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THE TRIBUNE SPECIALS
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B U S I N E S S

Ambani accuses GSM players of spectrum hoarding
New Delhi, November 11
Amid the ongoing telecom tangle, Reliance ADAG chairman Anil Ambani has accused GSM operators of “hoarding” surplus spectrum and sought Prime Minister Manmohan Singh’s intervention to ensure that service providers like Vodafone and Bharti Airtel surrender excess airwaves. 

Bull-blessed Bachchan 
Shahenshah’s scrip wealth surges 10 times
Mumbai, November 11
It’s not just Ambanis and Mittals who are making big bucks on the bourses; even Bollywood superstar Amitabh Bachchan has seen his stock market wealth grow over 10-fold in just about two-and-half years. Bachchan currently holds shares worth over Rs 23 crore in a company promoted by his friend and politician Amar Singh, from Rs 2.3 crore at the end of June 2005 quarter when he purchased these shares.


EARLIER STORIES

 
Emirati vice-president and Prime Minister Sheikh Mohammed bin Rashed al-Maktoum (left) attends the opening of the Dubai air show
Emirati vice-president and Prime Minister Sheikh Mohammed bin Rashed al-Maktoum (left) attends the opening of the Dubai air show on Sunday. Airbus scored first blood in its head-to-head battle with US rival Boeing at the world’s third biggest air show, winning orders from Emirates worth more than $20 billion. — AFP

Oil prices worry industry dons
New Delhi, November 11
Crude oil touching $100 per barrel is perceived to be the biggest downside risk followed by unabated rise in rupee value and signs of global slowdown, a CEO survey by Assocham Business Barometer (ABB) said.

US-listed Indian firms lose $20 b
New Delhi, November 11
Indian blue chips led by Infosys, Wipro and ICICI Bank lost close to $20 billion (about Rs 80,000 crore) of market value on the US bourses in last one week following a downslide in America.

Market Scan
2008 may not be rosy on bourses

The stock market slipped last week on all trading days from Monday to Thursday. During the Samvat Mahurat trading on Friday, Sensex moved down further by 151.33 points. It was for the first time in seven years that the market closed in the red during mahurat trading. Taking last week as a whole, including the mahurat trading, Sensex was down by 853.56 points i.e. from 19,590.78 points on Monday to 18,737.22 on the mahurat day. Sensex, however, climbed 6,000 points from the last year’s mahurat closing of 12,736.82.

Tax Advice
No age bar on opening PPF account

Q. I went through the “saving for child” published in the columns of your esteemed daily. This appealed to me as the best way to save keeping in view the child’s college education etc. I am a retired Haryana government Class II gazetted officer. I want to clarify:

 

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Ambani accuses GSM players of spectrum hoarding

New Delhi, November 11
Amid the ongoing telecom tangle, Reliance ADAG chairman Anil Ambani has accused GSM operators of “hoarding” surplus spectrum and sought Prime Minister Manmohan Singh’s intervention to ensure that service providers like Vodafone and Bharti Airtel surrender excess airwaves.

In a scathing attack on GSM players, who are demanding auctioning of spectrum and have moved telecom tribunal TDSAT on new spectrum norms, Ambani said even sector regulator TRAI, fair trade practices watchdog MRTPC as also TDSAT have issued notices to Bharti and Vodafone for “anti-consumer practices”.

It is essential that the future of telecom industry is “not undermined by a few vested interest for their narrow personal interests”, Ambani said in a letter to Manmohan Singh days before the Diwali festival.

The letter comes after GSM lobby Cellular Operators Association of India (COAI) challenged the new policy of allowing dual technology for mobile telephony and new spectrum allocation norms as recommended by Telecom Engineering Centre.

ADAG firm Reliance Communications is a key CDMA player and was the first one to apply for GSM spectrum under the new norms.

Ambani asked the government to “see through the motivated agenda of a few existing GSM operators and not succumb to their pressure tactics”, and said there should be “a transparent framework for surrender of spectrum in a time-bound manner, wherever not utilised, as per guidelines”.

As if supporting Communications Minister A Raja, who has clarified to Prime Minister the issues relating to spectrum, Ambani opposed the auction of spectrum. He said such a route would benefit a close club of few large existing GSM players who remain free to indulge in anti-consumer practices like cartelisation and price fixation.

Ambani said: “A few large existing GSM players have, in fact, unjustifiably taken away precious and scarce spectrum in the past free of cost, far in excess of their actual requirements and far in excess of the 6.2 MHz they were entitled to under their licenses.” The extra and free spectrum to existing players has enabled them to enjoy savings in capital expenditure at an estimated over Rs 20,000 crore. It also enabled them to generate abnormal profits for themselves and deprive the government of revenues in direct and indirect taxes, he said.

The COAI petition, which earlier represented five out of the eight telecom operators, is now down to three operators, reflecting its own “lack of credibility”, he said, adding that this clearly demonstrated the misleading nature of the claims made by COAI and a few existing large GSM players.

It may be recalled that Raja had also exposed the divide in COAI, saying: “Operators have openly admitted that COAI had misled them, media and the public in general.” Raja had said he was following all issues including those in the regime of his predecessor Dayanidhi Maran as “honest endeavours” aimed at developing the telecom sector, increase teledensity and “lower the tariff for the benefit of public in general and customers in particular”.

Ambani pointed out that although the GSM operators have been vocally criticising the spectrum allocation norms as recommended by TRAI and in the TEC report, but they are yet to furnish any scientific data to challenge the revised norms. — PTI

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Bull-blessed Bachchan 
Shahenshah’s scrip wealth surges 10 times

Mumbai, November 11
It’s not just Ambanis and Mittals who are making big bucks on the bourses; even Bollywood superstar Amitabh Bachchan has seen his stock market wealth grow over 10-fold in just about two-and-half years.

Bachchan currently holds shares worth over Rs 23 crore in a company promoted by his friend and politician Amar Singh, from Rs 2.3 crore at the end of June 2005 quarter when he purchased these shares.

The actor used to be a promoter in Energy Development Company Ltd (EDCL) in 2005-06. While his shareholding stands unchanged at 10 lakh shares, he is no longer a promoter. This is probably the only listed company in India where Bachchan holds shares.

According to information available with stock exchanges, Bachchan figured among the promoters of the company between June 2005 and March 2006 quarters. But his name is among the shareholders holding over 1 per cent stake June 2006 quarter onward. The share price movement for the company, however, shows Bachchan has gained more after being a non-promoter.

The value of 10 lakh shares held by Bachchan grew less than twofolds to about Rs 4 crore as on March 31, 2006 from about Rs 2.3 crore at the end of June 2005 quarter. Currently, his 3.64 per cent stake is worth Rs 23.06 crore.

The shares of EDCL are currently trading at Rs 230.65 on the BSE and has more than tripled in the past one month. The company’s market cap has grown to over Rs 600 crore, representing about five-fold jump in a year.

Bachchan is also an executive director on the company’s board, while Singh is an executive chairman.

According to the company’s annual report, Bachchan was given a remuneration of Rs 2,500 in 2006-07 for being a director. In contrast, Amar Singh got Rs 32.10 lakh for the same fiscal.

EDCL is a power generation company with registered office in Kodagu, Karnataka. The company listed its shares on NSE on November 2, while it is already listed on the BSE. — PTI

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Oil prices worry industry dons
Tribune News Service

New Delhi, November 11
Crude oil touching $100 per barrel is perceived to be the biggest downside risk followed by unabated rise in rupee value and signs of global slowdown, a CEO survey by Assocham Business Barometer (ABB) said.

An ABB survey on ‘Major Downside Risk to Indian Economy’ of 180 CEOs done across the various sectors during the week October 29 to November 5, has revealed that 81 per cent of them felt that with limited options available, government may have to pass on the burden of rise in oil prices to the consumers.

They said that if this issue is not handled expeditiously, it might create difficult situation for the economy, which has so far maintained a pace of 9 per cent.

Crude prices have shot up from $77 per barrel to $97 per barrel in the international market in last three months on a combination of factors including growing demand from China, India and reduction in stockpiles in the US. The situation has worsened following the increase of speculative activities in the future oil market with maximum of the traders betting on the crude. 

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US-listed Indian firms lose $20 b

New Delhi, November 11
Indian blue chips led by Infosys, Wipro and ICICI Bank lost close to $20 billion (about Rs 80,000 crore) of market value on the US bourses in last one week following a downslide in America.

The total loss registered by 16 Indian companies listed on the US bourses is about one-fourth of that recorded by over 4,000 companies on domestic bourses.

IT major Infosys registered the biggest loss of about $5 billion while Wipro and country’s biggest private lender ICICI Bank saw an erosion of close to $4 billion each in their market capitalisation in the US.

The total market capitalisation of all 16 US-listed Indian firms dropped to about $130 billion on Friday, against close to $150 billion a week ago.

None of these companies managed to record a gain during this period.

Five out of these 16 companies are not listed on the Indian bourses. Among the remaining 11, the loss seen on the US bourses was bigger than the Indian bourses for as many as eight companies. The two private sector lenders - ICICI Bank and HDFC Bank - and IT firm Patni Computer Systems recorded bigger losses on the Indian stock market.

The US stock market’s benchmark index Dow Jones Industrial Average (DJIA) dropped 4.06 per cent during the week. Dr Reddy’s Labs and Sterlite Industries were the only two Indian firms recording a lower fall of 1.5 per cent and 3.5 per cent, respectively. The decline was higher for other 14 firms.

The Bombay Stock Exchange’s 30-share barometer index dropped by about 5 per cent during this period.

In percentage terms, Wipro recorded the biggest fall of 17.6 per cent among the US-listed firms, followed by Infosys (17 per cent), Rediff.com (15.1 per cent), VSNL (13.9 per cent), Sify (13.8 per cent) and ICICI Bank (12.6 per cent).

Satyam Computer, HDFC Bank, MTNL and WNS Holdings also saw their market value plummeting by over 10 per cent. — PTI

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Market Scan
2008 may not be rosy on bourses
by J.C. Anand

The stock market slipped last week on all trading days from Monday to Thursday. During the Samvat Mahurat trading on Friday, Sensex moved down further by 151.33 points. It was for the first time in seven years that the market closed in the red during mahurat trading. Taking last week as a whole, including the mahurat trading, Sensex was down by 853.56 points i.e. from 19,590.78 points on Monday to 18,737.22 on the mahurat day. Sensex, however, climbed 6,000 points from the last year’s mahurat closing of 12,736.82.

There are clear indications that the financial year 2008 is likely to be not as good as the current financial year. Standard and Poor (S&P), a top rating agency, has indicated that the Asian markets are likely to face turbulence in 2008 and a sharp slide. In general, 2008 will be a more difficult year for the stock market. S&P does not rule out the risk of a sharp correction. More or less similar indication has been given by Stephen S. Roach, chairman, Morgan Stanley, Asia. According to him, Asia and India will be hit hard due to the likely recession in the US in 2008. If the “US sneezes”, says Roach, “Asia will catch cold”.

The basic fact is that the US economy is facing recession due to subprime market defaults. The largest US securities group Morgan Stanley has lost $ 3.7 billion of subprime mortgage linked investments during the last two months. Merrill Lynch, the second-largest securities group, reported losses of $7.9 billion and Citigroup, the largest US bank, reported a slide-down of $11 billion on subprime holdings.

Federal Reserve chairman has told the law-makers in Washington that a noticeable slowdown is expected during this quarter and the economy is likely to pick up only later in 2008 as the housing slump wanes. Oil and energy costs are depressing economy and putting pressure on inflation.

Many of the Asian companies have been doing well due to export to the US. Now that the US economy has depressed, the export earnings of the Asian companies will be adversely affected. India has relatively lesser export earnings than China, Japan and Korea. Indian economy may be affected to a relatively lesser extent but will also suffer losses.

Another reason for relative decline in the Indian economy in 2008 is likely due to the rising exchange value of the Indian rupee against dollar and other currencies. This has cut down the Indian exports to the US and other countries, making Indian goods less competitive than China and other SE Asian countries. The worst sufferer is the textile sector and to a lesser extent the software. Companies based at Gurgaon (to take one example) are sending workers on 45 days’ leave without pay before Divali. Tripura and Tamil Nadu have not renewed contract of over 8,000 workers. House of Pearls has said that the company has laid back 1,000 employees recently. In the Punjab region, recent quarterly results indicate a sharp decline in the net profits and EPS. Nahar Spinning, Vardhman Textiles and other companies have lower sales and profits.

The Planning Commission has projected the growth rate at 9 per cent. It will be difficult to meet this target. The current exchange value of the rupee, high international crude prices (now ranging between $95 and $ 98 per barrel), poor infrastructure and power generation and power crunch are the three factors, which are blocking and weakening the Indian economy and growth outlook. The year 2008 will register lesser growth rate than the current financial year.

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Tax Advice
No age bar on opening PPF account
by S.C. Vasudeva

Q. I went through the “saving for child” published in the columns of your esteemed daily. This appealed to me as the best way to save keeping in view the child’s college education etc. I am a retired Haryana government Class II gazetted officer. I want to clarify:

(i) Can I can open PPF account at this age?

(ii) My daughter has her own PPF account for IT purpose. Will her income from this PPF (new to be opened) on maturity be taxable?

(iii) In case of my death, will my daughter, i.e. the nominee be entitled to continue the PPF account till maturity?

(iv) Can my daughter give me a gift? Will it be taxable?

My only consideration is to save something for the 11 months old girl child for her college education etc.

— Santosh Dutt, Haryana

A. (i) Clause 3 of the Provident Fund Scheme, 1968, provides that any individual may, on his behalf subscribe to the PPF, any amount not less than Rs.500 and not more than Rs 70,000 in a year. Accordingly, there seems to be no bar in your opening Provident Fund Account even though you have attained the age of superannuation.

(ii) You can appoint your daughter as nominee in the account so opened.

(iii) The nomination in her name will not affect her own PPF account.

(iv) In case of death, she will be entitled to receive the amount deposited in the account, along with the interest thereon.

(v) Your daughter can give you a gift of any amount. The same would not be chargeable to tax.

Interest on FDR

Q. I request you to please guide and give information on these points for IT for the current year 2007-08 started from April 1, 2007.

(1) I am a senior citizen and doing business. What amount of tax on income is allowed for IT?

(2) What amount of FDR bank interest is allowed and other relief, if any?

(3) What amount of service tax is allowed and after what amount is the service tax number necessary to apply.

— S.Nath, Chandigarh

A. The answers to your queries are:

(i) In case of a senior citizen, the maximum amount, which is not chargeable to tax is Rs.1,95,000. This limit is applicable for the assessment year 08-09.

(ii) The interest earned on FDR is entirely taxable and there is no relief allowable in respect thereof under any provisions of the Act.

(iii) The service tax is chargeable for specified services rendered by the service providers. The service tax becomes leviable if the amount of services rendered exceeds Rs 8 lakh per year. However, in case the amount of services rendered are Rs.7 lakh or more during the year, it would be necessary to get registered with the department.

Parents’ income

Q. Reference your replies to questions 1 and 3 (dated August 20, 2007). You have answered that not the income but its interest shall be taxable as income of the father under the head “income from other sources”. But answering the question “Pension among legal heirs…” the income of the minor daughters will be clubbed with your income in view of the provisions of Section 64(1A) of the Act. Thus your reply to the two above said answers differ.

“If the income of a minor daughter is by way of gift, only the income of interest shall be included in the income of the father and if it is an income by way of a proportionate family pension of the father it will be included in the income of the mother” Why so, when in both cases the minor is under the guardianship of the father in the first instance and in the second under the guardianship of the mother. Does the law know of such laxities? I do not think so.

— Krishan Kumar Singh, Nabha

A. It seems you have not looked up the queries put to me. In the first case, the query had been raised by the father with regard to the cash gifts received on the occasion of the birthday celebrations of his daughter. The answer was accordingly given in view of the provisions of Section 64(1A) of the Act which require that in computing the total income of an individual, there shall be included such income as arises or accrues to his minor child not being a minor child suffering from any disability of the nature specified in Section 80U of the Act. The query did not make any reference with regard to the income of the mother and, therefore, it could not have been presumed that the income of the wife would be greater than that of the husband which would necessitate the inclusion of such income in the mother’s income, since Section 64(1A) of the Act provides this method of inclusion of minor’s income in the income of either of the parents.

In the second case, the query raised was with regard to the family, which the lady was entitled on account of the death of her husband. The inclusion in the second case had to be in the income of the mother in view of the provisions of Section 64(1A) of the Act quoted herein above.

Donation & deduction

Q. How much amount an IT payee (senior citizen) can donate for repair and renovation of notified historic gurdwara/temple that can be claimed as rebate from gross total income during the financial year under Section 80G of the IT Act.

— Raminder Singh, Patiala

A. Section 80G(2)(b) of the IT Act, 1961 (the Act), provides for the deduction to the extent of 50 per cent of any sum paid by the assessee in the previous year as donation for the renovation or repair of any such temple, mosque, gurdwara, church or other places as is notified by the Central Government in the official gazette to be of historic archeological or artistic importance or to be a place of public worship of renown throughout any state or states.

I may add that in case the amount of specified donations including for the aforesaid purpose exceeds 10 per cent of the gross total income, as reduced by any portion thereof, on which income tax is not payable under any provisions of this Act and by any amount in respect of which the assessee is entitled to a deduction under Sections 80C to 80U of the Act (excluding section 80G) then the amount in excess of 10 per cent of the gross total income shall be ignored for the purposes of computing the aggregate amount in respect of which deduction is to be allowed. Gross total income for this purpose means the total income computed in accordance with the provisions of this Act before making any deductions under Section 80C to 80U of the Act. 

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