DMIL to mortgage assets
for fund expansion

NEW DELHI, Nov 13: Daewoo Motors India Limited is planning to mortgage its fixed assets to borrow money for funding its ambitious growth plans which includes expanding the manufacturing facilities for .....more

20-30 years reasonable for
full rupee float in India:
WB official

MUMBAI, Nov 13: Tarapore Committee has mis-recognised the time required for the build up of necessary infrastructure for Capital Account Convertibility (CAC) and a period of 20-30 years is a "reasonable time" for India to make rupee fully ....more

N Vittal

CVC will convene
bank chiefs meet
on Nov 24

NEW DELHI, Nov 13: Central Vigilance Commissioner (CVC) N Vittal will convene a meeting of Chief Executives of public sector banks on November 24 to formulate guidelines for banks to fight corruption and prevent fraud. .....more

20-30 years reasonable for full rupee
float in India: WB official

MUMBAI, Nov 13: Tarapore Committee has mis-recognised the time required for the build up of necessary infrastructure for Capital Account Convertibility (CAC) and a period of 20-30 years is a "reasonable time" for India to make rupee fully convertible, a senior World Bank official has said.

"Institutional building will take much larger time than recognised in the Tarapore Committee report,"World Bank’s Chief Economist John Wlliamson said while delivering a special guest lecture here last night as part of a three-day derivatives conference.

"CAC cannot be a course for the next few years (in India)", he said delivering the lecture titled "whither financial liberalisation?"

The visiting World Bank official said though CAC was a major element in causing devastation in the East-Asian countries, the advantages of CAC were greater.

"You cannot measure benefits from ACNZ he said and expressed himself in favour of the reforms recommended in the Tarapore Committee.

Williamson, however, was of the opinion that the Tarapore Committee failed to deal with one major condition for CAC, which is attaining "a core membership of organisation of economic cooperation and development".

Williamson admitted that evidence pointed to financial liberalisation leading to banking crisis and observed that "while there is a bigger risk, how big depends on the financial order".

"In a country which respects rule of law, risks are contained", he said, suggesting that in such a country, advantages of liberalisation are in the form of more efficient investment allocation which outweighs risks.

Liberalisation needs much more than just opening up, he said, adding "if liberalisation is to work, institutional building is must".

Part of the problem in East Asian countries was poor regulation of the banking system and over-leveraging by banks to the private sector, he said.

"India, China, Banladsh and Taiwan were unaffected by the East Asian contagion because of strong regulation, supervision and transparency", he felt.

India had not allowed short term money to come in and prevented domestic money from going out, he noted.

Referring to financial sector reforms in India, he said he would love to see staturoty liquidity ratio reduced along with that of Government’s fiscal deficit. (PTI)

The Board of Directors has in-principle agreed to go ahead with the mortgage for part-financing the expansion plans. However, an exact time-table for the same has not been fixed as yet, DMIL Managing Director Shiv Gopal Awasthi told here.

It has been decided that if need be, the movable and immovable property of the company would be mortgaged for securing the loan and other financial assistance provided the mortgage so created does not exceed Rs 5,500 crore.

The board is presently working out the details and modalities of creating such a mortgage.

"It is at a very premature stage. As the company is implementing its further expansion plan, it is required to mortgage some assets for borrowing moneys by way of long term and short term loans. So the decision was taken to go ahead with it as and when necessary. But there are no immediate plans for the same," Mr Awasthi said.

The company has already got the shareholders’ nod for the same.

Besides, Daewoo Motor Corporation of South Korea is planning to infuse Rs 750 crore as fresh equity into DMIL for part-financing the expansion programme. An exact time table for the same has also not been set as yet, Mr Awasthi added.

The fresh equity infusion would be done by way of preferential or rights shares. The company is also mulling over the idea of privately placing a part of its equity, either at par or at a premium, to raise funds. But Mr Awasthi refused to divulge any details saying, "it is very premature. It is just a thought and we are yet to finalise the modalities."

Meanwhile, company sources said the Board of Directors of DMIL is presently working out the modalities, terms and conditions of the floats, including the total amount of issue, nominal value, rate of dividend and, amount of premium.

DMIL, the sources said, is likely to issue preference shares of Rs 100 each and equity shares of Rs ten each either to the existing members of the company by way of rights issue or to the public through prospectus.

The company is in the process of implementing its further expansion plan with regard to the manufacturing facilities for small cars and other models and also bus and trucks. "For this purpose, it is planned to raise funds inter-alia by further issue of shares by any mode that would be suitable for the company depending upon the market situation and other factors," the sources said.

The sources further stated that if the funds are raised by issue of equity shares on private placement basis then the same shall be offered to either the existing management group, financial institutions, foreign institutional investors or Non-Resident Indians. However, there would be no change in the management because of the same.

The pricing of the issue has not been finalised as yet and would be done in accordance with the subsisting guidelines issued by the securities and exchange board of India.

Meanwhile, DMIL has reduced its losses during the first half of the current fiscal by over 11 per cent. The company closed the six-month period ended September 30, 1998 with a net loss of Rs 8.05 crore as against the previous year’s Rs 9.06 crore.

Gross profit during the period was down 42.8 per cent from Rs 3.66 crore in H1 of 1997-98 to Rs 2.09 crore this year. However, depreciation was higher this year.

Gross sales in the April to September period stood at Rs 72.80 crore, down 36.5 per cent from the previous year’s Rs 114.71 crore. Net sales were Rs 54.75 crore as against the previous year’s Rs 89.86 crore.

The company expects to get out of the red in the next fiscal. "We are trying hard to achieve break-even this year and next year, we will surely record profits." (UNI)

Apart from asking banks to speed up computerisation of their operations, the CVC would insist on establishing interbank network to share information about frauds and corruption cases, Vittal told on the sidelines of the national convention of Indian Institution of Industrial Engineering (IIIE) here.

I am studying reports on guidelines for checking corruption in banks from Reserve Bank of India and Vigilance Commission, which would help in discussions with the bank chiefs, Vittal said.

He said the initiative taken by CVC to insist on bank computerisation and exchanging information about corrupt fraudsters would help in making economic administration work more productively.

Earlier speaking at the IIIE national convention, Vittal said high priority should be given to reduce corruption in the context of improving productivity and competitiveness of Indian industry.

He said apart from corruption, lack of efforts to harness human resources was equally responsible for poor productivity at the national level. (PTI)

The draft of the proposal will be placed before the next meeting of the Cabinet for its approval, Jethmalani said at the concurrent session on infrastructure, housing and real estates at the global Indian entrepreneurs conference here.

He assured Non-Resident Indians (NRIs) that after the lock in period, their profits could be that the rate of return would be higher.

The minister said the Urban Land Ceiling (Regulation) Act would be repealed by Parliament during its winter session beginning November 30 to remove bottlenecks in ensuring availability of land and thereby encourage housing activities.

He said though the Government wanted to repeal the act through an ordinance, it had to wait in view of Election Commission’s directive not to go ahead with any populist measure before Assembly elections later this month.

The Government also intends to give more tax concessions in the housing sector in the next annual budget to attract more investments, particularly from the private sector, he said. (PTI)

The department has also been directed to identify the areas having low fertility and take effective measures to increase the productivity as well as production, State Agriculture Production Commissioner Sant Kumar Tripathi said here today.

He said that this year a target of increasing productivity by ten per cent and production by 3.5 per cent had been fixed for the current rabi season.

During the current rabi season a production target of 14.84 lakh tonnes of foodgrains had been fixed for Jhansi division, 12.73 lakh tonnes for Chitrokoot Dham, 17.09 lakh tonnes for Allahabad and 21.10 lakh tonnes for Kanpur division.

Tripathi said that the Divisional Commissioners and District Magistrates had been asked to ensure the implementation of the rabi action plan so that production and productivity could be increased. (PTI)

Onion crisis eased down, claims Delhi Govt

NEW DELHI, Nov 13: The onion crisis in the Capital appears to have eased down considerably with the supply at subsidised rates exceeding the demand, delhi government claimed today.

Out of the 208 metric tonnes of onions released to the Delhi Civil Supplies Corporation (DSCDC) yesterdays qop mt was sold and 18 mt returned unsold, the Government said in a release.

The information regarding excess supply was conveyed to the empowered committee meeting held under the chairmanship of Chief Secretary Omesh Saigal to review the availability of onion in the city.

The number of Government outlets for selling onions at Rs ten per kg has been increased to 146, including 76 mobile ones and supply through these outlets has shown significant improvement, the meeting was informed.

The meeting was told that since sale per outlet was around 1.50 mt, release of 300 mt of onions per day for these outlets would be adequate to meet the public demand.

In view of the improved situation, Delhi Government decided topocure only 300 mt of onions through NAFED per day from today instead of 400 mt received earlier.

Arrival of onions in Azadpur Mandi also showed significant improvement and supply which increased to 688 mt today as against 556 mt yesterday, the release said, adding wholesale prices were in the range of Rs nine to Rs 25 per kg depending on variety and quality. (PTI)

PAN applicants to be cleared by April

NEW DELHI, Nov 13: The Government will clear the backlog of Permanent Account Number (PAN) applicants running over a crore by the end of the current financial year, Chairman of the Central Board of Direct Taxes (CDBT) Ravi Kant said today.

Talking to reporters at the ongoing All India Tax and Company Law Conference here, Mr Ravi Kant said that the Income Tax Department would put a lot of its efforts and energies on pan allocations in the next two to three months putting "some other issues on the backburner". Mr Ravi Kant said with so much rush of applicants at the last minute the Income Tax Department could not expected to work wonders but it would try and clear backlog at the earliest.

Eighty-six per cent of the applicants in Delhi have already been given PAN while others would get within the next few months. The CDBT would achieve a growth of 20 per cent in the number of tax assesses who now total about 1.38 crore. The CBDT chief said the Government has been able to achieve a growth in direct tax revenue of 20 per cent by October this year over the same period in the last year. He could not specify whether the growth has come from the personal income tax or the corporate taxes.

While the number of assesses is likely to increase by 20 per cent, the CBDT is not expecting a commensurate increase in the tax collection essentially because most of the fresh entrants would the small tax payers. However, they hold the potential to be big tax payers. Besides their entry would bring in the culture of tax compliance.

Mr Ravi Kant said the recent three-day strike by the staff of the Revenue Department did not have much impact on the collections. He expressed confidence that all the pending issues would be resolved with the staff and there would no no fresh strike. (UNI)

Samman scheme to be notified shortly

New Delhi, Nov 13: Government would notify the Samman scheme by November-end, Chairman of the Central Board of Direct Taxes Ravi Kant said today.

A committee has been appointed under the chairmanship of Chief Commissioner Raj Narayan. The committee is presently working on the final modalities of the scheme, which would be ready in a few days and would finally be notified before the month-end, Mr Kant told newspersons here.

Under the scheme, the Government proposes to reward the tax payers and it would be applicable to both direct and indirect taxes. With the objective of making the Samman scheme operative and workable, the Income Tax Department solicited suggestions from various professional bodies and industry chambers.

"We wanted to know from the taxpayers in what form would they like to be honoured.We have got a lot of suggestions and are presently processing them. The final notification would come shortly."

Meanwhile, addressing a seminar organised by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), Mr Kant said the Department has taken certain administrative steps besides revising norms and monetary limits in an effort to bring down appeals for litigation. Besides, the department is reviewing existing appeals already filed and efforts are being initiated to reduce the number of appeals.

"This year, till date, we have received 2,000 applications involving a litigated amount of about Rs 200 crore."

The department, he said, is making all out efforts to substantially widen the tax base and simplify the procedures for filing returns. ‘’last year, under the two out of four scheme, we ensured that in 40 minutes a tax payer could collect his form, file returns and walk back satisfied. Efforts are on to improve this further. This would free a bulk of my manpower which can then be utilised to take care of the tax evaders.’’

The other steps include office automation and making officers assessee-friendly.(UNI)

Ernst & Young to hold IEC meet in India next month

NEW DELHI, Nov 13: Ernst and Young, a leading global largest professional services company, will hold its International Executive Council (IEC) meeting in India-next month.

The IEC, which is the highest decision making body of Ernst and Young International, comprises the country heads of the twelve highest revenue generating countries for the company.

Company Chairman and CEO Philip A Laskawy and Vice Chairman Mr Richard N Findlater would attend the meeting.

Besides, ernst and young in the USA, Britain, Canada, Japan, Germany, Switzerland, Sweden, France, Singapore, Italy, Hong Kong and Australia, would also participate in the meeting.

Mr Laskawy said in a statement "my colleagues in the executive council " and I consider India be a‘priority emerging market’ for Ernst and Young. I look forward to seeing the company continue to grow and prosper in India. (UNI)

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