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CHANDIGARH

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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Bharti Airtel gets DTH licence
To invest Rs 150 crore in Phase I
New Delhi, September 23
Bharti Airtel today said it has got licence to start Direct-To-Home (DTH) services in the country and announced an investment of Rs 150 crore in the first phase to launch nation-wide operations, a move that would bring in much required competition in the DTH segment.

Exporters reset clauses to combat Re rise
New Delhi, September 23
Exporters have started using mechanisms such as forward contracts, shifting to other currencies and establishing protective clauses in their newly set contracts to overcome the adverse effect of appreciation of the rupee to dollar.

Centre plans 500 regional airports, says Patel
Kolkata, September 23
The Centre wants at least 500 small airports to come up all over the country to facilitate growth of regional airlines, the future of domestic aviation industry, Civil Aviation Minister Praful Patel said here today.

Vinod Khosla in Vanity Fair’s influential list
New York, September 23
India-born venture capitalist Vinod Khosla, known for his love for “clean” technology, has been named along side titans like Rupert Murdoch, Bill Gates, Warren Buffett, Bill Clinton and Steven Speilberg, in a list of most influential names prepared by ‘Vanity Fair’ magazine.






EARLIER STORIES

 
A bank employee counts currency notes in Mumbai
A bank employee counts currency notes in Mumbai. The rupee is set to head higher against the dollar as foreign investors buy shares and pour money into plants and infrastructure projects to exploit the booming economy. — AFP photo

No more time to Bear Stearns: FIPB
New Delhi, September 23
Foreign Investment Promotion Board has turned down a proposal that a subsidiary of US-based financial services firm Bear Stearns Companies Inc be given two more years to increase the paid-up capital of Ford Automotive Finance Co India, which it wants to acquire.

BPCL, US firm collaborate
New Delhi, September 23
PSU major Bharat Petroleum Corporation Ltd (BPCL) will form a 50:50 joint venture (jv) company with US-based Matrix Marine Fuels LLC in Singapore. The board of BPCL has approved the proposal of formation of the jv company with Matrix Marine Fuels LLC in Singapore (primarily for expanding bunkering business) with equal participation by both companies, a company statement said.

Market Update
After Fed cut, Q2 results to trigger market
The markets surged amid global rally triggered by the US Federal Reserve announcing a larger-than-expected 50-basis points cut in Fed funds rate to 4.75 per cent from 5.25 per cent. The move eased concerns about housing slump driving the world’s largest economy into recession.

Tax Advice
VRS amount up to Rs 5 lakh exempted
Q. I got voluntary retirement under exit option scheme from the State Bank of India on April 30, 2006. I was paid Rs 6,19,745 as ex-gratia payment for 25 months and 15 days salary i.e. 15 days of my remaining service of 51 months.

Videos
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Bharti Airtel gets DTH licence
To invest Rs 150 crore in Phase I

New Delhi, September 23
Bharti Airtel today said it has got licence to start Direct-To-Home (DTH) services in the country and announced an investment of Rs 150 crore in the first phase to launch nation-wide operations, a move that would bring in much required competition in the DTH segment.

“We have received the licence and plan to launch pan-India services by the first quarter of next financial year,” N Arjun, head of DTH operations, Bharti Airtel, said.

Company officials said Bharti would be investing Rs 150 crore in the initial phase on infrastructure for which it has chosen Tendberg Television, a subsidiary of Sweedish telecom equipment major Ericsson.

Bharti Telemedia, a subsidiary of Bharti Airtel, handling DTH operations, will use a range of Tandberg Television’s solutions, including the iSIS 8000 IP head-end and MPEG-4 AVC standard definition encoders, Arjun said.

The DTH services will be launched nationally across India and Bharti is setting up a state-of-the-art infrastructure near Gurgaon (Haryana) for the purpose of uplinking and broadcast.

By using the latest MPEG-4AVC video compression, and IP tenchnologies, Bharti can cost-effectively deliver more channels in less bandwidth, while still maintaining high quality pictures, officials said.

Asked about the satellite capacity, Arjun said Bharti Telemedia has acquired transponders from the recently launched 4CR Insat early this month which is likely to become operational by month-end.

Zee group’s Dish TV, Tatas’ Tata Sky and Prasar Bharati’s DD Direct are the three operational DTH players in the country having a total subscriber base of over 5 million. Sun Direct and Reliance’s DTH venture Reliance Bluemagic are expected to hit the market by the end of the current year or in early 2008. — PTI

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Exporters reset clauses to combat Re rise
Tribune News Service

New Delhi, September 23
Exporters have started using mechanisms such as forward contracts, shifting to other currencies and establishing protective clauses in their newly set contracts to overcome the adverse effect of appreciation of the rupee to dollar.

While the order book position has taken a hit compared with the position six months ago, the outlook for the next six months is also none-too-bright, according to a Ficci survey on exports for the first quarter of 2007-08.

Exporting more to regions such as West Asia and the European Union, a strategic move to partially nullify the impact of the strengthening rupee vis-à-vis the $, is also being resorted to by some exporters.

While in the last survey 75 per cent of the participating companies had cited the appreciating rupee as an impediment to their business performance against 62 per cent in the survey for Q3 2006-07, in the present survey it has emerged as the number one impediment with 91 per cent of the respondents being affected..

The Ficci survey saw the participation from 286 companies with a wide geographical and sectoral spread. The turnover of the companies that participated in the survey ranged from Rs 1 crore to Rs 16,000 crore and the companies represent sectors like automobiles, consumer durables, food and food processing, leather, marine products, gems and jewellery, FMCG, textiles, handicrafts, metal and metal products, heavy engineering, pharmaceuticals and chemicals.

While the exporters have welcomed the ‘relief package’ announced by the government, its impact on export movement will not be pronounced because of the overriding influence of Rupee appreciation on their overall earnings.

Several exporters have cited a reduction in interest rate on pre - shipment and post - shipment credit as an important measure as over the last one-year the northward movement in the interest rates had resulted in a concomitant increase in the interest charged on pre / post shipment credit, which is linked to the PLR of the banks.

Meanwhile, sharp appreciation of rupee against the US dollar is threatening small scale manufacturing and exporting firms of Punjab, with the industry anticipating almost 10 per cent erosion of margin and abandoning of several expansion plans.

Industries like light engineering industry, garment and IT are feeling the maximum heat because of the volatility in rupee value against dollar.

"The margins are definitely going to be hit as a result of rupee appreciation and it will especially hit small scale manufacturing sector which do not have the capacity to absorb the shock. The current surge in rupee will force industry to work on no profit no loss position," Engineering Export Promotion Council regional chairman S.C. Ralhan said.

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Centre plans 500 regional airports, says Patel

Kolkata, September 23
The Centre wants at least 500 small airports to come up all over the country to facilitate growth of regional airlines, the future of domestic aviation industry, Civil Aviation Minister Praful Patel said here today.

“The government is promoting regional airlines. That is where the traffic is ... The USA has 5,100 operational airports. Why can’t we have at least 500?” Patel said after laying the foundation stone for developing infrastructure for an airport at the Behala Flying Club in south Kolkata.

Patel, however, did not specify by when the government expected to have all 500 airports in place.

The civil aviation sector was expected to generate 30 lakh jobs in the next 10 years, he said adding, within the next three to five years, the number of commercial aircraft in the country would go up to 1,000 from 350 now.

“This means that we will need more pilots. There are 1,000 pilots from abroad working in India now. We do not have enough pilots from India. It is good that a flying training institute has been set up here,” he said.

The Centre’s new policy was to encourage operation of small aircraft of up to 80 seats, which used less fuel, and these were exempted from paying various fees to the Airports Authority of India as incentive, Patel said. — PTI

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Vinod Khosla in Vanity Fair’s influential list

New York, September 23
India-born venture capitalist Vinod Khosla, known for his love for “clean” technology, has been named along side titans like Rupert Murdoch, Bill Gates, Warren Buffett, Bill Clinton and Steven Speilberg, in a list of most influential names prepared by ‘Vanity Fair’ magazine.

Khosla, who was born in Pune and invests through Khosla Ventures, has been ranked 62 in Vanity Fair’s Annual Power Ranking for 2007. He has been featured in the list for the first time and is the only person of Indian-origin there.

The list, “The New Establishment,” published in the magazine’s October issue, is topped by media baron Rupert Murdoch. He is followed by Mac computer and iPhone maker Apple’s Steve Jobs and Google founders Sergey Brin and Larry Page.

Khosla has been ranked ahead of investment guru George Soros (67th), fashion queen Donatella Versace (77th), The New York Times columnist and author of the famous book “The World is Flat” Thomas L Friedman (78th), Disney’s John Lasseter (66th).

Khosla acquired his engineering degree from IIT Delhi and was the founding CEO of Sun Microsystems in early 1980s.

The list also has private equity giant Blackstone Group’s Stephen Schwarzman and Pete Peterson (4th), investment guru Warren Buffett (5th), former US President Bill Clinton (6), Oscar winning filmmaker Steven Spielberg (7), and Microsoft chairman Bill Gates and his wife Melinda Gates (10). — PTI

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No more time to Bear Stearns: FIPB

New Delhi, September 23
Foreign Investment Promotion Board (FIPB) has turned down a proposal that a subsidiary of US-based financial services firm Bear Stearns Companies Inc be given two more years to increase the paid-up capital of Ford Automotive Finance Co India, which it wants to acquire.

The subsidiary, Bear Strategic Investment Corp, plans to buy 100 per cent stake in Ford Automotive Finance. The stake is to be purchased from Ford Credit International, which had proposed to FIPB that Bear Stearns be taken as new entrant of 100 per cent equity in the non-banking financial company.

Ford Credit had also sought FIPB approval that Bear Stearns be given two more years to capitalise the company.

However, FIPB in a recent meeting refused to give additional time beyond October 4 deadline. — PTI

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BPCL, US firm collaborate

New Delhi, September 23
PSU major Bharat Petroleum Corporation Ltd (BPCL) will form a 50:50 joint venture (jv) company with US-based Matrix Marine Fuels LLC in Singapore.

The board of BPCL has approved the proposal of formation of the jv company with Matrix Marine Fuels LLC in Singapore (primarily for expanding bunkering business) with equal participation by both companies, a company statement said.

Matrix Marine Fuels is in the bunker-fuels business, including marketing, operations, supply, and administration. Its customers include shipping agents, charter carriers, shipping companies, and agents. — UNI

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Market Update
After Fed cut, Q2 results to trigger market
by Lalit Batra

The markets surged amid global rally triggered by the US Federal Reserve announcing a larger-than-expected 50-basis points cut in Fed funds rate to 4.75 per cent from 5.25 per cent. The move eased concerns about housing slump driving the world’s largest economy into recession. The BSE Sensex gained over 6 per cent last week to close at a record high of 16,616. Similarly Nifty gained close to 7 per cent to close the last week at an all-time high closing of 4837.

Meanwhile, foreign institutional investors’ (FII’s) net inflow in the country crossed $10 billion so far during the current calendar year. FIIS have made a net purchase worth about $10.5 billion in equity and debt markets since the beginning of 2007, topping the total net investment of $8.87 billion in the entire 2006. Total FII inflow so far in the country is $61 billion.

The market is expected to be consolidated at higher levels as profit-booking might emerge at higher levels after a sharp recent rally. From a recent low of 13,989 on August 21, 2007, the Sensex surged 18 per cent to 16,564 on September 21, 2007. in just 23 trading sessions.

The next trigger for the market will be the second quarter results, which are expected to be strong. Investor may book at least 50 per cent of their profit now and keep a close watch on the political situation as the committee constituted by the government to look into Left Front’s concerns over the Indo-US nuclear deal, will meet a gain again on October 5.

Supreme Infrastructure

Supreme Infrastructure is a Mumbai-based small construction company with primary focus on road construction. The company is registered as Class ‘I’ by the PWD of the Maharashtra government and as ‘A’ class contractor by the Bombay Municipal Corporation, which entitles it to bid for and accept works and orders as per its bidding capacity.

Traditionally, road construction is a low-margin business. But with the presence in quarrying, crushing, wet-batch mixing, asphalt and ready-mix concrete (RMC), the company is well integrated to earn healthy margin in constructing roads.

To meet the funding requirement for its projects, augment plant and machinery (P&M), and meet long-term working capital requirement, Supreme Infrastructure is tapping the capital market with 34.50 lakh shares in the price range of Rs 95 to Rs 108.

Apart from setting up an RMC plant to cater to the needs of the National Highway (NH) 4 Westen Transport Corridor project in Karnataka, Supreme Infrastructure is constructing a new crushing plant. A Rs 90-crone order for construction of an IT park from Supreme Housing & Hospitality (SHHL), a company set up by promoters, marks Supreme Infrastructure’s foray into construction of office blocks. The total current order book stands at Rs 300 crone.

The company’s last years earning per share on the expanded equity base is about Rs 9.2, which means that the company’s offer price is discounted at Rs 10.3 and Rs 11.7 at the lower and the upper band, hence making it a reasonable issue. Listed comparable peers enjoy higher discounting than what is being offered in the IPO, therefore, investor may consider applying in the IPO.

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Tax Advice
VRS amount up to Rs 5 lakh exempted
by S.C. Vasudeva

Q. I got voluntary retirement under exit option scheme from the State Bank of India on April 30, 2006. I was paid Rs 6,19,745 as ex-gratia payment for 25 months and 15 days salary i.e. 15 days of my remaining service of 51 months. How can rebate under Section 89(1) be claimed whether for:

(i) By bifurcating amount of ex-gratia on 25 months and 15 days for the coming assessment years or for 51 months period.

(ii) By claming on average salary of tax paid for past three years on 10E.

— Rajinder Kumar Gupta, Ludhiana

A. Any amount received by a person on his voluntary retirement in accordance with the prescribed guidelines would be exempt from tax to the extent of Rs 5 lakh. The State Bank of India should, in my opinion, be covered within the provisions of Section 10C of the Act, which provides for such exemptions. It may, therefore, not be essential for you to claim the benefit under Section 89(1) of the Act in respect of the entire amount of Rs 6,19,745 as Rs 5,00,000 should be exempt from tax if the same has been paid in accordance with the prescribed guidelines. You may, therefore, checkup in this regard with the bank. The relief can thus be sought under Section 89(1) of the Act in respect of the balance amount under the category of advance salary and particulars should be filed in Annexure-1 to Form 10E.

Rebate on farm income

Q. My taxable income, after availing Rs 1,85,000 but adding my agriculture income, becomes more than Rs 1,85,000. How to calculate tax rebate on agriculture income by adding, which exempt income i.e. Rs1,00,000 - 1,35,000 or Rs 1,85,000, with agriculture income so that net payable tax be calculated?

— Raghbir Singh, Chandigarh

A. In case of a senior citizen, while computing the tax, the rebate would be allowed for a sum of Rs 1,85,000.

Leave encashment

Q. In The Tribune dated July 9, 2007, you stated that leave encashment, at the time of retirement, as does not exceed 10 months pay is tax-free. Is there an upper limit above which it is taxable? I retired from the service of PSEB on March 31, 2006 and received 10 months leave encashment amounting to Rs 4,44,680, out of which income tax of Rs 44,300 was deducted by our Accounts Department and Rs 1,44,680 was treated as income and added to my Form-16. Is it correct?

— Baldev Singh

A. The provisions of Section 10AA do provide that the amount of leave encashment should not exceed a period of 10 months immediately preceding the date of retirement or superannuation or otherwise and the amount should not exceed a sum of Rs 3 lakh. Accordingly, the Accounts Department, in your case, has correctly brought to tax the balance amount of Rs 1,44,680 as the exemption should have been limited to the extent of Rs 3 lakh only.

Form ITR-2

Q. As a sequel to introduction of new forms by GOI (ITR-1 to ITR-8) effective from this year for filing the return, which ITR will be applicable to an individual tax payer, having LTCG of Rs 1,68,095.

— K. Singh, H.P.

A. An individual not having an income chargeable to income tax under the head ‘profits or gains of business income’ is required to file his return in Form ITR - 2. Such form contains a column with regard to the inclusion of short term as well as long term capital gain in the total income of an individual.

Income tax

Q. A person (not a doctor) has opened an ultrasound centre and has employed a radiologist to perform ultrasound on salary. No treatment or medicine is given. Proprietor of ultrasound center is a retired person and is not a qualified doctor. Whether it will fall under business or professional for income tax purpose.

— Parminder Bansal

A. The income, in respect of ultrasound centre, should be assessed as income from business because the owner is not carrying on any professional activity as he is not a qualified professional himself.

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