Slew of tax breaks for industry
War on WiLL continues as deadline nears
Go-ahead for Benz, BankAm proposals
All Bank operating profit at Rs 300 cr
India Inc blames it on hurdles for all ills
Max Life to invest premia in debt
Chinese knick-knacks land in gift packs
Midea wind blows in fan market
Foreign Exchange, Bullion, Stock Indices

New Delhi, April 25: 
Industry received a slew of tax breaks today as finance minister Yashwant Sinha tweaked the finance bill in an attempt to mollify several aggrieved sections.

The biggest concession to win over industry was the announcement of changes in the transfer pricing provisions to incorporate transactions between the head office and its branch. Adjustments made to the transfer price in the case of one enterprise would by itself not become the basis for a consequential adjustment in the case of the other.

To help exporters who have been wilting in the heat of recession-hit markets abroad, the government announced re-phasing of tax sop withdrawals. Some 30 per cent of export profits will be taxed in the current year against an earlier proposal of 40 per cent. Similarly, their taxable income will increase to 50 per cent, 70 per cent and 100 per cent in the next three years instead of 60, 80 and 100 per cent.

To help scam-ravaged stock markets to improve their functioning through corporatisation, the finance minister exempted transfer of assets by them from capital gains tax. Sinha also tried to create a level playing field in the garments market by extending a 16 per cent excise duty imposed on branded readymade garments and accessories to all categories of garments excluding clothing accessories raincoats and undergarments.

Small-scale excise exemption scheme would also be extended to the garment sector, the minister announced, adding the changes would be effective from May 1 this year. To encourage domestic shipping companies to acquire new vessels, Sinha said a proposed 5 per cent customs duty on ships would also stand abolished. In a bid rationalise the direct tax regime, Sinha said non-corporate tax payers would now be required to file returns by October 31 instead of July 31 bringing them at par with corporates.

Funds enjoying exemption under section 10(23c) would be put at par with charitable institutions for accumulation of 25 per cent of their income without a time limit, but the remaining income could be accumulated only up to five years, he said.

Both the funds and charitable trusts would also be required to publish their accounts if their income exceeded Rs 1 crore as against Rs 10 lakh proposed earlier.

In a move billed as relief to poor, the finance minister also Sinha exempted plastic footwear costing up to Rs 125 from a nominal 4 per cent excise levy proposed in the budget.

Customs duty on metallurgical coke has been cut to 5 per cent in order to provide a fillip to steel producers dependent on imported coke.

At the same time, Sinha also withdrew the concessional duty of 55 per cent proposed in the budget for the import of crude palm oil by sick vanaspati units to “avoid discrimination”.

The changes in customs and excise duties passed today will be effective from tomorrow excepting those on garments which will come into effect from May 1.

Ficci president Chirayu R. Amin said, “The finance minister has carried out pragmatic re-assessment of some of the proposals of the finance bill.’’

CII president Arun Bharat Ram said the implementation of the budget proposals was absolutely crucial for bringing back growth and the “feel good factor” in the economy. Assocham president Raghu Mody welcomed the reduction in customs duty on textiles and IT equipment.


New Delhi, April 25: 
The controversial issue of limited mobility to basic telecom players is still tied up in knots with the Group on Telecom and Information Technology (GoT-IT) failing to submit its recommendations to the Prime Minister as differences persisted among its members.

GoT-IT sources said, “The issue is a complex one and another review meeting will be held tomorrow. We expect to be able to submit the final report within the given time.”

Today’s meeting discussed the issue of interconnectivity charges for fixed line service providers and cellular service providers, but failed to reach a decision.

“Since it is a tariff issue, it may have to be referred to the Telecom Regulatory Authority of India (Trai),” sources said.

Sources said the government is exploring the possibility of a new formula for sharing long-distance call charges, which could see basic service providers paying 95 per cent of long-distance call charges to the government for calls made from wireless in local loop (WiLL) mobile phones. The 60:40 formula will, however, continue to apply to all fixed line calls.

Today’s meeting which lasted for about an hour, also discussed the role of the Telecom Dispute Settlement Appellate Tribunal (TDSAT), which may also hear both sides on the limited mobility issue.

The GoT-IT had been asked by Prime Minister Atal Behari Vajpayee to examine whether the New Telecom Policy 1999 allowed basic service operators to provide limited mobility and, if it did, to consider whether cellphone and fixed operators will get a level playing field.

Another concern before the Group was to see whether its decision would give consumers the cheapest option available.

Meanwhile, basic operators continued to be a divided house. While Reliance, Shyam and HFCL want fixed phone companies to talk to the government only on WiLL mobile phones, others including the Tatas, Bharti and Hughes want the talks to be broadened to include other issues concerning cellphone companies.

This is understandable, as the Tatas, Bharti and Hughes are not only in the running for fixed-line phone licences, but also have substantive cellular phone businesses.

On the other hand, Reliance, Shyam and HFCL have only a peripheral involvement in the cellular business.


New Delhi, April 25: 
The government today cleared 47 foreign direct investment (FDI) proposals worth Rs 508 crore, including the Rs 235-crore Bank of America proposal for starting financial investment services and the Rs 84-crore proposal of Mercedes Benz for increasing foreign equity.

The proposals cleared by commerce and industry minister Murasoli Maran today, include, chemicals and pharmaceuticals, software development, mineral exploration, automobile and engineering industry, engineering consultancy, power projects equipment and NBFC activities.

Bank of America got the approval to launch a 100 per cent subsidiary non-banking finance company (NBFC) for commencing financial investment, capital markets and merchant banking services, an official release said.

Mercedes Benz India Ltd’s Rs 84 crore proposal is for increasing foreign equity from 86 per cent to 100 per cent in its Indian passenger car manufacturing operations.

A Rs 31.22 crore proposal of De-Nocil Corp also got the nod for increasing foreign equity from 51 per cent to 75.7 per cent in its Indian operations for manufacturing Chlorpyrifos.

Cabot India’s Rs 33-crore plan to increase foreign equity up to 100 per cent in two tranches in its carbon black making operations and Hoganas India’s Rs 27 crore proposal for manufacturing and marketing atomised iron powders, was also cleared.

Other FDI proposals which got the nod include the UK-based Mott McDonald International Ltd’s Rs 29.05 crore proposal for offering multi-disciplinary services in the areas of engineering, infrastructure and management consultancy.

Demerara Distillers’ Rs 10-crore plan for import and wholesale of liquor through a 50 per cent subsidiary; Stern Stewart’s Rs 10.40 crore proposal for providing advisory services in financial management and corporate finance; Compaq Computer (India) Pvt Ltd’s proposal for restructuring foreign/NRI equity in its computer hardware operations; the Rs 9.2 crore proposal of Eltete Ltd of Finland for manufacturing and transport packaging products, were among those that got the nod.


Calcutta, April 25: 
The city-based Allahabad Bank has posted an operating profit of Rs 300 crore in the financial year ending March 31, 2001 as against Rs 285 crore in the previous year.

The bank also recovered non-performing assets (NPAs) worth Rs 288 crore during the last financial year. The bank’s gross NPAs as on March 31 last year stood at Rs 1,690 crore.

The bank has decided to make a provisioning of Rs 25 crore in the 2000-2001 balance sheet for the voluntary retirement scheme (VRS) that it launched in December. The total outgo on account of the VRS, granted to 1,500 employees, is Rs 150 crore.

Talking to The Telegraph, chairman and managing director B. Samal said the bank had done business worth Rs 30,269 crore in the last financial year compared with Rs 26,525 crore in the previous year. Out of the total business, advances have shot up to Rs 10,295 crore as against Rs 8,883 crore in the previous year. Similarly the bank’s deposit have shot up to Rs 19,975 crore from Rs 17,642 crore in the previous year.

Samal said the bank’s net profit is yet to be decided, pending provisioning for several items. “It will be marginally higher than last year,” he said. Last year, the bank registered a net profit of Rs 69 crore. Business per employee has also increased from Rs 1.06 crore in 1999-2000 to Rs 1.26 crore in 2000-2001. Besides, the bank has initiated a programme for bringing in the three-tier system, according to the reorganisation plan submitted by Arthur Anderson.

Samal said the bank has adopted a four-pronged strategy to increase its business, that includes technology upgradation, increasing the number of retail boutiques, rural development and a complete overhauling of its human resource department.


New Delhi, April 25: 
The movers and shakers of Corporate India renewed calls for better infrastructure and a regulatory regime more conducive to growth at the annual session of the Confederation of Indian Industry (CII) here today.

From infotech to manufacturing to agriculture, these were seen as two of the biggest hurdles on way to faster growth. The gripe was not limited to barons and policy wonks — even key figures who govern the nation carped about it.

While Pramod Mahajan the BJP-led government’s infotech minister, said better power supply, bandwidth and improved computer education were crucial to give the country a China-style Great Leap forward, Planning Commission member Som Pal felt restrictions on farm trade stifled growth.

Biotech boffins blamed it on a perception problem, while consumer durable makers clamoured for a level playing field against the much-feared wave of imports after the end of import quotas.

Pal, a former Union agriculture minister himself, saw little scope for cooperation between agriculture and industry unless the raft of restrictions on farm trade are removed.

He said agriculture exports were poor in spite of the fact that the country’s warehouses were bursting with surplus foodgrains, putting down the paradox to restrictive laws like the Land Ceiling Act and curbs on movement of grain within the country.

Kiran Mazumdar Shaw, chairman and managing director of Bio-Con India, blamed ‘low public esteem’ for the biotech sector’s woes. “Though it could use government funds, it is public awareness which can make all the difference.”

The 30 Indian biotech players who have tapped the market have not generated growth, diagnostic kits for diseases are out of reach for rural markets and plant extracts are not used widely enough. “To really shore up the bottomline, the way out for entrepreneurs would be to generate steady capital and speed up technology flows to the sector in a process where the initiative is taken by the government.”

Sue Evans of A. T. Kearney India described India as a country with a awesome growth potential and a place where companies would like to invest — if the government did more than it is doing now to make it a lucrative destination.

Representatives of consumer durable companies, which have been railing against the Chinese onslaught on their turfs for months now, called on the government to work out ways to help them scale down costs to counter the threat. And, topping their long wishlist was a demand for lower taxes.

Reconsider ban

New York Stock Exchange executive vice-president George Ugeux said the ban on BPL, Sterlite and Videocon from accessing the market up to four years was a retrograde step and should be reconsidered. “Curbs on issue of fresh capital by these companies punishes their shareholders.”


Calcutta, April 25: 
Max New York Life Insurance Company, a joint venture between New York Life Insurance Company and Max India, will invest all its premium income in debt instruments issued by public sector companies and private firms.

Company CEO and managing director, Anuroop ‘Tony’ Singh, told reporters here today that his company is against using investors’ money to bet on stocks at a time when bourses are in the throes of unprecedented turbulence. The company intends to maintain a solvency ratio of 1.65 till the formation of IRDA’s policy-holders’ protection fund.

The paid-up equity capital will be raised from Rs 100 crore to Rs 200 crore, of which the foreign partner will hold 26 per cent. Chairman Analjit Singh said more funds will be injected later if it is required to maintain capital adequacy at a healthy level. He said Max India’s own investment in the company will be stepped up to Rs 350 crore in the next four to five years.

With eight offices and 500 agents, Max New York Life has introduced five products with seven riders which can be customised into 200 combinations. The policies are: whole life participants, whole life non-participating, five-year term renewable and convertible, easy term and a 20-year endowment. There is a ‘free-look’ offer, which gives a prospective investor 10 days to make up his mind from the day the policy is handed.

The chief executive (Asia region) of New York Life, Dennis. J. Pedini, said there is a massive potential for life insurance products in India, where the percentage of premia collections as a proportion of the GDP is only 0.6 per cent. The market, now dominated by LIC, is yet to attain maturity in respect to other emerging markets of Asia, he said.


New Delhi, April 25: 
Chinese goods have found a unique way to reach the Indian market.

While on one hand, Indian industry has been crying itself hoarse over the threat from cheap Chinese imports, on the other, Indian multinational firms are using low-cost Chinese products as gift items to prop up sales.

The gift items range from torches, clocks, cameras to small consumer durables. And the source of these gift items is a Calcutta-based establishment called Zenith Finesse, whose sole business is to provide cheap but foreign gift items to these companies.

Market sources revealed that brands serving the lower segment, where the customer base is huge, are even importing Chinese goods and passing them off as their own.

Even HLL, Colgate and leading liquor and tobacco companies adopted a similar route for different schemes launched by them sometime last year. The fact that the Chinese goods are being offered with branded Indian goods makes them instantly acceptable to the consumer.

A camera free with a ceiling fan, or with emergency lights, seem to be quite a good bargain. But it has a catch—the Made in China camera cost only Rs 80 or even less to the importer. Thus, the quality of the product automatically comes under question.

Usha International Ltd, the Siddharth Shriram group company, is offering an unbranded Chinese focus-free camera with every fan. The scheme, launched on March 1, has picked up and the company has already marketed 2 lakh pieces, with the customer paying an extra Rs 40 in addition to the cost of the fan.

Luring customers with a value-added gift has cost Usha International around Rs 4 crore.

About a year or so back, BPL lured customers with the Made-in-China label. They bundled focus-free cameras with emergency lights, offering the cameras completely free.


Calcutta, April 25: 
Three domestic fan majors—Usha, Polar and Bajaj—have entered into separate tieups with the world’s largest fan maker, Midea of China, to import fans into the Indian market.

These companies, in separate agreements with Midea, have proposed an annual import of 1.5 lakh portable fans each for their respective brands, in exclusive colours and designs.

Midea, based in the Shunde province of China, manufactures 10 million portable fans, against the Indian fan makers’ combined production of about 8 million ceiling, portable and exhaust fans.

While Usha, with a production of 1.5 million, is the largest of the three, Bajaj and Polar each account for a production of about a million units each.

Crompton Greaves, till recently a market leader, now accounts for 1.65 million fans annually. It recently introduced Crompton Tropicana portable fans, imported from Thailand. Polar Industries is also negotiating with LYC of Taiwan for introducing a range of exhaust fans in the Indian market, said Hardeep Singh, managing director.

The craze for tieups with Chinese, Thai and Taiwanese fan manufacturers, however, is restricted to portable fans, the market for which is expected to witness unprecedented growth in the short as well as long term, market surveys suggest. While portable fans, which include table, stand and wall fans, account for 20 to 25 per cent of the domestic fan market, light-duty exhaust fans used in bathrooms and kitchens make up for the rest. Singh said market intelligence reports suggest demand for portable and exhaust fans will rise phenomenally in the next three years. The market for portable fans is likely to go up to 30 per cent in the next three years, he said.

However, some fan makers still prefer to go it alone.

Orient Industries, the largest fan maker accounting for 1.8 million units belonging to the GP-CK Birla group and the the city-based Khaitan Fans, which manufacture about one million fans, would like to go it alone and reduce costs as well as margins if necessary, to retain their competitiveness..

Senior Orient executive, C. L. Mohta, said indigenisation of motors for table fans has already led to reduction in costs. The company is also considering importing certain engineering plastic components to reduce costs.

S. K. Khaitan, chairman of Khaitan Fans, noted that despite some constraints in margins, the company has the strength to face the competition.

Singh noted domestic manufacturers faced no threat in case of ceiling fans, which account for 72 to 75 per cent of the total fan market in India.



Foreign Exchange

US $1	Rs.46.85	HK $1	Rs. 5.95*
UK £1	Rs. 67.25	SW Fr 1	Rs. 26.95*
Euro	Rs. 41.87	Sing $1	Rs. 25.50*
Yen 100	Rs.38.29	Aus $1	Rs. 23.35*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4400	Gold Std(10 gm)	NA
Gold 22 carat	Rs. 4155	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7475	Silver (Kg)	NA
Silver portion	Rs. 7575	Silver portion	NA

Stock Indices

Sensex			3600.83		+ 10.84
BSE-100			1729.09		+  7.27
S&P CNX Nifty		1155.35		+  9.05
Calcutta		122.43		+  1.34
Skindia GDR		 NA		   -

Maintained by Web Development Company