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THE TRIBUNE SPECIALS
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B U S I N E S S

PM sends another missive to ministers
New Delhi, August 22
Manmohan SinghPointing to reports about some Public Sector Undertakings (PSUs) not following norms of good corporate governance, Prime Minister Manmohan Singh has asked his ministers to change the perception that the administrative ministries treat PSUs as their “fiefdoms.”

Govt rapped over fraud by cos
New Delhi, August 22
Parliamentary Standing Committee has rapped the government for its failure to keep a close eye on the fraudulent activities of various finance, plantation and other companies that have cheated the public worth thousands of crores of rupees over the past few years.

Ratan TataTata Steel cuts price to arrest pressure
Kolkata, August 22
Tata Steel will reduce prices of its main products by Rs 2,000 per tonne with effect from midnight tonight.

Achievers
Yashovardhan SabooThe artist in Saboo drew him to watches, paints
Chandigarh, August 22
Mr Yashovardhan Saboo, Managing Director, Kamla Dials and Devices Limited, Chandigarh, though born with the silver spoon in his mouth, decided to carve a golden one for himself.

Yashovardhan Saboo — Photo by Pradeep Tewari

TCS share allotment
Mumbai, August 22
The retail investors who had participated in the Intitial Public Offering for TCS Ltd will get 17 shares of Re 1 each against 50 applied for, according to merchant banking sources.

Wal-Mart subsidiary Asda has overtaken Marks & Spencer as the country’s biggest clothing retailer, according to confidential market share figures, the Sunday Telegraph reports. Wal-Mart subsidiary Asda has overtaken Marks & Spencer as the country’s biggest clothing retailer, according to confidential market share figures, the Sunday Telegraph reports. — Reuters file photo


Norwegian artist Edvard Munch’s 1893 masterpiece 'The Scream' is shown in this undated file photo.
Norwegian artist Edvard Munch’s 1893 masterpiece ‘The Scream' is shown in this undated file photo. Armed robbers stole masterpieces by Munch from a museum in Oslo on Sunday, and national radio NRK said a version of ‘The Scream' was part of the haul. (No archives, no sales). — Reuters

EARLIER STORIES

 

Lalu’s ‘kulhars’ enrich potters
New Delhi, August 22
Railway Minister Lalu Prasad’s decision to replace plastic cups with earthen ‘kullars’ in trains, if implemented in toto, will result into a net yield of Rs 1,600 crore to the potters during this fiscal, according to Assocham.

Tax advice

Foreign firms and tax
Q. Whether the provisions of Section 115JB relating to Minimum Alternate Tax (MAT) are applicable to foreign companies?

  • Mediclaim

  • Car sale

Market scan

Stock market likely to dip further
I
N spite of its volatility, the stock market continues to move down. On August 9, the Sensex had closed at 5233.31 points and on August 21, it stood at 5064.31 points, declining by 169 points.

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PM sends another missive to ministers
Tribune News Service

New Delhi, August 22
Pointing to reports about some Public Sector Undertakings (PSUs) not following norms of good corporate governance, Prime Minister Manmohan Singh has asked his ministers to change the perception that the administrative ministries treat PSUs as their “fiefdoms.”

In a letter to his colleagues, Dr Manmohan Singh said ministers in charge of PSUs were custodians of the resources of the country and it is their duty to lead them by their example of efficiency, rectitude and austerity.

“We must correct the perception that PSUs are profligate and also that administrative ministries tend to treat them as their fiefdoms,” he said.

Dr Manmohan Singh, who had earlier written a similar letter against misuse of PSUs, said there had been disquieting reports about some of the PSUs ignoring the ground rules of good corporate governance and conduct.

Allegations of extravagance in expenditure on the part of some of their senior officials had been brought to the notice of the government, he said.

He said while granting full operational autonomy to the PSUs to enable them to compete and succeed in the global market, the concerned ministries had a responsibility to ensure accountability of PSU executives for their performance in conformity with established norms of conduct.

Observing that PSUs have a pride of place in the country, the Prime Minister said they perform valuable functions in several core sectors of the economy and their efficient management contributes to generation of wealth, overall development and social well-being of the people.

“We are committed to improving their standards of efficiency and competitiveness and expect them to be model employers,” he said.

Dr Manmohan Singh asked the ministers to convey the concerns to the PSUs under their ministry for appropriate follow up.Top

 

Govt rapped over fraud by cos
Manoj Kumar
Tribune News Service

New Delhi, August 22
Parliamentary Standing Committee has rapped the government for its failure to keep a close eye on the fraudulent activities of various finance, plantation and other companies that have cheated the public worth thousands of crores of rupees over the past few years.

The committee headed by Major-Gen B.C. Khanduri (retd), has expressed concern over the fact that “out of about 6,52,000 registered companies operating in the country, not even one per cent of the companies are being inspected by the government agencies.”

The Ministry of Company Affairs submitted before the Standing Committee that during the past four years the number of inspected companies have rather declined.

The investors associations have often lamented that leniency on the part of government, inefficient regulatory mechanism have caused huge financial loss to them. For instance, between April 1992 and March 1996, about 4000 companies, including hundreds of forest, agricultural plantation and finance companies from Punjab, Haryana raised about Rs 54,000 crore through public and hybrid issues. Investors have lost thousands of crores in the stock scams as well.

Another 1500 companies raised about Rs 34,000 crore through rights issue at very high premium during that period. Most of these companies later vanished from the market. But neither the Security Exchange Board of India (Sebi) nor the Ministry of Company Affairs took adequate steps to deal with the situation.

Only last month, the Ministry of Company Affairs issued a list of 229 companies and have initiated action against some of them.

The Standing Committee also noted that the Serious Fraud Investigation Office (SFIO) set up in October 2003, has been able to complete its investigation only in one case, out of six cases referred to it.Top

 

Tata Steel cuts price to arrest pressure

Kolkata, August 22
Tata Steel will reduce prices of its main products by Rs 2,000 per tonne with effect from midnight tonight.

Stating this today, Tata Group Chairman Ratan Tata said the company had endeavoured to hold prices during the year for its direct customers through long-term contracts and these prevailing prices had remained below those of its major competitors despite the rise in global steel prices.

“To take the initiative in displaying its corporate responsibility at this critical time, Tata Steel will reduce prices of its main products for its direct and bona fide customers with effect from midnight tonight,” Mr Tata said.

“It is expected that this price reduction by Tata Steel will, in turn, contribute in arresting the pressures on price increases by major users of their products,” he said.

“The Indian economy has seen a turnaround last year after three years of an economic downturn. The recent upward spiral of prices will, definitely, dampen the current robust consumer demand for goods,” he said.

Global steel prices have increased significantly over the past two years, “converting the industry from a ‘sunset’ industry to an industry attracting investment in new capacity. Steel price increases have been driven mainly by the phenomenal demand for steel from China, which is investing substantially in its infrastructure,” he said.

Mr Tata added that Indian steel prices had tracked these increases, although having remained below international levels. — UNITop

 

Achievers
The artist in Saboo drew him to watches, paints
Peeyush Agnihotri
Tribune News Service

Chandigarh, August 22
Mr Yashovardhan Saboo, Managing Director, Kamla Dials and Devices Limited, Chandigarh, though born with the silver spoon in his mouth, decided to carve a golden one for himself.

Mr Yashovardhan (Yash to his friends) was born in the family of needle magnate R.K. Saboo. But he preferred to create an empire of watches, high-precision electronics gadgetry and paints because the needle business didn’t interest him.

Mr Saboo did his matric from St John’s School, Sector 26, Chandigarh, in 1974, with distinction. He then shifted to New Delhi to pursue BA (Hons) in economics from St Stephen’s College. Egged on by parents, he went on to do a management course from the IIM, Ahmedabad, even though photography, art and classical music held his interest.

“I didn’t like the needle business on two counts — one it didn’t gel with my artistic mindset and second, my ideas were different from the German firm, Groz Beckert,” he says.

“I settled for the watch business in 1983 as it was a hi-tech affair and had an artistic element in it. HMT was importing a lot of hi-precision stuff for making watches then. I saw an opportunity and it clicked instantly.”

The Saboo group and Groz Beckert’s parted ways in the early nineties. “When the goals of business partners are different, it’s best to part ways,” he says.

Today, Kamla Dials of Saboo group has business interests in watch dials, hand, bracelets manufacturing, precision stamping that includes manufacture of high-precision pressed components, connectors and electronics goods making. The group also has a tie-up with a Swiss firm for manufacture of paints and coatings under the brand name, Saboo-Berlac. The factories are located in Chandigarh, Derabassi, Parwanoo and Bangalore. The total turnover of the group is Rs 100 crore.

“Kamla Dials’ total turnover is Rs 50 crore,” says Mr Saboo.

About the watch market in India, he opines, “It is growing at 10 per cent at the lower end and 20 per cent at the higher end since the markets opened up in 1999 when watch imports were allowed with price restrictions. In 2001, the $ 1000 price barrier also was eased and competition picked up. That’s why now you have so many national and international players vying for the pie. Rado Tag Heur and Titan,” he says.

Kamla Dials, which is the only Indian company to export watch components, also has a multi-brand shop, Ethos, and the market share of the company in the watch-component business is more than 60 per cent in India. It is 3 to 5 per cent, globally. In paints, the national market share is nearly 2 per cent.

Discussing the future plans, he says, “Growth is on the agenda. Paint business has the potential to grow 20 to 25 per cent and we hope to achieve Rs 30-40 crore target within next four to five years. Watch business has the potential to grow at 10 to 20 per cent.”

“I believe in speciality niche-business. It is better to foray into small things and do them well rather than try to do big things and be one among many,” he says.

Besides business, the group has several philanthropic assignments on hand. Voluntary blood donation, polio immunisation, education of children, teacher recognition business, technical training service and night schools are just a few of them.

And what about photography? “In the din of business, it just receded to the background. But some day I plan to revive it.”

Just wait err… watch.Top

 

TCS share allotment

Mumbai, August 22
The retail investors who had participated in the Intitial Public Offering (IPO) for Tata Consultancy Services Ltd will get 17 shares of Re 1 each against 50 applied for, according to merchant banking sources.

The company, which will list its stock on NSE and BSE on August 25, has also decided to exercise the green shoe option comprising over 80 lakh shares.

The retail portion of IPO was oversubscribed by 2.9 times.

The issue price was fixed at Rs 850 per share. — PTITop

 

Lalu’s ‘kulhars’ enrich potters

New Delhi, August 22
Railway Minister Lalu Prasad’s decision to replace plastic cups with earthen ‘kullars’ in trains, if implemented in toto, will result into a net yield of Rs 1,600 crore to the potters during this fiscal, according to Assocham.

The chamber said its analysis was based on the fact that each of the 16 zones of the Indian Railways spent about Rs 100 crore each on plastic cups for serving beverages in trains, totalling Rs 1,600 crore.

Assocham President M K Sanghi said the effective implementation of this decision would lead to the shift of plastic industry’s business to the potter industry during 2004-05.

It also pointed out that railways purchased bedclothes and curtains worth Rs 1000 crore, which the department had been sourcing from Mumbai based companies. This order was likely to go to Khadi. — UNITop

   
Tax advice

by S.C. Vasudeva

Foreign firms and tax

Q. Whether the provisions of Section 115JB relating to Minimum Alternate Tax (MAT) are applicable to foreign companies?

— Parminder Singh

A. Section 115JB of the Act, provides that “Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April 2001, is less than seven and one-half per cent of its book profit, such book profit shall be deemed to be the total income of the assessee.

As per Section 2 (17) of the Act, ‘company’ means any body corporate incorporated by or under the laws of a country outside India. Since the term ‘company’ includes a foreign company, therefore, the provisions of Section 115JB would be applicable to a foreign company as well. The Authority for Advance Rulings has in one of the cases also held that the provisions of Minimum Alternate Tax are applicable to a foreign company.

Mediclaim

Q. What is the maximum amount that I can claim as a deduction in respect of mediclaim? 

— Ashok Jain

A. As per the provisions of Section 80-D of the Act, the maximum eligible amount of deduction is Rs 10,000. However, if the premium is paid to effect or to keep in force an insurance on the health of the assessee who is the senior citizen, the maximum amount eligible is Rs 15,000.

Car sale

Q. I am a retired person having only pension and interest income. I want to sell my old car. I have been told that I shall have to pay capital gains on the sale of the car. Please advise?

— Jaswant

A. As per the provision of the Act, capital gains tax is payable only when a capital asset is transferred by an assessee. In your case, the car that you own would be treated as a ‘personal effect’ and, therefore, no capital gains tax would be chargeable on the sale of such a car.

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Market scan

by J.C. Anand

Stock market likely to dip further

IN spite of its volatility, the stock market continues to move down. On August 9, the Sensex had closed at 5233.31 points and on August 21, it stood at 5064.31 points, declining by 169 points. Even during the last week, the Sensex dipped by .75 per cent. All indications presage a further decline in the stock market. Inflation rate is now at a 42-month high of 7.96 per cent. Petro crude prices are $ 49 a barrel, at their highest so far. Traders are on strike against the imposition of service tax. Floods and erratic monsoon rains have damaged crop in many parts of India and the production of oilseeds is expected to be low. It is quite obvious that the second quarter results of the corporate sector would be much lower than those of the first quarter.

It is not surprising that the Business Confidence Index (BCI) is lower by 11.6 per cent. As indicated in the report, the overall business conditions, investment climate and financial position of the firms have all got lower ratings. In spite of the cut in excise and customs duties of petro products and a reduction in import duties on non-alloy steel by the government, the inflation rate is not likely to dip before October. This would affect the economy in general and the corporate sector in particular. With the inflation rate at about 8 per cent, even the “senion citizens bonds” carrying an interest rate of 9 per cent (which is taxable), the net return is less than the inflation rate of 8 per cent.

The first quarter results were no doubt excellent. According to one competent analysis based on a survey of 3156 companies in their first quarterly results, the net profit rose by 32.77 per cent and the sales were higher by 21.77 per cent. This image is likely to be distorted by the 2nd quarter result announcements.

There are, of course, many bright spots in the corporate sector. Larsen & Toubro is expected, as its chairman A.M. Naik announced, to improve its revenues this year by 75 per cent to Rs 650 crore from Rs 380 crore last year. The company is also setting up an engineering sector in Chennai. It is also setting up a new software park in Bangalore through its subsidiary, L & T Infotechs. L & T has also received an order estimated at Rs 500 crore from China. The L & T scrip moved up from Rs 772 to Rs 817. But on Friday, it settled around Rs 498. Some other bright spots are: Reliance Industries and Tata Motors. The shares of these companies are quoting at reasonably low rates but these are expected to move down further.

Investors should mark time for making any substantial investments in the stock market and invest only in companies which have trusted management, excellent fundamentals and promising prospects.Top

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BRIEFLY

Coca-Cola
Chandigarh, August 22
The Rajiv Gandhi Foundation (RGF) Chairperson, Mrs Sonia Gandhi has presented a memento to Mr Sanjiv Gupta, President & CEO of Coca-Cola, India in appreciation of the company's participation in RGF's Motorised Triwheeler Scheme for Empowerment and Self-reliance for the disabled through mobility. — TNS

Grand Hyatt
New Delhi, August 22
The promoters of The Grand Hyatt, Mumbai, are eyeing India’s silicon valley Bangalore for building their next hotel. Owner and developer of The Grand Delhi and the Grand Hyatt Mumbai Arun Saraf said the deal to acquire a four-acre plot in Bangalore would be finalised by next month. — UNI

Indian vehicles
Colombo, August 22
New members of the Sri Lankan parliament have declined to accept India-made four-wheel drive vehicles as they preferred Japanese ones, a report said here today. “Majority of the members are insisting that they be allowed to import vehicles from Japan as the vehicles imported from India had less market value,” the Sunday Times said. — PTI

IT exports
New Delhi, August 22
Delhi led IT exports from northern states saw 26 per cent rise during the last fiscal, even as the region’s share in total IT exports from the country declined to 24 per cent, a report has said. IT exports peaked to Rs 15,423 crore during 2003-04, the PHDCCI report said. — UNI

Software
Mumbai, August 22
The software industry has overtaken the gems and jewellery as well as textiles industries, to become the number one exporter in the country, National Association of Software and Services Companies (Nasscom) president Kiran Karnik said. He said that software accounted for exports worth $ 13 billion against a total merchandise export of $ 60 billion and the industry grew at 30 per cent last year despite the slowdown in the US economy. — UNI
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