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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

NTPC victim of RIL’s corporate greed: Anil
New Delhi, August 2
Anil Ambani Terming NTPC as an “innocent victim” of Mukesh Ambani-led RIL's corporate greed, Anil Ambani today warned that the power PSU could lose up to Rs 30,000 crore if it did not get gas at the committed rate of $2.34 per mmbtu.

Who packs greater political punch — Mukesh or Anil?
New Delhi, August 2
They have abundant money power, but who between the two Ambanis is more influential in political circles? This is not a survey to find India's most influential person, but a poser by Anil in reply to a query about his proximity with one political party.

Indian job market back on track
2.5 lakh jobs increased this quarter: Survey
New Delhi, August 2
After taking the hit of global recession last year, the Indian job market is on recovery path, finds the latest quarterly labour bureau survey conducted to assess the impact of economic downturn on the employment scenario in India.



EARLIER STORIES




Photographers take pictures of Nissan Motor's electric vehicle called ‘Leaf’ during the opening ceremony for the new company headquarters in Yokohama, Kanagawa prefecture, on Sunday. Nissan will release the electric vehicle next year.
Photographers take pictures of Nissan Motor's electric vehicle called ‘Leaf’ during the opening ceremony for the new company headquarters in Yokohama, Kanagawa prefecture, on Sunday. Nissan will release the electric vehicle next year. — AFP

The Observer may close down
London, August 2
The world’ oldest Sunday newspaper - The Observer - may be forced to close down as part of a cost-cutting exercise by the The Guardian Media Group (GMG), a news report said today. An Observer-branded news magazine may replace the paper as part of a renewal plan after a drastic plunge in the group’s finances, bringing an end to a 218-year publishing era, The Times reported.

$70 b drugs to lose patent
New Delhi August 2
The Indian drug industry would make huge gains as over $70 billion worth of drugs are expected to go off patent in the US, the world's largest pharma market, in the next three years, according to a report.

Tax Advice
Detention allowance not taxable
Q. While serving in a university as a scientist, in addition to my regular duties, I also acted as editor of a scientific journal published by a society based in the university. At the time of my retirement, I was asked by colleagues to continue editorship on honorary basis. I agreed and have been continuing the same for more than a year without charging any money from the society. Most of the editing work is done by me from home.

Market Update
Global economy looking up
The market continued to spiral-up last week as the quarterly earnings came to a close with most of the companies posting impressive numbers, contradicting the general perception prior to the start of the earnings season. There are positive signs of revival both for domestic as well as global economy as the US indices surged to nine-month highs with the Dow Jones above the psychological 9,000-mark on better-than-estimated results from frontline companies. Asian markets, too, struck 11-month high, as better-than-expected earnings of companies from Japan and the US reinforced hopes of stronger global growth.





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NTPC victim of RIL’s corporate greed: Anil

New Delhi, August 2
Terming NTPC as an “innocent victim” of Mukesh Ambani-led RIL's corporate greed, Anil Ambani today warned that the power PSU could lose up to Rs 30,000 crore if it did not get gas at the committed rate of $2.34 per mmbtu.

Offering every possible cooperation to NTPC, Anil sought a meeting with Power Minister Sushil Kumar Shinde to clarify that his group company RNRL was not at all attempting to scuttle the PSU's chance of getting 12 mmscmd gas, contrary to “speculative media reports and misinformation campaign by vested interests”.

In a letter to Shinde, Ambani, who is fighting a bitter battle with RIL for getting 28 mmscmd gas at $2.34 per mmbtu, said: “We firmly believe that NTPC, like RNRL, is an innocent victim of RIL's corporate greed, which is reflected in its attempt to back out of its solemn and legal contractual commitments.” Anil Ambani had earlier written a letter to Prime Minister Manmohan Singh last month wherein the industrialist urged the PM to direct the Petroleum Ministry to “cease from overtly and covertly attempting to intervene in our commercial dispute with RIL”.

The letter was written in the wake of the Petroleum Ministry moving the Supreme Court seeking annulment of a memorandum of understanding between Mukesh-led RIL and Anil group firm RNRL.

In his letter to Shinde Anil said: “We would be delighted if NTPC, a navratna, gets its rightful share of 12 mmscnd of gas for 17 years at a price of $2.34, which was discovered through open transparent international competitive bidding in 2004”.

Expert opinion and independent financial analysis suggest that NTPC could potentially lose over Rs 20,000 crore if the gas price is revised from $2.34 to $4.2, he said, adding this loss could be even higher and touch Rs 30,000 crore, based on cost of alternate fuels.

Petroleum Minister Murli Deora is also scheduled to make a statement on the floor of the Lok Sabha tomorrow on the issue of gas supply to Anil Ambani-promoted Dadri power plant which has been lingering for the assured supply of fuel. — PTI 

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Who packs greater political punch — Mukesh or Anil?

New Delhi, August 2
They have abundant money power, but who between the two Ambanis is more influential in political circles? This is not a survey to find India's most influential person, but a poser by Anil in reply to a query about his proximity with one political party.

“I have relationships across political spectrum like several others from Indian industry. Why not take a look at certain proximities that exist in Reliance Industries,” he retorted.

“The fact that exists today is - Anu Tandon, who is a Lok Sabha Congress MP, is on the board of Observer Research Foundation, a lobbying arm of RIL, disguised as an independent think tank,” he said.

No comments could be obtained from RIL.

Anil, elected in 2004 to Rajya Sabha as an independent member with Samajwadi Party's support and resigned midway, said: “Another fact that exists today is - Parimal Nathwani, who is a Rajya Sabha MP, is a full time employee of RIL. Rajya Sabha MP YP Trivedi is a director serving on the board of RIL. What do you call this — proximity or bonhomie?” “We have General VP Malik, ex-Chief of Army Staff, on the board of Reliance Infrastructure. Do you think that means the Indian Army belongs to us," he quipped.

Anil had launched a scathing attack on Petroleum Minister Murli Deora, a close friend of his father late Dhirubhai Ambani, saying: “It is evident that the apparently biased stance commenced in 2006, coinciding with changes in the (Oil) ministry.”

To a question on former NTPC chairman CP Jain joining Reliance ADAG after retirement and RIL's accusation that the court cases were an attempt to increase ADAG's share of gas to 40 mmscmd from 28 mmscmd, Anil said: "I take great objection to the comment from RIL. Jain is an outstanding independent professional."

RNRL wants 28 mmscmd of gas for 17 years from RIL at USD 2.35 per mmBtu, but RIL has maintained it can fix or sell gas without the government's nod. Cross-appeals filed by the two will come up for hearing before Supreme Court on September 1, when the government's petition asserting its ownership on natural resources will also be considered. — PTI 

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Indian job market back on track
2.5 lakh jobs increased this quarter: Survey
Aditi Tandon
Tribune News Service

New Delhi, August 2
After taking the hit of global recession last year, the Indian job market is on recovery path, finds the latest quarterly labour bureau survey conducted to assess the impact of economic downturn on the employment scenario in India.

Where the country had lost five lakh jobs between October and December 2008, it has recorded an increase of 2.5 lakh jobs in several crucial sectors between January and March this year.

The total estimated increase in employment has been 0.6 per cent in this quarter, with non export units contributing the most to job revival, with their higher rate of increase in jobs at 0.92 per cent as against export units.

The surprise gainer in the latest quarter has been the gems and jewellery sector that had witnessed a severe job crash of 10.28 per cent between October and December last. It has bounced back now, registering an increase of 3.08 per cent in employment between January and March. Other gainers are textiles (0.96 per cent rise in jobs), IT and BPO sector (0.83 per cent rise), handloom/powerloom sector with 0.28 per cent job rise and automobiles at 0.10 per cent increase.

The trend of job decline, however, continues in leather, metals and transport sectors, with percentage drops for the quarter being 2.76 for leather, 0.56 for metal and 0.36 for the transport sector.

Another major finding of this second job survey (the first one was conducted between October and December last when the recession was at its peak) relates to the nature of workers who lost or gained jobs. The findings show that there was 0.30 per cent increase in the employment of direct workers over the past year - between April 2008 and March 2009. The sectors studied include textile, leather, metals, automobiles, gems, jewellery, transport, IT/BPO, handloom and powerlooms. 

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The Observer may close down

London, August 2
The world’ oldest Sunday newspaper - The Observer - may be forced to close down as part of a cost-cutting exercise by the The Guardian Media Group (GMG), a news report said today. An Observer-branded news magazine may replace the paper as part of a renewal plan after a drastic plunge in the group’s finances, bringing an end to a 218-year publishing era, The Times reported.

Members of the Scott Trust, the charitable foundation that owns GMG, discussed the plan on July 6. They were shown trial copies of an Observer-branded news magazine that would replace the paper and be published on a Thursday, it said.

However, opposition from some trust members forced the GMG executives to put the scheme on hold while an alternative was worked out, the report said.

This would keep The Observer as a Sunday newspaper but heavily slimmed down. Insiders now expect a decision at a trust meeting next month, it said.

According to insiders, the management is now examining a range of other cost-cutting plans, including redundancies. — PTI 

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$70 b drugs to lose patent

New Delhi August 2
The Indian drug industry would make huge gains as over $70 billion worth of drugs are expected to go off patent in the US, the world's largest pharma market, in the next three years, according to a report.

In the past five years, drugs worth around $50 billion went off-patent in the US, which, along with a doubling of generic alternatives in the market, has led to a rise in the generic share by volume to 68 per cent, said a report by Noble, the UK investment bank.

“The Indian generic industry is well positioned to benefit from the structural and macro-economic changes affecting the healthcare industry globally,” the report on the Indian generic industry said.

Indian pharma companies have earned the reputation of being the most competitive generic firms globally with a large FDA approved product pipeline, coupled with a strong research and development foundation. Indian companies have filed more than 900 abbreviated new drug applications, which is the first stage approval for launching the drugs with US health regulator in 2008 alone, and has got around 300 approvals in the last year. — PTI 

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Tax Advice
Detention allowance not taxable
by S.C. Vasudeva

Q. While serving in a university as a scientist, in addition to my regular duties, I also acted as editor of a scientific journal published by a society based in the university. At the time of my retirement, I was asked by colleagues to continue editorship on honorary basis. I agreed and have been continuing the same for more than a year without charging any money from the society. Most of the editing work is done by me from home. However, on some days I have to go to the office of society. I visit the office 3-6 times a month. I use my car to visit the office. I am paid for my car expenses (TA) and I am also given certain amount of detention allowance (DA) on such visits. Shall it be considered as my income in addition to the pension I am getting? If yes, under which column I will show this amount in ITR - 1?

— Balbir

A. The amount paid to you towards meeting your travel expenses as well as DA for going to office of the society is not taxable as the same is not in the nature of an income. The above reply is based on the presumption that the detention allowance is paid so as to compensate you for meeting the expenses incurred by you for visiting the office.

Gross salary

Q. I want to know how should I show amount of salary in schedule ‘S’ in ITR-2. Let us assume an employee is getting gross salary of Rs 3,20,980 and HRA of Rs 21,170. According to Form 16, now in schedule ‘S’ of ITR-2, what amount he should show in schedules of salary (salary excluding all allowances, perquisites & profits in lieu of salary): Rs 3,20,980 or Rs 2,99,810 (3,20,980- HRA i.e. 21,170). Please guide.

— Desilva

A. The amount of Rs 2,99,810 should be reflected in Schedule ‘S’ forming part of ITR-2 in the column ‘salary (excluding allowances, perquisites and profits in lieu of salary)’. The amount, which would be exempt under Section 10(13A) of the Income-tax Act-1961 (the Act) out of the house rent allowance, should be shown against the column ‘allowances exempt under Section 10 of the Act’. The amount out of Rs 21,170, which is not exempt under Section 10 of the Act, should be shown under the column ‘allowances not exempt’. Accordingly, the total income chargeable under the head ‘salary income’ would be the amount of Rs 2, 99,810 plus the amount which is not exempt under Section 10(13A) of the Act.

IT return

Q. My son is employed with Infosys Technologies Ltd, Chandigarh, and is on deputation to Germany. The period of stay depends upon the completion of his assignment there.

a) He left India for Germany for 40 days in May 2008. He was paid fixed DA per day there along with his salary in India. He again sent to Germany on October 5, 2008, till date i.e. in the previous year ended he was in Germany for 40 days+ 177 days i.e. total 217 days. Infosys has issued him Form 16 from April 1, 2008, to October 4, 2008, with TDS details till the time he was in Chandigarh. His salary in Germany is paid by the company from October 5, 2008, in Euros and that is also tax paid. He has paid tax in India as well as in Germany.

What is his residence status in the previous year 2008-09 (assessment year 2009-10) for tax purposes? How to file his return in India?

Is his income earned in Germany from October 5, 2008, onward taxable in India although that was paid after deduction of TDS?

What about Double Taxation Treaty benefit of India with Germany?

— AK Sareen

A. On the basis of facts in the queries, the replies are given hereunder:

a) The status of your son for the previous year ending 2008-09 (assessment year 2009-10) would be that of non-resident as he was not in India in the year ended March 31, 2009, for a period of 182 days or more.

b) His income in Germany would not be taxable in India and the return will have to be filed for his Indian income only. 

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Market Update
Global economy looking up
by Lalit Batra

The market continued to spiral-up last week as the quarterly earnings came to a close with most of the companies posting impressive numbers, contradicting the general perception prior to the start of the earnings season. There are positive signs of revival both for domestic as well as global economy as the US indices surged to nine-month highs with the Dow Jones above the psychological 9,000-mark on better-than-estimated results from frontline companies. Asian markets, too, struck 11-month high, as better-than-expected earnings of companies from Japan and the US reinforced hopes of stronger global growth.

Investors are likely to turn their attention to the global markets as Indian markets are likely to track their global counterparts. They will also keep a watch on the progress of the annual monsoon as more than two-thirds of the population lives in villages and 60 per cent of the farm land depends on rains. Though the southwest monsoon has gathered pace in the last couple of weeks, it has been 18 per cent below average between June and July. Meanwhile, the primary market is likely to pick up with the issue of NHPC, which is slated to hit the market this week.

NHPC

National Hydro Power Corporation, a state-run power company, has finally come out with the decision on the IPO (initial public offering). NHPC issue has become important as the company is going in for large-scale expansion in coming years. The company, which accounts for over three per cent of the country’s total power generation capacity, targets to double its output capacity by 2012 to over 10,000 MW from 5,200 MW now. NHPC has a current capacity of 5,175 megawatts (MW) and plans to have a capacity of 9,600 MW by 2013.

The proposed issue involves NHPC infusing 10 per cent fresh equity through this public offer while the government will divest its five per cent stake in the company.

NHPC is likely to raise between Rs 5,000-Rs 6,000 crore depending on the band between Rs 30-Rs 36. NHPC profit rose by seven per cent last year to Rs 1,075 crore. In the price band of Rs 30-Rs 36, the issue looks a tad aggressively priced as compared to NTPC, another power PSU listed on the market. But power deficit country like India will ensure that the issue is lapped up by FII’s and other investors at large. Investor may subscribe to the offer but only with a long-term perspective as listing gains on this IPO are likely to be minimal.

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