SUCHETA DALAL ON: THE FOURTH ESTATE EXPOSED Personal Finance Magazine GOING CHEAP: INDIA FOR SALE 16 December 2010 THE JALAN REPORT: A COMPLETE LETDOWN Rs 25 moneylife.in Will and Nomination Make a proper & PASS it on SMoothly Millions of people, including the rich, are careless about how they leave their wealth behind, creating problems for their loved ones. Don’t be one of them. Here is all you need to know about the right Will and nomination BLANK PAGE BLANK PAGE chairman and managing director.3/66. 3rd Floor. Kalkaji.in Pune Jitendra Garsund “SANSHREY”. 7th Main Road.700 045 Tel: 033 2422 1173/4064 4318 Hyderabad C/o Rajnidev. why should patients suffer? Are they not customers of health insurance companies? Even if the cost of various medical procedures across hospitals is standardised and maximum caps are enforced. However. Hind Service Industries Premises. Off Veer Savarkar Marg. and no one can change the terms midway during the validity of the contract.411 036 Mobile: 9881309801 E. worth Rs1. Srirampuram. Dadar (W).400 067 and published at 315. (Beside Ramdas Paper Mart). the claims outgo was estimated at 1.mail subscribe@moneylife. But after de-tariffing. Circulation & Subscription Office 315.in Subscription e.mail: sales@moneylife. 3rd Floor. Near Madras Youth Hostel.pune@gmail. It was purely a commercial decision taken by the companies earlier. Ghorpadi. they are suffering from underrecoveries. Legally.com New Delhi DDA Flats. The reason being attributed to this outgo was fraudulent and expensive claims being submitted by the insured and larger hospitals charging more for people with existing health insurance covers. Mumbai . Dadar (W). Shivaji Park.560 021 st Kolkata 395. this was causing them huge losses. Lake Gardens. 13/1. Mr Srinivasan says that during the tariff era. This shows that there is more to the Congratulations Tarun Agarwal from Bareilly! restrictive stand taken by Your letter to the Editor wins a Surat Diamond gift the public health insurers worth Rs1. While it may be true that insured patients are being charged more by hospitals. Shop No.in Sucheta Dalal Managing Editor suchetadalal@yahoo. Nanai Baug Society. Kandivli (West). Sadly.600 005 Tel: 044 4215 5442 Bengaluru 1st Floor. “Cost of Insurance Should Come Down with PPN” (Moneylife. insurance is a binding contract between a company and an individual.500 012 Moneylife is printed and published by Debashis Basu on behalf of Moneywise Media Pvt Ltd and printed at Magna Graphics. not expect better treatment in a bigger hospital compared to someone who has taken a policy for only Rs2 lakh? This whole exercise of standardisation of cost of treatment is a farce. Chepauk. they are facing a lot of pressure with regard to health insurance premiums. Advertisement. According to these companies. IRDA and the government have remained mute spectators.9. United Insurance. has thrown up an interesting point. Insurers initially said. for health insurance. would a patient who has taken a policy for say. Mumbai .400 028 Tel: 022 2444 1059/60 Fax: 022 2444 2771 E.000! engineering and other insurance covers.mail:
[email protected] Floor. IInd Street. Hyderabad . Neither is willing to take the patients’ case forward with insurance d companies. Pune .mail: jrg.in E. Shivaji Park.110 019 Chennai 14.com Editorial Consultant Dr Nita Mukherjee Letters to the Editor SILENT SPECTATOR The interview with G Srinivasan. Kolkata . Write to the Editor! health insurance was being The only investment that Win jewellery enhances your face value. Bengaluru . Editorial. 4 November 2010). Mian Sahib. Hind Service Industries Premises. I am surprised that the new norms were not only enforced on ce ed customers going in for new policies and ci ies renewals. 1 Cross. Gowliguda Chaman. BT Kawade Road. Off Veer Savarkar Marg. as health insurance is still a personal choice and not a retail product where you can set a maximum retail price (MRP).2.16. Mumbai . 15. Issue 21 3 December – 16 December 2010 Debashis Basu Editor & Publisher
[email protected] 028 Editor: Debashis Basu RNI No: MAHENG/2006/16653 MONEYLIFE | 16 December 2010 | 4 .3 times the premium collection. New Delhi . Rs4 lakh. Saibabanagar. cross-subsidised by fire. for which they are projecting the patients and the hospitals now as the villains in this saga. it is obvious that the real reason for under-recoveries and huge claims is the fact that companies have stopped cross-subsidies. Government Industrial Estate. but they were also imposed on posed existing policyholders. Chennai .Volume 5.000.101C&D. J. Keep writing! Keep winning! on cashless benefits with big hospitals. BLANK PAGE . 18 November 2010). it is only the middle class which will suffer. why should I spend another Rs120 or more for redemption? I am a senior citizen. Tarapore Towers. Tarun Agarwal. signature attestation by a bank manager costs around Rs120.LETTERS Even the option of providing premium policies (where the patient is entitled to larger and better hospitals) as suggested by a few insurance companies might not work. Insurers are also constantly hiking their sales targets. With the minimum sum assured rising to approximately 15 times the premium amount. by email CAN’T TRUST THEM I had invested in UTI Infrastructure Advantage FundSeries I on 3 December 2007—the lock-in period is three years. higher mortality charges will eat into growth and nullify the cap on charges. they should be constantly reviewed. with higher coverage. When I have not gained a single paisa from my investment in the Fund for the past three years. Mumbai 400053. Unfortunately. I fail to understand why the AMC insisted on signature attestation. But the Fund’s performance has been below par. by email IMPROVING LIFE I thank the Insurance Regulatory and Development Authority (IRDA) chairman J Hari Narayan for his commendable work in cleaning up the life insurance industry. 489-B. where power rules (and where power corrupts absolutely). Oshiwara. Sales brochures (including proposal forms. Again. After IRDA cracked its whip. No charges should be cast in stone. Recently. Mr Narayan has rightly said that even traditional products will come under the scanner. if such unreasonable demands are made that harass the common man? VS Venkataraman. Benefits from any existing policy from an insurer will not be rolled over to the new one. The sales force from various companies will come under more strain. But mortality charges are still outside the purview of regulatory control. There should be a few regulations to protect employee interests. policy bonds. etc) should be standardised across all insurance companies. All policyholders should be given an option of direct credit facility in the proposal form (by the submission of a cancelled cheque) so that there is no delay (typically 7-10 days) in physical delivery of a cheque. Name withheld on request. Why can’t UTI follow the same rules that are followed by other mutual fund companies? ABSOLUTE POWER This refers to “Getting More Corrupt” in Crosshairs (Moneylife. Sahukara. Andheri (West). I am not in a position to pay anything more for receiving lesser money than what I had initially deposited in the Fund. It is strange that some other states MONEYLIFE | 16 December 2010 | 6 . when I have not yet submitted my redemption request. the question of signature attestation should arise only if my signature does not tally with the one available with them. Mortality charges should be mandated. O Block. by email Will the concerned authorities look into the irresponsible statements being sent out by those who deal with UTI’s day-to-day affairs? How can government companies hope to compete with private companies. Flat 553. Bareilly 243003. life has become a lot better for policyholders. and the AMC asked me to submit a written request in the common transaction form along with a cancelled cheque and a copy of my permanent account number (PAN) card. These will be new policies with fresh terms & conditions and waiting periods. Also. Products are efficient. No private sector mutual fund company insists on submission of documents—including a copy of the PAN card and a cancelled cheque— for redemption. Again. is Delhi. The AMC also insisted that my signature should be attested by a manager from a nationalised bank. larger hospitals will neither suffer any loss—nor will they bend to the companies’ demands of lowering treatment costs. I approached UTI Asset Management Company for redemption of my units. The regulator and the government will continue to watch from the sidelines. The most corrupt state. BLANK PAGE . Don’t our politicians and builders have a conscience? Why are they playing with the lives of our Kargil heroes and war widows? Don’t they have their own families? This is sad and people should not forget these scams easily.in or can be posted to: The Editor. RN Tikot. We are circulating this article to all our volunteers and well-wishers of Vidya Poshak. Land and property have become the hallmark of corruption. by email COMING TO TOWN I receive regular mails from Moneylife Foundation regarding free seminars conducted on various interesting topics. Unit No. We cannot handle physical letters. Any new entry or exit is always mentioned in the text. Advertising For information and rates. Mumbai 400 028 or call 022-24441059-60 or fax to 022-24442771. Only the media can stop these scams and expose the corrupt. We request readers to please send us crisp complaints. Colaba (Mumbai) has hurt everyone. It has extensively covered almost everything about our organisation—Vidya Poshak. by email HELP US TO HELP YOU Moneylife offers its readers a unique service—helping redress grievances on a best-effort basis. I wish more and more people would be joining our mission. HOW TO REACH US MONEYLIFE | 16 December 2010 | 8 . I am a bit confused. There is not a single building which has got a clearance without having given bribes to babus. The last addition that I can see in these tables was in August 2010.in or to Subscription Manager. Everyone knows that the Mumbai real-estate sector is based on black money and thrives on corruption. B-49. CEO & founder. Hind Service Industries. 315. 315. Moneylife readers like me would be happy if you could conduct seminars in cities like Chennai. we have limited resources to devote to this effort and can only pursue complaints that come to us by email. complaints about current subscription and books. New Subscription & Customer Service For new subscription requests. Off Veer Savarkar Marg. email us at sales@moneylife. Through the efforts of Dr Nita Mukherjee and Moneylife. Gulmohar Park. by email I thank Dr Mukherjee for connecting us to such a prestigious media organisation. However. Mumbai 400 028 or faxed to 022-24442771.LETTERS are ahead of Delhi as per some press reports. New Delhi 110 049.in or call 022-24441059-60. — Editor GROUND REALITIES I went through the article “To Nurture Knowledge” published in Moneylife (2 December 2010). especially in Delhi and Mumbai. Am I missing something? Or does this need to be read along with Street Beat? Radhakrishna Karanth. Jerome Fernandes. by email TABLES TURNED I am an avid reader of Moneylife. Mahesh Kumar. Dadar (W). address and telephone no. Dadar (W). Letters to the Editor can be emailed to editor@moneylife. Vidya Poshak. Why do the Central Bureau of Investigation (CBI) and the police take action only after a media exposé? Vijay Mantri. write to subscribe@moneylife. Moneylife Magazine. Hind Service Industries. 3rd Floor. Letters must include the writer’s full name. Chennai. Unit No. Off Veer Savarkar Marg. Could you please tell me when and where you add new scrips to your Stockgrader? Even in the latest issue (4 November 2010) none of the three tables has any new stocks and. We bring changes in the stocks in the grader when their grade changes or if we feel it is necessary to make the changes. only if we ask for them. We should control the flow of black money. hence. — Editor GROUND REALITIES The latest scam related to the Adarsh Housing Society. by email These Stockgraders are to be read with the table. 3rd Floor. and may be edited for clarity or space. with all the facts on email (not as an attachment) and send us the supporting documents. BLANK PAGE . our Cover Story this time argues that everybody needs to make a Will and discusses some key issues that you need to keep in mind when writing it. There are some basic precautions you can take to ensure that after your passing away. This was evident from the huge response that our affiliate non-profit organisation. Changing family structures. Although the law does not prescribe any special format for it and a valid Will can be made without legal assistance. this is the first time that the issue of Wills is being tackled extensively by a personal finance magazine. Sucheta Dalal tells you all that you need to know about this vital but ignored area of personal finance 12 Current Account Why have realty stocks crashed. They are having to seriously consider making a Will. it’s not so simple. Privacy & Other Issues 20 Different Strokes The Bimal Jalan committee has delivered a report whose sole beneficiary is the National Stock Exchange Disclaimer: Moneylife has a policy of not allowing its editorial staff to buy and sell stocks that are written about in the magazine. All personal transactions in individual stocks are subjected to internal disclosure rules. we thought a Will is necessary only for the rich. As far as we know. the passing on of your wealth is smooth. Moneylife Foundation. We discuss the Niira Radia tapes. Debashis Basu MONEYLIFE | 16 December 2010 | 10 16 December 2010 F Cover 26 Pass It Story on Smoothly Proper Will and Nomination is a must for transmitting your assets. Radia’s Agenda & Modus Operandi. have all meant that Indians are having to think seriously about what to do with their money after they are no more. We also have an analysis on the partisan and retrograde Bimal Jalan committee report which seems to have been written with the sole purpose of perpetuating the monopoly of the National Stock Exchange. Soundbites 18 PR-Mediagate. economic development. brokers and big investors Beware! Your credit scores are not updated fast Equity schemes may no longer be sold like variants of soap Make way for India—the world’s top shoplifting nation 17 LOOSE CHANGE Moneylife Quiz. . This issue is packed with diverse matters of importance to all citizens. which have been blocked out by the mainstream media (that preferred to hold panel discussions without even publishing or broadcasting the tapes). but were released by Open and Outlook magazines. or even a business publication. received for three separate workshops on Wills and inheritance laws. which has hugely increased self-earned assets of middle class families (as opposed to joint family assets). Encouraged by the overwhelming response to these workshops and the diverse questions of the participants. No more. and nuclear families.LETTER FROM THE ISSUE CONTENTS EDITOR Will Skill or ages. when realty prices are high? SEBI wants to probe insider trading in the bank-realty scam The dark side of banks. . Jaideep Mukerji explores the fascinating culture and history of this beautiful country AUTO Daily Market Forecast Keep track of short-term market movements and long-term trends to know what’s coming 54 Clearance Sale The surge in auto sales in October was simply the outcome of heavy discounts from dealers who had been holding large inventories POLITICS 22 Dilli Durbar And the Winner in the Telecom Scam Is….. Mass Protection . while Hyderabad Industries declined 14% 62 Home Truths An expert on property matters.. Bajaj Auto rises 2%. do your homework and choose a good advisor....Having Enough . Yes Bank tumbles 12% EARNING CURVE 24 STOCKS Fund Pointers 58 Learn the Basics of Savings and Investing .. 4 Random Numbers . 16 Book Review ..........Co-pay—Burden-sharing ...CONTENTS Here’s why you should click on www............. Cadila Healthcare falls 2%..... 63 ...... No PC Please FUNDS STOCKGRADER 41 M Momentum t Dish TV gains 4%.... Vimal Punmiya shared his insights on matters pertaining to co-operative housing societies.Online Insurance Is Convenient .Anchored to Price ML FOUNDATION EVENTS A non-trending and volatile market favours SIPs Medium Term Crompton Greaves introduces a new transformer......... JB Chemicals has recorded strong growth for the September quarter COLUMN 46 Nest Eggs Don’t depend only on your bank for financial products. Read the Moneylife magazine articles and join in for discussions TRAVEL 50 Here’s Looking at Morocco Morocco is a mystical country which attracts over 10 million tourists every year.... Dr Reddy’s is finalising an American foray 36 Street Beat Long Term Shri Lakshmi Cotsyn gained 2%... what you don’t see is more important 48 Insurance Trends DEPARTMENTS Letters ......Mood Investing? ........moneylife.in neyli e Exclusive News Get Insights Get the latest on business & corporate news and other developments in the financial world Our leading analysts and columnists dissect the issues that are impacting you.. MDA is committed to securing the rights of children with dyslexia INSURANCE WHICH WAY 40 The Invisible Hand Often. AMCs & Their Strange Ways 66 Overcoming culties Learning Diffi A not-for-profit organisation.. Another Shock for Chavan.... Elgi Equipments plans to expand its business significantly.. 60 Money Facts .. and more BEYOND MONEY Aditya Birla Chemicals (India) is a low-priced scrip.. Media Blanks Out Barkhagate..Accident Policy... in our issue dated 11 February 2010. The freefall has been led by as BRICK OR BY TRICK? From 8 January 2008 Lok Housing Orbit Corp DB Realty PVP Ventures Prajay Engineers Unitech Arihant Foundations From 6 October 2010 IVRCL Assets Unitech HDIL -35% -34% -33% -43% -40% -95% -95% INVESTOR INTEREST -89% -88% -84% of insider trading norms during the recent rally to new record levels above 21.140%).estate prices are high? R eal-estate prices are high all across the country. Stocks across the entire universe of realty have ty have y av has been taken a severe beating. a senior official from the market watchdog Securities and Exchange Board of India (SEBI) was quoted as saying: “SEBI has enhanced its surveillance for possible violations of rules prohibiting trading based on prior and inside information. right? How come the high real-estate prices are not getting reflected in the prices of real-estate stocks? In fact. Reall- estate stocks should do well. Flats are getting sold at exorbitant prices not just in Mumbai but in every market. Interestingly. It can start with the repeated instances of price manipulation that we have highlighted for two years now fter the prices of government-owned banks and realty companies started crashing and the venerable Life Insurance Corporation’s name got dragged into the muck. But the silence has been deafening. we had reported the unnatural rise in Supertex Industries (4. realty stocks are down by a massive 23%.estate stocks crashed again.” While it is extremely heartening that SEBI has woken up to this menace.” SEBI apparently has come across “over two dozen instances of major suspected violations A MONEYLIFE | 16 December 2010 | 12 .000 level (sic) and the subsequent correction last week. even when real. Some stocks are still down 80% from their highs three years ago. a part of our Street Beat section. in the third week of November. they crashed.CURRENT ACCOUNT INVESTING Scrip & Trip Why have real. Since 6 October 2010. For instance.realty scam. ML Bhakta from Kanga & Co has written to Moneylife articulating what a number of investors would feel: “I still wonder whether SEBI will ever wake up to the Wake-up Stall SEBI wants to probe insider trading in the bank. Which set of prices is giving you the real picture? Real-estate prices or stock prices of real-estate companies? First. some facts about real-estate stocks. readers of Moneylife know that we have been constantly highlighting cases of insider trading and price manipulation for over two years now. But no action has been taken against these companies which have wilfully thrown regulatory norms to the winds. our work has not gone unnoticed. It is well within the regulator’s purview to have taken suo moto action against the cases that we have been repeatedly highlighting in “Unquoted”. Moneylife broke a scandal involving Money Matters Financial Services Ltd which was being investigated by the Central Bureau of Investigation (CBI). After the investors and intermediary. a scam and sham recovery have combined to make sure that real-estate stocks are down.CURRENT ACCOUNT DB Realty. we revealed how with no pedigree to write home about. PVP Ventures and Prajay Engineers Syndicate (down 95% each) have suffered the most. and who is reasonably expected to have access to unpublished price-sensitive information in respect of securities of a company. Ever since the market peaked in January 2008. Unitech (down 88%) and Arihant Foundations & Housing (down 84%).” Well. Even the investment bank involved in the Rs445-crore deal with the international institutional investors. an ‘insider’ is defined as any person “who is or was connected with the company or is deemed to have been connected with the company. Housing Development & Infrastructure (down 34%) and IVRCL Assets & Holdings (down 33%). clinging on to hazy hopes of demand revival. some people prematurely assumed a reversal in the fortunes of the realty sector. Isn’t that strange? For the past two years. it appeared that realty companies have been liberally helping themselves with loans from public sector companies and LIC Housing Finance. Now. the regulator has decided to probe further into these cases and enhance its oversight.” SEBI’s unidentified senior official told reporters: “While the suspicious trading activities have been noticed in SEBI’s routine surveillance of market activities. most seasoned experts are just as prone to making wrong judgements as anybody else. this rings hollow. India Infoline has always been known for sharp practices. will ensure that realty stocks find it to hard to climb up— unlike real-estate prices. By the looks of it. Most of these expensive systems. brokers and big investors n 24th November. but it pocketed fat fees anyway. 13 |16 December 2010 | MONEYLIFE . noticed anything. or who has received or has had access to such unpublished price sensitive information. real-estate companies and foreign real-estate brokers have been arguing in favour of a solid recovery taking shape in the sector. we gather. Mounting debt. Money Matters managed to raise Rs445 crore from renowned institutional investors like Morgan Stanley. might not have done proper due diligence. suspicious activities are supposed to be probed further for violations of norms—including those regulating insider trading. In the aftermath of our exposé. If SEBI had. which lost a whopping 43% within a span of less than two months. This revelation opened up a can of worms from which maggots are still crawling out. are lying idle. It is followed by Orbit Corporation (down 40%). the third kind of players to stand exposed were the public sector financiers.” The regulator supposedly has systems in place to monitor unusual stock trends. So. When the stock markets turned around after March 2009. SCAM Money Shatters The dark side of banks. the free-for-all insider trading will continue. coupled with the backlash from the ongoing investigation into the housing loan scam. the reality is hitting home. how does one explain the fact that real-estate prices have not fallen at all? In late November. They are followed by Lok Housing & Constructions (down 89%). where is the action? As per SEBI’s ‘Prohibition of Insider Trading Regulations’. However. In our first report. Just a few weeks ago everybody was celebrating the great new dawn for India. it was revealed how Money Matters managed to give hefty bribes to senior officials of public-sector banks and housing finance institutions for facilitating big-ticket loans to property developers. particularly when Moneylife is repeatedly pointing out instances of such cases. Unitech (down 35%). So. The Central Bureau of Investigation launched a probe that gave us a glimpse of how realestate companies are managing to keep themselves afloat—getting funded by hook or by crook. Fidelity and GMO—proving that even the O problem faced by unsuspecting investors—the sudden rise in prices of unknown scrips without any logic or reason. indeed. India Infoline. this precipitous fall is not just a recent trend. Developers stubbornly refused to slash high property prices and binged on credit. realty stocks have been on a relentless downward spiral. It holds information of around 160 millions loan accounts and about 95 million customers—individuals and businesses. SEBI has also objected to names of certain schemes that could potentially create confusion in the minds of investors.” CIBIL caters to about 300 lenders (banks. While SEBI remained mum during this period. Moneylife believes that it is high time the regulator took a close look at NFOs. What else would explain the names of funds like Hi-Fi Fund. it is using MUTUAL FUNDS No Fancy NFOs Equity schemes may no longer be sold like variants of soap erturbed by the increasing complexity of new mutual fund schemes waiting for its approval. This is a violation of the Credit Information Companies (Regulation) Act according to which credit bureaus must rectify data within 30 days of receiving it from members. market watchdog Securities and Exchange Board of India (SEBI) has asked several asset management companies (AMCs) to simplify their new fund offers (NFOs).CURRENT ACCOUNT BORROWINGS Overdue Credit Beware! Your credit scores are not updated fast ou may have made all your loan repayments in time. He had called on a working Friday at 2pm! MONEYLIFE | 16 December 2010 | 14 . Progressive Themes Fund. their spokesperson said. co-operative banks and non-banking financial Y companies. It says that the reports are delivered in about a week. We have been pointing out. This is a regular and disciplined process. SEBI is especially critical of capital protection oriented schemes. the credit bureau takes six weeks or more to even rectify records. According to a senior bank manager. CIBIL has started providing a credit information report (CIR) to individuals through its website. P postal services to send these reports. structured schemes and ‘guaranteed NAV’ schemes. thousands of investors have taken the bait. SEBI’s move has been long overdue. The credit data gets updated automatically every month with the information received from members. It believes that these schemes are either too complex for the average investor or their strategies involve substantial risk. ever since this magazine was launched in 2006. etc? So. But since there is no separate mechanism to verify the identity of an individual. “We update our records within one week from the date of receipt of the data from the lenders. AMCs were actively attracting money into their kitty through NFOs during the boom of 2005-07. When we contacted CIBIL about this. But don’t be surprised if your credit score is not reflecting it. Special Situations Fund. that NFOs are a marketing tool designed to gather assets. Much of the money not only came by offering schemes that bear fancy names but were also pushed through with the help of fat commissions to distributors. This is because the Credit Information Bureau of India Ltd (CIBIL) is falling behind in updating your credit condition. One borrower who tried calling the CIBIL helpline was told to call back during working hours (10am to 6pm). 295 crore) and retail crime rates have increased.72% of total sales—against the global average of 1.3%. Apparently.6% and India performed much better than it did in 2009. it becomes difficult to spot all culprits. about Rs9.2 million store thieves in 2010.4% of this. In the country.91% of total retail stock.32 billion worth of retail stock has ‘shrunk’ between June 2009 and June 2010—which accounts for 2. Shrinkage declined from last year by 5. Even last year. employee theft contributes a generous 26. Canada and Japan have recorded greater losses. Australia and Canada. A On an average. Experts in the field say that with more people frequenting retail chain stores.295 crore or $2. rank at the bottom of the list of 42 countries. perfumes and alcohol. Retailers apprehended a jaw-dropping 6.3 billion (Rs9. but no country shows a loss of such a high percentage of sales. 15 | 16 December 2010 | MONEYLIFE . maybe.631 to an Indian family’s shopping bill this year. Taiwan and Hong Kong. fashion accessories. India records the highest shrinkage in retail stock with the main reason being shoplifting.3%. Countries like the US.3% of the loss. According to the survey. But. and yes… a majority of them are women. Again. Total global shrinkage has been $107.20% of total sales. India topped the list.87% and 0. compared to India’s. the global employee theft ratio stands at a much higher 35.64%) by a wide margin. reporting a loss of 3. The rest may be attributed to pricing or accounting mistakes and thefts by vendors and suppliers. retail crimes added Rs6. Shoplifting accounts for 47. this improvement has been noticed at a time when many regional economies are recovering after the nearcollapse of 2008. Shoplifters hide small objects or foldable items in their dresses and handbags. Is there a silver lining? Well. there is some comfort. Most stolen items are apparel. recording a respective loss of 0. Retailers have started investing in loss-prevention strategies with increased vigilance and staff training.CURRENT ACCOUNT BOTTOMLINE BY MORPARIA RETAIL Quick Flick Make way for India—the world’s top shoplifting nation ccording to the ‘Global Retail Theft Barometer Survey’. Indian employees are more honest than their counterparts in the US. India beat runners-up Morocco and Brazil (both at 1. * insurance 3 crore from the time of the mishap for 85% It takes of compensation.000 00. even from demanding tasks. Danger Ahead Investors embraced riskier assets.000.* this time increases case of death due to vehicle accidents.* of accident victims to receive payment 5 years Crash Course . despite the roads. by IRDA Safety.000 0 00 That was the amount of money illegally siphoned out of India between 1948 and 2008.000 people $462. Source: Global Financial Integrity their waking hours daydreaming’. killed in road acci get killed every year on Indian About world’s road fatalities.# fact that the country has only 1% of *Source: ‘Third Party Claims’. at least 30% of the time. get Almost # dents each day. People spend ‘half 12x $462 billion is nearly 12 times the size of the estimated loss to India due to the 2G spectrum scam. according to the BofA Merrill Lynch survey of fund managers for November 2010.000. Cash Stash h Out of Body A study by Science magazine says that minds wander. In for a majority of accidents to be reported It takes at least to 3 years.000. notably equities and commodities.RANDOM NUMBERS pending accident There are cases in various Indian courts.5% Illicit financial flows out of India have grown at this rate every year. A synopsis of the survey: Global economy to strengthen in the next one year 40% 30% 20% 10% 0% Oct-10 Nov-10 Inflation will rise in the next 12 months 50% 40% 30% 20% 10% 0% Oct-10 Nov-10 Asset allocators overweight on equities 50% 40% 30% 20% 10% 0% Oct-10 Nov-10 Asset allocators overweight on commodities 25% 20% 15% 10% 5% 0% Oct-10 Nov-10 35% 15% 48% 27% 41% 27% 21% 17% MONEYLIFE | 16 December 2010 | 16 . That is 40% of the country’s GDP . by WHO # Source: Global Status Report On Road 2 years 550 Indians 200. This represents 15% of the the world’s motor vehicles. after the resumption of quantitative easing (QE) but a correction could be nearing. but daydreaming ‘does not make you happy’. 11. Which company has launched ‘Smart Life’ plan? a. Bihar Caustic and Chemicals d. The answers will be published in the next issue. Richard Lehman b.90 Another quiz to tickle your brain. Chambal Fertilisers c. INDIAN OFF-SPINNER. 2005 c. Hindalco Industries b. Nurturing Education • 8-b. 2000 b. Congrats Sir! You will get a surprise gift from Surat Diamond Jewellery. in Indian Express 17 | 16 December 2010 | MONEYLIFE . on CNBC-TV18 “The US and China are the two governments that are causing the biggest distortions in the private markets.pimco. PIMCO. CHIEF ECONOMIC ADVISOR. 1. 30% b. Sound Bites “The IMF says temporarily trying to have capital controls may be advisable. The winner will be chosen by a lucky draw from correct entries. Aaron Chaze c. Legatee d. ICICI Prudential d. Burton Malkiel 4. New York 2. who dish out flat decks like the ones at Motera and Hyderabad. why should capital controls be controlling only the inflows? Why shouldn’t they control the outflows? Why should it be only for developing countries. Future Generali 7.200tpa • 4-b. address and telephone number before 13 December 2010. Aegon Religare b. London School of Economics 6. on www. Now. Tata Chemicals 8. Witness The answers to Moneylife Quiz-89 are: • 1-c. PORTFOLIO MANAGER. they both have the same policy: our currency. what is the cap on aggregate anchor investor holding? a. London b. in The Times of India “Instead of banning teaser rates. Copenhagen Business School b. your problem” – ED DEVLIN. why not for developed countries?” – YV REDDY. The answers to this quiz are in this very issue. Who wrote the book A Random Walk Down Wall Street? a. Where does Gabriele Lepori work as a researcher? a. 1990 3. The winner of Quiz-89 is Sai Narayanan from Ahmedabad. FORMER RBI GOVERNOR. $25 million In all. Turin • 2-a. 37% • 3-c. Intestate c. For which city did Aston Martin win the contract for designing and manufacturing city buses? a. Harvard Business School d. What is the term used for a person who dies without leaving a Will? a. In which year was the Maharashtra Dyslexia Association formed? a. Steven Davidoff d. GOVERNMENT OF INDIA. 22 readers got all the answers right last time. 1. 51% c. Bangkok c.. While expressing it in different ways. Aditya Birla Chemicals (India) was formerly known as— a. My view is that we can have a professional body which will have a right to say whether you are making a good judgement or not” – KAUSHIK BASU. we can have independent experts who can prescribe them like doctors prescribe steroids.com “Indian curators. 1996 d. 20% d.LOOSE CHANGE Surprise Gift for Quiz winners from: Moneylife Quiz . Mumbai d. As per the Bimal Jalan committee. The University of Oxford c. Testator b. 40% 5. should be rewarded with contracts to build national highways” – HARBHAJAN SINGH. Beagle Channel • 5-d.in with the Quiz no. MetLife c. your name. Send in your answers to quiz@moneylife. 20% • 7-d. 6 years • 6-a. The existence of these tapes was known for a while. “The Tata group has had a long and fruitful association with Vaishnavi Corporate Communications. the audio recordings now available are sensational because they expose the powerful network of media-business-bureaucrats and lobbyists who are able to purchase or influence decisions regarding powerful ministerial berths. Consequently.” A Wikipedia post explains the fruits of this association—how the Tatas have benefited through Pradip Baijal’s stints as secretary (disinvestment ministry) and as the telecom regulator. Niira Radia is among the most powerful corporate lobbyists. the stories behind the headlines and the truth between the lines by Sucheta Dalal PR-Mediagate ometime in the middle of November. heavy Internet traffic crashed the Open magazine website in a few hours. Manoj Modi. Ms Radia’s conversations explain why Ratan Tata was persuaded to issue a rare press statement saying. Ratan Tata’s statement claimed that all of Ms Radia’s interactions with government have been in keeping with the Tata values and never involved payouts or seeking undue favours. Not only journalists. journalists and others. ‘manage’ public perception and dictate national policy over allocation of natural resources or large projects.PR-Mediagate Radia’s Agenda & Modus Operandi Privacy & Other Issues Exclusive news. For those who are still in the dark. These recordings of conversations between Niira Radia. Mukesh Ambani and a string of journalists from The Economic Times and CNBC are among those whose personal conversations expose how Ms Radia uses them all to achieve her goals. bits and pieces have appeared in the media and blogs since April 2010. were part of a public interest litigation (PIL) filed by advocate Prashant Bhushan on the 2G spectrum allocation scam. However. Outlook and Open magazines released sensational audio recordings that sent tremors through the media and corporate world. Mr Baijal is now part of a think-tank set up by Ms Radia along with other powerful retired bureaucrats such as former finance secretary CM Vasudev. who apparently give her access. Kotak and Macquarie to do reports on power and telecom against Anil Ambani’s companies. although the mainstream media blacked out the tapes.. with top industrialists. but these tapes are a revelation for the aam admi.. Barkha Dutt and Vir Sanghvi. Ms Radia tells Mr Tata that she has got analysts of UBS. It’s funny how her conversations . Yet. Ratan Tata. a top corporate lobbyist. She also set up a thinktank packed with a bunch of top bureaucrats. especially those who believe in the images built by television. Niira Radia Mukesh Ambani and Ratan Tata are among her two biggest customers. Ms Radia’s phones were tapped by the income-tax (I-T) department’s intelligence unit in 2008 and 2009. intellectual firepower and a roadmap to the inner working of government. Many of us in the media have a ringside view of how the wheels MONEYLIFE | 16 December 2010 | 18 S of government are greased by this cabal of fixers. Mukesh was involved in a fight to deny him natural gas and her other big client. about Uddhav Thackeray suggest otherwise.” This is true in principle. was fighting him in power and telecom. “It is not just the 2G spectrum but the entire Republic of India that seems to be up for sale. Her hectic lobbying through Kanimozhi or ‘Kani’ (daughter of DMK supremo Karunanidhi and a member of parliament) and the apparent interventions of Barkha Dutt and Vir Sanghvi (who were liaising with the Congress Party) W on behalf of A Raja. important government posts and directorships. In one conversation. who owed his Cabinet post to Ms Radia’s lobbying. Interestingly. as the Outlook magazine says. Dr Pratap Bhanu Mehta has correctly discussed the implications of notoriously corrupt government investigating agencies being allowed to tap and leak private conversations at will. were clearly successful. No wonder. In fact. Mukesh Ambani’s main concern those days was the allocation of natural gas which was fought all the way to the Supreme Court. that we must work to tighten the laws of privacy. a stinkball of sleaze and corruption that gives the public a dose of reality. telecom minister A Raja.” This cosy nexus needed to be exposed.000 crore on purchases for Air India and Indian Airlines and that his sole intention was to strip the airlines which would help Jet Airways and Kingfisher Airlines. both her powerful clients had a common problem—a man called Anil Ambani. was ‘won’ over by Anil Ambani on the spectrum allocation issue. protection for whistleblowers and a crusade against the loot of the nation through the nexus between business and politics. The state becomes even more deeply corrupt when it gives up the principles that should regulate its conduct. there now seems to be virtually no check on the state in terms of what private conversations it can record. when in the name of pursuing investigations it gives itself carte blanche to do virtually anything. But she quickly worked at creating a common front against Anil Ambani by enlisting the support of Sunil Mittal of Bharti Airtel. Ratan Tata needed her to ensure that Dayanidhi Maran did not get the telecom portfolio. Radia’s Agenda & Modus Operandi ith Reliance Industries and the Tata group—two of India’s biggest corporate accounts —under her belt. Putting them up for scrutiny is not mere voyeurism—it is part of a much needed clean-up of society.Privacy & Other Issues W riting in the Indian Express. bureaucrats and journalists. who could always be asked to ‘behave’ by the friendly ‘Kani’. Her brief (at the time of the tapes) was twofold. well-intentioned attempts to combat corruption enact the very instrumentalism that they seek to decry. All in all. there are no statements of support from Mr Tata this time around. First of all. His subsequent articles clearly demonstrated Ms Radia’s influence. “But we should worry about this. lobbyists. But. It is only when we have a cleaner and less corrupt society. In civil society. she discusses instigating the Shiv Sena and Raj Thackeray to organise a protest against Anil Ambani’s power project. 19 | 16 December 2010 | MONEYLIFE . For their service and advice to political parties. under what pretext. Ratan Tata. Ironically enough. It would be a travesty of justice to invoke the right to privacy only when this small and powerful group of influencepeddlers is exposed in a rare situation that lays bare the cosy nexus between netas. Often. journalists have been rewarded with Rajya Sabha nominations. They soon launch alternate careers as permanent experts on television talk fests. A grateful Mr Raja. Ms Radia successfully ensured the right media coverage by controlling access to her big clients or smoothly hinting at withholding advertising. Then there is her claim that civil aviation minister Praful Patel has pocketed a whopping Rs10. this is the time to debate systemic change. Niira Radia’s areas of interest were clear— telecom and natural gas. was great for the Tata group. with the dealers being a group of powerful telemarketers—corporate houses. She even dictates the line and length of a proposed interview with Mukesh Ambani to Vir Sanghvi. the right to privacy and freedom from harassment by petty officials for bribes must be the norm. The media plays a big role in influencing public opinion and ‘influenced’ journalists are effectively used by their political mentors to build or destroy careers and put a lid on gross corruption involved in large government purchase or infrastructure contracts. babus and top opinion-makers in the media. 7 crore. listing of bourses and other issues. S Gopalakrishnan of Infosys (1.com exchanges are natural monopolies. unless directed by the government? Wouldn’t it have been simpler for the committee to recommend nationalisation of bourses with a single monopoly exchange? This would be in line with the committee’s other view—that T The Bimal Jalan committee has delivered a report whose sole beneficiary is the National Stock Exchange Sucheta Dalal is the Managing Editor of Moneylife. would have their salaries brought on par with chairmen of banks or public sector companies. MONEYLIFE | 16 December 2010 | 20 . should cause investors. She can be reached at suchetadalal @yahoo. once it is nearly dead can be quietly merged into the NSE (in fact. deputy MD Chitra Ramakrishna. Its only rival. will soon be starved of funding and become inconsequential while the report’s recommendations will ensure that MCX Stock Exchange (MCX-SX) is not allowed to enter the equity space. Keep private corporate entities (read MCX-Financial Technologies group) out of the capital market space. and the company secretary. The committee says there must be a cap on profits of stock exchanges and this must be linked to yields on 10-year government bonds after taking into consideration risks faced by market infrastructure institutions (MIIs) including equity risk premium and liquidity risk due to non listing of MIIs. the committee also suggests a 51% cap on aggregate anchor investor holding. Probably the only reason why the Jalan committee has not suggested nationalisation is that institutional directors on the NSE may also suggest that managing director (MD) Ravi Narain. especially those who have acquired NSE’s equity expensively. Rahul & Shrenik Baldota (2. this is already being discussed in certain quarters). the BSE.5 crore and Rs2 crore. their stock would have probably hit the lower circuit after the release of the Jalan committee report. if accepted. The result is a set of recommendations that is devoid of any vision to develop or deepen the capital market. the Bombay Stock Exchange (BSE). ownership. to scramble for the exit door. Here are some of the bizarre recommendations.5 lakh shares). the committee slips in a recommendation that sneakily protects the salaries of NSE’s top brass but not those of the BSE. Surely. This is probably the first committee that is so overwhelmingly packed with regulatory officials and just two regulated entities. once NSE is a monopoly. Each of them has paid a hefty premium. Rs4. The objective of the committee is clear.25 lakh shares). who take home gross salaries of Rs6. So. Ironically. This hits at the top brass of the BSE which is struggling to survive. It recommends “No variable pay or stock options” for the top bosses of stock exchanges (SEs). The Jalan committee says banks and financial institutions with Rs1. It also disfavours listing of exchanges which further puts paid to all the plans and ambitions of BSE and MCX. The result seems to be a ‘special purpose report’ (SPR) that appears to be aimed at helping the National Stock Exchange (NSE) retain its monopoly for the next five years at least and also work at permanently eliminating any competition. Wipro’s Azim Premji (13. This recommendation. While paying some lip-service to the propensity of entrenched bourses to use anti-competition strategies against potential rivals.71 lakh shares) did not invest in a ‘fixedincome instrument’ of the NSE. If the NSE and the BSE were listed entities.DIFFERENT STROKES Jalan Protects NSE he Bimal Jalan Committee was appointed in February 2010 to deliberate on governance. respectively. its solution is to eliminate competition altogether and perpetuate existing monopolies.000-crore+ of net worth can qualify as anchor investors and hold up to 24% (as against 15% today) for a maximum period of 10 years. The only reason private investors would stay on is if NSE convinces them that ‘risk premium’ is just a euphemism to ensure there is no real cap on profits or dividends. Instead. But did the committee spend a few minutes debating who these investors would be? Why would any institution invest 24% in a bourse to get a fixed return. Subscribers get free help in resolving their problems with select providers of financial services. Independent deliberations with several entities and directors on the board. who agreed to demutualisation of bourses (and conversion of their membership rights to equity) in the hope that their holdings would soar on listing. the committee itself gives relegated to advisory boards to use their its recommendations only a five-year shelf “rich practical experience. since how committees packed with their variable pay depends yes. The ostensible reason is that management of an exchange may misuse its majority holding to get surveillance-related information. The recommendations reveal how prevent them from accessing and misusing surveillance-related information or trading committees packed with yes-men come positions. BSE members. because they hope that the Securities and Exchange Board of India the committee and its findings will die a (SEBI) and not paid any commission or natural death. few have bothered chairman of SEs should be approved by to respond publicly. With turnover dwindling markets everyday.men come up with ideas that destroy rather than develop on the SE’s performance. the committee’s recommendation seems wholly influenced by the monopoly exchange. While without trading or clearing interest. SEs cannot hold more than a 24% stake in depositories because they have now become independent and self-sufficient entities. the BSE brass The Jalan committee’s recommendations could justify bigger bonuses only by showing stem from the ridiculous notion that neither higher valuations. The Exchange seems sure to sink and there is little chance it will be able to run a business with returns slightly higher than those from fixed-income securities. once there is a new chairman remuneration. 21 | 16 December 2010 | MONEYLIFE . This The recommendations reveal would have upset BSE’s top management. “shall at least be individuals. no trading and clearing up with ideas that destroy rather than member “should be allowed to be on the develop markets. Funnily. The committee mentions board” of any stock exchange. would be badly hurt. If accepted. If the Jalan committee’s stockbrokers nor management can be trusted recommendation on capping variable pay is to construct robust Chinese walls that also accepted.DIFFERENT STROKES started packing boards with retired IAS officers and this trend will only accelerate after the Jalan-Krishnan-Bhave (all former bureaucrats) recommendations are accepted. This will again affect BSE’s valuation. Trading members will be at SEBI. On the other hand. Many of them say that their equal to the number of shareholder directors views find no mention in the report. It says. Considering that nobody other than NSE’s well-paid and well-entrenched top management is opposed to listing. this recommendation will force the BSE to reduce its recently increased stake in Central Depository Services Ltd (CDSL) from 54% to 24%. this becomes a non-issue.” The they are hugely agitated.” SEBI has already life. the obvious target was telecom minister A Raja of the DMK. The winner is obviously the one who gains from the pain of the prime minister and the DMK. this leaked letter sucked Manmohan Singh into the corruption whirlpool. bureaucrat after former bureaucrat spoke openly. Now. Mr Raja was forced to resign on 14th November. on the night of 16th November. you have to ask another question: Who was the target or who would benefit from the unfolding of independent India’s biggest financial scam? On 12th November. the Congress Party and Sonia Gandhi inexplicably kept mum. has taken a severe beating. when they discuss the next election in Tamil Nadu. castigating Mr Raja for not heeding the PM’s advice. the DMK will remember to be a little more accommodating. For two days after that.70. Simultaneously. So. This time it was different. She has managed to remind Manmohan—who has.000 crore as earlier estimated but Rs1. It exploded with a ferocity not seen before because the scam figure.000 crore. suddenly became the person who deliberately left the safe open to help the looters. The prime minister. The CAG had anyway ‘cleared’ the prime minister saying that Mr Raja had disregarded his advice. she has demonstrated that the DMK needs the Congress more than the Congress needs the DMK. The telecom scam has been rearing its head every now and then since 2008.Dilli Durbar And the Winner in the Telecom Scam Is… Nothing happens in politics that is not planned. In the letter (written in 2006). What will happen from here on is difficult to guess. So the big question doing the rounds in power circles in Delhi is: Who has been leaking the details of the telecom scam? To answer that question. It was being repeated ad nauseum that even the prime minister’s office was kept in the dark by Mr Raja. we don’t know whose. Things seemed to be going okay for the PM. somebody didn’t like that. it seemed like he was the only villain. Obviously. the leaks did help Sonia. MONEYLIFE | 16 December 2010 | 22 . as the PMO grappled with screaming banner headlines about the sins of his commission and omission. So. The DMK has come out a big loser having been painted as a party that doesn’t stop even at mortgaging the interest of the nation for personal pelf. For three full days. His personal integrity might not be in question but his moral integrity as the leader of the nation. Sonia Gandhi. but the government has always managed to wriggle out without much action or explanation. Nobody sprang to Manmohan’s defence until 20th November when Kapil Sibal went channel-hopping in defence of the prime minister. although notional. been comparing himself to Jawaharlal Nehru and Indira Gandhi and repeatedly asserting that he will complete his full term—that he is in office at the pleasure of the Congress president. Mr Maran is making a pitch that the issue of spectrum pricing should be dropped from the terms of reference of the group of ministers (GoM). As if on cue. The biggest loser has been the prime minister. whose job it is to save every taxpayer-rupee. Coupled with the Supreme Court’s strictures for the delay in responding to Subramanian Swamy’s petition seeking sanction to prosecute Mr Raja. when CNNIBN broke the story that the loss to the nation was not Rs60. of late. The channel quoted the figure from the final report of the Comptroller and Auditor General of India (CAG) four full days before it was tabled in Parliament and released publicly (16th November). but it is easy to figure out the winners and losers of this round. was astounding even for a country that has got used to scams getting bigger and bolder with each passing day. who was thus far seen as a helpless bystander. CNN-IBN broke another story: a letter to the prime minister by Mr Raja’s predecessor BV Rao Dayanidhi Maran. The Tatas wanted A Raja to get the telecom ministry (which he finally got). So there was space for one more seat at the head table. and wrote exactly that. group editor of NDTV English news. Open and Outlook magazines published transcripts and uploaded taped conversations these two worthies had with Niira Radia. The Singhs. BV Rao has wide experience across print. The American side suggested that some other senior Cabinet member could be seated at the high table but the Indian side refused. Barkha Dutt. Digest that. head of Vaishnavi. All the other 11 tables seated eight persons each. has been able to show that tens of crores were spent by him on paid news. ask yourself this question: Why have you not seen this story on any channel or any newspaper (Mail Today in Delhi being the only exception). But. The Election Commission of India will soon be taking a call on the paid news case against Mr Chavan. TV and digital media. 23 | 16 December 2010 | MONEYLIFE . Obviously. on the nation. two groups at opposite ends of the corporate moral spectrum. the prime minister has not taken kindly to the projection of Mr Chidambaram as a prime ministerial candidate. The tapes are still out there on the websites of these two publications. Mr Chavan had shown only Rs5. and Vir Sanghvi. Vir even discussed exactly what Ms Radia wanted him to write in his popular Sunday column (‘Counterpoint’) in Hindustan Times. this is being too clever by nothing! Recorded between 2009 May and August. Can you trust a media that shrieks and shouts at every indiscretion of everybody else and blanks out the story on the questionable conduct of its own stars? What a shame! Another Shock for Chavan? Ashok Chavan. Paid news is the phenomenon where politicians pay newspapers and channels to run stories favourable to them. Basically. Ms Radia is such a force in the lobbying universe that she represents the Tatas and Mukesh Ambani. might be in for a shock. more importantly. That will mean Mr Chavan will lose his MLA-ship along with chief minister-ship.DILLI DURBAR Media Blanks Out Barkhagate Another gory story was playing on the sidelines of the telecom scam.000 as his campaign expenditure whereas the BJP. who was forced to resign as chief minister of Maharashtra in the wake of the Adarsh Housing Society scam. He was group editor at ZEE News and senior editor with DNA and Indian Express. which has lodged a case against him in the Commission. Forget about being too clever by half. the Gandhis and Pranab Mukherjee. this is an advertisement that is camouflaged as news amounting to betrayal of the reader’s trust. the penalty could be as harsh as annulling his election. In the 2009 Assembly elections. the tapes reveal how Ms Dutt and Mr Sanghvi are making themselves willing couriers for Ms Radia as she tries to influence the Union Cabinet formation to ensure that the telecom portfolio does not go to Dayanidhi Maran. Listen to them and make up your mind on whether these two top editors were just playing the ‘nice guys’ in the dirty gang-wars of politicians and corporate houses or were active participants in foisting one of the biggest scams No PC Please There were seven people at the head table for the prime minister’s dinner for president Obama. indulge them out of professional necessity and personal courtesy. Since evidence against Mr Chavan is undeniable. Mr Chidambaram. Ms Radia wanted Barkha and Vir to carry messages to the Congress top brass from the DMK side during the height of Cabinet formation for UPA-II. the Obamas. a corporate lobbying group. home minister P Chidambaram was deliberately kept away from the power table. advisory editorial director of Hindustan Times. occasionally. were at the vortex of this unseemly story. Obviously. Both of them protested that as journalists they have to talk to all types of people for news-gathering and. 61 -39. DSP BlackRock Top 100 (non-SIP) yielded 57.43 -38.11 -30.78% returns over this period. Staying invested only for a year may affect your returns.95 43.20 50. let us understand how SIP of five years proves that SIP holds an investor in good stead. in March 2009.53%.94 47. Now.08 35.92 Non-SIP 10.80 70.53 57.75 -44.60 -31. Now. stocks got beaten down severely.95 2. the SIP had purchased substantial units in the Fund at the lowest price. one should give it at least three to five years.49 -44. Reliance Growth Fund also yielded -48. investors having made a one-time investment in January 2008 got nowhere as the market only moved sideways over this two-year period.38 -26.13 0.000 to a low of around 8.13 61. Comparatively. the annualised SIP returns are 35.10 Mar-09—Oct-10 SIP 63.05% returns during this period. How did the SIP route work out so much better? As the market was falling rapidly. plunging from a high of nearly 21.37 -32.55%. The HDFC Equity Fund (non-SIP) delivered -44. For SIP investment to work.63 Non-SIP -49. when the SIP return was -38.000 mark again by October 2010.MUTUAL FUNDS POINTERS SIPping Pays.01 3.53 -30.91 78.78 -42.76 0. But does that mean you should wait for a sunnier day to make your move? If you do.19 -45.19 10.000 by March 2009.40 -37.19 46. While the non-SIP investment has yielded 3.79 27.54 33.05 32.67%.78 96.88 3.76 3. The minimum amount can be as small as Rs500 and the frequency of investment may be daily.67 63.75 3.92%. The Sensex went into free-fall starting January 2008. let us see where SIP got investors during the rally that began in March 2009.85 82.07 -55. the Sensex staged a phenomenal rally. However. How did equity funds perform during this period? The HDFC Equity Fund has delivered non-SIP annualised returns of 10.88% over this period. What is the difference between a SIP and non-SIP return? If the market is volatile and nontrending the difference can be huge.05 102.34 -48. By the time the market had touched rock-bottom.95 79. MONEYLIFE | 16 December 2010 | 24 .45 -49. SIP helps to minimise losses during a downturn but underperforms woefully in a stock market rally. your SIP process was buying more and more units at lower and lower prices every month.47 47. ironing out the market volatility during the period.07% returns in this period.20 28.48 35. while the SIP in the same Fund clocked only 61.trending and volatile market favours SIPs W ould you invest a lump sum amount in an equity fund when the market is hovering around the 20.95% over the same period! Take another popular scheme—Reliance Growth Fund. Fund performance analysis over a period Merits of SIP Fund Name Jan-08—Oct-10 SIP ICICI Prudential Discovery Fund HDFC Equity Fund Sundaram BNP Select Midcap Reliance Growth Fund Fidelity Equity Fund Principal Large Cap Fund Canara Robeco Multi Cap SBI Magnum Multiplier Plus Franklin India Prima Plus DSP BlackRock Top100 Equity Fund Source: Value Research Returns (%) Jan-08—Mar-09 SIP -36. however.46 64.54 5.13 73. Its SIP equivalent. you could lose out on a strong rally.07 -41.87 -38. as happened during the past one year.78 46 40.54% annualised returns during this period. the SIP return of the Fund is a whopping 43. Under a SIP. From this point.77 51. Between January 2008 and March 2009. However. Sometimes A non. rising to touch the 21.000 mark? Most would hesitate to take the plunge. allowing it to take advantage of the steep rise in works out in different market cycles. To address this dilemma there are systematic investment plans (SIPs).55 35.16 Non-SIP 103. monthly or quarterly.47% whereas its SIP equivalent delivered 35.75%. HDFC Equity Fund (non-SIP) managed to deliver 96.16 34. do keep in mind that it will not always help you if you select a poor mutual fund. you invest a fixed small amount of money at regular intervals in a mutual fund of your choice.59 43.66 -49. managed to keep losses somewhat lower at -32.16 prices thereafter. BLANK PAGE . 000-crore estate to RS Lodha (also deceased now). For us. by and large. corporate law expert. On the other hand. How should you go about it? Why Make a Will? Before we get into that. If you do it well. For want of a Will. set the cat among the Birla pigeons. but has not signed the documents for years. Daughters got their share of family assets by MONEYLIFE | 16 December 2010 | 26 . says Dr SD Israni. various claimants to your estate and some tweaking by the court. Priyamvada Birla. it is a good idea to create a document which spells out what you wish. rather than have your estate distributed under various laws of inheritance. For instance. inheritance was decided by the laws of succession. But. even though the group had previously partitioned their assets. He talks of a client. Priyamvada Birla made a Will and it still created a problem. made a Will. proper Will and Nominations are a must. the lady who shot to fame after her death. it won’t be easily contested. although his fortune was vast enough to provide for several generations of Ambanis. many Indians think making a Will brings bad luck. DH Ambani did not make a Will and it created a problem. Given that a lot of Indians are si ng on significant wealth. Dhirubhai Ambani’s sons fought one of the bloodiest succession battles. sometimes after a bitter battle among your heirs. Changing family structures and growing prosperity is forcing Indians to realise the importance of a Will. a significant part of the assets of middle-class families comprised the family home and some land. The angry clan ganged up to contest the Will. Sucheta Dalal tells you all that you need to know about this vital but ignored area of personal finance Wills of the rich and the famous almost inevitably land in court but that’s because they have money to spend. whether or not there is a Will involved. probably fearing bad luck. until recently. who prepares a Will and updates it frequently. properlyexecuted Will ensures that your wishes are honoured. a well-drafted. especially from stocks and real estate. But the fact that the widow of industrialist MP Birla stunningly bequeathed a Rs5. a financial advisor and auditor to the entire Birla group.COVER STORY PASS it on smoothly I nheritance battles seem the norm for the rich and the famous. ” The inheritance laws applicable to you differ according to your religious affiliations. says. even a written one. Increased awareness about the need for a Will is evident from the huge response to Moneylife Foundation’s three seminars on Wills. “The law does not prescribe the form or content of a Will. Elders in traditional patriarchal Indian families. It must have your name. or a physically-challenged child. a wish list. 1925. This can only be done through a Will. especially women. can never substitute a proper Will. inter-caste and inter-religious marriages and children from different spouses. Jains and Sikhs. you can change your Will as many times as you want to. applies to Hindus. large institutions and sharetransfer agents prefer to depend on the Will that is registered. straightforward and easyto-understand language. Having said that. “Making a Will is especially important if all your children are not all equal— financially or in terms of physical and emotional well- 27 | 16 December 2010 | MONEYLIFE . 1956. The executors apparently went to court against this ‘wish list’ and finally handed out peanuts to the godchildren. then be careful to ensure that it’s complete each time. you have to make a Will. even a judge does not necessarily have domain knowledge. accounts and property law expert.” say the authors. because inheritance laws would treat all children equally. an associate at the law firm Singhi & Company. Instead. middle class senior citizens have significant selfacquired assets and want a say in their bequest. The Indian Succession Act. says. with nuclear families and children scattered across the globe. A person with a dependent widowed daughter. But if you are in the habit of changing the Will frequently or to use your Will as an instrument to ensure your family’s devotion. my daughter-inlaw will get the diamonds and my layered gold chain will go to my second daughter. it is important that a ‘homemade’ Will is legible and comprehensive. “What if I change my mind?” Well.COVER STORY way of dowry or streedhan. Jayesh Desai. which increase the importance of writing a Will. It must have a complete list of your assets and liabilities and details of their distribution in simple. make sure you have a legally valid Will which is very specific about how cash and assets will be distributed. It wasn’t unusual for the matriarch to say. address. it must be signed and attested by two witnesses in the presence of each other and the testator (the person making the Will). age and a declaration that you are in a sound medical state. Among the younger generation. The lesson: “Don’t undermine your Will or trust by taking shortcuts. may want to make special provisions for them through a Will. over children who are better-off. is applicable to Christians while Zoroastrians and Muslims have different laws of inheritance based on their religious texts. The last one will be the one that is held valid on your death. His family was forced to spend thousands of dollars to have his Will clarified by a probate court. And you do not even need a lawyer to make a valid Will. an eminent tax. However.” Today. As the authors Danielle and Andrew Mayoras point out. Trial & Heirs narrates the story of a US Supreme Court judge who believed in such brevity that he wrote a Will that was just 176 words. For some people. it is a simple statement of your wishes. the big worry about making a Will too soon is. Shias and Sunnis have different laws and Muslims are the only ones who can make an oral Will. “My (gold) bangle set will go to my elder daughter. when it comes to actual transfer of your assets. How To Go about It? Let’s start with some basics. a Will does not require payment of stamp duty and registration. At the core. being. Buddhists. Vimal Punmiya. there are multiple marriages. would bequeath their jewellery orally. This is often easier said than done. to avoid confusion over which succession law would apply. If you want these laws not to apply to your case. Today. so it makes sense to get a Will Corporate law expert Dr SD Israni speaking at Moneylife Foundation event on Wills The authors of a well-known book called Trial & Heirs write about how Princess Diana made the mistake of leaving a ‘letter of wishes’ asking her executors to divide her personal property at their discretion but to give one-quarter to her godchildren. The Hindu Succession Act. It can be handwritten or typed on plain paper.” Further. But again. accounts and property law expert speaking at Moneylife Foundation event on property. We learn there was still a litigation over the Will—not about the bequests Key People in the Process While planning to make a Will. for instance. The same is true of witnesses. a doctor’s opinion on your mental soundness is less likely to be contradicted and a lawyer or a chartered accountant would ensure correct legal procedure. from a royal family. In such situations. ensure they are people who will turn up and vouch for your mental soundness if there is a dispute. chose to appoint her ex-husband as the executor of her Will. At the same time. learn from Vimal Punmiya’s client. Typically. In the US. It said that anyone who contested his Will would be completely disinherited. Trial & Heirs provides a dramatic story to show how important it is to choose the right executor. it is not necessary for you to inform them. From her signing of the Will to the entire entourage going over to the registration office to have it duly registered. First. “is when you want to favour particular persons (say a neighbour or your favourite library) or disinherit a daughter who married against your wishes. demanding a larger share of his estate.” says Mr Punmiya. Apart from avoiding executors who may turn nasty or greedy. When she died. other than your heirs. the divorced wife of millionaire Ronald Perelman. All this suffering because she made the dreadful mistake of appointing Perelman as the executor of her Will. if the executor is one of the beneficiaries. Perelman dragged her old and paralysed father Robert Cohen to court. The courts cut down the dog’s inheritance to just $2 million. who did not even tell his family that he had executed a Will and given it to Mr Punmiya for safekeeping. this simple act (where there are no disputes) has turned into a MONEYLIFE | 16 December 2010 | 28 .COVER STORY reviewed by a lawyer who specialises in the subject. While it is a good idea for your witnesses or executors to be confidants and know the content of your Will. the sisters immediately staked a claim to the home and the father ended up leaving a pile of woes for his son. remember his position is compromised. was so certain that her relatives would question her Will and soundness of mind that she went to enormous lengths to record the process on videotape. who are crucial to the process. in a nutshell. If the Will is challenged. but died without making a Will. Probate means getting a copy of the Will validated by a court. because they get discredited if there is a dispute. As Dr Israni says. an eminent tax. One of Mr Punmiya’s clients. The process and rules differ from one state to another. It must be a person whom you trust and who is rational and will have your best interest at heart. it would require a probate. Greedy and unfair relatives are a problem the world over.” was discovered only by chance. it is important that the Will provides full explanation for your wishes and action. several months after the client’s death. but. When it comes to a homemade Will. In doing it. It is also a smart idea not to have your heirs or beneficiaries as witnesses. “The tricky part. As it happened. chairman of cosmetic giant Revlon. it makes practical sense to select your witnesses carefully. it is simply the act of getting the seal of a court on the contents. you need to think carefully about whom to appoint as executor to your Will. So keep someone informed. but he ignored that too. Learning from Disputes Mr Punmiya recounts the story of a man who gave away big chunks of his estate to his daughters and planned on leaving the family home to his son. It Vimal Punmiya. grandchildren of the hotel heiress Leona Helmsley disputed her decision to leave $12 million to her dog and very little to them. The famous Frank Sinatra added what is called a ‘No Contest Clause’ to his Will. While any two persons can be witnesses. Again. everything was recorded. you need to start thinking about the key people. Wills and nomination but because his last wife was needlessly delaying the distribution of his assets. he spent a few million dollars of his ex-wife’s money to sue her father! Claudia Cohen had specifically requested that Perelman should not strain the relationship between the daughter and her father. just in case there is a battle over your assets. Claudia Cohen. a commonsense approach is to choose an executor who is capable and familiar with legal formalities and is younger than the testator and has a higher probability of outliving him. BLANK PAGE . For Christians. Mutual Will: Two testators confer reciprocal benefits—either of them constituting the other as his/her legatee. This is known as a ‘Privileged Will’. Testator: A person making the Will. the late Madhu Dandavate. as Ch Viswanath of Karvy Investor Services Some Important Terms Will: A legally-valid document that enables you to choose who gets your self-earned assets a er your death. Codicil: Changes to a Will or explain certain provisions.COVER STORY nightmare because of clogged courts and corruption. he says. Zoroastrians have a different law of inheritance. This can be done by using the nomination facility effectively. Every page of the Will must be signed by the testator and initialled by the witnesses in each other’s presence. MONEYLIFE | 16 December 2010 | 30 . legal experts can often guide you on how to leave your assets without needing a probate. 1956. is applicable. A nominee is not necessarily the heir or beneficiary but only has the right to receive the asset. if something were to happen to the parents. That has. * Only Muslims can make a valid oral Will. The law allows members of the armed forces engaged in actual warfare/ expeditions and mariners at seas to make an oral Will. Jains and Sikhs. Finality of Will: A Will can be revoked any time and updated as many times. Muslims have their own law. it will not be enforceable during the lifetime of either. * You can only bequeath what you own. Both have different laws of inheritance. insurance and flats in co- operative societies by filling the prescribed forms. Similarly. Who Can Make a Will: A person who is not a minor and is of sound mind. not been codified in any legislation but is based on their religious texts. usually a er checking. Kinds of Wills Conditional or Contingent Will: They come into effect only if a certain event happens. However. * A Will must be signed in the presence of at least two witnesses. Nomination: A person can be nominated to take charge of assets such as bank accounts. In an email to Moneylife. under the Indian Succession Act. finally went public about how the Bombay High Court had delayed the probate of his father’s Will for five years and how his lawyers hinted that it wouldn’t happen unless he paid a bribe. “I am not budging. Probate: It is the copy of a Will certified by a court. he/she must be clearly identified to avoid ambiguity or Know More About Wills confusion. for creating trusts and for appointing testamentary guardians of minor children. A conditional Will is invalid if the condition imposed is invalid or contrary to law. Law Applicable to Intestate Succession: For Hindus. Providing proof of ownership of assets avoids disputes. Joint Will: A joint Will by two persons is intended to take effect a er the death of both. It can be on plain paper and can be handwritten (ensure it is legible). son of the former socialist leader and railway minister. Legatee: A person who inherits under the Will. if other heirs have objections.” For middle-class Indians. Executor: An executor is a person appointed by the testator to administer his/her Will. There are two major sects of Muslims—Shias and Sunnis. * The Will must contain the name. without rewriting the entire Will. the Indian Succession Act. address of the testator as well as those of the Witnesses. * The law does not prescribe a format for a Will. 1925. These are usually made by husband and wife. He (his father) led his life without taking any illegitimate money. It is important that an executor agrees to perform this role. Must be signed by the testator and attested by two witnesses. Single parents usually appoint testamentary guardians to take care of minor children. Testamentary Guardian: A guardian appointed through a Will. Uday Dandavate. If an executor is appointed. because otherwise the court appoints an administrator. Registration: Registration is not mandatory but it provides strong legal evidence of proper execution of a Will. In November 2010. Other Benefits of a Will: Wills can be made for appointing executors. the laws of inheritance have been codified in the Hindu Succession Act. * A Will must list and document all your movable and immovable assets and clearly specify your bequests. Buddhists. however. It can be updated through a Codicil or can contain a ‘residual clause’ to cover assets that are not specifically mentioned or acquired later. Intestate: Person who dies without leaving a Will. Essential Components of a Will * A Will has to be in writing. BLANK PAGE . only 2% said it invites bad luck to make a Will or that a Will cannot be changed. though. Make a Will now. co-operative societies allow transmission of apartments through nomination as well. What Is Nomination? ‘Nomination’ has different meanings depending on whether the asset is property. lack of deeper awareness was widespread We conducted a survey of Moneylife readers to gauge their awareness of various aspects of Wills. However. Do you think nominations are a good substitute to making Wills? Yes-25% No-75% One out of four respondents considers it is necessary to have a doctor/lawyer as a witness. MONEYLIFE | 16 December 2010 | 32 . MONEYLIFE SURVEY Will Issues While the respondents to our survey knew the basics. as many as 46% are unaware of the landmark judgement of the Bombay High Court that a nominee men oned in the demat account becomes the owner of shares. But. Also. once made. discussed later) nomination does not lead to ownership. All the legal heirs of the deceased member have a right of succession to the property of the deceased member and a nominee cannot exclude the other legal heirs. Most often. lack of awareness was widespread on many other issues. Yes-54% No-46% 54% of the respondents say that a nominee becomes the owner in case of shares. Yes-30% No-70% One in three respondents thinks that nominations are a good alternative to making a Will. A nominee gets a charge of the assets and acts as a trustee but will have to hand them over to the heirs if there is a Will. Even the rare few who are tracking their wealth are not thinking of it. shares. Their informa on level on the basics of a Will was high (probably because 1.” If you hold shares in demat accounts. Legal expert Dr Israni says that the wording of the amended Section (109A) of the Companies Act (dealing with nomination for shares) is such that the Bombay High Court judgement will probably be upheld by other courts as well.” A Will is not something we think of. Is it mandatory to have a doctor/ lawyer as a witness? they are Moneylife readers). “Companies prefer a Will that is registered or sometimes require a probate. For instance.COVER STORY told Moneylife at a seminar in Pune. 25% believe that it is mandatory to have a doctor as a witness (wrong) and 30% felt that nomina ons were a subs tute for Wills (wrong). as our survey shows. especially since a lot of average people have become wealthy. Does a Will have to be registered? 4. Mr Punmiya points out that the Supreme Court of India ruled in 1984 that “A nominee is a mere trustee with whom the (co-operative) society can initially deal after the death of a member. insurance policy or asset. 2. but not necessarily.” The transmission of immovable property also requires a probate (which is why court officials make money by threatening delays). As many as 96% (of the 740 respondents) believed that it is important to make a Will. 3. then remember the recent Bombay High Court judgement which held a nominee’s rights to be higher than those of an heir. insurance or bank accounts. But a Will is an essential component of your personal finance. on the death of the shareholder/s or holder/s of debentures of the company become entitled to all the rights in the shares or debentures… to the exclusion of all other persons. you nominate a person who you intend to be the beneficiary of a bank account. Does a nominee become a owner in case of shares? Yes-40% No-60% More than one-third (40%) of the respondents think that a Will needs to be registered. In most cases (except shares. Section 109A (3) reads: “The nominee shall. though this number is growing. unless the government amends the badly-worded Section. A nominee can also be an heir. thanks to the rising value of their financial assets and real estate. in Maharashtra. BLANK PAGE . Here is what you get: What’s Inside . and clear recommendations on when to sell Email us at mail@kensource. Price is the most important information and should normally overrule most other factors 3.995 .Weekly market view . Just 30 minutes a day. A Winning Edge. delivered by email M oneylife magazine has been bringing you the finest approach to stock picking – methodical.Weekly updates on all recommended stocks. An open mind about value and closed mind about price allows us to go wherever the opportunities currently are.com for a sample Our Investment Philosophy 1.6000 Stocks. Value is a subjective idea impossible to capture in any financial formula 2. research. Let us do it all for you: screening. non-impressionistic and ethical.A short list of stocks to buy. grading and tracking Weekly stock letters for high profits with low-risk strategies. with reasons .495 Special Combo Offer for All Three: Rs1. The same team that created a proven system that beats the major indices year after year now offers stock letters in different flavours for investors with different investment horizons and objectives. Only large companies are recommended Annual Price of Each Stock Letter: Rs995 Special Combo Offer for Any Two: Rs1. analysis. We do not limit ourselves to specific styles and themes Cheetah: Short-term momentum Antelope: Medium-term growth stocks available at reasonable prices Lion: Long-term value—stocks that have a reasonable chance of beating the market over time. Ltd.Investment Process: We crunch thousands of numbers to spot trends. This offer is valid for a limited period. We aim to earn positive returns in all markets. 315. COMPANY Crompton Greaves Aptech Shree Renuka Sugars Coromandel International Chambal Fertilisers Oil Country Tubular* Titan Industries* Sterlite Technologies* Financial Technologies* Torrent Pharmaceuticals* Yes Bank* * Non-annualised Issue Date 05-Jan-09 05-Jan-09 15-Dec-08 26-Jan-09 05-Jan-09 24-Aug-09 28-Dec-09 28-Dec-09 09-Nov-09 24-Aug-09 24-Aug-09 Recommended Price (Rs) 147 101 66 109 41 83 1. we do not benchmark ourselves against arbitrary indices. Mutual funds propagate that you cannot time the market.000 . The best stocks will decimate your portfolio if you don’t sell them on time. Special Combo Offer for Any Two: Rs1. We use this information solely to service your account . Hind Service Industries Premises.. This is because it gives them an excuse to invest lazily—hold on to companies in a declining market.000. Ltd. Credit card orders can be faxed to Mumbai 022-24442771. I wish to subscribe for one year to the following winning stock letters: Cheetah: Short-term momentum Antelope: Medium-term growth stocks Lion: Long-term value Annual Price of Each Stock Letter: Rs995. In case payment is through credit card. We suggest holding at least 50 stocks in the portfolio. we believe that the only objective of an investment is to earn positive returns. ( ) Please charge it to my ( ) /( ) /( ) /( ) My card number is _______________ & expiry date is ____________ (MM / YY) DATE: ______________________ SIGNATURE: ______________________ Please fill in this order form and mail it with your remittance to Kensource Information Services Pvt.Rs50. it improves your chances of owning those rare few stocks that everyone wishes they had spotted too—earlier. Mumbai 400 028. How are we different from a mutual fund and your stockbroker? 1. # All disputes shall be subject to Mumbai jurisdiction only. unearth bargains and use our years of perspective and knowledge of companies and managements to select the stocks that best meet the relevant investment criteria. we are not concerned with whether you buy 50 shares or 5.420 71 1. We believe that timing is crucial. telephone number. # Rates and offers are valid only in India. You can cancel by email or phone. Cancel within four issues. Dadar (W). 4.000 ( ) Please find enclosed ( ) Cheque / ( ) Demand draft number ____________________________________ dated __________________ favouring Kensource Information Services Pvt. Unlike stockbrokers. Off Veer Savarkar Marg. 2.809 86 1. In contrast. brokers earn their commissions irrespective of whether you make money or not. Special Combo Offer for All Three: Rs1.000 ( ) Rs25.571 274 196 Return 76% 63% 59% 55% 54% 32% 27% 22% 17% 15% 14% YES. Unlike mutual funds that hold your stock through a sharply falling market and often end up with poor returns. Our stock letters will survive only if you make money.347 238 173 Exit Price (Rs) 257 165 104 170 63 110 1. or any other information that you provide to us. expiry date of the card should be mentioned. 3rd Floor. Buying scrips of good companies is not an end in itself. We will return your money for the remaining period of subscription. Shivaji Park.000 ( ) Above Rs50. You can cancel your subscription within four issues.995 NAME: ____________________________________________________________________________________________ ADDRESS: __________________________________________________________________________________________ PHONE (Office): ____________ Phone (Res): ____________ E-mail address: _____________________________________________ Date of Birth: ____________________ (MM) (DD) (YY) (Please ensure correct date of birth if payment is by credit card) _____________________ Profession: _____________________ Designation: ____________________________________________________________ Monthly Household Income: (Please tick the appropriate) ( ) Below Rs25. 3.495. Our income is not tied to your actions. whether you buy/sell once a week or 20 times a week. Privacy Policy We do not give away your e-mail or postal address. We earn by selling ideas that we have to be responsible for. Unlike mutual funds. Caustic soda is critical to many industries such as paper.000 tonnes per annum (tpa) aluminium chloride plant in 2007 and a 17. ABCIL plans to expand its aluminium chloride plant’s capacity from 25 tonnes per day (tpd) to 50tpd by installing additional reactors based tio n St or ies of Pr ice Ma nip ula Explicit Finance (Rs17) e (Rs17 Mumbai-based Explicit Finance deals in shares and securities. To meet its uninterrupted power-supply requirement in power-starved Bihar. It recorded an operating profit of Rs124 lakh on revenues of Rs1. The stock has jumped 269% between 24 June 2010 and 16 November 2010. Its product range includes caustic soda lye. formerly known as Bihar Caustic and Chemicals. as a joint venture between the Aditya Birla group and the Bihar State Industrial Development Corporation. hydrochloric acid. textiles. tanning process. the company had commissioned a 12. ABCIL is one of the leading chlor-alkali manufacturers in India. including alkyl chloride. hydrogen gas and sodium hydroxide (caustic soda). petroleum products. was set up in 1976. MONEYLIFE STOCK IDEAS THAT WORK Recommended Price Rs55 Moneylife Issue 30 July 2009 162%* Current Price Rs173 On 26 November 2010 * Annualised returns ( KNR Constructions ) MONEYLIFE | 16 December 2010 | 36 . bleach. Revenues in the March 2010 quarter fell to Rs1. For value-addition and effective utilisation of chlorine. Explicit’s operating loss in the June 2010 quarter was marginally lower at Rs32 lakh while revenues declined to Rs1. sewage systems. liquid chlorine. to supply caustic soda to Hindalco Industries.STOCKS STREET BEAT Unbiased & Methodical Stock Picking that Works! Right Equation Aditya Birla Chemicals is a low. the company has a 30MW captive power plant.99 (Rs) A 30 25 20 15 10 5 0 Explicit Finance 269% Aug-10 Nov-10 Jun-10 crore and operating profit to Rs26 lakh. The term chlor-alkali refers to the two chemicals (chlorine and alkali) which are produced as a result of the electrolysis of a salt solution.500tpa stable bleaching powder plant in 2008. organic synthesis and other applications. Further processing can create a variety of chemicals. The September 2009 quarter saw revenues increase to Rs1. the unusual rise in the stock price has little to do with its financial performance. The company’s caustic soda lye capacity is around 105. sodium hypochlorite.72 crore in the June quarter. aluminium chloride and stable bleaching powder. soaps & detergents. etc. Stable bleaching powder is marketed under the brand name Shaktiman and is used in textile mills for bleaching. aluminium and chemical processing.000tpa. Its operating profit was Rs21 lakh on revenues of Rs85 lakh in the March 2009 quarter.priced scrip and a growing organisation ditya Birla Chemicals (India) (ABCIL). hydrochloric acid.97 crore and the company’s operating loss was Rs33 lakh. Currently. sanitation. sodium hypochlorite. compressed hydrogen gas. Clearly.23 crore. The most common chlor-alkali chemicals are chlorine. It uses environment-friendly membrane-cell technology. ABCIL’s manufacturing process is energy-efficient. The additional capacity will be commissioned by the end of the current financial year.76 compared to Rs204. Caustic soda For FY09-10. The company’s revenues in the September 2010 quarter surged to Rs10. The stock soared 1. Revenues in the December 2009 quarter rose to Rs24 lakh and operating profit was Rs9 lakh. Y-o-Y: Year on Year.07 62. Shree Nath posted an operating loss of Rs1.40 crore.10% to 75 Rs16.75 crore from Rs60. The coal linkage for the proposed power plant has also been sanctioned by the ministry of coal in January 2010.84 59.698% between 1 February 2010 and 16 November 2010. Net profit was up Y-o-Y OP Growth -5% 0% 12% by 31.03 crore in the corresponding quarter last year. The company is also exploring expansion of its caustic soda plant by another 150tpd for which it has received clearance from the ministry of environment & forests.698% Jun-10 Nov-10 Feb-10 was nil. Its EPS increased 27.86 crore Sales* 57.12 crore in the June 2010 quarter while its revenues jumped to Rs3.70 crore from May-10 Aug-10 Nov-10 Rs13. with a capital investment of Rs12.31 crore. MONEYLIFE STOCK IDEAS Recommended Price Rs110 Moneylife Issue 4 June 2009 THAT WORK 116%* Current Price Rs300 On 26 November 2010 * Annualised returns ( Sesa goa ) 37 | 16 December 2010 | MONEYLIFE . the poor and erratic financial performance has nothing to do with the humungous rise in its stock price.11 crore.96% to Rs7.25 25.96 23.14 from Rs5.58 in the tio n St or ies of Pr ice Ma nip ula Shree Nath Commercial & Finance (Rs63) mercia Shree Nath Commercial & Finance is supposedly engaged in the commercial finance business. its net Mar-10 Jun-10 Sept-10 sales were Rs221.01 crore and its operating profit stood at Rs2.STOCKS STREET BEAT Unbiased & Methodical Stock Picking that Works! on the latest technology.81% from last OPM 35% 39% 41% year—to Rs60.14% rise in net sales to Rs62.74 crore from Rs46.64 crore in the previous Y-o-Y Sales Growth 4% -1% 5% year. Clearly. due to a 5. 105 ABCIL’s standalone net 90 profit rose 28. For the quarter ended September 2010. The average production of caustic soda Positive Reaction and chlorine for FY09(Rs) 10 has been recorded at 150 the highest-ever level of Aditya Birla Chemicals 286tpd of caustic soda 135 and 191tpd of liquid 120 chlorine. The company’s revenues in the March and June 2009 quarters stood at Rs1 lakh while its operating profit in the same period (Rs) 75 60 45 30 15 0 Shree Nath Commercial & Finance 1.05 crore. The cost of this expansion is expected to be around Rs325 crore.08 crore in the OP: Operating Profit. OPM: Operating Profit Margin * Figures in Rs crore last fiscal.07 OP* 19. Belair.07 52% 44% 16% Sept-10 207.78 49% 20% 12% Jun-10 172. pharmaceuticals.95 times. Operations in China are stabilising and (are) expected to pick up Global Vision Elgi Equipments plans to expand its business significantly Mar-10 Sales* OP* Y-o-Y Sales Growth Y-o-Y OP Growth OPM 175. food. Elgi is exploring various organic and inorganic growth opportunities in various geographies. North America.89 50% 58% 20% E lgi Equipments makes compressors and other related equipment used in mining. etc. in turn. The recovery is sporadic and slow. which. Y-o-Y: Year on Year. On its international plan.93 40. Elgi has a presence in all major markets across the world covering Europe. “Export markets have started recovering from the recessionary trend only during the OP: Operating Profit. transport. the company has said. As part of its domestic expansion. based on the September quarter results. Elgi has finalised the land for building a new facility. while annualised market-cap to operating profit was 9. second half of the financial year. while operating profit in the same period rose by a superb 58%.45.STOCKS STREET BEAT Unbiased & Methodical Stock Picking that Works! corresponding period last year. Africa. Latin America. The company is also working on a plan to set up its own foundry to support the critical needs of highquality components and casting. Middle East. was 1.41 and 3. plastics. It is not cheap. Besides serving the domestic market. Many manufacturers are launching new models of cars in the small segment which will fuel growth in car sales. especially since its EoNW (Earnings on Net Worth) for the year ended March 2010 was 15%. One can buy the stock around Rs134. The company’s market-cap to sales. The operating profit margin was a hefty 20%. especially since its RoNW (return on net worth) for March 2010 was 18%. power. OPM: Operating Profit Margin * Figures in Rs crore Heavy Duty (Rs) 210 Elgi Equipments 185 160 135 110 85 May-10 Aug-10 Nov-10 during the coming year. Procedural formalities for establishing the Brazil outfit are complete and the company will be expanding its business significantly. will strengthen and increase servicing networks. Asia and the Far East. respectively. oil. Elgi acquired a French compressor company.17 27. as a wholly-owned subsidiary which will be a gateway for spreading the business into Europe.82 20.” The demand for vehicleservicing is bound to increase as the population of cars keeps on increasing. MONEYLIFE STOCK IDEAS THAT WORK Recommended Price Rs130 Moneylife Issue 31 December 2009 58%* Current Price Rs199 On 26 November 2010 * Annualised returns ( everest industries ) MONEYLIFE | 16 December 2010 | 38 . All this will increase the requirement of garage equipment. Elgi Equipments reported 50% growth in sales in the September 2010 quarter over the corresponding year-ago period. But the stock enjoys great growth momentum and can be bought around Rs186. Australia. which are quite attractive.93 times. Its market-cap to sales and operating profit ratios are 1. In FY09-10. JBCPL has launched ‘Zephyr’. With a strong base of 11 manufacturing units (including three US Food and Drug Administration-approved tablet & bulk drug plants) and two R&D centres. exit if the stock falls by 20% from the highest daily closing price. The cardiovascular and antidiabetic markets together are worth about Rs2. 39 | 16 December 2010 | MONEYLIFE . None of the stock information. Source: Centre for Monitoring Indian Economy’s Prowess database.000 by the end of next financial year.21 31. CNS drugs are one of the major growth drivers in the world with high level of R&D activities channelled in this segment. Past performance is no indication of future results. such as cardiovascular drugs & antiulcerants. it expects to start these supplies this fiscal. It hopes to leverage its low-cost manufacturing and marketing. established in 1976. For the fiscal ending March 2010. Disclaimer: Street Beat stocks are selected from over 1300 stocks in the Moneylife database. Europe. The stock makes a good buy at the current market price of Rs119.15 36% 42% 24% OP: Operating Profit. For this. This is called stop loss. Operating profit margin for the reporting quarter was a solid 24%. Recently. Around 52% of the company’s revenue comes from exports. its neuro-psychiatry division. The company recorded superb growth in sales (36%) and operating profit (42%) for the September 2010 quarter over the corresponding year-ago period. The company is aggressively exploring opportunities for new site transfers and contract research and manufacturing services (CRAMS) projects. Y-o-Y: Year on Year. and acute therapy such as pain management & anti-infectives. With these initiatives. and respiratory CNS (central nervous system) drugs. It exports drug intermediates. To accelerate growth in the domestic market. This is called stop profit. the company is expected to clock a CAGR (compounded annual growth rate) of 19% over FY1013E. throwing open enormous growth opportunities.09 times. With the ever- increasing number of cardiac and diabetic patients. Individual stocks presented may not be suitable for you. though the company remains conservative on the growth prospects for CRAMS. financial situation or needs. Investors must do their own research before acting on them. has a strong presence in various therapeutic segments that include lifestyle management therapy.20 times while annualised market-cap to operating profit is 5. bulk drugs and formulations to the US. such as anti-diabetics.47 56. JBCPL has entered new contracts with British. data and company information presented herein constitutes a recommendation or a solicitation of any offer to buy or sell any securities. However.STOCKS STREET BEAT Unbiased & Methodical Stock Picking that Works! Potent Drug JB Chemicals has recorded strong growth for the September quarter B Chemicals & Pharmaceuticals (JBCPL). J Mar-10 Sales* OP* Y-o-Y Sales Growth Y-o-Y OP Growth OPM 170. CIS (Commonwealth of Independent States) countries. above the industry growth rate of 13%-15% and strengthen its position in the domestic market. the company has entered a dynamic phase of expansion into newer and faster-growing therapeutic segments. if the market price is running above the purchase price. Information presented is general information that does not take into account your individual circumstances. OPM: Operating Profit Margin * Figures in Rs crore Sweet Pill (Rs) 135 JB Chemicals & Pharmaceuticals 120 105 90 75 May-10 Aug-10 Nov-10 Awareness of neuro-psychiatryrelated problems has also increased over time. JBCPL is setting up various strategic business units (SBUs) to optimise the product mix. return on net worth was 16%.09 29. we do not guarantee its accuracy and the information may be incomplete or condensed.000 crore ($445 million) and are growing at double-digits. This report is for informational purpose only. it plans to increase its field force from 450 to around 800 by the end of this fiscal and to 2. This makes it its first foray into niche marketing through focus on a selected specialty. JBCPL is pursuing plans to launch a division in cardiology and diabetics segments. Exit Strategy: Please exit if the stock closes 9% below the purchase price. To consolidate its position in the Indian pharma market. Australian and South African companies for supply of lozenges. nor does it present a personalised recommendation to you. Middle East and South East Asia. It enjoys a brand leadership status in most of these segments. Africa. Annualised market-cap to sales based on the September 2010 quarter was 1. Although information has been obtained from and is based upon sources we believe to be reliable. thanks to its experience of over two decades of international marketing.02 18% 48% 19% Sept-10 237.65 6% 141% 17% Jun-10 163. All opinions and estimates constitute our judgement as on the date of the report and are subject to change without notice. and bureaucracy brings valuation. the first only is immediate.” What does this have to with investing? a huge government presence in the economy. ‘That Which Is Seen. gives economy in the right way. you also Traders look at price. (The) Chinese government birth not only to an effect. The growth you see today in real-estate scam) that are suddenly China is there. the more bitter are the painful consequences… For example. and Is Not Seen’. a growth that you’ll see a few years from now. His recent interview to The Casey Report on China is worth reading and referring to from he French economist Frédéric Bastiat penned time to time. He believes that China is Often.in . and to 12% (of) GDP… The only problem is that these the converse… It often happens. and That Which says that the government is very. unsustainable growth in India. corruption… Corruption breeds misallocation of At least that’s what the objective is of all the stock capital. For a subscription offer that is unique. I leave India and turn Medium-term: — thinking about. basically by firehappens that when the immediate consequence is housing the stimulus package that was equivalent favourable. The centrally manage an economy of China’s size… the others unfold in succession—they are not seen… Chinese government was able to pull the economy This difference is enormous. the economy slows down. but to a series of effects. what you don’t see is more headed for a bust and he uses a lot of arguments of important the ‘unseen’ kind that Bastiat (a staunch anti-socialist) would approve. its leaders may have these effects. low productivity misallocation of capital which would lead to even lower and high corruption could lead to productivity and falling revenues. because the capital flows not to the best use. The true magnitude of these Society.” But. No investor has ever to… China has huge excesses… they believed that massive corruption. if corruption is too large. but it’s not a sustainable growth. And the scams (Adarsh growth. It’s not surfacing? India’s super growth will overcome it all. a habit. “The conventional wisdom an essay. the first fruit of a habit is. Of may have the best intentions. are likely to be much greater than low productivity and low skills we can measure today as they are in India have anything to do with covered up by robust economic investing. Vitaliy argues. but it is impossible to itself simultaneously with its cause—it is seen. look for a form elsewhere in this issue or on our website at www. it can easily lead to I don’t know whether high costs. invitation for events and free online help. for it almost always out of the recession remarkably fast. it manifests IQs of 250 each on a bad day. when you have consequences. research that goes on.STREET BEAT WHICH WAY Debashis Basu The Invisible Hand Investing I had reviewed a couple of years ago. an act. a law. He wrote: “In the department of therefore they can do a very good job in steering the economy. Vitaliy was born in a malfunctioning Soviet Union and was sent to the US to get a better life.in) Katsenelson whose book Active Value T investment that is MONEYLIFE | 16 December 2010 | 40 not subject to market risks Attractive gifts. But hardly any investor is but it basically flows to whatever the political bothered about hidden issues that could potentially connection or whatever the bribe is directed derail growth. Investors look at earnings and have a huge bureaucracy. to a renowned value investor Vitaliy Long-term: Up (Feedback at editor@moneylife. the excesses will come to the surface once the media-neta-babu-lobbyist nexus. that the sweeter kinds of short-term advantages come with long-term. It’s worth At this point. the ultimate consequences are fatal. very smart. Commonwealth Games.moneylife. an institution. local knowledge and corporate relationships to jointly pursue mergers & acquisitions. RS Grade A A A A A A A A B Funda Grade A A A B B C C C B Final Grade A A A A A A A A B Entry Date 16 Apr-10 29 Apr-10 06 Aug-10 16 Apr-10 12 Nov-10 29 Apr-09 12 Nov-10 12 Nov-10 23 Jul-10 Return* 74% 55% 31% 43% -2% 174% -9% -11% 27% Company OBC Shree Renuka Sugars Yes Bank Bank of Baroda Axis Bank Andhra Bank HDFC Shree Cement — RS Grade B B B B B B B B — Funda Grade B B B C C C D D — Final Grade B B B B B B B B — Entry Date 29 Apr-10 06 Aug-10 29 Apr-10 29 Apr-09 29 Apr-09 01 Apr-10 15 May-09 12 Nov-10 — Return* 24% 13% 5% 174% 139% 47% 77% -13% — Methodology: Momentum Stockgrader is a fortnightly ranking of stocks. This is nearly double the number of monthly acquisitions recorded by the sector in the first half of the year. adding 130 new dealerships and upgrading 1. Titan Industries fell 10%. Focus only on stocks with final grade A. the number is predicted to rise to 80 million. Bajaj Auto rises 2%. With this tie-up. a private sector Indian bank and Shinsei Bank.” Dish TV gained 4% in the fortnight. would take the total number to more than 600 dealerships across India. we have used only operating profit growth and sales growth over three quarters. as we go to print. a diversified Japanese financial institution. joint venture and merchant banking opportunities. have signed a memorandum of understanding to advise Indian and Japanese companies on cross-border deals. Yes Bank tumbles 12%. added over half a million subscribers. Dish TV India. 41 | 16 December 2010 | MONEYLIFE . When we include a stock in the grader. we had an incremental share of 40% of the market. like diabetes and heart ailments. fell 2% in the fortnight.9 million people with chronic obstructive pulmonary disease (COPD). CEO of Dish TV said. Yes Bank ended 12% lower in the fortnight. Cadila Healthcare. while COPD cases are likely to jump by 50% in the next six years. The respiratory segment.100 service centres by the next festive season. fundamental. The festive offers played a strategic role in converting fence-sitters and attracting subscribers. Bajaj Auto has a massive distribution network expansion plan to meet robust growth targets. which is a stock’s relative outperformance during the past 10 weeks over select companies. with nearly two million subscribers added in a month. which had on offer a value pack at Rs990 for two months of content and an ‘e-platinum’ pack at Rs1. the company said. two. Bajaj Auto was up 2% in the fortnight. New dealers. World Health Organization data show that India has about 30 million asthmatics and about 14. Losers: Yes Bank. Healthcare experts estimate that 5%-15% of the Indian population living in urban areas suffer from respiratory problems. Note: Please read our changed methodology for grading stocks (given below). Exit: We are recommending an exit from LIC Housing Finance. Salil Kapoor. it is based on the fortnightly closing price of the scrip that coincides with our issue and that would be the entry price. Similarly. Returns from new stocks added are counted after one issue. Yes Bank and Shinsei Bank are expected to leverage their combined expertise. it is based on the closing price on Friday. market-related or quantitative and. Cadila Healthcare falls 2% Gainers: The festive season spruced up the sales numbers of DTH service providers. We have also added a column showing returns since the stock’s appearance in the table.STOCKGRADER MOMENTUM Festive Sparks Dish TV gains 4%. “In the first week of November. is fast becoming a crucial area for pharma companies which are looking at introducing more products in this category. By 2020. However. based on two key factors that drive stocks—one. which has a presence in this segment. RS carries a higher weightage. when we drop a stock from the grader.490 for four months of content (packages include installation charges). The quantitative factor is the relative strength (RS). mainly in small towns. For momentum stocks. For arriving at fundamental grades. The alliance will Company Titan Industries Bajaj Auto Dish TV India Cummins India Cadila Healthcare GSK Consumer EID-Parry Himatsingka Seide Hindalco Industries *Non-annualised Compounded Annual Return 45% play an active role in further augmenting investment flows in the Indo-Japanese corridor. as the patent for this drug is originally owned by the US government and is exclusively licensed to Tibotec. When we include a stock in the grader. market-related or quantitative and. Returns from new stocks added are counted after one issue. But. Lupin was up 5% during the fortnight. growth score (GS) and value score (VS). Suprajit Engineering reported a net profit of Rs7. carrying equal weightage. in the US in bottles of 60 counts in 10mg and 20mg strengths DRL rose 2%. based on two key factors that drive stocks – one. We then combine the RS grade and fundamental grades.200-KV capacitive voltage transformer. CGL was up 5%. it is based on the fortnightly closing price of the scrip that coincides with our issue and that would be the entry price. Focus only on stocks with final grade A. The US government has also separately sued Lupin. We have also added a column showing returns since the stock’s appearance in the table. MONEYLIFE | 16 December 2010 | 42 . This acquisition allows DRL to enter the US Company Bank of Baroda Titan Industries Bajaj Auto JVL Agro Inds Suprajit Engineering Whirlpool of India Lupin Punjab National Bank Jain Irrigation Sys State Bank of India GAIL (India) Unichem Laboratories Supreme Petrochem Andhra Bank Balkrishna Industries Shriram Transport Crompton Greaves *Non-annualised Compounded Annual Return 62% penicillin-containing anti-bacterial market segment. Dr Reddy’s Laboratories (DRL) has signed an agreement to buy GlaxoSmithKline’s (GSK) oral penicillin facility and product portfolio in the US. has sued Lupin in the US for allegedly violating patent coverage of HIV drug Darunavir (Prezista). which is a stock’s relative outperformance during the past 26 weeks over select companies. Crompton Greaves (CGL) has come out with a 1. Seshasayee Paper and Suprajit Engineering fell 13% and 11%. JVL Agro Industries fell 17% over the fortnight. over the corresponding year-ago period. GSK will transfer its plant in Bristol. fundamental. Its sales and operating profit grew by 87% and 53%. respectively. Dr Reddy’s (up 2%) is finalising an American foray Gainers: Tibotec. and rights for selling Augmentin and Amoxil brands in the US to DRL.85 crore for the quarter ended September 2010. a Johnson & Johnson subsidiary. it is based on the closing price on Friday. CGL has dispatched this product to the ultra high voltage research station of Power Grid Corporation of India at Bina in Madhya Pradesh. Tennessee. Exits: We are recommending an exit from LIC Housing Finance and Oil and Natural Gas Corporation. respectively.82 crore and a sales turnover of Rs76. becoming the first company in the world to develop such a high-range power product. The quantitative factor is the relative strength (RS). as we go to print. the American company will retain the rights for these brands outside the US. two.STOCKGRADER MEDIUM TERM Greaves Grooves Crompton Greaves (up 5%) has introduced a new transformer. Note: Please read our changed methodology for grading stocks (given below). when we drop a stock from the grader. Similarly. Our grading methodology of fundamental factors includes two key scores. RS Grade A A A A A A A A A A A B B B B B B Funda Grade C C C C C C C D D D D B B C C C C Final Grade A A A A A A A A A A A B B B B B B Entry Date 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-09 10 Jun-10 27 May-10 29 Apr-09 29 Apr-09 27 May-10 01 Apr-10 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-09 01 Apr-10 01 Apr-10 RS Grade A A A A A A A A A A A A A A A A A Funda Grade A A A A A A B B B B B B B B B C C Final Grade A A A A A A A A A A A A A A A A A Entry Date 29 Apr-09 01 Apr-10 27 May-10 27 May-10 11 Nov-10 11 Nov-10 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-09 27 May-10 27 May-10 11 Nov-10 29 Apr-09 15 May-09 Return* 174% 96% 55% 36% -5% -9% 244% 148% 127% 121% 90% 57% 41% 26% -1% 250% 240% Company Nestlé India Infosys Technologies HDFC CRISIL Sun Pharmaceutical TCS Siemens Petronet LNG HDFC Bank Dr Reddy’s Lab Seshasayee Paper HCL Technologies Union Bank of India Axis Bank Power Finance GSPL Dabur India Return* 121% 103% 101% 97% 84% 36% 7% 122% 111% 33% 24% 198% 108% 142% 106% 20% 19% Methodology: Medium Term Stockgrader is a fortnightly ranking of stocks. DRL was also in news for launching generic asthma drug. Zafirlukast tablets. Losers: In spite of good September quarter results. Infosys Technologies rose 2% while Unichem Laboratories rose 1% over the fortnight. Exide Industries fell 5%. We have also added a column showing returns since the stock’s appearance in the table. Karur Vysya Bank has revised the rates of interest offered on its domestic deposits in November. has opened 100 new branches and 100 new ATMs in November 2010. while the Haryana-based maker of refrigerant gases SRF Ltd fell 10%. GSK Pharma fell 5% and Hyderabad Industries declined 14% Gainers: During the fortnight. Container Corporation and Hyderabad Industries with Orchid Chemicals. fundamental. When we include a stock in the grader. LIC Housing Finance. two. GSK will retain the rights for selling the brands elsewhere. Jain Irrigation Systems rose 6%. VS is calculated considering market-cap as a multiple of five quarters of average sales and operating profit. when we drop a stock from the grader. Similarly. Tennessee. Focus only on stocks with final grade A. which is in its 105th year of operations. dipped 14%. 43 | 16 December 2010 | MONEYLIFE . based on two key factors that drive stocks: one. GSK will transfer ownership of its penicillin manufacturing site in Bristol. Its parent company GlaxoSmithKline Plc has sold its US penicillin business to Dr Reddy’s Laboratories as part of a strategy to focus on its new drugs. market-related or quantitative and. Karur Vysya Bank fell 1%.2 crore from Rs20 crore in the corresponding period last year. RS Grade A A A A A A A A A A A A A A A A A A Funda Grade A A A A A A B B B B B B B B B B C C Final Grade A A A A A A A A A A A A A A A A A A Entry Date 29 Apr-09 01 Apr-10 27 May-10 05 Aug-10 27 May-10 01 Apr-10 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-10 25 Nov-10 29 Apr-09 29 Apr-09 Return* 311% 63% 60% 25% 20% 0% 246% 244% 199% 174% 127% 108% 106% 90% -1% — 228% 142% Company State Bank of India Nestlé India Infosys Technologies CRISIL Aarti Industries GSK Pharmaceuticals Cairn India ITC Karur Vysya Bank Orchid Chemicals Hindustan Unilever Adani Enterprises HDFC Bank Sun Pharmaceutical HDFC Ambuja Cements Sterlite Technologies — RS Grade A A A A A A A A A A A A A A A A B — Funda Grade C C C C C C C C C C C D D D D D B — Final Grade A A A A A A A A A A A A A A A A B — Entry Date 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-09 29 Apr-09 27 May-10 10 Jun-10 25 Nov-10 25 Nov-10 29 Apr-09 29 Apr-09 29 Apr-09 01 Apr-10 19 Aug-10 11 Nov-10 — Return* 121% 121% 103% 97% 81% 81% 69% 23% 1% — — 234% 111% 84% 25% 11% -11% — Methodology: Long Term Stockgrader is a fortnightly ranking of stocks. Returns from new stocks added are counted after one issue. plus the US rights to the antibiotics Augmentin (amoxicillin clavulanate) and Amoxil (amoxicillin). Note: Please read our changed methodology for grading stocks (given below). For the quarter ended September 2010. Ambuja Cements fell 12%. as we go to print. Losers: GlaxoSmithKline (GSK) Pharmaceuticals fell 5%. it is based on the closing price on Friday. The company’s net profit for the September 2010 quarter rose 16% to Rs23. Exits: We are replacing Solvay Pharma. The long-term list carries more large-cap stocks. Kanpur-based textiles manufacturer Shri Lakshmi Cotsyn gained 2%. it is based on the fortnightly closing price of the scrip that coincides with our issue and that would be the entry price. Hindustan Unilever and Crompton Greaves. while Lupin increased 5%. The fundamental factor includes growth score (GS) and value score (VS). Lead-acid battery firm. GS is based on operating profit growth and sales growth.127 crore and Company Ador Fontech Bajaj Auto SRF Shree Renuka Sugars Asian Paints Birla Corporation Canara Bank Lupin Exide Industries Bank of Baroda Jain Irrigation Sys Union Bank of India Power Finance GAIL (India) Shri Lakshmi Cotsyn Crompton Greaves TCS Axis Bank *Non-annualised Compounded Annual Return 62% an adjusted growth of 17% in net profits to Rs166 crore. The quantitative factor is the relative strength (RS). a flagship of the CK Birla group.STOCKGRADER LONG TERM A Good Yarn Shri Lakshmi Cotsyn gained 2%. The Bank. Exide Industries reported an 18% year-on-year growth in net sales to Rs1. as well as latest Return on Net Worth (RoNW). which is a stock’s relative outperformance during the past 26 weeks over select companies. Hyderabad Industries. to Dr Reddy’s. Public sector lending institution Canara Bank fell 13%. ” “Time for a Break?” 9-22 Nov ‘07 6 -19 Jun ‘08 2-16 Aug ‘07 17. You know what’s more valuable 18-31 Jan ‘08 12-25 Oct ‘07 “The huge over-speculation.725 “The panic looks done for now” Sensex “Might the markets be ready to surprise us on the upside?” “Expect another leg of stock market rally” 6.20. stocks will suffer collateral damage” 31 Aug-13 Sept ‘07 28 Mar-10 Apr ‘08 13..900 “You Can’t Time the Market.175 15 Feb-1 Mar ‘07 “Time to Go Neutral” “The market may correct 10%-15% before the next move up” 23 Apr-7 May ‘06 “We don’t have a forecast” “A “If the government moves to slay the monster of inflation. It is easy to describe market moves. We are a fortnightly magazine. should now lead to some painful correction.. But. .000 Apr-06 Jun-07 A We have no compulsion to issue breathless market calls like TV channels or brokers. But they have been reasonably accurate so far.. You will get sensible and occasional predictions from only one source. the past is no guide to the future.” Maybe. It is hard to predict them which is why fund managers tell you that you cannot time the market. But we don’t issue market calls every fortnight.450 “Is the market due for a fall?” 16-29 Mar ‘07 “A short-term bottom may be very near” “A Rally Now?” 4-17 August ‘06 9. of course. Moneylife market calls are infrequent. You will get vivid descriptions of the past everyday from business channels and the next day from newspapers.. who make money by getting you to trade frequently. 13-26 Aug'10 18-31 Dec‘09 4-17 Dec‘09 23 Apr-6 May'10 Time To Sell? 19 Jun-2 July ‘09 7-31 Jul ‘08 The Coming Decline Headed Down? Short-term Top? w downleg may tart soon” “Is the market about to crack?” 6 Nov-19 Nov ‘09 11-25 March '10 31 July-13 Aug ‘09 “We have no Forecast” A Buyers' Market 2-15 Jan ‘09 27 Feb-12 Mar ‘09 “Buy the dip” “Weakness has resurfaced” “A Breakdown?” 30 Jan-12 Feb ‘09 13-26 Mar ‘09 “A weak rally now” “Another weak rally” Sept-09 Nov-10 08 Moneylife Stock Analysis KNOW WHAT’S COMING . Found out that she had gone through an ‘intensive’ oneweek course on insurance. etc. com was at my bank for some work. sorted out issues regarding adding his newly-wedded spouse’s name to the account. they don’t ‘sell’ term insurance. clients were easy on ULIPs as opposed to mutual funds. He said that ULIPs were the preferred ones. the sales guy has to sell three to four times the amount of funds. the one exception is the systematic investment plan (SIP). Once in a while. they don’t ‘sell’ term insurance. ULIPs are the way to go. he said that the preferred push is based on schemes the asset management companies (AMCs) are making available at a particular point in time. The bank’s staff does not offer any mutual fund product unless the client asks for it. My ears perked up when I heard familiar words like ‘NAV’.” Client: “Less than five years?” PYTS: “Then you won’t get highest NAV. The PYTS was explaining: “Sir. Of course. Today. naturally. Do your homework and choose a good advisor too The author can be reached at balakrishnanr@gmail. Apart from that. there is no effort to sell mutual funds. It does not give any credit to the employee for trail commission the bank may net! To me. The distributor’s thrust on upfront commission leads to employees churning the same asset over and over again. ‘Guaranteed’. Seven years and you get highest NAV. To earn the same level of upfront commissions. the relief for the PYTS was obvious. My relationship manager mentioned that only one person from the branch had cleared the exams. Also. when the associate fund house launches a new fund offer (NFO).SMART MONEY R BALAKRISHNAN Nest Eggs I Don’t depend only on your bank if you want to shop for any financial product. The bank is not bothered about trail commissions.” The conversation went along these lines as the client filled up the form. anxious and eager. the relationship managers get targets on those. As the client finally affixed his signature. And. ‘SIP’. since they fetched the highest commissions. the client was engrossed in something else.5% per annum. Of course. etc. Across her was a client (an NRI. she had not passed any exam to sell mutual funds or insurance. At the next table. ULIPs are the way to go selling non-banking products. Selling is restricted to insurance products. This MONEYLIFE | 16 December 2010 | 46 . you can choose seven years or fifteen years. upfront commission has come down to anything between 0. so the PYTS merely exchanged a conspiratorial grin with an assistant who was holding the papers.5%1. Upfront commission is important.5% and the trail commission is going up to 1% per annum.” Client: “What if I want to discontinue?” PYTS: “Sir. with him and had that NRI look) who was trying to fill up a form. And. naturally. One more ULIP (unit-linked insurance plan) sale notched up. Each relationship manager had a stiff target on Selling is restricted to insurance products. etc. upfront commissions used to be 2%-3% (excluding the NFOs for which it used to be 6%). Here. Trail commissions for equity schemes used to be 0. the eyeopener was the refusal of the bank to give credit for ‘trail’ commission to its employee! In the ‘golden’ days for the distributor. you will get the highest NAV. a pretty young 20-something (PYTS) was sitting tight-lipped.” Client: “What if I stop after five years?” PYTS: “Then you will not get highest NAV. The relationship manager said that they push this because most clients are happy to have three to four accounts in SIPs of equity mutual funds. Fortunately for her. since he had his passport. but everyone was selling. I got speaking to my relationship manager and asked about the PYTS. if you pay for at least five but make it seven. She was from the bank. his monthly salary and commission are the driving force. Distributors fear that once the details get into the domain of the registrar & transfer agent (RTA). Or he has to get financially savvy and do his own thing. The sooner you realise it. but the pressure to perform overwhelms most of them. AMCs have tried to use the AMFI (Associa on of Mutual Funds in India) route to get this commission payments released. Yes. the small investor will be left to the fly-bynight operators and suffer. neither the old nor the new distributor gets the trail commission. They not only end up losing clients. It is possible that this structure will make all distributors and independent financial advisors (IFAs) focus only on clients with a certain minimum level of financial assets. No address proof is given. AMCs & Their Strange Ways L arge distributors (euphemis cally called ‘channel partners’) submit large applica ons of high networth individuals (HNIs) which do not comply with the requirements that ordinary mortals have to comply with. since the market regulator Securities and Exchange Board of India (SEBI) has mandated that when a client moves away from a distributor. the distributor is not able to build on his total asset base. there has been no progress. AMCs cannot afford to displease the distributors. In case of non-compliance with the direc ves. the regulator came down heavily. the trail commission will disappear as well. but a couple of mes that AMFI recommended the release on some pretext or the other. but he has to come around. 47 | 16 December 2010 | MONEYLIFE . The best way is for the investor to become more financially aware. The address given in the form is a ‘care of’ address of the distributor! This prac ce has been maintained by AMCs. but also end up being forced to change jobs. but the sales guy is not bothered with that. SEBI had directed that un l there is compliance in full. the AMC and compe ng distributors would get hold of the addresses and contact the clients directly. The times are changing. Fund houses have a dilemma on their hands. understand that there is no free lunch. AMCs are likely to be penalised heavily. the better. the client will be a reluctant payer. given the fact that he is unlikely to acquire the skills or have the time to understand complex products like ULIPs. Once again. There is clearly an issue of uniformity in compliance. And. this is an example of the hold that the large distributors have on fund houses who simply cannot afford to have their own distribu on network in place. AMCs cannot pay distribu on commission on these investments. And. Now the industry is seeking an extension for compliance (just means comple ng the address and contact details). Otherwise. Some have paid the amounts from the AMC itself. The compliance deadlines are at hand. since the regulator first no fied AMCs for compliance. you will be a victim of mis-selling at the hands of those who you think you can trust—your bankers. Choose a good advisor and pay him/her a fair sum for advice. Spend time on understanding the products and their risks. A number of sales employees I have talked to say that they understand this. Substan al sums are involved and distributors have been pressuring AMCs to release their commissions. For over a year.SMART MONEY R BALAKRISHNAN mangles the client’s returns. since he will lose the client and the employee at some time. with the client gone. They have to charge the customer separately for advice. Only their PAN (Permanent Account Number) card copies are provided. So. For him. As a result. which is virtually impossible. The regulator is si ng firm on its deadline. since it is these large distributors who run the game. Is there a better alternative to this state of affairs? There has to be a realisation among all concerned that a selling agency will get paid 1% per annum as all-inclusive revenue from the producer. while the fund schemes have not yet been debited. Future Generali’s Smart Life plan offers sums assured ranging from Rs10 lakh to Rs50 lakh. For policyholders buying large sum assured levels. Before buying a life cover online. Other insurers offering online term life insurance covers are Aegon Religare. the policy is issued. chief–corporate communications. Online purchase of insurance will make you forego any advice a financial planner can offer you. a large discount/ rebate is available for sum assured between Rs25 lakh and Rs50 lakh. This is because the risk perception is higher when you are buying a second policy. technologically-savvy Indian customers by providing financial security and protection at a click. you can go online. your online purchase of term life insurance will not be completed. Life Insurance Corporation of India (LIC). on a case-to-case basis. Details about employment. In case the insurer determines that you need a medical test. In case you are dissatisfied with your policy. regulations. How good an insurance policy is. That apart. insurance history. If you are running out of time or need savings on premium. The product aims to tap into the market of young. “Younger customers look for a policy that offers the convenience of buying through mobile (telephony). The regulator allows insurance companies to charge differential premium for online and offline life products. most online term policies are not comprehensive as they either do not offer any rider options or the ones offered fall short compared to those available with offline term policies. MONEYLIFE | 16 December 2010 | 48 . income. depends on how claims are settled. Future Generali has just launched its ‘Smart Life’ plan. features and options. they will take up the task of helping your dependents for filing claims. you need to enquire in detail about the claimsettlement process of the insurer. family history and medical history need to be filled in. MetLife. no such test is required. But convenience is not the reason for choosing an insurance policy.” The online insurance space for term-life policies is witnessing the entry of several players. interpreted from your perspective ONLINE INSURANCE It’s Convenient But you should consider these other factors as well T he convenience of buying insurance online needs no elaboration. Aegon Religare’s iTerm Plan has policies for three situations. According to Vipin Anand. lifestyle. Once the test is completed and evaluated by underwriting. if the applicant has an existing medical problem. if the age of the insured is above 40. For first-timers. dependents may have to approach the centralised claims cell directly. etc. If you have purchased the product through a branch or agent. ICICI Prudential. number of dependents. Two. The brochure does not clarify whether medical examination is required. The thumb rule is that life insurance cover should be minimum 10 times your annual salary. ICICI Prudential’s iProtect life insurance scheme asks a person to go for a medical test if he/she already has a life insurance cover.Insurance Trends New products. One. This may be a cause of inconvenience for some. The process is quite simple. you can surrender it within the 15-day ‘free-look’ period. due to lack of personal connect. In case of an online policy. And three. It will also depend on your expenses. and Kotak Mahindra Old Mutual Life. There are times when one needs to buy insurance for tax savings before the end of a financial year. The most important aspect of life insurance is claim settlement. if the total sum assured (even if it is through different policies) is Rs50 lakh and above. But the company decides whether a medical test is required. LIC has the lowest percentage of claims repudiation. prevalent in overseas mediclaim policies sold by Indian insurance companies to people travelling abroad. The premium per Rs1 lakh coverage is just Rs90 every year. The minimum sum assured is Rs1 lakh while the maximum is Rs5 lakh. a deductible of Rs5. Its unique feature is that the policy provides personal accident insurance and hospitalisation expenses on account of an accident. the policy will pay nothing. Of the total insurance cover. For these policies. In some cases. If your co-pay is 20% and the claim amount is Rs1 lakh. Higher co-pay may lower the premium.000 in a year before he starts claiming from the policy.000 would mean that a policyholder pays the initial Rs5. It is a good option for travellers outside India because the cover is also provided for travel abroad. Some may apply it when a policyholder gets treatment in a non-PPN (preferred provider network) ‘C hospital. If the deductible amount is not reached in co-pay clause is more prevalent in senior citizens’ mediclaim where premiums are not low. makes them more careful about medical bills. but the claim settlement is done only in Indian currency. it is not surprising that the concept has found its way into individual mediclaim policies as well. It is popular in the US. The policy starts paying after a prefixed deductible amount is paid by the policyholder for medical services. The policy period ranges from one year to four years. An equivalent concept of deductible has arrived in Indian mediclaim through ‘Topup’ and ‘Super Top-up’ policies. the The other trend that will surface sooner or later in India is ‘deductibles’. 80% is for personal accidents while the remaining 20% is for hospitalisation due to an accident.000—while the insurer is liable to pay the balance. hence.INSURANCE TRENDS CO PAY Burden-sharing Share your costs with the insurer o-pay’ simply means that the policyholder pays a certain percentage of medical costs while the rest is paid by the insurer. 49 | 16 December 2010 | MONEYLIFE . This is. The percentage can vary between 10 and 30 in most cases. ‘Nagrik Suraksha Policy’ is a combination of personal accident cover and medical insurance. The policyholder will also question a doctor/hospital about any tests or treatment because he is liable for a part of the costs. a year. payments kick in after a threshold amount has been spent. It forces policyholders to pay a part of the bill and. Unfortunately. Co-pay has been prevalent in the US for a long time and is also included in group insurance provided by Indian insurers. co-pay may be applied only to certain ailments specified in the policy or medical expenses related to preexisting conditions. ACCIDENT POLICY Mass Protection Affordable protection for everyone T his is an excellent lowpremium product from Oriental Insurance. The main advantage of co-pay to the policyholder is a lower premium. Others may insist on co-pay if the policyholder undergoes treatment in certain metropolitan cities. Considering the potential benefits of cost-cutting through co-pay. you will shell out Rs20. today. For example. The co-pay clause is applied in different ways by insurers. Star Health’s Senior Citizen Red Carpet policy has 50% co-pay for pre-existing diseases/conditions and 30% co-pay for all other claims. It means that at the age when you need medical facilities the most is when you will also have to bear the burden of hospital bills partially. directions and signs are in French with the older buildings mostly of colonial French style. my late decision to spend a week in the country after a travel conference in Italy saw me flying Britain’s low-cost carrier EasyJet from Milan to Casablanca for less than a 100-euro return trip. Khalid. definitely worth a visit. Jaideep Mukerji explores the fascinating culture and history of this beautiful country MOROCCO orocco is just 15% the size of India. Non-Muslim visitors may enter the mosque on guided tours which are conducted several times a day in English. The most distinctive character of the mosque is its spectacular location—on a platform jutting out into the Atlantic Ocean. Customs and immigration clearance was efficient and within less than an hour of landing. MONEYLIFE | 16 December 2010 | 50 . Apart from the heart of Casablanca city which merits a drive past. different ethnic groups and ancient history— that draws travellers looking for an unusual destination that enriches. Morocco is a mystical country which attracts over 10 million tourists every year. Although there are flight connections linking India via the Gulf or the Middle East to Casablanca. On a tight schedule. entertains and informs. Morocco’s commercial capital. I was in an airport taxi on my way to a city hotel. but the number of international visitors to Morocco is over twice the number of international visitors coming to our country every year. I found the King Hassan II Mosque located beside the sea to be an impressive building. some 30km south of Casablanca city. has recently been renovated H E R E ’ S LO O K I N G AT M extensively and is now of international standards. town-planning and language was obvious. painted in white.A view of the Moroccan Kasbah SPENDING TRAVEL Located in North Africa. I had arranged for a car with a Moroccan driver-guide to accompany me for the week. it is Morocco’s incredible variety of landscapes—from high snow-covered mountains to miles of unspoilt beaches. the French influence in architecture. As we drove further into Casablanca’s city centre. Morocco’s largest and busiest airport. phoned me that evening to introduce himself and we decided to meet early the following morning and start on our journey. although the street names are Moroccan. a friendly middle-aged gentleman. So what is it about Morocco that attracts over 10 million tourists every year? Apart from its proximity to Europe and year-round abundance of sunshine and largely pleasant weather. 51 | 16 December 2010 | MONEYLIFE . olive oil with dates. Even the Latin language survived for centuries and was ESSENTIAL FACTS Why Go There: For a relatively small country. Alitalia. transportation and hotel bookings in a country where language can be a problem in the smaller towns located far from the main cities. Volubilis was not abandoned after the Romans lost their foothold in this part of Africa in the 3rd century. I wanted to explore what Moroccan cuisine had to offer. Getting There: Where To Stay: Although you may be able to book Moroccan hotels online. Situated on the ledge of a long plateau. At a traditional restaurant filled with locals. indeed. Moroccan and Christian sailors captured at sea. is connected by KLM Royal Dutch Airlines. Morocco’s third-oldest Imperial City and modern capital. on a trip to a less known destination? Foot of the Atlas Mountains Casablanca. the food is superb. Meknes was expanded and a number of impressive monuments built by the 17th century ruler Moulay Ismail who put a massive army of slaves. it is strongly recommended that you go through a reputed Moroccan tour operator who will be able to provide you with guides. part of the Mosque’s floor is made of glass so worshippers can kneel directly over the sea. we drove through the countryside dotted with whitewashed tombs of local Muslim holy men. prunes. I had heard of the Moroccan ‘tagine’—named after the special clay pot in which it is cooked slowly on charcoal—as being the national dish and wanted a first-hand experience. before taking me to the Museum of Antiquities where some of the richest archaeological treasures in Morocco are displayed. Morocco’s youngest Imperial City and a World Heritage Site. The grain produced in this fertile region was exported to Rome. It was a drive of about 100km to Rabat. Unlike many other Roman cities. Lufthansa and Air France. on our way to the impressive Roman site of Volubilis. contemplate God’s sky and ocean. saffron. to work. Khalid and I sat on floor cushions around a small centre table as steaming pots of tagine accompanied with loaves of local flat bread were served. Emirates. its people are friendly. with or without meat.Moroccan spices Village children Middle Atlas village Moroccan ‘tagine’ Uniquely. apples and vegetables. An automated sliding roof opens on special occasions to the heavens so the faithful of Casablanca can. Morocco has an amazing variety of attractions and landscapes. A late afternoon drive eastwards for 120km through flat countryside brought us to Meknes. EgyptAir and Qatar Airways offer connections from India via the Gulf and the Middle East. the dramatic site was once one of the Roman Empire’s most remote Western outposts and an administrative city for this part of Roman Africa. Leaving Meknes the next morning. Visas: Tourist visas are easily available from the Moroccan Embassy in New Delhi. The tagine combines ginger. For dinner that evening. Without much time on hand. Morocco’s main gateway city. What more can one ask for. Etihad. home of the royal family in Morocco. Khalid drove me past the Palais Royal. with a population of just over a million. is well worth a visit. With cedar and oak forests covering the nearby slopes and leafy. Fes is still seen as the spiritual and cultural capital of Morocco with one of the largest historic medinas (old walled towns) full of monuments reflecting the different periods of Morocco’s imperial past. two cities linked by their immense power and rivalry. NonMuslims are not permitted to enter the Kairaouine Mosque but nobody seems to object to tourists peering in through the gates and taking photographs of its impressive interior. a former capital and another one of the country’s four imperial cities. mosques. The historic city straddles the traditional trade route from the Sahara to the Mediterranean. it was time for Khalid and me to undertake the long drive of six hours to Marrakech—the last on my list of Morocco’s Imperial Cities. Khalid and I walked to the tower of the Koutoubia Mosque. until the Arabs conquered North Africa in the late 7th century. tree-lined avenues sheltering large homes. horse-drawn carriages. acrobats. paved streets. the second-largest in Morocco and the country’s spiritual centre. The decorated Saadian Tombs. quack dentists. piled high with platters of local cuisine—including a dozen or more varieties of kebabs—are hard to resist. several centuries old. where I saw the graves of the rulers that made this city so important. over centuries. The following morning. For an hour that morning. the others being Rabat.SPENDING TRAVEL not replaced. In the busy square. clowns. Fes el Bali (the old. storytellers. In the heart of the medina is the Kairaouine Mosque. I bid farewell to Khalid and took the evening air-conditioned fast train from Marrakech back to Casablanca before taking a taxi to the airport for my return flight. snake-charmers. The Djemaa el Fna is like nowhere else in North Africa and is a mustsee when visiting Morocco. Entering the old city through the impressive ‘Blue Gate’. we were soon at the foothills of the Middle Atlas driving through the town of Ifrane located at about 5. where leather is tanned using ancient techniques. Marrakech’s beauty lies in the atmosphere and the spectacular location with the snow-covered peaks of the Atlas Mountains as a spectacular backdrop. I wandered through the silent arches. With the High Atlas Mountains in parallel. The Ethnographic Museum located in an excellent old palatial home in the medina has artefacts from all over Morocco and is also very interesting. For centuries. A walk through Fes’ medina provides an amazing view of the life of an average Moroccan person that has changed little. busy citizens going about their daily chores. bustling marketplaces and the everyday clatter that would have brought this place alive in its beautiful setting on a plateau surrounded by plains with hills in the far distance. Built in the year 857 by a wealthy woman from Tunisia. homes and schools where everything—from food to clothing—can be purchased. The city is made up of three very distinct parts. is Morocco’s oldest. Fes Jdid (new Fes) and Ville Nouvelle (the French-built new section of Fes). The highlight of Marrakech is a visit to the famous Djemaa el Fna in the centre of the city. The enticing smells of Djemaa’s food stalls. All too soon. Fes is also Morocco’s second largest city after Casablanca. Fes is known for its traditional leather industry and I was taken to a nearby rooftop to see the rows of vats. henna artists. a Marrakech landmark nearly 230ft high and built in classic Moroccan design. mosaic floors and columns of Volubilis thinking about the sounds of workers. it is no wonder that Ifrane attracted a large number of European settlers earlier in the 20th century.500ft. Heading southwest. you can see musicians. Khalid guided me through the labyrinth of alleys and lanes lined with shops. developed as a hill resort by the French colonial rulers exactly as Shimla and Darjeeling were in India. — With Veeresh Malik King Hassan II Mosque MONEYLIFE | 16 December 2010 | 52 . we drove along the fertile northern edges of the mountain range where most of Morocco’s agriculture is based. Marrakech and Meknes. witch doctors. its minaret. the political centres in Morocco were Fes and Marrakech. dating back to 956. walled city). another World Heritage Site. The honking of Khalid’s car brought me back to the present and we set off for the short 40-km drive past olive groves to Fes (or Fez). monkeys and every type of tradesperson and entertainer imaginable. Workshops and Seminars: These would cover all personal finance products meant for borrowers.in/register. 4. MKC will supplement the efforts of regulators and providers of financial services in spreading financial literacy and redressing grievances MKC offers the following facilities: 1. please register online: http://www. financial literacy and activism. Lectures. Grievance Redressal: MKC will provide an opportunity for investor and consumer associations to reach out to people and help them with support and grievance redressal. Investors would be directly addressed by independent experts on key issues. a permanent knowledge centre in Mumbai dedicated to education and protection of consumers and investors. magazines and digital materials on personal finance. Database Access: Discerning investors will have access to financial databases.moneylife. Register for Free To use the facilities at Moneylife Knowledge Centre. 3.free Regi strat ion Get Enlightened About Your Money Moneylife Foundation is pleased to announce the setting up of Moneylife Knowledge Centre (MKC). 2.html . MKC will have at least two computers available for investors to access the Internet or view videos on financial issues. senior citizens and investors. Reading Room: MKC provides a model environment of financial literacy by providing free access to the best books. PERSONAL BUSINESS AUTO Clearance Sale The surge in auto sales in October was simply the outcome of heavy discounts from dealers who had been holding large inventories, says Veeresh Malik uring the last week of October and early November, there was a sudden surge in automobile sales across India. Popular logic puts it down to festival demand. Dig deeper and the truth is revealed. Many dealers were holding 60-90 days of inventory of some slow-moving models and hefty discounts were the norm. Barring one manufacturer, Tata Motors, which announced a price D Tata Nano become a case of importing knocked-down components and sub-assembly kits from China or other countries, go with the screwdriver technology part of setting things up, repackage them as ‘Made in India’ and sell to manufacturers. A chance visit to an inland container depot revealed that the same games that were played in the heyday of the great Indian brand television industry—remember Weston, Televista, Beltek or Texla—are now set to be played out in the automobile industry as well. How does one spot all this by balance-sheet analysis? One doesn’t. But customs import data is freely available and it’s about time that financial analysts started wading through it. A lot can be found there, especially in this day and age of computerised data, with all customs houses linked up too. MAKE THEM PAY Environment minister Jairam Ramesh recently took on sports utility vehicles (SUVs) and other large private vehicles which benefit from the diesel subsidy and pollute more than they should. Yes, there is a case for levying higher taxation and penalties on these vehicles. These are two different, though related, issues and any solution, therefore, must take both aspects into account, as well as a few more aspects like the higher environmental cost at the time of manufacture as well as scrapping since so much raw material goes into making some of these monsters. In addition, they tend to occupy a lot more space on our already congested roads, and sociological impacts, like secondary smoke, are negatives too. Recent advancements in diesel-engine technologies have changed the rules of the game from increase for the Nano and, therefore, saw sales tumble, the rest were on clearance sales. This clearance sale, incidentally, may not carry on through the end of this year, since vehicles carried forward from the manufacturing year 2010 will require a separate strategy. If there is a domestic slowdown, export orders for fuel-efficient vehicles to developed countries may come in handy, since vehicles shipped abroad are sold in the destination country by registration date and not manufacturing date. Either way, in rupee terms, it looks as though the cost of owning and maintaining automobiles is going to rocket upwards next year. The cost of oil is another factor, not just basic crude oil prices, but the incredible rise in the cost of transporting and refining it to cleaner oils. MADE IN INDIA Keep a close eye on the components industry in India. There have been record turnovers, for sure, but what’s the reality? In some cases, especially where new technology is concerned, it seems to have Toyota Fortuner MONEYLIFE | 16 December 2010 | 54 PERSONAL BUSINESS AUTO what they were, say, a decade or so ago. However, if manufacturers want us to believe that putting two-three tonnes worth of metal on the road with thick rubber is not really causing environmental harm, especially when it is used to transport one or two human beings, then they have a problem—because they insult our common sense. On that ground alone, these huge diesel or petrol cars, whether SUVs or otherwise, need to be taxed and penalised so that the prospective owners realise that it’s not just simply economically stupid, but also socially incorrect to own and operate these symbols of waste. More so, because these gas-guzzlers are rapidly becoming unpopular in their own countries of origin, and cleaner big vehicles seem to be the order of the day. Each one of the manufacturers named by the minister has new-generation SUVs that run on alternate fuels and technologies that are available. In some cases, they already sell these in other Asian countries. So, if most of the SUVs in India are going to be driven only in the cities, then there is a good case to tax those which operate on liquid fuels in such a way that selling and using the cleaner options, running on batteries or fuel cells, becomes a more attractive choice. of brand value and association a vehicle has. Whether it is a super-car, ordinary car, two-wheeler, bus or truck. It just has to deliver what a particular market needs at a particular time. And predicting that is what differentiates the winners from the losers. DECENT 4WD, INDECENT PRICE At the launch of the Skoda ‘Yeti’ in Delhi recently, we saw most motoring media reacting incredulously at the prices. The Rs16 lakh-Rs17 lakh ex-showroom price for something that is just about slightly bigger than a Maruti Gypsy, and much smaller than the slightly costlier Toyota Fortuner, is something which even the rainmakers at Volkswagen (VW) were unable to confidently push forward at the media function. The Skoda Yeti is a perfectly decent four-wheel drive (4WD), which has a spec-sheet close to what a costlier VW or Audi 4WD SUV of similar size would offer, and it is a joy to drive too. But it does not satisfy the CAN’T SELL OLD WHEELS Delhi has been blessed with two new Metro lines in the past few weeks—one to Gurgaon and the other to Badarpur (on the Faridabad border). In addition, there has been a deluge of low-floor buses, both air-conditioned as well as standard. The Bus Rapid Transport System (BRTS) has also attained public acceptance. Gurgaon and Badarpur are supposed to have the highest automobile sales in the country. More than one automobile manufacturer, however, has observed how these two areas are falling back in sales growth. In addition, resale values of used vehicles from these locations have dropped to a point where used-car dealers in the area are reportedly asking sellers to go elsewhere. Or accept rock-bottom distress sale prices. So the cycle starts—can’t sell old wheels, won’t buy new replacement wheels, and use Metro oftener. Meanwhile, Aston Martin, bespoke manufacturer of super-cars to James Bond, has won the contract for designing and manufacturing city buses in London. Likewise, Tata Motors, which now owns and operates very profitably the Jaguar marquee (more super-cars), is going full steam ahead with all sorts of well-priced stateof-the-art buses in India. The low-floor ones in Delhi, for example, are available at a fraction of the cost of similar Volvo buses used elsewhere in India. There is a lesson here—it doesn’t matter what kind Skoda Yeti essential criterion of SUVs in India—that of being big— and so it may end up as yet another on the long list of also-rans. In addition, the cost of ‘luxury’ itself is notching down fast, as we said a few columns ago, in context with the BMW 3-series Executive Edition. The new EMI benchmark is Rs20,000, now being matched by the Audi A-4 and Mercedes Benz C-Class, though the down payment and lock-in does make it much costlier. The much-awaited Skoda Yeti is a great car, but simply too expensive when viewed against its own stable-mates as well as against the rapidly-changing Indian automobile market. The brand, sadly, does not matter here anymore. Veeresh Malik started life as a seafarer, and in the course of a work life, founded and sold Pacific Shipping and Infonox Software, to return to his first love—writing. 55 | 16 December 2010 | MONEYLIFE UNIQUE CONTENT Only Moneylife gives you an outstanding mix of relevant information, safe advice, sharp and unique analysis... all wrapped in world-class design. GIFTS OF KNOWLEDGE We offer you relevant and unique free books on investment and finance, not run-of-the-mill consumer items irrelevant to the world of personal finance. FREE SOLUTIONS Got a genuine problem? Moneylife will give you free help for a solution. An exclusive & unique offer, only for our subscribers. 3rd Floor. Dadar (W). Introduce a friend / Fill in the details below and we will send a free copy to your friend. Hind Service Industries Premises. you have to do your homework. # Please allow 4-6 weeks for the delivery of your personal copy. A fast. In case payment is through credit card. expiry date of card should be mentioned. NOW IN ITS SEVENTH PRINTING The most thrilling business book ever written in India. colourful narrative knitting together the life and times of all stock market players involved in two of India’s biggest market scams. This guide tells you in a simple style. ( ) Cheque / ( ) Demand draft number ___________ Dated: ________________________ for (tick one) ( ) Rs325 ( ) Rs650 ( ) Rs1.” .300 with Free Gifts Rs1. the key elements needed to be a successful stock picker in any market condition Choice Period 6 Months 12 Months 24 Months 36 Months No. “The authors have excellent credentials for attempting this book. But to make funds work for you. This offer is valid for a limited period. Dr RA Mashelkar and Keki Dadiseth Equity funds are key to any wealth-creating strategy. Shivaji Park.950 with Free Gifts (Please tick) NEW SUBSCRIBER EXISTING SUBSCRIBER YOUR SUBSCRIPTION NO. what you must know to make successful investments Mutual Funds PATHBREAKERS Rs1. 315. which takes the subject headon which is its endearing quality. Credit card orders can be faxed to Mumbai 022-24442771. # Rates and offers are valid in India only. Mumbai 400 028. THE ONLY BOOK ON THE TWO BIGGEST STOCK MARKET SCAMS OF INDIA.300 ( ) Rs1. Jignesh Shah.(tick one) ( ) Investing ( ) Mutual Funds ( ) Stocks The Scam Any 2 titles of the Plain Truth Series .950 Favouring Moneywise Media Pvt Ltd ( ) Please charge it to my ( ) /( ) /( ) /( ) My card number is ________________ & expiry date is ___________________ (MM / YY) DATE: __________________ DESIGNATION ________________________________ Add Rs50 extra for outstation cheques Please fill in this order form and mail it with your remittance to Moneywise Media Pvt Ltd. # All disputes shall be subject to Mumbai jurisdiction only. This friendly guide tells you what you must know while buying equity funds Stock Investing Stock picking is rewarding provided you have the right understanding.India Today This commonsense guide tells you in an inimitable plain-speaking style. KV Kamath. of Issues 13 Issues of Moneylife 26 Issues of Moneylife 52 Issues of Moneylife 78 Issues of Moneylife Magazine Magazine Magazine Magazine Special Offer Rs325 with Free Gifts Rs650 with Free Gifts Rs1. peppered with lots of real life examples.200 This is a priceless book of autobiographical narratives that candidly reveal the unique thought processes. NAME: ________________________________________________________________________________________________________________ BASIC DETAILS ADDRESS: _____________________________________________________________________________________________________________ _____________________________________________________________________________________________________________________ PHONE: (Office):_______________________Phone (Res): _________________________E-mail address: ______________________________________ DATE OF BIRTH: _______________________(MM) (DD) (YY) (Please ensure correct date of birth if payment is by credit card) PROFESSION:_________________________DESIGNATION ________________________ Subscription Period Option A Option B CHOOSE FREE GIFT 6 Months 1 Year: Choose Option ( ) A / ( )B 2 Years: 3 Years: Any one title of the Plain Truth Series . untiring efforts and colourful anecdotes of top achievers like Mukesh Ambani. * Name: ___________________________________________________________________________________________________________________________ Address: __________________________________________________________________________________________________________________________ Email ________________________________________________ Tel: ___________________________ *Free copy will be sent only to addresses which can be verified prior to sending . Off Veer Savarkar Marg.Choose your free gift! THE SCAM Rs400 PLAIN TRUTH SERIES Investments Rs125 EACH THE BIG BEST-SELLER. Rajiv Bajaj.(tick two) ( ) Investing ( ) Mutual Funds ( ) Stocks The Scam + All 3 titles of Plain Truth Series Pathbreakers PAYMENT DETAILS ( ) Please find enclosed ( ) Cash. The study opines. titled ‘Now That I Think About It. participants who were asked to suppose they were in good. However. our emotions and moods s do sway our decisions.” Another experiment by Eugene M Caruso and Eldar Shafir. this is far from the truth. a researcher at Copenhagen’s Business School. according to Gabriele Lepori. The finding. In Study 4. We are rational beings. it is the mind that plays tricks with your decisionmaking abilities. compared to others who had not thought about mood. In fact. One such recent study suggests that what we do over the weekend may play a crucial role in determining our investing impulse. is that when a blockbuster comedy movie is released. Similar patterns were observed when people thought about how they felt before making a hypothetical choice (Study 2) or an actual choice (Study 3). only to realise later that you made the wrong call? What prompted you to take that course of action at that time? More often than not. bad. more in detail. when people went to the movies— any movie—they tended to take more risk. even subconscious ones. Investing has as much to do with an individual’s state of mind as anything else.Learn the basics of savings and investing Earning Curve BEHAVIOURAL FINANCE Mood Investing? What has your movie-watching got to do with your investment results? H ow many times have you bought or sold a particular stock at a point of time. Though we won’t ’t admit it. especially when potential losses are real and salient. the latter factor may influence the marginal investor’s risk-taking behaviour and the investment decisions she assesses over the weekend. Several studies have established this. Our feelings. Risk-taking decreased. the result was quite the opposite. The author argues that the results conflict with the classical assumption that the markets are efficient and individuals are rational. I’m In the Mood for A Laughs: Decisions Focused on L Mood.07% and 0. Whether you are an ardent follower of movies or not.’ reports the result of M four fo studies which examined the impact thinking about mood made im on o people’s choices. or neutral moods were more likely to choose a silly comedy movie over an otherwise more attractive drama. “Changes in comedy movie attendance generate sizable mood fluctuations across the population and. participants who pursued moodrelevant information chose to see a comedy play more often than MONEYLIFE | 16 December 2010 | 58 . the data lend support to the theory that people in good moods tend to behave more cautiously in risky situations. even though the mood may be the result of matters unrelated to investment. But when the theatres filled for blockbuster comedies. They tend to affect our decision to buy or sell. an entire field of study has emerged dedicated to understanding the role of human psychology in influencing investment decisions— behavioural finance. Modern finance is built around the assumption that investors are rational in their decision-making and unbiased about their outlook for the future. it has been found that people in high spirits tend to be more risk-averse. markets often stumble on the next trading day! Mr Lepori found that.34%. In Study 1. “An increase in comedy movie admissions during the weekend generates a corresponding wave of mood enhancement across the population. He charted several portfolios and found that value-weighted returns fell between 0. as they lo try tr to protect their current good emotional state. In turn. but we are emotional as well.” the study concludes. in general. play on our investing acumen. finding little to survive on for the rest of your life. It appears that the trauma of 2008 has a lot to do with the redemption spree. But the question you should ask is: Did you enter the market hoping to exit after three years? If not. Save Money. save as much as you can. by way of investments. You may end up becoming a financial burden on your loved ones or compromising heavily on your standard of living. Ensure that allocations towards these are separate from those towards your longer-term goal of building your retirement kitty. You may even be stripped of your entire life savings. insurance protection is a must. Low Borrowings: Some people have the habit of taking loans for simple purchases. the purchase price. Allocate a small sum of money regularly towards this fund. why not take advantage? Credit cards are the biggest culprits. Emergency Fund: A good way to protect yourself from the occasional crisis situations of life is to create an emergency fund. accounting for the most purchases. one needs to put some simple fail-safes in place. investors have pounced on the opportunity to book whatever profits they have gained. Be it life or health. But sky-high interest rates on credit cards and too much leverage can leave your finances in a mess. such plans and dreams often take a knock or two along the way. you may be falling in a behavioural trap that is called anchoring. Thinking about their own mood appears to increase decision-makers’ concern with the pleasurable consequences of decisions. possibly in favour of less optimal outcomes. ask yourself: Why do you need to exit now? 59 | 16 December 2010 | MONEYLIFE . sometimes brutal.EARNING CURVE those who had not focused on such information. Y But alas. Investors who had entered the markets through this route in late 2007 found their portfolio value erode dramatically after January 2008. Goal-oriented Investments: You may be looking at providing for some necessary expenses—like children’s education. etc. This refers to a situation where investors stay anchored to a rupee value. until whenever you can. Compounding the problems of the AMCs is the relentless outflow of funds from the equity schemes. Now that T he mutual fund industry is witnessing a bit of turmoil right now. one that will provide for contingencies without affecting your overall financial health. marriage. You are in the process of building a substantial nest egg that would help you fulfil some of your long-cherished dreams—a trip to an exotic island or a cosy bungalow far removed from the hustle-bustle of city life. To avoid such a situation. in this case. INVESTING Anchored to Price Should you redeem mutual fund units now? early 2008 when a lot of people invested in stocks. thereby promoting mood regulatory activities and altering preference. Investors are fearful of another market crash that will send their investments tumbling again. Little by Little: Last. Ideally. They reason that if banks are willing to lend. If you have not invested to create wealth over just three years. This steady drain of funds is partly due to profit-booking by unitholders as the market has surged to the near highs of late 2007 and the valuations have regained the earlier levels. Do not cheat yourself by taking a low-premium-based plan— take enough cover that makes sense for you and your family. Insurance Cover: Words cannot perfectly emphasise the importance of having an insurance safety net. asset management companies (AMCs) are trying to cope with the myriad regulatory changes since last year. A longterm illness or spiralling debt can deal a fatal blow to your financial plan. but not the least. Invest in growth-oriented instruments like equities to avoid inflation ravaging your lifelong savings. vacation. RETIREMENT Having Enough How to avoid running out of your life savings ou would have worked on a financial plan to work your way towards retirement and provide for you and your family in the golden years of your life. don’t have the time to learn market-timing and don’t need the money. start early and let your money work its magic over time. and evaluate your lifestyle to eliminate unnecessary expenses. Therefore. Fundamental analysis of companies. He simplifies GUIDE TO INVESTING the approach by dealing with BURTON MALKIEL just four key categories of Viva Books assets—cash (savings accounts). Stocks and real estate offer potentially high returns. For insurance. He wants you to ask yourself how much risk you feel comfortable with. On the other hand. it is important to understand the relationship between risk and reward. It treats the Pages 235. you may not need life insurance at all. keep some cash reserves (i. Market trends exist and can be anticipated before they are formed. Technical analysis is one of the tools to interpret the impact of human behaviour on stock prices. an American economist..90 market as generally efficient MONEYLIFE | 16 December 2010 | 60 . Richard Lehman. Malkiel describes the random nature of f individual stocks but makes no distinction between individual stocks and the market. On the random nature of stock prices. which involves studying their financial performance. Along the way. mark-ups. The earlier you start saving. Rs250 stocks. the market moves in well-defined and. Stocks are highly volatile and risky over the short term but not over the long term. It did not offer the readers a set of do’s and don’ts. He compares them with ‘airplanes’ that are built to fly only in one direction. Malkiel argues that investing THE RANDOM WALK isn’t complicated. by Burton Malkiel. if you invest your money well. stocks and equity funds. bonds and real estate. generally. They only have a ‘forward gear’ as they only have a method of collecting stocks without saying whether it’s a good time to buy the stock I or not. Pages 202. or investment management fees. because many of them are companies with which brokerage firms have an investment banking relationship. the longer you’ll have the power of compounding work for you.cutter approach to financial planning urton Malkiel is famous for his book A Random Walk Down Wall Street which brought to the average investor the distilled wisdom from academic research on investing—efficient markets and benefits of portfolio diversification. A Random Walk Down Wall l Street.BOOKS Set Rules The cookie. it was more focused on concepts. One needs to understand investor behaviour and trend analysis to forecast market movement. but can lose value sharply. One source of information for investors is what their brokers tell them. Many stocks are ‘buys’. While that book keeps its reputation intact as one of the best-known books on markets and investing. ‘Random walk’ hypothesis is an orthodoxy among financial economists but has been discredited repeatedly. Malkiel advises you to start saving now. B Cash and bonds are relatively safe ways to hold money but they don’t offer returns that beat inflation. and you can profit from the patterns n Far from Random. an instructor in finance. FAR FROM RANDOM Sometime in the 1990s. Interpreting Patterns The stock market is not random. the author refers to the classic on finance. tries to counter the belief that stock market movement is unpredictable.e. He says. develop a clear budget. is important. a fixed deposit is the best avenue for all their investing. but have insurance in case some disaster occurs. He advises you to set up an automatic investment plan. predictable ways. but it cannot explain sudden changes in stock price movements. stick to term policies because insurance isn’t a great investment. Lehman criticises brokerage firms by saying that they make money through transaction fees. sales commissions. For many people. says Malkiel. the RICHARD LEHMAN behavioural finance approach Bloomberg Press started evolving. often. an emergency fund) on hand to deal with unexpected trouble. To make your money grow over time. Malkiel’s next piece of advice is: match your asset mix to your investment personality. They are risky. $39. it is essential to diversify to spread the risk. Lehman says that the stock market is not random. This led some to conclude that the stock market is ‘far from random’. The author has managed to peer behind the veneer of Page and Brin. and some in bonds. even during extreme market volatility. Though one can detect that the writer holds a not-too-secretive admiration for the company that changed the very definition of Internet search. Lehman begins with the very basics of technical analysis (such as bar graphs) and then moves on to the concept of TCA. The ingredients are all there in this book for a film script. Lehman.99. The final chapter looks at some behavioural traps that investors fall into. the proportion of your money kept in stocks goes down. But there is nothing new in it. — Debashis Basu Seek Peek Want to know all about Google? Your search ends here en Auletta (Googled: The End of the World As We Know It. ideas such as self-assessment of risk are not practical. The Random Walk Guide to Investing is a guide for beginners. in the near future. it is unlikely that random walk hypothesis provides an exact description of the behaviour of the stock prices. is it resting on the many laurels that it has achieved. £12. who may lack technical skills. the market exhibits decidedly non-random characteristics in both the short and long term. for which you should choose low-cost index funds. But. both notoriously secretive founders. some in cash. racy account of the company that has become the face of the new media industry. as happened in 2008. — Devarajan Mahadevan K and for the most part random but with identifiable imperfections that are caused by the imperfect behaviour of the participants. As you age.BOOKS offer better returns but they can give you nightmares as well. are Page and Brin getting used to sipping some Kool-Aid? As an aside. In any case. Virgin Books. Pages 384) manages to get right under the skin of one of the world’s most influential companies— an organisation that has redefined the meaning of ‘disruptive technology’—the technology giant Google. Keep an eye on YouTube for more on this front. will make everybody’s stomach churn. the book’s title looks like Auletta is laying the ground for a full-length movie. Founders Larry Page and Sergey Brin make a fascinating study and Auletta delivers a compelling. This book does not shy away from asking some hard-hitting questions—has Google become complacent because of its success. Paying off a high-interest debt is like making an investment that returns 19% a year. He correctly advises: pay off all high-interest credit-card debt before you invest. often. The market always moves back and forth in a channel. — Dolly Mirchandani 61 | 16 December 2010 | MONEYLIFE . Auletta’s book could probably be the last word on Google—at least on the developments so far. It is possible that the movement of individual stocks is primarily random. he does not shy away from exposing the many potential pitfalls that lie ahead. If you can’t stand this. TCA is a powerful technique for reading market behaviour and forecasting not just the direction but also potential lows. Unlike other writers—numerous books come to mind—who have just about managed to skim the surface of the working of this technology giant. So many smart people are playing the game that even the smartest lose regularly. While the movement of individual stocks supports random hypothesis in the short term. exhaustive and. Malkiel follows this with some simple rules to take care of your debt. using techniques such as trend channel analysis (TCA). stick to cash and bonds. because you can’t. The market can be understood through an analysis of price charts. such as following the herd and investing in whatever the hot new thing comes up. It is the function of aggregate psychology and behaviour of the participants. Page and Brin have admitted Auletta to some closed-door meetings. Also. so the reader at least gets to dip a finger into Google’s secret success ‘sauce’. highs and turning points. A 60% loss. because if you don’t pay it off. Or. based on conventional ideas such as having some investment in stocks. He says that efficient market hypothesis and random walk theory are generalised theories that describe the stock market. thus. The book is an interesting read that puts technical analysis in the overall context of market theory. To make the book comprehensive for a reader. differs significantly from Malkiel and the random walk theory. if Google has to continue on its path of explosive growth. while predictable patterns exist at the market level. As someone who believes that markets are efficient. Malkiel offers some sample asset-allocation models. you can be half in stocks and half in bonds—or any other proportion you are comfortable with. it is not surprising that Malkiel would suggest that you should not even try to routinely beat the market. keep your investment costs low. In fact. you’re losing 19% a year to interest. or selling in panic. when it comes to stocks. Mr Punmiya said. after 1984. Societies that don’t want to frame their own bye-laws can adopt the new bye-laws. of these 35. Moneylife Foundation conducted a seminar in Mumbai on one of the most contentious subjects in the city— co-operative housing society rules. a chartered accountant with more than 34 years of experience and an expert on property matters.” This means that despite having a clear title to property. out of which 35. Explaining the basic concept of a co-operative housing society. Mr Punmiya said. “Under a co-operative housing society. In 2001. constantlychanging and subject to innumerable interpretations. Mr Punmiya’s exhaustive session was followed by an extensive and interactive question & answer session— where numerous questions were asked. had rights to make their own laws.” He also pointed out how society laws have been frequently An attentive audience takes in Mr Punmiya’s insights amended in the past.000 societies. For a matter as important as housing.000 housing societies. “Under old bye-laws. Moneylife Foundation will continue to host such seminars on topics which affect the life of the common citizen. stamp duty charges and registration rules. builders have not (properly) conveyed the property to the societies. Mr Punmiya helped to clear the fog. Vimal Punmiya. Mr Punmiya has written a number of books on subjects like transfer of flats. residents of cooperative societies are often left in limbo whenever any dispute crops up. along with norms related to wills. and ran the audience through the difference between the old bye-laws and new bye-laws. the new bye-laws were introduced. But even the marathon 120-minute session was not enough. there are 60. And. Mr Punmiya also fleshed out issues relating to stamp duty and registration and explained the importance of conveyance of property.” Mr Punmiya said. shared his extensive knowledge on four main topics with regard to co-operative housing societies— bye-laws. managed to highlight. On the current scenario with regard to cooperative societies in the state. and more Vimal Punmiya from Vimal Punmiya and Co O n 16th November. “Joint ownership is recognised in the new bye-laws. He also explained the process of property registration and guided the audience on wills. the laws in India are in complete disarray and Maharashtra is no exception. MONEYLIFE | 16 December 2010 | 62 . you are much superior to tenants (as far as your title is concerned) but inferior to the landlord. Vimal Punmiya shared his insights on almost every matter pertaining to co. He talked about stamp duty on lease agreements and leave & licence agreements. nominations and transmission of property in co-operative housing societies. Societies formed before 1984 can also follow the new bye-laws. which were formed up to 1984. Laws—especially those governing co-operative housing societies—are extremely arbitrary. registration. He also explained the rules under the new bye-laws. and the audience kept asking the obliging expert for much more. for about 28. However.operative housing societies. housing societies.000 are in Mumbai.” he said. It is really a matter of concern that the country’s mass media has almost never touched upon the topics that Moneylife Foundation along with Mr Punmiya. income-tax laws and accounting provisions. and in-depth answers were given by the speaker in his inimitable style. and capital gains.ML FOUNDATION EVENTS Home Truths An expert on property matters. “In Maharashtra. stamp duty. new bye-laws were introduced.000 societies. nominations and transmission. The society is the owner of the property and members only have a certain share of the society. 70 113.42 118.000 35.518 1.00 +/(-) .45 12 Nov 62.4% . May 2010 =100 130 -740 -1.4% .89 12 Nov 306.16 5.65 121.913 8.25 25 Nov 111.600 1.7% . Mexico IPC index is making new highs.cap Index ML Small.75 116. May-10 Aug-10 Nov-10 ML Micro-cap 1.985 24.080 2.071. On the other hand.24 118.223 25 Nov 10.5% 63 | 16 December 2010 | MONEYLIFE .cap Index ML Mid.318. Two days of the fortnight witnessed outflows from this segment.2% .8% .00 25 Nov 335.120 120 -1.38% Aug-10 Nov-10 The Nikkei and Nasdaq Composite gained 4% and 1%.000 May-10 25 Nov Change 67.3% . respectively. the Sensex and the Nifty lost 4% each.367 5.797 2. ML Micro-cap and ML Small-cap indices tumbled 8% each.350 11.5% .699 2.362 5.cap Index ML Micro.8% .95 25.60 235.543 1. 400 20 -360 Share Prices.193 70.85 63.725 2.89 6.52 117.80 26.20 80. the Hang Seng lost 5%.200 10% 32.8% Change 580 240 -100 15 Nov-10 25 Nov-10 GLOBAL MARKET TRENDS 37.799.cap Index ML Large.05 81.30 12 Nov 72.400 30.MONEY FACTS STOCKS INDIAN MARKET TRENDS The market ended with a steep decline in the fortnight.65 25 Nov 35.10 8% .41% Change 30% .35 12 Nov 31.928 8.187 69.800 .21 107.1% .23% 31. 140 FUND FLOWS Foreigners: Foreign institutional investors were net sellers but pumped in small amounts on three days of the fortnight.316 11. but in small amounts.98 126.055 +/(-) 4% 1% 1% 0% 0% .260 920 100 ML Mid-cap ML Large-cap ML Small-cap ML Mega-cap Nifty Sensex DII Net Investments (Rs Crore) Index Sensex Nifty ML Mega.600 Mexico IPC 34.29% Change 13% . The ML Mid-cap.67 130.35% Change 9% .70 25 Nov 79. Index Nikkei Nasdaq Composite Korean Composite Taiwan Weighted Dow Jones Ind Avg Bovespa FTSE Shanghai Composite Hang Seng 12 Nov 9.15 25 Nov 19.05 12 Nov 85.500 15 Nov-10 FII Net Investments (Rs Crore) 25 Nov-10 110 Indians: Domestic institutional investors were net buyers.898 23.95 39.10 16.38 120.85 401.88 109.156. the ML Large-cap and ML-Mega-cap indices fell 7% and 5%.cap Index Mega-cap Gainers/Losers Bharti Airtel Unitech Large-cap Gainers/Losers Dish TV India DB Realty Mid-cap Gainers/Losers Murli Industries Orbit Corporation Small-cap Gainers/Losers Orient Abrasives SEL Manufacturing Micro-cap Gainers/Losers GG Dandekar Machine Works Agro Dutch Inds (All Prices in Rs) 12 Nov 20. 700 3.45 266.00 20.Fund 1995 sold 3.11% .85 69.22% .95 25 Nov 335. Arvind Rao bought 5.51% and 12.07%).23% . Real estate. Ekta Kapoor bought 50.42. in Man Infraconstruction (stake up to 21. petrochemicals and plastics witnessed heavy selling.900 3. respectively.35 37.80 154.40 85.300 . Real-estate stocks were hammered during the fortnight.10 81.65 186.85 86.00.66%). Gujarat Venture Capital .50.33%). Mavi Investment Fund Ltd sold 41. CVCIGP II Client Rosehill and CVCIGP II Employee Rosehill sold 10.049 shares in Educomp Solutions (stake up to 8.23% .38%).75 22.2% Petrochemicals .15 62.35 244.100 1.00 13.13% .007%).12% ML SECTORAL TRENDS Telecom and automobiles managed to put on a brave front in a bleak market scenario. of Jindal Drilling & Industries (stake down to 5.25 105. ML Telecom Service Index 1. LLP.000 shares in Balaji Telefilms (stake up to 15.45 55.11% .10 24 Nov.500 4.10 22 Nov. Bhavook Tripathi bought 2. DB Realty (down 41%) tanked the most while Orbit Corporation (-29%).10 26 Nov.030 960 890 820 750 May-10 Aug-10 Nov-10 ML Sectoral Trend Telecom Services Auto 1% Real Estate 0% Printing & Publishing .21.29% . respectively.000 shares of Ruchi Infrastructure (stake down to 7.18% 4.24 3.3% Plastics . Other telecom stocks were beaten down severely.90 10.45 63.21% .000 shares in Praj Industries (stake up to 4.19 1. Wellington Management Company.12% .932 shares.45 27.19% .11% . Bharti Airtel soared by 10% while Idea Cellular remained flat over the fortnight.MONEY FACTS STOCKS What’s H T Companies Bharti Airtel Idea Cellular Tata Communications MTNL Tata Teleservices RCom 12 Nov 306.2% Pap & Paper Prod .55 25 Nov 235.16%).536 shares in R Systems International (stake up to 7.30 19. Mansi P Shah and Kishore C Shah bought 1.194 and 5. respectively). respectively). Companies DB Realty Orbit Corporation HDIL Unitech Prajay Engineers PVP Ventures Ansal Prop & Infra IB Real Estate IVRCL Assets Vijay Shanthi Bldrs (All Prices in Rs) ML Real Estate Index 4.44 1.10 18 Nov.100 3.21% .10 Company Monsanto Ind Rainbow Pape (BSE Indonext) Sangam India Resurgere Shiva Cement Resurgere Camson Bio Buyer Monsanto Holdings Pvt Orient Newsprint Splendor Vanijya Pvt Runwell Steel Pvt Preeti Gupta Runwell Steel Pvt Clairvoyance Energy Pvt Seller Bretco Holdings (Mau) Niyati S Agrawal Swagatam Marketing Pvt Parshwa Stonex Pvt Usha Gupta Parshwa Stonex Pvt Viraj Mercantile Pvt Rs Cr 70.85 +/.000 shares.93.41% .71.10 26 Nov.05 113.071 shares of 20 Microns (stake down to 7.121 shares in OnMobile Global (stake up to 4.49%.98 1. printing & publishing.79%).645 and 20.16% .20 169.10 25 Nov. paper & paper products.90 +/10% 0% . Stocks of some telecom companies emerged unscathed from the downturn across industries.18.98% and 3.500 May-10 Aug-10 Nov-10 BULK DEALS Date 23 Nov.80 67.75.19% Pharma Cons Products Education (All Prices in Rs) What’s N T 12 Nov 401.46. bought 8.59 1.55 302.12% .07%.15 195.17 MONEYLIFE | 16 December 2010 | 64 . HDIL (-24%) and Unitech (-23%) also took a beating.60 30.25 137.60 1.24% INSIDER TRADES Parimal Chaudhari bought 4.05 69.25 80. 35 4.065 crore.75 216.30 n increase in paprika oleoresin production in China may result in India losing as the top producer of paprika.136.3.799.35 1.10 Nov. MCX PRICE TRENDS Particulars Active Contract 9 Nov 2010 23 Nov 2010 Change % High Low revival in the US consumption of seafood has helped India’s seafood exports to rise in H1 FY10-11.93 43. has some pungency that is removed for paprika oleoresin.80 Paprika oleoresin A Others Mentha Oil Rs/kg CPO Rs/10kg Potato Rs/100kg Cardamom Rs/kg Ref Soy Oil Rs/10kg Nov.912.62 2. It recovered all the losses as the price bounced back from lower levels on bottom-fishing activity.74 26 Nov 2.90 97.60 42.798.95 2. about 35% of India’s total oleoresin exports (Rs708 crore) came from paprika.10 Dec.5 billion during FY10-11 with volumes rising 15%.64 4.54 .83 3.569 3.15 1.70 26.10 Dec. Since a shortfall is expected in Indian crop as well.70 492.2% 52.35 990.103. 16% in rupee realisation and 23% in dollar terms.34 3.Week High 2. Since China’s production of paprika is higher. U COMMODITY FOCUS Natural Gas (Rs/mmBtu) 210 195 180 165 150 135 Oct-10 Oct-10 Nov-10 Seafood A At the end of November. seafood exports in the September 2010 quarter stood at 2.0.127.55 1.14.115.47 .80 616.90 388 508. In the Konkan region. up 4% in volume. For the near term. According to Marine Products Export Development Authority (MPEDA).80 505.233.21 3.01 COMMODITY TRENDS Crops ntimely and excess rainfall is likely to affect Maharashtra’s contribution to the country’s kharif output.43 . MPEDA hopes to achieve exports of $2.865.486.191.11 Dec.60 116. vegetables (like tomatoes) and kharif pulses.5. Indian oleoresin exporters have started importing paprika oleoresin from China for refining and re-exporting.39 2.74.40 957.MONEY FACTS COMMODITIES INDEX TRENDS MCX Commodity Indices Particulars Energy Agri Comdex Metal 12 Nov 2.979 399.017.32 3.142. natural gas futures look positive.30 578.90 .10 1.50 162.10 Nov.10 Nov.377. India uses byadgi chilli which.90 488. soybean and sugarcane.25 1.692.70 931.47 2. 65 | 16 December 2010 | MONEYLIFE .10 Dec.56 8.506 291 93. grapes.10 Nov. currently.10 Mar.10 849.10 Nov. They are expected to climb up to Rs210-Rs215 in the coming weeks. About 10 lakh hectares of kharif crop has been damaged in the state.07 . unlike Chinese paprika.95 . Global Commodities Silver Rs/kg Gold Rs/10gm Crude Oil Rs/barrel Copper Rs/kg Zinc Rs/kg Nickel Rs/kg Lead Rs/kg Natural Gas Rs/mmBtu Dec.512 3.99 3. It also produces cotton.049.40 116.925 395. more than one lakh hectares of rice crop has been damaged.1% .75 114. Maharashtra produces onions.16.197 591.85 95.10 185.954.83 1.174 20.51 .70 192.10 42.10 Nov.70 699. In 2009.1.175.Week Low 2.260 3. even after Diwali.40 567.763 373. Rainfall is continuing across the state.90 98.110.737.1. Natural gas prices climbed to Rs205 per mmBtu after testing the bottom at Rs1`60 in earlier months.026 20.35 2.10 667.663 tonnes worth Rs5.706. India may not be able to sell at lower prices. natural gas prices bounced back to Rs200 per mmBtu at the Multi Commodity Exchange of India (MCX) due to strong demand in the western region ahead of changed weather conditions.68 .527 3.61 52.70 1.13 .80 1.095 116.40 485.9.4.1.27 12.53 .770 19.305.32 Change 0% .09 2.652 20.1% . mdamumbai.” she said. said. parents have unrealistic expectations from them. It also offers the only dyslexia therapist training programme in the country and coordinates an advocacy cell that brings together leading professionals to push for the rights of children with learning disabilities. MDA is a global partner of International Dyslexia Association. it was a meeting place for parents to seek emotional and professional support for their children and to create a community. 423. They can give correct answers orally. who was instrumental in bringing together parents of children who faced problems in school. Often. Now. Treatment and therapy for dyslexia is expensive. Deonar Farm Road. “It is equally important for the parents to undergo counselling to keep track of the children’s development. they formed the Maharashtra Dyslexia Association (MDA). Gupta Marg. Children and their parents are counselled on dyslexia. is a specific learning difficulty which affects a person’s ability to read. but have difficulty in writing. in the Dream Run category. sponsoring a child helps the organisation provide treatment to more students. He is more confident and his performance has improved in school. There is a corpus fund for advocacy and research programmes. MDA also organises workshops and conducts training programmes throughout the year. MDA is committed to securing the rights of children with dyslexia. These are often a revelation for the struggling children as they learn about their strengths and weaknesses. Amit Park. and holds meetings with educational institutes. It results in confusion and erodes the child’s self-esteem because he fails to understand why his friends sail through academics while he is left behind. Soon. MONEYLIFE | 16 December 2010 | 66 . “Dyslexic children are as intelligent as others. he is able to communicate better and has a fair knowledge of his abilities.” You can contribute financially or by way of professional support to the team. along with their teachers and the volunteers. he has moved to Level-2. including children and our staff. MDA. In 1996. when they participated in the Mumbai Marathon for the second time.BEYOND MONEY overcoming learning difficulties A not-for-profit organisation. Lala Jamnadas. It was the perfect platform to raise awareness about the cause and boost the children’s self-esteem.com www. president. Dyslexia. An MDA representative said. Children with learning difficulties are taken to MDA by their parents or are referred to MDA by their teachers. literally ‘difficulty with words’. planning and evaluating his own activities and had attention deficiency and poor communication skills. but also to develop self-esteem and help them with their personal and emotional issues. offering various services. It holds workshops in schools and colleges. Initially. reports Shukti Sarma I MAHARASHTRA DYSLEXIA ASSOCIATION 003. children go through tests. After a year. Ms Currawalla. but cannot perform in class because it is a language-based disability. The children and their families participated enthusiastically. The focus is not only on achieving academic competence at school. Donations for office equipment and the library are also welcome. provides teacher training. for continuing education for professionals in this field and for qualified interns. He was enrolled for Level-1 of the instrumental enrichment programme. Mumbai 400088 Tel: (022) 25565754 mda@dyslexiaindia. special educators and other professionals. a respected principal of Arya Vidya Mandir.com t was Vinita Pandit. 2010 was a big year for MDA.” Project coordinator Sunita Pagedar talked about a 13-year-old boy who came a year ago with multiple problems. spell and understand language while speaking or in writing. other activists and professionals lent support to the cause. He had trouble with concepts. We show the parents that their IQ levels are quite high and make them understand where the difficulty lies. offers therapy and career counselling. “About 60 members are participating in the coming year. undertakes research. MDA has three centres in Mumbai. Kate Currawalla. It has a team of psychologists. said.” At MDA. “Now. He has become more receptive and looks forward to coming to our centre. BLANK PAGE . BLANK PAGE .