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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

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B U S I N E S S

REL to get capital infusion of Rs 8,000 cr
Mumbai, December 2
Anil Dhirubhai Ambani Group (ADAG) today said it would infuse fresh equity capital of up to Rs 8,000 crore in Reliance Energy Ltd (REL), a move that will help the company execute large projects in power and infrastructure sectors.

Licence Fee
RCom opposes GSM Cos’ view

Reforms in financial sector must: FM
New Delhi, December 2
Terming sustained average growth rate of 8.6 per cent in the past four years as a "proud achievement" for the Congress-led UPA government, finance minister P Chidambaram expressed his disappointment over lack of further reforms in the financial sector and lack of alternate innovative delivery system for social security programmes.

Taming Rupee
Tag Re to bunch of currencies: Experts


 
Tag Heuer brand ambassadors Shah Rukh Khan and Priyanka Chopra display the latest new generation wrist watches, Calibre sports watch, at their launch in New Delhi on Sunday.
Tag Heuer brand ambassadors Shah Rukh Khan and Priyanka Chopra display the latest new generation wrist watches, Calibre sports watch, at their launch in New Delhi on Sunday. Tribune photo by Manas Ranjan Bhui 

Market Update
Markets likely to consolidate
The market posted decent gains in the last week as buying momentum picked up in the later half of the week, volatility was high due to alternate bouts of buying and selling by FIIs caused by redemption pressure in their home countries and fears of a US recession arising from US housing slump and credit crisis. The FIIs, however, on net basis were sellers last week. The sensex gained 2.7 per cent to close at 19,363 and Nifty gained 154 points to close the last week at 5,762.

SBI associate banks’ staff on strike today
Bangalore, December 2
Employees of six associate banks of SBI will go on strike tomorrow against the attempts to merge these banks with the country's largest lender.

Tax Advice
Wife can be a nominee for HUF a/c
Q. I am having a HUF A/c in a bank. Can I nominate my wife? The bank is not agreeing on the plea that only male member can be nominated. — Kartar Brar

Mittal 3rd richest self-made billionaire in Asia
New York, December 2
Bharti Airtel's Sunil Mittal has been ranked third in Forbes magazine's 20 self-made Asian billionaires list, which also has five other Indians, including Unitech's Ramesh Chandra, Suzlon's Tulsi Tanti, Gautam Adani, G M Rao and Uday Kotak.

 

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REL to get capital infusion of Rs 8,000 cr

Mumbai, December 2
Anil Dhirubhai Ambani Group (ADAG) today said it would infuse fresh equity capital of up to Rs 8,000 crore in Reliance Energy Ltd (REL), a move that will help the company execute large projects in power and infrastructure sectors.

"The new equity infusion of capital of up to Rs 8,000 crore will propel Reliance Energy into a completely new orbit, facilitating our participation in a large number of forthcoming mega projects," an ADAG press release said here.

The decision was taken at a meeting of the company's board of directors here. The capital infusion is proposed through a preferential offer of equity shares or equity related securities to Reliance Anil Dhirubhai Ambani Group.

The preferential offer, subject to necessary approvals from shareholders, will be made at a price of Rs 1,812 per share, a premium of 5 per cent to the current market price and the minimum price as per applicable SEBI guidelines, it said.

The group said subscribing to shares at a premium sets a "new trend in corporate governance and transparency". This also gives a "strong signal to capital markets and the international and domestic investor community on our confidence in the company's future growth prospects", it said.

Infusion of fresh capital will substantially enhance REL's net worth and augment its borrowing capabilities.

Net worth would almost double from Rs 10,542 crore to Rs 20,000 crore by March 2009. REL's borrowing ability will increase from Rs 10,000 crore to Rs 20,000 crore, even at a conservative debt-equity ratio of 1:1, the release said.

REL group is engaged in several mega projects under implementation and under consideration in power generation, transmission and distribution, as well as infrastructure development in areas such as highways, bridges, metro rail and real estate among others.

“We have a great sense of excitement at the unprecedented opportunities unfolding before the Reliance Energy group, in the high growth areas of power and infrastructure development,” REL chairman Anil Ambani was quoted as saying in the release.

Life Insurance Corporation, New India Assurance, Oriental Insurance, General Insurance, National Insurance and United India Insurance, who collectively hold about 18 per cent of equity, will be provided an opportunity to participate in the proposed offering, on the same terms and conditions.— PTI 

Licence Fee
RCom opposes GSM Cos’ view

New Delhi: Reliance Communications (RCom) today opposed GSM operators' view that licence fee for new entrants should be raised above the level prevailing in the past, saying any such move will prevent fair competition and create artificial barriers for the entry of new players.

"The private dominant GSM operators have unleashed a misleading propaganda by stating that the existing licence fee numbers for various circles are outdated, and the same need upward revision to reflect current realities," RCom chairman Anil Ambani said in a letter to Prime Minister Manmohan Singh.

He said as recently as in December 2006, the Department of Telecom (DoT) had issued 23 licences to leading existing GSM players, including Idea Cellular, Vodafone and Aircel.

The entry cost of a pan-India licence is Rs 1,651 crore and since the fee paid only 11 months back has been accepted, "it would be discriminatory and unfair to now suggest that the same requires revision for new entrants", he wrote.— PTI 

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Reforms in financial sector must: FM
S. Satyanarayanan
Tribune News Service

New Delhi, December 2
Terming sustained average growth rate of 8.6 per cent in the past four years as a "proud achievement" for the Congress-led UPA government, finance minister P Chidambaram expressed his disappointment over lack of further reforms in the financial sector and lack of alternate innovative delivery system for social security programmes.

Expressing happiness over the impressive growth of Indian companies, both organically and inorganically, the finance minister expected the outflow of foreign direct investment (FDI) to be higher than the inflow of FDI in the current fiscal.

"There are two areas where the performance of our (UPA) government was below expectations. Firstly, its inability so far to push forward further reforms in the financial sector, especially in banking, insurance and pensions. Secondly, we are still depending on the failed and tested systems of delivery of social security programmes and have failed to find an alternative innovative system," Chidambaram said while addressing a session on "The shifting power equation" at the India Economic Summit 2007 that got underway here today.

However, on financial sector reforms he struck a positive note saying "we have still 16 months to go and we might be able to make some progress."

Elaborating on social security programmes, he said "there is no problem of finding resources, but my real concern is its delivery at the field level. Although government has considerably increased the outlays on various social security and development programmes, this has not yet translated into better outcomes."

Replying to a question of growth prospect, Chidambaram said "If India is able to increase its savings from 35.1 per cent at present to 40 per cent of the GDP in the next five years, then the present level of growth of around 9 per cent could be sustainable for 10 to 15 years."

On the general perception that the global economic power centre is shifting to developing countries, Chidambaram said although economic growth was being driven by the developing world, economic power still resides with the developed world.

On an opportunistic note, the finance minister said India would acquire these advantages through its ability to produce goods and services at a lower cost, nimbleness of its entrepreneurs, the managerial talent, demographic advantage and the drive of its younger generation.

On the global forum, Chidambaram said India has been playing a responsible and reasonable role. "India was committed to keep its per capital emissions below the level of the developed countries," he said admitting that India is still lagging behind in achieving the millennium development goals.

Over 700 delegates from across the globe are participating in the three-day India Economic Summit, organised jointly by World Economic Forum and the Confederation of Indian Industry. 

Taming Rupee
Tag Re to bunch of currencies: Experts
Tribune News Service

New Delhi, December 2
Amid apprehension that rupee appreciation would cast its shadow on Indian growth story, experts today suggested tagging the Indian currency to bunch of foreign currencies rather than tagging it to greenback alone.

"The government could tighten external commercial borrowings for the short term. However, this cannot be a long-term solution," said Suman Bery, director-general of National Council of Applied Economic Research, while taking part in a discussion at the World Economic Forum.

Gerard Lyons, chief economist of Standard Chartered, said the currency was likely to strengthen in the coming years. India should have a long-term view of the situation and not take short-term measures, which could hurt its economic growth. He suggested that the country could shift its exchange rate from dollar to bunch of currencies to minimise fluctuation.

The rupee has appreciated almost 15 per cent this year against the dollar. But, its growth against other currencies was not that sharp. Foreign investment into Indian stocks are about $17 billion so far this year which has boosted the rupee and making it difficult for the RBI to manage the surplus cash. 

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Market Update by Lalit Batra
Markets likely to consolidate

The market posted decent gains in the last week as buying momentum picked up in the later half of the week, volatility was high due to alternate bouts of buying and selling by FIIs caused by redemption pressure in their home countries and fears of a US recession arising from US housing slump and credit crisis. The FIIs, however, on net basis were sellers last week. The sensex gained 2.7 per cent to close at 19,363 and Nifty gained 154 points to close the last week at 5,762.

An important aspect during the month was, even outflow of FII money failed to dampen the spirits of the bulls as local funds continued to provide support to the market. FIIs selling is expected to continue as they may resort to year-end profit taking. However, going forward any sharp outflow of funds by foreign institutional investors (FII) may dampen the sentiment.

The market is expected to consolidate at higher levels, before making any fresh upmove. It may see spells of volatile movements as it consolidates.

Surya Pharma

The Chandigarh based Surya Pharmaceutical Limited is a government recognised export house with a focus on manufacturers and exporters of bulk semi-synthetic penicillin antibiotics.

Surya started as a manufacturer of penicillin derivatives in 1993. The company now concentrates on contract manufacturing for global pharmaceutical majors. The company carries its manufacturing through four state-of-the-art manufacturing units, three for active pharmaceutical ingredients (API) and one for formulations.

With special emphasis on research & development activities at a dedicated well equipped R&D centre at Panchkula near Chandigarh, steered by highly qualified scientists from the industry, the company assures the qualities of quick time to market, quality optimisation & cost effectiveness in product delivery.

Surya has initiated construction of a new plant in the tax-haven state of Jammu. The Jammu plant will be constructed in line with US Food and Drug Administration (USFDA) standards primarily to manufacture new APIs (in the therapeutic areas of oncology and sterile cephalosporins. The construction of the new plant began in May 2007, and is likely to be completed by the start of next financial year.

On the financial front, the company has reported a 90 per cent increase in its top line to Rs 118.1 crore in second quarter and an 83 per cent jump in its net profit at Rs 11.7 crore for the quarter. The growth was driven by the increase in the company’s existing API business contribution from the new business of menthol and its derivatives.

With most of the capacity enhancements and de-bottlenecking of the existing capacities completed, Surya’s investment phase seems to be finally over. Surya is planning to make in roads into the high-margin injectable segment through its new facility in Jammu and is augmenting its business by entering the menthol and menthol derivatives segment. Also, with the expansion of its API capacity, Surya is also entering the high-end therapeutic segments like anti-cancer etc. The entry into higher-end products will also have a positive impact on the company’s margins. Given the above factors, Surya pharma, may be worth a pick at the current price of Rs 104. 

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SBI associate banks’ staff on strike today

Bangalore, December 2
Employees of six associate banks of SBI will go on strike tomorrow against the attempts to merge these banks with the country's largest lender.

The staff of six associate banks, excluding State Bank of Saurashtra, would observe strike under the banner of State Sector Bank Employees Association and All India Bank Officers Association.

Officers of these banks as well as State Bank of Saurashtra will observe strike on December 4 as well, according to State Bank of Mysore Employees Union.

The unions said SBI is facing tough competition to maintain its top position and hence planning to merge these associate banks with itself to utilise their assets for its own "selfish ends". — PTI 

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Tax Advice by S.C. Vasudeva
Wife can be a nominee for HUF a/c

Q. I am having a HUF A/c in a bank. Can I nominate my wife? The bank is not agreeing on the plea that only male member can be nominated.
— Kartar Brar

A. The bankers have their own procedures for the maintenance and nomination of accounts and, therefore, the ultimate decision would rest with the bankers with regard to the person to be nominated for receiving the proceed of the bank account in case of the death of a depositor. You may, however, explain to the bankers that in view of the amendment to the Hindu Succession Act, 1956, a daughter is a co-partner in a joint Hindu family property. The wife, in any case, is a member of the HUF and, therefore, the bankers should not have any problem with regard to the nomination of your wife since she is a member of the family.

Tax liability

Q. I am senior citizen and Govt. pensioner. My queries are as under:

1. Pension income during (Rs) the financial year 1,73,748

2. Pension revision arrears w.e.f. 01.01.1996 to 31.03.2007 2,68,343

3. Interest on maturity of FD during financial year 2007-08. 43,470 4,85,561

4. FD under 80(C) i.e. tax saver FD for 1,00,000 5 years in a nationalised bank.

My problems are as under:

1. Tax liability for the financial year 2007-08 on my total income may kindly be worked out.

2. How to save the payment of tax to the maximum extent. I have already deposited Rs 1 Lakh under Section 80(C) FD in Indian Overseas Bank as tax saver FD.

3. Whether or not the interest due on maturity of all those FDs which are due after the expiry of the current financial year 2007-08 and are due during 2009, 2010 & 2011 is to be added in my total income in financial year 2007-08.

4. In order to claim relief under Section 89(1) rule 21 of Income Tax Act 1961 can I attach calculation sheets of the relevant years as Annexure or some other specific income tax return form for this purpose is required to be filled.

5. Can I deposit the whole or part amount of tax before 31.03.2008 through relevant challan in any branch of State Bank of India or not.
— Arun Gupta, Mandi

A. (i) On the basis of figures given in the query, your total income works out at Rs 3,85,561 on which a tax of Rs 53,218 is payable. This amount is inclusive of education cess of 3 per cent.

(ii) The maximum deduction allowable is Rs 1 Lakh under Section 80C of the Income-Tax Act 1961 (the Act). There is no other section which provides for any further deduction against total income. You can, however, make investments in Equity Linked Mutual Funds. The dividend income therefrom would be tax-free.

(iii) It seems you are following the cash system of account for declaring your interest income. Accordingly, the interest received on maturity of fixed deposits would be taxable in the year of receipt of interest.

(iv) For claiming relief under Section 89 of the Act, you are required to file Form 10E along with the return of income.

(v) The tax should be deposited in advance on 15th September, 15th December and 15th March of the year in which income is earned. The advance tax is required to be deposited with reference to the total income estimated for the year. The total tax for the year should be computed and deposited as under:-

Due date of Amount instalment payable

On or before No less than 30 pc September 15 of such advance tax

On or before No less than 60 pc December 15 of such advance tax as reduced by the amount, if any, paid in the earli- er instalment.

On or before The whole amount

March 15 of such advance tax as reduced by the amount or amounts, if any, paid in the earlier instalment or instalments.

In case you make the payments of the entire tax by 31st March 2008 you would be liable to pay interest under Section 234C of the Act.

Transfer of shares

Q. I have some queries regarding shares. My father had purchased about 40 shares of Rs 10 each in 1949 from The National News Print and Paper Mills Ltd. Now it is NEPA Limited. My father expired on 15-8-94. There is no nominee in the company papers. After 15 years, we got these papers and came to know about the shares. When we asked company we are interested to withdraw our money, they have asked for succession certificate from the civil court. To borrow this succession certificate, it costs us Rs 10,000 - Rs 12,000.

(1) Please advise whether spending Rs 10,000-Rs 12,000 will be worthy for us or not.

(2) (a) I came to know through someone that the shares act came in service in 1956, and my father had purchased shares in 1949. Some people say that it was at that time like a partnership and you will get something. (b) Some say they are ordinary shares and we will not get any thing. What is your advice.
— Chaman Sharma, Ludhiana

A. The answers to your queries are as under:

(i) The transfer of shares on the death of a person is made on the basis of the provisions contained in the Articles of Association of the Company. Normally, the Articles of Association do provide for obtaining a succession certificate or a probate of a Will for transferring the shares in the name of legal heirs/person named in the Will. You should approach the company in case the Articles of Association provide for some alternative. You may request the company to follow such alternative procedure so as to avoid the expenditure of Rs 10,000 to Rs 12,000 referred to in your query.

(ii) It is not possible for me to advise whether it would be worthwhile to obtain a succession certificate by spending the above amount. You will have to judge the same on the basis of the cost benefit ratio.

(iii) The later part of your query is not clear and I am therefore not able to give any reply in this regard.

NRO account

Q. What are the legal implications if my NRI son delays/does not convert his savings a/c in India into an NRO a/c. 
— Angoori Devi Goyal

A. In accordance with the master circular issued by the Reserve Bank of India on Non Resident Ordinary Rupee (NRO) Account dated 2nd July 2007, the existing account is required to be designated as a NRO account. You would be, therefore, well advised to inform your bankers about the status of your son having migrated abroad with an intention to stay outside India for an uncertain period. The implications of not informing earlier should be checked up with your bankers.

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Mittal 3rd richest self-made billionaire in Asia

New York, December 2
Bharti Airtel's Sunil Mittal has been ranked third in Forbes magazine's 20 self-made Asian billionaires list, which also has five other Indians, including Unitech's Ramesh Chandra, Suzlon's Tulsi Tanti, Gautam Adani, G M Rao and Uday Kotak.

In the latest list of 20, Sunil Mittal has grabbed the third place with a net worth of $12.5 billion while Ramesh Chandra is at the fourth place with an estimated worth of $11.6 billion.

Tulsi Tanti of Suzlon Energy holds the fifth position, while Adani Group's Guatam Adani is ranked 10th, G M Rao of GMR Infrastructure 13th and Uday Kotak of Kotak Group 20th.

The top two positions have been cornered by two billionaires from Hong Kong — Li Ka-shing ($23 billion) and Lee Shau Kee ($17 billion). Hong Kong is represented by five persons, while China and Malaysia have two each.

According to the US business magazine, Sunil Mittal began his first business in 1976 with "$1,500 borrowed from his father. Later, co-founded Bharti Group with two brothers.

Now, their Bharti Airtel is nation's largest mobile phone operator, with more than 50 million customers." — PTI 

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