Sunday, June 20, 1999
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B U S I N E S S | Sunday, June 20, 1999 |
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Infinet for inter-banking
communication |
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 Union Minister for Science and Technology, Dr Murli Manohar Joshi, going round the space gallery "Space — Emerging technology in the service of mankind", which was inaugurated in Bangalore on Saturday. — PTI photo |
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LIC Housing Finance plans 1200
crore loans Exports increase by 10 per cent:
Hegde SC grants relief to FCA holders Industry reviews to go online IOB posts 55.34 crore net
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Infinet for inter-banking communication HYDERABAD, June 19 (PTI) — The Indian financial network (Infinet), for communication between closed user group of banking and financial sectors for speedy payment system, was today commissioned by RBI Deputy Governor, S.P. Talwar at the Institute for Research and Development in Banking Technology here. Mr Talwar said Infinet, the satellite based network set-up by the RBI on VSAT, would give the much-required fillip in enabling information flow across branches of banks. “This will become the backbone of transmission of messages, information, data and funds for the entire banking sector in the country”, he said. In the first phase VSATs have been installed in all the sixteen offices of the banking department of the RBI, at the Ministry of Finance in New Delhi, and at selected sites of the public sector banks, the RBI Deputy Governor said. For effective and optimal utilisation of Infinet, computerisation of bank branches as also standardisation of hardware, operating systems, platforms and application softwares throughout the banking industry would be imperative, he said. Mr Talwar also held a brief video-conference using Infinet with the RBI Governor Dr Bimal Jalan in Mumbai. Mr Jalan congratulated the team for commissioning the system and said the network would be the main medium of transactions in the next millennium. Mr Talwar said all major bank branches in commercially important cities should be totally computerised as early as possible. The next step would be to link all computerised branches to their service branches, treasury/funds departments and controlling offices, he said. With the inter-bank connectivity being provided by the Infinet, more than 70 per cent of banking business would have the advantage of access to an On-line real time environment, Mr Talwar said. Dr A. Vasudevan, Executive Director of RBI, pointed out that the Infinet clearly gets the distinction of being a forerunner of an efficient telecommunications backbone for the banking and financial sector. Inter-city electronic clearing service (ECS) under which corporate customers at one place could effect credits to accounts of customers situated anywhere within the reach of ECS, could be one of the applications of Infinet, he said. RBI was working on the
establishment of a centralised funds management system
comprising the centralised funds enquiry system and
centralised funds management system which would pave the
way for banks to manage their funds with the RBI in a
much more efficient manner, he added. |
LIC
Housing Finance plans 1200 crore loans CHANDIGARH, June 19 — The LIC Housing Finance Ltd plans to sanction over 50,000 individual loans amounting to Rs 1,200 crore and Rs 55 crore to corporate bodies, public housing agencies and developers during the current financial year said Mr S.C. Sharma, Regional Manager, Northern region at a press conference here today. Mr Sharma said the company has shown all round phenomenal growth in its performance during the decade 1989-90 to 1998-99 i.e. a net profit increase from 0.12 crore to 101.14 crore, an increase from Rs 10.85 crore to Rs 944.93 crore, in disbursements. The net worth increased from Rs 9.75 crore to Rs 482.16 crore. the dividend on equity shares had been increasing from year to year from 7.50 per cent in 1990-91 to 25 per cent plus five per cent as special anniversary dividend for 1998-99. The company started with eight offices and today it has largest net working of 67 offices. He said the company has crossed many milestones amidst tough competition in its pursuit to attain a prestigious position in the housing finance sector. Amongst the 26 companies listed with the National Housing Bank, LIC Housing Finance has a market share of 25 per cent. Mr Sharma said in
Northern region — after Delhi — Chandigarh area
office has shown progress, particularly during the last
five years. Disbursement has increased from Rs 3.56 crore
as on 31.3.94 to Rs 16.40 crore as on 31.3.99. Till
May-end the total disbursement was about Rs 70 crore. The
recovery rate of the Chandigarh region is almost 100 per
cent whereas it is 98.5 per cent overall. |
Exports increase by 10 per cent: Hegde MUMBAI, June 19 (PTI) — Exports have increased by 10 per cent in the current year so far, the Union Commerce Minister, Mr Ramakrishna Hegde said here today. India’s exports had recorded a 10 to 11 per cent increase in the first three months of this fiscal, while exports of gems and jewellery had shown a rise of 20 to 22 per cent, he said at an award function of the Gems and Jewellery Export Promotion Council. The minister said a decision with regard to special import licence for gold will be taken after a meeting with the Finance Ministry scheduled next week. The Gems and Jewellery Industry had grown from a paltry Rs 22 crore in 1966-67 to over Rs 26,000 crore in 1998-99 with an export figure of $ 6.152 billion, Mr Hegde said. “A lot of initiatives have been introduced in the recent exim policy to boost exports of gold jewellery, yet exports are not picking up and are far below its potential”, he added. The value of exports of cut and polished diamonds in 1998-99 was $ 5.013 billion as against $ 4.492 billion in the previous year recording a growth of over 12 per cent. Recognising the design
talent of the domestic industry, Hegde said it is
imperative that more training and design development
centres are established and added that the ministry has
planned to set up a jewellery design centre of
international standards in the metropolis. |
SC grants relief to FCA holders ISLAMABAD, June 19 (PTI) — In a partial relief to the foreign currency account (FCA) holders in Pakistan, the country’s Supreme Court has ordered the banks to instantly pay the profit and interest on the FCAs in foreign currency, at the rates existing before its nuclear tests in May last year. The court yesterday also asked the Nawaz Sharif Government to evolve schemes to return the principal of the FCA holders over a reasonable period, keeping in view the country’s foreign exchange position. It also ordered that a reasonable provision should be made in every annual Budget to gradually lift all the restrictions imposed on FCAs last year. The Sharif Government had last year frozen $ 11 billion worth of private FCAs in anticipation of massive capital flight from the country due to political and economic uncertainity following its nuclear tests in May last year. As part of the order overseas Pakistani’s and even foreigners have been allowed to receive the profit or interest on their FCAs and also remit the profit abroad. The court declared as
illegal an earlier deadline of July 31 1998 set by the
banks for borrowers to get their FCAs liquidated. Thus
any liquidation that took place due to that deadline
could now be questioned and undone. |
Santro to
cost more NEW DELHI,June 19 — Hyundai Motor India today announced an upward revision of the Standard variant of the Santro. The new price of the Santro Standard variant, according to a company statement is Rs 2,99,940 (ex-showroom Delhi) against the current price of Rs 2,93,940. The company statement
added that the upward revision of prices is applicable
only to the Standard variant of the Santro and not the
two deluxe models or the three Euro II options. |
Industry
reviews to go online NEW DELHI, June 19 — International information agency, Reuters Limited and public affairs consulting firm, Indian Public Affairs Network (IPAN) today announced that industry reviews prepared by IPAN are now available on the Reuters Business Briefing On-line Dial Up Service. These monthly reviews based on information from various sources, cover the Indian economy as well as industries such as aviation, broadcasting, automobile, power, information technology, insurance, telecom, pharmaceuticals and oil and gas. The Reuters Business Briefing On-line Dial Up service has been structured into several sections. Newswires deliver the full range of Reuter’s global economic, political, general and sports news as it happens, a release said. New search offers swift
access to a ten year information and photo archive from
Reuters and thousands of business publications from
around the world. |
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CHENNAI, June 19 (PTI) — Public Sector Indian Overseas Bank (IOB) today announced a net profit of Rs 55.34 crore during 1998-99 following a 15 per cent increase in business turnover which crossed Rs 32,000 crore. While deposits neared Rs 22,000 crore, advances crossed Rs 10,000 crore during the period, resulting in productivity per staff exceeding Rs 1 crore, an IOB statement said. The bank, which achieved a capital adequacy ratio (CRR) of 10.5 per cent on end-March compared to 9.34 per cent a year ago, managed to record a gross profit of Rs 142.96 crore inspite of immense pressure on interest spread. While ratio of net NPAs were reined in at 7.3 per cent, proportion of current investments in approved securities stood at 87.5 per cent as against the stipulation of 70 per cent. While global deposits
went up from Rs 19,329 crore to Rs 21,914 crore, domestic
rose from Rs 18,263 crore to Rs 21,093 crore. |
Not
yet packaged for recovery The Rs 2300 crore flexible packaging industry comprises three segments: BOPP films, PET films and converters. Besides, there is an entirely separate segment of laminated tubes too. The case of PET films and BOPP films is quite similar to the competition between DMT and PTA in the synthetic fibres industry. Both the types of laminates have their own quality, but could be used by consumers the world over, as per their choice. The BOPP segment comprises six producers in our country, which include Cosmo Films, Gujarat Propack, Max India, Flex Industries, Biax and Supreme. The total capacity of the BOPP in the country is close to 40,000 tonnes per annum, but the domestic demand for the same is restricted to about 26,000 tonnes. However, another 3,500 tonnes of the product is being shipped out of the country annually, thus bridging the demand-supply gap. Unlike the PET films segment, where at least four or five players are stalwarts for long, there are only two majors, Cosmo Films and Gujarat Propack who have been focussing on BOPP films as their core area. Others are either the diversified companies who got into BOPP films too, or are now in a situation when they want to dispense away with this line due to severe pressure. PET films enjoy the price advantage and furthermore, it also does not require that much of a specialised equipment to be installed at the converters and end is easily useable. The product finds application in pan masalas, food snacks, car films and some other products. But in case of BOPP films, the prices, world over conventionally rule higher than PET films, though much of it is determined by the thickness factor of the films too. However, BOPP films require more sophisticated machinery at the conversion end, and the possibilities of its growth depend in the technological advancement in the country. At present, the BOPP films segment is growing at a rate of 8-10 per cent annually world over. Till date, it has been the foods industry, which has been dominating as the active consumer for the flexible packaging industry. In fact, it includes both the food processing and also the beverages, the two account for almost 60 per cent of the clientele of the flexible packaging industry. Cosmo Films: Cosmo Films, a prominent player in the polypropylene films (BOPP) segment, has been unable to bear the pressure on its profit margins following a continuous slide in the prices of BOPP films, and has ended up slipping into the red. This setback has forced the company’s management to re-evaluate its strategies. The focus of Cosmo has shifted to the export markets, particularly in the West. The company has targeted Rs 20 crore in the current financial year out of exports. Besides, it has also tried to minimise costs, by raising productivity. Essel Packaging: Essel Packaging is one of the leading players in the flexible packaging segment. It is unique, in the sense that it has a slightly different line of laminated tubes. These tubes are flexible ones, which have replaced the earlier metallic kind of packing for personal care products like toothpastes. The company is now a global-sized player in this segment, and has almost 80 per cent of the market share for lamitubes. The company has now spread over its wings through ventures in countries like China and other places. The product is catching on, and is finding wider applications. With no major competitors within the country, Essel Packaging is still ruling the roost in this segment. Flex Ind: Flex Industries ill-conceived decision to get into backward integration and to set up lines for BOPP films and also the polyester films segments has cost it dearly. Though both the projects went on stream two to three years back, yet the timing proved to be wrong for Flex Industries, considering that both BOPP and polyester films business lines are facing overcapacities. The result of the entire episode is that the company is now loaded with heavy debt burdens of over Rs 400 crore, most of them being the high interest ones, and the company’s performance is slipping year after year. The company has been trying to look for a possible bailout for almost a year now, by substituting its high cost debts with a $90 million ECB, but even that has not materialised. Having already become a defaulter, the company has been unable to get the FIs support so far for rescheduling of its loans. Polyplex Corp: Polyplex
has a capacity to produce upto 15000 tonnes per annum of
polyester films. The survival strategy adopted by
Polyplex in the past two difficult years has been to
focus on exports. The company derives almost 55 to 60 per
cent of its sales volumes out of export markets. The same
has partly ensured that the company was not hit that hard
by the initial glut in the polyester films segment. But
with the international prices of PET films now coming
down sharply, the free fall has eaten into the profit
margins of the company. In case there is any further fall
in international prices of PET films, this company too
will slip into the red. |
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Novartis India Novartis India Ltd (NIL) is a prominent player in the Indian pharmaceuticals industry. The company is the fourth largest player in this segment in Europe and seventh largest player in the world. Novartis is also involved in the agricultural segment. On the financial front, the company’s financial performance has been good. During the year that ended in March 1998, the company posted sales and net-profits of Rs 663 crore and Rs 37.02 crore respectively. The company is part of the 31.2 billion Swiss Franc giant, the Novartis group, which was formed subsequent to a world wide merger and a complicated business restructuring of the two entities, Sandoz and Hindustan Ciba Geigy. This company has planned a number of OTC launches during this year and later. It is likely that these launches will enhance its business. Lately, it has launched three products in the pharma segment, which has been readily accepted in the market. Thus, the overall prospects of the company seem very encouraging and a long term investment in its shares could be considered. Shasun Chem SHASUN Chemicals and
Drugs manufactures Ibuprofen, Ranitidine and other
intermediares, amongst which Ibuprofen is a major
contributor to its turnover. However, the fall in prices
of Ibuprofen in the local market and also of Ranitidine
by a sharp 50 per cent may have a negative impact on the
performance of the company during the current year. To
counter the same, the company is planning to add
supplementary products like Naproxen and Nizatidine which
may also be beneficial in the long term and it also
proposes to set up a 60 tpa capacity for the same, while
at the same time trying to fully utilise it’s
Ranitidine capacity. On the financial front, the
company’s performance has been satisfactory. During
the year that ended in March 1998, the company posted
sales and net profits of Rs 156.70 crore and Rs 2.42
crore respectively, thus yielding an EPS of Rs 2.9. The
company has expanded its Ranitidine capacity from 240 tpa
to 360 tpa while its Ibuprofen capacity is over 3000 tpa.
Though, the company is not fully utilising it’s
Ibuprofen capacity, it plans to increase the production
to 2800 tpa in the current year out of which 1500 tpa
could be exported, whereby it gets better margins. The
outlook for the company may improve as Naproxen is
expected to yield an additional turnover of Rs 10 crore
and its technology transfer agreement with Chiotech, UK
also augurs well for the future. |
Q: Should the oral evidence in a disciplinary enquiry be taken in presence of parties or can it be taken in any other manner? Ans: This Supreme Court in Union of India v Thyagarajan P. (1999-I-L.L.J. 507) was answering this question thus: The Disciplinary Authority noticed certain irregularities in the conduct of the enquiry and in particular that the Enquiry Office acted on letters of one witness on behalf of the department and another witness who was on behalf of the delinquent Sub-Inspector. On the basis of the department and another witness who was on behalf of the delinquent Sub-Inspector. On the basis of the representation made by them stating that they are not in a position to attend the enquiry proceedings but indicating the facts within their knowledge, the Disciplinary Authority took the view that the witnesses should have been examined in person and procedure adopted by the Enquiry Officer was contrary to relevant rules in taking letters as statement. Therefore, the Disciplinary Authority set aside the findings recorded by the Enquiry Officer and directed De Novo enquiry. The question posed before the S.C. was regarding authority of the Disciplinary Authority to order De Novo enquiry. The S.C. observed that Rule 27 (c) of the Central Civil Services of the Central Reserve Police Force Rules, 1955 contemplates that evidence material to the charge could be either oral or documentary and if oral: (1) it shall be direct; (ii) it shall be recorded by the officer conducting the enquiry himself or by any officer; (iii) the accused shall be allowed to cross-examine the witness. Thus, when reliance is
sought to be placed on oral evidence of witness it will
have to be obtained in the manner indicated in the said
Rule and the statement has to be recorded by the officer
himself conducting the enquiry in the presence of the
parties and it cannot be done in any other manner.
Consequently, the S.C. held that the procedure in taking
letters as statements is in violation of Rule 27 (c) (2).
Rule 27 (c) enables the Authority to record its findings
on the report and pass appropriate order including
ordering De Novo Enquiry in a case of present nature. |
Q: I am interested in gifting an urban property to a relation of mine. Kindly guide if such gift is permissible under law and the taxes leviable on the donor and donee if any. Kindly also advise about the procedure of executing gift deed for the purpose. — R.P. Singh, Amritsar Ans: With effect from October 1, 1998 it is possible for you to make a gift of urban property to a relation of yours. There is no liability to gift tax at all. Thus both the donor and donee are not required to make payment of any gift tax on such gift.However, please do remember that for making the gift of immovable urban property you are definitely required to execute a conveyance deed to be registered in the office of the sub-registrar. Q: I am an Income-tax payee servant. I am suffering from Chronic Heart disease for which a certificate from competent authority is issued to me. I am prescribed medicines for this which I have to take regularly without a gap. I spend Rs. 60,000 on medicines every year. This used to be reimbursed by my employer but after start of fixed medical allowance of Rs. 250 per month the reimbursement has been stopped for out-door treatment. Kindly let me know if deduction for expenditure on chronic disease like heart is exempt from income tax. If so to what extent and under which Section of IT. What are other requirements for claiming exemption —Amarjit Singh, Talwara Township. Ans: In respect of expenditure incurred by you on chronic heart disease please remember that the deduction for chronic heart disease is available only if the disease is covered by section 80DDB of the Income-tax Act, 1961. The maximum amount that is permissible as the deduction is Rs. 15,000 per annum for the A.Y. 1999-2000. However, please do ensure whether your disease falls under the terminology of chronic disease. For this purpose please refer in greater details to Income-tax Rule 11DD (1) which provides for exhaustive commentary on the chronic disease. Apparently it appears that your disease would not fall under chronic disease for Income-tax purpose. Please also remember that in respect of the fixed medical allowance received by you from your employer, the entire fixed medical allowance will be fully taxable within the purview of the Income-tax law. However, reimbursement of medical expenses to the tune of Rs 15,000 in one year is exempt from Income-tax but reversibly if it is an allowance then it becomes fully taxable. Q: Please give a clarification on the following points: “A PPF account normally remains operative for 15 years. It can, however, be extended further for 5 years and thereafter again for 5 years with normal benefits under the Income-tax Act, 1961. Please advise whether it can be extended thereafter also without any limit but each time for a period of 5 years. Please quote the relevant rule or para of the scheme. Is the age of the account holder relevant for the purpose of PPF account and in what manner? —A.C. Aggarwal, Madhuvan. Ans: The amount deposited in the PPF A/c can be kept alive even after 15 years by extending the period of PPF A/c for a block of 5 years and thereafter again for a block of 5 years and so on. Q: My wife is a teacher. She has inherited a house of 5.5 marlas by way of a registered will from her sister’s husband, the market value of which at present rates is Rs. 8 lakh. What will be her liabilities towards Income Tax/wealth tax/capital gains tax or any other tax of the said inherited house. We also want to sell this house (inherited house) and want to purchase another house from the sale proceeds of the inherited house. What formalities are required to be made before that purchase of the house, if any. — Mohinder Pal, Jalandhar. Ans:
There is no liability to Income-Tax, wealth tax, gift tax
or capital gains tax on merely inheriting the house. Thus
in respect of inheritance of the house there is no
liability to any Income-tax at all. However, when your
wife wants to spell this inherited house she will be
liable to make payment of the capital gains. Now to
legally avoid tax payment of capital gains your wife has
got two options. One option is to make investment of the
capital gains in acquiring another house property within
a certain specified period as per Section 54 of the
Income-tax Act, 1961. If she is not interested to make
investment in the house property and she makes the
investments as per Section 54EA or Section 54EB, then
also she will also not be liable to make payment of any
capital gains tax. Finally, if she wants to invest the
money in the manner she likes then she will be required
to pay tax on long-term capital gains @ 20 per cent.
Therefore, many options are available for making savings
on the capital gains accruing to her. |
Q: We are engaged in the business of manufacture and sale of plywood and plyboard in Haryana being a dealer registered under the provisions of Haryana General Sales Tax Act, 1973 and the Central Sales Tax Act, 1956. A consignment of plyboard was sent to a Punjab based registered dealer in pursuance of an agreement for the supply of the material and necessary documents such as bill of sale as well as goods receipts were issued and handed over to the person incharge of the goods carrier who was entrusted with the job of transporting the goods from our place of business to the ultimate destination. While the goods were en route these were intercepted by an Excise and Taxation Officer (Enforcement), Punjab on the footing “the documents produced at the time of checking appeared to be not genuine and needed verification”. Following this we visited the Sales Tax Officer of Punjab and explained that the documents were quite genuine and valid and thus there was no evasion of tax due under the Punjab General Sales Tax Act. 1948. However, the Checking Officer does not agree to this and has called upon the Punjab based party to bring his account books in order to verify the genuineness of the documents. It has been stated by the Checking Officer that he is not concerned with our account books and other record. Kindly advise if the approach of the Checking Officer is justified? How to defend the case, this may also be clarified. — Rajan Gupta, Haryana Ans: Detention of goods under transport under sub-section (6) of section 14-B of the Punjab General Sales Tax Act, 1948 can be resorted to by a Checking Officer only if either (i) the goods are not found covered by proper and genuine documents; or (ii) if the person transporting the good is attempting to evade the payment of tax due under the Act; or (iii) that the driver or other person incharge of the vehicle fails to stop the vehicle despite asking by the Checking Officer. However, before a Checking Officer takes recourse to these grounds for detention of the consignment it is necessary to bring some evidence on record suggesting the existence of any of these three grounds. It is not that an Officer exercising powers of Checking can arbitrarily proceed to seize the goods on the ground that the documents produced are not genuine. Unless valid reasons exist for such a conclusion, a Checking Officer cannot acquire jurisdiction to order the detention of the consignment. Moreover it is equally illegal to call upon in this case the Punjab based party to produce his account books for verification of the documents which have been prepared and issued by someone else. How a buyer can be asked to explain the documents which have been sent to him by the seller? Having regard to the facts of the case, you may file an objection in writing before the Asstt Excise and Taxation Commissioner-cum-Deputy Director of the District concerned explaining this position resisting to the illegal seizure of the consignment. Q: During the course of inspection of our place of business, the inspecting officer recorded the statement of one of the partners of our firm in which stock inventory of the goods found in the godown was also included. We have requested the sales tax authorities for the issue of a copy of the aforesaid statement which has been refused on the ground that there is no provision which entitles the dealer to have the same. — S.K. Rohilla, Bhiwani Ans:
There is no prohibition in section 35A of HGST Act, 1973
which authorises the sales tax authorities carrying out
inspection or checking to supply the copy of the
statement that is recorded during the course of
inspection or checking. Therefore it is absolutely
incorrect to say that such a copy cannot be made
available to the person concerned. After considering a
similar issue, it was decided by the Department that the
copy of the statement recorded during the course of
inspection of the business premises or checking may be
provided to the dealer in the interest of equity and
justice so as to enable the dealer to explain the
irregularities at the time of verification of impounded
documents or assessment. The denial by the sales tax
Officer of the copy of the statement is therefore neither
fair nor legal. |
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| Gold recovers NEW DELHI, June 19 (PTI) — Gold recovered on the bullion market today on emergence of local buying and closed with gains while silver fell down on stockists offering. The quotations: Silver .999 (ready 7540 and delivery 7565, coins buyer 10,300 and seller 10,500. Standard gold 4055, ornaments 3905 and sovereign 3625. Seminar Workshop |
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