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THE TRIBUNE SPECIALS
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B U S I N E S S

Corporate tax rate cut in new Budget likely
New Delhi, January 28
The government is actively considering a series of fiscal reforms in this year’s Budget (2005-06), including a possible reduction in corporate income tax rates to 30 per cent from the existing level of 35 per cent.


Editorial: A new track

Private PFs can invest in equity
New Delhi, January 28
Private provident funds (PFs) have been allowed to invest five per cent of their assets in shares of blue-chip companies and 10 per cent in corporate debts and equity-oriented mutual funds from April 2005.

Sensex up by 180 points
Mumbai, January 28
Buoyed by excellent performance by select corporates, the market today rallied sharply and ended 180 points up, extending the winning streak to third straight session on the back of across-the-board buying support from institutional investors and operators.

A-I, IA to launch IPO next fiscal
New Delhi, January 28
A day after the government decided to hold back sale of equity in Bhel and Maruti and set up a National Investment Fund from the proceeds of disinvestments, public sector carriers Air-India (A-I) and Indian Airlines have been told to start working towards the launch of an IPO.

Ram Sharma Varanasi Oracle eyes SMEs in North India
Chandigarh, January 28
Oracle Corp, the $ 10.3 billion software giant, is eyeing small and medium enterprises (SMEs) in North India to expand its customer base. “Nearly 70 per cent of Indian companies fall in the SME segment, which is showing 15 per cent year-on-year growth.

Safexpress unveils super hub on NH 1
Chandigarh, January 28
To tap the growing market in the Northern region, Safexpress, India’s leading logistics company, today unveiled its state-of-the-art super hub in Ambala, 50 km from here, on National Highway 1.

Bank account
PNB registers 30 per cent jump in profit
Ludhiana/Chandigarh, January 28
The Punjab National Bank (PNB) today declared that it would pay a 30 per cent interim dividend. The bank, which declared its Q3 results today, disclosed it had recorded a 29.4 per cent increase in its net profits for the nine months ended December 2004 in comparison to net profit in the corresponding period last year.




Teen moguls Mary-Kate (R) and Ashley (L) Olsen have taken full control of their billion-dollar media empire a few years ahead of schedule by buying out the attorney who helped turn them into global icons, the parties said on Thursday. Robert Thorne said the 18-year-old twins approached him to buy his ‘very substantial minority stake’ in their privately held vehicle Dualstar LLC, where he had risen to CEO during a lucrative
Teen moguls Mary-Kate (R) and Ashley (L) Olsen have taken full control of their billion-dollar media empire a few years ahead of schedule by buying out the attorney who helped turn them into global icons, the parties said on Thursday. Robert Thorne said the 18-year-old twins approached him to buy his ‘very substantial minority stake’ in their privately held vehicle Dualstar LLC, where he had risen to CEO during a lucrative 
15-year relationship. — Reuters

EARLIER STORIES

 

Corporate results
Essar Steel moves from red to black

Mumbai, January 28
Essar Steel Ltd has posted a net profit of Rs 197.54 crore for the third quarter ended December 31, 2004, as against net loss of Rs 21.74 crore in Q3 of FY-04.

  • i-flex

  • Tata Infotech

P&G to acquire Gillette
New York, January 28
The United States’ largest consumer goods company Procter and Gamble is acquiring Gillette Co. for about $ 55 billion in stock to create the world’s largest consumer product business overtaking Unilver, media reports said here.

Panel on ethanol-petrol blending set up
New Delhi, January 28
After deferring the project of blending ethanol in petrol due to poor sugarcane crops, the government has now decided to set up a task force to implement the project.

Joshi Autozone to set up Maruti driving school
Chandigarh, January 28
Chandigarh-based Maruti Dealer Joshi Autozone has been selected by Maruti to set up the country’s first Maruti Motor Training School.



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Corporate tax rate cut in new Budget likely
Gaurav Choudhury
Tribune News Service

New Delhi, January 28
The government is actively considering a series of fiscal reforms in this year’s Budget (2005-06), including a possible reduction in corporate income tax rates to 30 per cent from the existing level of 35 per cent.

A cut in corporate income tax rates to 30 per cent would integrate it with the peak rate of personal income tax, which also stands at 30 per cent. This would be in line with the recommendations made by the Kelkar Task Force.

However, the reduction in tax rate is expected to come along with fewer exemptions. The thinking within the government is that while a reduction in tax rates would improve tax compliance, removal of exemptions will eliminate tax-induced distortions. It would also widen the tax base and curb evasion.

A cut in personal income tax rates appears unlikely as of now, though officials maintained that there was some scope for a cut in these rates provided the present exemption limit was reduced. A phased reduction in income tax exemption limit would not, however, be a politically correct decision at this point of time, sources said.

Currently, the corporate tax rate in India is 35 per cent for domestic companies and 40 per cent for foreign companies. In addition, a surcharge at the rate of 2.5 per cent thereon is also payable plus the 2 per cent education cess.

The effective tax rate for domestic companies thus comes to 36.6 per cent and for foreign companies it is 41.8 per cent.

This is significantly higher than the prevailing corporate income tax rates of most developed countries which are in the range of 25 to 30 per cent. The average corporate tax in Asean countries is around 25 per cent.

However, this year’s Budget is unlikely to contain any proposal to levy a common goods and service tax (GST) as recommended by the Task Force. The panel had suggested that the long-standing distortion in terms of differential treatment of manufacturing and services can be eliminated by the imposition of a common goods and service tax (GST).

Although the Kelkar Task Force is being consulted as a major guide-book, the implementation of a common GST may have to wait as the government is keen on first establishing a comprehensive Vat regime in the country.

A full-fledged Vat system is scheduled to come into force from April 1 this year. The success of Vat will determine the timing of imposition of GST, sources said.

This year’s Budget will primarily focus on widening the tax base, bringing more and more people under the tax net. At present, there are only three crore taxpayers in the country in a population of more than a 100 crore.

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Private PFs can invest in equity
Tribune News Service

New Delhi, January 28
Private provident funds (PFs) have been allowed to invest five per cent of their assets in shares of blue-chip companies and 10 per cent in corporate debts and equity-oriented mutual funds from April 2005.

As per the revised norms, these funds would be permitted to invest in term deposit receipts of the public sector banks up to three years as against the present limit of less than a year.

Further, the said funds can invest in the bonds of the public financial institutions and public sector companies if these are rated as investment grade by two credit rating agencies.

It has also been decided to allow investment in Collateral Borrowing and Lending Obligations (CBLO) issued by Clearing Corporation of India Limited and approved by the Reserve Bank of India (RBI).

An amount up to 5 per cent of the total portfolio has also been allowed to be invested in shares of companies that have an investment grade debt rating from two credit rating agencies and up to 10 per cent in the debt instruments bearing investment grade rating and/or equity-linked scheme of mutual funds regulated by Securities and Exchange Board of India (Sebi), an official statement said.

The maximum exposure of any fund to investment in any gilt fund has been restricted to 5 per cent of its portfolio at any point of time.

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Sensex up by 180 points

Mumbai, January 28
Buoyed by excellent performance by select corporates, the market today rallied sharply and ended 180 points up, extending the winning streak to third straight session on the back of across-the-board buying support from institutional investors and operators.

Today’s is the biggest single session gain since May 18, 2004, when the sensex had risen by 371.86 points.

Prompted by better-than-expected third quarter working results announced by State Bank of India, the sentiment was aided further on continued flow of excellent Q3 working as well as low inflation rate.

The BSE Benchmark 30-share Index opened moderately higher at 6245.26 and soared to the intra-day high of 6432.58 before ending the day at 6419.09 as against yesterday’s close of 6239.43, a net rise of 179.66 points or 2.88 per cent.

Foreign Institutional Investors (FIIs), which have been net sellers during the new calendar year, were believed to have rolled over positions to the F&O segment while making aggressive purchases at lower levels in the spot market.

Led by a surge in stock prices in almost all the segments, the National Stock Exchange index (Nifty) today crossed the psychological 2000 points mark after a gap of over two weeks.

The Nifty was up by 48.50 points, or nearly 2.45 per cent, at 2003.50 in afternoon trading. It had last crossed the 2000 mark at 2016.75 on January 10. — PTI

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A-I, IA to launch IPO next fiscal
Tribune News Service

New Delhi, January 28
A day after the government decided to hold back sale of equity in Bhel and Maruti and set up a National Investment Fund from the proceeds of disinvestments, public sector carriers Air-India (A-I) and Indian Airlines have been told to start working towards the launch of an IPO.

The two public sector airlines have been asked to prepare for their initial public offers by the next fiscal. This has primarily been done to fund their fleet acquisition programmes and to enhance the debt-equity ratio.

Civil Aviation Minister Praful Patel said here today that the two airlines have been asked to work towards this end. “It will take some time and the two airlines could launch the IPO in the later part of 2005-06,” he said.

At the same time, it is exploring the option of private placement of their equity to financial institutions or domestic private equity investors to benchmark a valuation for both.

He said specifically that the proceeds of the IPO would be used by the two airlines to finance their fleet expansion plans.

The plan for the IPO for the two airlines comes after the launch of the Jet Airways IPO. Low-cost carrier Air Deccan has also announced plans to go ahead with its IPO by September 2006.

“We need to finance the growth of both carriers. How long can we depend on debt financing? We will have to dilute stake in them in the long term,” Mr Patel said.

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Oracle eyes SMEs in North India
Peeyush Agnihotri
Tribune News Service

Chandigarh, January 28
Oracle Corp, the $ 10.3 billion software giant, is eyeing small and medium enterprises (SMEs) in North India to expand its customer base.

“Nearly 70 per cent of Indian companies fall in the SME segment, which is showing 15 per cent year-on-year growth. It is estimated that 3 per cent of their budget would be allocated towards upgrading their IT products and services,” Mr Ram Sharma Varanasi, General Manager, Sales, Oracle India, said on the sidelines of a press conference here today. The conference focussed mainly on the promotion of Oracle 11i and e-business special edition, the software suites commercially packaged for SME customers.

Talking to TNS, he said with the opening up of the textile sector, he saw immense growth opportunities in the North, especially Ludhiana and Jalandhar. “Besides the textile sector, we plan to tap the auto segment of Punjab and pharma units at Baddi,” he said and added that the North comprises 25 per cent of their market, while ruling out any possibility of opening up of a development centre in North India in immediate future.

“For industry specific requirements, we have a tie-up with GTL and Sonata. The products are configured according to the customer needs,” he said. The price of the SME product suite varies from Rs 16 lakh to Rs 26 lakh depending upon the requirements and specifications.

Mr Varanasi added that India and China are the two countries that are emerging as major SME growth drivers in the Asia-Pacific region.

Oracle India that has more than 6,200 customers across the government and private sectors plans to up the base. “As many as 7,500 potential SMEs have been identified across whole of India. We are in the process of tapping them,” Mr Varanasi said.

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Safexpress unveils super hub on NH 1
Tribune News Service

Chandigarh, January 28
To tap the growing market in the Northern region, Safexpress, India’s leading logistics company, today unveiled its state-of-the-art super hub in Ambala, 50 km from here, on National Highway 1. With an investment of Rs 6 crore, this 37th hub of the company will serve as a key nerve centre for its operations in the states of Jammu and Kashmir, Punjab, Himachal Pradesh, Uttaranchal, Chandigarh and Haryana.

Talking to mediapersons, Capt Aman Bhalla, Vice-President (Operations), said the hub has been opened here as lot of industrial and business developments were taking place in this region of HP and Uttaranchal due to the Central government declaring it as a tax holiday zone. Offices have recently been opened in Baddi, Parwanoo and Shimla to cater to the requirements of the companies and warehouses, he added. Plans are to expand in Jammu and Kashmir by opening offices in Samba, Kathua and Nagrota.

The super hub, with a floor capacity of 1,20,000 sq ft, has a cargo handling capacity of over 300 tonnes per day. He claimed that the 23 docking platforms would, in turn, significantly reduce the turnaround time for consignments from in and out of Ambala to the other part of the country. This upgraded facility will serve all districts and Union Territories across the country, in an average surface transit time of 2.32 days and by air mode in 1.14 days from Ambala.

The company claims a 40 per cent market share in North India and targets a 40-45 per cent growth every year. A major part of the turnover comes from the pharmaceutical companies, IT and manufacturers of readymade garments, Mr Bhalla said.

As an innovation, Safexpress 3000-strong national fleet now has GPS-based vehicle tracking system, which would provide “on-line real time” tracking of its vehicles across the country.

Customers also have access to the Safexpress ever to track consignments with high degree of mobility using the SMS facility. It also boasts of a Radio Trunking technology through V-Sat and satellite communication that monitor route vehicles by a Global Positioning System (GPS).

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Bank account
PNB registers 30 per cent jump in profit

Ludhiana/Chandigarh, January 28
The Punjab National Bank (PNB) today declared that it would pay a 30 per cent interim dividend. The bank, which declared its Q3 results today, disclosed it had recorded a 29.4 per cent increase in its net profits for the nine months ended December 2004 in comparison to net profit in the corresponding period last year.

The bank stated that its net profits during this period were Rs 1,049.49 crore in comparison to Rs 811.32 crore in the corresponding period of previous year.

As per the reviewed results, the bank could achieve the above level of net profit after making necessary provisions of Rs 1,131 crore towards wages revision, loan losses, depreciation on investment, standard advances, income tax, wealth tax, etc. as compared to Rs 1,610 crore last year.

Mr S.S. Kohli, CMD of PNB, while disclosing the results said the board had decided to pay a 30 per cent interim dividend.

He informed that while operating profit for this period was Rs 2,180.23 crore compared to Rs 2,421.63 crore in the corresponding period last year, the Earning Per Share (EPS) stood at Rs 39.56 as on December 31, 2004, in comparison to Rs 30.58 on December 31, 2003. Capital Adequacy Ratio was 13.11 per cent.

SBI

Aided by higher credit offtake and lower cost of deposits, State Bank of India (SBI) has posted a 19.57 per cent rise in net profit at Rs 1,099.35 crore for the quarter ended December 31, 2004 as compared to Rs 919.44 crore for the corresponding quarter previous fiscal.

Total income rose to Rs 10,267.07 crore for the third quarter ended in December 31, 2004 as against Rs 8,559.34 crore in Q3 of 2003-04, SBI said in a press note here today.

Net interest income recorded a 31.99 per cent growth in Q3 over the same quarter last year due to higher level of advances and lower cost of deposits, the release said.

The net profit and total income for the nine months ended December 31, 2004 stood at Rs 3,239.64 crore (Rs 2,808.54 crore in April-December 2003) and Rs 29,209.75 crore (Rs 28,351.56 crore), respectively.

BoP-Punjab pact

The Bank of Punjab today entered into a tie-up with the Government of Punjab to extend the retail finance facility to the state government employees for purchase of homes and cars at a discounted rate of interest. The bank is targeting advances of Rs 300 crore under this scheme.

The BoP is also putting in place systems for providing this facility to the employees stationed outside Punjab.

A memorandum of understanding was signed today by Mr K.R. Lakhanpal, Principal Secretary-Finance, Punjab, and Mr Tejbir Singh, Executive Director, Bank of Punjab. To facilitate quicker processing, the BoP has nominated a nodal branch at Sector 35, Chandigarh, with dedicated staff. — TNS, PTI

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Corporate results
Essar Steel moves from red to black

Mumbai, January 28
Essar Steel Ltd has posted a net profit of Rs 197.54 crore for the third quarter ended December 31, 2004, as against net loss of Rs 21.74 crore in Q3 of FY-04.

The total income in the third quarter was up by 53 per cent at Rs 1,428.95 crore from Rs 931.58 crore in October-December 2003, a company press note said here today.

The total sale of steel for the quarter ended December 2004 stood at 5.24 lakh tonnes (5.02 lakh tonnes in Q3 of 2003-04), it said.

The domestic sales stood at 3.60 lakh tonnes (3.56 lakh tonnes) while overseas shipments rose to 1.64 lakh tonnes for Q3 of current fiscal from 1.46 lakh tonnes in same period last year.

The raw material prices and freight rates remained firm in the quarter under review. The domestic and international demand for steel also continues to remain firm, it added.

i-flex

Revenue growth coupled with improved operating performance helped i-flex Solutions Ltd to report a rise in net profit at Rs 45.4 crore during the third quarter ended December 31, 2004, on a consolidated basis, compared to Rs 35.5 crore during the quarter ended December 31, 2003.

Total income, on a consolidated basis, for the reporting quarter rose to Rs 300 crore from Rs 208.3 crore during the Q3 of 2003-04, i-flex said in a press note here today.

Tata Infotech

Tata Infotech Ltd has posted a 12.6 per cent growth in net profit at Rs 20.23 crore for the quarter ended December 31, 2004, as compared to Rs 17.96 crore for the corresponding quarter of the previous year.

Announcing the results, the company said its total income went up 33.8 percent to Rs 200.78 crore for the quarter ended December 31, 2004 as against Rs 149.96 crore in the same period last year. — Agencies

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P&G to acquire Gillette

New York, January 28
The United States’ largest consumer goods company Procter and Gamble is acquiring Gillette Co. for about $ 55 billion in stock to create the world’s largest consumer product business overtaking Unilver, media reports said here.

If approved by regulators, the acquisition would couple Gillette’s Duracell batteries, Right Guard deodorant, Oral-B dental products and razor brands with P&G’s Tide detergent, Clairol and Pantene hair products and Folgers coffee.

Several newspapers, including the New York Times and the Wall Street Journal, reported the deal on their websites late last night.

Quoting executives close to the deal, the New York Times said P&G will pay 0.975 P&G shares for each Gillette share, valuing the offer at about $ 54 a share. — PTI

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Panel on ethanol-petrol blending set up
Tribune News Service

New Delhi, January 28
After deferring the project of blending ethanol in petrol due to poor sugarcane crops, the government has now decided to set up a task force to implement the project.

The project is aimed at bringing down India’s dependence on oil imports that has now crossed 25 per cent of the total import bill.

The task force would be headed by M.S. Srinivasan, Additional Secretary in the Ministry of Petroleum and Natural Gas, and will have representatives of the ministries of Agriculture and Cooperation, Food and Public Distribution, Chemicals and Petrochemicals, Panchayati Raj, and the Planning Commission, a senior official said.

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Joshi Autozone to set up Maruti driving school
Tribune News Service

Chandigarh, January 28
Chandigarh-based Maruti Dealer Joshi Autozone has been selected by Maruti to set up the country’s first Maruti Motor Training School.

The project will take off in three or four weeks. The school will have state-of-the art training facilities based on modules comprising classrooms, on the road and training on most advanced simulators imported from France.

The training cars will be latest model Altos, WagonRs and Maruti 800s fitted with safety devices and dual control systems offering world class training experience.

The school will cater to students, housewives, industry and corporates and help first time car buyers to upgrade their driving skills.

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BRIEFLY


Mitsubishi Motors Corporation newly-appointed President and Chief Operating Officer Osamu Masuko speaks during a news conference in Tokyo on Friday following an announcement of their business revitalisation action plan. Ailing automaker Mitsubishi Motors said it had secured financial aid worth 270 billion yen ($2.63 billion) from the Mitsubishi group, its second rescue package in eight months.
Mitsubishi Motors Corporation newly-appointed President and Chief Operating Officer Osamu Masuko speaks during a news conference in Tokyo on Friday following an announcement of their business revitalisation action plan. Ailing automaker Mitsubishi Motors said it had secured financial aid worth 270 billion yen ($2.63 billion) from the Mitsubishi group, its second rescue package in eight months. — Reuters

Canon profit
Tokyo, January 28
Canon Inc. posted a 19.7 per cent rise in operating profit for 2004 on Friday on strong sales of colour copiers, laser printers and digital cameras and forecast record earnings for a fifth straight year. Canon, which runs neck-and-neck with Sony Corp. for the top spot in the digital camera market, also said it expects group operating profit to rise 5.4 per cent to 573 billion yen ($5.57 billion) in 2005, helped by healthy demand for colour copiers and printers. — Reuters

Greatest Briton
London, January 28
Tim Berners-Lee, the man who invented and then gave away the World Wide Web, was picked on Thursday as epitomising the Greatest of Britishness — a quality finance minister Gordon Brown said was unique. His selfless act added to modesty and ingenuity were deemed by a panel of judges to make Berners-Lee the Greatest Briton of 2004 in the first of what organisers said they hoped would become an annual event. — Reuters

Ambani opts out
New Delhi, January 28
Reliance Industries Chairman Mukesh Ambani has opted out of the 50-member business delegation to World Economic Foum in Davos due to his “preoccupation”. Ambani was part of the 50-member CEOs delegation led by Commerce and Industry Minister Kamal Nath at the forum’s meeting. — PTI

Inflation drops
New Delhi, January 28
The annual rate of inflation dipped for the sixth week in a row to 5.42 per cent for the week ended January 15, 2005 in the wake of lower prices of fuel and food products. The wholesale price index, however, remained unchanged at the previous week’s level of 188.6. — UNI

NTPC
New Delhi, January 28
State-run National Thermal Power Corporation today said it will borrow Rs 1,000 crore from Life Insurance Corporation during the fourth quarter of the current fiscal to fund its capital expenditure requirements. While Rs 500 crore borrowing will be in the form of term loan, the balance half will be in the form of bonds by way of private placement, NTPC informed the Bombay Stock Exchange. — PTI

Airtel in J&K
Srinagar, January 28
Airtel today launched its prepaid mobile telephone service in Jammu and Kashmir. The prepaid sim card has been specially priced at Rs 149 for the customers in the state and comes with pre-activated STD and ISD facilities, the company said in a statement here. — PTI

Bath fittings
Kasauli, January 28
Ess Ess bath fittings and accessories has launched a new range of products at the Kasauli Resorts here. The products include quarter-turn-convenient taps and sensors especially manufactured for preserving water and creating a hygienic environment. — OC
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