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Assocham favours phased FDI in retail
New Delhi, June 3
Since organised retailing is likely to touch $23 billion by 2010 and create huge business space for those global retail giants that are drawing up their expansion plans for India, Assocham has suggested opening up of retail to FDIs in a calibrated manner to restrict flight of domestic capital.

Food processing sector
US investors keen on India
New York, June 3
US investors have shown keen interest in India's expanding food processing sector that has an investment potential valued at $40 billion.

Birlasoft to recruit 2,500 professionals
Lucknow, June 3
Birlasoft, a software company of the 1.2 billion C K Birla group, will be recruiting 2,500 IT professionals in the next one year to meet the demands of its rapid expansion, an official said today.

Angel Broking to dilute 25 pc stake
Mumbai, June 3
Angel Broking, which proposes to enter into insurance and third-party products, plans to invest Rs 600 crore to complement its expansion plans that includes scaling up its branch network from 75 to 250 branches across the country in 3 years.



EARLIER STORIES

 
Actress Perizad Zorabian unveils Gitanjali Group's 'Tesoro', an exclusive diamond-studded business card, in Mumbai late on Saturday.
Actress Perizad Zorabian unveils Gitanjali Group's 'Tesoro', an exclusive diamond-studded business card, in Mumbai late on Saturday. — PTI

Indian mangoes fall behind Pakistan’s
Mumbai, June 3
Selling mangoes in global market is becoming a bitter experience for Indian exporters as they are losing out to Pakistan due to higher cost due to exorbitant freight levied by international airlines.

Market Update
Firm market near record high
Last week, markets continued to surge ahead and the BSE Sensex gained 232 points at 14,570, its highest level in nearly four months. The market has been on an uptrend since early April 2007. Nifty closed at 4,297, its lifetime high closing, a gain of nearly 49 points over the last week. The firm trend in bourses stems from strong global markets and continued institutional buying in index heavyweights.

Tax Advice
Farm income of senior citizens not taxable
Q. I am a senior citizen of above 65 years of age. Following incomes will accrue me in 2006-07 (assessment year 2007-08).

 

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Assocham favours phased FDI in retail
Tribune News Service

New Delhi, June 3
Since organised retailing is likely to touch $23 billion by 2010 and create huge business space for those global retail giants that are drawing up their expansion plans for India, Assocham has suggested opening up of retail to FDIs in a calibrated manner to restrict flight of domestic capital.

This, in view of the Assocham, will give enough breathing period to domestic retailers to prepare and face their competitors such as Wal-Mart and to have a proportionate share in the projected retail business. Currently, organised retailing is estimated between $7.5 billion to $8 billion.

The chamber is also of the opinion that organised retail still occupies about 50 million sq ft of retail space in organised sector, space requirement of which could well exceed beyond 150 million sq ft by 2012.

Assocham president Venugopal N Dhoot endorsed the view of its members, emphasising that the government should consult stakeholders before any policy announcement is made.

Dhoot said domestic players suffer from lack of infrastructure - the biggest bottleneck being prohibitive prices of large retail spaces in upmarket or central locations in Indian cities. This is primarily because private holdings are fragmented and impact of the Urban Land Ceiling Act. The pro-tenancy Rent Control Acts have distorted the property market in cities leading to exceptionally high prices.

“Absence of single-window clearance, coupled with other issues like lack of property infrastructure, work as a major impediment to the growth of the retailing,” Dhoot said.

The chamber is also of the view that retailing, the biggest private sector industry in the world is one of the prime mover of an economy. A major driver for real estate and urban development, it accounts for almost 10 per cent of GDP in most countries.

India employs roughly about 40 million people in its real state and retail sector directly while for indirect employment, there are multiple estimates.

Dhoot also said global retail giants were drawing up their expansion plans in India and looking for opening up of foreign investment in the sector. A revolution in the Indian retail sector is already underway and with the help of right policy changes, it can bloom further and benefit consumers greatly.

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Food processing sector
US investors keen on India

New York, June 3
US investors have shown keen interest in India's expanding food processing sector that has an investment potential valued at $40 billion.

At an interaction organised by the United States India Business Council here, American investors and industry representatives evinced keen interest in participating in India's food processing sector that has received many tax concessions from the government in order to boost investment.

Indian minister for food processing industry Subodh Kant Sahai said the government has planned 56 parks in various parts of the country, which would provide state-of-the-art facilities across the food chain.

Interacting with investors and industry representatives, Sahai said many tax concessions were available and the retail sector was already setting up supply chain opening up vast opportunities for investment in agro-industries.

He said with an estimated potential of $40 billion investment the food processing industry is the next "hot" sector in India after information technology.

He said India was looking for investment in capacity building as also technology transfer in this sector.

India provided ideal condition for production of organic foods whose popularity is increasing across the world, the minister told investors during his three-day visit here.

Sahai said only 1.8 per cent of total production of fruits and vegetables is being processed even though India is the second largest producers of these commodities.

The minister said the government has decided to give a boost to research and development in this sector with its decision to set up the National Institute for Food Technology and Management in collaboration with American Cornell University. — PTI

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Birlasoft to recruit 2,500 professionals

Lucknow, June 3
Birlasoft, a software company of the 1.2 billion C K Birla group, will be recruiting 2,500 IT professionals in the next one year to meet the demands of its rapid expansion, an official said today.

Birlasoft’s head-count has doubled to 4,200 employees worldwide in the last two years.

About one-third of the professionals will be picked up directly from engineering and MCA campuses in Uttar Pradesh, Punjab, Haryana and south India.

Birlasoft, which has registered a quantum leap in its revenues last fiscal, has launched three software development centres in last three years.

A new facility is coming up in Noida, while the Bangalore centre will be more than doubling its manpower from 400 to 900 soon, Narendra Puppala, VP (HRD), said. — PTI

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Angel Broking to dilute 25 pc stake

Mumbai, June 3
Angel Broking, which proposes to enter into insurance and third-party products, plans to invest Rs 600 crore to complement its expansion plans that includes scaling up its branch network from 75 to 250 branches across the country in 3 years.

Angel is planning to raise Rs 250 crore from private equity investors and rest of the amount from internal accruals.

"We are planning to open 250 offices in the next three years, we also propose to venture into the distribution of insurance and other third-party products," Angel Broking's CMD Dinesh Thakkar said.

"We would be raising a fund by diluting 25 per cent of our stake in two tranches," Thakkar said adding the company was also planning a huge spend on its already robust online trading business.

Immediately Angel is looking to tie-up with a foreign partner but more as a financial partner than a strategic one.

It has 2.2 lakh clients, including the NRIs. — PTI

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Indian mangoes fall behind Pakistan’s

Mumbai, June 3
Selling mangoes in global market is becoming a bitter experience for Indian exporters as they are losing out to Pakistan due to higher cost due to exorbitant freight levied by international airlines.

“Despite Indian mangoes being of superior quality, we are finding it hard to sustain in the international market. Our mangoes are losing out to Pakistan mainly due to high air freight,” CEO Ashvina Trading Company Kirit Bhuptani said.

While the original cost of mangoes is Rs 65 per kg, it gets added on with various other surcharges like fuel, security and some even add airport charges. This hikes the cost to Rs 80 per kg. While Pakistani mangoes cost Rs 55 per kg, including of freight. Besides, there is no surcharge,” Bhuptani said.

India is the largest producer of mango with a production of 14 to 16 million tonnes a year. India exports to Europe and West Asia. The exporters fear losing out their market to arch rivals Pakistan due to cost disadvantage.

According to chairman and MD of Desai Fruits and Vegetables Ajt Desai, the airlines don't require to hike the freight rate during mango season. They could earn enough through its volume margin.

The resultant action of retailers is that as soon as Pakistani mangoes arrive in the market, they stop selling Indian mangoes.

Desai, who is the first exporter to have exported 60 tonnes of irradiated mangoes to the USA, was worried about losing the US market too.

“Though India has entered the US market before Pakistan, exporters fear it could lose out on price competitiveness, once their mangoes are permitted here,” he said. — PTI

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Market Update
Firm market near record high
by Lalit Batra

Last week, markets continued to surge ahead and the BSE Sensex gained 232 points at 14,570, its highest level in nearly four months. The market has been on an uptrend since early April 2007. Nifty closed at 4,297, its lifetime high closing, a gain of nearly 49 points over the last week. The firm trend in bourses stems from strong global markets and continued institutional buying in index heavyweights.

FII inflow remains healthy on the back of strong global liquidity. However, there are apprehensions that too much money will lead to inflated prices of assets and cause volatility in asset prices.

There are concerns among some of the market participants that two large IPOs — DLF and ICICI Bank — which are slated to hit the market this month, may suck out liquidity from the secondary market. The response to these IPOs also holds key in the near term.

Over the next few months, the progress of the July-September monsoon will hold key. The weather office said in April 2007 that this year’s monsoon was likely to be 95 per cent of the long-term average, with a 5 per cent margin of error. The annual monsoon is vital for India’s economic health as it is the main source of water for agriculture, which generates more than a fifth of the gross domestic product. Another trigger for the markets would be the first quarter results that would start flowing in from a month from now.

DLF public offer

The Gurgaon-based DLF group is one of the leading real estate developers in India. It has been focused on the National Capital Region (NCR; i.e. Delhi and adjacent areas like Gurgaon). The group has developed over 220 million square feet (msf) of saleable area across segments like residential (apartments, row houses and plots), commercial building and retail properties.

To maintain its leadership position, the company has amassed land reserves of 10,255 acres and intends to significantly scale up the size of its operations.

Apart from this, the company has already obtained the approval for several special economic zone (SEZ) projects. It is also in the process of finalising approvals for several other SEZs, which would cover an aggregate area of 26,100 acres, including a 20,000-acre multi-product SEZ in Gurgaon, a 2,500-acre SEZ in Ludhiana, a 1,100-acre SEZ in Amritsar and a 3,000-acre SEZ in Ambala.

The company in order to fund acquisition of land, development and construction of various real estate projects is coming out with an initial public offering (IPO). The fresh issue of 17.5 crore equity shares is aimed at raising Rs 8,750 to Rs 9,625 crore (depending on the price band of Rs 500-550 per share). The key positives of the IPO are that DLF is a reputed brand with premium positioning. The company besides having aggressive development plans has extensive and strategically located reserves.

Valuation

Unitech, a comparable company, has its stock trading at a 25 per cent premium to its net present value of land reserves, using that yardstick the DLF IPO is decently priced in the range of Rs 500- Rs 550. On other real estate companies parameters, DLF compares favourably with Unitech. In addition to this, the huge upside from its several SEZ projects and various joint ventures in the fast-growing areas of hotels, insurance, construction and project management could boost DLF stock’s valuations in spite of the uncertainties and lack of trading history. Therefore, investors may apply for the IPO, at cut off, which opens on June 11.

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Tax Advice
Farm income of senior citizens not taxable
by S.C. Vasudeva

Q. I am a senior citizen of above 65 years of age. Following incomes will accrue me in 2006-07 (assessment year 2007-08).

1. Annual pension Rs 1,23,684

2. Bank interests Rs 88,418

3. N.S.C. interest after maturity Rs 37,260

4. Agricultural Rs 4,02,520

Kindly compute my total income-tax 2006-07 (assessment year 2007-08). I have Rs 1,00,000 in ICICI Prudential Life Insurance during 2006-07. Rs 8,176 were deducted as T.D.S. I am an Income-tax payee with PAN.

— Amarjit Singh, Ludhiana

A. Your total income on the basis of figures given in the query would work out at Rs 1,49,362. To this will be added the agricultural income of Rs 4,02,520. As you are a senior citizen, the maximum amount up to which tax is not chargeable would be Rs 1,85,000. On the basis of computations required to be made in such cases, no tax will be payable by you on such income even after adding the agricultural income. The amount of tax deducted at source would be refundable to you.

Rebate on tuition fee

Q. I am a Punjab govt retiree. My income for the financial year 2006-07 is as under:

1. Amount of pension: Rs 1,22,162

2. L.T.C.: Rs 6,375

3. Interest from post office MIS: Rs 21,600

4. Interest from S.B.I.’s saving account: Rs 16,000

Total: Rs 1,66,137

I had paid a sum of Rs 6,500 to education centre of Punjab Technical University, Jalandhar on account of fees where my son is doing his B.Sc. (IT). Kindly advise me whether I am entitled to get tax rebate on the amount of Rs 6,375 received by me on account of L.T.C. and the amount paid to P.T.U., Jalandhar on account of fees of my son?

— Narinder Singh, Mohali

A. The answers to your queries are as under:

1. Section 80C of the Income-tax Act 1961 provides for the deduction of tuition fees (excluding any payment towards any development fee or donation or payment of similar nature), whether at the time of admission or thereafter, paid to any university, college, school or other educational institutions situated within India for the purposes of full time education of any two children of the payee. You would entitled to the deduction of Rs 6,500 paid to education centre of Punjab Technical University, Jalandhar from your total income if you satisfy the above conditions.

2. The amount received by a former employee in respect of the value of travel concession or assistance in connection with his proceeding to any place in India after retirement from service is exempt to the extent of amount actually incurred on the performance of such travel. Further, the exemption is available to an individual in respect of two journeys performed in a block of four calendar years commencing from the calendar year 1986. The amount of Rs 6,375 received in respect of LTC would be exempt only if your satisfy the above conditions.

IT return

Q. I have got PAN from Income-Tax Authorities. I am 75 years old and my income is less than Rs 1,85,000. In a previous issue, you had stated that a person having income less than the allowable limit need not submit income tax return. Kindly advise in what year I have to tell the I.T.O. the reason for not filing the return?

— Raja Ram V. Thathal

A. There is a change in law that in case of every person, being an individual or Hindu undivided family, whose total income during the previous year, without giving effect to provisions of Section 10A or Section 10B or section 10BA or Chapter VI-A of the Act, exceed the maximum amount which is not chargeable to Income-Tax, shall, on or before due date furnish a return of his income. This change has been effected from the assessment year 2006-07. Accordingly, you will have to file the return in case your total income before taking into account the deduction under Section 80C of the Act (which is part of Chapter VI-A of the Act), is more than Rs 1,95,000 (as applicable from assessment year 2008-09 for senior citizens), being the maximum amount on which tax is not chargeable in case of a senior citizen.

FD interest

Q. I am a retired Punjab govt employer. I have Rs 15 lakh which included my P.F. plus savings.

If I deposited these is an F.D. for nine years at the rate of interest of 8.5 per cent, how much amount will I get after nine years? How much tax will I pay on this amount? I receive Rs 9.987 per month as a pension also.

A. It seems you would like to make a fixed deposit with bank for a period of nine years and would like to receive a lump sum after the expiry of the term of fixed deposit. The bankers in such cases compound the interest as the interest which accrues every year would become the principle sum. The interest due as on March 31, 2008 will therefore have to be ascertained from banks, a certificate obtained from them for the purposes of filing your Income-Tax return. The yearly simple interest on a sum of Rs 15 lakhs at the rate of 8.5 per cent works out at Rs 1,27,500 which, if added to your pension income, will bring the total income to a sum of Rs 2,47,344. However the interest in the succeeding year(s) would be more than the said amount as it will have to be a compound interest. The actual interest for the year ended March 31, 2008 would depend upon the date of deposit and may be different than the above said amount of Rs 1,27,500. The amount due after the expiry of nine years would also be difficult to compute unless the actual date of deposit is known. Further the banks are giving a rate of 9.5 per cent per annum. On the basis of an enquiry from one of the banks if the amount of Rs 15,00,000 is deposited for a period of ten years carrying interest at the rate of 9.5 per cent, the amount receivable after the expiry of ten years would be Rs 34,92,000.

UTI units

Q. On redemption on maturity of units from UTI/ULIP, I have Rs 1,02,500. The statement sent by UTI, alongwith the cheque in my name, shows a long term capital loss of Rs 24,672 = and a short term gain of Rs 4,024. Kindly advice me the rate at which my tax liability would be calculated? I am an officer in a govt undertaking.

— B.S. Jangra, Hisar

A. The long term capital gain of Rs 24,672 will be taxed at the rate of 20 per cent plus applicable surcharge. However, if the tax payable in respect of units is in excess of 10 per cent of the amount of capital gain before taking indexation into account, the capital gain would be taxed at the rate of 10 per cent. The short term capital gain of Rs 4,024 will be added to your total income and taxed at the normal slab rate. 

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