Monday, November 20, 2000,
Chandigarh, India



Govt yet to decide on Maruti sell-off: Joshi
NEW DELHI, Nov 19 — The government has not yet taken any decision to divest its holding in the auto joint venture Maruti Udyog (MUL) and the issue will come up for discussion at the December meeting of Cabinet Committee on Disinvestment (CCD), Heavy Industry Minister Manohar Joshi said here today.

Baron sold 1.6 lakh TVs in October
CHANDIGARH, Nov 19 — Civil aviation fascinates Mr Kabir Moolchandani, Chief Executive of Baron, the company that sold a record number of 1.6 lakh television sets in Indian market during the month of October alone. 

Haryana to be leader in IT
NEW DELHI, Nov 19 — Haryana is poised to be a leader in the IT sector in the country in the near future.

MTNL to expand mobile network
NEW DELHI, Nov 19 — In order to notch a larger share in the growing telecom market, Mahanagar Telephone Nigam Ltd will expand its ‘common man’ mobile telephone network by 50,000 new lines in the current financial year, at a total investment of Rs 65 crore.

Services on wheels
t is gratifying to hear Railway Minister Mamata Banerjee ruling out any hike in the rail passenger fare or freight charges and her saying that the railways would absorb Rs 275 crore as additional cost due to increase in prices of petroleum products.








Govt yet to decide on Maruti sell-off: Joshi

NEW DELHI, Nov 19 (PTI) — The government has not yet taken any decision to divest its holding in the auto joint venture Maruti Udyog (MUL) and the issue will come up for discussion at the December meeting of Cabinet Committee on Disinvestment (CCD), Heavy Industry Minister Manohar Joshi said here today.

When contacted Joshi said “CCD has not taken in-principle decision to disinvest government equity in MUL.”

After the CCD meeting, chaired by Prime Minister Atal Behari Vajpayee here yesterday, Disinvestment Minister Arun Shourie had said that government had decided to approach Suzuki Motor Corporation (SMC) of Japan for disinvestment in MUL.

Joshi’s comments assume significance amdist reports that government was withdrawing from 50:50 joint venture with SMC.

The minister, however, said “I do not think that there will be any difficulty in reaching a decision for disinvestment in MUL. When the issue comes up for discussion at the next meeting of CCD, we will take necessary decision.”

CCD had decided yesterday that a committee of secretaries (CoS) would be constituted by Cabinet Secretary T.R. Prasad to talk to SMC for its consent for divestment in accordance with the provisions of joint venture agreement.

Even though CCD directed the CoS, which is likely to comprise Heavy Industry Secretary T.R. Vijayaraghavan, Disinvestment Seceratary Pradeep Baijal and Expenditure Secretary C.M. Vasudevan, to submit its report within a fortnight, the process could be delayed in the wake of scheduled retirement of Vijayaraghavan by the month end.

Mr Joshi clarified that he did not oppose any disinvestment in MUL saying “I had expressed my individual views in the committee earlier and I have no differences with the CCD’s decision.”

Asked about the various options before the government for ‘optimal disinvestment’ in MUL, Joshi said he would be happy if government buys out SMC provided that Japanese company was willing to part with its stake.

On whether SMC had approached the government with its earlier offer of buying out the joint venture partner, Joshi said that it had not approached him with any such proposal during the last one year.

Mr Joshi said the process and procedure would take some time even after the government decided to offload its holding and added that the extent of disinvestment would also depend on pricing.

Asked if the timing of disinvestment was appropriate in the wake of industrial unrest in MUL and the reported move to sell off of the Daewoo’s Indian subsidiary, Joshi said he would speak his mind only at the meeting of CCD and not through press.

He said that his ministry was also exploring possibilities of helping out the joint venture for bringing industrial peace in the wake of nearly two-month long employees’ agitation.Top


Baron sold 1.6 lakh TVs in October
By Prabhjot Singh
Tribune News Service

CHANDIGARH, Nov 19 — Civil aviation fascinates Mr Kabir Moolchandani, Chief Executive of Baron, the company that sold a record number of 1.6 lakh television sets in Indian market during the month of October alone. Before he diversifies into domestic aviation, he plans to market airconditioners, refrigerators, audio systems for cars and mobile phones besides the electronic “magic box” to facilitate use of television set for internet and other IT uses.

Says Mr Moolchandani “I always have middle class in my mind before launching my products in the market. The airconditioner we plan to introduce soon will be in the range of Rs 15,000 to Rs 20,000. Our magic box will also be out soon and will cost around Rs 10,000 each. This magic box will facilitate use of Television for various IT uses, including Internet and e-commerce besides others.

The new policy announced by the government will push cable operators out of the system as “magic boxes” would provide the consumers not only direct access to various channels but also to internet and other IT services, including e-commerce, Mr Moolchandani said.

“Whenever I diversify to any other sector from the present field of consumer electronic goods, it will be civil aviation. This field fascinates me. Once I enter the domestic aviation sector, I can assure you it would be quality service at affordable price. This sector has tremendous potential” he says.

Mr Moolchandani was here to participate in a meeting of company dealers from Punjab, Haryana, Himachal Pradesh and Chandigarh. “We sold television sets worth Rs 192 crore during the month of October alone. Of these total sales, share of Punjab and Haryana market was 25 per cent. This is one area where we have witnessed nearly 20 per cent annual growth,” he says maintaining that opening of economy and liberalisation have made the electronic goods “affordable and reasonable”.

“I cannot say what will happen when the WTO regime becomes fully effective from April 1 next year. May be our markets get flooded with very cheap consumer products and make the competition real tough. But I feel that the criticism that WTO would kill ‘local industry’ is misplaced. I am local and have 1600 people working for me. My company has a turnover of Rs 1400 crore,” he adds.

Mr Moolchandani feels that Punjab market has much more potential. After Punjab and Haryana, it is Gujarat and some other states, including Maharashtra, where sales are good. He finds that no other company was in any competition with him because of the price line and the quality of products marketed by Baron.

Mr Moolchandani claims that the supremacy of Asia in electronic consumer goods would continue though in some sectors including automobile industry, Europeans and Americans were equally strong.

The chances of electronic consumer items becoming disposable, he says, are possible in coming years because of the glut and rapid technological developments which make new products obsolete rapidly.Top


Haryana to be leader in IT
Tribune News Service

NEW DELHI, Nov 19 — Haryana is poised to be a leader in the IT sector in the country in the near future.

Talking to mediapersons at the India International Trade Fair here, Mr S.Y. Quraishi, Principal Secretary to Haryana Chief Minister, said that the IT policy of Haryana aimed at improving quality of life and upgrading the standard of administration.

He said that information and technology policy of the state would make information easily accessible to people and lay stress on improving Human Resource Development. He said that various incentives such as uninterrupted power supply, were being given to the IT sector.

Mr Quraishi said that Gurgaon had emerged as the Cyber Capital not only of the state but of the northern region and the government was taking major initiatives in e-governance.

He said that the new industrial policy had succeeded in catalysing an investment of Rs 17,000 crore while the recent tour of the Chief Minister, Mr Om Prakash Chautala to South East Asian countries had succeeded in inviting an assured investment of Rs 1,000 crore.

The Haryana Pavilion is attracting a large number of visitors daily. The tastefully decorated pavilion is sky-grey in colour with ‘sky is not the limit’ inscribed on the wall, reflecting the state government’s special thrust on information technology. According to Ms Neerja Shekhar, Administrator, Trade Fair Authority of Haryana, a large number of business enterprises, both Indian and foreign, have shown interest in IT sector and in the industry of the state.Top


MTNL to expand mobile network

NEW DELHI, Nov 19 (PTI) — In order to notch a larger share in the growing telecom market, Mahanagar Telephone Nigam Ltd (MTNL) will expand its ‘common man’ mobile telephone network by 50,000 new lines in the current financial year, at a total investment of Rs 65 crore.

The corporation has decided to retain the old tariff plan with free incoming call and out going call costing Rs 1.40 for three minutes.

The subscriber would have to give Rs 10,000 towards security deposit for the handset and monthly rental would be Rs 600, K.H. Khan, CGM, MTNL (Delhi) told PTI.

“The corporation has earmarked Rs 65 crore for expanding its Wireless in Local Loop (WLL) services, providing limited mobility to the subscribers by adding 50,000 lines in Delhi during 2000-01,” he said.

Keeping in line with the upcoming plans MTNL would set up about 30 Base Transmission Stations (BTSs) across the capital for WLL mobile communication, Khan said adding that this would cover entire Delhi making the mobile radius close to 25-30 km.

Global telecom major Motorola would be supplying the equipment and base stations, Khan said adding that Himachal Futuristic (HFCL) has been selected for supplying the handsets.

The handsets cost about Rs 16,000 to the corporation which would be provided to cutomers at deposit of Rs 10,000.

The network would also be used for providing fixed connection especially in those areas where the corporation was not able to lay cables or non-availability of pairs.

“MTNL has planned to add 50,000 lines each in next two years to make the total subscriber base of more than 1.5 lakh in three years,” Khan said.

He said locations for setting up BTS have been identified and the work would be completed before the end of next month.

It is pertinent to mention that MTNL has also planned to launch its cellular services using GSM under the brandname of ‘Dolphin’ in January next year.Top


Services on wheels
By S.K. Aggarwal

It is gratifying to hear Railway Minister Mamata Banerjee ruling out any hike in the rail passenger fare or freight charges and her saying that the railways would absorb Rs 275 crore as additional cost due to increase in prices of petroleum products. Her remarks, “One has to use one’s mind to generate resources. Hiking the fares is not necessary for maintaining the financial position,” are innovative. Her target of saving Rs 865 crore by the end of financial year 2000-2001 by cost cutting measures are well taken by the public in general and financial managers in particular in the light of current industrial scenario which it is no longer a sellers market. She has also promised to provide better services on wheels.

However, the facts based upon actual experience of the writer as a frequent commuter on Delhi-Sonepat-Ambala Cantt-Chandigarh section of Northern Railways form interesting reading about the services on wheels.

If you plan to board from Chandigarh, The Himalayan Queen, you would meet a battery of daily passengers ready to board any compartment including reserved one’s exercising their right to sit on any available seat notwithstanding the fact the same may be reserved by you by spending extra time to get reservation in advance for a little comfort of travelling while sitting. Some unlucky passengers may not even get their reserved seats since the already sitting passengers may not be obliging and the ticket examiner is normally seen after Ambala Cantt only. It is afraid some commuters may be even without tickets causing loss to the railway exchequer.

From Ambala Cantt onwards you come across a series of hawkers with uniform and name plates on their pockets indicating that they are probably licensed vendors. In addition there are large number of such persons without uniform.

The problem is even worse on Bathinda Express and similar trains on the above mentioned route where even household goods including hosiery items are also available for sale by moving hawkers.

It is expected such unauthorised growth of service and nuisance providers on wheels is not allowed to go unchecked or else it becomes unmanageable and perpetual eyesore for the Railways who continue to loose precious revenue. 


Mukta Arts to remain a dark horse
From Ashok Kumar in Mumbai

THE nature of our work affords us the opportunity to meet several promoters and get an early insight into their companies and its prospects. Among the more hyped IPO’s in recent times was that of Mukta Arts Limited (MAL), which had as its USP, none other than the Bollywood showman Subash Ghai as its promoter. To start with, Subash Ghai does not take too kindly to the term Bollywood and prefers to refer to it as Hindi cinema. So be it, but as far as we stock buffs are concerned, the bottomline is what matters, name it what you like.

A flashback indicates that MAL had embarked on a self-appraised Rs 100 crore project, of which, the prime objectives included the setting up of an Integrated studio-cum-Research & Training Institute (Rs 23 crore) and the acquisition of movie rights and music albums (Rs 25 crore). In the absence of institutional appraisal and participation, the project was to be entirely equity financed. While the objectives, prima facie, appeared to be feasible, the bothersome fact was that the payback from the setting up of a training institute may take some while in coming raising doubts about its standing up to the revenue model scrutiny.

The financial track-record of the company has been lopsided, and that is primarily because of the nature of its prime business of film-making which, in case of MAL has a payback cycle of 18 months. This then results into sharp upswings and downswings in income and bottomline levels as there will be accounting periods that predominantly reflect expenses, with the revenues flowing in, in a cluster at the culmination of the cycle. While the same may be partially offset henceforth by the revenue streams being kept on flow through the airing of MAL’s rich film content library on the various television channels that have proliferated, the fact remains that there will continue to be fluctuations in MAL’s earning levels.

The biggest plus point and USP of this company is Subash Ghai, MAL’s promoter and showman-par-excellence. Ironically though, it in some ways also becomes a point of weakness for MAL as his personality looms large over the company suggesting that the company is largely personality driven. However, the string of box-office hit films that Ghai has churned out over the years translates into ‘golden’ content and highly potent revenue-earning stream for the company. Similarly, the brand equity of the promoter is very high translating into the music and advertising rights of its films being pre-sold, thus ensuring an early break-even with subsequent revenue flows, which incidently, would be substantial when a movie does well, enhancing the bottomline. Again, the fickle nature of box-office fortunes is akin in many ways to those at the bourses, and that again casts a shadow over the company.

MAL’s management will have to display hitherto unproven corporate maturity, which is something that most analysts have been skeptical about. This will send out the right signal to investors whose faith on the company higes around Ghai’s proven ability to churn out one box-office hit after another. MAL’s shares still trade marginally above its IPO price and although it would be imprudent to underestimate Ghai’s ability to set the cash counters ringing, the fact that it will be a while before ‘Yaadein’, MAL’s current production is released, would certainly cast a shadow for the time being. Finally, an aside.

At the time of MAL’s IPO it was pointed out that international media companies like Time Warner & MGM enjoy a P/E multiple of 75 plus at the American bourses. Well, even a novice would know that there is a long way to go before MAL comes even close to achieving the kind of levels of professionalism that these companies can boast of. Furthermore, no amount of convincing will change the fact that MAL’s fortunes revolve around those of Subash Ghai whose fortunes in turn revolve around the box office. So at the end of the day, MAL will have to bide its time before entering the big league on the corporate front, but, yes of course, it continues to remain a dark horse.


Air India selloff before March 31
K.R. Wadhwaney

THE new slogan of the Bureau of Immigration “Service with smile” will be fully appreciated only when incoming passengers are cleared quickly at the Indira Gandhi International Airport (IGIA), which is the gateway to the country.

As of now, the immigration personnel are not as courteous and efficient as they ought to be. Quite a few passengers, who are dressed slovenly and are not fluent in Indian languages, are treated roughly. They are harassed and humiliated until they shell out money.

The Deputy Commissioner of Police (Foreigners Regional Registration Office — FRRO) P.K. Bharadwaj has gone on record as saying: “Passengers are our customers and we are basically service providers. At the same time, we have a challenging task since we have to take care of national security....”

These are indeed ‘pleasing’ words. But are the officers showing courtesy to the passengers? The last fortnight’s survey shows several bottlenecks and the passengers have to wait for long before they are cleared. Clearance of passengers will quicken only when quantum of corruption is reduced.

The uniform of the personnel is indeed impressive but the performance of some of the officers is not as satisfactory as it ought to be. There are officers who continue to treat passengers as if they are dealing with criminals. They take undue long time in scrutinising passports. This naturally causes worry and concern to passengers who have disembarked after a long and arduous flight.

Mr Bharadwaj claims that the ‘satisfaction level has risen enormously’. This is not what airline officials say. They are of the firm view that the passengers are still harassed. Says Bharadwaj: “Of the 100 suggestions cards we had distributed some time ago, we received appreciation in about 10. But in about 10 cases allegations of corruption and harassment were made”.

The police ‘boss’s’ observation itself reveals that the improvement, if at all, is marginal.

The sharp contrast to immigration, customs authorities have stream-lined their functioning. Majority of passengers are treated with respect. If they say ‘nothing to declare’, they are believed. Their baggage is not unnecessarily checked.

The performance of the Airports Authority of India (AAI), however, continues to be lacklustre. The body continues to be money-amassing unit instead of service provider.


The Government seems to be determined to complete disinvestment process of two national carriers, Air India and Indian Airlines before the end of financial year on March 31, 2001. But there are apprehensions that it may not, after all, be a beneficial policy.

Former Prime Minister V.P. Singh, for example, has written a personal letter to the Prime Minister Atal Behari Vajpayee cautioning him against AI’s sell out. In his two-page letter, Mr Singh has asked the PM ‘to ensure that the national carrier is owned and controlled by Indians’.

Expressing concern that the disinvestment policy would result in ceding control of AI to foreign interests he says: “With 26 per cent equity, the foreign investor will be able to dominate the management of AI completely”.

Mr Singh adds: “Many countries, including the USA, are cautious with respect to allowing foreigners to gain control of their air transport sector.... In my view these are compelling reasons why India must seek to follow a similar policy”.

Air India, as a national carrier, is entrusted with security and social responsibilities. During national crises, it is these two national carriers, AI and IA, which play key role in evacuating persons. Says Mr Singh: “...Our primary flag carrier must be, at its core, Indian. Its reliability to meet national requirements in times of duress must be assured”.

According to Mr Singh: “It would be a serious error to put AI in the hands of owners and managers who may, in times of crises, turn out to be fair-weather friends and who may give priority to their on commercial interests”.Top


Essel Packaging to emerge as number one
By J.C. Anand

DURING the last fortnight, two Indian companies have launched themselves on the international stage as leaders in their respective areas. Pentamedia Graphic has acquired Film Roman, a top US company in graphics and animation technology by buying out 51 per cent equity holding in that company. Essel Packaging has negotiated a merger with another world leader, Propack, in the area of manufacturing laminated tubes to form a new company to be called Essel Propack. In this company, Essel group will have 34 per cent and Propack’s former shareholders will hold 22 per cent of the equity capital.

Essel Packaging’s acquisition is expected to bring greater rewards to the shareholders of the company than Pentamedia Graphic’s take-over of Film Roman, because Film Roman is as yet a loss-making company and Pentamedia Graphic will have to improve the working of this acquisition. This may take at least two years. The shareholders of Pentamedia Graphic should not expect any fireworks for some time, though the company is expected to maintain its past profitability. Essel Packaging is taking over, through merger, a company which is world No. four in ranking in the area of laminated tubes. While Essel Packaging has about 80 per cent share in laminated tubes business in India with subsidiaries in China, Egypt, Nepal and Germany, Propack has 60 per cent share in China.

According to projections, the pro-merger company, Essel Propack, will be the dominant company in its trade in India and China and in sizeable market share in many other countries of the world. It is expected to rank as number one company in the world in the manufacture of laminated tubes. By 2005, this company is expected to have 80 per cent share in the area of laminated tubes. Propack has also patented its technology, which can now be used by the merged company.

Targeted sales for the merged company for the current fiscal year will be Rs 371.5 crore and Rs 59 crore in net profit. The equity capital of the new company will be increased to Rs 31 crore. The legal formalities for the emergence of the new company will take a few months to complete.

At present, Essel Packaging has an equity capital of Rs 15.21 crore and book value of Rs 145.9 crore. On the basis of March 31,2000 results, the company had EPS of Rs 21.8. It has already declared a bonus issue of 3 for 5 held, and is at present being quoted on the stock exchanges on cum-bonus basis. After the merger news, the company’s share which had been quoting at around Rs 400 (an even lower) is now quoting around Rs 468 or so.

Those who decide to invest in the company should do it only as long-term investors for the market price of the shares is expected to move down rather move up during the coming weeks. As a long-term investment, it is an excellent investment proposition.

During the last week, the market moved within a narrow range. The stock exchange indices do not reflect any change. I do not expect any change during the current week too. The Parliament will also be holding its session this week, and it has been seen that the stock markets move south rather than north when the Parliament is holding its sessions.Top



by R. N. Lakhotia

Q: I am a pensioner and I.T. assessee. I request you to guide me on the following two points:

1) I deposited some money in NSS in 1990 and 1991 and made no withdrawal so far. Now I want to withdraw some of it. Can I give declaration on the form 15-I if I purchase NSCs of sufficient amount and bring my income tax below zero I.T. level?

2) Under 1/6 scheme what is meant by floor area? Does it mean area of the plot or the covered (i.e. roofed) area? What is the position if the house has two storeys?
— J.B. Mehta, Jalandhar

Ans: You can withdraw the money from NSS A/C and submit from 15 (I) to the Post Office. By doing so, you are not committing any mistake because you are going to deposit the money in NSC whereby the net tax payable by you will be zero. For the purposes of 1/6 scheme criteria the floor area means the total area which is occupied. In the case of a house which have got two storeys the total floor area of both the floors will be taken into account to determine whether the provisions of Income-tax would be applicable or not.

Q: I would like to draw your kind attention towards your reply in The Tribune in which a question regarding calculation of tax payable for gifted amount of Rs 20,000 to daughter on her marriage anniversary-cum-birth day.

Your reply to this that the amount of Rs 20,000 is fully exempted but the amount gifted is not to be deducted from the gross total income.

Then please advise how to calculate income tax payable if this amount gifted to son/daughter on the marriage anniversary-cum-birth-day which is totally exempted from tax both for doner and donee.

I request you kindly to advise if this amount is to be deducted from total gross income after getting a receipt that the gifted amount has been accepted as a gift by the donee or this amount is to be shown in the Col. 8 Relief admissible u/s 80-G donated as gift after getting a letter of acceptance from the donee.
— Duni Chand Karwal,
Bassi Pathana

Ans: Please do not commit the mistake of claiming any tax deduction u/s 80G in respect of the gift made by you. No tax concession or benefit is permissible either to the donor or the donee in respect of the gifted amount. The deduction u/s 80G is permissible only in respect of donations to approved institutions, etc. It is, therefore, not applicable on the personal gift made by you.

Q: I took voluntary retirement from ONGC Ltd (a Public Sector Undertaking) and got ex-gratia payment under BRS. C.P.F. and gratuity, P.S.U.’s do not incorporate pension scheme for their employees as applied by Central Government. Therefore I invested these funds in various Govt. and Private Securities and started getting income which came under taxable bracket.

It is a fact that now I do not receive any income under the head of salary or pension but I do receive the income resulting from amounts invested which had the nexus with the salary I was earning prior to my retirement.

Please tell me whether I should now continue to take the benefit of standard deduction from my taxable income? If yes how should I show/claim this in my I.T. Return Statement and under which section/clause of I.T. Act?
— K.K. Joshi, Jalandhar City

Ans: You cannot take the benefit of standard deduction from your taxable income because as on today you are not an employee of any organisation. Merely investing the funds received from retirement will not result into any tax claiming or deduction of the standard deduction. It is advised that you may shift your investment to tax free incomes and Mutual Funds whereby you can save Income-tax.


Insurance meet
NEW DELHI, Nov 19 (PTI) — Over 300 participants from various countries including the United States, Australia, Japan and Canada will discuss emerging issues in insurance during a two-day summit starting from November 22. The summit, organised by CII will be inaugurated by the Finance Minister Yashwant Sinha.

Inflation up
NEW DELHI, Nov 19 (PTI) — Continuing its upward trend, the annual inflation rate increased by 0.35 percentage points to 7.27 per cent for the week ended November 4, due to the rise in fuel prices. The point-to-point inflation rate based on the Wholesale Price Index (WPI) for all commodities (Base: 1993-94= 100) rose from the previous week’s level of 6.92 per cent and 3.23 per cent a year ago.

Moser Baer
NEW DELHI, Nov 19 (PTI) — Moser Baer India Ltd (MBIL) is planning to go for external commercial borrowing and private placement of debt to raise a total of $ 110 million, to fund the third phase of capacity expansion at its Noida plant.Top

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