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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

More loan waiver schemes if growth hits 10 pc: FM
Coimbatore, April 19
Finance Minister P Chidambaram today exuded confidence that more schemes like loan waiver to the farmers and national rural employment scheme were possible if the economic growth of the country reached 10 per cent.

Punjab sets up industrial devp boards
Chandigarh, April 19
The Punjab Government today announced the formation of three Industrial Development Boards one each for large, medium and small scale entrepreneurs, directly involving the leading players from industry in the decision-making process of the government to create the industry-friendly climate in the state.

Get ready for mobile airports
Shillong, April 19
Mobile airports will soon take a place in the country’s aviation sector, with the Czech Republic planning to introduce its latest innovation in the Northeastern part of the country.

Fresenius to acquire majority stake in Dabur Pharma
New Delhi, April 19
Home grown drug maker Dabur Pharma today said it would sell 73.27 per cent stake to Fresenius Kabi (Singapore) Pte Ltd for an undisclosed amount.



EARLIER STORIES



Indian models present creations by Indian designers participating in the Montana World of WearableArt (WOW) awards in New Delhi.
Indian models present creations by Indian designers participating in the Montana World of WearableArt (WOW) awards in New Delhi. Eight designers have been pre-selected for judging at the Montana WOW Awards to be held in New Zealand later this year. — AFP

Oil hits new record at $117 a barrel
New York, April 19
Oil prices hit a record high $117 a barrel Friday as jitters over Nigerian oil supplies outweighed a rally in the dollar and fears of an economic slowdown in giant energy consumer China.

Ispat Ind to raise 500 cr via warrant issue
Mumbai, April 19
Pramod and Vinod Mittal-promoted Ispat Industries today said it would raise over Rs 500 crore through issue of share warrants to promoters on a preferential basis.

Saimira floats JV with China music board
Chennai, April 19
Indian entertainment firm Pyramid Saimira Theatre has floated a joint venture with the China Society Music Research Board, a unit of the Chinese Ministry of Culture, to enter entertainment industry in that country.

Aviation Notes
World-class Airports: India nowhere in running
A study reveals that the world’s five top international airports are in Asia, including Seoul (South Korea), Kuala Lumpur (Malaysia), Singapore, Hong Kong (China) and Nagoya (Japan).

Investor Guidance
Inherited property has no gift tax
Q. I own a property in Mumbai that I propose to will to my son who is in the USA. In return, my son intends to send some money to me for taking care of my living expenses throughout my remaining life. This, in short, is our family arrangement. In this regard, will the money sent by my son be regarded as a gift? Does it matter whether the money is paid from India or the US? When the property goes to my son, will there be any gift tax? At the moment, my son is an NRI and a green card holder. If tomorrow he becomes an American Citizen, can he continue to own property in India?

Video
Government to cut steel prices, says Kamal Nath.
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More loan waiver schemes if growth hits 10 pc: FM

Coimbatore, April 19
Finance Minister P Chidambaram today exuded confidence that more schemes like loan waiver to the farmers and national rural employment scheme were possible if the economic growth of the country reached 10 per cent.

Being a developing nation there could be up and downs and imbalances in India’s economy, which could be made good by sustaining the growth, Chidambaram said while inaugurating ‘Palladam Hitech Weaving Park’, about 30 kms from here.

Though certain political parties, particularly those who wanted waiver of farmers loans, were sceptical about NREG scheme of Rs 12,000 to Rs 18 000 crore and Rs 60,000 crore farmers loan waiver scheme, the government can do more such things if the growth reached 10 per cent, he said.

On several issues raised by ministers from Tamil Nadu and Union Minister of Textile Shankarsing Vaghela and his Deputy EVKS Elangovan at the function, Chidambaram said that the crisis in the textile and engineering sector was temporary phenomenon and a business cycle, which the industrialists should face bravely.

Taking a dig at financial experts and analysts on commenting on rupee appreciation against US dollar, Chidambaram said they were criticising when rupee had depreciated and now singing the same tune when it was appreciating, which was contradictory in nature.

The government was paying special attention to the textile sector, which was the largest employment generator after agriculture sector, Chidambaram said.

Chidambaram assured both the textile and engineering sectors, which, at present, were facing crisis for the past six months to take right step at appropriate time to solve their problems.

In his address, Vaghela said there has been huge response to the new scheme designed on the public-private partnership model and 30 parks have been sanctioned under it.

Elangovan said there was bound to be some obstacles in a fast developing economy like India, which was also the largest democracy. Textile sector would become the largest employment generating sector in another 10 to 15 years as the agriculture sector was witnessing a sharp decline in job opportunities particularly due to migration of labour to urban area, he said.

State Rural Industries Minister, Pongalur N Palanisami, asked Chidambaram to take steps to rectify the ‘crisis’ due to rupee appreciation against USD by which the exporters had suffered a loss of about Rs 4000 crore.

Tamil Nadu Textile Minister NKKP Raja urged the Finance Minister to consider waiver of loans to the tune of Rs 320 crore to Rs 350 crore against the total Rs 1500 crore at national level taken by weavers from central cooperative banks. — PTI

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Punjab sets up industrial devp boards

Chandigarh, April 19
The Punjab Government today announced the formation of three Industrial Development Boards one each for large, medium and small scale entrepreneurs, directly involving the leading players from industry in the decision-making process of the government to create the industry-friendly climate in the state.

Simultaneously, two Traders Boards — one each for large scale and small scale traders — have been set up for encouraging and promoting trade activity in the state as also to involve representatives from the trade of all levels in facilitating and promoting business and trade in the state.

According to the government notification, Punjab Chief Minister Parkash Singh Badal and Local Government, Industries and Commerce Minister Manoranjan Kalia will be the Chairman and Vice-Chairman, respectively, of the Large Industry Development Board, which will include almost all leading industrialists of the state as members.

The Chairmen of Medium and Small Scale Industry Board will enjoy the status of Cabinet Minister while their Vice-Chairmen will be in the rank of a Minister of State.

Similarly, the Chairmen of the two Traders Boards will also have the status of Cabinet Minister while their Vice Chairmen will enjoy the status of Minister of State.

Harcharan Bains, Media Adviser to Chief Minister Parkash Singh Badal, said here today that the government had issued a notification for the formation of these boards on April 15.

He said that while these boards would serve to bridge the gap between the policy makers within the government and the actual target group, it would also enable the captains of industry in the state to clinch tie up with their counterparts elsewhere in the country to set up joint ventures in Punjab.

Chief Minister Parkash Singh Badal and SAD president Sukhbir Singh Badal, MP, had invited professional and intellectual input from the leading lights from the world of industry to prepare the stage for a public-private participation in areas that had remained governmental domain.

State Industries Minister Manoranjan Kalia has played a critical role in putting this philosophy into operation, he said. — UNI

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Get ready for mobile airports

Shillong, April 19
Mobile airports will soon take a place in the country’s aviation sector, with the Czech Republic planning to introduce its latest innovation in the Northeastern part of the country.

The Czech Republic, located in Central Europe, claims to have expertise in the field and plans to introduce such airports that can be transported in trucks and set up anywhere in 20 minutes in the Northeastern states like Mizoram and Meghalaya.

“We are interested in the region because the Czechs are all over India but drew a blank in the Northeast,” the Czech Republic Ambassador Hynek Kmonicek said yesterday.

“The Republic provides integrated airport control and monitoring system and mobile airports that can be carried in trucks and set up within 20 minutes.

“We have been in the aviation sector since the beginning of the 20th century. Our skills in portable heliports and mobile airports are recognised world over,” he said.

These portable airports can take aircraft loads of 26-40 tonnes. Czech aviation companies are providing their services in as many as 27 countries.

The Ambassador, Commercial Counselor Vladimir Jenista, and Third Secretary (Commercial) Jitka Znamenackova, are on a visit to the region. They held a meeting with the Chief Minister, other officials from the power and mining department, Neepco and the Airports Authority of India.

Meanwhile, Meghalaya Deputy CM Donkupar Roy said, “After the visit of the technical experts in October a tie-up with Czech companies could also be made.” — PTI

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Fresenius to acquire majority stake in Dabur Pharma

New Delhi, April 19
Home grown drug maker Dabur Pharma today said it would sell 73.27 per cent stake to Fresenius Kabi (Singapore) Pte Ltd for an undisclosed amount.

The Singapore firm would purchase the stake at Rs 76.50 per equity share from the promoters and certain other shareholders of the company, Dabur Pharma said in a filing to Bombay Stock Exchange.

Giving the details, the acquisition however, would be subject to the fulfilment of certain conditions. These conditions include receipt of necessary regulatory approvals and compliance by Fresenius with public offer requirement under the SEBI regulations, the pharma company said.

Fresenius Kabi Pte is a unit of healthcare firm Fresenius SE, based in Germany.

Dabur pharma, which makes anti-cancer drugs, had earlier denied that it is in talks with a German drug maker for a partnership or sale.

The deal with Fresenius values the company about 10 per cent higher from its market capitalisation of $273 million.

Last year, Dabur Pharma had sold its non-oncology drugs business to a local rival pharmaceutical company Alembic to focus on cancer treatment drugs.

Ahead of the announcement, Dabur Pharma shares ended at Rs 69.15 on Thursday, down 4.2 per cent in a strong Mumbai market. — Agencies

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Oil hits new record at $117 a barrel

New York, April 19
Oil prices hit a record high $117 a barrel Friday as jitters over Nigerian oil supplies outweighed a rally in the dollar and fears of an economic slowdown in giant energy consumer China.

U.S. light crude settled up $1.83 at $116.96 a barrel, before hitting a record $117. London Brent crude gained $1.49 to $113.92.

Oil prices have more than quadrupled since 2002 as supply struggles to keep up with booming demand, especially in China and other emerging economies.

A Nigerian rebel group said yeaterday it had sabotaged a major oil pipeline operated by Royal Dutch Shell and vowed to step up attacks on oil installations.

Shell officials, which is currently pumping 400,000 barrels per day below capacity in the OPEC nation due to sabotage and security concerns, confirmed a small amount of production had been shut in.

Strong demand for diesel fuel in emerging markets has been offsetting weakness in U.S. oil demand, analysts at Goldman Sachs said in a research note released yestrday.

A sharp fall in China’s stock market yesterday spurred concerns over a possible economic slowdown in China, the world’s second largest consumer of oil.

China’s stock market fell nearly 4 per cent to a 12-month closing low as the biggest stock, PetroChina slid below its October initial public offering price in Shanghai.— Reuters

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Ispat Ind to raise 500 cr via warrant issue

Mumbai, April 19
Pramod and Vinod Mittal-promoted Ispat Industries today said it would raise over Rs 500 crore through issue of share warrants to promoters on a preferential basis.

The company said in a filling to the Bombay Stock Exchange that the board has approved the issue and allotment of 11.32 crore-share warrants to eligible promoters at a price of Rs 44.69 each aggregating to Rs 506 crore

The holder of the share warrants would have an option to apply for and be allotted one equity share of the company at any time after the date of allotment in one or more tranches, it said.

Ispat further said that MD V K Mittal, has been re-designated as Vice-Chairman and MD of the company. While, Vinod Garg has been re-designated as ED (Commercial).— PTI

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Saimira floats JV with China music board

Chennai, April 19
Indian entertainment firm Pyramid Saimira Theatre has floated a joint venture with the China Society Music Research Board, a unit of the Chinese Ministry of Culture, to enter entertainment industry in that country.

Pyramid managing director P S Saminathan told reporters here that his company would invest Rs 400 crore in the JV during the current fiscal.

The JV would manage cinemas, produce films, provide contents for television programmes in that country, besides exporting films produced, he said.

It would also organise exchange of artistes from both the countries. — PTI

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Aviation Notes
World-class Airports: India nowhere in running
by K.R. Wadhwaney

A study reveals that the world’s five top international airports are in Asia, including Seoul (South Korea), Kuala Lumpur (Malaysia), Singapore, Hong Kong (China) and Nagoya (Japan).

In sharp contrast, the Indian airports are nowhere in running. The regular flyers, Indian and foreign, consider airports at Delhi and Mumbai no more than railway stations. The assessment has been made on the basis of facilities provided to passengers, visitors and other users. Recently, two international airports have been built at Hyderabad and Bangalore. While the Hyderabad airport has posed problems to the passengers and commanders, the commissioning of the Bangalore airport has been deferred because of poor road connectivity and other shortcomings.

On the basis of four public interest litigations, the Karnataka High Court had to issue directives that the old airport should stay open and no additional fee be charged from passengers. The court said: “The government of India and the Airports Authority of India are directed to renegotiate the concession agreement with Bangalore International Airport Limited to make sure that inconvenience to passengers is minimised, if not completely removed".

The new Rs 2,470-crore airport was originally scheduled to start operations from March 30, 2008. But it was put off to May 11 because of lack of air traffic control facilities and inadequate road connectivity between airport and city.

According to aviation analysts, the situation is no better at Delhi and Bombay as there is no adequate planning. Despite substandard infrastructure development, new aviation deals are being signed. The private operators are being given permission to start operations between India and China and between India and Islamabad. Without proper infrastructure, there will be chaos, if operations are commenced. However, an independent regulator for aviation will start functioning before the year-end. Once this happens, many problems will be solved.

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Investor Guidance
Inherited property has no gift tax
by A.N. Shanbhag

Q. I own a property in Mumbai that I propose to will to my son who is in the USA. In return, my son intends to send some money to me for taking care of my living expenses throughout my remaining life. This, in short, is our family arrangement. In this regard, will the money sent by my son be regarded as a gift? Does it matter whether the money is paid from India or the US? When the property goes to my son, will there be any gift tax? At the moment, my son is an NRI and a green card holder. If tomorrow he becomes an American Citizen, can he continue to own property in India?

— V K Kapoor

A. The family arrangement that you describe is a bit like an informal reverse mortgage structure. When your son sends money (without any consideration as such), it would automatically amount to a gift. On the money sent, there will be no tax either on you or on your son by virtue of the provisions of Section 56 of the Indian Income Tax Act that exempts the levy of gift-based tax on gifts between relatives. It makes no difference (tax-wise) whether the money is remitted from abroad or transferred from an NRE or NRO account. When the property passes by way of a will, it becomes an inherited asset and there is no gift tax on inherited assets. India doesn’t levy an inheritance tax and hence the passing of the property would be totally tax-free. NRIs are persons abroad who continue to have an Indian passport. PIOs are Indians who have a foreign passport. The rights, privileges and obligations of both NRIs and PIOs are similar as regards property in India. The only restriction being as a foreign passport holder, if ever he wants to sell the property, your son will not be allowed to sell it to another PIO. He will necessarily have to sell it to another NRI or to a resident Indian.

Non-convertible debentures

Q. In case of non-convertible debentures issued by a corporate with interest paid every year (which is taxable in the hands of the investor) with maturity after three years, the principal amount is returned on maturity. How do we calculate long-term capital gains in the same fashion as we do for an equity share applying indexation? If there is gain, we pay tax. If loss, can it be carried over for eight years?

— R C Press

A. When a financial asset is transferred, surplus or deficit is a capital gain or loss. Regular income-paying avenues like bank deposits, NSCs and Co-FDs are certainly financial assets and, therefore, if we can go strictly by the letter of the law. We should be able to claim long-term capital loss even on such instruments. But generally such instruments aren’t envisaged under capital gains taxation.

Bonds and debentures, though taxable as capital gains, the benefit of indexation is expressly not available. The only exception is indexed bond issued by the government, which attracts indexation.

ELSS scheme

Q. As per one of your replies to a reader, you have mentioned that reinvestment of dividends in an ELSS scheme also qualifies for a deduction under Section 80C. I have read the notification of ELSS in this regard and based on the reading of the same I do not see that dividend reinvestment qualifies for deduction under Section 80C of the Income Tax Act. I shall be much obliged if you could clarify the basis of your opinion.

— Khurshed

A. The notification is to do with how the ELSS scheme is structured. It doesn’t speak of any tax benefit. In other words, we do not find anything in the notification that is contrary to our stand. If the reinvestment option is available and the investor has opted for the same, the amount of dividend reinvested is definitely a contribution to the scheme and, therefore, it is eligible for the benefit of Section 80C.

The authors may be contacted at wonderlandconsultants@yahoo.com

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