|Monday, April 24, 2000,
Small units need sops
Flaws in working of Mines
Escorts Comm out of BIFR net
Changes in Canadian immigration
Venture Capital a bridge
between high risk and high return
Small units need sops
THE SSI sector in real terms should be taken as the orphaned sector instead of so many other names. Orphans get lot of wordy sympathy but nothing tangible.
Punjabs economy mainly runs on two wheels. One is represented by agriculture while the other by the SSI sector. It is good that one wheel is well taken care of. Can the states economy be viable with the other wheel bobbling widely?
Many problems of the SSI sector relate to the Central Government and it is certainly not within the capacity of this sector to have them sorted out without the assistance of the State Government. Coalition era should have given boost to the SSI sector due to strong presence of the States power in the Central Government. Unfortunately Punjab is lagging far behind.
During the Clintons visit commercial agreements worth $ 4 billion were firmed up. Apart from the U.S. Exim banks grant of $ 1 billion was also agreed to help small and medium enterprises.
The Government proposes to announce Rs 2,500 crore fund for helping the sector. This is credit guarantee against loan to the SSI sector by banks. SIDBI will stand guarantee for up to 75 per cent of loan extended to the SSI sector by banks. This scheme will be operated for five years on pilot basis.
First centre under the National Programme of Innovation and Incubation for the SSI sector is proposed to be set up in U.P. by SIDBI in collaboration with IIT, Kanpur. Entire expenses will be met by SIDBI.
The Centre proposes single legislation for the SSI sector as at present it is covered by as many as 52 laws. The Centre also proposes to enforce uniform sales tax in respect of items reserved for the sector. At the moment these look to be mere rhetorics. For instance the National Labour Code was drafted in 1994 to unify and rationalise visits of inspectors. It has not been implemented so far.
Banks are charging very high rate of interest from the SSI sector. This is being done on the basis of parameters which do not match with the working of this sector. How can be the parameters of organised and unorganised sectors be the same? This is a very crucial issue for the viability of the SSI sector.
The Punjab Government can extend arguments to the Centre on economic basis to smoothen the working of the SSI sector which is the main stay of its economy. All through the decades since independence Punjab did not get its due share in terms of public sector investment. Now with market related economy the SSI sector cannot be expected to stand in full competition with giants unaided. Other States which got public and private investments in big projects are placed in much better position due to culture as such.
Punjab and other States placed in a similar position should ask for longer share of concessions being extended to the SSI sector.
The Punjab Government
has also a cause of worry. According to the estimates of
the Planning Commission Punjab is going to face the
ordeal of unemployment. As per projections for 1997-2002
Punjab will have employment opportunities for 0.73 lakh
persons against the growth of 2.27 lakh unemployed.
working of Mines Department
A number of discrepancies have been highlighted in the working of the Mines and Geology Department of the Haryana Government as a result of which arrears of revenue of Rs 491.66 lakh under mines and minerals were pending collection as on March 31,1998.
Out of this, Rs 283.57 lakh were covered under recovery certificates, recovery of Rs 11.09 lakh was stayed by high court and other judicial authorities, Rs 3.12 lakh were held up due to dealers becoming insolvent and demands for Rs 2.08 lakh was proposed to be written off. Detailed break up of the remaining amount, according to the audit, of Rs 191.80 lakh was not available with the department.
During test-check of records of the Director, Mines and Geology, Haryana, it was noticed that 41 leases were granted for extraction of various minerals from different mines in Faridabad, Gurgaon, Rewari, Narnaul and Panchkula. While executing lease deeds, stamp duty was charged on the estimated amount. This resulted in short levy of stamp duty of Rs 55.44 lakh beside non levy of registration fee as deeds were not registered in any case.
The department stated that the consideration amount, at the time of execution of lease, is worked out on the basis of royalty leviable on the likely production of minerals during the first year of the lease as mentioned by the lessees in their application forms. The audit did not agree with this argument as the stamp duty was to be charged of the amount of royalty based on expected average annual production of minerals to be extracted during the period of lease.
In the office of the Mining Officer, Sonepat, it was noticed that a contract for extraction of sand from a quarry at Khatkar sand zone was allotted on May 30,1996, for three years, for an amount of Rs 2.47 crore per annum. The contractor failed to pay two monthly instalments and the contract was terminated. On contractors having gone to the court against termination, the court ordered for handing over the possession of the quarry to the petitioner company within a period of four months.
Despite being requested by the department, the company refused to take the possession. The department filed an application in the court stating that the firm had refused to take the possession, the court modified its previous orders and issued direction that Rs 82.21 lakh deposited by the contractor with the State Government need not be repaid and authority would be at liberty to proceed against the contractor.
The contract money recoverable from the firm worked out to Rs 59 lakh and interest of Rs 36.76 lakh upto March, 1999. Though the case was decided in September, 1997, the department failed to recover the contract money and interest thereon. This resulted in non recovery of Rs 95.76 lakh.
In 10 mining offices, 79 contractors who were awarded mining contracts did not pay contract money for various periods between April, 1993, and March, 1998. The department failed to recover the contract money of Rs 129.43 lakh and interest of Rs 42.39 lakh.
In six mining offices, 60 contractors who were awarded mining contracts did not pay the contract money. The department though terminated the contracts but did not take any step to recover the contract money amounting to Rs 84.21 lakh which was due from the contractors upto the date of taking back the possession of the quarries. Interest amounting to Rs 18.15 lakh was also recoverable for non-payment of contract money.
Lessees of 63 leases granted in Faridabad, Gurgaon, Bhiwani and Rewari were required to pay dead rent and royalty amounting to Rs 78.50 lakh and interest of Rs 0.63 lakh for various periods was either short paid or not paid. The department had not taken any action to recover the amount. This resulted in non/short recovery of dead rent, royalty and interest amounting to Rs 79.13 lakh.
NEW DELHI, April 23 (PTI) Escorts Group company, Escorts Communications, has come out of the purview of BIFR following an equity infusion by Korean company LG.
LG Information and Communications had recently picked up 49 per cent stake in the company for a consideration of Rs 9.99 crore, taking the total networth of Escorts Communication to Rs 19.99 crore compared to accumulated losses of Rs 18.89 crore.
We find that the company had succeeded in making its networth exceed the accumulated losses and thereby ceased to be a sick company, a two-member bench of BIFR said in a recent order.
The company was taken out of the purview of BIFR after Escorts filed an audited balance-sheet as on February 29, 2000 after the conversion of share application money of LGIL into paid up capital along with the report of auditors for its consideration.
Canadian immigration laws likely
CHANDIGARH, April 23 Mr Elinor Caplan, Minister of Citizenship & Immigration Canada has tabled a Bill in the House of Commons to create a new Immigration & Refugee Protection Act. This very tough and comprehensive Bill would have to go through the Legislative process before it comes into effect and will be supported by a set of new immigration regulations.
A press release issued by WWICS said the new Bill will put severe penalties and stiffer fines for smugglers and human traffickers which would be punishable by a fine of $ 1 million or life imprisonment or both. However, it would make the refugee determination system in Canada faster and more fair.
There is some relief in the family class category where the guidelines have been expanded, says Col. Baljit Sandhu, CMD WWICS. Same-sex and common-law relationships would be considered acceptable. In addition to this the Canadian residents would get an opportunity once in their lifetime to sponsor any one relative, giving greater importance to family reunification.
Venture Capital a bridge
between high risk and high return
There are high risk ventures promoted by unquoted first generation professionals having ideas and instinct of technology innovations, particularly in knowledge organisations, associated with potentials of high growth and returns usually through substantial capital gain in the medium and long term rather than interest income or dividend yield.
The Venture Capital (VC) is the money to finance such start ups and acts as a bridge between high risk and high returns, since if nothing is ventured nothing can be gained. Many leading enterprises in the IT sector such as Apple Computer, Digital Equipment Corporation and Microsoft etc. were financed by VCs. In fact provision of risk bearing capital usually in the form of participation of equity is an activity by which the investors support unquoted entrepreneurial talent with finance and business skills to export the market opportunities and thus obtain long term (generally between 3 to 7 years) capital gain.
The VC investors also provide experience, knowledge, power, contacts and strategic advise to add value to the new venture for its growth and the ability to compete since the returns to the VC investors are entirely dependent upon the patience factor, growth and profitability of the investee company. The return on VC investment if not known at the time of the investment as it is dependent on the exit or the disinvestment value of the investment. There is no collateral or guarantee. This is contrary to the debt financing where the return is fixed and known. VC leads to jobs and national wealth.
The Indian Venture Capital Association (IVCA) which is an association of the premier venture capitalists in the country interacts with different regulatory authorities and various industry associations to highlight the various issues faced by the VC investors.
The bulk of the contributions to VC Funds in India come from FIIs and all India Financial Institutions like ICICI Venture, UTIs India Technology Venture, UTIs Offshore Venture, APIDC Venture, SIDBI Venture, Kotak Mahindra, Infinity Venture etc. to the tune of $ 3 billion with over $ 5 billion already invested.
Formerly, a VC Fund could not acquire more than 40 per cent of a start up venture. Now this ceiling has been done away with completely, the only restriction that remains is that the VC Fund cannot invest more that 25 per cent of its own fund base in one company, meaning thereby, that if VC Fund has a fund base of Rs 100 crore, it can only invest upto Rs 25 crore in a new company.
IDBI has also cleared a proposal to set up an IT subsidiary with a corpus of Rs 1000 crore and having strategic alliances with international IT majors for providing IT related services to the financial institution and its clients. This fund would provide equity support to new enterprises as well as companies planning viable expansion projects.
In the end it can be
said that there is no paucity of VC Funds particularly
for IT start ups but entrepreneurs should be able to
present their ideas and ensure that pre-requisites that
the funds are looking for are there in the term sheets.
Moreover, with short product life cycle, shelf life of
any idea being fragile and replication and duplication of
the idea being very fast it is imperative that the
company is able to deliver quickly. This is essential to
achieve the goals set by Nasscom of $ 87 billion software
business (of which $ 50 billion would be exports) by the
HIMACHAL Futuristic Communications (HFCL) is one of the leading telecom equipment manufacturing companies in India. The companys revenue structure includes turnkey projects, telecom software, optical line terminal equipment terminals, optical-fibre cable and micro wave communication equipment. It also has many associate companies in the related businesses. Microwave Communications (MCL) is providing radio-paging services under the brand name Pagelink. Himachal Exicom Communications (HECL), is engaged in the manufacture of telephone instruments, switch mode power supply (SMPS) power plants and Digital Pair Gain System. HFCL Satellite Communications, is providing VSAT communications services.
The financial track record of the company appears encouraging and during the year that ended in March 1999, the company posted sales and net-profits of Rs 392.1 crore and Rs 36 crore respectively thus yielding an EPS of Rs 5.1 and an OPM % of 19.8. In the first half ended September 1999, sales was Rs 202.2 crore and net profit was Rs 27.8 crore translating into an OPM % of 21.4. HFCL recently acquired a controlling stake in Essar Commission, which should further the companys presence in the basic telephony services. HFCL also has a 10 per cent strategic equity stake in the cellular service provider in Gujarat. In its recent thrust on internet related areas, it has entered into a joint venture with Consolidated Press Holdings (CPH), Australia, under which it will provide software products and services. Overall, Himachal Futuristic appears to be a promising scrip given its track record and its plans for enhancing its future profitability.
Based in Bangalore, VXL Instruments is primarily associated with the networking in the telecom sector. The company recently entered into the hi-tech areas of networking and telecom related infotech solutions segments. It has a 100 per cent subsidiary XL Net, which was initially incorporated with a view to provide embedded software for VXL Instruments. Presently it is focusing on carrying out pilot Television cables projects, particularly in Europe and United States.
Orders have already
started pouring in, notably from bigwigs such as Unisys,
United States. During the year that ended in March 1999,
the company posted sales and net-profits of Rs 41 crore
and Rs 2.4 crore respectively thus yielding an EPS of Rs
5.3 and an OPM % of 14.8. In the first half ended
September 1999, sales was Rs 15.0 crore and net profit
was Rs 0.4 crore translating into an OPM % of 8.1.
Despite projections revealing an unimpressive result on
the financial front, the players maintain a positive
outlook for the company this stems from its recent
venture in the telecom networking area in the country
where VXL Instruments holds an upper hand for being an
early starter in this segment. A close watch over this
scrip is recommended.
by R.N. Lakhotia
Q: I would request you to please give your advice on the following points:Is Section 80-GG of Income Tax Act applicable for Financial Year 1999-2000 (A.Y. 2000-2001) in case of pensioner who is living in rented residential accommodation? If so, then what are the provisions of Sections 80-GG of Income Tax Act.
Amar Singh, Chandigarh
Ans: Even when you are having pension income you can get the benefit of deduction u/s 80GG of the Income Tax Act, 1961. As you are not having your house and you stay in the rented house, the deduction would be permissible @ 25 per cent of your income subject to a maximum of Rs 2,000 per month. You are now required to submit Form No 10BA with the Income Tax return to claim this deduction.
Q: I am a defence officer and my wife is a housewife. My salary for the year is approx. Rs 2 lakh. I want to clarify whether the amount gifted by me from my salary to my wife or any other persons in relation will be reduced from my total taxable income? And what will be its tax liability thereafter?
Capt Keen Kumar
Ans: The amount gifted by you from your salary income will not go to reduce your taxable income. However, the gift given by you after making payment of Income Tax on the gross total income will be treated as belonging to the person to whom such gift has been given. In future the interest income on such gifts would belong to the person who has received gift from you. If you make a gift to your own wife the income therefrom will be clubbed or added with your income in terms of section 64 of the Income Tax Act, 1961.
Q: I am a housewife and have some shares which were purchased by my father in my name at the time of his retirement for my marriage purpose. But due to the bad shape of share market these shares could not be sold out. Now I want to sell these shares. The total cost of these shares is Rs 30,000. But shares worth Rs 20,000 are of those companies which are not in existence or are running in loss. The rest shares of Rs 10,000 are worth of Rs 1,20,000 in these days. Now will you please guide me how much I have to pay Income Tax and how much rebate I can avail under section 88B.
Anu Walia, Mohali
respect of the shares which are not in existence you will
not be eligible for any tax benefit. It would have been
better if you would have sold these shares even for a
loss in which case the loss would have been allowed
adjustment against the long-term capital gains. In
respect of the capital gains on selling shares worth Rs
10,000 for Rs 1,20,000 please calculate the total quantum
of capital gain by reference to Cost Inflation Index and
on the resulting capital gain you are required to pay tax
@ 20 per cent. If you desire, you can also avail the
scheme of concessional Income Tax on selling these quoted
shares @ 10 per cent but in which case the benefit of
Cost Inflation Index would not be permissible. You can
also save tax by investing in units, etc. as per section
54EA and section 54 EB in case shares have been sold by
31-3-2000. In case the same are sold on or after
1-4-2000, the exemption on payment of tax on long-term
capital gains can be obtained as per new s.54EC. The
maximum tax rebate permissible u/s 88B is Rs 10,000 for
the Assessment Year 2000-2001 and Rs 15,000 for the
Assessment Year 2001-2002.
by K. Garima
Issue opens/closes on:
Listing: Bangalore, Chennai, Ahmedabad
Bangalore Softsell Ltd (BSL) was incorporated in 1986 and is currently engaged in the execution of software services and projects for global IT companies and large corporations. The company is making the current foray into the capital market to raise funds to part finance the expansion of software development facility for export at Bangalore and to set up overseas marketing offices/investments in joint venture in UK and USA. The self-appraised fund requirement has been estimated at Rs 16.65 crore and is to be funded by a small term loan of Rs 1.7 crore and the balance through the equity capital. Although BSL has been operational for over a decade, it has yet to make an impact worth taking note off on the industry. The company has identified LEMIT as its growth vehicle and the same has been developed with due consideration to the potential in the legacy applications migration segment. Herein it may be noted that it is primarily dependent on two customers/sources for as much as 75 per cent of its revenues. It is also noteworthy that BSL recorded a substantial jump in its net earnings in the accounting year preceding to the present public issue and projections indicate that the same will multiply during the current financial year that will end in 2001 although the projected net profit of Rs 2.38 crore is far from impressive. The projected EPS of Rs 2.38 for 2001 indicates a P/E ratio of around 14.
by Ashok Kumar
Goetze to have encouraging prospects
Q: How do you rate the future prospects of Goetze India?
R.N. Bansal, Patiala
Ans: Goetze (India) Ltd (GIL) is engaged in the manufacture of piston rings, pistons, cylinder liners, grove inserts, sleeves and high alloy cylinders. GIL also owns solvent oil extraction and leather garments units. The company plans to reap benefits from core competencies. As pistons contribute over 50 per cent of its total sales, the company plans to consolidate on its market position on the domestic as well as its export front. It has forged alliance with T&N Plc of UK and Telkoku Piston Ring of Japan to manufacture steel piston rings. The new venture will be located in Bangalore. The companys new venture will roll out 10 million rings per annum by 2004. The improved product range of Goetze TP is expected to sharpen the companys competitive edge. With the automobile sector poised to attain higher scales of successes in the near future, Goetze India, with its fundamental strength and sound track record appears to be a company fairly encouraging future prospects.
Q: Kindly comment on the future prospects of Kothari Sugars.
G.K. Singh, Ludhiana, Sanjeevan Rathod, Katra
Ans: The South-based Kothari Sugars and Chemicals Ltd (KSCL) is the flagship company of the H.C. Kothari group of companies and is engaged in the manufacture of sugar polyisobutenes, para nitro chloro benzene, ortho nitro chloro benzene and concentrated nitric acid. The company was among the first to receive an ISO 9002 certification in India for both, polyisobutene and nitroaromatics units. Notably, the company has technical collaboration agreements with Piazzi of Italy and Krebs of Germany. However, on the financial front, the companys performance has been just modest. On the positive side, the company has a fully integrated sugar complex which should stand in good stead for its prospects in the long term. The company has established congeneration facilities to generate power by making use of bagasse available in the sugar mill. The company also enjoys the benefits acrruing due to the highly diversified operations. To conclude, KSCLs profitability should record an upward trend in the future and hence a close watch on this scrip is recommended.
Q: Please comment on the medium to long term prospects of Infar India. Would you advise an investment therein?
Ans: Infar India is a constituent of Akzo Nobel, Netherlands, which is a leading player in healthcare, coatings, chemicals and fibres. Out of the total turnover of NLG 27.5 billion in 1998, it derived NLG 5.1 billion ($2.6 billion) from its pharma business alone. The pharma business of Akzo Nobel is, in turn, divided into five broad divisions called Organon, Organon Teknika, Intervet, Diosynth and Chefaro. Organon is the largest Dutch research-based pharmaceutical company and the largest pharmaceutical business unit of Akzo Nobel. To date, much of its international reputation rests on its core expertise in the field of hormone research and gynaecology. Psychiatry is another major area of its focus. Organon Teknika specialises in advanced systems and products for hospitals, laboratories, and blood banks.
The marketing and
distribution network has also been expanded, and the
company has become aggressive in its product promotion.
On the financial front, the company has recorded steady
growth over the years. Given the current scenario in the
pharma industry in general and the company in particular,
the medium to long term prospects of the company appear
satisfactory and an investment in the shares thereof
could be contemplated.
|| Punjab | Haryana | Jammu & Kashmir | Himachal Pradesh | Regional Briefs | Nation | Editorial |
| Business | Sport | World | Mailbag | Chandigarh Tribune | In Spotlight |
50 years of Independence | Tercentenary Celebrations |
| 119 Years of Trust | Calendar | Weather | Archive | Subscribe | Suggestion | E-mail |