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                                                                                                                                      EDITOR’S NOTE

           Year : 02

                                  Issue : 28

                                                                  Oldy cry
                                                                       When Oldy was a child, he easily got attached to people and places. He used
                                                                  to develop attachment to guests who visited his parents and brought him choco-
                                                                  lates and sweets. It hurt him emotionally to see them leave. It was difficult to under-
        EDITORIAL TEAM                                            stand that whether he used to get attached to the guests or to the sweets and
        Kanchan Dass, Senior Sub editor                           chocolates they used to bring. Oldy was very much attached to his grandma too.
        Shilpy Arora, Senior Sub editor cum correspondent
        Alok Dwivedi, Sub Editor cum correspondent                She lived in a village and visited his grandson only once in a year. Upon their meet-
        Harish Kumar, Sub Editor cum correspondent                ing, she pampered him with a lot of sweets, chocolates and new dresses. His grand-
        Renu Baliyan, Sub Editor cum correspondent                ma could leave only when Oldy happened to be in sound sleep. I have been a
                                                                  witness to it. Her grandma's departure made him terribly upset. Oldy thus thought
        GRAPHIC DESIGNER                                          of marrying his grandma. When Oldy made public his childish vow, people around
        Harikrishan Pal                                           him burst into laughter. I am still puzzled over what was Oldy really attached to
        Arun Sharma                                               - his grandma or the chocolates and dresses she used to buy him. Once, Oldy
                                                                  went to Manali with his parents. He was so happy to be there in the absence of
                                                                  home work, school and tutions. When time came to leave, he insisted his par-
        Ravi Girota
                                                                  ents to live in Manali itself. Again the same question arose. Was it his attach-
        CIRCULATION                                               ment to Manali or the tension of going back to school, attending tutions and
        K K Pandey                                                doing homework again? Whatever psychologists say about Oldy's strange behav-
        8860609250                                                iour, the fact is that any person or place which makes human beings happy,
                                                                  developing an attachment to that is quite natural.
        Kamal Sharma                                                   Some days back Mr Ganguli, my neighbour, rang my door bell at 7.30 in the
        Subhash Chaudhary                                         morning. He was holding a plate of rasogulla and his joy was very much evi-
                                                                  dent. His happy face reminded me of Oldy. On enquiring Mr Ganguli about
        HEAD OFFICE                                               what was the matter, he shied away. In a haste to rush to office I buried my
        C- 125, Sector- 19
                                                                  curiosity, but I assigned the job to get the details to my wife. What came up
        Uttar Pradesh                                             moved me. Mr Ganguli was celebrating a news report which talked about the
        Email:                       proposed extension being given to SEBI chairman CB Bhave. At a time when
        Phone: 0120- 4710700                                      CBI is raiding the house of former telecom minister A Raja and banks are get-
        Fax: 0120-4710728
        www.                                    ting tainted with loan scams, celebrating the deeds of a regulator is unbeliev-
                                                                  able. I visited Mr Ganguli to question him and he was quick to defend himself.
                                                                  "The man who abolished entry load, capped exit load, extended stock market
                                                                  timings, introduced pre-market opening session, doubled the application amount
                                                                  for retail investors, brought ASBA and forced IRDA to modify ULIP to the ben-
                                                                  efit of investors is nothing but a ....," he said emotionally. I understand his emo-
                                                                  tions. May be this is due to the fact that he was able make some money due to
        Published by Jyoti Narain for                             regulatory measures implemented by Mr Bhave. No doubt, Mr Bhave has made
        Pearls News Network Pvt. Ltd.from C-125,
                                                                  the office of SEBI honoured and brought it close to the common investors.
        Sector- 19, Noida,
        Uttar Pradesh and Printed at MP Printers,
                                                                  Thanks to Mr. Ganguli who recognised the good work done by Mr Bhave.
        B- 220, Phase- II, Noida- 201305                               I will not tell much about the cover story this time. Title of the write up is strong
        Disclaimer: Money Mantra is a personal finance
                                                                  enough to convey its content. With this, let us bid good bye to the year 2010 and
        magazine and the financial solutions provided by                                          gear up to welcome the next year on a happy note.
        different experts in this magazine are only sug-                                              With best wishes,
        gestive in nature. Readers should take advice
        from their financial advisors before taking a final
        call. In no case, Money Mantra team or manage-
        ment can be held responsible for financial loss
        caused to readers.
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         CONTENTS                                                           News Track
         December 16-31, 2010                                               08 One exam will give you job
                                                                               with so many banks
          Volume 28                                                         08 Kotak launches e-insurance                 Stock & Commodity Banking
                                                                            09 UID may be made mandatory                                                             50 Invest in FD, save tax
                                                                               for all securities transactions            18 Gold likely to continue
            ON THE COVER                                                    09 South Indian Bank launches                 its northward move                         Various tax saving fixed deposit
                                                                                                                                                                     schemes are available with banks
                                                                               smart card                                 If the Federal Reserve extends its QE
                                                                                                                                                                     which offer guaranteed return on matu-
                                                                                                                          policy, it could undermine the dollar;

                    THE VICTORS AND                                                                                       hence, fresh buying would be seen
                                                                                                                          emerging in yellow metal.
                                                                                                                                                                     rity as well.

                                                                                                                          21 Value buying opportu-                   54 Know the right bank
                    THE LAGGARDS                                                                                          nities in power, infra
                                                                                                                          Revelations of 2G scam have given
                                                                                                                                                                     Co-operative banks, integral part of
                                                                                                                                                                     Indian banking system, are prone to
             The year 2010 will go down in history as the year of                                                         further jitters to our markets. Long       risks as they are not monitored so
             investors. It witnessed a number of regulatory changes to                                                    term value buying opportunities are in     closely.
             the benefit of common investors. Though major equity                                                         power and infra space at this juncture.
             indices didn't move so much during the year, still a number
             of scrips delivered more than 100 per cent.The story not       10 Banks hike fixed deposit and                                                          Mutual fund                                Special stories
             only talks about the best and the worst performers of             lending rates
             dalal street, but also discusses cases of victors and lag-                                                                                              56 FMPs back in action
             gards of mutual fund and insurance industry.              36   10 Foreign funds are more popu-
                                                                               lar than Indian peers
                                                                                                                                                                     FMPs are debt-oriented funds and
                                                                                                                                                                     aspects of capital gains come into play
                                                                                                                                                                                                                14 Markets go merry on
                                                                            11 NCDEX starts SMS based                                                                when the units are redeemed.               After touching a peak on Diwali day,
                                                                               facility for traders                                                                                                             our markets have fallen nearly 9 per
                                                                                                                                                                                                                cent till now. But if we go by history,
                                                                            11 Kotak 30 becomes Kotak 50                                                              Insurance                                 last fortnight of the year is likely to be
                                                                            12 DIN made mandatory for com-                                                                                                      positive.
                                                                               munication with I-T department                                                        58 Little Caution, less pain
                                                                            12 New pension scheme is avail-                                                          Single premium plans are suitable for      62 Tackling jealous co-
                                                                               able online                                Scrips on Radar                            individuals whose source of income is      workers
                                                                            13 PAN made mandatory for all                                                            lumpy or irregular.                        One’s perfection in work may make
                                                                               MF investments for Jan 1                   23 Biocon                                                                             his/her colleague feel jealous. Further
                                                                            13 Reliance MF revises minimum                Biocon has entered into a strategic                                                   appreciation by boss can worsen the sit-
                                                                               investment amount                          agreement with Pfizer for global com-                                                 uation between them.
                                                                                                                          mercialisation of Biocon’s products.
                                                                                                                                                                                                                69 For a starter
                                                                             Financial Planning                           24 Gujarat Gas                                                                        Saving money for future is good but it
                                                                                                                          Even in a scenario where the average
                                                                                                                                                                                                                makes no sense if that is lying idle in
                                                                                                                          cost of gas is increasing, the company
                                                                                                                                                                                                                savings account. Investment thus is
                                                                                                                          has managed to improve its spreads.
                                                                                                                                                                                                                essential. Here we have a few tips for
                                                                                                                          26 Tata Steel                                                                         those who have just started investing.
                                                                                                                          If we compare Tata Steel, which has
                                                                                                                          presence in six continents, with other
                                                                                                                          metal companies, it is quite cheap val-
                                                                                                                          uations wise.

                                                                                                                          27 Coal India
                                                                                                                          Coal India, world’s largest coal pro-
                                                                                                                          ducing company, has recently under-
                                                                                                                          taken various initiatives for the acqui-
                                                                                                                          sition of coal assets outside India.       Consumer Issues
                                                                             68 Dr. Menon’s Clinic                        28 TVS Motor
                                                                             Kripa, a 27-year-old widow, wants to                                                    60 Baggage blues
                                                                             settle down again. But before that she       TVS Motor, the third largest two-          There are many incidents where travel-
                                                                             wants to make sure that her in-laws are      wheeler company, is aiming to              ers lose their luggage due to negligent
                                                                             well protected financially. She visits Dr.   increase its market share from around      attitude of transporters. And the situa-
                                                                             Menon for a way out.                         15% currently to 20% by FY12.              tion is no different in luxury buses.
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                                                                                                                                                                                                                                            Cartoon Mantra
        READER                 Mail
                                                                                                                                                                                                                       Affaire d'airfare

                                                                  “        Let me start with a confession. I
                                                                           bought Money Mantra dated 15 Dec
                                                                   because of its look. Although there were
                                                                   three financial magazines on the stall having
                                                                   same topic on the cover, your magazine
                                                                                                                                                                                                                                Nothing happens in airline indus-
                                                                                                                                                                                                                                   try without the knowledge and
                                                                                                                                                                                                                                      consent of Civil Aviation
                                                                                                                                                                                                                                       Minister Praful Patel. He
                                                                                                                                                                                                                                        claims it too. Now people
                                                                                                                                                                                                                                        are finding it unbelievable
                                                                                                                                                                                                                                        that the arbitrary hike in
                                                                   looked different. I bought it. And I did not                                                                                                                        airline tariff was done with-
                                                                   regret thereafter. Content was as good as                                                                                                                          out the consent of the high
                                                                                                                                                                                                                                     profile minister. The way air-
                                                                   the look of the magazine. Whatever was                                                                                                                           lines succumbed to his diktat
                                                                   there inside was quite convincing and logi-                                                                                                                      and lowered fare by 25% at one
                                                                                                                                                                                                                                    go makes us all the more suspi-
                                                                   cal. There was no fake commitment, no over-                                                                                                                      cious. Some airline owners
                                                                   statement. There were just statements of                                                                                                                         were so confident, that they
                                                                                                                                                                                                                                    didn't care to attend the meet-
                                                                   facts. Editorial was simply superb. Its narra-                                                                                                                   ing called by the minister. All
                                                                   tive was so interesting that I read it almost a
                                                                   dozen times. I was so impressed that I sent a
                                                                   cheque for subscription.
                                                                                                                                   “                                                                                               said and done, the fact remains
                                                                                                                                                                                                                              that the airline fare ended with a
                                                                                                                                                                                                                              huge premium despite 25% cut exe-
                                                                                                                                                                                                                              cuted after minister's intervention.
                                                                                                                                                                                                                      Public sab janti hai mantri ji.
                                                                                                     - Patanjali, by e-mail
                                                                                                                                       Chair Vying Commissioner (CVC)                                                   Anil Looks Up To
               Legally nominated                                                           Help me out
                   Refer to “Why you must                                                       I am interested in doing online
                                                                                                                                       Chief Vigilance Commissioner PJ Thomas has become an eyesore to the same
                                                                                                                                       government which had appointed him to the post. Former telecom secretary         Mukesh

                                                                                                                                                                                                                                                                           Content: Kanchan Dass, Illustration: Rajkumar Singh
               Nominate…” (MM December 1-                                                  trading. Can you please tell me             Thomas, who is unwilling to relinquish his post, is in no mood to rescue out     Fissures might be there between the two
               15, 2010). When a person appoints                                           which brokerage firm should I               the government from SC wrath on 2G scam.                                         Ambanis, but that doesn't stop Anil from
               a nominee and dies, he gets the                                             select? I also want to do a short           He argues that putting in his papers would                                       following the footsteps of his elder broth-
               payment or gets the assets trans-                                           term course in trading, where can           mean accepting the charges levied on him                                         er Mukesh. The junior Ambani wants to
               ferred in his name. The nominee                                             I do that? Is there any online course       in Palmolein scandal. The 1973 batch                                             touch the same height as his brother's. On
               has no right to retain and utilise                                          for it? Later on I want to become           Kerala cadre IAS officer is lobbying                                             the lines of Mukesh, who has got a 170-
               the funds/assets in his name as only                                        a broker or sub-broker, what is the         with Keralite parliamentarians to gar-                                           metre tall structure built for residential pur-
               legal heirs of the deceased person                                          procedure for it? Can you please            ner support. He knows it well that the                                           poses, the junior one too is thinking of
               has the right over nominated asset.                                         provide brief answers to all my             government won't impeach its own                                                 building a dream home of the same height
               Remember nomination only facil-                                             questions?                                  appointee. The CVC also knows that                                               at Bandra's Pali Hill. Anil had got a per-
               itates the transfer of assets in his                                                       -Siddharth Goenka,           if he will leave his chair, the govern-                                          mission to build a 66-metre tall structure
               name. Actual beneficiaries of such                                                                     by e-mail        ment won't shy away from allowing                                                but now he has sought permission to raise
               assets are only legal heirs of                                                                                          intelligence agencies to grill him.                                              the height to 150 metres. It is enough a
               deceased person. To make it clear-                                                For online trading, it is bet-                                                                                         pointer to the fact that Anil doesn't want
               er, nominees have no right to          write up on Diwali bonus. This       ter to go with a firm which has bank                                                                                         to stay behind his elder brother in the 'tall-
               encash or utilise or derive any ben-
               efit from nominated assets of the
                                                      write up rightly suggests easy yet
                                                      effective ways to save bonus. I
                                                                                           as a sister concern. There are var-         Pillai Loves Talking                                                             home' race.
                                                                                           ious short term courses in trading
               deceased. Nominee is a trustee for     have never saved a penny out of                                                  Union Home Secretary GK Pillai finds it difficult to resist
               the legal heirs of the deceased per-   my Diwali bonus but this year        which can be done from NISM,                media glare. In a recent conversation with a foreign daily,
               son. Or nominee is a bailee only -     these tips have helped me save       BIFM, NSE, BSE etc. There is no             he not only remarked on the details of Nira Radia tape,
               all the rights of such nominated       approx. 50% of my bonus. I am a      online course available, but it can         but also went on to say that the remaining tapes
               shares vest in legal heirs of          regular reader of Money Mantra       be done through distance learn-             may be in public domain sometime. He revealed
               deceased person                        and I find useful write ups in it    ing from NSE. If you want to                that the tapes in possession of media are just
                   Mahesh Kapasi, New Delhi           which help me manage my              become broker or sub-broker, you            juicy ones and do not have something important
                                                      finances in a better way. Kudos to                                               about 2G scam. He said the remaining 5000 con-
                                                                                           have to contact stock exchanges
               Saving Diwali bonus                    the writer and the team....
                                                                                           for the same. - Editor
                                                                                                                                       versations have much more to reveal. Pillai not
                  This is in reference to your            Norman Singh, by e-mail                                                      only told that the tapes are in possession of the
                                                                                                                                       court but also indicated that they could be pro-
                                                        SEND YOUR LETTERS & EMAIL:                                                     cured by petitioning the court. The media-friend-
                                           Address: Editror, Money Mantra C- 125, Sector- 19 Noida                                     ly bureaucrat was gagged a few months back for
                                                    Email:                                                making ill timed remark regarding the role of Pakistan
                                                                                                                                       in the 26/11 Mumbai terror attack.

           6    MONEY MANTRA   31 December, 2010                                                                                                                                                                                    31 December, 2010   MONEY MANTRA   7
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           News Track
           One exam will give you                                                                                                                            SEBI wants to know whether IT’S FOR ALL
                                                                                                                                                             Gold ETF schemes buy gold
                                                                                                                                                             Market regulator SEBI has directed mutual funds to dis-

           job with so many banks                                                                                                                            close whether money collected for gold- focused
                                                                                                                                                             schemes is actually invested in the precious metal.
                                                                                                                                                             The regulator has said that statutory auditors of mutu-
                                                                                                                                                             al fund schemes should physically verify the amount
                     rom the year 2011, banking         advertisements for interviews. The                  conduct pan-India tests for specialist           of gold underlying the Gold ETF units and report the

           F         career aspirants won't have to
                     appear for recruitment exam
                     separately for each bank. Only
           one exam will be sufficient enough to
           get a job with any of the banks, where
                                                        biggest benefit for the PSBs will be that
                                                        the time taken for recruitment will fall
                                                        by almost a third. IBPS also plans to
                                                                                                            officers in the fields of agriculture,
                                                                                                            information technology, accountancy,
                                                                                                            and law.
                                                                                                                                                             same to the trustees on half-yearly basis. The half-
                                                                                                                                                             yearly reports, which MFs first have to submit to their
                                                                                                                                                             trustees, need to be forwarded to SEBI. In the reports,
                                                                                                                                                             the MFs will have to mention whether the funds invest-
                                                                                                                                                             ed in Gold ETFs was in line with the amount men-
           recruitment has been planned. Upon            AWESOME                                                                                             tioned in the Scheme Information Document and if
           clearing the common test, which will be                                                                                                           the same has been audited, as per the SEBI circular. This
           administered by the Institute of                                                                                                                  shall come into effect from the half-yearly report end-
           Banking Personnel Selection (IBPS) on                                                                                                             ing April, 2011, by trustees to SEBI.
           behalf of PSBs (public sector banks),
           all that the candidates have to do is to
           respond to individual bank's advertise-
           ments to appear for interview. Twenty
                                                                                                                                                             UID may be made mandatory
                                                                                                                                                                                                                         Anup Bagchi, ED, ICICI Securities Ltd, Yogesh Agarwal, Chairman of Pension
           PSBs will be part of this joint exercise                                                                                                          The ministry of finance has sought the views of cap-        Fund Regulatory & Development Authority and Praveen K Tiwari, at the launch
           which will enable them to tap the pool                                                                                                            ital market regulator Securities and Exchange Board         of the New Pension System (NPS) facility in Mumbai.
           of candidates who have been success-                                                                                                              of India (SEBI) on making the unique identifica-
           ful in the common test, for recruitment.
           The State Bank group, comprising State
                                                                                                                                                             tion (UID) number mandatory for all securities trans-
                                                                                                                                                             actions, a move that, if implemented, could help the
                                                                                                                                                                                                                         Sahara Cos barred by SEBI
           Bank of India and its five associate                                                                                                              former track incidents of frauds and money laun-            SEBI has barred two Sahara Group companies-Sahara Real Estate
           banks, however, will plough a lonely                                                                                                              dering in market transactions. SEBI's support will          Corp and Sahara Housing Investment-from raising funds from the
           furrow on the recruitment front.                                                                                                                  also give a boost to UID, not just because the regu-        market and, in effect, delayed the launch of the IPO for Sahara Prime
                According to IBPS officials, while                                                                                                           lator calls the shots in India's booming financial mar-     City, another group company. The market regulator issued a show
           the pan-India common test for the cler-                                                                                                           kets, but also because the regulator's move to make         cause notice against the two companies on why it should not take
           ical cadre will be conducted four times                                                                                                           UID mandatory for transactions will enhance the             action against them for issuing convertible bonds without SEBI's
           a year, for probationary officers it will                                                                                                         number's acceptance and use. The ministry's pro-            permission and barred them from issuing such bonds, termed as
           be held twice. The scorecard issued to                                                                                                            posal is in line with the recommendations of the inter-     optionally fully convertible debentures (OFCDs). In its order, SEBI
           successful candidates is likely to be                                                                                                             governmental Financial Action Task Force (FATF)             has also said that when asked for documents and explanation for
           valid for one to one and- a-half years.                                                                                                           that seeks to prevent money laundering and the              issuing such convertible bonds, the Sahara Group companies had
                                                         Koji Nagata, ExecMng Coordinator; Hiroshi Nakagawa, MD; Sandeep Singh Dy MD and
           During the validity period, the eligi-        Yoshinori Noritake, Chief Engg at the launch of Toyota Etios, at Hotel Laiit Intercontinantal, in
                                                                                                                                                             financing of terrorism globally.                            said that the instruments which they had issued did not come either
           ble candidates can respond to bank            Mumbai                                                                                                                                                          under the jurisdiction of SEBI or the National Housing Bank.

           NEWS BRIEF
           A new ULIP from Reliance                    Kotak launches e-insurance                                      IRDA fines Reliance Life              A jolt to Life Industry                        ICICI to protect crops                          Smart card from SIB
           Reliance Life Insurance has                 Kotak Mahindra Old Mutual Life Insurance                       IRDA has fined Reliance Life           The life insurance industry has reported        ICICI Lombard will provide cover for          The Thrissur-based South Indian
           launched Reliance Life Insurance            has launched its online term insurance                         Insurance Rs.10 lakh for paying        a drop in the renewal premium. For the          weather-based crops to farmers in             Bank (SIB) has launched a smart
           Classic (a ULIP plan). Under the            product. It is priced 10% cheaper than the                     excess referral fees and selling       first half of the current fiscal, life com-     Madhya Pradesh, Bihar, Tamil Nadu,            card as part of its financial
           plan, the beneficiary would get dou-        term insurance cover available through the                     policies before they have been         panies have reported a renewal premi-           Karnataka, West Bengal, Chhattisgarh,         inclusion initiative. The card
           ble the base sum assured plus total         company's agents and distributors. The buy-                    approved by the regulator.             um income of Rs 62,805 crore, which is          Jharkhand and Himachal Pradesh. It            carries features such as
           fund value in the event of acciden-         ing procedure is almost similar to the rest of                 Among the irregularities detect-       over Rs 100 crore lower than the                has been given the mandate by the             customer enrolment through
           tal death. The plan has two options         the online products namely ICICI Prudential                    ed during inspection, IRDA has         renewal premium of Rs 62,911 crore in           respective state governments to pro-          hand-held terminals, flexibility to
           - Regular and Single Premium.               Life Insurance's iProtect Term Insurance and                   listed the opening of new offices      the corresponding period last year. The         vide weather- based crop insurance            deposit money without insisting
           Under the Regular Option, minimum           Aegon Religare Life Insurance's iTerm plan.                    without permission, delay in           drop in renewal premium collections             for Rabi season (2010-11). The major          for biometric authentication of
           investment amount is Rs 20,000              While ICICI Prudential and Aegon Religare                      issue of licence to agents, out-       has been in ULIP, where it has come             crops that the private insurer would          the customer and facility to
           annually and for the Single                 Life Insurance offer only yearly options of                    sourcing of key jobs, paying high      down by Rs 3,159 crore. However, it             cover for Rabi season (2010-11) are           make restricted non-smartcard-
           Premium option it’s Rs 50,000 dur-          payment, Kotak has monthly, quarterly, half-                   referral fees and violation of the     has been compensated by the increase            winter paddy, cotton, wheat, mustard,         based transactions. The card is
           ing the 15-year policy tenure.              yearly and yearly options of payment.                          file and use policy for new insur-     in premium from traditional policies            barley, maize, onion, potato, tomato,         capable of incorporating the UID
                                                                                                                      ance products.                         which has grown by Rs 3,051 crore.              lentil, peas, arhar, jowar etc.               being implemented by GoI.

           8   MONEY MANTRA   31 December, 2010                                                                                                                                                                                                                 31 December, 2010   MONEY MANTRA   9
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           News Track
               FIIS ON SELLING SPREE?
                                                                          Banks hike FD,                                                                                 NCDEX starts SMS       Only SEBI can relax
                                                                                                                                                                         based trading facility disclosure norms
                                                                                                                                                                         NCDEX spot exchange (NSPOT) has               Companies seeking exemption from


                                                                          lending rates                                                                                  started mobile message based-trading
                                                                                                                                                                         facility for all the traders registered
                                                                                                                                                                         with it. After initiation of this service,
                                                                                                                                                                                                                       disclosure norms before tapping the
                                                                                                                                                                                                                       capital market can only do so with the
                                                                                                                                                                                                                       prior consent of market regulator

           7-Dec                                                                  anks are hit with liquidity crunch         SBI's move to raise rates comes a           traders can now get all online                Securities and Exchange Board of India
                                                           -542                   and inflation monster. In order to    day after the largest private bank, ICICI        NCDEX spot market information and             (SEBI), the Supreme Court has ruled. The
                                                                                  attract more deposit, almost all      Bank, and the largest home loan provider,        live updates about their contract on          apex court's direction came over a
                                                                          the banks have increased their fixed          HDFC, raised their lending rates. HDFC           their mobile sets through short               petition filed by SEBI against the
               -1400 -1200 -1100 -800 -600 -400 -200   0 200 400   600
                                                                          deposit rates. This simply means that the     raised PLR by 75 bps to 15%, while               messaging service (SMS). NCDEX                Securities Appellate Tribunal (SAT),
                                                                          cost of funds will become high and loan       ICICI Bank increased its PLR to 16.75%.          Spot Exchange is one of the leading           which had on August 7, 2009, directed
                                                                          will become costlier.                         HDFC has done away with its teaser loan          pan-India electronic bourses with             the Bombay Stock Exchange (BSE) to
                                                                              State Bank of India, the country's        scheme as well. Kotak Mahindra bank              active contracts in states of                 grant in-principle approval for the                                  To achieve
                                                                          largest bank, has raised deposit rates by     has raised its benchmark lending rate by         Maharashtra, Rajasthan, Karnataka,            allotment and listing of shares issued by S                          our collec-
                                                                          50 to 150 basis points (bps) giving a clear   25 basis points to 8 percent. Bank of India      Madhya Pradesh, Gujarat and Kerela.           Kumar's Nationwide Ltd to its promoters                       tive aspiration of
                                                                          indication that lending rates are set to      has hiked its fixed deposit rates by 1%                                                        on a preferential basis.
                                                                          rise. The bank will offer 8.50% for 555-      on select maturities.                                                                                                                                         double-digit and
                                                                          days and 1,000-days deposit. As per the            Banks continue to scrounge for liq-         ALL SET TO JUMP IN                                                                                     inclusive growth, we
                                                                          recent changes in the way banks price         uidity and have been borrowing on an                                                                                                                         need to raise the
                                                                          their loans, the Reserve Bank of India        average Rs 1 lakh crore through RBI's                                                                                                                   level of national sav-
                                                                          (RBI) has told banks that their lending       repo window every day. Liquidity is
                    To me the capital flow
                                                                          rates should factor in the increased or       expected to tighten further as more                                                                                                                          ings and channel
               situation is not alarming                                  decreased cost of deposits. SBI, along        money flows out of the system by way                                                                                                                       those savings into
               because we are using it                                    with all other banks, will be reviewing its   of advance tax payments from corporates                                                                                                                     investment... This
               very well. There are coun-                                 base rate - at 7.60%. At the same time,       to the government.
               tries that have imposed
                                                                                                                                                                                                                                                                                  means banks need
                                                                          SBI will review its special home loan              As a result of rise in interest rate, EMI
               capital flow controls. I do                                scheme where it charges a fix rate of 8%      is set to increase. It has cast its spell on
                                                                                                                                                                                                                                                                                 to raise the interest
               not see any such need                                      in the first year and 9% in the second        capital market as well. Banking and real-                                                                                                                      rates offered to
               right now. Economy has                                     and third year. The new deposit rate          ty stocks are bleeding. Hike in FD rate                                                                                                                         depositors and
               been able to take it well.                                 became effective from December 7.             will affect bottomline of banks and hike                                                                                                                  reduce the lending
                                                                          Among all slab, the sharpest hike is in       in lending rate will affect topline of real-
                                                                          46 to 90-day slab where bank would offer      ty sector. It may lead to cooling down
                                                                                                                                                                                                                                                                                     rates charged on
               KAUSHIK BASU,                                                                                                                                                                                                                                                                borrowers.
               ECONOMIC ADVISOR                                           5.50% as against 4% earlier. In case of       of realty prices as well. The best way to
               MINISTRY OF FINANCE                                        one year deposits, the bank will now          beat looming interest rate crisis is to go
               said while interacting with                                offer 7.25% as against 6% earlier.            for floating rate, as the rates will correct                                                                                                                                D SUBBARAO
               media in New Delhi.                                        Banking analysts feel that SBI would          once inflation goes down. The finance                                                                                                                                     GOVERNER, RBI
                                                                          hike lending rates at least by 40 bps to      minister has said that inflation may go                                                                                                                 said at Bancon 2010 held in Mumbai.
                                                                          protect its margins.                          down to the level of 6% by March’11.             P K Anand, ED, H S Makker, Chief GM with officials of Punjab & Sind Bank during the announce-
                                                                                                                                                                         ment of IPO opening on December 13, in Mumbai

          NEWS BRIEF
           Pinebridge buys AIG’s Indian                                      MFs bank on Banking and                     Foreign Funds more popular                      Principal Mutual Fund offers                    Shinsei MF renamed                              Kotak 30 becomes Kotak 50
           Mutual Fund Business                                              Capital Goods                               than Indian ones                                something Smart Equity                          Shinsei Investment Ltd, Rakesh                  Kotak Mahindra MF has revised the
           American International Group (AIG)                                The banking sector continued to be          Foreign funds are gaining popularity            Principal SMART Equity Fund aims to             Jhunjhunwala and Freedom Financial              investment objective of fund - Kotak
           has entered into a purchase-sale                                  the most favoured of mutual fund            among Indian investors. Statistics              invest on the basis of price-earnings           Services Private Limited have entered           Mahindra 30 Unit Scheme (Kotak 30)
           agreement with Pinebridge                                         managers. Statistics from the SEBI          from the AMFI says that foreign play-           ratio (P/E ratio) of the S&P CNX Nifty.         into an agreement with Daiwa Asset              in light of changing stock market
           Investments, a global asset manage-                               show the fund market's exposure to          ers' assets rose 13 per cent in the             When the market turns expensive in              Management Co. Ltd. (DAM) and                   dynamics. To reflect the revised
           ment company, for the sale of its                                 banks reached close to 17 per cent          first half of the current financial year.       terms of the P/E ratio, the scheme              Daiwa Securities Group Inc. (DSGI).             investment objective, it has proposed
           Indian mutual fund business. At the                               of the total in October. A month ago,       Domestic fund houses either regis-              will reduce its allocation to equities          Pursuant to the agreement, DAM will             to rename the scheme to Kotak
           peak of the financial crises in late                              it was below 16 per cent. Compared          tered negative or poor growth. For              and move assets into debt and vice              acquire 91% of the equity share capi-           Mahindra 50 Unit Scheme (Kotak
           2008, AIG sold a number of its sub-                               with September, MFs' exposure to            instance, in the private sector, Indian-        versa. The minimum investment is Rs             tal of the AMC and the balance 9% of            50). Currently the fund invests in a
           sidiaries. Among them was its global                              capital goods went up from 6.6 per          owned fund houses saw a dip of 7.5              5,000. There is no entry load but exit          the AMC will be acquired by DSGI.               maximum of 39 stocks. This would be
           asset management business, which                                  cent to 7 per cent to Rs 14,059             per cent in average assets under                load is 2% if one decides to move out           The name of the Fund will be                    increased up to 59 stocks. The asset
           was renamed Pinebridge                                            crore.                                      management while foreign players in             of the scheme before completing                 changed from "Shinsei Mutual Fund"              allocation and the investment strate-
           Investments.                                                                                                  the private sector saw a jump of 14%.           one year.                                       to "Daiwa Mutual Fund".                         gy shall remain the same.
          10       MONEY MANTRA             31 December, 2010                                                                                                                                                                                                                 31 December, 2010   MONEY MANTRA   11
EP 3-17- alok.qxd    12/13/2010        2:51 PM     Page 12

           Farm Fresh
           DIN made mandatory for                                                                                                                      MARKET PERFORMANCE
                                                                                                                                                        Best Performers in group ‘A’ vs Nifty
           communication with I-T
                      he government has made it mandatory for tax pay-
                                                                                                                                                                        (from 24-11-2010 to 08-12-2010)

           T          ers as well as collectors to quote a unique docu-
                      ment identification number (DIN) on every com-
                      munication with the income tax (I-T) department.
           The number is on the lines of permanent account number
           (PAN) and tax deduction account number (TAN).
                                                                                     ATM: The New Gateway of
                                                                                          Terror Funding
                                                                                ATMs have become the new gateways to fund terror activi-
                                                                                ties and carry out money laundering as economic intelligence
                                                                                agencies are recording an increasing trend of suspicious with-                                                                                                            Growth rate
                According to a guideline brought out by the Central             drawals of huge amounts from these machines with easy
           Board of Direct Taxes, DIN will be mandatory in respect              access across the country. The Financial Intelligence Unit (FIU)
                                                                                                                                                                                                                                                 for the fiscal 2010-
           of every notice, order, letter or any tax-related correspon-         which received more than 17,000 Suspicious Transaction                                                                                                              11 will be 8.75 %
           dence, including the filing of returns for 2010-11, with the         Reports (STRs) during 2009-10 financial year, has reported                                                                                                    plus minus 0.35 %. In
           I-T department by the taxpayers. DIN will be generated by            such incidents involving ATMs in its 66-page report to the
           the I-T department and the Aayakar Sampark Kendras will              Finance Ministry. Withdrawals from ATMs reduce the chances                                                                                                    the first two quarters
           distribute the numbers to assessees. Income tax officials            of detection of terror agents by police and intelligence agen-                                                                                                   we have grown 8.9
                                                                                cies, the report says. For instance, a report was received from
           will also be allotted the numbers to streamline the tax fil-
                                                                                a bank on transactions in a savings account in a district in                                                                                                          %. That is quite
           ing process. Taxpayers as well as tax officials will have to         Kerala. The account showed cash deposits below Rs 50,000
           quote the number on every communication without which no                                                                                                                                                                                    encouraging....
                                                                                across several branches in Kerala and Maharashtra, followed
           communication will be considered as received.
                According to income tax department, DIN will be use-
                                                                                by withdrawals through ATMs. The report was disseminated
                                                                                to an intelligence agency. Enquiries revealed that the subject
                                                                                                                                                   PAN made mandatory for all                                                                     Inflation is coming
                                                                                                                                                                                                                                                   down. Now it is in
           ful for error-free filing of returns and claiming refunds. In the    had gone to one of the Gulf countries for employment and
           Finance Act, 2010, a new Section 282B was inserted for
           the allotment of DIN. The implementation of the new sec-
                                                                                had started his own business in flowers and curtains in Kerala
                                                                                on his return. Analysis of two bank accounts of the person
                                                                                                                                                   MF investments from Jan 1                                                                   the single digit but I
                                                                                                                                                                                                                                                   would like further
                                                                                and his son revealed remittances from Gulf and immediate cash
           tion was made effective from October 1. Under the provi-
                                                                                withdrawal from an ATM at Hyderabad. Investigations showed
                                                                                                                                                   All mutual fund investors, new as well as existing, will need to mandatorily fur-            easing. I am hoping
           sions of the section, every I-T authority shall allot a com-                                                                            nish their PAN (Permanent Account Number) details from next year irrespective
           puter-generated DIN in respect of every notice, order, let-
                                                                                business connections with an accused who was in police cus-
                                                                                                                                                   of the size of their investment. The move is part of the revised Know-Your-Customer         that by March it will
                                                                                tody for involvement in a pipe bomb case. The money was with-
           ter or correspondence issued by him to any other income              drawn from Hyderabad-based ATMs by an associate of the             (KYC) compliance norms to be adopted by fund houses from next year in order                 be around 6%. But it
           tax authority, assessee, or any other person and such num-           accused and was allegedly used to facilitate terrorist activi-     to comply with money laundering prevention rules. Currently, individual investors             should come down
           ber shall be quoted thereon. The document, which does not            ties.                                                              need to quote PAN only for investments of Rs 50,000 or more, although non-indi-
           bear DIN, shall be treated as invalid and be deemed never                                                                               vidual investors are required to quote their PAN for all amounts. All the fund                              further.
           to have been issued. The same applies for the documents             However, the I-T department needs to have the requisite             houses have been asked by industry body AMFI to comply with new KYC norms,
           received by an I-T authority, or on behalf of such authority.       infrastructure and facilities in place before it can cover the      which would include collecting details like PAN, address proof and photograph
                                                                                                                                                                                                                                                        PRANAB MUKHERJEE
           I-T department will allot DIN on each incoming or outgo-            gamut of services mentioned in Section 282B on a pan-               of all their new and existing investors, with effect from January 1, 2011.
                                                                                                                                                                                                                                                         FINANCE MINISTER
                                                                                                                                                                                                                                                said after tabling mid-year analysis of
           ing communication so that no one can deny its existence.            India basis.                                                                                                                                                                    economy in parliament.

           NEWS BRIEF
           Silver ETF in the offing                     NPS goes online                     Another portal, which        94-day plan from Fidelity                   Reliance MF revises mini-                 Electronic stamps
           Benchmark MF has said that the               ICICI Securities has launched                offers NPS online, is         Fidelity MF has launched Fidelity           mum investment amount                     The Indian postal department is plan-
           company is all set to launch Silver          National Pension System (NPS) facili- offers only the basic         Fixed Maturity Plan Series IV-Plan D,       Reliance Mutual Fund has revised          ning to offer e-stamps. US firm
           ETF. It’s waiting for regulatory             ty on its online broking site,               tier I account, while          a close-ended income scheme. The            the minimum application amount of         Accenture has been roped in for the
           approval. Jewellery chains across   It is the first time        offers tier II as well.                       investment objective of the Plan D is       Reliance Monthly Income Plan with         project which according to an official
           India are promoting silver as afford-        that such an online facility has been                                                      to generate reasonable returns and          effect from 7 December 2010.              should replace paper postage stamps
           able and modern jewellery in place of        offered in India. Through                    Not More than this...                         reduce interest rate volatility primarily   Accordingly, for all the plans &          within two years. The two main bene-
           gold. India's silver imports US dollar, customers can sub-          IDFC Mutual Fund has announced                through investment in money market          options the minimum application           fits of e-stamps are: reduce the ram-
           terms were $309.8m in June 2010,             scribe to NPS, select a fund manager,        that the maximum application                  and short to mid term debt instru-          amount will be Rs. 5000 and in multi-     pant losses incurred due to stamp
           up 854% on the year, In the first six        view and access registration details         amount in IDFC Ultra Short Term               ments having maturity, on or before         ples of Rs. 1 thereafter. Reliance        forgery by cutting printing costs and
           months of 2010 they were up 579%,            as well as place contributions at the        Fund and IDFC Savings Advantage               the date of maturity of a plan. The         Monthly Income Plan is an open            making it easier for users to get the
           at $1.69bn. Silver like gold is a hot        click of a button. Currently Tier I type     Fund (Plan A and D) has been revised          tenure of Plan D shall be 94 days.          ended fund with the investment            stamps. IT majors Capgemini, Wipro,
           investment in India.                         of accounts can be opened in                 to Rs. 10,000 per application with            The exit load is nil. The minimum           objective to generate regular             TCS, Infosys, HCL, IBM and HP are in
                                                                                                     effect from 8 December 2010.                  investment amount is Rs 5,000.              income.                                   talks for this modernisation project.

           12   MONEY MANTRA   31 December, 2010                                                                                                                                                                                                31 December, 2010   MONEY MANTRA   13
EP 3-17- alok.qxd    12/13/2010        2:51 PM        Page 14


                                                                                                                                           THE GREAT FALL OF                                                                  2010
                                                                                                                                                                                                                        SE Sensex tumbled 454 points or 2.3 per cent to

                                                                                                                                                                                                             B          19242.36 on December 9. With this, Sensex is
                                                                                                                                                                                                                        down 9.2 per cent from its peak on November 5,
                                                                                                                                                                                                                        2010. On the other hand, Nifty slid 2.38 per cent
                                                                                                                                                                                                               137.2 points to 5766.50. The downfall was heavier on
                                                                                                                                                                                                                 the broader indices. The BSE Mid-Cap index fell 4.48%
                                                                                                                                                                                                                   and the BSE Small-Cap index shed 5.92%. With this,
                                                                                                                                                                                                                          BSE Small Cap index is down 22.2% within a
                                                                                                                                                                                                                             month, while the BSE Mid-Cap index has slid
                                                                                                                                                                                                                               16.8%. All the sectoral indices on BSE were
                                                                                                                                                                                                                                in the red, barring the BSE IT index.
                                                                                                                                                                                                                         Consumer Durables index (down 6.29%), Realty
                                                                                                                                                                                                                           index (down 4.76%), Metal index (down
                                                                                                                                                                                                                            3.67%), Healthcare index (down 3.53%), Auto
                                                                                                                                                                                                                         index (down 3.33%) and Banking sector index
                                                                                                                                                                                                                    Bankex (down 3.24%) show how big the fall was.
                                                                                                                                                                                                               Trading in 569 share on BSE was frozen due to lower

                                                                                                                                                                                                                                  MARKET VOICES
           MARKETS GO MERRY                                                                                                                                                                                                               Worst is still nor over for
                                                                                                                                                                                                                                          our markets as things
                                                                                                                                                                                                                                          are in phase of revela-
                                                                                                                                                                                                                                          tion in one form or

           ON CHRISTMAS!
                                                                                                                                           REASON BEHIND FALL                                                                             another. But I don't see
                                                                                                                                                                                                                                          much downside from
                                                                                                                                           On December 8, 2010, a television channel had said the Intelligence Bureau         here and markets are likely to con-
                                                                                                                                           suspects insider trading in shares of K S Oils, Ruchi Soya and Karuturi            solidate in near term.
                                                                                                                                           Global. According to the channel, IB suspected that a market operator Vimal               Madhumita Ghosh, Vice President-
                                                                                                                                                                                                                                                   PMS & Research,
                                                                                                                                           Rathod was accumulating shares of Ruchi Soya, KS Oils, Karuturi Global                                   Unicon Financial
                                                                                                                                           on behalf of investor C Shivasankaran. The IB reportedly passed on the infor-
                                                                                                                                           mation to the Central Bureau of Investigation (CBI) and the market regu-                       News of corruption and
                                                                                                                                           lator- the Securities and Exchange Board of India (SEBI) for further action.                   price rigging is more or
                                                                                                                                           Various non-economic factors on domestic front like corruption and insid-                      less factored in. Good
                                                                                                                                           er trading have hit on Indian markets big in last one month or so.                             IIPnumbers are likely to
                                                                                                                                                                                                                                          change the sentiment of
                                                                                                                                           FIIS' ACTIVITY                                                                                 market participants.
                                                                                                                                                                                                                              From here onwards, Nifty is likely
                                                                                                                                           Foreign Institutional Investors (FIIs) were net sellers of Rs.1297.80 crore        to consolidate in a range 5700-6000
                Alok Dwivedi                              In 2005, DAX managed to                 is celebrated by Christians and non-     on December 9, according to the data available on SEBI's website. FIIs were        in near term.

                                                                                                  Christians alike across the globe. The   net buyers of Rs.1002.20 crore till December 9, 2010. They were net buy-                                  KK Mittal, PMS Head,
                      iwali saw markets touching          offer over two per cent                 festival marks the beginning of          ers of Rs.24978.50 crore, Rs.28562.90 crore and Rs.18293.10 crore in                                             Globe Capital

           D          a peak of 21005. But the
                      uptrend did not last as mar-
                      kets lost over 7 per cent in the
           remaining days of November, raising
           concerns among the participants about
                                                          return in the last fortnight
                                                          of the year. The returns
                                                          from DAX were 3.3 per
                                                                                                  Christmastide, which lasts for twelve
                                                                                                  days. Mood around this time is fun
                                                                                                  filled which lingers on as people pre-
                                                                                                  pare themselves to welcome New Year
                                                                                                  on a cheerful note. Markets too catch
                                                                                                                                           September, October and November respectively.

                                                                                                                                           SCRIPS DOWN ON CORPORATE
                                                                                                                                           GOVERNANCE ISSUE
                                                                                                                                                                                                                                          Worst is not over and
                                                                                                                                                                                                                                          markets are yet to see
                                                                                                                                                                                                                                          the bottoms of this cur-
                                                                                                                                                                                                                                          rent downfall. Lower
                                                                                                                                                                                                                                          levels of last downfall
           which course markets will take in the          cent and 2.5 per cent in                up with the festive mood remaining
                                                                                                                                                                                                                                          around 18954 are still
           future. After the festival of lights, it is                                            optimistic all this while.               Shares of K S Oils were down 10.8% at Rs 30.55 on December 9. The
           now the turn of festival of joy. A peek        year 2008 and 2009                           If we look at the data of CAC 40,   stock had tumbled 14.7% on December 8, after the television channel report-        under threat for Sensex. After that,
                                                                                                                                                                                                                              Sensex is likely to consolidate in a
           into the history shows that stock mar-         respectively.                           a benchmark French stock market          ed about the IB report. Shares of Ruchi Soya were down 6.89% at Rs
                                                                                                                                                                                                                              range of 300 points either side in
           kets across the globe have performed                                                   index, which represents a capitalisa-    83.15 on December 9. Shares of Ruchi Soya had tanked 27% a day before.
                                                                                                                                                                                                                              near term.
           well around Christmas. Will history                Christmas, observed on December     tion-weighted measure of the 40 most     Shares of Glodyne Technoserve remained locked at 20% lower circuit at                                               Arun Kejriwal,
           repeat itself this time again?                 25 to commemorate the birth of Jesus,   significant values among the 100 high-   Rs 645.65 on BSE. The stock had tumbled 17% on December 8, 2010.                                                    Director, KRIS

           14   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                    16-31 December, 2010   MONEY MANTRA   15
EP 3-17- alok.qxd     12/13/2010         2:51 PM       Page 16

                                Performance of Sensex during last fortnight



                                                                                                                                                   D   STREET




                 -2                 -1                    0                    1                  2                 3                    4
                                                                 Return in per cent

           est market caps on the Paris Bourse,                                       Returns in last fortnight of year
           has been giving positive returns for the
           last five years during the last fortnight       Year               CAC 40           DAX             Straits Times    FTSE 100
           of the year. In 2005, the index provid-
           ed approximately one per cent return.           2005               +0.90%           +2.12%          +0.93%           +2.25%
           It had offered over two and a half per
           cent returns during the fortnight last          2006               +0.01%           +0.12%          +1.86%           -0.63%
           year.                                           2007               +0.16%           +1.5%           +0.46%           +0.94%
                If we talk about DAX, a blue chip
           stock market index consisting of the 30         2008               +1.01%           +3.34%          +1.22%           +3.66%
           major German companies trading on
           the Frankfurt Stock Exchange, has as            2009               +2.67%           +2.51%          +3.53%           +2.40%
           well offered positive returns during the
           period in the last five years. In 2005,             FTSE 100, a share index of the 100       Sensex lost 1.88 per cent in 2008 dur-
           DAX managed to offer over two per              most highly capitalised UK companies          ing the last fortnight of the year. But
           cent return in the last fortnight of the       listed on the London Stock Exchange,          it provided nearly three and a half per
           year. The returns from DAX were 3.3            has offered positive returns four out         cent return last year during the same
           per cent and 2.5 per cent in year 2008         of five times during the period.              period.
           and 2009 respectively.                         However, it offered over two per cent              But there is one exchange whose
                Straits Times, index comprising           return in 2005; it lost 0.63 per cent the     performance remained weak thrice in
           stocks of 30 representative companies          following year. FTSE 100 provided 2.4         the last five years during the year-end.
           listed on the Singapore Exchange, has          per cent return last year.                    Dow Jones Industrial Average, a stock
           performed superbly during last fort-                Sensex, the benchmark index of           market index which shows the move-
           night of the calendar year if we look          BSE consisting of the 30 largest and          ment of 30 large companies based in the
           at the data for the last five years. In        most actively traded stocks chosen            US during a standard trading session
           2009, it rose more than three and a            from various sectors, gave positive           in the stock market, offered negative
           half per cent during the period.               returns four out of five times. However,      returns thrice in the last five years.

            16   MONEY MANTRA   16-31 December, 2010                                                                                                       16-30 November, 2010   MONEY MANTRA   17
EP 18-35- alok.qxd    12/13/2010        2:49 PM       Page 2

                C JUNCTION                                                                                                                                                                                                                                     C JUNCTION
                                                                                                                                                      demand as investors treat the white
                                                                                                                                                                                                                                     Silver MCX continuous

           Gold likely to continue                                                                                                                    metal as poor people's gold.
                                                                                                                                                          Outlook: Precious metals will
                                                                                                                                                      continue to rally after a consolidation,

           its northward move
                Anjani Sinha                                                                              gold offering allowed by Beijing.
                                                                                                                                                      benefiting from global economic
                                                                                                                                                      uncertainties- sovereign concerns in
                                                                                                                                                      peripheral European countries, infla-
                                                                                                                                                      tionary pressures in China and other
                                                                                                          Hong Kong authorities allowed the           Asian economies, geopolitical ten-
                                                                                                          launch of domestic gold trust fund last     sions between North and South Korea
                  GOLD & SILVER                                                                           month, backed by physical Gold              and US' QE measures. Unemployment
                         Market Review                                                                    Bullion held at the government-con-         rate rose to 9.8%, the highest in 7
                (21st Nov to 5th Dec 2010)                                                                trolled depository near the island's air-   months, in November, signaling the
               Gold price rallied to all time high,                                                       port. The world's No.1 Gold Mining          pace of US recovery remained slug-
           as decline in USD increased the appeal                                                         producer, China, also the No.2 gold         gish. Fresh concerns emerged over the
           for the yellow metal. The benchmark                                                            consumer, accounted for 16% of glob-        stability of the foreign exchange mar-
           COMEX gold contract rose to a 3-                                                               al demands in the third quarter with        kets after Federal Reserve Chair Ben
           week high of 1417 before settling at                                                           Chinese households doubling to near-        Bernanke that bank could buy more
           1406.2, up +3.83% during the fort-                                                             ly 2% the amount of their fast-grow-        than the $600 billion in U.S. govern-
           night. Gold's consolidation since mid-                                                         ing annual savings they put into gold.      ment bonds it has committed to pur-             tive easing policy, further undermin-            buying of gold as an alternative to fiat
           November has ended and price even-                                                                 Silver has outperformed gold since      chase. If the Fed extends its quantita-         ing the dollar, it could lead to fresh           currencies.
           tually reached new highs again. At                                                             the second half of the year and gold-
           COMEX Gold February contract                                                                   to-silver ratio has dropped below 50                                                                                         Refined Soy oil MCX
           gained by USD 53.90/Toz while                                                                  last week. Earlier this year, silver
                                                                                                                                                            REFINED SOY OIL
           COMEX Silver December contract                                                                 moved in line with base metals given                    Market Review
           gained by 187.10 cents/Toz. MCX                                                                its heavy industrial demand.
           Gold February gained Rs.696/10 gram                                                            Obviously, rally in silver price has             (21st Nov to 5th Dec 2010)
           and Silver March contract gained by                                                            been driven by strong investment                 The refined soy oil futures traded on
           Rs.2587/Kg. At NSEL, Ahmadabad                                                                                                             a positive note in the fortnight. A number
           spot Gold gained Rs.513/10 gram and                                            Gold MCX continuous                                         of factors have been contributing to the
           Silver gained by Rs 2867/Kg. NSEL                                                                                                          wide swing in prices of soya oil over the
           Demat E-Gold gained by Rs. 81.90/gm                                                                                                        past three weeks. These include uncertain-
           while NSEL Demat E-Silver gained by                                                                                                        ty about Chinese demand, fluctuating cur-
           Rs. 338.40/ 100 gm.                                                                                                                        rency values, trading activity of commod-
                                                                                                                                                      ity speculators, and the La Nina weather
           Future market prices                                                                                                                       factor. MCX near month contract closed
               Gold moved higher in the fortnight                                                                                                     at 586.50/10 kg with net gain of
           amid ease in sovereign concerns in                                                                                                         Rs.20.10/10Kg.
           the European periphery and robustness                                                                                                           The soya crop in Brazil, the world's No
           in economic indicators. ECB                                                                                                                2 exporter behind the United States, was         Market    Contract         Open       High        Low       close       Prev.      Net
           announced, to leave the main refinanc-                                                                                                     seen at 67 million tonnes, down 1 mil-                                                                                   close      change
           ing rate unchanged at 1% and to keep                                                                                                       lion tonnes from a prior estimate and down       MCX       Dec' 10          570.00     587.80      559.75    586.75      566.75     20.1
           providing unlimited liquidity to the                                                                                                       from last season's 69 million-tonne crop.
           market through 1Q11. Sentiments                                                                                                            Soybean planting had been delayed in            the inflation on the country. In order to cool   million tons. During Apr-Oct, soy meal
           have improved in global markets. In                                                                                                        Brazil in October due to a lack of rain in      down, gains and oilseeds prices, China is        shipment rose 44% Y/Yto 1,248,387 tons.
           China, gold imports jumped to 209                                                                                                          many regions. Growers in, Brazil's largest      selling in an auction from its reserves.         COOIT has estimated soy meal export
           metric tons in the first 10 months of                                                                                                      soy-producer state, had been forced to          But crushers become active to procure            from the country in 2010-11 would be
           2010, compared with 45 metric tons                                                                                                         postpone seeding in some parts of the state     beans from the spot market at lower lev-         3.4 million tons against 2.4 million tons
           for all of 2009. The robust demand                                        SPOT MARKET PRICES                                               last month due to the La Nina weather phe-      els. Unfavorable weather condition in            in last year. Indian soy meal export
           for the yellow metal is driven by infla-      Commodity Market                  Price           Open      Close     Prev. Net              nomena which caused drier than usual            South America is leading to delay in sow-        price is $10-15 per ton discount to
           tionary pressures and the government's                                          Quote                               Close Change           weather.                                        ing activities. This turned a positive fac-      Brazil and Argentina. This may attract
           measures to curb asset prices. At a con-      Gold           NSEL Amd           Rs. /10 gm. 20102         20589     20076 513                   Positive trend in overseas market on       tor for India to export more soy meal this       South East Asian countries to import
           ference in November general manag-            Silver         NSEL Amd           Rs./kg.     41470         44136     41269 2867             reports of strong export demand gave            year.                                            more this year. Soybean-meal exports
           er of China National Gold Corp said                                                                                                        underlying support to the market. Report             Robust oil meal export demand-as            from India, Asia's top supplier of the
           China's gold consumption will be                                        FUTURES MARKET PRICES                                              of fresh export orders from China for soy-      indicated by strong export data for last 3-      animal feed, may climb 68 percent this
           around 430 metric tons the year.              Market   Commodity-       Unit         Open      High    Low       Close   Prev.    Chg      bean during mid of the fortnight resulted       4 months-is likely to render support to          month as Southeast Asian buyers sub-
               Meanwhile China's Lion Fund                        Contract                                                          Close             into sharp rise in the soy oil prices.          the domestic market. According to Solvent        stitute imports from South America,
           Management Co. won permission to              MCX      Gold-Feb-10      Rs/10 gm.    20299     20874   20212     20798 20102 696                Recently, the Chinese central bank         Extractors Association of India, edible          where dry weather threatens planting.
           invest up to $500 million of private          COMEX    Gold-Feb-10      $ / Troz     1358.95   1417    1352.35   1406.20 1352.30 53.9      raised banks' reserves requirement by 50        oil import in 2009-10 oil years rose 8%          Sales to Japan, South Korea, Vietnam,
           investors' cash in foreign-listed Gold        MCX      Silver-Mar-10    Rs/kg.       41890     44290   40900     44261 41674 2587          basis points so it is anticipated by the mar-   Y/Y to 8.83 million tons. Soy oil imports        Thailand and China may be 500,000
           ETFs, the first such exchange-traded          COMEX    Silver- Mar-10   Cents/Troz   2746      2949    2643.00   2927.10 2740.00 187.1     ket that China may raise interest to curb       in the same period rose 68% Y/Y to 1.66          metric tons in November, compared

           18   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                                          16-31 December, 2010   MONEY MANTRA   19
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                C JUNCTION                                                                                                                                                                                                                             D STREET
           with 297,661 tons a year ago according
           to SOPA.
               Outlook: In domestic market the
                                                         despite record imports. Higher landed
                                                         price of imported oil may also support
                                                         upward movement in the prices. Rising
                                                                                                    bumper crop harvest might render sup-
                                                                                                    port to the oil market. It is important to note
                                                                                                    that India has imported record edible oil in
                                                                                                                                                      Value buying opportunities
           edible oil is likely to trade higher

                                                         consumption despite record import and      the oil year 2009-10.

                                                                                     Cotton futures (ICE)
                                                                                                                                                      in power and infra sectors
                        Market Review                                                                                                                    Ashish Kapur                             power sector stocks, especially power        lots of action on the bourses. The vir-
                (21st Nov to 5th Dec 2010)                                                                                                                                                        generating and transmission companies        tual tug of war between the buyers and
               The International cotton prices                                                                                                        After a good run up in September and        have been lying low. They have under-        the sellers kept the anticipation alive
           rose during this fortnight as demand                                                                                                       October, markets came within striking       performed the broader markets in a sig-      throughout the month. NSE's bench-
           for cotton has remained strong aided                                                                                                       distance of scaling higher than the all     nificant way. This is not difficult to       mark index, Nifty kicked off the month
           by the weakening dollar. There                                                                                                             time high achieved in the January of        explain as results of companies in this      riding high on the wave of optimism.
           remains uncertainty about the China                                                                                                        2008. However, investor psychology          sector have been lackluster particular-      CNX Nifty kicked off the month 75
           crop that also adds strength to prices.                                                                                                    always makes the all time high a diffi-     ly in comparison to their peers in the       points higher at 6092 from the previ-
           The ICE cotton future for December                                                                                                         cult barrier to cross. This together with   automobile, banking and pharma sec-          ous close of 6017. It retained the posi-
           delivery settled higher by 17.09 cents,                                                                                                    less than expected IIP numbers for the      tors. However with significant capaci-       tive momentum for a week taking the
           or by 13.36%, at $1.4499 a pound.                                                                                                          second consecutive month, loan for          ty expansions coming into play in the        index to the highs of 6338.5.
               The world cotton estimates for                                                                                                         bribe case against some senior public       next 2-3 years this sector is likely to          However, it could not hold on to
           2010-11 indicates slightly lower end-                                                                                                      sector bank officials and the resulting     emerge as the dark horse in the long run.    these levels for long and slid to the bot-
           ing stocks compared with last month.                                                                                                       uncertainty over future funding of real     Moreover, with the demand supply gap         tom of 5690.35 in the last week of the
           Higher production in Argentina,                                                                                                            estate projects made the markets enter      in this sector not likely to get filled up   month after descending continuously on
           Australia, and Turkey is more than                                                                                                         into a corrective phase. Revelations of     even after the stupendous capacity aug-      the stairs formed by black candles on the
           offset by a 1.0-million-bale reduc-                                                                                                        the 2G scam gave further jitters to the     mentations, we are looking at a possi-       charts.
           tion for China, which is based main-           Market          Contract    Open     High     Low      close      Prev.      Net            market. Moreover, tension in the            ble multiyear bull rally here; something         On the charts, index corrected about
           ly on lower area as reported by                                                                                  close      change         Korean Peninsula and fears of sover-        akin to the public sector banking rally      600 points from its peak to recover with
           Chinese agencies. China's beginning            ICE (Cents/lb) Dec 10       149.98   149.98   140.00 144.99       127.90     +17.09         eign debt crisis resurfacing in Europe      over the last one year. This expected        a consistent pace. On balance volume
           stocks are reduced as the current                                                                                                          resulted in the strengthening of the dol-   astounding rally may start as early as the   slid in the middle of the month accom-
           severe shortage suggests that con-                                                       lakh bales comprising of 20,000 to                lar index. This led to concerns over        next financial year. Hence we advise         panied by relative strength index. RSI
           sumption in 2009-10 was higher than                                                      25,000 bales in Northern States,                  hedge funds moving away from emerg-         long term investors to book partial prof-    reached very close to oversold zone but
           previously forecast. Estimates of total                                                  45,000 to 50,000 bales in                         ing markets resulting in panic selling      its in the banking and automobile sec-       has started picking up in the last two
           world consumption and trade are                                                          Maharashtra,65,000 to 70,000 bales in             in our bourses in the last week of          tors and buy quality power stocks in a       days of the month. Besides, Money flow
           raised slightly. World ending stocks                                                     Gujarat, 8,000 to 10,000 bales in                 November.                                   regular and systematic way.                  index (MFI), which is a momentum
           are now forecast at 44.7 million bales,                                                  Madhya Pradesh, 5,000 to 6,000 bales                   Positive development amidst all this                                                indicator, is used to determine the con-
           down about 2.0 million bales from the                                                    in Karnataka and around 32,000 to                 mayhem was that a large part of the mar-
                                                                                                                                                                                                  TECHNICAL ANALYSIS                           viction in a current trend by analyzing
           beginning level. Compared to last sea-                                                   35,000 bales in Andhra Pradesh. As on             ket got rid of its excess valuations.           November month had witnessed             the price and volume of index or secu-
           son, China's stocks are forecast to fall                                                 30th November 2010, the progressive               Stocks particularly in the banking space
           by 3.5 million bales, while stocks are                                                   arrivals are 57.67 lakh bales as against          fell significantly and became attractive                                      NIFTY INDEX
           expected to rise in Brazil, India, and                                                   58.60 lakh bales in previous year.                once again. Bargain hunting at lower
           Australia.                                                                                   Outlook:The Global cotton price               levels pulled back the indices very
               The physical market has been                                                         is bullish due to fundamentally weak-             sharply thereby asserting once again the
           holding up during the sell-off in New                                                    ening of dollar and strong consumer               huge liquidity pool waiting at the side-
           York, with overseas mills continuing                                                     demand from China, and supply and                 lines to enter our markets whenever it
           to pay prices in the 140's and 150's                                                     demand have driven cotton ending                  smells of an opportunity. However
           for US cotton and the A-Index never           increasing. While domestic cotton          stocks to their lowest level since 1995.          going ahead we feel that breaching the
           dropped below 143.35 cents. The sur-          physical price is improving, physical      The wide spread rains across the cot-             all time high of around 6350 of Nifty
           prisingly strong US export sales              trade remains light. Downstream            ton belt in central and southern states           will be a fairly insurmountable task for
           report of this morning reinforced the         products stocks are building.              had affected the pace of kapas arrivals           our markets in the near future. At the
           market's already bullish sentiment.               In India, cotton prices remained       in these areas have higher moisture               same time buying emerging at lower
           For the week that ended on November           steady with moderate transaction.          contents. In anticipation of better               levels will help restrict the downside
           25 combined sales for both marketing          Mills are reported to have modest pur-     prices, at present, the cotton farmers are        from these levels. Keeping this in mind
           years amounted to 636'900 running             chases at lower rates for nearby           holding stocks with them, which have              a range bound movement is likely to
           bales of Upland and Pima cotton. This         requirements and turnover was report-      also affected the pace of arrivals. The           take place over the next few months.
           brings total commitments for the cur-         ed to be thin as buyers were hesitant      demand for cotton from the domestic                    Stock specific action is likely to
           rent season to 13.5 million statistical       at current levels. Exporters were strug-   and international buyers is good. At              dominate proceedings against this back-
           bales, of which only 2.8 million bales        gling to buy good quality produce. The     present, the exporters are active and             ground. While in the near term banking,
           have been exported so far. For the            untimely rains and inclement weath-        hence, it is felt that the domestic cot-          automobiles, pharma and sugar sectors
           2011-12 marketing year there are              er conditions across the central and       ton prices may remains steady in the              are likely to stay on top of every mar-
           already 1.3 million bales on the              southern zone had affected the pace of     coming weeks.                                     ket participant's mind, long term value
           books. In China, economic growth is           arrivals. The per day arrivals are now           (Writer is MD, National Spot Exchange       buying opportunities exist in the power
           steady, but inflation pressure is             reported around 1,90,000 to 1,95,000                                      of India Ltd.)     and infrastructure space. For a long time

           20   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                                  16-31 December, 2010   MONEY MANTRA   21
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          D STREET                                                                                                                                                                                                                                 BROKER’S PICKS
                     PUT CALL CONCENTRATION (As on 6th Dec)                                          strong build up in 6000 call as compared      Biocon                                BUY          CMP: Rs.396                   TARGET: Rs.540
                                                                                                     to 6300 call in last 15 days signifying
                                                                                                     anxiety in the market. The strong out-
                                                                                                     standing open interest position in 6000
                                                                                                     call is of ~71lakh shares, followed by
                                                                                                     6100 and 6200 calls with ~64lakh
                                                                                                                                                   Benefit of alliances
                                                                                                     shares and ~60lakh shares outstanding            Ashish Kapur                                                   Biocon: 3 months performance
                                                                                                     respectively, also support the firmness
                                                                                                     in market. Further 6400 strike call           Biocon Limited (Biocon) is a global
                                                                                                     seems to be losing sheen implying the         biopharmaceutical company with prod-
                                                                                                     top of the range has moved lower to           ucts and research services ranging from
                                                                                                     6300 levels.                                  pre-clinical to clinical development
                                                                                                         The Put-Call open interest ratio for      through commercialization. Within bio-
                                                                                                     index options has increased from 0.91         pharmaceuticals, the Company manu-
                                                                                                     to 1.2 signifying relatively stable sen-      factures generic active pharmaceutical
                                                                                                     timents and with the hope of higher           ingredients (APIs) like Statins and
                                                                                                     prices in the near future.                    Immunosuppressants that are sold in the
                                                                                                         On the above observations we              developed markets of the United States
                                                                                                     believe the likely range for NSE Nifty        and Europe. It also manufactures
                                                                                                     for the next few trading sessions is          biosimilar Insulins, which are sold in
                                                                                                     expected to be 5700 to 6300.                  India as branded formulations and in
                                                                                                                   (Writer is CEO, Investshoppe    both bulk and formulation forms. Biocon
                                                                                                                                     India Ltd.)   along with its two subsidiary companies,
           rity. It is used as a measure of the                                                                                                    Syngene International Limited and
           strength of money going in and out of                                    OPTION STRATEGIES                                              Clinigene International Limited forms
           a security. MFI fell to lower extremes          Buy 4 Lots of 6000 Puts @ Rs.104; Sell 15 Lots of 5800 Puts @ Rs.43                     a fully integrated biotechnology enter-       Recombinant Human Insulin in 27 coun-              Widening Horizons- Malaysia
           along with index signifying outflow of                                                                                                  prise specializing in biopharmaceuticals,     tries.                                        Calling: The company has signed a
           money on the bourses. At present, nifty          The above strategy will be the most beneficial for the investors who think             custom research and clinical research.             The Benefiting Alliances- Biocon         Biocon is also in talks with Biotech Corp
           is trading near its 100 DMA (Daily              that Nifty will find its support at 5700. Also the above strategy will be the most                                                    and the Center of Molecular                   to manufacture biopharmaceutical prod-
           Moving Average).                                profitable when Nifty will be at 5800. This strategy will give an inflow of ~           Investment Rationale                          Immunology (CIM) have strengthened            ucts and formulations within Malaysia's
                VIX hovered in the range of 19-22          Rs.11450 and a fixed return of ~2.38% from 6000 onwards. Between 5700                       The Pfizer Connection- Biocon             their existing research partnership by        Nusajaya, Iskandar Malaysia in the
           in the entire month implying confidence         and 6000; the maximum gain is ~10.7% at 5800 levels.                                    entered into a strategic agreement with       joining forces for an integrated antibody     biotech park called the Bio-XCell
           amongst the investors despite of correc-                                                                                                Pfizer for global commercialization of        program in immunology. The two com-           Ecosystem.
           tion in the index. Index finds some                                                                                                     Biocon's biosimilar versions of insulin       panies are moving to create an innova-             Product Pipeline : The Company
           resistance at 6200 levels, while it finds                                                                                               and insulin analog products such as           tive product pipeline focused on autoim-      has launched its new Comprehensive
           support at 5720 levels. It appears that                                                                                                 Recombinant Human Insulin, Glargine,          mune disease and cancer.                      Care Division, dedicated to provide
           Nifty is now upward bound with little                                                                                                   Aspart and Lispro. The money received              The company has inked a pact with        affordable solutions to critical illnesses
           correction.                                                                                                                             by Biocon will be used for development        Teleradiology Solutions under which the       like nosocomial infections, post surgi-
                                                                                                                                                   and registration of these products in var-    latter will provide teleradiology report-     cal complications, trauma and medical
           PUT CALL CONCENTRATION                                                                                                                  ious markets and expansion of existing        ing services to the former's clinical         emergencies. This would be the fifth
               Last few trading sessions have been                                                                                                 manufacturing facilities. The alliance is     research unit- Clinigene. These reporting     division for Biocon, complementing the
           quite topsy-turvy. From tensions in the                                                                                                 targeting the US$14b insulin opportu-         services help clinical research and           existing product portfolios in
           Korean peninsula, to Irish Debt Crisis                                                                                                  nity. By 2015, several insulin analogues      biotechnology companies to reduce the         Diabetology, Oncology, Nephrology
           coupled with jitters in the European            Sell 50 lots of 6500 call @ Rs.5; buy 5 lots of 6400 call @ Rs.7; buy 2                 are expected to lose patent, thereby offer-   time required for their development           and Cardiology divisions. Biocon is
           market and the domestic corporate gov-          lots of 5900 put @ Rs.62.                                                               ing a large opportunity for biosimilar        cycle. The company has entered into a         awaiting Phase-III clinical trial data
           ernance issues, we had it all affecting             The strategy will be the most useful for investor who has little clue as to         products. The Company expects revenue         long-term supply agreement with               for its oral insulin NCE program which
           the sentiments in the market. Since then,       where the market will head but has a bearish outlook. It will give an initial           from emerging markets under this agree-       Optimer Pharmaceuticals, Inc. for the         will be available by the end of FY11.
           VIX, based on implied volatility in             inflow of ~Rs.4500.The gains will start escalating as Nifty starts moving below         ment to start in the near future with         commercial manufacturing of the active        Results Update: The company has
           Nifty options premium has been hov-             5900.From 5900 to 6400 , it will give a constant return of 0.29%.And after              Biocon      having       approval       for   pharmaceutical ingredient (API) -fidax-       posted a 20% jump in its net profit to
           ering around 18-20.                             6400 the profits will again start mounting and will reach the peak at 6500 trans-                                                     omicin, the latter's lead product candi-      Rs. 89 crores for the second quarter of
               Analyzing the put-call concentra-           lating ~1.9% return. After 6510 the investor will start incurring losses.                Key Indicators (As on Dec 08, 2010)          date for the treatment of CDI disease.        FY11 as compared to corresponding
           tion for last 15 days, we see that 5800                                                                                                 Face Value (Rs.)        5                          Syngene International, a 100% sub-       previous period. Total income grew by
           and 5700 put options are the most active                                                                                                Closing Price (Rs.)        396                sidiary of Biocon, has partnered with         16% to Rs. 688 crores. Operating
           and have the highest amount of open                                                                                                     52 week H/L(Rs.)           464.6/263.75
                                                                                                                                                                                                 Endo Pharmaceuticals to develop a novel       profit grew by 21% to Rs 153 crore,
           interest with ~69lakh and ~65lakh                                                                                                                                                     biological therapeutic molecule against       while the operating margin stood at
                                                                                                                                                   Market Cap (Rs. Crore)     7920
           shares outstanding respectively. The                                                                                                                                                  cancer. Biocon and Bayer Healthcare           22%.
           active participation of 5600, 5900 and                                                                                                  EPS (Rs.)                  14.90              have entered into strategic partnership to    Outlook & valuation: The company
           6000 puts in the trade suggests that there                                                                                              BV per Share (Rs.)         78.27              fight the diabetes menace in India. The       is trading at 18.8x and 15.1x for
           are many crucial support levels between                                                                                                 P/B                        5.06               partnership aims at bringing the latest hi-   FY11E and FY12E earnings
           5600 and 6000.                                                                                                                          P/E                        26.58              tech blood glucose meter branded as           respectively and is expected to reach
               On the calls front, we have seen the                                                                                                                                              'Breeze2', to the masses in India.            Rs. 540 in the near future.

           22   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                                  16-31 December, 2010   MONEY MANTRA   23
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            BROKER’S PICKS                                                                                                                                                                                                                           BROKER’S PICKS
           Gujarat Gas    BUY                                  CMP: Rs.387.50                  TARGET: Rs.430                                        Siemens                                      Neutral              CMP: Rs.780.95

           Improving spreads                                                                                                                        At an Inflection point
                                                                                                                                                       John Perinchery
                                                                                                                                                                                                                     Siemens: 3 months performance
                Rajesh Jain                                              Gujarat Gas: 3 months performance
                                                                                                                                                    Siemens in India is a leading provider
           Overall the world stock markets are                                                                                                      of industry and infrastructure solutions
           showing a rising momentum. The fall in                                                                                                   with a business volume aggregating
           the Dollar Index recently has been a                                                                                                     about Rs 11,000 crores. Business
           trigger for the rally in Crude, Copper,                                                                                                  Segments of the company is categorized
           Gold, Silver and the base metals have                                                                                                    into six, such as Energy, Healthcare,
           witnessed a rising momentum. In such                                                                                                     Industry,          Information           &
           a scenario it makes sense to buy at dips                                                                                                 Communication,           Lighting       and
           for higher targets. We have identified                                                                                                   Transportation.
           two stocks namely Gujarat Gas                                                                                                            Diversified play on infra and indus-
           Company Limited and Havells India                                                                                                        trial capex: We expect Siemens India,
           Limited.                                                                                                                                 a leading provider of industrial and infra-
                Gujarat Gas Company Limited                                                                                                         structure solutions, to report major accre-
           (GGCL) is India's largest private gas                                                                                                    tion to its order book given that India is
           distribution company. It distributes                                                                                                     in the cusp of a new investment cycle and
           approximately 3.2 million metric stan-                                                                                                   infrastructure building. The company's
           dard cubic meter per day (mmscmd) of                                                                                                     industry segment spans across sectors
           natural gas to about 2,80,000 industri-                                                                                                  and supplies production, transportation
           al, commercial and domestic customers.        (regasified liquid natural gas) to play a   LNG in the supply mix.                         and building technologies. The energy
           Piped natural gas (PNG) is another            crucial role in domestic gas market. The        The stock of Gujarat Gas is look-          segment offers an array of products, serv-    sion lines would largely benefit compa-       products, Siemens would be setting up
           growth area for the company. GGCL             company has managed to improve its          ing good on weekly charts. One may             ices and solutions to the power and oil       nies like Siemens, which are expected         six new hubs dedicated for designing,
           supplies PNG to 2,00,000 domestic             spreads (net sales less purchase of gas)    buy near support levels of 370-80 with         & gas sectors.                                to leverage growth opportunities by           development, manufacture and sale for
           households and it is rapidly increasing       on a per scm basis, even in a scenario      a closing stoploss of 345, for higher               Industry and energy segments to          widening the spectrum of high-tech            the Indian and the global markets.
           its user base.                                where the average cost of gas has been      targets of 430 and above in the com-           drive growth: The industry and energy         products and solutions.                       Siemens expects the locally manufac-
                The company expects RLNG                 increasing due to higher amount of spot     ing weeks.                                     segments (each contributes ~45% to                 Order inflow gains momentum:             tured value-priced products to generate
                                                                                                                                                    overall revenues) are expected to be the      The company's consolidated order              revenues of ~Rs.6,500cr by FY2020.
           Havells India                                                                                                                            key growth drivers, going forward.            inflow in FY2010 stood at Rs.12,813cr,             Outlook and Valuation: After
                                                               BUY                CMP: Rs.379.35                TARGET: Rs.435                      Major contributors to the industry seg-       up 27% against the de-growth witnessed        reporting sluggish growth in revenues
                                                                                                                                                    ment would be the mobility division,          during previous two years. Nearly 60%         during the past couple of years, going

           Expanding the product portfolio                                                                                                          which has been consistently gaining mar-
                                                                                                                                                    ket share due to its state-of-the-art tech-
                                                                                                                                                    nology and local manufacturing of
                                                                                                                                                                                                  of the new orders relate to the energy seg-
                                                                                                                                                                                                  ment, including the Rs.2,500cr order
                                                                                                                                                                                                  from Qatar General Electricity and Water
                                                                                                                                                                                                                                                ahead we expect Siemens India to post
                                                                                                                                                                                                                                                double-digit growth across its various
                                                                                                                                                                                                                                                business segments, backed by a strong
           Havells India Limited is a leading                                                                                                       propulsion equipment. In the energy seg-      Corporation (Kahramaa). Consolidated          order backlog and improving outlook in
           manufacturer of low-voltage electri-                         Havells India: 3 months performance
                                                                                                                                                    ment, increased demand for supercritical      order backlog, as on September 2010,          the industrial and energy segments. Its
           cal equipment. In the past few years,                                                                                                    technology and PGCIL's move to                stood at Rs.13,584cr, up 32% providing        strategy to set up a global hub in India for
           the company has greatly expanded                                                                                                         upgrade to the 800kV HVDC transmis-           improved revenue visibility for the next      sourcing value-priced products will not
           its consumer durables business and                                                                                                        Key Indicators (As on Dec 08, 2010)          5-6 quarters.                                 only help it sustain healthy growth rates,
           this division now accounts for nearly                                                                                                    Face Value (Rs.)        2                          In for a long haul: As part of its       but will also enable Siemens India gain
                                                                                                                                                                                                  long-term India strategy, Siemens has         access to various products at low cost.
           10% of revenues and nearly 15% of                                                                                                        Closing Price (Rs.)        780.95
                                                                                                                                                                                                  earmarked Rs.1,600cr for setting up           Assured access to critical technologies
           the PBIT. The company has planned                                                                                                        52 week H/L(Rs.)           234.40/163.5       facilities over the next three years to       and R&D support from parent Siemens
           to extend its product portfolio by                                                                                                       Market Cap (Rs. Crore)     26330.53           strengthen its position in the green infra-   AG, will enable the company offer supe-
           introducing ceramic metal halide                                                                                                         EPS (Rs.)                  24.53              structure solutions and make its India        rior products in the Indian markets, espe-
           (CMH), a new generation lighting                                                                                                         BV per Share (Rs.)         111                operations the sourcing base for value-       cially in the power sector. We expect the
           which has a high CRI (colour ren-                                                                                                                                                      priced products. A major portion of the       company to post CAGR of 21% and 18%
                                                                                                                                                    P/B                        7.04
           dering index) and is considered the                                                                                                                                                    above-mentioned investment is expect-         in revenues and profit respectively, over
                                                                                                                                                    P/E                        31.84              ed to be deployed in the renewable ener-      FY2010-12. On the valuation front, at cur-
           closest substitute for natural light.
                                                         to bring brands from its international      els of 365-75, with a closing stoploss          Shareholding Pattern (in %)                  gy markets. The company would be              rent levels the stock trades at 29x and
                The company plans to manufac-                                                                                                        (As on Sep 30, 2010)                         investing ~Rs.500cr to manufacture            24x FY2011E and FY2012E EPS, respec-
           ture one million CMH lamps and is             subsidiary Havells Sylvania to India        of 350 for higher targets of 435 and            Promoters                   55.18            high-end technology wind turbines for         tively. Our fair value for the stock
           targeting revenues of about Rs 100            early next year.                            above in the coming weeks.                      FIIs                         4.13            the Indian market and expects the first       works out to Rs.690. We initiate cover-
           crore on an annualised basis at peak              Overall the stock formation is                      (Writer is EVP, Retail Research     DIIs                        23.14            shipment to roll out by FY2012.               age on the stock with a Neutral view.
                                                         good, one may buy near support lev-                            with Religare Securities)    Others                      17.55                 In its endeavour to make India a                                  (Writer is associated
           production. Havells India also plans
                                                                                                                                                     Total                       100.0            major production centre for value-priced                                with Angel Broking)

           24   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                                   16-31 December, 2010   MONEY MANTRA   25
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            BROKER’S PICKS                                                                                                                                                                                                                             BROKER’S PICKS
           Tata Steel                                   BUY CMP: Rs.623.65                      TARGET: Rs.689                                      Coal India                                    BUY CMP: Rs.318.20 TARGET: Rs. 335

           Cheaper to its peers                                                                                                                     Bet on largest coal producer
                 Harshal Patil                                             Tata Steel: 3 months performance
                                                                                                                                                      Amar Ambani                                                     Coal India: 3 months performance
           Tata Steel Limited (TSL) is one of the
           leading steel manufacturers having                                                                                                       By FY17, India's coal-based power gener-
           manufacturing facilities spread across                                                                                                   ation is set to more than double from the
           the Asian continent and European con-                                                                                                    current capacity of 84GW leading to an
           tinent. In the South East Asian                                                                                                          incremental demand of 396mn tons for
           Continent the company has manufac-                                                                                                       coal (75% of current capacity). This, cou-
           turing facilities located at Thailand,                                                                                                   pled with the expansion in the various sec-
           Singapore under the name of Tata Steel                                                                                                   tors, would lead to an additional demand
           Thailand and National Steel Holdings                                                                                                     of 114mn by FY12 and 513mn tons by
           (Nat Steel) respectively. In the                                                                                                         FY17. We estimate an increase of 341mn
           European continent it has presence                                                                                                       tons in coal supply over FY10- 17, which
           through Corus and is present in a big                                                                                                    is significantly lower than demand. As a
           way in the Indian markets. TSL derives                                                                                                   result, imports would jump 3x and would
           a major chunk of its revenues from                                                                                                       account for 25% of consumption by FY17.
           European operations (64.3% - FY10)                                                                                                             Coal India (CIL) enjoys a near
           followed by the Indian Operations                                                                                                        monopoly with a dominant 82% share in
           (24.4%-FY10), Natsteel Holdings                                                                                                          domestic coal production and is the            273 underground and 35 mixed) in 21            company to maintain healthy margins
           (6.1%-FY10), Tata Steel Thailand                                                                                                         world's largest coal producing company.        major coalfields across eight states in        despite selling coal at a huge discount to
           (3.1%-FY10) and other JV’s and sub-            around 7.4% for the quarter. The com-       coking coal have started to firm up and       Company's proven reserves account for          India. It has also recently undertaken var-    market price. We estimate OPM to expand
           sidiaries (2.1%-FY10).                         pany witnessed a drop in deliveries         are likely to remain on the higher end        ~48% of India's proven reserves and the        ious initiatives for the acquisition of coal   260bps over FY10-12 led by a 5.5%
               TSL, one of the leading steel man-         across all its geographies except emerg-    in the near future. This could pressurize     reserves to production ratio for CIL stands    assets outside India.                          CAGR in volumes, improvement in prod-
           ufacturers in India and world over, has        ing economies like India, where it reg-     the operating performance of the com-         at 122 years. Company is currently oper-            Being one of the lowest cost produc-      uct mix and cost savings/productivity
           presence in 6 continents with major rev-       istered a volume growth.                    pany at-least in the near future. The         ating out of 471 mines (163 open cast,         ers globally (US$16/ton) has enabled the       improvement measures.
           enues coming in from Europe and Asian               Going ahead the demand from            company has restructured the debt at
           region. Post the acquisition of Anglo-         emerging nations is likely to remain        its European operations, which is like-
           Dutch steel maker Corus; the compa-            buoyant while other developed nations       ly to free up cash flows amounting to 40
                                                                                                                                                    Infosys                                       BUY CMP: Rs.3134.60 TARGET: Rs. 3200
           ny is ranked amongst the top ten steel         like European are still in the midst of     million pounds per annum. This could
           manufacturers in the world. TSL plans
           to increase its installed capacity in
           excess of 50 mtpa by 2015 from the cur-
                                                          a revival stage. The European markets
                                                          are likely to be affected by seasonal
                                                          trends in Q3 FY11 and hence the vol-
                                                                                                      boost the bottom line in the near future.
                                                                                                           In order to secure the raw material
                                                                                                      linkages for the European operations,
                                                                                                                                                    Demand likely to be sanguine
           rent levels of ~30 mtpa. The company           umes from the region could be muted.        TSL had invested in coalmines in              Top tier IT companies have seen robust                              Infosys: 3 months performance
           recently declared its Q2FY11 consoli-          However Q4 FY11 is likely to register       Mozambique and had also formed a              business traction in H1 FY11 reflected
           dated results. The consolidated top line       a marked improvement over Q3FY11.           joint venture with New Millennium             in robust volume growth and multiple
           registered a growth of 11.2% Y-o-Y pri-        Also some quantitative easing measures      Capital Corp. Canada for procuring iron       large deal wins. The demand environ-
           marily triggered by higher realizations        in the European region are likely to        ore. The current status of the projects       ment continues to be sanguine with
           growth of 20%. Deliveries dipped by            stimulate demand in the near future.        suggests that the commercial produc-          meaningful up-tick in discretionary
           Key Indicators (As on Dec 08, 2010)            The capacity expansion plans lined up       tion from the Mozambique mines is             spends. Pricing has been stable largely
           Face Value (Rs.)       10                      by the company, primarily to cater to the   expected by early 2012, while the activ-      being only driven by changes in the serv-
                                                          buoyant domestic demand, are also pro-      ities at New Millennium Capital Corp          ices mix.
           Closing Price (Rs.)    623.65
                                                          gressing as per schedule. However the       has also gained momentum and could                 Infosys has been witnessing strong
           52 week H/L(Rs.)       737/543                 European operations (accounting for         commence commercial production                traction in discretionary services like
           Market Cap (Rs. Crore) 56266.59                ~65% of the revenues) have exhibited        soon. Once on stream, these measures          engineering, consulting and package
           EPS (Rs.)                    77.57             a slow recovery from the sovereign debt     could reduce the raw material cost of the     implementation space with a large chunk
           BV per Share (Rs.)           412.14            crisis, which is likely to exert pressure   European operations (64.3% of FY10            of the recent incremental growth com-
           P/B                          1.51
                                                          on the volumes and the realizations at      revenues) and thus augment the over-          ing from them. The increasing revenue
                                                          least for Q3 FY11.                          all profitability of the company.             share of discretionary services has also
           P/E                          8.04
                                                               The consolidated operating margins          TSL is quite cheap on P/E basis          reflected favourably in pricing of the com-
            Shareholding Pattern (in %)                   for the quarter at 12.8% (against a loss    compared to other metal companies. On         pany. The large deal pipeline (US$865mn
            (As on Sep 30, 2010)                          in Q2 FY10) have dropped on a sequen-       a relative basis, TSL could trade in the      TCV end Q2 FY11) is rich with multi-
            Promoters                   32.48             tial basis by around 350 bps. The raw       band of Rs 527 (6.5X its FY12E EPS)           service, consulting and transformational       decision making. Margins are expected          being questioned, Infosys with the most
            FIIs                        15.77             material cost (as a % of net sales) has     and Rs 689 (8.5xFY12E EPS) for the            deals forming a large part of it.              to remain in narrow range with a possi-        admirable corporate governance prac-
            DIIs                        26.78             risen to 43.3% for Q2 FY11 from a level     next quarter.                                      Infosys has guided for a modest 3%        ble up-tick due to better business mix         tice should perform well in the near term.
            Others                      24.97
                                                          of 38.1% as of Q1 FY11. Going ahead                          (Writer is associated with   CQGR for H2 FY11 citing lower num-             and price increases. With corporate gov-                         (Writer is Head of Research
            Total                       100.0
                                                          the prices of the key raw materials like                            HDFC Securities)      ber of working days and slower client          ernance of large chunk of companies                                       with India Infoline)

           26    MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                                    16-31 December, 2010   MONEY MANTRA   27
EP 18-35- alok.qxd     12/13/2010        2:49 PM      Page 12

            BROKER’S PICKS
           TVS Motor                                      BUY    CMP: Rs.69.80                          TARGET: Rs.87.40
                                                                                                                                                      Investors Keep Distance From
           A better play from auto lot                                                                                                                Pre-open Session
                Pankaj Pandey                                                Tvs Motor: 3 months performance                                                                                                                    Movements of Nifty
                                                                                                                                                          Alok Dwivedi
                                                                                                                                                                                                  Date           Previous High-low during       Open        High        Low        Close
           TVS Motor Company is the third
                                                                                                                                                                                                                 close    pre-open session
           largest two-wheeler manufacturer in                                                                                                        Nifty jumped 444 points in pre-open
           India. The company has a capacity                                                                                                          session of November 29. Earlier, we         Dec 3, 2010    6011.70    5912.35-6012.2      6013.35     6025.40 5964.25 5992.80
           of 2.4 million units, which it plans to                                                                                                    used to see wild fluctuations and sig-
                                                                                                                                                                                                  Dec 6, 2010    5992.80    6033.65-6088.4      6033.65     6069.45 5981.70 5992.25
           expand even further to 3 million units                                                                                                     nificant gap up or gap down market
           by FY11E. The company intends to                                                                                                           openings. The purpose of introducing        Dec 7, 2010    5992.25    5983.55-5994.55     5995.05     6001.00 5939.70 5976.55
           increase its market share in the two-                                                                                                      pre-open call auction mechanism was
                                                                                                                                                                                                  Dec 8, 2010    5976.55    5945.1-5954.4       5954.40     5960.00 5878.60 5903.70
           wheeler segment from ~15% current-                                                                                                         to do away with such movements. But
           ly to 20% by FY12E, on the back of                                                                                                         even after the introduction of pre-open     Dec 9, 2010    5903.70    5883.2-5949.50      5924.25     5927.30 5742.30 5766.50
           overall growth in the segment and its                                                                                                      session from October 18, wild move-
           latest product offerings. It continues                                                                                                     ment either side is witnessed daily.                                                     book are organised. Then, the cumu-
           to maintain its sales target of 20 lakh                                                                                                        But market experts see no issues                                                     lative buy and sell quantity is calcu-
           vehicles in FY11 and intends to sell                                                                                                       in these fluctuations. KN Rahaman,                                                       lated at each price point. The price at
           40-45,000 units during the period.                                                                                                         Deputy Research Head - Equity,                                                           which the maximum quantity is trad-
                                                           forming higher highs and higher lows          mode the price rallies have seen hectic      Commodity & Forex, Way2Wealth,                                                           ed is fixed as the equilibrium or open-
            Technical view                                 a characteristic of primary uptrend .The      volume activity whereas any declines to      cites lower participation as the reason.                                                 ing price. If more than one price has the
           The stock embarked upon a long term             recent price action suggests that the         the 50 day exponential moving aver-          He says, "It is happening due to lack                                                    same highest quantity, then the price
           uptrend since recording a double bot-           stock is consolidating sideways just          age (EMA) support has been on lower          of overall participation. Indices won't                                                  which has the least order imbalance
           tom near 7.50 levels in January 2009.           below the all-time highs of 91 levels.        volumes. The rising short-term and near      move in such way if there is a good par-                                                 (cumulative buy quantity minus cumu-
           Thereafter, the share price has rallied         A look at the volume principle shows          term moving averages are also acting as      ticipation in pre-open session."                                                         lative sell quantity) is deemed to be
           from strength to strength, consistently         that while in sideways consolidation          cushion on every price decline.              Madhumita Ghosh, Vice President-                                                         the equilibrium price. If a tie still per-
                                                                                                                                                      PMS & Research, Unicon Financial,                                                        sists, then the price closest to the pre-
                                                                                                                                                      says, "We have to remember that these                                                    vious day's close is chosen as the equi-
           Indraprastha Gas                               BUY    CMP: Rs.320                      TARGET: Rs.355.50                                   fluctuations show the indicative Nifty                                                   librium or opening price of the day.
                                                                                                                                                      and not the actual Nifty movement.                                                       Limit orders get precedence over mar-
                                                                                                                                                      Hence, there is nothing in it to be con-                                                 ket orders during trade execution. All

           Set to gain on expansions                                                                                                                  cerned or feel excited about."
                                                                                                                                                          As far as wild movement of
                                                                                                                                                      November 29 is concerned, that was
                                                                                                                                                                                                                                               unexecuted eligible orders are then
                                                                                                                                                                                                                                               moved to the normal market on a price-
                                                                                                                                                                                                                                               time priority basis.
           Indraprastha Gas Ltd (IGL) is the sole                      Indraprastha Gas: 3 months performance                                         due to a freak order and one should
           supplier of compressed natural gas                                                                                                         not be concerned about it, says a bro-                                                   What should investor do?
           (CNG) and piped natural gas (PNG) in                                                                                                       ker. Market experts say it is mere indi-                                                      Brokers don't see much signifi-
           the National Capital Territory of Delhi.                                                                                                   cation of market participants' mood at                                                   cance of first 8 minutes. If brokers are
           It is involved in the business of retail gas                                                                                               that point of time. Rahaman says,                                                        to be believed, they don't track pre-
           distribution and supplies CNG to auto-                                                                                                     "Everyone has the right to punch in                                                      open session usually. Sultania says,
           motive customers and PNG to domes-                                                                                                         an order. It is one's wish to punch order   management mechanism. According              "Movements during the first few min-
           tic and commercial sectors like hotels,                                                                                                    at any price (under the price band),        to a broker, "Prices may fluctuate dur-      utes are not more than indications and
           hospitals, restaurants, etc. IGL's expan-                                                                                                  whether it seems logical or not. If one     ing first 8 minutes, but after order         no one can predict about actual open-
           sion plans are in the NCR towns of                                                                                                         has a share at a price around say Rs        matching, software executes only             ing on the basis of these movements.
           Noida, Greater Noida and Ghaziabad                                                                                                         90 and last closing has been Rs 100,        those orders that satisfy the margin         The price of scrips is not based on the
           and large scale conversion to CNG vehi-                                                                                                    he may wish to sell it around Rs 120.       requirement." It is important to note        price of the first order for the securi-
           cles on favourable fuel economics                                                                                                          And that is where this mechanism is         that all other orders are rejected. In       ty, but it is the equilibrium price based
           would drive its growth, going forward.                                                                                                     useful." Pramod Sultania, CEO,              addition, a uniform price band of 20 per     on the demand and supply of the
                                                                                                                                                      Nikunj Stock Brokers, says, "Such           cent is applicable to all 50 eligible        same." Rahaman says, "No one in the
           Technical view                                                                                                                             freak orders may be intentional or may      stocks during the pre-open session.          market is concerned about these fluc-
           The share price recorded an all time                                                                                                       happen by mistake, but these have no        Apart from that, iceberg orders are not      tuations. We start tracking our mar-
           high of 373 levels in early September                                                                                                      meaning if the orders are not in line       allowed. It means all the orders have to     kets from 9.15 AM onwards." Then
           2010 accompanied by strong volumes.             seen the share price recording a break-       as the daily MACD is on the verge of         with the price movement of those            be completely in display mode and in         what should common investors do?
           In the ensuing corrective decline, the          out above the downward sloping trend          generating a positive crossover below        scrips."                                    full quantity.                               "For investors it is suggested to keep
           share price has garnered support at the         line, which has acted as resistance in the    the trigger line indicating build up of                                                                                               away from the pre-open session. It is
           38.20% retracement of the recent rally          entire decline since the all time             momentum on the upside.                      Risk management system                      How opening price is                         better for a common investor to place
           and registered a pullback from there-           highs.Among oscillators, the 14 peri-                         (Writer is associated with       To keep the things under control,       determined?                                  orders during normal market hours,"
           on.Price action in the last few days has        od RSI is pointing northwards where-                        )     stock exchanges have established risk          At first, all limit orders in the order   says Ghosh.

           28   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                                  16-31 December, 2010   MONEY MANTRA   29
EP 18-35- alok.qxd     12/13/2010         2:49 PM      Page 14


           Differentiators between E-                                                                                                                                                       Technical Report
           Gold and other Gold Products                                                                                                                                Stocks







                Anjani Sinha                                       COMPARISON    OF INVESTMENT IN      E-GOLD    THROUGH DIFFERENT SOURCES                             NIFTY         5904       5822       5863    5920              5961                6018
                                                          Parameter           NSEL E-Gold           Gold ETF              Bank (bars / coins)   Jeweller               ABB            792        775        784     794               803                 813
                                                          Purchase & Sale     Dematerialized Form   Dematerialized Form   Physical Form         Physical Form          ACC           1011        990       1000    1010              1020                1030
           1. Differentiators between E Gold              Pricing             Linked to Indian      Linked to interna-    May differ from       May differ from
              and Gold ETF:                                                   Gold Prices           tional gold prices    bank to bank          jeweller to jeweller
                                                                                                                                                                       AMBUJACEM      138        133        136     139               141                 144
           a. Low holding cost: In case of ETF, Impurity Risk               Cannot exist     -                  May exist         May exist                            AXISBANK      1252       1196       1224    1271              1299                1347
              there is an AMC cost in the range of Annual Recurring         NIL              1.0-2.25 %         High              High                                 BHARTIARTL     348        341        344     349               352                 357
              1 % per annum, while the annual Expenses (Storage,                                                                                                       BHEL          2240       2214       2227    2238              2251                2262
              holding cost of E Gold is 0.4% only. Insurance and AMC)                                                                                                  BPCL           678        643        660     674               691                 704
           b. Market Timing: Gold ETF is avail- Market Timing               10 AM - 11.30 PM 9 AM - 3.30 PM 10 AM - 5 PM          10 AM - 7 PM
                                                                                                                                                                       CAIRN          327        322        324     328               330                 333
              able for trading from 9.00AM to 3.30 Security of Asset        Taken care of by Taken care of by Investor            Investor
                                                                                                                                                                       CIPLA          369        363        366     369               372                 376
                                                                            Exchange         Fund house         Responsible       Responsible
              PM, while E-gold is available for
                                                      Resale                At Transparent   At Transparent     May not be        At Deep Discount                     DLF            290        280        285     294               299                 308
              trading from 10.00AM to 11.30 PM.                             secondary market secondary market Possible                                                 GAIL           507        485        496     503               514                 521
           c. Fungibility with physical Gold at var-                        prices           prices
                                                                                                                                                                       HCL TECH       433        424        429     432               437                 440
              ious Delivery centers: Gold ETF can- Convenience of buy- High - Totally        High - Totally     Low-As physical Low-As physical
                                                                                                                                                                       HDFC           685        669        677     690               698                 710
              not be converted into Gold coins and ing, storage and sell- Demat              Demat              movement &        movement &
              small denomination Gold bars. In ing                                                              transfer involved transfer involved                    HDFC BANK     2280       2220       2250    2295              2325                2370
              case of E-Gold, investors can get                                                                                                                        HEROHONDA     1758       1721       1739    1770              1788                1819
              physical delivery of Gold coin and         investor holding E Gold can get phys-             jewelry from jewelers is around 8-                          HINDALCO       222        217        219     223               225                 229
              bar in various denominations at var-       ical Gold against such units and deliv-           9%. In case of E Gold, the total                            HINDUNILVR     296        292        294     296               298                 300
              ious locations without any premium.        er the same on MCX.                               round trip impact cost is hardly 0.05                       ICICI BANK    1104       1073       1089    1101              1117                1129
           d. Pricing: Gold ETF is a mutual fund 2. Differentiators between E Gold                         per cent.                                                   IDEA            71         69         70      71                71                  72
              and hence, it is based on NAV driv-        and Imported Gold Coin sold by 4. Differentiators between E Gold                                              IDFC           175        169        172     176               179                 183
              en price. E-gold is linked to real time    banks:                                        and MCX Gold contracts                                          INFOSYSTCH    3131       3086       3109    3136              3159                3187
              Indian gold prices, which tracks the a. Pricing: E gold units are quoted much a. Investment options: Futures con-                                        ITC            167        164        165     168               169                 171
              international                              below the price quoted by banks in               tracts are good for hedging, trading,                        JINDALSTEL     692        673        683     691               701                 709
              gold prices.                               respect of Gold coins.                           speculation and price reference, but
                                                                                                                                                                       JPASSCIAT      104        101        103     105               106                 108
           e. Fungibility                              b. Re-sale / buy back: Banks do not                not meant for investors to park their
                                                                                                                                                                       KOTAK BANK     466        448        457     463               472                 478
              with MCX                                     provide buy back facility. In respect          funds. On the other hand, E-gold is
                                                                                                                                                                       LT            1994       1964       1979    2000              2015                2037
              Gold: An                                     of E Gold, buying and selling is pos-          a retail investment product. E Gold
                                                           sible at any point of time.                    contracts do not involve daily MTM                           M&M            789        777        783     790               796                 803
                                                      c. Convenience of buying, storing and               profit/ loss and roll over charges                           MARUTI        1417       1365       1391    1418              1444                1471
                                                         selling: E Gold provides a seamless              every month as in MCX gold and                               NTPC           191        188        189     191               192                 193
                                                         process of buying, selling and hold-             silver contracts.                                            ONGC          1345       1326       1336    1350              1359                1374
                                                         ing of Gold.                                  b. Delivery centers: MCX provides                               PNB           1180       1161       1171    1180              1190                1199
                                                      d. Market Timing: Banks normally                     deliveries in Ahmadabad only while                          POWERGRID       98         97         97      98                99                  99
                                                        operates from 10.00AM to 5.00 PM                   delivery against E-gold units is                            RANBAXY        568        553        560     565               572                 577
                                                        while E-gold is available for trading              available at various locations with-                        RCOM           130        126        128     131               132                 135
                                                        from 10.00AM to 11.30 PM.                          out any premium.                                            RELCAPITAL     683        665        674     689               698                 713
                                                            3. Differentiators between E c. Frequency of deliveries: In MCX,                                           RELIANCE      1021       1003       1012    1020              1028                1036
                                                               Gold and Physical Gold                      Members/ clients can get deliveries                         RELINFRA       834        814        824     831               841                 848
                                                               through jewelers                            only once in month or once in two
                                                                                                                                                                       RPOWER         157        153        155     157               159                 161
                                                            a. Pricing: It differs from jeweler to         month, while in case of NSEL, all
                                                                                                                                                                       SAIL           178        174        176     179               181                 185
                                                               jeweler and place to place. On              outstanding position at the end of
                                                               the other hand, E-Gold has uni-             day result into compulsory deliv-                           SBIN          2805       2751       2778    2819              2846                2887
                                                               form and transparent pan India              ery.                                                        SIEMENS        781        768        774     783               789                 797
                                                               pricing.                                e. SIP schemes/ accumulation of Gold                            STER           169        166        168     169               171                 173
                                                      b. Impurity Risk: In case of physical                for marriage and other purposes over                        SUNPHARMA      458        450        454     458               462                 466
                                                          market, there are chances of impu-               a period of time: A small investor                          SUZLON          50         49         50      51                51                  52
                                                          rity, which is not possible in case              can work under SIP model, buy 5-                            TATAMOTORS    1336       1275       1306    1326              1357                1377
                                                          of E Gold.                                       10 units of E Gold every month and                          TATAPOWER     1296       1278       1287    1294              1303                1311
                                                      c. Making charges and deductions in                  keep accumulating his holdings.                             TATASTEEL      624        612        618     627               633                 642
                                                         case of Resale /buyback: The total                Such features are not available in a                        TCS           1079       1059       1069    1081              1091                1103
                                                         impact cost for buying and selling of             futures contract.                                           UNITECH         65         62         64      65                67                  68
                                                                                                                                                                       WIPRO          435        430        432     435               437                 440

           30    MONEY MANTRA   16-31 December, 2010                                                                                                                                                                      16-31 December, 2010   MONEY MANTRA   31


                                                                                                                                                                                                                                                                                                                                                                                                                                                                      EP 18-35- alok.qxd


                                                                                                                                                                      Feb-09                                                                                                                                 Sep-05

                                                                                                                                                                       Apr-09                                                                                                                                Mar-06

                                                                                                                                                                                                                                                                                                                                                                                            (Rs bn)

                         Jun-09                                                                                                                                        Jun-09                                                                                                                                Sep-06

                         Aug-09                                                                                                                                        Jul-09                                                                                                                                Mar-07

                         Sep-09                                                                                                                                       Sep-09

                                                                                                                                                                                                                                                             1 Yr Gsecs

                                                                                                                                                                                                                                                             10Yr Gsecs
                         Nov-09                                                                                                                                       Nov-09

  16-31 December, 2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                                      2:49 PM

                         Jan-10                                                                                                                                       Jan-10
                         Mar-10                                                                                                                                       Mar-10

                                                                                                                                 CRR, Repo
                                                                                                                                                                                                                                                                                      G-Secs yield
                         May-10                                                                                                                                       May-10
                                                                                                                                                                                                                                                                                                                                                                                                                                                                      Page 16

                         Jun-10                                                                                                                                       Jun-10
                                                                                                                                                                                                                                                                                                                                                                                                       GDP Growth % (RHS)

                                                                                                                                                                                                                                                                         5 Yr Gsecs
                                                                                                                                                                                                                                                                                                                                                                                                                            Quarterly GDP growth

                         Aug-10                                                                                                                                       Aug-10

                          Oct-10                                                                                                                                                                                                                                                                             Sep-10

                         Nov-10                                                                                                                                       Nov-10





                                                                                                                                                                      Nov-08                                                                                                                                 Feb-07

                                                                                                                                                                      Jan-09                                                                                                                                 Apr-07
                         Feb-09                                                                                                                                                                                                                                                                              Jun-07
                                                                                                                                                                                                                                                           (Rs bn)

                                                                                                                                                                      Mar-09                                                                                                                                 Aug-07
                                                                                                                                                                     May-09                                                                                                                                  Oct-07
                         Jun-09                                                                                                                                                                                                                                                                              Dec-07

                                                                                                      IIP growth
                                                                                                                                                                      Jul-09                                                                                                                                 Feb-08
                                                                                                                                                                                                                                                                     M3 (LHS)

                          Oct-09                                                                                                                                      Oct-09                                                                                                                                 Aug-08
                                                                                                                                                                     Dec-09                                                                                                                                  Dec-08
                         Feb-10                                                                                                                                      Feb-10                                                                                                                                  Feb-09


                                                                                                                                                                                                                                                                                        M3 grwoth

                                                                                                                                                                      Jun-10                                                                                                                                 Aug-09
                          Jun-10                                                                                                                                                                                                                                                                             Oct-09


                                                                                                  Six key infra ind growth (%)
                          Oct-10                                                                                                                                                                                                                                                                             Apr-10
                                                                                                                                                                     Nov-10                                                                                                                                  Jun-10




                                                                                                                                 IIP and Six Key Infra Ind. growth


                          Dec-08                                                                                                                                                                                                                                                                             Dec-05
                                                                                                               (Rs bn)
                                                                                                                                                                                                                                                                                                                                                                                                           (USS bn)

                                                                                                                                                                                                                                                                     (USS mn)

                           Feb-09                                                                                                                                                                                                                                                                            Jun-06
                           Apr-09                                                                                                                                    May-09
                           Jun-09                                                                                                                                     Jul-09
                          Aug-09                                                                                                                                     Sep-09

                           Oct-09                                                                                                                                    Nov-09
                           Dec-09                                                                                                                                                                                                                                                                            Jun-08
                                                                                                                                   Fiscal deficit
                                                                                                                                                                                                                                                                                                                                                                                                                              Trade deficit

                          Feb-10                                                                                                                                                                                                                                                                             Dec-08
                                                                                                                                                                     May-10                                                                                                                                  Jun-09
                                                                                                                                                                      Jul-10                                                                                                                                 Dec-09
                                                                                                                                                                     Sep-10                                                                                                                                  Jun-10



                                                                                                                                                                      Nov-08                                                                                                                                  Jun-05
                         Dec-08                                                                                                                                                                                                                                                                              Dec-05
                                                                                                                                                                                                                                                                                                                                                                                                         (USS bn)

                                                                                                                                                                                                                                                                     (USS bn)

                                                                                                                                                                       Apr-09                                                                                                                                 Jun-06
                         May-09                                                                                                                                                                                                                                                                              Dec-06

                                                                                                                                                                      Nov-09                                                                                                                                 Dec-07
                                                                                                                                                                      Feb-10                                                                                                                                  Jun-08
                                                                                                                                                                      Apr-10                                                                                                                                  Dec-08
16-31 December, 2010


                         Jun-10                                                                                                                                                                                                                                                                               Jun-09
                                                                                           INR/100 Yen
                                                                                                                                                                                                                                                                                        RBI forex reserves

                                                                                                                                 Currency movement

                                                                                                                                                                                                                                                                                                                                                                                                                               Current account deficit

                         Nov-10                                                                                                                                       Oct-10                                                                                                                                  Jun-10
EP 18-35- alok.qxd    12/13/2010           2:49 PM        Page 18


                                             Second fortnight will
                                               make you cheer
                                    Kundli 16 Dec 2010, Time: 9:00 am, Place: Mumbai

                                               10         Rahu
                                                                    8      7
                                       11                 Mercury        Venus
                                                             9    Saturn
                                             Jupiter                        6

                                       1                   Ketu                      5
                                                                                                                                     Pt. Jai Govind Shashtri
                                                                                                                               e mail :

                                                                  FIIs to                                 Realty,                  Better
                               Better                             increase
                                            Better                                                        Oil &       Normal       day for
                               trade in                           selling
                                            day for                              FIIs like-   Good        Gas sec-    trade        com-
                               morning                            pressure,                                                                    Keep
                                            com-                                 ly to be     buying in   tors to     expected.    modities               Selling
                               session,                                                                                                        away
                                            modities              but            net sell-    morning     do well,    FIIs like-   and                    expected, Better
                               dullness                           Sugar,                                                                       from                 day for
                                            and         Normal                   ers, but     session,    but be      ly to be     intra-day              be cau-
                               in after-                          Hotel,                                                                       markets.             markets.
                                            intra-day   day of                   Telecom,     profit      cautious.   net sell-    traders.               tious.
                               noon.                              Fertilizers,
                                            traders.    trade.                   IT,          booking                 ers.
                                                                  Auto           Banking,     expected
                                                                  shares to      Insurance,   in after-
                                                                  perform        Pharma       noon.
                                                                  well.          compa-
                                                                                 nies to do

                               16 Dec 17 Dec            20 Dec 21 Dec            22 Dec       23 Dec      24 Dec      27 Dec       28 Dec      29 Dec 30 Dec        31 Dec

           34   MONEY MANTRA   16-31 December, 2010
EP 36-49.qxd    12/13/2010       2:48 PM       Page 4

                                                                                                                    NIFTY                                                             REGULATORY CHANGES
                                                                                                                                                                                            Change in Market Timing:
                                                                                               Bajaj Auto 1yr return:88.8%                    Suzlon 1yr return:-36.9%                Pursuant to SEBI circular dated
                                                                                             Bajaj Auto has performed superbly dur-       Suzlon Energy is focusing on expand-        October 23, 2009, BSE announced
                                                                                             ing the last one year. Its competitor        ing its business without giving much        change in trading time with effect
                                                                                             Hero Honda is facing a loss of mar-          thought to making profits on its cur-       from December 18, 2009. As per
                                                                                             gins which has given an opportunity          rent business. The end result is that the   media release by BSE, the trading
                                                                                             to the company to eat into the market        company is pushing itself into debt and     was to commence from 9:45 a.m.
                                                                                             share of its rival. Investors are finding    experts say that if the situation contin-   to 3:30 p.m. instead of 9:55 a.m.
                                                                                             Bajaj Auto a safer bet in view of the        ues to be the same, the company will        to 3:30 p.m. in the Equity and Equity
                                                                                             concerns (like royalty payment) relat-       become worthless. Suzlon Energy             Derivatives segments on all busi-
                                                                                             ed to Hero Honda Group. The compa-           reported consolidated net loss of Rs.       ness days. But this decision was
                                                                                             ny has done well on the sales front. It      369.23 crore in Q2 September 2010,          changed later. BSE and NSE joint-
                                                                                             reported 19 per cent jump in motorcy-        higher than a net loss of Rs. 355.52        ly decided the revision of market
                                                                                             cle sales at 2,65,036 units in November.     crore in Q2 September 2009. Net sales       open timing at 9 AM, effective from
                                                                                             In October this year, Bajaj Auto had         fell 21.3% to Rs. 3771.56 crore in Q2       January 4, 2010.
                                                                                             reported its highest ever motorcycle         September 2010 over Q2 September                 NSE Rajdhani Express: NSE
                                                                                             sales in a month at 3,29,776 units. Bajaj    2009. Recently, Suzlon's share prices       launched investor awareness cam-
                                                                                             Auto is eyeing a massive distribution        got hammered due to its earlier trans-      paign on Rajdhani Express trains

                                                                                             network growth in order to meet the          action with Money Matters. However,         on select routes in April 2010.
                                                                                             healthy growth objectives. The compa-        analysts do not see much of a down-         Initially, the campaign was started
                                                                                             ny's net profit for the three- month peri-   side from the current levels, given the     in Rajdhani trains running from
                                                                                             od ended September 30 grew by 69.3%          low valuations. Recently, REpower           New         Delhi     to     Chennai,
                                                                                             to Rs 682.08 crore due to 49.7% surge        Systems AG, in which Suzlon is a            Thiruvananthapuram                  and
                                                                                             in net sales, recorded at Rs 4180.91         majority shareholder with over 90%          Bangalore. In October, NSE start-
                                                                                             crore, over the same period last year.       holding, signed two contracts with UK-      ed the awareness initiative on the
                                                                                             Going by the good show of the com-           based wind energy company                   Delhi-Sealdah Rajdhani as well.
                                                                                             pany, investors can buy Bajaj Auto.          Energiekontor UK Construction.              The campaign is aimed at educat-
                                                   &                                                                                                                                  ing investors about NSE, the Nifty

                                                                                                                                                                                      index and other NSE products, dos

                                                                                                                                                                                      and don'ts of investment, guide-
                                                                                                                                                                                      lines on power of attorney etc. The
                                                                                                                                                                                      coaches bear slogans in English
                                                                                              TVS Motors         1yr return:173.7%        Maruti Suzuki 1yr return:-14.4%             and Hindi, like 'soch kar, samajh
                                                                                             The scrip of TVS Motors, the third           Driven by concerns about market share       kar, invest kar' (think carefully
                                                                                             largest two-wheeler maker in India, has      loss due to increasing competition,         before investing). In addtion, the
                                                                                             done well on the back of better per-         adverse forex movement and increase         NSE has already started advertis-
                                                                                             formance of the company. Company's           in royalty, Maruti Suzuki's stock has       ing several products through the
                                                                                             total two-wheeler sales for November         underperformed Sensex since January         suburban trains in Mumbai and
                                                                                             stood at 1.53 lakh units, a 27.33 per cent   2010. The company has been in reverse       Metro Trains in Delhi. The market
                                                                                             rise from 1.20 lakh units in November        gear on margin pressure. Maruti Suzuki      regulator SEBI is equally thrilled at
                     MM Bureau                                                               2009. The company's net profit jumped        saw a 200 basis points dip in its           this new form of investor
                                                                                             123.1% to Rs. 54.78 crore on 42.5%           operating profit margins in Q4 March        education.
                      he year 2010 has been memorable for retail investors. Be it the

               T      stock market or mutual fund or insurance sector, all went through
                      investor friendly regulatory changes. Even banking system had to
                accommodate investors' benefit by calculating interest rate on daily basis
                                                                                             increase in net sales, recorded at Rs.
                                                                                             1589.83 crore, in Q2 September 2010
                                                                                             over Q2 September 2009. Encouraged
                                                                                             by its performance, the company is
                                                                                             looking at launching a range of low-
                                                                                             cost bikes in rural and semi-urban
                                                                                                                                          2010 over Q3 December 2009.
                                                                                                                                          Maruti's domestic sales jumped 34.2%
                                                                                                                                          to 1.02 lakh units in November 2010
                                                                                                                                          over November 2009. It was the second
                                                                                                                                          consecutive month when Maruti
                                                                                                                                          clocked domestic sales of over 1 lakh
                                                                                                                                                                                         Companies must list within 12
                                                                                                                                                                                      days post IPOs: From May 2010, the
                                                                                                                                                                                      period of initial public offer (IPO) list-
                                                                                                                                                                                      ing got shorter. On April 6, 2010,
                                                                                                                                                                                      capital market watchdog SEBI said
                                                                                                                                                                                      that from May 1, all companies
                and switching over to Base Rate system. Adapting to the regulatory           areas. All these products would be           units. The company's net profit rose 5%     going for an IPO should get their
                                                                                             launched in the next two-three years.        to Rs. 598.24 crore on 26.8% rise in        shares listed within 12 days after
                changes and responding to the ever-changing financial matrix, some of        The company's export volume is like-         sales, recorded at Rs. 8977.37 crore, in    the close of the offer. The period
                the investment products outperformed while some descended into nega-         ly to increase from next year in a big       Q2 September 2010 over Q2                   was 22 days earlier. It was seen ear-
                                                                                             way. TVS Motors is aiming to have a          September 2009. The company                 lier that market conditions changed
                tive zone. Bidding good bye to the year 2010, let us have a quick look at    decent market share in this business and     reported better-than expected EBITDA        drastically after the close of an IPO
                                                                                             with the margins being good, that            margin despite higher raw-material          and IPO investors saw severe ero-
                the regulatory changes in financial sector along with the victors and lag-   would add to the topline. According          costs (up 149bp yoy) and a substantial      sion in the value of their invest-
                gards of the year gone by.                                                   to market experts, TVS Motors has            increase in royalty (up 160bp yoy) to       ments on listing.
                                                                                             more room for upside.                        5.3% of net sales (3.7% in 2QFY2010).

           36    MONEY MANTRA   16-31 December, 2010                                                                                                                                      16-31 December, 2010   MONEY MANTRA   37
EP 36-49.qxd     12/13/2010     2:48 PM        Page 6

           BANKING                                                                                 REGULATORY CHANGES
                                                                                                                                             INFORMATION TECHNOLOGY                                                                        REGULATORY CHANGES
               UCO Bank 1yr return:138.7%               Kotak Bank 1yr return:19.2%                   DPs asked to refund balance to                CMC 1yr return:77.6%                                                                      Smart Order Routing (SOR): After
                                                                                                   AMC: On July 1, 2010, depository
                                                                                                                                                                                                  Mastek 1yr return:-52.9%                 receiving necessary approvals and
           UCO Bank has maintained long term            Almost all the shares of banking sec-      participants (DPs) were directed to       IT sector has done reasonably well in           Mastek Limited, a global IT solutions         guidelines from SEBI in August this
           uptrend outperforming broader mar-           tor have performed very well in the        refund the balance amount if the          the current rally of the markets.               and services outsourcing provider             year, Bombay Stock Exchange intro-
           kets. During 2QFY2011, the bank's            last one year. But performance of Kotak    beneficial owner closes or shifts         During the quarter ended Sep 2010,              focusing on Insurance, Government and         duced Smart Order Routing (SOR)
           CASA ratio improved to 25.3% (from           Mahindra Bank has not been at par the      his/her demat account before the          the profit of CMC Ltd rose 25.92%               Financial Services verticals, has not         for its members in September 2010.
           23.5% in FY2010), driven by current          performance of the banking sector.         expiry of the period for which the        to Rs 436.27 million from Rs 346.47             been able to do well despite better per-      SOR allows brokers' trading engines
           and savings deposit growth of 19.2%          Currently, the share of Kotak Mahindra     charges have been levied.                 million in the same quarter previous            formance by IT shares. Weighed by a           to systematically choose the execu-
           yoy and 27.2% yoy respectively. On a         Bank is trading at around 48 PE. Its EPS   According to SEBI, there have been        year. Net sales for the quarter                 sharp fall in revenue, higher wage costs      tion destination based on factors
           sequential basis, calculated NIM             (TTM) is below 10 as of now. Net           instances where the Annual                increased 23.71% to Rs 2,710.56 mil-            and operating expenses, company post-         like price, cost, speed, likelihood of
           improved by 17bps to 2.97%. This             Interest Margin (NIM) for the bank has     Management Charge (AMC) was               lion. Company posted earnings of Rs             ed a net loss of Rs 134.6 million in the      execution and settlement, size,
           resulted into robust NII growth of           been a cause of concern. As on             collected upfront for the year but on     28.80 a share during the quarter, reg-          first-quarter ending Sep 2010 compared        nature or any other consideration
           90.6% yoy. On the asset quality front,       September 30, 2009, consolidated           closure/shifting of the account, the      istering 25.92% growth over the pre-            with a net profit of Rs 264.1 million a       relevant to the execution of the
           the bank faced pressure, with gross          quarterly annualised NIM for Q2FY11        AMC for the balance period, for           vious year's period. The basic EPS              year earlier. Mastek's operating margin       order. Best Price, lowest cost and
           NPAs increasing by 6.7% qoq to               stood at 5.6% (Q2FY10- 5.9%). As on        which no service was provided by          of the company stood at Rs.22.87 for            was -3.2% for the first quarter. However,     better probability of execution are
           Rs.2,058cr and net NPAs increasing           March 31, 2010, NIM for the bank was       the DP, was not refunded.                 the quarter ended Sep 2009. CMC has             the company is likely to improve its          key attributes of this SOR facility.
           by 9.4% qoq to Rs.1,005cr. The bank          6.1%. However, second quarter of              Return idle cash to investors:         expanded its partner network with the           operating margin to more than 15% in             Pre-open session: To reduce price
           witnessed large slippages of Rs.678cr,       financial year 2010-11 has not been so     Concerned over brokers misusing           signing of a Value-Added Reseller               the next 18 months led by a revenue           volatility due to multiple matching of
           implying an annualised slippage ratio        bad for the company. Kotak Mahindra        the funds lying in investors' trad-       Agreement with FileVision Inc. This             growth that may start before December-        orders at a single price, for better
           of 3.3% as compared to slippage              Bank's consolidated profit after tax       ing accounts, SEBI, in August 2010,       mutually-beneficial partnership will            end. The Mumbai-based company has             price discovery and to dilute mar-
           ratio of 1.6% in FY2010. Structurally,       stood at Rs.364 crore in Q2FY11, up 21     asked brokers to return the clients'      help facilitate the delivery of large           bought the assets of US-based SEG             ket impact, country's two premier
           the bank has had relatively higher expo-     % from Rs.300 crore in Q2FY10. On          unutilised cash at the end of every       digitisation solutions integrated with          Software LLC, a provider of policy            bourses- National Stock Exchange
           sure to large corporates, low CASA of        the other hand, consolidated PAT for       month or quarter. As per SEBI direc-      advanced business process automa-               administrative systems for the insurance      and Bombay Stock Exchange- start-
           ~25% and low fee/assets. But still, the      first half of the financial year 2010-11   tive, brokers would need to trans-        tion capabilities. CMC expects orders           industry. While the US contributes 44%        ed 15-minute pre open call auction
           bank is available at below 8 PE. Book        was up 24% to Rs.692 crore from            fer the funds lying in a client's trad-   from overseas markets and the coun-             to the total revenue of the company,          session from October 18, 2010. The
           value for the company is Rs.65.7 as          Rs.557 crore in the first half of finan-   ing account to the attached bank          try`s private sector to drive its future        Europe brings in 51% and other markets        mechanism, known as 'pre-open
           of now.                                      cial year 2009-10.                         account electronically or through         growth.                                         make up for 5% of the revenue.                session call auction', lasts for 15
                                                                                                   cheque if no internet banking                                                                                                           minutes (from 9:00-9:15 AM). In

                                                                                                   account was attached. The regula-                                                                                                       these 15 minutes, investors can

                                                        P&G Hygiene 1yr return:2.9%
                                                                                                   tor made it mandatory to return
                                                                                                   such funds within one working day
                                                                                                   or 24 hours. Besides, the broker-
                                                                                                                                             REALTY                                                                                        place orders for eight minutes on the
                                                                                                                                                                                                                                           basis of which the exchanges deter-
                                                                                                                                                                                                                                           mine the rates at which trading will
               Pidilite Ind 1yr return:54.4%                                                       ages were directed to send out a                Omaxe 1yr return:48.2%                      Orbit Corp. 1yr return:-43.4%               happen. The call auction session is
           Pidilite Industries has done well in last    The company's profit has been prone to     monthly or quarterly statement of                                                                                                       applicable for those stocks which
           one year if we look at FMCG and con-         various fluctuations. During the first     funds, as per the client's choice,        Realty and infra sectors were hit very          During recession, most of the real estate     are the part of Sensex and Nifty.
           sumer products sector. The company           quarter ended September 30, 2010,          so that the investors are well-versed     badly in the global recession in the year       companies were either forced to stop          Market regulator SEBI had given its
           has consistently maintained its sales        Procter & Gamble Health & Hygiene's        with the status of cash or securi-        2008 and 2009. Seeing the efforts of gov-       their projects or slow down the pace of       green signal for introduction of pre-
           as well as volumes. Pidilite Industries'     net sales grew to Rs.228 crores from       ties lying in their trading accounts.     ernment, it was expected that the realty        activities. There was a lack of buyers        open session call auction on the
           Fevicol celebrated its 50th anniversary      Rs.225 crores in the same period last         Buy and sell shares with mobile:       and construction sectors would pick up          in the markets and companies were not         bourses in July this year.
           in 2009; that was coincidentally a           year. The PBT for the current quarter      As Bombay Stock Exchange (BSE)            hugely. But it did not happen so. That was      able to liquidate their investments.             Retail cap in IPOs increased to
           recessionary period. Thus, in the times      for the company stood at Rs 40 crores      launched its mobile trading plat-         the reason realty sector was the worst          Things are changing for real estate com-      Rs 2 lakh: SEBI increased invest-
           of global recession, the premium brand       vs Rs 69 crores in the corresponding       form on September 21, 2010,               performer on bourses. But Omaxe turned          panies after recession, but the pace is a     ment limit in IPO (initial public offer)
           in a low-involvement category was able       quarter last year. The PAT for the cur-    investors were now able to buy and        out to be the best performer in the sec-        bit slow. A number of companies of the        or FPO (follow-on public offer) for
           to garner 43 per cent overall growth.        rent quarter stood at Rs 31 crores vs      sell shares through their mobile          tor. The company reported net sales of          sector are still feeling the pinch of that    retail investors to Rs 2 lakh from Rs
           It also saw 70 per cent growth on quar-      Rs 51 crores in the same period last       phones. A month ago, SEBI had             Rs. 354 crore for the quarter ended             period. Orbit Corp announced a steep          1 lakh. Market regulator has raised
           ter-on-quarter basis. Pidilite Industries    year. The company's profits declined       given permission to the stock             September 30, 2010 compared to Rs 224           drop in standalone net profit for the quar-   this limit for the first time in the last
           Ltd's Jul-Sep consolidated net sales was     mainly due to an increase in excise duty   exchanges and brokerage houses            crore in the corresponding period of last       ter ended September 2010. During the          five years. RPP Infra Projects was the
           Rs. 6.68 billion, up 15.3% from a year       as well as price corrections that P&G      to offer mobile trading services to       fiscal, registering a growth of 58%. Net        quarter, the profit of the company            first public offer that got benefited
           ago. The company's total expenditure         Hygiene undertook to expand the fem-       their clients. National Stock             profit for the quarter stood at Rs. 37 crore,   declined 33.53% to Rs 167.51 million          from this investment limit. Market
           stood at Rs. 5.55 billion, up 16.3%. The     inine hygiene category. P&G in India       Exchange (NSE) started the same           a growth of 63% The company is focus-           from Rs 252.00 million in the same quar-      regulator had announced to
           company's revenue from consumer and          has a combined 4,500-crore turnover        after a             few days. Prior to    ing more on deliveries and it offered pos-      ter previous year. Net sales for the quar-    increase the limit in October 2010,
           bazaar products in Jul-Sep was Rs. 5.32      between its three subsidiaries - Procter   this development, investors could         session for more than 7 million sq. ft.         ter declined 35.27% to Rs 911 million,        but it got implemented from this
           billion, up 9.5% from a year ago, while      & Gamble Health & Hygiene, Procter         get real-time updates on the mar-         of sold area in the last six months. At         while total income for the quarter fell       issue only which came in November
           revenue from industrial products was         & Gamble Home Products and Gillette        ket, and also the stock prices by         present, it has order book of over Rs.          35.07% to Rs 921.32 million when com-         2010. It is felt that the SEBI should
           up 19% at Rs. 1.4 billion. But compa-        India. Procter & Gamble Health &           downloading the 'Sensex Streamer'         1250 crore. The company recently ven-           pared to the previous year's period. It       have raised the quota reserved for
           ny's consolidated net profit for the peri-   Hygiene sells two products-Whisper         from the                 BSE website      tured into construction of roads and            reported earnings of Rs 1.52 a share dur-     retail investors from 35 per cent of
           od was at Rs. 792.4 million, down 2.9%       sanitary napkins and the Vicks range       onto their mobile handsets.               bridges and going forward it expects            ing the quarter, registering 71.80%           the share issue in tandem with the
           from a year ago.                             of cold remedies.                                                                    more projects in this vertical.                 decline over previous year period.            increase in the investment limit.

           38    MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                           16-31 December, 2010   MONEY MANTRA   39
EP 36-49.qxd    12/13/2010      2:48 PM        Page 8

                                 EQUITY MF (SECTORAL)                                                    REGULATORY CHANGES
                                                                                                                                                  BANKING AND FINANCIALS                                                                       REGULATORY CHANGES

               DSPBR Micro Cap Regular                                 JM Basic                                Abolition of entry load:              Reliance Banking Retail                      JM Financial Services Sect.                     Fund houses barred from tapping
                                                                                                         Regulations by market regulator                                                                                                       unit premium reserve: In March
           When the recession of 2008-09 was            The scheme primarily invests in basic            SEBI scrapped entry loads com-           Since 2005, when its new fund man-             Despite better performance by banking         2010, SEBI barred fund houses from
           about to fade, rally was first seen in       sectors like energy, petrochemical etc.          pletely and introduced a variable        ager took charge, the fund has been in         stocks during last one year, JM               tapping the unit premium reserve to
           large caps. After that, this rally trick-    Though JM Basic deployed money in                load structure for all mutual fund       the first three slots in its category. The     Financial Services Sector Fund has            distribute dividends. Instead, it
           led to mid caps and small caps. This         equities which offered better returns            investments with effect from August      fund has offered 50.31 per cent return         offered 25.15 per cent return in the last     directed mutual funds to pay divi-
           rally has been the main reason behind        during the last one year, it could not           1, 2009. The ushering in of the era      in the last one year. The most important       one year which is well below its cate-        dends only from realised gains, a
           the good performance of this scheme.         generate profits and ended up giving             of no-entry load meant that instead      thing with the scheme is its flexibility       gory return of 37.62 per cent. If we look     move that has drawn hushed
           DSPBR Micro Cap aims to generate             negative returns. The category return            of taking a commission from the          to invest in any instrument whether it         back, the scheme had managed to pro-          protests from the industry. As per
           profit by investing in the companies         for such schemes has been 19.13 per              investors' money, distributors were      is equity or debt or any other instrument      vide 95 per cent return in 2007 when the      new rules, SEBI asked mutual funds
           which are not in the list of first 300       cent during the last one year. But JM            required to move over to a fee-based     up to 100 per cent of its capital. The         category return was 79.54 per cent. The       to pay dividends from profits booked
           companies by market cap. Hence, the          Basic has managed to provide -6.99 per           structure negotiated with the            fund manager believes that government          portfolio for the fund looks a bit dif-       in the event of a surge in the mar-
           DSPBR Micro Cap scheme invests               cent return to its investors during the          investor.                                sector banks, with wonderful prof-             ferent from other category schemes as         ket. This means, if the NAV rises from
           around 75 per cent in smaller com-           period. Reason behind its poor per-                  Mutual Fund trading through          itability and growth prospects, are            it usually prefers investing in non-          Rs 100 to Rs 110, mutual funds can
           panies and 25 per cent in midsized           formance is that it didn't invest in per-        exchanges: Investors were enabled        available at cheaper rates. Hence,             banking companies and this strategy           only use Rs 10 to distribute divi-
           companies. All this investment is done       forming sectors. In addition, it pre-            to transact in mutual funds units        Reliance Banking Retail, which was             has been a reason behind its poor per-        dends, provided profits were booked.
           in growth stocks. The aggressive allo-       ferred to stick to its rigid strategy.           through the National Stock               launched in May 2003, bets on such             formance. However, the fund manag-               Express dividend in rupees, not
           cation strategy of the fund manager          Despite the fact that basic infrastructure       Exchange (NSE) from November 30,         companies. But it has invested in other        er gave importance to banking stocks          in percentage: SEBI asked mutual
           paid off and the scheme provided             shares were not moving up, the fund              2009. With this, investors could buy     companies as well. If we take a look           too. He placed a bet on mid cap bank-         funds to quote the dividend declared
           more than 57 per cent return in the          manager didn't change his strategy. The          and sell mutual fund units through       on top ten allocations of its portfolio,       ing stocks which has lower PE. It was         on their various schemes in absolute
           last one year. The scheme was                scheme has offered -21.76 per cent               their demat account like the way         there are only two non- government             done in an expectation that mid cap and       rupee terms, and not as a percent-
           launched in May 2007 and it has out-         average return in the last three years           they bought and sold shares of list-     banks. There are two NBFCs as well             small cap stocks would perform well.          age. So far, most fund houses
           performed its category every year            which shows its poor strategy and exe-           ed companies. UTI Mutual Fund was        in top ten. Balance between large cap          But on the contrary, large caps of the        declared the dividend as a percent-
           since its launch. It is important to note    cution. Its fund house has now changed           the first fund house to use the NSE's    and mid cap and faith on government            banking sector continued to do lot bet-       age. Dividends paid in percentage by
           that shares of smaller companies slide       the benchmark for JM Basic. The                  mutual fund platform. Bombay             sector banks have been the main rea-           ter in comparison to mid cap banking          mutual funds have little significance
           more in case the stock market starts         scheme is benchmarked with BSE 200               Stock Exchange (BSE) soon fol-           sons behind the success of the scheme.         stocks.                                       since they have to be compared with
           tumbling.                                    from November 2010.                              lowed the same. Idea behind the                                                                                                       that of NAV to arrive at dividend pay-
                                                                                                         move was to facilitate the buying of                                                                                                  out.

                                                                                                         mutual fund units through an
                                                                                                         avenue which has a greater reach.
                                                                                                             SEBI extends ASBA to MFs:
                                                                                                         Market regulator SEBI extended
                                                                                                                                                  INFRASTRUCTURE                                                                                  Registration fee hiked: Mutual
                                                                                                                                                                                                                                               fund industry body AMFI, in its cir-
                                                                                                                                                                                                                                               cular issued on May 19, 2010, hiked
                                                                                                                                                                                                                                               the ARN fee and renewal fees across
                 Baroda Pioneer Gilts                         Tata FIP scheme A1                         Application Supported by Blocked               DSPBR TIGER Inst.                           Reliance Infrastructure                    the board with effect from June 1,
                                                                                                         Amount (ASBA) to mutual funds as                                                                                                      2010. AMFI had hiked registration
           If a pure debt scheme is able to offer       Tata Mutual Fund had launched various            well. As per SEBI guidance, a com-       Last year has been tough for infra funds       It was expected that infrastructure shares    fees from Rs 500 to Rs 5,000 and
           annual return of around 17 per cent,         schemes in fixed income portfolio seg-           pulsory ASBA facility was mandated       in the country. Still DSPBR TIGER              would do better after recession. But it did   renewal fees from Rs 250 to Rs
           which is equal to return from equities,      ment. Tata FIP Scheme A1 was one of              for all NFOs from July 1, 2010.          fund managed to offer maximum return           not happen. Infra sector along with real-     2,500.
           what else one would ask for? There is a      those. Investment objective of the scheme            New Fund Offer (NFO) period          in the last one year. The fund, which was      ty remained the worst performer in the            Know your distributor (KYD)
           scheme called Baroda Pioneer Gilts           is to generate returns and/or capital appre-     reduced to 15 days: SEBI reduced         launched in April 2007, provided 18.75         last one year. Therefore, bad perform-        norms: AMFI directed that after
           Scheme, which has offered 16.78 per          ciation along with minimisation of inter-        the new fund offer period for mutu-      per cent return during the last one year       ance of mutual fund schemes was quite         September 1, 2010, all new agent
           cent return far better than the category     est rate risk. In order to achieve its invest-   al funds. The market regulator           which is well above to its category            obvious. The primary investment objec-        registration as well as those coming
           return of 2.99 per cent. Baroda Pioneer      ment objective, the scheme invests pre-          reduced the time period of NFOs to       return that was just 8.75 per cent. The        tive of the scheme is to generate long        up for renewal would need to com-
           Gilt Fund is an open-ended Gilt scheme.      dominantly in a portfolio of debt &              15 days from 30 days for open-           reason behind its success is its objective     term capital appreciation by investing        ply with the KYD norms before they
           The primary investment objective of          money market instruments. In order to            ended schemes and 45 days for            of investment, which is very different         predominantly in equity and equity-           can be permitted to sell mutual fund
           the plan is to generate income through       control the interest rate risk, average          close-ended schemes.                     from other funds of its category. The          related instruments of companies              schemes. Existing mutual fund
           investments in Gilts of various maturi-      maturity of the portfolio doesn't exceed            AMCs to disclose investor com -       fund seeks to generate capital appreci-        engaged in infrastructure and infrastruc-     agents were given time till February
           ties. The reason behind better return has    30 days. The benchmark for the scheme            plaints: SEBI asked all Asset            ation by investing in equity and equi-         ture-related sectors. If we look at the       2011 to comply with the KYD norms.
           been the hike from apex bank RBI in          is CRISIL Liquid. On one hand, the cat-          Management Companies (AMCs) to           ty- related securities of corporates that      portfolio of Reliance Infrastructure fund,    Those agents, who fail to comply with
           the policy rates in recent months.           egory return of this fund was 5.19 per cent      disclose investor complaints on          could benefit from ongoing structural          it invested in construction companies         these KYD norms by that time, would
           Managers of the mutual fund scheme           in the last one year, on the other hand          their respective websites as well as     changes and economic reforms in the            and the bet went wrong. The scheme            not be given their commission. In
           worked smartly in line with the mood         the scheme has provided -0.14 per cent           in their annual reports in a bid to      country. Despite being an infrastructure       invested in big names like JPAssociates,      addition, the mutual fund agents
           of markets and invested 70 per cent of       return. During the last one year, when           protect investor interest and bring in   fund, it has the flexibility to invest in      NTPC and Nagarjuna Construction, but          were asked to get biometric cards
           the capital in reverse repo/CBLO rather      high volatility was witnessed in interest        more transparency. In order to fol-      other sectors. The fund has invested in        these stocks couldn't do well. Lack of        that would carry an impression of
           than putting the money in instruments        rates, the scheme preferred to keep its          low these norms, all mutual              banking and retail sectors           which     proper improvisation in its strategy and      their right hand index finger. This
           which offer lower returns. Around 30 per     money in cash or invested in call money          fund houses were asked to disclose       have performed really well during the          investment in metal & energy stocks led       would help in immediately checking
           cent of the investment of the Baroda         market. This bet of the fund manager             last year's complaints by June 30,       period. The fund made good profit with         the scheme towards negative returns.          the distributor's record for any pos-
           Pioneer Gilt Fund is in net                  didn't pay off and the scheme incurred           2010.                                    this, but other funds couldn't replicate the   The fund offered -1.86 per cent return        sible irregularities in the past.
           receivables.                                 losses.                                                                                   success due to their limitations.              in the last one year.

           40    MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                               16-31 December, 2010   MONEY MANTRA   41
EP 36-49.qxd    12/13/2010      2:48 PM        Page 10

           TECHNOLOGY                                                                                REGULATORY CHANGES
                                                                                                                                                                    MAXIMUM NAV                                                        REGULATORY CHANGES

                ICICI PRU. Technology                      DSPBR                           No third-party cheques for                Smart Performer                           Aegon religare wealth                        Deadlock over cashless treat -
                                                                                                     mutual fund: In order to protect                                                              protection                          ment issue: The four public sector
           The fund seeks long term capital              Performance of the fund has been the        the interest of the investors, mutu-   In an effort to make policies more                                                         insurance companies- New India
           appreciation by investing in equity           worst among technology funds. The           al fund industry body AMFI issued      attractive and lure more customers,           Various insurers came up with a num-         Assurance, United India Insurance,
           and equity-related securities of tech-        scheme is aimed to generate long term       guidelines to all AMCs advising        insurance companies had come out              ber of such products but many poli-          National Insurance and Oriental
           nology and technology dependent               capital appreciation. The fund has          them not to accept third party         with policies with investment capital         cies didn't do well. Aegon Religare          Insurance- had taken off from July
           companies. The scheme has offered             offered only 14.67 per cent return in       cheques in respect of mutual fund      guarantee and maximum NAV. SBI's              Wealth Protection was one of those.          1 nearly 150 hospitals in Delhi,
           47.22 per cent return in the last one                                                     investments (with a few excep-         smart performer provides guarantee at         According to experts, the plan ensures       Mumbai, Bangalore and Chennai
                                                         the last one year despite better than
           year which is well above the catego-                                                      tions) effective from November         maturity based on '5 per cent Higher          that the policyholder never misses           from the list that offer cashless
           ry return of 26.64 per cent in the same       average performance by technology           15, 2010. Even in case of excep-                                                     opportunity to maximise the gains and        hospitalisation services to policy-
                                                         sector. Its diversification in commu-                                              than Highest Guaranteed NAV' during
           period. A large share of the AUM is                                                       tions, mutual fund houses were         the first seven years or prevailing NAV       shields it during downturn. Aegon            holders under the mediclaim
           invested in the stocks under the              nication, media and engineering sec-        directed to ensure that the pay-                                                     Religare Wealth Protect Plan guaran-         scheme. The PSU insurance had
                                                         tor has been the main reason behind its                                            at maturity, whichever is higher.
           Benchmark Index. Surprisingly, it has                                                     ments are coming from entities         According to insurance experts, the           tees that the returns will not dip below     stopped the cashless service
           invested in only 11 companies. PE             failure. The scheme invested in com-        duly authorised by the actual                                                        80% of highest NAV during the poli-          because of alleged over-billing by
                                                                                                                                            policy is better than its peers. It comes
           for five of those 11 companies ranges         panies like Tata Communications,            investors.                                                                           cy term. But the company has not been        some private hospitals, which
                                                                                                                                            with automatic rebalancing to lock-in
           between 7 and 20.5. The scheme has            Hathway        Cable       and    Zee           MF trustees should be more                                                       able to attract customers despite its var-   impacted their insurance busi-
                                                                                                                                            the gains. In addition, it offers conven-
           invested in large companies like              Entertainment. The performance of           accountable: SEBI expressed its                                                      ious special features. On maturity, one      ness. According to the PSU insur-
                                                                                                                                            ience to pay through single premium
           Infosys, TCS, HCL and Wipro. On the           these stocks has been bad during the        wish that trustees and independ-                                                     receives the special fund value as on        ers, they had to suffer a loss of over
                                                                                                                                            (SP) or 5 year Premium Paying Term
           other hand, it has put money in rela-         last few months. The scheme bet on          ent directors should become more                                                     maturity date plus special addition.         Rs 2000 crore per annum because
           tively smaller companies as well.                                                         proactive in the functioning of        (PPT). Smart Performer offers life cov-       Policyholder can partly withdraw his         of overcharging.
                                                         mid cap growth stocks. This strategy,
           Most important thing of the portfolio                                                     fund houses and enhance their          erage with minimum sum assured of 10          money after the first three policy years.        Public sector Insurers Move to
                                                         which was good for technology sector,                                              times or 7 times of annualised premi-
           is that it has invested around 49 per         did not pay off for other sectors. PE       roles to ensure investor protec-                                                     Policyholder can surrender the policy        PPN: Due to over-billing by some
           cent of its assets in Infosys despite                                                     tion.                                  um. There is facility of liquidity            any time after the first three policy        private hospitals, public sector
                                                         for 16 out of 23 companies in which                                                through partial withdrawals. In addi-
           the fact that the PE of the company           scheme is investing is above 30. Fund           Use of equity derivatives by                                                     years. In case of unfortunate demise         insurers decided to make PPN (pre-
           is approaching 30. Balance between                                                        Mutual Funds barred: Capital mar-      tion, customers have the option to cus-       during the policy term, the nominee          ferred provider network), a net-
                                                         Manager's strategy to diversify for                                                tomize the policy with accidental death
           lower and higher PE companies is rea-                                                     ket regulator SEBI, in a circular                                                    will receive the sum assured or the spe-     work of providers who agree to
                                                         managing the risk hasn't paid off.                                                 benefit.
           son behind its success.                                                                   released in August 2010, curbed                                                      cial fund value, whichever is higher.        negotiate rates on specified proce-
                                                                                                     the use of equity derivatives by                                                                                                  dures. The hospitals on PPN were

           PHARMACEUTICALS                                                                                                                  HEALTH INSURANCE
                                                                                                     mutual funds, including barring                                                                                                   given a fixed-tariff rate-card by pub-
                                                                                                     them from selling options con-                                                                                                    lic sector insurance companies for
                                                                                                     tracts. The ban was effective from                                                                                                more than 40 different surgeries.
                                                                                                     October 1, 2010.                                                                                                                      New guidelines for redressal:
               UTI Pharma and Healthcare                        Magnum Pharma                             Simplify new fund offers:                 Mediclaim Policy                         Health Protection Plus                    Insurance Regulator IRDA formed
                                                                                                     Concerned that mutual fund                                                                                                        Consumer Affairs department to
           Pharma Sector is considered as a safe bet     Almost all the shares from pharmaceu-       schemes are becoming too com-          Last year was happening for the health        In an effort to en cash the growing          handle grievances and issued new
           and it does well in turbulent times. The      tical sector are doing well as of now on    plex for average investors, SEBI       insurance sector. Public sector companies     health insurance market in the coun-         guidelines for insurance compa-
           sector has done well in the last one year     the back of their strong fundamentals.      asked several asset management         decided to exclude various big hospitals      try, public sector insurer LIC had come      nies with regard to redressal of pol-
           and hence pharma-based funds have             The reason behind the better perform-       companies to rework some proposed      from their list. However, due to PNN row,     out with a policy named Health               icyholders'       complaints.       It
           outperformed various MF schemes. UTI          ance of pharma companies is good            new schemes and file offer docu-       customers avoided PSU insurers but they       Protection Plus. But despite its vari-       announced turn around time (TAT)
           Pharma and Healthcare Fund was                demand from international market and        ments afresh. The capital market       couldn't do that for long time. Still, PSU    ous special features, the policy has not     within which insurance companies
           launched in June 1999 with an aim to          inventory realisation. The objective of     regulator was particularly skeptical   health insurers were able to retain their     done well so far. According to experts,      are required to redress issues
           invest in companies engaged in the            Magnum Pharma Fund is to provide            about capital protection schemes.      customer base. New India Assurance's          LIC's Health Protection Plus plan is a       raised by customers. All Insurers
           research, manufacture or marketing of         investors maximum growth opportu-              KYC Norms for all MF Investors:     Mediclaim Policy is running on top as         unique long term health insurance plan       had to adhere to these new guide-
           OTC products, bulk drugs and formu-           nity through equity investments in          In compliance with industry body       far as sales are concerned. Transparent       that combines health insurance covers        lines by August 1, 2010.
           lations. The scheme has done really           stocks of growth-oriented sectors. The      AMFI’s circular dated October 7,       claim settlement system and lower num-        for the entire family (husband, wife and         IRDA call centre: IRDA started
           well during last one year. It has offered     fund, which was launched in July            2010, the threshold limit for KYC      ber of claim rejections have been the         children). In addition, the policy pro-      a call centre for registering griev-
           40.98 per cent return to its investors        1999, has preferred investing in phar-      (know your customer) compliance for    major reasons behind customers' incli-        vides Hospital Cash Benefit (HCB) and        ances on policy-related matters.
           in the last one year. There are two           ma sector companies only. It has            all individual investors was changed   nation towards the policy. The policy cov-    Major Surgical Benefit (MSB) along           It selected Sparsh BPO Services
           FMCG stocks in its portfolio, while it        offered 34.18 per cent return in the last   to Nil with effect from January 1,     ers hospitalisation expenses for the treat-   with a ULIP component (investment            to provide call centre services. The
           has put a small portion of its capital        one year, which is very close to its        2011. The threshold limit for KYC      ment of illness/injury, provided hospi-       in the form of Units). The plan is specif-   call centre was established to pro-
           in Union Bank of India as well. The           category return of 36.02 per cent. Fund     compliance was Rs 50,000 till now.     talisation is for more than 24 hours. Pre-    ically designed to meet Domiciliary          vide an easy and convenient way to
           manager has invested in 23 compa-             manager of the scheme has put all his       Hence, KYC compliance has              hospitalisation expenses for 30 days and      Treatment Benefit (DTB)/Out Patient          bring complaints to the notice of
           nies as of now. His strategy to invest        faith on growth stocks only. The fund       become a prerequisite for invest-      post-hospitalisation expenses for 60 days     Department (OPD) expenses for the            the IRDA. For that, one can call up
           in growth stocks as well as value stocks      has mainly invested in generic pharma       ment in mutual fund by individual      are               also            payable.    insured members. It is important to note     toll free number 155255 or alter-
           has done well for the scheme. This bal-       companies. It is very easy to decipher      investor from this effective date      Ayurvedic/Homeopathic and Unani sys-          that increase or decrease of premiums        natively e-mail their grievance at
           ance between value stocks and growth          that Magnum Pharma Fund is lack-            irrespective of the amount of          tem of medicine are covered to the extent     is allowed during the term of the poli-
           stocks has been the main reason behind        ing diversification in its investment       investment.                            of 25% of Sum Insured provided the treat-     cy. Increase in premium must be in mul-
           its good performance of this scheme.          strategy.                                                                          ment is taken in government hospital.         tiples of Rs 500.

           42    MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                      16-31 December, 2010   MONEY MANTRA   43
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                     Jeevan Anand
                                                                                                     REGULATORY CHANGES
                                                                                                         ULIPs overhauled :Unit Linked
                                                                                                                                               VEHICLE INSURANCE                                                                        REGULATORY CHANGES
                                                                                                                                                                                                                                           IndiaPost to sell insurance policies:
                                                                  Jeevan Tarang                                                                   Bajaj’s auto insurance                      Maruti’s auto insurance
                                                                                                     Insurance Plan (ULIP) was over-                                                                                                    With the industry regulator allowing
           There are a number of private players        LIC policies do well. Yet there are          hauled to the delight of investors.       With the increasing number of vehicles       Maruti's auto insurance has not been        IndiaPost to sell policies of multiple
           in life insurance segment but they           some that performed badly. Jeevan            The changes were effective from           in India, auto insurance business is         up to the mark as far as customers'         insurance companies, India's largest
           haven't been able to compete with LIC.       Tarang is one of the LIC's policies          September 1, 2010.                        picking up rapidly. Earlier, there was       satisfaction is concerned. After the        distribution network with 1.55 lakh
           Among endowment plans, LIC's                 which failed to attract customers.               Lock-in period increased to five      supremacy of public sector companies         guidance from IRDA, Maruti Suzuki           offices was opened to the insurance
           Jeevan Anand is the most popular pol-        This is a with-profits whole life plan       years: IRDA has increased the lock-       in this field, but now things have           India set up Maruti Insurance Brokers       industry. As per guidelines, each of
           icy. It is a combination of Endowment        which provides for annual survival           in period for all Unit Linked Products    changed and a number of private gen-         Limited with a paid up capital of Rs        the 22 circles of Indiapost are
           Assurance and Whole Life plans. It pro-      benefit at a rate of 5½ per cent of the      (ULIPs) from three years to five          eral insurers have managed to capture        50 lakh. Earlier Maruti had six whol-       allowed to act as a corporate agent
           vides financial protection against death     sum assured after the chosen accu-           years, including top-up premiums,         good share of the business. Bajaj            ly-owned companies each working             of two non-life insurers, two life insur-
           throughout the lifetime of the policy-       mulation period. The plan offers             thereby making them long term             Allianz's auto insurance is most popu-       as an agent for six separate insurers.      ance companies, one agricultural
           holder with the provision of payment of      three accumulation periods- 10, 15           financial instruments.                    lar in auto insurance segment. The com-      Each subsidiary had a paid up capi-         insurance company and one stand
           a lump sum at the end of the selected        and 20 years and proposer may                    Premium made uniform: All reg-        pany provides cashless claims for vehi-      tal of Rs 15 lakh. The services of          alone health insurance company.
           term in case of his survival. Most           choose any of them. The bonuses are          ular premium/limited premium              cles. It has signed agreements with          Maruti Insurance Brokers cover pol-         The regulator, however, barred
           importantly, this is a with-profit plan      payable on survival at the end of the        ULIPs shall have uniform/level pay-       1500 preferred garages for servicing.        icy issuance, emergency assistance          IndiaPost from selling customer data
           and participates in the profits of the       accumulation period or early death.          ing premiums. Any additional pay-         Through its network, Bajaj Allianz           to post accident repairs and claim set-     to insurance companies under some
           LIC's life insurance business. Simple        Further, the sum assured, along with         ments shall be treated as single pre-     offers inspection quick facility of          tlement. Maruti Insurance Brokers           referral arrangement.
           Reversionary Bonuses are declared per        loyalty additions, is payable on sur-        mium for the purpose of insurance         inspection and cashless settlement.          offer services in the workstations of          IRDA proposes tougher norms for
           thousand Sum Assured annually at the         vival till 100 years of age or early         cover.                                    Besides, the company offers towing           Maruti Suzuki only and it hasn't            agents: In an exposure draft on per-
           end of each financial year. Once             death. Policies under this plan partic-          Charges to be distributed even -      facility and the service is available        shown interest in adding workstations       sistency in life insurance policies,
           declared, they form part of the guar-        ipate in profits of LIC. During the          ly: Charges on ULIPs have been man-       24X7. In addition, the company gives         of other parties. Auto insurance from       IRDA proposed norms for enhanc-
           anteed benefits of the plan. Bonus is        accumulation period, policies are            dated to be evenly distributed during     premium updates to its customers             the company doesn't include third           ing the performance of agents. It pro-
           added during the selected term or till       entitled to receive simple reversion-        the lock-in period to ensure that high    through mobile SMS. And the most             party insurance. Hence, the insurer         posed a minimum of 20 policies per
           death, if it occurs earlier. Final bonus     ary bonuses which will be payable on         front ending of expenses is eliminat-     important factor of its popularity is that   doesn't take responsibility if any          agent a year and the first year pre-
           may also be payable provided the pol-        survival at the end of the accumula-         ed. Now the entire expense, includ-       it is cheaper in comparison to its           unprecedented incident takes place          mium income to be procured by an
           icy has run for certain period.              tion period or early death.                  ing commission, will be recovered         competitors.                                 with the third party.                       agent at Rs 1.5 lakh per annum. If
                                                                                                     from the investors in a span of five                                                                                               these two conditions were not met,
                                                                                                     years.                                                                                                                             the agent would have to achieve pro-

                                                                                                         Premium for minimum five years:
                                                                                                     All limited premium unit linked insur-
                                                                                                     ance products, other than single pre-
                                                                                                     mium products shall have premium
                                                                                                                                               TRAVEL INSURANCE                                                                         portionately more in either one to
                                                                                                                                                                                                                                        make up for the shortfall in the other.
                                                                                                                                                                                                                                        Spouses and close relatives of
                                                                                                                                                                                                                                        employees of insurers should not be
                   Endowment Plus                                Secure Dreams                       paying term of at least five years.                  Travel Policy                          Reliance Travel Care                   engaged as agents. Further, there
                                                                                                     This means whatever be the premi-                                                                Insurance                         should be a disincentive for lapse in
           After the row between SEBI and               There are hordes of unit -linked prod-       um amount no policy will be of less       In order to ensure safe journey, peo-        Reliance General offers various fea-        the form of commission clawback
           IRDA, ULIPs sale saw a decline.              ucts that insurance companies are sell-      than five year tenure.                    ple have nowadays started preferring         tures under Reliance Travel Care            by the insurer, on a proportionate
           According to experts, this was expect-       ing. But relatively lower commissions             Life insurance/health cover a        insurance policies. Travel insurance         Insurance policy but experts say that       basis, the draft said.
           ed. At the moment, insurance indus-          to agents have affected the sales of         must for ULIPs: All unit linked prod-     policies of public sector companies are      it is troublesome for customers to set-         ULPs are VIP now: Insurance
           try is grappling with the task of moti-      ULIPs drastically. Max New York              ucts, other than pension and annu-        better in comparison to policies of pri-     tle claims. If a person is admitted in a    Regulator IRDA clarified that univer-

                                                                                                                                                                                                                                                                                        (All figures as on 3rd Dec 2010)
           vating agents to sell ULIPs with rela-       Life's Secure Dreams is one such prod-       ity products shall provide a mortali-     vate insurers. However, private insur-       hospital for a day during a visit abroad,   sal life plans (ULPs) will be known
           tively lower commissions. Despite all        uct which has not been able to pull cus-     ty cover or a health cover, thereby       ers have come up with cheaper poli-          the company doesn't provide daily           as variable insurance products
           issues, LIC's Endowment Plus has             tomers. However, the company says            increasing the risk cover component       cies, but transparency in claim settle-      allowance. The plan pays for in-patient     (VIPs). Every policy must have a cor-
           done well in recent months.                  that the product is doing well. The prod-    in such products.                         ment has been the reason behind the          and out-patient hospitalisation. It pro-    responding account where the bal-
           Endowment Plus is a unit linked              uct offers a lot of features. Like in case       Guaranteed return: All ULIP pen-      popularity of PSU insurers. Though all       vides daily allowance if hospitalisation    ance shows the accrual to the poli-
           endowment plan which offers invest-          the insured person dies, the company         sion/annuity products shall offer a       the PSU general insurers are offering        exceeds two days. This policy also cov-     cyholder. It is important to note that
           ment-cum-insurance cover during the          claims to immediately pay the sum            minimum guaranteed return of 4.5%         travel insurance, United India's travel      ers the travel cost of an immediate fam-    charges must be deducted under
           term of the policy. The policyholder         assured equal to 10 times of the annu-       per annum or as specified by IRDA         policy is doing well among all. The          ily member in case of hospitalisation       three heads- risk premium, admin-
           can choose the level of insurance cover      al premium. In addition, the policy shall    from time to time.                        policy covers the risks of personal acci-    of more than seven days. In addition,       istrative charges and agents' com-
           within the limits, which depends on the      continue to be in existence as it is and         Cap on charges: With a view to        dent and loss of baggage of the insured,     the policy covers dental expenses for       mission. The minimum duration of
           level of premium the policyholder has        all the future premiums will be fund-        smoothening the cap on charges,           spouse and dependent children covered        acute anaesthetic dental treatment          policy and premium payment must

                                                                                                                                                                                                                                                                                       (Equities are selected from
           agreed to pay. He has a choice of            ed by the company. Even after the death      the capping was rationalized to           during the period of outstation travel       caused by an injury. The company            be five years and all VIPs must have

                                                                                                                                                                                                                                                                                       the universe of BSE 500.)
           investing premiums in one of the four        of the policyholder, the loyalty addi-       ensure that the difference in yield       within India from the declared place         compensates for emergency evacua-           a lock-in period of three years. The
           types of investment funds available.         tions are also credited while the poli-      is capped from the 5th year               of departure. Under the policy, cover-       tion to India and covers the cost of        policy account must be credited with
           No increase of covers is allowed under       cy is on a premium funding mode. And         onwards. From fifth year onward, the      age is available for a single round of       repatriation of mortal remains. If the      premium net of all charges and a
           the plan. However, the policyholder          on actual maturity date of the policy, the   cost will be capped at 4% and the dif-    travel to the places declared up to the      checked baggage is delayed for more         statement of policy account should
           can decrease the risk covers, without        maturity value will be paid to the nom-      ference between gross and net yield       scheduled date of return. It is important    than 12 hours, then Reliance Travel         be sent to the policyholder at least
           reducing the level of premium once           inee. This plan provides certain tax ben-    will not be less than 4%. All costs are   to note that the cover is available for      Care reimburses the policyholder with       once in a year.
           in a year during the policy term.            efits on policyholders' premiums.            clubbed into this 4% figure.              journeys less than 60 days.                  essential expenses.

           44   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                         16-31 December, 2010   MONEY MANTRA   45
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                                                                                                                                                                                                    India people selling chickens wait for           It happens for two reasons. First, the
                                                                                                                                                                                                    Suguna poultry to announce price before          utility of the product differs according
                                                                                                                                                                                                    they fix the price. It is one of the largest     to the perceived value of the product
                                                                                                                                                                                                    growers of chickens and it is market             to the user. That is why people who
                                                                                                                                                                                                    leader. At macro level, banks wait for           buy air tickets at the counter end up pay-
                                                                                                                                                                                                    SBI before they fix their rates.                 ing more than people who have booked
                                                                                                                                                                                                    Educational institutions may be bench-           before. He has a more dire need. That
                                                                                                                                                                                                    marking against IIMs and IITs in fix-            is why you have Tatkal in Railways.
                                                                                                                                                                                                    ing their fees. In Software Industry, the        Second, the cost of service per consumer
                                                                                                                                                                                                    Big 3 act as the reference points just as        will vary from customer to customer.
                                                                                                                                                                                                    the Big 4 in Consulting. In small towns,         If a Pizza outlet supplies at home, the
                                                                                                                                                                                                    a restaurant or provision shop owner             order can be for Rs 200 or for Rs 700.
                                                                                                                                                                                                    may wait for its leading restaurant or           The profit will depend on the order size.
                                                                                                                                                                                                    provision owner to revise its price before       There is a case of a stationery manu-

                                                             PRICING IS                                                                                                                             it revises. This is of course the easiest
                                                                                                                                                                                                    guidepost. One has to decide how much
                                                                                                                                                                                                    to benchmark against. Should it be 90%
                                                                                                                                                                                                    or 75% of the competitors price is a mat-
                                                                                                                                                                                                    ter of hunch. It depends upon what he
                                                                                                                                                                                                    expects the threshold level of the cus-
                                                                                                                                                                                                    tomers after which the customers may
                                                                                                                                                                                                                                                     facturer who offered to supply to banks
                                                                                                                                                                                                                                                     in bulk on 'just in time' basis. It was
                                                                                                                                                                                                                                                     observed that some customers were
                                                                                                                                                                                                                                                     ordering on daily basis in small lots and
                                                                                                                                                                                                                                                     some customers on weekly basis. It
                                                                                                                                                                                                                                                     found that it was losing money below
                                                                                                                                                                                                                                                     a certain quantity of order. It changed

                                                                                                                                                                                                    shift to his competitors.                        its offer and told its customers to stock
                                                                                                                                                                                                         Companies also operate within a             it for a month and pay them as and when
                                                                                                                                                                                                    bandwidth. For example, if you try to            they draw from the stock in their com-
                                                                                                                                                                                                    under price and keep it low, the customer        pany. The price of product in all these
                                                                                                                                                                                                    may actually perceive it to be of poor           situations remained the same but the
                                                                                                                                                                                                    quality. Alternatively, if you keep it rel-      net profit that the firm made differed
                                                                                                                                                                                                    atively low, you may be actually moving          drastically based on the usage pattern
                                                                                                                                                                                                    to next segment. For example, if Coffee          of customers. One study of saving
                                                                                                                                                                                                    Day charges Rs 35 for a coffee and you           accounts in banks showed that if the
                                                                                                                                                                                                    charge Rs 15, you may be still treated           deposit is below a certain level or the
                                                                                                                                                                                                    as a decent restaurant. But, if you charge       number of withdrawals (not the amount
                                                                                                                                                                                                    Rs 5 per cup than you will be treated at         of withdrawal) is above a certain num-
                                                                                                                                                                                                    par with a road side shop and you will           ber these accounts are losing accounts
                                                             Before I move to the issue of pricing,   an electronic system which helps even           prefer convenient locations, time to buy,     attract clientele accordingly. So, you can       for the banks. All these come from
                                                         I would like to share one experience I       the illiterate public to book time and save     buying experience, etc. It introduced         always be a low cost supplier but do not         understanding the pricing strategy, its
                                                         had recently. I was at the Delhi airport     hassles. This is how innovation builds.         smart card for buyers interested in buy-      undersell. It can kill your image. On a          profit implications and customer behav-
                                                         and was standing in the queue at the         But, it is important to keep the eyes and       ing in quick time. It introduced coffee       positive side, when Reliance started             ior.
                                                         boarding point. My hand was on a stand       ears open, especially for the entrepre-         outlets and gift shops for people interest-   charging Rs 1 per call, the target segment
                                                         which was there to hold the tapes to         neurs.                                          ed in experience. That is why you see the     itself totally shifted and it led to larger      What about Quality?
                                                         direct the queue. When I read the name                                                       petrol stations in India with many vari-      market. This is as a matter of strategy.              One puzzling question about pric-
                                                         of the brand, it said Q Manager. It struck   Pricing                                         ations. Earlier, it was all unimpressive           Also, companies use different prices        ing has been its relationship with qual-
                                                         me like a lightening. One common expe-            In the traditional economic sense,         petrol pump outlets with one product.         to differentiate services among seg-             ity. Does higher price necessarily sig-
                                                         rience we all face in India is "Q". Right    price is important because it determines        Petrol or diesel is no longer a commod-       ments. In credit card industry, for exam-        nals better quality? How to price prod-
                                                         from morning to night and why even           the demand and profit. In reality, there        ity. Of course another way they tackled       ple, there are Gold Club, Platinum Club,         ucts to communicate quality? These are
               G Ramesh                                  from birth to death there is "Q". Here       is so much variety to pricing that it is dif-   price sensitivity is by differentiation by    Silver Club etc available at different           important considerations in pricing. We
                would like to stress a lot on Price      is one firm which has made a product         ficult to talk of one price and one demand      introducing products like speed petrol.       prices, but all delivering basically sim-        discussed several strategies of pricing.

           I    Factor. Normally, entrepreneurs
                are used to talking only about Time
                Factor. It is important they under-
           stand Price Factor also. Here again I
           would like to contrast theory and prac-
                                                         which facilitates systems to form
                                                         queues. The entrepreneur instead of crib-
                                                         bing about it is making money out of it.
                                                         I am sure there would have been simi-
                                                         lar products both in India and abroad.
                                                                                                      for it. All entrepreneurs start with the
                                                                                                      belief that consumers are generally price
                                                                                                      sensitive. Studies have shown that it
                                                                                                      need not be. There was a petroleum
                                                                                                      products company which undertook a
                                                                                                                                                      This also helps to keep pricing outside
                                                                                                                                                      the regulatory regime.
                                                                                                                                                           A firm goes by several yardsticks
                                                                                                                                                      in fixing price. The foremost is cost but
                                                                                                                                                      surprisingly marketing books discussing
                                                                                                                                                                                                    ilar services. Still, it is prestigious to own
                                                                                                                                                                                                    a Gold Card. Kotler in his book on mar-
                                                                                                                                                                                                    keting discusses different practices of
                                                                                                                                                                                                    pricing of ultimate pricing, gold stan-
                                                                                                                                                                                                    dard pricing, luxury pricing, me too
                                                                                                                                                                                                                                                     Do we have examples of companies
                                                                                                                                                                                                                                                     pricing its products boldly above the
                                                                                                                                                                                                                                                     reference or competitors' pricing? Why
                                                                                                                                                                                                                                                     do they do so? Another important
                                                                                                                                                                                                                                                     aspect is discounts. I used to think dis-
           tice. There are economic theories of          This product is of course customised         study to understand its customers' pref-        pricing hardly discusses the influence of     pricing, price alone pricing, etc. Some          count is specific only to India where
           pricing which can help regulators fix         for India. The firm has made it flexible     erences and price sensitiveness to diesel       cost on price. It is almost as if cost is     newcomers may also practice disruptive           we are used to bargain pricing. I found
           electricity tariff or telecom tariff. There   enough for people to jump the "Q"; it        and petrol. Generally, it is assumed that       just one of the considerations of price       pricing as an entry strategy. Reliance           it widely prevalent in US and some
           are strategic theories which can help         happens more so at the airports. Here        petroleum products of diesel and petrol         whereas for the economist cost is the         followed this policy in mobile sector.           shops and even malls had discounts per-
           corporates like Hindustan Level fix           is one company which is making the           are commodities and are price sensi-            foremost. Mostly companies have refer-                                                         manently painted in their shops. What
           price of its products. Do we have any-        most out of a necessity and coming with      tive. This study pointed out that hardly        ence price against which they bench-          Customer Profitability                           is its rationale? These are key ques-
           thing for the small and medium scale          new versions. Of course, Tirupati            about 23% of the segment are price              mark. The reference price can be that            Even when a company charges its               tions in pricing.
           entrepreneurs?                                Devasthanam did something which              shoppers, ie. price sensitive. The study        of competitors or market leader or even       customers same price, the customers                   (The author is Associate Professor with
                                                         made even "Q" redundant. It developed        showed that there are customers who             a newcomer. For example, throughout           may not perceive it to be of same value.                                     IIM, Bangalore)
           Q Manager
           46   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                                        16-31 December, 2010   MONEY MANTRA   47
EP 36-49.qxd                                  12/13/2010             2:48 PM          Page 16

                                         NOTHING WITHOUT BRIBE
                                                   ne person in four worldwide paid a bribe dur-                                  WHO CAN SAVE FROM CORRUPTION?
                                         O         ing the past year while 54 per cent Indians
                                                   said they greased the palms of authorities
                                         to get things done, says a study released on December
                                                                                                                                 25                                                                                                                 Media 25
                                         9, 2010 to mark the International Anti-
                                         Corruption Day.
                                              In India, 54 per cent of users of services said they
                                         paid a bribe to receive attention from service
                                         providers.Almost half of all the respondents said they
                                         paid bribes to avoid problems with the authorities
                                         and a quarter said it was to speed up processes.
                                              Releasing the findings of the 2010 Global                         Organisat
                                         Corruption Barometer, a worldwide public opinion                       ion 8
                                         survey on corruption, Transparency International
                                         (TI) said most worrying is the fact that bribes to the                                                                                                                                                                      Govt Leaders 22
                                         police have almost doubled since 2006, and more
                                         people reported paying bribes to the judiciary and for                                 NGO 9
                                         registry and permit services than they did so five
                                         years ago.                                                                                                                      private sec-
                                              The agency said it showed that in the past 12                                                                              tor 11
                                         months one in four people paid a bribe to one of
                                         nine institutions and services, from health to edu-
                                         cation to tax authorities.
                                                    POLICE DEPTT. GOT                  THE MAXIMUM            BRIBE                                                            CORRUPTION                                     IN INSTITUTIONS

                                           Tax Authorities              4%                                                         80%
                                           Land Services                  6%
                                         Education System                 6%                                                         50%
                                          Medical Service                   8%                                                        40%
                                                   Utilities                8%
                                                 Customs                      10%                                                       10%

                                                 Judiciary                                     14%                                       0%
                                                                                                                                                Political parties

                                                                                                                                                                    Public Officials/

                                         Registry and                                                       20%
                                                                                                                                                                    Civil Servants


    Source: Transparency International

                                         Permit services

                                                                                                                                                                                                 Business/ pri-
                                                                                                                                                                                                   vate sector




                                                           0%        5%          10%       15%         20%         25%      30%


                                                                                                                                   Percentage of respondents report-                                                                                                    Military
                                         Percentage of people who reported paying bribe in the previous 12 months, by service      ing the sector/ institution to be cor-
                                                                                                                                   rupt or extremely corrupt

                                                                                                 CORRUPTION BOMB                 HAS INCREASED IN                                       SIZE
                                                                                                                                                                                                                                                                                   Percentage of respondents
                                                                                                                                                                                                                                                                                   reporting the sector/ insti-
                                                                                                                                                                                                                                                                                   tution to be corrupt or
                                                                                                                                                                                                                                                                                   extremely corrupt

                                         48    MONEY MANTRA         16-31 December, 2010
EP 50-73.qxd    12/13/2010     2:46 PM        Page 2

    FINANCIAL PLANNING                                TAXATION                         STOCK MARKET                                 COMMODITIES        MUTUAL FUND                           INSURANCE                                  BANKING                                     INDIA POST

                                                                                                                                                           Features of tax-saver                                    Bank                Minimum Investment                Maximum Investment
                                                                                                                                                           deposits                                                  SBI                      Rs 1000                         Rs 100, 000
                                                                                                                                                                                                                    PNB                       Rs 1000                         Rs 100,000
                                                                                                                                                                Fixed Deposit Receipt: As per the               Vijaya Bank                  Rs 10,000                        Rs 100,000
                                                                                                                                                           scheme notification, tax benefits under              ICICI Bank                   Rs 10,000                        Rs 100,000
                                                                                                                                                           this scheme are to be claimed through
                                                                                                                                                                                                                HDFC Bank                    Rs 10,000                           Rs 100,000
                                                                                                                                                           the fixed deposit receipt issued by the
                                                                                                                                                           bank.                                              Kotak Mahindra                 Rs 25,000                           Rs 100,000
                                                                                                                                                                Tax Deduction: Term deposits shall               Axis Bank           Rs 100 or multiples thereof                 Rs 100,000
                                                                                                                                                           be subject to tax deduction at source as              UCO Bank                      Rs 100                            Rs 100,000
                                                                                                                                                           per the Income Tax Act, 1961. Interest                IDBI Bank           Rs 100 or multiples thereof                 Rs 100,000
                                                                                                                                                           on these term deposits shall be liable
                                                                                                                                                           to tax under the Act. The investors get                                  Fixed Deposit Interest Rates
                                                                                                                                                           tax rebate only on the principal amount.     BANKS                              2 – < 3 Year                      3 – < 5 5 Years &
                                                                                                                                                           TDS will be applicable if interest earned                                                                         Year    above
                                                                                                                                                           is above Rs 10,000 in a financial year.      Bank of Baroda                     8.00%                             7.25%      7.25%
                                                                                                                                                           "The interest income shall be taxable.       Bank of India                      7.25%                             7.25%      7.00%
                                                                                                                                                           For example, if you earn more than Rs        Bank of Maharashtra                7.50%                             7.50%      7.50%
                                                                                                                                                           10,000 as interest, you need to pay tax      Canara Bank                        7.75% - 8.25%                     7.50%      7.75% - 8.00%
                                                                                                                                                           at the rate of 10 per cent. And, if you      Central Bank of India              7.50%                             7.60%      7.60% - 7.85%
                                                                                                                                                           don't have a PAN card, then the rate
                                                                                                                                                           will go up to 20 per cent," says Rohini,     Corporation Bank                   8.10%                             8.20%      8.20%
                                                                                                                                                           an executive with ICICI Bank. "This          Dena Bank                          7.75%                             7.75%      7.75%

                                                                          INVEST IN FD                                                                     guideline was introduced in this finan-
                                                                                                                                                           cial year only," she says. This is one of
                                                                                                                                                           the negative features in this scheme.
                                                                                                                                                                The rate of interest doesn't remain
                                                                                                                                                           fixed. It keeps changing from time to
                                                                                                                                                                                                        Indian Oversea Bank
                                                                                                                                                                                                        Oriental Bank of Commerce
                                                                                                                                                                                                        State Bank of India
                                                                                                                                                                                                        Syndicate Bank
                                                                                                                                                                                                                                           7.25% - 8.00%
                                                                                                                                                                                                                                           8.25% - 8.50%
                                                                                                                                                                                                                                                                                        8.50% - 8.75%
                                                                                                                                                                                                        Union Bank of India                7.25%                             7.50%      7.50% - 8.00%
                                                                                                                                                           time depending upon the market fac-

                     SAVE TAX
                                                                                                                                                           tors like inflation and deflation.           Vijaya Bank                        7.50%                             7.50%      7.50%
                                                                                                                                                                Encashment in the event of death:       Axis Bank                          7.50% - 7.75%                     7.00%      7.00%
                                                                                                                                                           If the holder of a fixed deposit dies, the   Development Credit Bank            7.75%                             7.75%      7.50%
                                                                                                                                                           nominee will be eligible to en cash the      HDFC Bank                          7.25% - 7.50%                     7.50%      7.50%
                                                                                                                                                           fixed deposit at any time before or after                                                      Rates (for upto Rs. 15 lakhs as on 7th Dec. 2010)
                                                                                                                                                           the maturity of the fixed deposit. In case
                                                                                                                                                           of pre-matured payment, the interest will    100 in prescribed form with one or          saving term deposit. One can only exit
                                                                                                                                                           be paid according to the period the          more approved sureties or with a bank       from this scheme at the expiry of five
                                                                                                                                                           deposit actually run without penalty at      guarantee.                                  years.
                                                                                                                                                           the rates applicable under normal fixed      Loan: As per the scheme, no loan can         No sweep-in facility: This tax saver
                Renu Baliyan                               scheme is Rs 1,00,000 in order to avail       ber are eligible to open a fixed                  deposit scheme.                              be taken against the term deposit. You      fixed deposits do not have the sweep-
                                                           the benefit of tax exemption under sec-       deposit account. Any individual who                    Transferability: The fixed deposit      cannot pledge the term deposit as col-      in facility. It means that this fixed deposit
                   he safest place for Indians to keep     tion 80 C. Same is applicable to the          is a Resident Indian and has attained             may be transferred from one branch to        lateral to secure a loan to meet your       cannot be linked to a savings account and

           T       money is bank and fixed deposit
                   is the most popular way to earn
           interest on it. But the tax deduction on
                                                           rate of interest. Every bank offers dif-
                                                           ferent rate of interest on these fixed
                                                                                                         18 years of age can open the account.
                                                                                                         Types of Term deposit
                                                                                                                                                           any other branch of the bank if the hold-
                                                                                                                                                           er of fixed deposit places any such
                                                                                                                                                                                                        liquidity needs. No overdraft facility
                                                                                                                                                                                                        will be provided in tax saver deposits.
                                                                                                                                                                                                        Lock-in period: The lock-in period
                                                                                                                                                                                                                                                    the surplus funds available under the
                                                                                                                                                                                                                                                    savings account cannot be automatical-
                                                                                                                                                                                                                                                    ly invested in this fixed deposit.
           the returns of FD pinches the investors             Tax saving fixed deposit has a lock-           Single holder: In the single hold-           In the event of loss: If the fixed           for the term deposit will be five years.         The distinctive features of this
           hard. The solution to it can be found           in period of five years. You can never        er type deposit, receipt will be issued           deposit receipt is lost, stolen,             These deposits cannot be encashed           scheme by various banks are as below
           in tax saving fixed deposits. Banks have        withdraw money from such deposits             to an individual for himself or HUF.              destroyed, mutilated or defaced, the         before the expiry of five years. The        in the table given above.
           formulated fixed deposit schemes for            before the maturity period i.e. five               Joint holder: In the joint holder            fixed deposit holder (s) will be eligi-      lock-in period can be extended if the            In short, there are various tax-saving
           tax saving under section 80 C of the            years. One can seek nomination facili-        type deposit, receipt will be issued joint-       ble to apply for the issuance of a dupli-    holder has applied for the auto renew-      alternatives available in the market. One
           Income Tax Act. These schemes offer             ty in this scheme. Investors can opt for      ly to two adults or jointly to an adult and       cate receipt. A statement showing par-       al facility. Precisely the deposit is       should scout the market properly to find
           investors guaranteed return on maturi-          this facility either at the time of deposit   a minor. It will be payable to either of          ticulars, such as number, amount and         accepted for any period from five           out the best interest rates offered. And,
           ty coupled with tax saving option. So           or at any time before the maturity peri-      the holders or to the survivor. In joint          date of the receipt and the circum-          years to 10 years. No interest will be      one should also check the best time to
           if you are keen to save tax on investment       od ends.                                      holder type deposit, the deduction from           stances explaining the loss, theft,          paid after five years as it is a closed-    invest in these deposits since the inter-
           and earn high return, you can opt for tax                                                     income under section 80C of the Act               destruction, mutilation or defacement,       ended scheme which is similar to NSC        est rates keeps changing. A five-year
           savings fixed deposit scheme.                   Eligibility                                   shall be available only to the first hold-        shall accompany every such applica-          (National Saving Certificate) and KVP       fixed deposit scheme, nevertheless, is
                The minimum amount for invest-                All individual depositors and Hindu        er of the deposit who should be a PAN             tion. A duplicate receipt shall be           (Kisan Vikas Patra).                        a near risk-free investment because tax-
           ment is not similar in all banks. The           Undivided Family (HUF) who have a             holder. In the case of minor, a guardian          issued to the applicant on furnishing        Premature withdrawal: No premature          saver fixed deposit enables you to save
           maximum amount to be invested in this           Personal Account Number (PAN) num-            should be appointed.                              an Indemnity Bond with a stamp of Rs         withdrawal will be provided in the tax      tax and earn high returns.

           50   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                                          16-31 December, 2010    MONEY MANTRA       51
EP 50-73.qxd   12/13/2010       2:46 PM       Page 4

                                                                                                                                                     ble my money and how much
                                                                                                                                                     amount I need to deposit in such                                                      Home Loan Junction
                                                                                                                                                                                                   Home Loan EMI/Rs 100,000 for a loan amount of Rs 30 Lakh as on December 07, 2010
                                                                                                                                                                  - Sandhya, Kanpur                                              5 years           10 years           15 years            20 years
                                                                                                                                                                                                                                 FIXED FLOATING FIXED FLOATING FIXED FLOATING FIXED                FLOATING
                                                                                                                                                     Dear Sandhya,
                                                                                                                                                     Banks continue to find out ways and          Allahabad Bank                 2212 2100         1449 1322          1233 1090           1119     998
                                                                                                                                                                                                  Axis Bank                      2327 2064         1553 1253          1332 999            1244     884
                                                                                                                                                     means to attract customers by
                                                                                                                                                                                                  Bank of Baroda                 DP 2076           DP   1280          DP   1029           DP       932
                                                                                                                                                     redesigning their products. Banks
                                                                                                                                                                                                  Bank of Maharashtra            2112 2040         1335 1227          DP     970          DP       852
                                                                                                                                                     which are offering these schemes will        Festive Offer*

          BANKING WITH                                                                                                                               usually not give you a fabricated pic-
                                                                                                                                                     ture. But it is for the beneficiary to
                                                                                                                                                     look into the scheme and make a thor-
                                                                                                                                                     ough analysis of the time involved in
                                                                                                                                                                                                  Canara Bank
                                                                                                                                                                                                  Central Bank of India
                                                                                                                                                                                                  HDFC Limited

                                                                                                                                                                                                                                 2125 2076

                                                                                                                                                                                                  ICICI Bank                     2432   2100       1675   1294        1469   1044         1391     932
                                                                                                                                                     doubling the money and the terms and         IDBI Bank                      2187   2088       1392   1280        1152   1029         1049     916
                                                                                                                                                     conditions prescribed in the scheme.         Indian Bank Festive Offer*     2052   2052       1240   1240        985    985          868      868
                                                                                                                                                     If period involved is too long, you may      LIC HF New Fix-O-Floaty*       DP     2071       DP     1261        DP     1008         DP       893
                                                                                                                                                     have to plan your finances keeping           Oriental Bank of               2137 2112         1335 1308          1105 1075           998      965
                                                                                                                                                     in mind your future needs. As a pru-         Commerce
                                                                                                                                                     dent investor you must work out the          Punjab National Bank           2088 2088         1322 1294          1105 1059           998      949
                                                                                                                                                     return on your investments viz. a viz.       SBI Easy Home Loan*            2028 2028         1213 1213          956 956             836      836
                                                                                                                                                     the rate at which money is likely to         UCO Bank                       2162 2088         1378 1294          1152 1059           1066     965
                                                                                                                                                     depreciate. You can find out the other       PN: The rates given above are for the 1st year of the loan tenure. For the subsequent years, the interest
                                                                                                                                                     investment opportunities which will          rates vary from bank to bank. * These banks have interest rates fixed for the initial few years and thereafter
                                                                                                                                                     generate better return in near future.       then prevailing rate are applicable.The home loan rates are indicative rates, which may change according
                                                                                                                                                     You also have to look into the risk fac-     to the credit profile of the customer. Fixed Interest Rates are usually subject to reset clause of two to five
                                                                                                                                                                                                  years and vary from bank to bank. However, fixed Interest Rates of ICICI Bank, HDFC Limited and Axis
                                                                                                                                                     tor i.e. the credibility of the bank or      Bank remain fixed during the entire tenure of the loan
                                                                                                                                                     financial institution and the age of         DP - Do Not Provide
                                                                                                                                                     the institution in Indian financial mar-
                                                                                                                                                                                                        Fixed Deposit Interest Rates (upto - Rs. 15 lakhs as on 7th Dec. 2010)
                                               I recently quit job. I had my salary account       consent of employer, so your account will          ket. After taking a comprehensive

                                               in Axis Bank. After quitting job, I was            automatically be classified as regular savings     view, you should take your own deci-         BANKS                       6mths - < 1       1 – < 2 Year      2 – < 3 Year      3 – < 5 5 Years &
                                                                                                                                                                                                                              Year                                                  Year    above
                                               informed by the bank that my account had           account unless your new employer has any           sion to invest your hard earned money.
                                               been changed to regular savings accounts.          such agreement with some of the bank.                                                           Bank of Baroda              6.00% - 6.75% 7.75% - 8.10% 8.00%                     7.25%       7.25%
           Salary account gives                What is the difference between a savings                                                              Sir, I received a fake note of Rs 500        Bank of India               6.50% - 6.75% 7.50%                 7.25%             7.25%       7.00%
                                               account and a salary account? What are             I deposited my cheque at bank drop box.            when I was withdrawing money
           benefits of the terms of            the benefits salary accounts accrue to its         But that did not get deposited in my account.      from an ATM. I approached the                Bank of Maharashtra         6.00% - 6.25% 7.50% - 7.60% 7.50%                     7.50%       7.50%
           agreement between                   customers? Can my account continue to be           When I queried about it after a week, the          nearest branch, whose executive told         Canara Bank                 6.50% - 6.75% 7.75% - 8.15% 7.75% - 8.25% 7.50%                   7.75% - 8.00%
           the employer and the                a salary account even after changing the           bank informed that the cheque had lost dur-        me to visit my parent branch. My             Central Bank of India       5.75% - 6.25% 7.35% - 8.00% 7.50%                     7.60%       7.60% - 7.85%

           banker. These terms                 organisation?                                      ing transit. Sir, please tell me who are           own branch is refusing to exchange           Corporation Bank            7.25% - 8.00% 8.10%                 8.10%             8.20%       8.20%
                                                                      -Arunima, Bangalore         responsible for this negligence and who will       the note. What should I do now?
           differ from one                                                                                                                                                                        Dena Bank                   6.25% - 6.50% 7.75% - 8.00% 7.75%                     7.75%       7.75%
                                                                                                  bear the interest cost for this period?                              - Naveen, Madurai
           organisation to                     Dear Arunima,                                                              - Karunesh Ranchi                                                       Indian Oversea Bank         6.75% - 7.75% 7.25% - 8.25% 7.25% - 8.00% 7.75%                   7.75%

           another. The terms of               Salary accounts are opened and maintained by                                                          Dear Naveen,                                 Oriental Bank of            6.50% - 7.00% 7.50% - 8.25% 7.50%                     7.50%       8.00%
                                               the bank as per agreement executed between         Dear Karunesh,                                     It is extremely difficult to prove that      Commerce
           agreement favouring
                                               your employer and the bank. So after you           Customers face such problems due to sheer          you received a fake note while with-         State Bank of India         7.25%             7.75% - 8.50% 8.25% - 8.50% 8.25%               8.50% - 8.75%
           employees of the                    ceased to be in employment and bank is             negligence of bank employees and front staff.      drawing money from the ATM. Bank
           organisation also                                                                                                                                                                      Syndicate Bank              6.50% - 6.75% 8.20%                 8.25%             8.50%       7.75%
                                               informed either by the employer or finds that      I am of the opinion that if you have enough        may not accept your claim because
                                               no salary is credited to your account, they may    evidence to prove your claim that cheque was       as per practice and extant guidelines,       Union Bank of India         6.25%             7.25% - 8.10% 7.25%                 7.50%       7.50% - 8.00%
           depends on their HR
                                               shift your account to a regular savings account.   deposited by you on time and cheque has been       the cash which is replenished or             Vijaya Bank                 6.25% - 7.00% 7.25% - 8.25% 7.50%                     7.50%       7.50%
           policies and practices.             Salary account gives you benefits of the terms     lost in transit either due to negligence of bank   recycled in the ATM has to be exam-
           Banks too provide                                                                                                                                                                      Axis Bank                   6.25% - 6.75% 7.50%                 7.50% - 7.75% 7.00%           7.00%
                                               of agreement between the employer and the          staff or the courier, you should talk to your      ined at various channels in the bank.
           certain additional                  banker. These terms differ from one organi-        bank that interest burden for the time lost is     Whether the practice is religiously          Development Credit          6.50%             7.75%             7.75%             7.75%       7.50%
           benefits to the                     sation to another. The terms of agreement          not your responsibility. In case your bank         followed in the branches depends

                                                                                                                                                                                                                                                                                                                   Source: Apnapaisa Research Bureau
                                               favouring employees of the organisation also       does not co-operate, you can knock at the          on the level of sincerity and disci-         HDFC Bank                   5.75% - 6.75% 7.00% - 7.25% 7.25% - 7.50% 7.50%                   7.50%
           employees taking in                 depends on their HR policies and practices.        door of Banking Ombudsman.                         plined approach.                             ICICI Bank                  5.75% - 6.50% 7.25% - 8.00% 7.50% - 8.25% 8.25%                   8.25%
           view the size,                      Banks too provide certain additional benefits                                                                                                      ING Vysya                   6.50% - 7.00% 7.50% - 7.75% 7.75%                     7.75%       8.00%
           background, status                  to the employees taking in view the size, back-    Nowadays many banks are offering                   Virendra Kumar Dhingra is a post-graduate

                                                                                                                                                     in Commerce with over forty years of expe-   IDBI Bank                   6.85% - 7.25% 7.60% - 7.75% 8.00%                     8.00% - 8.00% - 8.25%
           and credibility of the              ground, status and credibility of the organi-      "duguna karein apna paisa" or "double                                                                                                                                             8.25%
                                                                                                                                                     rience in banking. He retired as Executive
                                               sation. The benefits are provided by the banks     your money" schemes. Are banks really
           organisation.                       keeping in view the perspective business also.     doubling this money? If yes, is there any
                                                                                                                                                     Director, UCO Bank. Currently, he is
                                                                                                                                                     Director, Industrial Investment Bank of      The Federal Bank            7.25% - 7.60% 8.25%                 8.25%             8.25%       8.25%
                                                    Salary accounts are opened only with the      risk involved? Where can I invest to dou-          India Ltd.
                                                                                                                                                                                                  Kotak Mahindra Bank         6.75% - 7.25% 7.50%- 8.10% 8.10%                      8.10%       8.10%

          52   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                                                 16-31 December, 2010    MONEY MANTRA       53
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      FINANCIAL PLANNING                              TAXATION                       STOCK MARKET                                COMMODITIES      MUTUAL FUND                             INSURANCE                                    BANKING                                  INDIA POST

                                                                                                                                                     says a retired banker on condition of                     LISTS OF PUBLIC BANKS, PRIVATE BANKS, FOREIGN BANKS
                                                                                                                                                     anonymity.                                    Public banks          Private banks                     Foreign banks
                                                                                                                                                          Private Banks: In the pre-inde-          Allahabad Bank        Bank of Punjab                    ABN-AMRO Bank
                                                                                                                                                     pendence era, Private Banks used to           Andhra Bank           Bank of Rajasthan                 Abu Dhabi Commercial Bank
                                                                                                                                                     serve the banking needs of people. In         Bank of Baroda        Catholic Syrian Bank              BNP Paribas Bank
                                                                                                                                                     1921, Bank of Bengal, Bank of Bombay          Bank of India         Centurion Bank                    Bank of Ceylon
                                                                                                                                                     and Bank of Madras merged and                 Bank of Maharashtra   City Union Bank                   Citibank
                                                                                                                                                     Imperial Bank of India (IBI) came into        Canara Bank           Dhanalakshmi Bank                 China Trust Commercial Bank
                                                                                                                                                     existence. In the year 1935, Reserve          Central Bank of India HDFC Bank                         Deutsche Bank
                                                                                                                                                     Bank of India was established and took        Corporation Bank      ICICI Bank                        HSBC

                                                             KNOW THE RIGHT                                                                          over central banking responsibility from
                                                                                                                                                     IBI which was subsequently re-chris-
                                                                                                                                                     tened as SBI.
                                                                                                                                                          In 1994, RBI issued a policy of lib-
                                                                                                                                                     eralisation to license private banks, also
                                                                                                                                                                                                   Dena Bank
                                                                                                                                                                                                   Indian Bank
                                                                                                                                                                                                                         IDBI Bank
                                                                                                                                                                                                                         IndusInd Bank
                                                                                                                                                                                                   Indian Overseas Bank ING Vysya Bank
                                                                                                                                                                                                   Punjab National Bank Karnataka Bank
                                                                                                                                                                                                   Syndicate Bank        Karur Vysya Bank
                                                                                                                                                                                                                                                           JPMorgan Chase Bank
                                                                                                                                                                                                                                                           Standard Chartered Bank
                                                                                                                                                                                                                                                           Scotia Bank
                                                                                                                                                                                                                                                           Taib Bank
                                                                                                                                                                                                                                                           Royal Bank of Scotland
                                                                                                                                                     known as tech-savvy banks. Global             UCO Bank              Laxmi Vilas Bank                  State bank of Mauritius
                                                                                                                                                     Trust Bank was the first private bank

           BANK FOR YOU
                                                                                                                                                                                                   Union Bank of India        South Indian Bank        Barclays Bank
                                                                                                                                                     after liberalisation which was later          State Bank of India        UTI Bank (Now Axis Bank)
                                                                                                                                                     merged with Oriental Bank of
                                                                                                                                                     Commerce            (OBC).       Housing      The policy conveys that foreign banks          challenge state and private sector
                                                                                                                                                     Development Finance Corporation               in India may not acquire Indian ones           banks.
                                                                                                                                                     Limited (HDFC) became the first bank          (except for weak banks identified by the
                                                                                                                                                     to receive an approval from RBI to set        RBI, on its terms) and their Indian sub-       Co-operative Banks Types
                                                                                                                                                     up a bank in the private sector.              sidiaries will not be able to open branch-         There are two types of co-operative
                                                                                                                                                          Presently, private banks in India        es freely.                                     banks. The first one is the short term
                                                                                                                                                     include leading banks like ICICI Bank,             Foreign banks have very high              lending oriented Co-operative Banks.
                                                                                                                                                     ING Vysya Bank, Kotak Mahindra Bank,          charges. They have limited number of           It can be divided into three sub cate-
                                                                                                                                                     SBI Commercial and International Bank         branches. The function like electronic         gories i.e. State Co-operative banks,
                                                                                                                                                     etc. Undoubtedly, being tech-savvy and        transfer is offered by them to other           District Co-operative banks and the
                                                                                                                                                     full of expertise, private banks played a     banks, but there is no way to know who         Primary Agricultural Co-operative
                                                                                                                                                     crucial role in the development of Indian     has sent the amount.                           societies.
                                                                                                                                                     banking industry. Private banks made               Co-operative banks: They are an               The second is the long term lend-
                                                                                                                                                     banking more efficient and customer           integral part of Indian financial system.      ing oriented Co-operative banks. In
                MM Bureau                                Foreign banks have                         Saurashtra (SBS), and State Bank of              friendly. They provide optimum use of         They play a key role in rural financing.       this second category, there are land

                                                                                                    Travancore (SBT).                                technology like internet banking, ATM         Recently, they have gained momentum            developments banks which are at three
                ndian banking system remained            brought latest technology                       The large scale nationalisation of          and phone banking. The major disap-           in the urban areas also due to a rise in the   levels. First is the state level, the sec-

           I    resilient and showed no sign of
                pressure during the global down-
                turn. Cut-throat competition in the
           banking sector makes you think time
           and again where to deposit your hard-
                                                         and banking practices in
                                                         India. With their arrival,
                                                         Indian banking system has
                                                                                                    banks took place in 1969. Its sole objec-
                                                                                                    tive was to reach out to rural areas and
                                                                                                    make cheap finance available to the
                                                                                                    farmers. This time 14 major commercial
                                                                                                    banks were nationalised. The second
                                                                                                                                                     pointment comes on the service charges.
                                                                                                                                                     Most of the time, the charges associat-
                                                                                                                                                     ed with private banks are higher.
                                                                                                                                                          "Guidelines of every bank are same.
                                                                                                                                                     The rate of interest for saving bank
                                                                                                                                                                                                   number of primary co-operative banks.
                                                                                                                                                                                                   They are registered under the Co-oper-
                                                                                                                                                                                                   ative Societies Act. They are regulated
                                                                                                                                                                                                   by the apex court. They are governed
                                                                                                                                                                                                   by the Banking Regulations Act 1949
                                                                                                                                                                                                                                                  ond is district level, and the third is
                                                                                                                                                                                                                                                  the village level. They offer a higher
                                                                                                                                                                                                                                                  rate of interest compared to other
                                                                                                                                                                                                                                                  banks. Most of the banks remain open
                                                                                                                                                                                                                                                  in the evening which makes it easy for
           earned money. Doubts are whether your         became competitive and                     phase of nationalisation took place in           account is same in every bank. If you         and Banking Laws (Co-operative                 working people.
           money will be safe in public banks, pri-                                                 1980 when seven more banks were                  seek higher return, then you should           Societies) Act, 1965.                              "If risk factor is considered, then
           vate banks, foreign or co-operative
                                                         efficient. With higher                     nationalised with deposits worth over Rs         invest your money in private banks,”               Co-operative banks finance the agri-      co-operative banks are prone to risks.
           banks.                                        competition, domestic                      200 crore. By now the government held            says a private banker on condition of         culture based activities which include         Because they are not so closely mon-
               Reserve Bank of India (RBI) is the                                                   about 91 per cent of total assets of bank-       anonymity.                                    activities like farming, cattle, milk,         itored," says a financial planner. When
           governing body for all the banks in           banks improved their                       ing industry. There was a sharp rise in the            Foreign Banks: They have brought        hatchery, personal finance etc. They           it comes to depositing the cash, you
           India. It regulates and monitors their        performance and provided                   deposits and advances with the banks             latest technology and banking practices       finance various categories of people for       have many options. But, to choose
           activities. Precisely, banks can be seg-                                                 after nationalisation. Currently, SBI has        in India. With their arrival, Indian bank-    self-employment, industries, small             among them can be a tricky thing for
           regated into four categories i.e. public      better services.                           become the first Indian bank to be ranked        ing system has became competitive and         scale units, home finance, consumer            you. "If the individual is keen to invest
           banks, private banks, foreign banks and                                                  among the top 50 banks in the world,             efficient. With higher competition,           finance and personal finance. The              money, private bank is a better option
           co-operative banks.                           years later, its seven subsidiaries were   capturing the 36th rank. The drawback            domestic banks improved their perform-        growth of Co-operative banks is attrib-        for him. It varies from individual to
               Nationalised Banks: Nationalised          also nationalised with deposits worth      of these banks is that they are not as mod-      ance and provided better services.            uted mainly to their much better con-          individual. If he wants to do net bank-
           banks or public sector banks rule the         over Rs 200 crores. These subsidiaries     ern as private banks.                            Standard chartered bank was the first one     tacts with the local people, person-           ing, he can opt for private sector banks.
           banking system. Their history dates           of SBI were State Bank of Bikaner and           "Public banks are better than pri-          to arrive in India in 1858 and Citi Bank      al interaction with customers, and             Here he can also avoid filling forms.
           back to 20th century when Imperial            Jaipur (SBBJ), State Bank of Hyderabad     vate because they have more transparen-          opened its branch in 1902.                    their ability to catch the nerve of the        If he is scared of taking risk, he should
           Bank of India was nationalsed under the       (SBH), State Bank of Indore (SBIR),        cy. There is no hidden charge as well.                According to new rules announced         local clientele. Some of the Co-opera-         go for public sector banks," says KK
           SBI Act of 1955 and re-christened as          State Bank of Mysore (SBM), State          These banks offer higher credibility             by RBI for foreign banks in India, they       tive banks have developed core compe-          Goel, chief executive, Unique health
           State Bank of India in July 1955. Five        Bank of Patiala (SBP), State Bank of       because they are controlled by RBI,"             are permitted to set up local subsidiaries.   tencies to such an extent that they can        & wealth consultants private limited.

           54   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                                     16-31 December, 2010   MONEY MANTRA   55
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                                                                                                                                                   MUTUAL FUND                           INSURANCE                                MUTUAL FUND                                   INDIA POST

                                                                                                                                                       en by the investor to understand the                                                        evaluate the quality of portfolio by
                                                                                                                                                                                                     Fixed Maturity Plan                           looking at the kind of instruments that
                                                                                                                                                                                                         FMPs are debt-oriented funds              will be selected for investment but this
                                                                                                                                                       Time periods                                      which mature after a specified peri-      again will not help as unless the fund
                                                                                                                                                           One of the first things that the              od of time.                               actually constructs the portfolio, they
                                                                                                                                                       investor has to consider is the various                                                     can only guess the position. The over-
                                                                                                                                                                                                         At the end of the time period,
                                                                                                                                                       time periods for which the new launch-                                                      all expectation should be that if they
                                                                                                                                                                                                         investors are returned their money

                                   AFTER A LULL
                                                                                                                                                       es are being made. This is important                                                        stick with the fund till the time of matu-
                                                                                                                                                                                                         at prevalent NAV.
                                                                                                                                                       as it will help them to understand the                                                      rity, then they will make the returns that
                                                                                                                                                       kind of choices that they have with               1 year offering usually has extra         are available for the securities of this
                                                                                                                                                       respect to the different offerings for            days so that it gets classified as a      duration less the expenses that are pres-
                                                                                                                                                       making the investment. Some of the                long term capital asset.                  ent for the fund.
                                                                                                                                                       launches that are visible are the 90 days,
                                                                                                                                                       180 days and the 370 days offerings               For selling the holdings, one may         Taxation

                                                                                                                                                       which roughly correspond to the 3                 take the route of secondary market.            There are two aspects of taxation
                                                                                                                                                       months, 6 months and 1 year time peri-                                                      that will be present for the FMP. The
                                                                                                                                                       od. The 1 year offering usually has a         while the remaining amount would              first is the dividends that are received
                                                                                                                                                       few extra days so that it gets classified     come back as the return of capital for        in case the dividend option is chosen.
                                                                                                                                                       as a long term capital asset for tax pur-     the investor. Similarly, if the quarterly     The dividends that are received would
                                                                                                                                                       poses. This makes the decision mak-           option is chosen for a six- month fund,       be tax free in the hands of the investor
                                                                                                                                                       ing process easier as there are not too       then there will be two dividend payouts       so that they do not have to look at the
                                                                                                                                                       many choices that can confuse the             over the life of the investment.              amount for taxation purposes once this
                                                                                                                                                       investor.                                         There would be several investors          is received. However, since the fund
                                                                                                                                                           The manner in which the investor          who would like to get out before the          is a debt-oriented fund, there will be
                                                                                                                                                       has to look at these choices is to see        time period is up and for these investors     an indirect impact that the investor will
                                                                                                                                                       the time period for which they would          there is the option of doing so on the        suffer on account of the dividend dis-
                                                                                                                                                       want to invest their money. If their          stock exchanges. The units of these           tribution tax that will be paid when the
                                                                                                                                                       investment time period matches the            funds would be listed on the stock            dividend is declared. This figure will be
                                                                                                                                                       FMP time periods, then they make their        exchanges so they would be able to take       adjusted in the NAV of the fund so this
                                                                                                                                                       choice. The position is similar to what       this route for the purpose of selling their   will be an indirect cost that they would
                                                                                                                                                       they would face when they are look-           holdings. The problem that the                have to pay for the dividend that is
                                                         FMPs are now once again there will be no fund in existence after                              ing out for the fixed deposits that are       investors would face in such a situation      received and will constitute the taxa-

                                                                                     the specified time period. This is meant                          available with banks because there too        would be that there might not be              tion for this aspect of the work.
                                                         hitting the market in       for investors who would like to ensure                            they would choose the deposit based           enough liquidity that is present for the           The other aspect deals with capi-
                                                         higher numbers as more      that they are investing money for a spec-                         upon their investment time horizon.           units if there is no demand so even           tal gains that would come into play
                                                                                     ified time period and do not want to take                                                                       though there is a listing it might not        when the units are redeemed.
                                                         and more funds launch       high risk with the investment. Since                              Exit option                                   yield the desired benefits for the                 This is a debt fund so the rules appli-
                                                         these products to attract   the fund invests in debt instruments, the                              The next point that is present is that   investors. They need to keep this point       cable to such funds will be in force here.
                                                                                     nature of the fund is like a debt invest-                         since the investment will be operational      in mind while they are thinking about         If the holding period is for less than a
                Arnav Pandya                             investors towards their     ment with the expectation that the                                only for a specified period, what is the      their options. For past FMP investors,        year, then the gains will be short term
                                                         offerings. There are        investor will try and earn a slightly                             exit option available for the investor?       this entire set up might be a different       capital gains and the amount will be
                  ixed Maturity Plans (FMP) were                                     higher return from the investment.                                If the investor continues with the            way in which they would be dealing            added to the taxable income of the indi-

           F      a favourite with investors for a
                  long time. Then the economic cri-
           sis hit the markets resulting in problems
                                                         specific features here that
                                                         one needs to know so that
                                                                                         FMPs are now once again hitting
                                                                                                                                                       investment for the entire duration of the
                                                                                                                                                       fund, then there is no complication as
                                                                                                                                                       the amount will be returned to them
                                                                                                                                                                                                     with the investment but since the rules
                                                                                                                                                                                                     for the investment have changed, this
                                                                                                                                                                                                     will be required.
                                                                                                                                                                                                                                                   vidual and taxed at the applicable tax
                                                                                                                                                                                                                                                   rates. On the other hand, if the holding
                                                                                                                                                                                                                                                   period is for more than a year, then the
           with these funds for investors as they        there is no confusion       the market in higher numbers as more                              according to the prevailing NAV of the                                                      gains will be long term capital gains and
           found it difficult to exit these funds. The                                                                                                                                               Returns
           funds on their part found it tough to
                                                                                                 funds launch these products
                                                         about the manner in which and moreinvestors towards their offer-
                                                                                     to attract
                                                                                                                                                       fund. This happens because the fund
                                                                                                                                                       is in existence only for the time dura-           The expectation of investing in a
                                                                                                                                                                                                                                                   the rate of 20 per cent with indexation
                                                                                                                                                                                                                                                   or 10 per cent without indexation will
           meet the redemption pressure that had         this investment will behave ings. There are specific features here                            tion that is mentioned at the time of         FMP is that there would be a slightly         be applicable. The individual in this
           built up as they could not sell the assets                                that one needs to know so that there is                           launch. The other thing is the option         higher return that is available for the       situation could find that if they go for
           that they had in the portfolio. This led
                                                         for the investor.           no confusion about the manner in which                            regarding the payout that they have           investor. However, now the funds can-         the indexation benefit, then the net
           to new regulations that were introduced                                                    this investment will behave for the              chosen. If this is the dividend option,       not give an indicative return to the          amount that will be taxed will be quite
           for the FMP and which are now oper-           which mature after a specified period of     investor. This will also ensure that there       then the fund will declare the divided at     investors so the investors would have         low. Proper selection of the option
           ational. There are now a lot of new           time. The time is known at the start of      is a proper way in which the invest-             the required time period and this will be     to make the estimate themselves based         depending upon the time period of the
           offerings from funds under this cate-         the investment period so there is a finite   ment decision and allocation can be              the payout enjoyed by the investor. So        upon the current position in the debt         FMP can bring down the tax impact that
           gory and here is a look at these details.     phase for which the fund will be in oper-    made towards this instrument. There are          for example if the dividend option cho-       market. This becomes a slightly tough         the investor will face.
                                                         ation. At the end of the time period, the    several features that are now different          sen is annually for a one-year fund, then     task as the investors are not very con-
           Nature                                        investors are returned their money at the    for the FMP so it is vital that there is         a part of the money that represents the       versant with the debt markets and the                            (The writer is Chief Coach
                FMPs are debt-oriented funds             prevalent Net Asset Value (NAV) and          some amount of work that is undertak-            gain would be received as the dividend        way it operates. The investors must also                            at FinCare Consulting)

           56   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                                      16-31 December, 2010   MONEY MANTRA   57
EP 50-73.qxd    12/13/2010     2:46 PM        Page 10

    FINANCIAL PLANNING                                TAXATION                       STOCK MARKET                               COMMODITIES    INSURANCE                                                               Medical Insurance
           Expert Advice                                                                                                                                                                                             Age : 30 years Sum Insured Rs.300,000
                                                                                                                                                                                                                     Compare your Health Insurance Policy
                                                                                                                                                                                             Name of the     Name of the Premium Renewa Pre Existing Sub Limts

               Little Caution                                                                                                                                                                Companies

                                                                                                                                                                                             Bharati AXA
                                                                                                                                                                                                             Policy                ble Upto disease
                                                                                                                                                                                                             Smart Health 2,729/- 70
                                                                                                                                                                                                                                            Covered After
                                                                                                                                                                                                                                            4 continuous Room rent of 1% of

                Less Pain                                                                                                                                                                    ICICI
                                                                                                                                                                                                             Comprehens 3,046/- 70
                                                                                                                                                                                                             ive Health
                                                                                                                                                                                                                                            policy year   Sum Insured per day

                                                                                                                                                                                                                                            4 continuous No Sub- Limit
                                                                                                                                                                                                                                            policy year
                                                           such policy for your daughter for the
                                                           remaining term of her studies.                                                                                                    United India    Mediclaim     3,609/- Life     Covered from Room rent 1% of Sum
                                                                                                                                                                                             Insurance       Policy                Time     day one       Insured per day or the
                                                           Q2. In motor insurance, especially in                                                                                                             Platinum                       (Congenital   actual amount
                                                                                                                                                                                                                                            diseases not whichever is less.
                                                           two wheeler's insurance, a locality
                                                                                                                                                                                                                                            covered)      I.C.U expenses :
                                                           can be blacklisted just because there                                                                                                                                                          Room rent 2% of Sum
                                                           are many reported cases of theft in                                                                                                                                                            Insured per day or
                                                           that area? What should one do if an                                                                                                                                                            actual amount
                                                           insurer cites such a ground for not                                                                                                                                                            whichever is less.
                                                           giving a motor insurance policy?                                                                                                  Apollo          Easy Health 3,626/- Life        3 continuous No Sub- Limit
                                                                              - Shushant Yadav,                                                                                              Munich          Individual            Time     policy year
                                                                                 Danapur, Bihar                                                                                                              Standard
                                                           We suggest you buy a two wheeler pol-                                                                                             Star Health     Medi Classic 3,640/- 80         4 continuous Room rent of 2% of
                                                           icy online. You can buy one from                                                                                                                                                 policy year   Sum Insured per day
                                                  or www.baja-                                                                                                                                                              maximum to Rs
                                                  or .                                                                                                                                                          4,000/-
                                                                                                                                                                                             HDFC Ergo       Health        3,653/- 75        4 continuous No Sub- Limit
                                                           Q 3. While planning for a cover I                                                                                                                 Suraksha                       policy year
                                                           was suggested to go for a single pre-                                                                                             Future          Health           3,932/-     70           4 continuous Room rent 1% of Sum
                                                           mium ULIP by a broker. Sir, I need                                                                                                Generali        Suraksha                                 policy year   Insured per day and
            Q1. Three years back, I took a health                                                                                                                                                            Golden                                                 I.C.U expenses :Room
                                                           to know whether there is any single
           cover for my 17-year-old daughter.                                                                                                                                                                                                                       rent 2% of Sum
                                                           premium ULIP policy which gives
           She went to New Zealand this year for                                                     critical illness). However, they asked                                                                                                                         Insured per day to a
                                                           cover to dependents too? Please tell                                                 prove you as owner of the policy.                                                                                   maximum of 35%.
           higher studies and met with an acci-                                                      him to pay the first premium. I came
                                                           me what are the benefits of single                                                   Insurance company may impose cer-                                                                                   Surgeon fees up to
           dent there. When I claimed money for                                                      to know about it after he paid the
                                                           premium ULIP? Also, what could                                                       tain fees for issuance of duplicate pol-                                                                            35% of the Sum
           my daughter's treatment, the insur-                                                       amount for both the plans. Is it a reg-
                                                           be the maximum policy period                                                         icy certificate which varies from insur-                                                                            Insured per claim.
           ance company denied payment, say-                                                         ulated practice for an insurer or a
                                                           (time) in the aforesaid case?                                                        ance company to                 compa-                                                                              OTC : Up to 40% of
           ing payment can't be made as the girl                                                     representative of the insurer to col-                                                                                                                          the Sum Insured per
                                                                         - Rakesh Ranjan, Delhi                                                 ny.
           had met with the accident outside the                                                     lect premiums before sending the                                                                                                                               claim.
                                                           In single premium plan the policyhold-                                               Q 7. I have taken a Jeevan Aanand
           country. While taking that health                                                         proposal form and other relevant                                                        National        Mediclaim        3,988/-     80           4 claim free Room rent 1% of Sum
                                                           er need to pay the premium amount                                                    policy of LIC. Annual premium is
           cover, I had gone through the fine                                                        application forms to the policyhold-                                                    Insurance       Policy                                   policy year   Insured Per day to a
                                                           only once during the policy term. Such                                               Rs. 10500. I am paying the premi-
           prints of the policy and nothing of that                                                  er? Would it be right to ask for pre-                                                                                                                          maximum of Rs
                                                           plans are suitable for individuals                                                   um regularly for the last two years.
           sort was mentioned there. What                                                            miums even before being certain of                                                                                                                             5000.I.C.U expenses
                                                           whose source of income is lumpy or                                                   Can I convert the same into term
           should I do now?                                                                          the proposer's profile?                                                                                                                                        :Room rent 2% of Sum
                                                           irregular and who want peace of mind                                                 insurance jeevan amulaya or jee-
                                  - Saloni, Jaipur                                                                 -Yogima Sinha, Mathura                                                                                                                           Insured per day to a
                                                           of having insurance by paying only                                                   vand anmol?                                                                                                         maximum of Rs.10,000.
           Please read your policy document                                                          Premiums need to be paid along with
                                                           once. This policy will pay the sum                                                            - Shravan Kumar, by e-mail                                                                                 Surgeon fees : Maximum
           carefully. Health insurance policy                                                        the proposal form. In case your pro-
                                                           assured or the fund value (whichever is                                                                                                                                                                  limits per illness- 25% of
           issued in India will reimburse the hos-                                                   posal is not accepted, the premium will
                                                           higher) to the dependant(s) named by                                                 There is no such provision in insur-                                                                                Sum Insured. OTC :
           pitalisation expenses incurred within                                                     be refunded to you.
                                                           you as your nominee (s) in the policy.                                               ance to convert one insurance plan to                                                                               Maximum limits per ill-
           the country only. In your daughter's
                                                           The policy cannot give cover to depen-                                               another plan. The only way to change                                                                                ness- 50% of Sum
           case if the hospitalisation expenses                                                      Q 6. Sir in an accident I lost my orig-

                                                                                                                                                                                                                                                                                                     Source: Apnapaisa Research Bureau
                                                           dants.                                                                               the plan is to first take term insurance                                                                            Insured
           were incurred outside India (New                                                          inal certificate of insurance policy.                                                   IFFCO Tokio Individual           3,990/-     70          Not covered Room rent 1% of Sum
                                                                                                                                                policy based on your insurance
           Zealand), the Indian insurance compa-                                                     From where can I get duplicate cer-                                                                 Medishield                                                 Insured Per day
                                                           Q 5. My husband wants to take a                                                      requirement. If you feel that other
           ny will not entertain the claim. In this                                                  tificate & what is the whole process                                                                                                                           I.C.U expenses :Room
                                                           term insurance and a family floater                                                  policies are not making financial
           regard, general insurance companies                                                       and charges?                                                                                                                                                   rent 2.5% of Sum
                                                           health plan. While researching, he                                                   sense, you can surrender them (mini-

           issue policy specially designed for stu-                                                     - Raghvendra Mishra, Darbhanga                                                                                                                              Insured per day.
                                                           stumbled upon an online portal that                                                  mum 3 years premiums have to be
           dents going out of India for further                                                      You need to contact your insurance                                                      Cholamanda Individual            4,377/-     69          3 continuous OTC : Maximum limit
                                                           sells policies. He has been in touch                                                 paid) separately.                            lam MS     Health                                        policy year   per illness - 15% in AC
           studies by name "Student Travel                                                           company for issuance of duplicate
                                                           with a couple of customer representa-                                                                                             General                                                                Single Room Upwards.
           Medical Insurance". Such policy is                                                        insurance policy. The standard proce-
                                                           tives of the portal, who convinced                                                    (Harsh Roongta is CEO, a      Insurance
           issued in dollar denomination and is                                                      dure for the same is to submit form for
                                                           him to buy Aviva Term Plan and                                                              search comparison engine for loans,   All policies come with cashless facility in the network hospital, specific to each company
           applicable worldwide for duration of 2                                                    issuance of duplicate insurance policy
                                                           Apollo Munich Health plan (with                                                           insurance and investments. He can be    * Premium is inclusive of service tax
           years. It would be advisable to take                                                      along with required document proof to                                                   ** No claim discount of 5 per cent for every claim free year to a maximum of 25 per cent
                                                                                                                                                reached at
           58   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                                       16-31 December, 2010   MONEY MANTRA   59
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      FINANCIAL PLANNING                              TAXATION                        STOCK MARKET                                 COMMODITIES     MUTUAL FUND                             BANKING                                CONSUMER LAW                              INDIA POST

                                                                                                                                                                                                 had not paid for its carriage. (In her       delivery.
                                                                                                                                                                                                 case, since she was forced to move the            The Commission also pointed out
                                                                                                                                                                                                 baggage to the roof of the bus later, she    that the baggage could have slipped
                                                                                                                                                                                                 had not been given a ticket nor had          from the roof of the bus and fallen
                                                                                                                                                                                                 she insisted for one.)                       down on the road somewhere, it could
                                                                                                                                                                                                      The State Commission, after a           have been stolen, or it could be a case
                                                                                                                                                                                                 detailed hearing, came to the conclu-        of mistaken delivery. But whatever
                                                                                                                                                                                                 sion that the transport company was          may be the cause, the baggage was
                                                                                                                                                                                                 negligent in handling the passenger's        missing because of the carelessness
                                                                                                                                                                                                 suitcase. Said the Commission: When          or negligence of the bus staff. And the
                                                                                                                                                                                                 a passenger carries his personal lug-        owner of the bus was vicariously liable
                                                                                                                                                                                                 gage with him and keeps it under his         for the loss.
                                                                                                                                                                                                 own supervision, the staff of the bus             However, the State Commission

                                                                                                                                                                                                 have no responsibility in the matter.        awarded only Rs 10,000 as compen-
                                                                                                                                                                                                 But if the luggage is entrusted to the       sation, on the ground that (a) the com-
                                                                                                                                                                                                 staff of the bus for safe custody, then      plainant had given different estimates
                                                                                                                                                                                                 it is obvious that it is the responsibil-    of the cost of jewellery lost by her in
                                                                                                                                                                                                 ity of the staff to ensure its safe          her written complaint before the
                                                                                                                                                                                                                                              Commission and later in her evidence
                                                                                                                                                                                                      Cautious consumer                       and also in her FIR before the police.
                                                                                                                                                                                                  Consumers would do well to take cer-        (b) she had failed to show, as promised,
                                                                                                                                                                                                  tain basic precautions while travelling     the still photographs and video clips
                                                                                                                                                                                                  long distance by bus:                       of her wearing the jewellery at the
                                                                                                                                                                                                  (a) Whenever you buy a ticket to trav-      wedding in Bhubaneshwar, in support
                                                                                                                                                                                                      el long distance, make sure that        of her claim that the suitcase contained
                                                                                                                                                                                                      the bus has a luggage compart-          expensive jewellery and (c) if she real-
                                                                                                                                                                                                      ment with a proper locking system,      ly carried as much jewellery as she
                                                                                                                                                                                                      to keep your baggage.                   claimed, she would not have allowed
                                                                                                                                                                                                  (b) Never allow suitcases, particularly     the suitcase to be taken away from her.
                                                                                                                                                                                                      those containing clothes or even             In another case where the passen-
                                                                                                                                                                                                      food, to be put on the roof of a bus.   ger's baggage kept in the luggage com-
                                                                                                                                                                                                      It may just fall down during the        partment of the bus was found missing,
                                                                                                                                                                                                      journey or even get damaged in          the State Commission directed that the
                Pushpa Girimaji                         realise that today we have a variety of     held that so long as the baggage is in           such practices.                                  the sun or the rain.                    passenger be fully compensated for the
                                                        them - in larger cities, we may have air-   the custody of the passenger, it is his              Anyway, when Ms Devi reached             (c) If on some routes you have no           loss of goods. (Divisional Controller,
                     ow-cost airlines may have          conditioned, luxury coaches, 'sleeper'      or her responsibility to keep it safe, but       Sundergarh and asked for her suitcase,           choice but to allow your luggage to     KSRTC, Mysore vs Ramesh Reddy)

           L         managed to take away a
                     chunk of the business from
                     the railways by wooing rail
           passengers with low fares, but they
           have not been able to make inroads into
                                                        coaches and also 'video buses', most
                                                        of which have provision to store pas-
                                                        senger baggage in a storage compart-
                                                        ment provided either at the back or
                                                        the side of the buses. But we still have
                                                                                                    if it is entrusted to the care of the trans-
                                                                                                    port operator, he is liable for any loss
                                                                                                    or damage caused to it.
                                                                                                          Take the case of Prabhat Nalini
                                                                                                    Devi, decided many years ago by the
                                                                                                                                                     she found to her horror that it was miss-
                                                                                                                                                     ing. She complained to the State
                                                                                                                                                     Transport Authority and also the
                                                                                                                                                     police, but nothing happened, forcing
                                                                                                                                                     her to eventually file a complaint with
                                                                                                                                                                                                      be put on the roof, make sure that
                                                                                                                                                                                                      it is securely tied and covered with
                                                                                                                                                                                                      a water-proof material. Insist on it
                                                                                                                                                                                                      and tell the driver/conductor or the
                                                                                                                                                                                                      transport company that you will
                                                                                                                                                                                                                                              The passenger, who travelled from
                                                                                                                                                                                                                                              Bangalore to Mysore, had a valid tick-
                                                                                                                                                                                                                                              et for the baggage, which he said con-
                                                                                                                                                                                                                                              tained goods worth Rs 3,745 that he
                                                                                                                                                                                                                                              had purchased in Bangalore. He even
           the road transportation business. I do       a large number of buses for long dis-       Orissa State Commission. Here, after             the Orissa State Commission (Prabhat             hold them responsible for any           produced receipts in support of this
                                                                                                                                                                                                      damage caused.
           not know how many of you are aware           tance travelling that do not have such      attending a marriage, she was return-            Nalini Devi vs Rashmi Travels) seek-                                                     claim.
           of this that India has the second largest    provisions and the baggage is kept on       ing from Bhubaneshwar to Sundergarh              ing a compensation of Rs 1,42,690 for        (d) Most transport companies these               Here, the baggage had been kept
           road network in the world, stretching        the roof of the bus.                        by bus and since the suitcase contained          the silk sarees and jewellery lost.              days issue a baggage ticket or a        in the luggage compartment at the back
           to 3.34 million kilometres and that this         While with the latter, there is every   some expensive sarees and jewellery,                 Here, the bus company took the               baggage token for having received       of the bus and locked, but the com-
                                                                                                                                                                                                      your baggage. Insist on it. It also
           network carries 85 per cent of passen-       possibility of the baggage falling off or   she kept it right next to her in the aisle       plea that for every luggage that was                                                     plainant had noticed, when the bus
                                                                                                                                                                                                      ensures that the bus has a system
           ger traffic.                                 even getting wet and damaged in rain        of the bus. Now, usually that is not             loaded onto the roof of the bus, a sep-                                                  stopped midway to allow passengers
                                                                                                                                                                                                      of handing over the baggage in
                                                        (unless they are adequately covered         allowed because it impedes passen-               arate baggage ticket was given and at            their custody only to genuine own-
                                                                                                                                                                                                                                              to have some coffee, that the door of
           Baggage woes                                 with tarpaulin to protect them from         ger movement. But in this case, the              the end of the journey, the baggage was                                                  the boot compartment was open. Later,
                                                                                                                                                                                                      ers. In other words, it prevents
               Given these facts, one must think        rain), with the former too, there have      conductor insisted on moving her lug-            handed over to the passenger on veri-            your baggage from being carried         when he got off the bus at Mysore and
           of the rights of those who travel long       been cases of baggage getting stolen        gage to the top of the bus not because           fication of the ticket. As far as the            away either by mistake or inten-        asked for his baggage, he found his bag
           distance by buses and carry baggage.         -this is despite the passengers being       it inconvenienced other passengers,              smaller articles of baggage that the             tionally by some other passenger.       missing.
           You have probably guessed by now,            given the baggage ticket.                   but because he wanted to put a wood-             passengers carried with them into the        (e) If you are carrying expensive                As these cases show, a transport
           what I am going to talk about- the pos-                                                  en stool and accommodate an addition-            bus, the transport company took no               clothes, camera, jewellery or           company can be hauled up before the
           sibility of loss or theft of baggage on      Transporters taken to task                  al passenger (which actually was ille-           responsibility for their safety. In this         cash, pack them all in a small bag      consumer court, if the baggage entrust-
           buses and the rights of consumers in             So what happens in such cases? Is       gal). And as is the wont in India, pas-          case, since the passenger had not                and keep it with you. Never hand it     ed to its care is lost or damaged.
           such cases.                                  the transport company liable to make        sengers do not protest in such cases and         bought a luggage ticket, she cannot              over to the bus conductor to be
               When we talk of buses, we must           good the loss? Consumer courts have         allow the conductor to get away with             claim compensation for the loss as she           kept in the luggage compartment.                           (The writer is a columnist
                                                                                                                                                                                                                                                                 on consumer right issues)

           60   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                                                16-31 December, 2010   MONEY MANTRA   61
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       FINANCIAL PLANNING                             TAXATION                        STOCK MARKET                COMMODITIES   MUTUAL FUND                   BANKING                                     OFFICE WOES                              INDIA POST

                Renu Baliyan                                                                                                                  shrugs off the responsibility and hold someone              him abreast of all the developments.
                                                                 Your perfection in your work                                                 else responsible for it. It may help them feel less              Personal discussions: Indulge in discus-

                      ealous colleague at workplace can                                                                                       hostile towards you.                                        sion with the envious colleague to remove the

                J     mar your performance. It does not
                      only lead to distraction at workplace
                      but it may cost you the job in extreme
           circumstances. A conducive environment
           helps bring out the best in you. It is near impos-
                                                                 is likely to make your
                                                                 colleague feel jealous of
                                                                 you. And, it may make them
                                                                 compare their work with
                                                                                                                                                  Focus: Concentrate on the goals which the
                                                                                                                                              organisation has set for you to meet. You should
                                                                                                                                              shift your energy towards constructive activities
                                                                                                                                              as it will help you focus on the target. Completing
                                                                                                                                               your work assignments efficiently and effec-
                                                                                                                                                                                                          differences. In order to strike a chord, discuss
                                                                                                                                                                                                          light topics like health, entertainment, lik-
                                                                                                                                                                                                          ing and disliking. Abstain from topics like
                                                                                                                                                                                                          religion or politics as it may invite nasty
                                                                                                                                                                                                          arguments. It is important to show your gen-
           sible not to find such people in any organisa-                                                                                     tively         may                                          uine interest in their opinion.Avoid issues
           tion. So it will be a futile exercise to change       your job. Appreciation by                                                    reduce gossip                                               which may lead to confrontation between you
           the job thinking that you will not meet such          boss can fuel the existing                                                                                                regarding      and the colleague. It will help break the ice
           persons in the next organisation. They exist                                                                                                                                      your lack    and start building a relationship on a new and
           everywhere. Someone has rightly said that "the        jealousy and worsen the                                                                                                     of skills.   healthier level.
           jealous are troublesome to others, but a tor-         situation. In order to avoid                                                                                                 If the           "You can't tackle a person who is jeal-
           ment to themselves." You cannot change them                                                                                                                                        work-       ous of you because no matter how hard you
           but certainly you can learn a trick or two to         such situation tell them                                                                                                      place      try to be nice to him/her, there is little chance
           handle them.                                          politely that you are not                                                                                                  jealousy      they would mend their ways. I have faced
               "Being jealous is in nature and it can't be                                                                                                                               is coming        people who were jealous of me and found
           helped. What I can do is to make sure that I          pretending to be perfect.                                                                                            straight from       myself at a loss on how to handle them. The
           do not pose a threat to his existence. Be it his                                                                                                                      your supervisor,         only strategy in my view is that you have to
           professional supremacy or otherwise. I will                                                                                                                        it's important to           be on your guard always. Because, jealous
           make sure that he/she doesn't see me as a            my       boss                                                                                                   ensure that work          people keep looking for chances to point out
           threat. It can't be done away with as it is in       called me                                                                                                        assignments are          your faults and mistakes before others and
           the nature of that person, so minimising it          and                                                                                                              completed in a           your superiors. Jealousy is a feeling that the
           would be a better option and that too by win-
           ning his/her confidence," says Abhishek
           Jaiswal, a sub-editor.
           How to cope with jealous
                                                                ated the
                                                                way I
                                                                                                                   TACKLING                                                      commendable
                                                                                                                                                                                 manner and on
                                                                                                                                                                                    Find friends:
                                                                                                                                                                              If you want to
                                                                                                                                                                            defend yourself in a
                                                                                                                                                                                                          jealous person can't overcome. They are a
                                                                                                                                                                                                          sort of victim,” says Asim Khan, a journal-
                                                                                                                                                                                                               Share a cup of coffee: Socialising is the
                                                                                                                                                                                                          best way to iron out your differences with the
                                                                                                                                                                                                          colleague in question. Sharing lunch or coffee
                Praise efforts: In order to maintain har-
           monious relation at workplace tell your jeal-
           ous colleagues that you are not their enemy.
           If they do something good make sure you
                                                                says Ritika
                                                                Handa, an interior
                                                                     Accept mistakes: Your
                                                                                                                   JEALOUS                                                 hostile situation,
                                                                                                                                                                          make sure that you
                                                                                                                                                                          have          influential
                                                                                                                                                                           friends by your side.
                                                                                                                                                                                                          once or twice in a month will surely help you
                                                                                                                                                                                                          deal with such situation and narrow down the
                                                                                                                                                                                                          differences. It may help you interact with the jeal-
                                                                                                                                                                                                          ous co-worker and establish an understanding.

           praise their effort. But, don't overdo your          perfection in your work is                                                                                  Make sure that they           It may help you overcome the differences and
           praise. It may make them feel that it's a fake       likely to make your colleague                                                                                stand        by       you    resolve the issues by making the optimum utili-
           act and you are just trying to please them.          feel jealous of you. And, it                                                                                 through your thick           sation of this opportunity. If you resolve the issue
           You can extend your advice so that they can          may make them com-                                                                                            and thin. It will           on your own, other colleagues won't get the oppor-
           better their performance. If your boss asks you      pare their work                                                                                               discourage           the    tunity to make fun of the situation at your expense.
           for a suggestion, allow such colleagues to join      with your                                                                                                     jealous colleague                Learning how to deal with jealous colleagues
           on equal terms. Give them space so that they         job.                                                                                                         to indulge in a ver-         is a mammoth task but is worth pursuing as it
           get the opportunity to show their talent.                                                                                                                         bal spat with you.           will help you develop healthier relationships with
                "A colleague of mine always used to find                                                                                                                      The presence of a           your colleagues and work better.
           out unnecessary flaws in my work and call                                                                                                                            strong or a senior             Give them chance to back down: Give your
           me with funny names in front of others. I never                                                                                                                       colleague          by    adversary every opportunity to back down. If your
           complained about it as I didn't want to be                                                                                                                             your side is            enemy is unusually nice or makes a friendly ges-
           labeled as someone who brings up problems.                                                                                                                             likely to dis-          ture, trust it, though not blindly. He may be
           But, at the same time, I couldn't afford to bear                                                                                                                       suade          them     attempting to apologise in a way that does not sac-
           this crap. I took two smart steps. First, I start-                                                                                                                     from getting            rifice his pride. In such a situation don't increase
           ed ignoring her. She was doing all that to gain      Appreciation                                                                                                        into an alter-        your offensive assault. Try to be gracious. It will
           attention and stir up controversy. Since I did-      by boss can fuel the exist-                                                                                          cation.         It   benefit you if other co-workers are aware of your
           n't pay attention to her comments, she got tired     ing jealousy and worsen the                                                                                           will        help    peacekeeping efforts. So at least you cannot be
           and stopped doing that. Second, I started prais-     situation. In order to avoid such                                                                                     you focus on        faulted for not trying.
           ing her work in front of my boss who was prob-       situation tell them politely that                                                                                  your job and                Dealing with jealous coworkers is often a
           ably aware of the controversy. It made an            you are not pretending to be perfect.                                                         distract their attention at the             difficult situation that you want to avoid. Make
           impression that I'm not jealous of her and she       Show them that you don't feel afraid of                                                    same time.                                     a conscious effort to be a team player and defuse
           is the one who criticises my work. It helped me      accepting your mistakes openly and take                                                     If you still bump into a jealous              their jealousy before it becomes a problem. No
           make a positive repute in the office. Also, after    responsibility for them at the same time. Make                                     colleague who is keen to disturb you,                  one comes out ahead when you have to fight
           few months when the controversy died down,           them feel sure that you are not the one who                                   raise your concern with the superior and keep               things out.

           62   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                       16-31 December, 2010   MONEY MANTRA   63
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                      aving money is essential for serving the future purposes. It is impor-           Review your investment: Though stocks provide good returns in the long term, it is not so always. Thus, it is bet-

           S          tant to deploy the savings in income-generating instruments. For this
                      reason, one prefers to make a portfolio of his/her investment, which
                      is an appropriate mix of various assets. Portfolio making is based on
                      diversification which helps reduce the risks. The assets in an invest-
           ment portfolio may include gold, stocks, real estate, mutual funds and bonds
           etc. In this article, we will discuss the basic points which a greenhorn should
           keep in mind while making a portfolio. Let us discuss those one by one.
                                                                                                       ter to review the investment from time to time and bid adieu to the shares which are not performing. As a smart investor,
                                                                                                       one should review his investments after every three months. Yearly review should be done as well. Apart from reviewing
                                                                                                       the investment, one should keep a vigil on his financial goals and risk taking ability as well.

                                                                                                             Diversification in sectors and stocks: It's not good to bet on a single sector as it may fail as a theme.
                                                                                                                Hence, diversification is the key for smart investment in equity market and one should go for various sectors.
                                                                                                                  But it doesn't mean that a person should have a number of equities in his portfolio. It's better to invest in lim-
                                                                                                                    ited number of shares. Investment in 10-15 stocks is more than enough. Another thing is that one shouldn't
                                                                                                                        put more than 10 per cent of capital in any scrip.

                                                                                                                              Don't borrow for investment: One should not borrow money for investment in stock
                                                                                                                                 market. It is a claymore sword. Investing in equity market is risky, so it not advisable to borrow
                                                                                                                                  money and deploy money into stocks. It is always suggested to invest the savings which you
                                                                                                                                    will not need for at least a year.

                                                                                                                                         Every big dip is an opportunity of buying: It is always better to keep some
                                                                                                                                          cash on hand and wait for a good dip in the market. Big dips make the big companies
                                                                                                                                           cheaper and help in averaging of stocks. But levels don't have much role to play for
                                                                                                                                            those who have long term approach.

                                                                                                                                                         INVESTMENT PORTFOLIO AND GOLD
                                                                                                                                                      Gold, termed as safe
                                                                                                                                                  haven, is an integral compo-
                                                                                                                                                  nent of financial portfolio of
                                                                                                                                                  every smart investor. Gold is
                                                                                                                                                  a good hedge against inflation
                                                                                                                                                  and offers better returns in the
                                                                                                                                                 times of crisis. The best way to get
                                                                                                                                                 benefit from gold is to think why

                                                                                              FOR A
                                                                                                                                                 one wants it and how he would use
               INVESTMENT PORTFOLIO AND EQUITIES                                                                                                it. Buying gold in the form of jew-
                                                                                                                                                ellery, gold bars and gold coins is a
           Equities are the most important part of a portfolio for better                                                                      costly affair. Gold bars and coins sold
           returns. These are liquid in comparison to other                                                                                    by banks carry a premium over the mar-

           avenues of investment. Investing in equities is                                                                                    ket price.
           more risky than other avenues of investment.
           In addition, it demands more time. But it can turn                                                                               ETFs are best for investment:
           out to be more rewarding. Looking at the his-                                                                                  There is no organised market to sell gold coins.
           tory of stock markets, equities have outper-                                                                                 In India, banks don't buy back the coins. Adding more to the woes, banks don't accept
           formed every other asset class in the long run                                                                              gold coins as collateral for a loan. Jewellers buy these but with discount. Hence the process
           across the globe. Equities do better in rela-                                                                              becomes dearer for investors. Hence, it is better to buy it in the form of ETFs, which are
           tively stable political and economic scenario.                                                                           the most convenient and profitable way of investing in yellow metal.
           Choosing a good company: Investor
           should always go for a good company. One                                                                               Enter in gold when dollar slips : Typically, the dollar and gold have negative correla-
           way of choosing a good company is by going                                                                          tion. Dollar is no doubt the currency which makes the world go round, hence when it starts trem-
           for a company which has reported consistent                                                                       bling, investors easily decipher that it is time to return to the only store of value - the yellow metal.
           profits in recent years. The risk is diminished with                                                           Gold is a hedge against the types of stock market investments. Therefore, when one's investment port-
           the companies having bigger market capitalisation. For instance, companies from Nifty                      folio implodes, gold comes out as the only ally.
           and Sensex can be chosen, but after considering other factors too.
                                                                                                                Keep an eye on exchange rates:The movement in dollar plays a significant role for investors as the
           Invest for long term: Risk associated with equity investment gets reduced when                   dollar-rupee exchange rates decide the price paid for gold. Hence one should take a call in the yellow metal after
           one invests with an approach of long term. Approach of more than five years proves to         taking both the gold and dollar prices into consideration as both of these are dynamic.
           be fruitful. With this a person not only participates in the long term development of the
           company, but it also helps in wealth creation for him. In short term, the performance of    At last : The key to get benefited from gold is the same as that of other avenues of investment- buying weakness and
           a share is affected by the movement of the market more rather than the fundamentals of      selling strength. Last but not the least, there is no loss or profit until an investor sells.
           the company.

           64   MONEY MANTRA   16-31 December, 2010                                                                                                                                                16-31 December, 2010   MONEY MANTRA   65
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                                     INVESTMENT PORTFOLIO AND MUTUAL FUND                                                                                                        Don't mix insurance and investment: Insurance agents con-
                                                                                                                                                                                 sistently reiterate that the policies sold by him would help in long term wealth
           Smart investment is no doubt a skill, but not everyone has it. For those who don't possess this skill, mutual fund is a better                                        creation. They ignore the basic question that the protection cover would be
           option for them. MFs don't require much time from investors' side and may become part of portfolio for every kind of investor-                                        enough or not and offer rosy illustrations about the returns in future. Under
           whether starting a career or retiring, growth-oriented or income-seeking, conservative or risk-taking. AMCs have come up                                              this mis-selling approach, investors tend to mix insurance and investment.
           with a lot of options and investors can choose from those according to their requirements.                                                                            This is not the right approach at all and unbundling of the investment and
           Choose the right mutual fund: Choosing the right mutual fund schemes for a portfolio is like a battle won on                                                          insurance aspects lead to better returns.
           the very first day. One should think about whether the scheme suits his/her requirements? And, what has been the
           track record of the scheme? Experts say that best funds are the ones which fall less in the bearish market. Besides,
           one can check the performances of other schemes managed by that fund manager. Portfolio allocation and divi-
           dend yield are other factors which can give clear idea about the fund.
           Start early and invest regularly: It is better not to time the market and start as early as possi-
           ble. Compounding helps an investor's money to grow. However, it is not better to buy some units of a
           mutual fund and say good bye. The best approach is to put a fixed amount of money after certain
           intervals. It brings down the average cost per unit. As almost all the open-ended funds offer sys-
           tematic investment plan, one can take this facility.
           Long term approach is good: The great confusion that persists in the minds of
           every investor is - how much period is enough for better return? The answer is simple. The
           longer one stays invested, the better the return is. Minimum tenure of five years is better
           to get good returns, though it depends on the type of scheme as well in which one invests.
           Select the ideal combination of schemes: Investing in just one mutual
           fund scheme doesn't work; hence one may consider investing in a mix of schemes to
           achieve specific goals. One should at least have diversification of equity-oriented mutu-
           al funds and debt-oriented mutual funds in a portfolio. But remember, a horde of mutu-
           al funds doesn't make any sense. As far as different options are concerned, one should,
           typically, go for the growth option in an equity scheme and dividend option in debt
           NFO or the existing fund: It is not good to run after every new fund offer
           (NFO). Given a situation where an NFO is available with the same objective of an
           existing fund; it is preferable to go with the existing fund. However, if there is an
           NFO with a new theme, it makes sense to invest in that.

                                                                                                                                                                                                    FOR A
           Higher or lower NAV: One shouldn't avoid any scheme if the net asset value
           (NAV) is higher. It is not fair to prefer lower NAV schemes. The NAV has no say in                                               It is better to avoid
           the returns an investor receives. Lower or higher NAV decides the number of units                                                ULIPs : When following
           the investor gets, nothing more than that.                                                                                       the approach of not mixing

                                                                                                                                            insurance and investment,
                    INVESTMENT PORTFOLIO AND INSURANCE                                                                                      one should avoid unit liked
                                                                                                                                            insurance plans (ULIPs).
           Every investment portfolio is incomplete without insurance portion. Life insurance poli-                                         With the amount one is pay-
           cies, broadly termed as benefit policies, offer cover against financial implications of the                                      ing for ULIPs, it is better to
           death of the insured. General insurance, usually non-benefit covers, offer protection in sev-                                    have a term insurance poli-

                                                                                                                                                                                                                                                                        Content: Alok Dwivedi, Graphic: Harikrishan Pal
           eral areas such as health and property etc. These policies only reimburse losses and not pro-                                    cy for 15-20 years and take
           vide any additional benefits to the policyholder. Unfortunately, insurance products, over the                                    a SIP in mutual fund scheme
           years, have been sold more as a tool of investment rather than a tool of protection.                                             for the same period. This
                                                                                                                                            combination would proba-
           Determine the requirement :Though all of us need insurance in one form or another,                                               bly provide much better
           it is always better to decide whether one requires insurance or not. One should assess the probabil-                             return than investing in a
           ity of an event and its financial impact before going for a policy. The financial damage may be sig-                             ULIP.
           nificant if an event takes place frequently. The cover needed for it would be high and the premium
           required would be higher. The premium charged by an insurer would be low, if the event occurs infre-                                                              Insurance and tax matters : The contributions towards life insur-
           quently. In case of life insurance, though death is a certainty, the financial impact of death varies with the                                                    ance premium of up to Rs.1 lakh is reduced from the total income under sec-
           age, income and the number of dependents etc.                                                                                                                     tion 80C. It is often seen that insurance agents exploit the urgent need to save
                                                                                                                                                                             tax and sell the policies which doesn't suit one's needs. Remember, tax saving
           Cover should be adequate :Merely having an insurance cover is not enough at all and one should ensure that                                                        should be secondary for choosing a cover and should not be the sole consider-
           the cover is adequate for him/her. Having too small a cover is pointless as it would not serve the purpose. Same thing                                            ation behind it. One shouldn't start thinking for insurance only in the last quar-
           goes with the health policies one buys. On the other hand, having too much insurance means wastage of money towards                                               ter of a fiscal year.
           payment of premium. There are certain techniques available which can help in estimation of the right quantum of insur-
           ance cover. One may take help of these techniques. The cover availed should be set like this that the insurance premiums
           do not eat into a huge part of one's income.

           66    MONEY MANTRA   16-31 December, 2010                                                                                                                                                                         16-31 December, 2010   MONEY MANTRA   67
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               DR MENON'S CLINIC
                                                                                                                                                                                                       tion is covered.
                                                                                                           GOALS                                    HOW TO
                                                                                                                                                           REACH                                      Check whether many day care procedures that do
                                                                                                                                                                                                      not require 24 hours hospitalisation are covered.
                                                                                                                                                                                                      Check whether the hospital within your vicinity
                                                                                                  Investment Plan                     Initial Observations:                                           forms a part of their empanelled list of hospitals of
                                                                                                  for Son FD                              It is said "Time heals the deepest of wounds" but sur-      the company.
                                                                                                                                           mounting the loss of a family member is not easy.          Before signing the dotted line understand what the
                                                                                                  Rs 5 Lakh                               Right now you need to exercise caution in managing
                                                                                                                                                                                                      policy covers and what is excluded from the cov-
                                                                                                                                          Let me share my views on the same.
                                                                                                                                                                                                   Funding Education:
                                                                                                                                      Funding For Parents:                                           As your child is young, start planning for his high-
                                                                                                                                         This comes first on list of goals. As of now your in-        er studies from now onwards.
                                                                                                                                         laws receive a monthly pension of Rs. 20,000 and            Fixed deposits help in shielding capital and do not
                                                                                                                                         have a bank balance of Rs. 10 lakhs.                         provide the much required capital appreciation.
                                                                                                                                         Their monthly requirement is Rs. 12,000. If we               You can divert this money into wealth creating
                                                                                                  Health Plan For                        assume an inflation rate of 6% then,                         instruments for better growth.
                                                                                                  Mother-in-law                           5 years down the line they would need Rs. 16,060
                                                                                                                                          per month.
                                                                                                                                                                                                     Deploy this money in a fund growing @ 12% for
                                                                                                                                                                                                      the next 20 years. The same would most likely

                  Keep In Mind                                                                    Rs 5 lakh                             10 years down the line they would need Rs. 21,500
                                                                                                                                         per month.
                                                                                                                                         15 years down the line they would need Rs. 28,750
                                                                                                                                                                                                      yield Rs. 48 lakhs by the end of 20 years.

               Inflation, Liquidity                                                                                                      per month.
                                                                                                                                         20 years down the line they would need Rs. 38,500
                                                                                                                                         per month.
                                                                                                                                                                                                         ING LOO

                                                                                                                                         Inflation and liquidity (two crucial factors) should be    You also need to take a medical cover to the extent
           Dear sir,                                  mature in 2013. She is now left with Rs
                I am a 27-year-old woman. I got mar- 5 lakhs of which she plans to spend Rs                                              kept in mind before deploying money in any instru-          of Rs. 5 lakhs to cover yourself from any abrupt
           ried two years back. I was blessed with 1 lakh on my marriage. Of the Rs 20,000,                                              ment.                                                       medical exigencies.
           a son in October last year. Life was going the monthly expenditure is 8,000 and        Health Plan For                        If we assume the monthly pension to be steady at           It is recommended to go for floater plan which would
           very smooth till one day my husband met Rs 4000 goes in for medicines of my                                                   Rs. 20,000, then in the tenth year we would need
           with a fatal accident in January. He father-in-law, who is a heart patient. My         Father-in-law                          Rs. 21,500 pm (as per the above inflated figures)
                                                                                                                                                                                                     cover you and your son in one policy.
                                                                                                                                                                                                    It is further suggested to have an insurance cover to
           remained in coma for four months and in-laws save Rs 8,000 which they put
           then passed away in May.                   in a savings account. They have not taken
                 My husband - Sumit -- was the only any health cover. I want them to take a
                                                                                                  Rs 5 lakh                              i.e. an additional Rs 1,500 to meet the mundane
                                                                                                                                                                                                     the extent of Rs. 50 lakhs. Stick to term assurance
                                                                                                                                                                                                     plans with highest tenure. Insurance requirements
           son of his parents. To come over the health plan of Rs 5 lakh each. The two-                                                  Out of the existing Rs. 10 lakhs in savings account         need to be reviewed once you settle down in life.
           grief, I joined a school after his death. bedroom house, worth Rs 60 lakhs, in                                                keep aside Rs. 5 lakhs for emergency needs. This            Other financial goals like your retirement, child's
           My father in-law retired in 2008. My which we live is owned by my father-                                                     money can be parked in a fund growing @ 8% p.a.             marriage are pending and the same can be initiat-
           mother-in-law too took VRS while in-law. My in-laws have in their sav-                                                        The rest Rs. 5 lakhs can be parked in a fund grow-
           Sumit's treatment was going on. She was ings account Rs 10 lakhs. Where should                                                                                                            ed once you settle down.
                                                                                                                                         ing @ 14% p.a. for the next 10 years.
           working with a PSU bank. For the last they invest this amount so that it reaps
                                                                                                                                         Both these funds in next 10 years will most likely
           one year my in-laws have been forcing them maximum benefits to take care of
                                                                                                                                         generate approximately Rs. 29 lakhs. This kitty if
           me for a second marriage and the fami- them in their old age? I also want to men-                                                                                                                      HOT
           ly members have decided to marry me tion that my in-laws are firm that the                                                    grown at 10% p.a. will most likely meet the monthly           SNAPS
           off to my husband's cousin with my con- money they will get from Sumit's office                                               requirement of your in-laws for the next 10 years
           sent. The marriage is due for February will be given to me. That amount would                                                 (i.e. from year 2020 to 2030). These funds would be          Ponder over the above strategies and invest in
           27, next year.                             be around Rs 8 lakhs and would be given                                            over and above the monthly pension amount.                   instruments which beat inflation and at the same
                Before I start a new life, I want to by March-end. Also, which is the best                                                                                                            time are liquid.
           ensure that my in-laws don't face any place to deploy the FD money of my                Ms Kripa, 27 went through a        Funding Medical Needs:                                          Create a contingency fund and review the plan
           hardships after I am gone. Sumit's par- son after it matures in 2013? Give me           lot of trauma after her husband       Medical insurance is critical. It would be ideal to          periodically.
           ent spent a lot of money on Sumit's treat- solutions to my queries. Hope they           passed way. Her in-laws have
           ment. My father-in-law spent all his would help me unburden myself.                                                           have medical cover of Rs. 5 lakhs for both.
                                                                                                   been the pillar of strength dur-
           retirement money (Rs 15 lakh) and his           Regards,                                                                      Following things to check before you take a medical        Satish Menon is a Financial Planner & con-
                                                                                                   ing the tough times. Kripa con-                                                                           sultant with Transcend Consulting
           LIC amount (Rs 5 lakh) and mother in-           Kripa Sharma                                                                  cover;
                                                                                                   templates to settle down again                                                                                                   (I) Pvt. Ltd.
           law (58) too spent 5 lakhs from her VRS Income per month           Rs 20,000                                                  The entry age is restricted to 60 years in most com-                    If like Kripa, you would also
           amount. My father-in-law (62) draws a                                                   but before taking this step she
                                                                                                                                         panies.                                                      like to share your financial story with
           pension of Rs 20,000. My mother-in-law Bank balance                Rs 6 lakhs           wants to ensure that her in-
                                                                                                                                         Check whether the policy has a cashless facility.               us and have a plan made by Satish
           gave Rs 5 lakhs to her grandson in the House                       Rs 60 lakhs          laws are well shielded from all                                                                   Menon, do write to us at
                                                                                                   sides.                                Check whether medical illness during the 30 days
           form of a three-year FD which will                                                                                                                                                                    
                                                                                                                                         prior to hospitalisation and 60 days post hospitalisa-
           68   MONEY MANTRA   16-31 December, 2010                                                                                                                                                                          16-31 December, 2010   MONEY MANTRA   69
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           70   MONEY MANTRA   16-31 December, 2010     16-31 December, 2010   MONEY MANTRA   71
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                                                                                                                                               STOCK MARKET
           MOVIE ON
                                                                                                                                               & Mutual Fund
           MEMORY CARD                                                                                                                             DATA
                                                                                                                                                        Dividends or scrip quot-
                Shilpy Arora                            ry of mobile phones ranges somewhere       quality of picture is as good as in a                ing cum dividend
                                                        between 120-160 MB. Micro SDs,             DVD player."
                           ith the arrival of micro     launched in the country, have 2GB to           T-series has also launched a Mobile              Bonus or scrip quoting

           W               SD that allows you to
                           save a full length movie
                           on a 1cm chip, DVDs and
           CDs have become things of past. Movie
           procurement has long been limited to
                                                        4GB memory space which is enough
                                                        to save a Bollywood movie. Some cards
                                                        also work in DVD players and com-
                                                            Another advantage of micro SD is
                                                                                                   Handset model T-650 which has been
                                                                                                   bundled with external memory device,
                                                                                                   Micro SD. This handset has expand-
                                                                                                   able memory of up to 8GB with MP3
                                                                                                   and MP4 music and video support,
                                                                                                                                                        cum bonus
                                                                                                                                                        Rights or scrip quoting
                                                                                                                                                        cum rights
           cassettes but emergence of CDs and           that it is absolutely handy. It is very    JAVA, Bluetooth and FM.                              IPO in 2009-2010
           DVDs made the movie world complete-          light in weight and 1 cm in length.            The price of micro SD cards varies
           ly digital. But the influx of micro Secure   What you need to do is to put this mem-    from company to company and movie                    Indices Performance
           Disk (SD) is now going to make the           ory stick in your cell phone and watch     to movie. By and large, its cost is
           world of entertainment even more com-        movie anywhere. It also illuminates the    around Rs.500 to Rs.600. A CD or a
                                                                                                                                                        Bulk Deals
           pact and handy.                              need to change CDs and DVDs since          DVD costs just half that of the price                Sensex based compa-
               In India, T-series is the first com-     a large amount of data can be stored       of Micro SD. Some dealers, however,
           pany to launch memory SDs for movies.        on this small chip. Moreover, you don't    feel that if a customer can spend
                                                                                                                                                        nies P/E
           Talking to Money Mantra, Vice                need Bluetooth and the Internet as it      Rs.5,000 on a mobile handset, spend-                 World Market Indices
           President of Int'l Bzns, Publishing &        doesn't involve any downloads.             ing Rs. 500 on a micro SD is not a big
           Digital Content, T-Series Neeraj Kalyan          "Micro SD has revolutionised the       deal considering its advantages over                 Performance
           says, "As mobile handsets are becom-         world of movie media. With my Micro        CDs and DVDs.                                        The Best & The Worst
           ing the primary entertainment hub in         SDs, I can even watch movie in bed             In India, there are nearly 40 crore
           India, the delivery of music and videos      since my parents don't allow me to play    mobile phone users and over 50 per                   Performance A,B & S
           is undergoing a paradigm shift. So,          CD player and television at night. It      cent users are believed to change cell               group
           micro SDs as means of movie procure-         is an awesome device." says a cus-         phones frequently. It is expected to
           ment will become a hit in the Indian         tomer Vicky Panwar.                        spur the market of micro SD.                         Volume gainers
           market."                                         Like in the case of CDs and DVDs,      Further, the emergence of new gener-                 India's top 50 compa-
               Like DVDs and CDs, micro SDs are         the prime concern of the customer is       ation smart phones that will hit the mar-
           readily available in the market. The         the print quality. As Kalyan puts it, "A   ket next year would offer features of                nies based on market
           major advantage of micro SD is that it       Micro SD offers a good quality pic-        both iPhone and a netbook that will                  cap
           lets you watch a full length movie in        ture in a normal handset while in a        augment the growth of movies on
           your mobile. Usually, internal memo-         Smartphone such as Nokia N8, the           micro SD.                                            BSE 500 Companies
           72   MONEY MANTRA   16-31 December, 2010                                                                                                       16-30 November, 2010   MONEY MANTRA   71

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