Commission to be set up to overhaul economic laws
Sebi puts off decision on carry-forward ban
Change in basic licence terms
Meet on limited mobility called off
CSE readies list to nail more defaulters
2 Jhawar firms in Usha Beltron fold

New Delhi, May 5: 
The government plans to set up a commission to overhaul “the entire gamut of economic legislation” in a bid to further relax controls and globalise the economy. It also aims at bringing in a comprehensive income tax law by next March.

Speaking at a function organised here today by the Income Tax Settlement Commission, finance minister Yashwant Sinha said, “There is a need to look at the entire gamut of economic legislation to deal with the situation today as well as tomorrow’s.”

The finance minister explained the new economic law commission would work in the light of similar experiments abroad, which he said had resulted in better tax compliance. The finance ministry will discuss the issue with the law ministry soon to work out the modalities.

Sinha also said the government was facing a shortfall in its targeted revenues for 2000-2001 which he admitted would “have an (adverse) impact” on the fiscal deficit. The government had earlier forecast a fiscal deficit of 5.1 per cent of GDP, but with expectations of a shortfall of more than Rs 5,000 crore in direct taxes and about 3,500 crore in indirect taxes, this could grow to about 5.6 per cent, feel analysts.

Given the fact that the country has a very narrow tax base, the only way to bring more people into the tax-payers’ category was to scrap the plethora of exemptions. “There is a need to look at all the exemptions and, perhaps, take a more detailed view than we have done in the past.”

Many corporates were taking advantage of these loopholes to turn into zero tax companies, he said. To make matters worse, Sinha added tax arrears had mounted to a staggering Rs 50,000 crore, much of it non-realisable.

The minister admitted there was need to write off much of it, but said no single bureaucrat or finance minister had the courage to do so.

A new “cleaner” income tax act was being proposed to deal with all these problems that arose because the existing legislation was a “patchwork of repeated amendments”. Sinha pointed out that some 3,500 amendments had been made to the original act of 1962 at an average of 100 a year.

“I myself have been responsible for 300 amendments . Several of these were due to mistakes in drafting earlier amendments,” he said. Countries that had liberalised their economies have undertaken similar changes in tax laws too, the minister said.


Mumbai, May 5: 
The Securities and Exchange Board of India (Sebi) today failed to make up its mind on the controversial recommendation to ban carry-forward trading and deferred a decision to May 14.

The reason for the deferment was the absence of two key members—Rakesh Mohan, who is a representative of the finance ministry, and Kumar Mangalam Birla, the AV Birla group supremo—at today’s crucial meting.

Though the capital market watchdog was clueless about the reason for their absence, sources said Kumar Birla had frequently failed to turn up at crucial board meetings.

Apart from the J.R. Varma committee recommendations on carry-forward deals, the Sebi board deferred a decision on the rules for much-debated insider trading.

“It was felt that important decisions on carryforward and insider trading should be taken when the full board is present,” Sebi chairman D.R. Mehta told reporters. “We have therefore left the decision for the next meeting, scheduled to be held here on May 14,” he added.

“There is more to it than meets the eye,” said cynical stock market observers.

However, Mehta scotched all doubts that Sebi is not serious serious about cleaning up the capital market and said, “though the issue was discussed, a decision has been deferred to a later date.”

The J.R. Varma committee’s recommendation to ban carry-forward trading had raised hackles in the market as marketmen felt that “it was too drastic a step”. The committee had recommended that deferral products approved by the regulator would cease to be available from July 2, leading to a sharp drop in the sensex as brokers expressed disappointment over the suggestion.

The rolling settlement is to be introduced on stock exchanges on July 2.

The group recommended that automated lending & borrowing mechanism (ALBM), borrowing & lending of securities scheme (BLESS), modified carryforward system and continuous net settlement (CNS) would cease to function from that date.

Already rumours are rife in the market that Sebi is not going to ban carry-forward right now and will allow to co-exist with the rolling settlement for some time.

According to market observers, the fear that the simultaneous launch of rolling settlement in 200 scrips and the ban on carry-forward may result in trade volumes plunging further.

Mehta said today’s meeting cleared the code for stock market functionaries, including broker directors to improve the governance standards at the exchanges.

The code would lay norms and govern the disclosures by office-bearers and officials of the stock exchanges and regulate their proprietary investments.

Asked about the relevance of such code when the demutualisation and corporatisation were being introduced, Sebi executive director L.K. Singhvi said “certain provisions of the code are applicable to the officials of the exchanges and therefore the decisions will be relevant and valid.”


New Delhi, May 5: 
Basic telephone licences have been re-issued to Reliance, Himachal Futuristic Communications Limited, Tata and Bharti Telenet, but with a few amendments.

In a letter sent to all the four telecom operators, the department of telecommunications (DoT) has said the amendments to the original licences issued in March follow the recommendations made by the Group on Telecom and Information Technology (GoT-IT) report on limited mobility.

Bharti Telecom was issued licences late Friday night for the eight circles it had bid. The licences are for offering fixed line services in Delhi, Punjab, Kerala, Karnataka, Tamil Nadu, Haryana, Maharashtra and Andhra Pradesh. The company will get 90 days to accept them.

The amendments stipulate that short distance charging area (SDCA), applicable for limited mobility, should be divided into three sub-categories — rural, semi-urban and urban.

The GoT-IT report had stated: “For covering SDCA, it was felt that each of these categories should be equally covered for each phase of roll out prescribed. That means, in the first phase, where 15 per cent of SDCA is to be covered in a circle, the operator should cover each of the three categories in equal proportions.”

The amendment also stipulates allocation of spectrum for providing limited mobile service using wireless in local loop technology (WiLL) should be based on meeting the roll out obligations. Earlier, DoT in its communique to private fixed telecom operators had indicated that spectrum would be offered on a first- come-first-served basis.

The Group had observed, “The description of ‘first-come-first served’ used in the guidelines was not an accurate description of policy as announced by and as implemented with reference to existing fixed service operators.”

Further, it clarified that “first-come-first served means allocation of spectrum is and must be considered to be inextricably linked to performance.”

The fixed line licensees are required to establish a point of presence (PoP) in an SDCA to be eligible for first tranche of spectrum.


New Delhi, May 5: 
The Cellular Operators Association of India has cancelled its proposed executive council meeting scheduled to be held on Wednesday.

The meeting was to discuss differences amongst members over allowing basic operators to come out with wireless in local loop (WiLL) mobiles.

T. V. Ramachandran, director-general COAI, said: “The meeting was scheduled to discuss the future course of action on limited mobility, following the GoT-IT report. However, it has been called off since the vice-chairman and a few other members will be out of the country on Wednesday.”

He reiterated that there were no differences among members on the fundamental issue of allowing basic fixed line operators to offer limited mobility with a new licence.


Calcutta, May 5: 
The Calcutta Stock Exchange (CSE) may soon announce a fresh list of defaulters because of their inability to fulfil pay-in obligations particularly in settlement numbers 148, 149 and 150.

Sources put the number of the defaulting members, who have been debarred from trading since early March, at well over 40.

These brokers, though small in terms of their respective trading turnover, had allegedly acted on behalf of the three big bulls, Dinesh Singhania, Ashok Poddar and Harish Biyani, who have already been declared defaulters by the bourse.

“These brokers were lured into taking huge positions in three scrips since February—Himachal Futuristic, Global Tele and DSQ Software—on behalf of the big three. But, as the prices of these three scrips declined sharply in early March, they went bankrupt,” explained a senior CSE official.

But while they faced pay-in commitments to the exchange, they did not get any funds from the brokers they had acted for.

“We could never anticipate such a scenario as a crisis like this never occurred before. Now we are finished. We have nothing left by which we can meet our obligations to the exchange,” said a broker whose terminals have been deactivated since March 8.

The CSE’s sub-committee on defaulters today met a large number of defaulting brokers and discussed ways to recover their outstandings dues. The new defaulters’ sub-committee comprises Shyamal Sen of Hindustan Lever, V. N. Reddy of the Indian Institute of Management and former Calcutta high court Justice P. K. Majumdar, besides the bourse’s executive director Tapas Dutta and secretary P. K. Roy.

Confirming the move, Dutta said the process is on to persuade brokers to make the payments.

“However, if they fail to make the payments, we will have no other option but to declare them defaulters and start proceedings against them,” he said.

Today’s meeting was part of the bourse’s efforts to improve its financial position that has been under pressure ever since the payment crisis hit the bourse.

Sources said the sub-committee will submit its report on today’s talks with the brokers to the managing committee next week.

“The brokers will be given some more time to clear their dues. But if they still fail, they will be served show cause notices as to why they should not be declared defaulters,” they added.

Meanwhile, CSE has transferred some 10.5 lakh shares of DSQ Software, lodged by a defaulting broker in March, in its name. The shares will be sold to replenish the Trade Guarantee Fund, which still has a shortfall of Rs 12 crore.


Calcutta, May 5: 
The Jhawars have completed the consolidation of their Rs 1,100-crore Usha Martin group with the amalgamation of UMTL Holding Company and UBL Industries and Investments Ltd with Usha Beltron. The Calcutta high court has approved the amalgamation which took effect on May 3.

Usha Beltron has become the flagship company for the group’s manufacturing activity which includes, steel, wire rope, communication cables, rolling mill and tools, wire drawing and cable-making machinery along with a captive power plant.

The other group company Usha Martin Infotech, recently created by demerging the information technology division of UBL, will concentrate on software development and other infotech activities, including education and training.

Usha Martin’s consolidation activity is prompted by the group’s withdrawal from mobile telephony business. Recently, the group sold off its entire holding in Usha Martin Telekom, which operates the Command brand of cellular service in the city, to Hutchison Max.

In a statement issued to the stock exchanges, the company said that the certified copy of high court order dated April 17, has been filed with the Registrar of Companies, West Bengal, on May 3, thus making the amalgamation scheme effective from that date.

Usha Beltron was floated in 1987 as a joint venture company with the Bihar government for manufacturing jelly filled cable. Subsequently, Jhawars bought Bihar government’s stake in UBL and Usha Martin Industries was merged with UBL.

A senior company official said here today that following a series of merger and demerger process, the group’s consolidation was complete with UBL becoming flagship for the group’s manufacturing activities.

Steel accounts 40 per cent of the group’s Rs 1,100 crores turnover, 30 per cent by wire rope and 28 per cent by communication cables. Wire export fetched about Rs 200 crores to the company’s coffer.

Currently, the group is expanding its steel-manufacturing capacity from 2.2 lakh tonnes to 3.5 lakh tonnes at a capital cost of Rs 80 crore which will be commissioned by the end of this year.

The company also acquired UK-based Brunton Shaw, a wire rope manufacturing facility, for effective marketing of mild steel, wire and rope in the international markets.


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