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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

Vodafone may revise bid for Hutch-Essar
London, January 1
Vodafone is expected to make a renewed bid for Hutchison Essar, India's fourth largest mobile phone operator, as early as next week, resuming the takeover exercise it had initiated towards the end of 2006.

CII seeks hike in savings limit under Section 80C
New Delhi, January 1
The CII has urged Finance Minister P. Chidambaram to increase the savings limit under personal income tax, which would help in substantial infrastructure investments.

IT Dept raises demand for Rs 60,000 cr more tax
New Delhi, January 1
After the scrutiny of around 2 per cent of the income tax returns filed during assessment year 2004-05, the Income Tax Department has raised a demand of Rs 60,000-crore additional tax from the assesses.

BHEL to invest Rs 3,200 cr
New Delhi, January 1
Kicking off the New Year on a big note, BHEL today announced an investment of Rs 3,200 crore in the 11th Plan to expand its equipment manufacturing capacity to 15,000 MW annually.

Disney characters Mickey and Minnie Mouse, wearing kimonos, wave to greet guests from a float at a New Year's Day parade at Tokyo Disneyland in Urayasu, a Tokyo suburban, on Monday. Some 4,00,000 persons are expected to visit the Disney theme parks during the three-day New Year holidays Disney characters Mickey and Minnie Mouse, wearing kimonos, wave to greet guests from a float at a New Year's Day parade at Tokyo Disneyland in Urayasu, a Tokyo suburban, on Monday. Some 4,00,000 persons are expected to visit the Disney theme parks during the three-day New Year holidays. — AFP photo



EARLIER STORIES

 

 

Exporters seek moderate taxes
New Delhi, January 1
Exporters have urged the government to address “certain deficiencies”, including their demand for abolition of export cess and reducing the costs of inputs, to support them in reaching the export target of $125 million for 2006-07.

Corus: Revised bids likely by January 15
New Delhi/London, January 1
The uneasy lull in the takeover battle between Tata Steel and CSN for Anglo-Dutch steel maker Corus may end soon, with experts anticipating revised bids from the suitors by the middle of this month.

Nissan plans auto units in India
Lines up $840 m investment: Report

Tokyo, January 1
Japan's second largest automaker, Nissan Motor, plans to invest some $840 million in the construction of auto factories in India.

TN adopts VAT
Chennai, January 1
The VAT regime came into force in Tamil Nadu, making it the most preferred destination for investors, Industries Secretary Shaktikanta Das said.

Mukesh Ambani to contest IT notice
Kolkata, January 1
Reliance Industries Chairman Mukesh Ambani will contest the income tax notice requiring him to pay tax on deemed income of Rs 2635 crore for the assessment year 2005 on the ground that 'no tax can be levied on notional income', according to a highly placed RIL source.

250 SEZs await nod in 21 states
New Delhi, January 1
As many as 250 proposals to create special economic zones (SEZs) in 21 states are awaiting approvals from various governments, mainly due to disputes on compensation package and acquisition of agricultural land in the absence of suitable relief and rehabilitation package.

 

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Vodafone may revise bid for Hutch-Essar

London, January 1
Vodafone is expected to make a renewed bid for Hutchison Essar, India's fourth largest mobile phone operator, as early as next week, resuming the takeover exercise it had initiated towards the end of 2006.

A report in The Observer said the bidding war for telecom firm Hutchison Essar will erupt again, with Britain's Vodafone preparing to table a fresh offer that would value the target at up to $19 billion.

Two Indian companies are counter-bidding in one of the most hotly fought takeover battles for years.

Hutchison Whampoa, controlled by Li Ka-shing, the Hong Kong shipping and property magnate, put its 67 per cent stake in Hutchison Essar up for sale in November. Offers are being handled by investment bank Goldman Sachs.

The mobile business is a joint venture with Essar, an Indian conglomerate headed by two brothers, Shashi and Ravi Ruia. They have the right of first refusal in the bidding contest and have tabled $11 billion for the Hutchison stake. But Vodafone will shortly outbid Essar and offer close to $13 billion dollars, putting a price tag of $19 billion dollars on the whole company, the report said.

Vodafone is prevented under Indian takeover laws from owning more than 74 per cent of Hutchison Essar so it needs to find a partner.

One option for Vodafone boss Arun Sarin is to persuade the Ruia brothers to support the UK company's bid by dropping out of the auction, it said.

The other contender for Hutchison Essar is Reliance Communications, India's second-largest mobile company, which is expected to team up with a private equity firm such as KKR or Texas Pacific, The Observer said.

A city banker told the newspaper: "Reliance is a serious competitor and it is not inconceivable that Sarin will be forced to talk away."

Banks say that Vodafone could make a bid that valued Hutchison Essar at $20 billion without breaching internal guidelines designed to ensure that acquisitions deliver above average rates of return. — PTI

Ruias keep bidders guessing

Mumbai/Hong Kong: The takeover battle for Hutch-Essar may have moved into the new year, but the fate of all bidders is still hanging in balance, with the Indian partner Ruias yet to take a call on its position.

While Hutchison Telecom (HTIL) confirmed that it was talking to all shareholders in the Indian venture, including Ruias' Essar Group, for a possible sale of business, the Indian partner has not yet clarified whether it wants to stay put, buy out the foreign partner or simply exit the JV.

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CII seeks hike in savings limit under Section 80C
Tribune News Service

New Delhi, January 1
The CII has urged Finance Minister P. Chidambaram to increase the savings limit under personal income tax, which would help in substantial infrastructure investments.

For the country to maintain an 8 per cent growth trajectory, the infrastructure needs upwards of $330 billion of investments over the next five years and one of the ways to raise this resource is to look how savings from personal savings can be mobilised for this purpose, it said.

It has suggested that the limit of savings under section 80C should be raised from Rs 1 lakh to Rs 2 lakh, provided the additional Rs 1 lakh savings are invested in infrastructure bonds.

Investments into infrastructure bonds should be tax exempt in the year of committing the money. However, income from the bonds would be taxed at the prevailing rate at the time of encashing the bonds. It also asked for re-introduction of Section 10 (23G), which would help make investments in infrastructure more attractive.

The apex chamber has also urged the government to do away with the dividend distribution tax and if that is not possible, it should be reduced to 5 per cent. Section 80M (Omitted through the Finance Act, 2003) should be reintroduced, which provides for deduction in respect of inter-corporate dividends.

The CII reiterated the need for removal of the fringe benefit tax (FBT) or allowing the firms the option to pay additional 1 per cent corporate tax in lieu of FBT.

It has suggested that if the government has to levy FBT it should be only on elements of personal benefit to employees and exclude pure business expenses as personal expenses, in line with the practice followed in a number of countries.

Expenses like travelling, hotel boarding, sales promotion, conference expenses are genuine business expenditures for which no benefit accrues to the employees and taxing them only affects the competitiveness of industries in a global market, the CII said.

It also asked for abolition of the minimum alternate tax (MAT). The rate of MAT was increased from 7.5 per cent to 10 per cent last year. If the government was unable to abolish MAT, the increase should be nullified.

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IT Dept raises demand for Rs 60,000 cr more tax

New Delhi, January 1
After the scrutiny of around 2 per cent of the income tax returns filed during assessment year 2004-05, the Income Tax Department has raised a demand of Rs 60,000-crore additional tax from the assessees.

"The Income Tax Department is confident of collecting at least Rs 30,000 crore additional tax after the scrutiny of returns and subsequent demand notices issued to the assessees," sources in the Finance Ministry said.

The department had recovered around Rs 24,000 crore last year against the additional demand for Rs 56,000 crore raised after the scrutiny of returns filed for the 2003-04 assessment year.

So far the department has collected around Rs 1,50,000 crore direct taxes, including corporate tax and individual personal tax, as against the target of Rs 2,10,000 crore for 2006-07.

"In spite of a shortage of around 20,000 manpower in the Income Tax Deparment, we are going to raise the heat against tax-evaders through surveys, demand notices and other measures without harassing the honest tax-payer," said Central Board of Direct Taxes (CBDT) spokesperson A.K.Sinha.

The investigation wing of the Income Tax Department had recently collected over Rs 250 crore from builders in the NCR region.

The department was also processing information collected through annual information returns (AIRs) from banks, credit card companies, mutual fund houses and property registrars. — PTI

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BHEL to invest Rs 3,200 cr

New Delhi, January 1
Kicking off the New Year on a big note, BHEL today announced an investment of Rs 3,200 crore in the 11th Plan to expand its equipment manufacturing capacity to 15,000 MW annually.

"We have just completed our first phase of expansion to increase capacity to supply equipment for 10,000 MW capacity at an investment of Rs 1,200 crore... But this is not the end of it, we are developing a plan to expand further," BHEL Chairman and Managing Director Ashok K. Puri said.

Based on the assessment of demand during the 10th Plan, BHEL had decided to expand its capacity to 10,000 MW by this year from 6,000 MW per annum at the start of the 10th Plan in 2002.

The total investment of Rs 3,200 crore would be in a combination of expansion through brownfield capacity and modernisation of existing facilities. "We shall be investing Rs 2,500 crore on expansion and the rest Rs 700 crore for modernisation," he said.

BHEL, which recently announced plans to acquire companies in the US and Europe in niche technology at a total funding of up to Rs 10,000 crore, has an orderbook of more than Rs 45,000 crore as on date. — PTI 

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Exporters seek moderate taxes
Tribune News Service

New Delhi, January 1
Exporters have urged the government to address “certain deficiencies”, including their demand for abolition of export cess and reducing the costs of inputs, to support them in reaching the export target of $125 million for 2006-07.

They urged the government to address issues like maintaining an exchange rate range favourable to exporters, moderating the taxes at various levels, improving physical infrastructure, reconsidering the scrapped schemes like the target plus scheme and checking the frequent fluctuations in the prices of raw materials, a Ficci statement said.

According to the exporters, increasing the cost of inputs is posing a serious problem for them to meet competition. They have also asked the government to abolish the export cess for the enhancement of country’s exports.

“They have strongly suggested that the Indian embassies in foreign countries become facilitation centres for promoting businesses,” the statement added.

“The government should take initiative in combating the problems that has to do with the tariff and non-tariff barriers.”

One of the major concerns for the exporters is lack of adequate space aboard ships that overbook cargo through multiple slot agents. This results in the upsetting of delivery schedules leading to cancellation of contracts.

Lack of security in the port areas also remains a primary concern for the exporters, which results in theft and pilferage. They have suggested installation of CCTVs (closed circuit television) at the ports and warehouses, it added. 

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Corus: Revised bids likely by January 15

New Delhi/London, January 1
The uneasy lull in the takeover battle between Tata Steel and CSN for Anglo-Dutch steel maker Corus may end soon, with experts anticipating revised bids from the suitors by the middle of this month.

Legal experts as well as investment bankers expect the two bidders to sweeten their offers, if any, by that time so that the prevailing situation could be factored into the terms of the auction process mooted by the UK Takeover Panel.

The panel has set January 30 as deadline for submitting revised bids, albeit with a rider that if the competitive situation continues "shortly before this date" auction process would be initiated to decide the winner.

If the revised bids are in by mid-Janaury, it would give the Takeover Panel time to factor in the development into the auction process that would be announced by the end of this month, Roy Montague-Jones, Partner and Joint India Head of UK-based international law firm Richards Butler said. — PTI

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Nissan plans auto units in India
Lines up $840 m investment: Report

Tokyo, January 1
Japan's second largest automaker, Nissan Motor, plans to invest some $840 million in the construction of auto factories in India.

Nissan is considering two or three coastal cities in western and southern India as possible locations and plans to negotiate with local governments before making a decision, which could come as early as this month, the Nikkei business daily said today.

The construction on a main assembly plant would begin this year, the business daily said, adding that Nissan expected to launch operations in the latter half of 2009 with an annual output capacity of around 200,000 units.

With about 10 auto-parts manufacturers that supply Nissan also slated to start local production in India in line with the move, the group's overall investment was expected to total $840 million, it said.

The factory would turn out one-litre-class subcompacts, the daily said. Some 30 per cent of the vehicles would be sold in India with the remaining 70 per cent to be exported to Europe and other markets.

The number of models produced would be gradually expanded, with plans to eventually bring the total output to around 400,000 units.

Nissan, which currently only exports some 200 vehicles to India from Japan a year, would work on developing a dealership network and eventually open about 100 branches in major urban areas by 2010, the daily said.

Nissan's top shareholder, Renault SA, has separately drawn up plans to jointly produce vehicles with midsize Indian automaker Mahindra and Mahindra Ltd. in India. — AFP

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TN adopts VAT

Chennai, January 1
The VAT regime came into force in Tamil Nadu, making it the most preferred destination for investors, Industries Secretary Shaktikanta Das said.

"This is one system (VAT) the state lacked. The investors look for VAT as it will benefit the industries to a great extent," he added.

VAT would create a competitive environment in the state for initiating business in the manufacturing sector. It would also facilitate growth of supply chain for any industrial and manufacturing activity, Mr Das said.

The VAT regime has come into force amid protests from the Traders' Associations. They had called for an agitation tonight to burn copies of the VAT Bill passed in the Assembly on December 5.

Though various industry bodies and chambers welcomed the government's move to switch over to VAT, traders' associations feel that they would be badly hit. — UNI

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Mukesh Ambani to contest IT notice

Kolkata, January 1
Reliance Industries Chairman Mukesh Ambani will contest the income tax notice requiring him to pay tax on deemed income of Rs 2635 crore for the assessment year 2005 on the ground that 'no tax can be levied on notional income', according to a highly placed RIL source.

The Mumbai circle of the IT Department had issued a notice to Mr Ambani asking him to explain why he should not pay tax on deemed income from 500 million shares of Reliance Infocomm issued to him in March, 2004.

The valuation of the shares was Rs 2685 crore from which the tax authorities had deducted a Rs 50 crore interest-free loan obtained by the company from Mr Ambani.

The RIL source claimed the entire transaction mentioned in the IT notice was subsequently annulled and hence no income accrued to Mr Ambani and, therefore, no tax could be levied on the notional income. — PTI 

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250 SEZs await nod in 21 states
Tribune News Service

New Delhi, January 1
As many as 250 proposals to create special economic zones (SEZs) in 21 states are awaiting approvals from various governments, mainly due to disputes on compensation package and acquisition of agricultural land in the absence of suitable relief and rehabilitation package.

According to an analysis conducted by Assocham, these proposals were to be cleared latest by mid of 2006.

The sanction for the proposals are likely to linger on as dispute on agricultural land acquisition is unlikely to be resolved quickly until the top policy-makers of various state governments intervene.

According to Assocham, the 250 proposals will require about 25,000 hectares of land and have been awaiting approvals for the last 7-8 months with an estimated investment of over Rs 3,000 crore.

Maharashtra is yet to give its nod to 41 SEZ proposals. As many as 36 SEZ proposals are yet to be granted approval in Karnataka.

The states like Andhra Pradesh, Delhi, Goa, Himachal Pradesh, Jharkhand, Orissa and Punjab are yet to approve proposals for 16, 2, 5, 2, 2, 4 and 4 SEZs, respectively. The other states, which await SEZ approvals, include Madhya Pradesh, Rajasthan, Assam, Chhattisgarh, Kerala, Bihar, Gujarat, Haryana, Uttar Pradesh and Union Territory of Chandigarh.

Assocham has also suggested that 130 IT SEZs could be developed and made operational within a period of six months from the date of notification resulting in an immediate investment of $9-12 billion. 

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BRIEFLY

Canara Bank hikes PLR
Bangalore, January 1
Canara Bank said in view of an increase in the cost of funds, it has hiked its benchmark prime lending rate (BPLR) by 25 bps -- from 11.5 per cent to 11.75 per cent -- with effect from today. The bank noted in a statement that it had recently hiked deposit rates. —PTI

Tata Indicom
Shimla, January 1
Tata Indicom today launched seven company-owned outlets in the state. These "true-value hubs" have been opened at Amb, Baddi, Badsar, Poanta Sahib, Sujanpur, Kunihar and Rohru. The company now has 13 "true-value outlets" in Himachal, Mr Sandeep Srivastava, Chief of Operations, said. These outlets offer one-stop solutions to customers in telephony accessories, bill payment and query resolutions. The entire product range of post-paid, pre-paid, PCO, and EBG (enterprises business group) cards are available at these outlets. — TNS

Zinc prices cut
Mumbai, January 1
The country's top zinc producer, Hindustan Zinc Ltd (HZL), has cut zinc prices by Rs 3,200 a tonne to Rs 2,21,500 effective from December 30, 2006. In a statement issued today, HZL said it had increased the lead prices by Rs 1,500 per tonne to Rs 86,300 per tonne. — UNI

Markets closed
Mumbai, January 1
The Bombay Stock Exchange (BSE), the National Stock Exchange (NSE), the Foreign Exchange (FOREX) and the money market remained closed today on account of Id-ul-Zuha. — PTI 

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