|B U S I N E S S||
Sunday, August 15, 1999
Of nuts, asses &
madmen in IT
CII holds workshop
Debt repayment drain on Haryana
ICICI Bank net up 26.30 per cent
IA ties up with Emery for cargo
Jaidka elected woollen export
asses & madmen in IT
CHANDIGARH: A. Had India taken a copyright on zero that it invented, half of computer-generated income would have come to it. But we interpret copyright as the right to copy.
B. There are at least two fields in which Indians have excelled. One, software the countrys annual software export growth has been at 50 per cent since 1991. And this will continue. Two, we have won Miss World and Miss Universe titles. Thats because there is no government department for software and there is no government department for beauty contests.
That come from Dewang Mehta, Indias whiz kid on IT (information technology, not income tax), who came to Mohali last Friday to address potential entrepreneurs on Semiconductor Complex Ltds premises.
His is the dynamic face of young and successful Indian software professional quite unlike the traditional image of a calculating and manipulative bania-cum-businessman. Dewang Mehta charmed his audience with his knowledge and wit, his breezy style and penchant for anecdotes.
Recalling how N.Vittal once described Nasscom as an association of nuts, asses, stupid and mad people, Dewang said there is little difference between madness and genius. Unless one is half mad, that innovative streak does not come out.
With government policies becoming software-friendly and Indians getting crazy about software They drink IT, eat IT and sleep IT nothing can stop India from going ahead.
Earlier it was felt that : it is better to have brain-drain than to have the brain in the drain. Now brain-drain in reverse is taking place because India offers tremendous opportunities. E-commerce is asserting its existence.
Dewang Mehta, who hails from Gujarat, said in Rajkot e-commerce is known as e-veopar. In that saurashtra town they even have an e-matka in operation.
There are two Salem towns one in India near Chennai and the other in the USA near Seattle. During his recent visit to Seattle, Dewang said Americans felt embarrassed when they discovered that our Salem had a website and theirs didnt
There were quite a few interesting observations and suggestions Dewang made:
a. If you cant compete with MNCs in our own country, you cant do it offshore. Stop surviving on subsidies.
b. There is no slowdown in the current year in software exports which amount to $ 3.5 billion and will reach $ 50 billion by the year 2008.
c. Indian software exports are not to some small, poor countries but to developed and advanced countries of Europe, North America and America.
d. India seems to have planned a strategy not to computerise till the year 2000 because of Y2K.
e. Each political partys manifesto has something to say how it would go about IT development a new practice.
Finally, an anecdote about Indian chartered accountants. Once the UN interviewed candidates from different countries for the post of chartered accountant. The only question posed to all was : how much is 2 + 2?
The Briton was enraged on being asked such a simple question and walked out without answering it. The French, trained not to lose his cool, politely answered : two plus two is four. The American calculated on his laptop and said: four. The Indian chartered accountant walked up to the Chairman of the interview board and said: what do you want it to be ? It can be 4, 40 or 400 . That is called customer satisfaction.
The HCL story
Another interesting speaker at the SCL function, apart from Air Marshal K.S. Bhatia, was Ajai Chowdhry, President & CEO of HCL Infosystems Ltd. He shared with the audience how he and his colleagues launched HCL. Six engineers, aged between 24 and 29, employed with DCM Data Products, feeling constrained, decided to leave their jobs in 1975 after three-four years of service.
They pooled in their savings, which totalled to a princely sum of Rs 1.85 lakh. They approached an IT company and offered to market its calculators and computers. They got the company to agree to their request that payments would be made in 60 to 90 days.
After about a year down
the line, with the suppliers money at their
disposal for a short duration and with their own savings,
they forged a tie-up with an IT company. Thus, Hindustan
Computers Ltd was born. Today the HCL groups
combined turnover is Rs 3,000 crore. The message: IT is
not about money. It needs innovation and hard work..
CALCUTTA, Aug 14 (UNI) Calcutta High Court has asked for details from the Government of India regarding floor prices and anti-dumping of steel proceedings. Mr Justice A.N. Ray while hearing a writ petition on Thursday filed by the Indofer Society, Lloyd Steel and Ispat Industries asked the Government to give details within seven days when further hearing is scheduled.
The petitioners asked to declare invalid the disposal by the designated authority on February 8 last without calling the procedures laid down in the rules. This was against SAILs application dated January 6 to the Commerce Ministry for initiating anti-dumping proceedings in respect of exports into India from South Korea, South Africa, Japan, Australia and China.
The Government contended that there was adequate protection against dumping of hot rolled coils with the floor price at $ 302 per tonne.
With the chips down in the steel industry and the Government in election mode, steel producers are involved in two more cases in Calcutta High Court with the Government of India.
The cases clearly display a despondency on the part of the steel producers in the face of huge losses and financial crisis for completing their projects.
Meanwhile, in a landmark judgement, the long standing demand of the new steel producers like Ispat Industries, Essar Steel and Jindal Vijaynagar Steel Limited for a share of the steel development fund was dismissed.
Mr Justice A.N. Ray of Calcutta High Court, summarily dismissed a writ-petition of Ispat Industries that claimed a share of Rs 5,000 crore from the Steel Development Fund and also sought an order on the Government of India to prevent it from converting loans issued to Steel Authority of India Limited from SDF into equity.
The court ruled that the Government is free to take its own decision regarding SDF and observed that approaching the writ court to have the Government policies altered is an improper motive.
Apart from these two cases another petition related to the steel industry is also pending in the court.
A Division Bench
comprising Mr Justice S.B. Sinha and Mr Justice M.H.S.
Ansari has completed the hearing on the petition filed by
Shilpi Banerjee. The petition drew attention to public
health hazards posed by the use of imported tin plate
seconds and tin free material for packaging of edibles.
The judgement is expected any time.
facility in TimesBank soon
CHANDIGARH, Aug 14 TimesBank received good response to its maiden public issue of equity last month. It was over subscribed by eight times. With the public issue the paid up capital of the bank has increased to Rs 135 crore and will rise to 9-10 per cent by March 2000 said Mr Nani B. Javeri, Managing Director of TimesBank Ltd here today.
TimesBank has four branches in this region at Chandigarh, Panchkula, Mohali and Ludhiana with latest technology. Chandigarh branch won the Times Cup-99 for mobilising the highest number of relationships.
Mr Javeri said that dial-n-bank facility will be launched in Chandigarh soon. Debit cards with daily withdrawal facility of Rs 10,000 and Master Card tie up has already been launched. The bank has already started auto loans, overdraft against demat shares. It will soon be offering personal loans and home finances.
Mr Javeri said that the bank has grown to 36 branch strong network in the last four years and has sought RBIs approval to further expand by opening new branches at Vasco, Dumdum, Ahmedabad and Mumbai.
CHANDIGARH, Aug 14 Mr KN Rattan, Executive Director, Shriram Pistons and Rings Ltd,while addressing a workshop on cost reduction and value engineering today at Rohtak, said the cost reduction was an important tool for improving productivity,lowering costs and maintaining competitiveness in todays environment. Value engineering was the key to achieving optimum results at the lowest overall cost, consistent with all the requirements which comprise a products value such as performance, reliability, usability, maintainability, appearance etc.
TO the Indian Railways, the Gaisal disaster will probably be just another accident, to be added to an already long list. But for railway passengers, it will be a long time before they can step on to a train without fear. The one-man commission of inquiry set up by the Government will no doubt go into the cause of the collision between Brahmaputra Mail and Awadh-Assam Express, but by all accounts, it was human failure or to be more precise, callous negligence of the railway employees which led to the mishap, taking a heavy toll.
While that is one part of the story on railway safety, the other pertains to the poor infrastructure. I do not know how many of you watched on Star News last Sunday a short capsule on railway safety. The report would make anyone think twice about travelling by train. Poor signals, archaic communication system, badly maintained engines, tracks in need of repairs, were some of the many lacunae that were noticed during the reporters journey on a train.
With that kind of infrastructure, no wonder the Railways have a dismal safety record. Travel by train is supposed to be the safety mode of transport. But look at the number of casualties reported every year from railway accidents. While in 1993-94 for example, 179 passengers were killed and 446 were injured, in 1994-95 the number was 84 and 434 respectively. In 1995-96, 406 passengers were killed and 681 injured in railway accidents, while in the following year, this number was 83 and 237 respectively. In 1997-98, 171 persons were killed and 747 injured in railway accidents.
In the report on safety performance (1997-98) published by the Directorate of Railway Safety, Ministry of Railways, there is a column on train accidents since 1960. Here you cant find one year where the railways have not had any accident. The only achievement of railways, if one can call that as achievement, is that the number of collisions has come down from 130 in 1960 to 35 in 1997-98. Similarly derailments have come down from 1,415 in 1960 to 289 in 1997-98. In this age of electric communication and sophisticated signalling and track management, the biggest public sector in the country reports 35 collisions in a year and 289 derailments! There is no better proof than this of the callous attitude of the Railways towards safety. Every Railway Minister has used the railways for nurturing his constituency and granting new trains, new stations and new halts to keep his votes happy. Obviously, while pleasing the constituents received the highest priority, safety which should have been of paramount importance, did not get the attention that it deserved.
Signalling, says the report, plays a vital role in promoting safety by minimising the impact of human error on the safety of train operations. Centralised operation of points and signals, apart from enhancing the efficiency of train operations, also reduces dependence on the human elements, it says. Considering the large number of accidents caused on account of human failure, it is unfortunate that the Railways have not given the highest priority to improving signals.
At least now, the Railways must immediately appoint an independent outside agency consisting experts in the field to evaluate the existing safety standards and suggest immediate remedial steps to make travel by rail safe. This report must be made public. I emphasise the need for an independent outside agency because consumers or passengers have a right to information and a right to safety. They must have the true picture on railway safety. They must know how safe rail travel is and what needs to be done to ensure safety. And this will not come from within the Railways. Besides, a comprehensive report would also help passengers lobby for immediate implementation of safety measures. There can be no compromise on safety.
The Railways must also make public all reports on investigations into previous accidents and the action taken by railways to prevent such accidents in future. Consumers have a right to this information. In addition, passengers, particularly the families of those who have died in these accidents need to know whether those responsible for the accidents were identified and punished.
Debt repayment drain on Haryana finances
NEW DELHI, Aug 14 (UNI) The finances of Haryana are a matter of great concern as its total indebtedness amounted to 23.5 per cent of the State domestic product (SDP) in 1998-99. Debt repayment and interest element are a major drain on the State finances, says a paper prepared by the PHDCCI.
The paper, to be presented to the Haryana Chief Minister at a meeting with the Chamber on Thursday, has pointed out that the public expenditure in the State has shown a rising share of general services at the cost of social and economic services.
This is due largely to the rising interest payments as a percentage of revenue expenditure from 9.3 per cent in 1980-81 to 14.9 per cent in 1991-92 and an estimated 20.4 per cent in 1999-2000. The revenue expenditure in 1980-81 increased from Rs 399.26 crore to Rs 2,148.54 crore in 1991-92 and is estimated at Rs 6,626 crore in the year 1999-2000. Implementation of the Fifth Pay Commission based emoluments alone has imposed an annual liability of Rs 670 crore on the State.
The PHDCCI has suggested restoration of the budgetary balance and maintaining macro-economic stability in order to allocate higher resources for development.
In the post-1991 reforms period, development expenditure grew by 0.53 per cent per annum as against non-development expenditure of 2.53 per cent in the Eighth Plan period.
For reducing fiscal deficit the government should be made more efficient, leaner and thinner, limiting its role to governance.
For accelerating development, allocation of higher funds for infrastructure and social welfare is necessary. The Government should set up an autonomous expenditure commission.
The suggested terms of reference are (a) restoration of efficient resource between Plan and non-Plan expenditure (b) reduction in the size of government employment in the next five years and (c) efficient fiscal management.
The functioning of the Government should be restructured and the tool of information technology extensively employed in the administration. The endeavour should be to introduce executive-oriented governance instead of multiple decision layers from the level of Inspectors.
For the industrial sector, the policy thrust should be to take necessary steps to associate the private sector to turn around loss making public sector units. Even the profit-making undertakings should be converted into joint ventures to be run professionally.
For reducing the adverse impact of subsidy on State finances and maximising the benefit to targeted groups, it is necessary to make subsidies transparent, focus subsidy on final goods and services for maximising the benefit to target population at minimum cost, set limits for duration of any subsidy scheme and clearly define the economic objective before introducing subsidies, the paper said.
net up 26.30 per cent
CHANDIGARH, Aug 14 ICICI Bank has reported the first quarters operating profit of Rs 36.21 crore and net profit of Rs 20.25 crore. These figures translated to an increase of 26.30 per cent and 20.97 per cent over the comparable figures of June 30, 1998.
The deposits of the bank stood at Rs 5,954.39 crore at June 30, 1999, compared with Rs 3,677.84 crore last year, a growth of 61.90 per cent. The total advances and investment in credit-like corporate debt instruments stood at Rs 3,448.56 crore against Rs 1,644.51 crore.
During April-June 1999, the bank opened 5 branches. The bank now has 60 branches, 9 extension counters, 16 work-site/off-site ATM centres.
The bank has made a
detailed assessment of the risks posed to its operations
by the year 2000 (Y2K) problem and has initiated
appropriate risk-mitigation measures, including a
business continuity plan, to ensure that all
mission-critical operations of the bank will be carried
out and customer interests fully protected in case of any
failure of utility services, etc, beyond December 31,
IA ties up with Emery for cargo movement
NEW DELHI, Aug 14 (UNI) Indian Airlines today entered into an agreement with leading air freight transporters Emery Worldwide for carriage of cargo from Singapore to India.
IA will explore possibilities of allying with other freight transporters for other international routes and markets, Mr Anil Baijal, Managing Director of IA, told reporters here.
This agreement of agreed space at an agreed rate, the first of its kind for the national airline, will be on a trial basis for six months on the ex-Singapore route. Possibilities of extending to other international routes and markets by tying up with other freight players will be tried out thereafter, he added.
At present, IA has an
average monthly carriage of 5,800 tonnes on the domestic
routes and 1,100 tonnes on the international routes. The
airline expects to earn Rs 280 crore from the cargo
sector in 1999-2000 while it registered Rs 270 crore
revenues in 1998-99. With this tie-up, the airline
expects to earn over Rs 1 crore in incremental revenue.
Q: When the workman dies during writ proceedings, are heirs of that workman entitled to get wages after the death of the workman?
Ans: Calcutta H.C. was considering this point in the case of Nandita Dutta v Third Industrial Tribunal (1999-I-LLJ.1342)
The workman died on 2-8-97 and the writ proceedings was initiated in July, 1998. Now the question is whether the legal heirs of the workman who have been substituted on this writ proceeding in place of the workman are entitled to get the payment in terms of S.17-B of the I.D. Act after 2.8.1997?
The workman argued that the legal heirs of the workman are entitled to payment in terms of S.17.B of the said Act even after 2.8.97 during the pendency of the writ proceeding. He referred to Bharat Petroleum Corporation Ltd. v Union of India reported in (1998-I-LLJ-1228) (Cal). In that case, the H.C. had held that where three necessary conditions for the application of S.17.B of the paid Act are satisfied, Court is under obligation to pass orders in terms of S.17.B. of the said Act.
These three conditions are: (1) Labour Court should have directed reinstatement of the workman (2) the employer should have preferred proceedings against the Labour Court award in the H.C. or the S.C., and (3) the workman should not have been employed in any establishment during such period.
In the present case, all the three conditions were satisfied. But when the workman died during the pendency of the application, there could not be any question of his being employed or not employed. In other words, when all the three conditions of S.17.B are fulfilled. The Court is under obligation to pass orders in terms of S.17.B.
However, in the instant case, the workman died on 2-8-97. Therefore, the H.C. held that on and from 3-8-97, the third condition as stated above is not satisfied and, therefore, on and from 3-8-97 S.17.B. is not satisfied.
Q: The interest on loan against TDR/NSC can be deducted from the accrued interest on TDR/NSC while claiming rebate under Sec.80L. For example, if interest on TDR/NSC during the year is Rs. 5000 and interest on loan is Rs. 2000 then interest income should be taken as Rs. 5000-2000 = 3000. Please specify the rule/section under which this facility is available.
P.C. Sharma, Chandigarh
Ans: Yes, only the net interest income from NSC is to be taken for Income-tax purposes. It is provided in sections 56 and 57 of the Income Tax Act as to how to calculate the income from other sources for Income-tax purpose.
Q: I am a member of the Housing Society and contributed Rs.20,000 towards the same. The society has applied to the Government for the allotment of the land which may or may not be allotted. Whether I am eligible for deduction upto 10,000 under Section 88 by way of this contribution.
2. Suppose a person do not have any taxable income in a particular year and he purchases some NSCs in that year. Whether he can claim the deduction of this investment under Section 88 in the next year when the taxable income arises.
3. The maximum rebate available under Section 88 is limited to investment of 60,000/70,000. Suppose a person contribute Rs. 1,00,000 in such investments in one year. Whether he can spread over this investment over two different years and claim deduction of Section 88.
Manoj Aggarwal, Chandigarh
Ans. You will be eligible to tax rebate u/s 88 on Rs.10,000 in respect of amount paid to housing society. In case there is no taxable income in a particular year and the investment is made in NSC, the benefit of tax rebate cannot be taken advantage in the subsequent year when the taxable income arises. Similarly, in respect of investments which have been made so as to claim tax rebate u/s 88 but during the year, higher investment is made to make it eligible to tax rebate u/s 88, then in respect of such higher investment so made the tax rebate cannot be available in the subsequent year.
Q: Is fixed medical allowance taxable? Is there any method to get rebate on this FMA?
2. How can we get exemption on HRA being paid in Rural Areas of Haryana? What is the meaning of Salary for the purpose of getting exemption on HRA in the grade of 2200-4000 (pre-revised). Should ADA be added in the Basic Pay for this purpose?
3. What is the status of accrued interest on NSCs VIIIth issue under Section 80-L?
4. Who can give relief on the instalments and interest of loan taken for the construction of House? What is the maximum limit during the Assessment Year 1999-2000?
Balram Chawla, Rewari
Ans. The fixed medical allowances will be fully taxable in Income Tax. The position would be same even if you are possessing this evidence to prove that the entire amount has been spent by you. It is advisable that the employer, instead of granting fixed medical allowance, should grant you reimbursement of medical expenses which are exempted upto Rs.15,000 in a year. The exemption in respect of house rent allowance will also be available in rural areas of Haryana. For the purposes of getting exemption of house rent allowance, the ADA would be added to the basic salary. The accrued interest on NSC VIIIth issue will be included in the income of the assessee and will be eligible for tax deduction u/s 80L. This accrued interest will also be eligible for the tax rebate u/s 88. The relief in respect of payment of instalment for housing loans, etc. can be given by the employer itself. Similarly, they can also give the deduction u/s 24 of the Income Tax Act,1961.
Q: I am a retired senior citizen and not engaged in any business or profession. I am residing in Ludhiana having a house and phone. Kindly let me know is it necessary for a senior citizen to file I.T. Return under One/Six scheme who has a house and a phone?
P.C. Gupta, Ludhiana
Cheaper edible oils
This refers to the write-up Cheaper oils (August 8). I fully agree that any industry that produces and sells products at prices higher than those at the global level will get punished by the market. But how can any industry be expected to produce and sell its finished products at a price even below the cost of its raw material?
The Government every year declares a minimum support price in respect of oilseeds which is fixed keeping in view the cost of production of various types of oilseeds. The industry is expected to buy oilseeds at least at the minimum support price. Recently the government declared a minimum support price for sunflower seed at Rs 1155/- per qtl. The sunflower seed contains about 40 per cent oil and thus the bare raw material cost of the 1 kg. crude sunflower oil works out to be Rs 28.87 and then there are costs of extraction as well as the costs of refining. The realisations from the residue i.e. deoiled cake are just sufficient to cover up the various levies like R.D.F., market fee, sales tax and other mandi expenses.
Under these circumstances how the industry can produce & sell the refined oils at par with the imported refined oil the landing cost of which is ruling between Rs 21 and 22 per kg in the wholesale market. The only alternative available with the industry in order to compete with the imported oils is to pay much lesser price to oilseed growers than the minimum support price which is bound to discourage them from growing oilseeds in future and they are bound to diversify into other crops which can prove to be suicidal for the nation
Already we are meeting about 30 per cent of our total requirements of edible oils through imports and are spending huge amounts of precious foreign exchange for this purpose. Increased dependence upon imports increase the risk of blackmailing by oil exporting countries. We witnessed it last year.
Last year our indigenous production was low and the oil exporting countries exploited this situation to their advantage. In spite of reduction of import duty, consumers had to pay a heavy price for edible oils. So there is nothing to feel happy about the low prices of edible oils which is the result of excessive imports of oils much beyond the official estimated gap between demand and supply from local sources. It is in the long-term interests of consumers to curve excessive imports so that farmers are not discouraged from growing oilseeds and we are not blackmailed by foreign suppliers as happened last year.
Our oilseed productivity is only 60% of the world average and 35% of western world. Our agricultural universities and the TMO & P under the Ministry of Agriculture have to play an important role in this direction. The industry in India has to bear high rates of interest and electricity as compared to world standards. Further the edible oils as well as oilseeds are burdened with a heavy dose of local taxes & levies. The government has to look into all these aspects in order to enable the industry to produce & sell edible oils at internationally competitive rates.
Jaidka elected woollen export
NEW DELHI, Aug 14 Mr Ashok Jaidka has been elected as the new chairman of Wool and Woollens Export Promotion Council. Mr Jaidka is the Chairman of Ludhiana based exporter Jaidka Hosiery.
Mr Surinder Singh of Winter Woollies, also of Ludhiana, has been elected the new Vice- Chairman of the council, which is promoted by the Ministry of Textiles.
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