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4-month IPO drought ends tomorrow
New Delhi, June 21
Ending a four-month long lull in the domestic IPO segment, Mahindra Holidays & Resorts is set to come out with an initial public offering (IPO) tomorrow, which analysts feel could signal a revival in the primary market.

AP’s economy dream run continues
Hyderabad, June 21
Despite global recession, Andhra Pradesh’s economy dream run continues unhindered.The state has been able to maintain a steady economic growth rate from the last four years. It has achieved an enviable growth rate of 10.64 per cent, as against the national average of 9.03 per cent during 2007-08. The average economic growth during 2004-05 to 2007-08 was 8.73 per cent, as compared to 5.79 per cent during 1994-95 to 2003-04.

Satyam is now Mahindra Satyam 
Hyderabad, June 21
Software services provider Satyam Computer Services Ltd today unveiled its new brand identity, ‘Mahindra Satyam’, symbolising the amalgamation of the Mahindra Group’s values with Satyam's expertise.


EARLIER STORIES



A model displays a creation as part of Gucci spring/summer - 2010 men’s collection during Milan Fashion Week on Sunday.
A model displays a creation as part of Gucci spring/summer - 2010 men’s collection during Milan Fashion Week on Sunday.— Reuters

Market Update
Consolidation seen ahead of Budget
Consolidation is likely to continue after profit booking halted a stupendous 14 weeks of unabated rally on the bourses, last week. The Senses is up more than 50 per cent in calendar year 2009 and up by more than 77 per cent from a three-year low that it touched on March 9. The main drivers of this surge have been FII’s (foreign financial investors) who have pumped in close to $5 billion in the current calendar year and majority of this has come after April.

Tax Advice
No tax on amount received under  reverse mortgage scheme
Q Budget for 2008 contained some provisions with regard to reverse mortgage. As I understand that on the basis of the amendments, amount received under the reverse mortgage scheme would be chargeable to tax as the income of the recipient. Is my understanding correct?





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4-month IPO drought ends tomorrow

New Delhi, June 21
Ending a four-month long lull in the domestic IPO segment, Mahindra Holidays & Resorts is set to come out with an initial public offering (IPO) tomorrow, which analysts feel could signal a revival in the primary market.

The IPO of Mahindra Holidays would be the first public offer to hit the market in the last four months since the public offering of Chennai-based EdServ Softsystems in early February.

Faced with uncertain financial conditions and economic sluggishness, firms have been holding back their plans to hit the capital market. With possible signs of revival, experts feel the segment is now expected to witness frenzied activity.

The IPO of Mahindra Holidays, which is part of diversified group Mahindra & Mahindra, opens on June 23 and the entity plans to mop up Rs 301 crore from the primary market, as per data available on the National Stock Exchange.

The company would be hitting the capital market with an IPO of 92.65 lakh equity shares and has fixed a price band in the range of Rs 275-325.

“Since the IPO is being brought in by a business conglomerate, the response would be closely watched by the investors. If hugely subscribed we can safely conclude that the primary market space has become a safe haven once again, else we will have to wait for public sector IPOs,” SMC Capital's equity head Jagannadham Thunuguntla said.     

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AP’s economy dream run continues 
Tribune News Service

Hyderabad, June 21
Despite global recession, Andhra Pradesh’s economy dream run continues unhindered.

The state has been able to maintain a steady economic growth rate from the last four years. It has achieved an enviable growth rate of 10.64 per cent, as against the national average of 9.03 per cent during 2007-08. The average economic growth during 2004-05 to 2007-08 was 8.73 per cent, as compared to 5.79 per cent during 1994-95 to 2003-04.

Growth in the industry sector was 8.9 per cent, compared to 5.4 per cent during 2000-04. Assocham statistics reveal that the state had attracted capital expansion worth Rs 1,08,559 crore during the first half of 2008, and became the country’s top investment destination for the domestic private sector.

As per RBI report for 2007-08, the state was the second “most investor-friendly” state after Gujarat.

The government’s efforts to invest more in capital expenditure to create permanent assets have helped in maintaining positive growth.

The growth in capital expenditure touched 160 per cent during the previous year with the state investing over Rs 54,000 crore on asset creation against the Rs 33,000 crore of borrowings.

The state recorded a gross state domestic product growth of 7.20 per cent during the first half of 2008-09 while the per capita income during 2007-08 has been pegged at Rs 34,057, compared to national average of Rs 33,299. In the manufacturing sector alone, investments to the tune of Rs 16,735 crore were made during 2004-08. The only exception to the growth story is the real estate sector. According to industry experts, it is passing through a correction phase which is expected to continue for another year.

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Satyam is now Mahindra Satyam 

Hyderabad, June 21
Software services provider Satyam Computer Services Ltd today unveiled its new brand identity, ‘Mahindra Satyam’, symbolising the amalgamation of the Mahindra Group’s values with Satyam's expertise.

“This rebranding exercise symbolises an amalgamation of the Mahindra Group’s values with Satyam’s fabled expertise, even as it retains that part of Satyam’s identity which signifies commitment, purpose and proficiency of the organisation and its people,” Mahindra Group vice-chairman and managing director Anand Mahindra said.

The logo for the new brand would be adopted from the Mahindra Group, a company statement said. — PTI

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Market Update
Consolidation seen ahead of Budget
by Lalit Batra

Consolidation is likely to continue after profit booking halted a stupendous 14 weeks of unabated rally on the bourses, last week. The Senses is up more than 50 per cent in calendar year 2009 and up by more than 77 per cent from a three-year low that it touched on March 9. The main drivers of this surge have been FII’s (foreign financial investors) who have pumped in close to $5 billion in the current calendar year and majority of this has come after April.

Meanwhile, the National Stock Exchange (NSE) will adopt the free-float market capitalisation method to calculate its benchmark indices from June 26, 2009, from the existing full-float method. As a result, volatility may swell, as fund managers will realign their index funds portfolios to mirror changes in the benchmark. Weights of public sector undertakings-ONGC, NTPC, Sail, Power grid Corporation and National Aluminum Company will come down by at least 50 per cent with the index going free float.

Other stocks that will see a drop in weightage to this change in methodology include Bharti Airtel, Reliance Communications, Tata Consultancy Services, DLF and Wipro due to high promoter holding in these companies.

However, Infosys Technologies, ICICI Bank, Larsen and Turbo, HDFC and HDFC Bank will stand to gain from this change as their weights will almost double from their current levels.

Under the free-float market capitalisation method, weights are assigned on the basis of floating stocks or open market shares of a company. On the other hand, under the full-float method, weights are decided on the total market capitalisation of the company.

Market will look at the two very important events in the next fortnight. One is the Budget that is to be presented on July 6 and the second is advance of monsoons. These two factors will decide the future course of markets. Investors, meanwhile, may book profits that have been earned in the last couple of months given the uncertainty associated with monsoon and high expectations that market has developed from the ensuing Budget.

Mahindra Resorts

Mahindra Holidays & Resorts India is a leading leisure hospitality provider in India. The company provides family holidays primarily through vacation ownership memberships. Its members can choose to stay and holiday at resorts in a range of holiday destinations for a pre-determined number of days in a year for a fixed number of years.

Started in 1997, Club Mahindra Holiday membership entitles members choice of holidaying at any of its 23 resorts for seven days each year in a season and in an apartment type of their choice for 25 years. The membership is divided into four seasons: Purple, Red, White and Blue. In addition, its members can choose to access a range of resorts globally through the company’s affiliation with Resort Condominiums International (RCI). The company has 91,997 Club Mahindra Holiday vacation ownership members end May 2009.

The revenue model that Mahindra Holiday & Resorts is it takes membership fee of Rs. 2,50,000. This is split into non-refundable admission fee of 60 per cent, or, Rs. 1,50,000 and balance 40 per cent is recognised equally over 25 years. The member is also charged annual subscription fees for maintenance of properties. Currently this subscription fee is close to Rs 8,000 and is adjusted to the Consumer Price Index

Among others, the company’s strength, is a strong parentage of the Mahindra group, which is among the top 10 industrial houses in India. Club Mahindra has the highest brand equity among timeshare companies in India. In terms of market share, accounted for 72 per cent of the total active members across the vacation ownership industry in India with RCI up to May 2009.

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Tax Advice
No tax on amount received under reverse mortgage scheme

by S.C. Vasudeva

Q Budget for 2008 contained some provisions with regard to reverse mortgage. As I understand that on the basis of the amendments, amount received under the reverse mortgage scheme would be chargeable to tax as the income of the recipient. Is my understanding correct?

— Radhey Shyam

A The Finance Act - 2008 clarifies that any payment received in respect of reverse mortgage of a house property whether in instalments or lump sum will not be taxable. The capital gain will be payable by the owner only if and when the property is eventually sold by the mortgagee to recover the loan.

Your understanding is, therefore, not correct. The Act in fact clarifies that no tax would be payable in respect of the money received under the reverse mortgage scheme.

Tuition fee

Q My wife and I are Haryana government retirees and drawing pensions. Our son is doing in MBA and we are paying his fees twice a year amounting to Rs 1, 02,500 every semester. Can both of us claim rebate of Rs 1, 00,000 each u/s 80C? We are not senior citizens.

— SP Singh

A On the basis of the facts given in your query, it should be possible for each one of you to claim the deduction of the tuition fee paid in respect of your son’s education. This is subject to the proposition that he is studying in India and the amount of fee is paid by each one of you out of his/her bank account. The deduction as pointed out by you is limited to the extent of the amount paid subject to a maximum of Rs 1 lakh per year. It may be added that the amount of Rs 1 lakh is inclusive of all sums paid or deposited in the schemes specified in Section 80C of the Income-tax Act, 1961.

Foreign education

Q My annual income is about Rs 3 lakh. I have paid Rs 3.5 lakh for my son as tuition fee for study in Australia. Please tell me what will be my IT exemption?

— Balkrishan

A According to the provisions of Section 80C of the Act, deduction is allowable in respect of tuition fee paid whether at the time of admission or thereafter to any university, college, school or other educational institution situated within India. The amount of Rs 3.5 lakh paid as tuition fee for studying in Australia would, thus, not be considered for the purposes of the allowability of deduction under Section 80C of the Act.

Senior citizen

Q I retired a few years ago. I will 65 on February 23, 2009. Kindly let me know if am entitled to avail the rebate under the category of senior citizens for 2008-09.

— Pawan Kumar

A The status of senior citizen is available to a person who has completed the age of 65 years in a particular previous year. For example, if a person had attained the age of 65 years in the year ended March 2009, he will be entitled to the status of senior citizen for tax purpose for assessment year 2008-09. Since you attained the age of 65 years before March 2009, you will be entitled to claim that status.

Wealth tax

Q Is an FD with bank liable to wealth tax?

— RS Channa

A Fixed deposit in a bank is not covered within the definition of the assets which are specified as chargeable to wealth tax in section 2(ea) of the Wealth-tax Act, 1957.

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