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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

CERC threatens to cancel licences of Tata, Reliance
New Delhi, July 3
Upset over the non-compliance of licence agreement for inter-state trading in power, the Central Electricity Regulatory Commission (CERC) has threatened to cancel the licences of 13 companies, including Tata Power, Reliance Energy, NTPC and PTC India.

Incentives lure industry to HP
Shimla, July 3
Industrial houses are making a beeline for Himachal Pradesh eversince the Centre sanctioned a package of incentives to accelerate the pace of industrialization in the hill state.

Bentley’s Rs 1.5 cr car
New Delhi, July 3
Charting out long term plans for India, premium luxury car manufacturer Bentley Motors today said it would focus on the top-end market here.

Models at the launch of the new Bentley Continental Flying Spur car, the fastest four-door vehicle in the world with a top speed of 312 kmph, in New Delhi on Sunday

Models at the launch of the new Bentley Continental Flying Spur car, the fastest four-door vehicle in the world with a top speed of 312 kmph, in New Delhi on Sunday. — Tribune photo by Rajiv Tyagi

Indian firms going global: study
New Delhi, July 3
The Indian corporate sector has acquired as many as 26 foreign firms whereas foreign corporates could lay their hands only on 20 Indian firms in the first quarter of
2005-06.


Child models present creations by Japanese fashion designer Yohji Yamamoto in Paris.
Child models present creations by Japanese fashion designer Yohji Yamamoto in Paris.
— AP/PTI

EARLIER STORIES

 

Nalco to make vision document
New Delhi, July 3
Allaying aside the recommendation of the Finance Ministry to consider disinvestment of the government stake in public sector profit- making units, the Mines Ministry has called upon the state- owned Nalco to prepare a vision document for the aluminium industry for the next 20 years.

Agri exports touch Rs 27,000 cr
New Delhi, July 3
Agriculture exports from India have registered an increase of over 11 per cent in the last fiscal while gems and jewellery exports marked a rise of 29 pc.

Market Update

It’s time to book profits
Sensex has now gained for nine straight weeks. Short covering in the futures and options segment ahead of the expiry of June, 2005, derivatives contracts and the surge in FII inflow were the main reason for the gains in the indices.

  • IL & FS Investsmart

Tax advice

Register educational society for getting tax exemption
Q. You mentioned in one of your answers that an educational trust has to be registered with the income tax authorities to claim exemption.

  • Form 15G

  • No tax on gift

  • Tax on FDs

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CERC threatens to cancel licences of Tata, Reliance

New Delhi, July 3
Upset over the non-compliance of licence agreement for inter-state trading in power, the Central Electricity Regulatory Commission (CERC) has threatened to cancel the licences of 13 companies, including Tata Power, Reliance Energy, NTPC and PTC India.

The CERC has rapped the trading companies for not submitting the required information every quarter to the power regulator and has now issued notices to the companies asking them why their licences should not be revoked for the non-compliance of licence conditions.

As per the licence agreement for inter-state trading in electricity, all companies have to submit quarterly information to the regulator as well as to the regional load dispatch centre and the regional electricity board.

However, the regulator observed that these trading companies had not been submitting this information regularly to the authorities and asked for their explanations. The commission has given the companies time till July 15 to file their replies.

The companies include big guns such as Tata Power Trading Co Ltd, Reliance Energy Trading Co Ltd, PTC India, NTPC Vidyut Vyapar Nigam Ltd and MMTC Ltd.

The regulator has also issued notices to Adani Exports Ltd, DLF Power Ltd Jindal Steel & Power Ltd, Sumer Drganis Pvt Ltd, Lanco Electricity Utility Ltd, GMR Energy Ltd, Chhattisgarh Electricity Company Ltd and Karam Chand Thapar & Bros Ltd.

The CERC has also questioned Delhi-based PTC India (formerly Power Trading Corporation of India Ltd) and Ahmedabad-based Adani Exports Ltd over the high trading margins being obtained by them. While trading margins in case of PTC was 30 paise per unit (kilowatt hour), for Adani it was even higher at 36 paise per unit.

Interestingly, the CERC has so far issued trading licences to only 14 companies. The only company that has been left is Bangalore-based Subash Kabini Power Corporation Ltd.

PTC submitted the information but did not disclose the purchase and sale prices of electricity, stating that this was sensitive information and could not be shared. But as per the licence, all trading companies were required to disclose the information. — PTI

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Incentives lure industry to HP
Tribune News Service

Shimla, July 3
Industrial houses are making a beeline for Himachal Pradesh eversince the Centre sanctioned a package of incentives to accelerate the pace of industrialization in the hill state.

The state, being increasingly viewed as an alternative investment destination, has succeeded in attracting 5195 new units with an investment of about Rs 10931 crore over the past two years which will help create employment opportunities for over 1,76,000 persons.

The industrial infrastructure is being strengthened to meet the demands of new units.

A sum of Rs 30 crore is being spent for the purpose. An amount of Rs 2.46 crore has been provided to the Himachal Pradesh State Electricity Board for augmenting power supply to growth centre phase-III in Raja-ka-Bag in Kangra. 

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Bentley’s Rs 1.5 cr car

New Delhi, July 3
Charting out long term plans for India, premium luxury car manufacturer Bentley Motors today said it would focus on the top-end market here.

“We are relatively new here in India but have a long term plan to stay in the Indian market and for that we are focusing on our high-end market,” Bentley Motors Regional Director (Middle East, Africa and India), Ian Gorusch said here.

The company today launched its latest offering “Bentley Continental Flying Spur”, coming at a price tag of Rs 1.7 crore.

Bentley, which sells cars only on a regional allocation basis, plans to launch the convertible variants of Arnage and Continental GT later next year, Mr Gorusch said. He, however, said the company was not looking at bigger allocations for India.

Out of total global sales of 5700 cars last year, India contributed just six units of its model Arnage.

With the launch of the Continental Flying Spur, the company has three models in its portfolio here in India starting from the Rs 3 crore Arnage, and the Continental Series—GT and Flying Spur, both of which are tagged at Rs 1.7 crore.

Being delivered as complete imported units, Mr Gorusch said its delivery would take about six months from the date of order in India. — PTI

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Indian firms going global: study
Tribune News Service

New Delhi, July 3
The Indian corporate sector has acquired as many as 26 foreign firms whereas foreign corporates could lay their hands only on 20 Indian firms in the first quarter of 2005-06. According to Assocham Eco- Pulse (AEP) study, cash-surplus domestic corporates have gone overseas and bought some of the best-known transnational companies (TNCs) in their mergers and acquisitions bid, said chamber president, Mr Mahendra K. Sanghi, while releasing the study.

There were 110 mergers and acquisition deals across sectors like FMCG, pharmaceuticals, metal, food and beverages, banking, financial services, insurance, media, engineering.

“The quarter ending June 2005 saw some major deals: Deccan Chronicle acquired 67 per cent stake in the Asian Age, Matrix Laboratories acquired stake in Belgium-based Docpharma, one of the largest-ever acquisition done by any Indian pharmaceutical company”. The number of acquisitions done by Indian corporates stood at 26 in just three months as against 38 deals in 2004, said Mr Sanghi.

In the most recent acquisition, Videocon group has decided to acquire the colour picture tubes manufacturing business of Thompson for Rs 1,280 crore. UCAL fuels acquired US-based Amtec Precision Products Inc engaged in manufacturing of auto ancilliary products for $28 million, Godrej Global solutions acquired Outsource Offshore Inc of US, Aditya Vikram Birla group gained control over a Canada-based pulp plant.

In pharma sector too, Dishman acquired 100 per cent stake in Synprotec of the UK for Rs 15 crore, Ranbaxy acquired product portfolio of a Spanish company. 

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Nalco to make vision document
Tribune News Service

New Delhi, July 3
Allaying aside the recommendation of the Finance Ministry to consider disinvestment of the government stake in public sector profit- making units, the Mines Ministry has called upon the state- owned Nalco to prepare a vision document for the aluminium industry for the next 20 years.

Nalco had achieved the highest-ever net profit of Rs 1234.84 crore during last fiscal, an increase of 67.47 per cent over the previous year figure of Rs.737.37 crore. The sales turnover of the company reached Rs 4,439.99 crore during 2004-05.

It also reported an all-time record sales turnover of Rs 4,439.99 crore compared to Rs 3,338.87 crore in the previous year, recording a growth of nearly 33 per cent.

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Agri exports touch Rs 27,000 cr
Tribune News Service

New Delhi, July 3
Agriculture exports from India have registered an increase of over 11 per cent in the last fiscal while gems and jewellery exports marked a rise of 29 pc.

Exports of agriculture and allied products from India increased to Rs 27,111.41 crore during the financial year 2004-2005 from 24,844.48 crore during 2003-2004. Agri and allied products showing a substantial increase in exports were rice, pulses, tobacco, spices, nuts, seeds, cashew, gur, gum meal, castor oil and processed food items.

Dairy and poultry products showed a record increase of over 65 per cent in the last fiscal while export of chemicals and related products registered an impressive growth of over 27 per cent.

Officials said India emerged as a major exporter of petroleum products in 2004-2005 with exports reaching a record high of $ 6.7 billion, up by over 90 per cent from $ 3.5 billion achieved in 2003-2004.

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Market Update

by Lalit Batra

It’s time to book profits

Sensex has now gained for nine straight weeks. Short covering in the futures and options segment ahead of the expiry of June, 2005, derivatives contracts and the surge in FII inflow were the main reason for the gains in the indices.

Sensex gained 62 points to close at the lifetime high of 7210 and Nifty gained 17 points to close the week at 2211.

The federal Reserve on Thursday raised the key interest rates a quarter point for a ninth straight time to 3.25 per cent — its highest level since mid-September, 2001. Fed said it would continue tightening at a “measured” pace.

The final chapter on the merger of Bank of Punjab with Centurion Bank inked last week with the share swap ratio being fixed at 4:9 (9 shares of Centurion Bank for every 4 shares of Bank of Punjab). The merged entity will be called Centurion Bank of Punjab. FMCG and auto stocks gained ground on the steady progress of the monsoon whereas steel stocks were under the bearish influence due to softening of the steel prices.

While we remain bullish on the equities in the long run, the shorter term gains may be limited from here on and it would be advisable for investors to book profit at the current juncture. The market may take a breather in the coming weeks after nine weeks of rampage by bulls. Technical charts indicate that Nifty may head for 2230 before a correction sets in. On the downside Nifty has a support at 2187.

IL & FS Investsmart

IL & FS Investsmart was set up as Investsmart India Limited, a wholly owned subsidiary of Infrastructure Leasing & Financial Services Limited, for carrying on capital market activities such as share and stock broking, underwriting, placement of securities etc. IL & FS Investsmart is now one of the leading financial services companies in India primarily engaged in intermediation of financial products and financial advisory services for retail, institutional investors and corporates. Retail business is at the core of the business strategy and has strong linkages with all other businesses. The company believes in leveraging its retail presence to move up the value chain and grow into a full service one-stop financial solutions provider.

IL & FS Investsmart is in discussions with E*Trade to seek managerial inputs and know-how on building skills in its existing business lines. E*Trade is a global leader catering to around 35 lakh customers and pioneer in the field of Internet broking. E*Trade would provide strategic inputs and assistance to the company to successfully roll out and attain market leadership in the area of Internet broking.

The company is coming out with a book building issue of 1.14 crore shares at an offer band of Rs 110 - Rs 125. The offer is priced at about 16 times the diluted earnings at the upper price band. The valuation is attractive compared to it peers in the industry such as India Infoline, which is trading at 17.5 times earnings. Investors with a high-risk appetite can invest at Rs 125 with a long-term perspective, as listing gains may be limited.

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Tax advice

by S.C. Vasudeva

Register educational society for getting tax exemption

Q. You mentioned in one of your answers that an educational trust has to be registered with the income tax authorities to claim exemption. Is it also true for educational societies? Do we need to file income tax returns and pay tax if the society is not registered with the income tax department?

— M. Agnihotri

A. There is no difference in treatment with regard to the registration with income tax authorities. Thus, an educational society shall also have to be registered under Section 12A of the Income-Tax Act 1961 (The Act) to claim exemption under Section 11 and 12 of the Act. Educational institution; be it a trust or a society, existing solely for educational purpose and not for purposes of profit can, however claim the exemption from taxability under Section 10(23C)(iiiad) of the Act if the aggregate annual receipts of such educational institution do not exceed the amount of annual receipt as may be prescribed. The prescribed limit at the moment is Rs 1 crore. In such a case, legally there is no requirement for registration under section 12A of the Act. However, it is advisable to do so in such cases also so as to avoid any litigation on the issue of claim of exemption under Section 10(23C) (iiiad) of the Act.

An educational society is required to file an income tax return even if it claims exemption under Section 11 and 12 of the Act. In case the society is not registered as explained earlier, regular provisions of the Act regarding taxability of the income of the society would become applicable.

Form 15G

Q. I am a pensioner. My annual pension is Rs 60,000 for the financial year 2005-06. I have deposited Rs 8 lakh as fixed deposits whose interest is Rs 47, 000 for the financial year 2005-2006, being lady please let me know can I give form 15 H in the bank to abide T.D.S.

— Vimla Devi

A. Your taxable income being less than the maximum amount chargeable to tax (Rs. 1,35,000 in case of women), the applicable form to be filed with the person responsible for paying the interest would be Form 15G. This form is required to be filed in duplicate with the person responsible for paying the interest.

No tax on gift

Q. I am a government employee and income tax payee. I will immigrate to Canada as a skilled worker. My father and mother want to gift Rs 10 lakh to me. I want to take this money with me to Canada in the form of a bank draft. Will this money be taxable in India.

— Rajinder

A. No gift tax is payable in case the gift is received from father or mother of the donee. Schedule III to the Foreign Exchange Management (Current Account transactions) Rules 2000 provides that a person emigrating from India can carry foreign exchange not exceeding $ 1,00,000 or the amount prescribed by the country of emigration without the prior approval of the Reserve Bank of India. In view of the above provisions, it should be possible for you to carry the bank draft for Canadian dollars equivalent to Rs 10,00,000 which is much less than the amount of $ 1,00,000.

Tax on FDs

Q. In the Finance Bill 2005-2006 government is planning to tax payment of encashment of fixed deposits with banks on maturity please give details on this. Also please inform whether withdrawals from NSS-1987 scheme will be taxable as per new proposals of 2005-06.

— M.L. Sharma

A. The Banking Cash Transaction Tax Act 2005 as enacted by the Finance Act, 2005, provides that a transaction being a receipt of cash from any scheduled bank on any single day on encashment of one or more term deposits, whether on maturity or otherwise, from that bank exceeding

(i) Rs 25,000 in case such terms deposit or deposits are in the name of any individual or HUF;

(ii) Rs 1,00,000 in case such term deposit or deposits are in the name of any person other than individual or HUF.

shall be treated as a taxable banking transaction. The tax is chargeable @ 0.1 pc of the value of the taxable banking transaction.

In my opinion, the amount withdrawn from NSS account shall not be liable to Banking Cash Transaction Tax as 
it would not be in the form of any cash withdrawal which is sought to be taxed under the aforesaid 
enactment.

Readers are welcome to send questions for tax advice. These should be brief, to the point and not exceed 100-150 words. The letters should be sent to Tax Advice C/o The Tribune, Sector 29, Chandigarh-160020 or emailed to: 
taxadvice@ tribunemail.com

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BRIEFLY

Ambanis’ get-together
New Delhi, July 3
A fortnight after the settlement of ownership issues, the entire Ambani family, including Mukesh and his younger brother Anil, came together for the first time for ‘puja’ ahead of third death anniversary of Dhirubhai Ambani. The two Ambani brothers along with their wives and kids joined mother Kokilaben, and other members of the family last evening for the ‘puja’ at their family residence Seawind in Mumbai, sources said. Reliance founder Chairman Dhirubhai died on July 6, 2002, and a family prayer meeting would be held on that day. Mukesh and Anil also joined other 
members for a dinner thereafter. — PTI

IBP plans
Kolkata, July 3
IOC subsidiary IBP Co. Ltd will invest around Rs 500 crore during the current financial year. IBP sources said the investment would go towards expansion of retail outlets as well as modernisation of the existing ones. The investments would be entirely funded from internal accruals, the sources said. — PTI

Air Arabia
Dubai, July 3
Budget airliner Air Arabia will continue to operate additional daily flights to Mumbai from its hub in Sharjah till July 16 so as to cope with increasing traffic over the summer season. “The Mumbai route has been one of the most popular ones for both business and leisure travellers,” said airline’s Head of Planning and Revenue Management Harish Kutty. The flights depart Sharjah airport twice daily at 4.40 p.m. and 11 p.m. arriving at Mumbai at 9 p.m. (local time) and 3.20 a.m., respectively, the next day. The flights would depart Mumbai at 9.45 p.m. and 5.10 a.m. arriving in Sharjah at 11.05 p.m. and 6.30 a.m. (local time), respectively. — UNI

Panacea Biotec
New Delhi, July 3
Planning a foray into the US and European markets by 2008, Delhi-based Panacea Biotec is setting up three new plants and will add four more R&D centres.“Investments are being made on new plants, two for vaccines in Punjab and one for soft gelatin and cephalosporins in Himachal Pradesh,” Panacea Biotec Joint Managing Director Rajesh Jain said here. Mr Jain, however, declined to comment on the investment figures, stating that “it is much more than Rs 44 crore we invested for setting up the latest plant in Baddi with a capacity of 900 million tonnes of tablets per year”. — PTI
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