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Sugar industry awaits sweet drops of sops
New Delhi, July 18
In his “Green Budget,” Finance Minister P. Chidambaram may not have given any relief to the sugar industry that is facing a tough time for the last three years but the industry is still hopeful that during next few days, the government will offer a financial package keeping in view the interest of millions of farmers.

Steel units desert Punjab, move to adjoining states
Chandigarh, July 18
Disillusioned with the fact that no special economic package has been given to Punjab in the Budget, industrialists from Punjab, particularly those dealing with the steel-based units have decided to shift their centre of operations to Himachal, Uttaranchal, Jammu and Kashmir.

Delhi traders begrudge 24x7 shopping concept
New Delhi, July 18
Shops open 24 hours a day and seven days a week may sound like a shopper’s dream. But the Delhi Government’s proposal to allow shops to operate round the clock has not gone down well with traders, who say such a situation will be a nightmare for them.



EARLIER STORIES

 
Iraqi brokers bid during a trading session at the well-guarded stock exchange building in Baghdad on Sunday. At present, the stock exchange is open only on Wednesdays and Sundays from 10 am until midday but plans are underway to create a six-day trading week. There are currently 27 listed companies with about 100 more due to go public in the coming months.
Iraqi brokers bid during a trading session at the well-guarded stock exchange building in Baghdad on Sunday. At present, the stock exchange is open only on Wednesdays and Sundays from 10 am until midday but plans are underway to create a six-day trading week. There are currently 27 listed companies with about 100 more due to go public in the coming months. — Reuters

CII initiative to boost local industry
Jalandhar July 18
In a first of its kind initiative in the Northern region aiming to forge strong industry-academics partnership for providing low-cost indigenous solutions to the industry’s problems, the Confederation of India Industry (CII), in partnership with the Technology Development Board (TDB) has set up six Technology Transfer Centres (TTC) in various parts of Punjab.

Market update

Truant monsoon leaves market high & dry
M
arkets closed flat last week as concerns about the fallout of transaction tax, coupled with jitters over the erratic progress of monsoon, offset strong results from companies like Infosys, Biocon and HDFC Bank. The Sensex gained 5.69 points to settle at 4,951.17 and the Nitty 5.60 points at 1,558.80 last week.

  • Biocon

  • HDFC Bank

Tax advice

Govt employees can accept gifts from explainable sources
Q:
In reply to a question regarding gift from son (Business page, The Tribune dated April 19, 2004), you have mentioned that there is no restriction on a government employee on accepting gift provided the source of gift is explainable.

  • Salary & pension

  • Agricultural land

  • Trip to India

  • Sale of car

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Sugar industry awaits sweet drops of sops
Manoj Kumar
Tribune News Service

New Delhi, July 18
In his “Green Budget,” Finance Minister P. Chidambaram may not have given any relief to the sugar industry that is facing a tough time for the last three years but the industry is still hopeful that during next few days, the government will offer a financial package keeping in view the interest of millions of farmers.

Sources say Agriculture Minister Sharad Pawar is also pressing upon the Finance Minister to provide relief to the industry on the pattern of the textile sector. He is reportedly arguing “if something was not done immediately for the sugar sector, the Congress-NCP alliance may have to pay a heavy price in Maharashtra, where it will face the state Assembly elections by September.”

The government has informed the Rajya Sabha that the sugar mills have still to pay about Rs 2,000 crore to the farmers for the sugarcane purchased during last year. It includes Rs 75.56 crore in Punjab, Rs 76.49 crore in Haryana, Rs 1159.02 crore in Maharashtra, Rs 127.80 crore in Karnataka and Rs 96.04 crore in Bihar as on April 30,2004. In UP, sugar mills owed Rs 239.44 crore to farmers as on June 30, 2004.

The farmer organisations maintain that due to harassment at the hands of mills and delay in payment over the years, sugarcane production is likely to come down this year. The country may soon have to resort to sugar imports as a section of farmers have already shifted to other crops. As per mid-season estimates of the government, 1,418.96 lakh tonnes of sugarcane is likely to be crushed during the current sugar season 2003-04 (October-September).

The sugar industry has sought to expedite subsidy claims, softening of terms of financial assistance under Sugar Development Fund and other relief measures for the industry. It has expressed its helplessness to pay the outstanding amount of farmers, if the government fails to provide any relief in the current Budget.

The industry experts claim that prices in the international sugar market have firmed up over the past two months, but the sugar mills lobby is delaying the payment to the farmers on one pretext or the other. The average sugar prices, they said, is hovering around Rs 1465 to Rs 1645 per quintal as against Rs 1100 to Rs 1200 per quintal, a few months ago.

Further, with the delay in monsoon in most of the states, claim farmer leaders, “the sugar prices are likely to increase in the next few days. It is high time for the government to press upon sugar mills to clear outstanding payments with interest, besides announce a hike in sugarcane prices after rise in diesel and other input costs.” 
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Steel units desert Punjab, move to adjoining states
Poonam Batth
Tribune News Service

Chandigarh, July 18
Disillusioned with the fact that no special economic package has been given to Punjab in the Budget, industrialists from Punjab, particularly those dealing with the steel-based units have decided to shift their centre of operations to Himachal, Uttaranchal, Jammu and Kashmir.

Industrialists allege that the policies of the previous NDA government and the present government are the main reason responsible for the shift of the industry to the neighbouring states. They point out that it was just recently that the Prime Minister, Dr Manmohan Singh, had assured a delegation of industrialists that special package of incentives would be given to Punjab on the pattern of the neighbouring states to boost the prospects of trade and commerce in the state.

Nearly a dozen steel units from Punjab, Haryana and Delhi are already in the final stages of setting up their units in Nalagarh, Baddi, Barotiwala and Kala Amb in Himachal Pradesh. The units, which started moving gradually a year ago will start production within a month’s time.

While the industry from Amritsar is gradually shifting to Kathua in Jammu and Kashmir, industrialists of Ludhiana, Derabassi and Mohali are shifting to Baddi and other areas in Himachal Pradesh.

The Chairman of Modern Steels Limited, Mandi Gobindgarh, and the President of the Punjab Unit of PHD Chamber of Commerce and Industry, Mr Amarjit Goyal, said even as a dozen -odd steel units have shifted to Himachal, the products manufactured by them would be sold in the main market of Mandi Gobindgarh because of the higher prices they can get in accordance with the Punjab rates. The cost of power per unit in Punjab is more as compared to the hill states and there is a huge difference of 12 per cent in the excise duty as the special economic packages exempt them from paying this duty on their produce for the next 10 years.

Mr Gautam Kapoor, a leading industrialist from Jalandhar, voicing his resentment over the government once again ignoring Punjab in the Union Budget said: “We have no option but to explore options elsewhere and set up a new steel unit in Jammu or Himachal Pradesh which are already enjoying the benefits of the lucrative economic packages announced by the government.” The problems have also forced us to look for these options.

Nearly 30 to 40 small and medium enterprises have shifted to Baddi and adjoining areas. 
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Delhi traders begrudge 24x7 shopping concept

New Delhi, July 18
Shops open 24 hours a day and seven days a week may sound like a shopper’s dream. But the Delhi Government’s proposal to allow shops to operate round the clock has not gone down well with traders, who say such a situation will be a nightmare for them.

Claiming that the trading community was not consulted before the government made the proposal about permitting shops to be open at all times and on all days, traders say it is not “humanly possible” for them, especially those with small establishments, to function in such a scenario.

“We bitterly oppose the proposal as the 24x7 set-up is not in the interest of the small shopowners, for most of whom running the shop is a one-man show,” said Mr Praveen Khandelwal, Secretary General of the Confederation of All India Traders (CAIT).

“The shopowner handles everything alone — from purchasing goods for the shop to doing the accounts to paying the taxes, apart from manning it (the shop),” Mr Khandelwal said, adding the proposed strategy to make Delhi a shopper’s paradise would mean no holidays whatsoever for the small trader.

He said the government ought to have consulted the traders and the various market associations in the city before coming up with the plan.

Chief Minister Sheila Dikshit recently announced at a conference of the PHD Chambers of Commerce and Industry that the government was considering granting permission to all shops in the capital to remain open 24 hours and asked market associations to submit their proposals to the government.

In an attempt to make a strong case, the trading associations have sent out questionnaires to all shopowners, asking them if they are willing to function round the clock, if yes why and if no why not. — PTI
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CII initiative to boost local industry
J.S. Malhotra

Jalandhar July 18
In a first of its kind initiative in the Northern region aiming to forge strong industry-academics partnership for providing low-cost indigenous solutions to the industry’s problems, the Confederation of India Industry (CII), in partnership with the Technology Development Board (TDB) has set up six Technology Transfer Centres (TTC) in various parts of Punjab.

Mr Anjan Das, the Director (Technology & IPR) of the CII, said the initiative was part of a long standing aim of the CII to bring industry more closer to the academics for updating the students about the problems being faced by the industry in some particular fields. 
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Market update

by Lalit Batra

Truant monsoon leaves market high & dry

Markets closed flat last week as concerns about the fallout of transaction tax, coupled with jitters over the erratic progress of monsoon, offset strong results from companies like Infosys, Biocon and HDFC Bank. The Sensex gained 5.69 points to settle at 4,951.17 and the Nitty 5.60 points at 1,558.80 last week.

Trading volumes slumped during the initial part of last week but picked up during the latter half. The markets struggled to find a reason to cheer. While uncertainty regarding any change to the turnover tax continued to remain among the reasons for the market’s apprehensive behaviour, another factor and a more fundamental one — delay in monsoons — kept investors on the backfoot. There are concerns that this delay could also affect the yield of cash crops like cotton, grains and cereals.

Besides monsoon, some of the real factors that might bog down the recovery in the markets are inflation and the oil prices. Inflation has already topped 6.1 per cent and re-affirms the fact that the hike in the interest rates is imminent. Oil prices are ruling at $ 41 a barrel and threaten to hit all the economies around the globe.

In the near term, the market would move on the news being emitted out of the Meteorological Department and from the Ministry of Finance. Long-term investor can focus on the first quarter results and pick stocks at decent valuations with a three years perspective.

Biocon

Biocon, a leading biopharmaceutical company, had posted a strong growth in topline and bottomline during the first quarter of the current financial year. The results are impressive on all counts, though the net profit growth is also on account of the higher income. The sales growth of the company is mainly driven by biopharmaceuticals business where statins (cholestrol reducing drug class) witnessed a growth of 79 per cent year-on-year growth. Statins contributed nearly 55 per cent of the company sales. The growth in the statins sales was driven by the successful entry of Biocon in the European market. There is another statin molecule, Simvastatin, which will be off patent from the US market next year, and will offer huge opportunity to Biocon, considering its low cost and high-quality manufacturing strength. The company stock, which is trading at Rs 560, discounts the annualised earnings by 29 times. Long term investors can buy the stock with a three year perspective on declines.

HDFC Bank

HDFC Bank’s juggernaut continued to roll. In the first quarter, while the banks topline grew by 22 per cent to Rs 702 crore, the bottomline has jumped 31 per cent to Rs 140 crore. The growth in the bottomline is seen despite fall in other income. The bank continues to keep its interest costs low and has significantly helped the growth in net interest income. HDFC Bank continues to show strong growth in its advances, both from the retail and wholesale.

An important factor for investors to note is that as interest rates rise, we may witness lower profits from the sale of investments for most of the banks and this is likely to impact their profitability. HDFC Bank, however, will not be impacted much since its reliance on this stream is very limited.

The bank’s stock is quoting at 18 times its annualised earnings of Rs 19.8 per share. Though the stock may not see a major upward move in the short-terms yet investors willing to wait for two years can buy the stock for decent returns.
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Tax advice

by S.C. Vasudeva

Govt employees can accept gifts from explainable sources

Q: In reply to a question regarding gift from son (Business page, The Tribune dated April 19, 2004), you have mentioned that there is no restriction on a government employee on accepting gift provided the source of gift is explainable. I have been advised that there is a monetary limit of Rs. 5,000 for acceptance of gifts as prescribed in the conduct rules for government servants. I intend to gift Rs. 1 lakh to my son-in-law who is a government servant. Will you please elucidate the correct position in this regard?

Balwant Singh

A: As replied earlier, a government servant can accept a gift from relatives, provided the source of the gift is explainable. As per the conduct rules, which are applicable to government servants, the donee has to declare the amount of gift received in the prescribed form to his/her department if the value of the gift exceeds Rs. 5,000 (for a Group A Officer) or Rs. 3,000 (for a Group B Officer) as the case may be. Accordingly, there is no restriction in giving a gift of Rs. 1 lakh to your son-in-law. I may further clarify that as per the amendments proposed by the Finance Bill, 2004, gifts in excess of Rs. 25,000 from non-related persons would be taxable in the hands of the donee.

Salary & pension

Q: I am a pensioner from the Armed Forces and presently a Punjab Government employee. My pension and salary for the current financial year will be as under:-

a) Pension: Rs. 73,000

b) Salary: Rs. 96,000

My question is whether I am entitled to enjoy separate deduction from the amount of pension? If so, how will both the incomes be entered in the income column of the return and how will standard deduction from the salary and the pension be calculated.

Jatinder Singh

A: The pension and salary income will be aggregated and such aggregate amount will be taxed as income under the head ‘Salary’. The standard deduction shall also be calculated on the aggregate amount of Rs. 1,69,000. For the assessment year 2004-05, i.e. financial year 2003-04, the standard deduction available to you will be Rs. 30,000.

Agricultural land

Q: I have an agricultural land evaluated about Rs. 10 lakh. I want to sell it and deposit the money in the post office’s Monthly Income Scheme in the name of different family members (as more than 3 lakh cannot be deposited in the name of a single person). Is it a capital gain and please tell me what are the tax liabilities?

Arvinder Singh

A: The taxation of the amount received on sale of agricultural land depends upon the fact whether the land in question is an urban agricultural land or a rural one land. If the same is an urban agricultural land, then the gain resulting from the sale of the land would be taxable as capital gains. However, if the said land is ‘rural’ then there would be no liability to pay capital gains tax. Further, in the first case, you can deposit the amount received in the following options and save capital gains tax provided certain specified conditions are complied by you:

a) Investment in agricultural land

b) Investment in a residential house

c) Investment in capital gain bonds

I may also add here that as per the amendments proposed by the Finance Bill, 2004 there would be no capital gains tax on the sale of the urban agricultural land in case the same has been used for agriculture purposes during the last two years. Therefore, it is advisable that you wait till the Finance Bill is passed before disposing off your agricultural land.

Trip to India

Q: An individual is above 65 years of age and also a pensioner. He used to visit India after two years and stay for three months every time. Kindly clarify whether the individual in question is eligible for:-

1. Tax rebate amounting to Rs. 20,000 u/s 88B

2. Filing self declaration in regard to no deduction of tax at source for interest income.

3. Exemption from filing the income tax return.

S. Singh

A: The answer to your queries are as under:-

1. The rebate u/s 88B is available only to an individual who is a resident of India. From your question, it is not clear whether the individual is a resident of India for tax purposes or not. For this purpose the exact dates of arrival and departure in and out of India would need to be provided to ascertain whether an individual is a resident or a non-resident.

2. As per Section 197 (1C) of the Act, self-declaration is possible where an individual is eligible for rebate u/s 88B i.e. senior citizen.

3. If the total income earned is more than Rs. 50,000 then an individual has to file his/her return of income in India.

Sale of car

Q: I have sold off my car of Rs. 1.50 lakh. The car was purchased in the financial year 2000-01 for Rs. 2.5 lakh. I am salaried employee. Please let me know whether I have to pay any capital gains tax or not?

Shewta

A: The car that you own is not a capital asset within the meaning of Section 2 (14) of the Act. Accordingly, there is no liability to pay capital gains for in the instant case.
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BRIEFLY

FIIs net sales
Mumbai, July 18
In a trading environment marked by extremely low volumes, the foreign institutional investors registered net sales of Rs 151.8 crore in equities and Rs 5.6 crore in debt for the week ended July 16. Mutual Funds were net sellers in equities at Rs 56.7 crore. They were also net sellers in debt at Rs 322.68 crore during the period under review, according to the SEBI data. — PTI

Loeb award
New York, July 18
Two Indian journalists have bagged the Gerald Loeb awards for 2004, an award given to business, financial and economic journalism. Mr Manjeet Kripalani of the Business Week and Mr Abhay Singh of Bloomberg News received the award for their articles “Is Your Job Next/The Rise of India” and “The Flimflam Man” respectively. — UNI

Lancer’s price
New Delhi, July 18
Following the two per cent education cess levied in Budget 04-05, Hindustan Motors today hiked the prices of its popular luxury brand Lancer by 0.5 to 1 per cent. However, the company left the prices of Mitsubishi Pajero untouched. The basic price of Premium LX range of Lancer has been increased by one per cent and the basic price of Priviledge XL and Elegant-LE range of Lancer has been hiked by 0.5 per cent. — UNI

AFS revival
Kolkata, July 18
Allahabad Bank has decided to revive its idle subsidiary, Allbank Financial Services (AFS), and initiate a series of measures to implement Business Process Engineering (BPE) to improve the bank’s services and increase total business to over Rs 61,000 crore during the current financial year. — PTI

Agro sector
Amritsar, July 18
As per the instructions of the Central Government and the Reserve Bank of India, more than Rs 920 crore have been earmarked for improving the financial conditions of farmers of the district. The earlier allocation was Rs 774.58 crores. — OC

Jet Airways
New Delhi, July 18
Jet Airways will link Patna with Delhi by a daily evening flight from August 16. Patna will be 44th destination on the airline’s route network. The Boeing 737 flight will depart from Delhi at 1920 hrs and arrive in Patna at 2050 hrs. — UNI

Air Deccan
Bangalore, July 18
The country’s first low-cost airline, Air Deccan which recently launched its “Dynafare” scheme for Bangalore-Delhi flight offering tickets for as low as Rs 500, will be extending it to all its 19 destinations in a phased manner, a top executive of the Airline said. — PTI

DC Design
New Delhi, July 18
After a joint venture with the Al Araba Group of Saudi Arabia to produce a range of specially-built sports utility vehicles, India’s leading automobile designer Dilip Chhabria is mulling to set up a similar assembly unit in Dubai. — UNI

Jindal Stainless
New Delhi, July 18
Jindal Stainless Ltd will shortly acquire a cold rolling downstream unit in South-East Asia with an initial investment of $ 25-35 million, a senior company official said. — UNI
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