Andhranews

New Delhi, Sept. 20: The board of approvals for special economic zones (SEZs) will shortly lay down new guidelines governing the development of these zones, said Mr Gopal K. Pillai, special secretary, ministry of commerce and industry, here on Wednesday.

A meeting of the board of approvals for SEZ is slated for Thursday. Speaking at the India SEZ Summit 2006, organised by the Confederation of Indian Industry (CII), Mr Pillai said, “The proposed guidelines will cover the percentage of processing and non-processing areas in SEZs, development of infrastructure within SEZs and the approvals process. To date, 150 SEZs have been set up covering 26,800 hectares, and no farmers have been displaced.”

Another 225 applications which are pending will cover 75,000 hectares, he said, adding “This is a tiny fraction of India’s cultivable area and we need to keep a sense of proportion.” Under the SEZ Act 2005, the Central or state government, or any individual can set up an SEZ. Individuals can either apply to the state government authority or directly to the board of approvals.

In wake of the controversies surrounding the SEZ issue, especially that of projected loss of revenue of around Rs 90,000 crores over the next few years, Mr Pillai said, “The ministry has analysed this and feels that the net benefit to the government through indirect taxes will be Rs 45,000 crores.” Ministry of commerce and industry joint secretary Anil G. Mukim said that SEZ-based industries are expected to employ half a million people by December 2007 and invest Rs 100,000 crores, including Rs 25,000 crores of FDI.

SEZs are specially-designated duty-free enclaves, outside the customs territory of India. Within SEZs, trade in goods and services is allowed, as is warehousing. SEZs are part of the government’s strategy to generate economic activity and exports, employment, develop infrastructure and promote the investment from both domestic and foreign sources.

Mumbai/Hyderabad, Sept. 20: Applabs Technologies, a software testing and development services company, on Wednesday said it has acquired IS Integration, a UK-based business solution testing consultancy firm for $37 million (Rs 170 crores). While the management and employees of IS Integration will be retained, the company’s name will be changed to AppLabs Technologies UK.

“The merged business will create the largest global provider of testing consultancy, with a combined staff base of approximately 1,500 employees. We are expecting revenue worth $75 million and a profit of $8 million by FY2007,” said Mr Sashi P. Reddi, founder, chairman and CEO of AppLabs Technologies, which has its largest software testing centre at Hyderabad.

Mr Reddi said the deal was funded by $10 million from private equity fund Sequoia Capital India, $12 million was raised as debt from UTI Bank, Singapore, while the remaining payment was made in stocks and internal cash reserves. He said the company plans to add around 1,400 employees in India, taking the total to 2,500 employees.

“The acquisition will help us to mark a strong presence in the UK and it will also position us well to continue enjoying rapid growth in this market, along with offering our clients a broader range of services on a global basis. IS Integration has a strong presence in the BFSI space,” he said.

Mr Reddi will continue as CEO of the new entity, while Mr Adam Ripley, co-managing director of IS Integration, will become senior vice-president of marketing for AppLabs and Mr Clive Grummett, co-managing director of IS Integration will be the senior vice-president of AppLabs in Europe.

The IS Integration purchase is the biggest acquisition by AppLabs since its planned merger with VisualSoft Technologies Ltd, a software services provider, fell through in March this year. Last year, the company acquired KeyLabs for $7 million. This acquisition positions AppLabs to tap the growing opportunities in the software testing market, which is at around $13 billion globally. Moreover, the merged entity may go in for IPO on reaching $100 million in revenue.

Hyderabad, Sept. 20: Subhiksha, a Tamil Nadu-based discount retail chain, has joined the race to buy Adani Retail, the non-core business of the Adani group in Gujarat, a senior company executive indicated here on Wednesday. Without confirming or denying its interest in Adani Retail, but dropping enough hints that the company is in the race, Mr R. Subramanian, managing director of Subhiksha said, “We would be interested if the opportunity exists. Everything (regarding the deal) would come out in a week’s time.”

Adani Retail is reportedly looking to sell its business, which includes eight hypermarkets and several smaller format stores spread across major Gujarat cities. On the size of Adani Retail’s business, Mr Subramanian, who was here to formally launch the Subhiksha chain of stores, said, “The Adanis have valued their retail business at Rs 200 crores, but our estimate is close to Rs 110 crores.”

Despite bigger players like Reliance Retail and Bharti firming up plans for an entry into the booming retail industry, companies like Subhiksha have charted out significant expansion plans. Subhiksha has 53 stores running in Andhra Pradesh and plans to increase its presence here to 80 stores in four months with an investment of Rs 40 crore.

Subhiksha has a wider network in Tamil Nadu and recently began operations in New Delhi, Maharashtra and Bangalore. The target, according to Mr Subramanian, is 600 stores with an investment of Rs 300 crore. Having roped in ICICI Ventures as a strategic investor with Rs 50 crore for a 24 per cent stake, Subhiksha will funding the expansion with a mix of term loans and equity.

Asked about the possibility of an IPO, Mr Subramanian said, “We will tap the market at the opportune time...Maybe within a year when we touch 1,000 stores.” Subhiksha posted a net profit of Rs 10 crore on revenues of Rs 330 crore in 2005-06. It expects to increase its turnover to Rs 900 crores by this year-end, Mr Subramanian said emphasising that margins in the business, after a 10 per cent discount, was thin and centred around 3 to 4 per cent. Subhiksha sells food and grocery, pharmacy and vegetables from its stores and plans to enter the telecom vertical by this year-end.

Mumbai, Sept. 20: Jet Airways has deferred its plans to raise $800 million through securities in overseas market to support capital expenditure programmes, citing unfa-vourable market conditions. “Owing to the downturn in the domestic equity markets and emerging markets, (the airline) on the advise of our bankers deferred these capital raising plans until market conditions are more conducive,” Jet Airways Chairman Naresh Goyal told shareholders at the company’s annual general meeting. The capex plans included purchase of 30 narrow and wide-bodied aircraft at a cost of $ 2.5 billion.

The airline had, however, resorted to short-term borrowings from IDBI, State Bank of India and ICICI Bank to meet pre-delivery payment commitments. “We are actively monitoring the market conditions... and will revive our efforts to raise additional capital as soon as a window of opportunity arises,” he said.

Plans to raise $800 million through issue of FCCBs, SDRs and ADRs would be revived once the market conditions become more conducive, he said. In February, Jet Airways had informed the exchanges that it would raise $ 800 million via FCCBs, GDRs, ADRs or equity shares to support the aircraft acquisition programme. Mr Goyal said that the airline’s growth over the next two to three years will be fairly rapid and the international operations on an overall basis will start contributing positively to the company’s results as these operations mature.

He said, “In addition to investing a total of approximately $2.5 billion over the next three years in new aircraft equipped with state-of-the-art technology, the company is investing for the future in several other ways, like pilot and cabin crew training, which is at the top of the agenda.” He said they were also exploring opportunities to establish an integrated training facility and a flight academy.

Mr Goyal explained that the company is also implementing various cost-reduction initiatives to ensure continued growth in profitability. These initiatives include increasing the proportion of online sales, which will lead to reduction in selling and distribution costs and increasing employee productivity while increasing overall capacity by more than 15 per cent per year.

Hyderabad, Sept. 20: The Japan Bank for International Cooperation has signed an agreement with the State Bank of India for setting up an export credit line of upto Rs 325 crores. According to the JBIC, the loan is provided as a credit line to SBI to finance Indian corporations to import machinery and equipment from Japanese exporters. The credit line is aimed at helping Indian corporations “secure international competitiveness, increase exports between Japan and India and boost business transactions,” a JBIC statement said.

The loan is part of the “Eight-Fold Initiative” signed by Prime Minister Manmohan Singh and Japanese Prime Minister Junichiro Koizumi, during the latter’s visit to India in April, 2005, it said. “The Initiative set out various measures to broaden and deepen bilateral, economic, trade and cooperative ties between the two countries, raising expectations for further expansion and diversification of bilateral trade,” the release said.

Citing a report on “overseas business operations” by Japanese manufacturing companies, issued by JBIC, the statement said India ranked second as a “promising country for business development over the medium and long term, following China.”

“This reflects the current focus of corporate attention being placed on India. Considering the potential endorsed by the robust economic growth, as well as large expectations for India as a new destination for business development of Japanese firms, JBIC intends to assist Japanese companies’ efforts to boost exports and improve international competitiveness, by providing loans, including this one, in support of their export business to India,” it said.

Mumbai, Sept. 20: The index stocks which took a drubbing on Tuesday were back in favour on Wednesday, pulling up the Sensex 138.67 points and wiping out some of Tuesday’s loses. Sensex, which has been hopping in and out the 12,000 mark Lakshman Rekha, closed at 12,109.14, while the Nifty crossed the 3,500 mark for the first time to close at 3,502.

The market perked up towards the second half of the day on short covering and ignored the negative trend in the Asian markets. Except for the Hang Seng, which was up 166.26 points, the Nikkei was down 155.61 points, the Kospi 7.51 and the Straits Times 6.82 points.

The turnover on both the exchanges was Rs 37,384 crores with the F&O sector accounting for Rs 27,418 crores. There were 448 stocks that ended positive and 446 that closed negative. The information technology and auto stocks, that were down on Tuesday, made some gains on Wednesday.

Singapore, Sept. 20: The IMF on Wednesday promised to carry out further reforms that would open up the possibility of more powers in the fund for India, which along with 22 other developing countries voted against granting of more rights for China and three others in the multi-lateral world body.

Wrapping up the week-long annual meeting of World Bank-IMF here, fund managing director Rodrigo De Rato said this week’s vote in favour of more powers to China, Mexico, Turkey and South Korea was “not the end of our reforms on quotas, but the beginning of a process that will continue during the next year.”

He praised India for having agreed to work with the multilateral institution to carry forward the second stage of IMF reforms, which opens up the possibility of New Delhi getting more voting rights in the world body. In the second stage of reforms, broader adjustments for more emerging economies are planned and poorer members are likely to get more voting powers in the IMF.

In Monday’s poll, 90.6 per cent of votes went in favour of ad-hoc increase in quota for the four countries as a result of which India’s voting rights got diminished to 1.91 per cent from 1.95 per cent along with reduction in powers for other countries. Finance minister P. Chidambaram had termed the formula for this phase of reform as flawed and reminded those who voted for the resolution of their promise that the second stage of reforms will also be carried out.

Before leaving for South Korea on Tuesday, Mr Chidambaram promised to cooperate with IMF in the second stage of reforms, which he said should start right now. Mr Rato said: “I want to thank again all of the governors who supported this important reform. I also extend my appreciation to those like governor (P.) Chidambaram (finance minister) of India, who ha-ve said that they will work with us to move the second stage forward.”

Imagine this: You have just stepped off a plane, and the first ring from your cellphone (after it is switched on that is), is not from your wife or girlfriend (or husband or significant other to be PC), but from your phone itself. What am I talking about here? Well, it’s this new technology in your handset that tells you that the air quality at your destination is very bad for your asthma or allergy. It essentially gives you the cue to take your meds. Now this technology is in very early stages yet. Gentag, its inventor, has just been issued a patent in the US for its “Method and Apparatus for Wide Area Surveillance of a Terrorist or Personal Threat.”

According to Gentag, handset makers who employ the new technology can programme their devices to detect virtually any kind of chemicals in the environment, from pollen and carbon monoxide to the noxious gases dispersed by criminals or terrorists. “Gentag’s broad patent covers the uses of personal wireless devices such as cell phones, PDAs, pagers, or watches as low-cost customisable wireless-sensor readers to detect external environmental threats for consumer, industrial, and government applications,” it says.

A particular focus of this particular technology is to allow individuals with multiple chemical sensitivities to customise and train their cell phones to recognise specific chemicals that cause person-specific allergies in order to help reduce asthma attacks or chemically induced allergies worldwide.

Femtocells on upsurge

While, by 2011, shipments of dual-mode (cellular/voice over Wi-Fi) wireless handsets will be well in excess of 300 million worldwide, the arrival of femtocell access points may prove disruptive for the market. Femtocells provide extremely limited cellular coverage. They are like picocells, but smaller. Handsets based on the 802.11n protocol will outnumber those of other protocols in those 300 million shipments.

Why? “Cellular handset vendors have made sure that their voices have been heard in the 802.11n standards process, so they are getting all the optional features that they want,” says ABI Research. Wi-Fi enabled handsets, however, may have to compete with the upcoming opportunity of femtocells, the new, small cellular base stations.

“As frequency reuse issues are resolved, femtocells will provide some counterbalance to the trend towards dual-mode handsets,” the research firm says. “Some operators now believe that they don’t need to subsidise more expensive Wi-Fi-enabled handsets; they can use the handsets they have, and put femtocells in the home.” That would certainly slow down the VoWi-Fi market’s momentum, but UMA is moving forward nonetheless, it concludes.

I am a salaried individual and purchased a flat for Rs 29 lakhs this June. The registration fee was Rs 2.20 lakhs and the total amount spent was close to Rs 31.20 lakhs.
I plan to sell the flat for Rs 46 lakhs. The flat was purchased with a home loan from ICICI Bank and the loan disbursed to me was Rs 30.75 lakhs. I have already repaid around Rs 3.5 lakhs to the bank as interest on loan. How much amount out of Rs 46 lakhs shall be taxable? How can I save this tax? Assuming it involves buying some bonds etc, how do I invest?

Ajay, via email

To claim benefits of capital gains tax liability, the asset has to be held for a period of three years. In your case, the flat you intend to sell is held by you for less than 36 months and hence the sale of this asset shall amount to short-term capital gains. You are not eligible to claim the special rates of tax, which is applicable only on sale of long-term capital asset, and shall be taxed at normal rates. Further, you will not be entitled for any deduction envisaged under section (U/s) 54 EC pertaining to investments in capital gains bonds or U/s 54 for the investment of capital gains in a residential house. Your short-term capital gains on the sale of the flat works out to Rs 11.30 lakhs, viz. sale consideration less purchase of flat including registration expenses and interest on home loan.

I am a former Air India officer and purchased land at the time of retirement near Chennai with the intention of building a house and settling down there. This plot was purchased from the Anubhavg group (Natarajan). As there were some legal issues with the land that dragged on for over 10 years I could not construct a house. Now that the legal issues have been resolved, I plan to transfer the plot to my only grandson. What is the best way to hand over this property to him. Is it through a will or transferring the documents on his name (re-registration?)

K.G. Ramaswamy

The property can be transferred to your grandson through a will or gift, which shall not attract any capital gains tax liability for you. Among the two, the option of transfer by way of “will” looks to be a better one since it would entail negligible expenditure on transfer. It is always better to register the will to prove its authenticity.

(Kamal Rathi represents Rathi & Malani, a Hyderabad-based chartered accountancy firm. The views expressed here are those of the author. They do not reflect the views of this newspaper. Readers can send their personal income-tax queries to Mr Rathi at kamalrathi.ca@gmail.com, or write him at Tax Matters, C/o Deccan Chronicle, 36, Sarojini Devi Road, Secunderabad-500003, AP)

Hyderabad, Sept. 20: Unisys Corporation, a technology services and solutions company, will be setting up two additional global sourcing operations centres in India, in Hyderabad and Bangalore, respectively.

Unisys’ third centre in India will be located in Hyderabad and will be operational in the second quarter of 2007, a company statement said on Wednesday. A second facility at SJR iPark Whitefield, just outside Bangalore , will be operational by mid-October 2006.

“The third facility will be located in Hyderabad and is expected to be operational in Q2 of 2007. The Hyderabad and Whitefield facilities will allow Unisys to expand beyond its original Bangalore centre, which is currently operating at full capacity. These facilities will enable Unisys to tap into a broader talent pool,” the statement said.

The two new Indian centres are part of Unisys’ expansion of its global services capabilities. Earlier this year, the company opened new centres in Budapest, Hungary, and in Shanghai, China.