Sunday, December 16, 2001, Chandigarh, India





National Capital Region--Delhi

THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

UTI still the best bet: Damodaran
Chandigarh, December 15
The UTI has launched a major public relation exercise to shore up investors’ confidence in its schemes which had been badly shaken by the US-64 fiasco a few months ago.

India reviews export strategy 
New Delhi, December 15
India is reviewing its export strategy in the wake of the post-September 11 developments in the United States and the slowdown in other world economies.

BSNL cellular services soon
Jaipur, December 15
The Bharat Sanchar Nigam Limited (BSNL) will launch cellular phone services in the country within the next three months.

Graphic: Market watch

RENT CASES

Old age needs
Q:
Whether the ailments of the respondent and his wife are such that they cannot look after members and they need somebody to live with them virtually for all times to come?

IN THE WONDERLAND OF INVESTMENT

Q: My father’s gross total income after Sec. 80L deduction is around Rs 1,35,000 and my mother’s for the same period is around Rs 1,55,000. Can the following Tax planning be done?



EARLIER STORIES

 
AVIATION NOTES

29 airports opened for chartered flights
A
viation experts have been proved right. Since the initiation of disinvestment proposal in Air India (AI) and Indian Airlines (IA) about two years ago, they were maintaining that the proposal would not take off, come what may.

GRAPEVINE

  • Political Shadow
  • IPO Flood Ahead
  • Beaming revival

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UTI still the best bet: Damodaran
A. S. Prashar
Tribune News Service

Chandigarh, December 15
The UTI has launched a major public relation exercise to shore up investors’ confidence in its schemes which had been badly shaken by the US-64 fiasco a few months ago.

Mr M. Damodaran, Chairman, and other top executives of the UTI have begun an extensive tour of the country where they are addressing a series of media meeting and put in appearances at conferences organised by the trade and industry. Mr Damodaran, along with other executives, was in Chandigarh today on the same mission.

While in the city Mr Damodaran also took the opportunity to look up his old friend, Mr Sunil Malhotra, a chartered accountant of Chandigarh, at latter’s office in Sector 16.

During his interaction with mediamen as also corporate executives at the CII, Mr Damodaran stressed that despite the adverse publicity the UTI had received in recent months, it still remained the best bet for the retail investor. Its performance was also among the best when compared to other mutual funds. And, of course, it was the only Indian mutual fund in operation which did not require the “prop” of a foreign MF to sell itself to the investors.

Mr Damodaran dwelt mostly on the operations of US-64 which was launched in 1964 to mop up the savings of small investors and channel them into productive purposes. Its assured returns attracted lakhs of small investors. In 1988, a new provision was added to the IT Act which made US-64 attractive even to corporates who could invest their surplus funds in the UTI with an assured return which went up every month.

Thus, the UTI acquired two types of investors: the long-term retail investors and the corporates who were there for only short term assured returns. When the stock market started booming in 1992, the UTI portfolio became heavily weighted in favour of equities. This was a mistake because a fixed income scheme should not have so much exposure to risky ventures like stock market.

When the stock markets fell, the UTI’s equity placements also lost their value which impacted on its schemes like US-64 that had led to panic among the investors and all the attendant problems.

It has now been decided to make the scheme based on net asset value (NAV) from January 1. A unit purchased at the rate of Rs 14 some time ago may not fetch even Rs 10 per unit next month.

Mr Damodaran noted that “we are still very heavily invested in equities. We are trying to reduce our holdings in equity portfolio which at present stood at about 1,100 scrips”.

Several other measures have also been initiated to revamp the UTI. All officers above the age of 58 years have been retired. Fund managers have been given more autonomy and powers to operate funds. Equity research has been completely streamlined. All UTI offices have been networked. New products are being offered by merging the old ones.

The organisation is becoming investor-friendly. It will become NAV-based from the new year. The UTI will also become SEBI compliant the next year. As a matter of fact, all its schemes except US-64 are already SEBI compliant. UTI officers will be made accountable for their decisions, something which was lacking in the UTI so far.

He also said there seemed to be a “UTI equity overhang” which had depressed the stock-markets because not many were coming forward to trade in scrips in the belief that the UTI would have to go in for a distress sale of scrips held by it in January to meet its financial obligation to the investors. They could then pick up scrips of their choice at a low price.

“But this is not going to happen. We are not in distress. Therefore, the question of distress sale does not arise”, Mr Damodaran declared.
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India reviews export strategy 
Tribune News Service

New Delhi, December 15
India is reviewing its export strategy in the wake of the post-September 11 developments in the United States and the slowdown in other world economies.

Commerce Secretary Prabir Sengupta said various export promotion councils were giving their feedback and based on that the medium-term export strategy would be finalised.

After the attacks on the US, the world trade scenario has undergone a sea change and the markets have shrunk. India’s woes have been compounded after the United States and the European Union decided to give preference for trade from Pakistan in return for its support for the retaliation against terrorists in Afghanistan. It is estimated that the largesse towards Pakistan would come at the expense of India.

The Federation of Indian Export Organisation also cautioned today that the December 13 attack on Parliament could have an adverse impact on trading sentiments abroad. It felt buyers may not feel safe making visits to India.

Mr Sengupta however, described any linkage between export performance and the suicide attack on Parliament as “absurd”.

The review of export strategy comes at a time when the country’s export performance had shown a negative growth as per the latest trade data.

Giving an indication of the thrust of Indian export policy, Commerce and Industry Minister, Mr Murasoli Maran, who launched a trade portal of the Indian Trade Promotion Organisation said “we should use the strength in diversified fields such as e-commerce, networking, m-commerce (payment gateway), web content development and other IT enabled services, to improve our trade efficiency and increase our competitiveness and ability to trade better with increased market access.”

Meanwhile, a trade consultant, Mr S.Jaishankar told The Tribune that with the slowdown in the western markets, it would be a good idea for India to look towards China.

He said China’s entry into the World Trade Organisation has opened up new opportunities for India.

This was confirmed by the Chairman of the Shanghai WTO Affairs Consultation Centre, Mr Wang Zhan, who said the Shanghai market alone provided a $ 50 billion market for trading.

Emphasising the need for upgrading bilateral trade exchanges on the mutual economic strengths of the two countries, Mr Zhan said India and China have a critical role in realising a fair trade regime for Asia and the developing world, particularly after China’s accession to the WTO.

Mr Zhan, who is leading a seven-member delegation from Shanghai, told the Assocham that China was engaged in several initiatives to enhance its knowledge of WTO rules and conducting specialised training in WTO affairs. The first India initiative, he said was to send trainees to the Indian Institute of Foreign Trade to learn the intricacies of trading rules and regulations.
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BSNL cellular services soon

Jaipur, December 15
The Bharat Sanchar Nigam Limited (BSNL) will launch cellular phone services in the country within the next three months.

Announcing this here today, BSNL Board, New Delhi Director (Operations) Prithipal Singh told reporters that the negotiations for installing the system including equipment at the cost of Rs 2500 crore with four multinational companies were at final stages and expected to be finalised next week, he added.

Mr Singh said five lakh lines capacity exchanges were being set up to introduce WLL Mobile phone services in the country.

The services, meant for rural and hilly areas, inaccessible regions and short distance charges areas, will be in operation early next year, the director said. UNI
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RENT CASES

by Praful R. Desai

Old age needs

Q: Whether the ailments of the respondent and his wife are such that they cannot look after members and they need somebody to live with them virtually for all times to come?

Ans: This aspect was considered by the Delhi H.C. in Narendra Kumar Jain v Sham Lal Gulati (2001 (2) RCJ 385) as under:

The petitioner has challenged an order passed by the Rent Controller declining leave to contest the eviction petition filed by the respondent landlord U/s. 14 (1) (2) of the Delhi Rent Control Act, 1958.

The case set up by the landlord was that he and his wife are aged persons and they need their married daughter, who is their only child, to live with them to look after them in their old age. It is alleged that the petitioner is suffering from back pain and his wife is suffering from hypertension and high blood pressure.

The lower court was of the view that the landlord was entitled to have his married daughter live with him to look after the landlord and his wife in their old age. Reliance was also placed on certain medical certificates which were considered while arriving at his conclusion that the petitioners application for leave to defend requires to be dismissed.

While this is a matter of one’s subjective opinion, the H.C. was of the view that the landlord and his wife, who are said to be about 60 years of age can hardly be described as “aged persons”. Moreover, the medical records that have been filed by the landlord are all of a period subsequent to the filing of the eviction petition.

The Silvertoe Mfg. Co. of India v Usha Sai (1994 (55) DLT 523) the persons were aged about 75 years or eighty years. Such elderly persons can surely be described as “aged persons”, who would perhaps, require looking after and hence this case cannot be made applicable to present facts.

What is to be determined is whether the need of the landlord is bona fide or not. For that purpose, in the opinion of the H.C., the Rent Controller ought to have granted leave to the tenant to contest the eviction petition.

The H.C. held that the impugned order is set aside and leave to defend is granted to the tenant. Petitioner directed to file the written statement within two weeks from today.

In that way, this petition was allowed.
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IN THE WONDERLAND OF INVESTMENT

by A. N. Shanbhag

Q: My father’s gross total income after Sec. 80L deduction is around Rs 1,35,000 and my mother’s for the same period is around Rs 1,55,000. Can the following Tax planning be done?

My father will get a Mediclaim policy in his name but the premium will be paid by my mother and claimed in her tax return. If a Mediclaim premium of about Rs 6,000 is paid, my mother’s income will also come under the 20 per cent tax slab. Both my father and mother earn income from interest on their investments. Neither of them is dependent on the other. Since my father is not dependent will this payment be disallowed in the hands of my mother?

Can a joint Mediclaim policy be taken on my father & mother and benefit claimed by my mother?

Vikram Sashittal

A: Deduction u/s 80D for Mediclaim is available if the premiums are paid on the health of assessee himself, his spouse, dependent children or parents. You will note that the spouse need not be dependent. Yes, a joint policy can be taken. The deduction is possible for the person who pays the premium.

Realise that your mother can claim tax rebate of Rs 5,000 and your father cannot. Do you still desire to go ahead with this tax planning? There are better ways to plan the tax. Do you think both of your parents should continue to invest in FDs? That is not good tax-planning.

Q: One of my customers has gone abroad and wishes to withdraw some funds from his PPF account. His father is holding power of attorney from his son. The SBI, Santacruz branch is not allowing the withdrawal under any power of Attorney. Are they justified?

Makarand Dhokte

A: SBI mishandles PPF account holders sheerly because of lack of knowledge of procedure.

If it is a general power of attorney, prepared and granted according to law, SBI should accept and act upon requests made by the PA holder.

Q: I am a citizen of the United States. I’m in the process of coming to India to help a software business grow internationally. I’ll most likely be paid in rupees for the tenure of the assignment (15-7 years). The question (s) I have for you are:

1. Do I have to obtain an Indian Work Permit, and do I have to apply for Indian residence?

2. Will I be taxed by both India and the US?

3. Can I send part (70 per cent) of my Indian salary back to the US?

4. When I leave India, will part of my taxes be refunded to me?

Ajay Paul

A: 1. There is no special work permit. A proper visa will do.

2. You will be taxed in India. Make enquiries about US taxation in the US.

3. Yes, you can. The limit is 75 per cent and not 70 per cent.

As per Notification No. GSR 103(E) dt 22.1.01, a national of a foreign state resident in India being employee of a foreign company on deputation to the office, branch, subsidiary, joint venture in India of such foreign company may open, hold and maintain a foreign currency account with a bank outside India. Upto 75% of the salary can be credited to such account and the remaining shall be paid in rupees in India. Income tax has to be paid on the entire salary.

1. The advantage of DTAA is to be claimed while paying tax for respective years. The question of any refund does not arise.
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AVIATION NOTES

by K. R. Wadhwaney

29 airports opened for chartered flights

Aviation experts have been proved right. Since the initiation of disinvestment proposal in Air India (AI) and Indian Airlines (IA) about two years ago, they were maintaining that the proposal would not take off, come what may.

The exercise, on which a huge amount has been spent, has not materialised as politicians were on different wave-lengths, while bureaucrats were humming their own tunes.

When the proposal was mooted, there were many renowned bidders. The Tatas and Singapore Airlines were among them. Subsequently some withdrew due to the slow progress. Some were discredited while a few were black-balled on technical grounds.

In this cumbersome exercise AI, in particular, has got a lot of negative publicity. The Airline’s Managing Director Michael Masarenhas, who was suspended, had been reinstated two days before his retirement on November 30. Can there be more shocking state of affairs than this?

Shahnawaz Hussain is all set to provide new lease of life to a national carriers. With additional fleet and several new routes, the “Maharaja” may display a renewed vigour and vitality in taking off serenely from hazard runways. Similar kind of exercise will be undertaken for the domestic carrier.

The aviation experts are optimistic that the airlines will see happy days if funds are judiciously utilised for the purpose they have been sanctioned.

There are several candidates for posts of the Chairman-cum-Managing Directors for three pivotal units—the Airports Authority of India AI and IA. Shortly, there will also be a new director-general of civil aviation. As many as 29 airports, including some international airports, have been opened for operation of chartered flights. This move will bring a lot of revenue but efforts should be made to avoid air-space violations.
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GRAPEVINE

Political shadow

How long will the ongoing stock market rally continue? A veteran marketman predicts, at least till February. Does that mean till the budget? Maybe, but sources close to him hint that he’s referring to the forthcoming assembly election in an important cow belt state.

IPO flood ahead

The cocktail circuit has it that Q4 will herald the revival of the IPO market and as if on cue, queues have begun to lengthen for a SEBI IPO card. Will the merchant bankers behave more responsibly this time and ensure more reasonable issue prices or is that asking for too much?

Beaming revival

With Zee’s nemesis show ‘KBC’ scheduled to go off the air soon, it seems, better times lay ahead for this media major. The cocktail circuit is abuzz with rumours of some big time alliances and if the stock price moment is any indicator, the party might just be beginning again.
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BIZ BRIEFS

Paddy payments
Ropar, December 15
The RBI has released the final payment of Rs 125 crore for the paddy procurement in the state. The Finance Department has also given the orders to the state treasuries to clear all the remaining payments of paddy in the state, said Mr Madan Mohan Mittal, Food and Civil Supplies Minister, Punjab here today. OC

SBP seminar
Chandigarh, December 15
Mr Amitabha Guha, Chief General Manager, State Bank of Patiala, today presided over a seminar of branch managers on development of business at Jalandhar here today. Mr Guha stressed upon the need to market aggressively the newly introduced SBP Kisan Gold Card Scheme whereby farmers with satisfactory track record can avail limit/loan upto Rs 5 lakh. TNS

Online service
Shimla, December 15
The New India Assurance has started the online service in its branch as well as divisional office here today. The online service was inaugurated by Mr J.D. Benegal, Manager, Chandigarh Regional Office. TNS

Holland Tractors
Chandigarh, December 15
New Holland Tractors, has been awarded the ISO 9001:2000 Registration from Underwriters Laboratories Inc. (UL) for design, manufacturing, installation and servicing systems adhered to by its world class manufacturing facility based at Greater Noida, U.P. in India. TNS

Amartex
Chandigarh, December 15
Amartex opened its showroom at Yamunanagar, Haryana. With the opening of this store, Amartex grows to a total number of 14 showrooms. TNS

Markets holiday
Mumbai, December 15
Most of the major-markets, including the Bombay Stock Exchange, National Stock Exchange, oils and oilseeds, pepper, cotton, non-Ferrous metals, Interbank Foreign Exchange and money markets will remain closed on Monday, December 17 on account of “Ramzan-Id”. PTI
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