26th August 2006: Auto component manufacturer Kew Industries Ltd is tapping the capital market to raise Rs 21 crore through an initial public offer to fund its expansion programme.

The Jalandhar-based company is issuing 70 lakh equity shares of face value Rs 10 each at a price of Rs 30. The issue constitutes 54.33% of the fully diluted post issue paid up capital of the company. It will open on August 28 and close on September 1.

Commenting on the purpose of the issue, Kew Industries Ltd Director Ashok Kumar said the company intended to utilise the proceeds from the IPO in modernising and expanding manufacturing facility and also enhancing its R&D centre.

"The majority of the fund will be used for plant, machinery and civil structure, and also in the working capital requirement," he said.

KIL, which supplies to leading commercial vehicle manufacturers like Tata Motors and Ashok Leyland, expects the expansion programmes to be completed by March next year.

"We have been given the Tier I supplier status by Ashok Leyland and currently about 70% of our revenue comes from the commercial vehicles component business," he said.

He said, going forward the company expected to increase its supplies to the government for defence requirements and also to Railways, adding the company has also started exports to countries like Italy and France and is in the process of expanding it further.

KIL's total income for FY06 stood at Rs 39.65 crore with a PAT of Rs 2.99 crore.

25th August 2006: Air and gas compression company Deep Industries Ltd on Thursday announced its plans to tap the capital market to mop up around Rs 40 crore for funding its expansion plans.

"Deep Industries proposes to utilise the funds raised through the public issue to part finance its plans for procurement of plant and machinery for business expansion and office equipment valued at Rs 51.50 crore," Deep Industries Managing Director Rupesh Salva said.

While the company recently purchased a 100 tonne work over rig to be shortly deployed at ONGC, it plans to acquire 11 more compressors, slated to be commissioned by October.

The company will enter the capital market with a fixed price IPO of 1,13,00,000 equity shares of Rs 10 each at a price of Rs 36 aggregating to Rs 40.68 crore.

The issue, constituting 56.5% of the post issue paid up capital of the company, opens on August 29 and closes on September 4.

The total fund requirement along with the working capital need is estimated at Rs 60.28 crore. The company has already made a pre-issue allotment of 22 lakh equity shares to promoters, promoter group and others at Rs 30 per equity share aggregating Rs 6.6 crore.

While the company has received a sanction of Rs 13 crore term loan from the Union Bank of India, it would raise the remaining amount through the IPO.

The issue includes 11,30,000 equity shares reserved for employees and directors, 28,25,000 shares for NRIs and FIIs and 11,30,000 for scheduled banks and multilateral development financial institutions. The rest 62,15,000 equity shares would go to the public, Salva said.

Deep Industries has also bid for a coal bed methane block in Andhra Pradesh jointly with Coal Gas Mart LLC, US and Adinath Exim Resources Ltd, Ahmedabad and a coal bed methane block in Madhya Pradesh jointly with Coal Gas Mart LLC, US.

25th August 2006: Tech Mahindra Ltd, which offered 12,746,000 equity shares through an IPO earlier this month, will be listed on Bombay Stock Exchange and National Stock Exchange on August 28.

Tech Mahindra, an IT solutions provider to telecom companies, had fixed the issue price at the upper end of the price band at Rs 365 per equity share of Rs 10.

Tech Mahindra IPO received an overwhelming response from all categories of investors getting over subscribed 70.09 times, the company said in a release.

While the qualified institutional buyer (QIB) portion was oversubscribed 103.98 times, the high net worth individual (HNI) category was oversubscribed by 123 times and the retail category was oversubscribed by 7.58 times. The issue received over 1.93 lakh bids, the release said.

The IPO of 12,746,000 equity shares of Rs 10 each consisted of a fresh issue of 3,186,480 equity shares and an offer for sale of 9,559,520 equity shares by Mahindra and Mahindra Limited and British Telecommunications Plc (of the issue. As many as 1,158,790 equity shares were reserved for eligible employees), which opened for subscription on August 1 and closed on August 4.

The issue constituted 11% of the post issue paid up capital of the company, and the net issue constituted 10% of the post issue capital, the release said.

The company proposes to use the proceeds for expansion of their project at Rajiv Gandhi Infotech Park in Hinjewadi, Pune, for which the company has been granted land measuring 98,923 square meters recently.

24th August 2006: Chartered accountants are seeking to widen their horizon. With gloabalisation gaining ground, they are keen to tap business in other countries and are willing to support opening of the Indian market on a reciprocal basis.

Efforts have been initiated to ink mutual recognition agreements (MRAs) with the US & Australia, and talks are at an advanced stage with Singapore so that Indian CAs can take up work in these countries. The government may give the move a thrust when a US delegation led by Franklin Lavin, under secretary for international trade, US dept of commerce, visits the country later this year.

US has informed New Delhi that its accounting regulator, the International Qualification Assessment Board (IQAB) is in touch with its Indian counterpart — the Institute of Chartered Accountants of India — and that the issue continues to be monitored during its trade policy review.

Meanwhile, ICAI, which is at an advanced stage of talks with Singapore in line with the comprehensive economic co-operation agreement (CECA) between the countries, has also started talks with its counterpart in Australia — the Institute of Certified Public Accountants of Australia.

It also has a joint working group with UK to work out an MRA. The talks are expected to gain pace due to a convergence of views between the government, the industry & some major legislative initiatives.

The limited liability partnership (LLP) bill, which allow partnerships without a cap on the number of partners, is expected to please both the professionals here and in the partnering country.

Now there is a ceiling of 20 partners in a partnership firm and 10 in a banking firm. Professionals say the new law will ensure a level playing field, while liberalising services trade. “We are ready to open up the accounting sector on a reciprocal basis.

Our professionals should be allowed to do in the partnering country what we allow them to do here. We see it as an opportunity, not as a threat,” said ICAI president TN Manoharan. He said that talks revolve around five areas for the convergence of the qualification.

These are the minimum eligibility for a student to enroll for accounting qualification, the curriculum, practical training, examination and the licensing needed for practice (not for working with a corporate).

MRAs have the advantage that the liberalisation could be broader than what is envisaged under the WTO — accounting, auditing and book keeping. Taxation-related services, restructuring, valuation and consultancy are not part of WTO talks.

24th August 2006: A dress code for practicing Chartered Accountants will be out by the end of this month with Institute of Chartered Accountants of India giving finishing touches to the recommendatory proposal to give its professionals a corporate look and don a new brand identity.

"We are in the process of finalising a dress code that will be announced by the end of this month," said ICAI president T N Manoharan.

He, however, said the proposal would not be mandatory in nature. "It will be more of a recommendation, though we expect it to be followed by the professionals," Manoharan said.

Elaborating on the proposal, he said the dress code would not be for day-to-day affairs but for events like business meetings and other official representations and engagements.

Set up under an Act of the Parliament, ICAI is the apex governing body working for regulation and development of the accountancy profession in India.

Manoharan clarified the code would be applicable only to professionals working in individual or partnership capacity. "Those who are employed with companies are not bound to follow as they will be acting as per the requirements and stipulations of the organisation they work for," he added.

A formal dress code, he said, could be a full-sleeve shirt, tie and shoes.

ICAI is also working on the design of a logo that Chartered Accountants could use on their visiting cards, letter-heads and other stationery. This follows a similar initiative of the institute where it had allowed its members to prefix the letters 'CA' before their names, similar to what doctors do. PTI DP PD AN ANS 08061125 DEL (Reopen DEL 24)

The steps are being taken at a time when ICAI is going in for major changes with regard to the development and working of accounting professionals in India.

The institute has recently taken a bold initiative as part of which the time-period for becoming a CA has been cut down, almost by one-and-a-half year. It has simplified the rigorous examination structure students have to go through and the new system is likely to be operational from next month.

In another move it has also permitted its members to set up management consultancy firms while retaining their status of being practicing CAs, who were so far not allowed to be equity holders in companies.

This has been done keeping in mind the growing role of CAs in management consultancy as well as to help them compete with major consultancy firms who could employ huge capital and human resource, Manoharan said. PTI DP PD AN ANS 08061126 DEL

21st August 2006: GMR Infrastructure Ltd on Monday listed 2.38% above its issue price at Rs 215 on the Bombay Stock Exchange. The Hyderabad-based infrastructure major had come out with a public offer of 3.81 crore equity shares of Rs 10 each at an issue price of Rs 210 per share (including a premium of Rs 200 per share).

The initial public offer of the company, with a price band of Rs 210-250, had been subscribed 6.68 times, primarily driven by the demand from institutional investors. The issue had opened for subscription on July 31 and closed on August 4. JM Morgan Stanley, DSP Merrill Lynch, Enam Financial Consultants and SSKI Corporate Finance Pvt Ltd were the book running lead managers for the issue.

19th August 2006: Leading paint manufacturer Berger Paints India Ltd on Friday said it will issue bonus shares in the ratio of 3:5 to the shareholders. The company informed the Bombay Stock Exchange that the shareholders had approved the bonus issue, where three bonus shares would be allotted for every five shares held, at the AGM held last month.

19th August 2006: Global Broadcast News Ltd, a TV18 group company, on Friday said it has filed its red herring prospectus with the Securities and Exchange Board of India to enter the capital markets with its Initial Public Offer of shares.

GBN, which owns the news channel CNN-IBN, proposes to raise up to Rs 105 crore through an initial public offer of equity shares of Rs 10 each for cash at a premium, which would to be decided through 100% book building process, a company statement said.

The retail portion of the IPO comprises of Rs 100 crores and the issue of equity shares aggregating up to Rs 5 crores is reserved for the employees.

Of the net offer to public, 60% is reserved for allotment to Qualified Institutional Buyers on a proportionate basis, 5% of which will be available for allotment to mutual funds. Further, up to 10% of the net offer to public is reserved for allotment to non-institutional investors and the balance of up to 30% for allotment to retail investors, it said.

"The IPO is an important milestone in realizing our larger corporate vision. It would help strengthen GBN's position in the television news business and tap future growth opportunities," GBN Joint Managing Director Sameer Manchanda said.

The Book Running Lead Managers to the issue are ICICI Securities Ltd and Kotak Mahindra Capital Company Ltd. JM Morgan Stanley Limited and IL&FS Investsmart Limited are the Co- Book Running Lead Managers.

19th August 2006: BUSINESS OVERVIEW: Voltamp Transformers Ltd. (VTL) is one of the leading manufacturers of transformers in India, with a strong presence in the high margin industrial segment. VTL has 5400 MVA p.a of transformer manufacturing upto 50MVA class transformers.

VTL has a unique business model with significant share of its revenues coming from the high margin industrial segment. VTL top ten customers include Siemens, L&T, ABB & suzlon & utilities such as Reliance & Torrent. Thus VTL is not exposed to receivables risk on account of financial ill health of SEB’s. VTL enjoys a leading position in the dry transformers segments as well as in the power & distribution transformers market in the industrial sector.

ISSUE DETAILS:

FINANCIAL HIGHLIGTS:

                                                                              ( Rs. in million)

INDUSTRY OVERVIEW:

Organized transformer industry is expected to grow at 15-20% through 05-08. The size of the organized transformer market in India is estimated at Rs. 20bn. And is largely dominated by ABB, Crompton Greaves, BHEl, Areva, Voltamp, Bharat Bijlee, Emco, Viajy Electricals, Kirloskar Electric & Indotec. Cost efficient designing & customer franchise are the two key barriers in the business & therefore a large unorganized market exists in the lower range of transformers.

KEY HIGLIGHTS:

VTL’s key strength lies in its unique sourcing ability for all key components from various ancillary units & manufacturing of transformers at its own premises. It thus manages to optimize as per the demand resulting in an asset turnover of over 3x, which is better than industry average. Infact VTL is amongst those with the highest return ratios in the industry.

16th August 2006: The move to allow institutional investors to short sell securities might be delayed as there are perceptible differences between market regulator SEBI and the Reserve Bank on whether to allow FII right from the start.

While SEBI wants to adopt a big bang approach by allowing all institutional investors to short sell right from the beginning, the Reserve Bank favours a gradual process starting with domestic institutional investors, official sources said.

Technical committee of SEBI and RBI will meet soon to thrash out their differences, the sources said. Short selling, that is selling securities without owning them, is presently allowed only for retail investors.

SEBI is of the view that all institutional investors should be allowed from the beginning so as to have a deep and wide market. Domestic institutional investors were not large enough for a significant economies of scale to operate.

The Central Bank is however of the view that permission to short sell should be in a gradual manner starting with domestic institutional investors.

SEBI wants that even if it meant a delay of six months, permission on short selling should not be allowed in a piecemeal manner. It is already nine years since the idea was originally proposed and a few months delay would not make much of a difference, the sources said.

According to the present guidelines, institutional investors like FIIs, mutual funds, banks and insurance companies are mandatorily required to settle on the basis of deliveries of securities owned and held by them.

12th August 2006: The Securities and Exchange Board of India (Sebi) has barred broker Credit Suisse First Boston (India) Securities (CSFB) from carrying on its trade for a month for violating its code of conduct for brokers. The order takes effect from September 1.

Sebi found the firm, registered as a broker on both the NSE and the Bombay Stock Exchange, to have executed trades of another broker C Mackertich Ltd, or CML, which, it claimed, was acting as an unregistered sub-broker in violation of the law.

“By allowing CML to act as an unregistered sub-broker, CSFB has miserably failed to abide by the Code of Conduct prescribed for a broker. Further, the possibility that the very trades executed by CML through the terminal of CSFB forming part of the trades that led to the manipulation of the scrip of South East Asia Marine Engineering and Constructions can also not be ruled out. In any event, the fact remains that CSFB allowed its terminal to be misused by CML,” G G Anantharaman, whole-time member, Sebi, said in his order today.

According to the regulator, between June 01, 1999, and May 31, 2000, CSFB traded in the scrip on behalf of CML, its own partner company Kallar Kahar Investment, and another firm Milhill Investment Limited.

During the period, the share-price moved from Rs 15 to Rs 389 within eight months, it pointed out.

12th August 2006: The Securities and Exchange Board of India (Sebi) has given the green signal to mutual funds to launch “capital protection-oriented schemes,” under which investors are assured of their capital invested even if the scheme underperforms.

As per Sebi guidelines, capital protection schemes have to be close-ended. However, investors investing in such schemes will not have an exit option before maturity. Among the guidelines stipulated by Sebi, asset management companies will not be allowed to repurchase units of a capital protection scheme before maturity.

But the asset management company (AMC) will not be allowed to repurchase the units of such a scheme before maturity. Also, AMCs will have to get such a scheme rated by a registered credit rating agency “from the viewpoint of the ability of its portfolio structure to attain protection of the capital invested therein,” the Sebi release said.

In some ways, the capital protection scheme is a form of an assured return scheme, which Sebi had banned some years back. The key difference here is that the AMC is assuring the investor of protecting his capital, and not returns, as used to be the case earlier.

Industry watchers feel this move could attract more retail money into the mutual fund industry, which has already been witnessing a good interest from that quarter of late.

“A significant portion of the fund — say up to 80-85% — is likely to be invested in highly-rated debt instruments, including government bonds,” said the CEO of a private mutual fund, on how capital protected schemes were likely to be structured.

“That will ensure protection of the capital to a large extent. The remainder will be invested in equity, allowing the investor to benefit in case the stock market does well,” he said. From an AMC’s point of view, shortfall on maturity is unlikely to be substantial due to the higher component of debt in the scheme.

11th August 2006: The tremendous investors' response to the two big IPOs of Tech Mahindra and GMR Infrastructure is likely to lure those promoters who had shelved their IPO plans back into the market, market watchers said pointing to the trend in the last ten days.

Some of the companies that have rushed IPO applications to market regulator Sebi this week include Lanco Infratech Limited, ICRA and the Bangalore-based Sobha Developers.

The IPOs of companies such as Global Vectra Helicorp Ltd., Malwa Industries and Bluebird, are also on track. These companies are expected to enter the market once they receive observations on their Draft Red Herring Prospectus (DRHP) from the Securities and Exchange Board of India (Sebi), they said.

Encouraged by the recent uptrend in the market, companies that had shelved their IPOs, even after regulatory approvals were received, following high volatility on the bourses, are now ready to enter the market, the analysts said.

One such company is Kew Industries, which has already received SEBI observations on its DRHP. The company now plans to enter the market towards the end of this month.

The rally in the Sensex in the last ten days, in excess of 1,000 points, has also encouraged companies to enter the market after a two-month lull.

Lanco Infratech Limited, an infrastructure development company with interests in power generation, construction and property development, filed its Draft Red Herring Prospectus (DRHP) on August 7 with Sebi.

Investment and Credit Rating Agency (ICRA) also filed the DRHP with Sebi on Monday to raise funds from the market by diluting its holding. Realty major Sobha Developers too filed its DRHP with SEBI for its IPO on Monday.

11th August 2006: Bracing up for a detariff regime from January next year, insurance regulator IRDA has issued a 31-point draft revised 'File and Use' guideline for all general insurance products to be complied by insurers.

Products which are currently under tariff but which will be underwritten with modified rates after the tariffs are removed should be filed under these guidelines, after September 30, 2006.

IRDA requires that design and rating of products should provide clear and transparent cover, simple language for product description for laymen to understand and use similar wordings for describing same cover across all products such as clauses of renewal, basis of insurance, due diligence clause, cancellation clause, arbitration clause, etc.

Further, the product should be genuinely an insurance of an insurable risk with a real risk transfer and insurers should not enter financial guarantee business in any form.

Pricing of products should be based on support of appropriate data and technical justification; and terms and conditions of cover should be fair to both the insurer and insured.

Margins built into rates should be consistent with the experience of insurer in respect of commission, expenses of management, contingencies and profits.

IRDA said insurers should take steps to ensure that competition will not lead to unprincipled rate cutting and other improper underwriting practices.

IRDA has asked insurers to give their suggestions on the draft by August 25 for consideration and modifications, before the guidelines come into effect from September 30, 2006.

10th August 2006: JM Financial said it will launch a corporate private equity fund - JM Financial India Fund - with an initial corpus of $150-175 million.

According to a release issued by JM to the BSE, the US-based Old Lane Partners LP would be the lead investor or co-sponsor of the fund, which would invest in Indian companies.

"We are pleased to announce the setting up of our corporate private equity fund. This is in line with the expansion plans for the group. The India growth story, and strong emerging companies backed by new age entrepreneurs offer tremendous opportunity for the JM Financial Group to invest private equity capital," JM group chairman Nimesh Kampani said.

United Plastomers v. CCEx. [2006] (1) S.T.R. 194 (Tri.-Del.)

A dealer agent shall not be covered under the category of cleaning & forwarding agent services for the levy of service tax as the goods are not being directly or indirectly handled by them.

Essel Propack Ltd. V. CST [2006] (1) S.T.R 150 (Tri.-Mumbai)

Royalty payment for use of technology cannot be equated with any services to be provided by foreign company to Indian company and thus are not liable for service tax.

CIT v. Pateshwari electrical and Associated Industries P. Ltd. [2006] 282 ITR 61 (All.)

    Letting out of house property (having a sarai license and a license from District Health Officer) to a bank to be used as a Guest house to be treated as business income and not income from house property. The main reason was that the municipality of Nanital had assessed the property as a hotel establishment.

8th August 2006: Market regulator Sebi would soon come out with a policy statement on short selling of shares.

"You will soon see a policy statement (on the issue)," M Damodaran, chairman of Sebi, said.

Damodaran, however, refused to divulge whether such a statement will allow short selling by institutional investors or not.

Unless all issues relating to short selling are addressed, a decision could not be announced. All those concerned with the matter are being consulted, Damodaran said.

Short selling - selling stocks without actually owning them or selling them by delivering borrowed stocks - is currently permitted for retail investors.

The issue of allowing institutional investors to short sell is linked to the programme for stock lending and borrowing.

The stock lending and borrowing programme was in vogue for institutional investors until 1997 under FERA, which was replaced with FEMA in 1999-2000. Now the issue is whether proposed lending and borrowing programme could be allowed for foreign institutional investors under FEMA.

A revised scheme for lending and borrowing stocks was prepared after the stock markets experienced a huge volatility in May.

8th August 2006: ICRA, a leading credit agency, has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) for an offer for sale of 25.81 lakh equity shares of Rs 10 each for cash at a price to be decided through the book building process.

The offer for sale is by IFCI, State Bank of India and administrator of the specified undertaking of Unit Trust Of India.

The offer constitutes 25.81% of the fully diluted post-offer capital of ICRA. The equity shares are proposed to be listed on NSE as well as BSE with 50% of the offer reserved for qualified institutional buyers (QIBs), 15% for non-institutional investors and 35% for retail investors.

8th August 2006: Tech Mahindra Ltd has priced its IPO at the higher end of Rs 365 per share as against the offer band of Rs 315-365 per share.

The IPO of 1.27 crore shares, which closed on August 4, had seen subscription of 72 times.

Market observers said this was the highest oversubscription for any IPO in this fiscal so far and was expected to end a long subdued phase in the primary market.

The issue received robust response from the Qualified Institutional Buyers, particularly the foreign investors, with the QIB portion of the IPO receiving over 104 times subscriptions.

The issue constitutes 11% of the post issue paid up capital of the company and the net issue constitutes 10% of the post issue capital.

The company intends to use the IPO proceeds partly for expanding its existing facilities at Pune.

Kotak Mahindra Capital Company Limited and ABN AMRO Securities (India) Private Limited were the book running lead managers to the issue, while Intime Spectrum Registry Limited was the registrar to the issue.

8th August 2006: The Securities and Exchange Board of India (Sebi) has doubled the registration fees for sub-brokers with effect from the next financial year.

Sub-brokers have also been asked to pay the fees for a block of five years in advance from next fiscal compared with existing practice of submitting the fees annually.

As per a Sebi notification issued by the Bombay Stock Exchange to its members on Monday, sub-brokers who were granted certificate of registration before August 1, 2006, are required to pay Rs 10,000 for the block of five financial years starting April 1, 2007.

After the expiry of this five years, sub-brokers are required to pay Rs 5,000 for every subsequent of five financial years.

The change in fee structure for sub-brokers was brought about through an amendment in the Sebi (Stock Brokers and Sub-Brokers) Regulations 1992. Under the earlier fee structure, sub-brokers were required to pay Rs 1,000 per year to Sebi, a BSE official said.

Under the new rate structure, Sebi said sub-brokers who are granted certificate of registration by the Board on or after August 1, 2006, are required to pay Rs 10,000 for the block of five financial years commencing from the financial year in which the registrations have been granted.

8th August 2006: Power and infrastructure major GMR has fixed its initial public offering at the lower end of the price band of Rs 210 per share, investment banking sources said, pegging the total issue proceeds at about Rs 800 crore.

The IPO of Hyderabad-based GMR Infrastructure, which closed on Friday last week, was oversubscribed by 6.68 times primarily driven by the demand from institutional investors.

The company sold shares worth nearly Rs 800 crore in the public issue of 3.81 crore shares, which received bids for about 25.5 crore shares. The company had fixed the price band at Rs 210-250 per share.

While the IPO received oversubscriptions for nearly 11 times of the portion reserved for the Qualified Institutional Buyers (QIBs), the retail portion was under subscribed and received bids for only 52% of about 1.13 crore shares reserved for retail investors.

The company has fixed a 5% discount for the retail investors for the price derived from the book building process, which would lead to the share allotment at a price of Rs 199.50 per share to the retail investors.

The investment banking sources said that most of the bids were received in the range of Rs 230-250 per share.

GMR issue had opened on July 31 and closed on August 1, the same day when IPO of Tech Mahindra closed. However, the oversubscription was much larger at more than 72 times for Tech Mahindra.

GMR Infrastructure plans to use a part of the IPO proceeds for investment in various infrastructure Special Purpose Vehicles, which are currently in the development stages.

JM Morgan Stanley Private Limited, DSP Merrill Lynch Limited, Enam Financial Consultants Private Limited and SSKI Corporate Finance Private Limited are the BRLMs for the issue.

8th August 2006: Reliance Capital Asset Management Ltd on Monday filed initial papers with India's market regulator to launch an open-end income scheme and a three-year close-end equity fund.

Reliance Liquid Multiplier Fund would have the freedom to invest its entire corpus in debt and money market instruments of up to a year's maturity, but can also invest up to half the money in longer-term securities.

On the other hand, the Reliance Long Term Equity Fund would primarily invest in mid-cap and small-cap stocks, allocating at least 70% of its corpus to equity and up to 30% to debt-related securities.

In its offer document filed with the Securities and Exchange Board of India, the fund house said the minimum subscription requirement for the income fund would be 100,000 rupees under the retail plan and 10 million rupees for institutions.

The fund would charge no entry load but an exit load of 0.15% for redemption within 15 days.

For the equity scheme, there would be no entry load during the offer period but varying exit loads would be charged for redemption in the first three years.

The fund house managed assets worth about 262 billion rupees at the end of July, data from the Association of Mutual Funds in India showed.

8th August 2006: Indiabulls Financial Services Ltd has received Bombay Stock Exchange and National Stock Exchange nod for demerger of its real estate business.

The company said the NSE and BSE have approved its scheme of rearrangement, whereby Indiabulls Real Estate Ltd would be a separately traded public entity.

Last year, Indiabulls had acquired Jupiter Mills and Elphinstone Mills, located at prime areas in Mumbai, from NTC for building commercial office space.

"Every shareholder holding one share of Indiabulls Financial Services Ltd would get one share of Indiabulls Real Estate Ltd, the demerged entity," the company said.

Farallon Capital Management LLC, recently invested Rs 644 crore in the company under a share subscription agreement.

As per the agreement, Oberon Limited, a Farallon SPV will be allotted convertible preference and non-convertible preference shares against the deal.

Indiabulls, which had committed to complete the de-merger by the third quarter, has also applied to the Delhi High Court for its approval, the release said.

I           Preface 

            A number of tax administrations in the world have established special systems to administer their large taxpayers. In the 1950s and 1960s, several OECD countries introduced special tax audit operations for large operations. A more recent trend, especially in developing and transitional countries, has been to set up full-fledged large taxpayer units that are responsible for most tax administration functions relating to such taxpayers, including collection, enforcement of tax arrears and audit. Some developed countries (such as Australia, the Netherlands, New Zealand, the United Kingdom, the United States of America) have reorganized their tax administrations around different types of taxpayers, or taxpayer segments.

             In Asia, 13 countries have established LTUs at different points of time, including our neighbours Pakistan, Sri Lanka, Bangladesh and Nepal. The LTUs functioning in these countries have achieved a fair deal of success in meeting their objectives and have universally led to increased satisfaction amongst taxpayers by reducing their compliance and transaction costs and in bringing more efficiency in tax administration.

             Following the international practice, the Hon’ble Finance Minister in his Budget Speech 2005-06 announced the proposal to set up Large Taxpayer Units (LTUs) which would act as a single window facilitation centre for all large entities paying excise duty, corporate tax/income tax and service tax.

             The proposal has since been worked upon in the Government and wide ranging discussions have also been held with the trade and industry bodies/associations. It has been decided to establish LTUs in India in a phased manner. LTUs would be established initially in five large cities of the country, viz. Bangalore, Chennai, Delhi, Kolkata and Mumbai and will be made operational from early financial year 2006-07.

II         Definition and Eligibility

What is an LTU: LTUs will be self-contained tax administration offices under the Department of Revenue acting as a single window clearance point for all matters relating to central excise, income tax/corporate tax and service tax. Entities would be able to file their excise return, direct taxes returns and service tax return at such LTUs and for all practical purposes will be assessed to all these taxes at these LTUs. Such units would be equipped with modern facilities and trained manpower to assist the tax payers in all matters relating direct and indirect tax / duty payments, filing of documents and returns, claim of rebates/refunds, settlement of disputes etc. The scheme aims at reducing tax compliance cost and delays, and bringing out uniformity in the matters of tax/duty determination. An eligible taxpayer can opt to avail of the facility of LTU scheme. It is expected that large taxpayers, especially those having multi-locational units/factories, would take the benefit of the scheme by opting for it.

Eligible Taxpayers: Every taxpayer (single PAN-based entity)

(a)                who is presently assessed to income tax/corporation tax under the Income-tax Act, 1961 in any of the five cities (Bangalore, Chennai, Delhi, Kolkata or Mumbai)

and

(b)               who has paid during financial year 2004-05 

(i)        excise duty in cash (account current) of Rs 5 crore or more; or

(ii)       service tax in cash (account current) of Rs 5 crore or more; or

(iii) advance (income) tax/corporation tax of Rs 10 crore or more

is an eligible taxpayer for the purposes of being served by the LTU. 

III     Benefit/ Facilities offered   

(i)                         A large taxpayer (single PAN-based entity) can file all his direct taxes, excise and service tax returns at a single place, irrespective of the geographical location of their units.

(ii)                       All other documents, correspondence, intimations such as export / import related central excise documents, bonds, proof of exports, etc. pertaining to all these establishment can be filed with LTUs.

(iii)                      To begin with, the returns of the company and its units can be filed electronically and the payment of tax/duty can be made electronically. Gradually, these units would be provided with required software and infrastructure so that other documentations, such as filing of rebate/ refund claims, filing of intimations or permission, reply to notices can also be done electronically.

(iv)                     Digital signature certificates can be issued on request by the Department, free-of-charge, to facilitate electronic transaction. There would be no requirement for filing a parallel paper document.

(v)                       Upon joining the LTU, an officer of the level of Assistant / Deputy / Joint / Additional Commissioner would be appointed as ‘client executive’ for each taxpayer. The taxpayer can remain in touch with the client executive for assistance in any/all tax matters (for example for returns filing, classification issues, intimation matters relating to refund/rebate, exports, other claims, etc). This would ensure that the taxpayer need not interact with different section / officers of the LTU.

(vi)                     Once a taxpayer opts for the scheme, the erstwhile jurisdictional field officers (including preventive units of the erstwhile Excise Commissionerates) would not suo motu visit its units or interact with them for any issues arising. However certain procedures under the Central Excise Rules, requiring physical control, and verification of premises or documents, would be carried out by the local Commissioniorates under the express directions of the LTU. Further, in respect of excise and service tax matters, on-going investigation, appeals, provisional assessments that had commenced prior to the large taxpayer opting for LTU would continue to be with the erstwhile jurisdictional Commissionerate.

(vii)                    Cases, where show cause / demand notices have been issued by the erstwhile jurisdictional officers but not adjudicated, would stand transferred to LTU and the same would be adjudicated by officers posted at LTU. All pending matters with the jurisdictional Commisionerates of Income-tax, other than those with CIT(Appeals)  would stand transferred to the LTU.

(viii)                  The taxpayer would have the option to transfer any excess CENVAT credit (of central excise duty or service tax) accumulated in one manufacturing unit or service providing unit to any other eligible unit of his choice through a simple mechanism. Necessary changes in the CENVAT Credit Rule, 2004 are being made.

(ix)                     The taxpayer would have the facility of removing capital goods and inputs from one unit to any other unit of its choice, without payment of duty / reversal of credit through a simple method. Similarly the finished product of one unit can be transferred to another unit, without payment of duty, provided the second unit uses the products as inputs and pays excise duty on the finished goods manufactured using such inputs.

(x)                       The taxpayers would not be subjected to mandatory audit. The selection of a taxpayer for audit would be based on ‘risk assessment’. The Department would ensure that audit schedules are drawn in consultation with the taxpayers so as to cause minimum inconvenience.

(xi)                     The taxpayers would do self-sealing in case of all exports. In order to ensure that there is no delay in examination and sealing by the officer, the requirement of examination / sealing by the officers at the units of taxpayer is dispensed with.

(xii)                    It would be ensured that there is uniformity in the practice as regards classification, valuation, credit availment and similar other issues, for various units of a taxpayer. Trade notices will be issued centrally by the LTU.

(xiii)                  The rebate / refund claims would be disposed off within 30 days of their filing, if the claims filed are in order.

(xiv)                  With respect to income-tax specifically, facilities would be provided for on-line submission of returns, e-payment of taxes, electronic credit of income-tax refunds, and on-line filing of grievances and appeals.

 IV        Functions

             The LTU will perform all the statutory functions presently mandated under the Income Tax Act, 1961, Wealth Tax Act and Rules made there under (in respect of direct tax matters), under the Central Excise Act, 1944 and Rules made there under (in respect of central excise matters), Customs Act/Rules (in respect of functions handled by excise authorities) and under the Finance Act, 1994 and Service Tax Rules (in respect of service tax matters).           

V             Organizational structure 

            Each LTU will be manned by officers and officials drawn from the Customs and Central Excise Department and the Income Tax Department. The LTU will be headed by a Chief Commissioner drawn from either of the two Departments who will be the overall in-charge of the LTU for all matters pertaining to its functioning. Under the Chief Commissioner would be Commissioners who would perform the administrative and statutory functions in respect of the three taxes. Under each administrative/executive Commissioner, officers of the rank of Additional/Joint Commissioners would be placed as Range heads who, in turn, would be supported by Deputy/Assistant Commissioners and other supervisory and managerial staff.

 VI        Procedure   

i)             Application

                An eligible large taxpayer would submit ‘Consent Form’ (as per Annexure enclosed) while opting for LTU. The Consent Form may be sent to the Dy. Secretary, Central Board of Direct Taxes, Ministry of Finance, Room No. 243-F, North Block, New Delhi or faxed at 011-2309 3902. The Form can also be e-mailed at . On acceptance of the Consent Form, the taxpayer shall be issued a LTU membership number by the concerned LTU.

 ii)            Registration

                No new registration would be required. However, in case a new factory/service provider/registered dealer comes up after the taxpayer has opted for LTU scheme, new registration has to be taken from the LTU.

 iii)           Filing of returns

                The taxpayer would be required to file the direct taxes returns in the LTUs while in respect of excise matters, individual returns would be filed for all units (as is being done presently). However, all the unit returns would be filed with LTU office. Option would be given to the taxpayer for e-filing the returns.

 iv)           Payment of Taxes

                Facility for payment of the three taxes through the internet would be provided in the LTUs. The excise duty/service tax payable would be paid by the taxpayer separately for individual units. The taxpayer would, however, have the option to transfer any excess CENVAT credit (of central excise duty or service tax) accumulated in one manufacturing unit or service providing unit to any other eligible unit of his choice under cover of a transfer voucher. The credit balances at both the units would have to be suitably adjusted by the respective unit. In case duty/service tax is paid in excess of the amount due, the taxpayer can adjust it against his future tax / duty payments. For this purpose he shall take credit of the excess tax / duty, as if the same was tax / duty paid on his inputs, capital goods or input services. However, these adjustments would be allowed only under the same accounting head. In case a taxpayer wants to transfer inputs, capital goods or finished goods from one of his units to another, the same can be done without payment of duty on a challan. Both the units would have to maintain records showing receipt and dispatch.

 v)            Refunds

                The rebate / refund claims would be disposed off within 30 days of their filing, if the claims filed are in order. In respect of income-tax, facility for direct credit of refunds to the bank account of taxpayers would be made available.

 vi)           Audit and Scrutiny

                The unit-wise audit shall be conducted by the LTU. While there would be no ‘mandatory’ audit, case selection for audit would be based on ‘risk assessment’ and attempt would be made to ensure that audit schedules are made in consultation with the taxpayers so as to cause minimum inconvenience. Cases for scrutiny under the Income-tax Act will be similarly picked up on the basis of scientific risk management procedure.

 vii)          Adjudication/ Appeals

                In respect of direct taxes, all appeals presently pending with the CIT(Appeals) would be heard and disposed by them. All future appeals would be lie with the CIT(Appeals) in the LTUs. Facilities for on-line filing of appeals will also be provided.

                In respect of central excise/service tax matters, in cases where show cause/demand notices have been issued by the erstwhile jurisdictional officers, but not adjudicated, would stand transferred to LTU and the same would be adjudicated by officers posted at LTU. The process of adjudication would be completed within 3 months of the issuance of the notice, wherever possible. The erstwhile jurisdictional Commissioner (Appeals) would adjudicate the appeals pending with them. However, all future appeals would be filed with Commissioner (Appeals), LTU. In case any duty/tax has been short paid and a notice has to be issued for its recovery, the LTU would first inform the tax payer about his liability before issuance of any demand notice. In case the taxpayer pays up the duty/tax/interest within a period of 15 days from such intimation, no notice would be issued.

 viii)         Export

                All other documents, correspondence intimations such as export / import related central excise documents, bonds, proof of exports etc pertaining to all these establishment can be filed with LTUs. The taxpayers would be eligible for self-sealing in case of exports. In order to ensure that there is no delay in examination and sealing by the officer, the requirement of examination / sealing by the officers at the units of taxpayer is dispensed with.

 ix)           TDS Returns

                All companies are presently filing the quarterly TDS statements and the annual TDS returns electronically through the designated intermediary. The same system would continue after they join the LTU. However, jurisdiction over the TDS returns would shift from the local Commissionerates to the LTU.

 ix)           General Procedure

                In case of any procedure or difficulties which do not have revenue implications, the Chief Commissioner in-charge of LTU can prescribe procedures, methods or relaxations to facilitate tax compliance by the taxpayer.               

VII      Interactive forum

             A website is being developed enabling taxpayers to access all information relating to functioning of LTUs, avail e-services being offered in respect of the three taxes, submit miscellaneous applications and post their view/suggestions. At present, taxpayers can e-mail their views at .

Annexure

CONSENT FORM FOR COMPANIES PARTICIPATING IN LTUs

M/s ____________________________, hereby gives consent to be administered as a large taxpayer under the Large Taxpayer Unit situated at ______________ (Bangalore/Chennai/Delhi/Kolkata/Mumbai). Following information regarding the company is furnished.

1.      PAN :

2.      Address as in last income-tax return filed :

3.      Jurisdiction of Assessing Officer before whom income-tax return is filed :

4.      Details of registrations (under central excise and service tax Rules):

(* including exempted units)

5.      Details of TAN allotted and TDS returns filed in the following format

6.      Details of total taxes paid by the company during financial year 2004-05

(i)                  Excise duty through cash (account current)

(ii)                Service tax through cash (account current)

(iii)               Advance tax (income tax/corporation tax) 

7.      Name, designation, phone and fax numbers and e-mail address of the contact person(s) of the company (to be authorized by the company)

(Signature)

(Name and Designation of the

7th August 2006: People over 55 have to pay agent's fee for getting medical insurance policy on doorstep.

If you are above 55 years of age and find insurance agents reluctant to sell mediclaim policy on your doorstep, you can address the problem by paying the commission that agents otherwise get from companies for mobilising business.

Insurance Regulatory and Development Authority (IRDA) norms allow general insurance companies to pay a maximum of 15% of the premium as commission to agents.

Two of the government-owned general insurance companies (United India Insurance and Oriental Insurance Company) recently issued circulars denying commission to agents for mediclaim policies sold to people above 55 years of age.

CS Rao, chairman of IRDA, justified the move. “For every service there is a charge. So in case a person wants an agent’s service, he will have to pay more. Those not availing of agents’ service would pay less,” he added.

“Oriental Insurance has filed for new mediclaim products, and we have told them that we will see that they are cleared. Health insurance is a non-tariff product. We are looking at the proposal,” Rao added.

The public sector general insurers are feeling the pinch of higher claims from people in the 55-65 age group.

They have to suffer an overall claims ratio of 150% in the health portfolio, which includes incurred claims of 130%, plus up to 10% agency commission, TPA fees, and acquisition costs. However, when it comes to health insurance claims of people above 55 years of age, the claims ratio climbs to over 180%.

The insurers hope their attempts at demotivating agents from selling health policies to people above 55 years can bring down their losses. The companies are already adding 5.4% to the mediclaim premium if a policyholder opts for cash-less hospitalisation.

M Ramadoss, chairman and managing director of Oriental Insurance, said the company had proposed changes in the existing mediclaim policies, with a higher premium for the higher age group and discounts for the lower age group, besides caps on room charges etc.

“We had filed the new products with IRDA in February. The company is awaiting IRDA’s approval,” he said.

Healthcare costs are rising by 10-12% every year, but the mediclaim premium has remained unchanged since 1998. A senior official at United India Insurance said, “It’s a loss-making business (health) with the high claims ratio. So we have decided to take some corrective measures.”

In 2005-2006, the total health insurance premium amounted to Rs 1,750 crore. The four public sector general insurers had almost a 90% share in the health insurance market.

According to Sandeep Dadia, director, Enam Insurance Consultants, the solution lay in increasing the customer base, and hiking the premium.

5th August 2006: The Securities and Exchange Board of India (Sebi) has allowed mutual funds (MFs) to invest in ADRs, GDRs, foreign securities and overseas exchange traded funds (ETFs), a move that is in line with the government’s decision to raise the overseas investment limit of the fund houses from $1 billion to $2 billion, announced in the 2006-07 budget.

In a circular issued by Sebi, the regulator has stated that MFs can invest in ADRs and GDRs issued by the Indian companies. They can also invest in the equity of the overseas companies listed on recognised foreign stock exchanges.

MFs can invest in foreign debt securities in the countries with fully convertible currencies and short term as well as long term debt instruments with highest rating (foreign currency credit rating) by accredited or registered credit rating agencies like A-1/AAA by Standard & Poor's, P-1/AAA by Moody’s, F1/AAA by Fitch IBCA and others.

They can also invest in government securities where the countries are AAA rated. The funds can invest in units or securities issued by overseas MFs or unit trusts which invest in the aforesaid securities or are highly rated and are registered with their respective regulators.

Sebi is expected to release a set of guidelines for MFs' overseas investment based on proposals submitted by the Association of Mutual Funds of India (Amfi).

The capital market watchdog said MFs can invest in ADRs or GDRs or foreign securities within overall limit of $2 billion, prescribing a sub-ceiling for individual MFs, which should not exceed 10% of the net assets managed by them as on March 31 of each relevant year. This limit can be maximum of $100 million per MF, it added.

It may be mentioned here that the finance minister, in his budget speech in February, had announced a proposal, whereby the limit of overseas investment by MFs was hiked from $1 billion to $2 billion. The budgetary proposal envisaged that a limited number of qualified MFs can invest cumulatively up to $1 billion in ETFs. For this, MFs, managing different schemes, should be in existence for a minimum period of 10 years as on December 31, 2006. The MF or its sponsors shall have experience, to be certified by the trustees, of investing in foreign securities and an appropriate disclosure regarding the nature of experience. The regulator has made mandatory compliance of some disclosure norms by the mutual fund industry.

5th August 2006: Hiring Chartered Accountants (CA) for audit work is going to be costlier with the Institute of Chartered Accountants of India (ICAI) today revising the fee structure.

The institute today also decided to allow chartered accountants to provide management consultancy services as a corporate entity. Now a CA can provide management consultancy only as an individual or as a partnership firm.

ICAI president TN Manoharan said here that the new minimum fee structure is with reference to the size of a CA firm via-a-vis the population of the cities where they practice. It would come into force from next month, he said.

The fee-per-audit revision has been done after a gap of two years. For firms with five to ten partners in a city of 3m and above population, the revised audit fee would be Rs 6,000 (now Rs 5,000) and for firms with more than 10 partners, it would be Rs 12,000 (now Rs 9,000) per audit.

Similarly, for cities with population size less than 3m, audit fee has been increased to Rs 3,500 for firms with 5-10 partners, while for more than 10 partners it is now Rs 8,000, he said.

However, the condition shall not apply to income tax audit, VAT audit and audit under sales-tax law because these heads do not require statutory audit if it is below a certain limit, he said. The revision has been effected in the wake of spiralling prices, inflation and the increased service tax over the years.

ICAI said the decision to allow CAs to head management consultancy service firms without surrendering their certificate of practice has been taken to facilitate the profession’s growth in the wake of the outsourcing boom.

The condition is that the firm should be in the field of consultancy exclusively. This enables professionals to provide other functions like attestation of documents, while being in a consultancy firm, a practice disallowed so far.

The accounting regulator also revised the norms for accounting property, plant and equipment. As per the changes in accounting standards 10 and six, companies could capitalise the cost of major inspections or overhaul as a part of the cost of the asset.

The costs capitalised thus should be charged to the profit and loss account over a number of years, by way of depreciation. The change is made in line with international practice, said Mr Manoharan.

5th August 2006: India's premier bourse Bombay Stock Exchange (BSE) is awaiting market regulator Sebi's nod for offloading 51% stake, in which the likes of NASDAQ and NYSE have shown interest.

BSE will be offloading 26% stake to a strategic partner and the remaining in retail market through an IPO.

Kotak Mahindra, the financial advisor for the demutualisation process, has selected eight leading global bourses for the stake sale.

"We are in the process of selecting our strategic partners. We will be completing this procedure by May 2007," Rajanikant Patel, CEO & MD of BSE, said.

Sebi is expected to prescribe criteria for selection of strategic partner and will be announcing these norms soon as the process has to be completed within a span of nine months.

"There exists automatic approval from the Reserve Bank for a foreign partner interested in 26% stake in an Indian financial institution," he added.

Robert Greifeld, president & CEO of NASDAQ, during his August 1 visit to the city had said he is in favour of global consolidation of exchanges and had also held a meeting with BSE officials to possibly discuss picking stake in the exchange.

NASDAQ had made a 2.4 billion pound bid for London Stock Exchange (LSE). However, the bid was rejected by LSE, after which NASDAQ hiked its stake to 25.3%, buying LSE's largest shareholder.

5th August 2006: Bangalore-based Sobha Developers has filed its draft red herring prospectus (DRHP) with Securities & Exchange Board of India (Sebi).

According to a release issued today, Sobha is planning to offer 94,76,800 equity shares of Rs 10 each for cash at a premium to be decided through the book-built process. "The issue would constitute 13% of the fully diluted post issue paid-up capital of the company," the release added.

P N C Menon, chairman of Sobha Developers, said: "This is a historic moment for us at Sobha Developers, and we look forward to this IPO as an event that will help us welcome new members into our family."

The company has reserved up to 9,47,680 equity shares for eligible employees. Thus, the net offer to public would stand at 85,29,120 equity shares.

Sobha Developers is entering the capital market to raise funds for land acquisition, on-going and forthcoming projects and repay certain debts, the release said.

The Book Running Lead Managers to the Issue are Kotak Mahindra Capital Company and Enam Financial Consultants. IL&FS Investsmart Limited is the Co-Book Running Lead Manager.

4th August 2006: The IPO of GMR Infrastructure has been oversubscribed by 6.5 times when it closed on today evening.

GMR Infrastructure, having interests in airport, power and road projects, entered the capital markets on 31st July 2006 with a public issue of 38,136,980 equity shares of Rs.10 each in a price band of Rs. 210 to Rs. 250. The net offer to public constitutes 11.3% of the fully diluted post issue paid up capital of the company.

The company intends to use part of the issue proceeds for investment in various infrastructure Special Purpose Vehicles, which are currently in the development stage.

4th August 2006: Top property firm DLF Universal Ltd has put off plans to sell its shares to institutional investors before an initial public offer, two sources familiar with the development said.

"There are some issues to be sorted out, so it is not happening now - at least for the time being," said one source.

DLF, which plans to develop special economic zones and hotels to tap into a new trend in India's booming property market, declined comment.

Investor appetite for IPOs had soured after a stock market slide in May sliced the value of new listings. Shares in low cost airline Deccan Aviation have nearly halved to 76.95 rupees from the IPO price of 148 rupees.

DLF had aimed to raise between $100 million and $500 million in a pre-IPO placement of shares, the sources said.

"It is already behind schedule, so probably we would skip the pre-IPO sale and go ahead with the IPO straight away and complete it in a few weeks," said the second source.

A stock market recovery, up about a quarter from a low in June, and a willingness by companies to price their IPOs attractively have helped woo big investors back.

Two IPOs that opened this week from construction firm GMR Infrastructure Ltd. and software services provider Tech Mahindra Ltd got full bids, but demand from small investors have been sharply lower compared to in February or March, bankers said.

GMR, which sold shares to funds at as high as 270 rupees a share, fixed a price band of 210-250 rupees for bids in the IPO.

IPO by October.

DLF's IPO could hit the market in September, or October, sources said.

New Delhi-based DLF had filed an offer document with the regulator in May hoping to raise between $3-3.5 billion in an IPO in June. Bankers said those expectations have been scaled down.

The offering could still become India's biggest-ever, ahead of $1.17 billion raised by both software firm Tata Consultancy Services and state-run utility National Thermal Power Corp.

"We are still looking to raise about $2 billion," said the second source.

The New Delhi-based DLF planned to sell up to 12.8%, or 219 million shares including an option for an additional 17 million.

4th August 2006: LIC Mutual Fund plans to launch a three-year close-end equity fund that would primarily invest in mid-cap and small-cap stocks.

The company filed initial papers with the Securities and Exchange Board of India to launch LICMF India Vision Fund, the regulator's Web site showed on Thursday.

While the fund would largely invest in companies with a market cap of up to Rs 75 crore, "investment in large-cap stocks will be purely to take short-term advantage of the market momentum," the offer document said.

It would disclose the net asset value once a week.

The fund house managed assets worth about Rs 990 crore at the end of July, data from Association of Mutual Funds in India showed.

4th August 2006: Realising the threat posed by global management and consultancy firms like KPMG and Ernst & Young, the Governing body of Chartered Accountant professionals today allowed its members to set up management consultancy companies to help shore up capital and human resource.

Practicing CAs were so far not allowed to be equity holders in companies and could function in the capacity of individual or partnership firms.

Institute of Chartered Accountants of India (ICAI) president T N Manoharan said that its Council members had approved the proposal, keeping in mind the growing role of CAs in management consultancy as well as helps them compete with major consultancy firms who could employ huge capital and human resource.

Manoharan said professionals were increasingly being involved in management consultancy works and today's decision would help them expand to respectable levels.

"Gradually, decision-making jobs are being outsourced by managements to CAs. These include management decisions like deciding on debt or equity, methods to improve operational effiencies, interest swapping and cost effiency measures," he said.

He said that with the permission, CAs would get empowered to operate in a corporate form in specialised management subjects without the constraint of human resource or capital.

ICAI also introduced a new course on consultancy management which will be open to practicing CAs and based on self-assessment.

1st August 2006: Mediclaim policy-holders will not only have to pay a higher premium but also bear a part of the claims if the Insurance Regulatory Development Authority (IRDA) gives its nod to the proposal mooted by the four public sector insurance firms.

According to industry sources, the revamped Mediclaim policy will see the introduction of the concept of “copayment.”

In other words, the policy will not cover all expenses, and policy-holders will have to bear a portion of the cost.

For instance, on a hospital bill of Rs 1 lakh, a policy-holder may have to pay Rs 10,000. The concept of “copayment” will apply to both reimbursement as well as cash-less hospitalisation schemes.

However, the concept will be applicable only to those who have crossed the age of 40. Younger policy-holders will continue to get 100% cover.

“We are still working on the nitty-gritty of the new Mediclaim policy. It will take about two months to finalise the new scheme,” said sources.

V Ramasaamy, chairman and managing director of National Insurance Company, confirmed the development, and said the IRDA’s approval would be sought once the new terms were finalised.

On an average, Mediclaim premiums will go up by 15 to 20%, depending on the age of the policy-holder. Till now, policy-holders pay premiums irrespective of their age.

In the new scheme of things, even the region in which medical treatment is provided will have a bearing on the cost. For instance, policy-holders in Mumbai will have to pay more premium than their counterparts in Chennai.

The floor for the minimum sum insured is also set to go up. At present, the minimum sum insured under Mediclaim is Rs 15,000, and the policy is available in multiples of Rs 5,000.

The revamped Mediclaim policy will raise the level of the minimum sum insured to Rs 25,000, and will be available in multiples of Rs 25,000.

This means that a Mediclaim policy will be available for Rs 25,000, Rs 50,000, Rs 75,000 and so on, instead of Rs 15,000, Rs 20,000 and Rs 25,000 now.

The revamped policy will also have restricted cover on certain diseases. For example, hernia, piles, fibroids in uterus, and prostate gland enlargement are not covered in the first year of the policy now.

They get covered from second year onwards. The revamped Mediclaim will cover these from third year onwards.

1st August 2006: The initial public offering of construction firm GMR Infrastructure Ltd has been fully subscribed on the first day of the issue, although most bids were at the lower end of the price band, a banker said.

The 38.1-million-share offer by the firm, which specialises in road building and airport construction, had received bids for 40.3 million shares, he said.

The issue, which consists of 11.5% of the fully diluted equity, would raise up to 9.5 billion rupees at the top end of the band.

"It is quite a successful issue given the recent turbulence in the market and the fate of other IPOs," said the banker. "We expect the final demand to be around 5-6 times the offer."

The final pricing would be decided based on demand after the issue closes, he said.

Many companies, including low cost carrier Deccan Aviation Ltd, struggled to see their IPOs through in recent weeks as investors were hesitant to bid after May's emerging markets meltdown, sparked by rising interest rates.

Some of the IPOs - such as construction firm Punj Lloyd's and that of publisher Jagran Prakashan, which raised funds earlier this year, are trading below their IPO price.

The banker said that the response to the GMR issue on its first day exceeded expectations. The company, which aimed to sell 45.3 million shares in the IPO, sold some shares to funds ahead of the offering.

Those buyers include a private fund of ICICI Bank, Soros group's Mauritius-registered fund Quantum (M) Ltd, Citigroup Venture Capital International Ltd, and the state-run Punjab National Bank.

The current IPO price - in the 210-250 rupees band - is lower than the price at which some of these funds bought GMR shares a few weeks ago.

While the ICICI fund paid 261 rupees a share, other funds paid 270 rupees.

GMR has won contracts to build airports at Delhi and in the southern city of Hyderabad. It posted a net profit of 705.5 million rupees for the year to March 2006, and a total income of 10.90 billion.

The company also has power assets that include 440 megawatts of electricity-generating capacity in two plants, and it is adding another 500 megawatts, according to the offer document.

It also has the rights to develop and operate sections of national highways.

31st July 2006: Product innovation may take a back seat in general insurance, even as customers gain out of a price war.

The Insurance Regulatory and Development Authority (Irda) has decided that companies cannot introduce new features in products even as it frees pricing.

There is also confusion among insurance companies about the future of tailor-made policies which are currently allowed. Some time ago, Irda had proposed `file-and-use’ guidelines, where even policies tailor-made for customers with exceptional needs would have to be lodged.

Until now, tailor-made policies, or special contingency policies as they are defined by the industry, do not need any regulatory approval. An example of tailor-made policies is a specialised cover for institutions such as stock exchanges.

They also include mega-risk policies — umbrella policies covering all properties of corporates with sum assured of over Rs 10,000 crore. The restrictions on altering terms and conditions of standard policies are part of Irda’s draft guidelines on detariffing, which were issued last month.

The guidelines propose that product innovation be shelved until April ’08. The draft also states that new guidelines will supercede all directions issued earlier. Insurance companies say the guidelines are aimed at preventing confusion among buyers.

“Restrictions on altering the terms of a policy can be understood if it were only for those policies issued to lay persons who do not read the fine print and may be confused between two products.

But the same logic does not apply for corporates who have insurance departments,” said an official. He adds that one of the reasons for opening up the industry was to facilitate product innovation, which itself has now been disallowed.

Meanwhile, Irda has asked insurance companies for feedback to its guidelines. The companies are expected to discuss the draft in the next meeting of the general insurance council — an insurance body.

28th July 2006: The deadline for the salaried class to file tax returns is approaching. Hence, it is very important that individuals complete the procedure in the right manner. Even though individuals could have filed their returns in late June or early July, many of them wait till the last few days to file returns. In case you are still struggling to get your returns in order, here’s how you can go about it.

The process starts by selecting the right income tax returns form. The salaried class, which does not have income from business or profession, or capital gains, or income from agriculture, can opt for the Saral Form 2E, which is quite easy to fill and does not require additional calculations and disclosures. On the other hand, those who incur capital gains, or have business or professional income, have to fill Saral Form 2D.

While filling in Form 2D, investors must submit their bank details, along with the MICR code of their bank branch, which will be used to direct credit the tax refund, if any, to the bank. Most people run into problems on this front because they do not fill in the MICR code.

After selecting the returns form, individuals should collect the required documents. The most important document is Form 16, which is provided by the employer at the end of the year. If individuals have changed jobs during the year, they will have to submit two Form 16s. The next document is a certificate from the housing loan authority to classify the interest and capital repaid on housing loan. This will enable investors to calculate tax breaks in the form of division of amount repaid.

Individuals also have to gather the various proofs relating to their investments. In most cases, they don’t need to do any additional work on this count, because the proofs would already have been generated when investments were made in the last financial year. Now, only the copies of the proof of payment have to be collected.

This includes premium paid on insurance policies, payments made to public provident fund (PPF) or copy of the National Savings Certificate (NSC) payment. At the same time, there is an ELSS investment and an account statement of the fund to show that investment made during the year is enough for the returns.

Individuals also need to consider any additional income, especially under the head of income from other sources, like bank interest, as this is liable to tax. There have been cases when individuals did not show bank interest earned on savings accounts, as it was a small amount; but more importantly, under Section 80L, an amount up to Rs 12,000 was allowed as a deduction, so there was no tax to be paid.

Now, this Section has been removed and the impact of this is that any amount will be liable to tax and hence, even small amounts will have to be shown while filing tax returns. Anyone who has a bank account will have this additional source of income, because every savings account earns some interest income — even if it is only a few rupees — and this will have to be shown as income.

Moreover, where there is additional income — like dividends or long-term capital gains — which is tax-free, and individuals do not have to pay any tax on this amount. But the amount under these heads which is claimed as tax-free, should be mentioned, so that no tax needs to be paid on that sum. If there is tax deducted at source (TDS) on interest payments or some other receipts, then the relevant TDS certificate should be attached with the tax returns.

Once all this has been completed, individuals won’t face too much problem in calculating the final tax amount. If some tax needs to be paid, it will have to be done using a challan and the proof will have to be attached with the returns. Many banks accept I-T payments and hence, payment is no longer a troublesome exercise. However, completing the process before the last day should be the aim of individuals.

28th July 2006: Come 2007, the Lion City will be hunting ground for five categories of Indian professionals. Singapore will soon allow Indian architects, chartered accountants, nurses, dentists and health service providers to practice in the city-state without appearing for qualification tests.

The two countries are giving finishing touches to mutual recognition agreement (MRA) for the five mentioned categories of professionals. The exercise is likely to be completed in 3-4 months.

Singapore had committed to provide opportunities for Indian service providers to practice there in the Comprehensive Economic Cooperation Agreement (CECA) signed last year.

Commerce ministry officials said all formalities will be completed by year-end and the identified professionals will be allowed to set up shop in Singapore by the beginning of next year.

Other service providers mentioned in CECA need not despair.

“It is not possible to work on MRAs for large number of professions at the same time.

After we complete all formalities for the five identified categories, we will move on to other services identified in CECA,” an official said.

Other services include IT, engineering, financial services, university teaching and advertising.

As per CECA, there will be mutual recognition of 129 education degrees given by recognised universities and technical education boards.

CECA with Singapore is the first comprehensive bilateral economic agreement signed by India incorporating goods, services and investment. It includes free trade agreement in goods, an agreement on investments, mutual recognition agreements in services and conformity assessment of standards in goods.

Cooperation pacts in customs, science & technology, media, education, e-commerce and intellectual property are also part of CECA. The pact includes a Bilateral Investment Protection Agreement (BIPA), a Double Taxation Avoidance Agreement (DTAA) with additional safeguards to avoid misuse by shell companies and a Bilateral Economic Integration Agreement in Services.

27th July 2006: Fixed deposits of banks with a maturity of five years or more will only qualify for tax breaks with the government set to issue a notification this week.

An investment of up to Rs 1 lakh in bank term deposits of a medium maturity of five years or more will enable investors to qualify for a tax deduction of up to Rs 1 lakh starting from this fiscal.

Investments in bank deposits will now be eligible for a tax deduction similar to that offered for payment of insurance premia, payment of school tuition fee, repayment of the principal amount on housing loans besides contribution to small savings schemes under Sec 80 C of the Income tax Act.

Although the banking division of the finance ministry had recommended three years as the cut-off eligibility for a tax break in line with the banking industry’s demand, the revenue department did not go along with the proposal.

The Central Board of Direct Taxes was of the view that bank deposits could not be equated with the Equity Linked Savings Scheme (ELSS) which has a lower maturity of three years and yet offers tax breaks.

Officials said that there was the element of risk in equity linked schemes compared to bank deposits especially when a large number of banks have the backing of the sovereign.

Tax breaks are being provided for the first time for term deposits considering the difficulties faced by banks in mobilising medium term funds while competing with tax free instruments like small savings schemes.

The government also acceded to the demand of the banking industry this fiscal to provide this tax break after taking into account the blistering growth in credit last fiscal. The new scheme for tax deduction for term deposits is expected to address the issue of premature withdrawals.

In all the other schemes like the Public Provident Fund and the National Savings Certificate which offer a similar tax deduction, there is a lock-in.

Earlier, banks used to cite the advantage of flexibility in withdrawals before maturity compared to small savings schemes for term deposits even though it came with a penalty in some cases. Now with a tax benefit on offer, that flexibility will go.

27th July 2006: After ‘Saral’ became not so easy for the salaried class, its now the turn of self employed doctors, engineers, chartered accountants and other professionals to face the income-tax blues.

The tax returns form for these people has expanded from a five-page affair to a 20-page business. They have been given a breather till October 31 to fill up the new forms, with the government extending the last date from July 31. Experts say while the effort of the government has been to make the income tax returns compact, but in the process they have made it lengthy and cumbersome.

“The new forms especially for the non-corporates having business income, is a very lengthy one. In fact, the new forms are detailed asking for lot of information and could be cumbersome for the one filing. People generally prefer simple forms, “Rajiv Tiwari, senior associate, Titus and Company said.

However, he said the forms are designed to reveal a greater degree of information to government about the cashflow of taxpayers and could help in higher collections.

Echoing similar views, Ravi Prakash, Principal Consultant, PricewaterhouseCoopers said instead of implementing the forms from this year, the government should have implemented them only from next year. They should have taken some more time and invited comments from the public instead of implementing it this year.

He also wondered as to how a taxpayer who is not required to enclose any document with the return form would make disclosures or notes related to the income computation. Also, he said, one is not required to enclose any tax withholding certificate or Balance sheet/report, along with the new return forms.

26th July 2006: Peninsula Land Management, the real-estate arm of the diversified Ashok Piramal group, is planning to raise about Rs 450 crore by diluting part of its equity. The real estate firm is exploring two possibilities - either to go for a second public offering or offer part of its equity to qualified institutional bidders (QIBs) through a private placement route.

"We have plans to mobilise around Rs 400 to Rs 450 crore from the market. It could be a follow-on IPO or a placement with QIBs," Ashok Piramal Management Corporation group executive director Mahesh Gupta said.

The funds will be used for expansion activities, he added.

Peninsula Land is also planning to float a Rs 1,000-crore real estate fund to buy properties across India. "We have got a Securities and Exchange Board of India (Sebi) clearance to float a real estate fund. We are in the process of mobilising fund for the proposed funds," Mr Gupta said.

The company is also entering the special economic zone (SEZ) business in Goa and Pune. It has already created a sizeable land bank to set up SEZs - in Goa; the company has acquired around 250 acres.

Recently, Peninsula Land decided to merge the recently-acquired Dawn Mills Company with itself to consolidate the group's real estate businesses under a single entity. The merger will boost the company's saleable land bank and help develop its future real estate projects. Dawn Mills has 5 lakh sq ft near Peninsula Park in central Mumbai, which can be sold.

The Ashok Piramal group, which has interests in real estate, textiles, retail and engineering, owns 72.60% of Dawn Mills. The Rs 180-crore Peninsula Land has real estate projects in Mumbai and other cities, including a saleable land bank of 30 lakh sq ft in the Maharashtra capital, Goa and Pune.

26th July 2006: The Mukesh Ambani group has scaled up its holding in Reliance Industries by nearly 2% to 49.83% during the quarter ended June through open market operations.

Going by the average market price of Reliance Industries, the promoters may have spent nearly Rs 2,688 crore for scaling up their stake.

The shareholding pattern of the company filed with stock exchanges revealed that the promoters held 694.3 million shares, representing a 49.83% stake on June 30. This was higher than their holding of 667.47 million, amounting to a 47.9% stake, on March 31.

The Reliance stock has been hovering around Rs 1,000 for the past quarter.

It shot up to its 52-week high of Rs 1,195 on May 10. It closed today at Rs 987.30 on the BSE, 1.56% higher than yesterday's close of Rs 972.10. Petroleum Trust holds 7.51% while the remaining holding of the promoter group is held by as many as 47 entities and individuals.

On June 30 financial institutions held 27.73% in the company against their holding of 28.85% in the March quarter. The public holding is around 14%.

26th July 2006: Tech Mahindra will be offer 1.27 crore shares of Rs 10 each in its initial public offer (IPO) through book building process.

The company has fixed the price band of Rs 315-365. The offer opens on August 1, 2006 and will close on August 4, 2006.

Following which, the shares will be listed on the Bombay Stock Exchange and National Stock Exchange.

Kotak Mahindra Capital and ABN Amro Securities India are the lead managers for the IPO.

The company plans to issue the proceeds from the IPO for expansion of its current facilities.

26th July 2006: Do not forget to include your interest earnings from bank deposits, National Savings Certificates, bonds and debentures of public sector units as taxable income now. The department could levy an interest or penalty for concealing such incomes.

This was the message from the income tax department on Tuesday for tax payers. In budget ’06-07, the finance ministry has erased a tax shelter, exempting interest income earned from these sources upto Rs 12,000. There was also an additional deduction of Rs 3,000 on interest on Government securities.

The exemptions were available under section 80L of the Income Tax Act. In a release the income tax department has said “interest income from bank deposits, National Savings Certificates, bonds, debentures of public sector units in the financial year 2005-06, even if the amount if below Rs 12,000.”

25th July 2006: Cambridge Technology Enterprises (CTE), a Hyderabad-based IT service provider will be going for an Rs 24-crore initial public offering. The company is raising funds to finance its Rs 30.7 crore investment plans.

"We have filed a draft prospectus with the Securities and Exchange Board of India (Sebi) for a public issue worth Rs 24 crore. Centrum Capital will be the lead manager for the issue," Krish Nangegadda, a director of CTE, said.

"We have planned an investment of Rs 30.7 crore for acquisitions, to build our competency centre in service-oriented architecture and to meet our working capital needs. While Rs 24 crore will be raised via public issue, UTI Bank has granted a term loan of Rs 4.7 crore. Further Rs 2 crore has been funded by CellExchange Inc," Y Ramesh Reddy, CFO of CTE, said.

CellExchange Inc, earlier owned 88% stake in CTE. It later divested its entire stake in the company. With a recent infusion of Rs 2 crore, it now has close to 10% stake in CTE.

As of today, promoters hold around 74% stake in CTE and around 16% is with employees in the form of stock options. The public will be offered 25-30% stake in the company.

Meanwhile, CTE is also planning to expand its market reach. "We will make investments in the west coast of the US," Nangegadda said. Nangegadda is also the president of CellExchange Inc.

25th July 2006: Anil Dhirubhai Ambani has picked up an additional 2.2% stake in his group company, Reliance Energy Ventures (REVL), through open market transactions taking his total stake in the company to 43.97%.

Anil Ambani, along with PACs (persons acting in concert) Tina A Ambani, Jaianmol A Ambani, Jaianshul A Ambani, Kokila D Ambani, Anadha Enterprise, Bhavan Mercantile, AAA Global Business Management, AAA Project Ventures, Hansdhwani Trading Company, Reliance Capital and Reliance General Insurance Company, has acquired over 2.68 crore shares of REVL between June 27 and July 20.

Following the latest acquisition, the stake of Anil Ambani along with PACs in REVL stands at over 53.77 crore shares, aggregating to 43.97% of the company's total paid up capital, according to a release issued by REVL to the National Stock Exchange.

Anil Ambani, along with PACs, has also picked up 2.19% stake (amounting to about 2.68 crore shares) in Reliance Capital Ventures (RCVL). With this acquisition (between April 1 and July 19), the stake of Anil Ambani along with PACs in RCVL stands at over 51.13 crore shares aggregating to 41.8% of the company's total paid up capital, the release added.

22nd July 2006: The Securities and Exchange Board of India (Sebi) will shortly be coming out with regulations for the silent period of companies' initial public offers, in a move aimed at curbing the hype being created about the companies during silent period, M Damodaran, chairman of Sebi, said on the sidelines of a FICCI conference on market reforms & corporate governance imperatives.

Some hype is being generated about companies during the period from filing of their draft prospectus with Sebi to announcement date to push up the prices. Sebi's norms - to be out in a few weeks - would direct companies and market forces to talk only about the information provided in the prospectus during the silent period, Damodaran said.

Sebi would look into the composition of boards of companies to assess the quality and independence of the independent directors. Corporate governance is not just about numbers, but about the quality of the people on board, Damodaran said.

Good corporate governance is at least a necessary condition if not sufficient condition for the long time sustainable delivery of values to the shareholders. Without going through the experience of Enron or Worldcom, we can put regulations in place...Many other markets are receiving guidance from India on corporate governance, Damodaran said.

No rating of companies should be done before having the climate of corporate governance in the country. Till large number of companies practice corporate governance, let us not get into the practice of rating companies and giving away awards, Damodaran added.

GENERAL MANAGER

Market Regulation Department

E-mail:

MRD/DoP/SE/Cir- 8 /2006

July 13, 2006

The Executive Directors/Managing Directors/Administrators

of All Stock Exchanges

Dear Sir / Madam,

Sub:     Mandatory requirement of Permanent Account Number (PAN) for transactions in the cash market

1.      As you are aware, PAN has been made mandatory for transacting in the Futures and Options market as well as for operating a Beneficiary Owner (BO) Account in the Depository system.

2.      In continuation of the above and to further strengthen the Know Your Client (KYC) norms in the cash market with a view to facilitate sound audit trail,  it has been decided that PAN will be mandatory for all the entities/persons who are desirous of transacting in the cash market  with effect from October 1, 2006.

3.      The stock exchanges are advised to ensure that the members of their exchanges shall ;

3.1  Collect copies of PAN cards issued to their existing as well as new clients by the Income Tax Department and maintain the same in their record after verifying with the original. 

3.2  Cross-check the aforesaid details collected from their clients with the details on the website of the Income Tax Department i.e. http://incometaxindiaefiling.gov.in/challan/enterpanforchallan.jsp. 

3.3  Upload details of PAN so collected to the Exchanges as part of unique client Code.

 4.      The stock exchanges shall ensure that with effect from October 1, 2006 transactions in the cash market are executed only in respect of clients whose PAN details have been collected and uploaded to the exchange by the members.

5.      The Stock Exchanges are advised to ; 

5.1.   make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately. 

5.2.   bring the provisions of this circular to the notice of the member brokers/clearing members of the Exchange and also to disseminate the same on the website. 

5.3.   communicate to SEBI, the status of the implementation of the provisions of this circular in Section II, item no. 13 of the Monthly Development Report for the month of August, 2006.

6.      This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Yours faithfully,

22nd July 2006: Sebi has sought more information from state-run Power Finance Corporation on its proposed Initial Public Offer, which has been delayed after the government put all disinvestment decisions on hold.

"By now it (the IPO) would have been done... (but) we have to submit some more information to the Sebi," PFC Chairman and Managing Director V K Garg said. Garg, however, did not elaborate.

PFC had submitted its draft Red Herring Prospectus with the Securities and Exchange Board of India on June 5 for its IPO of 10% fresh equity along with the sale of 5% government equity.

The power PSU planned to issue 10.3 crore new shares of Rs 10 face value each, while the government was to sell 5.15 crore shares to raise an estimated Rs 1,500 crore. Government holding in the company would have come down to 86.36% from 100% at present.

PFC initially wanted to launch the IPO by early-July, but its plans were delayed after Prime Minister Manmohan Singh earlier this month put on hold all disinvestment proposals and decisions following objections raised by some constituents of the UPA government.

When asked whether PFC has approached Power Ministry for clarification on the status of the public issue, Power Secretary R V Shahi replied in the negative.

Besides PFC, the government's decision to hold divestment also affected forthcoming public offers of National Aluminium Company and Neyveli Lignite Corporation.

19th July 2006: INTRODUCTION: GMR Infrastructure Limited (GIL) is a part of GMR group, having substantial experience in the development and operation of power plants and road projects. GIL is in process of developing an international airport adjacent to Hyderabad city, which is expected to commence commercial operations by July 2008. In addition, GIL has been awarded a contract to operate, manage and develop Delhi airport. GIL owns 100% share of 220 MW Manglore power plant and 370 MW Vemagiri power plant, and 51% share in 200 MW Chennai power plant. Apart from these, GIL has right to develop 140 MW hydroelectric power plant in Uttaranchal. GIL also owns various annuity road projects on a ‘Build-Operate-Transfer” basis in various parts of the country.

ISSUE DETAILS

OBJECTS OF ISSUE

Ø      Investment in various infrastructure SPVs (Special Purpose Vehicles)  promoted by GIL

Ø      Repayment of unsecured loans

Ø      Payment to sundry creditors

Ø      General corporate purposes

Ø      To achieve benefits from listing of equity shares 

FINANCIAL HIGHLIGHTS

VALUATION

Considering the Adjusted EPS for FY05 of Rs.0.89, the issue price at the higher band of Rs. 250, discounts the EPS by 280.89 times and at lower price band of Rs. 210, by 235.95 times.

TRIGGER

 Post Issue Holdings in GMR Infrastructure Ltd.

NOTE 

1. Minimum bid lot of 25 Equity Shares & thereafter in multiples of 25 Equity Shares

2. Retail Individual Bidders will have two options for making payment of Application Money.  Option one is to make payment @ Rs.125/- per Equity Share OR Option two is to make full payment.

3. Retail Individual Bidders can apply for maximum 400 Equity Shares under both the options (at upper price band)

4. Retail Individual Bidders has to attach copy of their PAN card if they apply for 200 Equity Shares & above under both the payment options

5. 5% discount will be available to Retail Individual Bidders only to issue price and  the same shall be refunded by the Registrars (Please do not deduct the same while making an application)

6. Only Retail Bidders can Bid at “Cut-off Price”

7. Non-Institutional Bidders has to make full payment on application

8. In case of Resident Retail Bidders Cheques / Demand Drafts to be drawn in favour of “Escrow Account – GIL IPO – Retail – R”
9. In case of Resident Non-Institutional Bidders Cheques / Demand Drafts to be drawn in favour of “Escrow Account – GIL IPO – Non-Institutional – R”

21st July 2006: Essar Teleholdings Ltd on Thursday said it will delist its shares from the Bombay Stock Exchange. The shareholders at the EGM held on July 15 approved the delisting of equity shares of the Essar Group Company from BSE and five other regional stock exchanges, the company informed the BSE. The company would also delist from Madras, Ahmedabad, Delhi and Calcutta stock exchanges, it added.

20th Ruling out the extension of the July 31 deadline for filing income tax returns, income tax authorities said that special counters will be opened from July 28 onwards to meet the eleventh hour rush.

Central Board of Direct Taxes (CBDT) spokesman AK Sinha said that there would not be an extension of last date, but special arrangements would be made in Delhi, Mumbai, Chennai, Bangalore and Kolkata for filing of I-T returns.

In Delhi, special arrangements would be made from July 28-31 to receive income tax returns, he said, adding that it was left to chief commissioners in other major cities to make necessary arrangements for this purpose.

Though July 29 and July 30 being Saturday and Sunday, the counters would function for the convenience of the public for filing I-T returns, he said appealing to tax-payers file returns from tomorrow onwards.

Regarding spot refunds for senior citizens, he said since they would be computer-generated from this year, the facility would be available only in those places where computer linkage could be established.

To a question, he asserted that tax department has been mandated to process all income tax refunds within four months of filing and at any cost assessees should get refunds before March 31.

“There is no possibility of delay in refunds as it would be totally computer-generated,” he said. However, there could be some delay in the refunds reaching the doorsteps of the assessees as dispatch would still be done manually, he said.

20th July 2006: The finance ministry will soon re-notify the list of infrastructure facilities eligible for tax concessions to include three star hotels and hospitals.

While hotels and hospitals were eligible for tax breaks as infrastructure, the benefit had got knocked off after the government erased Section 10(23G) from the Income Tax Act this year.

This section, among other things, had specified these and other sectors as eligible for the tax breaks. The ministry will soon issue a notification to re-confirm them along with SEZ developers, as eligible infra sectors under Section 36(1)viii of the Income-Tax Act.

While sub-Section 4 of 80IA defines infrastructure projects that are eligible for tax concessions, Section 10(23G) had included additional categories. These are hotel projects-for constructing a hotel of not less than three-star category as classified by the central government - and hospital projects, with at least one hundred beds for patients.

Till now, no applications has run into problems about the tax rebate because of this lacunae. But government officials said the a fresh tax rebate could face problem unless the anomaly is rectified. Section 10(23G) provided tax exemption to financial institutions for investments in approved infrastructure projects. The tax break was given to ensure low-cost capital for thrust area projects during the era of high interest and tax rates. But the macro-economic scenario has since changed, and the government withdrew the concession.

Section 80IA defines, among other things, the list of eligible infrastructure projects like road, highway, bridge, airport, port, rail system or any other public facility of a similar nature as may be notified by the CBDT. The list also includes projects like water supply, irrigation, sanitation and sewerage systems, generation and distribution of electricity or any other form of power and telecommunication services.

19th July 2006: If you are over 55 and want to buy a Mediclaim insurance cover, you’re in for a shock.

In a circular to its agents, Oriental Insurance said they will earn no commission on renewals or fresh sale of mediclaim policies to people in that age bracket. What it means is simple. Agents selling these policies will have no incentive to sell them to you.

And if you’re between 45 and 55, the company will accept your premium rather reluctantly. Which is why, agents selling policies to people in this age bracket will have to be content will a 10% commission as against the 15% they could earn earlier.

And assuming you do have a policy, stop expecting calls from the agent who sold it to you, reminding you to pay the premium.

According to sources, three other public sector general insurance companies — New India Assurance, United India and National Insurance — are likely to come out with similar circulars.

All the four public sector insurance companies have been struggling to manage huge losses on account of mediclaim policies due to a higher claims ratio. Currently, it ranges anywhere between 120%-170%.

A source in the industry said by disincentivising the sales force from selling or renewing policies to people in the older age bracket, companies are hoping to cut losses.

Theoretically though, you don’t need an insurance agent as an intermediary to buy the policy. You could go to the company and buy one directly. However, a source said that steps are being taken to make even this difficult. Customers will be put through medical tests to make sure they don’t suffer from any ailment before policies are issued to them.

In January, TOI had reported that the four PSU companies had issued a circular to agents and development officers asking them not to sell mediclaim policies with a sum assured below Rs 1 lakh. Also, the companies had put extra load on policies sold to people in a higher age group. However, the companies had to reverse the move after the insurance watchdog Insurance Regulatory and Development Authority (IRDA) had asked for them to justify the changes.

At that time, the insurance companies claimed the idea was to build a higher premium pool to service claims. A senior official at a PSU insurance firm said the companies wanted people to start buying mediclaim at a younger age.

19th July 2006: Competition is hotting up in the life insurance segment, with the entry of more private players. Insurance Regulatory Development Authority (Irda) has given telecom major Bharti Enterprises the go-ahead to enter the life insurance business partnering French major AXA.

The regulator’s clearance comes close to one year after the agreement was inked between the two partners. Bharti will hold 74% stake, while AXA will hold 26% stake in the joint venture.

Bharti will be the second telecom company after Reliance to foray into the insurance business. However, both Reliance Life Insurance and Reliance General Insurance do not have a foreign equity partner. Currently, the foreign equity stake in domestic insurance companies is capped at 26%.

“We have cleared Bharti Enterprises’ application for a licence to enter into the life insurance business partnering AXA,” CS Rao, chairman, Irda, said. The JV company has earmarked Rs 500-crore investment for a period of 3-4 years. Bharti expects to encash on its telecom customer base to sell insurance products.

Irda is also vetting state-owned Punjab National Bank’s (PNB) application for a licence to foray into the life insurance business. US-based Principal Financial Group will hold a 26% stake in this four-way equity tie-up with PNB, Vijaya Bank and Berger Paints. PNB and Vijaya Bank will hold 30% stake each. The balance will be held by Berger Paints.

According to PNB executive director K Raghuraman, the new company will focus mainly on the group life insurance segment. He said that presentations were made recently to Irda. The JV is expected to commence business with a paid-up capital of Rs 110 crore. PNB already has ongoing ventures with the Principal Group, Vijaya Bank and Berger Paints.

Some of the other groups exploring the possibility of entry into the insurance business are Pune-based Kirloskars who are in talks with a few foreign players. The Finolex group and Bharat Forge are also looking for opportunities in terms of partnerships.

Right now, there are 15 players in the life insurance segment — state-owned LIC and 14 private players. Bharti AXA Life Insurance Company will be the sixteenth player. For private players, opportunities in this segment are reckoned to be huge as 80% of the population is without life insurance coverage.

As part of the comprehensive changes to the insurance law, Irda has mooted varying the percentage of foreign participation in the paid-up capital of an Indian insurance company depending on the category of the company. The regulator has also made out a case for separately defining a health insurance company to enable the formation of a health insurance company.

Domestic insurance companies will need capital infusion to sustain their growth. Capital is an issue because it takes nearly 6-7 years to break even in the industry.

18th July 2006: Infosys Technologies Ltd has allotted over 27 crore bonus shares to the shareholders in the ratio of 1:1.

The Board allotted over 27.68 crore shares of Rs 5 each amounting to about Rs 138 crore as bonus shares in the ratio of one share for every equity share held, the IT major informed the Bombay Stock Exchange.

The shares were allotted to those shareholders whose name appears on the Register of Members / Register of Beneficiaries as on July 14, it added.

At the AGM held last month the company had received shareholders nod for the 1:1 bonus issue.

17th July 2006: With a semblance of normalcy returning on the bourses, GMR Infrastructure, which bagged the contract for modernisation of Delhi airport, has revived its IPO plans and would hit the market by this month-end to raise up to Rs 1,100 crore.

The offering would be the first major IPO since that of Reliance Petroleum on May 11, which helped the Mukesh Ambani group company mop up Rs 2,700 crore.

GMR, the power and infrastructure major, was previously expected to launch its public issue last month but is now likely to hit the capital market by the end of July or early August with a public issue of more than Rs 1,000 crore, sources in the know said.

In order to attract even more investors' interest, the company is also likely to offer a discount of 5% to retail investors on the price discovered from the book building process.

The company is expected to offer its shares to the public in a price-range of Rs 225-260 per share, which is much lower than the price it got from private placements ahead of the offer, the sources said.

The company is planning to begin roadshows next week for attracting investors towards the public issue, while an approval from the Registrar of Companies is also expected next week.

GMR's top brass is in hectic consultations with its merchant bankers to plan the dates and roadshows for the IPO, sources said. However, an official spokesperson of the company, when contacted, declined to comment on the matter.

17th July 2006: The Taxation Laws (Amendment) Act, ‘06 got the assent of the President on Friday. The Act has made amendments to the Income-Tax Act to smoothen the approval and monitoring process for certain charitable entities, scientific research associations and prescribed filing of return by them.

The Bill was passed by Parliament in the last Budget session. Simultaneously, it has also toughened the tax rules for charitable institutions.

It has made it mandatory for those institutions with aggregate annual receipts below Rs 1 crore to require all payment exceeding Rs 20,000 to be made through an account payee cheque or bank draft.

It has mandated tax-deducted at source on renting of plant and machinery, equipment, royalty and non-compete fees.

14th July 2006: If you’re fed up of trying to decipher jargon spouted by different life insurance companies, you may get a breather soon. The Insurance Regulatory and Development Authority (Irda) has roped in National Insurance Academy (NIA), Pune, and other members from the life insurance industry to work out a common format and language for life insurance players.

Based on feedback from consumer courts, insurance ombudsman and customers, Irda has mandated NIA director KC Mishra to head the ‘harmonisation of documentation of the life insurers committee'.

"Each foreign partner of the insurance players has brought in their own definitions, language and procedures to the Indian market. This has led to confusion in the customer's mind and made it difficult to understand and compare products. We plan to change this," says Mishra, NIA director.

The committee, formed two weeks ago, has already obtained documentation from most life insurers. It is in the process of compiling the information and will now find a way to simplify the procedures and language to bring down the policy and proposal document to just two.

Currently, in the market there are close to 300 types of policy and proposal documents. It will then submit an exposure draft to all the insurance players by mid-August and submit a draft of the guidelines to Irda by August 31.

The plan will ensure that every player follows the same format of documentation as well the same language. To begin with, only linked and conventional life insurance products are covered under the plan.

“It’s a fairly complex procedure because information in 300-odd documents has to be brought down to two. So we’d like to tackle life insurance first,” says Mishra.

Though Irda has asked the committee to restrict the format to two documents, Mishra says in all probability it will be brought down to four. Within the four documents, the committee is hoping to ensure that each document is only one page.

13th July 2006: The Shirdi Industries Ltd. IPO has been withdrawn.

11th July 2006: Private equity investor Actis, with its affiliate companies, has made an open offer to the shareholders of Phoenix Lamps Ltd to buy a 20% stake in the company.

The open offer made to the shareholders of Phoenix Lamps is to acquire about 47.69 lakh equity shares of Rs 10 each, representing 20% stake in Phoenix Lamps at a price of Rs 152 per share, subject to terms and conditions.

Argon India, Argon South Asia along with PACs, Actis India fund, Actis South Asia Fund and Actis Executive Co-Investment Plan LP made the open offer to the shareholders of Phoenix Lamps. Yes Bank Ltd is the manager to the offer.

The leading automobile halogen lamps manufacturer, Phoenix Lamps informed the Bombay Stock Exchange that the offer opens on August 31 and closes on September 19.

Earlier this month, Actis had announced that it would invest Rs 133 crore in Noida-based Phoenix Lamps, which owns the Halonix brand, to buy out the promoter stake and pick up a 36.7% stake in the company.

11th July 2006: The world of finance is likely to face a big hole in its chartered accountants pool as more and more pass-outs are headed towards knowledge processing outsourcing firms, which are offering handsome salaries.

“We are expecting about 50% of the CAs passing-out over the next five years to join KPOs. In the last couple of years alone, 30% of all pass-outs have joined BPOs and KPOs,” CA Manoharan TN, president, Institute of Chartered Accountants of India (ICAI) said.

During campus placements held in March this year, a total number of 1,144 candidates were absorbed by 102 companies. Of the 1,144 absorbed, 459 joined BPOs and IT firms, according to figures collated by ICAI, which has a membership base of over 130,000 CAs.

Progeon and Gecis made over 160 offers each to the CAs. The revised syllabus for chartered accountancy also enables students to deal with international accounts. This has also increased the demand for qualified and trained people, and companies are not hesitant to dole out huge salaries.

During ‘05, 7,455 newly qualified CAs joined the profession and only about 17% of them obtained Certificate of Practice. The remaining 83% opted for employment. During campus placements, 517 CAs received offers worth over Rs 5 lakh per annum and 20 received offers for over Rs 9 lakh.

“CAs are proving assets for KPOs and the IT sector. To keep pace with the demand we intend to attract more quality students by initiatives such as simplifying the curriculum and increasing exam centres,” said Mr Manoharan.

10th July 2006: A fixed or recurring deposit with the post office could soon require you to pay tax on the interest earned.

The income tax department is mulling withdrawing the tax-deducted-at-source exemption on instruments such as fixed, recurring deposits and the national savings certificate offered by the department of posts.

The finance ministry had last month clarified that tax deducted at source (TDS) is applicable on the senior citizens savings scheme, operated by the department of posts.

The issue of withdrawal of the exemption was raised at the meeting of chief commissioners and directors-general of income tax earlier this week.

“It was pointed out by some zones that several instruments offered by the department of posts did not pay TDS. The matter is now under examination,” a finance ministry official said.

Increasing TDS collection is a focus area for the tax department since it accounts for 45 per cent of direct tax collections. Officials said the chief commissioners’ meeting noted that several government departments did not pay TDS because they were unaware.

At present, several instruments offered by the postal department such as fixed deposits, recurring deposits, investment deposits and national savings certificates are notified for exemption from TDS.

“There is a view that if TDS is applicable on the senior citizens savings scheme, which targets mainly retired persons, then it should be applicable on other investment instruments offered by the department of posts,” an official said.

The finance ministry had only last month said that interest accruing on deposits held under the senior citizens savings scheme, 2004, was taxable as per the provisions of the Income Tax Act, 1961 and was liable for tax deduction at source according to the provisions of section 194A of the Act.

The ministry had said that citizens investing in the senior citizens savings scheme would have to furnish a declaration in Form 15H or Form 15G to the bank / post office, in order to avoid deduction of tax.

10th July 2006: India’s state-owned banks, poor cousins of their counterparts in private banks and new age firms when it comes to rewarding employees, may soon be able to shake off such an unwelcome tag.

The finance ministry is working on a proposal to unveil an Employees Stock Option Scheme (ESOS) for state-owned banks as part of the incentives to be offered to staffers to boost performance and to retain the talent pool in such banks.

Most of the new private banks which started operations after 1994-95 have liberal ESOS which has helped them to not only attract top flight talent including from foreign banks but to lure them to stay on also.

According to top government officials, the government is working on a proposal to kick off an ESOS for state-owned banks with a limit of up to one per cent of the bank’s capital. To begin with the scheme could cover only senior level management staff of the banks only or those manning board level positions in banks.

Later, once the scheme is unveiled it could be widened to cover staffers in other positions, officials said. The other form of compensation which the government has favoured is providing bonus to employees with a cap of one per cent of the bank’s net profit.

By rewarding key employees through generous issue of shares of the company at an attractive price firms seek to motivate them, thus driving performance with its impact on the top and bottomline.

In the Indian banking industry, this has been showcased in private banks such as HDFC Bank, ICICI Bank, UTI Bank and IDBI Bank prior to its merger with IDBI.

Senior bankers say that much of the success of these new age private banks could be attributed to the formulation of such employee compensation schemes.

For instance, these banks were able to draw top officials from foreign banks by offering stock options which in any case is restricted to just a handful in such overseas banks. What they offer instead is a large cash component.

HDFC Bank and IDBI Bank used this powerful tool of compensation successfully to draw in senior bankers from foreign banks during their initial years of business. However, some banks found that employees at the lower level favoured cash rather than deferred compensation in the form of stocks.

This is because the shares are vested and is to be exercised over a certain time-frame. The remuneration committee of the bank decides on the allotment of shares based on key performance parameters annually.

Says a senior banker who was associated with the ESOS in his bank, “It is a very important tool to ensure that the interests of the managements and the shareholders are aligned.

8th July 2006: The Bombay Stock Exchange (BSE) is firmly taking steps to achieve the goal of demutualisation and is planning to take a route of bringing in a strategic investor and offer for sale/initial public offering (IPO). This was revealed by Rajnikant Patel, MD & CEO of BSE.

He said the exchange might go for an initial public offer (IPO) and also look for some strategic investors. “According to the guidelines, BSE has to divest 51%. We are mulling a 26% stake sale to strategic investors and the rest 25% through an IPO or an offer for sale. But, as of now, nothing has been finalised. If everything goes on smoothly, then the process might be completed by December 2006”, Patel said.

“As far as strategic investors are concerned, there could be more than one investor, too, and we will look at other exchanges, banks and financial institutions also,” he added.

BSE has appointed Kotak Mahindra Capital Company as financial advisor to achieve the goal of corporatised & demutualised (C&D) exchange. The deadline to complete the process has been extended till May 2007.

It may be recalled that BSE was the first stock exchange (SE) whose C&D scheme was clear by the Securities and Exchange Board of India (Sebi) last year. BSE became a corporatised entity in August 2005. As per the C&D scheme cleared by the regulator, following the corporatisation of the exchange within the period of 18 months the demutualisation process has to be completed.

8th July 2006: Motorcycle major Bajaj Auto Ltd has increased its stake in private sector bank ICICI Bank through open market purchases. In two block deals on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE)— valued at over Rs 630 crore — the auto major has bought 1.27 crore shares of ICICI Bank at a price of around Rs 500 per share.

The auto company bought 68,04,926 shares of ICICI Bank at Rs 499.73 per share as per data available on the BSE while on NSE it bought 58,66,552 shares at Rs 499.43. The ICICI Bank counter clocked trading volumes of 70.71 lakh shares on BSE, while on NSE it clocked volumes of 65.67 lakh shares.

The shareholding of Bajaj Auto in ICICI Bank as on March 31, 2006 was 2,41,32,703 shares amounting to a 2.71% stake in the company and post the acquistion, the shareholding would increase to 3,67,04,181 shares. This works out to just over 4% of the bank’s equity. Bajaj Auto has upped its stake in ICICI Bank as part of its investment portfolio, a company spokesperson said.

The ICICI Bank stock closed with a gain of Rs 13.80 (up 2.84%) at Rs 499.50 on the BSE on Friday. However, the Bajaj Auto stock skid 1.64% with a loss of Rs 45.40 to close at Rs 2,725.

8th July 2006: Bombay Stock Exchange Limited is looking to offload 26% of its equity to a strategic investor. A further 25% would be offloaded through an initial public offer, according to Rajnikant Patel, CEO and managing director, BSE Limited.

Kotak Securities has been appointed as an advisor for the stake sales. The exchange has set a deadline of May 2007 for completing these two deals, but is targeting the end of the calendar year for the same.

The strategic investor could be a domestic or overseas one, Patel said. This could also include other exchanges, banks and multi lateral agencies, he added. Patel was addressing an audience at BSE’s 132nd Foundation Day.

The exchange also unveiled a Gujarati website www.bseindia.com/gujarati.

As part of the demutualisation and corporatisation exercise of the stock exchanges, BSE became a company from an Association Of Persons in 2005.

6th July 2006: Real estate developer DLF Universal’s mega initial public offer slated for mid-July is set to be delayed by at least a couple of months. As things stand now, the delay may not be prolonged, provided the company redresses residual investors’ grievances, which the company affairs ministry is looking into.

Capital market regulator Sebi had referred a decision on clearing DLF’s public offer to the company affairs ministry (MCA). DLF is expected to look at a fresh date, most likely in September-October.

A quick resolution of the last minute glitch in its estimated Rs 13,000 crore public offer looks possible as the government does not intend to institute an inspection or an investigation into the affairs of the company under company law provisions. “We follow a laid down procedure to redress investor grievances.

We would ask the firm to redress these issues at the earliest,” said a government source. The ministry’s next move would depend on how quickly the company responds to its request.

Launching an inspection or an investigation into the affairs of the company under section 209 or section 235 of the Companies Act would have proved damaging to the firm’s plans to go ahead with India’s biggest issue so far.

Company sources said that talks are currently on with the disgruntled group of minority shareholders and that all outstanding issues would be resolved soon.

Sources in investment banking circles said that the group would now have to take a fresh look at its valuation and IPO size, apart from coming out with a new deadline for the issue.

5th July 2006: After taking full control of its cellular venture, Aditya Birla Group company idea cellular is looking at the possibility of an initial public offer besides expanding services with three new circles roll-out in the next three months.

"At some point of time the company would go public", Aditya Birla Nuvo Managing Director Sanjiv Aga said.

However, sources said the company would be assessing the situation on an IPO now and take view accordingly.

Idea Cellular, which is keen to enter the Mumbai circle and for which it has already applied to department of telecom for permission, is waiting for the approval.

"The application is still pending with the government", Aga said.

In rest part of the country, it is planning to enter into three new circles.

"We are rolling out in three new circles. Himachal, Rajasthan and eastern UP in the next few months. The company will also take a view whether to enter into national long distance in the next few months", Aga said.

The current eight circles are--Haryana, Delhi, UP (W), Gujarat, Maharashtra and Goa (one circle), MP and Chhattisgarh (one circle), AP and Kerala.

The combined holding of Aditya Birla Group companies in Idea stands at 98.3%, which includes Aditya Birla Nuvo Ltd with 35.7%, Birla TMT holdings 44.9%, Grasim Industries ltd 7.6% and Hindalco Industries Ltd 10.1%.

Idea has earlier announced that it would like to offload 35% to financial investors at some point of time at no-profit-no-loss.

Aditya Birla Group concluded acquisition of Tata Group's 9% stake in Idea Cellular Ltd for Rs 4,406 crore, putting an end to the high-profile corporate battle between India's top two business houses.

Idea has eight million cellular subscribers in the country.

30th June 2006: IT solutions company Tech Mahindra said it would stick to its schedule for the Initial Public Offer, despite the turbulent stock market and decreasing demand for IPOs.

"After we get the approval from SEBI, we will check with the investment bankers. The market doesn't make difference... During bad markets, demand for good scrips is very high. We will past muster," Tech Mahindra CEO Vineet Nayyar said.

He said SEBI clearance was likely to come by the third week of next month and the company will approach the market soon after.

The company would offer 11% of equity through the IPO to mobilise funds for expansion of its services delivery infrastructure.

Tech Mahindra is planning to have centres in Noida, Chennai, Hyderabad, Kolkata and Chandigarh with an investment of Rs 350 crores. The centres in Kolkata, Chandigarh and Noida will have capacity to seat 2,000 professionals each.

Tech Mahindra is planning to develop its centres in Kolkata, Chandigarh and Pune as special economic zones, which offer a host of tax concessions.

The company has recently acquired Axes Technologies and is open to more acquisitions and joint ventures, if they fit in the overall strategy of growth.

Nayyar said the company is gradually reducing reliance on British Telecom and expanding its client base including in geographies as diverse as Egypt, Qatar, Singapore and China.

In the last three years, the company's revenue has grown by around 30% from Rs 742 crores in 2004 to Rs 1,245 crores in 2006. Its net profit has grown from Rs 64 crores to Rs 235 crores during the same time.

30th June 2006: Aditya Birla Nuvo Ltd has informed BSE that the Committee of Board of Directors (CoD) of the Company at its meeting held on June 30, 2006, has approved the Date of effectiveness of the Scheme of Amalgamation between Birla Global Finance Ltd (BGFL) & the Company i.e. June 30, 2006. The Scheme will become effective with effect from September 01, 2005, which is the Appointed Date.

Further the Company has informed that the meeting of the Board of Directors of the Company will be held on July 03, 2006, inter alia, to consider recasted accounts on merger of BGFL & the Company.

30th June 2006: Two years after the withdrawal of the highly popular tax-free Relief Bonds, investors will soon celebrate the return of a new high-return, tax-free instrument. Municipal bonds, better known as Munis across the world, will now be a reality in the Indian financial market.

The government has given the go ahead for the introduction of the bonds which will carry an 8% tax-free rate of return to be floated by municipal bodies across the country, with the government guarantee. The rate of return on these tradable bonds of varying maturities would be equivalent to 11.4% taxable.

It’s the guarantee which will make the bond a zero risk debt, and attract retail as well institutional players like banks, bond houses, mutual funds and insurance companies.

The bonds have been in the works for quite sometime. Municipalities with their weak financials find it tough to raise fund. Till now only a few municipalities like Ahmedabad and Nasik have floated bonds. At present there is a cumulative ceiling on annual municipal bond issuances (of as low as Rs 150-200 crore) and only select issues get a tax-free status. The government has now done away with both these restrictions.

The bonds are part of the UPA government’s attempt to give a big boost for development of urban infrastructure in the country. The National Urban Renewal Mission has set an ambitious agenda for investing in urban projects.

While the municipal bodies can issue bonds with higher coupon rates of above 8%, they will not qualify for a tax-free status. Some of these bonds will hit the market in this fiscal.

The bond issues will be approved by the Central government. When the municipal bond market grows, and becomes a significant source of urban infrastructure financing, the Centre’s control over bond issue has the potential to become a source of friction between the Centre and state government.

Globally, municipal bonds constitute a huge market. In the US, investors hold about $1.7 trillion worth of municipal bonds. As of now, the only investment avenues that offer similar tax-free interest are the small savings instruments, including the PPF, KVP and the NSC. But these instruments face the threat of coming within the tax net, with a Central government committee examining the subject. The government proposes to bring in a new tax regime for savings in which they would be exempt from tax at the stages of contribution and accumulation, but taxed on withdrawal (EET).

The Government of India’s 8% savings bonds introduced in April ‘04 are taxable. The Senior Citizens Savings Scheme offers a 9% taxable return, but its subscription is limited to those above 60 years (55 for those taking voluntary retirement).

Since the bonds will be virtually risk-free, as they carry a government guarantee, the attraction for subscribing to these bonds among the investors, at the cost of other avenues like fixed deposits, will be immense.

To take advantage of the scheme, the municipal corporations are working on a switchover to an accrual-based system of accounting, from the present cash-based system. The Institute of Chartered Accountants of India (ICAI) is already working on the draft norms for the new system of accounts, which the municipal bodies are expected to adopt soon.

29th June 2006: In a move that will impact initial public offering (IPO) plans of a host of real estate companies, the Reserve Bank of India (RBI) has said that FIIs can participate in the pre-IPO placements of these companies.

In a recent communication to the finance ministry, the central bank has said that shares picked up by FIIs in pre-IPO placements would be subject to a lock-in period of three years, which is currently stipulated for foreign direct investment (FDI). However, the pre-IPO placements to FIIs will not attract conditions laid down under Press Note 2 of ’05, which prescribes minimum built-up area and capitalisation for FDI in real estate projects.

Till now, FII participation was not allowed in pre-IPO placement of any real estate company. The question did not arise since not many realty firms were going for IPOs and pre-IPO placements. The policy on such investments gained significance after DLF and a number of other real estate companies came out with plans for IPOs.

The RBI has generally been wary of much foreign inflows creating a real estate bubble in the economy. While 100% FDI is allowed for in real estate, automatic clearance is available only to projects that adhere to minimum built-up area and capitalisation criteria.

Since real estate companies deal with various projects — including those which do not conform to these stipulations — doubts had cropped up on whether FIIs can buy shares of such companies. While the commerce and industry ministry had earlier cleared FII investment in pre-IPO placements, the RBI green signal provides the final seal of approval to the ticklish issue.

The RBI approval means that FIIs can invest in both IPOs and pre-IPO placements of real estate companies. The only stipulation that needs to be observed is a lock-in period of three years for all pre-IPO investments by FIIs in conformity with Sebi regulations. The central bank has emphasised on this stipulation despite the argument that FII investment in IPOs and pre-IPO placement is portfolio investment rather than FDI.

A copy of the RBI’s communication to the finance ministry has been sent to the commerce and industry ministry.

The question of FII investment in IPOs and pre-IPO placements of real estate companies came up for discussion after DLF sought clarifications on the applicability of FDI norms.

The commerce and industry ministry said that FII investment is categorised as portfolio investment and FDI norms of minimum capitalisation and minimum built-up are will not apply. The ministry conveyed its views to the RBI, which in this case is the final deciding authority.

The central bank’s go-ahead will now pave the way for flow of FII investments in the proposed IPOs of real estate companies like DLF and Parasvnath. On the basis of the RBI views, Sebi is likely to clear applications of real estate companies for FII investments.

“In this connection, we advise that we are of the view that the pre-IPO offer is in the nature of private placement/preferential allotment which is subject to lock-in period under Sebi (DIP) Regulations. Such issue of shares under the pre-IPO would therefore have to be reckoned as part of the FDI and would be subject to minimum lock-in period of three years stipulated for FDI holdings under Press Note (No 2 of 2005) stated above.

Therefore the FII investments in the pre-IPO holding would also attract the lock-in stipulations notwithstanding the clarification that the FII investments in pre-IPO and IPO issues are not subject to the guidelines contained in Press Note 2 (2005 series),” says the RBI communication to finance ministry.

3rd July 2006: State Bank of India, the country's largest lender, has made a proposal to issue fresh shares that could lower the government's holding to 51%.

The government is vetting the proposal that includes a public offer and a possible offer of shares to the bank's employees, the newspaper said, quoting unnamed officials.

India's central bank holds 59.73% of State Bank under 1955 government legislation, SBI Act. The act mandates the central bank hold at least 55% stake.

"A dilution of government holding over the next couple of years could be underway considering the bank's need to beef up its capital for business growth and to take care of more stringent regulatory norms," the financial daily said.

SBI officials could not be immediately reached for comment.

30th June 2006: Unlisted companies, like those in real estate business, will now be able to make fully paid-up (sponsored) share issues abroad. The relaxation to the American Depository Receipts\Global Depository Receipts was announced by the finance ministry.

The facility of sponsored issues was so far restricted to listed companies only. But the government heeded representations made by industry associations like Ficci to permit “unlisted Indian companies to sponsor an issue of ADR\GDRs with an overseas depository against shares held by its shareholders”.

Sponsored issues are those where one or a group of investors commit themselves to subscribe to the entire offer. So there is no possibility of the issue being under-subscribed.

Commenting on the decision, R Sridhar, senior manager in PricewaterhouseCoopers, said real estate and other closely-held companies are usually reluctant to go public, but they have been urging the government to permit them to float shares abroad to selected parties.

The government has however put in a rider saying that unlisted companies which have issued the ADRs before August 31, ‘05, will have three years time to get themselves listed in an Indian stock exchange, after they start making profits.

All other unlisted companies would need to go in for prior or simultaneous listing in India, before making the sponsored issues. Also, the sponsored issue must be made available to all categories of shareholders of the company, and comply with the FDI policy for the sectors, the ministry release says.

30th June 2006: Investors may now find derivatives more attractive. The Securities & Exchange Board of India (Sebi) is considering a proposal to re-define the universe of stocks eligible for trading in the derivatives segment. Stock exchanges may also be able to launch new sectoral futures indices, such as an auto index and a pharma index.

Currently, the scrips eligible for derivative trading are chosen from among the top 500 scips on the basis of various criteria, including data on market capitalisation (M-cap ), average dailytraded value and order size over a six-month period.

The market regulator is now considering relaxing some of these criteria for selecting individual stocks which can be traded in the futures market.

The new parameters are intended to increase the universe of stocks which can constitute sectoral indices. The move will thus help stock exchanges launch different sectoral and sub-sectoral futures indices, government sources said.

Details on the exact nature of the changes to be introduced was not available. Currently, 118 scrips are traded in the futures and options (F&O) segment.

"It is proposed to increase the number of stocks on which derivatives will be permitted. A presentation to this effect was made by Sebi officials at its board meeting on Monday. The board has asked Sebi to provide additional details before giving its nod," a source said.

The market regulator is scheduled to provide this information to Sebi board members before its meeting on July 10, 2006.

Sectoral indices were permitted for derivatives trading in December 2002. Experts said the move will help inclusion of new stocks (including group B1 stocks) in sectoral indices, making investments in F&O more attractive. According to PricewaterhouseCoopers associate director Dinesh Arora: "The derivative market in India is still evolving. Allowing more stocks in futures and options would certainly attract investors in derivative segment."

KPMG director (advisory services) Manish Mohnot said the change seems be focused on bringing 'more depth in the derivative market.'

Introducing financial derivatives will facilitate hedging in the most cost-efficient way against market risk.

In the late 1990s, the LC Gupta Committee had stressed the need to have equity derivatives, interest rate derivatives and currency derivatives and had suggested starting with stock index futures.

A survey conducted by the committee in May 1997 revealed that stock index futures ranked as the most popular and preferred type of equity derivatives, the second being stock index options and the third being options on individual stocks.
Stock index futures are internationally the most popular forms of equity derivatives.

SRIP TEASE

Change to bring depth in market Introduction of financial derivatives to bring about hedging in the most cost-effective way.

30th June 2006: The Reserve Bank of India (RBI) has told Sebi and the government to exercise caution on the proposal to introduce a revised stock lending and borrowing programme for institutional investors, saying that it may violate provisions of the Foreign Exchange Management Act (Fema).

The proposal was discussed at the meeting of the Sebi board on Monday as part of a set of policy measures aimed at curbing excess volatility in the market. However, the Reserve Bank of India has said that foreign institutional investors (FIIs) could be allowed to participate in stock lending and borrowing only after ensuring that it is consistent with the provisions of Fema.

The regulator wants the government and Sebi to ensure that Fema provides for stock lending and borrowing by foreign institutional investors. It has also raised concerns relating to Know Your Client (KYC) norms and the audit trail for overseas portfolio investors with regard to the proposal to permit stock lending and borrowing as well as short sales. According to senior government officials, the government will refer the proposal to the law ministry to check out whether it is within the bounds of Fema.

The officials said that the RBI was fine with these proposals in principle and it was being studied now legally. Once the views of the law ministry are obtained, the proposal will be taken up again at the next board meeting of Sebi over the next three weeks.

The stock lending and borrowing programme was in vogue for institutional investors until 1997 under the old legislation, Fera, which was replaced with Fema in 1999-2000. Under Fema provisions, FIIs can invest in shares and debentures of companies and in exchange trade derivative contracts. The issue now is whether is there is an explicit provision permitting FIIs to lend or borrow stocks. A revised scheme for lending and borrowing stocks which are covered in the futures and options segments was readied after the stock markets experienced a major bout of volatility last month.

The proposal to allow institutional investors like FIIs to short sell - which is selling securities which they do not own at the time of sale - is linked to the programme for stock lending and borrowing. The plan is to allow short sales in the futures and options stocks - with the clearinghouse corporations being the authorised intermediaries for the scheme. They will provide the platform for those who want to either lend or borrow stocks.

According to officials, short sales for institutional investors would be allowed only after putting in place rigorous disclosure norms and ensuring that information or data on the short sales is available in the public domain. The idea is that at any point of time, there should be a realistic link to the extent of short sales and the inventory of stocks with the intermediaries.

30th June 2006: The Securities and Exchange Board of India (Sebi) chairman M Damodaran on Thursday said the regulator is in the process of addressing issues coming in the way of implementing Clause 49 of the listing agreement.

The issues will be addresses by next year, he added. The clause mandates induction of independent directors on boards of listed companies. He was talking at the launch of a database on directors of listed companies compiled by Prime Database, a Delhi-based research firm tracking primary market. Mr Prithvi Haldea, MD, Prime Database, said while gathering data on board of directors of listed companies he has come across various cases where corporates are not strictly complying with Clause 49 norms.

Mr Haldea said Sebi should prescribe specific norms in relation to age and qualification of independent directors. Out of the 908 companies - data on whose directors was available with the Prime Database - 299 companies had promoter directors, described as non-executive chairman.

This is not in line with Clause 49 norms. Besides, there are few companies where independent directors are related to each other, again violating Clause 49 of the listing agreement. Reacting to observations made by Mr Haldea, Mr Damodaran said some of the issues will get addressed this year and part of the next year. He added educational qualification should not be a criteria to induct any person as an independent director on the board of any company.

"Educational qualification should not be an entry norm but, at the same time, it can not be a disqualification," said Mr Damodaran. "Formal education will make a person better equipped to be on the board. It will make him/her capable of bringing perception that is independent of promoters," he added.

Mr Damodaran also launched BSE's corporate e-filing system, Indian Corporate Electronic Reporting System (ICERS). It is an internet-based application, enabling dissemination of information seamlessly from the point of origin to the point of display on BSE website in the shortest possible time. This will help investors and users access corporate filings almost on a real time basis. Currently, the filings need to be uploaded from BSE, while in the new system it will get done automatically.

Companies will be able to e-file all corporate announcements and financial results. The application will be subsequently enhanced to cover all other compliance related filings by companies listed on BSE.

30th June 2006: The following are the Corporate Announcements: ARVIND REMEDIES:

The company's Board of Directors (BoD) has recommended a dividend of 5% subject to the approval of members.

NSE LTP: 1.45 (-) Volume: 92317

B. L. KASHYAP AND SONS:

The company's BoD has recommended a dividend of 30% per equity share, on par value of Rs 10 each. B L Kashyap & Sons Limited's BoD has fixed book closure dates from July 29 to August 11 ' (both days inclusive) and decided to hold the forthcoming annual general meeting on August 11, '06.

NSE LTP: 919.10 (23.95) Volume: 20405

BANNARI AMMAN SUGARS:

The company's BoD has recommended a payment of 70% dividend for the year ended March 31, '06. The company's register of members and share transfer books will remain closed from September 20 to September 27, '06 (both days inclusive) for the purpose of annual general meeting and payment of dividend.

NSE LTP: 1139.65 (-32 .00) Volume: 1510

BHAGYANAGAR METALS:

The company has entered into an agreement for purchase of 25 acres of land for a total value of Rs 118 crore for development of IT park/housing township. This site is located near Hitech City, Hyderabad, which is the hub of activities for IT parks and housing townships. With this project the company will be fully diversified into a real estate and infrastructure development activity. The company is also in the process of getting construction contracts for IT parks. The current clients of the Group include Microsoft India (R&D ) Pvt. Ltd, Oracle Software (India) Ltd, Motorola India, Fusion Cybertech Pvt. Ltd, Matisse Network (India) Limited, Patn Telecom Solutions Pvt. Ltd and D E Shaw. The company has also initiated a housing project on 52 acres land in Vizag along with Salarpuria in Bangalore. The company has got approvals from registrar of companies for the name of Bhagyanagar India Limited; the same shall be taken up during the ensuing Annual General Meeting for the change of name of the company, as this name would represent its diversified activities.

NSE LTP: 64.00 (1.90) Volume: 227818

DCW:

The company has announced a dividend of Rs 0.30 per equity share of Rs 2 each, i.e. @ 15%, if approved at the company's forthcoming AGM to be held on July 6, '06 will be paid by July 10, '06.

NSE LTP: 11.20 (0.25) Volume: 217466

DISHMAN PHARMACEUTICALS AND CHEMICALS:

Dishman Pharmaceuticals And Chemicals has developed a unique position in bulk actives in the area of disinfectants. The company produces as many as 15 disinfectants and the division is likely to contribute significant growth to Dishman Group's total revenue. Dishman Pharmaceuticals & Chemicals' annual general meeting of the members/shareholders approved and passed, among others, the following resolutions: i. In respect of the FY06 a final dividend @ 35% (Rs 0.70 per share) on the paid up equity shares of the company has been declared by the members. ii. The company's members also decided, approved and resolved to appoint M/s Deloitte Haskins & Sells, chartered accountants, Ahmedabad as the company's statutory auditors to hold office as auditors from the conclusion of this annual general meeting until the conclusion of the next annual general meeting in place of retiring Auditors M/s Kunte & Associates, chartered accountants, who have expressed their unwillingness to be re-appointed as the company's auditors after the conclusion of this annual general meeting. (iii) Re-appointment of Mrs Deohooti J Vyas as a wholetime director of the company for further period of five years w.e.f. September 3, '06.

NSE LTP: 173.10 (14.30) Volume: 18657

HERITAGE FOODS:

The company has recommended a dividend for the year ended March 31, '06 @ Rs 3 per share (30%). The company has announced the book closure from July 21 to July 25, '06 (both days inclusive) for paying dividend for '05-06 and for holding the AGM on July 31, '06.

NSE LTP: 143.10 (1.75) Volume: 227645

HINDUSTAN PETROLEUM CORPORATION:

The company with a consortium led by Oilex, Videocon, GAIL & BPCL signed an exploration & production sharing agreement for Block No. 56 with Sultanate of Oman on June 28, '06. This is HPCL's first international exploration venture where it would have a 12.5% participating interest in the exploration, development and production phases.

NSE LTP: 230.75 (-14 .35) Volume: 961182

JYOTI STRUCTURES:

With regards to the sub-division of shares, the company proposes to issue new share certificates consequent to sub-division of shares of face value of Rs 2 each without calling for old share certificates of face value of Rs 10 each held by the shareholders and that the old share certificates shall automatically stand cancelled.

NSE LTP: 362.30 (2.05) Volume: 18060

LAKSHMI MACHINE WORKS:

The company's BoD at meeting held on June 28, '06 recommended a final dividend of Rs 200 per equity share of Rs 100 each. The company's annual general meeting will be held on August 18, '06.

NSE LTP: 19480.00 (507.55) Volume: 102

PEARL GLOBAL:

The company's BoD has recommended a dividend of 30% for FY06, subject to the approval of shareholders of the company in the ensuing AGM.

30th June 2006: Payment by issue of shares, for the purpose of acquiring know-how, is eligible for tax deduction, according to a ruling by Income-Tax Appellate Tribunal (ITAT), Pune, in the case of Mercedes Benz India.

Payment for acquisition of know-how was eligible for tax deduction under Section 35 AB Income-Tax (I-T) Act. In many cases, such payments were made in kind, by issuing equity shares to the seller of the know-how. The tax department has often taken the stand that payment by shares for acquiring know-how is not entitled to deduction.

Mercedes Benz India (MBIL) was a joint venture between Telco and Daimler Benz, with the latter holding 51%. According to the agreement between the parties, Daimler Benz had the option to make its contribution partly or fully in shares.

The latter made a part contribution in shares and claimed the deduction under Section 35 AB of the I-T Act. The assessing officer (AO) allowed the claim but the I-T commissioner had set aside the order of the AO.

The tax authorities cited a Supreme Court order in the case of Eimco KCP which stated that allotting shares could not be construed as expenditure.

The Pune tribunal held that the facts of the Eimco KCP were different from the case of MBIL. In the former, the amount was not paid after the incorporation of the company. The logical inference then is that had the amount been paid after the incorporation, there was a possibility of a decision in favour of a deduction.

The tribunal pointed out that the payment in the case of MBIL was after the incorporation of the company. Therefore, the apex court’s decision cannot be applied in this case. TP Ostwal, a senior chartered accountant, said: “The ITAT decision just explained the position of the law “.

30th June 2006: The time to file income tax returns is around the corner. It is important for you to understand the basic tax liability for payment of income tax for the year 2005-06. Any shortfall in tax payment for the last year (i.e. till March 31, 2006) may be paid now, along with interest.

The Finance Act 2005 had specified the rates of income tax for the assessment year 2005-06 and the rates of income tax on the basis of which tax has to be deducted and advance tax has to be paid during the financial year 2005-06.

The rates for deduction of income tax at source from salaries during the financial year 2005-06 and also for computation of ‘advance tax’ payable during that year in the case of all categories of tax payers have been specified in the Act. These rates are also applicable for charging income tax during the financial year 2005-06 on current incomes in cases where accelerated assessments have to be made, e.g., assessment of persons leaving India for good during that financial year, assessment of persons who are likely to transfer property to avoid tax etc (see table).

The tax payable would be enhanced by a surcharge at the rate of ten percent of the tax payable (after allowing rebate under Chapter VIII-A) in cases of individuals, Hindu undivided families, association of persons, and body of individuals with a total income exceeding Rs 10 lakhs. No surcharge would be payable by persons having incomes of Rs 10 lakhs or below.

Marginal relief would be provided to ensure that the additional amount of income tax payable, including surcharge, on the excess of income over Rs 10 lakhs is limited to the amount by which the income is more than Rs 10 lakhs. For example, the amount of tax and surcharge on a total income of Rs 10,20,000 calculated at the rates specified would have been Rs 2,56,000 and Rs 25,600 totaling to Rs 2,81,600.

The additional tax liability, as per this computation, incurred as compared to a person having a total income of Rs 10,00,000 is Rs 31,600. However, additional income as compared to a person having a total income of Rs 10,00,000 now comes to only Rs 20,000. Therefore, a marginal relief is given to the extent of Rs 11,600 in this case thereby providing that the additional tax liability cannot be more than the additional income. The total tax liability in this case will, therefore, be Rs 2,76,000.

Education cess

An additional surcharge called education cess is to be levied at the rate of two percent on the amount of tax computed, inclusive of surcharge , if any. For instance, if the income tax computed is Rs 2,00,000 and the surcharge is Rs 20,000, then the education cess of two percent is to be computed on Rs 2,20,000 which works out to be Rs 4,400. No marginal relief will, however, be available in respect of the education cess.

26th June 2006: Indian Chartered Accountants can look forward to practice in Singapore and the UK as the Institute of Chartered Accountant of India (ICAI) is in the process of signing a mutual recognition of professional agreement with the two countries.

ICAI president T N Manoharan said that the association, the apex body for CAs in India, was in very advanced stage of discussion with its counterpart in Singapore for signing the agreement.

"I am hopeful that in next two months, everything would be finalised between both the institutes," he said, pointing out that this was a part of the Comprehensive Economic Cooperation Agreement (CECA) with the city-state.

ICAI has also initiated talks with its counterpart in the UK. "This is at a preliminary stage now," he said, adding that besides mutual recognition of degrees, many other areas are being looked into for cooperation.

"For this, an Indo-UK study group has been formed at the instance of the Commerce Ministry and I expect that the agreement with the UK would be through by the end of this year," Manoharan said.

Apart from the two countries, SAARC nations like Nepal and Sri Lanka had also envinced interest in having similar kind of agreement with ICAI. "Dialogue would start soon," the ICAI president said.

23rd June 2006: Future Capital, the financial arm of the Future group (earlier known as Pantaloon Retail), is in talks with a leading US-based financial institution to be the equity partner for its $150-200 m foray into the hospitality sector, sources said.

The group is setting up a separate subsidiary to build 50 hotels in the 3 and 4 star category as part of a retail-led, mixed-used development project that will be built by Future Capital's $350m Horizon fund. The group will also be establishing a joint venture with an international hotel operator to manage the hotels.

Confirming the move, Samir Sain, CEO of Future Capital, said the plans are still at the drawing board stage. "We see the retail-led real estate developments having strong syngergies with hospitality, both for hotels and service apartments" he said. A retail-led mixed used development typically is a mall built on a large tract of land and includes residential, commercial and hotel developments. The group is planning to have such centres across tier I and tier II markets, sources said.

The proposed plan will be headed by Shishir Baijal, CEO of the group's real estate funds, Horizon and Kshitij, sources said. The group is hiring a senior team with a CEO to handle the business which would report to Mr Baijal.

Meanwhile the group is contemplating a corpus of around Rs 300-500 crore for its second real estate fund, Kshitij 2. Horizons, which focuses on areas of more than 50,000 sq ft, has a lot of foreign investors and closed recently at $ 263m, sources said. Kshitij 1 closed last year at around $350m.

16th June 2006: The Government on Wednesday clarified that the Senior Citizens Savings Scheme, that gives 9% interest rates on investment up to Rs 15 lakh, is taxable and that tax would be deducted at source for those elderly people who come under the tax net.

Senior citizens beyond 65 years of age and having no taxable income can fill up form 15 H, finance ministry sources said.

Those who are between 55-65 years of age would have to fill up form 15 J in case they do not have taxable income, they said.

For all others, tax will be deducted at source on interest income, which is deposited in their savings accounts quarterly, the sources said.

The tax rate at 10% is raised to 10.2% due to education cess. Those with income beyond Rs 10 lakh per annum will also pay 10 per cent surcharge, increasing their tax liability on interest income to 11.22%.

The scheme was launched in August, 2004 when bank deposit rates had hit a low of 5-6%, making it one of most attractive options for senior citizens.

At that time Finance Minister P Chidambaram had made it clear that the scheme was taxable.

Investors were allowed to invest a maximum of Rs 15 lakh and the tenure is five years, extendable by three years. The scheme was open for those aged 60 and above and those who took voluntary retirement at the age of 55 and above.

16th June 2006: Franklin Templeton Investments (India) on Wednesday announced plans to re-open sales in its open-end diversified equity fund, Franklin India Prima Fund (FIPF), which invests predominantly in mid-and-small-cap stocks.

Fresh subscriptions will be accepted from June 19, 2006, the company stated in a release issued here on Wednesday.

"Given the recent declines in mid-and-small-cap stocks and the consequent fall in their valuations to relatively attractive levels, our investment team is confident of deploying fresh inflows in good long-term opportunities," said Vivek Kudva, President of the company.

The fund was closed for fresh subscriptions in February 2006.

15th June 2006: A sustained fall in the stock market has put a question mark on the timing of the country's largest equity offering, the Rs 14,000-crore DLF Universal IPO.

The Delhi-based real estate firm's managing director Rajeev Singh said, "Currently, our sole focus is on obtaining the Sebi approval. We expect it in the next ten days. We will take a call on the timing after that." However, there is speculation in the market that DLF may even cut the size of the issue.

The company was initially expected to hit the primary market sometime in early July. But there is a growing thought among bankers that the IPO could be postponed till markets turn favorable.

The stock market has fallen 29% since its peak on May 11 when the Sensex touched 12,671 points. On Wednesday, the benchmark index ended at 8,929.44 points.

"Small investors, as well as HNIs who have taken a hit in the mid-cap crash will not return to the market in a hurry. Besides, the lack of oversubscription and weak listing of IPO shares have forced banks to stop IPO finance," said a market source. Mr Singh said, "We're looking at long-term investors as real estate plans typically result after two years. We're not looking at short-term market conditions." If DLF gives July a miss, the IPO may be delayed by more than a month as August is a lean period for FII investments. "Normally, corporates avoid IPOs and GDRs in August when big investors and fund managers go on vacation. So DLF will either try to tap the market in July or come back in September or October," said an investment banker. "There is speculation in the market that adverse conditions could postpone the (DLF) issue by a much longer period... may be towards September," said investment advisor Arun Kejriwal. "But many investors are also keeping their fingers crossed that merchant bankers don't bunch issues once the market improves," he added.

The DLF issue would serve as a test for other real estate companies. Major realty IPOs in the pipeline includes GMR Infrastructure, Lanco, Parsavnath Developers, Khanna Papers and others.

According to disclosures to Sebi, DLF plans to issue 202 million shares, with a greenshoe option of an additional 17 million shares. If fully subscribed, the IPO will result in a floating stock of 12.7% shares, diluting promoter KP Singh's holding to 87% from 99.5%.

Overall, the company proposes to reserve 2 lakh equity shares for allotment to employees. Of the balance, 60% will be allotted to QIBs (qualified institutional buyers) and at least 10% will be available for non-institutional investors. Retail investors will be allocated 30% of the shares. The firm is likely to raise up to Rs 14,000, which suggested the offer would be priced at up to Rs 736 a share. On reports that Sebi has asked for queries on litigations against DLF, Mr Singh said he is yet to get "a formal query from Sebi on this. I cannot comment anything further".

12th June 2006: The new service tax valuation rules, which came into effect recently, will change the base on which tax is calculated. Service tax is to be paid on brokerage income, which, on an average, works out to 0.5% of the transaction value. The broker is also required to pay a stamp duty of 0.01%.

Till now, broking houses were deducting the stamp duty outgo from the brokerage commission to arrive at the net income on which the service tax was paid. Thus, the service tax was calculated on an amount which was lower than the commission earned by the broker.

They did this as the rules were silent on the matter and tax authorities never bothered. The new rules mandate service tax on the ‘gross’ consideration, which means the calculation will factor in the entire commission and not the amount arrived at after deducting stamp duty. Though the rules allow for a few deductions, stamp duty is not one of them.

For retail transactions, the amount may be small enough to be ignored. But the absolute brokerage earned on bulk trades placed by FIIs is high and a change in the service tax calculation could make a difference. On a monthly basis, this may not be an insignificant sum.

The new service tax rules came into effect on April 19. Market intermediaries are aware of the issue. “It’s like a sleeping dog. No one wants to wake it up.

However, brokers are aware of the possibility that they may have to face a higher service tax outgo. The issue is being discussed informally among them,” said a source.

It’s a matter of interpretation and one is unclear which way the excise department would go. While it’s perceived that even if the department does not insist on the amended calculation immediately, given a choppy market and recent losses suffered by investors as well as brokers, the matter might be pursued at a later point.

A pointer to this is the department’s intention to levy service tax on entry and exit loads of mutual funds. These are charges that investors have to bear while buying or selling mutual fund units.

Even though fund houses along with the industry-level organisation, Amfi, think that this would amount to double taxation, the excise department has spelt out that there should be a service tax on the loads.

2nd June 2006: Asia Leisure Services Ltd, engages in tours and travel, proposes to enter equity market with a public issue of 85,72,000 shares of Rs 10 each through 100% book building.

The company intends to utilise the funds raised through this issue to part finance its expansion plan. The project envisages construction of hotels or taking over of existing hotels on long term lease, the company said in a statement.

It has appointed IDBI Capital Market Services Ltd as the book running manger and Intime Spectrum Registry Ltd as the registrar.

26th May 2006: The Government on Thursday said Saral forms will be valid for filing of income tax returns as of now.

Sources in the Central Board of Direct Taxes said they are contemplating new forms to replace the Saral form, but no decision has been taken so far.

Until the new forms are notified, as and when the decision is taken, the existing forms will not only be valid, those filing on Saral forms would not be asked to file again in the new forms, they said.

24th May 2006: Port-based logistics service provider Allcargo Global Logistics is planning to enter the market on June 1 with a public issue of 20.79 lakh equity shares of Rs 10 each through book building.

The price band has been fixed at Rs 625 to Rs 725 per equity share of Rs 10 each. The issue closes on June 6. The issue will constitute 10.26% of the post-issue paid-up capital.

The company is planning to deploy the net proceeds of the issue for setting up of container freight stations (CFS) and inland container depot (ICD), prepayment of loan availed from Yes Bank and general corporate expenses including acquisitions.

Allcargo Global Logistics is planning to set up CFS and ICD in Chennai, Mundra and National Capital Region (NCR).

24th May 2006: Deccan Aviation, which runs low-cost carrier Air Deccan, today extended its initial public offering (IPO) by three days and pared the lower limit of the price band by Rs 4.

The book-built issue with an original price band of Rs 150-175 was slated to close today. The new price band is Rs 146-175. This is the first instance of a price cut in a book-built public issue and extension of closing day.

“Possibly, this is the first example of a delayed closing of a public float,” said an investment banker.

Deccan Aviation Managing Director GR Gopinath said that the intention of the twin moves was to provide opportunity to the investors who were caught in the market mayhem in the past one week and could not participate in the issue.

“The issue was 1.06 times subscribed at the end of today. However, a lot of institutional investors told the merchant bankers that they could not focus on the issue as they were too preoccupied with the market slide. The company decided to provide them an opportunity to invest in the issue.

The price band was revised as it is mandatory under the Securities and Exchange Board of India rules if a corporate entity wanted to extend the closing date, merchant banking sources said.

They added that all the categories of the issue were fully subscribed. UTI and LIC were among the prominent institutions that put in bids for the Deccan Aviation stock.

According to the data available on the National Stock Exchange, out of the total issue size of 2.45 crore shares, the company received bids for 2.59 crore shares till late this evening.

However, analysts said the issue failed to evoke huge response from investors due to the company's poor financial condition.

“The loss-making company would break even only after two years. So investors were a bit bearish since the first day of the issue. The carnage in the market aggravated their fears,” they added.

Enam Financial Consultants and ICICI Securities are book-running lead managers for the issue and Karvy Computershare Private is the registrar to the issue.

Earlier, SBI Caps, JP Morgan and ABN Amro Rothschild had declined to manage the issue. The equity shares of the company are proposed to be listed on the BSE and NSE.

17th May 2006: Market regulator Sebi said on Tuesday that it has no plans to revise the existing system for Initial Public Offerings (IPOs), under which quotas are provided for various class of investors. "SEBI has no plans to do away with the existing systems for Initial Public Offerings," it said in a formal statement here.

16th May 2006: Steel pipe manufacturer Zenith Birla (India) has filed its draft prospectus with the market, for a public issue of Rs 131 cr. Zenith is raising funds primarily to set up additional facilities for manufacture of mechanical tubes for application in the auto components sector and also for augmenting the working capital requirement for its existing operations, it said in a release. IDBI Capital Market Services and Keynote Corporate Service are the lead mangers of the issue.

16th May 2006: Plastic products manufacturer Bluplast Industries will raise around Rs 35 cr from its proposed initial public offer to expand capacity of its Daman plant. The company has received Sebi acknowledgement for its proposed IPO of 1.10 crore equity shares of Rs 10 each at a price of Rs 32 per share. Out of this, it has reserved 10 lakh equity shares for its permanent employees and the net public issue size is one crore equity shares.

16th May 2006: UIL is one of India’s leading engineering and construction companies, with fast growing business that provides integrated engineering, procurement and construction services for civil construction and infrastructure sector projects. UIL has execute many projects on a turnkey basis, and in doing so, provided a range of specialized construction and operational services, including electrical, fire prevention & control, plumbing and air conditioning.

            UIL’S project expertise includes:

1)   Civil construction projects, which include structures such as commercial & residential buildings, mass housing projects and townships, industrial structures, information technology parks, corporate offices, transportation terminals including airports and railway stations, stadiums etc.

2)   Transportation engineering projects, including roads, bridges, flyovers and subways.

3)   Irrigation and water supply projects, including dams, tunnel, lift irrigation projects

Some of UIL’s major clients include, Airport Authority of India, The National Sports Club of India, Northeast Frontier Railway, Department of Irrigation, Govt. of Andhra Pradesh, Municipal Corporation of Greater Mumbai, Delhi Development Authority.

ISSUE DETAILS

OBJECT OF THE ISSUE

The objects of the Issue are to achieve the benefits of listing on the Stock Exchanges and to raise capital, which will enhance the Company’s brand name provide liquidity to the companies existing shareholders. Listing will also provide a public market for the Equity shares in India.

FINANCIAL HIGHLIGHTS

VALUATION

15th May 2006: The construction firm Patel Engineering Ltd said on Monday it had fixed a price of Rs 440 per share for its follow-on public issue.

13th May 2006: DLF Universal Ltd, which filed a draft red herring prospectus for its initial public offer with the Securities and Exchange Board of India today, aims to raise Rs 13,600 crore by issuing 202 million equity shares, each having a face value of Rs 2. The shares will be offered at a premium to be decided through a 100% book building process.

The issue, if the green shoe option is exercised, will constitute 12.77% of the fully diluted post-issue capital of the company. That will leave about 87% equity under the control of DLF Chairman KP Singh and his son, DLF Vice-Chairman Rajiv Singh.

If the company is able to raise the money from the market, its total value will be pegged at Rs 106,499 crore. The notional value of the holding in the hands of the father and the son will be Rs 92,899 crore, or about $20 billion, placing them second in the list of the richest Indians, just behind Mittal Steel Chairman LN Mittal.

“Notional is a good word. We are looking to create an institution, one that will take its rightful place not only in India but internationally,” said Rajiv Singh. The company’s balance sheet includes Rs 848.9 crore of “goodwill” in 2006, up from Rs 52.2 crore in 2005.

Of the targeted amount, the company intends to spend Rs 6,500 crore on land acquisition, Rs 3,100 crore on development and construction of existing projects, and Rs 4,000 crore on prepayment of loans.

Of the amount intended for land purchases, Singh said only a “small portion” would flow into special economic zones. “Most of it will be on homes, offices and retail,” he said.

The company has said in the prospectus that it’s has identified 62 cities for development of various projects. Until April 30, 2006, DLF Universal made partial payments to acquire 2,893 acres of land across the country.

All told, the company is evaluating residential, commercial and retail space projects of over 118 million sq feet in the country. Real estate consultants have valued DLF’s land bank at Rs 100,000 crore.

The company has said in the prospectus that it is adopting a new business model, based on the development and sale of commercial and retail properties. Earlier, it developed and leased properties. It believes the new model will protect it from steep declines in asset values as a result of market conditions.

In the IPO, the company proposes to reserve 200,000 equity shares for allotment to employees. Of the rest, at least 60% will be allotted to qualified institutional buyers, not less than 10% to non-institutional investors and not less than 30% to retail investors.

Kotak Mahindra Capital and DSP Merrill Lynch are the global coordinators and book running lead managers, Goldman Sachs and HSBC are advisors to the issue. Book running lead managers to the issue include Citigroup Global Markets India, Enam Financial Consultants, ICICI Securities, JM Morgan Stanley and UBS Securities India. SBI Capital Markets is the co-book running lead manager.

9th May 2006: Listed companies can now raise funds locally through QIB placements, as per recent guidelines issued by Sebi. The move is aimed at encouraging companies to raise funds locally instead of through GDRs and FCCBs. “Over a period of time, it will reduce export of capital from India.

It will help compete with the GDR/FCCB market. The move will also open up options for Indian retail investors since securities will have to be listed on domestic bourses. In case of GDRs/ADRs, shares need not ever come into the Indian market,” Sebi chairman M Damodaran said.

A minimum of 10% of the issue should be reserved for mutual funds. It also prescribed limits on the minimum number of institutional investors with whom securities would be placed.

Accordingly, an Rs 250-crore issue should have at least two investors and an issue in excess of Rs 250 crore should be allotted to five investors or more. Companies are not allowed to make placement for more than 50% of the issue size to any single investor. For this purpose, QIBs belonging to the same group will be treated as a single investor.

Sebi said the floor price of the specified securities will have to be determined on the basis of guidelines applicable to GDR/FCCB issues and the price will have to be adjusted for corporate actions, such as stock splits, rights/bonus issues, etc. The Sebi move has evoked positive response. However, the one year lock-in, similar to a preferential allotment, may make the option less attractive.

“This is a good move as Indian companies can now raise funds at much cheaper rate and at higher speed in the domestic market. However, companies will still be tapping GDR/ADR or FCCB markets, especially when they want to raise large funds,” said Prithvi Haldea, MD, Prime Database, a research firm.

According to Ravi Kapoor, MD and head of India equity capital market, Citigroup: “Allowing companies to make QIB placement is a welcome move. It will help increase liquidity. In case of GDRs, there are issues like division of liquidity between markets and delays with regard to fungibility.”

9th May 2006: Sebi to make the Indian markets more competitive and efficient, has decided to introduce an additional mode for listed companies to raise funds from the domestic market in the form of Qualified Institutions Placement (QIP).

Key features of the move include:

Issuer: A company, whose equity shares are listed on a stock exchange having nation-wide trading terminals and which complies with the prescribed requirements of minimum public shareholding of the listing agreement, will be eligible to raise funds in the domestic market by placing securities with Qualified Institutional Buyers (QIBs).

Securities: Securities that can be issued through QIP are equity shares or any securities other than warrants, which are convertible into or exchangeable with equity shares (hereinafter referred to as "specified securities").

A security, which is convertible into or exchangeable with equity shares at a later date, may be converted or exchanged into equity shares at any time after allotment of security but not later than sixty months from the date of allotment. The specified securities shall be made fully paid up at the time of allotment.

Investors / Allottees: The specified securities can be issued only to Qualified Institutional Buyers (QIBs). Such QIBs shall not be promoters or related to promoters of the issuer, either directly or indirectly. Each placement of the specified securities issued through QIP shall be on private placement basis.

A minimum of 10% of the securities in each placement shall be allotted to mutual funds. For each placement, there shall be at least two allottees for an issue of size up to Rs 250 crore, and at least five allottees for an issue size in excess of Rs 250 crore.

Further, no single allottee shall be allotted in excess of 50% of the issue size. Investors shall not be allowed to withdraw their bids / applications after closure of the issue.

Issue Size: The aggregate funds that can be raised through QIPs in one financial year shall not exceed five times the net worth of the issuer at the end of its previous financial year.

Placement Document: Issuer shall prepare a placement document containing all the relevant and material disclosures. There will be no pre-issue filing of the placement document with Sebi. The placement document will be placed on the websites of the stock exchanges and the issuer with appropriate disclaimer to the effect that the placement is meant only for QIBs on private placement basis and is not an offer to the public.

Pricing: The floor price of the specified securities shall be determined on a basis similar to that for GDR/FCCB issue, and shall be subject to adjustment in case of corporate actions such as stock splits, rights issue, bonus issue etc.

Other procedural requirements: The resolution approving QIP, passed under sub-section (1A) of Section 81 of the Companies Act, 1956 or any other applicable provision, will remain valid for a period of twelve months from the date of passing of the resolution. There shall be a gap of at least six months between each placement in case of multiple placements of specified securities pursuant to authority of the same shareholders’ resolution.

6th May 2006: State-run Rural Electrification Corporation on Thursday said it plans to hit the capital market with its initial public offer amounting to 10% of its equity by December this year.

"We are working on the IPO. We plan to hit the market by the end of this year," REC Chairman and Managing Director Anil K Lakhina said.

Lakhina said the company was looking at selling 10% of its equity. However, he did not say how much amount the company was expecting to raise through the issue.

REC, which primarily funds rural electrification projects in the country, posted a net profit of Rs 800 cr in 2004-05. The company has an authorised capital of Rs 1200 crore, paid up capital of Rs 800 crore and net worth of about Rs 3,800 crore.

REC is the latest power sector utility to consider coming out with the IPO. Another public sector company Power Finance Corporation is expected to come out with the IPO next month, while National Hydroelectric Power Corp and transmission utility Power Grid Corporation also plan to hit the market by the end of this year. So far, NTPC Ltd is the only public sector power company that is listed on the bourses.

The government has already given a go-ahead to sell 5% equity in PFC along with its IPO. The government was likely to follow the same route in case of Power Grid and REC as well, though no decision had been taken so far, sources said.

4th May 2006: Pune-based real estate firm DS Kulkarni Developers Ltd today said it has raised about Rs 60 crore through its rights issue of 55 lakh shares.

The rights offer comprising 55 lakh equity shares of Rs 10 each were issued at a premium of Rs 100 each in the ratio of one new equity shares for every two existing shares held on March 21, DSK informed the Bombay Stock Exchange.

The rights issue which got subscribed, opened from March 30 and closed on April 29, it said.

Meanwhile the company's follow-on-offer of 55 lakh shares also got closed yesterday. It intends to raise about Rs 151 crore at the higher end of the price band of Rs 250-275 from the issue.

4th May 2006: The Development Credit bank, an emerging private sector bank in India, would shortly go in for its IPO to raise Rs 300 crore.

The Aga Khan Fund for Economic Development (AKFED), an institution that supports economic development activities in the Third World, is its largest single shareholder and holds 69% of DCB's equity.

This (IPO) would reduce the AKFED stakes considerably, a top bank executive said here.

P Vasudevan, Head, Consumer banking group of the bank said that the Bank had applied for SEBI's permission for the IPO.

Being the first bank, which had been converted from a co-operative bank to private commercial bank, it wanted to increase its presence and make it a 'Pan India' one, he said.

The bank today launched its unique 'M-Power Current Account', claimed to be the first such in the country, here.

Under the scheme, the depositors need not maintain an average quarterly balance, but could still avail of several facilities like getting demand drafts up to Rs 50 lakh without paying any charges, free payable at par cheques up to Rs 50 lakh per month and electronic fund transfer facility upto Rs. one crore a month, he said.

The depositors should pay an annual fee of Rs 2,500 for using these facilities, he said.

4th May 2006: Reliance Petroleum Ltd, a subsidiary of Reliance Industries, launched its initial public offer (IPO) on April 13 with a price band of Rs 57-62. The issue was closed on April 20.

RETAIL CATEGORY: - 13.80 TIMES
 

NON-INSTITUTIONAL CATEGORY: - 57.59 TIMES

3rd May 2006: The Andhra Pradesh high court on Tuesday gave a breather to Karvy Stock Broking Ltd and allowed it to open fresh demat accounts. It also placed an interim suspension on Sebi’s April 27 interim order asking Karvy’s clients to shift their demat accounts to some other depository participant (DP) within 15 days.

Karvy is the largest DP with 7.5 lakh demat accounts across the country.

The high court ruling came in response to a Karvy petition against Sebi’s interim order. Karvy contested the order on the grounds that the regulator does not have jurisdiction under the Sebi Act and the Depositories Act, 1996 to give such an order. It also contested the delegation of such an order by a single member of Sebi.

G Anantharaman, whole-time director of Sebi, who passed the 252-page interim order refused to comment stating the matter was sub-judice.

When contacted, C Parthasarathy, chairman, Karvy group, who was in Mumbai said, “Having not read the court order , all I can say is investors need not worry about shifting their DP accounts.”

Karvy’s counsel S Venkatramana said Karvy would submit its objections to Sebi on Wednesday. It was now upto Sebi to respond to the high court order, he said.

The court’s interim suspension will continue till the market regulator modifies its order or passes a final order.

Sebi, vide its ex-parte ad interim order dated January 12, had already directed two DPs, Karvy and Pratik not to open new demat accounts till further notice. On April 27, Sebi followed this up and barred 24 key operators including Indiabulls from the market. Twelve DPs were barred from opening fresh accounts for their involvement in the Yes Bank and IDFC IPO scam. It gave them 15 days to file objections.

Following Indiabulls’ clarification submitted to Sebi on April 28, the market regulator kept its order against Indiabulls in abeyance. Sebi also clarified the same day that the ban applied only to proprietary trades and not to trades on behalf of clients.

3rd May 2006: India Cements has entered into a subscription agreement for $75 million foreign currency convertible bonds (FCCBs) on May 02, 2006.

According to a release issued by India Cements to the BSE today, the bonds, which have a maturity of 5 years and 1 day, are convertible at a conversion price of Rs 305.57 per share.

'The bonds are zero coupon bonds with a yield to maturity of 7.95%, calculated on a semi-annual basis. The aforesaid issue was significantly oversubscribed within a few hours of launch. The bonds are expected to be listed on the Singapore Exchange Securities Trading', the release added.

3rd May 2006: The Reserve Bank of India (RBI) has asked the banks to reduce their exposure to the real estate sector venture capital funds.

Real estate VCs attract funding from three sources — domestic institutional investors and banks, which account for 50-60% of the funds raised; corporate houses and high networth individuals, which account for 20-30% of the investment; and NRIs and PIOs who chip in with another 20%.

Given the current realty boom across the country, there’s not been much of problem in building a fund corpus, which after deployment, promises attractive returns to its investors. The Securities and Exchange Board of India (Sebi) has approved the proposals of close to 20 VCFs to invest in real estate in India.

Many of these VCFs are in the process of channelling a substantial amount from both local and global investors into realty acquisition and development. They started moving in since April ’04, when the government allowed VCFs to invest in realty and after FDI was allowed in the sector this year.

Venture funds promoted by ICICI, HDFC, Kotak, and Pantaloon and foreign funds with NRI components such as Solitaire Investments have already built up a portfolio of commercial realty that have established tenants.

2nd May 2006: Here’s some good news for salaried employees who may be struggling to maintain details on exactly how they spend their allowances. Even if you lose your restaurant bills, or laundry bills, or other evidence to prove that your allowances have been spent in full, you can still claim tax exemption, provided the claim is reasonable, thanks to a recent order by the Income-Tax Tribunal, Mumbai.

The order means that if a salaried employee spends his allowance during the course of his duty, the I-T department is bound to accept the contention of the tax payer that he had spent the allowance in full, even if the claim is not backed by the necessary evidence. The allowance thus claimed should appear reasonable and should be in proportion to the salary.

These issues have been analysed in an Income-Tax Appellate Tribunal (ITAT) order in the case of an employee with the Shipping Corporation of India, Madanlal Mohanlal Narang, who claimed exemption for uniform making allowance and uniform washing allowance amounting to Rs 51,554. The tax authorities declined to exempt the allowance from taxation on the ground that the evidence produced to prove that he had actually spent the amount, was insufficient.

The ITAT order says that the tax authorities cannot insist on details of expenses actually incurred unless the specific allowances are disproportionately high compared to the salary received by him or is unreasonable with reference to the nature of duties performed by the taxpayer.

Senior chartered accountant TP Ostwal said, “The decision is in tune with the current realities as it is impossible for an ordinary man to preserve all the documentary evidences of expenditure and the employers of large companies will not make frivolous payment without the business need”.

Section 10 (14) (I) of the Income-Tax Act provides for allowances for the purpose of meeting expenses incurred for official duties, but the exemption is available only to the extent to which such expenses are actually incurred. The assessing officer disallowed the exemption only on the ground that there were insufficient proofs that the tax payer has actually spent the allowance.

The ITAT, in its order dated April 21 quotes CBDT circular on April 1 1955. It said, “Special allowance or benefit being reasonable and not disproportionately high — No details of expenses actually incurred need be asked for the purpose of granting exemption under section 4 (3) of 1922 Act”.

28th April 2006: Sebi's order of barring Karvy as a registrar for new issues will not affect IPO of Reliance Petroleum.

Though Karvy has been barred from acting as a registrar for new IPOs, it will not affect RPL IPO as it has already happened; sources in Reliance Industries said.

In perhaps the largest ever oversubscription of a public issue in recent times, Mukesh Ambani-controlled Reliance Petroleum has received share applications for an unprecendent 49.72 times more than the size of its IPO.

28th April 2006: The Securities and Exchange Board of India (Sebi) has clarified that the ban on the three broking firms, Indiabulls, Anagram and Karvy is applicable only to own account (proprietary) trading by them. Clients of these brokerages, who have demat (trading) accounts with them will be free to trade as usual.

28th April 2006: Sebi, in an order issued, has barred 24 operators from the market for indulging in the IPO scam.

The market regulator has also asked 12 depository participants not to open fresh demat accounts.

The order also barred Karvy Stock Broking from being a registrar for IPOs and Indiabulls from participating in the market.

HDFC Bank, Centurion Bank and IDBI Bank have been ordered not to open fresh demat accounts.

The order has also barred 85 financiers from the market.

G Anantharaman, whole time member of SEBI, vide an order dated April 27, 2006 has issued ex-parte ad interim order in the matter of Initial Public Offerings.

"In the recent past, while examining off-market transactions in the IPOs of Yes Bank (YBL) and Infrastructure Development Finance Company (IDFC), it came to the notice of SEBI that certain entities had cornered IPO shares reserved for retail applicants by making applications in the retail category through the medium of thousands of beneficiary accounts in the name of fictitious/benami entities with each of the application being of small value so as to be eligible for allotment under retail category.

"After the allotment, these fictitious/ benami allottees transferred these shares to their principals, who in turn, transferred the shares to their financiers. Most of these shares were sold immediately on listing.

"SEBI conducted investigations in respect of all the IPOs during the period from January 2003 to December 2005. The findings of investigations so far, prima facie, reveal violations of serious nature by the key operators, their financiers, concerned DPs and the depositories including violation of the provisions of SEBI Act, 1992 and Depositories Act, 1996 and the rules and regulations made thereunder. SEBI has issued directions against the concerned entities."

27th April 2006: The board of directors of Godrej Consumer Products, which met today, approved a proposal to split stock in 1:4 ratio i.e one share of Rs 4 each would be split into four shares of Re 1 each. This was announced in a release issued by the company to the BSE today.

27th April 2006: Shringar Cinemas has raised $20 million via foreign currency convertible bonds (FCCB).

According to a release issued by Shringar to the BSE, the issue comprised of $12 million, zero coupon Series A bonds due in 2011 and $8 million, 0.5% per annum Series B bonds due in 2011. "The yield to maturity (YTM) for Series A and Series B bonds would be 6.5% and 7.5%, respectively," the release added.

The proceeds of the issue will be used for capital expenditure in expansion and modernisation of multiplexes and the food court business, the release said.

27th April 2006: Mukesh Ambani-controlled Reliance Industries is not planning to issue bonus shares or splitting shares. Reliance, in a release issued to the BSE, said, "At present, there are no such proposals being discussed by the board of directors of the nature stated in some media reports."

26th April 2006: Irda has suspended the use of the matrix that formed the basis for charging higher premium on third-party motor insurance, finding that it was being misused by general insurers.

The regulator has asked general insurers to go back to the system that prevailed prior to June 2003, when the matrix (a table of loading on motor insurance) came into effect.

The general insurers have been asked to load third-party motor premium tariff by 100% if the claims experience of any vehicle is adverse as per the insurer’s assessment. If the experience continues to be bad, then a further loading of 100% on the expiring premium can be charged, beyond which further loading is not allowed.

Irda said the loading matrix has led to undesirable practices, which have resulted in its suspension with immediate effect.

A senior official of a leading private sector general insurer said third-party motor insurance has high claims ratio and in some companies, the loss ratio is as high as 300%.

The regulator has also instructed insurance companies not to refuse third-party cover on motor vehicles.

It said the regional transport authorities, transporters and members of the insuring public has brought to its attention instances of refusal of third-party motor insurance cover by general insurance companies.

Irda said motor third-party insurance cover cannot be refused since it is a mandatory requirement under Section 146 of the Motor Vehicles Act, 1988.

It has been progressively receiving increasing number of complaints stating that insurers are either refusing third-party insurance cover (especially for commercial motor vehicles) or adopting dilatory tactics such as asking for a great deal of unrelated information or insisting on holding the documents relating to the vehicles for several days, aimed at making it difficult for the vehicle owner to get cover.

The regulator said it has been also been reported that besides the public sector insurers, the newly registered insurers are also refusing to entertain requests from commercial vehicle owners for motor third-party insurance.

26th April 2006: Kotak Mahindra Mutual Fund has launched a product - Kotak Twin Advantage Fund-Series II - that combines debt and stock options.

According to an official release by the company, Kotak Twin Advantage is a close-ended debt scheme with no entry load.

The scheme would invest 75 to 100% in debt and money market instruments and 0 to 25% in equity index options. The investment objective of the scheme is to generate income by investing in debt and money market instruments and to generate capital appreciation by investing in equity index options.

The fund gives investors an opportunity to capture the upside in potential of equity, with risk controlled participation in stock markets.

Nilesh Shah, president of Kotak Mahindra Asset Management Company, said: "As markets are trading at an all time high, valuations as reflected by P/E are higher than their long-term average. But fundamentals continue to be strong. Hence a lot of investors are contemplating to participate in equity markets."

Going by valuations, investors are concerned about the downside protection, but at the same time do not want to miss out the upside potential which is where Kotak Twin Advantage Fund-Series II helps, as it is "an innovative product meant for investors who strongly believe in the potential of equity markets," Shah said.

25th April 2006: The main aim of tax planning is to reduce the incidence of income tax on you. This becomes imperative if you are the sole earning member of your family.

Reducing Your Tax Liability

Being salaried, you can reduce the incidence of tax in two steps: Firstly, by structuring your salary in a manner that will enable you to optimally utilise all the deductions related to it.

Secondly, by making investments/payments in pre-determined avenues which offer a deduction from the total taxable income, to the extent of the investment /payment made, subject to the maximum permissible limit.

STEP 1

Minimising The Tax Liability On Your Salary Income

Here’s taking a look at the various components of your salary and the tax exemptions attached to them...

House Rent Allowance (HRA)

If you stay in a rented house and receive HRA from your employer, you can claim a tax exemption to the extent of the least of the following three: 50% of your salary, if your house is situated at Mumbai, Calcutta, Delhi or Madras and 40%, if it is in any other place or Actual HRA received or Rent paid less 10% of the salary. Alternatively, if you are staying in your own house and you have taken a loan from a financial institution, on or after April 1, 1999, for the purpose of construction /acquisition of the house, then you can claim a deduction of up to Rs 1.5 lakh per annum from your total taxable income. If, however, you have taken the loan prior to April 1, 1999, then the deduction available is only Rs 30,000. employer (in the form of ticket restaurant coupons, etc.) do not attract tax.

Medical Reimbursement

You are eligible for a deduction of up to Rs 15,000 in the form of “medical reimbursements” from your employer. However, in order to claim this benefit, you must produce proper vouchers, such as medical bills, certificates from your doctor, etc.

Leave Travel Allowance (LTA)

If the entire amount available under LTA is actually incurred for travel for two journeys which are undertaken in a block of four calendar years, the entire LTA component does not attract tax. However, if only a partial amount is utilised, then the balance (i.e. the LTA available less the actual expenses) will attract tax.

STEP 2

Availing Of Provisions Under Section 80

Under Section 80 of the IT Act, you can claim tax deduction from your total taxable income to the extent of the investment/payment made in certain pre-determined avenues. Here’s taking a look at some of them...

Section 80C:

This section allows you to claim a 100% deduction from taxable income for any investment in or purchases of certain specified instruments up to a consolidated amount

Cash Vouchers

Non- refundable cash vouchers such as free meals provided by your of Rs 1 lakh per financial year. Some popular instruments allowed as deductions under this section include premiums paid for servicing life insurance policies, equity linked savings schemes of mutual funds, PPF and fixed deposits held with scheduled banks for a term of 5 years or more.

Section 80CCC:

This section offers a tax benefit on the servicing of pensions plans. As per the last union budget, the ceiling fixed for such deductions is Rs 1 lakh. However, there is a condition that the total deduction available to you under sections 80C, 80CCC and 80CCD (i.e. deduction in respect of contribution to pension schemes of the central government) are restricted to an aggregate of Rs 1 lakh.

Section 80D:

As per this section, premium paid towards servicing of health insurance can be deducted from your taxable income. However, this section comes with a ceiling of Rs 10,000 (Rs. 15,000 for senior citizens).

Section 80DD:

This section allows you to claim a deduction from your taxable income for expenses incurred for the medical treatment, training and rehabilitation of a dependant who has severe or ordinary disability. The benefit can be extended to specified amounts deposited in schemes framed by LIC, UTI and other identified institutions for the benefit of such dependants.
Section 80DDB:

Under this section, deduction for expenses that you incur on the medical treatment of certain specified ailments is available to the extent of Rs 40,000. For senior citizens, the limit for the deduction is raised to Rs 60,000. However, if you receive any reimbursement for these medical expenses from an insurer or your employer, you have to reduce the reimbursement amount while arriving at the final deduction applicable under this section to you.

Section 80E:

This section allows you to claim a deduction for interest on loans taken for pursing higher education.

Section 80G:

Any sum that you have paid in the current financial year as donations to certain specified funds, charitable institutions, etc., can be deducted from your taxable income.

Note: This article has been created based on the tax laws pertaining to the financial year 2006-07.

25th April 2006: KEI Industries Ltd, manufacturers of stainless steel wires and cables, today said it will raise $60 million through issue of Global Depository Receipts (GDR) or Foreign Currency Convertible Bonds (FCCB) or other convertible securities in the domestic or international markets.

The board of directors has approved the raising of funds through issue of convertible securities, GDR, FCCB by way of public issue, preferential allotment or international offering, the company informed the Bombay Stock Exchange.

The company would also increase the limit of Foreign Institutional Investors (FIIs) up to 49% of the paid-up equity share capital of the company, it said. The board also approved increase in the authorised share capital of the company from Rs 20 crore to Rs 25 crore by creation of 50 lakh equity shares of Rs 10 each aggregating to Rs 5 crore, it added.

25th April 2006: Canara Bank on Monday reported a 21.06% year-on-year growth in net profit at Rs 1,343.22 crore for 2005-06 and said it plans to raise Rs 3,000 crore to Rs 4,000 crore through follow on public issue and other instruments in the current fiscal. Canara Bank chairman and managing director M B N Rao said the raising of the capital through tier-I and tier-II issues would be in the 1:2 ratio.

Total income of the bank increased to Rs 10,089.03 crore for 2005-06 from Rs 9,115.80 in the corresponding period of previous year. For the quarter ended March 31, 2006, the bank posted a near five-fold increase in net profit at Rs 493.52 crore, up from Rs 102.30 crore for the corresponding period of the previous year. With aggregate business of the bank reaching Rs 1,96,229 crore -- deposits of Rs 1,16,803 crore, up 20.67%, and advances of Rs 79,426 crore, an increase of 31.45%, Rao claimed that Canara bank has emerged as number one among the nationalised banks.

The bank is targeting a global business level of Rs 2,33,000 crore for 2006-07, a growth rate of 18.74%, comprising Rs 1,38,000 crore under deposits and Rs 95,000 crore under advances, he said.

25th April 2006: Reliance Petroleum on Monday fixed Rs 60 as the issue price for its maiden IPO, which offered 45 crore equity shares to the public.

24th April 2006: DS Kulkarni Developers Ltd on Monday said it has fixed the price band for its follow-on public issue of 55 lakh shares at Rs 250-275 per equity share. The 55 lakh equity shares of Rs 10 each would be issued though 100% book building process, DS Kulkarni informed the Bombay Stock Exchange.

The issue would open on April 25 and would close on May 03.

The price is 25 times the face value at the lower end of the price band and 27.50 times the face value at the higher end of the price band. The company develops residential housing colonies, including floorplans and amenities.

24th April 2006: The Anil Ambani-controlled Adlabs Films (AFL) on Sunday approved the demerger of its FM radio business. It also announced that the new entity would be listed on the stock exchanges.

“The board of directors of AFL approved the proposal for de-merger of the FM radio business to a wholly-owned subsidiary (SPV),” the company said.

The demerger would involve the issue of pro rata shares by the SPV to all Adlabs shareholders in the ratio of two free shares of the SPV for every one share of AFL.

“The demerged company is proposed to be separately listed on the BSE and NSE to provide liquidity to all shareholders. The demerger will not have any impact on the share capital of AFL,” the company added.

The board also approved the amalgamation/merger of two subsidiaries of AFL — Entertainment One (India) and Mukta Adlabs Digital Exhibition — with the company.

The demerger is subject to requisite approvals from shareholders, licensing and regulatory authorities, lenders, stock exchanges and the high court.

Adlabs said the demerger, apart from unlocking shareholder value, would help the company by creating an independent focused organisation to lead the FM radio business which was seeing high growth.

It would also increase the financial flexibility for the FM radio business to independently raise resources for future growth, Adlabs said.

21st April 2006: The initial public offer of RPL has broken all records. The IPO has been subscribed 52 times and has received applications worth around Rs 1,40,000 crore, almost double the Rs 72,737 crore ONGC received in its issue in 2004.

The qualified institutional buyer (QIB) portion of the issue received 44 times subscription, the high net worth individuals’ (HNI) portion 16 times and the retail individual investors’ portion 9 times. The issue has got 2.1 million retail applications. So far NTPC had received the highest number of retail applications at 14.2 million.

The maximum bids have been made at Rs 62 -- the upper end of the band. The company sold shares through nine investment banks, including Citigroup and the local joint ventures of Merrill Lynch and Morgan Stanley.

Analysts said the huge success of the IPO was a crowning glory for Mukesh Ambani. For a greenfield project, which had nothing to show on the ground, the promoters' track record alone prompted such a huge response, they said.

RPL, subsidiary of Reliance Industries, was set up to build a refinery and polypropylene plant in the special economic zone of Jamnagar.

The issue is being made to part finance the Rs 27,000 crore export oriented refinery being set up by the company next to its existing refinery project. The SEZ refinery would focuses more on supplying Euro IV grade diesel and gasoline to the EU countries and also to the US market.

RIL has come up with IPO almost after 29 years as the last IPO of Reliance group had hit the market way back in 1977. The RPL issue had hit the market on April 13 and closed today.

21st April 2006: The Mukesh Ambani-led Reliance Industries is believed to be considering a stock split, according to sources.

Although a timeline has not been drawn for this, one of the options the company is believed to be considering is to split the stock in the ratio of 1:2 or even 1:4, like many IT giants have done in the past, sources said. A stock spit involves reducing the face value of a share, thus increasing the number of shares. The RIL stock, which still has an Rs 10 face value, could be split into two shares of face value Rs 5, or 10 shares of face value Re 1.

A company spokesperson, however, denied any such plans. “This is pure rumour. Though it may look logical for us to go for a stock split— with the stock at Rs 900/1,000 levels— there is actually no strong case for us to do that. The dynamics of RIL are far different from that of tech majors,” he added.

RIL currently has a market cap of over Rs 1.10 lakh crore. Several theories are doing the rounds on why RIL might wish to go in for a stock split. It would increase the share float, and with a proportional fall in the share price, the stock split would further bolster retail shareholder participation.

With the stock zooming close to the Rs 1,000 level, RIL chairman Mukesh Ambani is reportedly keen to ensure that RIL remains a company with the largest pool of retail shareholders. Sources said the scrip touching the 1k level could well be the trigger point to start the process. There is, however, no confirmation of this.

19th April 2006: Stock market regulator Sebi has extended the market timing for Reliance Petroleum Ltd's IPO by eight hours owing to huge investor interest in the public issue. Application to RPL (a unit of Reliance Industries Ltd) shares can be made till 9 P.M. today and tomorrow. Besides, extra counters have been put up and additional applications forms made available to accommodate the huge turnout of applicants.

The IPO for 45 crore equity shares of RPL, which is building a 580,000 barrels per day refinery adjacent to RIL's existing 660,000 barrels per day refinery at Jamnagar in Gujarat, is to close tomorrow.

"The IPO Market Timings were 10 A.M. to 5 P.M. but owing to heavy rush SEBI has extended the time by which applications can be made on April 19 and 20 to 9 P.M.," a market source said.

The IPO had been oversubscribed 16 times, with Qualified Institutional Buyers making bids for 18 times the number of shares offered/reserved for them. Non-Institutional Investors made offers for 8.8 times of total shares reserved for the category.

60% of the shares on offer have been reserved for QIBs, while 4.5 crore shares have been blocked for Non Institutional Investors. Retail investors can get a maximum of 13.5 crore shares.

When contacted, a Reliance official said the company had deployed 50% extra counters and supplied additional application forms as the existing counters were swarmed by investors. "There is mad demand," he said.

Sources said the exchanges have officially announced extension of IPO market timing till 9 P.M. today in view of unprecedented demand for RPL shares leading to a huge load on brokers all over the country to punch data into BSE and NSE systems.

One of the reasons being attributed to the heavy turnout is the firming up of global crude oil prices, which touched a record 72 dollars per barrel.

19th April 2006: Real estate and construction major DLF will approach market regulator Sebi with a draft prospectus for its upcoming initial public offer (IPO) of over Rs 10,500 crore.

When contacted, company officials confirmed that the draft red herring prospectus will be filed with Sebi by April end and the IPO may hit capital market in the first or second week of June. The company has convened a pre-IPO meeting of shareholders to get their nod on issues like splitting the Rs 10-share into five shares of Rs 2 each and issuing a liberal bonus of seven shares for each share held to the existing shareholders.

The extraordinary general meeting would be held on April 20, they said, adding this would be followed by a pre-IPO survey to decide the price band for the shares.

Asked about the size of the IPO and money to be raised, the officials declined to comment but said this would be the largest IPO in the history of the India’s capital market. The company would be issuing 132,18,79,895 fully paid new equity shares as 7:1 bonus after splitting the shares. The notice has been sent to all shareholders enlisting 10 resolutions.

The company has capitalised a sum of over Rs 264.37 crore from the standing to the credit of share premium account, general reserve account and credit of surplus as per profit and loss account as on March 31, 2005 for issuance of new shares as bonus.

19th April 2006: TCS has posted 76.38% growth in net profit at Rs 832.12 crore for the quarter ended March 31, 2006, against the corresponding previous quarter’s Rs 471.77 crore. Total income during the period went up by 43.85% to Rs 3,709.21 crore from Rs 2578.52 crore in the same period last year.

The company's consolidated results according to the US GAAP showed that its net profit went up by 50% to Rs 2,966.75 crore in 2005-06 after posting a 36% per cent rise in total income at Rs 13,252.15 crore. The income growth of 36% was more than the industry average.

Buoyed by the good show, the company announced its maiden 1:1 bonus ratio, which means shareholders will get one bonus share for every equity share they hold.

The company also announced final dividend of Rs 4.50 per share, taking the total dividend to Rs 13.50 for 2005-06. The face value of the TCS stock is Re 1.

Earnings per share (EPS) stood at Rs 15.74 at the end of the quarter ended March 2006. EPS for 2005-06 increased to Rs 60.63 from Rs 42.02 in 2004-05.

S Ramadorai, CEO and Managing Director, said, “An outstanding performance in the fourth quarter has rounded off a defining year for the company, marked by large deals, strategic acquisitions, expansion in size and its transformation into a global corporation."

He added that the company was poised for "valuable growth opportunities" and it had the "right structure and leadership globally to take advantage of the tremendous opportunity."

TCS plans to add 30,500 people in this financial year. It made 9,200 offers for new recruits in various campuses. Its active customers at the end of the fourth quarter stood at 748, of which 89 were added in the quarter.

19th April 2006: Kirloskar Brothers Ltd on Tuesday declared a 100% final dividend for the financial year ended March 31, 2006. The board of directors has recommended a final dividend at Rs 2 per shares for the fiscal ending March 31, 2006, Kirloskar Brothers informed the Bombay Stock Exchange.

17th April 2006: The Centre has decided to allow private sector insurance industry professionals to join the Irda as full-time members.

In six years of Irda’s existence, the Centre has only drawn officials from public sector companies to fill two important posts—member-life and member-non-life. However, the Centre has now decided d to heed the view of private insurers that Irda cannot have only officials from public sector companies as its members.

The Centre has called for applications from private and public sector insurance companies for the post of member-life, which has been lying vacant for the past couple of months after TK Banerji retired. 22 applications, including from the private sector, have been received.

17th April 2006: Deccan Aviation has decided not to rope in any private equity investors for the present and plans to hit the market to raise approximately Rs 500-550 crore, sometime in the second week of May.

The initial public offering (IPO) for 2.45 crore shares is likely to be priced in a band of Rs 200-250. Two of the merchant bankers associated with the IPO, ABN Amro Rothschild and JP Morgan, may however, withdraw from it. The issue will now be lead managed by ICICI Securities, Enam and SBI Caps.

The reason for this, according to a senior company executive is that JP Morgan and ABN Amro have other commitments in May. However, should the IPO be delayed for any reason and hit the market only in June or July, these investment bankers may once again be part of the team.

While Deccan has been toying with the idea of a preferential allotment to private equity investors, even before the IPO, it was apparently taking too much time. The company needs to bring out the public issue before May 20; otherwise it will have to file a fresh prospectus with Sebi.

In fact Deccan was to bring the IPO in February, which got delayed because of a deal that the company was negotiating with Airbus. While ABN Amro and JP Morgan were comfortable with the public issue coming up in February-March, they now have other assignments.

However, sources say, the investment bankers were also not too comfortable with the pricing as indicated during the road shows overseas; they found it aggressive. At that time, the price being talked about was between Rs 300-325 per share.

The overseas investors have been a little wary of the aviation stocks because Jet Airways, which came out with its IPO in February last year, is currently trading below Rs 1,100.

However, the shortage of aviation stocks and the lower pricing should generate interest from both foreign and local investors, say merchant bankers.

Deccan Aviation incurred a net loss of Rs 19.5 crore for the year-ended March 2005, on a net income of Rs 305.5 crore. The loss for the six months ended September 2005, was Rs 72.5 crore, on a net income of Rs 328.86 crore.

The issue will result in a dilution of 25% of the post-issue equity of Rs 98.18 crore and the price band of Rs 250-250 would mean a market capitalisation of Rs 2,000-2,500 crore. Jet, which trades at Rs 970 have a market capitalisation of Rs 8,378 crore

14th April 2006: In a significant relaxation of listing rules, the Securities and Exchange Board of India on Thursday exempted a host of companies from the minimum 25% public shareholding requirement.

Companies with market capitalisation of Rs 1,000 crore and those having 20 million shares listed have also been exempted from the norm.

Companies which issued shares in initial public offers under Rule 19 (2)(b) of the Securities Contract (Regulation) Rules 1957 (SCRR) and those intending to get listed under the rule have been excluded from the requirement of having at least 25% public shareholding.

Rule 19 (2)(b) provides that a company can get listed with just 10% holding with the public provided the minimum net offer to the public is Rs 100 crore, a minimum of 20 lakh shares are offered to the public in an IPO through book-building method and allocation to qualified institutional buyers is 60 per cent of the size of an issue.

The rule was initially applicable to technology companies and, subsequently, companies across all sectors were brought under its purview.

The rule has been resurrected through a communication to the stock exchanges by Sebi, revising the minimum public shareholding norm.

The revised norms will provide relief to several companies, including software majors Wipro and TCS.

In a communication to the stock exchanges, Sebi said companies which at the time of initial listing had offered less than 25% but not less than 10% of the total number of issued shares in terms of Rule 19 (2)(b) of Securities Contract (Regulation) Rules 1957 (SCRR), or companies desiring to list their shares by making an IPO of at least 10% in terms of Rule 19 (2)(b), will be exempted from the norms. The new guidelines on revising Clause 40A of the equity listing agreement will come into force on May 1.

The exempted companies will be required to maintain the minimum level of public shareholding at 10% of the total number of issued shares for the purpose of continuous listing.

This requirement will not be applicable to government companies as defined under the Companies Act, infrastructure companies as defined under Sebi guidelines and to companies referred to the Board for Industrial and Financial Reconstruction.

The “public shareholding” for the purpose of continuous listing will continue to comprise shares held by entities other than promoters and promoter groups and shares held by custodians against which depository receipts are issued overseas.

Companies which do not meet the minimum public shareholding norm will be allowed a transparent mechanism to achieve compliance.

The mechanism for increasing the public shareholding to the minimum level would provide for various modes of issuing shares in the domestic market and a reasonable time period, as approved by the stock exchanges, Sebi said.

The market regulator has also revised the reporting format for shareholding patterns. Shareholding patterns will now be indicated under three categories — shares held by promoters and promoter groups, shares held by the public, and shares held by custodians and against which depository receipts have been issued.

Details such as the number of shareholders, the number and percentage of shares held and the number of shares held in the dematerialised form will have to be given for all the three categories.

13th April 2006: Mukesh Ambani-controlled Reliance Petroleum Ltd's Initial Public Offer was subscribed more than three times within ten minutes of its opening.

The Initial Public Offer was fully sold out within 10 minutes of its opening in capital market.

The Qualified Institutional Buyers portion has been subscribed over six times, market sources said, adding that the retail portion was subscribed four times.

RPL had fixed a price band of Rs 57-62 for the IPO, which comprises of 135 crore shares, of which RIL would subscribe to 90 crore shares and the balance would be offered to the public.

13th April 2006: Reliance Petroleum Ltd’s initial public offer of 450 million shares has opened today. The IPO is expected to mop up at least Rs 2,565 crore in a price band of Rs 57 to Rs 62 a share. The issue closes on April 20.

The company’s stock is expected to be listed on the exchanges between May 5 and May 10. Once listed, Reliance Petroleum can be among the top 30 companies of the country in terms of market capitalisation.

Retail investors will have the option to pay Rs 16 a share on application. Retail investors can apply for a minimum 100 shares and a maximum of 1,600 shares.

30% of the public offer will be available for retail investors, 10% for high networth individuals and 60% for institutional buyers.

In addition to the IPO, Reliance Industries has subscribed to 900 million shares of the company at Rs 62 apiece, working out to a total consideration of Rs 5,580 crore.

13th April 2006: Chevron India Holdings, Singapore-the 100% subsidiary of the second largest oil company in US, Chevron Corp-on Wednesday acquired 5% stake in Reliance Petroleum Limited (RPL) for $300 million. The deal, valuing RPL at $6 billion, is the first foreign investment in India’s oil refining industry in three decades.

Chevron also has the right to acquire another 24% (which will cost another $1.44 billion at today’s valuations) on conclusion of two memoranda of understanding (MoU) signed with RPL’s parent Reliance Industries: one, to optimise crude supply and product offtake and, two, to collaborate in other areas of the energy value chain.

The announcement has been strategically timed to coincide with the opening of Reliance Petroleum’s initial public offering on April 13.

The deal with Chevron is a rare instance of Reliance offering equity in its venture to another company. In 2002 it partnered Niko Resources, offering 10% equity in block D-6 in the Krishna-Godavari basin only to buy it back later. Earlier, its announcement to sell 4% equity in Reliance Infocomm to Qualcomm for $200 million did not materialise.

Chevron investment comes as a breather to the country’s downstream oil business which was recently rattled by UK giant BP Plc’s pull out of state-owned HPCL’s Bhatinda refinery project.

Analysts feel that Chevron’s move to buy equity stake in RPL will rekindle global oil majors’ interest to participate in India’s growing refining sector.

Chevron is one of the most aggressive players globally. Its planned expenditure of close to $15 billion on upstream and downstream activities during 2006, including $11.3 billion in upstream sector and $3.5 billion in downstream activities like refining and chemicals, is just a tad short of RIL’s 2004-05 revenues of about $17 billion.

RIL and Chevron could cooperate in many areas. In 2006, Chevron has planned investments in the deepwater blocks in the Gulf of Mexico and Africa, apart from developing LNG facilities and oil and gas E&P ventures. RIL, too, is pursuing investments in many of these countries.

If Chevron acquires an additional 24% equity in RPL, it will be one of the largest foreign direct investments in India.

12th April 2006: MphasiS BFL said on Wednesday that the company's board had decided not to proceed with the share buyback proposal in view of EDS' open offer.

12th April 2006: With the beginning of a new financial year comes the arduous task of filing your income tax returns of the previous year. For the purpose of income tax, your income comprises of your salary, revenue from house property, business and profession, capital gains from the sale of assets and income from any other source. If your income from all these sources during the course of a financial year exceeds the basic exemption limit applicable to you for that year, then you are required to file your tax returns.

Exemption Limits

Currently, there are three broad categories into which individuals are divided. Each of these categories comes with a basic tax exemption limit. If the income earned exceeds this limit, only then are you liable to pay income tax.

Individual male taxpayers enjoy a basic exemption limit of Rs 1 lakh.

Individual female taxpayers enjoy a higher exemption limit of Rs 1.35 lakh.

Senior citizens (persons above the age of 65 years) enjoy the highest exemption limit of Rs 1.85 lakh.

Tax Payable On...

Tax is payable on only that amount of income that exceeds the basic exemption limit.

Due Date

Normally, the due date for filing returns is July 31. However, it is extended to October 31 if you are a ‘working partner’ in a firm whose accounts are required to be audited or where your personal accounts are required to be audited under any law.

PAN

Acquiring a Permanent Account Number (PAN) from the IT department is a prerequisite for filing your returns.

Form To Be Used

Any person other than a company can file returns using Form No. 2D (also known as ‘Saral’).

Additional Documents To Be Filed

Along with the duly completed Saral, you must submit a statement showing the computation of your total income and the final tax payable. Depending on the components of your income, you might also have to attach additional documents such as: Form 16 in case of salary income.

Form 16A in case of non-salary income such as brokerage, contract, rent or professional fees.

In case you have made any investments prescribed under Section 80 or if you have taken a loan from any financial institution, then supporting papers have to be appended. Details of advance tax or any self-assessment tax that have been paid by you need to be mentioned in Saral. A photocopy of the challan should also to be attached.

Audit reports in case you are undergoing a tax audit or any other audit, as prescribed by law. “Profit and Loss Account” and “Balance Sheet and Capital Account” in case you are not covered by any audit and you have income under the head “business and profession”.

If You Miss The July 31 Deadline

If, however, the return of income is not filed by July 31 (or October 31 as the case may be), then it can still be filed before March 31 of the relevant assessment year.

Penalty

If however, you do not file returns before March 31, then a penalty of Rs 5,000 will be levied on you.

Conclusion

11th April 2006: Ranbaxy Laboratories Ltd has informed BSE that ESOPs Allotment Committee of Directors at its meeting held on April 10, 2006 has allotted 117,423 equity shares on exercise of stock options under the Employees Stock Option Scheme(s) (ESOS) of the Company. The paid-up Equity Share Capital of the Company post allotment is 372591616 Equity Shares of Rs 5/- each aggregating Rs 1862958080.

11th April 2006: State-owned Bharat Sanchar Nigam Limited has dropped plans for its proposed initial public offering during the current financial year.

"Government has been writing to us... We have taken advise from bankers and they have suggested that this is not an appropriate time to go for an IPO," S D Saxena, Director (Finance), BSNL said.

Asked by when the company would be ready to hit the capital market, he said "we need 12 to 18 months to clean up our accounts."

Earlier, BSNL had initiated the process of appointing an advisor for its proposed IPO and had invited bids from the merchant bankers.

The decision of BSNL to start such a process emerged from the government's policy to sell a small shareholding in profitable and non-Navratna public sector PSUs.

Conservative estimates value BSNL at around $15 billion.

During 2004-05, BSNL earned a net profit of Rs. 10,183crore, and expects to post a profit of around Rs. 8,000 crore during 2005-06.

11th April 2006: Ahmedabad-based Bhagwati Banquets & Hotels Limited (BBHL) is planning to go for an initial public offering (IPO) of around Rs 100 crore next year. The Rs 25-crore company is raising funds worth approximately Rs 500 crore to set up six five-star hotels across India by 2020. A part of this fund-raising will be via the IPO route.

Narendra Somani, chairman and managing director of Bhagwati Banquets & Hotels Limited, said, “We have already set up a hotel in Ahmedabad. Next year, we will be setting up a five-star hotel and a convention centre in Surat and will expand to cities like Hyderabad, Bangalore, Lucknow and Mumbai in future. We will be investing Rs 50 crore-Rs 80 crore in every hotel.” By 2020, the company plans to have around 1,050 rooms under its banner.

Somani was in Hyderabad to announce the launch of its catering services in the city. This involves an initial investment of Rs 3 crore. BBHL is setting up a 5,500 sft centralised kitchen in the city and intends to have a capacity to serve 5,000 people per day. The company will be charging Rs 500 per person for its catering services.

BBHL is targeting a turnover of Rs 10 crore in the first year of its operations in Hyderabad and plans to grow by 20% thereon. The total catering industry in Hyderabad and Secunderabad is estimated to be around Rs 500 crore with 3,000-odd caterers.

The company is also in parleys with corporates in the city to expand its business. Some of its clients in the country include Reliance Industries, Honda Motors, Wipro, Sony TV and Grasim Industries. BBHL will be expanding its catering business to Bangalore in the next three months.

10th April 2006: Chennai-based AML Steel Ltd has filed draft red herring prospectus with Securities & Exchange Board of India (Sebi) for its forthcoming follow-on public issue of equity shares of Rs 10 each for cash at a premium aggregating Rs 120 crore.

The company is raising the money to part finance its wholly-owned subsidiary’s integrated steel project being set up in Jharkhand, acquisition of existing steel plants and to fund the working capital requirements of the company and its wholly owned subsidiaries, a company release said. The subsidiary has already been allotted 384 acres of iron ore mine in Bokana village in Jharkhand to feed iron ore requirements to the above project.

Of the Rs 120 crore to be raised through the issue, Rs 20 crore would be raised as promoters' contribution and the balance Rs 100 crore would be the net offer to public.

The issue is to be made through a 100% book building process to be conducted on the Mumbai and National Stock Exchange.

8th April 2006: Rolta India Ltd has informed BSE that the Company has successfully raised US $ 90 million, through the issue of 16,071,429 Global Depositary Receipts ("GDRs"). Further the issue provides for a green shoe option of US$ 13.50 million through the issue of 2,410,714 additional Global Depositary Receipts ("GDRs") to be exercised within 30 days by the joint Lead Mangers. With the exercise of this option the total number of GDRs issued will be 18,482,143 and the proceeds shall aggregate to US$ 103.50 million.

Each GDR was priced at US $ 5.60, equivalent to Rs 250/- per equity share. The issue was priced on April 07, 2006 and listing is expected to take place on or about April 18, 2006. The GDR price has been decided based on the average daily closing price for four weeks ending on the pricing date, which was Rs 250.89 of the BSE.

The GDRs are expected to be admitted to listing on the Official List of the UK Listing Authority and admitted to trading on the London Stock Exchange Plc’s regulated market listed securities. Lehman Brothers International (Europe) acted Global Coordinator and Sole Bookrunner on this transaction. Lehman Brothers International (Europe) and Cantor Fitzgerald Europe acted as joint Lead Managers.

8th April 2006: ICICI Bank Ltd has informed BSE that the Bank has allotted 15,021 equity shares of face value of Rs 10/- each on March 31, 2006 under the Employees Stock Option Scheme, 2000 (ESOS).

8th April 2006: India's central bank has barred further purchases of ICICI Bank shares by overseas investors since their holding has reached the permitted 74%. "ICICI Bank has reached the limit of 74% of its paid up capital," a press release posted on the central bank's website rbi.org.in said. Policy makers set a ceiling on foreign holdings in various sectors and companies set their own limit within the overall ceiling. For ICICI, the limit is similar to the ceiling set for the sector.

8th April 2006: Sebi chairman M Damodaran today said that the regulator is expected to get more powers to penalise defaulters. Delivering his keynote address at a seminar on Making Corporate Boards Work, organised by CERG Advisory, he said: "Sebi may be armed with powers to levy heavy penalties that today's penalties may look like peanuts."

In his tough, but witty, address, the Sebi chief added that despite the regulators best efforts some companies may try and exploit loopholes. "In the coming year, we may do a random check, of say 20 companies, for compliance with Clause 49 and come down heavily on 4-5 defaulters."

Even as the regulator made it clear that it can become a powerful adversary if forced to, Business Standard Editor and Publisher, T N Ninan, who was moderating the session, raised an important question: "Who will regulate the regulator?"

Damodaran replied that Sebi is learning on its part to run its business in a better way and is open to suggestions. Explaining the tough job of a regulator, he remarked that even as Sebi would continue to plug loopholes, the defaulting companies have to ultimately answer the stakeholders.

7th April 2006: Reliance Petroleum Ltd, a subsidiary of Reliance Industries, will launch its initial public offer (IPO) on April 13 with a price band of Rs 57-62. The issue will close on April 20.

Retail investors will have a payment flexibility to apply with Rs 16 a share. The balance is payable at the time of allotment.

Reliance sources said Reliance Petroleum had received clearance from the Securities and Exchange Board of India for the IPO which would mobilise funds to finance the Rs 27,000-crore refinery at Jamnagar in Gujarat.

Investment banking sources said the company would organise a series of international road shows in cities, including Hong Kong, Singapore, London, Boston, New York and San Francisco. Reliance Industries Chairman Mukesh Ambani is expected to attend two of them.

A couple of days ago, Reliance Petroleum had concluded a pre-IPO private placement of Rs 2,700 crore to a clutch of investors.

They include LIC, State Bank of India, Goldman Sachs, Deutsche Bank, Citigroup, IDBI, Syndicate Bank, UTI Bank, Bank of Baroda, and Mukesh Ambani and his family.

The IPO will offer 1,350 million shares. Reliance will again acquire 900 million shares through the IPO, exactly the same amount to be offered to the public. This will have a three-year lock-in period.

Reliance Petroleum’s IPO might break the previous record of investor participation in a public float, investment banking sources said. National Thermal Power Corporation had set a record by attracting 15 lakh applications for its public issue in October, 2004.

After the issue, the company will have a Rs 4,500-crore equity. The company had also concluded syndicated loans of $1.5 billion to part finance the project.

Reliance Industries had invested Rs 2,700 crore in Reliance Petroleum as its equity contribution in three tranches in December, January and February.

As the pre-IPO placement has consumed 450 million shares, the public will be entitled to apply for 450 million shares.

7th April 2006: Object of the issue: The proceeds will be utilized for the following purposes (i) To achieve the benefits of listing, (ii) To raise capital for financing the proposed Greenfield refinery and polypropylene project at Jamnagar, Gujarat.

IPO Snapshot