Monday, September 4, 2000,
Chandigarh, India



Rally in new economy shares to continue
FIIs invest Rs 12.58 billion in equities in August

MUMBAI, Sept 3 — Share prices are expected to rally after opening steady on BSE next week on buying support from both FIIs and domestic operators.

Indian becomes crorepati in Dubai 
DUBAI, Sept 3 — For a 39-year-old Indian delivery man working at a food outlet in Dubai, life was a routine affair till he won Dirham 1 million (over Rs 1 crore) this weekend in the Dubai Summer Surprises Win a Million raffle.

Pak economy on brink of default: Benazir
ISLAMABAD, Sept 3 — Former Prime Minister Benazir Bhutto today warned that Pakistan’s economy stands on the brink of default.

World Bank dictated Andhra  power hike  HYDERABAD, Sept 3 — World Bank Chairman James Wolfensohn’s statement on the power tariff hike in Andhra Pradesh has kicked up a political row with opposition parties asserting that their stand on the issue was vindicated.

LIC invests Rs 226 cr in Punjab 
AMRITSAR, Sept 3 — Life Insurance Corporation of India has invested over Rs 226.71 crore during the last year in the various development projects in Punjab.



Inflation dips to 5.37 pc  
NEW DELHI, Sept 3 — The annual rate of inflation fell below the 6 per cent level to stand at 5.73 per cent during the week ended August 19 despite a 0.2 per cent rise in the wholesale price index of all commodities.



Rally in new economy shares to continue
FIIs invest Rs 12.58 billion in equities in August

MUMBAI, Sept 3 (IANS)— Share prices are expected to rally after opening steady on BSE next week on buying support from both FIIs and domestic operators.

“The undertone of the market remains bullish as both foreign funds and domestic institutional investors have turned active buyers in key index counters which look attractive at the prevailing low levels,” a stock market analyst said.

The index will open with a positive gap and move up in the intra-week trade to touch a level of 4,550-4,600 on institutional support, the analyst said adding that the rally will be led by new economy counters which recorded smart gains in the week.

The ICE (information technology, communication and entertainment) sector should firm further, taking the cue from a sustained recovery on the tech-heavy Nasdaq stock exchange, particularly Indian shares listed there.

A government decision to corporatise the Department of Telecom Services (DTS), liberalise FDI norms in telecommunications and allow 100 per cent FDI in special economic zones (SEZs) will boost sentiment.

“The move will send a positive signal to foreign investors who were worried over the slow pace of the second generation of economic reforms in the country,” the analyst said.

“The huge FIIs inflow in August came as a great relief for the market which had slumped after they pulled out large sums in the preceding two months,” the analyst said.

The FIIs have pumped a total of Rs. 12.58 billion into the domestic equities market in August.

A strong rupee in the inter-bank foreign exchange market also encouraged players to enlarge their positions in key old economy counters which had lost sheen in the wake of sharp depreciation in the value of the Indian currency.

The new economy counters were at the forefront of the recovery on the bourse following company specific developments which are expected to boost their profitability.

Infosys Technologies share moved up 3.6 per cent to Rs. 8060 over the week. Dealers said Janus Capital Corp., the fifth largest U.S. mutual fund, bought about 200,000 shares of the company on Thursday.

“Foreign funds and select domestic mutual funds enlarged their position in Infosys on speculation that the company will post a huge profit in the second quarter given the rupee’s slide against the U.S. dollar,” the analyst said.

Meanwhile, Infosys also surged to number two position in terms of market capitalisation (market-cap) ahead of Hindustan Lever.

With a market-cap of Rs. 552.50 billion, the software major has now taken a big lead over Hindustan Lever which has a market-cap of Rs. 525.17 billion. As per the new ranking, while Infosys is at number two followed by HLL, Wipro retains its numero uno position with a market-cap of Rs. 737.17 billion.

Zee Telefilms advanced 7.03 per cent to Rs. 517.80 on the company’s announcement of an alliance with Metro-Goldwyn-Mayer Inc. (MGM) to broadcast English movies in South Asia.

Analysts say the association with MGM would help Zee’s movie channel reach

about 25 million households that get cable television, and counter the challenge from News Corp.’s Star Movies channel and Time Warner Inc.’s HBO.

Buying action was also seen in old economy stocks and trading in the side counters was mostly selective and stock-specific.

BPL Ltd. rose nearly 6 per cent to Rs. 144.15. The government on Wednesday granted its telecom subsidiary, BPL Telecom, permission to raise up to $200 million by selling American depositary receipts (ADR).

Profit booking was however witnessed in counters such as Gujarat Ambuja Cements, Tata Steel, SBI, Mahindra & Mahindra, Hindustan Lever and BSES.


Indian becomes crorepati in Dubai 
From Mridula Krishna

DUBAI, Sept 3 — For a 39-year-old Indian delivery man working at a food outlet in Dubai, life was a routine affair till he won Dirham 1 million (over Rs 1 crore) this weekend in the Dubai Summer Surprises Win a Million raffle.

Hasan Kalithu, from Kerala, who is still trying to come to terms with his new status as a millionaire, wants to open an Indian restaurant in Dubai. But before that he wants to build a nice house for his family in his home village of Agalad. In spite of his being employed in the Gulf for the last 10 years, the family stays in a rented house.

Hassan, a father of three, says he will not work as a delivery man here. Having seen poverty, he says he will help the poor. "I have tasted what is poverty and starvation. My mother died of rabies when I was nine, and when I was 14 I lost my father who died of cancer," he told a local newspaper.

Hassan has two daughters and a son. His eldest daughter Fasla is studying for a graduate degree in Guruvayoor in Kerala, while his son Faisal and daughter Farida are students in the ninth and seventh standards, respectively.

Hassan said he picked up his lucky coupon when he bought shoes for himself and some items to send back home to his family. But after putting his coupon in the raffle box, he forgot about it.

"Never in my wildest dreams did I think I would win, since I never won before in my life. I just could not stop crying and I could not sleep all night. I called my wife and family, my wife was over the moon at the news," he said, adding that he had been working in Dubai since 1996 and in Kuwait prior to that. — IANS


Pak economy on brink of default: Benazir

ISLAMABAD, Sept 3 (DPA) — Former Prime Minister Benazir Bhutto today warned that Pakistan’s economy stands on the brink of default.

“With Islamabad on the brink of a default, emergency IMF rules born of the South American crisis could have been triggered into effect,” Bhutto said in a newspaper article published today.

She said once Pakistan’s reserves go down to $ 600 million, the IMF could ask the military regime of Gen Pervez Musharraf to come up with a stronger economic performance, failing which it could extend a standby loan to keep the country “just limping along in an oxygen tent”.

One of the factors motivating the IMF in giving the oxygen assistance could be the impact of a Pakistani default on other South Asian economies, she said.

But a standby loan would be a double-edged weapon, she said. Whilst it would give a short breather to the regime, it would simultaneously signal markets of the lack of confidence that international financial institutions have in the stewardship of the man who took over with great promise less than a year ago.

Because of corruption and recession, Pakistan’s economy has been on the slide and on dole for many years. The regime’s cajoling and enticements have not made it revive.

Last year, the ousted civilian government got the foreign debt payments rescheduled but the military regime has no money to repay the lenders the $ 5 billion that become due in 2001.

Ms Bhutto said the IMF would make standby loan contingent on harsh economic measures.

“The generals will have the choice of cutting the bloated defence expenditure or burdening the Pakistani people further. They are unlikely to annoy colleagues. It appears the common man will once again have to bear the burden of follies of the regime.”

“Appalled by the state holding citizens to ransom for money legitimately earned, many Pakistanis are fleeing to foreign shores. According to one estimate, about $ 4 billion have been transferred to Canada alone,” she said.

“One of the reasons of the failure of (present military ruler) Musharraf promises (to clean up) is the man’s reliance on aides who have a political agenda ... By pursuing the politically motivated witch-hunt of the past regime and in relying on political orphans hungry for power, he has foundered on the rocks of disinformation,” she said.


World Bank dictated Andhra power hike 

HYDERABAD, Sept 3 (PTI)— World Bank Chairman James Wolfensohn’s statement on the power tariff hike in Andhra Pradesh has kicked up a political row with opposition parties asserting that their stand on the issue was vindicated.

Mr K Roshiah (Cong), Mr S Sudhakar Reddy (CPI) and other left porty leaders said that their charge of Chief Minister acting on the dictates of the World Bank had proved true with Mr Wolfensohn announcing in Washington yesterday that his institution was responsible for the tariff hike in the state.

The state government had increased the power tariff at the instance of the World Bank, which had been confirmed by Mr Wolfensohn at Washington yesterday, Congress spokesman K Rosaiah told reporters at Vijayawada.

“The statement of the World Bank chief calls the bluff of Chief Minister N Chandrababu Naidu who has been misleading the people about the real state of affairs in bifurcating the state electricity board, power reforms and privatisation,” CPI State Secretary S Sudhakar Reddy said in a statement here.

Alleging that the World Bank dictated reforms in the power sector were aimed at selling out the state electricity board on a piecemeal basis to the private sector, Mr Reddy demanded that all agreements reached with the World Bank be made public.

The Congress and left parties were agitating against the hike for over three months demanding a rollback of tariff hike.


LIC invests Rs 226 cr in Punjab 
From Our Correspondent

AMRITSAR, Sept 3 — Life Insurance Corporation of India has invested over Rs 226.71 crore during the last year in the various development projects in Punjab.

The Divisional Manager, Mr Rajesh Kandwal, told newsmen here yesterday on the occasion of the 44th anniversary of the LIC that the corporation had invested Rs 125 crore in the electricity board, Rs 61.71 crore in Punjab Government securities, Rs 25 crore in state cooperative housing and Rs 10 crore in local development areas.

All local branches of Amritsar division will be connected with the Metro Area Network (MAN). This will help customers remit online premium. A new unit linked insurance plan, a double cover plan, a health insurance plan etc are also going to be launched shortly.

Inflation dips to 5.37 pc 

NEW DELHI, Sept 3 (PTI) — The annual rate of inflation fell below the 6 per cent level to stand at 5.73 per cent during the week ended August 19 despite a 0.2 per cent rise in the wholesale price index of all commodities.

The point to point rate of inflation fell to 5.73 per cent during the week from the level of 6.03 per cent in the previous week mainly due to a decline in the prices of non-food articles.

The rate of inflation during the corresponding week last year was 2.99 per cent.


Fare war in the air again
by K.R. Wadhwaney

IT may indeed be too late for the government to go back on disinvestment in Air India but the process can be considerably delayed because the powers that-be have been convinced that the national carrier is not all that sick that it should undergo major surgery immediately.

Minister for Civil Aviation Sharad Yadav, in the august company of Secretary A.H. Jung and Managing Director of Air India Michael Mascarenhas, told a crowded press conference that the airline’s operations had shown considerable improvement.

The minister was emphatic in saying that the airline was essentially a profit-making outfit. He also accused media of projecting Air India in a “poor light” and the reports on its assets were needlessly “painted black”.

There are many experts who feel that the national carrier has been taken for a ride by little-knowing politicians for the past more than one decade. Had the ministers been knowledgeable the scenario in national carriers would not have been so dismal.

The government should bring about professionalism at the level of the ministry so that the airline functions smoothly. This will help privatisation to come about serenely. There indeed is an “excess baggage” in Air India but it has got to be rid of meticulously. Even the process of voluntary retirement has to be brought about carefully so that airline’s operations are not affected at all.

The fare war may once again surface in the Indian skies. Jet Airways has taken the lead to hike fares by a huge margin of 18 per cent. The rise in fares, according to Jet Airways officials, is owing to a sharp rise in the price of aviation turbine fuel and also increase in landing and aviation charges.

Will Indian Airlines also increase fares as much as Jet Airways? Maybe, the airline decides to increase fares “marginally”. It will provide them an edge to woo the ever increasing traffic. This will be fine a gameplan. It is, however, not known as to why Jet Airways jumped the gun in announcing increase in fares when market leaders were still uncertain?

It is not known what action will Sahara take. The airline is facing internal problems. Its operations have not been as smooth as they ought to be. The party, which had given aircraft to the airline, has been threatening to withdraw them. Maybe, “Crown Air” will launch its own operations. The situation is fluid.

Jet Airways’ pride
Prime Minister Yoshiro Mori with his entourage chose to fly by Jet Airways to Agra to steal glimpses of the Taj Mahal. This was the first time that a head of a state had chosen a private airline to fly to his destination in this country.


by R. N. Lakhotia

Q: 1. I retired as a Government School teacher in November 1996 and misguided by a big majority of retirees, regarding IT return, but soon I realised and purchase NSC for the said year in May 1997 hence tax becomes nil. Accordingly for the year 1997-98 and 98-99 I purchased NSC well in time and tax becomes nil. Now for the year 1999-2000 should I file IT return? If the IT Department asks me about the previous three years IT returns?

2. In the year 1997 I deposited the maxi-amount in Pb. Govt.’s Small Saving Scheme in M.I.S. through Post Office, out of my GPF fund withdrawal. Should the interest of MIS be counted while calculating Tax?

— ABC, Kurali.

Ans: It is recommended that you should file your Income Tax return for 1999-2000. In case the tax authorities ask you about the details of the previous years, you may give the computation statement to show that there was no taxable income in the previous years. The interest income in respect of MIS Post Office will be liable to Income Tax. However, as per section 80L the sum of Rs 12,000 will be exempted from Income Tax in respect of Post Office MIS income, NSC income and bank interest, etc.

Q: I am a Punjab Government employee getting salary Rs 13000 p.m. approx. My son aged about 17 years is doing B.Tech. in private College affiliated to Punjab Technical University Jalandhar is staying in hostel.

I am paying about Rs 20,000 yearly as college tuition fees and Rs 5000 as hostel charges apart from mess charges and securities etc.

I want to know, if I am entitled for some reliefs in the Income-Tax for the expenses I am incurring on studies/hostel of my son kindly do mention the section.

— Jiwan Mittal, Sangrur

Ans: In respect of the payment made by you towards education and hostel expenses of your son you are not entitled to any tax deduction or tax rebate.

Q: My wife and I reside in our own house in a city in Haryana. I am serving in the city itself and drawing HRA as per Haryana Government rates. My wife is serving in the rural area in Haryana and drawing HRA admissible in rural area as per Haryana Government rates.

While HRA drawn by me is taxable, I want to know whether HRA drawn by my wife by serving in the rural area is taxable or exempted from tax.

— Gurbax Rai, Karnal

Ans: The amount of HRA received by your wife will be taxable even when she resides in a rural area. The exemption in respect of HRA will be permissible only if your wife is making payment of rent from the HRA amount received by her. In case no amount has been spent on payment of rent, the entire HRA will be liable to Income Tax.


Buy coffee, get condom

ROME: Italian espresso is supposed to give the drinker a lift, but it seems to be making some decidedly frisky.

A coffee bar in the Italian beach resort of Sperlonga has taken to handing out free condoms with every cup it sells.

“It's a bit of fun, but also to make sure people protect themselves,” the owner of the bar, The Pirate, told the newspaper Corriere della Sera, adding that a lot more young people had started drinking his coffee.

More than 150 people a day have been whisking condoms into their back pockets or handbags, according to the owner, but Sunday is apparently the busiest day of all.

“Who knows what they get up to,” he said. — Reuters

Most expensive ad aired

MALBOURNE: Australia’s national carrier, Qantas, has finally aired its controversial ad featuring India’s Taj Mahal and other internationally recognised landmarks.

The two-minute ad is supposed to have cost the airlines 6 million Australian dollars, the highest ever spent by an Australian corporate entity.

The advertisement ran into controversies as part of the footage shot in London went missing. The advertising company had no choice but to hastily reshoot the part that got misplaced. The operation meant flying 20 choristers back to Britain to reshoot scenes around London Bridge.

The two-minute spot features a choir of Australian children singing with famous international landmarks as the backdrop. India’s most popular tourist icon, Taj Mahal, Udaipur’s Lake Palace and Jaipur’s Hawa Mahal figure in the commercial, the latest in the “I Still Call Australia Home” series. — IANS

College expels 2 girls for stripping 

Pune: They dared to bare and have now paid the price. Two girls, one from Lebanon and the other from South Africa, who participated in Channel V’s “V Dares You” contest and stripped on Mumbai’s Linking Road have been expelled from the college they were studying in.

The duo were holidaying in Mumbai when they picked up the challenge of the Channel V anchor to strip, reportedly for fun, and of course, a cash prize.

The college authorities got to know about the incident after the show was aired in June and subsequently expelled the girls. The channel later apologised for airing the event.

Lebanon’s Kate Matzoboulos and South Africa’s Talhar Kaloustiasn were first-termers at Mahindra’s United World College, situated about 40 km from Pune. The college, the first of its kind in India, is among only 10 such institutions in the world. It caters to the International Baccalaureate (IB) Diploma programme, administered from Geneva. This is equivalent to the Class XI and XII examinations of the Central Board of Secondary Education (CBSE). The college selects 200 students in the 16-18 age group from over 70 countries after an elaborate screening process.

Kate and Talhar were in Mumbai in March on a weekend holiday that had been sanctioned by their college. The authorities had no inkling about their participation in the dare.

Principal David Wilkinson got to know about it only after the show was aired on June 4. “I was on an annual holiday then and followed it up thoroughly after I resumed in June-end,” he told India IANS.

“Although this act did not take place on the college campus, we have taken stern action because such kind of behaviour cannot be tolerated. It is not a question of whether they are Indian or not. No school in the world would have its children stripping in public, he said. — IANS

Yoga for UP employees 

LUCKNOW: The 5,000 government employees at an otherwise laid-back Uttar Pradesh secretariat may not appear stressed. But Chief Secretary Yogendra Narain has decided they need to be relieved of stress and brought yoga and meditation right to their office.

A yoga centre has already been opened at his instance within the secretariat and a gymnasium is coming up in a neighbouring complex. The response, according to Secretariat Administration Secretary Rita Sinha, has been “surprising”. — IANS


Bureaucracy irks ISPs on fast track
From Imran Qureshi

Bangalore, Sep 2 — Private Internet service providers (ISPs) that have mushroomed in India are facing an array of obstacles in their bid to reach out to Internet subscribers, the fastest growing population of netizens in the Asia Pacific.

Speed, the essence of Internet connectivity, seems to have been thwarted with several speed breakers like infrastructural bottlenecks, bureaucratic delays, lack of forward-looking rules and the ubiquitous bandwidth, making all projections of ISPs look warped.

“The government is willing. They call us for discussions, they are positive and there is some movement. But, at the end of the day, the subscriber revolution is moving so fast that none of those things can keep pace. What is required is a total re-think and an open minded attitude in terms of scaling up connectivity because people are adapting to the Internet very, very fast in India,” Atul Kunwar, chief executive officer of Mantra Online told IANS. Mantra Online is a joint venture between Bharti Telecom and British Telecommunications Plc.

“Given the current situation, the demand-supply problems will ease off only 12 to 18 months from now. The complaint is not about the attitude but the bureaucracy is so slow that everybody’s projections are going haywire,” Mr P.G. Ponnapa, head of the latest ISP, Wipro’s Netcracker, said.

The latest International Data Corporation (IDC) report substantiates Mr Kunwar’s description of the Internet growth in India as the “headiest in Asia Pacific”. By the end of this year, the IDC report says, there will be 2.13 million Internet users and 1.14 million Internet subscribers.

That is not all, the subscriber base would have a compounded annual growth rate of 95 per cent from 1999 to 2003. The IDC is a market research organisation specialising in conducting surveys on the computer industry.

The three drivers for this phenomenal growth, the report adds, will be communication, information and entertainment. More Internet users will come from among children, elders and housewives. “Access remains an issue,” the report adds.

And, access seems to be affecting the performance of the private ISPs in the country. For instance, subscribers’ access to each of the ISPs is through just one number. It is like one telephone number for a large office exchange.

The bigger ISPs are asking for multiple numbers for access. “Multiple numbers will help in providing different types of services, like a better range of services for the corporate sector and the student community. This will help in charging differently for each section at different times of the day. It will help particularly now that we have two gateways in Delhi and Bangalore,” Kunwar said. “It will help if each of the ISPs is given three numbers,” Ponnapa added. — IANS

Cyber cafés raided 

Surat, Sept 3— Nearly half of the cyber cafes in Surat have shut down. They are not in the red nor are they on a protest strike. It’s just that a team of the National Association of Software Services Companies (NASSCOM)

has been in this western industrial town in Gujarat for the past few days cracking down on pirated software.

Close to 100 cyber cafes have come up in the city in the last one year alone. The number of computer classes that have mushroomed is even more. Deepak Shethwala, Secretary of the South Gujarat Information Technology

Association (SITA), told IANS that almost all cyber cafés and most of the computer classes were running pirated software. The Nasscom squad is here to detect just that.

He said that hardware suppliers, too, were responsible for piracy. “They are giving pirated software while installing the systems at the cafes or the classes. Since café and class owners get software free without any effort, they go for it to save money,” he said.

As news spread of the team’s arrival, cafes and classes shut down for fear of being raided. Many of the owners will now how to order the genuine stuff if they are to remain in business.

“A cyber café has to install software worth at least Rs. 50,000. With large numbers of them forced to purchase genuine software, city software dealers can look forward to a boom time,” SITA office-bearer Basir Mansuri said.

The Nasscom team’s visit has resulted in a “loss” of hundreds of thousands of rupees to cyber café owners. An owner, who wished to remain anonymous, said he had to invest Rs. 32,000 to purchase genuine software to continue in business. In spite of this, he was still not able to run MS Office as he did not have the money to purchase this software. — IANS


Bill Gates’ visit may lift infotech scrips

LAST week, the stock market moved within a narrow range. Sensex was up by only 1.7 per cent and Nifty by 0.93 per cent. The market is expected to repeat this performance this week too. There may be some fireworks during the next week when the results of our Prime Minister’s visit are known, though not much is expected because of the Presidential election in the USA.

Bill Gates will visit Delhi by the middle of September and hold discussions with Chief Ministers on software opportunities in their respective states. According to a report, 16 Chief Ministers have been invited by Bill Gates for the purpose. Bill Gates’s visit is also likely to trigger off a bullish rise in the software scrips.

Now, more information is available regarding Vikas WSP and Sterlite Industries, the two shares recommended in this column during the previous weeks. Apart from the bank team which examined the accounts of Vikas WSP and gave an all-clear signal, another team of CNBC India has met the management of the company and has found that while “some of the criticisms are ill-informed, some the company’s claims hard to believe”. The details of the interview are available on India Infoline — Management Discussion.

The balance-sheet of the company clearly shows phenomenal growth in sales (which have grown from Rs 80.63 crore in the accounting year March 31, 1997, to Rs 168.19 crore in the accounting year ended March 31, 1999, and Rs 232.6 crore for March 31, 2000). The net profit has also moved up from Rs 20 crore in March, 1997 to Rs 71 crore in March, 2000. The earning per share was Rs 41.06 in March, 1999, and Rs 72.47 in March, 2000.

The company is the third largest in the world, after, Rhone Poulenc and Herdillia. But these two multinationals produce very high price guar polymers for fine foods and derivatives for specific industrial applications. Vikas does not compete with them but produces lower quality polymers and the company is not in direct competition with these multinationals.

The management is setting up another unit at Baroda where guar chemicals will be manufactured for industrial uses. The demand for these chemicals in oil drilling, explosive, textile and carpet printing is overwhelming. At present, there is no proposal for the issue of bonus shares but the management is confident of maintaining the tempo of growth both in sales and in net profitability.

The Vikas WSP’s share is now quoting around Rs 821 (recommended in this column around Rs 365 some two weeks back) and is now in its “no delivery” period. It can now be traded in a demat form only (since August 28). Those who hold this share in demat form should book profit.

Sterlite Industries has recovered its market price, and is quoting-round Rs 765. There is a report that the company has lost out on some tenders to the tune of Rs 500 crore face value, though its earlier backtracking on one of the tendered item has been now settled with a minor penalty of Rs 1 crore only. But the company has also received orders of about Rs 338 crore from abroad, and this will easily make up for any loss the company might suffer by missing the acceptance of tenders from the DoT. Sterlite has now found another customer for its goods in addition to DoT, and this is a distinct gain for the company for now it is not dependent on one buyer alone.

Partial profit-booking is recommended in this scrip also. Long-term investors can re-enter the market for Sterlite when its shares are split into two separate companies — one for metals and the other for cables.


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