|Sunday, January 30, 2000,
Haryana invites Japanese companies
Sensex to touch 6,500 mark
hints at changes in PDS
Renewed lending to Iran
PNB net rises
Haryana invites Japanese companies
CHANDIGARH, Jan 29 Top Japanese Industrialists may help the Haryana State by solving the power problem. Interacting with the Japanese delegation, the Finance Minister, Mr Sampat Singh, invited the Japanese companies to set up units for power generation in Haryana. Significantly, the lack of power is a major election issue in the ensuing Haryana State Assembly elections.
Mr R.S. Verma, Chief Secretary, Government of Haryana, said that already many Japanese units like Maruti, Sony, YKK etc are based in Haryana which goes to prove that Haryana is an attractive investment destination for Japan and that Haryana would welcome more investment in the field of food processing and other industries. He laid special emphasis on food processing and appreciated the delegations interest in this sector.
An Interactive Session was also organised by the PHD Chamber of Commerce & Industry between Industrialists of top Japanese Companies and those of the Northern Region of India.
The Session highlighted the three sectors of Infrastructure, Food Processing and Information Technology as being of main concern to the Japanese Delegation though they seemed open to other areas of trade also.
Mr Vikram Sahgal, Chairman, Chandigarh Committee PHDCCI informed that ever since the opening of the Indian economy in 1991, Japan has been one of Indias largest trading partners. Indias export basket to Japan has been dominated by iron ore, shrimps and diamonds and two new range of export items had to be identified to further strengthen bilateral trade.
Koshi Nojima, leader of the Japanese delegation informed that Japan would be helpful in promoting exports of tomatoes, ginger, garlic and red pepper. Traditional crops like wheat and rice also form an integral part of their list for prospective exports which leaves a vast potential area to be exploited by Indian exporters. India, he said has of course, to improve packaging of the products attractively and meet international standards.
Mr Amarjit Goyal, Chairman, Punjab Committee of the PHD Chamber stressed the need for increased Japanese participation in Punjab especially in the field of food processing.
Mr R.I. Singh, Secretary
Industries, Punjab and Mr S.S. Brar, MD, PSIDC,
highlighted that Punjab has witnessed considerable
progress in industrial activity during the past three
years. Investment in industry in the State has risen by
38 per cent and exports by 73 per cent.
LUCKNOW, Jan 29 (PTI) The Bombay Stock Exchange (BSE) sensitive index is expected to touch the 6,500 mark by Divali this year, Unit Trust of India (UTI) Chairman P. S. Subramanyam said here today.
Mood in the market is upbeat and we expect the BSE Sensex to touch 6,500 mark by Divali this year in the wake of recent cut in interest rates along with sound macro economic fundamentals, Subramanyam told reporters here.
The stock markets have been rising continuously since the middle of 1998 and on the first trading day of 2000 (Jan 3) the BSE Sensex increased by record 369 points and on January 10, touched its record high level of 5,668.
In addition to it, there has also been rise in cash groups share prices which have increased sharply in the recent past with the major attraction being in the software, media and private banks stocks. He said the recent relaxation for American Depository Receipts (ADR) and Global Depository Receipts (GDR) would also help in further improvement in the market sentiment.
With these relaxations (for ADR/GDR), more and more companies will realize better valuation in the global markets which will be reflected in their share prices in the domestic markets, he added.
MUMBAI, Jan 29 (PTI)
With effect from Monday, Sun Pharmaceuticals,
Morepen Laboratories and Lupin Laboratories would become
part of the baskets of BSE 100, BSE 200 and BSE 500
indices respectively. These replacements have been done
following the dropping of Wockhardt from these indices.
LONDON, Jan 29 (AFP) The World Bank is making tentative moves to resume lending to Iran, ending a six-year suspension, in spite of US objections, the Financial Times reported today.It said the improvement in Tehrans relations with European Countries and Japan had led the bank to prepare two projects needing more than $ 230 million in finance.
The move would allow reformist Iranian President Mohammad Khatami to show tangible results from Irans rapprochement with the West, strengthening his hand against conservatives, the FT noted.
hints at changes in PDS
JALANDHAR, Jan 29 Accepting the existence of certain basic flaws in the existing public distribution system (PDS), Mr Shanta Kumar, Union Consumer Affairs Minister, has indicated that certain changes to streamline the system and to make its pro poor were round the corner.
Mr Shanta Kumar, who was addressing a press conference here said today that though the PDS, had helped people, particularly the poor, but certain flaws had rendered it useless to some extent. As the era of subsidies is about to cease, now it has to be decided whether the system was for the 100 crore people or for 33 crore people who are living below the poverty line. I am of the view that why affluent people should go to ration depots, said Mr Shanta Kumar. He said his department was inviting suggestions from states regarding the proposed changes.
Mr Shanta Kumar said by June 7 he would be meeting different units of the advisory council formed to review the system.
He admitted that the situation was such that 35-40 per cent ration was not reaching people who really needed it. In case of Nagaland the diversion of PDS foodgrains is 100 per cent. Not a single grain is reaching people there and we have to correct it even as it is a challenge for the department, he said. One of the changes envisaged by the department was to associate village panchayats with the system. He said a copy of allocation of ration depots would be sent to each village panchayat. The ration depots would be also asked to prepare a balance sheet of stocks at the end of the month in addition to making them display the allocation, Mr Shanta Kumar said.
He said to prevent the inflow of spurious goods in the market, certain changes would be made in the Consumer Protection Act and the Essential Commodities Act.
Regarding the problem of storage of surplus foodgrains in Punjab, Mr Shanta Kumar, said the Centre was thinking to increase the monthly movement from 10 lakh to 15 lakh tonnes. He said his department was going to introduce privatisation for the storage of foodgrains in the country. The problem is that the per kg storage charges are too high at Rs 2.70 but in the private sector it was somewhere between Rs 1 and 1.50. So we are going to encourage people to build godowns and in turn we will pay storage charges to them, he said.
Advocating the presidential form of government in the country after affecting certain changes in the Constitution, Mr Shanta Kumar, said that the paraliamentary form of government was not suitable for the health of democracy.
He further said time had come to do introspection so as to establish where we went wrong and why we failed to make India as per the dreams of hundreds of freedom fighters who sacrificed their lives. Just think, we are living in a country where 24 lakh children go blind in just one year for their parents are unable to provide them proper food. He added that the need of the hour was to review the entire political set-up. If we failed to do so history would not spare us.
I am of the view
that there should be some amendments in the Constitution
without tinkering with its basic structure which is
democractic, said Mr Shanta Kumar. He said the
committee to review the Constitution would find where the
system went wrong and political corruption crept in.
NEW DELHI, Jan 29 (UNI) The Punjab National Bank today announced 37.7 per cent jump in net profits at Rs 385.2 crore for the nine months ended December 31, 1999 as against Rs 279.7 crore during the corresponding period last year.
The bank provided Rs 381.8 crore towards income tax, interest tax, wealth tax, non-performing assets during the period under consideration.
The gross profits went up 18.9 per cent at Rs 767 crore compared to Rs 645 crore after making provision of Rs 112.5 crore towards the proposed wage revision.
Total income increased 15.8 per cent at Rs 4,250 crore from 3,671 crore for the nine months period under review.
Interest income amounted to Rs 3,784.7 crore for the nine months ended December 99, registering a growth of 16 per cent over the corresponding period last year.
by Pushpa Girimaji
For consumers sake, privatise SEBs
ITs time trade unions in the services sector realised that in order to lobby successfully for their cause, they need the support of consumers. And that such support is conditional on their respecting the rights of consumers and keeping consumers interest in mind. So far as the power sector is concerned, it would be really difficult for those working in the state electricity boards to garner any sympathy for their cause because over the years they have completely forgotten that they are supposed to serve the consumer and have treated the consumer with utmost contempt and disrespect. Needless to say that today, the way the Government deals with the demands of the state electricity board (SEB) employees depends on the way the consumers react to the situation. I am referring to the strike by the Uttar Pradesh State Electricity Board (UPSEB) staff against reforms in the power sector in the state and the solidarity expressed by the staff of SEBs in other States.Power consumers in the country have always had a bad deal, but things have taken a turn for the worse in the last few years. Erratic supply, long power cuts, frequent breakdowns, violent voltage fluctuations have so severely affected the service that Indian consumers, who are by nature passive and apathetic have taken to the streets in several parts of the country to protest against the shoddy service. At time the protests have even turned violent. The situation has come to such a pass that even inverters and voltage stabilisers are of little use.
While power breakdowns are one part of the story, the other pertains to rampant corruption and gross inefficiency. Incorrect and irregular billing is certainly not a rarity with many of the SEBs in the country. It is also not unusual to find electricity boards not issuing bills for three to four years and then suddenly slapping a bill for the entire period and demanding that the consumer pay the amount immediately along with interest. And then, exaggerated bills are used to harass consumers and extract money from them. Even getting a power connection is a herculean task, if you refuse to grease the palms of those who have the power to sanction it. Of course if you pay a little extra, you can get an illegal connection and enjoy the supply without paying for it.
The woes of consumers are not restricted to bad billing and incorrect meters alone. Disconnecting supply without notice, and sometimes even without reason is another hallmark of SEBs, particularly those in the northern region of the country. I remember the case of a Noida resident, Ms Arun Arora, whose line was cut off for no other reason, but to extract some money from her. There were no pending bills and no arrears. She was not even issued a notice of disconnection, because obviously, if you do that then you must state the reason for disconnection. Since she refused to pay, she not only had to run from official to another to get back the supply, but also pay Rs 100 as reconnection charges. Look at the behaviour of the staff. Instead of apologising for the illegal action, they thought it fit to extract this money from the consumer. Ms Arora had to eventually seek the help of the consumer court for justice.
Electricity boards are also known to show utter disregard for public safety. Only recently, the National Human Rights Commission took cognisance of news reports that ten people were seriously injured as a result of snapping of an 11 KV electricity line in Hapur. Besides ordering an interim relief of Rs 10,000 to each to the injured, the Commission asked the UPSEB to take disciplinary action against the officials who were expected to exercise control and supervision over the installation and maintenance of the line. The comments of NHRC spoke volumes about the attitude of these boards, when it said that the board was grossly negligent, almost bordering on recklessness when it allowed a current of much higher ampere to flow in a line which was unable to take such heavy load, resulting in melting and snapping of the wire. Such recklessness is not restricted to UPSEB alone. There have been similar cases filed against the Haryana State Electricity Board and several others too.
The dismal power situation, the widening gap between supply and demand, the low plant load factor, the high transmission and distribution losses, all call for urgent reforms in the power sector and for constitution of strong and independent regulators with adequate consumer representatives to protect the interests of consumers. In fact consumers want the process of corporatisation and privatisation speeded up so that they can get quality service in the near future. So instead of protesting against restructuring of the power sector, trade unions would do well to condemn corruption and inefficiency in the state electricity boards.
Pfizer net jumps 145.86 per cent
PFIZER Ltd has reported a 145.86 per cent jump in net profit to Rs 30.93 crore for the year ended November 30, 1999, as its other income zoomed to Rs 50.52 crore from Rs 37.44 crore in the previous year.
The companys interest burden climbed down to Rs 54 lakh from Rs 2.11 crore last year, according to a statement here today.
Net sales increased by 21.37 per cent to Rs 287.33 crore, Pfizer said.
Tata Honeywell Ltds net profit for the third quarter ended December 31, 1999 remained at Rs 3.98 crore as in the same quarter last. The net profit was maintained despite net income falling from Rs 68.10 crore during October-December 1998 to Rs 58.95 crore in October-December 1999.
Steel Authority of India (Ltd) announced a massive 156 per cent increase in losses at Rs 701.27 crore for the quarter ended December 31, 1999 as against Rs 273.29 crore in the corresponding period last year.
BSL Limited has recorded a 22.72 per cent growth in net profit during the first nine months of the 1999-2000 fiscal to touch Rs 3.51 crore as against Rs 2.86 crore a year ago.
Essar Oil has reported a 204.4 per cent jump in net profit for the third quarter ended December 31, 1999, to Rs 13.7 crore from Rs 4.5 crore in the corresponding period last year.
Net profit for the April-December period rose by 42 per cent to Rs 36.6 crore as against Rs 25.8 crore during the same period last fiscal.
Alok Textile Industries has reported a 67 per cent increase in net profits at Rs 6.66 on a 34 per cent growth in turnover at Rs 99.95 crore for the third quarter ended December 31, 1999 over the similar period last year.
ONGC reported a 103 per cent jump in net profits in the third quarter of the current fiscal at Rs 1,261 crore compared to Rs 621 crore in the same period last year.
Sales revenue of the company also shot up by 56 per cent to Rs 6,262 crore for the quarter ending December 31, from Rs 4,007 crore in the same period last year, a company statement said.
TVS Electronics has reported a 73 per cent slide in net profit to Rs 13 lakh in the third quarter ended December 31, 1999, as compared to Rs 49 lakh a year ago.
Net profit for the April-December period rose by 99 per cent to Rs 2.17 crore as against Rs 1.09 crore of the same period last year.
Gujarat State Fertilisers and Chemicals Ltd has posted a net profit of Rs 11.16 crore in the third quarter of the fiscal 1999-00, up from its Q2 profit of Rs 10.76 crore. However, the net profit during the nine-month period in the fiscal was Rs 26.03 crore, down from Rs 74.40 crore in the corresponding period of the previous fiscal, a company release quoting GSFC Chairman Dr K.D. Jeswani said.
Corporation of India has reported a 75 per cent
slump in its net profit to Rs 9.87 crore during the third
quarter ending December against Rs 39.81 crore in the
corresponding period last year. Net income from
operations also dropped to Rs 583.66 crore against Rs
671.67 crore the previous year.
by Praful. R. Desai
Q: When certain categories of contract labour was abolished, whether only employees working on the day of abolition were entitled to be absorbed and claim regularisation?
A: In Chandra Mouli Reddy v Member Secretary, APSEB (1999-II-LLJ-1350) the Andhra Pradesh H.C. expressed the view thus:
Petitioners entered the service on contract basis subsequent to September 23, 1996. By a notification 33 categories of employment were abolished contract labour. It is an admitted fact all the petitioners are engaged on contract basis in the afore-mentioned prohibited 33 categories of employment.
Petitioners have sought for a writ of Mandamus declaring the proceedings with reference to clause 4 (iii) as illegal and arbitrary and for a consequential direction to the respondents to consider the claim of the petitioners for absorption in their respective cadres, in which they have been working on contract basis, with all consequential benefits.
To give effect to the notification flowing from the abolition and the contract labour in all these 33 categories, the Management of the Board issued a direction dt. 18-5-97. Under Cl. 4 (iii), it is directed that the contract labourer who seeks absorption of his service on regular basis should have been on roll as on 23-9-96 i.e. the date on which the prohibition of employment of contract labour was imposed. Admittedly, none of the petitioners was working as contract labourer on that date.
Therefore, the H.C. held that it cannot be said that the petitioners have acquired any vested right to be considered for absorption of their services on regular basis in terms of the direction given on 18-5-98. Only those contract labour who were on roll as on the appointed day i.e. 23-9-96, are entitled to be absorbed in terms of the direction as a legal consequence flowing from the above-referred Notification dt 23-9-96.
Therefore, the H.C. further held that no writ will lie against the Board commanding them to absorb the services of the writ petitioners in terms of the direction given by the Board dt. 18-5-97.
by Ashok Kumar
Keep booking partial profits
As one who tracks IPOs, I have had my share of interaction with various corporate leaders and managers. Having held the view that ICICIs retail branding of its bonds that led to repeated forays into the market was not acceptable, this institution invariably got the wrong end of the stick whenever I commented on it.
However, I accord high weightage to the quality of the top personnel from an organisation and here I must mention that right through the eyeball to eyeball confrontation with ICICI, I could not help but admire the tenacity of Madhabi Puri Buch of ICICI who has now been given charge of ICICI direct com which threatens to revolutionise trading at the Indian bourses forever. Madhabi brings in a lot of professionalism into her work, as would be expected of one who has cut her teeth at Indias premier B-school, the Indian Institute of Management (IIM).
Finally, ICICI, seems to have a winner on its hands with ICICI direct com and a cyber-visit to ICICIs website tells the story of its transition from a run of the mill term lending institution into a potential mega-corporation.
Although, we recommended this scrip when its price was below Rs 100 and have already seen a 35 per cent upside within a month, the fact is that the equity base is still quite too large and the earnings still not matured for an unqualified long-term recommendation.
In fact, my advice to anybody who cares to listen to me is set pre-determined trigger limits for all stocks and keep booking partial profits as this is the only way of staying float at the Indian bourses. Sceptics would do well to remember what happened in the aftermath of the last big boom in 1994. When the going is good, every thing seems hunky-dory and that is really when a shrewd investor hedges his, or shall we say her (I think women make better investors) bets by booking profits.
by A.N. Shanbhag
In the wonderland of investment
Q: I am a little confused about the date on which the PPF account matures, and the very first date when partial withdrawal can be made. Take the instance of my son who opened the account on September 15, 1990.
Ramesh Sharma, Shimla
A: The dates depend upon the financial year and not on the date of its opening. This account was opened in FY 1990-91.
The language of the rules is quite complicated and naturally even bank officers, leave alone the lay investors, find great difficulty in interpreting these rules correctly.
I shall simplify the rule for you. The first withdrawal can be made during the 7th year after opening of the account and each year thereafter. The amount of withdrawal is 50 per cent of the balance to the credit at the end of the preceding fourth or first year, whichever is lower. Even this is complicated.
You may apply the following simple method:
Remember that the account was opened in FY 1990-91.
Maturity: 1991+15 = 2006. Matures on April 1, 2006.
The term is 15 years. Actually, it is 16. The 16th contribution can be made in FY 2005-06, even on March 31, 2006, the last date of the year. The entire amount can be withdrawn on April 1, 2006 or any time thereafter, unless you desire to opt for post-maturity continuation. The 20 per cent tax rebate can be claimed for a lock-in of only one day.
Withdrawals: The first withdrawal can be effected in
1991+5= 1996. Withdrawal during FY 1996-97, even on April 1, 1996.
It the right is not exercised before the year-end, i.e. March 31, 1997, you lose the right. The amount of withdrawal next year does not necessarily depend on whether you have exercised your right during the previous year.
The first withdrawal will be in 1997-4= 1993 (FY 1992-93) or 1997-I (FY 1995-96).
The amount withdrawable in the FY 1996-97 ending on March 31, 1997, is 50 per cent of the balance to the credit as on March 31, 1993 or March 31, 1996, whichever is lower. You may start wondering as to how the balance to your credit on March 31, 1996, can ever be less than the balance as on March 31, 1993. But this is for the first withdrawal. Such a situation can arise in subsequent years depending upon the amounts of contributions and withdrawals made from year to year.
For subsequent withdrawals, apply the same formula. For instance, the amount that can be withdrawn anytime during FY 1998-99 would be 50 per cent of the lower amount of balance to the credit on 1999-4= 1995 (FY 94-95) and 1999-1= 1998 (FY 1997-98).
Loans: The first loan can be taken in 1991+2 = 1993 (FY 1992-93) upto 25 per cent of the amount to the credit on March 31, 1991. Further loans can be taken provided earlier loans have been repaid in full with interest at 1 per cent per annum. Thus, if one takes loan in the 4th or 5th or 6th year, the amount would be 25 per cent of the balances at the end of 2nd or 3rd or 4th year respectively.
Q: I own the present house where I am residing. I am considering buying yet another flat, larger in size through HDFC loan. I have been given to understand that this will add to my already heavy tax burden. Same notional income will be construed as my income. This appears unreasonable, but is it true?
R Singh, Chandigarh
A: The annual value of a self-occupieded property is to be taken as nil. Where there are more than one such self-occupied properties, only one property, as per the choice of the assessee, can be taken as self-occupied at nil value and all the others as let out. Where the assessee has only one residential house and it cannot be occupied by him, owing to his employment, business or profesion carried out at another place, the annual value will be taken as nil.In case, the assessee owns more than one house property, then in respect of the others, the entire interest payable is deductible.
Where the annual value is taken as nil, no deductions on account of repair, insurance premium, ground rent etc will be allowed except deduction in respect of interest paid or payable on funds borrowed, from whatever sources, for acquiring, constructing, reconstructing or re-pairing the self-occupied property, with a ceiling of Rs 30,000 (raised from Rs 15,000 by FA 98).
Yes, the second house will be liable for wealth tax. The method of computing value of any immovable property is specified by Sec 7 and Schedule-II, part B, rules 3 to 8 of WTA. This is normally much lower than its actual market value, Moreover, the initial threshold for levy of wealth tax is as high as Rs 15 lakh and even beyond this limit the tax rate is only 1 per cent.
I do not think you should worry much about buying another house in your own name.
Q: About 15 years ago, I had given a gift of Rs 50,000 to my wife and all along, have been clubbing the income therefrom in my hands. I have now come into the highest tax bracket and have also become a wealth tax assessee. My wife earns interest at 14 per cent and I pay 4.2 per cent tax thereon. The take-home is 9.8 per cent only. This is niggardly. My agony does not end here. My wife has also become an income tax assessee. The greatest advantage of gift arises out of the interest on interest being taxed in her hands. Much of this advantage has now become diluted since she has to pay tax on this amount, though at a lower rate. Of course, she saves this tax by contributing about Rs 10,000 to her PPF.
What I propose to do is to request my wife to give me a gift of Rs 50,000, since I had given her a gift of Rs 50,000 and she now gives me a gift of Rs 50,000, the clubbing provision gets cancelled. Your comments please.
A tax payer, Allahabad
A: Plus 50,000 and minus 50,000 is not equal to zero for ITA. In other words, if you implement your suggestion, you will have two headaches. The income earned on the amount gifted by you to your wife will be clubbed in your hands whereas the income earned on her gift to you will be clubbed in her hands separately!
Have you given any
thought to you and your wife earning the same income as
you are earning today but bringing down the income
chargeable to tax by earning your income through capital
gains? If not, permit me to examine your tax returns. I
may be able to suggest something better.
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