Andhranews

Mumbai, Sept. 6: Stock brokers are up in arms over the proposal by the Bombay Stock Exchange (BSE) to raise the membership fees from Rs 7,000 to Rs 25,000 for both individuals and corporates. The proposal is in the form of the resolution to be put for consideration at the annual general body meeting of the exchange to be held on September 26.

A young broker skilled at balance sheet analysis said that in the earlier days when the BSE charged a subscription fee of Rs 7,000 per annum they distributed notices and Bhav copies (a publication on the stock market transactions) everyday to the members. However, in the last few years members have to pay separately for the notices and Bhav copies.

Instead of removing this charge from the annual fee it is now raising the fees said the broker. “There is no logic to justify such a move as the BSE charges separately for issuing conduct certificates, turnover certificates etc from the brokers. This charge should be completely removed,” he said. Pointing out how much money the BSE makes from its member, for very little in return, he said out of the total income of Rs 145 crores, an income of Rs 48.8 crores is due to interest earned on investments and deposits from the trading members and listed companies. Interest-free deposits from trading members amounted to Rs 115.5 crores.

Its other income as given in the balance sheet is Rs 9.54 crores, “hence pure operational income is very less,” says the broker. Talking about the derivative segment being a non-starter when the derivatives segment in the National Stock Exchange (NSE) is seeing a turnover of nearly Rs 20,000 crores currently, another broker said though the BSE spent around Rs 20-30 crores to kickstart the derivatives segment it has not taken off. This is strange because the BSE brokers and even most of the committee members trade in the derivatives segment on the NSE.

The BSE continues to spend money on incentives to participants. They should wind up this segment instead of wasting shareholders’ money, he said. The BSE has recommended a maiden dividend of 132 per cent (marking the 132nd year of the BSE) for the period, August 8 to March 31, 2006 payable on pro rata basis. This would amount to Rs 7.32 per on a one-rupee share with total a total outflow of Rs 4.95 crores after paying a dividend distribution tax of Rs 69 lakhs. Brokers consider this a pittance since the total profits after tax was Rs 59.33 crores.

New Delhi, Sept. 6: Japan’s Nissan Motors is close to finalising its plans for India, which could see the company commit investments to the tune of around Rs 2,000 crores for having a presence across product segments. “The company is in the process of working out plans for India and these will be shortly finalised,” industry sources said.

The company, which sells the imported SUV ‘X-Trail’ in India, is looking at an aggressive entry into the market. “We will be pretty aggressive in India. As far as vehicles are concerned, we are looking at a possibly wider range of products,” they said. The company is not in favour of confining to the high-end market, considering the growth rates and the potential in India.

“Nissan wants to be present across model segments in India,” the sources said. Nissan, which in June this year announced an international manufacturing collaboration with Suzuki that would see Maruti producing vehicles for the company, is expected to go in for an all-new set-up under its proposed plan. “Nissan is looking at something separate, an all set up. However, there are still various possibilities,” they said.

Asked whether the company could also enter the small car segment, the sources said, “It is certainly looking at that. Nissan takes it as a challenge and is conducting a lot of studies for this.” Nissan had entered the Indian auto market with the launch of the X-Trail, which it sells through outlets in Delhi, Mumbai, Bangalore, Chennai and Hyderabad.

Mumbai, Sept. 6: The Reserve Bank of India has asked the board of directors of the United Western Bank (UWB) to give its rehabilitation plan for infusing Rs 300-350 crores into the bank by 10 am on Thursday. The bank board, according to sources, is said to have told the RBI that it could bring the money with the help of the government of Maharashstra and State Industrial and Investment Corporation (Sicom). On Wednesday the board met to discuss the issue of infusing capital of around Rs 300-350 crore as a part of its rehabilitation package.

PTI quoted a source in UWB, as saying that “Our primary objective now is to maintain the independent identity of UWB and the government of Maharashtra is also supporting us in this.” The source also said that only around Rs 25 crores has been withdrawn from the 230 branches of the bank since the RBI imposed a moratorium on Saturday. The source said the depositors of the bank were for maintaining the independent identity of the bank. Sicom and the State government are said to be keen to revive the bank.

Dearborn (United States), Sept. 6: William Clay Ford Jr., great-grandson of the founder of the Ford Motor Company, brought in an outsider on Tuesday to help run the company, in a tacit acknowledgment that he needs a new approach in his efforts to turn around the struggling automaker.

Mr Ford took the highly unusual step, for Detroit, of turning to an executive with no experience in the auto industry. He gave up the titles of chief executive and president to Alan R. Mulally, a top executive of Boeing; Mr Ford remains chairman. Mr Ford, 49, said he planned to remain the public face of the company — he has been the star in Ford’s ads for years — but give Mr Mulally responsibility for solving Ford’s many problems, including falling sales, slumping profits and the loss of market share to its Asian rivals.

Although his family’s name is on the building, Mr Ford’s prominent role at the company has been something of an anomaly in recent decades. He took over as chief executive in 2001, after a 22-year stretch in which the company was run by non-family members after his uncle, Henry Ford II, stepped down. Mr Ford has stressed his family heritage in many conversations, and has been visibly distressed about its troubles. The Ford family’s holdings have lost more than half their value this decade as the company shares have slumped.

Since becoming chairman in 1998, Mr Ford has steadily increased his grip on the company, adding titles. But in July, he told the company’s board that he wanted to bring in an outside chief. Mr Ford said of Mr Mulally: “Our team needs a steady hand from somebody who’s been through turnarounds and knows what it takes and can say, ‘You’re on the right path, stick with it, it’s going to work,’ or ‘This isn’t the way to go, let’s refocus and go somewhere else.’”

Ford has already begun closing 14 plants and cutting 30,000 jobs under a turnaround plan called the Way Forward. Even so, Ford executives are preparing an expanded blueprint of the restructuring programme.

New Delhi, Sept. 6: Infosys Technologies said on Wednesday it will be expanding its ‘nearshore’ capability in Brno in the Czech Republic with a new 350-seat facility under development. This would more than double the capacity of its existing facilities by 100 per cent, a company release said.

The facility would open in January 2007 and continue to deliver BPO services, besides increasing its capacity for IT services to its European customers. The expansion of Infosys’ nearshore operations in the Czech Republic, the opening of the second onshore development centres in Swindon, UK, the existing onshore development centre in Germany and the nearshore operations in Mauritius reflect the increasing adoption of outsourcing by European companies, it said.

“As European customers continue to adopt a global sourcing approach, we will continue to invest in geographies where local talent provides the specialist skills required to respond to EU regulation, language capabilities, local market understanding and cultural diversity,” said B.G. Srinivas, head of EMEA at Infosys.

The original Brno facility, opened in 2004, handles business processes such as sales order management, finance and accounts, market research and underwriting for clients across 16 European countries. In the new facility, this would expand to offer IT services such as infrastructure management and package implementations such as ERP and CRM, the statement said. Initially opened with a team of 30, the facility today has 130 people.

After retirement I invested in various schemes jointly with my wife on either-or-survivor basis for operational convenience. I have a PAN number and have been filing my yearly IT returns. My wife, a housewife, does not earn. Of late I find, such as in the case of demat, each of the joint holder must provide PAN. My questions are: (i) Is my thinking on joint investment on either or survivor basis for operational convenience right? (ii) Can my wife apply for PAN without having earnings of her own? (iii) Once she has the PAN, is it essential for her to file return or will it be any enquiry from IT regarding non-filing of IT return?

B.K. Sinha, Via e-mail

There is nothing wrong in making investments jointly with your spouse as long as the income generated from these investments are duly reflected in your account.

Your wife can certainly apply for PAN even if she has no income. It is not necessary for her to file return of income if her income is below the threshold limit i.e. Rs 1,35,000, even if she holds a PAN card.

My wife sold 100 shares of Infosys Technologies in June 2005 through the company sponsored secondary ADR programme. The company has arranged for the sale of the shares directly to investors in the US and remitted the proceedings directly to the investor’s bank account. The sale was not done through Indian stock exchanges and no transaction tax was paid. Please clarify the long-term capital gains tax treatment for this case.

M. Sharat Chandra, via e-mail

Your wife shall not be eligible to claim exemption envisaged U/s 10 (38) pertaining to the long-term capital gains and shall suffer tax at the rate of 10 per cent in case she does not avail the benefit of indexation or 20 per cent in case she avails the indexation benefit, presuming of course that the shares have been held by her for a period of more than 12 months.

(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, Andhra Pradesh)

San Francisco, Sept. 6: Intel announced it would cut more than a tenth of its workforce as part of a drive to become more efficient in the face of tough competition in the computer chip market. The world’s leading computer chip maker had a payroll of 99,000 people worldwide prior to the much-anticipated announcement that it would lay off approximately 10,500 workers.

“These actions, while difficult, are essential to Intel becoming a more agile and efficient company, not just for this year or the next, but for years to come,” said Paul Otellini, Intel president and CEO. Intel said its workforce would decline to 95,000 by the end of this year as a result of staff reductions, attrition and previously announced layoffs.

By mid-2007, the Intel workforce would drop to about 92,000 employees, 10,500 fewer than the company’s staffing level at the end of the second quarter of 2006. The chip maker also planned to cut costs in merchandising, capital and materials, according to Intel spokesman Mark Pettinger, to generate savings of approximately $2 billion in 2007. In 2008 the company expects savings from this restructuring to grow to approximately $3 billion annually. In July Intel announced a management rejig on the heels of a lacklustre earnings report and the laying off of 1,000 managers at its units worldwide.

Mumbai, Sept. 6: This may come as a surprise to many who feel that it takes forever to get permissions from the government. According to a new report by the World Bank and the International Finance Corporation (IFC) doing business became easier in India in 2005-2006.
It says five reforms in India and two in Pakistan reduced the time, cost, and hassle for businesses to comply with legal and administrative requirements.

No other South Asian economy improved its business regulations in 2005-2006, ranking the region last in the pace of reforms, it said. The report, “Business 2007: How to Reform” finds that India, the top reformer in South Asia, implemented reforms to simplify business registration, cross-border trade, and payment of taxes, as well as easing access to credit and strengthening investor protection. Although the reforms improved India’s ranking over last year’s, it still ranks relatively low at 134 and lies 41 places after China, which is reforming at a faster pace than India.

The top 10 reformers are, in order, Georgia, Romania, Mexico, China, Peru , France , Croatia , Guatemala, Ghana , and Tanzania . Pakistan is ahead of India among the 175 economies where it is easy to do business. The top ranked countries in the region are the Maldives (53) and Pakistan (74), followed by Bangladesh (88), Sri Lanka (89), Nepal (100), and India (134). India, as leading reformer in South Asia, has taken over the top spot from Pakistan in last year’s report. India cut the time to start a business from 71 to 35 days and reduced the corporate income-tax rate from36.59 per cent to 33.66 per cent. A Supreme Court decision made enforcing collateral simpler-easing access to credit.

Hyderabad, Sept. 6: Coimbatore-based Paramount Airways has placed firm orders for 15 more jets with Embraer, a Brazilian aircraft maker, in a deal-size estimated to be more than $500 million. This is in addition to the three 70-seater jets that the company currently operates and expects two more to join its fleet by the end of 2006. With this the privately-held airline expects to deepen its network in southern India.

Talking to reporters here after meeting the Andhra Pradesh Chief Minister Y.S. Rajasekhar Reddy, M. Thiagarajan, MD of Paramount, said, “The State government has offered us rebate on ATF rates, which has allo-wed us to look at Hyderabad in a larger perspective. Paramount would be stationing two of its aircraft here and by October would connect the city to Vizag, Bangalore, Kochi and Tirupati.”

For the airline which operates 15-20 flights a week from Hyderabad now, the rebate and subsequent reduction on sales tax to four per cent comes with an obligation of having more than 100 flig-hts per week from Hyderabad once it takes the deliver y of two new aircraft. Talking to this newspaper about the investment of Rs 70 crores by Kotak Mahindra Bank in the airline company, Mr Thiagarajan said, “Kotak with 10 per cent stake is a minority stakeholder in Paramount. Moreover, we have more inve-stors evincing interest in picking up stake but so far we have not felt the need to divest further. Going forward, we would look at an initial public offer but that won’t be anytime soon.”

Asked on the mode of payment for the new Embraer jets, Mr Thiagarajan said it would be a mix of financial leasing and the buyback-lease route. As Paramount increases its fleet size, the company has also drawn out plans to set up hangars at Chennai and Hyderabad to station its aircraft. “The primary hangar for Paramount would be in Chennai while a smaller version would be set up in Hyderabad,” he said. As per industry standards investments worth $15-20 million is required for a full-fledged hangar.