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THE TRIBUNE SPECIALS
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B U S I N E S S

ONGC strikes huge gas in Bay of Bengal
New Delhi, December 17
The ONGC has made a huge gas find in the Krishna Godavari basin with initial estimates suggesting reserves of about 21 trillion cubic feet, and also struck a big gas field in the Mahanadi basin off the Orissa coast.

PM’s recipe for developed economy
New Delhi, December 17
Prime Minister Manmohan Singh today outlined five challenges, including improving financial system for global integration, for India to become a developed economy while cautioning that the rapid progress should not lead to complacency.

DoT proposes tough norms for 74 pc FDI
New Delhi, December 17
The government is believed to have proposed stringent security conditions for telecom companies going for enhanced foreign direct investment (FDI) of 74 per cent, which among other things states that the Chief Officer Incharge of technical network operations and the Chief Security Officer should be resident Indian citizens.

Tata Motors plans two new plants
New Delhi, December 17
Tata Motors will set up one or two new greenfield plants in the country as part of its Rs 10,000-crore expansion programme to more than double the annual sales to one million units over the next five years, Tata Motors Managing Director Ravi Kant said.

10,000 Zen Estilos booked in 10 days
New Delhi, December 17
Zen Estilo, Maruti's latest offering in the compact car segment, has received tremendous response from the market with over 10,000 bookings in the first 10 days of its launch.

BHEL to buy 2 Cos 
New Delhi, December 17
Ahead of global acquisitions and expansion for which it has a warchest of Rs 10,000 crore, BHEL is all set to acquire two Indian companies as part of its efforts to become an Indian multinational.



A model presents an outfit from the "WWF-India endangered species collection" in New Delhi on Saturday night.
A model presents an outfit from the "WWF-India endangered species collection" in New Delhi on Saturday night. — A Tribune photograph

EARLIER STORIES

 

Reliance Life to enter pharma biz
New Delhi, December 17
Mukesh Ambani-promoted biotech venture Reliance Life Sciences plans to foray into pharma business for generics and contract manufacturing and acquire biotech companies globally as part of its expansion plan.

Market Update
Dr Reddy’s Labs a good buy
The RBI announcement of a two-stage hike in CRR previous Friday saw the indices end the last week in the red. Sensex lost 184.97 points for the week ended Friday to 13,614 while Nifty lost 63.90 points to settle at 3,888. The markets tanked heavily on the first two days of the last week, losing 400 points each, on back of selling by investors in knee-jerk reaction to the CRR hike.

Tax Advice
No tax up to Rs 1.85 lakh for senior citizens

Q. I am a retired pensioner and have crossed the age of 65 years for 2006-07. I am physically handicapped and eligible for rebate under section 80U. My income for 2005-06 is: Pension: 13,096; Interest from bank deposits: 1,95,303; Interest accrued on NSCs: 3,100.

 

 

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ONGC strikes huge gas in Bay of Bengal

New Delhi, December 17
The ONGC has made a huge gas find in the Krishna Godavari basin with initial estimates suggesting reserves of about 21 trillion cubic feet, and also struck a big gas field in the Mahanadi basin off the Orissa coast.

The ONGC, which had previously discovered 2-3 tcf of gas reserves in about half-a-dozen wells in the Krishna Godavari Basin block KG-DWN-98/2, struck a 28 meter net gas pay zone when deep sea drillship Belford Dolphin reached 5,300 meters depth at well UD-1, 55-km from the coast. Separately, the ONGC has struck an estimated 3-4 tcf of gas in Block MN-OSN-2000/2 in water depths of about 1200 mts, sources said.

They said the ONGC had also found 15-20 million barrels of oil reserves in an Assam block.

The ultra-deepwater well UD-1 is yet to reach its target depth of 6,500 meters and vertical seismic profile has thrown up at least one more pay zone larger than the one encountered. There could also be oil, the sources said.

The well UD-1 will reach its target depth in next 10 days and testing will take another week.

The ONGC might be planning a New Year gift to the nation with this (discovery), the sources said.

The state-run firm had done a mud drill test of the ultra-deepwater well UD-1 and preliminary estimate put in place reserves at 600 billion cubic meters (over 21 tcf).

The second net pay zone could be in excess of 80 meters and there appeared traces of oil too, the sources said.

ONGC Director (Exploration) Dinesh Kumar Pandey said: "It is too early to comment on reserves. We are yet to reach the target depth and will wait for conventional testing results before hazarding any guess on the size of the discovery."

Reliance Industries Ltd estimates 50 tcf of in-place reserves in neighbouring KG-DWN-98/3 block while the Gujarat State Petroleum Corp had last year found 20 tcf reserves in a shallow water block in the same basin.

An industry source said the well UD-1 had reached 5,800 meters depth and was the deepest well drilled so far in the country.

There are technological challenges in producing from such a deep well, the source added.

The ONGC had bought 90 per cent interest in the block in September 2003 from Cairn Energy Plc of the UK, which was awarded the deepwater block under the first round of the new exploration licensing policy (NELP).

Cairn had made a couple of finds, including the 1 tcf Annapurna discovery, before farming out the block to the ONGC.

The source said Cairn was not very enthusiastic about drilling in ultra-deep water depth but the ONGC exploration team persisted and went ahead with drilling three wells. UD-1 is the third and the deepest of these wells. The earlier two had also shown gas reserves.

A ministry official said the ONGC, which during the past few years had a poor run of E&P, was turning around with significant oil and gas finds.

"The KG and Mahanadi basin finds will add significantly to the production to reduce the country's gas deficit,” he said. — PTI

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PM’s recipe for developed economy

New Delhi, December 17
Prime Minister Manmohan Singh today outlined five challenges, including improving financial system for global integration, for India to become a developed economy while cautioning that the rapid progress should not lead to complacency.

"It would be wrong to assume, as some do, that the major development challenges had been solved and that the Indian economy can effortlessly coast towards becoming a developed economy," Dr Singh said while releasing "India Rural Infrastructure Report" by NCAER.

Despite a high level of public debt, inflation has been contained and "in brief the economic environment facing the private sector has been transformed and the results are evident," he said.

Giving policy prescription for each of the five challenges — revitalisation of rural economy, improved delivery of public services, improved management of urban areas, preparing financial system for greater inclusion and increased global integration besides facilitating private investment in infrastructure, he said.

He said rapid growth was needed to provide hope and productive employment for millions of young people joining the labour force each year and to accelerate the reduction of extreme poverty.

The Prime Minister also called upon the states to "experiment with a range of models" for delivery of basic education and health services considering their affect on poor people.

Underscoring public-private sector partnership in infrastructure sector, he called for establishing a credible regulatory regime. Investments will only materialise if there is a confidence in the independence and stability of the regulatory regime, he said. — PTI

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DoT proposes tough norms for 74 pc FDI

New Delhi, December 17
The government is believed to have proposed stringent security conditions for telecom companies going for enhanced foreign direct investment (FDI) of 74 per cent, which among other things states that the Chief Officer Incharge of technical network operations and the Chief Security Officer should be resident Indian citizens.

According to sources, the Department of Telecom (DoT) has proposed that majority of the directors in the Board shall be Indian citizens.

"The position of the Chairman, Managing Director, CEO and Chief Financial Officer, if held by a foreign national, the same will be required to be security vetted by the Ministry of Home Affairs," the draft note, to be placed before the Cabinet this week, said.

FDI up to 49 per cent would continue to be on the automatic route and Foreign Investment Promotion Board approval shall be required for FDI in the licencee company/Indian promoters/ investment companies, including their holding companies if it has a bearing on the overall ceiling of 74 per cent, it said.

The government had, earlier this year, allowed 74 per cent FDI in telecom but the policy could not be implemented due to differences among the different ministries. — PTI

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Tata Motors plans two new plants

New Delhi, December 17
Tata Motors will set up one or two new greenfield plants in the country as part of its Rs 10,000-crore expansion programme to more than double the annual sales to one million units over the next five years, Tata Motors Managing Director Ravi Kant said.

"Already we are in the process of expansion of our plants in Pune, Jamshedpur and Lucknow. But it won't be sufficient and thus we would be going in for one or two more greenfield plants," Mr Kant said, adding that the company was setting up new plants in Uttaranchal and West Bengal.

The company was banking on the success of its small truck Ace and the yet-to-be launched Rs 1 lakh car (to be out by mid-2008) for the push in sales. Tata Motors would also increase the capacity of its overseas assembly units, including Korea and Casablanca. — PTI

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10,000 Zen Estilos booked in 10 days

New Delhi, December 17
Zen Estilo, Maruti's latest offering in the compact car segment, has received tremendous response from the market with over 10,000 bookings in the first 10 days of its launch.

Estilo, an all-new model of Maruti's earlier number grosser 'Zen', was launched on December 5 in four variants after the company discontinued the production of the earlier model around eight months back.

The overwhelming response to the new model had resulted in a waiting period of three to six weeks. Company officials said: "Efforts were being made to reduce the delivery time for the car." — PTI

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BHEL to buy 2 Cos 

New Delhi, December 17
Ahead of global acquisitions and expansion for which it has a warchest of Rs 10,000 crore, BHEL is all set to acquire two Indian companies as part of its efforts to become an Indian multinational.

"We are looking at 100 per cent acquisition of Bharat Heavy Plates and Vessels (BHPV) and its subsequent merger. The new facility will be used for boosting our industrial boiler business," BHEL CMD A.K. Puri said.

The government had asked it to manage and operate another company, Bharat Pumps and Compressors Limited , he said, adding that BHEL would be interested in it also as and when the opportunity arose. — PTI

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Reliance Life to enter pharma biz

New Delhi, December 17
Mukesh Ambani-promoted biotech venture Reliance Life Sciences plans to foray into pharma business for generics and contract manufacturing and acquire biotech companies globally as part of its expansion plan.

The company has also charted out a Rs 900-crore capacity expansion plan to set up a new facility in Mumbai, industry sources said.

Besides, the company was on the prowl for acquisition in the biotech space globally, especially Europe.

As per its expansion plans, Reliance Life Sciences will manufacture off-patent drugs and was tying up with major drugmakers for its contract manufacturing foray, the sources said. — PTI

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Market Update
Dr Reddy’s Labs a good buy
by Lalit Batra

The RBI announcement of a two-stage hike in CRR previous Friday saw the indices end the last week in the red. Sensex lost 184.97 points for the week ended Friday to 13,614 while Nifty lost 63.90 points to settle at 3,888. The markets tanked heavily on the first two days of the last week, losing 400 points each, on back of selling by investors in knee-jerk reaction to the CRR hike. Next three days saw the markets recover three quarter of its loses but they still ended the week in the red. Though the recovery has been swift, I am of the opinion that Indian markets are not cheap (mainly large camp) anymore, and any gain from hereon should be used as an opportunity to book profit.

Dr Reddy’s is a leading pharmaceutical company with a presence across the pharmaceutical value chain — basic research, finished dosages, generics, bulk actives, biotechnology and diagnostics. In 2005 the company formed India’s first integrated drug research company, Perlecan Pharma, for the purpose of conducting clinical trials on its new chemical entities assets.

Generics market on the upswing

Drugs worth $ 65 billion are going off patent post 2006 in the US and Dr Reddy’s, with its ramp up in ANDA filings, is expected to benefit. Besides the US Dr Reddy’s has been increasingly focusing on the European markets and Russia to drive topline growth. Dr Reddy’s acquired Betapharm, Germany’s fourth largest generic company in February, 2006.

In a bid to mitigate risks of high R&D expenditure and litigation costs, Dr Reddy’s entered into an agreement with ICICI Venture for the development and commercialisation of ANDAs to be filed in year 2005 and 2006. In order to mitigate the clinical R&D risks the company formed India’s first integrated drug development research company — Perlecan Pharma Pvt Ltd —by roping in Citigroup Venture Capital and ICICI Venture Capital. Accordingly, the company has transferred four NCE assets for clinical trials to Perlecan. The clinical development costs will be borne by Perlecan and Dr Reddy’s will be able to capitalise on any upside in the event of a commercial launch of the four assets.

The company launched ‘Proscar’ and ‘Zocor’ as the authorised generic for Merck and has also launched the generic version of ‘Allegra’. Both ‘Proscar’ and ‘Zocor’ combined have generated revenues to the tune of $ 248 million in the first half of the current financial year.

The company’s performance has picked up pace on the back of a host of alliance and partnerships both in the R&D and the generics space (which are expected to continue in the future too). Given the above facts, I recommend a buy on Dr Reddy’s Lab with a two-year perspective.

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Tax Advice
No tax up to Rs 1.85 lakh for senior citizens
by S.C. Vasudeva

Q. I am a retired pensioner and have crossed the age of 65 years for 2006-07. I am physically handicapped and eligible for rebate under section 80U. My income for 2005-06 is: Pension: 13,096; Interest from bank deposits: 1,95,303; Interest accrued on NSCs: 3,100. Kindly guide me on standard deduction from pension income, rebate under sections 80C, 80U and 88B (senior citizen).

— C.S. Lal, Phagwara

A. The provisions of the Act have been amended and under the new provisions of the Act, the standard deduction against pension income and rebate under section 88B (senior citizen) is not allowable and instead the maximum amount not chargeable to tax in case of senior citizens has been fixed at Rs 1,85,000. You will, however, be entitled to a deduction under sections 80C and 80U of the Act (i.e. interest accrued on NSCs and physical disability allowance). I may add that interest earned on NSCs is includible in the total income and the deduction under section 80C would be allowable after such inclusion.

Calculation of tax liability

Q. I seek your advice regarding rebate under Section 10C, which is available to public sector employees who retire under VRS or exit policy. I got retired on 31.05.2006 from the State Bank of India under the bank’s exit policy and received compensation of Rs 5.50 lakh (half salary of remaining service) and Rs 4,14000 as gratuity. I am of the opinion that my tax liability for 31.03.2007 is as under:

Taxable income: Salary for two months: 54,000 + Exit policy compensation (Rs 5 lakh exempted under Section 10C): 50,000 + Gratuity (Rs 3.50 lakh exempted): 64,000 – Investment under section 80C: 4,000 = 1,64,000. Income tax will be Rs 7,956. Please guide whether my calculations are correct.

— Alok Kumar

A. The exemption under section 10C of the Income Tax Act 1961 (the Act) can be claimed if voluntary retirement is in accordance with any scheme of voluntary retirement and such scheme has been framed in accordance with the guidelines as are prescribed. Therefore, before claiming exemption of the amount you must ensure that the State Bank of India has complied with the requirements specified in the Act. Similarly, the gratuity payment has to be in accordance with the calculations specified in section 10(10) of the Act. Presuming that these conditions are satisfied, your taxable income would be Rs 1,19,000 (54,000 + 5,000 + 64,000 - Rs 4,000) instead of Rs 1,64,000 as specified by you. The tax on income of Rs 1,19,000 would work out at Rs 1,938, including education cess @ 2 per cent of tax.

No tax on death benefits

Q. Kindly calculate my tax liability for 2005-06. In addition to my salary (Rs 2,40,000), the following amounts have been received by me and my wife (50 per cent each) on account of death of our son, who was serving in an Indian MNC. Death gratuity: Rs 2,62,000, EPF: Rs 8,500, EDLI: Rs 1,50,000, life insurance claim: Rs 5,00,000 and grant from employees’ welfare fund: Rs 3,00,000.

1. Do I have to show the entire amount in my name in IT return? My wife is a housewife.

2. Is it mandatory to show all these amounts (other than salary) in the IT return even if these are tax-free?

You are requested to kindly quote the relevant IT section against exemptions.

— S.S. Gill, Jalandhar

A. You are liable to pay tax on your salary income. The other amount received after the death of your son are not taxable in your hands. However, it would be advisable to show such amounts in your tax return and state that the same are either not taxable under any provisions of the Act or exempt under section 10 of the Act. It is mandatory to reflect in the tax return those amounts which are claimed to be exempt from tax. Section 10 of the Act provides exemption in respect of (a) death cum retirement gratuity to the extent of Rs 3,50,000, (b) any sum received under a life insurance policy, and (c) any payment from a provident fund to which the PF Act 1952 applies. These amounts are, therefore, not taxable in your hands. The grant from employees welfare fund not being in the nature of income is also not at all taxable. You will, therefore, have to pay tax on your salary income only which would work out at Rs 23,460, including education cess. This has been calculated without considering any benefit that you can avail under section 80C of the Act by investing in tax saving instruments.

Adjustment of losses

Q. I am retired from the HP State Electricity Board and my present age is 60 years. My income for 2005-06 is as under:

Pension: 1,34,809; Post office MIS: 24,000; Varisht Bima Pension LIC India: 24,000; Interest from bank deposits: 62,042; Interest from NSCs: 10,120; Total: 2,54,971

Saving and losses for 2005-06: NSC purchased: 60,000; LIC premium of sons’ policies: 8,023; NSC interest: 10,120; Loss from future trading NSE: 30,000; Loss from agriculture: 20,000.

Kindly calculate my tax liability

— V.P. Sharma, Bilaspur (HP)

A. On the basis of figures given by you, your total taxable income works out at Rs 1,46,828 (2,54,971 - 30,000- 78,143) on which tax, including education cess, of Rs 4,777 would be payable. In computing the income it has been presumed that the loss suffered by you is in respect of an eligible transaction relating to the trading in derivatives. On this basis such loss being for the year under reference has been adjusted against your other income.

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