DoT moots private company with employee-shareholders
Jet seeks IDBI loan for $ 500m fleet expansion
Nalco rules out bidding for Balco selloff equity
Restore tax holiday for software: Assocham
Centre to fund tea body

New Delhi, July 2 
The department of telecommunications (DoT) has proposed the creation of a private company as an alternative to the planned corporatisaton of department of telecom service (DTS) and department of telecom operations (DTO).

A note to outlining the contours of this idea will soon be sent to Prime Minister Atal Behari Vajpayee. Prepared by deputy director general (long-term planning) V. P. Sinha, it says a private sector company formed with the participation of employees is a better option than corporatising the telecom department. More important, it claims that the idea has the support of all major unions, including technocrats represented by the All India Telecom Service Officers Association. 

According to the proposal, all employees would be deemed shareholders in the company. Also, the senior most officer in the department would be appointed the chief executive officer (CEO) while the heads of the existing nine telecom circles would don the mantle of managing directors. The managing directors would find a place, as co-opted members, on the board of directors, which would have seven permanent members to oversee the day-to-day operations. The directors will look after the technical, operations, planning and development, HRD, finance, new services and marketing divisions, with the CEO as the chairman.

The proposal, already circulated among members of the Telecom Commission, says funds for the company can be generated through public issues and by granting contracts to firms for non-voice services such as electronic commerce.

“The funds allocated in the Union budgets till now can be compared with the revenue generated and given to the Centre. The difference between the two can be transferred over a period that can be agreed. In addition, the company may pay the government a royalty that could range from 10 per cent to 20 per cent,” says the note, which wants the company to be incorporated and regulated under the Companies Act.

There are indications that the planned company will double up as an international telecom carrier, and to achieve that goal it would be ready to set up its own earth stations. “If Videsh Sanchar Nigam (VSNL) does not want to become a partner in the traffic flows of the proposed company, it can set up its own earth stations,” the note states.

A senior Telecom Commission member said it is a good proposal, and will be discussed soon. “The main benefit would be that the company will be in a position to generate funds from the world market as well as from domestic investors,” he said.

According to a DoT official, the company will be able to raise funds faster than a government or state-owned corporation. Another potential gain perceived is the higher productivity that could arise from having employee-shareholders.

“Such companies have been created in the United Kingdom and Germany. In the UK for instance, it was successfully implemented while privatising coal and textile companies,” DoT sources said. 

Mumbai, July 2 
Leading private airline, Jet Airways has approached the Industrial Development Bank of India (IDBI) to be one of the consortia partners for financing its fleet expansion programme.

Under this programme, the airline plans to induct 10 Boeing aircraft in the 737 series over the next couple of years. The fleet expansion project will cost more than $ 500 million. Jet Airways presently has a fleet of 25 Boeing 737 apart from 5 ATRs.

Top level sources at IDBI said that Jet Airways has sought an assistance of Rs 1,600 crore from the institution which would be part of a consortium led by the US Exim Bank.

The proposal from the airline is believed to have been discussed at the board meeting of the IDBI held here on Thursday. “We did discuss the preliminary proposal. The details of the proposal are yet to be obtained. It will be considered once we have received further details,” a senior director from IDBI told The Telegraph.

Sources from Jet Airways said that the planned expansion would also replace some existing aircraft which are on lease. Presently, of the 25 Boeing aircraft, around 13 have been leased by the domestic carrier.

Of these 25 B737 aircraft, 15 are new generation- B737-400/500 and 10 next generation B737-700/800 aircraft.

“These aircraft would be inducted in phases and they would join our fleet in 2001 and 2002. We are looking at series of 737 aircraft which includes 400, 500, 700 and 800,” the official said.

Apart from the Boeings, Jet Airways plans to increase the five ATRs to eight. All these expansion plans are expected to be funded by a combination of internal accruals and the consortium of banks and financial institutions led by the US Exim Bank.

Earlier Naresh Goyal announced the $ 500 million expansion which would make it the the country’s largest private airline. in the country. He had then said that the average age of its fleet is 3.08 years making it the operator of the youngest Boeing 737 fleet in India. The average age of the fleet later declined to 2.71 years in the previous fiscal. 

In December 1996 Jet Airways had signed an agreement with Boeing for 10 aircraft. The delivery of the aircraft was completed in February this year. 

Damanjodi (Orissa), July 2 
National Aluminium Company (Nalco) has ruled itself out of the race to buy the government’s stake in Bharat Aluminium Company (Balco) as a strategic ally.

“There is no synergy and besides, massive investments are required to modernise Balco,” Nalco chairman P. Parvathisem said.

Both Balco and Nalco are state-owned, highly profitable aluminium companies, but the government decided last month to sell a 51 per cent stake in the former to a strategic partner who brings in fresh funds needed to modernise its Madhya Pradesh-based plant and mines.

Nalco’s assertion comes amid speculation that the A V Birla group’s Hindalco — which recently bought out the Alcan-controlled Indal — is likely to emerge as the successful suitor for Balco. With Nalco saying it is not interested, the Birlas have an advantage. 

However, industry sources say Alcan and Kaiser Aluminium, which has a tie-up with Hindalco, may also throw their hats in the ring. Parvathisem, who was accompanied by Union secretary of mines, Deepak Chatterjee, said Nalco is in the midst of an ambitious expansion programme, which will double its annual alumina refining capacity to 15.75 lakh tonnes from 8 lakh tonnes by the end of this financial year. 

The update will also help the company increase its annual exports two fold to about one million tonnes, making it a major player in the Asian alumina market.

“We are increasing the capacity of our smelter at Angul — which converts alumina powder into metal — from 2.3 lakh tonnes to 3.45 lakh tonnes a year. This means, we will be using up more of what we refine here, but still have a huge exportable surplus,” the Naclo chairman said. 

“Of the Rs 3,726 crore to be invested in the brownfield expansion, Rs 1,664 crore will go towards expanding bauxite mines and alumina capacities,” said S. K. Banerjee, director (production). Nalco completed the first phase of the expansion programme last week, taking its refining capacity to 10.5 lakh tonnes. 

New Delhi, July 2 
Assocham has urged the government to restore the tax holiday given to computer software companies in the wake of reports that tax authorities are denying many companies the benefits because of legal ambiguities.

Chamber president Shekhar Bajaj asked the Central Board of Direct Taxes (CBDT) to clarify whether the words, ‘articles or things’, appearing in Section 80-IB of the Income Tax Act includes computer software. This section gives units set up in the industrially backward states, or in notified backward districts, a five-year tax holiday provided they have started their production before March 31, 2002.

Bajaj said many assessing officers prevent software firms from availing of this facility because the section does not explicitly contain the words, ‘computer software’. This interpretation, besides giving rise to litigation, could hamper the growth and development of the computer software industry, Bajaj said. 

“Since an industrial unit manufacturing computer software is eligible for a tax holiday under the Sections 10A and 10B, there is no justification for denying such relief to companies under the provisions of Section 80-IB,” the Assocham chief said.

The software industry has been granted sops and incentives to ensure that they develop rapidly. Prominent among them was a 10-year tax holiday extended under the provisions of Section 10A and 10B of the Income Tax Act. The government said it was open to companies ‘manufacturing or producing articles or things’ or computer software. 

However, there was a condition that these companies should be set up in Free Trade Zones (FTZ), or Software Technology Parks (STP), or notified Special Economic Zones (SEZ), or as 100 per cent export-oriented units. 

Calcutta, July 2 
The Union commerce ministry has in-principle agreed to provide 49 per cent of the funds required to run Tea Research Association (TRA) of Toklai —- one of the premier research institutes in the country.TRA’s functions have been hit in the last few years due to resource crunch and other problems. 

A senior industry official said, “Due to the efforts of the governing body of the institute as well as the support from the industry and the Tea Board, lot of work has been done in the last two years to significantly improve the situation. Improvement is now clearly visible in the administration as well as in the research activity at this place.” 

The ministry is working out the procedures for the proposed funding. Clearance for the funding is expected soon. 


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