributed 26.7 per cent of the total power generation in the country during 2004. It is also one of the most cost-effective producers in the country with good operational management, higher utilisation rates and plants close to input sources. The NTPC’s future looks bright in the backdrop of the Electricity Act, 2003. The NTPC is priced at a discounting of 10 on the upper price band of the issue price, this leaves a lot of room for gains. (Reliance Energy is trading at a discounting of 30) for short-term investor as well. Investor can subscribe at the upper price band of Rs 62.
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