Shortfall fails to dampen tax mopup zeal
Sify charms American investors again
Glaxo India net dips 11% to Rs 77 cr
Sebi group to settle margin dispute
Bankers want easier norms for insurance business
Microsoft lifts Windows 2000 shutters

 
 
SHORTFALL FAILS TO DAMPEN TAX MOPUP ZEAL 
 
 
FROM R. SASANKAN
 
New Delhi, Feb 17 
As the budget exercise enters the final lap, finance minister Yashwant Sinha is straining his nerves to mop up an additional tax revenue of Rs 23,000 crore in the next financial year.

He needs this money to finance the annual plan for 2000-2001. The tax revenue proposals in the next budget should amount to Rs 2,00,000 crore as against the current year’s target of Rs 1,77,000 crore. The actual collections, though, are expected to fall short of the budget estimates by Rs 7,000-10,000 crore this year.

Official circles say the finance minister has an unenviable task before him because he has to take decisions which may be perceived to be politically unwise. Sinha, for instance, is expected to do away with many exemptions in direct and indirect taxes. He is also likely to extend the concept of tax deduction at source to many areas. At present, this is compulsory only in the case of salaried employees.

During his budget exercise, Sinha discovered that personal income tax collections had not been impressive despite a reduction in rates and the widening of the tax base. In fact, tax revenues have not grown significantly since 1996-97.

Personal income tax accounted for only 1.5 per cent of the gross domestic product (GDP); 50 per cent of the people who paid these taxes accounted for only 0.1 per cent of the GDP. The finance minister now realises that the sound and fury over increasing the number of tax payers will not yield much.

What is really required is the deepening of the tax base to catch the big evaders. For instance, big hospitals in the country admit patients only if they pay in cash. This is considered a major area of revenue leakage. Sinha may insist that all major transactions should be settled through cheques.

There are still a large number of exemptions, both in direct and indirect taxes. These exemptions are a major source of sustenance for politicians and bureaucrats. Sinha cannot do away with them altogether. However, he is keen to prune the list. He can compensate the tax payers in some other form.

The finance minister has been holding out zero-based budgeting as something innovative. However, this is not so. He is not the first finance minister to attempt zero-based budgeting. In the mid-80s, the finance minister V. P. Singh came out with a long-term fiscal policy and attempted zero-based budgeting.

The basic idea behind it is that all schemes, old and new, should compete for funds on merit. In India, no department will admit that any of their schemes and projects have outlived their utility. The finance minister cannot stop funding any project without the approval of the ministry concerned.

Official sources say the major thrust in tax reform is going to be in the area of direct taxes, particularly personal income tax. However, the finance minister has to explore ways to increase revenue from customs and excise.

The dismantling of quantitative restrictions on imports has given him an opportunity to protect the domestic industry through higher tariffs. Here again, Sinha cannot go beyond a limit because the country is committed to WTO to bring down import duty in phases.    


 
 
SIFY CHARMS AMERICAN INVESTORS AGAIN 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb 17 
Satyam Infoway (Sify) evoked an overwhelming response from US investors when its second series of American Depository Shares (ADS) was oversubscribed 15 times after receiving book orders worth a startling $ 2 billion. The $ 130-million issue has a green shoe option of $ 20 million.

Satyam Infoway placed 1.625 million shares today at a price of $ 80 with premier investment institutions, technology-based funds and high-net worth investors in the US. Each ADS represents one fourth of Satyam Infoway’s equity share.

“The response to the issue shows clearly that investors recognise Satyam’s position in the Indian internet market and, more important, the country’s internet potential,” an ecstatic Amit Chandra, co-head- investment banking division at DSP Merrill Lynch, told The Telegraph.

DSP Merrill Lynch and Salomon Smith Barney were the two book runners to the issue. The greenshoe option, Chandra said, will be exercised within a few days. Sify will use the proceeds of this issue to finance acquisitions and to build its network infrastructure.

On the Nasdaq today, Sify was being traded at $ 87.063 when reports last came in. This represented a gain of $ 4.063 over its previous close on a volume of 13.61 lakh shares. Sify is the first India-based internet company to list directly on the Nasdaq, home to major infotech companies of the world.

Earlier, the company’s initial public offer (IPO) had opened to a massive response from investors in the US. Oversubscribed 27 times, it had attracted an order book value of $ 2 billion, making it the largest-ever oversubscription for any Indian ADR/GDR offering.

Sify raised $ 75 million through its initial public offer by issuing 4,175,000 shares at a price of $ 18 per share. That offering was also lead-managed by Merrill Lynch & Co and Salomon Smith Barney.

Satyam Infoway, at the time it was listed on the Nasdaq, was the latest addition to the list of over 440 non-US based companies listed on the technology-heavy US exchange. No other bourse the world over matches the Nasdaq in the number of foreign firms listed.

Satyam Infoway is the first and largest private national Internet Service Provider (ISP) in India, catering to more than 87,000 internet access subscribers and over 300 corporate customers.

The company’s largest shareholder is Satyam Computer Services Limited, one of the leading infotech companies in India. Its stake in Satyam Infoway fell from 73.8 per cent to 59 per cent after the first ADS issue. The second tranche of ADS will reduce the parent’s holding further.

Earlier, in what is the largest ever transaction of its kind in India, Satyam Infoway acquired India World Communications, a popular India-related portal for overseas Indians, for Rs 499 crore in a two-step cash transaction. This made Satyam Infoway the largest India related internet portal after integration.

Satyam Infoway had purchased 24.5 per cent of the outstanding shares of IndiaWorld for Rs 122.2 crore in a unique two-step transaction.

In addition, it acquired an option to purchase the remaining 75.5 percent of the outstanding shares of IndiaWorld at any time before June 30 this year at a pre-determined price of Rs 376.5 crore. It placed a non-refundable deposit of Rs 51.3 crore to cover the option.    


 
 
GLAXO INDIA NET DIPS 11% TO RS 77 CR 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb 17 
Pharmaceutical giant Glaxo India Ltd has recorded an 11 per cent decline in net profits for the year ended December 31, 1999. Net profits declined to Rs 77.06 crore against Rs 86.63 crore in the previous year.

The company’s directors lowered the dividend to 40 per cent from 50 per cent in the previous year. However, on the occasion of the company’s platinum jubilee, they recommended a special additional one-time dividend of 20 per cent, making a total of 60 per cent (Rs 6 per share).

The decline in net profits was largely due to a rise in expenditure which shot up to Rs 821.52 crore (Rs 705.27 crore in the previous corresponding period) on one hand and interest which rose to Rs 9.90 crore (Rs 8.63 crore).

Glaxo said the lower margins realised in a highly competitive market and the imposition of a protective customs duty on the import of one of its major bulk drugs impacted it adversely. During the year, sales stood at Rs 885.50 crore as against Rs 793.84 crore in the previous year, thus registering a growth of 11.5 per cent.    


 
 
SEBI GROUP TO SETTLE MARGIN DISPUTE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb 17 
The Securities and Exchange Board of India (Sebi) has formed a 15-member sub-group to evolve a consensus on imposing additional volatility margins (AVMs) on institutions after they opposed the move in its current form at a meeting with the capital market regulator today.

The group will comprise representatives of foreign institutional investors (FIIs), Unit Trust of India (UTI), Association of Mutual Funds of India (AMFI), foreign mutual funds, custodians and broking houses. It will also include bourses like the NSE and BSE, besides Sebi officials.

Sebi chairman D R Mehta told reporters after the meeting that margins on institutional investors are necessary because they are market movers with a strong financial muscle. If not, they would be asked to adopt rolling settlement.

“The move is intended to treat all investors alike,” the Sebi chief said, adding it was a key tool to reduce the market volatility.

According to Mehta, there was a suggestion in the meeting that institutional investors pay margins only on the volatile specific or, that they should trade in these shares in the rolling settlement. The Sebi chief said the meeting also discussed many issues, including the foreign exchange implications of FII inflows, and the cost of transactions.

Sensex vaults 110 points on heavy buying

The Bombay Stock Exchange (BSE) sensitive index vaulted 109.65 points today to 5835.15 on the back of heavy purchases by speculators and foreign institutional investors (FIIs) in shares of pharmaceutical and infotech companies. The 30-scrip index opened substantially higher at 5810.24 and moved in a range of 5877.04 and 5799.79 before closing at 5835.15 compared with Wednesday’s finish of 5725.50.

Pharmaceuticals scrips, which have been hammered in the recent days, perked up on reports that the International Finance Corporation (IFC) — the World Bank arm that invests in private sector projects — has decided to focus on infotech, pharmaceuticals, healthcare and education sectors, rather than manufacturing.    


 
 
BANKERS WANT EASIER NORMS FOR INSURANCE BUSINESS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb 17 
Representatives from the banking sector today urged the Reserve Bank of India (RBI) to reconsider its norms on insurance, one of which stipulated a 30 per cent ceiling on bank investment in an insurance joint venture.

The central bank had prescribed tough norms for banks and financial institutions planning to enter the insurance sector.

The norms had evoked considerable criticism from banks which said they were too tough. In the meeting today, FIs suggested that as they were not covered under the Banking Regulation Act, they could be permitted to invest in insurance ventures, subject to IRDA regulations.

A RBI release said the meeting also addressed various other issues such as the central bank’s guidelines on risk management with the banks being told to improve their credit risk management systems.

The meeting also discussed the role of banks in financing stock brokers and individuals against shares in the context of the recent surge in the sensex and the steps taken by Sebi to check the volatility of shares.

The bank representatives told the RBI that they were cautious in financing initial public offers (IPOs) and issuing guarantees on behalf of stock brokers.

The bankers said they wanted to internally review matters relating to lending margins and fixing prudential exposure limits.

The central bank indicated it would consider regulatory measures to cover all banks or specific to banks as and when needed.

The meeting was convened by S.P. Talwar, Y.V. Reddy and Jagdish Capoor, deputy governors of the RBI, and it was attended by CMDs/chief executives of select public sector banks, new and old private sector banks and foreign bankers.

The other issues which figured in the meeting included investments in SLR and non-SLR portfolio, flow of credit to agriculture and progress in the recovery of NPAs.    


 
 
MICROSOFT LIFTS WINDOWS 2000 SHUTTERS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Feb 17 
Bill Gates has gone ahead and launched yet another Windows version—the millennium 2000 version that is—and anti-trust cases be damned.

The Windows 2000 software bundles up as a desk top package by itself and also provides the option of combining NT workstations or servers.

The new version of Windows is a family of products that succeeds the Windows NT version 4.0 and is primarily aimed at corporate users. Large computers need the upgrade for complex tasks to run web sites and databases or run e-commerce and internet-based applications. The company will launch a Windows millennium edition targeted for home machines later this year.

However, with the problems faced by earlier versions like Windows-98 and with the likes of Novell and Linux waiting on the sidelines to grab a bigger slice of the market, Gates’ men face an uphill task.

This time round unless buyers find the new Windows software hot enough, Microsoft may have a real battle on its hands.

Microsoft’s Windows 2000 was launched today in India, ahead of the US launch due to the difference in time zones. The product will be showcased in Bangalore and will hit the retail stores on Friday.

The product is priced at Rs 40,000 for first time purchasers, while those who wish to upgrade from the existing Windows NT would have to pay about Rs 10,000.

The new Windows 2000 operating system has all the features currently available in Win-98 and Networking Operating System (NOS) and internet services.

However, the baby is already facing teething problems. Some users of test versions of Windows 2000 have complained of certain defects when trying to work with the various components. But then Windows 2000, it is rumoured, could prove a challenge to even the most technology savvy.

Company sources admitted that the latest edition of Windows was not exactly a user’s dream. “An internal memo had acknowledged that the software contained 63,000 possible defects. But this was at the time of developing it, now all of them have been removed,” they said.

Worldwide, Microsoft’s software and operating systems have a peculiar problem of locking up (commonly termed as ‘hang,’ when the software stops operating), which necessitates rebooting.

In fact, Microsoft had a tough time convincing Win-95 users to upgrade to Win-98 and Win 2000 is likely to give similar problems to Microsoft, industry sources said.

“Windows 2000 is for business use and Windows millennium is for most home users. We are confident that there will be no problems with both new softwares. We have companies like NIIT, Compaq, Cisco systems Sap and ITIL Infosys as our partners who will vouch for the product,” said N.B Sundar, marketing manager Microsoft Corporation (India) Private Ltd.

However sources in Compaq and NIIT said even the Windows millennium, dubbed “Windows ME” is unlikely to be trouble-free.

“The product launched today is an extension of Windows NT and Windows 95, the existing software programmes and it had initial hiccups. All new softwares have some problems, the ‘Windows ME’ too has had some teething problems,” said a senior engineer in Compaq.

Industry analysts say Windows 2000 will directly hit Novell software, as it will eliminate the need to buy Novell’s server packages separately as a supplement to Windows.    

 

FRONT PAGE / NATIONAL / EDITORIAL / BUSINESS / THE EAST / SPORTS
ABOUT US /FEEDBACK / ARCHIVE 
 
Maintained by Web Development Company