SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

PSUs outsmart private firms on bourses
New Delhi, November 4
The debate on wealth of Mukesh Ambani can go on but the government is the biggest gainer of the bull run with about 80 state-run entities adding Rs 10 lakh crore in market value this fiscal, which is nearly half the gains seen by over 4,000 private entities led by RIL. The government's promoter holdings in listed entities currently stands at over Rs 15,00,000 crore (close to $400 billion).

Citigroup may get Indian boss
New York, November 4
Vikram Pandit, an Indian origin banker, is understood to be in the reckoning to head world’s largest banking institution Citigroup, whose current CEO is reportedly planning to resign. US-headquartered Citigroup, which has presence across the world, including India, is holding a board meeting where its chairman and CEO Charles Prince is expected to tender his resignation.

Cellphone users not satisfied: IDC
New Delhi, November 4
India may be the world's fastest growing telecom market but subscribers are increasingly dissatisfied over poor customer care, according to an International Data Corp (IDC) survey.


 

EARLIER STORIES

 
Chairman of DP World Sultan Ahmed bin Sulayem speaks in Dubai on Sunday. DP World, one of the world’s largest container-port operators, launched an IPO for 17 pc of its shares in one of the biggest-ever flotations in the Gulf.
Chairman of DP World Sultan Ahmed bin Sulayem speaks in Dubai on Sunday. DP World, one of the world’s largest container-port operators, launched an IPO for 17 pc of its shares in one of the biggest-ever flotations in the Gulf. — AFP photo

Spectrum Issue
Telecom Minister sends letter to PM
New Delhi, November 4
Amid drama on high stake spectrum, communication minister A Raja informed Prime Minister Manmohan Singh that the Cellular Operators’ Association of India (COAI) was misleading the nation against ‘scientific approach’ on frequency allocation.

BEML may set up joint venture
Mumbai, November 4
The rail and metro business group of BEML is looking for a jv partner from overseas to manufacture hi-end bogies to meet the growing demand. The company may put up a greenfield facility for the proposed venture or can house it in any of its existing facilities in Bangalore, Kolar Gold Factory and Mysore. — PTI

Market Update
Sharp fall ruled out
by Lalit Batra
M arket continued to gain ground and Sensex ended the last week at 19,976, a gain of close to 4 per cent. The broader-based Nify gained over 4 per cent to close the last week at 5,932. The RBI (Reserve Bank of India) raised the cash reserve ratio (CRR) maintined by the banks from 7.0 per cent to 7.5, effective from November 10, 2007.

Tax Advice
Documentation of deal must in off-market transaction
by S.C. Vasudeva
Q. Kindly advise the consequences of ‘off-market’ transfer of shares, viz;
1. Who all can do this transaction?
2. What effect will it have on -
(a) date of acquisition/transfer,
(b) price of shares for calculation of gains (for both portion)
3. Tax implications (for both portions)
— K. Singh, H.P.

Videos
Airfares to be hiked?
(56k)
Sensex at 22K by Nov end?
(56k)

 

Top



 

 

 

PSUs outsmart private firms on bourses

New Delhi, November 4
The debate on wealth of Mukesh Ambani can go on but the government is the biggest gainer of the bull run with about 80 state-run entities adding Rs 10 lakh crore in market value this fiscal, which is nearly half the gains seen by over 4,000 private entities led by RIL.

The government's promoter holdings in listed entities currently stands at over Rs 15,00,000 crore (close to $400 billion), which is nearly three times the cumulative market capitalisation of all Mukesh Ambani group companies at about Rs 5,00,000 crore, leave aside the personal holding of the group chairman.

According to the latest data available with the stock exchanges, the total market capitalisation of all listed companies is about Rs 63.5 trillion, which has increased by about Rs 28 trillion since the beginning of this fiscal.

Out of this, the state-run companies have gained close to Rs 10,00,000 crore, while the remaining Rs 18,00,000 crore has been shared by all private sector firms put together.

Besides, it is the governments' promoter holdings in these companies that has walked away with a large chunk of the value appreciation - estimated at about Rs 8.4 trillion - with the remaining Rs 1.5 trillion being shared by all other institutional and retail investors.

According to an analysis of share price movements since the beginning of the current fiscal, market capitalisation of companies with promoter holdings of central or state governments has more than doubled from just about Rs 8,07,000 crore at the last fiscal-end to nearly Rs 17,95,000 crore now.

The three most valued PSU firms - energy giant ONGC, commodity trading firm MMTC and mining company NMDC - have contributed more than half the total gain in this fiscal.

In the past five years, the total market cap of all listed PSUs have grown over 10 times from just about Rs 1,53,000 crore as on November 4, 2002. Reliance Industries (RIL) is the only private sector firm in the top five with a market cap of Rs 3,88,000 crore. It is followed by ONGC at Rs 2.92 lakh crore, MMTC with Rs 2.12 lakh crore, NMDC (Rs 1,98,799 crore) and power major NTPC at the fifth place with Rs 1,93,562 crore.

The rally in PSU stocks has also forced all IT companies out of the top 10 list of corporate entities, based on their market cap, perhaps for the first time since the IT boom early this decade.

Market players believe that the rising valuation of PSU firms is driven by the fact that they provide a low-risk profile and long-term growth prospects in the current volatile market conditions. — PTI

Top

 

Citigroup may get Indian boss

New York, November 4
Vikram Pandit, an Indian origin banker, is understood to be in the reckoning to head world’s largest banking institution Citigroup, whose current CEO is reportedly planning to resign.

US-headquartered Citigroup, which has presence across the world, including India, is holding a board meeting where its chairman and CEO Charles Prince is expected to tender his resignation, media reports have said. Charles, who has been heading the institution for about four years, is reportedly taking the responsibility for huge losses that the bank suffered during the subprime crisis earlier this year.

According to industry sources, one of the main contenders for the post of CEO, at least on interim basis, could be Vikram Pandit, who joined Citigroup just about six months back and heads its investment banking operations.

If Pandit is appointed as Citigroup’s CEO, he would be the first Indian to head a leading global bank.

Pandit, a former professor at Columbia University, had earlier headed Morgan Stanley’s institutional securities business before starting a hedge fund, that he later sold to Citigroup for $800 million.

The New York Times reported that a search committee would be formed to find a successor to Prince. It added that the board is “highly likely to name Robert E. Rubin, the former treasury secretary and an influential adviser to its embattled leader, as its interim chairman.”

The report added that the board might already be pursuing other options for the job of acting CEO and Vikram Pandit was one contender.

The daily named the company’s chief operating officer Robert Druskin and its newly named finance chief Gary L Crittenden as other potential candidates, who, it said, could join Rubin or other high-ranking bank executives as part of the committee to oversee the bank.

The name of NYSE chief executive officer John Thain, earlier a senior executive at Goldman Sachs, is also doing the rounds as a candidate for the post. — PTI

Top

 

Cellphone users not satisfied: IDC

New Delhi, November 4
India may be the world's fastest growing telecom market but subscribers are increasingly dissatisfied over poor customer care, according to an International Data Corp (IDC) survey.

The average waiting time to speak to a customer care executive is well over five minutes, according to the survey by the IDC, a global market intelligence firm specialising in IT, telecommunications and consumer technology markets.

The survey entitled, India Mobile Services Usage and Satisfaction Study 2007, was conducted on a sample of 4,760 users.

IDC noted that the key concern areas of consumers was the lack of knowledge and promptness among customer care representatives, with no satisfactory final result.

"It appears that service providers are not upgrading infrastructure to match growing customer base. This needs greater attention.

Implementation of a well-defined customer care programme is likely to benefit service providers," Shailendra Gupta, senior manager for consumer research, IDC (India), said in a statement.

The number of loyal customers has gone down and the number of disloyal and opportunist consumers has risen, the survey highlighted.

According to IDC (India), this problem would become greater when the long-awaited number portability policy is implemented.

Mobile number portability would allow users to retain their numbers even if they change service operators.

"Indian telecom operators have done a good job of satisfying customers continuously over the last three years. But this may not continue if the government does not address the issue of spectrum availability speedily," Kapil Dev Singh, country manager, IDC (India), said.

"Although at present it is considered a core technology issue, customers will soon start complaining about network quality," Singh added. — IANS

Top

 

Spectrum Issue
Telecom Minister sends letter to PM

New Delhi, November 4
Amid drama on high stake spectrum, communication minister A Raja informed Prime Minister Manmohan Singh that the Cellular Operators’ Association of India (COAI) was misleading the nation against ‘scientific approach’ on frequency allocation.

Ahead of Bharti Airtel’s petition to Singh for his intervention, Raja sent a letter to the Prime Minister’s office informing about the ministry’s approach.

In fact, Raja’s communication exposed the divide in the powerful COAI, which had challenged the usage of dual technology and spectrum allocation at the apex tribunal TDSAT, saying: “operators have openly admitted that the COAI had misled them, media and the public in general.” Raja said he was following all the issues, including those in the regime of his predecessor Dayanidhi Maran, as “honest endeavours” aimed at developing the telecom sector, increase the teledensity and “lower the tariff for the benefit of the public in general and customers in particular.” Reliance and Tata had sought to take benefit of the dual technology immediately after the announcement of the new policy mechanism, a move that provoked COAI into action. — PTI

Top

 

Market Update
Sharp fall ruled out
by Lalit Batra

Market continued to gain ground and Sensex ended the last week at 19,976, a gain of close to 4 per cent. The broader-based Nify gained over 4 per cent to close the last week at 5,932. The RBI (Reserve Bank of India) raised the cash reserve ratio (CRR) maintined by the banks from 7.0 per cent to 7.5, effective from November 10, 2007. This is expected to curb the growth in the reserve money (base money) from the current 24.4 per cent to about 14.9 per cent. However, the RBI did not increase the bank rate, nor lowered the reserve repo rate at which it absorbs excess liquidity from the banks. The US Federal Reserve reduced the Fed funds rate by 25 basis point to 4.5 per cent.

The market may consolidate at the current level after the recent rally. The market is expected to take a pause before making the next move in the absence of near-term triggers. Spells of high volatility cannot be ruled out. Any sharp fall may be ruled out as tremendous liquidity is waiting to enter the market.

Mundra Port & SEZ

An Adani Group company, Mundra Port & Special Economic Zone, is the developer and operator of Mundra Port. Mundra Port is a non-captive private sector port in India. Apart from operating the port, the company plans to use surplus land surrounding the port to develop a multipurpose special economic zone (SEZ).

Mundra Port & SEZ intends to use the proceeds of the issue for (a) construction and development of basic infrastucture and related facilities in the proposed SEZ at Mundra and surrounding areas. (b) construction and development of terminal for coal and other cargo at the Mundra Port (c) investing in Adani Petronet (Dahej) Port, (d) investing in Adani Logistics’s container business, and (e) investing in Inland Conware’s inland container depot business.

Once fully developed, Mundra Port & SEZ will have diverse revenue streams, including income from offering port services, value-added logistic service income and lease and rental income from SEZ. Mundra Port is an operational port with natural draft depth in the range of 15-32 meters at a short distance from shore, enabling it to handle large-sized future generation vessels. There are no major ports in India, either in the public or the private sector, with such a huge natural draft depth. As a result, only Mundra Port is currently able to handle large new generation ships. Freedom in fixing tariff is one of the major advantages enjoyed by the port when compared with other major ports in the country that take orders from the Tariff Authority for Major Ports.

The risks of the issue are that the Food Corporation of India (FCI) cargo accounted about 27 per cent of the total bulk cargo handled during the last financial year. The type and quantity of cargo largely depends on the Government of India’s grain import-export policy.

Also, proactive steps by the Gujarat government and neighbouring states such as Maharashtra in privatising minor ports could increase competition.

Having said this, we still believe that Mundra Port & SEZ has a double advantage of an operator of a functioning port as well as a developer of SEZ. Given the current craze for infrastructure projects, the long-term growth potential is likely to get discounted in the price well in advance and one may not need to go through the operational and regulatory uncertainties and gestation period that such large projects normally entail. Retail investors may apply at “cut off” (price band Rs 400- Rs 440).

Top

 

Tax Advice
Documentation of deal must in off-market transaction
by S.C. Vasudeva

Q. Kindly advise the consequences of ‘off-market’ transfer of shares, viz;

1. Who all can do this transaction?

2. What effect will it have on -

(a) date of acquisition/transfer,

(b) price of shares for calculation of gains (for both portion)

3. Tax implications (for both portions)

— K. Singh, H.P.

A. The answers to your queries are as under:

1. Any individual can enter into an off market transaction.

2. In such transactions, spot delivery note has to be issued in case of demat done securities and the payment has to be received on the date of the delivery. The date of acquisition will be the date on which delivery is taken. The date of transfer would be the date on which the delivery is given. This is on the basis that moveable property can be transferred as and when delivery is given.

3. The price for the purchase/sale of such shares will also have to be evidenced. Such evidence can be on the basis of an agreement or can be any other documents to prove the sale price of the shares which have been sold.

4. The long term capital gain arising on such transactions in case of a listed company will be taxable at the rate of 10 per cent plus applicable surcharge and education cess. However, in case of unlisted companies the rate of tax would be at the rate of 20 per cent instead of 10 per cent.

TDS on FD

Q. I am a retired bank officer and not a senior citizen. I have no other income and is having income from bank FDRs, which are below taxable limit after taking into account the deduction, admissible under Section 80C. My wife and me depend on FDR’s interest. Total interest on FDR’s exceed Rs 50,000.

Please advice whether bank should deduct TDS on such FDR deposits if form 15G is given to the bank.

— B.R. Mehta, Solan

A. The bank is obliged to deduct tax at source (at the rate of 10 per cent plus education cess) in case the interest credited or paid or likely to be credited or paid during the financial year exceeds Rs 5,000 (Rs 10,000 w.e.f. June 1, 2007). Form 15H can be filed only by a senior citizen if such individual furnishes to the person responsible for paying any interest, a declaration in writing in the said form in duplicate to the effect that the tax on his estimated total income of the previous year in which such interest income is to be included in computing his total income will be nil. Form 15G can be filed by a person (not being a company or firm) if such a person furnishes to the person responsible for paying any income of the nature referred to in [Section 193 or Section 194A] or Section 194K, as the case may be, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the aggregate of the income of the payee from:

(i) dividends other than dividends from domestic companies;

(ii) Interest on securities;

(iii) Interest other than interest on securities;

(iv) Repayment of deposit under NSS; and

(v) Income in respect of units exceeding the maximum amount which is not chargeable to tax.

On the basis of facts given in the query, your interest income exceeds the maximum amount, which is not chargeable to tax. In my view, therefore, you cannot avail the benefit of filing Form 15G.

Premium on policy

Q. I am a retired senior citizen submitting income tax return regularly. My total pension with post office interest comes to Rs 2,30,000 in a year. Recently, I have taken insurance policy of Metlife India and have paid premium Rs 50,000. I will pay this yearly premium only for three years, After that, I will withdraw my three year’s premium alongwith interest as the lock in period is for three years.

My query is:-

(a) How much rebate will I get on my above premium in financial year 2007-08?

(b) Whether interest earned on three years premium will be taxable at the time of receipt in financial year 2010-11?

— S.K. Sharma, Karnal

A. In order to take the benefit or deduction under Section 80C of the Income-tax Act, 1961, the minimum period of holding of the policy has to be two years. This two years holding period basically implies that a person will atleast have to pay premium for first three years. For example, if the premium payment is annual, then annual payments for three years have to made i.e. first premium at the beginning of the year and two more premium. On the basis of facts given in the query you would be entitled to a deduction of an amount not exceeding 20 per cent of the capital sum assured. In calculating capital sum assured no account shall be taken of (a) value of any premium agreed to be returned or (b) benefit by way of bonus or otherwise over and above the sum assured, which is to be or may be received under the policy.

The taxability of the amount received on maturity would depend upon the premium paid with reference to the capital sum assured. The particulars with regard to capital sum assured not being given in the query, I am unable to give reply to the second limb of your query.

Retirement benefits

Q. One of my relatives is going to retire from the government service by the end of this year. He is likely is receive retirement benefits, i.e. G.P.F., gratuity, leave encashment and insurance amount to the tune of about Rs 80 lakh. Just to save income tax, can he gift Rs 20 lakh to his wife through payee’s account cheque. With this amount, she can open a PPF account in her name. I understand that she can take her interest income up to Rs 2,95,000. If she deposits the entire amount of Rs 20 lakh, in FDRs for five years, she is likely to earn interest of Rs 1,80,000. Can she purchase national savings certificates with Rs 1 lakh. I would like to know which of the tax saving scheme, you think, is better proposition?

2. Her brother is an NRI. He sends every year festival gifts to her sister. Is there any tax liability on this amount?

3. Will you please suggest any other tax saving scheme for investment?

— G.S. Sondhi, Ludhiana

A. The queries raised by you are being replied hereunder:

1. He can gift a sum of Rs 20 lakh to his wife without attracting any tax liability. The amount so gifted will not be allowed as a deduction wile computing his tax liability. Further, income arising on such gifted amount would be clubbed with his income.

2. In case the amount is deposited by her in a F.D. account for five years, the interest on such F.D. would be clubbed with the income of your friend. However, income earned on such interest i.e. interest on interest would be taxable in the hands of the wife of your friend.

3. The interest accruing on NSCs would also be clubbed with the income of your friend.

4. The best method would be to invest the gifted amount in an asset, the income from which is tax-free.

5. There is no tax liability in respect of the money received by your friend’s wife from her NRI brother. 

Top

 



HOME PAGE | Punjab | Haryana | Jammu & Kashmir | Himachal Pradesh | Regional Briefs | Nation | Opinions |
| Business | Sports | World | Mailbag | Chandigarh | Ludhiana | Delhi |
| Calendar | Weather | Archive | Subscribe | Suggestion | E-mail |