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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

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B U S I N E S S

MFs to tap boom in infrastructure sector
Govt mulls sops to woo small investor
New Delhi, February 3
Mutual funds are lining up to invest in the core sector, expecting rich dividends in the coming years.

Models display western and Indian summer collections in Kolkata on Thursday evening.
Models display western and Indian summer collections in Kolkata on Thursday evening. — PTI

A model displays fashion of the label, 5th Floor, during a “Catwalk with Ball” fashion show in Berlin.
A model displays fashion of the label, 5th Floor, during a “Catwalk with Ball” fashion show in Berlin. The show was themed “football” in the Year of the FIFA Football World Cup to take place from June 9 to July 9, 2006, in Germany. — AFP 

Mittals to shut Luxembourg steel plant
Luxembourg, February 3
Mittal Steel is to close its only majority-owned steel factory in Luxembourg, a number of sources told AFP today amid controversy over its hostile bid for Arcelor.

Tax the rich, Left pleads with PM
New Delhi, February 3
In their pre-Budget discussion with Finance Minister P. Chidambaram , Left parties have suggested measures, including taxing the rich, to mop up resources for the multi-crore social sector schemes and infrastructure projects.

Advisers not keen on divestment in Punjab
Chandigarh, February 3
Global bids invited by the government seeking advisers on guiding the privatisation of major companies like Puncom and sugar mills in the state have not got worthwhile response.

Hallmarking to be made must
Ludhiana, February 3
With a view to promote hallmarking, the BIS is conducting awareness programmes across the country. The first such programme was held here today.

PNB seeks nod for branch in Pakistan
Ludhiana, February 3
Punjab National Bank (PNB) plans to open a branch in Pakistan. The bank has sought approval of the RBI and the Pakistan Government in this regard, said, Mr S.C. Gupta, Chairman and Managing Director, who was here last evening.


A painting by Chaim Soutine, called Le Boeuf Ecorche, estimated to fetch £4,200,000 and £4,800,000 is seen behind a sculpture by Wilhelm Lehmbruck in London on Friday.
A painting by Chaim Soutine, called Le Boeuf Ecorche, estimated to fetch £4,200,000 and £4,800,000 is seen behind a sculpture by Wilhelm Lehmbruck in London on Friday. The auction is to be held this month.— Reuters 

EARLIER STORIES

 

Indian slashes air fares
New Delhi, February 3
The public sector carrier Indian has announced 20 to 40 per cent cheaper fares for limited seats on 146 sectors.

TRAI, DoT meet over access deficit issue
New Delhi, February 3
Department of Telecom (DoT) secretary J.S. Sarma today met Telecom Regulatory Authority of India (TRAI) chairman Pradip Baijal to resolve the deadlock over the new rates of levy paid by private operators to BSNL for its rural operations.

McDonalds plans outlets in Shimla, Amritsar
New Delhi, February 3
Fast food chain McDonalds India is planning to widen its presence in smaller North Indian cities and will be opening an outlet in South India.

Corporate News

L&T bags Spectrum Info
Mumbai, February 3
Larsen and Toubro Limited (L&T) has entered into a memorandum of understanding for acquiring 100 per cent shareholding of Bangalore-based defence electronics and aerospace research and development company Spectrum Infotech Pvt Ltd.

  • Satyam, Wipro bag GM orders

  • Siemens steam turbine project
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MFs to tap boom in infrastructure sector
Govt mulls sops to woo small investor
Manoj Kumar
Tribune News Service

New Delhi, February 3
Mutual funds are lining up to invest in the core sector, expecting rich dividends in the coming years.

The government has also indicated to offer some tax incentives to the mutual funds in the coming Budget to finance large infrastructure projects through private investors, besides offering an alternative to the retail investor to benefit from the rally in the stock market.

The Association of Mutual Funds in India (AMFI) has urged the government to simplify tax incentives for the sector to attract small investors to fund mega projects worth over Rs 200,000 crore in the next few years.

In consultation with SEBI and the RBI, sources said, the Finance Ministry was considering a package to encourage investors towards mutual funds through non-tax benefits. Mutual funds currently enjoy tax exemption on dividends and long- term capital gains.

A couple of mutual funds, including UTI and Principal PNB, have raised funds to invest in the core sectors and related industries like cement, steel, metal, oil and gas, besides housing. The latest to join the bandwagon is Birla Sun Life, which has launched a new fund dedicated to infrastructure development and related companies.

“According to government projections, projects worth around Rs 40,000 crore have already been approved for five years, ”Mr A. Balasubramanian, chief investment officer, Birla Sun Life, told The Tribune.

He said the ongoing rally in the market, and clearing of policy framework for private investment in ports, roads, power, transport, telecom and other core sectors, a large number of mutual funds are ready to investment in this sector.

For instance, he said, with the coming up of Delhi Metro, cement, earth moving equipment manufacturing companies have benefited. “We are closely watching companies like Alstom, Siemens, BHEL, Reliance, Tata, Ambuja and banks like SBI, PNB that are active in this sector.”

Fund managers said at least 12 per cent annual returns could be expected over the next 2-3 years, given the investment plans in the core sector.

“At present India is investing about 4 per cent of GDP in the core sector as against 11 per cent in China. To achieve 8-10 per cent growth as visualised by Prime Minister Manmohan Singh, the government will have to offer incentives for investment in infrastructure mutual funds,” said a UTI senior official.

“The government won’t have to spend money which will now come from private players, and the requisite regulatory infrastructure has already been built up. Besides, if we are to sustain growth at the 8 per cent level, there is no way outside infrastructure growth, as has been recognised by the government,” said another fund manager. 

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Mittals to shut Luxembourg steel plant

Luxembourg, February 3
Mittal Steel is to close its only majority-owned steel factory in Luxembourg, a number of sources told AFP today amid controversy over its hostile bid for Arcelor.

The plant, of which Mittal owns 75 per cent with the other 25 per cent controlled by European steelmaker Arcelor, is likely to close in 2009 or 2010, said the spokesman, Guenter de Backer.

The factory at Schifflange in southern Luxembourg employs 200 persons, who are all expected to be taken on at other plants, he said.

The closure plans came as a hostile takeover bid by Mittal Steel for Arcelor was being studied in Luxembourg, where a prospectus has been filed with the stock market regulator, according to a Mittal source.

Mittal Steel, which is registered in The Netherlands, says that the plan, if successful, would generate economies of scale of $ 1 billion a year, of which 60 per cent would arise in the first year. — AFP

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Tax the rich, Left pleads with PM
Tribune News Service

New Delhi, February 3
In their pre-Budget discussion with Finance Minister P. Chidambaram , Left parties have suggested measures, including taxing the rich, to mop up resources for the multi-crore social sector schemes and infrastructure projects.

The 13-point note, later circulated to the media, calls for the introduction of inheritance tax and restoration of long-term capital gains tax.

In the note on alternative resource mobilisation measures, the Left parties also suggested for expanding the scope of services tax, increasing corporate tax and imposition of tax on luxury consumption.

Abolition of long-term capital gains tax discriminated against other productive sectors of the economy, CPM General Secretary Prakash Karat told reporters after the meeting.

However, Prime Minister Manmohan Singh assured the nation yesterday that the UPA Government would not resort to “confiscatory” taxation to find resources to implement its major programmes like Bharat Nirman, Rural Employment Guarantee Scheme and Rural Health Mission. “We are committed to moderating and broadbasing tax structure and not confiscatory taxes... If the economy grows by 7-8 per cent that itself will create enough resources to meet our defined goals.”

The Left parties also proposed increasing the rate of securities transaction tax, the CPM General Secretary said.

As part of taxing the rich, the comrades also called for the introduction of inheritance tax in line with western countries. “We don’t say that whatever is inherited should be taxed. But over a limit, a tax should be imposed on inheritance,” he added.

The Left parties also proposed a tax on luxury consumption, which had increased tremendously in recent times, Mr Karat said.

The Left parties will meet Mr Chidambaram for another round of discussion on expenditure before the Budget, CPI General Secretary A.B. Bardhan said.

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Advisers not keen on divestment in Punjab
Tribune News Service

Chandigarh, February 3
Global bids invited by the government seeking advisers on guiding the privatisation of major companies like Puncom and sugar mills in the state have not got worthwhile response.

Senior officers in the state say the response has been poor and no major company has applied to guide the disinvestment process for Puncom and the sugar mills. Normally, companies, which specialise in this business, are in touch with the investors to guide them on disinvestment projects. They are paid for the same.

Sources say poor response is the outcome of the process of disinvestment of the Punjab Alkalies and Chemicals Limited (PACL), which was stalled midway. The company guiding the disinvestment process was to be paid once the process was completed or if the government backed out of the process.

In case of PACL there has been no decision either way thus no payment has been made to the disinvestment adviser. This sent a wrong signal. Subsequent advertisements for other companies elicited no response from global majors

Suggestions have been to change the rules that govern the functioning of these advisers.

The sources said the matter was discussed at the highest level and it has now been decided that the adviser guiding the disinvestment would be paid in parts right from the time they are appointed.

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Hallmarking to be made must
Tribune News Service & PTI

Ludhiana, February 3
With a view to promote hallmarking, the BIS is conducting awareness programmes across the country. The first such programme was held here today.

The government will make hallmarking of gold jewellery mandatory from January 1, 2008, Mr Y.P. Singh, Additional Director General, Bureau of Indian Standards (BIS) said.

“Currently 1,127 jewellers of the total three lakh across the country hold a license for hallmarking, which is a miniscule number. With hallmarking getting compulsory, not only would customers benefit, the country would also be able to increase its share in the global jewellery market,” he said.

He said that a survey by the BIS in 2000 revealed failure of 88 per cent of samples with an average shortage of purity of 11 per cent. It is on that basis that the hallmarking scheme got impetus in the country. When hallmarking becomes mandatory, legal action would be taken against jewellers if the purity were lower than what is mentioned on jewellery.

To contain the alarming situation with regard to sale of impure gold, the BIS has decided to introduce Hallmarking Regulation within three months in the country, which will take care of the cases relating to gold impurity.

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PNB seeks nod for branch in Pakistan
Tribune News Service

Ludhiana, February 3
Punjab National Bank (PNB) plans to open a branch in Pakistan. The bank has sought approval of the RBI and the Pakistan Government in this regard, said, Mr S.C. Gupta, Chairman and Managing Director, who was here last evening. The bank had already got approval to establish branches in the UK, Canada, Hong Kong and Singapore.

About home loan rates, Mr Gupta said the bank had no plans for the time being to increase interest rates on any kind of lending, be it home loans or retail.

PNB would increase its business to Rs 2.2 lakh crore by March, 2007, and to Rs 1.90 lakh crore by the end of this financial year.

The bank had set up seven additional zonal offices. Two new zones — south and north — had been formed in Punjab.

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Indian slashes air fares
Tribune News Service

New Delhi, February 3
The public sector carrier Indian has announced 20 to 40 per cent cheaper fares for limited seats on 146 sectors.

The move comes at the beginning of a lean traffic season with increased competition from private carriers. The reduced fares are valid until April 30.

A press note issued by Indian said that on the Delhi-Mumbai sector, an economy class ticket would cost Rs 2,300 compared to Rs 3,965, its existing lowest fare under Easy Fares scheme.

On the Delhi-Hyderabad sector, the new fare would be Rs 2,300 for an economy class ticket against Rs 3,965. For the Delhi-Kolkata sector, the new low fare will be Rs 2,300 against the earlier Rs 4,515.

Industry experts say the move will result in increased traffic as a result of passengers from other airlines and railways moving to Indian.

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TRAI, DoT meet over access deficit issue

New Delhi, February 3
Department of Telecom (DoT) secretary J.S. Sarma today met Telecom Regulatory Authority of India (TRAI) chairman Pradip Baijal to resolve the deadlock over the new rates of levy paid by private operators to BSNL for its rural operations.

According to sources, Mr Baijal and Mr Sarma discussed modalities on the new levy (access deficit charge) rates.

DoT had earlier issued the directive asking TRAI to restrain from taking out any order on ADC till further notice and had proposed to switch over to the revenue-share-based ADC regime from the existing per-minute-based system.

Since ADC, be its rates or quantum, is in the purview of TRAI and Mr Baijal is understood to have put forward his view before the DoT.

Meanwhile, describing migration into Next Generation Networks (NGNs) as a major challenge for country’s telecom sector, Trai today asked private telecom operators to get themselves ready for the transformation. — PTI

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McDonalds plans outlets in Shimla, Amritsar

New Delhi, February 3
Fast food chain McDonalds India is planning to widen its presence in smaller North Indian cities and will be opening an outlet in South India.

“We will be venturing in South India very soon with our second outlet in Chennai after Bangalore. We will also have outlets in smaller cities in North India such as Allahabad, Kanpur, Varanasi, Shimla, Amritsar,” Mr Vikram Bakshi, Managing Director of Connaught Plaza Restaurants, franchisee for McDonalds India, told reporters here today at the CII-CRM summit.

The company that already has ‘quick service restaurants’ or drive-in restaurants at Jalandhar and Mathura, is contemplating to open such outlets in some more places.

“Location and the price it comes at will be the deciding factor for such openings,” Mr Bakshi said.

The company has a comprehensive customer feedback methodology. “We do a quarterly fast track survey done on a daily basis apart from a mystery dining product and customer questioning method,” he added. — PTI

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Corporate News

L&T bags Spectrum Info

Mumbai, February 3
Larsen and Toubro Limited (L&T) has entered into a memorandum of understanding for acquiring 100 per cent shareholding of Bangalore-based defence electronics and aerospace research and development company Spectrum Infotech Pvt Ltd.

The acquisition is in line with L&T’s strategy to strengthen its position in the area of defence electronics, avionics and will be managed under the company’s newly launched Strategic Electronics Centre in Bangalore, focusing on defence electronics, avionics, and aerospace solutions, the company said in a press note here today.

Spectrum Infotech focuses on technology and product development in embedded computation, control and signal processing, for both hardware and software and is currently engaged in design and development of prototype sub-systems and units, it said.

“Spectrum’s expertise complements L&T’s strengths in defence electronics and avionics with a focus on entire systems and weapon platforms,” it said, adding the client base for the company includes defence research and development laboratories and defence public sector units.

Satyam, Wipro bag GM orders

Satyam Computer Services Limited, which will get a $150 million share of the $15 billion outsourcing contract from the world’s largest automaker General Motors (GM), announced strategic initiatives in the automotive vertical today.

As a first step, an automotive centre of excellence (ACE) was being launched by Founder-Chairman Ramalinga Raju later in the day, Satyam Manufacturing and Automotive Businesses Director and Senior Vice President Subu D. Subramanian said.

Sharing details about the GM deal with the media in Chennai through a video-conference from Detroit, he said, the automotive vertical contributed 12 per cent of total revenues and ACE would enhance its ability to provide automotive industry specific solutions to its customers.

The dedicated state-of-the-art ACE would assist in meeting the post-2006 business opportunity offered by GM, with which Satyam had a strong relationship.

He said the company was already catering to seven of the top 10 global automotive OEMs and four of the top 10 automotive suppliers.

Partnering with multiple agencies, like HP, for the GM contract, would fetch Satyam significant revenue, which would touch $150 million over a five-year period.

In separate development yesterday, Wipro won a $ 300 million contract from General Motors for providing system integration services to the automaker. Wipro has got more than $ 300 million contract, which is a part of the larger $ 15 billion deal announced by the carmaker, industry sources said. The contract will be executed over the next five years.

Siemens steam turbine project

Siemens Ltd today announced setting up of a greenfield steam turbine project at Vadodara, Gujarat, with an investment of Rs 300 million.

The project would provide direct employment to about 220 persons and was expected to be on stream by December 2006, company Managing Director J. Schubert told reporters here.

The factory will cater to the domestic market of below 150 MW and also supply turbine components to Siemens’ manufacturing facilities in Europe.

This is Siemens’ 50th year of manufacturing in India, and the Vadodara project will be the 15th manufacturing of the company in the country.

All components of steam turbine upto 45 MW would be manufactured locally, he said. — Agencies

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BRIEFLY

Inflation up
New Delhi, February 3
Inflation rose marginally to 4.51 per cent for the week ended January 21 from 4.4 per cent in the previous week due to increase in prices of manufactured items. The inflation rate at 4.51 per cent during the week was still lower than 5.43 per cent a year ago. The Wholesale Price Index remained unchanged at 197 points. — PTI

Forex up
Mumbai, February 3
Foreign exchange reserves (Forex) went up for the second week in a row by $37 million to $139.481 billion for the week ended on January 27, according to the weekly supplement released by the Reserve Bank of India (RBI). The reserves had gone down by $66 million to $139.444 billion for the week ended on January 20. Foreign currency assets rose by $35 million to $133.281 billion, the RBI said. — UNI

Gold prices
Chennai, February 3
Gold prices zoomed to a new high in the bullion market here today with standard gold being quoted Rs 50 more at Rs 8,295 per 10 grams and Ornament Gold (22 carat) going up by Rs 5 per gram at Rs 768. Yesterday, standard gold was quoted at Rs 8,245 per 10 grams and ornament gold at Rs 763 per gram. On January 31, standard gold was quoted at Rs 8215 per 10 grams, while ornament gold per gram was Rs 761. — PTI

Sun Pharma
Mumbai, February 3
Sun Pharmaceutical Industries Ltd today said it would consider demerger of its Research and Development unit into a new company. The Board of Directors would meet on February 9 to consider the proposal for demerger of the company’s Innovative research and development, including new drug delivery systems, it informed the Bombay Stock Exchange. — PTI

Central Bank ED
Mumbai, February 3
Mr K. Subburaman has taken charge as the Executive Director of Central Bank of India yesterday. A press release issued by the bank here said, Mr Subburaman’s last posting was in Bank of India as General Manager in-charge of corporate plan and strategy. — UNI

Merck arm
Mumbai, February 3
Merck Ltd today said it is seeking shareholders approval for selling its Life Science and Analytics business to Merck Specialties Pvt Ltd for a consideration of Rs 99.2 crore. The shareholders will approve the sale of the business excluding bulk drugs through a postal ballot. The board appointed Bharat Shemlani, chartered accountant, as scrutiniser for the postal ballot process, the pharma company informed the Bombay Stock Exchange. — PTI

Reliance Ind
Mumbai, February 3
Reliance Industries’ Jamnagar refinery has been awarded the first prize for its efforts made in promoting oil and gas conservation during 2004-05, by the Petroleum Conservation Research Association (PCRA). The company was awarded for its project ‘Blowdown gas recovery in coker’, undertaken by RIL’s refinery division at Jamnagar. RIL won the award in the large projects category from PCRA, a body of the Ministry of Petroleum and Natural Gas, a press note issued here today said. — UNI 
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