Monday, April 17, 2000,
Chandigarh, India



Net Face of Africa winner Nombulelo Mazibuko from South Africa wipes tears from her face after the announcement that she won the modelling competition on Saturday at the Goodhope centre in Cape Town. — AP/PTI photo
Police push world finance demonstrators near the World Bank in Washington on Saturday. Anti-globalisation protesters swarmed through the heart of the capital late Saturday and came face to face with lines of helmeted police in a tense show of will sparked by animosity toward international lending institutions. AP/PTI photo

G-7 ignores US market crash
WASHINGTON, April 16 — Financial leaders from the world’s richest nations have put a brave face on the latest plunge in U.S. stock markets as the police arrested 600 demonstrators just blocks away from where they met to discuss the global economy.

Handloom woes force 3 suicides
PANIPAT, April 16 — The handloom industry of Panipat is facing a crunch due to high input costs, decline in fabric prices and poor offtake. Thousands of workers engaged in this industry face unemployment.

BJP backs move to cut subsidies
NEW DELHI, April 16 — The BJP National Executive today endorsed the Government’s decision to raise the issue prices under the public distribution system, hike in prices of fertilisers, kerosene and cooking gas saying the well-off sections of society have to minimise their dependence on the Government in the overall interests of the economy.

IT dreams shattered ?
NEW DELHI, April 16 — Indian companies, particularly Internet start-ups and dot coms, will now find it hard to raise funds from the battered US capital markets, according to noted Harvard Economist Jeffrey Sachs.

Sales tax on bread opposed
LUDHIANA, April 16 — The Punjab Government has been accused of violating an all-India agreement to bring about uniformity in the rate of sales tax by imposing an 8 per cent tax on branded bread in the state.



G-7 ignores US market crash
Protests against IMF, WB policies
From Knut Engelmann

WASHINGTON, April 16 — Financial leaders from the world’s richest nations have put a brave face on the latest plunge in U.S. stock markets as the police arrested 600 demonstrators just blocks away from where they met to discuss the global economy.

On the eve of expected mass protests against the World Bank and the International Monetary Fund, finance officials from the Group of Seven (G7) said the global economic outlook was brighter than it had been in a long time and the economic fundamentals were sound.

“Asset markets were part of our broad ... discussions,” U.S. Treasury Secretary Lawrence Summers told reporters following the six-hour meeting, which included lunch.

“Certainly there were references to recent moves in all our stock markets,” he added. “But the focus was on fundamentals and what we could each do individually to strengthen our economies...and what we can do together to ensure more sustained, balanced and rapid economic growth globally.”

The G7 meeting took place in an atmosphere of siege as the police closed streets to foil demonstrators complaining about the lending policies of the World Bank and the IMF, which hold semi-annual meetings today and tomorrow.

The police arrested 600 protesters who were protesting a grab bag of issues near the IMF headquarters, just a few blocks from the White House. President Bill Clinton was travelling in California.

While not mentioned in the G7 communiqué issued after the talks, this week’s carnage on Wall Street overshadowed the meeting, pushing aside the usual topic of currency values.

The communiqué issued by finance officials after their talks did not refer explicitly to the Yen, Euro or Dollar, using instead standard G7 language saying “Exchange rates among the major currencies should reflect economic fundamentals”.

The G7 comprises Britain, Canada, France, Germany, Italy, Japan and the USA.

In the USA and Canada, the G7 noted that growth remained “very strong” and “inflation well contained,” urging both countries to keep fiscal policies tight and monetary policies prudent. It also called for Americans to save more.

The statement also said that emerging market economies were well on their way to recovery from Asia’s financial crisis of 1997-99. “However, it will be critical for countries to maintain the momentum of reform and continue to work to address potential underlying vulnerabilities,” the statement said.

The group also said it looked forward to hearing more about Russia’s plans to reform its ailing economy. — ReutersTop


G-24 seeks end to barriers

WASHINGTON, April 16 (PTI) — Developing countries have demanded a change in the long-standing tradition by which the heads of the IMF and the World Bank come from Europe and USA and insisted that candidates should be chosen from any part of the world.

Finance Ministers from the Group of 24, representing the developing countries, in a statement here yesterday sought establishment of a process which is “transparent, involves the entire membership through executive boards and allows selection of the best candidate from any part of the world”.

Describing the trade policies of industrial countries as “a major trade barrier”, the communiqué ahead of meetings here today and tomorrow of the IMF and the World Bank, asked the developed countries to lower export barriers from developing countries to help sustain global trade and enhance poverty reduction efforts.

Stating that while developing countries had liberalised their external trade, Chairman German Suarez said industrial countries continue to place barriers in textiles and foodstuffs and by subsidising local production where developing countries have a comparative advantage.

Developing countries must become more active partners in the next round of multilateral negotiations to obtain substantial benefits from full market access and the reduction of trade barriers, the communiqué said.Top


Handloom woes force 3 suicides
From Rakesh Bhardwaj

PANIPAT, April 16 — The handloom industry of Panipat is facing a crunch due to high input costs, decline in fabric prices and poor offtake. Thousands of workers engaged in this industry face unemployment.

Manufacturers, dealers and workers face problems in maintaining units. New units are not being set up, Shops dealing with spares of machines are seen empty.

There are no orders for exporters have closed their units. Handloom workers are turning to powerloom units. Due to poor off-take, roughly 500 handloom merchants appear to have diverted to trading activity.

The supply of substandard handloom fabric by some unscrupulous manufacturers of Panipat has also affected the business.

Manufacturers here say that UP’s Badohi market has hit them hard due to recession and non-payment of their dues. Three persons of Noorwala village and Panipat town have committed suicide due to losses suffered by them.

The burden of taxes has broken their backbone. Increased power tariff is another liability which has reduced production. Cotton blanket manufacturers have lost interest in their business due to curtailed demand within and outside the country. Manufacturers acrylic yarn blankets are selling their products on a no loss, no profit basis.

Due to the depression in the handloom industry, small dyeing units and cotton yarn units are also in doldrums. Environmental pollution is another source of headache for smaller dyeing units.

Cotton Spinning Mills are also depicting losses in the annual balance-sheets. Accordingly the Government will collect lower sales tax revenue this year.

Similarly, the carpet industry of Panipat is also in bad shape. As against 100 carpet units five-six years ago, hardly 30 to 40 units are left.Top


BJP backs move to cut subsidies
Tribune News Service

NEW DELHI, April 16 — The BJP National Executive today endorsed the Government’s decision to raise the issue prices under the public distribution system, hike in prices of fertilisers, kerosene and cooking gas saying the well-off sections of society have to minimise their dependence on the Government in the overall interests of the economy.

An Economic Resolution passed by the National Executive at the conclusion of its two-day session here said that at a time when the country was facing fiscal imbalance where total revenue collections fell short of even debt servicing by around 10 per cent, there was no other option except to rationalise subsidy expenditure. While the party was in favour of continued subsidy to the needy sections, it felt the it should be phased out for the others.

The party’s Economic Adviser, Mr Jagdish Shettigar, while briefing newspersons on the economic resolution said that the annual revenue collection of the Government in 1999-2000 was around 2.03 lakh crore and roughly half of that went for interest payments. Adding the repayment of debts, which was around 1.24 lakh crore, the revenue collections fell short by around 22,000 crore.

The National Executive advised the Government to reduce its establishment expenditure more pro-actively, instil a sense of austerity in the entire system of Government, avoid conspicuous consumption and wasteful expenditure.

The BJP was of the firm belief that sustained and broad based growth of the agricultural sector was essential for alleviating poverty, generating income and employment and assuring food security and in this context welcomed the various measures taken by the Government.

Supporting the Government’s disinvestment and privatisation programme, the resolution said such a policy was perfectly in tune with the approach of the party that Government has to contend with its role as a facilitator of economic development rather than a controller of the economy. In this context, the Government’s policy declaration to reduce equity holding to below 26 per cent in non-strategic areas and 33 per cent in the nationalised banks the proceeds of which would be used for social sector development and retiring debt with of course, full protection to workers, would have full backing of the party.

An area of concern expressed by the party was the management of globalisation. While it was fully aware of the WTO commitments, tariff protection should be provided to Indian products wherever necessary and Indian agriculture and industry must be rendered all help to become globally competitive.Top


IT dreams shattered ?

NEW DELHI, April 16 (PTI) — Indian companies, particularly Internet start-ups and dot coms, will now find it hard to raise funds from the battered US capital markets, according to noted Harvard Economist Jeffrey Sachs.

“The grinding halt to unprecedented bull run on the US capital markets has sounded a death knell to dreams of Indian infotech companies especially Internet firms raising funds from the US markets,” Sachs told PTI.

The boom was exaggerated and the stock prices of the Internet firms on the NYSE and Nasdaq were highly inflated, he said, adding that further correction in the stock index was expected.

The Nasdaq composite index, home to the technology stocks whose popularity has evaporated, suffered its worst point drop ever on Friday — down 355.49, or almost 10 per cent, to 3,321.29.

The Dow Jones industrial average plunged 617.78 points, or 5.7 per cent, to 10,305.77 — by far its biggest one-day point drop ever.

“However, this does not refute the new economy. We have a lot more to gain from the efficiency and speed of Internet and convergence.”

The prices of the stocks besides the sentiments have to be related to future earnings and profits.

Infosys Technologies, listed on Nasdaq, closed at $ 172 down about 18 per cent from Thursday’s close of $ 210 while Satyam Infoway’s share price nosedived to $ 29.5 down 23.37 per cent from the Thursday’s close of $ 38.

Kanwal Rekhi, a Silicon Valley-based venture capitalist, said the stock price boom was 99 per cent based on euphoria, but the prospects for the IT firms as distinct from dot coms remained strong.

“The price inflation mania has subsided and the US market crash was a necessary process of self-correction, he said adding that such correction would repeat in India as well.

Dot com firms must have clear streams of revenue and earn profits and failure to do so would force investors to dump their stocks as it happened in the case of 100 infotech initial price offering on the US bourses, Rekhi also President of The Indus Entrepreneurs said.Top


Sales tax on bread opposed
From A.S.Prashar
Tribune News Service

LUDHIANA, April 16 — The Punjab Government has been accused of violating an all-India agreement to bring about uniformity in the rate of sales tax by imposing an 8 per cent tax on branded bread in the state.

The sales tax was announced by the Finance Minister, Capt Kanwaljit Singh, in his annual Budget speech even though the State Government had undertaken to implement uniform sales tax pattern with effect from January 1, 2000. The Punjab Government’s commitment in this regard was announced in a press release issued by the Finance Minister on January 11, 2000, after attending a meeting of the ministers of various states in New Delhi earlier this year.

Repeated representations to the State Government by the Punjab Bread Manufacturers Association in this regard have so far produced no results. “It seems to be a case of convenient amnesia as regards the government and its functionaries”, said Mr Ramesh Mago, President of the Association in a talk with TNS here today. All our attempts to remind and persuade the government to stand by its public commitment to exempt the bread manufacturers from sales tax had proved futile so far.

Incidentally, all the neighbouring States had already exempted the bread, both branded and unbranded from the sales tax. “I don’t imagine the financial situation in Punjab to be so desperate as to force the government to go back on its commitment and break rank with the neighbouring states”, said Mr Mago.

Bread industry in Punjab primarily consists of small scale units and tiny units spread across the State. This industry played a pivotal role in effectively utilising wheat to provide hygienically packed bread at very competitive prices. Bread being an item of mass consumption, needed to be exempted from sales tax. The revenue accruing to the state government through the sales tax on bread was negligible as most units were located in the small scale sector. The production of bread had been reserved for development in the small scale sector.

Bread was hitherto exempted from the sales tax. In the recent exercise initiated by the Government of India for achieving uniform sales tax rates in all States, only the States of Punjab and Himachal Pradesh have divided bread into two categories i.e. “unbranded bread” and “branded bread” and sales tax on “branded bread” @ 8% while exempting “unbranded bread”.

Mr Mago points out that being a food item, hygienic packaging of bread is compulsory under the Prevention of Food Adulteration Act as well as the Weights and Measures Act and Packaged Commodities Rules. “Bread produced by industry is packed, sold and with the brand name and other details of the manufacturer printed in the packages as required under the above mention acts and rules. Hence, there is hardly any ‘unbranded bread’ manufactured and sold in the country except by small bakeries whose production constitutes 2 to 4 per cent of the total production of bread. Recognising these facts, almost all states except Punjab, Himachal Pradesh and J and K have exempted bread from the levy of sales tax”.

Bread is a perishable item like vegetables, milk etc. The market replacement of unsold bred can be as high as 5 to 7 per cent resulting in further loss to the small scale units who collect unsold bread from the market for which sales tax has already been paid. There is widespread sickness in the industry on account of competitive conditions in the market. “We are quite confident that the bread units in the State will drop their prices of bread in case the government exempts bread from sales tax”, emphasises Mr Mago.Top


by J.C. Anand

Monday to see Nasdaq effect

THE stock market has been roller-coasting during the last fortnight. While one rides of roller-coaster for thrills, sharp and sudden ups and downs in the stock market bring only losses to the traders and generate a feeling of mistrust in the stock market among the investors.

In general, two developments have been responsible for abrupt changes in the market indices during the last fortnight. The issue of Income Tax notices to some FIIs based in Mauritius but operating in India, and the fixation of buy-back price by Reliance which is distinctly lower than the prevailing market price of the Reliance scrip. The Income Tax notices have been wisely withdrawn. The buy-back proposition of the Reliance Management is unworthy of the calibre of this management. It can be argued that the buy-back price is in strict accord with the SEBI regulations, but it must have been quite clear to the management that at this offer price, no share-holder would care to look into the offer.

The market is likely to move within narrow range during this fortnight. The Parliament is scheduled to meet this week, and this would keep the market somewhat subdued. There is not much scope for any sharp rise in share prices.

Investment in equity shares has its risks but no other form of investment at present has greater prospects for rewarding the long-term investors than investing in scrips of good and well-managed companies. The bank rate on fixed deposits is low, and likely to be brought down still lower in stages. Investment in the real estate is alright in so for as one residential house is built or purchased but any such investment for speculative purposes would be an unwise proposition. The proposed changes in legislation, requiring compulsory registration of all property transactions, is sure to keep real estate prices low and depressed. Any investment in mutual fund schemes is, in a real sense, investment in the stock market in an indirect and a roundabout way.

A wise and well-informed investor should, however, make direct investment in equity shares on a long-term basis. Judicious profit-booking should always be resorted to when the occasion calls for it. Investment in fixed-income schemes like bank fixed deposits, company debentures, mutual fund monthly income schemes have stability but no growth. In fact, these investments suffer from slow erosion due to inflationary pressures on the economy and gradual down-sizing of interest rates.

Every investor who decides to invest in equity shares must define his investment objectives in terms of his investable funds, needs, age, income tax status etc. That category of investors who want good and reasonable return in the form of tax-free dividends from investment in equity shares, together with modest prospects of appreciation, should go in for the following shares at the prevailing market prices: CANFIN Homes (around Rs 19/20} carrying 23 per cent interim dividend, Balmer Lawrie and Co (around Rs 23/24) with interim dividend of 25 per cent but with some likelihood of final dividend later as well, Vanavil Dyes (around Rs 36/37) with 40 per cent interim dividend.

Those who are interested in ICE Info-Communication-Entertainment scrips should invest in NIIT and Global Tele. Infosys and Satyam have declared excellent results but not much appreciation in market price can be expected as these shares are already quoting at very high P/E ratio. The infotech shares have excellent earning capacity for the next two to three years but not much longer. Global Consultancy firm McKinsey and some other high-placed experts have warned of a possible crash in the prices of internet stocks world wide with heavy losses to investors.

The US market has already crashed, and this Monday, the Indian market is likely to feel its impact, particularly in infotech scrips. NIIT and Global Tele are high-priced but have some prospects for appreciation on a long-term basis.

I have, however, preference for the old economy shares. I have no hesitation in recommending the following shares on a long term basis. These scrips should be kept on the “watch-list” and picked up on a contrarian basis when the prices dip. These shares are: Hindalco, Larsen & Toubro, Vikas WSP, Tata Tea, Sundram Clayton, Novartis, Hoechst, Lumux, GKN Invel Transmission, Coates of India. The time scale for these is at least one and a half to two years for long-term investors.Top


by R.N. Lakhotia

Q: Please guide me on some points for the calculation of income tax and oblige.

I am a Punjab Government pensioner and my total pension during this financial year is Rs 89,902 plus interest on dues received on retirement from the Post Office Monthly Income Scheme is Rs 44,880. Please advise the following:-

(i) Standard Deduction for pensioner.

(ii) Amount of interest exempt.

(iii) Rate of IT.

— S.K. Gupta, Chandigarh

Ans: The standard deduction U/S 16 (i) of the I.T. Act is also permissible to the pensioners just like salaried employees. The standard deduction will be permissible @ 331/3 per cent on Rs 89,902 which comes to Rs 29,967 but this is restricted to a maximum of Rs 25,000. Hence, you will be eligible for standard deduction of Rs 25,000. The maximum amount of interest which is exempt U/S 80L from monthly income scheme of post office is Rs 12,000. The rate of income-tax for the financial year 1999-2000 relevant to the assessment year 2000-2001 is nil up to Rs 50,000, 10 per cent for income between 50,000 and 60,000 and @ 20 per cent for income in excess of Rs 60,000 but up to Rs 1,50,000. After Rs 1,50,000 income the tax rate is 30 per cent. The income-tax so payable is also to be increased by surcharge @ 10 per cent for tax payers having income in excess of Rs 60,000.

Q: After reading your column in the ‘Sunday Tribune’ I did not allow the rebate of income tax on house building advance taken by employees from the organisation on the plot/land registered in the name of his/her spouse U/S 88 amounting to Rs 10000 being myself is D.D.O. And now one of the employees of same case has forwarded a representation to my higher office complaining that our higher office is giving the said rebate and I am not. Please let me know the deeper points why he/she is not eligible for income tax rebate U/S 88 and of interest accrued on the HBA taken on the plots registered in his/her spouse name so that they can understand the point as they are pleading that “when the loan is granted then they are eligible for tax rebate also”.

— S.K. Sharma, Chandigarh

Ans: The rebate of tax U/S 88 in respect of house building advance will be permissible only when the assessee is the owner of the property. Hence, if the plot, etc. for which house building loan is repaid is standing in the name of the spouse such tax rebate will not be permissible. Hence, if the plot, etc. are registered in the name of the spouse, the benefit of tax rebate U/S 88 on repayment of the loan as also interest payment U/S 24 will not be eligible as these deductions are available only to the persons owning the property and not property held in the name of the spouse.

Q: My father had a house in the name his HUF since 1984. One of the coparceners sought partition through court and I was allowed 1/5th share in the name of my HUF. Subsequently the house was sold and each coparcener (HUF) got Rs 4,90,000 as sale proceeds of his share. For the sake of I/tax adjustment I deposited the entire proceeds of Rs 4,90,000 in a nationalised bank under Capital Gain Tax scheme for seven years @ 10 per cent P.A. My query is (i) Total interest for one year will be App Rs 50000 which will be within the exempted limit + exemption of bank interest to the extent of Rs 12000.

(ii) Bank as per rules will be deducting 10 per cent of the interest amount as TDS.

(iii) Would it be in order to furnish Form H-15, to the bank, as total income of the HUF will not be taxable, for not deducting TDS.

(iv) Am I required to file my HUF I/Tax return for the ensuing F. Year.

— Pawan Kumar, Gurgaon

Ans: Yes, you should furnish From No. 15-H to the bank so that no tax is deducted at source. If you are having income other than this interest income and if such total income exceeds the exemption limit, then you have to file your income-tax return or in the alternative if you are fulfilling any one of the conditions relating to six economic indicators, then also you have to file your Income-tax return; otherwise you need not file the return of your HUF.Top


Green Earth

I purchased “Green Earth Units Series-II” worth Rs 2500 for fifteen years on 16-02-94 from M/s Parasrampuria Plantations Ltd., Mumbai. (Folio No NA 05693 Certificate No. G. 20014487). I was issued five interest warrants of Rs 375.00 each up to 15.02.99. Further interests were assured after 15.02.99 which are not being issued by the company in spite of my repeated reminders.

Namrata Jerath, Yamunanagar

Reliance Ind

Reliance Industries issued ‘F’ series, 15 per cent secured debenture of face value Rs 100 each in 1985 against my Folio No 14063404. These debentures were rolled over for another seven years to be redeemed on 31.08.1999. I surrendered duly discharged debenture certificates ( 01324961-01324965-5 Nos) to M/s Reliance Consultancy Services Ltd., Despite many reminders I have not received the amount.

Sukhbasi Lal Sachan, Chandigarh


I and my wife were allotted 10 debentures Rs 1000 each Series ‘A’ Regular 19.5 per cent, secured non-convertible by DCM , Kanchanjunga Building, 18 Barakhamba Road, New Delhi vide Folios No 106021 and 106020. Maturity of these debentures was due on 14.8.98. Despite repeated reminders for payment of sum due, there is no response.

Chaman Lal Bhasin, Yamunanagar

Ambuja Cement

Gujarat Ambuja Cements Ltd. Corporate office 122 -Maker Chambers III Nariman Street, Mumbai-21 have not paid the dividends for 1997-98 on the following shares with folio numbers. V-6631, K-8944 and A-9495.

Amar Nath Kakria, PatialaTop


BLB net profit zooms 380 pc

NEW DELHI, April 16 (PTI) — BLB Ltd’s net profit has increased by 380 per cent to Rs 17.31 crore in 1999-2000 compared to Rs 3.60 crore in the corresponding period last year. Sales increased by 63.31 per cent to Rs 475.40 crore as against Rs 282.44 crore during the same period last year.

ICICI to begin online trading today

NEW DELHI, April 16 (UNI) — ICICIdirect of the ICICI group is beginning online trading tomorrow offering seamless investing environment to the investors. ICICIdirect has conveyed to its registered clients that the trading would begin in a phased manner.

Domino’s Pizza plans IPO

NEW DELHI, April 16 (UNI) — Having registered maiden cash profit in November 1999, Domino’s Pizza India Limited (DPIL) is mulling launching an initial public offering (IPO) over the next 24 months. The company is currently in the process of fine-tuning plans for the IPO and deciding on the quantum of equity that is to be divested, company sources told UNI here.

Nestle offers stake to Dabur at Rs 10

NEW DELHI, April 16 (PTI) — In a last ditch attempt to settle the dispute with Dabur India over joint venture company Excelcia Foods, Swiss major Nestle SA has offered to sell its entire 60 per cent stake for a nominal Rs 10 to the Indian partner. But industry sources said Dabur India was unlikely to accept Nestle SA’s offer, since the Swiss company has not given any commitment to either wipe out the accumulated losses of Excelcia or abide by the non-competition clause, under which Nestle would be banned from entering the biscuits segment.Top


CHANDIGARH, April 16 (TNS) — DuPont launched a herbicide called ‘Almix for rice here today. Almix is meant to control broad leaf and sedge weeds in rice. It is third crop protector from DuPont to be introduced in the country after Kloben for soybeans and Algrip for wheat. Mr Balvinder Singh Kalsi, Director, Agricultural Products, said that “the company is targeting business in excess of Rs 50 crore in the current year”.

Laghu Udyog
PHILLAUR, April 16 (FOC) — The Laghu Udyog Bharti representing more than one crore small industries of the country has urged the Union Government to form a “special economic zone” in the North on the pattern of the South and Maharashtra and Gujarat to facilitate small industrialists of the region. Mr Sudharshan Sareen, National President of Laghu Udyog Bharti, here demanded immediate abolition of inspector rule, continuation of reservation policy for small industries and raising the exemption limit of central excise from Rs 50 lakh to Rs 1 crore.

Inflation up
NEW DELHI, April 16 (PTI) — Annual inflation jumped to 4.22 per cent on the first day of the new fiscal as a new Wholesale Price Index (WPI) with revised base year and more weight to the manufacturing sector came into effect. The annual inflation based on the new series rose to 4.22 per cent (provisional) during the week .

FII investment
MUMBAI, April 16 (PTI) — FIIs have made a net investment of Rs 804.90 crore ($ 184.6 million) in the capital markets (both equities and debt) during the six-day period ended April 12, taking their total investments in the country during the year above the Rs 6,500-crore mark.

IA awards
JAMMU, April 16 (FOC) — The Managing Director of Nidheesh Tours and Travels Pvt Ltd, Capt Murti Gupta, and the Proprietor of Omani Travels, Mr A.K. Oswal, bagged Indian Airlines annual achievements award-2000 at a function held here yesterday. Top

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