The Tribune, Chandigarh, India - Business http://www.tribuneindia.com/2004/20040412/biz.

htm

Monday, April 12, 2004,

Chandigarh, India

BUSINESS
NEWS AND VIEWS
PUNJAB
HARYANA BRIEFLY
JAMMU & KASHMIR
HIMACHAL
REGIONAL BRIEFS Luminous battery-makers coming to
NATION
Baddi soon
OPINIONS
New Delhi, April 11
MAILBAG
Powered by reasonably strong brand equity in the inverter
BUSINESS and domestic power appliances market through the
SPORTS Luminous brand of products, Delhi-based SAR Silicon
WORLD Systems Pvt. Limited, has drawn out elaborate plans for
automotive and inverter battery segment.

Over 400 unemployed get lucky at JobFest

SPECIAL COVERAGE Chandigarh, April 11
CHANDIGARH A job festival (JobFest) was organised here today.
LUDHIANA Sixty-two corporate houses from more than 19 service
NATIONAL CAPITAL industries, including airlines, hotels, banking, tourism,
telecom and IT-enabled services, guided youth about Former cricketer Mohammed
Azharuddin and his wife
various opportunities that exist in the so-called
Sangeeta Bijlani at the launch
‘non-conventional’ fields. of Shades Fashion Event
THE TRIBUNE SPECIALS
(eyewear) in Hyderabad on
50 YEARS OF
INDEPENDENCE
Service sector on a roll Saturday.
— PTI
Services sector, which includes hospitality, event
TERCENTENARY managements, call centres, transportation, travel and tour, EARLIER STORIES
CELEBRATIONS
etc, will be the biggest employment generators in India in
India may attract $1 b
the next few decades. fresh FDI, says Ernst &
Young
China’s car industry attracts foreign April 11, 2004
Rising rupee prompts
players exporters to meet
Beijing, April 11 Jaitley
China’s booming automobile industry is attracting global April 10, 2004
giants, including Tata Motors to venture into a market Supreme Court upholds
which is expected to overtake the United States by 2020 as Securitisation Act
the world’s biggest auto producer. April 9, 2004
Brick prices up 20 pc
due to coal shortage
FIIs net buyers in equities April 8, 2004
Mumbai, April 11
Moody’s pricks India’s
The foreign institutional investors (FIIs) totally stayed away economy bubble
from the debt market while notching up heavy net April 7, 2004
purchases of Rs 1,035.6 crore ($ 229.3 million) in equities NTPC to tap market by
for the trading week ended April 9. August
April 6, 2004
Virgin eyes Hyderabad,
IT domestic market grows 11 per cent Bangalore and Chennai
New Delhi, April 11 April 5, 2004
Domestic information technology (IT) market is embarking LG boss lays emphasis
on a high growth path and telecom, financial services and on exports
government are the drivers, according to a study. April 4, 2004
Reuters wilts,
Bloomberg blooms
NDTV IPO on April 21 April 3, 2004
Mumbai, April 11
BSNL slashes STD, ISD
The news broadcaster New Delhi Television (NDTV) India rates by 25 pc
Ltd’s initial public offering (IPO) will open for subscription April 2, 2004
on April 21 to raise about Rs 100 crore from the capital
market.

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MARKET UPDATE

Cautious market awaits results

LAST week, trading remained lacklustre as cautiousness set in head of the
announcement of the fourth quarter corporate results. The sensex gained 50.37
points at 5,838.45 and Nifty gained 12.45 points for the week to 1,853.55.

TAX ADVICE

Invest in bonds to save capital gains tax

Q: I have sold a plot of land for Rs 25,00,000 during the year ended March 31, 2004.
The said plot was acquired by me in the year 1980 for Rs 2,00,000. I am told that to
avoid capital gains there is an option of investing some amount in certain bonds.
Please advise me in this regard?
Top

Luminous battery-makers coming to Baddi soon

Gaurav Choudhury
Tribune News Service

New Delhi, April 11

Powered by reasonably strong brand equity in the inverter and domestic power
appliances market through the Luminous brand of products, Delhi-based SAR Silicon
Systems Pvt. Limited, has drawn out elaborate plans for automotive and inverter
battery segment.

“We are shortly going to launch a full range of batteries for the automotive and
inverter segment. In fact, the batteries should hit the market by the end of this
month,” Managing Director of SAR Silicon Systems Rakesh Malhotra told The Tribune
in an interview.

To this effect, the company is setting up a separate assembly line production facility
at Baddi, which will eventually have a capacity of one million units per month.

The company has already entered into a technology transfer tie-up with the US-based
$ 685 million giant, EaglePicher Inc, for manufacturing of automotive and valve
regulated lead acid (VRLA) batteries.

The range of batteries will be marketed under the co-brand Luminous EaglePicher.

Mr Malhotra said the company was presently focussing primarily on the replacement
market for automobile batteries.

“We have not initiated any discussions with automobile manufacturers for entering
into an OEM (original equipment manufacturer) agreement,” he said.

The replacement market in the automotive market in India is estimated to be to the

tune of 3.5 to four million units a year. “This does not include the truck market as it is
mainly serviced by the unorganised market,” he said.

“Price-wise we will be placing our products at the fair value of the existing branded
players. Technologically, we expect to make batteries, which will outlast the current
ones by about 35 per cent”, he said.

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Regarding the technology transfer agreement with EaglePicher, he said the

“technology development and R&D in India has not kept pace with global standards
due to lack of effective competition in the industry.”

EaglePicher Inc., founded in 1843 and headquartered in Phoenix, Arizona, USA, is

diversified manufacturer of innovative and advanced technology and industrial
products for space, defence, automobiles etc. Presently, the company has more than
30 plants in the USA, Canada, Mexico, the United Kingdom (UK) and Germany.

Mr Malhotra said the company was expecting to clock a 60 per cent growth rate in its
turnover in the coming fiscal year. “Our present group turnover is about Rs 120
crore,” he said. On its flagship Luminous inverters, Mr Malhotra said the company was
planning to make a deeper penetration in the rural and semi-urban market.

“The present size of the inverter market in India is about 1.5 million units a year and
is growing at a compound annual growth rate (CAGR) of 12 to 14 per cent,” he said.

He said potentially, the inverter market has the capacity to grow by more than five
times its current size. “We are developing specialised products for the rural market.
For any inverter and battery manufacturer, it is extremely unfriendly environment
mainly because of the poor quality of power,” he said.

Mr Malhotra said Luminous is going to introduce two more products for rural market.

“The new products will, to a fair degree, meet the requirements of the rural
consumer. It will carry a comprehensive warranty, including the battery for three
years,” he said.

Mr Malhotra said, the company was going through a “bit of a makeover exercise” and
was looking at diversifying into other products as well.
Top

Over 400 unemployed get lucky at JobFest

Tribune News Service

Chandigarh, April 11
A job festival (JobFest) was organised here today. Sixty-two corporate houses from
more than 19 service industries, including airlines, hotels, banking, tourism, telecom
and IT-enabled services, guided youth about various opportunities that exist in the
so-called ‘non-conventional’ fields.

Major Gulshan Sharma (retd.), executive director of the Institute of Tourism and
Future Trends (ITFT) and one of the key organisers of JobFest, said there are 40
million graduate unemployed in the country and plain-and-staid sectors like
engineering, medicine et al do not have many job avenues left. Addressing a press
conference he said more than 2,000 students faced on-the-spot interviews and nearly
400 of them got jobs today. He said those who attended the interviews were broadly
categorised into three groups — technical graduates, graduates under 28 years and
those whose graduation results are awaited.

While speaking at length on the recent trends in the job industry, he pointed out that
318 out of 350 students from North-East India, who enrolled with the institute last
fiscal, had already found placements in the service sector.

Major Sharma said that nearly 5.5 lakh unemployed youth are currently registered in
Punjab employment exchanges while Haryana has 8 lakh of them. For Chandigarh,
the figure stood at 60,000.

Earlier, an award ceremony, which started two hours behind schedule, was presided
over by the Punjab Minister of Tourism and Culture, Mr Ashwini Sekri. The minister
gave away the prizes to those persons who had made outstanding contribution to the
development of the service industry.

Others who addressed the press conference included senior-level managers from the

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call centre, airlines, hotel and event-management sectors.

Top

Service sector on a roll

Poonam Batth
Tribune News Service

SERVICES sector, which includes hospitality, event managements, call centres,

transportation, travel and tour, etc, will be the biggest employment generators in
India in the next few decades.

Experts feel though the manufacturing sector has done fairly well in the last few
years, it will be the service sector that would be the major creator of jobs in the
country in the next few decades . The share of this sector in the country’s GDP is 54
per cent. In its report titled, “India Vision 2020,” the Planning Commission has
mentioned that India faces the challenge of generating 200 million new employment
opportunities over the next two decades out of which 120 million would be in the
services sector alone.

The northern region has tremendous potential in terms of jobs for the educated
unemployed in the business processes outsourcing (BPO) sector, largely due to their
accent, knowledge and communication skills,” says Mr Ashish Kumar, Senior HR
Manager, Converges.

Healthcare, education, media and entertainment, transportation including civil

aviation, housing, construction and enterprises in the unorganised sector have also
emerged as significant components of the overall services industry in the country, the
survey says.

One sector that will be one of the biggest employment generators in the next few
years is the event management. The industry is expected to grow by over 50 per cent
in the next two years, reaching the size of around Rs 11,00 crore by 2005-2006. “You
do different things everyday: it involves constant brainwork,’” says a senior executive
associated with the event management.
Top

China’s car industry attracts foreign players

Beijing, April 11
China’s booming automobile industry is attracting global giants, including Tata Motors
to venture into a market which is expected to overtake the United States by 2020 as
the world’s biggest auto producer.

Tata Group Chairman Ratan Tata, who was here recently scouting for business
opportunities for his conglomerate in China was clearly impressed by the fast pace of
development of the Chinese auto industry.

While Tata remained tight-lipped on the Chinese partner for a possible auto venture,
he said the company is looking at exporting, importing automobile components from
China and joint development of automotive products.

“We are talking to some Chinese companies,” he said.

China’s auto sector is among those being watched closely by the government to
prevent redundant investment which could lead to overcapacity.

Official statistics show that automobile production in China increased 56 per cent in
2002 and 83.25 per cent in 2003. The number of automakers in the country rose from
20 in 2002 to 32 at the end of 2003.

But Tata said the overcapacity fears did not bother him since his company is intent on
exploiting two-way trade and investment opportunities.

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“We’re looking at both countries together, not investing in China for China,” he said.

In the past decade, China’s auto production had grown by 15 per cent on average
every year, 10 times faster than in western countries, Vice Chairman of China
Machinery Industry Federation (CMIF), Zhang Xiaoyu said.

This year China would produce over five million cars, ranking third in the world and
the country would become a world auto industry power in future years, he said this
week at the ‘2004 China Auto Marketing Summit’. — PTI
Top

FIIs net buyers in equities

Mumbai, April 11
The foreign institutional investors (FIIs) totally stayed away from the debt market
while notching up heavy net purchases of Rs 1,035.6 crore ($ 229.3 million) in
equities for the trading week ended April 9.

Mutual funds (MFs) recorded net sales of Rs 401.86 crore in equities but netted
inflows of Rs 491.63 crore in debt instruments during the period under review,
according to the data with SEBI here.

FIIs were net buyers to the tune of Rs 417.4 crore ($ 92.7 mn) in equities, the
highest for the trading week, on April 6.

They were also net purchasers at Rs 318.7 crore ($ 70.1 mn), Rs 131.2 crore ($ 29.1
mn) and Rs 168.3 crore ($ 37.4 mn) on April 5, seven and eight respectively.

The foreign funds were completely away from the debt market for the four trading
days in the week.

MFs remained net sellers on three days while recording its highest net outflow of the
week at Rs 231.96 crore on April 6 followed by Rs 112.97 crore and Rs 56.93 crore on
April 7 and 5 respectively. — PTI
Top

IT domestic market grows 11 per cent

New Delhi, April 11
Domestic information technology (IT) market is embarking on a high growth path and
telecom, financial services and government are the drivers, according to a study.

According to initial estimates by industry body National Association of Software and

Service Companies (Nasscom), Indian domestic industry grew 11 per cent in 2003-04
to $ 7.42 billion.

In $-7.42 billion domestic industry, share of software and services was $ 3.37 billion
in 2003-04, up from $ 2.78 billion in 2002-03. The year-on-year growth in this
segment was 14.8 per cent.

In 2002-03, IT and telecom industry accounted for 22 per cent of the market,
followed by financial services at 21 per cent, manufacturing 15 per cent and
government 14 per cent.

“Going forward too, these segments are expected to witness escalated IT-related
activity and IT deployment, creating significant business opportunity for both Indian
and multinational companies operating in this sector,” Nasscom said.

According to Nasscom, spending by financial services sector is expected to jump to Rs

9,800 crore in 2004-05.

In 2002-03, IT spending by financial services sector grew 18 per cent year-on-year to

Rs 6000 crore. In insurance sector, IT investments are expected to clock Compound
Annual Growth Rate (CAGR) of 35 per cent between 2001-02 and 2004-05, Nasscom

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said quoting IDC data.

“Deployment of hardware, software and connectivity infrastructure remains the focus

of this sector, which has also implemented Customer Relationship Management (CRM)
solutions,” Nasscom said.

Domestic IT market, which has been neglected for long, is now attracting some of the
biggest names in the industry.

TCS, i-flex, Infosys, Wipro, HCL Technologies, NIIT Technologies, Polaris, Infrasoft,
Zenith Infotech, Nucleus, PCS and many others are focussing on this segment
intently.

The government spending on IT in 2002 was $ 1 billion, according to Gartner. In

2002, government accounted for nine per cent of the total IT spend in India and is
expected to grow to 15 per cent over the next five years.

Nasscom estimates that in next five years governments in India will spend close to Rs
15,000 crore on computerisation of their operations.

In 2003, the Central government proposed a total outlay of Rs 2,550 crore for the
national plan of e-governance. While Rs 1,485 crore has been allocated for the centre,
Rs 800 crore has been kept aside for financial institutions and Rs 265 for state
governments.

Gradual improvements in India’s telecom infrastructure are also playing a role in

improving the potential of domestic IT market. — UNI
Top

NDTV IPO on April 21

Mumbai, April 11
The news broadcaster New Delhi Television (NDTV) India Ltd’s initial public offering
(IPO) will open for subscription on April 21 to raise about Rs 100 crore from the
capital market. The company has received a nod from SEBI for its domestic IPO,
which would remain open for subscription for a week, investment banking sources
said here today.

NDTV is the second news company to go public, the first one being TV Today Ltd,
India Today group company, which visited the market few months ago. The company
would use proceeds from fresh issue of shares for repayment of loans of Rs 20 crore.
The outstanding term loans stood at Rs 30 crore. — PTI
Top

bb
MARKET UPDATE

by Lalit Batra

Cautious market awaits results

LAST week, trading remained lacklustre as cautiousness set in head of the

announcement of the fourth quarter corporate results. The sensex gained 50.37
points at 5,838.45 and Nifty gained 12.45 points for the week to 1,853.55.

A strong economic data along with improvement in liquidity in the secondary markets
after year-end and return of money locked in the public issues, triggered a sharp
rebound on the bourses in the last few days. Cautiousness emerged in the market as
the market expects the future guidance by IT companies in general could be muted.
The US backslash against outsourcing and a recent sharp surge in the rupee could
lead to the muted guidance by IT companies.

This week is crucial for the market as companies like Hughes Software, Infosys, Hero
Honda, Reliance Energy and HDFC Bank declare their fourth quarter results during the

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week. Some amount of volatility on the bourses cannot be ruled out as the results
flow in. Further, as the election dates draw near, investors would be keenly watching
the activities on the political front, which could be reflected on the stock markets.
Thus, investors need to keep a watch on all these developments, as these would play
an important role in determining the movement of the indices. On the technical charts
the 5840-5860 range is a strong resistance for the index while 5780 is acting as a
support level. In case the index breaks below 5780, the market is likely to slip further
to 5700 or 5650. On the upside the sensex can touch 6410 in the medium term.

Biocon

Biotech Major Biocon made sparkling debut last week at Rs 484.35, a 54 per cent
premium to its public issue price of Rs 315. The stock closed the week at Rs 581.20,
84 per cent premium to the IPO price of Rs 315.

Biocon is India’s largest biotech company with a presence in bio-pharmaceuticals,

enzymes, customs research and clinical research. Biocon along with its subsidiaries is
a completely integrated unit with capabilities from cell culture to drug discovery. Thus
it has potentially many revenue streams from plain but differentiated pharmaceutical
products to biological using recombinant DNA technology to drug discovery and
development space addressing the contract research outsourcing (CRO) segment. The
company’s 55 per cent revenue comes from stains, which has a world market size of
$21 billion. Biocon’s focus is on the US and EU markets and has its plants approved by
the regulatory bodies. It has filed relevant dossiers and waiting for 2 of the 4 statins
to come out of patent in 2006 and 2010 respectively. The stock is quoting at a
discounting of 47 to its earnings as per its last Thursday’s closing. The stock, though
has run up too fast and may see a correction, long-term investor can then buy the
stock for gains.

Software

Couple of weeks back, software stocks had received severe investor drubbing
seemingly on the back of the uncertainties raised with respect to the effect of a
severe rise in the rupee against the dollar as for Indian software companies, US is one
of the key markets and a strengthening rupee has a negative impact on their
earnings. But last week there was buying in the sector on the back of Infosys and
Wipro showing intentions of coming out with bonus issues. Infosys also announced
setting up of new subsidiary in the US for catering to consulting business.

Taking a cue from MphasiS (fourth quarter results have been lacklustre results
declared last week, investor should wait for the results and look into the guidance
provided by company before buying into any software stock.
Top

bb
TAX ADVICE

by S.C. Vasudeva

Invest in bonds to save capital gains tax

Q: I have sold a plot of land for Rs 25,00,000 during the year ended March
31, 2004. The said plot was acquired by me in the year 1980 for Rs 2,00,000.
I am told that to avoid capital gains there is an option of investing some
amount in certain bonds. Please advise me in this regard?

Ans: As per the provisions of Section 54EC of the Act, if the entire amount of capital
gains is invested in the specified bonds, there is no liability towards capital gains tax.
In your case the capital gains works out at Rs 15,74,000/- as per detail below.

In Rupees

Sales Consideraton 25,00,00

Less: Indexed cost of acquisition 2,00000x463/100 9,26,000
Long term capital gain 15,74,000

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Accordingly, if you invest Rs15,74,000 within a period of six months from the date of
transfer of the land in the specified bonds, you will not be liable to pay any capital
gains tax.

NRI income

Q: My uncle is a non-resident aged 68 years. He earns income from house

property and bank interest from his assets in India. I recently came to know
that as per the provisions of the Indian Income Tax Act, there is a deduction
available for senior citizens. Please elaborate on the same.

Ans: As per the provisions of Section 88B of the Act, a rebate of Rs 20,000 from the
amount of tax payable is available to a senior citizen at present. However, the said
rebate is only available to an individual who is a resident of India. Accordingly, your
uncle would not be entitled to the rebate.

Lease money

Q: I alongwith my three brothers am the owner of a house property. The said

property is being leased out to a company for their use as a guesthouse. We
requested the company to give four separate rent cheques so as to avoid the
deduction of tax at source. However, the company is of the view that even if
it gives four different cheques for the monthly rent, it would still have to
deduct tax at source. Please let me know whether the stand of the company
is correct or not?

Ans: It is presumed that the property in question is one property, which is in four
names and is not divided by metes and bounds between the four brothers.
Accordingly, based on various judicial pronouncements, the stand taken by the
company is absolutely correct.

House loan

Q: My client is working as an employee in an organisation located at Patiala

although he is a resident of Rajpura. Due to his employment, he has taken a
rented house in Patiala at a monthly rent of Rs 1500 p.m. and is living there.
He had taken a loan for the construction of his house located in Rajpura
some years back. During the financial year 2003-04, he has paid instalments
of this housing loan including interest as due. I want to know that can he
avail deduction u/s 24(b) in respect of interest payable after taking the net
annual value of the house located in Rajpura as nil as prescribed u/s
23(2)(b) (as the house in Rajpura can not be actually occupied by him due to
his employment at Patiala) simultaneously alongwith deduction u/s 80GG (in
respect of rent paid for the house in Patiala.) The house in Rajpura is
occupied by his family and, therefore, it has neither been let out through out
the financial year 2003-04 nor any other benefit has been derived.

Ans: The deduction under section 80GG is allowable if a declaration under Rule 11B of
Income Tax Rules 1962 is filed. The declaration is required to be filed in Form 10BA
which requires the claimant to certify that he is not occupying any other property the
annual value of which is determined under section 23(2)(b) of the Act. In view of such
a requirement under the Rules your client would not be allowed the deduction under
section 80GG of the Act.
Top

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