SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI


THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S 

Public sector banks to lead march of IPOs this year
New Delhi, January 30
Public sector banks are expected to lead the march as more than 50 companies are queuing up in the capital market to raise resources of more than Rs 40,000 crore during 2005 – making it the highest ever mop-up by public issues in the history of Indian bourses.

India makes pitch for FDI at Davos
New Delhi, January 30
The government has assured the international investors’ community once again that it would soon take new policy initiatives to attract foreign investment and open up the economy.

Indian furniture in Saarc countries
Chennai, January 30
The lesser known Indian furniture industry is growing by leaps and bounds with Style Spa Furniture Limited planning to open showrooms in South Asian Association for Regional Cooperation (Saarc) countries this year.

Dubai buys $1 b stake in Daimler Chrysler
Dubai, January 30
The government of the Gulf emirate of Dubai has bought a $1 billion stake in DaimlerChrysler AG, becoming the automaker’s third largest shareholder, it said on Sunday.



EARLIER STORIES

  Panacea Biotec net soars 42 pc
New Delhi, January 30
Panacea Biotec, based near Chandigarh, has registered a net profit of Rs 23 crore, up by 42 per cent during the nine-month period this fiscal as against Rs 16 crore during the corresponding period last year.

A woman captures the picture of a Renault car of year at the Vintage Car Show - 2005 in Kolkata on Sunday morning
A woman captures the picture of a Renault car of year 1906 (2nd oldest car in India) at the ‘Vintage Car Show - 2005’ in Kolkata on Sunday morning.
Noted painter M. F. Husain and Bollywood actor Aamir Khan at an art auction in aid of Mumbai police welfare in Mumbai on Saturday night
Noted painter M. F. Husain and Bollywood actor Aamir Khan at an art auction in aid of Mumbai police welfare in Mumbai on Saturday night.
— PTI photos


MARKET UPDATE

Markets may seek higher levels
Last week, bulls were back in the reckoning as they plotted a near 4 per cent gain for the Sensex, which closed at 6419 points. The Nifty gained 83 points to settle at 2008. A substantial part of last week’s gains accrued on Friday where the indices gained close to 3 per cent.

TAX ADVICE

Rebate on pensioner’s LTC
Q: Kindly verify/clarify the following: I am a pensioner retired from PSEB. I have received LTC of Rs 7,000 as one basic pension in a block of two years as admissible to pensioners in lumpsum. Please clarify whether this amount is taxable or tax exempt?
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Public sector banks to lead march of IPOs this year
Gaurav Choudhury
Tribune New Service

New Delhi, January 30
Public sector banks are expected to lead the march as more than 50 companies are queuing up in the capital market to raise resources of more than Rs 40,000 crore during 2005 – making it the highest ever mop-up by public issues in the history of Indian bourses.

Capital market sources said the total mop-up this year would exceed the aggregate of 2004 when the total issue size was Rs 30,511 crore, a record.

Sources said the list of issues lining up to hit the markets this year covers the entire spectrum of the industrial horizon, including 11 public sector banks and other PSUs.

While Dena Bank closed its second public issue on January 29, the Bank of Baroda, Punjab National Bank, Bank of India, Oriental Bank of Commerce, Allahabad Bank, Indian Bank and Indian Overseas Bank are all planning public issues.

Sources said the banks are in need of capital for meeting the new risk norms as mandated by the Basel II accord. A rise in credit off-take is another reason for fresh capital infusion into the system.

The other banks to have conducted second public issues so far are Vijaya Bank and Syndicate Bank.

Punjab National Bank is gearing up to issue up to 5 crore shares through a public offer, while the Bank of India is planning to issue 10 crore shares. The Bank of Baroda also announced a public offer of 9.1 crore equity shares in January 2005 to raise around Rs 1,500 crore.

In addition, several public sector banks, including Development Credit Bank (DCB), Centurion Bank, DCB, HDFC Bank, J&K Bank and Yes Bank, are expected to hit the market to raise funds through public issues.

Within the financial sector, other term lending and credit institutions such as GE Capital International, IDFC, and Mahindra & Mahindra Financial are planning to come out with fresh public offerings, sources said.

The telecom sector is expected to be another big player in the IPO market in 2005. Several telecom bigwigs, including Reliance Infocomm, Hutchison, Idea, Tata Teleservices and BPL Communications, are expected to raise resources through the public issue route.

The current political fissures notwithstanding, analysts are of the opinion that PSUs across various sectors would drive the IPO boom during this calendar year as well. While in some of these cases, such as the Oil and Natural Gas Corporation (ONGC), the public issues will be follow on offers, several issues are expected to be in the nature of divestment of government equity.

In 2004, the PSUs had led the march in the IPO boom with a total of Rs 20,218 crore being mobilized through public issues of government undertakings only. This included successful and hugely oversubscribed issues of PSUs in the energy sector.

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India makes pitch for FDI at Davos
Manoj Kumar
Tribune News Service

New Delhi, January 30
The government has assured the international investors’ community once again that it would soon take new policy initiatives to attract foreign investment and open up the economy.

Union Commerce and Industry Minister Kamal Nath, who led the Indian delegation to the five-day meeting of the World Economic Forum (WEF) in Davos, Switzerland, from January 26, called upon the businessmen to invest in India without hesitation. The Indian delegation included Rajasthan Chief Minister Vasundhara Raje, CII Chairman Sunil Kant Munjhal and Narayan Murthy of Infosys.

During the annual meeting, which attracted over 700 business and political leaders, the minister indicated that the government would soon take new initiatives to tackle the growing infrastructure problems and relax labour laws.

Mr Nath said with a market of one billion people, India was the right choice for them. Noting that India intends to attract $ 150 billion FDI in the infrastructure sector, he said, “The Central Government is encouraging the states to frame their own labour laws in keeping with the specific requirements and nature of the industry.”

Referring to the bottlenecks in the infrastructure sector, the minister hinted that the government might set up a new institutional mechanism in which the Centre would invest up to 25 per cent of its total capital with the rest funded by banks and financial institutions. It would pave the way for the private sector to invest in roads, electricity and transport sectors.

Mr Nath said India was in the process of shaping its future, aided by robust exports and industrial growth rates, the demographic advantage of a large skilled population and natural advantages in areas such as information technology and pharmaceutical sector.

India is understood to have conveyed the message that despite compulsions of the coalition government, the present government has made up its mind to reduce tariffs and dismantle physical trade barriers in various sectors, provided domestic industries in their infancy were not adversely affected.

India is likely to make these concessions in the next round of negotiations at the World Trade Organisation. The issue of poverty, outsourcing, terrorism in Iraq, Iran’s nuclear ambitions and reforms in Ukraine also dominated the WEF meeting, which usually discusses the agenda of the developed world.

Encouraged by revival of most of the economies in the world, the business leaders hoped that rapid growth seen in 2004 would continue this year.

However, industrial chambers lamented that the Indian Government representation was a low-key affair. “ Had Finance Minister P. Chidambaram attended the meeting, it would have given a strong signal to the international community about India’s commitment to the economic reforms,” said an industrialist on the condition of anonymity.

Referring to China’s strong delegation, he pointed out that unlike India, China assured the investors to strengthen its banking sector by shoring up capital adequacy ratios, to open capital markets to foreign institutional investment. China has claimed that its per capita income would quadruple by 2020.

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Indian furniture in Saarc countries
Arup Chanda
Tribune News Service

Chennai, January 30
The lesser known Indian furniture industry is growing by leaps and bounds with Style Spa Furniture Limited planning to open showrooms in South Asian Association for Regional Cooperation (Saarc) countries this year.

Talking to The Tribune, Style Spa, which earlier sold its products under the brand name of Gautier, Managing Director Arun Mahajan said, “We have been exporting office furniture to the United Kingdom, France, Dubai and Mauritius and the demand is growing. We are now tapping the home furniture market in Saarc countries which has a great potential. We plan to open showrooms in these countries, including Pakistan and Sri Lanka.”

He said though exports to the UK doubled within a year and stood at Rs 8 crore, it was only 10 per cent of the total turnover of the company which is expected to touch Rs 75 crore this year and Rs 100 crore in 2004-05.

The K.K. Birla group company, which had its turnover of Rs 10 crore in 1998-99, has grown over the years and now as far as the product range goes, it has plans firmed up for furniture and home-related accessories like furnishings, table lamps, curios and artefacts.

However, exports give a quality edge because the company had to compete with international brands.

The furniture industry in India is still unorganised with only 20 per cent in the organised sector though the home furniture market in the world is worth Rs 20,000 crore and during the past three years it grew by 20 per cent per annum.

According to a World Bank study, the organised furniture industry is expected to grow by 20 per cent a year and India, Russia and Brazil will witness a boom.

Style Spa Marketing Manager K. A. Parameswaran said, “We certainly want to take advantage of the boom in domestic market. We already have 60 showrooms all over the country, including the metros, but this year we will add 25 more showrooms in places like Chandigarh, Ludhiana, Jammu, Dehar Dun, Faridabad, Lucknow, Kanpur, and many more.

Interestingly, the Style Spa factory, located at Kakkalur in Tamil Nadu, 40 km from here, has a workforce of 350 people, but none of them are carpenters as the entire production process is mechanised.

This factory is one of Asia’s largest and most modern plants manufacturing furniture. Set up at a cost of $15 million, with CNC machines, it adheres to international standards in terms of quality and has an annual capacity of 200,000 units of based panel furniture. The factory is equipped to handle all aspects of furniture production, including design with an internationally trained team.

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Dubai buys $1 b stake in Daimler Chrysler

Dubai, January 30
The government of the Gulf emirate of Dubai has bought a $1 billion stake in DaimlerChrysler AG, becoming the automaker’s third largest shareholder, it said on Sunday.

The purchase was made through the government’s wholly owned Dubai Holding company, which was set up last year to oversee the emirate’s ambitious, multi-billion dollar domestic and foreign investment schemes.

“We welcome Dubai as a long-term investor, which shows it believes in DaimlerChrysler’s potential,” a DaimlerChrysler spokesman said, confirming the deal.

Industry sources said that neither Deutsche Bank AG nor the Gulf state of Kuwait—DaimlerChrysler’s biggest and second-largest shareholders—had reduced their stakes. Dubai’s stake was about 2 percent, the sources said.

“This is a perfect time to acquire shares in DaimlerChrysler as the company begins to bear the fruits of its merger with Chrysler,” said Mohammed Al Gergawi, chief executive of Dubai Holding.

He said in a statement that Dubai Holding had faith in DaimlerChrysler’s management team.

Dubai, the trade and tourism hub of the Gulf region, set up Dubai Holdings in late 2004. — Reuters

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Panacea Biotec net soars 42 pc
Tribune News Service

New Delhi, January 30
Panacea Biotec, based near Chandigarh, has registered a net profit of Rs 23 crore, up by 42 per cent during the nine-month period this fiscal as against Rs 16 crore during the corresponding period last year.

For the third quarter ending December, revenues were at Rs 68 crore and operating profit at Rs 9 crore.

The company has achieved net sales of Rs 240 crore during first nine-month period, a growth of 47 per cent as compared to previous year’s Rs164 crore.

Operating profit during the period was Rs 49 crore as against Rs 29 crore during the corresponding period in the previous year, up by 71 per cent. Profit before tax & exceptional items during the period rose to a record high of Rs 37 crore as against Rs 22 crore during the corresponding period in the previous year, recording a growth of over 69 per cent.

The company has also announced to commission an ultra-modern formulation plant at Baddi, Himachal Pradesh in the first quarter next fiscal. The plant will meet US FDA and UK MCA requirements, involving a total project cost of around Rs 44 crore.

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MARKET UPDATE

by Lalit Batra

Markets may seek higher levels

Last week, bulls were back in the reckoning as they plotted a near 4 per cent gain for the Sensex, which closed at 6419 points. The Nifty gained 83 points to settle at 2008. A substantial part of last week’s gains accrued on Friday where the indices gained close to 3 per cent. Last Friday’s rally is also significant as the market surpassed all resistances with ease and this has pulled it back into the bull orbit from a drifting one. While the key reason for this week’s rally seems to be the continued strong December quarter numbers by the various corporates, the fact that expectations are also being built up from this year’s Budget, has perked up investor interest in stocks.

We believe that rally may extend further and the indices may test the earlier highs. Charts confirm that the immediate target for the Sensex is 6510 and if this level is broken, it may test the earlier highs.

P&G-Gillette

In a surprise move, United States’ largest consumer goods company Procter and Gamble is acquiring Gillette Co for about $55 billion in stock. The deal if approved by the regulator would create the world’s largest consumer product business overtaking Uniliver.

The deal will strengthen the bargaining power of the company with various retailers and media companies — television, magazine and newspapers — to buy billions of dollars a year in advertising.

The implication of acquisition of Gillette by P&G is not immediately clear for the shareholders of Gillette India, but Gillette India at the current price of Rs 670 may be worth buying, given the fact that an open offer would need to be made as per the Sebi guidelines.

Though only about 12 per cent of the total outstanding shares are held by non-promoters, the open offer will need to be priced extremely attractive for the public shareholders to tender their shares. As it is, the downside is capped at about Rs 632, the minimum price for open offer as per the Sebi formula.

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TAX ADVICE

by S.C. Vasudeva

Rebate on pensioner’s LTC

Q: Kindly verify/clarify the following:

I am a pensioner retired from PSEB. I have received LTC of Rs 7,000 as one basic pension in a block of two years as admissible to pensioners in lumpsum. Please clarify whether this amount is taxable or tax exempt? If it is exempted from tax, please quote the relevant Section of Income tax Act so that the same is taken into account while filing of income tax return.

— Des Raj Goyal, Patiala

A: The amount received by you, as LTC would be exempt from tax provided the conditions mentioned in Section 10(5) of the Act read with Rule 2B of the Rules are complied with. The text of the Section & Rule is given below:

Rule 2B

1. ‘The amount exempted under Clause (5) of Section 10 in respect of the value of travel concession or assistance received by or due to the individual from his employer or former employer for himself and his family, in connection with his proceeding,

(a) On leave to any place in India;

(b) To any place in India after retirement from service or after the termination of his service;

Shall be the amount actually incurred on the performance of such travel subject to the following conditions, namely:

i) Where the journey is performed on or after the 1st day of October, 1997, by air, an amount not exceeding the air economy fare of the national carrier by the shortest route to the place of destination;

ii) Where places of origin of journey and destination are connected by rail and the journey is performed on or after the 1st day of October, 1997, by any mode of transport other than by air, an amount not exceeding the air-conditioned first class rail fare by the shortest route to the place of destination; and

iii) Where the places of origin of journey and destination or part thereof are not connected by rail and the journey is performed on or after the 1st day of October, 1997, between such places, the amount eligible for exemption shall be:

(A) Where a recognized public transport system exists, an amount not exceeding the 1st class or deluxe class fare, as the case may be, on such transport by the shortest route to the place of destination; and

(B) Where no recognized public transport system exists, an amount equivalent to the air-conditioned first class rail fare, for the distance of the journey by the shortest route, if the journey had been performed by rail.

2. The exemption referred to in sub-rule (1) shall be available to an individual in respect of two journeys performed in a block of four calendar years commencing from the calendar year 1986.

Section 10(5)

‘In the case of an individual, the value of any travel concession or assistance received by, or due to, him,

(a) From his employer or former employer for himself and his family, in connection with his proceeding on leave to any place in India;

(b) From his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service, subject to such condition as may be prescribed (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or assistance granted to the employees of the Central Government:

Provided that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel’.

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BRIEFLY

MCX
Chandigarh, January 30
Multi-Commodity Exchange (MCX) has launched futures trading in jeera (cumin seeds). Indian origin jeera of FAQ variety is being offered for futures trading. With this, the number of commodities traded on the MCX platform now totals 42. — TNS

Dena Bank IPO
Mumbai, January 30
The second initial public offer (IPO) of Dena Bank evoked tremendous response and was oversubscribed by 11.5 times. "The issue closed yesterday and it has been oversubscribed by 11.5 times. The second public issue of 80 million equity shares of Rs 10 each for cash at a premium of Rs 17 aggregating Rs 2.16 billion opened on January 29. — UNI

MTNL petition
New Delhi, January 30
The Telecom Tribunal will take up Mahanagar Telephone Nigam Limited's (MTNL) petition tomorrow, challenging the new Access Deficit Charge regime which comes into effect from February1, due to which public sector undertaking is expected to lose Rs 550 crore every year. — UNI

M&M tractor
New Delhi, January 30
Farm equipment giant Mahindra and Mahindra is planning to set up its third tractor plant in the USA through its wholly-owned subsidiary Mahindra USA Inc within a year and expects to capture 10 per cent share of the $ 2 billion low capacity US tractor market in the next three years. — UNI
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