SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

SEBI seeks US help to rein in advisers
New Delhi, April 15
Seeking to rein in the growing crop of investment advisers dishing out “hot” market tips through various media that include SMS, sector regulator SEBI has turned to its US counterpart for some regulation advice. Worried about the proliferation of unregistered entities acting as self-proclaimed investment advisers on stocks and other investments, Indian regulator is looking for the “experience and expertise” of US counterpart -Securities and Exchange Commission - for overseeing these advisers.

CII pegs GDP growth at 8.5 per cent
New Delhi, April 15
The GDP growth projection for 2007-08 has been pegged at 8.5 per cent due to global moderation of growth, inflation and falling demand as a consequence of the spiralling interest rates, appreciating rupee and significant supply shortages in the global and Indian economy, the Chamber of Indian Industry (CII) said here today. 

Uzbek invites GAIL to explore gas
New Delhi, April 15
In a significant development in country’s quest for energy security, gas-rich Uzbekistan has invited India’s Gas Authority of India Ltd (GAIL) for exploration activities. India and Azerbaijan have agreed to cooperate in oil and gas sector with Indian companies set to play a greater role in the development of Baku’s rapidly expanding oil and gas industry.

A unit run by disabled
Kolkata, April 15
Setting a motivational example for a lot of people on how to overcome disabilities, a factory located in Kolkata’s Kausba Industrial Estate, is being run by a group of physically-challenged persons.

TCS wins $100 m Bank of China deal
New Delhi, April 15
Tata Consultancy Services (TCS), the country’s largest software exporter, is believed to have clinched a $ 100 million deal spread over five years from the Bank of China to provide IT solutions. The contract can be termed as one of the major IT- related deals, signed by a Chinese bank, and is timely for a company aggressively expanding in China, industry sources said. When contacted, a TCS spokesperson declined to comment.

Indonesian girl and her dog pose for photographers at a dog fashion show in Jakarta on Sunday to promote a new pet shopping centr
Indonesian girl and her dog pose for photographers at a dog fashion show in Jakarta on Sunday to promote a new pet shopping centre. — AFP photo


EARLIER STORIES

 

A car saleswoman looks on as a boy checks under the body of the newly launched Suzuki SX4 model in Jakarta on Sunday. Domestic car sales were 26 per cent higher last month than the previous year at 33,905 vehicles, according to the secretary of the Indonesian Automotive Industries Association,
A car saleswoman looks on as a boy checks under the body of the newly launched Suzuki SX4 model in Jakarta on Sunday. Domestic car sales were 26 per cent higher last month than the previous year at 33,905 vehicles, according to the secretary of the Indonesian Automotive Industries Association, Prijono Sugiharto.—AFP photo

MARKET SCAN
Banking scrips under pressure

Infosys’s March quarterly results and decline in the inflation rate have brightened the market indices. Sensex was up 270.27 points and closed at 13,384.08. Nifty was up 87.50 points, ending at 3,917.35 points. Infosys March quarter results were rather moderate with a revenue growth of just 3.2 per cent and a drop in the operating margins. The future projections for the financial year 2008, estimating the growth in the revenues by about 28 to 30 per cent in dollar terms, however, pushed up the stock market.

Tax Advice
Profit on sale of shares taxable
Q. What is non-taxable threshold limit for investment in primary/secondary stock market for 2006-07? 
— S. S. Bhatia,Ludhiana

 

 

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SEBI seeks US help to rein in advisers

New Delhi, April 15
Seeking to rein in the growing crop of investment advisers dishing out “hot” market tips through various media that include SMS, sector regulator SEBI has turned to its US counterpart for some regulation advice.

Worried about the proliferation of unregistered entities acting as self-proclaimed investment advisers on stocks and other investments, Indian regulator is looking for the “experience and expertise” of US counterpart -Securities and Exchange Commission - for overseeing these advisers.

A team from SEC was in Mumbai late last month to conduct a four-day training programme on Investment Company Regulation, Examination and Enforcement, which was attended by more than 60 officials from SEBI as well as domestic securities exchanges and depositories.

This was SEC’s first-ever foreign regulator training programme focused on regulating and examining investment companies and investment advisers.

According to a SEC statement, Securities and Exchange Board of India chairman M. Damodaran said after the completion of the training programme that SEBI was looking “forward to benefiting from the considerable experience and expertise that the US SEC has gained over the years - especially in matters related to regulatory oversight, monitoring and examining of investment advisers and investment companies.”

Incidentally, SEBI has also mooted the idea of creating a private sector Regulatory Organisation (RO) as a first-level regulator for investment advisers and is inviting public comments and suggestions on the issue of regulation of investment advisers till the end of this month.

While introducing a consultative paper on regulation of investment advisers, SEBI, however, noted that there was no separate RO for regulating investment advisers in the US and the job is split between SEC and state governments.

Amid the sharp rally in the Indian stocks over the past few years, the public interest has grown manifolds in the market and so has been the number of advisers-who keep inundating investors with “hot tips” on which stocks to buy or sell through TV channels, newsletters, magazines, newspapers, websites and some innovative media like SMS and phone calls.

Damodaran has expressed his discomfort on many occasions over the growing number of self-appointed advisers, while there also have been certain cases when the regulator has fined individuals and entities for dishing out tips on market activities without proper disclosures.

SEBI currently does not regulate investment advisers as a separate class of intermediaries. Those currently under the regulator’s oversight include portfolio managers, stockbrokers, merchant bankers and credit rating agencies.

SEBI had also mooted the idea of journalists and mediapersons rendering investment advices getting registered and made to abide by the code of conduct and disclosure needs, while adding this might constitute denial of freedom of press. — PTI

Boost immigration: Assocham

As the United States of America loses its cost-competitiveness and faces the prospects of acute human resource crunch due to aging population, it is time the US Government took a call and relaxed laws treating the immigration as “opportunity and not threat”.

According to Assocham, the US Government should put itself into the shoes of the developing countries and seek significant changes in the WTO agreements, which go much beyond the existing mandate of the General Agreement on Trade in Services (GATS).

At the moment, the developed countries are not even ready to implement the Mode 4 provision in free movement of natural persons free of employment and immigration.

“While the Mode 4 is not encouraged on fears of employment and immigration, the rich countries like the US are not far from a situation where they would need to amend their domestic laws allowing quality people from overseas for meeting their economic needs,” Assocham president Venugopal Dhoot said.

The US economy is fast reaching a precarious situation as is evident from a recent address of its Commerce Secretary. The US has repeatedly closed its gates for the migrants on the pretext of economic, social and cultural protection of natives. — TNS

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CII pegs GDP growth at 8.5 per cent
Tribune News Service

New Delhi, April 15
The GDP growth projection for 2007-08 has been pegged at 8.5 per cent due to global moderation of growth, inflation and falling demand as a consequence of the spiralling interest rates, appreciating rupee and significant supply shortages in the global and Indian economy, the Chamber of Indian Industry (CII) said here today.

Elements in the economy, which have started surfacing towards the latter part of fiscal 2006-07, are likely to play a moderating role on growth prospects of the economy, the CII said in a statement.

Agriculture is expected to improve its growth performance from 2.7 per cent to 3 per cent, mainly owing to low base of last year. However, this sector would continue to be the area to watch out for as this has the potential to become a binding constraint to long term growth prospects for the Indian economy, said the CII.

It also feels that the current inflation is the result of mainly supply side shortages and therefore, a tight monetary environment is what should be in place.

However, there are signals of demand slowdowns due to result of the rate squeeze in sectors like automotive, retail banking and therefore, growth forecasts have accounted for this trend. 

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Uzbek invites GAIL to explore gas
Tribune News Service

New Delhi, April 15
In a significant development in country’s quest for energy security, gas-rich Uzbekistan has invited India’s Gas Authority of India Ltd (GAIL) for exploration activities.

India and Azerbaijan have agreed to cooperate in oil and gas sector with Indian companies set to play a greater role in the development of Baku’s rapidly expanding oil and gas industry.

The GAIL has identified four blocks for gas exploration and India has offered to help establish a training institute in the Uzbek capital of Tashkent to offer technical know-how in gas technology, commerce 
and industry ministry said 
in a statement today.

Tashkent’s invitation came during minister of state for commerce Jairam Ramesh’s visit to Uzbekistan and Azerbaijan to strengthen bilateral economic ties, especially in oil, gas and cotton textiles.

Azerbaijan President Ilham Aliyev has sought India’s assistance in enhanced oil recovery and deep sea drilling. Ramesh offered GAIL’s  expertise in gas-based petrochemicals and city-gas distribution.

In Azerbaijan, the OVL (ONGC Videsh Ltd) and SOCAR, the State-owned oil and gas exploration company of the Central Asian country, have agreed to hold negotiations for OVL investments in the hydro-carbon sector.

India and Azerbaijan also signed an agreement to set up a joint inter-governmental commission on trade, investment and economic cooperation.

India has also offered 
technical assistance to Azerbaijan to facilitate its entry into the WTO.

The two Central Asian countries also agreed to consider proposals from MMTC/ National Mineral Development Corporation (NMDC) for gold exploration.

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A unit run by disabled

Kolkata, April 15
Setting a motivational example for a lot of people on how to overcome disabilities, a factory located in Kolkata’s Kausba Industrial Estate, is being run by a group of physically-challenged persons.

The workers that comprise 35 differently-abled members, many of them having speech or hearing disabilities, manufacture soyabean nuggets at the Bengal Food Products.

According to Subrata Saha, the factory’s owner, the manufacturing unit being operation for the last four months works more efficiently than the one employing able-bodied workers.

“As far as efficiency is concerned I have another factory where physically fit workers work. I think this unit is more efficient than it. There is no sound pollution in my factory. Very good work happens here and almost 35 persons work here in two shifts.

There is a minimum two tons of production working in two shifts in a day,” says Saha.

The differently-abled workers are involved in the production process, starting from running the machines to packing material.

The workers, too, are happy that their talents have been meaningfully utilised by the factory owner instead of considering them useless or setting them aside on the fringes of life.

“I make a decent money working here ... I can do something, make a living despite being a handicapped,” says Madhai Bairagi, a differently-abled worker.

According to a government estimate about 2 per cent of the population has physical or sensory disabilities that include visual, speech, hearing and movement problems but volunteers working in the field put the figure at 5 to 6 per cent of the population, or 50 to 60 million persons. — ANI

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  TCS wins $100 m Bank of China deal

New Delhi, April 15
Tata Consultancy Services (TCS), the country’s largest software exporter, is believed to have clinched a $ 100 million deal spread over five years from the Bank of China to provide IT solutions.

The contract can be termed as one of the major IT- related deals, signed by a Chinese bank, and is timely for a company aggressively expanding in China, industry sources said. When contacted, a TCS spokesperson declined to comment.

The Bank of China had called for bids to revamp its IT infrastructure. It is the second-biggest lender in China and has the largest global network among all Chinese banks. The bank is looking at integrating IT requirements for its international network.

Sources said the opportunity is seen as huge because the vendors, who are able to bag the deal for the international network will get an edge for mainland operations of the bank.

Chinese banks have not outsourced their IT development to external vendors. Offshoring has not been tried in any of the Chinese banks so Indian vendors are keen on getting a portion of the current project, the sources said.

The deal is being touted as one of the largest in Asia and alignments across hardware, software and networking equipment are firming up for various consortia.

TCS, which is in operations in China for the last five years, will provide a range of banking solutions to BOC. It has a core banking solution called BANCS.

All major Indian IT companies, including TCS, Infosys, Satyam, Wipro, NIIT and i-Flex have set up bases in China to serve multinational customers and target the Chinese software market as well as the Japanese and South Korean markets.

The latest deal came close on the heels of a seven-year, $ 65 million agreement the Indian IT major had announced early this month with Somerfield, a British small-format food retailer, to provide a full range of managed IT services. — PTI

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Market Scan
Banking scrips under pressure
by J.C. Anand

Infosys’s March quarterly results and decline in the inflation rate have brightened the market indices. Sensex was up 270.27 points and closed at 13,384.08. Nifty was up 87.50 points, ending at 3,917.35 points.

Infosys March quarter results were rather moderate with a revenue growth of just 3.2 per cent and a drop in the operating margins. The future projections for the financial year 2008, estimating the growth in the revenues by about 28 to 30 per cent in dollar terms, however, pushed up the stock market. All major software scrips (Satyam, Tata Consultancy and Wipro) attracted investments and closed higher. Some other scrips, which also participated in the rising market were Larsen & Toubro, Reliance, IPCL HDFC Bank and Mahindra and Mahindra.

The inflation rate came down from 6.38 per cent to 5.74 per cent last week. Inflation rate in the corresponding period last year was 3.98 per cent. The Reserve Bank of India (RBI) has projected to bring down the inflation rate within 5 to 5.55 per cent range for the current financial year. So far so good, but the RBI has made no relaxation in its monitoring measures to check inflation yet. In fact, during the last week, a RBI draft note circulated among banks said that the banking sector may be required to make increase in “risk weightage on unrated loans in banks’ books”. The note proposed the weightage of 150 per cent on “unrated loans” to companies, housing loans and consumer-related loans. Unless the borrowing companies share the rating charges to be paid to the credit rating agencies on a regular basis, the banks will have to raise risk-weightage on these loans. In order to increase the risk weightage on unrated loans, banks may be required, as a leading financial paper has estimated, at least Rs 25,000 crore from the stocks and the bond market to fulfil this requirement.

It is resonable to expect that the last Friday rally in the stock market may not continue during the current week. Much will depend upon the other fourth quarterly results that have just started pouring in. It is expected, however, that the fourth quarterly results, on an average, are likely to be good.

The first quarter results, ending June, however, are not likely to be so good. Higher lending rates, wage inflation, power outages, and high raw material costs are likely to weigh upon the profit margins and the profitability of the corporate sector. One good news, however, is that according to the meteorological department’s forecast, this year’s monsoon is likely to be normal.

An advertisement in a leading financial newspaper by Vikas WSP states that the company’s scrip will be relisted soon by the Bombay Stock Exchange (BSF) as directed by a court. Those who are holding shares of Vikas WSP in demat or non-demat form should hold on to all these shares, for the company’s working has been good and these scrips are likely to be rated quite high when the scrip relists.

Gujarat NRE Coke’s fourth quarter results are encouraging. Its sales and profitability are high and the company’s scrip has moved up from Rs 35 to Rs 50 during the last fortnight. The company has issued bonus shares a number of times during the last five years, including last year. The company has made large investments in Australian coal mines and is doing well but a disturbing feature is that its paid-up equity capital of Rs 10 each now stands at Rs 243.91 crore (as on 31.3.2007) as against Rs 119.95 crore (as on 31.3.2006).

The profitability of the bank’s shares is now under pressure mainly due to the RBI’s recent measures to check inflation. The recent proposed measure to increase in “risk weightage” on heavy amount of unrated loans in banks’ books will further dilute their profitability and restrict unrated loans to the corporate and housing and consumer loan client. It may be wise to do some selective profit booking in bank shares.

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Tax Advice
by S.C. Vasudeva
Profit on sale of shares taxable

Q. What is non-taxable threshold limit for investment in primary/secondary stock market for 2006-07? 

— S. S. Bhatia,Ludhiana

A. There is no provision for the taxability of investments in primary/secondary stock market. You can invest as much as you like. However, it is the profit on sale of such stocks/shares, which may become eligible to tax, subject to the provisions of the IT Act 1961.

PO MIS

Q. I am a retired bank employee about 61 years of age. I have a PO MIS (post office monthly income scheme) as well as a senior citizen saving account. Interest on the former is tax-free while on the latter TDS is applicable. Is the interest on PO MIS included in the income? Will the inclusion/exposure of the same increase my tax liability manifolds?

— Sudarshan Kumar Jain, Ludhiana

A. The maximum amount on which tax is not chargeable is Rs 1,00,000 in case of an individual, Rs 1,35,000 in case of women below 65 years of age and Rs 1,85,000 for a senior citizen who is 65 years or more. The Finance Bill, 2007, proposes to raise the above limit under each category by Rs 10,000. The interest earned on PO MIS is inclusive in the taxable income and the same is not exempted from tax. A senior citizen age limit in case of income tax is 65 years. The higher limit of Rs 1,85,000 (proposed Rs 1,95,000 by the Finance Bill 2007) will be applicable as and when you attain the age of 65 years.

Income from stocks

Q. I am a housewife and have no other income except income from sale/purchase of equity shares from the money my husband gave me as a loan. I have earned about Rs 60,000 as short-term gains in the just ended financial year. I want to know whether my income will be exempted from tax under the scheme of tax free income for women up to Rs 1,35,000 or I have to pay short-term gain tax @ 10 per cent of above income, i.e. Rs 60,000 x 10 per cent = Rs 6,000? Is there any other formula to calculate tax on my income?

— Neelam, Bathinda

A. The income earned from the sale/purchase of equity shares being less than Rs 1,35,000 (the maximum amount up to which tax is not payable by a woman below 65 years of age), the same would not be eligible to tax. However, the loan from your husband should be interest bearing and interest should be paid regularly. This would prove the genuineness of the transaction.

Deduction on rent

Q: I am a retired govt servant of 75 years of age and pay Rs 3,500 pm as rent. My income particulars for 2006-07 are as under:

(i) Pension Rs 1,32,200

(ii) Income from interest Rs 65,700

(iii) Amount withdrawn from National Savings Scheme (old) shown as income: Rs 12,000

Total Income Rs 2,09,900

Kindly advise on following points:

i) Am I entitled to some deduction from my total income in respect of the house rent paid by me?

ii) In case I have to bear some portion of house rent, will it be a percentage of my pension or total income?

ii) Is it necessary to attach house rent receipt with the income tax return?

— M. C. Aggarwal, Chandigarh

A. The answers to your queries are as under:

i) You are entitled to a deduction of rent paid for your own residence under Section 80GG of the Act. The deduction is subject to the following conditions:

a) The rent paid is in excess of 10 per cent of the total income before allowing any deduction under this section;

b) The rent paid is in respect of accommodation occupied, subject to the condition that the assessee files a declaration in Form No. 10BA (vide Rule 11B);

c) The assessee can claim deduction only in case where the residential accommodation is not owned by him, his spouse, a minor child or by HUF of which he is a member, at the place where he resides or performs the duties of his office or employment or carries on his business or profession.

d) The deduction is to be allowed only in a case where residential accommodation is not owned by the assessee at any other place.

e) The deduction under this section would not be allowed if the assessee, being an employee is entitled to house rent allowance from the employer and is eligible for exemption under Section 10(13A) of the Act.

f) The deduction is limited to 25 per cent of total income or Rs 2,000 pm, whichever is less.

ii) The portion of rent to be borne by you would be with reference to your total income before allowing deduction under Section 80GG of the Act.

iii) It will be essential to enclose the house rent receipt in regard to the payment of house rent to justify your claim for deduction.

Sale of shares

Q. My wife and I started a company about 15 years ago. This year we sold all our shares to another company. Please tell us what is the capital gains tax on this transaction. Is it 20 per cent after indexation and 10 per cent without indexation? Kindly note that being shares of a private company, they are not listed.

— S. C. Jain

A. In accordance with the provisions of Section 112 of the Act, long-term capital gains arising on sale of shares of a private limited company would be taxable @ 20 per cent plus applicable surcharge and education cess. You will be entitled to indexation as the shares were acquired 15 years back. The option with regard to the taxability @ 10 per cent capital gain is available in respect of listed securities or units of mutual funds.

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