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B U S I N E S S

More refineries on Mittal’s radar
New Delhi, August 25
Close on the heels of acquiring 49 per cent stake in
HPCL’s Bathinda refinery, India-born billionaire Lakshmi N Mittal is eyeing stake in two more new refineries being set up at Bina in Madhya Pradesh and Vishakhapatnam in Andhra Pradesh.

Patent for Assam ‘muga’ silk
Guwahati, August 25
Assam’s golden silk ‘muga’ has now secured the much-needed Geographical Indication (GI) much to the glee of traditional ‘muga’ silk farmers in the state. The golden silk has now been recognised as a yarn of Assam origin.

Tata Steel is 100
New Delhi, August 25
Tata Steel turns 100 tomorrow. The world’s sixth-largest steel producer, completes a century of ‘We also make steel’ era and embarks on a new journey to be the world’s number two by 2012.

Pay farmer to remove poverty, says FM
Lucknow, August 25
Finance minister P Chidambaram today said he wanted to see the country get out of “abject poverty” in his lifetime.




EARLIER STORIES

 

Amritsar small retailers upset
Amritsar, August 25
Small retailers and shopkeepers, under the banner of Amritsar Karyana Retailer Association, are up in arms against Reliance Fresh, multinational companies and big business houses coming in the field of retailing and wholesaling.

Aviation Notes
Panel keeps authorities on toes
Notwithstanding occasional frivolous questions, the consultative committee of Members of Parliament (MPs) on the Civil Aviation Ministry is serving a very useful purpose as it is keeping authorities alert and focussed.

Investor Guidance
NRIs need portfolio investment scheme for stock trading
Q: I am about to relocate to the USA on a long-term work assignment. I am 38-years-old and have been working in India for the last 14 years. Consequently, over the period, I have invested in shares, mutual funds etc.

 
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More refineries on Mittal’s radar

New Delhi, August 25
Close on the heels of acquiring 49 per cent stake in HPCL’s Bathinda refinery, India-born billionaire Lakshmi N Mittal is eyeing stake in two more new refineries being set up at Bina in Madhya Pradesh and Vishakhapatnam in Andhra Pradesh.

Mittal is in talks to take 20 per cent stake in state-run Bharat Petroleum Corp Ltd’s (BPCL) Rs 9,100 crore, six million tonnes a year Bina refinery that is to be commissioned by 2010-11, industry sources said.

The steel tycoon is also talking to another public sector firm Hindustan Petroleum Corp Ltd (HPCL) for a stake in its proposed greenfield 9 million tonnes refinery-cum-petrochemical complex at Vishakhapatnam.

HPCL is also talking to France’s Total, state-run gas firm GAIL (India) and explorer Oil India Ltd for a possible four-way partnership in the Rs 25,000-30,000 crore project.

“Total was already talking to HPCL for a stake in the state-run firm’s planned doubling of capacity of the existing refinery at Vizag to 15 million tons.

HPCL it seems has abandoned the Vizag expansion and is now planning the new refinery-cum-petrochemical complex in the country’s first Petroleum, Chemical and Petrochemical Investment Region (PCPIR),” a source said.

“Mittal is very keen on getting into the oil and gas space. He first tied-up with Oil and Natural Gas Corp (ONGC) for acquiring oil and gas properties and now is entering into ventures with other state-run firms for refinery business,” the source said.

Talks with BPCL and HPCL were at a preliminary stage and a firm investment decision was not expected before October.

While BPCL has already placed orders for most of the equipments for the Bina refinery, HPCL Board has approved acquisition of 1,500 acres of land in the PCPIR for the Visakhapatnam project. — PTI

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Patent for Assam ‘muga’ silk
Tribune News Service

Guwahati, August 25
Assam’s golden silk ‘muga’ has now secured the much-needed Geographical Indication (GI) much to the glee of traditional ‘muga’ silk farmers in the state.

By virtue of the GI, the golden silk produced in the Assam and some parts of Garo Hills in Meghalaya has now been recognised as a yarn of Assam origin under the Intellectual Property Rights.

In the context of changed global trade and commercial scenario under the World Trade Organisation (WTO) regime, the GI for ‘muga’ silk will provide better legal protection to the unique golden yarn, fabric made from it and farmers and weavers connected with the yarn and fabric production in Assam.

Chief Minister Tarun Gogoi on receiving the GI certificate for the golden silk from the GI Registry in Chennai said that it would be a boon to ‘muga’ yarn producers from the state.

As the yarn has now been recognized as an ‘original yarn from Assam’, the fabric makers and weavers will have to procure it from Assam and this would lead to prevention of the disturbing tendency among some fabric makers to mix the original golden yarn with its synthetic look-alike.

Assam government’s Patent Information Centre (PIC) at Assam Science Technology and Environment Council (ASTEC) had made the application to GI Registry of India in Chennai in July 2006.

Buoyed up by the GI recognition to the golden silk traditionally produced in Assam, the state government is now contemplating to apply for GI in Japan, United State and Europe where the golden silk fabric exported from Assam is being used in garments and fashion industry.

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Tata Steel is 100
Tribune News Service

New Delhi, August 25
Tata Steel turns 100 tomorrow. The world’s sixth-largest steel producer, completes a century of ‘We also make steel’ era and embarks on a new journey to be the world’s number two by 2012.

It acquired Anglo-Dutch Corus for $12-billion amidst stiff competition from Brazilian steel major CSN early this year.

This acquisition catapulated Tata Steel from the 56th position on world steel output to the sixth.

Starting in 1907 with 100,000 tonne, the company is now in a big league with an annual production of 28 million tonne.

Its next milestone: 35 million tonne by 2012, to make it the second-largest producer of steel after Arcelor Mittal.

Tata Steel is a part of India in more ways than one. Its steel was used to build the Howrah Bridge in Kolkata, the Bhakra-Nangal and Damodar Valley projects, port of Kandla and Chandigarh.

“The centenary story of Tata Steel is also linked intrinsically to the genesis and growth of an industrial India, as envisioned by our founder Jamsetji Nusserwanji Tata. It is a story that we will continue to celebrate in multiple ways over the next one year. We look forward to another hundred years and more of creating wealth and well-being for all the communities we serve,” said B Muthuraman, managing director of the company.

On August 26, 1907, Tata Iron & Steel Company was floated. Construction at the site began in 1908 and the first blast furnace was operational in 1911.

It is a little known fact, that the first structure to come up at the site of the Jamshedpur steel plant was a hospital built for the local residents and the workers.

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Pay farmer to remove poverty, says FM

Lucknow, August 25
Finance minister P Chidambaram today said he wanted to see the country get out of “abject poverty” in his lifetime.

“I want to see abject poverty wiped out in my life time,” Chidambaram said after releasing his book ‘A view from the outside: Why good economics works for everyone’.

“We want to become a great economic power...We want to leave a country which is more happy, more prosperous and more safe,” he said.

“It is possible to grow at a high rate and it has been proved in the last two-three years. India is the flavour of the world today,” he added.

Chidambaram said the country had tremendous human resource. Quoting the book, he said the people of the country should not hesitate in paying more for food products as it will in turn benefit the farmers.

“The key to the removal of the poverty is to pay the farmer well," he said. — PTI

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Amritsar small retailers upset
Our Correspondent

Amritsar, August 25
Small retailers and shopkeepers, under the banner of Amritsar Karyana Retailer Association, are up in arms against Reliance Fresh, multinational companies and big business houses coming in the field of retailing and wholesaling.

They threatened to launch an agitation against them. Various shopkeepers and small traders held a meeting here today.

They urged the government to make a policy and control the blindfold increase of shopping complexes by multinational companies in Punjab and restrain them from encroaching upon small traders’ business.

Uttam Chand, patron of All-India Retail Traders Federation, said contrary to the claims of these big business houses that they would create 20 lakh jobs, it would render more than 13 crore traders, involved in small scale business, jobless.

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Aviation Notes
Panel keeps authorities on toes
by K.R. Wadhwaney

Notwithstanding occasional frivolous questions, the consultative committee of Members of Parliament (MPs) on the Civil Aviation Ministry is serving a very useful purpose as it is keeping authorities alert and focussed.

To Rajya Sabha MP Dinesh Trivedi's question on hydraulic failures, the authorities said 'various maintenance initiatives to fix the problems had been taken'.

Eight out of the 10 identified areas had shown improvement. "We are emphasising on scheduled maintenance," said the authorities, adding: "Seventeen major delays on Air India flights (A-310) occurred during the period between April 2006 and May 10, 2007. Of these 13 delays were in the first half of the year."

According to the authorities, effective measures in this regard had been taken by the Directorate-General of Civil Aviation and the reliability of hydraulic system had shown marked improvement.

On rescheduling of AI flights, the authorities conceded that there were as many as 610 last winter. Of these, 176 were rescheduled 48 hours before scheduled time of departure (STD) and 434 within 48 hours.

"The reason for these rescheduling ranged from non-availability of aircraft to operational commercial requirements."

When the MP asked about sexual harassment of air hostesses in Air India, the reaction was: "We have received three cases and they have been referred to the Prevention of Sexual Harassment Committee. The name of the official mentioned by the MP was incorrect and it diluted the question to a great extent.

As the debate was on, the Aviation Minister Praful Patel intervened as chairman of the committee and said: "We would undertake a thorough probe in this matter".

The international airport at Kolkata is undergoing rapid renovation and upgradation. Soon it will be back to its glory days when it handled many international flights.

The Lok Sabha MP T.B. Topdar's question, the authorities said that a third parallel runway has already been initiated by the Airport Authority of India (AAI).

"The land requirement has been projected to the state government. The renovated airport will have additional terminals, cargo terminals, hangars and infrastructure available for the use of passengers, visitors and other professional users.

To Rajya Sabha MP Farooq Abdullah's repeated questioning, the minister said: "I had a meeting with the Chief Minister of Jammu and Kashmir and the Air Force Chief. The follow up action would accrue after the completion of certain formalities."

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Investor Guidance
NRIs need portfolio investment scheme
for stock trading
by A.N. Shanbhag

Q: I am about to relocate to the USA on a long-term work assignment. I am 38-years-old and have been working in India for the last 14 years. Consequently, over the period, I have invested in shares, mutual funds etc.

Now that I am relocating and becoming an NRI, can I continue to invest (buy and sell shares, MFs etc.) as I have been doing? Or are there any restrictions on me consequent to my new NRI status?
— Niyodit

A: This is a very good question as these matters not only affect persons like you, who are on their way to becoming NRIs, but also who are already NRIs. Though Indian laws allow NRIs to invest in the Indian stock market, there are certain procedural formalities that you have to follow.

On becoming an NRI, your stock market transactions will have to be under the PIS (Portfolio Investment Scheme). PIS is a scheme of the Reserve Bank of India (RBI) under which NRIs can buy and sell Indian equities on the stock exchange.

This has to be done by routing all the purchase/sale transactions through the PIS account held with a designated bank branch. The bank obtains the PIS approval for you. In other words, though you can still buy and sell shares the way you used to when you were a resident, before the first trade in your new status as NRI, you will have to be enrolled under the PIS.

If you were to just pick up the phone and call your broker in the usual course (before getting a PIS approval), it would be illegal. Also, the bank will not accept the sale proceeds of shares in your normal NRE/NRO account - it has to be a specifically designated NRE/NRO account under the PIS.

For investments done prior to becoming an NRI, a Non-PIS account has to be opened. This is for the shares that you have already bought before becoming an NRI. Note that your earlier resident demat account cannot be used anymore to trade in the Indian market.

You will have to close the old one and open a fresh account under the NRI status. No purchases are allowed in such non-PIS account. However, you can sell shares acquired in IPOs as well as the secondary market, when you were a resident. All fresh purchases have to be through the PIS demat account as detailed above.

A PIS account is under the RBI approval and an NRI can have one such RBI approval at a time. In other words, multiple PIS accounts with multiple providers (banks) is not possible. Also, PIS is essentially for dealing in shares. The PIS procedure detailed above is not applicable. However, be careful to use your NRE account for making investments in order to maintain smooth repatriability.

Also, it is mandatory to have a Permanent Account Number (PAN) for trading in equities and buying mutual funds. However, many NRIs are under the impression that having a PAN makes it mandatory to file tax returns.

This is not so. Unless you have a taxable Indian income of over Rs 1.1 lakh, there is no legal obligation to file your tax return, notwithstanding the fact that a PAN is allotted to you.

As you may be aware, India offers full tax exemption on trades in equities and equity mutual funds after a holding period of one year. So, if you were to sell these investments after one year, notwithstanding the extent of the amount, you are not liable to file tax return.

FMP capital gain

Q: Can one set off a long-term capital loss (say on sale of property or shares) against the long-term capital gain in FMP?
— Rastogi

A: Yes, any taxable long-term capital gain can be set off against long-term capital loss.

PPF account

Q: In your column in The Tribune dated August 19, 2007, you have written, “Once a PPF account is continued without contributions for one year, the subscriber cannot change over to with-contributions extension (Notification F3 (6)-PD/86 dated August 20, 1986)”.

Whereas in your column dated April 23, 2005, you have opined that it is possible to revive the old PPF account by contributing Rs 500 with a penalty of Rs 50 by Notification GSR 768(E) dated November 15, 2002 per year.

Many do not know this. They feel that very old and discontinued accounts cannot be regularised. Again in your reply column, dated December 24, 2006, you have opined that dormant PPF accounts can be revived.

Is it not contradictory? I would like to know whether a PPF account continued without subscriptions for 2-3 years can be revived i.e. can be converted to with contribution account or not?
— Ranjana Bhatia

A: At its maturity, the account can be closed or it can be continued for a block of five years. This facility is available for a further block of five years on expiry of 20 years and yet another five years on expiry of 25 years and so on for any number of blocks - Yes, any number of blocks.

The continuation can be with or without contribution. Once an account is continued without contributions for more than a year, the subscriber cannot opt to change over to continue the account with contributions. [Notification F 3(6)-PD/86 dated August 20, 1986].

It is only the account with contributions, which get discontinued and be regularised. If you do not contribute even the minimum Rs 500 per year to a PPF account during its term of 15 (actually 16) years, the account becomes discontinued. An account extended with contributions becomes discontinued under similar situations.

A discontinued account can be revived by making the contribution of Rs 500 and a penalty of Rs 50 per year of default. I strongly recommend you to keep it alive so that you will be entitled to make the partial withdrawals as and when needed.

Income from house

Q: My father and me jointly own a flat in Delhi that is occupied by my parents. I bought a flat in Bangalore and have been living there since July 1. Before that I was living on rent. The flat at Bangalore is on loan whereas the Delhi flat has no liability.

The total interest paid on the Bangalore flat would be about 4 lakh for 2007-08. I want to cross check whether the calculation for income from house is correct or not:
a) Notional rental income from Delhi flat — Rs 4,000 per month (50 per cent of Rs 8000, which is market value)
b) Loan interest paid on Bangalore property — 4 lakh per annum
c) Loss under house property - 3,52,000

Is this calculation correct and if yes, can I claim the full deduction of Rs 3,52,000. Also, I sold some stocks that have given me a short-term capital gain. They are not STT paid and are calculated at 30 per cent as they are ESPP stocks on my company listed on NASDAQ. Can I offset the profit against the loss from house property?
— Pratap

A: Your calculations of the house property are not correct. The tax deduction on interest will be limited to Rs 1.5 lakh of such property of which value you are taking as nil.

The second property will be notionally taxed. In the example given by you, you are seeking the Delhi property to be notionally taxed hence you are ipso facto assuming the Bangalore property to be valued at nil.

If so, the interest deduction will be limited to Rs 1.5 lakh. This is the best course of action as if you take the Bangalore property to be notionally taxed, you will not get any deduction from the Delhi property as you are not paying any interest thereon. Losses of house property cannot be setoff against short-term capital gain income.

The authors may be contacted at wonderlandconsultants@yahoo.com

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BRIEFLY

Forex reserves
Mumbai, August 25
India’s foreign exchange reserves have fallen for the second consecutive week due to stagnant FII inflows and some outflows from international investors. According to data available from the RBI, forex reserves for the week ending August 17 fell by $2.551 billion to $226.445 billion. — TNS

Stake in BPO
Mumbai, August 25
The Hong Kong-based $400 million Mulitex Holdings plans to acquire a 10 per cent equity stake in Mumbai-based Effort BPO Ltd. Rajnish Sarna, director, Effort BPO, has confirmed the deal at an undisclosed price. The boards of both companies are in discussion and the transaction is scheduled to be completed by the first week of September. — PTI

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