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Rain Calcining takes US firm for $595 m
Mumbai, June 2
India's Rain Calcining Ltd said it has agreed to acquire US-based CII Carbon LLC for $595 million in an all-cash deal, making the combined entity the world's largest maker of calcined petroleum coke. Calcined petroleum coke is a pure form of carbon used in steel and aluminium industries.

SEBI to educate investors
Mumbai, June 2
Market regulator SEBI will soon launch a nationwide investor education campaign for the benefit of retail investors. “We will start a nationwide campaign in the next two months.

Just 3 pc take study loan, says Assocham
New Delhi, June 2
Despite several welfare schemes launched by the government for providing educational loans, mere 3 per cent students, mostly belonging to middle-income families in India, avail education loans as against phenomenally high percentage in developed countries.

BoB set to enter Trinidad
Port-of-Spain, June 2
The Bank of Baroda and Essel Steel Corp are set to open in Trinidad, according to minister of overseas Indian affairs Vayalar Ravi. The minister said in addition to these two companies, India’s business sector was looking for further opportunities in Trinidad while providing opportunities to Trinidad and Tobago businesses to operate in India.



EARLIER STORIES

 

Suzlon completes REpower takeover
New Delhi, June 2
Suzlon Energy Ltd today completed the acquisition of German wind turbine maker REpower. It will control 87.1 per cent stake in the company along with French company Areva and Portugal’s Martifer.

Aviation Notes
All eyes on Noida airport proposal
India had been one of early starters in the world of aviation. Punctual operations between India and the United Kingdom in 1948 were talked about even by the super powers. During the next 70 years, caught between politicians and bureaucrats, India slowly slid back.

Investor Guidance
Service tax rules for commercial rent anomalous
Q This is reference to the recently introduced provisions wherein rental income is to be subjected to service tax. A threshold of aggregate of Rs 8 lakh is provided to a landlord to fall under the ambit of service provider.

CEO of Asian Motorworks (AMW) Anirudh Bhuwalka poses with the newly launched 49 tonne 2518 tipper truck in New Delhi CEO of Asian Motorworks (AMW) Anirudh Bhuwalka poses with the newly launched 49 tonne 2518 tipper truck in New Delhi on Saturday. A new entrant in the heavy commercial vehicle industry, AMW has priced its global truck series with a starting price of Rs 15 lakh. Bhuwalka said government’s focus on new highway projects like the Golden Quadrilateral project and the NSEW corridors, is driving up the freight industry. — AFP






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Rain Calcining takes US firm for $595 m

Mumbai, June 2
India's Rain Calcining Ltd said it has agreed to acquire US-based CII Carbon LLC for $595 million in an all-cash deal, making the combined entity the world's largest maker of calcined petroleum coke.

Calcined petroleum coke is a pure form of carbon used in steel and aluminium industries.

The two companies would have total production of more than 2.4 million tonnes and annual sales of $550 million, Rain Calcining said in a statement on Saturday.

The company said the deal, executed by its US-based unit Rain/CII Holdings, was expected to be sealed later this month.

"This acquisition is a major step in Rain's long-term strategy to become a global calcining company, through both organic and strategic acquisitions," Gerard M. Sweeney, president at Rain/CII Holdings said.

Citi and ICICI Bank Ltd were financing the deal, the company said but did not give further details.

In a separate communication to the stock exchange, Rain said it would use proceeds worth $92 million, raised through an issue of preference shares to parent Rain Commodities Ltd, to part fund this acquisition.

Sweeney said the company would focus on reducing raw material and finished product distribution costs after the acquisition.

Rain Calcining said it also planned to double its existing capacity to nearly 1 million tonnes by setting up two new kilns in the southern Indian city of Visakhapatanam by 2009. — Reuters

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SEBI to educate investors

Mumbai, June 2
Market regulator SEBI will soon launch a nationwide investor education campaign for the benefit of retail investors.

“We will start a nationwide campaign in the next two months. This will reach out not just to those in the metros and tier II towns, but wherever investible surpluses are available,” SEBI chairman M. Damodaran told retail investors at the India investment show.

“We have already tied up with some large institutions so that our investor education programme reaches much beyond the metros and tier II towns,” he said.

SEBI will also be working closely with stock exchanges and the state governments in this matter to sort out funding requirements and have much wider participation.

“We have decided to commit money, working along side with two stock exchanges and through the National Institute of Securities Market,” he said.

Underlining the importance of the retail investors, Damodaran said: “If the Indian stock market is to function in a healthy manner over a long term and give reasonable return, it is the retail investor that must necessarily be present in large number.” — PTI

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Just 3 pc take study loan, says Assocham
Tribune News Service

New Delhi, June 2
Despite several welfare schemes launched by the government for providing educational loans, mere 3 per cent students, mostly belonging to middle-income families in India, avail education loans as against phenomenally high percentage in developed countries.

According to a study conducted by the Assocham, as compared to India (3 per cent), about 85 per cent students in the UK, 77 per cent in the USA and 70 per cent each in Germany and France avail education loans.

The study, released at the third education fair being organised by the chamber here, highlights that though there are many schemes for providing financial aids to poor students, amount given is low and procedure very cumbersome, which is the reason for the low percentage for education loan seekers.

Releasing the study, Assocham education committee chairman Vinay Rai said: “The USA spends nearly $80 billion on higher education annually mostly in the form of students aid, India has allocated about $3.5 million for its flagship merit-cum-means scholarship schemes.”

The study has projected that by 2012, India will contribute an additional 44 million to the global labour pool and the US workforce will expand by 10 million.

It also claims that higher education in India has expanded rapidly over the past two decades. This growth has been primarily driven by the private sector initiative. Public expenditure on higher education is less than 0.5 per cent of the gross national product and it has been falling in recent year.

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BoB set to enter Trinidad

Port-of-Spain, June 2
The Bank of Baroda (BoB) and Essel Steel Corp are set to open in Trinidad, according to minister of overseas Indian affairs Vayalar Ravi.

The minister said in addition to these two companies, India’s business sector was looking for further opportunities in Trinidad while providing opportunities to Trinidad and Tobago businesses to operate in India.

BoB (Trinidad and Tobago Ltd) managing director Kishor Kharat said the branch of the bank would open in July.

The BoB received approval to commence operations in March. It now operates in 21 countries, Kharat said.

“We are ready to open the doors. The only thing is establishing connectivity worldwide is taking time,” he added.

P R Dhariwal, managing director of Essar Steel Caribbean Ltd, said he expected the plant to be completed by 2009 with a production capacity of 2.5 million tonnes a year.

PNB interest rates

Punjab National Bank (PNB) has increased interest rate on foreign currency non-resident (B) deposit scheme for dollar, pound, euro and Canadian and Australian dollar with effect from June 1.

The interest rate on the US dollar deposits have been hiked to 4.64 per cent for a maturity of one year to less than two years and to 4.57 per cent for a maturity of two years to less than three years, PNB said in a release.

For tenor of three to less than five years, interest rate has been increased to 4.55 per cent and to 4.57 per cent for five years maturity.

On NRE term deposits, applicable rate of interest for June is 5.39 per cent for maturities of one year to less than two years and 5.3 per cent for maturity in between two to three years, it said. — Agencies

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Suzlon completes REpower takeover

New Delhi, June 2
Suzlon Energy Ltd today completed the acquisition of German wind turbine maker REpower.

It will control 87.1 per cent stake in the company along with French company Areva and Portugal’s Martifer.

Earlier this week, Suzlon had said it hoped to control 75 per cent of REpower and become the world’s fourth largest wind-tubrine maker, after rival Areva did not raise its bid.

Last week, Suzlon and Areva, which were locked in a battle over REpower, decided to jointly run the German firm after both separately failed to get a majority stake in it.

Suzlon holds 33.85 per cent in REpower after acquiring 25.46 per cent during an extended offer period for REpower’s shares, said a statement. Areva is the second-largest shareholder in REpower with 30.15 per cent, while Martifer, a unit of Portugal’s top builder Mota Engil, holds 23.08 per cent.

Suzlon had offered Euro 150 per REpower share, valuing the firm at around Euro 1.2 billion, while Areva, the world’s biggest maker of nuclear power plants, did not raise its offer price from 140 euros per share.

While Areva has the option to sell its stake to Suzlon after one year, Martifer can sell its share within two years for Euro 265 million. — UNI

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Aviation Notes
All eyes on Noida airport proposal
by K.R. Wadhwaney

India had been one of early starters in the world of aviation. Punctual operations between India and the United Kingdom in 1948 were talked about even by the super powers.

During the next 70 years, caught between politicians and bureaucrats, India slowly slid back. Pygmy nations have taken a decisive march over India, which is currently struggling at bottom.

India’s aviation woes may reduce considerably if the government starts looking beyond Delhi, Mumbai and the Airports Authority of India (AAI). Luckily, the Cabinet has cleared second international airport at Navi Mumbai after procrastination. Work will shortly commence and four capsules will be raised before the end of 2028.

India’s aviation light may burn bright if Noida airport, as assured by Prime Minister Manmohan Singh, also becomes a reality. UP Cabinet Secretary S.S. Singh worked overtime in four days to translate hazy ideas into a concrete proposal. It has already been sent to the Ministry of Civil Aviation for perusal.

Whatever airport’s location at Noida is, it will be utilised by more than half of Delhi, part of UP, Faridabad and several other cities. Traffic will flow on this sector. The world-class airport, which is a dream song of the Prime Minister and several other aviation personalities, will cater to the needs of the users, passengers and the visitors. Land is aplenty and designers and engineers are sharpening their tools to provide complete township, which will be a home away from home.

This airport will considerably reduce the pressure on the Indira Gandhi International Airport (IGIA).

While reversing previous government’s decision, UP Chief Minister Mayawati, has said that the new airport will help UP shine as brightly as Taj in moonlight. She has also reportedly stated that funds will not be a hindrance.

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Investor Guidance
Service tax rules for commercial rent anomalous
by A.N. Shanbhag

Q This is reference to the recently introduced provisions wherein rental income is to be subjected to service tax.

A threshold of aggregate of Rs 8 lakh is provided to a landlord to fall under the ambit of service provider. This tax is to be collected by him from tenant and paid to the exchequer. This would be over and above house tax, income tax, ground rent and other taxes that are already being charged on the rental income.

Now, there may be instances wherein the landlord has several tenants which are individually paying minor rents but when aggregated, exceed the threshold limit, thus, bringing him into the ambit of service tax. For all intents and purposes, none of these small tenants are going to pay the additional amount for service tax. Kindly advise, if in such circumstances the entire liability of service would befall on the landlord. If yes, what would he be left with considering that he is also liable to pay house tax, income tax, ground rent and other taxes? Would another landlord, who has just one tenant paying say, Rs 65,000 per month as rent, not fall within the ambit of service tax or the tenant have to pay any service tax? The situation seems anomalous when in one case petty tenants are being charged service tax whereas in the other, a tenant paying substantial rent is being absolved of the liability. Please give your opinion on the issue.

— Manjit Anand

A We appreciate your angst against the apparent discrimination in the service tax rules related to ceiling on the rent on commercial premises applicable to small number of tenants paying high rents vs large number of tenants paying low rents.

Such discrimination exists in several areas. For instance, all ceilings related to provident fund, gratuity, employees state insurance scheme, applicability of shop and establishment provisions, etc.

Yes, when the authorities are willing, a solution is provided. For instance, marginal relief is provided in case of surcharge on an income which is marginally over Rs 10 lakh.

PF balance

Q I recently resigned from the services of a public limited company after three years and six months.

a) I would like to transfer my PF balance to my new employer. How much time, would it take for the transfer of the same?

b) Alternatively, if I withdraw the whole amount, should I pay tax on it? If I withdraw after a period of 18 months from now, shall I enjoy the freedom from income tax since withdrawal after five years is tax free?

3. Can I transfer the PF balance to my PPF account?

— N Sukumar

A If an employee leaves the service before completion of five years, Rule 10 of Part A of Schedule IV, requires the trustees of a recognised PF to deduct tax when the accumulated balance due to an employee is paid. This payment is to be treated as income chargeable under the head ‘salaries’. Rule 9 puts a different responsibility on the assessing officer. He shall calculate the total of various sums of tax which would have been payable by the employee in respect of the total income for each of the related years to arrive at the amount by which such total exceeds the total of taxes paid by the employee for such years. This excess amount is payable by the employee in addition to the tax on the income during the year in which the accumulated balance of PF becomes payable.

a) Yes, you can transfer the account to your new employer if he has a PF trust. If he does not have one and is registered with the PF Commissioner, you can get it transferred to the PF Commissioner’s office. The time required to effect the transfer is minimal and is immaterial since the amount will continue to earn interest.

b) Yes, the amount is taxable if you close the PF account with the ex-employer. Holding the amount for 18 months will not help.

c) The PF amount cannot be transferred to the PPF account.

Futures and options

Q I want to invest in futures and options, but am not sure if income arising out of it will be treated as business income or as short-term capital gains.

— Sanjay

A Income from trading in stocks is treated as business income or capital gains depending on the period of holding, frequency of such transactions, motive of the transaction which is to be examined on facts, entries in the books, infrastructure deployed, source of funds, etc. However, in the case of futures and options, apparently the intention is to earn profit and not to hold them as an investment. Dealing in futures and options will be treated only as business income and not as income chargeable under the head capital gains. Section 43(5) has been amended by the Finance Act, 2005, to provide that trading in derivatives referred to in Section 2(aa) of the SCRA, 1956 will not be treated as a speculative transaction if carried on in a recognised stock exchange.

This benefit will be available only if the transaction is carried on through a registered broker, sub-broker, banks or mutual funds. The transaction should be carried out electronically on screen-based systems and should be supported by a time stamp contract note that indicates the client’s identity and number allotted under the SEBI Act, the SCR Act or the Depositories Act and also gives the permanent account number of the client.

Loan on second house

Q Are EMIs for two home loans eligible for tax rebate, considering both flats are in my name? My office insists that tax rebate can be claimed for only one EMI.

— Gaurav

A If you have two houses, only one of them will be treated as self-occupied and the other as deemed let out. On commercial properties and houses given on rent, there is no limit on the deduction for interest paid or payable on housing loans.

Section 80C covers payment by an individual or HUF for purchase or construction (not repair, renewal or reconstruction) of only a residential house (not necessarily self-occupied) the income from which is chargeable under income from house property, in respect of instalment or part payment towards cost of house property allotted to him due under:

i) Any self-financing or other schemes of any development authority, housing board or similar authority engaged in construction and sale of house property on ownership basis, or ii) Any company or co-operative society of which the assessee is a shareholder or member.

Moreover, even if two loans are taken for the same flat, total benefit can be claimed on both the loans as long as both are for acquisition or construction.

Suppose, an assessee has taken a flat through housing loan and is claiming deduction on interest and also on repayment of loan. Subsequently, he purchases a second flat, also on loan. This second house will be treated as let out or deemed let out. The entire interest payable without any ceiling is deductible against the income from it. Even if he does not let it out, the annual value of the flat will be treated as income for income-tax purpose.

The authors may be contacted at wonderlandconsultants@yahoo.com

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