B U S I N E S S

Hindujas bet big on India
Plan to invest $50 billion in five years
Davos, January 27
The diversified Hinduja Group today said it plans to invest $50 billion in power, realty, auto, healthcare and oil and gas projects in India, whose appetite for infrastructure funds is pegged at $492 billion over the next five years.

India leaves Davos hale & hearty
‘If the US sneezes, India need not catch a cold!' was New Delhi’s message to global business and political leaders as they prepared to leave this snow-clad mountain resort after spending five days worrying about a possible recession in the world's largest economy.

PepsiCo CEO Indra Nooyi smiles at the closing session of the WEF in Davos, Switzerland, on Sunday. — AP/PTI photo

Money order in 5 minutes
New Delhi, January 27
The Department of Posts is planning to introduce Instant Money Order facility across the country this year, which will enable people to send and receive up to Rs 50,000 within five minutes.

Tax Advice
No tax on PPF withdrawals
Q. I am maintaining PPF A/c with Post Office, maturing on 31.03.2008. I intend to extend the period for further period of 5 years. My questions are: 1. How much amount can be withdrawn before period is extended?

Hindujas bet big on India
Plan to invest $50 billion in five years

Davos, January 27
The diversified Hinduja Group today said it plans to invest $50 billion in power, realty, auto, healthcare and oil and gas projects in India, whose appetite for infrastructure funds is pegged at $492 billion over the next five years.

"We have made a blueprint of investment of $50 billion investment in India spread over 10 sectors in the next 4-5 years," group's global president G P Hinduja said here.

The investments will also cover areas such as IT and various other infrastructure sectors. The proposed investment will meet nearly 10 per cent of the funds that New Delhi says it needs to prop up the country's creaking infrastructure.

Hinduja, who was in Davos to participate in the World Economic Forum's annual meeting, said: "In the power sector, the group is setting up a 2,400 MW capacity power plant at Visakhapatnam in Andhra Pradesh with super-critical technology, and proposes to invest Rs 10,000-15,000 crore." "In the next six months, we could divest 49 per cent stake in this power project, through IPO route unless we find a strategic partner for the venture. However, we would keep 51 per cent stake with us," he said.

"In the IT sector, the group is looking for acquisition of suitable companies, and is open to acquiring good companies whenever suitable opportunities emerge," he said.

He said the Hinduja Group has entered into a joint venture "with Nissan and proposes to set up a light commercial vehicle (LCV) plant in the country."

“In the health care sector, the group has plans to invest $2-3 billion for setting up a chain of hospitals, clinics and medical cities in metros and second tier cities,” he said, adding that for this, the group has joined hands with Dubai World.

"In the real estate sector, the group has plans to invest $10-15 billion within the next 2-3 year period," he said, adding that the group has already acquired a land bank of over 3,500 acres in metros like Mumbai, Hyderabad, Bangalore and Chennai and investment would depend on how soon authorities gave required clearances for land development. — PTI

India leaves Davos hale & hearty

‘If the US sneezes, India need not catch a cold!' was New Delhi’s message to global business and political leaders as they prepared to leave this snow-clad mountain resort after spending five days worrying about a possible recession in the world's largest economy.

While it is not the first time that India has articulated this theory, finance minister P Chidambaram used the World Economic Forum to get across the message that India was fairly insulated from the global financial crisis - which he said was the result of "failure of regulators and lack of regulations."

Although India did not suffer any impact due to the US mortgage crisis, the year ahead could be difficult as there could be indirect implications for the services sector-dependent economy.

Chidambaram , however, said despite fears of global recession, Indian economy would grow by 8.5 per cent in 2008-09 fiscal.

"We are by and large a de-coupled system (not linked to global economic situation due to high dependence on domestic market). Indian financial system, including banking, insurance, pensions and assets management companies can bear these shocks," ICICI Bank CEO and managing director K V Kamath said.

A falling US dollar, rising oil prices, and journey of the US economy toward a possible recession had robbed this high-profile annual meet of its vibrancy, but things could have been much worse.

US Secretary of State Condoleezza Rice spoke of the "resilience" of the US economy on Wednesday, Chidambaram seconded the thought, saying there was no conclusive evidence to show that the US was moving toward a recession. He, however, felt a slowdown in the US economy could happen with some implications for Indian exports. But what worried him most was the 75 basis point rate cut by the US Fed.

As Chidambaram spoke of the need to moderate excessive flow of foreign capital, expected in the wake of rate cut in the US, commerce and industry minister Kamal Nath pitched for more investments that the country can easily absorb - like in infrastructure which requires $492 billion in five years. — PTI

Money order in 5 minutes

New Delhi, January 27
The Department of Posts is planning to introduce Instant Money Order facility across the country this year, which will enable people to send and receive up to Rs 50,000 within five minutes.

Currently, the users can send a maximum of Rs 5,000 in the money order and it takes 1-4 days for the other person to receive it at any part of the country.

"We will introduce Instant Money Order scheme across the country, where the other person will be able to receive it in just five minutes," Department of Posts general manager John Samuel told PTI.

The department has recently introduced this facility across 600 locations, which would be expanded all across this year.

In the Instant Money Order (IMO) facility, users would have to deposit money with one Post Office. After this, they would be given a code, which is to be given to the other person for receiving money in five minutes in the post office of his/her area.

However, the other person would have to give his identity proof before collecting the money, he said, adding, with this there would be no security hassle. — PTI

Ban futures trading in agri products: CPM
Tribune News Service

New Delhi, January 27
Expressing concern over alarmingly growing suicide cases among farming communities, CPM leader Sitaram Yechury today sought minimum support price (MSP) for wheat at Rs 1,250 per quintal and that of paddy at Rs 1,000 per quintal to ensure that farmers’ produce earn them a remunerative price.

He also demanded extension of institutional credit at 4 per cent to farmers and sought immediate ban on commodity futures trading in agri products.

Releasing the Assocham study on “Agricultural scenario: Agenda for farmers prosperity” here, Yechury argued that the government has already agreed to pay Rs 1,200 to Rs 1,600 per quintal more for wheat imports and it is still paying about Rs 1,000 per quintal to procure wheat from farmers.

On commodities futures trading on essential agri commodities, he sought placement of ban as it promotes speculative trading, which results in prices of essential agri products shoot up.

Indian banks eye US shores

New Delhi, January 27
Leading banks from India, including SBI and ICICI Bank, are looking to expand their presence in the US in a big way.

SBI last week received regulatory approval for a new branch in New York. The latest approval for SBI's new branch has come close on the heels of ICICI Bank getting an approval for its first ever branch in the US. — PTI

Market Update
Monetary review to set tone
by Lalit Batra

Last week proved as the most eventful week on the stock markets. What started as a bloodbath on the street ended with a solid recovery. The markets witnessed unprecedented volatility last week, with losses and recoveries of a 1,000 points becoming par for the course. The magnitude of the volatility could be gauged from the fact that the last week was witness to both the highest ever single-day loss as well as single-day gain on an absolute basis on the Sensex. Bears in the end triumphed, pulling the Sensex (18,361) down by a little more than 3 per cent and the Nifty (5,383) down by nearly 6 per cent.

Credit crisis in the US and fears of a US recession caused bloodbath on the domestic bourses at the onset of week with share prices falling like nine pins. Margin calls created havoc on the bourses in causing a steep decline in share prices that was initially triggered by a setback in global markets and selling by foreign institutional investors. Reserve Bank’s review of its monetary policy is due this Tuesday, which would set the tone for markets. After a surprise 75 basis point cut in Fed rate by the US central bank, market men expect a 25 basis point cut in repo rate by the RBI. Though the corporate results have been in line with expectation, any adverse news from overseas may further dampen the sentiment.

OnMobile Global

OnMobile provides value-added services (VAS) in the telecommunications space and software products in India with an expanding international presence, particularly in the emerging markets in Asia. It has a broad range of applications delivered by its carrier customers (telecom service providers) to their end-user subscribers. These products include ringback tones, voice portals, ringtone downloads, subscription manager, contests, music messaging, on-device client software, mobile radio, dynamic voicemail, voice SMS, and missed call alerts.

OnMobile was incorporated as Onscan Technologies India Pvt. Ltd. in September 2000 by its promoter On Mobile Systems Inc (OMSI) that is a startup firm of Infosys to develop telecommunications software platforms and applications for the mobile telecommunications industry. Subsequently, it was renamed as On Mobile Global Ltd (OMGL) in August 2007. Its customers include the major telecommunications carriers or operators in India such as Bharti Airtel, BSNL, Idea, Rcom, Tata Teleservices and Vodafone Essar.

Due to competitive industry dynamics, mobile tariffs have been falling and there has been pressure on the average revenue per subscriber (ARPU) of telecom operators. Thus, telecom operators would be looking for more VAS revenue at very little incremental capital expenditure. This is a potential lever to counter the trend of falling ARPUs. It will result in decent growth opportunity for OnMobile as VAS will have higher growth trajectory on lower base and increasing acceptability.

The inital public offer (IPO) is priced very aggressively at the higher end of Rs 450 which discounts its annualised 2008 earnings of Rs 10.3 approximately 45 times. To put things in right perspective, investors must also keep in mind that the company has been growing at 100 per cent compounded growth at net profit level for the last three years. In our view, investors with risk appetite may apply at cut-off with a two-year perspective. The issue closes on Tuesday.

Tax Advice
No tax on PPF withdrawals
by S.C. Vasudeva

Q. I am maintaining PPF A/c with Post Office, maturing on 31.03.2008. I intend to extend the period for further period of 5 years. My questions are:

1. How much amount can be withdrawn before period is extended?

2. What is the procedure for availing the option of five years?

3. Can I also withdraw part of the amount during option period? If yes, when and how much?

4. Till date, no withdrawal has been made.

5. What is the tax liability on withdrawal?

— O.P. Makhija, Ambala Cantt.

A. The answers to your queries are as under:

1. In the event of a subscriber opting to subscribe for a further block period of 5 years after the expiry of 15 year from the end of the year in which the initial subscription was made, a subscriber is entitled to make partial withdrawals not exceeding one every year by applying to the accounts office in Form C or as near thereto as possible, subject to the condition the total withdrawals during the five-year block period, shall not exceed 60% of the balance at the credit of the subscriber, at the commencement of the said period.

2. The application in Form-H is required to be filed for an extention for a further block period of 5 years.

3. There is no tax liability in respect of the amount withdrawn from public provident fund.

NRE account

Q. I recently returned after working abroad for 11 years and eight months. I had opened a bank account and a term deposit from my emoluments in foreign currency. On my return to India and becoming a resident after 180 days stay, could you clarify for how long I can retain the account and deposit without inviting tax in India. What are the precise RBI guidelines on the subject?

— Surinder Singh, via e-mail

A. Section 10(4)(ii) of the Income-tax Act 1961 (the Act) provides exemption from the taxability of interest on money standing to the credit in a Non-Resident (External) Account in India in case of a person resident outside India in terms of section 2(q) of Foreign Exchange Management Act (FEMA) 1999, such an account can be a savings account or a term deposit Account. FEMA 1999 defines a person resident outside India as a person who is not resident in India. A person resident in India is defined by the said Act as under:

"(i) a person residing in India for more than 182 days during the course of the preceding financial year but does not include-

(A) a person who has gone out of India or who stays outside India, in either case —

(a) for or on taking up employment outside India, or

(b) for carrying on outside India a business or vocation outside India, or

(c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;

(B) a person who has come to or stays in India, in either case, otherwise than -

(a) for or on taking up employment in India, or

(b) for carrying on in India a business or vocation in India, or

(c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period.

(ii) any person or body corporate registered or incorporated in India,

(iii) an office, branch or agency in India owned or controlled by a person resident outside India,

(iv) an office, branch or agency outside India owned or controlled by a person resident in India."

Since you have been in India for more than 180 days, interest earned on NRE A/c and Term Deposit, would be taxable for the previous year in which you were in India for more than 180 days. The foreign exchange denominated bank account will have to be converted into ordinary account after you attain the status of a resident in India.

Rebate u/s 80 U

Q. I, along with my wife, met with car accident on 27.11.2005 at Hoshiarpur. My both legs were fractured whereas my wife's hip and right arm was fractured. Both of us underwent various orthopedic procedures at Amritsar, Noida and Delhi. Due to non union of right "Femur" adjustable steel fixater has been fixed by St. Stephen's Hospital, Delhi, therefore I am hardly able to walk with the help of walker. My right leg has become shorter due to various operations and I am performing light duty in the office.

Both of us are employed in PSU. I am getting medical re-imbursement from my department i.e. Food Corporation of India. The other lot of expenses incurred on physiotherapy, servants, nurses in-admissible medicines, transportation etc. is borne by me. My wife employed in Punjab National Bank is also on E.O.L. since 26.01.2006.

Both of us are still under treatment at St. Stephen's Hospital, Delhi.

I want to know whether I am allowed deduction under Section 80-DD of Rs 50,000/- for rehabilitation?

— M.L. Gupta, Hoshiarpur

A. The deduction of Rs 50,000 under Section 80DD of the Act is allowable to an individual or Hindu Undivided Family resident in India for any expenditure incurred for medical treatment (including nursing), training and rehabilitation of a dependant being a person with disability.

The above section is therefore not applicable in your case. However, in case the above accident has led to some sort of disability, which is covered under the provisions of Section 80U of the Act, you can claim a deduction of Rs 50,000. The disability for the purpose of Section 80U of the Act means a disability provided in clause (i) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996), and includes "autism", "cerebral palsy" and "multiple disabilities" referred to in clauses (a), (c) and (h) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999). The disability as per clause (i) of section 2 of the above said Act covers blindness, low vision, leprosy-cured, hearing impairment, locomotor disability, mental retardation and mental illness.

In case your are covered by any of the above disabilities and you are suffering from not less than 40% of any such disability as certified by a medical authority, you would be entitled to the deduction from your total income to the extent of Rs 50,000. For claiming such deduction you are supposed to file a copy of the certificate issue by the medical authority in the form and manner prescribed along with return of income under Section 139 of the Act.