|B U S I N E S S||
Sunday, December 20, 1998
FIPB clears Kalyani project
ageing power machines
set up five-member panel
wash away grains output
Small cars make it big
for heavy industry in Fatehgarh Sahib
management committee formed
NEW DELHI, Dec 19 (PTI) Kalyani Groups proposal to set up a 200 MW cogeneration unit in Karnataka with Tenaska international Energy was today cleared by Foreign Investment Promotion Board (FIPB).
The proposal, envisaging an investment of Rs 330 crore by Tenaska, accounted for three-fourth of the total Rs 450 crore Foreign Direct Investment (FDI) approved by the board today.
Kalyani Cokes proposal is to set up production facility for metallurgical coke and cogeneration in Ramnagar in Karnataka using imported coal from Australia, FIPB sources said.
Tenaska, which is incorporated in Mauritius, will hold 65 per cent in the venture, while the remaining 35 per cent would be picked up by Kalyani Group.
The board also approved a proposal by Xerox Corporation of USA to set up a holding company in the country with an equity base of Rs 21 crore.
The new company would act as the holding company for Xeroxs investments in India in multiplication and reproduction equipment, sources said.
FIPB also allowed us computer giant IBM global services to pick up 5 per cent non-controlling stake in information technical services.
IBM will pay a premium of Rs 1790 per share for picking up 5000 shares in information technical services at a total cost of Rs 90 lakh.
Another proposal by Noida Toll Bridge to allow South African Inter Toll to pick up about 8 per cent stake in the 630 crore bridge between Noida in Uttar Pradesh to Delhi was also cleared, sources said.
Inter Toll would pick up the stake by subscribing to compulsorily convertible debentures at a total cost of $ 2.5 million.
Among other proposals cleared was infusion of Rs 20 crore equity by UK-based Opus Healthcare Education and Research Foundation in East Coast Hospitals in Pondicherry.
It also cleared six software proposals including IBM and one by Cisco Systems to set up a wholly-owned subsidiary investing Rs 8.4 crore.
General Utilities plc was allowed to set up facilities in India investing Rs 14 crore for recycling of waste water and waste water management.
The company would bid for water management contracts from municipalties and other local bodies, sources said.
FIPB closed the proposal
of Discovery Channel for marketing time on its channel in
line with its decision not to take up any more media
proposals till the Information and Broadcasting Ministry
finalises its policy of foreign investment in the sector.
NEW DELHI, Dec 19 (PTI) Fortunes of passenger carmakers may have been on a low ebb in 1998 due to economic slowdown but that did not deter them from introducing latest models, triggering off a never-before price war.
The year saw at least four new models and a number of variants being rolled out with much fanfare but who will emerge the king of the roads will become clear only next year.
While two South Korean giants, Hyundai and Daewoo, have already wheeled out their small cars to take on the mighty Maruti Udyog Ltd (MUL), a third one from the Telco, called Indica, is slated to hit the roads in the last week of December.
Cut-throat competition has already begun in earnest between these car companies to snatch a share from MUL, which currently holds over 83 per cent of the total passenger car market.
In the luxury car segment, almost all players had a poor run down the year, but despite this two more sedans entered the market from Japanese auto majors, Honda and Mitsubishi.
Overall, the passenger car segment recorded a negative growth of about 2 per cent between April and November, mainly because of the luxury cars which was down by over 20 per cent in the year.
The year was certainly a bad one for MUL. For the first time in its 15-year history Marutis monopoly came to an end and its market share began to dwindle.
The companys entry into the diesel segment by launching a diesel version of its popular Zen has also ended up a damp squib as the market rejected the car mainly due to its exorbitant price of over Rs 5 lakh.
Worse, Maruti finally had to cut down its production by over 20 per cent as inventories started piling up at its Gurgaon plant. Though the company sought to blame it on recession, it became clear that the new small cars had started to wean away prospective customers.
The only silver lining for Maruti in an otherwise dismal year was its partners, the government and Suzuki Motor Corporation of Japans, decision to bury the hatchet after a protracted battle that rocked the very existence of the joint venture.
Not that there were no hitches for these cars. While the customers found the tall-boy design of Santro as a bit unnatural, many had difficulty in accepting the Rs 3.55 lakh price tag of Daewoos Matiz.
However, all eyes are now
on Telco and its Indica, which is scheduled for a
year-end launch in both diesel and petrol versions.
Analysts predict that if Indica can stick to its promised
price tag of Rs 2.5 lakh for a petrol version, other
players may find the going getting more tough.
ageing power machines
CHANDIGARH, Dec 19 S. P. Sharma, member, Power, Bhakra-Beas Management Board, has stressed the need for renovation, modernisation and uprating of the existing ageing machines to enhance the power generation capacity.
In his keynote address at the hydro electric utility owners meet, power sector, held here last evening, Sharma said the task of upgrading the ageing machines could be done at a nominal cost.
He called upon Bharat Heavy Electricals Ltd ( BHEL) to find solutions to enhance the life of silt-affected components in power stations.
S. C.Munjal, Managing Director, Haryana Power Generation Corporation, inaugurated the meet by lighting a lamp. Senior executives of the BBMB , HPGCL, HPSEB, NHPC, PSEB and UPSEB participated.
C. K. Mohan Sastry,
Executive Director , BHEL said all BHEL divisions had
been awarded ISO-9002 certification, BHEL, he said, was
going for benchmarking techniques for quality improvement
in product and services. BHEL aimed at achieving quality
standards as per Six Sigma Quality standard by 2001, he
Sukhbir for heavy industry in
FATEHGARH SAHIB, Dec 19 The Non-Resident Indians and the top industrialists of the country are being motivated to set up the big industry in the state, and many of them have agreed to do so, said Mr Sukhbir Singh Badal, Union Minister for Industry, while talking to the media persons here today.
He said the work on Thein Dam has restarted and it would be completed at the cost of Rs 3,000 Crore and would be dedicated to the people of state in February 1999. He said the construction work on Bathinda oil refinery has started and it would be completed at the cost of Rs 16,000 crore.
CALCUTTA, Dec 19 (PTI) The Government of India has constituted a spectrum management committee which would frame policy measures and design for maximum utilisation of the scarce resource.
The Secretary to the Prime Minister of India, N.K. Singh, today said here that based on the recommendations of the Telecom group, the Constitution of the Spectrum Group would help the country to draft a sensible telecom policy.
The spectrum panel would consist of the signal officer-in-chief of the Ministry of Defence, Wireless Adviser to the Government of India, representative of the National Informatics Centre, and an official of the Defence Ministry.
According to Singh, the terms and reference of the group is to determine the optimal use of spectrum along with its opportunity cost, which would help to work out a sensible transitional path in which the utilisation of the resource could be improved significantly.
Spectrum, which are ether waves required to transmit voice and data, is the single-most important input which the entire telecom policy revolves around, Singh added.
Once a sensible telecom policy was put in place, the Government would find it easy to draft a sensible policy on Information Technology, which has a great potential of turning the country around, he added.
set up five-member panel
SAS NAGAR, Dec 19 In a new step to protect their interests, industrial unit owners in the state set up a Council for Industrial revolution in Punjab here yesterday.
The non-political council will endeavour to discuss, deliberate and form opinions on various issues confronting industry and make recommendations to the government. A five-member panel was set up which will nominate other members to ultimately form a governing body of the council comprising a total of 21 members.
The committee formed today had representatives from different districts Mr R.S. Sachdeva, President of the Mohali Industries Association (MIA), Mr Sukhdev Raj, President, Focal Point Industrial Association, Jalandhar, Mr Inderjit Singh Pradhan, President, Chamber of Industrial and Commercial Undertakings, Ludhiana, Mr Raj Pal Singh, President, Patiala Industries Association, and Mr Rakesh Goel, President, Association of Batala Small Industries.
Mr Sachdeva told media persons that no decision taken by the government to increase revenue would be acceptable to industry if the council was not taken into its confidence. The council would oppose all attempts of the government to thrust decisions on industry which had been taken unilaterally.
Mr Sachdeva said the council had demanded the appointment of an independent Minister of Industry in the state who should have an industrial background. The council meeting, he said, took note of the corruption in the Punjab State Electricity Board, the PSIEC, the Department of Excise, Sales Tax and Industry.
Mr Jagjit Singh, General
Secretary of the MIA, said there were 1.95 lakh
industrial units in Punjab out of which 8,000 had been
declared sick. As many as 20,000 of them were going in
losses and were on the verge of closure because of
wrong government policies.
NEW DELHI, Dec 19 (PTI) Prospects of a record foodgrains output in 1998 were washed away by heavy floods in parts of the country that caused shortages and sky-rocketing prices, especially of onions, which led to electoral defeat of the ruling BJP in the November Assembly polls.
On the policy front, the entire year was devoted by the Agricultural Ministry to finalise draft agricultural policy.
In between, it made efforts to tide over fertiliser shortage for the crucial rabi sowing season in October.
Agricultural had a bad year with damage to crop from natural calamities, pests attacks and crop diseases abounding. There were a number of suicides by farmer in Andhra Pradesh and Punjab due to their inability to clear heavy debt burdens.
This forced the Central Government to announce a crop insurance scheme that brought all crop varieties and all types of farmers under its purview.
But, single-most important issue which hit the headlines and caused acute embarrassment to the government was the sudden spurt in prices of onion that rose to as much as Rs 60 a kg during October-November.
Amidst opposition charge of mismanagement and delays in import of onions, the government tried to assuage fellings by making subsidised rates.
The year also witnessed a slump in mustard farming due to the dropsy epidemic outburst in August caused by adulterated mustard oil. Though government claimed normalcy, farmers remained edgy over mustard crop for most part of the year.
On the foodgrains front, the kharif output stagnated at last years level of 101 million tonnes while oilseeds stood at 142.6 lakh tonnes, marginally higher compared to 141.5 lakh tonnes achieved in the last kharif.
Agronomists are pessimistic of achieving the 201 MT overall foodgrains production target this year as rabi output would have to be in the region of 100 MT an unlikely situation keeping in view the lower targets and the severe fertiliser shortage.
announcement of ad hoc subsidy of decontrolled
fertilisers led companies to cut down output while import
order of about one million tonnes of di-ammonium
phosphate were cancelled, resulting in acute shortages at
the crucial rabi sowing time.
WITH the heat dust of the elections in the three northern Indian states beginning to settle down, the focus is once again bound to shift to the beleaguered Unit Trust of India (UTI), whose ill managed US-64 scheme has been facing massive redemption pressure. For once, the Government has got its act together and appointed a high powered committee headed by Deepak Parik to evaluate options to restructure the UTI.
Now, one of the suggestions of this six-member expert committee is the option of assigning approved security status for US-64. The committee has promised to come up with a stand-alone proposal and submit it to the government by mid-December. Since approved securities are part of the SLR securities, US-64 would become attractive to banks. SLR securities carry zero risk weightage, which means that banks will not be required to back their investments in US-64 with capital under RBIs capital adequacy norms. Declaring the US-64 an approved security would also have the effect of throwing open investments in US-64 to public trusts and charities, set up under the Public Trusts Act. Currently, the powers to declare a security an approved security is vested in the Central Government. Given the kind and volume of money which flows into investments which are declared trust securities, the notification of approved securities, is currently subject to case by case clearances.
The Approved Securities status is sought after by borrowers since it carries the stamp of safety. Experts say, by definition, an approved security means a security whose principal and interest stand guaranteed by the Central Government. This move would have several advantages. Firstly, there would be infusion of funds at a time when US-64s till-now robust income flows have been drying up. Furthermore, this would automatically improve the NAV of the scheme, and bring it closer to the artificially maintained repurchase price. Finally, it would also be possible for the scheme to maintain its hitherto high levels of dividends. Now, this is very important, as it is no secret that failure to maintain the current level of dividend of 20 per cent in June, 98 would further increase the redemption pressure on the scheme. However, it remains to be seen how far these artificial props help to sustain a wobbly UTI, whose biggest bane at the movement is its overexposure to equity.
The much belated corrective rally seems to have set in. Whether the rally can be sustained remains to be seen, but the most important facet of this rally. If it can be so called is the fact that the Life Insurance Corporation (LIC) has emerged as a major player among the domestic financial institutions at the Indian bourses. Institutional brokers have been whispering for a while that LIC has launched into a large buying spree over the past two months. In fact, it has been a net purchaser all through October and November, the time when the US-64 problem and fears of redemption reduced UTIs fresh purchases in the secondary market. LIC has thus taken off in its latest act of reviving the markets from where UTI left off.
It is believed that the
institution planned to put Rs 2,000 crore into equities
in 1998-99, which would include its share in the public
sector undertaking (PSU) divestment planned by the
government. Now, this would be 80 per cent higher than
its Rs 1,000 crore equity investment in 1997-98. As per
existing guidelines, LIC can invest upto 25 per cent of
fresh accruals to the investible surplus in the market
segment, which includes equities. This works out to
around Rs 4,100 crore. However, LIC is far short of this
limit and can in fact pump in more funds into stocks if
it so desires.
There is no conclusive evidence to link food cooked in aluminium utensils to Alzheimers disease and other related disorders, says Dr K.S.S. Murthy, an emeritus scientist from the Indian Institute of Science.
Efficiency of cooking depends on the conductivity of the vessel in which food is cooked and aluminium is a better conductor of heat compared to stainless steel.
Dispelling fears about the use of aluminium utensils, Dr Col. Singh Goel of the base hospital, Delhi cantonment, said studies conducted on people living in areas where water had a relatively high aluminium content showed no traces of any debilitation.
Tracing the genesis of aluminium controversy, he said a study conducted in the USA in 1965 on rats showed traces of aluminium deposits in their brain and this was assumed as the main culprit causing Alzheimers disease.
Cacophony reigned more supreme than usual in central Tokyo on Tuesday, as dozens of people screeched and bellowed in a contest that had but a single rule: to be as loud as possible.
Pent-up frustations at Japans recession, the anguish of breaking up, and hostility toward littering smokers all found release as contestants screamed messages in to a decibel gauge at the 18th annual Big Voice competition. Japanese Prime Minister Keizo Obuchi was the target of many of the vocal assaults. Heeey Obuchi, you listening?.... Abolish that consumption tax, got it? belted out contestant No. 5, 64-year-old Kinshiro Toyama, whose deep baritone suddenly cracked into a falsetto. Contestants were so enthusiastic many may even have been breaking the law. Tokyo has an ordinance limiting the sound level at public gathering to 85 decibels. The leading contenders all registered above 100.
Hundreds of spectators turned up to cheer the shouters in Tokyos bustling Shinjuku district. The event was sponsored by breath-mint maker Halls.
The champion, 24-year-old company worker Mamiko Kobayashi, also scored points for diplomatic finesse. Her scream was addressed to Taiwans President: Cheer up, Lee Teng-Hui she yodeled. Kobayashi triumphed with a decibel count of 111.6 and was awarded the top prize of 100,000 yen ($850).
The British tea merchants are returning to America to push their product and say theyre sorry.
On the 225th anniversary of the Boston Tea Party on Wednesday one of the events that led to the American Revolution Britians Consul General to Boston was on hand as representatives from that countrys biggest tea company, Brook Bond, formally apologised for the tea tax that led to the rebellion.
The seminal event of the American War of Independence involved a group of American patriots from the Massachusetts colony, masquerading as Indians, who boarded three British vessels and dumped 342 bales of tea into Boston harbour as a protest against higher taxes.
Brook Bond has hired British actor Tom Baker. Dressed as an 18th century gentleman, Baker delivered the apology to the Governor of what is now the Commonwealth of Massachusetts.
From our hearts, we say a sincere sorry. Sorry America! Baker told the Governors representative at a State House ceremony.
Chinas condom industry hopes to cash in on the governments strict family planning policy and increased awareness of venereal diseases to boost its fortune.
China is emerging as the worlds largest condom market as its long-term strategies on birth control and protection against venereal disease require more of the most common aid to safe sex, a front-page report in China Daily Business Weekly has said.
Effect of amendment
Q: When the suits for eviction against public sector undertaking is barred by amendment, are the suits filed prior to such amendment affected?
A: This point came up before the Allahabad H.C. in Hindustan Petroleum Corporation Ltd. v Kailash Motors, (1998 (L) RCJ 157) wherein the H.C. expressed the view thus:
The effect of the bar which is created by S.20 (1) of the Rent Act is that landlords substantive right to file a suit against the tenant, which is vested on him under the general law, is suspended from the date of the bar has been enforced by extending the provisions of the Rent Act to the building involved in the suit. However, in the opinion of the H.C., if before the bar against filing of the suit was imposed, the suit has already been filed, the imposition of bar has no consequence on the suit.
Therefore, a suit was filed by a landlord prior to 18.5.83 for eviction of his tenant, who for the purposes of this case, happened to be a public sector undertaking, except for anything else, either in the Rent Act or otherwise, had to be tried and decided by the court which was seized of the suit without attracting the bar imposed U/S 20(1) to that suit.
No provision has been brought to the notice of the H.C. nor despite the effort of the H.C., it could lay hands upon any provision either in the Rent Act or in any other enactment, which could prevent the court from proceeding with the trial of the suit which has been filed before it, prior to 18.5.83 for eviction of the applicant from the building, though as a result of the amendment of the provisions of the Rent Act by Amending Act. No. 17 of 1885, bar against filing of such suit became applicable to building in the tenancy of Public Sector Corporations by virtue of S.20 (1).
Q: I was having a house which has been sold by me costing Rs 6,25,000. From the mentioned amount I deposited Rs 4,20,000 in Post Office under monthly income scheme. I am getting Rs 39,000 as interest annually. The balance amount Rs 2,05,000 has been deposited in saving Bank Account and Rs 7341 as interest is paid to me by the bank. The total interest received by me is Rs 65,341 which is the only source of income for me.
I am 68 years old lady. You are requested to advise me whether I am exempted from the Income tax under section 80L.
Raj Kumari, Chandigarh
Ans: On the facts stated by you, you are advised that the maximum deduction u/s 80L in respect of bank interest, Post Office interest, etc is Rs 12,000. However, on the facts stated by you, you are not liable to any Income-tax at all because of the tax rebate available for a senior citizen. However, you should file your Income-tax return as it exceeds the maximum exempted amount.
Q: I am having a residential plot in Punjab. My wife has recently been allotted a residential plot in Punchkula by HUDA. She is a housewife and has no income of her own. Kindly advise:
1. Can I spend the proceeds of plot in my name in the construction of plot allotted to my wife without attracting Capital Gain Tax.
2. Alternatively, my wife can spend the proceeds of her plot for construction of plot owned by me without attracting Capital Gain Tax.
3. Kindly also intimate the procedure of Gift upto 30,000 whether any affidavit is required in this respect.
Narinder Pal Arora, Panchkula
Ans: No saving in respect of capital gains can be achieved by making investment in the name of your wife arising out of your capital gains. Similarly, you will not achieve any tax benefit by investing capital gains of your wife in your name. There is no requirement of any specific affidavit for making a gift whether it is Rs 30,000 or more. Please remember there is no liability to Gift Tax w.e.f. 1-10-98. The gift of immovable property must be registered in the Office of the Registrar or Sub-Registrar.
Q: Please reply my queries, are:
Can one set off the loss sustained on discounting/redemption of Mutual Funds on NAV after lock in period, out of the income from other sources by way of interest on bank deposits, bonds, etc.?
Can one set off amount of interest paid on loan raised from bank for consumer/conveyance purposes, out of the income received/accrued by way of interest on deposits with bank/P.O. taking basis of supporting expenditures for such interest income, since one may not have earned any interest income on that amounts of deposit which he would otherwise have utilised on consumer/conveyance purposes instead of raising bank loans.
Is redemption of MEP 92 u/s 80 CCB is also exempted form adding into income of the respective financial year on the lines of NSS-92?
What is the exemption limit of amount u/s 80L for interest income on Bank deposits, NSCs etc for the year 97-98? Does it stand restored for Rs 13000/- as income from shares/MFs is altogether exempted for computation to tax purpose.
Salokam Kumar, Hamirpur (HP)
loss on account of mutual fund, etc etc cannot be
adjusted against Income from Other Sources. The interest
paid for consumer durables, etc is not allowed as a
deduction. Yes, MEP 92 is at par with NSS 92. The
deduction u/s 80L is limited to Rs 12,000 in respect of
income from bank interest, monthly income plan together
with additional deduction of Rs 3,000 in respect of
deduction for income from mutual fund, etc. Thus the
total deduction available u/s 80L is Rs 15,000.
MARKETMEN, especially those trapped by the bear operators, invariably depended on UTI to support the Sensex whenever it was hammered beyond a certain limit. But given UTIs present condition, expecting the same would amount to merely wishful thinking. However, if the market grapevine is to be believed, LIC seems to have been bitten by the equity bug and has forayed into the volatile secondary market in a big way. One only hopes that the UTI fiasco is not repeated by LIC.
THE grapevine has it that instead of ending up with a bloody nose, perhaps on account of punches thrown by its own supporters, the Government will use the Classic Committee Response in case of the IRA Bill. In common parlance this would translate into tabling the Bill and then placing it in the hands of a committee, thus consigning it to the cold storage till a more opportune moment.
Hoechst & Rhone-Poulenc
GENETICS is where the
future lies, or so we are told, by those with a
scientific temperament. Following the proposed worldwide
merger of Hoechst & Rhone-Poulenc, a new genetic
power has come into force. The division to watch out for
in the new merged entity will be its life-sciences
division. Watch its performance.
NEW DELHI, Dec 19 (PTI) A divergent trend prevailed on the bullion market today as silver recovered on revival of buying while gold declined further on persistent arrivals. The quotations: Silver .999 (ready) 7395, delivery 7405, coins buyer 10.500 and sheller 10.600. Standard gold 4285, ornaments 4135 and sovereign 3725.
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