THE TRIBUNE SPECIALS
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TERCENTENARY CELEBRATIONS
B U S I N E S S

Haier to set up design centre in
12 months
New Delhi, December 20
Haier Appliances (India), the arm of the $8.7 billion Haier, has embarked on an aggressive corporate strategy aimed at establishing a major brand and manufacturing presence in the short term.

Infosys to spend Rs 3b on Mangalore centre
Karwar (Karnataka), Dec 20
Infosys Technologies said today it will invest Rs.3 billion to expand its operations at Mangalore, Karnataka. Infosys CEO Nandan Nilekani said the additional investment will create 5,000 new jobs in the next couple of years.

New pension scheme from January 1
New Delhi, December 20
The new contributory pension scheme for government employees will be implemented from January 1, 2004, Finance Secretary D.C. Gupta said today.

No roaming charges for BSNL users
New Delhi, December 20
BSNL said today there are no roaming charges for BSNL’s mobile services — CellOne and Excel. “The customer has to pay only nominal charges as applicable in home network for making local, STD or ISD calls and there is no additional charge of any sort”, an official statement from BSNL said here.

AVIATION NOTES

Landing system lying unused
F
og is a regular menace in this part of the country in December and January. Yet shockingly, the authorities have done precious little to combat this evil, which plays havoc with commuters and organisations. The Airports Authority of India (AAI) has not been able to reduce disruptions due to this.


A model displays Christmas and New Year collections at a fashion show in Bangalore
A model displays Christmas and New Year collections at a fashion show in Bangalore on Friday. — PTI

EARLIER STORIES

 

INVESTOR GUIDANCE

Cut in NSS-87 rate unjustified
Q: Please clarify about NSS interest? The Postal Department launched an NSS in 1987 with a yearly interest of 11per cent, with the understanding that the interest will continue to accrue till the deposit is not withdrawn from the account and income tax will be recovered at the time of withdrawal as per the rule.

Video

Prime Minister Atal Behari Vajpayee launches cards for artisans and weavers in New Delhi.
(28k, 56k)

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Haier to set up design centre in 12 months
Gaurav Choudhury
Tribune News Service

T K BanerjeeNew Delhi, December 20
Haier Appliances (India), the arm of the $8.7 billion Haier, has embarked on an aggressive corporate strategy aimed at establishing a major brand and manufacturing presence in the short term.

“We have already pumped in $ 6 million so far and should have our own design centre followed by an integrated plant within 12 to 24 months”, President and CEO of Haier India T K Banerjee said in an exclusive interview.

The company, which globally has 13,000 items in 86 product categories covering the whole range of televisions, refrigerators, washing machines and microwave ovens among others, is at present importing the top-end variations of its products to India.

“At present the focus will be on building the brand and simultaneously install a distribution network and customer care facilities starting from northern India and spreading it to the rest of the country within three to six months”, Mr Banerjee said.

Till the time the integrated plant and the design centre is in place, the majority of the products to be marketed in India will be manufactured in the country through strategic partners “leveraging on Haier’s global standards on design, quality control and product aesthetics”.

The Haier group, which was set up in 1984 at Qingdao in China, is selling its products in 165 countries and manufacturing its products in 13 countries, including the USA, Europe, Middle-East, Africa and Asia.

In India, Mr Banerjee said apart from establishing the sales distribution network, the immediate focus thereafter will be set up a research and development centre “so as to bring in new technology and new products befitting the needs of India”.

The proposed production facility in India will eventually be “leveraged as a sourcing base for South-Asia, Middle East and Africa”, he said.

Mr Banerjee said that innovation has been the hallmark of the company and “on an average Haier develops 1.3 new products everyday through its 18 R&D and design centres worldwide”.

“Haier has already developed its next generation Internet-enabled appliances and these will be brought to Indian consumers at an appropriate time”, he said.

Exuding confidence that there is enough space in the Indian market, which “has still not matured”, he said the company is expecting to clock a turnover of $50 million “within 12 operational months” in the country.

Haier is perhaps the second Chinese electronics major to enter India after Konka which had announced its arrival with much fanfare a couple of years ago. Konka, however, was not successful enough in making a major dent in the market despite the tempting price positioning of its products.

Mr Banerjee contended that difference in the entry strategies of Konka and Haier is that while the former was joint venture, the latter is a 100 per cent subsidiary of the parent organisation.

“Moreover, we are entering the marketing with a thorough preparatory groundwork”, he said.

The Foreign Investment Promotion Board (FIPB) had granted approval to the Haier group in June this year to set up a 100 per cent subsidiary in India.

Haier is offering 17 models of refrigerators, 14 models of colour televisions, eight models of washing machines, eight models of air- conditioners, four models of micro-wave ovens, two models of dish washers and three models of DVD/VCDs. The company will market its range of mobile phone handsets in the second phase.

“The industry will most definitely continue to grow at a double digit level”, he said.

Haier, he explained, will be positioned as a high technology brand, under the tag line “inspired living” and the advertising and promotional programmes will hit the television screens very shortly.

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Infosys to spend Rs 3b on Mangalore centre

Karwar (Karnataka), Dec 20
Infosys Technologies said today it will invest Rs.3 billion to expand its operations at Mangalore, Karnataka. Infosys CEO Nandan Nilekani said the additional investment will create 5,000 new jobs in the next couple of years.

The firm's plans to expand a software development centre at the city were announced at the two-day Coastal Investors' Meet here.

"The fresh capital infusion in our Mangalore centre will be in addition to the Rs.700 million invested since 1997.

With about 1,400 techies working, the centre has generated an export revenue of Rs.4 billion during the last 12 months.

"With the addition of 5,000 jobs, we expect our software exports from the Mangalore centre to scale up to Rs.20 billion.

Out of the nine development centres we have across the country, this centre rates among the highest in customer and employee satisfaction," said Nilekani.

The company is also planning to set up its own 25-acre campus in Mangalore once the state government approves its proposal.

"I want to commit to Chief Minister S.M. Krishna that Infosys will start developing the campus the day the state clears our application," Nilekani said.

Lauding the rapid growth of the IT industry in the state over the last decade, Nilekani disclosed that software exports from Karnataka alone would zoom to $10 billion by 2007 from $4 billion currently. — IANS

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New pension scheme from January 1

New Delhi, December 20
The new contributory pension scheme for government employees will be implemented from January 1, 2004, Finance Secretary D.C. Gupta said today.

“We are going ahead with the scheme,” Mr Gupta told reporters. Pending the appointment of a regular pension regulator, the government would make some “stop gap arrangement” for putting the scheme in place, he said.

“The government is committed to implementing it from January 1,” the Finance Secretary said. Initially meant for Central Government employees, the scheme would be thrown open subsequently to state government employees and those in the private sector as well.

The government has already appointed an interim pension regulatory authority. — UNI

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No roaming charges for BSNL users

New Delhi, December 20
BSNL said today there are no roaming charges for BSNL’s mobile services — CellOne and Excel.

“The customer has to pay only nominal charges as applicable in home network for making local, STD or ISD calls and there is no additional charge of any sort”, an official statement from BSNL said here.

BSNL said CellOne and Excel users, while roaming, are able to call anyone in the visited network as per charges payable by them in the home network.

If a Kolkata subscriber under Plan 525 roaming in Chennai makes a local call to a fixed or mobile number in Chennai, he has to pay Rs 1.20 per minute or Rs 0.40 per minute which is the same he would have paid in Kolkata, the statement said. — PTI

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AVIATION NOTES
by K.R. Wadhwaney

Landing system lying unused

Fog is a regular menace in this part of the country in December and January. Yet shockingly, the authorities have done precious little to combat this evil, which plays havoc with commuters and organisations.

The Airports Authority of India (AAI) has not been able to reduce disruptions due to this. Costly gadgets have been installed at the Indira Gandhi International Airport (IGIA), but they have not been of much use for several reasons. The category 3A of the Instruments Landing System (ILS) has been installed but when intense fog descents at the IGIA, the pilots decline to operate flights in low visibility. Majority of commanders on Indian and foreign airlines have not had requisite training to undertake such operations. The result is that the gadgets are seldom used.

Dissatisfied at the goings-on, the airlines have taken their own measures to face undue disruption. Many foreign airlines have rescheduled flights from December 23 onwards until the end of January when the fog automatically subsides.

Air-India will carry passengers a day in advance from Delhi to Mumbai for onward flights to London and the USA. Taking passengers a day in advance means providing them hotel accommodation.

Disruption of flights means bunching of flights. Previous data shows hold-in area and transit lounge get congested and passengers have to rough it out. Survey further shows that snack bars and restaurants are unable to cater to the needs of passengers waiting for hours for their flights to take-off. This is bad enough. What is worse is that toilets run short of ‘precious paper’.

These two months are part of ‘peak season’. Most of the traffic is that of returning passengers who are on vacation here. As the capacity is limited and demand increases, many airlines resort to overbookings.

Airline officials claim that they have taken extra precautions this season so that overbookings are within controllable limits.

‘Lowering fares is part of the aviation policy’. This is what the Minister of State for Aviation, Mr Rajiv Pratap Rudy, declares. These lofty observations are satisfying to the commuters.

But the aviation experts feel that it is easier said than done. Even if there is little concession or reduction of taxes, there will not be much reduction in fares.
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INVESTOR GUIDANCE

by A. N. Shanbhag

Cut in NSS-87 rate unjustified

Q: Please clarify about NSS interest? The Postal Department launched an NSS in 1987 with a yearly interest of 11per cent, with the understanding that the interest will continue to accrue till the deposit is not withdrawn from the account and income tax will be recovered at the time of withdrawal as per the rule.

I am surprised to find that the interest has been reduced to 7.5per cent from March '03. Is this not a breach of the contract made at the time of introducing the scheme by the government?

In all government/banks fixed deposits schemes, the new revised rate of interest is applicable only to the new deposits renewal old rate of interest will continue to old deposits. The deposits in this scheme have already been closed and only withdrawal is permissible. Is it justified?

— H. S. Rakhra, Ropar

A: I have been screaming hoarse at such injustice ever since the PPF rate was slashed from 12 per cent to 11. No one screamed with me. There were 49 PILs when the UTI closed down its Rajlaxmi scheme though UTI had a right to do so and all PILs were liquidated by the various courts. There was not a single litigation against the National Savings Organisation under whose aegis the PPF and NSS exist.

Emboldened by the general lethargy of investors in this regard, the PPF rates were steadily axed down to 9 pc and the investors accepted this atrocity. Now is the turn of NSS-87.

I agree with you whole-heartedly. The authorities should have continued to give the old rates on the closing balance of the corpus and applied the new rates on fresh contributions and the corpus generated therefrom. Since no fresh contributions can be made to the NSS-87, the question of splitting the corpus into two did not arise.

That is the direction of my thinking and I felt that they have been tinkering with the interest on PPF but had left NSS-87 alone, precisely, for this reason. I have been proved wrong.

Incidentally, I have written about NSS-87 scathingly on many occasions but no one appears to be reading. Any action of the government is justified as long as the public does not raise any protest.

Leave encashment

Q: I got leave encashment amount by my earlier company after resigning. Now I am in other job. At the time of resigning from the company I got leave encashed for 16 days for Rs. 14,970. The company simply deduct tax at the rate 30 pc. I worked in that company for 2.5 years. Kindly suggest if it is fine to suffer the tax.

I found the following from a web site :

Officers of the Income Tax Department are known to have taken a stand that leave encashment is exempt only if it is received at the time of retirement. However, as per the decisions given by the Mumbai High Court in CIT Vs. D.P. Malhotra reported in 229 ITR 394, leave encashed at the time of resignation is also exempted from tax under section 10(10AA).

My earlier company fellow is not agreeing for that. Can you suggest what is the best way to handle it?, if they do not agree to it.

— Amitabh

A: The Act has used confusing language. Exemption is available on ''retirement or superannuation or otherwise''. In the case of Malhotra cited by you, the judge observed, "On acceptance of resignation the employee stands retired from service. The word ''retirement'' has not been used in the restricted sense to mean ''retirement on superannuation''. On the other hand it is clear that it has been used in the widest possible terms to mean and include all cases of retirement, whether on superannuation or otherwise. What is relevant is ''retirement''. How it took place is immaterial for the purpose of the clause. It is, therefore, clear that on retirement, even on resignation, the employee will be entitled to the benefit of the exemption." The only way for you is to file the tax returns and claim the benefit. Hopefully you will succeed.

Extra amount

Q: I got a letter from the Income Tax Department headed "Intimation u/s 143(1) of the Income Tax Act, 1961" for assesment year 2001-02. And asking to pay Rs 4,624 u/s 234A, Rs. 378 /234B, Rs. 2586 /234C - Rs. 1678. Why this extra amount had been charged for me?

— Taxpayer

A: The department is expected to inform you about the reason thereof. Sec. 234A : Defaults in furnishing or late filing of the returns attract simple interest at 1.25 pc per month or part of a month on the tax as returned by the assessee as reduced by the advance tax and TDS. This interest is charged from the due date to the date of filing the return. Interest is leviable on the tax on the total income declared in the return and not on the income as assessed and determined by the assessing authority [Tej Kumari v CIT 22TCR250 (Pat), 2001].

Sec. 234B: Where an assessee who is liable to pay advance has failed to pay it or where the total advance tax paid is less than 90 pc of the assessed tax, simple interest at 1.25 pc for every month or part of a month comprised in the period from April1 next to the date of assessment, on the assessed tax or on the amount by which the advance tax paid falls short of the assessed tax.

Sec. 234C : In the case of shortfalls of the first two installment, simple interest at 1.25 pc per month is charged for 3 months (when the next installment falls due) on the amount of shortfall of 30 pc or 60 pc, even if the delay is just by one single day. If the advance tax paid on or before March 15 is less than the tax due on the returned income, then, the assessee will be liable to pay simple interest at 1.25pc on the amount of the shortfall.

Ex-employee's return

Q: I am a retired banker drawing pension from the bank. Now I have joined a public sector banks as a senior faculty on contractual lump sum salary basis. While computing my income and filing returns with the Income Tax Dept., I should be treated as an ex-employee of the bank or a professional. What will be the impact on standard deductions?

— Taxpayer

A: You can claim standard deduction at the applicable rates only on the pension. The contractual payment received does not attract any standard deduction, even if the principal happens to be your ex-employer. You may, however, claim expenses incurred exclusively in carrying out your duties as a faculty member, as deduction against your income as member of the faculty.
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BRIEFLY

Corp Bank, LIC ink pact
New Delhi, December 20
Corporation Bank deposit holders can now pay their LIC premium through the bank’s ATMs across the country. The facility was inaugurated by LIC Chairman S.B. Mathur and Corporation Bank chairman K Cherian Verghese at Mumbai while zonal manager of the northern region M.M. Mukherjee flagged off the facility in Delhi today. — PTI

Allahabad Bank
Mumbai, December 20
Allahabad Bank has decided to announce its benchmark prime lending rate (BPLR) on January 1 which will be lowered by at least 0.50 percentage point basis from the current general PLR of 11 per cent. “In our board meeting today, we debated on the BPLR issue and decided to announce the rate on January 1, ” said O.N. Singh, Chairman of the bank. — UNI

BoP in Surat
Chandigarh, December 20
Bank of Punjab opened its 120th banking office in Surat (Gujarat) today. The bank has seven branches in Mumbai. The launch of this branch in Surat is in line with the bank’s marketing strategy to expand its customer base. This branch will provide services from 10.00 am to 6.30 pm. — TNS

Hutch in Haryana
Chandigarh, December 20
Hutch will launch its services in Haryana soon. This was announced by Mr Rajiv Sawhney, Executive Director of Hutchinson Essar Telecom, on the occasion of Hutch crossing the one million subscriber mark in Delhi today. This service will be launched in all cities of Haryana, including Sirsa, Pehova, Pinjore, Radaur, Fatehabad, Charkhi Dadri, Mahendargarh, Thanesar and Narnaul.— TNS

Berger to pay
Mumbai, December 20
Berger Paints has decided to pay an interim dividend at 35 per cent on the paid-up equity shares for the current financial year. Informing the BSE, Berger Paints said the company’s Board of Directors at its meeting today decided to pay an interim dividend at the rate of 35 per cent on the ordinary (equity) shares for the financial year ending March 31, 2004. — UNI

GCL eyes pact
Chandigarh, December 19
GCL Limited yesterday celebrated its eighth successful year of carrying out service related projects. Briefing newspersons, Gagandeep Sharma, Managing Director of the company, said the plan to hire the services of solicitors for helping settling abroad through fair means is in the pipeline. The tie up with UK solicitors is on the anvil in next few days. — TNS

Bharti Board
Chandigarh, December 20
Bharti Tele-Ventures (BTVL) today announced the induction of Prof. V.S. Raju, a distinguished academician on its Board of Directors. Prof Raju was the former Director of IIT, Delhi, and has also worked as a Professor at IIT Chennai. — TNS

Syndicate Bank
Chandigarh, December 20
Syndicate Bank has paid interim dividend to the government. Mr Micheal Bastian, CMD, has formally presented the dividend warrant of Rs 34.69 crore to Mr N.S. Sisodia, banking secretary in New Delhi yesterday. — TNS
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