Some consumer goods companies are maintaining a brave front. They say sales are not only on track but will gather a fair clip in the coming days, but shopkeepers and dealers say that poor sentiment caused by the falling stock market, high inflation and absence of credit facilities have hit sales badly.

To get the shopper interested, companies are offering schemes and discounts and cut rates on several products. But will these work? At the retail level, people -- who have their ears close to the ground -- are keeping their fingers crossed, even if they don't sound too optimistic.

And, with reason. Take Prabhat Garg, an executive with a software company: ``How do schemes and discounts make a difference to the average customer? When money is low, a middle-class family becomes very careful about how to spend it. There are no interest-free EMIs any more.''

Sellers have noticed interesting trends in their customer profile. ``If it wasn't for government staffers, our sales would have worsened. Many of our customers are government staffers who have got their arrears under the 6th pay commission, '' said Rajeev Chopra, DGM sales, Samara Hyundai.

BUYERS WAIT & WATCH

To tackle the market slump in the festive season, companies are pulling out all stops to woo buyers

The market meltdown seems to have cast a shadow on the Diwali sales in the city. Sony, for instance, has cut down rates of some of its LCD models by Rs 50,000 to Rs 1 lakh. ``Even then,'' said Hitesh Soni, an employee at the Sony showroom in South Extension, ``our sales compared to the past few years is down. Cameras and LCDs are what sold the most but now there are hardly any sales. This has been the worst year so far in my eight years with the company.''

Samsung reported similar drops. ``Though there are several special schemes being offered by the company, nobody seems to be coming. Sales are down by 75%,'' said an official at the Samsung showroom in Lajpat Nagar. Another shopkeeper storing durable goods said that while sales used to shoot up a month before Diwali, at present they were worse than even normal. ``Prices of goods are down by about 30% since last year but even then, nobody seems to have the capacity to purchase. A prime reason for this is the fact that finance companies and banks are not giving loans so easily now. Most of our sales were on EMI but with that option closed, nobody is able to buy,'' said S K Khanna of Unique Electronics.

The automobile sector has been hit along the same lines. In fact, companies have had to reduce prices of certain models of cars to ensure competitive prices. General Motors has slashed the price of Chevrolet Spark by Rs 48,000-56,000, depending on the model, to bring it in the same bracket as Alto and i10. Said Shailesh Dahiya, sales manager at Triumph Motors in CP: ``Banks have increased the rate of interest which is a huge deterrent for consumers. Even today it went up by 0.75%. Overall, sales are down by 20-30%. While we have about 8-10 deliveries normally, today we sent out only about three cars.''

The report - 2008 City Microeconomic Competitive Index - highlights the business opportunities offered by various cities, and the challenges investors can expect.

The report maps the competitiveness of the 10 leading cities on a highly evolved framework of multiple dimensions encompassing 225 indicators.

Mumbai tops list, followed by Delhi and Hyderabad. Other cities on the list are Bangalore, Ahmedabad, Chennai, Kolkata, Pune, Chandigarh and Gurgaon.

"These cities present an excellent opportunity for embarking on pathways to build a stronger India, on the other they are onto trajectory of disasters," the report said.

The first quarter of the current fiscal saw a drop of 28.19 per cent in the capex plans from Rs 6,11,704 crore in the last quarter of previous fiscal, industry body Assocham said in its study.

The interest rates have been hiked four times by the Reserve Bank with the start of the fiscal to contain the inflationary pressures. The hikes have already sent signs of slowdown in economic growth coupled with higher capital, it said.

However, during the first six months of the current fiscal, capital outlay ranging between Rs 1,000 crore to Rs 10,000 crore accounted for a major share of 33.50 per cent, it said, adding that the announcements in this category were made by the companies like Mesco Steel, Aditya Birla Retail and Essar Shippings Ports.

The study further said that with the huge capacity expansion and new plants coming under way, employment generation is likely to accelerate in the next few years.

The investment plans made by the corporates have a potential to generate direct employment to about 1.5 lakh persons in the sectors like textiles, IT, real estate and financial services, it added.

Total direct and indirect employment opportunities of three lakh would be generated in the next three to four years, Assocham said.

"In the next few days, we are most likely to decide on the issue," finance ministry sources said.

In February this year, the ministry had come out with a discussion paper on the issue, proposing that for a company to be listed and continue to be listed, it must have a public holding of 25 per cent or more.

"If for any reason, the public holding reduces below 25 per cent, the promoters, management and company may be jointly and severally be liable to bring the public holding to 25 per cent, within three months, in the manner prescribed by the Securities and Exchange Board of India (Sebi), failing which appropriate enforcement action, including delisting, may be taken," the discussion paper had said.

Analysts said most of the companies forming part of the Sensex would fail the 25 per cent public shareholding test.

Shareholding pattern of the NSE-listed companies indicates that Indian public hold about 13 per cent of the capital, despite reservation of 35 per cent for retail at the public issue stage.

 Until early this year, it didn't take much to make you happy if you were an equity investor. India seemed like the flavour of the decade, India Inc.'s flagbearers were snapping up big rivals elsewhere in the world, and Sensex at 25,000 was where we were all headed (gosh, all that seems so awfully long ago now). Cut to today, investors are licking their burnt fingers and swearing never to touch equity again. Not surprising at all. In a stock market that has plunged from 21,000-something to less than 15,000 now, there's hardly anyone - small or big investor - who hasn't lost money.

But it's equally true that equity provides the best returns over the long term. So, if you are in for the long haul, who should you be investing with? Which are the companies that treat their shareholders like kings? Which companies announce their results on time, hold their annual general meetings every year and, most importantly, have a history of paying dividends consistently?

Here comes a good list of investor-friendly companies to start with, if you are betting on stocks for the long term: Our fifth annual survey of companies that have delighted their shareholders the most. We know. You don't think there are any investor-friendly companies in this market. But in a world where performance is relative, there are some who managed to put a smile on their shareholders' faces.

Source: cenredaily.com 25/Sep/2208

Praveen Khandelwal, secretary general, CAIT, says: "The schools will seek to change the traditional outlook of the traders and educate them to adopt a contemporary approach to retain customers and increase profitability."

According to CAIT estimates, there are about 50 million small traders operating within the country. Experts estimate the number to be between between 12 and 15 million.

The first school is scheduled to begin from Delhi this month, the second will come up later in Nagpur. CAIT has roped in the services of Indian Retail School as the knowledge partners.

"Our fight is not against the big names in the retail industry, but to help the kirana stores transform their business from traditional retail to modern format of retailing," said Khandelwal.

Retail experts from different parts of the country will take classes in the schools. NK Pandey, CEO, Indian Retail School, says "The course scheduled has been well-structured and customised." The traders will be trained in subjects like visual merchandising, customer servicing, marketing and retail operations monitoring.

Almost two-fifths of respondents do not expect industrial growth to slow more than 1 per cent, and the remaining believe the maximum decline to be less than 2 per cent. This is against the actual decline by 3 percentage points in 2007-08 over the previous year. Regarding GDP growth, 86 per cent say any deceleration would be contained at 0.5-1.5 points. Four-fifth of the respondents say they do not expect production to dip while 50 per cent do not expect any impact on their top line growth. There are several reasons to be upbeat. One, the service sector performance continues to be robust, fuelled by transport, communications and trade growth. In the transport segment, expenditure on highways expansion, ports and airports has not been affected since these are long-term investments.

 Two, infrastructure plans are on stream. Even though core sector growth has not been promising for the past few months, the government's intentions to spend and attract up to $500 billion in the next four-five years can itself be an incentive not to abandon production plans. CEOs have called for a special budget for infrastructure on the lines of the railway budget for kick-starting 20 national projects on a high-priority basis to boost core sector growth.

The Municipal Corporation of Delhi (MCD) approved a revised policy for the grant and renewal of trade or storage licences on Wednesday to "mitigate hardships being faced by the businessmen of Delhi".

Addressing a joint press conference after a meeting of the Standing Committee, chairman Vijender Gupta and deputy chairman Subhash Arya said the new policy would "help bring in transparency into the processing of licence cases and put an end to the era of ad hoc licences".

ROADBLOCKS REMOVED

• No new ad hoc licence to be issued or renewed. Existing ad hoc trade/storage licence holders will have to obtain regular licences wherever land use has been brought into conformity of the land owning agency
  
• No need for applicant to seek NOC from the building section of the zone before applying for licence
  
• Structural safety certificate to be submitted along with application and an undertaking
  
• Fire safety certificate will not be required -- only an undertaking will be obtained from the applicant
  
• The list of licencable trades/storage articles and their fees will not include trades that come under the Health and Veterinary departments
  
• Fee to be paid as a fixed amount and to be increased only in three years

• Regular trade/storage licences to be issued in commercial mixed-land use area, special areas, pedestrian shopping streets notified by the government
  
• Manufacturing activities being run manually in conforming areas and household activities in residential areas (without use of electricity, mechanical or other agency) to be granted regular licences
  
• Trading and storage activities started after February 6, 2007 to be licenced
  
• Small shops with a maximum area of 20 sq m, presently allowed only on groundfloors in residential premises, to be reviewed and number of shops in one plot can be increased (as per the provision of the Masterplan for Delhi-2021).

Although the move has been made to prompt multiplexes to lower ticket prices, we expect PVR to largely maintain prices at its multiplexes, which target upscale audiences. Lower entertainment tax incidence, as a result of this development, may help boost PVR's operating margins.

Entertainment tax takes away a proportion of gross ticket sales for multiplex operators. In order to encourage investment in multiplexes, many States exempt multiplexes from the tax, if they meet certain conditions such as offering certain number of tickets at a low entry price or screen regional films, for instance. Multiplex chains, too, have begun to target these States for their expansion, to avail of the exemption.

Lower incidence
Multiplexes in the Delhi and NCR region are not, however, entitled to such an exemption and the tax rate was steep, at 30 per cent. PVR, which has several multiplexes in the region, has, therefore, traditionally borne a higher entertainment tax incidence compared with its peers. About 25 per cent of its screens are still located in Delhi, even after a rapid addition of properties.

Barring the NCR region and one or two other properties, however, almost all PVR screens now enjoy an entertainment tax exemption. As a result, the entertainment tax incidence has been on a decline and now accounts for 17 per cent of ticket sales for the company in FY-08 from 20 per cent in FY-07. Margins have also been on the rise as a result. With the lower entertainment tax outgo for the Delhi properties as well, the incidence is likely to decline further and give margins a boost.

The retail schools will come up in New Delhi and Nagpur shortly and subsequently spread to other areas of the country.

CAIT has been spearheading protests against the sealing and demolition drives in the Capital. It has been fighting for the rights of small traders.

Terming it as `retail revolution', CAIT national president B.C. Bhartia and general secretary Praveen Khandelwal said that traders who are said to belong to the unorganised sector need to be given adequate information in face the increasing competition.

They said that the CAIT would hire the best faculty for its retail schools. The learners will be imparted knowledge about retail market, how to best utilise information technology in business and develop retail skills to manage retail infrastructure efficiently in relation to buying and merchandising. They will also be taught about increasing the survival rate of businesses.

This was discovered by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) during a brief study conducted in the region recently.

Releasing the report of the study today, ASSOCHAM secretary general D. S. Rawat said that in the process these industries consume as much as 35 crore litres of the precious fuel which otherwise could have been used for running road transport.

Also, running the generator sets for long hours cause environmental and noise pollution.

The report said that industrial units had no other option, as because of the erratic power situation in the area, without the use of generators they would have been unable to meet their targets.

At present, the transport sector consumes 51 per cent of diesel in the country followed by industry that accounts for 14 per cent consumption and agriculture sector, which has a 4 per cent share among others. Most of the commercial sectors in the economy are using diesel because the price of alternate fuels like naphtha and fuel oil have reached stratospheric levels thus increasing the cost of production.

Power plants like NTPC switched to diesel a year back instead of naphtha because of the subsidy advantage. Another reason for the shift has been the shortage of coal. But, with this decision, the cost advantage is likely to go. The cost of the end product is also going to be high as these companies will have to pay market prices for diesel and they in turn will ask the consumers to fork out the same.

The Gurgaon-based company is acquiring land for constructing warehouses across the country to tap opportunities in the retail and agriculture sector. It also plans to develop a part of its land bank in Mumbai, New Delhi and Bangalore for commercial and residential projects, and is setting up a team with expertise in real estate development.

TCIL, which manages 7.5 million sq.ft. of warehousing space in India, has already acquired land Chennai, Mumbai, Nagpur and New Delhi and has started construction in Pune.
"We have earmarked about Rs200 crore to expand warehousing capacity," said Vineet Aggarwal, executive director of the company. He had earlier said the company would create separate special purpose vehicles to set up warehouses and induct strategic investors.

TCIL has appointed Mumbai-based investment bank Edelweiss Capital Ltd to advice on this share sale.

Last September, Fidelity Investments International, an international fund manager, purchased around 10% equity in TCIL for Rs52 crore.

The company's market value is Rs598.17 crore based on its share price of Rs82.55 each at close of trading on the Bombay Stock Exchange on Friday.
Selling shares to a select group under a deal known as private placement does not have to be registered with the market regulator. Investors involved in such transactions are usually banks, mutual funds, insurance firms and other financial companies.

According to a report of business research and consulting firm Frost and Sullivan, the Indian warehousing market, estimated at about $890.3 million (about Rs3,800 crore) in 2005, is expected to grow to about $3.6 billion in 2012. The logistics sector, estimated at $130 billion now, is expected to be worth $220 billion then.
The growth in the manufacturing sector, coupled with domestic spending in the second fastest growing major economy in the world, will be the key drivers for the domestic logistics sector, ICICI Direct, the online arm of domestic brokerage firm ICICI Securities Ltd, said in a recent report.

To supplement its courier division, TCIL has kept aside about Rs100 crore as it conducts due-diligence on mid-sized Indian courier and cargo firms for an acquisition.

"We have established specialised hubs in Gurgaon and Bengal for boosting high-yield courier segment," Aggarwal said. The company is expecting 30-40% growth from its logistics business, including warehousing and road transport.

"TCIL is in the process of signing large-scale contracts for managing warehousing and logistics, including for Hero Honda and the Tata group's small car project Nano. We are also having new clients in verticals such as retail and cold chain," he said.

Aggarwal said his company, which also owns five cargo ships, has no plan to enter into container train transportation business. Instead, "we intend to tie up with the Indian railways and its subsidiaries for cargo movement."

The sunset clauses under Sections 10A and 10B of the Income-Tax Act 1961 have been extended and exemptions will be continued until March 31, 2010. These sections make special provisions in respect of newly established undertakings in Free Trade Zones (FTZs) and 100 per cent Export-Oriented Undertakings (EOUs).
Serving of Notice

The Finance Bill laid down that if the taxpayer appeared in any proceedings or cooperated in any enquiry relating to an assessment or reassessment, it shall be deemed that any notice under the I-T Act has been duly served in time in accordance with the provisions of the Act.

The assessee shall be precluded from taking any objection that the notice was not served or not served in time or not served in a proper manner. This amendment to Section 292BB evoked protests before the passing of the Bill.

The Finance Minister inserted provisions in the Section laying down that the amended provision will not apply wherever the assessee has raised objections before the completion of such assessment or reassessment.

This is a welcome change in the attitude of the Government. Taxpayers need not resort to writ petitions in the High Court to challenge notices from the department. They can register the objection and pursue the matter in appeal.

At the discussion stage in Parliament, the Government accepted the suggestion that audit report under Section 44AB should also be obtained on or before September 30 of the assessment year (AY) w.e.f. the AY 2008-09. This is in line with the amendment to Section 139 which requires returns to be filed on or before September 30.
Depreciation in books

The Finance Act has added Explanation 6 to Section 43(6) retrospectively from AY 2003-04 to deem depreciation provided in the books, as depreciation actually allowed for determining the written-down value (WDV) even though due to various circumstances of the case, such depreciation might not have been actually allowed in any assessment year.

This amendment seems unfair. Deprecation is for the age of the asset and its user. The Supreme Court had held that the WDV will have to be determined after reducing depreciation due for an assessment year even if it is not actually allowed (Straw Products vs ITO -- 68 ITR 227).

This was followed by the Income-Tax Appellate Tribunal (ITAT) in the recent Kandla Port Trust vs Assistant (CIT 104 ITD 1 Rajkot) case. The present amendment annuls these rulings.

A significant amendment has been effected in Section 35D relating to amortisation of preliminary expenses. This benefit was hitherto available only to industrial undertakings. The amendment now extends this benefit to the services sector. The benefit hitherto confined to the manufacturing sector for the extension of the undertaking or the setting up of a new unit will hereafter be available even to non-industrial unit. This is a big gain.

The Finance Act, 2008 represents a sea-change in the attitude of the Government with regard to the levy of taxes. As there is no system for adjusting tax brackets automatically for inflation, the Government has thought it fit to make an upward revision of tax slabs and exemption limits without lowering the tax rates.

The euphoria generated by this revision is already evaporating with inflation touching 8 per cent. European fiscal pundits are fond of criticising the tax system in Europe as leading to what they called "cold progression". Taxpayers are pushed into higher tax brackets even when real incomes have not risen. Inflation is itself a hidden tax.
Tax exemption limit

The lifting of the threshold for applying the tax rates may not be sufficient in inflationary times. This is especially true in the case of senior citizens with fixed incomes. Section 88B allowed a rebate of tax up to Rs 20,000 to senior citizens.

The Finance Act, 2005 provided for exemption limit of Rs 1,85,000 to senior citizens in lieu of the rebate. This was raised to Rs 1,95,000 last year and Rs 2,25,000 this year.

The senior citizen gets a relief of Rs 7,500 in 2008 when they were getting a relief of Rs 20,000 under the old Section 88B. The liberalisation of health insurance premium for parents under Section 80D is not much of a help.

Not many insurance companies are enthusiastic to extend insurance schemes to those aged above 70 years. While the general exemption limit has been increased by Rs 40,000 (from Rs 1,10,000 to Rs 1,50,000), the increase in the exemption limit for senior citizens is just Rs 30,000.

Many senior citizen must be wishing that the scheme of rebate under Section 88B will be restored instead of the misleading higher exemption limit.

He assured the delegation members to constitute a joint committee of MCD officials and traders to discuss the matter. The traders have to fill up a form and submit it to the department concerned.

Only hazardous trade PVC, chemical, dairy, poultry and fish, fruit and vegetables and large godowns are to be shifted to integrated freight complexes, CAIT informed the Standing Committee.