SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

Jet open to alliance with Air-India: Goyal
Seattle, July 8
Outlining an ambitious route expansion agenda for Jet Airways, its chief Naresh Goyal said today his airline was open for an alliance with state-owned Air-India to enhance the market share for Indian carriers from the prevailing 20 to 50 per cent in the next few years.


Naresh Goyal: Flying high Naresh Goyal: Flying high

Anil Ambani Anil Ambani 2nd Indian trillionaire
New Delhi, July 8
Hotly chasing his elder brother Mukesh Ambani in the wealth race, Anil Ambani has entered the exclusive trillionaire club with personal riches of over Rs 100,000 crore in terms of his share holding in various group companies.

IOC seeks Reliance gas
New Delhi, July 8
IndianOil Corp (IOC), the nation's largest oil firm, has sought 11.5 million standard cubic metres per day (mmscmd) of natural gas from Reliance Industries' KG-D6 block for consumption in its refineries.

Chateau Indage to set up winery in HP
Chandigarh, July 8
Chateau Indage is all set to start operations from Himachal Pradesh soon. In city for the silver jubilee celebrations, A.S. Bhatia, regional sales manager of the company, informed that this would be their first winery outside Maharashtra.

MTNL close to acquire Lanka’s Suntel
New Delhi, July 8
In what could be its first acquisition, state-run telecom firm MTNL is close to buy Sri Lankan fixed line operator Suntel and has sent a high-level delegation to start technical assessment of the company.

Market Scan
Investing in mutual funds
Should the retail investor invest in the stock market directly or through the mutual funds? The answer is simple, In case the investor is interested in gains through appreciation in the market price of the scrip in which investment has been made, direct investment in the stock market is indicated, but, in case the investor is interested in high dividend income more than appreciation in the investment made, investment through mutual funds is superior.





Actress and brand ambassador of Provogue, Esha Deol, at the launch of Provogue's store in Bangalore on Saturday.
Actress and brand ambassador of Provogue, Esha Deol, at the launch of Provogue's store in Bangalore on Saturday. — PTI photo


 

EARLIER STORIES

  Tax Advice
Son can repatriate any amount to parents
Q. I am a senior citizen (65 years of age) and an income-tax payer and regularly submit the returns.

Video
India, Asia’s most ardent TV-driven market.
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Jet open to alliance with Air-India: Goyal

Seattle, July 8
Outlining an ambitious route expansion agenda for Jet Airways, its chief Naresh Goyal said today his airline was open for an alliance with state-owned Air-India to enhance the market share for Indian carriers from the prevailing 20 to 50 per cent in the next few years.

Noting that cooperative arrangements were needed to increase the market share of Indian carriers in terms of traffic in and out of the country, he told reporters that his company favoured such cooperation with Air-India.

"We have agreed that the new merged Air-India and Jet Airways must cooperate, not just go for alliances. Why can't we have an alliance within India," Goyal posed, adding that all sides would benefit from such an arrangement.

Air-India has plans to join a major global alliance of airlines and has held advanced level talks with Star Alliance, which has Lufthansa and Singapore Airlines as partners among others.

Goyal was here for the rollout of Boeing's Dreamliner 787 for which Jet Airways has placed an order of 10 planes which will start joining the fleet in 2011. In addition to these planes, Jet has also placed an order for 10 Boeing 777 (long range), with two of these planes joining the fleet this month.

Elaborating his route expansion plans, he said the B-777s would be put on the North America route starting out of Mumbai first via Jet's newly-created European hub in Brussels, Belgium.

Within a period of one year, the premier private carrier hoped to increase the frequency that will include the Chennai-Los Angeles sector and a Mumbai-San Fransisco flight via China.

"Washington DC is also on my radar" Goyal said. "We would like to see Indian carriers' market share come to be 50 per cent. To do that we don't have to be joining alliances."

Stressing that cooperation would help Indian carriers compete with global airlines, Goyal said "if it is a joint thing, we can go in engineering and maintenance together. We set up joint companies to compete with the rest of the world." Both Air-India and Jet Airways have a similar fleet of aircraft bought from Boeing.

Goyal said he has already spoken with the government and the reaction from Air-India has been "very, very positive because it is a win-win situation."

While welcoming competition in the aviation sector, the Jet chief said it should not affect passengers. — PTI

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Anil Ambani 2nd Indian trillionaire

New Delhi, July 8
Hotly chasing his elder brother Mukesh Ambani in the wealth race, Anil Ambani has entered the exclusive trillionaire club with personal riches of over Rs 100,000 crore in terms of his share holding in various group companies.

As per the closing prices on Friday at the BSE, the value of Anil Ambani share was worth Rs 100,334 crore while market capitalisation of his group soared to Rs 162,930 crore.

While the wealth of Mukesh Ambani was upwards of Rs 115,000 crore, the share of Anil Ambani group companies — Reliance Communication and Reliance Capital touched an all-time high of Rs 551 and Rs 1,149, respectively, resulting in the increase in wealth.

Market capitalisation of flagship Reliance Communication was placed at Rs 112,657 crore, of which promoters holding is 67 per cent giving Anil Ambani a wealth of Rs 74,354 crore.

Likewise, Reliance Capital's market capitalisation was Rs 28,219 crore of which Anil Ambani's share was 53 per cent at a value of about Rs 15,000 crore.

This along with the shares in Reliance Energy, Reliance Natural Resources Ltd and elder brother's Reliance Industries Ltd (Rs 2,856 cr) took the combined wealth of Anil Ambani to over Rs 100,000 crore.

KP Singh, chairman of DLF, is close behind with the wealth of about Rs 85,000 crore in terms of market capitalisation. — PTI

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IOC seeks Reliance gas

New Delhi, July 8
IndianOil Corp (IOC), the nation's largest oil firm, has sought 11.5 million standard cubic metres per day (mmscmd) of natural gas from Reliance Industries' KG-D6 block for consumption in its refineries.

"We have approached RIL for supply of natural gas from their KG Basin find, basically for captive consumption in our own refineries," IOC chairman S Behuria said in a letter to petroleum secretary M.S. Srinivasan.

RIL has proposed to price gas from its KG-D6 block at $4.33 per million British thermal unit (mBtu), with delivered price ranging between $5.2 per mBtu and $6.2 per mBtu depending on distance and local taxes.

"We are also in discussion with RIL for entering into a joint venture for city gas distribution (supplying CNG to automobiles and natural gas to households for cooking purpose) in various cities in India," Behuria added. — PTI

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Chateau Indage to set up winery in HP
Tribune News Service

Chandigarh, July 8
Chateau Indage is all set to start operations from Himachal Pradesh soon. In city for the silver jubilee celebrations, A.S. Bhatia, regional sales manager of the company, informed that this would be their first winery outside Maharashtra.

The winery based in Shimla district is expected to start functioning in the coming three months. The grapes will be sourced from Kullu. The winery will initially take grapes on contract farming.

The winery in Himachal, he hopes, will also help in bringing down the prices.

The company will also be venturing into Jammu and Kashmir soon.

No longer being a rich man’s drink, wine, he said, is set for a makeover with the launch of their Vino wine, which hit the shelves today, priced at Rs 75 for 375 ml.

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MTNL close to acquire Lanka’s Suntel

New Delhi, July 8
In what could be its first acquisition, state-run telecom firm MTNL is close to buy Sri Lankan fixed line operator Suntel and has sent a high-level delegation to start technical assessment of the company.

A delegation has left for Sri Lanka to hold discussions with Suntel on technical assessment, which is a prerequisite to formalise the deal, company sources said.

MTNL is believed to have emerged as the highest bidder for Suntel with a bid of between $160-180 million. — PTI

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Market Scan
Investing in mutual funds
by J.C. Anand

Should the retail investor invest in the stock market directly or through the mutual funds? The answer is simple, In case the investor is interested in gains through appreciation in the market price of the scrip in which investment has been made, direct investment in the stock market is indicated, but, in case the investor is interested in high dividend income more than appreciation in the investment made, investment through mutual funds is superior. In both cases, however, investment will move up or down as the stock markets rises or fall.

A wise investor should be a long-term investor in both mutual funds and in direct investment in the stock market. Both forms of investments need expertise and guidance, but direct investment in the stock market requires greater expertise, up-to-date knowledge and long expertise of dabbling in the market. Those investors who do not have this kind of expertise, should prefer to move into the stock market through mutual funds. Even in selecting the mutual funds and a mutual fund scheme in which investment is being made needs expert guidance.

Mutual fund sector is now fully developed. There are at present about 32 mutual fund houses with huge assets. Mutual funds have many advantages over retail investor who directly move into the market. Mutual funds have better and much superior research facilities and equipment than retail investors. Mutual funds are able to recover from market losses sooner and in a more regulated manner. Mutual funds are in a position to “churn” their investment portfolios in response to the twist and turns in the stock market, which the long-term investor cannot do unless he is ready to move into the trader’s channel.

Even in mutual fund schemes, long-term capital appreciation is possible. For instance, Morgan Stanley Growth mutual fund scheme (the only mutual fund scheme listed in the stock market) which had a NAV of Rs 19 in 2004 is now quoting around Rs 48. This scheme would bound up in October 2009 and the NAV of the growth option is Rs 55.

But investments in mutual funds call for careful selection of the mutual fund scheme in which investment is to be made. At present, investment in infrastructure-related mutual funds schemes appear to be the most rewarding. DSP Merrill TIGER (The Infrastructure Growth Economic Return Fund) has a good track record. The other infrastructure schemes are: UTI Infrastructure, Tata Infrastructure, and Birla Infrastructure. The DSP Merrill TIGER Fund’s NAV is around Rs 22. It paid a dividend of 45 per cent in December 2006. This would imply a dividend return of about 20 per cent for the year 2006-07. UTI Infrastructure fund has recently declared a dividend @ 30 per cent and its ex-dividend NAV is Rs 20/12.

While investing in mutual funds the investor should look into the past track of the mutual funds as well as of the scheme in which the investment is being made. Avoid investing in new investment scheme as a good return will be possible from this scheme only after 3 to 4 years time. Mutual fund schemes relating to mid-cap and small-cap are also likely to give good returns. Sundram Mutual Fund schemes ‘SMILE’ and ‘Select Mid Cap’ with NAVs around Rs 17/20 and Rs 15/40, respectively, are good schemes for investments.

The investors have also the option to invest in dividend or growth option. Growth options are more useful and stable but do not suit senior citizens. They may go in for dividend option. Any investments in the mutual funds now would require documentary proof of the PAN.

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Tax Advice
Son can repatriate any amount to parents
by S.C. Vasudeva

Q. I am a senior citizen (65 years of age) and an income-tax payer and regularly submit the returns.

My son is software engineer currently sent to England by his company. He pays income tax for his income there. Please tell me:-

(1) The money he sends to me through ICICI Bank for which he has paid Income-tax there, is again taxable here in India?

(2) He sends about Rs 1 lakh per month to me. Whether I have to mention it in my income-tax returns?

(3) How much money he can send to me? Is there any limit for that?

— S.S. Sharma, Chandigarh

A. (i) The amount received by you from your son is not taxable in India provided the same has paid out of his taxed income.

(ii) It will be in your interest to mention the amount received from your son in the income tax return. I do hope you have the necessary supports with regard to the amount received from him.

(iii) There is no limit of the amount which a son can send to his father for his maintenance.

Tax liability

Q. I am an Ex-SM (defence) pensioner and was re-employed in Punjab National Bank and retired on 31.01.2007 after attaining 60 years of age. I request you to calculate how much is the tax I have to pay on the following retirement benefits.

1. 240 days leave encashments (entitled to accumulate during the service) 

 1,72,940

2. Provident fund + Voluntary PF 

 7,75,295

3. Gratuity (out of which Rs 99,300 is marked taxable) 

 2,48,250

4. Commutation of pension 

 1,86,950

5. My salary from 01.04.2006 to 31.01.2007 

 2,29,395

6. My defence pension 01.04.2006 to 31.03.2007 

 50,626

7. My bank pension 01.02.2007 to 31.03.2007 

 8,414

8. My total investments during the year under Section 80C of the Act. 

 1,00,000

Out of the above, which incomes are taxable and how much total tax and education cess/surcharge payable by me. Approximately Rs 13,140 has since been deducted at source.

— Ram Dhan, Haryana

A. The replies to your queries are as under:

(i) Leave encashment at the time of retirement as does not exceeds 10 months' salary calculated on the basis of the average salary drawn during the period of 10 months immediately preceding the retirement is exempt from tax under Section 10AA(ii) of the Income-tax Act 1961 (the Act). Accordingly, in case the leave encashment is within the above limits the same would not be taxable. The amount of provident fund and commuted amount of pension are also not taxable. The amount of Rs 99,300 which has been marked taxable out of gratuity would form part of your total income for the year 01.04.2006 to 31.03.2007.

(ii) Your net taxable income after the deduction of amount invested under Section 80C of the Act would be Rs 2,87,735 and the tax and education cess payable thereon would be 37,047 . The net amount payable would be Rs 23,907.

Rebate on family pension

Q. I am a gazetted officer and a senior citizen also. I am getting my own pension and a family pension also, therefore, my annual income is above Rs 1,85,000.

Please let me know that standard deduction of Rs 15,000 or 33 1/3 per cent of family pension is allowed for calculating income-tax

— Ms Ghuman, Phagwara

A. In accordance with the provisions of Section 57 of the Act, a deduction of 33 1/3 per cent of the family pension or Rs 15,000 whichever is less, is allowable as deduction from the family pension income. You can, therefore, claim the same while computing your total income.

Tax on gift

Q. I am a salaried employee of a company. Our employer had given me Rs 7,000 in cash for Diwali gift on 20.10.2006. Our employer is demanding the bill or voucher for expenditure of Diwali gift. In case I do not provide bill then our employer adds Rs 7,000 of Diwali gift to my salary income for calculation of income tax for the year of 2006-07.

So I want clarification whether Diwali gift of Rs 7,000 is taxable at the hand of employee. In case Diwali gift is taxable then how much amount of Diwali gifts is taxable. Further, any bill or voucher is required for claiming 100 per cent rebate of Diwali gift, or no, from salary income.

— Dharam Raj Sharma, Panchkula

A. In accordance with the provisions of Section 115WB of the Act, gifts of all types are liable for Fringe Benefit Tax in the hands of the employer. Since the amount is taxable in the hands of the employer, the same cannot be brought to tax again in the hand of the employee.

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BRIEFLY

Nalco to raise $250 m
Mumbai, July 8
State-run aluminium producer, Nalco, will tap the overseas market to raise $250 million by August-end for its ambitious capacity expansion plan. About 17 banks and merchant bankers, including SBI, ICICI and Citi have responded to the expression of interest invited by Nalco to raise over $250 million through the External Commercial Borrowings route, a senior company official said here. — PTI

UB Group plan
New Delhi, July 8
Unruffled by the removal of additional custom duty on imported wine, Vijay Mallya-promoted UB Group is planning an investment of Rs 88 crore in the next five years for setting up two wineries and developing vineyards. UB Group chief wine maker and business head, wines, Abhay Kewadkar said the firm would set up wineries at Baramati in Maharashtra and Bangalore, besides expanding its vineyards. — PTI

RINL contract
New Delhi, July 8
Italian engineering major Danieli Group has secured a contract worth 150 million euros (around Rs 900 crore) from state-run Rashtriya Ispat Nigam Limited (RINL) for supply of steel making equipment. "The Danieli Group got 150-million-euro contract for engineering and supply of bloom casters and continuous casting machines to RINL after almost one year of negotiations," law firm Titus and Co's senior partner Abhixit Singh, who represented the Italian company in the talks, said. — PTI

DTDC foray
Mumbai, July 8
Leading private courier DTDC, in which Anil Ambani-led ADAG holds 40 per cent stake, will foray into the warehousing business to cash in on the burgeoning retail sector. "Many international freight and logistics players are talking to us to be a partner in our proposed warehousing venture. Currently, we are evaluating their proposals," DTDC's chairman Subhasish Chakraborty said. — PTI

SBI loan
Chamba, July 8
The Chamba branch of the SBI is the first-ever branch in Chandigarh circle of the bank to sanction a loan to the tune of Rs 20 crore to M/s Jal Shakti Ltd of Hyderabad. The company is setting up a 5 MW hydro-electric project on the Dunali Nala, a rivulet of the Ravi in the Bharmour region of this district. — OC

GAIL director
New Delhi, July 8
B.C. Tripathi has taken over as director (marketing) of Gas Authority of India Ltd (GAIL). Prior to this posting, he was executive director (projects) with the company. — TNS

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