The Tribune, Chandigarh, India

Meltdown fails to deter Nalco
Aluminium giant to invest Rs 25,000 cr despite profit drop

Bhubaneswar, September 20
Allaying apprehension about its disinvestment, aluminium giant Nalco is all set to invest over Rs 25,000 crore to launch new projects and undertake major expansion despite decline in profit due to global recession.

“Though disinvestment has to be a government decision as it is the owner, Nalco does not figure in the list of public sector companies likely to be disinvested now,” Nalco chairman-cum-managing director CR Pradhan said here.

The government has not sought any comment from the Navaratna company in this connection, he added.

Despite adverse market conditions due to global meltdown that led to a fall in its net profit to Rs 1,272 crore during 2008-09 against Rs 1,632 crore in previous year, Nalco achieved a record turnover of Rs 5,631 crore last fiscal compared to Rs 5,576 during previous year, he said.

Posting 100 per cent capacity utilisation in alumina refinery and smelter, Nalco achieved highest-ever cast metal production of 3,61,262 tonnes in 2008-09 against 3,60,457 tonnes in 2007-08, the company CMD said.

On new domestic projects, he said besides a Rs 6,000-crore alumina refinery in Andhra Pradesh, the company planned to set up a five lakh-tonne smelter plant and 1,250 MW power unit in Orissa's Jharsuguda district at an investment of more than Rs 16,000 crore.

Pradhan said the company had already prepared a feasibility report for the proposed Andhra Pradesh project for which the Centre had accorded prior approval for mining lease proposals.

The proposal for smelter and power plant at Brajarajnagar in Jharsuguda district has been conditionally approved by the Orissa government, he said, adding the project was proposed without any coal, mineral and water linkage.

With the second phase expansion with an investment of Rs 4,402 crore nearing completion, Nalco is set to raise bauxite mine capacity from 48 lakh tonnes to 63 lakh tonnes and alumina capacity from 15.75 lakh tonnes to 21 lakh tonnes very soon, Pradhan said.

Similarly, aluminium capacity would rise from 3,45,000 tonnes to 4,60,000 tonnes and power generation capacity from 960 MW to 1,200 MW by the end of the year, he said.

Sharing more details about the company's performance, he said it produced highest-ever domestic metal sale of 271,274 tonnes during 2008-09 against 251,612 tonnes in 2007-08.

Similarly, the company has also achieved highest-ever domestic sale of special alumina of 36,695 tonnes against 27,293 tonnes in 2007-08. — PTI

Plans nuclear power plant

Nalco is focusing on diversification, including setting up a nuclear power plant and moving into other metals, to meet the economic meltdown.

As part of its plans, the company has begun talks with the Nuclear Power Corp of India Ltd (NPCIL) to set up a nuclear power plant of 1,000 MW capacity, said Nalco chairman and managing director CR Pradhan.

“We are in talks with NPCIL. We have plans to become an independent power producer,” Pradhan said after the company's 28th annual general meeting here on Saturday.

Nalco also aspires to be a global player in metal business and is in the process of diversifying into other metals from its core business interest, aluminium. — IANS

Okay with new FDI norms, says FinMin

New Delhi, September 20
Shedding earlier reservations over some aspects of the controversial new FDI guidelines, the Finance Ministry now says it does not have any objection to new rules that changed the criteria for calculation of foreign ownership in a company and its downstream investment.

However, whether the new scenario will pave the way for Bharti-MTN deal to comply with sectoral caps is not yet clear.

“We are not opposed to press notes (2,3 and 4). Earlier, we may have some opposition to some aspects of these notes. We are doing everything to implement these notes, approved by the Cabinet,” a key source said here.

He said the Foreign Investment Promotion Board (FIPB) has been approving cases, based on these notes.

When asked whether Bharti-MTN deal will require FIPB permission to go through or would it breach the sectoral cap as per the new norms, he said the board had not taken a call on it as the deal has not come to it.

The deal to create the world's third largest telecom company with 200 million subscribers and over $20 billion of revenue is still in negotiating stage and is yet to fructify as it has to cross some hurdles, including dual listing of MTN on South African and Indian bourses with equal voting rights. — PTI

Govt cracks whip on oil firms
Ajay Banerjee
Tribune News Service

New Delhi, September 20
To eliminate problem of delays in oil and gas exploration that could hamper national energy security in the long run, the government has cracked whip on companies that delay their projects.

This is a method used to keep exploration on target and ensure tight deadlines for the companies involved in drilling and for oil and gas.

The Directorate General of Hydrocarbons, which works under the Petroleum Ministry, has collectively imposed and recovered fines running up to $90 million (Rs 450 crore) on oil companies. The list includes biggies like the state-owned Oil And Natural Gas Corporation (ONGC) and Mukesh Ambani-owned Reliance Industries Limited, among others. The RIL alone has paid about $17.1 million (about Rs 85 crore) as fines. Another major chunk of fine has been paid by ONGC.

A large number of fines have been imposed within the ongoing financial year that coincides with the second term of the Congress-led UPA combine at the Centre. Sources said the fear of heavy penalties was working well.

Sources said imposition of fines is a continuous process and the sum of Rs 450 crore has been collected in the past few years.

They also revealed that no extension in deadline was being given to anyone without imposition of appropriate penalties. Since India is heavily dependent upon imports to meet its fuel needs, it makes no sense for any company to delay. The companies are classified as production sharing contractor (PSC) under the new exploration licensing policy.

The PSC lays down terms under which it is mandatory for the contractor or the bidding party to meet a minimum work commitment within the stipulated timeframe. Though the ministry does not give details, sources in the petroleum sector said the penalty clause makes the contractors work on time. The fine is so heavy that delays would not just mean a financial loss for the contractor — it also means cancellation of contract.

PepsiCo vice-chairman to retire

New York, September 20
PepsiCo vice-chairman and international CEO Michael D White will retire later this year, after an association of nearly 20 years with the beverages giant.

Upon his retirement, White would also step down from his seat on the PepsiCo board of directors, keeping with the company's practice, PepsiCo said in a statement. — PTI

Global job market still grim
27 persons lose job per hour

New York, September 20
Despite the US economy showing indications of recovery, the global job market remains gloomy, with companies laying off at least 27 employees every hour to cut costs.

With companies continuing to reduce their headcount in their efforts to tackle the downturn, around 13,000 jobs have been slashed so far in September by some of the leading global firms most of them headquartered in the US.

Job losses of about 12,900 have been witnessed in just 20 days of this month, translating into an average of 645 people being laid off per day. In turn, the toll comes to at least 27 people losing jobs per hour.

The lay-offs are happening across almost all the sectors from pharma to software to refinery, among others.

Most of the job cuts happened in the US, which has already seen a staggering 5,50,000 Americans filing for unemployment benefits in the first week of September.

Last week, US Federal Reserve chairman Ben Bernanke said the recession was “very likely over”, while America's retail sales data strengthened on hopes that recovery from the economic downturn was progressing.

Bernanke, however, said recovery would be slow and it would take time to create jobs.

September's job cut wave was led by Pharma major Eli Lilly & Company, which will slash around 5,500 jobs globally by 2011.

Moreover, US-based computer maker Dell is eliminating 500 people while Deere & Company is reducing its workforce by 367 manufacturing employees. — PTI

Tax Advice
Medical reimbursement not taxable
by S.C. Vasudeva

Q. A deduction has been made in respect of income tax from the amount of medical reimbursement exceeding Rs 15,000 pa. I am employed with the Haryana government and the reimbursement is made in the following circumstances:

a) Indoor treatment in govt hospitals

b) Indoor treatment in private hospitals approved by the government

c) Treatment of chronic diseases in a hospital approved by CCIT.

— Rakesh Kumar

A. In accordance with the provisions of the Act, any amount paid by the employer in respect of any expenditure actually incurred by an employee on his medical treatment or treatment of any member of his family is not treated as a perquisite and is not taxable, in case such reimbursement is in respect of the expenditure:

a) In any hospital maintained by the government or any local authority or any other hospital approved by the government for the purposes of medical treatment of its employees.

b) In respect of the prescribed diseases or ailments, in any hospital approved by the chief commissioner having regard to the prescribed guidelines.

In case of reimbursement covered at (b) above, the section requires that the employee shall attach with his return of income a certificate from the hospital specifying the disease or ailment for which medical treatment was required and the receipt for the amount paid to the hospital. Chronic diseases prescribed for the above purpose include cancer, tuberculosis and ailment of heart, ailment or disease of eye, nose or throat requiring surgical operations. The list is provided in Rule 3A(2) of the Income-tax Rules, 1962. The conditions for the approval by the chief commissioner are prescribed in Rule 3A (1). Accordingly, in case the medical reimbursement to you is covered within the above guidelines, the same will not be treated as a perquisite and would not be taxable.

House rent

Q. I work for a public limited company and entitled to Rs 20,000 monthly rental. I pay Rs 16,000 by cheque to my wife. The house is in the name of my wife. I claim benefits of payment of rent of Rs 16,000 pm in my returns. Similarly, my wife, who has no other source of income accept a nominal bank interest income of about Rs 15,000 pa, shows this rental as income in IT returns. Please advise whether this procedure is correct? If not, (a) how should we proceed further? (b) What could be its consequences?

— Sumit Bhalla

A. Payment of rent to your wife for the house owned by her may be legally correct but sounds illogical that a husband is paying rent to his wife for living in the house owned by her despite the fact that both are living together. The alternative is not to make a claim for the house rent paid to your wife. In case entire facts of the case have not been explained to the assessing officer, your assessment can be reopened for disallowing exemption of house rent allowance to the extent permitted under the provisions of the Income-tax Act, 1961.