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Financial stats show slump in demand
New Delhi, May 3
The effects of slumping domestic and international demand, high borrowing costs and forex losses are showing in the financial results of companies. In an analysis of the financial performance of 324 companies for the quarter ending March 2009, it was revealed that net sales for these companies grew by a mere 8.7 per cent during Q4 of 2008-09 in comparison to 23.7 per cent growth witnessed during Q3 of 2008-09.

Biggies to stay with Satyam
New Delhi, May 3
In a news that could bring cheer to Satyam employees, three of their big clients Nestle, Nissan and CIBA, who were on wait and watch mode, have assured to continue business with the firm. “Clients such as Nestle and Nissan has already expressed confidence in the company and had assured us that they will continue with us,” an official privy to the development said.Nestle have also given some additional business to Satyam last month, the person added. One of the multi-million dollar SAP client of Satyam, Nestle, which was earlier keeping a tab on the developments.



EARLIER STORIES



RECESSION BLUES: A customer pulls on the locked doors of a Starbucks Coffee shop in Washington, DC. Starbucks Corp has said its fiscal second-quarter profit dropped 77 per cent
RECESSION BLUES: A customer pulls on the locked doors of a Starbucks Coffee shop in Washington, DC. Starbucks Corp has said its fiscal second-quarter profit dropped 77 per cent. Meanwhile, three more American lenders have been closed down, making it an average of six bank failures every month in 2009. A staggering 32 banks have gone belly up so far this year, a toll much higher than 25 collapses for the whole of 2008. — AFP/PTI

Back on track: Toyota to run full throttle by July
New Delhi, May 3
With the domestic auto market showing signs of recovery, Japanese carmaker Toyota will increase its vehicle production to full capacity in India in the next two months. The company, which operates in India through a joint venture with Kirloskar Group - Toyota Kirloskar Motor (TKM), had cut its production to 3,500 units a month in November.

Tax Advice
Income from mutual funds not taxable
Q On closing UTI Raj Lakshmi Unit Plan, it was converted in to 6.5% tax-free bonds. This scheme ended March 2009. A cheque of Rs 2,20,320 is likely to be received shortly in the name of a minor.





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Financial stats show slump in demand
Bhagyashree Pande
Tribune News Service

  • Net sales for these firms grew by 8.7% during Q4 of 2008-09 in comparison to 23.7% during Q3 of 2008-09
  • Falling inflation of wholesale prices of commodities has resulted in net profits of the companies contracting by 1% during Q4 of 2008-09
  • This has improved as compared to the contraction of 2.4% in the net profit previous quarter when inflation was still at 9-11% level

New Delhi, May 3
The effects of slumping domestic and international demand, high borrowing costs and forex losses are showing in the financial results of companies.

In an analysis of the financial performance of 324 companies for the quarter ending March 2009, it was revealed that net sales for these companies grew by a mere 8.7 per cent during Q4 of 2008-09 in comparison to 23.7 per cent growth witnessed during Q3 of 2008-09.

Companies like Ranbaxy Laboratories have witnessed degrowth of net sales by 3.7 per cent over last year due to slump in demand from the US (7 per cent) and Europe (14 per cent). The company also faced major foreign exchange loss due to depreciation of the rupee during financial year 2008-09.

The gradual slowing down of demand was witnessed in manufacturing companies 173 of which were surveyed by an industry chamber.

Falling inflation of wholesale prices of commodities was witnessed in moderation in raw material costs. This has resulted in net profits of the sample of companies contracting by 1 per cent during Q4 of 2008-09. This is a little bit improved when compared to the contraction of 2.4 per cent in the net profit previous quarter (October- December) when inflation was still at 9-11 per cent level.

Maruti witnessed its profit fall due to high raw material cost, which accounts for nearly 79 per cent of its sales cost. The company stated that raw material cost rose considerable also due to a volatile rupee.

Petrochemical major Reliance Industries have witnessed sales hit by 23.9 per cent in Q4. High cost of debt and rupee fluctuation has also hit the profits of the largest petrochem major, which imports crude oil and exports products to the international markets.

High interest costs have also hit retail firms like Pantaloon Retail, whose interest costs at one time were as high as 90 per cent in 2008-09.

Cross currency headwinds impacted tech major Infosys, which has already stated that business environment was going to be challenging in the year ahead as 69 per cent of its clients will be pruning 10 per cent IT budgets.

India Inc has been able to limit the inventory build-up in their units to manageable levels despite slackening export orders and sluggish domestic demand, according to a survey conducted by PHD Chamber. According to the survey, around 31 per cent of units have reported a low inventory build-up of less than 10 per cent. This has been possible as companies have appropriately undertaken production cuts to suit prevailing demand conditions. The pile-up can be seen mainly in textiles, chemicals, steel, metals, auto, sanitary ware, ceramic tiles and building materials.

The CII said at a time when the global economy and trade were projected to contract, the government needed to maintain higher spending, especially in the creation of public assets. Monetary policy, in turn, needs to be supportive. Any pressure on interest rates to rise at this juncture will crowd out private spending, Chandrajit Banerjee, director general, CII, said. However, there is a ray of hope as the country has received equity investments worth around Rs 7,000 crore in April, ahead of investment destination favourites like Korea, Taiwan, Japan and the Philippines. Compared to India, which has pulled in $1.57 billion of foreign money, other emerging markets such as Indonesia, the Philippines, Taiwan and South Korea have bagged $18 million, $531 million, $632 million and $7 million, respectively.

In 2009-10, CII expects a recovery to be driven by decline in interest rates, moderation in price of essential commodities such as food and fuel as well as the reductions in indirect tax rates. Rural demand also remains strong in view of the good performance of the agricultural sector.

The fact that rural demand remains unaffected by global developments is a source of strength for the economy, Banerjee said.

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Biggies to stay with Satyam

‘But for the forgery, Satyam was work of art’

New Delhi: Had it not been for a fraud, the way things were manipulated for over seven years in IT major Satyam Computers could be a “work of art”, former Securities and Exchange Board of India chairman M Damodaran said.

“If it were not for a dishonest purpose, the planning and execution to the minutest detail was a work of art,” he said at a gathering of CEOs hosted by CEO Clubs, a business network organisation, yesterday.

Damodaran, who is on the board of software firm Tech Mahindra, which made the successful bid for Satyam, said the fraud at Satyam was “unique” and he believes it is an isolated case, not reflective of the state of affairs of India Inc.

Expressing hesitation to reply to a query on the major takeaways for market regulator after the Satyam fiasco, he said he retired as the chief of the SEBI over a year now. — PTI

New Delhi, May 3
In a news that could bring cheer to Satyam employees, three of their big clients Nestle, Nissan and CIBA, who were on wait and watch mode, have assured to continue business with the firm.

“Clients such as Nestle and Nissan has already expressed confidence in the company and had assured us that they will continue with us,” an official privy to the development said.

Nestle have also given some additional business to Satyam last month, the person added. One of the multi-million dollar SAP client of Satyam, Nestle, which was earlier keeping a tab on the developments.

Analysts had feared that post acquisition of the firm by Tech Mahindra, clients of Satyam who were sitting on the fence would jump to other vendors. However, post the acquisition, some of the companies had expressed confidence in the entity and pledged to continue business with them.

Auto major Nissan for whom Satyam provides application management had also said they would continue business with the firm. The company has also got an endorsement from another SAP client CIBA. Moreover, UK, Switzerland and Germany who had earlier imposed some strict norms on Satyam employees for getting Visa have eased them.

Earlier, chairman of Satyam Kiran Karnik had said though some clients had left the company but Satyam have got some new work as well. — PTI

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Back on track: Toyota to run full throttle by July

New Delhi, May 3
With the domestic auto market showing signs of recovery, Japanese carmaker Toyota will increase its vehicle production to full capacity in India in the next two months.

The company, which operates in India through a joint venture with Kirloskar Group - Toyota Kirloskar Motor (TKM), had cut its production to 3,500 units a month in November. It will produce 3,800 units in May and gradually increase it to 5,000 units by July.

Besides, the company will introduce two models in the current year and add 65 new dealerships by 2010 in its efforts to expand its presence in the country.

“On the basis of the market's performance last year, we cut our output, but since in the last four months the market is coming back on track, we will increase the production of our vehicles from May,” TKM deputy managing director (marketing) Sandeep Singh said.

TKM currently has a production capacity of 60,000 units per annum. In March, the company sold 3,634 vehicles. The domestic passenger car sales grew by 21.8 per cent in February and was marginally up in March after witnessing slump in sales last year, which lasted till January (down by 3.2 per cent) this year.

In view of the upswing in the auto sales, the company is planning to bring in new models also.

“In June, we will launch utility vehicle Land Cruiser LC200 in India, which will be followed by sports utility vehicle Fortuner in September,” TKM managing director Hiroshi Nakagawa said.

The company had earlier announced the Fortuner to be priced around Rs 20 lakh, but has not revealed any detail about Land Cruiser 200 yet.

“We want to penetrate now more in the semi-urban and Tier II cities. We will have 150 dealers across the country by next year from the existing 85 outlets,” Singh said. — PTI

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Tax Advice
Income from mutual funds not taxable
by S.C. Vasudeva

Q On closing UTI Raj Lakshmi Unit Plan, it was converted in to 6.5% tax-free bonds. This scheme ended March 2009. A cheque of Rs 2,20,320 is likely to be received shortly in the name of a minor. Kindly advice in which scheme this amount be invested that may be tax-free.

— Jagjit Singh Sohi, Patiala

A At present, the only investment presently the income from which is tax free is the investment in mutual funds or investment in equity shares because the income received from mutual fund as well as dividends received in respect of equity shares are not taxable. There is a likelihood of tax saving bonds being issued by few undertakings as per newspaper reports. In case you so desire, you may wait for the issue of such bonds.

Sr citizen savings scheme

Q In your column on February 2, 2009, you stated that the amount deposited under Senior Citizen Savings Scheme (SCSS) in post office has now been covered under Section 80C of the Act and deduction thereof against the total income will be allowed within the overall limit of Rs 1 lakh provided under the section.

After reading this, I deposited Rs 1 lakh in SCSS in post office and withdrew Rs 59,000 from NSS and gave for Form 15H thinking that the amount of SCSS will be deducted from the total income and my tax will be nil.

Now, in the column by AN Shanbhag dated March 8, 2009, it was stated that no rebate on Post Office Senior Citizen Scheme is given. This has come as a shock. May be there has been some amendment. Please apprise me about the latest position.

— Sujan Singh, Ambala City

A The deduction in respect of amount deposited in the Senior Citizen Saving Scheme Rules, 2004, has been provided in clause (xxiii) of Section 80C of the Income-tax Act, 1961 (the Act). The above provision is applicable w.e.f. April 1, 2008 i.e. for assessment year 2008-09. The reply given by me was on the basis of an amendment to Section 80C of the Act by the Finance Act, 2008, effective assessment year 2008-09.

Form 15H

Q In FY 2009-10 I will become a senior citizen. My date of birth is January 6, 1945.

(i) My pension will be about Rs 2,20,000

(ii) Interest from bank FDs - Rs75,000

(iii) Interest from tax savings FD & SB a/c - Rs 5000

(iv) NSS-87 a/c, closing completely Rs 75,000

Total - Rs 3,95,000

The bank deducts 10.3% TDS on Rs 75,000 and the postal authorities deducts 20.6% TDS on Rs 75,000.

If I deposit Rs 70,000 in PPF a/c and Rs 30,000 in bank FD tax saving scheme i.e. under Section 80C, I save Rs 1,00,000.

The limit (exemption) will be Rs 2,25,000 being aside w/d from NSS-87 a/c.

My query is:

(i) Can I file Form 15H form with the post office for no TDS?

(ii) Alternatively should I file Form 15H in the bank to avoid TDS and let the post office to deduct 20.6% on Rs 75,000. The purpose is just to avoid more refund from the IT Dept or otherwise I should not file Form 15H?

— Madhusudan, Patiala

A Your queries are replied hereunder:

a) On the basis of your date of birth, you would be a senior citizen for financial year 2009-10 and would be entitled to file Form 15H with the post office for non-deduction of tax at source from interest income arising to you.

b) It will be advisable to take the benefit of deduction under Section 80C of the Act so as to claim the maximum deduction of Rs 1,00,000 allowable under the said section. This would enable you to avoid the filing of Form 15H as the interest on fixed deposit each year may not exceed Rs 10,000 and the bank would thus not be required to deduct tax at source in respect of such interest income.

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BRIEFLY


“Place de la Concorde” by French artist Jean Duffy on display in Hollywood
“Place de la Concorde” by French artist Jean Duffy on display in Hollywood on Sunday. The painting, estimated at $20,000-$30,000, will be auctioned on Monday at Bonhams and Butterfields. — AFP

Ajit Jain in race to replace Buffett
London:
India-born Ajit Jain could be in race to replace billionaire investment guru Warren Buffett as the chief executive of Berkshire Hathaway, according to a media report. As per a report appearing in The Telegraph, Buffet was quoted as saying all the candidates, including Jain are already working for the company. After over 40 years, Buffett’s job would be split between his son Howard, who will become the chairman, and the yet unidentified chief executive and chief investment officer. — PTI

GAIL gas for Bettiah plant
Patna:
GAIL would supply gas to Barauni fertiliser factory and its 250-300 MW power plant at Bettiah through its 1,400 km Jagdishpur-Haldia pipeline by 2012. “We are laying down 1,400 km gas pipeline from Jagdishpur to Haldia at an estimated cost of Rs 7,000 crore which would pass through some areas of Bihar such as Rohtas, Bhabhua, Aurangabad, Gaya... The gas to both Barauni fertiliser factory and Bettiah power plant will be supplied through two spur lines,” UD Choubey, chairman and managing director of GAIL, said. — PTI

Future Axiom plans
New Delhi:
Future Group's mobile retailing arm Future Axiom Telecom has earmarked about Rs 494 crore for expansion over the next 2-3 years and plans to set up 16 more stores across the metros and tier-I cities by December. Future Axiom Telecom also runs smaller 'One Mobile' stores, which are located mostly in Future Group's Big Bazaar and Pantaloon outlets as shop-in-shops. — PTI

Godrej Consumer Products
Mumbai:
Godrej Consumer Products Ltd is eyeing acquisitions worth $1 billion in emerging markets in this fiscal, a top official of the company said. “We are looking at acquisitions worth up to $1 billion. The ideal range (acquisition price) would be around $50-100 million. We are open to acquisitions that are synergistic and accretive to our growth,” Godrej Group chairman Adi Godrej said here. — PTI

Tenon eyes acquisitions
New Delhi:
Facility management service provider Tenon is looking at acquisitions worth Rs 300 crore to expand its presence across India over the next two years. “To expand our services across the country, we will be acquiring four-five companies over the next two years and all the acquisitions put together would be around Rs 300 crore,” Tenon Property Services Group CEO Andrew Barker said. — PTI

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