The Tribune, Chandigarh, India

	Reviving Sick PSUs Plan panel for strategic sale New Delhi, April 11 The Planning Commission has pitched for strategic sale in sick public sector units to help them find a partner for revival. "We have always said let's have a strategic sale rather than yet another restructuring ... Most of the time these companies say that if you help us revive, you will get more money," Planning Commission deputy chairman Montek Singh Ahluwalia said at a SCOPE function. "But if you don't get strategic sale, why do you think it will revive....That keeps delaying the decision," he added. At present, over 20 state-owned companies, including Hindustan Fertilizer Corporation, Indian Drugs and Pharmaceuticals Ltd and Nagaland Pulp and Paper Company, are chronically sick. Ahluwalia said the public sector units should generate resources internally as it would help the government increase its spend on welfare activities. "They (PSUs) should increasingly get less budgetary support, we need the money for schools, hospitals, building roads and infrastructure...They can generate resources internally," he said. The government had approved Rs 15,254 crore for the 36 sick PSUs over three years, of which Rs 4,877 crore has gone to 14 firms. The companies, which have turned the corner by posting net profit since 2007-08, include Bharat Pumps and Compressors, Cement Corp, Heavy Engineering Corp and Andrew Yule. The turnaround has been achieved through change in management strategy, government support and reduction of staff strength through voluntary retirement schemes. The Board for Reconstruction of Public Sector Enterprises (BRPSE) was mandated to devise revival schemes for the state-owned sick PSUs. Standing Conference of Public Enterprises (SCOPE) is an apex professional organisation representing the central government public enterprises. It has also some state enterprises, banks, and other institutions as its members. — PTI
	FCI silos fail to attract farmers Ruchika M. Khanna Tribune News Service Chandigarh, April 11 The state-of-the-art silos constructed by Adani Agri Logistics, on behalf of the Food Corporation of India (FCI), have failed to catch the fancy of farmers in the region. Three years after the silos were commissioned at Moga (Punjab) and Kaithal (Haryana), these have failed to become effective market yards. The two silos were commissioned in 2008 and were subsequently declared as market yards by the Punjab and Haryana governments. This enabled the FCI to procure wheat directly at the silo storages, rather than first procuring in mandis and then transporting it to these storages. Each facility has a capacity to store 2.25 lakh tonnes of grain. Though these silos are being used as storages for wheat procured in mandis, they have failed to attract farmers to bring the produce directly to them, by bypassing the commission agents in mandis. Official sources informed TNS that last year 600 metric tonnes of wheat was received at the Kaithal silo and 6,000 metric tonnes of wheat was received at the Moga silo. This year, just 2,000 metric tonnes of wheat is expected to reach the Kaithal storage, while 10,000 metric tonnes of grain is expected at the Moga storage. This, in spite of the fact that the Union government also gives a bonus (on per quintal basis) over and above the MSP of wheat, while Adanis offer incentive in terms of lucky draw with attractive prizes, so that more and more farmers bring their produce directly to these silos. This year, too, a bonus in cash and a lucky draw scheme is being proposed to attract more farmers to bring and sell their produce directly at these silos. It may be noted that these plants have been built on a build-own-operate basis by Adani Agri Logistics, after it was awarded a global tender in 2006. The FCI has given a 20-year guarantee for usage of these storage facilities and will pay the company at the rate of Rs 200 per quintal per annum. Under this project, two base depots have been constructed at Moga and Kaithal. While the first mother depot at Moga has been linked to three field depots in Chennai, Coimbatore and Bangalore, the one at Kaithal is linked to Navi Mumbai and Hooghly. Except for the Navi Mumbai field depot, which has a storage capacity of 50,000 tonnes, all other four field depots have a storage capacity of 25,000 tonnes each. A key feature of this storage is that the entire handling of foodgrains, right from receiving at base depots, cleaning, drying, storage and transportation to the field depots, is carried out in bulk form, thus minimising losses.
	ULIP spat unlikely to hit market: Analysts New Delhi, April 11 The turf war between two sectoral regulators SEBI and IRDA over equity-linked insurance scheme (ULIPs) is unlikely to impact the stock market in a big way even as insurance companies would not hardsell the products, analysts said. "There will not be any big impact on markets due to this controversy as April is considered as lean month for insurance companies," Bonanza Portfolio vice- president (equities) RL Narayanan said. ULIPs - one of the most common insurance plans sold by life insurers, where the money collected from consumers is invested into equity and debt markets and returns are linked to the same - have become a bone of contention between the two financial sector regulators, with both claiming authority to regulate these schemes. On Friday, capital markets regulator SEBI had banned 14 life insurance companies from selling ULIPs, without its approval. The companies which come under the ban include Reliance Life, SBI Life, ICICI Prudential, Tata AIG and HDFC Standard Life. "The market has got enough time to digest the development in the ULIP issue and there is less possibility of any impact in coming trading sessions," SMC Capitals equity head Jagannadham Thunuguntla said. Marketmen said the spat between the two regulators for control of ULIP is not new and investment in equity market would not be affected largely because of this. "We expect the issue to be sorted out in a week's time. There is no concern of insufficient liquidity in stocks even if ULIPs are not the main driver of Dalal Street," Narayanan said. Meanwhile, Insurance Regulatory and Development Authority (IRDA) has asked the 14 insurance companies to ignore the ban imposed by SEBI, and asked the companies to continue their business as usual. ULIPs account for over 50 per cent of the total life insurance business in the country. — PTI
	Videocon eyes Philips India New Delhi, April 11 Diversified conglomerate Videocon Industries is understood to be making moves to acquire consumer electronics business of Philips India. "The company is looking at acquiring consumer products vertical of Philips India. The due diligence has just started," a source in the knowledge of the development said. When contacted, Videocon Group chief Venugopal Dhoot declined to comment. — PTI
	Tax Advice Commuted pension not taxable by SC Vasudeva Q. My father is a senior citizen. He received the arrears of revised basic pension commutation, gratuity with interest from March 1991 to Dec 2009. (i) Pension: Rs 3,18,000 (ii) Commutation: Rs 15,400 (iii) Gratuity: Rs 12,800 (iv) Interest on enhanced gratuity, commutation and revised pension Rs 1,29,000. Please let me know his tax liability. — S.K. Thakur A. Your queries are replied hereunder: a) The commuted amount of pension is not taxable in view of the provisions of Section 10A of the Act. b) The amount of gratuity received by your father would also not be taxable in view of the provisions of Section 10(i) of the Act c) The interest received on account of late payment would be taxable and includible in your father's total income. The above queries have been replied on the assumption that your father was a government employee. It is not possible to compute the tax liability as figures of other income have not been indicated in the query. Gift to grandchildren Q. I have received medical reimbursement which I spent on indoor operation charges of my wife in a government-approved hospital. Whether this amount is taxable or non taxable on my part. I want to gift Rs 50,000 to each one of my grandson and granddaughter (both students) by 'account payee cheques', to be spent by them on their studies or elsewhere. Whether there is any implication or liability on them, towards income tax. They have no other source of income which attracts income tax. — Narinder Singh Sangha A. The reimbursement made to you with regard to the treatment of your wife in a government approved hospital should not be taxable in view of the provisions of Section 17(2) of the Act. The amount of gift intended to be made by you to your grandchildren would not have any tax liability as far as your grandchildren are concerned. Service Tax Q. I want to clarify the following points on income tax and service tax. (i) Is there a provision in Budget 2006 that persons other than professionals need not to keep account books for their turnover is less that Rs 40 lakh and net profit shown at the rate of 8% and the provisions is applicable from 01.04.2010? (ii) Is commercial rent up to Rs 10 lakh received in F.Y. exempt from service tax like any other services under S.T. net? (iii) Is there any amendment in Budget 2010 regarding sale purchase of property that from 01.09.2009, circle rate will not be enforced on sale and purchase of property instead actual price paid by the buyer and received by the seller will take into account. — Vinod Kumar A. Your queries are replied hereunder: (i) Yes, there is a provision which was contained in the Finance Bill 2009 whereby Section 44AD had been amended. It is now provided that any person carrying on any business except the business of plying, hiring or leasing goods carriages which is covered by Section 44AE of the Act and whose total turnover or gross receipts in the previous year does not exceed an amount of Rs 40 lakh need not maintain books of account provided he agrees to pay tax at the rate of 8% of the turnover/gross receipts. (ii) The commercial rent up to Rs 10 lakh is exempt from service tax. However, you will have to get yourself registered with the authorities and keep filing a nil return. (iii) There is no amendment in the Finance Bill 2010 with regard to the non-adoption of circle rate in case of a sale of a property. The provisions of Section 50C of the Act, which require the computation of capital gain on the basis of the value assessed for stamp duty purposes, have not been amended. Section 80 C Q. I want a clarification that if a sum of Rs 1,00,000 is deposited in an FDR under Section 80C what would be my tax exemption limit. I am a senior citizen. I have only source of income from interest — savings interest and pension. — L.P. Rai A. Section 80C of the Act provides that in computing the total income of an assessee, being an individual or a Hindu Undivided Family there shall be deducted, the whole of the amount paid or deposited in the previous year being the aggregate sum referred to in said section as does not exceed Rs 1 lakh. The fixed deposit made in accordance with the requirements of the said section within the aforesaid limit is deductible from total income. You would thus be entitled to a deduction of Rs 1 lakh in totality under section 80C of the Act.
	Market Update Corporate results to dictate trend by Lalit Batra The market reported, last week, ninth straight weekly gain, boosted by earnings optimism and continued fund inflows. The Indian market managed to bounce back from the Greek-related concerns, buoyed by the gains in the US market. Better than expected retail sales posted by most US retailers raised hopes of a faster recovery in the world’s largest economy. The market is entering an important period of quarterly earnings, with IT bellwether Infosys kick starting the reporting season on Tuesday. Foreign funds have shown steady interest in Indian equities since late-February’s Budget which emphasised on fiscal consolidation and higher consumption power. Foreign institutional investors (FIIs) inflow in April 2010 totalled Rs 3,462 crore while the inflow in the calendar year 2010 totalled Rs 24,107 crore (till April 7, 2010). The overall mood indicates absolute bullishness although further trend would be dictated by some of the major corporate results that would come out the proceeding weeks. The global markets and the problems at the Euro zone relating to the Greece crisis would also play a minor role. However, going ahead the market seems to be on a firm footing with enough steam for further up-move unless some major negative on the result front or government’s monetary or fiscal policy front arises. Graphite India GIL is India’s largest and the world’s fifth largest manufacturer of graphite electrodes, used to melt steel and iron scrap in the electric arc furnace (EAF) to make steel. The usage of graphite electrode is on the rise worldwide. This is on the back of a gradual shift towards the EAF way of manufacturing steel, as it is cost effective, environment-friendly, and more flexible as compared to the traditional blast furnace route. As for the global steel production and consumption, these are expected to rise on the back of continued strong urban investment in emerging markets like China and India. India herself is looking at a robust growth in steel making capacity over the next 5-10 years. A strong advantage that the few graphite electrode manufacturers like GIL have is the high entry barrier. This is because of two reasons. The primary one is the technology and capital-intensive nature of the business. Another key factor that makes it difficult for a new player to enter this business is acquiring the key raw material for manufacturing electrodes — needle coke, which is a specialty product. It is believed that four companies majorly control the supply of needle coke globally. The company has a deeply entrenched position in the electrode industry. This has helped it grow strongly in the past. Its sales have multiplied by around three times in the past five years. Net profits have multiplied four times during this period. This is amongst the highest in the industry. Apart from this, it has been a very good dividend payer. The stock is currently available at a very attractive price of just around 6 times that current years’ projected earnings. Add to this, the dividend yield of around 4 per cent, GIL seems to be a good investment opportunity from a long-term perspective.