15-Jan_2011 - Money Mantra English Magazine by niusheng11


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                                                                                                                                  EDITOR’S NOTE

                                                              chose to
           Year : 02
                                  Issue : 29
                                                              marrry ...
        EDITOR                                                He happens to be my college friend. During University days, his looks were enough
        AWANISH K MISHRA                                      to deter somebody from coming close to him. His oil-soaked hair and old fash-
                                                              ioned kurta-pyjama image made him all the more repulsive. But God had made
        EDITORIAL TEAM                                        up for it by blessing him with a super brain. While everybody else avoided him,
        Kanchan Dass, Senior Sub editor                       she died for him. She was Miss College, the most sought after in campus. We failed
        Shilpy Arora, Senior Sub editor cum correspondent     to understand what she found so appealing in him. Some days back, I happened
        Alok Dwivedi, Sub Editor cum correspondent            to meet this friend again. He is now a civil servant posted in South Block (the build-
        Harish Kumar, Sub Editor cum correspondent
        Renu Baliyan, Sub Editor cum correspondent
                                                              ing which houses Prime Minister's office). He not only got the most coveted
                                                              civil services job, but also, to my shock, is the proud husband of then Miss College.
                                                              Getting impressed with my clout as editor, he invited me over tea at his resi-
        GRAPHIC DESIGNER                                      dence. I immediately accepted the offer as it gave me an opportunity to meet his
        Harikrishan Pal                                       wife. And I found her to be more beautiful than what she used to be in her col-
        Arun Sharma
                                                              lege days. The curiosity over what attracted her to my friend had not died down
        PHOTO                                                 over the years. Unable to hide my inquisitiveness, I finally asked her. She took
        Ravi Girota                                           very little time to answer as if she had become habitual to the question. The
                                                              pretty lady told me that she always vied for a company having an impeccable record
        CIRCULATION                                           of self-discipline, integrity and stability and that’s is the reason why my friend
        K K Pandey                                            earned an edge over others.
                                                                  What she told me kept revolving in my head and one day when I was going
        ADVERTISEMENT                                         through stock market updates, I realized that the same thing applied to stocks as
        Subhash Chaudhary                                     well. There may be companies making huge profits, have ace brand ambassa-
                                                              dors and mammoth PR team. But lack of corporate governance mars their
        HEAD OFFICE                                           prospects. A fine example is of Satyam. Recently, Money Matters scrips smashed
        C- 125, Sector- 19                                    when their corporate malpractice came to the fore. You must have observed that
        Uttar Pradesh                                         whenever any corporate malpractice surfaces demolishing the stock market, scrips
        Email: editor.moneymantra@gmail.com                   like Infosys, SBI and TATA lend support to the index. This is due to their better
        Phone: 0120- 4710700                                  corporate governance system. Corporate governance plays a decisive role when
        Fax: 0120-4710728                                     it comes to scrip selection by FIIs. A company with good corporate governance
        www. moneymantra.co.in
                                                              record may give you comparatively less return but won't rob you of your wealth,
                                                              the way Satyam and Money Matters did. Therefore, the New Year advice from
                                                              Money Mantra is 'never invest in a stock with poor corporate governance record'.
                                                              And we have taken this into account while suggesting you a portfolio for the
                                                              year 2011.
                                                                  We approached the top brokers and analysts of stock market and requested
                                                              them to make a portfolio for our readers. The portfolios have a time horizon of
        Published by Jyoti Narain for                         one year. The scrips selected in the portfolio have well defined entry and exit points.
        Pearls News Network Pvt. Ltd.from C-125,              Their weightage in the portfolio is also defined. The risk profile of the portfolio
        Sector- 19, Noida,
                                                              has been kept at moderate level. You may choose any of the portfolios as per
        Uttar Pradesh and Printed at MP Printers,
        B- 220, Phase- II, Noida- 201305
                                                              your choice. If you wish to follow more than one portfolio, you may divide your
                                                              money among between them. Exercise caution while following weightage of a
        Disclaimer: Money Mantra is a personal finance
        magazine and the financial solutions provided by
                                                                                               particular scrip, its entry and exit point and stop loss,
        different experts in this magazine are only sug-                                       if any. We'll be tracking the performance of each port-
        gestive in nature. Readers should take advice                                          folio in every issue. Let us see, which of our ana-
        from their financial advisors before taking a final                                    lysts brings more wealth to you. Happy investing.
        call. In no case, Money Mantra team or manage-
        ment can be held responsible for financial loss
                                                                                                    Wishing you all a prosperous New Year,
        caused to readers.
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        CONTENTS                                                    News Track
                                                                    08   AMC’s hiding their AUM
        January 1-15, 2011                                          08   SEBI wants fewer NFOs
          Volume 29                                                 09   RBI cautions against Money Mule
                                                                    09   Facebook & Twitter on SEBI Radar
                                                                         Drivers to get third party cover
              ON THE COVER                                          10
                                                                    10   Hold insurance policies in Demat
                                                                    11   Cost for NPS is set to reduce

                  PORTFOLIO 2011
              How should a winning portfolio look like? It should
              have a maximum of 10-12 stocks, risk profile should
              be moderate to low and return should be more than
              average. What if we try to make it for you with one
              year horizon in mind? That’s what we have done.       11   UID sufficient for a bank account
              Top brokers and analysts have prepared a tailor-      12   Group policies likely for agents
              made portfolio for you. We call it portfolio 2011.    12   SBI One India Fund on NSE
                                                                    13   SBI to offer matrimony service
                                                                    13   Satellite Banks in Jharkhand

                                                                     Wealth Management
                                                                     64 Saving money is not as
                                                                     difficult as you think
                                                                     It is a human tendency to get attracted to
                                                                     the wooing boards reading buy one get
                                                                     one free offers.

                                                                     66 Start investing today
                                                                     itself : Raghvendra, a project manag-
                                                                     er with a mid-sized software company,
                                                                     is planning to quit his job. He visits
                                                                     financial planner to get a financial plan.

                                                                     67 Make a contingency fund
                                                   36                Varun, a 35 years old software engineer,
                                                                     resides in Varanasi. He is married and
                                                                     having two kids. The family has no pro-
                                                                     vision for medical insurance. What to
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              Stock & Commodity Banking
              18 Rally in Gold may con-                  52 Beware of bank charges
                                                         Many consumers are not aware of a
              tinue after consolidation                  host of services that are chargeable like
              Benefiting from global economic
                                                         cash withdrawal, SMS alert and money
              uncertainties, precious metals are like-
                                                         transfer etc.
              ly to continue to rally after

              21 Market is range bound
              between 5800 and 6300
                                                         Mutual fund
              The Nifty has got stuck in a very tight    56 A closer look at capital
              range of 5750-6000. At present, Nifty      protection schemes
              finds its crucial support at 5730 level,
              while resistance is seen at 6120.
                                                         Capital protection schemes seek to
                                                         ensure that the investors get back at
                                                                                                      Consumer Affairs
                                                         least the capital that they have invested.
                                                                                                      62 All that glitters is not
                                                                                                      pure gold
                                                         Insurance                                    Unfortunately, hallmarking on yellow
                                                                                                      metal jewellery is not mandatory in the
                                                         58 Keep reviewing insur-
                                                         ance cover
              Scrips on Radar                            One needs to review his/her insurance        Special stories
                                                         cover after taking any kind of loan com-
                                                         mitment or getting married.                  14 Merry time for technical
              23 Kaveri Seed                                                                          analysts
              The company is well poised to contin-                                                   After poaching stalwarts of rival
              ue its growth trajectory on the back-                                                   camps, ET Now is using these faces in
              drop of increased capacity and higher                                                   its brand campaign.
              R&D focus.

              24 Yes Bank                                                                             68 Dealing with a difficult
              Yes bank is continuously posting stu-                                                   boss
              pendous growth and has emerged as                                                       In today’s life, having a supportive and
              one of the fastest growing banks of                                                     caring boss is nothing less than a bless-
              the country.                                                                            ing in disguise.

              25 Wipro
              Wipro has been strengthening its
              domestic presence with large deal
              wins from government as well as sub-
              stantial contracts bagged from telecom

              26 United Phosphorus
              At current levels, post the recent cor-
              rection the stock is trading at attrac-
              tive valuations of 10.1x FY2012E
                                                         60 Tracking high value
              27 JSW Steel                               financial transactions
              JSW Steel is acquiring 41.3% equity        One must know that income tax depart-
              in Ispat Industries and it will make       ment tracks all high value financial
              JSW the largest steel producer in          transactions.
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        READER                    Mail

                                                                       “          I have been a regular reader of Money
                                                                                  Mantra since its first issue. Of late, I
                                                                         have been finding some difficulty in getting
                                                                         the magazine from newsstands. My hawker
                                                                         says that the magazine is in short supply. Pls
                                                                         don’t suggest me to subscribe to the maga-
                                                                         zine, because being a retired person, I find it
                                                                         entertaining to go to the market place to buy
                                                                         one. It gives me an opportunity to have a look
                                                                         at other magazines as well. I like the Brokers’
                                                                         Picks section of the magazine, although I
                                                                         don’t invest in stock market. I observe the
                                                                         market and try to tally it with your picks.
                                                                         Picks from Rajesh Jain and Ashish Kapur has
                                                                         been doing quite well.
                                                                                                     - P. Vaidyanathan, Chennai

                  Take Tough Action                                                               limit of Rs.10000) eats into the
                      Refer Cartoon Mantra-Chair                                                  capital. In the forthcoming Direct
                  Vying Commissioner (CVC)                                                        Tax Code this point must be suit-
                  (MM December 31, 2010). The                                                     ably covered.
                  Supreme Court has rightly                                                           -Mahesh Kumar, New Delhi
                  objected to Mr. PJ Thomas’
                  appointment in office as the
                  Central Vigilance Commissioner
                                                                                                  Best is Fund Baba
                  as he was named as one of the                                                   Refer to cover story “Victors and
                  officials and politicians involved                                              Laggards” (MM December 16-31,
                  in the palm oil import scandal.                                                 2010). I like the cover page as well
                  There is a charge sheet against                                                 as the cover story. It was all the
                  him and he is an accused in a                                                   more interesting because the story
                  case. If a person is accused in a                                               covered not only the stock mar-
                  criminal case, how he will func-        Tedious TDS                             ket, but also mutual fund and insur-
                  tion as the CVC? To clean the               Refer to “Invest in FD, Save        ance. ‘Market behaviour during
                  government, the PM should sack          Tax” (MM December 16-31,                Christmas’ was an interesting and
                  all tainted ministers. It is high       2010). Tax Deduction at Source          timely reading. Fund Baba Bachat
                  time to make suitable necessary         (TDS) limits are not commensu-          Singh cartoon corner is very
                  amendments                      to      rate with inflation index of the        informative. Subhash Lakhotia’s
                  Constitution/laws so that if any        country - the limits for TDS are not    column needs to be re-read some-
                  person is chargesheeted or con-         increased to make it realistic with     times because of sheer repetition.
                  victed or sentenced to jail under       inflation index. These limits were      I have been listening to him on dif-
                  trial under any court of law, then      fixed quite a few years ago. It         ferent TV channels. He explains so
                  that person (including his or her       should be enhanced two to three         nicely. Sometimes he repeats his
                  spouse or other near relatives          times of the present limits and must    inteapretations in order to elabo-
                  etc.) should not be allowed to          be linked directly to index of infla-   rate his point. But this repetition
                  hold any public office.                 tion in future. Bank fixed deposits     must be avoided in write ups.
                       -M Kumar, New Delhi                are most liquid but TDS (present                         -Ketan, by e-mail

                                                            SEND YOUR LETTERS & EMAIL:
                                               Address: Editror, Money Mantra C- 125, Sector- 19 Noida
                                                        Email: editor.moneymantra@gmail.com

              6    MONEY MANTRA   1-15 January, 2011
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                                                                                                                  Cartoon Mantra
                                                                          Economic Intelligence in demand
                                                                               Almost all the investigation wings of the government
                                                                                are grappling with economic offences. CBI is busy
                                                                                     in grilling Niira Radia, Pradeep Baizal and oth-
                                                                                         ers to fix the gap of 1.75 lakh crore 2G scam.
                                                                                            It has the added burden of finding the cul-
                                                                                            prits of CWG scam as well. Intelligence
                                                                                         Bureau is grappling with stock price manip-
                                                                                         ulation in stock market. Central Economic
                                                                                             Intelligence Bureau is busy in gathering
                                                                                                 inputs on hawala movement and
                                                                                                  Enforcement Directorate is busy in
                                                                                                   cross border movement of kickbacks
                                                                                                   in different cases. Income tax
                                                                                                    department is busy in opening over-
                                                                                                    seas offices to bring back black
                                                                                                     money stashed overseas. This has
                                                                                                     given a sudden spurt in demand of
                                                                                                      neglected-till-date        Indian
                                                                                                          Economic Service Officers.
                                                                                                             It's high time to utilize
                                                                                                                 their expertise for
                                                                                                                  nation's sake.

               Mixed bag of feelings                                                           Maintaining secrecy
              UK Sinha's strong candidature for SEBI chief's post has led to cheers                Swiss Bank UBS is known for main-

                                                                                                                                                  Illustration: Rajkumar Singh
              among mutual fund CEO's, jeers among mutual fund investors and fears             taining secrecy of its customer's identity
              among UTI AMC officials. All of them have a reason. UK Sinha is sup-             and networth. Recently, it has asked its
              posed to be an industry friendly guy, who himself has been a sufferer of entry   officials to stand up to the reputation of
              load ban. The industry is expecting a partial roll back                          bank's unique selling point (USP). For that
              and has thrown a party at Goa to celebrate                                       purpose, the bank has asked its women
              it. Investors are jeering at the choice of UK                                    employees to wear 'skin colored' lingerie
              Sinha because of his industry leanings and                                       and not to wear skirts that are too tight
              submissive image. They suspect that Sinha                                        behind. Again, the undergarment must not
              may sacrifice their welfare in his bid to                                        be visible against clothing or spilling out
              favour the industry. Officials of UTI, who                                       of the clothing. The code also applies to
              has been appointed by UK Sinha on irra-                                          men employees who are required to wear
              tional salaries, fear that the new incum-                                        a straight-cut two button jacket and pants
              bent to the post may cut their remunera-                                         and not to wear ties that do not match the
              tion to size.                                                                    morphology of the face nor socks with car-
                                                                                               toon motifs. All employees are urged to
                                                                                               avoid smelling of strong scent, garlic,
              Onion cry shakes Raisina Hill                                                    onion and cigarette smoke, so that peo-
              Onion prices doubled in just one week. No asset class doubles so swiftly.        ple could sniff their presence.
              And this swift escalation has shaken the mandarins of Raisina Hill. None
              else than the Prime Minister came forward to console the onion aggrieved
              citizens. While the Prime Minister assured to arrest increas-
              ing onion prices immediately, his cabinet colleague Sharad
              Pawar didn't subscribe to his urgency. He told that
              people may have to wait for 'two-three' weeks
              to see onion at their dining table. He differed
              with Annad Sharma, Commerce Minister, as
              well. While Sharma felt that hoarders were
              behind the steep rise in onion prices, Pawar rea-
              soned out that it was due to heavy rains in
              Nashik region. Pawar sees no need to import
              onion. In fact, his ministry issued more than
              usual licences in Novemebr to facilitate onion
              export. Poor citizen don't know, whom to blame.

                                                                                                          1-15 January, 2011   MONEY MANTRA   7
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              News Track
              The tale of missing AUM
                       our of the 15 biggest domes-       several years, most AMCs have been                   Among the 10 biggest AMCs,

              F        tic mutual funds have stopped
                       making a crucial investor dis-
                       closure in their fact sheets
              uploaded on their websites, reported
              a leading financial daily. Reliance
                                                          providing monthly disclosures on
                                                          their own, partly forced by competi-
                                                          tion to ensure higher transparency.
                                                          Some AMCs provide the entire list
                                                          of securities their schemes own, while
                                                                                                           only five provided enhanced disclo-
                                                                                                           sure of the month-end market value of
                                                                                                           every holding. They were DSP
                                                                                                           Blackrock,       IDFC,       Franklin
                                                                                                           Templeton, LIC MF and Fidelity
              Capital MF and Birla Sun Life MF            some others give only the major hold-            India. The rest only gave the percent-
              have not made the disclosure from           ings and leave out details of small              age to net asset ratios of the securi-
              October 2010 onwards; ICICI                 holdings.                                        ties held in schemes.
              Prudential MF and Tata MF have done
              so from November. The other large
              mutual funds - HDFC MF, SBI MF,              CELEBRATING GOLD
              Franklin        Templeton         Asset
              Management (India), DSP Blackrock
              MF, IDFC MF, LIC MF, Sundaram
              MF, Religare MF, and Fidelity India
              MF -continue to provide the fact
              sheets on their websites.
                  The officials of mutual fund hous-
              es concerned are quoting an AMFI
              communication. On October 8 Amfi
              wrote to its members stating the deci-
              sion that "AMC wise average asset
              under management (AUM) (was) not
              to be displayed on the AMFI website
              on a monthly basis. As such, members
              are requested to discontinue upload-
              ing (this) …on the AMFI website
              from October 2010." But, no where
              did the AMFI note tell AMCs to stop
              the disclosure to investors. Fact sheets
              or other sections of a fund's website
              are the most accessed source of infor-
              mation by MF investors. Securities
                                                           Kannada film actor Jennifer Kotwal unveiling the Goldplus Nano jewellery car to celebrate 5000
              & Exchange Board of India regula-            year of Indian Jewellery in Bangalore.
              tions mandate six-monthly disclosure
              of mutual fund portfolios. For the past

              NEWS BRIEF
              SEBI wants fewer NFOs                      Say NO to over-leveraging                                   Investor complaint takes toll
              Market regulator, Securities and           SEBI has said that it would try to find ways                SEBI expelled five companies (Indo
              Exchange Board of India (SEBI), has        to impose restrictions on big companies                     American Credit Corporation,
              said that it is in favour of fewer         from getting excessively leveraged. "Big enti-              Kanel Oil & Export Industries,
              NFOs (new fund offers) by mutual           ties create big mess. Regulators must                       Kolar Biotech, Motorol Enterprise
              funds and called for a greater focus       explore ways to impose restrictions on big                  and Panjwani Packaging) and their
              on growing existing schemes. SEBI's        companies from getting excessively lever-                   directors from trading on stock
              Executive Director, K N                    aged so that there is no systemic failure,"                 markets wef Dec 16, 2010. Indo
              Vaidyanathan, has said that the reg-       SEBI Chairman C B Bhave said at a confer-                   American Credit Corporation has
              ulator was restraining mutual funds        ence. Regulators need to check whether                      been barred due to various com-
              from launching new fund offerings          companies are excessively leveraged, he                     plaints against it received from
              at random. Mutual funds were mis-          said, without elaborating. "If any sector is                about 85 investors whereas, Kanel
              using the new fund offer option to         over-leveraged for a long time, without                     Oil & Export Industries has been
              pay higher ommissions.                     doubt it will fail," he added.                              barred as 64 investor complaints
                                                                                                                     were pending against it.

              8    MONEY MANTRA   1-15 January, 2011
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              RBI cautions customers                                        THREE-IN-ONE ACCOUNT
              against ‘money-mule’
              The RBI has warned customers not to fall prey to lucra-
              tive offers coming on the web giving commissions for
              money transactions from their bank accounts. This
              way the customer unknowingly falls prey to financial
              crime known as money muling. The customer whose
              bank account is used is referred to as the 'money mule.'
              However, there have been cases where customers are
              also party to the crime on their free will. Of late, it has
              been brought to the notice of RBI that money mules
              can be used to launder the proceeds of fraud by crimi-
              nals who gain illegal access to deposit accounts by
              recruiting third parties. The third parties may be inno-
              cent or they could be complicit in the crimes. These
              money mules when caught get their accounts suspend-
              ed which leads to financial losses on the part of the bank.

              Central Bank infuses                                          Shailendra Bhandari, MD and CEO, ING Vysya Bank with Dinesh Thakkar,
                                                                            CMD, Angel Broking, signing the papers at the announcement of the strategic
              liquidity into system                                         tie-up to offer ING Vysya Bank customers a "three-in-one account" in Mumbai.

                   RBI has kept its repo and reverse repo rates, at
              which the central bank injects or drains liquidity,
              respectively, unchanged at 6.25% and 5.25% respec-            Government facilitates
              tively in its mid-quarter monetary policy to ease pres-
              sure on liquidity. The cash reserve ratio, the proportion
                                                                            PSU’s global aspirations
              of deposits that banks need to keep with RBI, was             The Department of Heavy Industry (DHI) has finalised a policy
              also kept unchanged at 6%. The central bank                   to facilitate acquisitions in foreign countries by maharatna/navrat-
              announced a buyback of government bonds to increase           na giants and is all set to seek the Union Cabinet's approval for
              the availability of cash in the system. The statutory liq-    the same. DHI has finalised a 'Policy for Acquisition of Raw Material
              uidity ratio (SLR), or the proportion of deposits that        Assets by Central Public Sector Enterprises (CPSEs).' The proposed
              banks need to invest in government bonds, has been            policy would be applicable by CPSEs in agriculture, mining, man-
              cut by one percentage point to 24% by RBI, which              ufacturing and power sectors. In a note to the Cabinet Committee
              will also buy back such paper worth Rs.48,000 crore           of Economic Affairs (CCEA), the DHI has sought enhancing acqui-
              in the next one month, freeing up cash. RBI has already       sition powers of maharatna CPSEs from Rs 5,000 crore, subject
              allowed banks to keep their SLR holdings at 23%               to a ceiling of 15 per cent to 25 per cent of the net worth. It has
              instead of the currently mandatory 25%. Banks have            also proposed that the acquisition powers of navratna CPSEs be
              been allowed to do so until 28 January and use the            increased from Rs 1,000 crore in a single project to Rs 3,000 crore,
              excess bonds as collateral for borrowing from RBI.            subject to a ceiling of 25 per cent of the net worth of the firm.

              To check black money into MF SEBI to swoop on Facebook                                            Brokers will execute ASBA
              SEBI has said that individuals will be           SEBI is putting in place new software            SEBI is on its way to integrate
              included as client of special category in        tools that would analyse discussions on          brokers with online ASBA -
              the Prevention of Money Laundering Act           social networking platforms (Facebook,           Application Supported by
              (PMLA). The norms, SEBI says, exist for          Twitter etc.) in order to keep tab on            Blocked Amount - a software
              politically exposed persons (PEPs),              unfounded tips and stock price manipu-           provided by stock exchanges.
              which include heads of states, bureau-           lation. It will assist the regulator in          The exchanges would provide
              crats, senior politicians, officers of gov-      analysis of traditional social neworks as        stock brokers access to the
              ernment, judiciary, military as well as          well. The regulator aims to utilise this         online ASBA mechanism,
              public sector units. The guidelines are a        software for analysis of data received           wherein brokers would be able
              part of the 'know your client' (KYC)             from stock exchanges, depositories,              to key in details like the demat
              process and will be applicable to all            banks etc in connection with its investi-        account number, the depository
              securities market intermediaries from 1          gations. This would be integrated with           participant ID, the bank account
              Jan 2011. This is being done in order            SEBI's Data Warehousing and Business             number, the permanent account
              to track black money into MF.                    Intelligence System.                             number and the bid details.

                                                                                                                     1-15 January, 2011   MONEY MANTRA   9
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              News Track
                      WISDOM MANTRA
                    Banks won't give
                                                     Share the shareholding
                                                               he Securities and Exchange
                     you loan if your
                    take home is less
                   than 35% of gross
                                                     T         Board of India (SEBI) has made
                                                               amendments to the equity listing
                                                               agreement of publicly listed com-
                                                     panies. A company, after a public issue,
                                                     will have to make public details of its
                                                                                                       INVOKING TRANSPARENCY
                                                                                                      1. Shareholding to be disclosed before
                                                                                                      2. Shareholding pattern has to refiled, if
                                                                                                         there is more than 2% rejig to paid
                                                                                                         up capital.
                                                     shareholding a day prior to its listing. It
                                                     added that the bourses should upload the         3. Companies must maintain a "func-
                                                     same on their websites before the shares of         tional website" with updated informa-
                                                     the company are listed.
                                                         Refile shareholding pattern: SEBI            4. Agreements with media firms must
                                                     has said that any listed company whose              be published on companies' web
                                                     capital restructuring makes a change of
                                                     more than two per cent to its paid-up share      5.Pre-announced fixed pay date for
                                                     capital, will have to file its revised share-      payment of dividends and credit of
                                                                                                        bonus shares.
                                                     holding with the stock exchanges within
                                                     ten days from the date of allotment of the      SEBI has said that companies can issue
                                                     shares that constituted the restructuring.      shares through prospectus (primary mar-
                                                     It added that all listed companies should       ket), offer shares for sale by its promot-
                     There is no cause               maintain a "functional website" with all        ers or by sale of shares by promoters
                                                     relevant updated information. SEBI has          through the secondary market. This is just
               for panic on the market               also mandated that those corporates which       to align the Listing Agreement with the
               reaction ...You should                have agreements with media companies            new changes to Securities Contracts
               remember that at this time            have to disclose such details on their web      (Regulations) Rules.
               of the year, FIIs withdraw            sites and also to the stock exchanges.              Unclaimed shares: SEBI has mandat-
               money because of the year-                Date of dividend: To help investors         ed uniform procedure for dealing with
               ending as many of them                manage their cash and securities flow,          unclaimed shares (both demat and in phys-
               have a system of closing              companies will now have a pre-announced         ical form). If there is no response to three
               with the calender year.               fixed pay date for payment of dividends         reminders by a registrar regarding
                                                     and credit of bonus shares.                     unclaimed shares, the shares shall go into
               PRANAB MUKHERJEE,                         Companies with depository receipt:          the Unclaimed Suspense account. The
               FINANCE MINISTER OF INDIA             From now on, those companies issuing            issuer company shall dematerialise the
               reacting to panic situation in        depository receipts will have to further        shares held in this account with one of
               stock market due to alleged           segregate the details of the shares held by     the depository participants. All benefits
               leakage of IB report.                 custodians into 'promoter/promoter group'       accruing on such shares shall be credited
                                                     and 'public'.                                   to this account. The voting rights will
                                                         In order for the listed companies to        remain frozen till the rightful owner claims
                                                     meet the minimum public shareholding,           the shares.

          NEWS BRIEF
              Third Party Insurance for                   IRDA to set up Investor                      Hold your insurance policies
              drivers as well                             Protection Fund                              in Demat form
              The drivers of commercial vehicles          IRDA is contemplating to set up an           Policyholders will be able to hold their
              may soon get third party liability          investor protection fund. The fund will      life insurance and other policies in
              cover. This is one of the various           work to protect the interests of policy-     demat form, just like company
              aspects to be examined by a panel           holders and spread awareness about           shares, IPO allotments and mutual
              headed by Mr M Ramaprasad,                  insurance.The initial corpus would be        fund units. IRDA is awaiting the pro-
              Member (Non-life), set up by IRDA on        around Rs 100 crore. The regulator           posal of Life Insurance Council in this
              third party liability cover. The commit-    would set up the fund after its board,       respect. Typically, a company incurs
              tee, which would submit its report in       meeting on December 28, 2010                 (a cost of) Rs 20 per policy, merely as
              three months, would also study the          approves the proposal. Unclaimed             paperwork and distribution costs.
              pricing mechanism to provide the            policies, which form a part of the mis-      Fifty million policy sales cost nearly
              necessary adequacy and reasonable-          cellaneous income of insurance com-          Rs 100 crore to the industry. This
              ness of third party insurance cover.        panies, will go into this fund.              move may lower the cost of policy.
          10     MONEY MANTRA   1-15 January, 2011
EP 3-17.qxd     12/25/2010        6:50 PM       Page 11

              NPS may go cheaper Axis Bank joins m-
              The transaction cost for the New Pension banking league
              Scheme (NPS) are set to be reduced. The          More and more banks are going for m-
              central record keeping agency for the            banking. Axis bank is the latest entrant in
              scheme -NSDL has agreed to reduce its            this league. It has signed an agreement with
              charges by nearly 15 per cent to Rs 240          Idea for the same. According to it, Idea will
              per year. The NSDL charges an annual             act as a business correspondent of Axis
              fee of Rs 280 per year at the moment.            Bank and offer financial products and serv-
              While the government bears this charge           ices through its retail outlets. As of now,
              for civil servants subscribing to the            seven banks including HDFC , ICICI and
              scheme, private individuals have to pay          SBI have gone live with the system. Seven
              the cost from their own pockets. For             more banks are in the process of activat-
              last few months, NPS has been on a drive         ing the service and 22 others are expected
              to lower the cost of NPS in order to max-        to join the network soon. As a first initia-                            Inflation
              imise its yield. Recently, two web por-          tive, Axis Bank and Idea will start with a                            remains a
              tals started offering this product online        remittance pilot between Dharavi in                           cause for serious
              as well.                                         Mumbai and Allahabad in UP.
                                                                                                                        concern in our coun-
              AWARD FOR EXCELLENCE                                                                                         try. We have made
                                                                                                                        all the efforts to con-
                                                                                                                        tain inflation and we
                                                                                                                           will continue to do
                                                                                                                            so. In recent days,
                                                                                                                          the rate of inflation
                                                                                                                            has come down to
                                                                                                                        7.5%. We expect this
                                                                                                                           downward trend to
                                                                                                                             continue and the
                                                                                                                            rate of inflation to
                                                                                                                              stabilise around
                                                                                                                         5.5% by next March.
                                                                                                                                 DR MANMOHAN SINGH
                                                                                                                              PRIME MINISTER OF INDIA
              Union Finance Minister Pranab Mukherjee presenting the 10th ICSI National Award for Excellence in           said in New Delhi on 2oth Dec 2010.
              Corporate Governance 2010 to Dr. Reddy's Laboratories Limited & Larsen & Toubro Limited at a
              function in New Delhi.

              UID will be sufficient to open                   SEBI’s NO to ‘Dark Pools’                          Dhanlaxmi with Doha Bank
              a bank Account                                   SEBI has said that "dark pools" can-               Dhanlaxmi Bank has entered into an
              Unique Identification Number (UID)               not be permitted in India for now as               agreement with Doha Bank, the
              will be sufficient enough to open a              there was no transparency in such                  largest private commercial bank in the
              bank account. A notification issued by           activities. J.N. gupta, ED, SEBI, said             State of Qatar, for online remittance of
              the finance ministry has recognised              that liquidity in Indian stock market is           funds. Using this service, NRI cus-
              the Aadhaar number as an "officially             not so high. If SEBI allows dark pools             tomers will be able to transfer money
              valid document" to satisfy the Know              to operate, then the bigger deals that             from any of Doha Bank's branches in
              Your Customer (KYC) norms for open-              happen in stock exchanges will go to               Qatar or via its internet banking plat-
              ing bank accounts. The new forms for             these dark pools. This will make price             form to designated beneficiaries
              opening an account will have a col-              discovery very difficult. Dark pool liq-           accounts in any of Dhanlaxmi Bank's
              umn for writing in the 12-digit exclu-           uidity refers to the trading volume                274 branches in India. They will be
              sive unique identification number                created by institutional orders that               able to remit funds to beneficiaries
              'Aadhaar'.                                       are unavailable to the public.                     having accounts with other banks.

                                                                                                                        1-15 January, 2011   MONEY MANTRA   11
EP 3-17.qxd        12/25/2010      6:50 PM       Page 12

              Farm Fresh
              Realty emerges as most
              preferred long term investment
                           ccording to a nationwide survey conducted by

              A            ASSOCHAM , 65% of the working individuals
                           in urban India prefer to invest their hard-earned
                           money in real estate for long term as on one hand
              it guarantees them higher future returns and on the other it
              helps them stay off other investment options involving more
                                                                                    Real Estate is precious than Gold

                                                                                     Invest in real Estate

              risk like stock market, equity, mutual fund, gold etc. In the          Invest in Gold
              survey 'Current Investment Patterns in working Urban                   Invest in FD,
                                                                                     Stocks and Bond
              Indians', almost 1500 directors, officers, executives, teach-
              ers, professionals in PSUs and MNCs and self-employed                                                             20%
              traders, lawyers, doctors, financial experts etc. were inter-
              viewed by the ASSOCHAM representatives with whom they
              shared their views on investment options to save for the
              rainy day.
                   While many of them opined that investing in gold, NSCs,         Hyderabad, Bangalore etc. Of the remaining, 20 per cent
              FDs etc. is passé and represents 'old school' of investment          preferred to stick to investing in gold considering it a safe
              concepts, exposure in real estate and mutual funds, life insur-      and a trusted store of value in possession, encashable anytime
              ance etc. finds favor among younger generation and are con-          and with its sheen not likely to diminish anytime soon in
              sidered to be an efficient and effective investment option.          near future.
              Around 975 of the participants from 10 cities namely, Delhi,              Whereas rest of the respondents felt that sectors like mutu-
              Mumbai, Chennai, Kolkata, Ahemdabad, Chandigarh,                     al fund, various insurance products with an eye on social secu-
              Lucknow, Hyderabad, Pune, Jaipur approved of investing               rity, less amount required and other traditional investment
              in real estate and felt that Indian real estate has huge prospects   instruments are safer and likely to give higher returns. This
              in sectors like commercial, hospitality, retail, manufactur-         is because gold does not provide high returns and preserves
              ing, healthcare.                                                     the capital but does nothing to grow it besides, storage and
                   Of the 65% of those interested in investing in real estate,     safekeeping against theft, carrying and transporting gold is
              about 40 per cent prefer to invest in properties in tier II &        risky thus, people prefer real estate investment to investing
              tier III cities, as price in tier 1 cities are much beyond their     in gold. ASSOCHAM data reveals that young working adults
              means/reach. Affordable and easy availability of land cou-           are decidedly jittery about investing in stocks, bonds.
              pled with better connectivity, infrastructure and other basic        Considering the ferocious swings in stock prices and a sag-
              facilities are the prime reasons cited towards this trend.           ging economy, the younger generation do not actively reck-
              Around 25 per cent of the respondents preferred investing            on stock investing as the appropriate use of their money as
              in tier I metro cities like Delhi, Mumbai, Kolkata, Chennai,         they perceive of the stock market as way too volatile.

              NEWS BRIEF
              NO to trade credit insurance                  Group insurance to insurers                      SBI MF on stock exchange
              IRDA has prohibited companies from            Life insurers will be allowed to offer           SBI Mutual Fund has announced that
              offering trade credit insurance policy        group insurance policies to their                units of SBI One India Fund and SBI
              product to banks and other lenders.           agents under a proposal to be                    Infrastructure Fund-Series I shall be
              Trade credit insurance means provid-          cleared by the industry regulator.               available for purchase/redemption
              ing cover to suppliers of goods and           Under the proposed structure, an                 through Mutual Fund Service System
              services against the risk of non-pay-         agent may be offered a health cover              (MFSS) of the National Stock
              ment by buyers. The regulator has             of up to Rs 2 lakh annually as a part            Exchange of India (NSE) and BSE
              asked insurers providing these prod-          of the group health insurance plan.              Stock Exchange Platform for
              ucts to assess the credit risk of any         The group term assurance plan is                 Allotment and Repurchase of Mutual
              buyers who contributes more than              also likely to offer a life cover of Rs 2-       Funds (BSE StAR MF System) of
              2% of the total turnover. Existing            3 lakh. All agents who have complet-             Bombay Stock Exchange (BSE) with
              policies may be continued.                    ed 5-10 years will get these covers.             effect from 20 December 2010.

              12    MONEY MANTRA   1-15 January, 2011
EP 3-17.qxd    12/25/2010      6:50 PM     Page 13

                 MARKET PERFORMANCE
                   Best Performers in group ‘A’ vs Nifty
                                  (from 09-12-2010 to 23-12-2010)

                                                                                                                       India should
                                                                                                                   get used to high
                                                                                                               energy prices. India
                                                                                                                 will not be able to
                                                                                                                   grow rapidly if it
                                                                                                                 does not adjust to
                                                                                                              high energy prices…
                                                                                                              If we are not adjust-
                                                                                                                   ing the prices of
              SBI to offer matrimony service                                                                   petroleum products
              There is yet another innovation from State Bank of India. It will offer match-                    in our country with
              making services to its NRI clients. Deputy Managing Director of the bank, Shiva                  global prices it only
              Kumar, said the bank has entered into tie-ups with various service providers to offer
              different services like payment of water tax, income tax, telephone bill, getting                  means we want to
              medicines or sending flowers to their dear ones and even matrimonial service.                    subsidise imported
              "We maintain an internal database of prospective grooms and brides for matri-                   petroleum products.
              monial services. Depending on the interest of the parents, matching will be done
              and names will be suggested," he said. He said the services will be available                  MONTEK SINGH AHLUWALIA
              24X7 across all branches and the Hyderabad office will act as hub of all activi-                DY CHAIRMAN, PLANNING
              ties. The NRI customer in need of any service would only need to call the facili-                         COMMISSION
              tation centre or send an email stating the account number and service required.                 said at a function in New Delhi on Dec
              The facilitation centre for the NRIs is part of the innovative services the bank                            16 in reply to a question on
                                                                                                                              recent petro price hike.
              has started offering. Earlier, the bank had started ''crorepati branch'' at Hyderabad.

              Deutsche Bank to exit CC                   Satellite Banks in Jharkhand                  India welcomes Chinese Bank
              Deutsche Bank India is exiting its         Reserve Bank of India Governor D              India and China have agreed to grant
              credit card business in the country.       Subbarao has said that RBI was con-           permission to each other's banks to
              The German bank has received close         sidering the proposal of satellite            open branches and representative
              to 11 bids. ICICI Bank, Karnataka          banks and ATMs to provide banking             offices. Reserve Bank of India and
              Bank, Dhanlaxmi Bank, YES Bank             facilities to the villagers in Jharkhand.     China Banking Regulatory
              and Standard Chartered Bank are            The governor said that the satellite          Commission have signed an MoU for
              among those who have evinced inter-        banks would initially function on a           increasing banking and financial
              est. Deutsche Bank has 1.5 lakh            weekly basis and it would be convert-         cooperation between them. This was
              active cards and the outstandings of       ed into full-fledged branches, if they        agreed to as part of the joint commu-
              Rs 200-250 crore. Deutsche bank’s          worked smoothly. Out of the 4,423             niqué issued after delegation-level
              customer profile is good and what          panchayats in the state, 1,540 pan-           talks between the visiting Chinese
              makes it attractive is that the bank       chayats had no banking facilities             Premier, Wen Jiabbao, and Prime
              has been adding only platinum cards,       at all.                                       Minister Manmohan Singh.

                                                                                                              1-15 January, 2011   MONEY MANTRA   13
EP 3-17.qxd        12/25/2010      6:50 PM       Page 14

               SPECIAL REPORT

              MERRY TIME FOR TEC
                    Alok Dwivedi

                      oaching stalwarts of rival
                                                           nels. The analysts, now a part of ET
                                                           Now, are said to be paid heavy amounts
                                                           for these contracts. Apart from business
                                                                                                          If we look at TAM Media Research
                                                                                                      data, the share of ET Now among view-

              P       camps is a practice prevalent
                      in all competitive markets. And
                      Times Group's business chan-
              nel ET Now has followed it by pulling
              to its side the big shots of CNBC.
                                                           analysis, ET Now is using these estab-
                                                           lished faces in its brand campaign as
                                                           well to enhance its core proposition-
                                                           Stay Ahead of the Market. In the cam-
                                                           paign's phase one, the channel is pro-
                                                                                                      ers has dropped to less than 14 per cent
                                                                                                      in November. It was over 17 per cent
                                                                                                      in June this year. Insiders say that the
                                                                                                      channel had to take some aggressive
                                                                                                      steps to put breaks on its decreasing
              Market experts are expecting that the        moting five technical analysts. By this    popularity. From 13 December,
              move will push CNBC to woo talent-           selection, ET Now has tried to create      Sudarshan Sukhani, Ashwani Gujral,
              ed and sound analysts from other chan-       a clear line between good and better       CK Narayan, Rajat K Bose and Deepak

              14    MONEY MANTRA   1-15 January, 2011
 EP 3-17.qxd     12/25/2010      6:50 PM     Page 15

               Mohoni have started offering market
               advice on ET Now. These well known
               experts are allotted very much similar
                                                           unknown before their appearances on
                                                           CNBC-TV18. They shot to fame
                                                           through this channel and became a
                                                                                                       from one channel to the other channels
                                                                                                       to give their advices. But competition
                                                                                                       started building up around four-five
               slot to market hours. They are now seen     brand. All of them run their own com-       years ago. To compete with their peers,
               on the Times Group's channel between        panies, which offer customers SMS           business channels started having exclu-
               8 AM and 4 PM on market days. All           services or calling services for stock      sive deals with these analysts. And now
               these analysts have a number of simi-       market trading. A few of these analysts     the situation has reached a point where
               larities. They all are technical analysts   run technical analysis classes for inter-   business channels are aggressively
               and had been associated with CNBC           ested market participants too.              grabbing renowned technical experts.
               TV-18 for several years. Many of these          After the start of business channels    In the ET now deal, these technical
               technical analysts were relatively          in India, technical analysts used to hop    experts are paid around Rs 5-6 lakhs per

                                                                                                               1-15 January, 2011   MONEY MANTRA   15
EP 3-17.qxd        12/25/2010      6:50 PM       Page 16

              month. In addition, these experts are
              assured of a guaranteed increment of 15
              per cent per year with an annual review.
                  The presence of these experts will
              surely help the channel, but it will also
              be favourable for the technical analysts
              too as it will increase their reach. If we
              go by the claims of the organizations
              run by the analysts, the move will bring
              to them new viewers of ET Now. Also,
              the channel will get those viewers who
              used to follow these analysts on CNBC.
                  As per TAM Media Research data,
              viewership of ET Now has dropped
              drastically. In the mean time, viewer-
              ship of NDTV Profit has fallen too.
              CNBC-TV 18 has no threat and it still
              remains at number one position. In its
              second year of operations, ET Now is
              fighting hard for number 2 position with
              NDTV Profit.
                  Sudarshan Sukhani, a well-
              known technical analyst and promoter
              of Technicaltrends.com, was a regular
                                                           Analyst                      Show Timing                 Payment
              guest on CNBC-TV18 since the chan-
              nel started in December 1999. Sukhani        Ashwani Gujral               8.15 AM to 10 AM and 2.15 Rs.5.75 lakhs per month
              has participated in more than 30                                          PM to 4 PM on market days
              Investor Camps organised by CNBC-            Sudarshan Sukhani            8.15 AM to 10 AM and 2.15 Rs.5. 5 lakhs per month
              TV18 across the country. But now, he                                      PM to 4 PM on market days
              has done an exclusive contract with ET       CK Narayan                   1.30 PM to 2.30 PM on       Rs.5 lakhs per month
              Now. He only features on the pro-                                         market days
              grammes of ET Now from 8.15 AM to
              10 AM and 2.15 PM to 4 PM on mar-            by Chartadvise. He has entered into an      Business, Aaj Tak, Star TV and
              ket days.                                    exclusive contract with ET Now for one      Doordarshan.
                  Ashwani Gujral, a well known             year. He only features on ET Now                But, exclusive contracts with ana-
              technical analyst and Chief Market           between 1.30 PM to 2.30 PM on mar-          lysts in now new. If we recall, in the
              Strategist, ashwanigujral.com, was in        ket days.                                   year 2008, CNBC AWAAZ team had
              the exclusive panel of CNBC before the           Rajat K Bose of rajatkbose.com          roped in two of India's leading finan-
              ET Now's assignment. He used to be           is known for his technical analysis, but    cial experts Gul Teckchandani and S
              an important part of CNBC's investor         he also does fundamental analysis.          P Tulsian, who were supposed to use
              camps. He is an MBA (Finance) from           Before joining hands with ET Now, he        their unique styles and help investors
              Georgetown University, Washington            has appeared on several Indian channels     make investment decisions. CNBC
              DC, USA, 1995. He has just published         like NDTV-24x7, NDTV Profit, Zee            Awaaz had come up with The Gul &
              a Revised Edition of his book "How           Business, Sahara Samay, CNBC TV18,          Tulsian Show- every Saturday 10 AM
              to Make Money Trading Derivatives:           BloombergUTV and several other              and 9.30 PM and Sunday 11 AM and
              An Insider's Guide". His new book            regional language TV channels. He has       9.30 PM. The talk-show promised to
              "How to Make Money Trading with              also written for The Economic Times,        give investors, traders and players the
              Charts" is also available at stands. Like    Kolkata edition, and The Statesman,         right advice to guide them towards risk-
              Sukhani, he has as well decided to leave     Kolkata. He used to write articles on       free investments. For this, the channel
              CNBC's ship and have entered into an         market outlook in www.moneycon-             had entered into exclusive contracts
              exclusive contract with ET Now. Time         trol.com. Now, Rajat K Bose appears in      with these well known experts.
              slot for Gujral is very similar to           ET NOW programmes between 11 AM                 A prominent Hindi business chan-
              Sukhani's.                                   to 12 noon on market days.                  nel -- Zee Business -- had entered into
                  CK Narayan, chief mentor and                 Deepak Mohoni, MBA - IIM                an exclusive contract with Rajesh
              trainer at Chartadvice.com, is known as      (Calcutta) and foremost market strate-      Tambe. He appears in a programme
              top technical analyst of the country.        gist, is the founder of Trendwatch India.   called D Street Ka Don on Zee Business
              With over 30 years of rich market expe-      He has been writing columns in the          every Monday and Friday at 6.30 PM.
              rience, Narayan uses his vast knowl-         Economic Times and Business World,          The programme showed Tambe
              edge and technical analysis skills to        and appears regularly on ET Now's pro-      addressing telephone calls of investors
              guide the company. He is also the Chief      grams. He has appeared on BBC,              and traders from different parts of the
              Trainer of all the programs that are done    CNBC TV18, NDTV Profit, Zee                 country.

              16    MONEY MANTRA   1-15 January, 2011
EP 3-17.qxd   12/25/2010   6:50 PM   Page 17

                           C                   JUNCTION

                           D                   STREET

EP 18-35- alok.qxd    12/25/2010         6:14 PM    Page 2

                C JUNCTION

           Rally in Gold may continue
           after consolidation
                 Anjani Sinha                          of 1266.5 as Greece was facing insol-             markets, have been picking up. As of
                                                       vency and the euro was threatened to              1Q10, the 9 Asian countries have togeth-
                  GOLD & SILVER                        be disintegrated. At that time, gold was          er contributed 8% to the world's gold
                        Market Review                  trading in sync with US dollar, sig-              reserve, almost doubling the percentage
                 (6th Dec to 20th Dec 2010)            naling extreme risk aversion. In early            in 2000.
               Gold fell below $1400 again and         November and early December, gold                     Meanwhile, gold demand has been
           finished at $1386.55 during the fort-       also surged to all-time highs of 1424.3           rising rapidly in emerging markets.
           night, as US dollar strengthened and        and 1432.5 respectively amid resur-               According to the Shanghai Gold
           Treasury yields soared. The bench-          face of sovereign concerns in the 16-             Exchange, gold imports in China jumped
           mark COMEX gold contract fell to a          nation region. Ireland was at risk and            to 209 metric tons in the first 10 months
           3-week low of $1361.95 before set-          sought bailout from EU/IMF in late                of 2010, more than quadrupling 45 met-
           tling. At COMEX Gold February con-          November.                                         ric tons for all of 2009. The robust
           tract lost by USD 28.10/Toz while               Sovereign crisis in the Eurozone and          demand for the yellow metal is driven
           COMEX Silver December contract              Fed's quantitative measures, central bank         by inflationary pressures and the gov-
           lost by 3.00 cents/Toz. MCX Gold            activities and rising demand from emerg-          ernment's measures to curb asset prices.
           February lost Rs.191/10 gram and            ing markets have pushed gold price high-          Indeed, investment demand for the metal
           MCX Silver March contract gained by         er this year. While advanced economies            has expanded quickly. While demand in
           Rs.291/Kg. At NSEL, Ahmadabad               such as the US and the Eurozone have              3Q10 rose +16% y/y to 153.7 tons, net
           spot Gold lost Rs. 70/10 gram and           continued to dominate the world's official        retail investment accelerated +39% y/y to
           Silver gained by Rs 207/Kg. NSEL            gold holdings (around 60%), holdings              45.8 tons and jewellery demand rose +9%
           Demat E-Gold lost by Rs. 39.60/gm,          in emerging economies, especially Asian           to 107.9 tons. As China will continue to
           while NSEL Demat E-Silver gained by
           Rs. 29.10/100 gm.                                                               E- Gold NSEL
               Precious metals markets continued
           to be affected by macroeconomic
           developments           rather       than
           demand/supply fundamentals. Selloff
           in bond markets resulted in rise in
           yields and in turn triggered liquida-
           tions in commodities, particularly in
           gold. The commodity market experi-
           enced great volatility during the fort-
           night. Earlier in the Fortnight, US
           President Barack Obama said after
           meeting with Democratic congres-
           sional leaders that he would agree to
           a 2-year extension on all Bush-era tax
           cuts in exchange for extending unem-
           ployment insurance and cutting the
           payroll tax by 2% for workers next                                       SPOT MARKET PRICES
           year. This statement gave support to         Commodity Market                 Price            Open       Close      Prev. Net
           the US dollar and the precious metal                                          Quote                                  Close Change
           retreated last week, erasing gains           Gold           NSEL Amd          Rs. /10 gm. 21077           20519      20589 -70
           recorded over the past few weeks. In         Silver         NSEL Amd          Rs./kg.     44261           44343      44136 +207
           the EU meeting, finance ministers
           failed to agree on new initiatives to                                  FUTURES MARKET PRICES
           deal with sovereign crisis. Limited          Market   Commodity-       Unit         Open      High      Low       Close   Prev.    Chg
           possibilities to increase the size of the             Contract                                                            Close
           750B euro rescue fund and joint              MCX      Gold-Feb-10      Rs/10 gm.    20809     20924     20371     20607 20798 -191
           issuance of bonds has also pulled            COMEX    Gold-Feb-10      $ / Troz     1411.55   1422.45   1361.95   1386.55 1414.65 -28.1
           down metals as a whole.                      MCX      Silver-Mar-10    Rs/kg.       44300     45735     42653     44552 44261 291
               In 2Q10, gold made a record high         COMEX    Silver- Mar-10   Cents/Troz   3003.00   3072.00   2800      2936.00 2939.00 -3

           18   MONEY MANTRA   1-15 January, 2011
EP 18-35- alok.qxd      12/25/2010        6:14 PM       Page 3

                                                                                                                    C JUNCTION
           deregulate gold trading, it is expected that
                                                                                                E-SILVER NSEL
           more investment products, such as ETFs,
           will be launched in 2011.
                Outlook: Precious metals will con-
           tinue to rally after a consolidation, ben-
           efiting from global economic uncertain-
           ties: sovereign concerns in peripheral
           European countries, inflationary pres-
           sures in China and other Asian
           economies, geopolitical tensions
           between North and South Korea and US'
           QE measures. Unemployment rate rose
           to 9.8%, the highest in 7 months, in
           November, signaling the pace of US
           recovery remained sluggish. Fresh con-
           cerns emerged over the stability of the
           foreign exchange markets after Federal
           Reserve Chair Ben Bernanke said that
           bank could buy more than the $600 bil-           committed to purchase. If the Fed               further undermining the dollar, it could
           lion in U.S. government bonds it has             extends its quantitative easing policy,         lead to fresh buying of gold.

               REFINED SOY OIL                                                              Refined Soy oil MCX
                         Market Review
                 (6th Dec to 20th Dec 2010)
                The refined soy oil traded on a neg-
           ative note in the fortnight on extended
           selling pressure due to bearish funda-
           mental factors. Indian traders were on
           a selling spree on shrinking demand for
           the produce and on the fear that China
           might hike interest rate to curb the ris-
           ing prices. MCX near month contract
           closed at 591.05/10 kg with net loss of
                The refined soy oil prices staged on a
           strong footnote early in the fortnight due to
           strong buying interest supported by bull-         Market    Contract        Open        High       Low         close       Prev.       Net
           ish fundamental factors. Talks of revision                                                                                 close       change
           in import duty on edible oil also sent bull-      MCX       Jan' 10         599.20      610.00     590.40      591.05      601.90      -10.85
           ish signal to the market. Rise in landed         High domestic prices of soybean prompt-         is estimated at 17.55 million hectares (ha),
           price of imported oil due to higher inter-       ed farmers to plant more acreage for            a marginal increase from 17.49 million
           national price also lent support to the Indian   oilseed cultivation. Edible oilseed produc-     ha covered under major oilseeds during the
           oil futures. Strong physical demand for the      tion is likely to rise 10 per cent on favor-    last kharif season. India's oilseed produc-
           produce was also one of the factors.             able climatic conditions and better soil fer-   tion during the kharif season is expected
           According to USDA World soybean pro-             tility. So higher crop estimates let the soya   to be around 17.27 million tonne, almost
           duction is forecast to fall by around 3 mil-     oil markets in the downward direction.          10.2% more than last year.
           lion tonnes in 2010-11 to 257 million                  Solvent Extractors' Association                According to SEA, India's vegetable
           tonnes. In contrast, the United States has       (SEA), estimates say oilseed yield will rise    oil imports in November fell 11.3% from
           produced a record soybean crop this year,        to 1,050 kg per hectare (ha) this year, from    a year earlier on higher local soyabean
           estimated to be around 92 million tonnes.        955 kg per ha last year. While the Central      crushing compared with the previous
           This is 440 000 tonnes higher than in 2009-      Organization for Oil Industry & Trade           month. Overall, most market watchers
           10 and is primarily the result of a record       (COOIT) estimated the total oilseed out-        expect domestic oilseed production to rise
           planted area of 31 million hectares for this     put to rise 12.5 per cent in the recently       significantly this year, because of good
           season. On the other hand according to           ended kharif season at a staggering 15.41       monsoon rains and healthy sowing.
           USDAtotal oilseed production for India in        million tonnes as compared to 13.69 mil-        However, it won't cut down on the imports
           2010/11 is forecast at 34.9 million tons,        lion tonnes in the same season last year.       as demand is projected to rise. India's is
           up 3.2 million tons over the 2009/10 pro-        Higher production of oilseeds will also         expected to import almost 9 million tonne
           duction estimate assuming a normal mon-          be supported by an overall increase in          of edible oils in 2010-2011 marketing sea-
           soon and favorable growing conditions.           acreage. Total acreage during the season        son that started in November.

                                                                                                                       1-15 January, 2011   MONEY MANTRA   19
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                C JUNCTION
            Outlook: Rising consumption despite             Positive trend in soybean is likely to sup-    international price despite zero import duty
           record import and bumper crop harvest            port soy oil market. Market may take sup-      on the same. Though China is selling oil,
           might render support to the oil market.          port on fresh buying so low level buying       oilseeds and grains from its reserves, it
           India has imported record edible oil in the      might support the prices. Higher landed        might have temporary impact on the mar-
           oil year 2009-10. Domestic traders are like-     price of imported oil may also support         ket. It may go for fresh purchases to fill
           ly to buy soy oil futures anticipating revival   upward movement in the prices. The             its granaries, which may trigger buying
           in demand for the produce in near term.          imported oil price is increasing on rise in    in international market.

                COTTON PRICE MAY                                                           Cotton futures (ICE)
                    FIRM UP
                          Market Review
                 (6th Dec to 20th Dec 2010)
                The International cotton prices con-
           tinue to climb during this fortnight on
           speculation that demand will rise as the
           U.S. economy strengthens. Weakening
           US dollar supported commodities last
           week. Plus some delay in U.S. cotton
           shipment, a declining Indian crop and
           an uncertain export policy, amidst the
           tight fundamental pushed world cotton
           price further higher. The ICE Cotton
           futures for March delivery gained by
           21.78 cents, or 16.46 %, to close at a
           record $1.5412 a pound on ICE in New
           York. Prices have more than doubled this
           year, heading for the biggest annual gain         Market           Contract      Open      High     Low      close    Prev.      Net
           since 1973.                                                                                                           close      change
                Global cotton mill use rebounded by          ICE (Cents/lb) Mar 10          146.12    150.12   143.40 154.12     132.34     +21.78
           5% to 24.60 million tons in 2009-10.
           Cotton mill use is expected to remain sta-       World cotton production is expected to         state by 550,000 bales. The loss from the
           ble in 2010-11, due to limited available         slightly exceed consumption in 2010-11.        Central Zone and Andhra Pradesh now
           supplies and high prices. In particular,         The global ending stocks are projected to      stands at 850,000 bales, which is a major
           cotton mill use in China, which accounts         increase to 9.30 million tons. The U.S.        factor for the decline in the 2010-11 esti-
           for 40% of global consumption, could             2010-11 cotton estimates include slight-       mates. As on December 19th 2010, the
           decrease slightly to 9.8 million tons due        ly lower production and higher domes-          progressive arrivals are 101.88 lakh bales
           to difficulties in sourcing cotton, both         tic mill use, resulting in a decrease of       as against 100.10 lakh bales in previous
           domestic and imported. Cotton spinning           200,000 bales in ending stocks compared        year.
           in other major importing countries,              with last month. In China, cotton price             Outlook: The cotton price may con-
           including       Bangladesh,        Turkey,       was steady to higher.                          tinue to go up in the international market
           Indonesia, Pakistan, Thailand and                     In India, Cotton prices remained          while uncertainty of Indian cotton export
           Vietnam, is also expected to be con-             steady with moderate transaction.              policy causes tight supply and better sales
           strained. However, cotton mill use in            Demand has been moderate from                  of U.S. cotton. The world cotton supply
           India could continue to increase by 8%           exporter and local mills at lower levels       and demand estimate showed lower U.S.
           to 4.6 million tons, as drop in domestic         that are keen on making purchases of           cotton production and higher cotton con-
           supplies may be curbed by the govt's con-        quality cotton. Overseas demand for            sumption in the U.S. India will decide its
           trol on exports.                                 Indian cotton has increased after bad          cotton export policy which keeps the mar-
                The World cotton stocks fell by 25%         weather hit crops in China and Pakistan,       ket in suspense. The domestic cotton
           in 2009-10 to 8.90 million tons, the small-      both leading consumers. Exports so far         arrivals in various upcountry markets,
           est in seven seasons. Production in 2010-        have been around half the allowed amount       including Southern zone, have started
           11 is projected up by 15% to 25.0 mil-           after unseasonal rains hit supply and qual-    picking up. The contracts for export of cot-
           lion tons. Plantings in the southern hemi-       ity. India is likely to produce more than      ton shall be registered with the DFGT
           sphere are taking place now and should           32.50 million bales of cotton in 2010-11,      prior to shipment have changed the sen-
           rebound strongly from last season, driv-         higher than last year's 29.50 million bales.   timents of both exporters and domestic
           en by the high cotton prices. Production         Domestic cotton arrivals at Indian spot        buyers, who have become active in pur-
           in this part of the world is forecast at a       markets have now picked up after dry           chasing their cotton requirements. It is
           record of 3.10 million tons in 2010-11 but       weather in December and so far in the          felt that the domestic cotton prices may
           this cotton will not be harvested before         2010-11 season have risen 2.3 percent          remain firm in the coming weeks.
           March 2011 and will be exportable only           over a year ago. The floods in Andhra               (Writer is MD, National Spot Exchange
           starting in the second quarter of 2011.          Pradesh have decreased the output in this                                    of India Ltd.)

           20   MONEY MANTRA    1-15 January, 2011
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                                                                                                           D STREET

           Market is range bound
           between 5800 and 6300
               Ashish Kapur                            We are in very volatile                     in the first half of the month and fell

                                                                                                   to the low of 5766 in the middle of the
           With the yearend holidays around the        times, sentiments change                    month. Currently, Nifty is trading above
           corner, market seems to be in a festive     very fast, so though the                    its 100 DMA and rising above to touch
           mood and no major movement or vol-                                                      its 50 DMA.
           ume is seen or expected in the next cou-    things are looking cheerful,                     Since the beginning of the month,
           ple of weeks. Good time to increase         caution may still be                        technical front liners have been trad-
           exposure as markets seem to have fac-                                                   ing in a range. Relative Strength Index
           tored in all the negative news. Though      adhered to going ahead.                     (RSI), which is a momentum indicator
           it may take time, the trend seems to be     Broader indices are not                     that measures the speed and change of
           definitely buoyant and upbeat.                                                          price movements, went down to touch
                Market has shown a lot of strength     very cheap. Stock specific                  oversold zones in the first half of the
           and resilience on the way back giving       approach is best for 2011.                  month. MACD (Moving Average con-
           hope that the corrective phase may get                                                  vergence Divergence) at present is cur-
           over very soon. Global markets too are                                                  rently trading below the zero line (cen-
           showing a lot of resilience. We are liv-        On the whole prospects are bright       tre line) foreseeing lower levels on the
           ing in very volatile times, sentiments      but investors would do well to remem-       bourses in near future. On Balance
           change very fast, so though things are      ber that the broader indices are not very   Volume, which reflects the cumulative
           looking cheerful, caution may still be      cheap. Stock specific approach would        volumes of the index, has been form-
           adhered to going ahead.                     work best for 2011. Happy investing         ing lower highs and lower bottoms indi-
                IT is emerging as the strongest sec-   in the New Year!                            cating profit booking on the bourses.
           tor in the near term due to improved out-                                                    Index's 15-day Price Rate of
           look of the western economies. Large        TECHNICAL ANALYSIS                          Change (ROC), which is a centered
           cap IT stocks have shown amazing                December month began on a posi-         oscillator, has been trading below zero
           resilience during the recent downturn.      tive note on the charts. Since then,        levels. ROC measures the percentage
           However, most of these stocks have          NSE's benchmark index, Nifty has been       price change over a given time period.
           already moved up and are richly val-        dodging the market participants by not      It implies higher the difference between
           ued. Mid cap stocks on the other hand       giving any clear indication of its future   the current price and the price 15 days
           are still attractively valued and can be    direction. Index touched a high of 6069     ago, higher the value of the ROC
           accumulated at the current levels.
                Automobile companies continue to                                        NIFTY INDEX
           perform well and leading auto and auto
           ancillary companies continue to be good
           investment ideas. Some of the well man-
           aged auto ancillary companies can also
           be considered for investments as better
           prospects of the auto majors should
           automatically translate into improved
           fundamentals for this segment.
                Banking stocks will benefit from
           good economic growth and increased
           consumer spending. Recent correction
           has been centered on this sector. Most of
           the counters in this sector are available
           at fairly attractive valuations now.
                Metal stocks especially of compa-
           nies having their own mines are heading
           for very interesting times as demand
           from China, India and some other
           emerging economies is likely to remain
           buoyant. Possible early recovery in US
           and some other developed countries
           should provide further flip to these

                                                                                                           1-15 January, 2011   MONEY MANTRA   21
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          D STREET
                     PUT CALL CONCENTRATION (As on 21st Dec)                                       Concentration at Nifty

                                                                                                   5800 put implies that this
                                                                                                   is acting as a very strong
                                                                                                   support. Strong build up in
                                                                                                   6000 call indicates that
                                                                                                   this level is acting as a
                                                                                                   stiff resistance. Heavy
                                                                                                   action was also seen in
                                                                                                   Nifty 6100 and 6200 call.
                                                                                                   On the above
                                                                                                   observations, we believe
                                                                                                   that likely range for the
                                                                                                   next few trading sessions
                                                                                                   is expected to be 5800 to

           Oscillator. At present, Nifty finds its                                OPTION STRATEGIES
           crucial support at 5730 level, while           Sell 5 lots of 6500 call @ Rs.15; Sell 10 lots of 5500 put @ Rs.24
           resistance is seen at 6120. VIX
           remained in 18.2-22.6 range shooting           This strategy is for investors who think that the market is going to remain
           to 23.72 recently signifying caution           between 5460 and 6550. This strategy will give a fixed return of ~3.45%
           amongst investors. The put call ratio          between 5460 and 6550. Below 5460 and above 6550 levels the strategy
           stood at 1.29.                                 will incur losses. The net inflow from this strategy will be around Rs.15800.
                                                          As long as the market remains range-bound, there is a potential to make money
           PUT CALL CONCENTRATION                         using this strategy.
               India VIX closed at 20.78 on Dec
           21, 2010. Volatile movement in the VIX
           has led it to remain above 20 levels. The
           Nifty has got stuck in a very tight range
           of 5750-6000. The Put-Call open inter-
           est ratio for index options is almost at
           the same levels of 1.29, signifying rel-
           atively stable sentiments.
               Nifty 5800 put total open interest
           is close to ~91 lakh shares and this is
           acting as a very strong support. Also the
           active participation of 5600 and 5700
           puts in the trade suggests that market         Sell 20 lots of 6500 call @ Rs.15; Buy 5 lots of 5500 put @ Rs.24
           participants are taking a cautious
           approach at current levels. Strong build           The strategy will be the most useful for investors who believe markets cur-
           up in 6000 call total open interest still      rently lack strength and have a bearish outlook. It will give an initial inflow
           remains to stand out and is around ~77         of ~Rs.8950. The gains will start escalating as Nifty starts moving below 5500.
           lakh shares and hence, this level is act-      From 5500 to 6500, it will give a constant return of 1.44%. And after 6400,
           ing as a stiff resistance. Heavy action        the investor will start incurring losses.
           was also seen in Nifty 6100 and 6200
           call with ~61 lakh shares and ~56 lakh
           shares outstanding respectively.
               On the above observations we
           believe the likely range for the next
           few trading sessions is expected to be
           5800 to 6300.
                         (Writer is CEO, Investshoppe
                                           India Ltd.)

           22   MONEY MANTRA   1-15 January, 2011
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                                                                                                              BROKER’S PICKS
           Kaveri Seed                            BUY                   CMP: Rs.362                         TARGET: Rs.480

           Bet on capacity expansion
              Ashish Kapur                                                 Kaveri Seed: 3 months performance
           Kaveri Seed Company Limited (KSCL)
           is an India-based agri-input company.
           The Company is engaged in the devel-
           opment and commercialization of vari-
           ous seed products. KSCL operates in two
           business segments: Seed Division and
           Micro Nutrients Division. The
           Company's products include corn, sun-
           flower, cotton seeds, pearl millet, grain
           sorghum, rice, tomatoes, okra, chillies
           and watermelon. The Company, through
           Microteck, produces and markets bio
           products, such as micro-nutrients and
           bio-pesticides. The Company operates
           in two brand names for cotton hybrids:
           Jaadoo and Jackpot.

           INVESTMENT RATIONALE                                                                           In view of demand for higher quality and
                To get full benefit of expansion            POTENTIAL BENEFACTORS                         more variety in vegetables, Kaveri R&D
           plan: Timely expansion at Pamulparthi          1. Over 60% of the company sales is con-        is laying new thrust to vegetables with
           village (Andhra Pradesh), will aid the           tributed by the H1 of the year. The com-      emphasis on tomato, okra and chilly. The
                                                            pany had also started concentrating on
           company in getting the benefit of                Rabi crop demand since last year.             company is anticipating approval of the
           increased capacity expansion which will          Growing demand for maize and sunflower        BT Brinjal in India which will provide
           further boost earnings. The company has          will help company boost their top line fur-   a huge potential business opportunity for
           invested more than Rs 60 crore in recent         ther up. Q3 and Q4 sales for FY11 are like-   the company.
           past. The capex includes strategic green         ly to be better as good and stretched mon-         Germplan- the genetic wealth of
           field expansion at Pamulparthi village,          soon in the month of August and               the company: Germplasm- a seed data-
                                                            September will help the Rabi crops.
           with state-of-the-art facility for utilizing   2. Major sales of the company are limited       base, with various combinations of traits
           cob drying, seed processing and cold             to south India so far and now the com-        possible in a specific crop is the key dif-
           storage on owned farmland of 29 acres            pany is targeting for the other regions of    ferentiating factor for a seeds compa-
           which has commenced production dur-              India.                                        ny, enabling it to roll out hybrids far
           ing FY 10. From FY 11 the company will         3. Fortifying BT cotton with herbicide toler-   more quickly to respond to a specific
           get the full benefit of this expansion plan.     ance (HT) and drought tolerance is in the     trait required in a crop for a particular
                                                            research agenda of the company.
                Favorable change in business mix:         4. Since India is one of the largest produc-    region. Over the time, Kaveri has con-
           The company's revenues were dominat-             ers of rice, the company is expecting to      sciously been enhancing its germplasm
           ed by corn and sunflower till 2007 with          have huge market potential for BT rice        (either sourced from various universities
           corn contributing ~40% while sunflower           after BT cotton.                              and global bodies, or developed in-
           contributing ~21%. But after 2007 the          5.The bio pesticides and micro nutrient busi-   house) in multiple crops. Today, it can
           company has shifted its focus to the BT          ness of the company is likely to provide      boast of access to a wide range in vari-
                                                            good boost to the revenue on the back
           cotton seeds and the contribution of BT          of increased demand for bio products.         ous crops, thereby providing it with a
           cotton to the top line is 25% during FY                                                        competitive edge.
                                                          10 from just 10% in FY 07. The market                Outlook & valuation: On the back-
            Key Indicators (As on Dec 24, 2010)           share of the company in BT cotton seeds         drop of increased capacity and higher
           Face Value (Rs.)        10                     is just 2% in FY 10 while cotton is con-        R&D focus, the company is well poised
           Closing Price (Rs.)         362                tributing more than 25% to the top line.        to continue its growth trajectory. The
           52 week H/L(Rs.)            429.95/233
                                                          It shows huge potential for the cotton          company has been growing at a CAGR
                                                          seeds business. The company is likely to        of 35% over last 3 years and has been
           Market Cap (Rs. Crore)      496.02
                                                          add some more contribution from the BT          recording a CAGR of 40% in its PAT
           EPS (Rs.)                   27.82              cotton business in FY11.                        over the same period. The stock is cur-
           BV per Share (Rs.)          110.15                  Diversified portfolio mix: The             rently trading at 16.0x and 12.3x for
           P/B                         3.29               product portfolio includes 12 maize, 6          FY11E and FY12E earnings respective-
           P/E                         13.01              cotton, 23 paddy, 5 sunflower and other         ly and is expected to reach Rs 480 in
                                                          vegetables and sorghum seeds varieties.         the near term.

                                                                                                                   1-15 January, 2011   MONEY MANTRA   23
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            BROKER’S PICKS
           Yes Bank       BUY                                CMP: Rs.307.85                   TARGET: Rs.325-330

           Bank with stupendous growth
                Rajesh Jain                                              Yes Bank: 3 months performance
           With dollar index firming up, we can see
           some correction which could be a time
           to buy at dips. We are recommending
           the two stocks namely Yes Bank and
           JSPL which could be bought at correc-
           tion. In Q2FY11, the total Advances
           grew by 86% as compared to the same
           period of corresponding year. Total
           Deposits grew by 107% in September
           2010 as compared to September 2009.
           On Sequential basis, deposits grew by
           32%. CASA deposits grew by 119% to
           Rs 4,052.8 crore taking the CASA ratio
           to 10.1% as at September 30 2010.
               Total employee strength as on
           September 2010 was 3,626 (2,733 as
           of September 30, 2009 and 3,034 as of
           March 31, 2010, an increase of 592 in       count to 250 by end of June 2011.            In our view, strong asset quality will sup-
           the first 6 months). The bank has hired         The bank is continuously posting         port the bank in posting higher revenues.
           around 592 employees in the half year       stupendous growth and has emerged as             The stock has a lot of support
           ended September 2010. The bank has          one of the fastest growing banks of the      between 280-285 levels, at these lev-
           increased its branch network to 171 in      nation. The provisions & contingencies       els one can buy keeping a closing stop
           half year ended September 2010.             are declining; this decline can be attrib-   loss of 275 for target of 325-330 in the
           Management plans to increase branch         uted to improvement in asset quality.        coming weeks.

           JSPL                                              BUY                CMP: Rs.698.30                   TARGET: Rs.750+

           Expected to show better numbers
            Jindal Steel & Power Limited is a part                           JSPL: 3 months performance
           of the $8 billion Jindal Organization.
           The company has business interests in
           steel production, steel products, power
           generation, mining, sponge iron, ferro
           chrome and heavy machinery.
           Environment ministry gave a clearance
           for engineering & construction work
           to resume at the plant site in
           Chhattisgarh after a brief hold up. The
           ministry has passed the approval for the
           operation of first two 600MW units
           under the expansion project, which
           envisages capacity addition of 2,400
           MW through the installation of four
           new 600-MW power trains as coal link-
           ages have already been granted by the       tion from Shadeed subsidiary will            615-635 where it can be accumulated
           Coal Ministry. In December 2010,            increase the production capacity of the      for much higher targets of 750+ in com-
           Shadeed Iron & Steel Co., a subsidiary      company. Therefore, the company is           ing weeks. One should maintain a clos-
           of JSPL, has started trial production.      expected to show better numbers in           ing stop loss of 600.
               We believe that the approval by the     coming quarters of FY12. The stock has               (Writer is EVP, Retail Research with
           environment ministry and the produc-        a lot of support between the levels of                                Religare Securities)

           24   MONEY MANTRA   1-15 January, 2011
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                                                                                                         BROKER’S PICKS
           Wipro                                        BUY CMP: Rs.481.95 TARGET: Rs. 540

           A play on better product mix
             Jagannadham Thunuguntla                                         Wipro: 3 months performance
           IT giant Wipro is strengthening its oper-
           ations in China by setting up four new
           labs for android platform, wireless tele-
           com, mobility and ATG and three cen-
           tres of excellence. The company pro-
           poses to increase its headcount by three
           times in China as more companies are
           establishing manufacturing facilities
           there. Wipro, which currently has 1,000
           employees at its centre in China, plans
           to expand its client base by providing
           software services to more companies.
               The company has a strong balance
           sheet with upward trend in its operat-
           ing cash flows. As on September 2010
           the cash and cash equivalent stood at Rs.
           3784.4 crore. In the second quarter of        890 up from 858 at the end of sequen-       also expanded its client footprint to
           current fiscal the company reported top-      tial quarter.                               include banks by signing contracts with
           line growth of 12% to Rs. 7730.5 crore             Wipro has been strengthening its       Punjab & Sind Bank, Central Bank of
           benefited by volumes growth of 6.6%           domestic presence with large deal wins      India and UCO Bank. This is a welcome
           in IT services, while the net profit          from government clientele as well as        development, as the banking and finan-
           jumped by 14.8% to Rs 1284.7 crore.           substantial contracts bagged from           cial services segment is fast growing
           During the quarter, it added 29 new           Aircel, Unitech Wireless and Vodafone       with both public and private players
           clients taking the total active clients to    Essar. In recent times, the company has     increasing spends on technology.

           Zee Entertainment                                  BUY                 CMP: Rs.138.75                  TARGET: Rs.155

           Well placed to enjoy benefit
           With rights to more than 3,000 movie                                Zee: 3 months performance
           titles from foremost studios and of icon-
           ic film stars, Zee house is the world's
           largest Hindi film library. Through its
           strong presence worldwide, Zee enter-
           tains over 500 million viewers across
           167 countries. It is amongst the largest
           producers of aggregators of Hindi pro-
           gramming in the world. The manage-
           ment has given a guidance of 14% to
           15% of growth in Ad revenue for FY11.
           Management indicated that the ad-rev-
           enue environment remains buoyant, and
           in the festive season, the company's
           leading      General     Entertainment
           Channels (GECs) are running at close
           to 100% utilisation levels. The capex for     tional subscription revenue was Rs 98.9     take advantage of the growth opportuni-
           FY11 is Rs 70 crore. The consolidated         crore. The Indian media industry contin-    ties that this sector provides. It has a
           operating revenues for Q2 FY11 grew           ues to witness buoyant growth across        strong balance sheet to grow its business
           32% at Rs 711.57 crore. Of subscription       platforms with advertising spends con-      both organically and inorganically.
           revenue, domestic subscription revenue        tinuing to rise. The management is con-                      (Writer is Head of Research
           stood at Rs 174.8 crore, while interna-       fident that the company is well placed to                   with SMC Global Securities)

                                                                                                             1-15 January, 2011   MONEY MANTRA   25
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            BROKER’S PICKS
           United Phosphorus                           BUY            CMP: Rs.160.65               TARGET: Rs. 198

           It’s advantage RICECO
                Sageraj Bariya                                    United Phosphorus: 3 months performance
           United Phosphorus (UPL) has
           announced acquisition of RICECO
           (RC) LLC of USA. We believe that
           the estimated acquisition cost of
           Rs.225cr is in line with UPL’s historic
           average of 2x EV/Sales. Given UPL’s
           strong cash position (~Rs.2,000cr at
           the end of 2QFY2011), the acquisi-
           tion would be funded through the
           same. RC, a key pesticides player for
           the rice crop in the US, is beefed up
           with a strong herbicides product port-
           folio. USAcontributes a major 70-80%
           to its sales, while the balance comes
           from the EU, Lat-Am and RoW. RC,
           a profit-making entity at the net level,
           clocked revenues of US $25-30mn in
           CY2009. RC is also a debt-free com-
           pany.                                        generic players like UPL.                  cost base, we believe that UPL enjoys
               Innovators dominant in off-                  Generic segment market share to        an edge over competition and is placed
           patent space - Generic firms in sweet        increase: Generic players have been        in sweet spot to leverage the upcoming
           spot: The global agrichem industry,          garnering high market share, increas-      opportunities in the global generic
           valued at US $40bn (CY2008), is dom-         ing from 32% levels in 1998 to 40%         space.
           inated by the top-6 innovators, viz.         by end 2006. During 1998-2006, while           Outlook and Valuation: Over the
           Bayer, Syngenta, Monsanto, BASF,             industry registered CAGR of 3%,            last few years, the global agriculture
           DuPont and Dow, which enjoy large            generic players outpaced industry with     sector has been rejuvenating on the
           market share of patented (28%) and           a CAGR of 6%. Going ahead, given the       back of rising food prices. Food secu-
           off-patent market (32%). Pertinently,        opportunities and drop in rate of new      rity is also top priority for most gov-
           the top-6 innovators also enjoy a large      molecule introduction by the innova-       ernments, while reducing food loss is
           share of the off-patent market due to        tors, we expect generic players to con-    one of the easiest ways to boost food
           the high entry barriers for the pure         tinue to outpace industry growth and       inventory. Hence, we believe that agri-
           generic players. Thus, 1/3rd of the total    increase their market share in the over-   chemical companies would continue to
           pie worth $13bn (controlled by the top-      all pie.                                   do well in the wake of heightened food
           6 innovators through proprietary off-            Historically, the global agrichem      security risks and strong demand is
           patent products) provides high growth        players have been logging in-line          likely to be witnessed across the world.
           opportunity for the larger integrated        growth with global GDP. Going ahead,       Overall, we expect the global agri-
           Key Indicators (As on Dec 24, 2010)          over CY2009-11E, the global econo-         chemical industry to perform well from
           Face Value (Rs.)       2                     my is expected to grow at around 3-        here on. However, generics are expect-
                                                        4%. Assuming this trend plays out in       ed to register healthy growth on
           Closing Price (Rs.)    160.65
                                                        terms of growth for the agrichem           account of: a) increasing penetration
           52 week H/L(Rs.)       219.7/146.9           industry and the same rate of generi-      and wresting market share from inno-
           Market Cap (Rs. Crore) 7083.99               cisation occurs, the agrichemical          vators, and b) patent expiries worth US
           EPS (Rs.)                    4.44            generic industry could log in 6-8% yoy     $3-4bn (2007) during 2009-14. We
           BV per Share (Rs.)           43.58           growth during the period and garner        estimate UPL to post 8.8% and 13.3%
           P/B                          3.69
                                                        market share of 44-45%.                    CAGR in sales and PAT respectively,
                                                            A global generic play: UPL fig-        over FY2010-12. At current levels,
           P/E                          36.18
                                                        ures among the top-5 global generic        post the recent correction the stock is
            Shareholding Pattern (in %)                 agrichemical players with a presence       trading at attractive valuations of 10.1x
            (As on Sep 30, 2010)                        across major markets including the US,     FY2012E EPS. Hence, we upgrade the
            Promoters                   27.81           EU, Latin America and India. Given         stock from Accumulate to Buy with a
            FIIs                        34.85           the high entry barriers by way of high     revised Target Price of Rs.198
            DIIs                        17.99           investments, entry of new players is       (Rs.228).
            Others                      19.35
                                                        also restricted. Thus, amidst this sce-                          (Writer is associated
            Total                       100.0
                                                        nario and on account of having a low                              with Angel Broking)

           26    MONEY MANTRA   1-15 January, 2011
EP 18-35- alok.qxd    12/25/2010      6:14 PM     Page 11

                                                                                                          BROKER’S PICKS
           JSW Steel                               BUY       CMP: Rs.1170 TARGET: Rs.1323

           Ispat will add to capacity
                 Tarang Bhanushali                                       JSW Steel: 3 months performance
           JSW Steel announced the acquisition of
           41.3% equity in Ispat Industries at
           Rs21.57bn, implying an enterprise
           value of Rs126bn (post conversion of
           preference shares). JSW would be sub-
           scribing to 1.09bn of preferential shares
           at Rs19.85 per share and will also make
           an open offer to acquire up to 20% addi-
           tional stake. The management aims to
           hold a minimum of 51% stake in Ispat,
           which is expected to decline to 39% post
           the conversion of all preference shares
           (assuming no shares are tendered in the
           open offer). The acquisition will make
           JSW the largest steel producer in India,
           taking its steel making capacity to
           14.3mn tons by the March ’11. Though        plant includes a 1.6mtpa gas-based DRI,       14.3mn tons by the March ’11. Even
           the deal is relatively cheaper at           a 2mtpa blast furnace and a 3.3mtpa hot       though the deal looks expensive in terms
           US$845/ton against the benchmark            strip mill. At its facility in Kamleshwar,    of Ispat’s financials, we believe the deal
           replacement cost of US$1,000/ton, we        Ispat has a 0.7mtpa downstream plant          is reasonable at US$845/ton against the
           believe it would affect the near term       comprising a cold rolling mill with           benchmark replacement cost of
           earnings of JSW due to low raw mate-        0.33mtpa capacity, a galvanising mill         US$1,000/ton considering the long
           rial integration and locational disadvan-   with 0.325mtpa capacity and a pipe and        delays in setting up new capacities in the
           tage of Ispat. The management is con-       tube facility with 0.06mt capacity. It also   country.
           fident of achieving an EBIDTA/ton of        owns a 12mtpa captive port.                        EBIDTA/ton of US$100-150 by
           US$100-150/ton by the end of FY12.               JSW’s stake to decline to 39%:           the end of FY12: Ispat reported oper-
           We maintain our BUY recommendation          Ispat’s current share capital stands at       ating loss in June-Sept ’10 quarter due
           on the JSW Steel with a price target of     13bn (1.3bn shares) and is expected to        to high input costs and subdued steel
           Rs1,323.                                    increase to Rs23.9bn with the subscrip-       prices. The company buys power from
                Future capex aimed at increasing       tion of preference shares by JSW Steel.       the grid at Rs5-6/unit, imports coke and
           backward integration: Ispat Industries      This is expected to increase further by       buys iron ore pellet and lumps; both at
           is a flat steel maker, having two facili-   2.45bn due to conversion of 0.01% pref-       higher cost. JSW plans to reduce the
           ties in Dolvi & Kamleshwar located in       erence shares, raising the capital to         input costs, by buying power from JSW
           Maharashtra. Ispat Industries owns a        Rs26.32bn. Some part of the company’s         Energy (@Rs3.5-4/unit), coke from JSL
           3.3mtpa steel plant in Dolvi near           debt would be further converted to equi-      (reducing transportation cost and yield
           Mumbai, close to consumers. The Dolvi       ty adding Rs1.3bn to the company’s cap-       loss) and consuming surplus pellets
                                                       ital, thereby taking the share capital to     from JSW’s pellet plant (to be opera-
           Key Indicators (As on Dec 24, 2010)
                                                       Rs27.6bn. Post the conversion of pref-        tional by May ’11). With the mentioned
           Face Value (Rs.)       10
                                                       erence shares, we expect JSW’s stake          measures, the company plans to achieve
           Closing Price (Rs.)    1170                 to decline to 39.3% assuming no shares        an EBIDTA/ton of US$100-150/ton by
           52 week H/L(Rs.)       1400/998.80          are tendered in the open offer. The com-      the end of FY12.
           Market Cap (Rs. Crore) 26104.71             pany has indicated it would maintain a             JSW to refinance Ispat’s high
           EPS (Rs.)                90.84              minimum of 51% stake in the compa-            interest debt: Ispat’s gross debt
           BV per Share (Rs.)       421.41             ny, which they plan via creeping route        (including preference capital) at the end
                                                       in case the open offer route does not         of September’10 stood at Rs98.4bn
           P/B                      2.78               work out.                                     (debt of Rs80.4bn and acceptances of
           P/E                      12.88                   Deal reasonable at US$846/ton:           Rs18bn). The average rate on domes-
            Shareholding Pattern (in %)                JSW’s acquisition of 41.3% equity in          tic loans is 12% and 6.5% on foreign
            (As on Sep 30, 2010)                       Ispat Industries at Rs21.57bn                 currency loans leading to a weighted
            Promoters                   44.98          (Rs19.85/share) implies an enterprise         average cost of 10%. JSW plans to refi-
            FIIs                        29.57          value of Rs126bn (post conversion of          nance the entire debt by September ’11
            DIIs                         7.12          preference shares). The acquisition will      on the back of its strong balance sheet.
            Others                      18.33          make JSW the largest steel producer in                            (Writer is associated with
            Total                       100.0          India, taking its steel making capacity to                                    India Infoline)

                                                                                                             1-15 January, 2011   MONEY MANTRA   27
EP 18-35- alok.qxd     12/25/2010          6:14 PM   Page 12

            BROKER’S PICKS
           Exide Industries                            BUY     CMP: Rs.164.40              TARGET: Rs.184

           Charged up to grow
                Karan Mittal                                          Exide Industries: 3 months performance
           Market dominance, strong brand equi-
           ty and multi-sector exposure make
           Exide Industries (EIL) an attractive play
           in the domestic auto ancillary sector.
           Due to EIL’s high market share in the
           auto (~70%) and industrial (~45%) bat-
           tery segments, we believe it will be a
           key beneficiary of sustained growth of
           auto sales in FY11E, burgeoning auto
           replacement market and higher infra-
           structure investment. Margins would
           remain firm on the back of its back-
           ward integration initiatives and higher
           proportion of recycled lead usage. We
           project revenues and PAT to grow at
           20.4% and 20.2% CAGR over FY10-
           12E to Rs.5498 and Rs.776 crore,
           respectively. We initiate coverage on        and the consequent reduction of bank            er network (13,850 dealers at present).
           EIL with Buy rating.                         lending. With the economy coming out            The company plans to expand to 250
               Robust demand from the OEM:              of the slowdown and the low sales base          locations by Q3FY11 and further to
           The ever increasing volume play in the       in FY09, domestic vehicle sales have            around 500 till FY13. The company has
           auto OEM segment presents attractive         grown strongly. As a result, vehicle pro-       also entered into distribution agreements
           growth opportunities for EIL given its       duction growth was robust in FY10,              with IOC, Hindustan Petroleum and
           dominant market position (market share       driving growth of battery demand by             Toyota Kirloskar to expand its presence
           of ~71% in OEMs vs. 25% for the sec-         auto OEMs. We expect the automotive             in the Tier II and Tier III cities. The com-
           ond-largest player Amara Raja Batteries)     sector to continue growing in FY11E-            pany has also started the innovative
           and diversified client base across vari-     12E (CAGR of 15-16% in FY10-12E)                ‘Project Kissan’initiative, through which
           ous segments (battery supplier for pas-      fuelled by the improved economic envi-          it plans to grow its share in the rural mar-
           senger vehicles, two-wheelers and com-       ronment and increased disposable                ket by converting the low cost unbrand-
           mercial vehicles). EIL is the preferred      income (lowering of tax slabs). The auto        ed batteries buyer into its own potential
           brand for a majority of vehicle manufac-     sector has exhibited sustained growth           customer.
           turers in India. Domestic vehicle sales      despite the government’s move to                     Backward integration bearing
           significantly slowed down in FY09 (up        remove the excise duty cut of 2% across         fruit: With EIL’s backward integration
           0.7% vs. CAGR of 10% during FY03-            product categories from March 2010              initiatives starting to bear fruit (in-house
           08) as a result of the economic slowdown     onwards. As a consequence, we estimate          smelters constituted ~42% raw materi-
           Key Indicators (As on Dec 24, 2010)          EIL’s auto OEM segment sales volume             als requirements in FY10), we expect the
           Face Value (Rs.)       1                     will grow at 14-15% CAGR in FY10-               company’s margins to sustain at high
           Closing Price (Rs.)    164.40                12E. We believe upside potential exists         levels (22.5% in FY12E). Over the next
                                                        due to the expected launch of new mod-          few years, the company plans to further
           52 week H/L(Rs.)       179.8/112.5
                                                        els by almost all automotive companies          raise proportion of recycled lead, thus
           Market Cap (Rs. Crore) 13974
                                                        during the next one or two years.               reducing the margin volatility from
           EPS (Rs.)                    7.57                Wide distribution channels: EIL’s           changing lead prices and improving its
           BV per Share (Rs.)           25.76           focus on expanding its distribution chan-       competitive position with higher pricing
           P/B                          6.38            nels to Tier II and Tier III cities is likely   power.
           P/E                          21.72
                                                        to provide the necessary push for mar-               Valuation: At the CMP of Rs.161,
                                                        ket share expansion in the replacement          Exide is trading at 19.6x FY11E EPS
            Shareholding Pattern (in %)                 battery segment (especially from the large      of Rs.8.2 and 17.6x FY12E of Rs.9.1. We
            (As on Sep 30, 2010)                        unorganised sector). The company has            have adopted an SOTP-based methodol-
            Promoters                   45.99           41,500 retail outlets to cater to the           ogy to value the standalone business at
            FIIs                        15.43
                                                        demand. Currently, EIL is present in over       18x FY12E (Rs.164/share) and the rest
            DIIs                        16.54
            Others                      22.04
                                                        206 locations in India (vs. 30 locations        of the subsidiaries at Rs. 20/share.
            Total                       100.0           in early 2008) through company-owned                                   (Writer is associated
                                                        distribution centres that feed to its deal-                         with ICICI Direct.com )

           28    MONEY MANTRA   1-15 January, 2011
EP 18-35- alok.qxd      12/25/2010          6:14 PM     Page 13

              CALLING IT A DAY
                          Challenges for THE SPLIT
                            Hero Honda Japanese auto major Honda Motors sold its 26% stake in Hero Honda (originally Hero Motors)
           Developing own reasearch and development             for an undisclosed price.
           wing.                                                Hero Honda has been paying 2-3% of its sales as royalty to Honda Motors. Analysts are
           Challenge of branding when Hero Honda                of the opinion that there may be more royalty outgo due to the split.
           brand will continue to exist after 2014. Hero        Hero Honda will save on director fees (including remuneration and other benefits) paid to
           honda has hired JWT for rebranding exercise.         representatives of Honda who are expected to step down from the board of the Indian
                                                                firm. Joint Managing Director Toshiaki Nakagawa and Director (technical) Sumihisa Fukuda
           Hero Motors would have a tough time pro-             were paid as much as Rs 60 crore last year, making them among the highest paid expa-
           tecting its market share of 60% in motorcy-          triates in the country.
           cles and 43% in two-wheeler segment. One             Post split, Hero Honda will be free to acquire technology from any foreign firm.
           big challenge will be to keep its dealer net-        Honda Motors will also grant new licences for new products which will be produced and
           work of 4,500 intact.                                sold under a new brand name.
           Onslaught from Honda Motors, as it has a size-       Hero Honda will have the freedom to go global and export across segments to new inter-
           able presence in India through Honda Scooter         national markets.
           and Motorcycle India (HMSI). Honda Motors            Hero Honda will be able to use the brand name till 2014. It will continue to get technology
           may kickstart a price war with Hero Honda.           support from Honda for existing models (Splendour, Passion, CD Dawn, CD Deluxe,
           Looking for overseas market and compete              Glamour, Achiever, CBZ, Karizma, Hunk, Pleasure scooter).
           with already active companies like Bajaj,TVS.        Company to raise huge amount via bridge loan. Will raise money from banks, NBFCs and
                                                                the PE investors to pay back the bridge loan.

            Opportunities for                                  1984             Hero Honda Motors
                                                                                JV set up                      Holding pattern      Then     Now
                                                                                                               Munjals              26.2     52.2
            Honda Motors                                                        Honda forms 2-                 Honda                26       0
            Honda's first move will be to launch two
            entry-level bikes. It is building a new fac-
                                                               1999             wheeler venture                Institutions         37.5     37.5
                                                                                HMSI                           Non Institutions     10.3     10.3
            tory for two-wheelers in Andhra Pradesh.
                                                                                Honda renews
            Honda's two-wheeler business will explore
            synergies with its car and logistics opera-
                                                               2004             technology support
            tions. Its two wheeler and car plants are
                                                                                agreement for 10
            coming up adjacent to each other in                                 years
            Honda Motorcycle & Scooter has recent-
            ly announced an investment of Rs. 500
            crore to set up its second plant in Tatukara

                                                                                                                                                           Content: Money Mantra Bureau
            (Rajasthan), with an annual capacity of
            six lakh units. Once the facility becomes
            operational, in the second half of 2011,
            the company's total annual capacity will
            reach 22.5 lakh units.

                      The           share
                      bounced back on                  Hero Honda has
                      the news and                     been moving up
                      soared 18 per cent               and down on the
           after senior executives of the    news. The bounce back we
           company said that royalty         saw a few days back was due
           outgo would be lower than         to short covering. It has a
           the anticipation of analysts.     strong resistance around
           Investors, who are holding        1980-2000. Those who have
           the scrip should better book      invested in the stock should
           profits. There are still a few    better take exit route.
           doubts regarding its future       Investors who don't have
           and the share is not likely to    exposure to the scrip should
           see much upside unless            avoid it.
           these doubts are cleared.
           Investors should avoid the                   Salil Sharma,
           stock on current levels.                         Partner, Kapur
                             KK Mital,                       Sharma & Co
                      Head of portfolio
               management services,
                          Globe Capital

                                                                                                                       1-15 January, 2011   MONEY MANTRA   29
EP 18-35- alok.qxd    12/25/2010          6:14 PM   Page 14

           Copper has an electronic variant E- copper
                Anjani Sinha                                       E-Copper                          portfolio.
                                                                                                          The Exchange has designed E-
                                                         Small denomination
               In India for the first time Copper is                                                 Copper as an investment product in
           now available in the demat form for           Cost efficiency                             such a way so that anyone can par-
           trade and investment. Successful launch                                                   ticipate and invest easily without the
           of E-Gold and E-Silver with over-             Same price on pan India basis               worry of excise duty, VAT and other
           whelming response from the market             Convenience for long term holding           tax liability. E-Copper units can be
           prompted NSEL to come out with E-                                                         purchased through the members of
           Copper in its E -Series of products. The      Greater uniform availability                the Exchange. Client is required to
           E-Copper is designed for those who                                                        have demat account with any of the
           desire diversification into industrial      also has other advantages of liquidity        exchange empanelled depositories.
           metals but prefer the instrument which      and market depth. The systematic              As E-series product can be bought
           resembles a common stock or securi-         investment plan (SIP) which is being          electronically, it can also be sold elec-
           ty. Buying E-Copper is not only a safe      offered to investors for E-gold and E-        tronically. The purchased units are
           way of diversifying the portfolio but       silver would also be offered for E-cop-       credited into the clients demat
                                                       per.                                          account and equivalent physical cop-
                                                             E-series commodities are basically      per is kept safely in the exchange-
                                                       commodity in the demat form which             nominated vault. Demat facility
                                                          is specially designed to promote sav-      enables buying, holding and selling
                                                            ings and investment among retail         in seamless manner. There is no risk
                                                             investors. These products are easi-     of commodity custody/theft.
                                                             ly traded through the screen based           The contract in E-copper is avail-
                                                             trading terminals of NSEL which is      able for trading on NSEL platform
                                                                  easily accessible to investors     from Monday to Friday from 10 am
                                                                   on pan-India basis. E-series of   to 11.30 pm. The trading unit for E-
                                                                   commodities are unique prod-      Copper is 1 unit, which is equivalent
                                                                  uct offerings of National Spot     to 1 kilogram of Copper with the tick
                                                                 Exchange Limited (NSEL) for         size of Rs 0.05/ unit. The clearing and
                                                                those who want to invest in          settlement pay-in and pay-out are
                                                                commodities but otherwise find       based on T+2 cycles and settled com-
                                                               difficulties to handle the physical   pletely in demat form. In E-Copper
                                                             commodities                             contract, intraday trading is allowed
                                                                There has been product innova-       but all open positions (buy and Sell
                                                        tion in financial market mostly around       trades) must result into compulsory
                                                             Gold and Silver. Globally, ETFs         delivery in demat form on the desig-
                                                                               are being offered     nated delivery day.
                                                                                 in Gold and              As the stock markets remain
                                                                                 Silver but not in   volatile throughout the world, people
                                                                                 other commodi-      are looking to diversify their invest-
                                                                                 ties. In India,     ments away from the Stock Market
                                                                                 other than Gold,    into other areas. One of the most prom-
                                                                              there are no ETFs      ising of these is the market for precious
                                                                           available for any         metals. Gold and silver have tradition-
                                                                other commodity. This restricts      ally served investors very well and
                                                               retail investors from entering        have been used for thousands of years
                                                                 into the commodities market.        for trade. However, now a new metal
                                                                  E-copper will enable those         is emerging as the preferred invest-
                                                           retail investors who prefer invest-       ment option, which is copper. The
                                                          ing in commodity stocks with a             price of copper is dictated by the eco-
                                                        view to gaining benefits from the            nomic principle of supply and demand
                                                       price appreciation. National Spot             and many investors are increasingly
                                                       Exchange is the first and only                finding copper as an interesting invest-
                                                       exchange in India and world to offer          ment. Copper is used extensively in a
                                                       E-Copper for investment. So copper,           number of industries and therefore, it
                                                       which used to be absent in the port-          tracks the industrial demand quite close-
                                                                     folio of investors, is now      ly, which makes copper have a great bull
                                                                    available to diversify their     run during the good economic times.

           30   MONEY MANTRA   1-15 January, 2011
EP 18-35- alok.qxd   12/25/2010   6:14 PM   Page 15

                                            Technical Report
            Stocks                Close                 S2         S1    Pivot              R1                 R2

            SENSEX                 19983              19863      19923   19999           20060               20136
            NIFTY                   5980               5942       5961    5984            6003                6026
            ABB                      803                768        785     798             816                 828
            ACC                     1074               1056       1065    1079            1088                1101
            AMBUJACEM                140                137        138     139             141                 142
            AXISBANK                1314               1302       1308    1316            1321                1329
            BHARTIARTL               343                336        340     344             347                 352
            BHEL                    2324               2277       2301    2319            2342                2361
            BPCL                     696                676        686     694             704                 712
            CAIRN                    332                325        328     331             334                 337
            CIPLA                    362                355        358     361             365                 368
            DLF                      282                276        279     284             287                 292
            GAIL                     509                500        505     509             513                 518
            HCL TECH                 458                446        452     455             461                 464
            HDFC                     698                691        694     700             703                 708
            HDFC BANK               2191               2160       2175    2190            2205                2220
            HEROHONDA               1940               1909       1925    1932            1948                1955
            HINDALCO                 238                231        234     237             240                 243
            HINDUNILVR               294                288        291     293             296                 298
            ICICI BANK              1130               1114       1122    1131            1139                1148
            IDEA                      69                 66         68      69              70                  71
            IDFC                     178                175        176     178             180                 181
            INFOSYSTCH              3368               3314       3341    3356            3384                3399
            ITC                      167                165        166     167             168                 169
            JINDALSTEL               700                686        693     697             705                 709
            JPASSCIAT                102                101        101     103             103                 105
            KOTAK BANK               449                442        445     451             454                 460
            LT                      1935               1902       1918    1944           21961                1986
            M&M                      751                734        743     753             761                 771
            MARUTI                  1394               1378       1386    1393            1401                1408
            NTPC                     196                191        193     195             197                 198
            ONGC                    1300               1282       1291    1301            1311                1321
            PNB                     1203               1182       1193    1201            1211                1219
            POWERGRID                 98                 97         97      98              98                  99
            RANBAXY                  571                557        564     572             579                 588
            RCOM                     128                127        128     129             129                 131
            RELCAPITAL               637                627        632     637             642                 647
            RELIANCE                1059               1044       1052    1058            1066                1072
            RELINFRA                 789                776        782     791             797                 805
            RPOWER                   148                147        147     149             150                 151
            SAIL                     186                178        182     189             193                 200
            SBIN                    2746               2717       2732    2750            2764                2783
            SIEMENS                  778                771        774     779             783                 788
            STER                     180                178        179     180             181                 183
            SUNPHARMA                453                420        437     447             464                 474
            SUZLON                    49                 48         49      49              50                  50
            TATAMOTORS              1353               1316       1334    1354            1373                1393
            TATAPOWER               1290               1275       1282    1293            1301                1311
            TATASTEEL               6661                648        654     666             673                 685
            TCS                     1140               1116       1128    1144            1156                1171
            UNITECH                   63                 62         62      63              64                  65
            WIPRO                    480                471        475     481             485                 491

                                                                                 1-15 January, 2011   MONEY MANTRA   31
EP 18-35- alok.qxd               12/25/2010                                6:14 PM                          Page 16

                                 Quarterly GDP growth                                                                                                                                                                     Inflation
                13,000                                 GDP(LHS)                                 GDP Growth % (RHS)                                                         15.0 (%)
                                     (Rs bn)                                                                                                 (%)
                12,000                                                                                                                                                     12.0
                11,000                                                                                                                                          11.0
                10,000                                                                                                                                                      9.0
                                                                                                                                                                9.0         6.0
                 7,000                                                                                                                                                      3.0
                 6,000                                                                                                                                          7.0
                 4,000                                                                                                                                          5.0        (3.0)







                                                        G-Secs yield                                                                                                                                              M3 growth
                                                            10Yr Gsecs                                               5 Yr Gsecs                                                                                M3 (LHS)                        M3yoy%(RHS)
                8.5                                                                                                                                                       60,000                                                                                                  40.0
                               (%)                          1 Yr Gsecs                                                                                                                       (Rs bn)                                           (%)

                                                                                                                                                                          55,000                                                                                                  35.0
                6.5                                                                                                                                                                                                                                                               25.0
                5.5                                                                                                                                                       40,000
                4.5                                                                                                                                                                                                                                                               10.0
                                                                                                                                                                          30,000                                                                                                  5.0
                3.5                                                                                                                                                       25,000                                                                                                  0.0
















                                                                CRR, Repo                                                                                                 IIP and Six Key Infra Ind. growth
                 6.5               (%)                                     CRR                                                     Repo                                    10                              IIP growth               Six key infra Ind growth (%)
                                                                                                                                                                            9                                                                                                     18.0
                 6.0                                                                                                                                                        8                                                                                                     16.0
                                                                                                                                                                            7                                                                                                     14.0
                 5.5                                                                                                                                                        6                                                                                                     12.0
                                                                                                                                                                            5                                                                                                     10.0
                 5.0                                                                                                                                                        4                                                                                                     8.0
                                                                                                                                                                            3                                                                                                     6.0
                 4.5                                                                                                                                                        2                                                                                                     4.0
                                                                                                                                                                            1                                                                                                     2.0
                 4.0                                                                                                                                                        0                                                                                                     0.0










           32    MONEY MANTRA                        1-15 January, 2011

                                                                                                                                                                                                                                                                                                                                     EP 18-35- alok.qxd

                       Oct-08                                                                                                       Jan-09
                                                                                                                                                                                                                                                                                                (USS bn)

                                                                                                      (Rs bn)

                                                                                                                                                                                                       (USS mn)
                      Feb-09                                                                                                                                                                                                           Jun-06


                                                                                                                                                                                                                                                                                                                                     6:14 PM

                       Oct-09                                                                                                       Nov-09

                       Dec-09                                                                                                                                                                                                          Jun-08

                                                                                                                 Fiscal deficit
                                                                                                                                                                                                                                                                                                           Trade deficit

                      Feb-10                                                                                                        Mar-10                                                                                             Dec-08
                                                                                                                                                                                                                                                                                                                                     Page 17

                       Apr-10                                                                                                                                                                                                          Jun-09
                                                                                                                                    Jul-10                                                                                             Dec-09
                                                                                                                                    Sep-10                                                                                             Jun-10


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

                                                                                                                                                                                                     (USS bn)

                                                                                                                                     May-09                                                                                             Jun-06
                     May-09                                                                                                          Jun-09                                                                                            Dec-06
                      Jul-09                                                                                                         Aug-09

                                                                                                                                     Nov-09                                                                                            Dec-07
                     Dec-09                                                                                                          Jan-10
                     Feb-10                                                                                                          Feb-10

1-15 January, 2011
                     Apr-10                                                                                                          Apr-10

                                                                                    INR/100 Yen
                                                                                                                                                                                                                  RBI forex reserves

                     Jun-10                                                                                                          Jun-10                                                                                             Jun-09

                                                                                                                Currency movement
                      Jul-10                                                                                                          Jul-10
                                                                                                                                                                                                                                                                                                           Current account deficit

                                                                                                                                     Sep-10                                                                                             Dec-09
                                                                                                                                     Oct-10                                                                                             Jun-10


EP 18-35- alok.qxd    12/25/2010            6:14 PM         Page 18


                                            Markets to enter new
                                             year with a bang
                                    Kundli 03 Jan 2011, Time: 9:00 am, Place: Mumbai
                                                                 Rahu Mars
                                                                  Sun Moon
                                                                        9        8
                                    Jupiter                                    Venus

                                                                4                   Saturn
                                               Ketu                                                                           Pt. Jai Govind Shashtri
                                                                                                                          e mail : jaigovindshastri@yahoo.co.in

                                                                                                 Realty                                     day to
                                 Global             Auto,                                        will                                       trade. In
                                 senti-             bank,                                        remain                                     the after-
                                 ment               FMCG             Global                                                   Good
                                                                                                 in focus.                                  noon
                                 will               and avia-        market                                  Realty,          buying in
                                                                                                 Property                                   Govt.        Very
                                 weigh              tion sec-        will                                    fertilzer,       the
                                                                                                 and                                        announc      good
                                 heavily.           tors will        weigh                                   metal            morning,
                                                                                                 Inflamm                                    ement        trade.
                                 Slow               perform.         heavily.                                and auto         later sell-
                                                                                                 ables                                      will         Luxury
                                 trade.             Market           Good            One way                 stocks           ing pres-
                                                                                                 will per-                                  impact       goods
                                 You                is look-         day to          trade. It               will per-        sure by
                                                                                                 form                                       the mar-     will per-
                                 must               ing              trade.          may                     form             FIIs.
                                                                                                 well.                                      ket.         form
                                 buy.               good.                            have a                  better.          Banking
                                                                                     clear                                    and
                                                                                     negative/                                insurance
                                                                                     positive                                 sector
                                                                                     bias.                                    will per-

                                  3 Jan             4 Jan            5 Jan            6 Jan      7 Jan       10 Jan            11 Jan        12 Jan      13 Jan

           34   MONEY MANTRA   1-15 January, 2011
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EP 36-51- alok- edited.qxd         12/25/2010       6:10 PM   Page 2

          PORTFOLIO 20
           36   MONEY MANTRA   1-15 January, 2011
 EP 36-51- alok- edited.qxd   12/25/2010   6:10 PM   Page 3

                                                 W                   e wanted to gift a 'portfolio' to you. A portfo-
                                                                     lio wherein there is less risk of losing money
                                                                     but probability of a high return. Before elab-
                                                                     orating more on our endeavour, let us have
                                                 a close look at the word 'portfolio' itself.
                                                 A portfolio is a collection of investments held by an institu-
                                                 tion or an individual, says Wikipedia. What is the difference
                                                 between buying a set of financial instruments and building a
                                                      portfolio? The difference lies in diversification.
                                                      Diversification is a risk mitigating strategy. By investing
                                                    into carefully selected assets, one may limit the risk factor
                                                 and maximise the gain factor. For example, if you invest Rs.
                                                 5 lakh in the stock of India's biggest bank SBI, your invest-
                                                  ment may suffer if inflation rises and RBI takes some liquid-
                                                  ity tightening measures. Now think of another option where-
                                                   in you have invested Rs. 2.5 lakh in SBI stocks and 2.5 lakh
                                                   in gold. With rise in inflation, the demand for gold will
                                                   increase and its price will shoot up. As a result, the loss
                                                   incurred by SBI scrip due to rise in inflation will be balanced
                                                   by the appreciation in gold. Here, the portfolio comprised
                                                   only two financial instruments - equity and gold, which low-
                                                   ered the risk profile of investment.
                                                  Institutions, for example mutual fund companies have an
                                                 army of analysts, who keep a tab on scrips and fund man-
                                                    agers design a portfolio keeping in view the objectives of
                                                                             the fund. For individuals like I and
                                                                                  you, there are portfolio man-
                                                                                  agers to design a portfolio to
                                                     suit our specific needs. These managers decide which
                                                     assets to include in the portfolio, given the goals and risk
                                                  tolerance of the portfolio owner. Selection involves deciding
                                                 which assets to acquire/divest, how many to acquire/divest,
                                                 and when to acquire/divest them. These decisions always
                                                 involve some sort of performance measurement, most typi-
                                                 cally the expected return on the portfolio, and the risk asso-

                                                 ciated with this return (e.g. the expected standard deviation
                                                 of the expected return). Many strategies have been devel-
                                                 oped to form a portfolio; among them: equally-weighted port-
                                                 folio, capitalization-weighted portfolio, price-weighted port-
                                                 folio and optimal portfolio are the most common.
                                                 So, we decided to make a portfolio for you and requested
                                                 stock market analysts for the same. We set a parameter for
                                                 them. Amount of investment was fixed at Rs 5 lakh and peri-
                                                 od of investment was kept one year. Risk profile has been
                                                 kept moderate. Maximum number of scrips in the portfolio
                                                 should not exceed 12 (because it would be difficult to track
                                                 a portfolio with more than a dozen scrips). And the result is
                                                 there in the pages hereafter. We'll keep on tracking the port-
                                                 folio of each analyst on fortnightly basis. And before we end
                                                 this commentary, here is a word of caution- strictly follow the
                                                 weightage of different scrips in the portfolio and stick to the
                                                 entry and exit points. Happy Investing.

                                                                                          1-15 January, 2011   MONEY MANTRA   37
EP 36-51- alok- edited.qxd           12/25/2010           6:10 PM     Page 4

                                Rajen Shah, Chief Investment Officer, Angel Broking
           Year 2011 would certainly be a             Stock         Weightage CMP
           year of small and mid caps.                Godrej Ind    15%      83.70
                                                                                                             Godrej Industries
           Anyone bullish on India cannot             BEML          10%      993.70
           ignore Godrej Industries, after            AB Nuvo       10%      835.65
                                                                                       Market Cap: 5834.77 cr
           all it's a proxy play on the Indian        Indian Hotels 5%       94.55
                                                                                       P/E: 57.41
           economy. It represents the                 India Cements 10%       105
           FMCG business (holds 22%                                                    EPS: 3.20
                                                      JK Tyre       10%      136.25
           stake in Godrej consumer/ 43%              Mahindra Ugin 10%      63.50     Book Value: 31.79
           stake in Godrej Hershey), the                                               High/Low: 248/143
           real estate business (owns 69%             Tata Global   10%      112.45
           stake in Godrej properties) and            United Phos   10%      160.65
           the agriculture business (owns                                             ally well. Besides, the high promoter (finest and cleanest in
                                                      Shanthi Gears 5%       44.15
           75% of Godrej Agrovet). All the                                            the country) stake of 79% makes one very comfortable own-
           3 segments are doing exception-            Finolex Cable 5%       53.95    ing this stock.

           Bharat Earth Movers Limited (BEML) is exploring the                                                      BEML
           possibility of venturing into the business of assembly of
           helicopters and small aircraft. It aims to become a Rs 10,000
           crore company in five years (from 2011-12 to 2016-17) and                   Market Cap: 4138.21 cr,
           has appointed IIM (B) to draw up a five-year road-map for                   P/E: 17.75
           it. BEML plans to achieve this goal by diversification, expan-              EPS: 55.97
           sion and export. It is looking to earn about Rs1,000 crore
                                                                                       Book Value: 489.31
           in three years from its new dredging equipment division.
           Having registered a turnover of Rs 3,558 crore in 2009-10,                  High/Low: 1275/956
           it is set to cross Rs4,000 crore mark in the current fiscal.

                                        AB Nuvo                                       Aditya Birla Nuvo (ABNL) has business interests in insur-
                                                                                      ance, asset management, financial services, garments, car-
                                                                                      bon black, insulators, rayon, fertilisers, IT and ITeS business-
           Market Cap: 8608                                                           es. The company also holds ~25% stake in Idea Cellular.
           P/E: 20.95                                                                 ABNL has started delivering improved performance in its
           EPS: 39.88                                                                 manufacturing businesses. The BPO and garments busi-
                                                                                      nesses have been profitable since the last two quarters. The
           Book Value: 438.73
                                                                                      company's manufacturing business constitutes carbon black,
           High/Low:974/704                                                           agri business (fertilisers), insulators, rayon and textiles. It
                                                                                      is also present in fashion and lifestyle business.

           Occupancy in the key destinations in India (where Indian                                              Indian Hotels
           Hotels has strong presence) had been hovering in the range
           of 75-80% during third quarter of FY2011. The stock is cur-
           rently trading at 18.0x its FY012E EPS. In view of the                      Market Cap: 6840.44
           improved business fundamentals, the strong room invento-                    P/E: 56.28
           ry and the company`s thrust on improving its balance sheet,                 EPS: 1.68
           it seems IHCL is a good buy in the hospitality space. It is                 Book Value: 37.23
           trying to improve its balance sheet by reducing its debt. IHCL,
                                                                                       High/Low: 118/87
           with a strong room inventory under its belt and catering to
           all segments of the hotel industry is well poised to grab the
           opportunity in the current business environment.
                                                                                      The recent price hike by India Cements has seen realisations
                                 India Cements                                        improving in 3QFY2011. Going ahead, the demand situation
                                                                                      is also expected to improve in the south and aid price recov-
           Market Cap: 3225.34                                                        ery. At the CMP, the stock is trading at EV/tonne of US
           P/E: 50
                                                                                      $76/tonne based on FY2012E capacity, which is at a substan-
                                                                                      tial discount to its peers. The company has forayed into the
           EPS: 2.10
                                                                                      northern region with the commissioning of the 1.5mtpa
           Book Value: 114.86
                                                                                      green-field plant at Rajasthan. It has already completed the
           High/Low: 143/95                                                           formalities for leasing a 1,400 acre coal mine in Indonesia
                                                                                      and is expected to start mining by March 2011.

           38   MONEY MANTRA     1-15 January, 2011
EP 36-51- alok- edited.qxd         12/25/2010    6:10 PM     Page 5

           We are revising downwards our earnings estimate for JK                                       JK Tyre
           Tyre owing to the rubber prices sustaining at high levels going
           ahead and the substantial impact on OPM thereof. Further,          Market Cap: 559.43
           its plans of incurring higher capex would leverage the bal-        P/E: 5.43
           ance sheet and poses downside risk to our earnings estimates.      EPS: 25.07
           We estimate EPS of Rs.31.1 for FY2011 and Rs.40.4 for              Book Value: 168.88
           FY2012. Commissioning of the new T&B radial capacity in
                                                                              High/Low: 236/130
           October 2009, expansion of the PCR capacity by 10% to 5mn
           tyres in FY2011 and increase in the OTR segment in FY2010
           is working in favour of JK. Given the shortage of radial tyres    utilise its enhanced capacity at higher realisations. The Tornel
           in the T&B segment, the company is in pole position to fully      acquisition could act as an upside trigger for the JK Tyre's stock.

                                 Mahindra Ugine                              Mahindra Ugine Steel, one of the leading manufacturers
                                                                             of alloy steel and special steel products in India, is also in
                                                                             the business of Stampings (Pressed Sheet Metal &
           Market Cap: 206.26                                                Components) and is the leading player in this segment in
           P/E: 14.87                                                        India. For FY11, the company continues to post consistent
                                                                             improvement in performance as Q2-FY11. The Steel divi-
           EPS: 4.27
                                                                             sion is expected to achieve higher volume and margin in
           Book Value: 52.71
                                                                             Q3 FY11 since the input cost and selling price is likely to
           High/Low: 78/52                                                   remain firm and stable. It wants further penetration in oil
                                                                             and energy sectors for new products and also export in these
                                                                             sectors for recognition as global supplier.

           Tata Global Beverage (TGBL) has evolved from an Indian                                   Tata Global
           tea farming company to a global beverages company. TGBL
           has a number of brands under its belt and focused towards
           marketing of those brands. The brands include Tata Tea,            Market Cap:6953.89
           Tetley, Good Earth, Tata Tea Premium etc. They also have           P/E: 44.27
           Himalaya Water which is under Mount Everest Mineral water.         EPS: 2.54
           The company has cash of close to Rs 2,000 crore. It has got
                                                                              Book Value: 33.60
           a debt of close to Rs 1,700 crore but the cash in the balance
                                                                              High/Low: 139/93
           sheet will provide the armour for future expansion of the com-
           pany. Tata Global is also exploring options to introduce
           other products like soft drinks and kids foods business. TGBL     to increase business. The company has acquired a 51% stake
           is looking at new geographies like Russia and South America       in the consolidated group of Suntyco Holding.

                               United Phosphorus                             Over the last few years, the global agriculture sector has been
                                                                             rejuvenating on the back of rising food prices. Hence, we
                                                                             believe that the agrichemical companies would continue to
           Market Cap: 7083.99                                               do well. United Phosphorus (UPL) has announced acqui-
                                                                             sition of RICECO (RC). We believe that the estimated acqui-
           P/E: 36.18
                                                                             sition cost of Rs.225cr is in line with UPL's historic aver-
           EPS: 4.44                                                         age of 2x EV/Sales. Given UPL's strong cash position
           Book Value: 43.58                                                 (~Rs.2,000cr at the end of 2QFY2011), the acquisition would
           High/Low: 220/147                                                 be funded through the same. We estimate UPL to post 8.8%
                                                                             and 13.3% CAGR in sales and PAT respectively, over
           Shanthi Gears is engaged in manufacturing gears and gear          Owing to strong growth in the existing LT cables seg-
           products. The Company's products include helical and bevel        ment and entry into the HT and EHV cables verticals,
           helical gear box, geared motor, worm gear box, custom-            Finolex Cables is poised to register robust growth over
           built gear box, open gearing, mill gear box, products for         the next few years. In the LT cables vertical, we expect
           textile industries and CNC machine tools. It offers various       the organised players to gradually gain market share
           services, which includes engineering design, analysis and         as their distribution reach expands and customers
           simulation, modeling and drafting, assembly and animations,       increasingly demand for higher quality and branded
           reverse engineering and tooling (mould and pattern) design        wires. Entry into the HT cables segment gives accessi-
           and manufacturing. Second quarter of current fiscal has           bility to the generation and distribution segment, where
           been splendid for the company as its net profit has risen         the market opportunity is estimated at Rs.37,000cr over
           2.37 times in comparison to corresponding quarter last year.      the next 10 years.
                                                                                                             1-15 January, 2011   MONEY MANTRA   39
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                               Vipul Verma, CEO, MoneyVistas.com
           With liquidity playing a Stock             Weightage CMP
           major role in growth story, Kotak bank
                                                                                                    Kotak Mahindra
                                                      15%        450.40
           banks are surely going to
                                       Renuka Sugars 25%        97.90
           benefit from it. Kotak                                              Market Cap: 33067.22
           Mahindra Bank is our HDIL                  15%       190.75
                                                                               P/E: 45.49
           best pick in this sector as Tech Mahindra 25%        688.10
           Kotak is one of India's Jain Irrigation 20%                         EPS: 9.90
           leading financial institu-                                          Book Value: 62.10
           tions, offering complete financial solutions across personal        High/Low: 530/356
           financial services, commercial banking, corporate and invest-
           ment banking, stock broking, asset management and life
           insurance and has been underperforming among the large             bank stocks.

                                                                              Possible diversion of sugarcane for ethanol production in
                                 Renuka Sugars                                Brazil is the main reason for the northward movement of sugar
                                                                              prices in the global market. Decontrol on sugar and permis-
                                                                              sion for exports are other postive factors. Brazilian acquisi-
           Market Cap: 6557.34
                                                                              tions by Renuka Sugars have made it one of the largest inte-
           P/E: 15.97
                                                                              grated sugar players globally. The acquisitions are charac-
           EPS: 6.13                                                          terised by assured low cost cane availability for next 6-12 years
           Book Value: 18.59                                                  which makes it the only sugar/ethanol producer in the world.
           High/Low: 124/52                                                   It also has benefit to arbitrage between India's regulated sugar
                                                                              industry and liquid global markets. Renuka Sugars is the best
                                                                              pick in sector to benefit from global sugar industry recovery.

           Though trouble for realty sector is yet not over but it seems
           that the worst is over for the sector. Most real estate compa-
           nies are reporting good volumes. Since the sector's weigh-
           tage is very low presently, this sector may get structural re
                                                                               Market Cap: 7916.2
           rating once things improve further. Housing Development and
           Infrastructure Ltd. (HDIL) has operations covering every            P/E: 10.04

           aspect of the real estate business. The company has recently        EPS: 19
           diversified into energy, hospitality and the development of         Book Value: 170.98
           SEZs. With reduced debt level and large land base, It is expect-    High/Low: 392/160
           ed to benefit immensely from the possible re-rating of the
           sector as it is trading at much lower rates than its true value.

                                 Tech Mahindra                                IT sector will benefit in both the possibilities -- either the
                                                                              world economy expands or faces crisis. If economy expands,
                                                                              then IT sector will get new business from increased activi-
                                                                              ties and if economy faces crisis, then also the industry will
           Market Cap: 8650.79
                                                                              benefit as companies in western countries will shift busi-
           P/E: 12.19
                                                                              ness to India to save cost. Among other major IT compa-
           EPS: 56.47                                                         nies, Tech Mahindra is trading at a PE of 9.77, almost one
           Book Value: 228.28                                                 third of PE of TCS and Infosys. Now that the audited results
           High/Low: 1158/600                                                 of Mahindra Satyam are out, the worst is over for Satyam and
                                                                              with the good clientele Tech Mahindra is now poised to
                                                                              gain handsomely.

           Jain Irrigation Systems Ltd (JISL) is an India-based agri-
                                                                                                      Jain Irrigation
           business company. It is a micro irrigation company global-
           ly and also a manufacturer of irrigation systems in India. JISL
           is a manufacturer of tissue culture banana plants in India.         Market Cap: 7900
           It renders consultancy for complete or partial project plan-        P/E: 27.34
           ning and implementation. The Company markets its prod-              EPS: 7.58
           ucts in India, Europe and US. With strong balance sheet
                                                                               Book Value: 35.18
           and Indian government's focus on micro irrigation, JISL
           share will see good appreciation though volatility in this          High/Low: 265/154
           stock cannot be ruled out.

           40   MONEY MANTRA     1-15 January, 2011
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                                Rajesh Jain, EVP, Retail Research, Religare Securities
           Indraprastha Gas Limited Stock            Weightage CMP
                                                                                                     Indraprastha Gas
           is investing Rs 3,000 crore IGL           15%        327.80
           on a massive expansion pro- Sun Pharma 25%           472.75
           gramme in Delhi and NCR                                               Market Cap: 4589.21
                                        Lupin        20%        454.20
           areas. It had posted a 17%
                                        GAIL         15%        513.80           P/E: 19.63
           increase in its net profit,
           which stood at Rs 66.27 ITC               25%       169.85            EPS: 16.70
           crore for the three-month                                             Book Value: 58.96
           period ended September 30 as against the net profit of                High/Low: 378/208
           Rs 56.80 crore during the same period of 2009. The prof-
           it growth was mostly due to a 63% jump in sales, which
           stood at Rs 501.06 crore.

                                  Sun Pharma                                     Pharma stocks are likely to do better as there is a huge gener-
                                                                                 ic market space opening up in US. Sun Pharma would ben-
                                                                                 efit out of this. It has offered to buy out all outstanding
           Market Cap: 48957.14
                                                                                 shares in its US-based subsidiary- Caraco. It will spend
                                                                                 around $45.8 million for buying the outstanding shares of
           P/E: 39.40
                                                                                 Caraco, but it will not have much impact on the EPS as the
           EPS: 12                                                               company is cash rich. If the move materialises, it would
           Book Value: 55.22                                                     give Sun more flexibility in handling its subsidiary's opera-
           High/Low: 476/290                                                     tions. It is looking at another buyout in the US and it has
                                                                                 got the green signal from the US health regulator to market
                                                                                 a generic version of 'Cymbalta' in the American market.

           Lupin is riding on geographical expansion, product pipeline                                     Lupin
           and investment in R&D which is almost like 7.5% to 8% of
           its revenue. As far as revenue of the company is concerned,
           35% of its revenue comes from US, 30% India, 12% Japan                Market Cap: 20252.87
           and 5% Europe. It has made sizeable investments in other
                                                                                 P/E: 29.32
           markets like South Africa. Australia and the Philippines.
           Lupin Pharma has requested USFDA to cancel acceptance                 EPS: 15.49

           of any generic drug application of anti-cholesterol drug              Book Value: 56.76
           Antara, if the generic product does not have the same dosage.         High/Low: 520/289
           American drug regulator USFDA had said no to an earlier
           request made by Lupin.

                                       GAIL                                      India's largest gas transmission and marketing company
                                                                                 GAIL (India) Limited is negotiating an equity stake in
                                                                                 unlisted Australian oil and gas exploration firm Advent
           Market Cap: 65174.37                                                  Energy. There is about 11,000 km of pipeline network in India
           P/E: 18.20                                                            with 7,500 km being owned by GAIL India. Gail India's
           EPS: 28.23
                                                                                 subsidy sharing burden declined 24.4% to Rs 346.37 crore
                                                                                 in Q2 September 2010 from Rs 458.54 crore in Q2 September
           Book Value: 132.43
                                                                                 2009. GAIL India has proposed to set up 5,500 km of gas con-
           High/Low: 520/402
                                                                                 nectivity over the next two-three years with the investment
                                                                                 of $4 billion.

           With the government deciding in favour of cigarette manu-                                         ITC
           facturers, concerns regarding the cash-cow business of ITC
           are over. Prior to this decision, tobacco major ITC had stopped
                                                                                 Market Cap: 130766.37
           production of cigarettes due to the uncertainties surrounding
           the implementation of pictorial warnings. The cash generat-           P/E: 29.13

           ed from the cigarette business is utilised to strengthen the future   EPS: 5.83

           of the company's other businesses. Also, the company's other          Book Value: 18.20
           businesses are expected to maintain their strong growth               High/Low: 185/126
           momentum in the coming quarters.

                                                                                                               1-15 January, 2011   MONEY MANTRA   41
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                         PK Agrawal, Director, Purpleline Investment Advisors
           To reduce the production              Stock           Weightage CMP      Nangal and Chainsna-Jhajjar-Hissar region so as to serve the
           and demand gap in the                                                    Northern market and around 1,000 km were laid during
                                                 GAIL            20%      513.80
           country, GAIL India has                                                  this year only. In Southern region, pipelines were also laid
           proposed to set up 5,500 km           Infosys         20%      3368.50   in Kochi-Bangalore-Mangalore and Dabhol-Bangalore so
           of gas connectivity over the                                             as to serve the Kerala, Karnataka and Tamil Nadu market.
           next 2-3 years with the               CIPLA           20%      363.80    Targeting the eastern region, the company has also planned
           investment of $4 billion.             Bharti Airtel   20%      348.50
                                                                                    to lay a pipeline connecting Haldia-Jagdishpur soon. Net
           GAIL is in the process of                                                profit for the company rose 29.49% to Rs 923.55 crore on
           laying additional pipelines           HUL             20%      295.30    29.5% rise in total income to Rs 8278.10 crore in Q2
           in the Dadri-Bawana-                                                     September 2010 over Q2 September 2009.

                                                                                    Higher investments in IT by large clients and the diversified
                                          Infosys                                   portfolio of services of Infosys will help it grow faster than
                                                                                    mid tier IT vendors. With deal activity robust and win rate
                                                                                    in line with the past few quarters, Infosys is looking better.
           Market Cap:193363.58                                                     Infosys expects pricing to be stable in FY12 as opposed to
                                                                                    commentary by some of its peers, which have expressed
           P/E: 32.37
                                                                                    confidence in getting higher prices in the face of continued
           EPS: 104.05                                                              strong demand. Infosys has hinted at a likely 20% growth
           Book Value: 383.88                                                       in FY12 (4.7% CQGR) in the absence of macro shocks. The
                                                                                    macro environment, protectionism in the US and austerity
           High/Low: 3378/2396
                                                                                    measures in Europe are the biggest threats to sustainable
                                                                                    demand. Infosys is on track to hire 50,000 (gross) employ-
                                                                                    ees in FY11.

           Cipla has said the speculative news on stake sale of Cipla                                          Cipla
           or any of its brand is baseless. It has commercialised the
           supply agreement with DRL for Russia and Ukraine region,
           and expects to ramp it up over next few quarters. It has                 Market Cap: 29210.28
           maintained its conservative revenue guidance of 8-10%
                                                                                    P/E: 26.93
           growth for FY2011 despite 11.5% revenue growth in
           1HFY2011. It would launch inhaler Seroflo in Russia and                  EPS: 13.51
           South Africa in 2HFY2011. If approvals for EU come                       Book Value: 73.55
           through, Inhaler sales contribution may increase to 25% of               High/Low: 380/307
           net sales in next 3 years. On biosimilars front, it has planned
           to launch two products in the domestic market by FY2012.

                                    Bharti Airtel                                   Bharti Airtel has spread its wings to the neighbouring
                                                                                    Bangladesh by announcing the launch of its mobile servic-
                                                                                    es under the Airtel brand recently. Barring the concerns over
                                                                                    the telecom scam in the country, Bharti Airtel looks strong
           Market Cap: 132343.92
                                                                                    in future ahead. Over the quarters, the rate of decline in ARPU
           P/E: 15.62                                                               has abated to a great extent. ARPU has been declining since
           EPS: 22.31                                                               the onset of the price war in 3QFY2009. Company is present-
           Book Value: 96.24
                                                                                    ly focusing on growing its Africa business via exploiting
                                                                                    the high price elasticity nature of the African market. In
           High/Low: 377/272
                                                                                    addition, the capex, which had peaked in 1HFY2011, will
                                                                                    drop down to ~Rs.11,500cr from FY2012.
           The volume growth for Hindustan Unilever (HUL)has
           returned to double digits in three successive quarters this                                  Hindustan Unilever
           calendar year. It has broken a run of 40 quarters during
           which volume didn't expand by more than single digit.
           Due to its aggressive marketing stance, the company's                    Market Cap: 64443.9
           advertising expenses rose 23.5% in the first half of this
                                                                                    P/E: 27.65
           fiscal yoy. HUL has a year-to-date market share of 34.5%
           in detergents and 45.9% in shampoo versus P&G's 9.6%                     EPS: 10.68

           and 23%, respectively. HUL ended the September quarter                   Book Value: 11.84
           with an OPM of 16.32%, compared with 30.91% and 39.5%                    High/Low: 321/226
           for GCPL and ITC, respectively.

           42   MONEY MANTRA      1-15 January, 2011
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                                  Arun Kejriwal, Director, KRIS
           Total consump-             Stock
           tion of primary fertiliz- Aries Agro
                                                     Weightage CMP
                                                                                                  Aries Agro
                                                     38%        132.70
           er products in India was
                                      Ruchira Papers 35%       17.40
           estimated around 5.08
           crore tonnes in the fiscal LIC Housing    27%       939.80       Market Cap: 172.57
           2008-09. Demand for Finance                                      P/E: 11.94
           primary fertilizers in the
                                                                            EPS: 11.11
           country is picking up and domestic fertilizer companies are
           not able to meet the demand. Aries Agro Limited, a medi-         Book Value: 75.54
           um-sized fertilizer company, has a production capacity           High/Low: 204/76
           of 84 thousand tonnes of micronutrients and 60 thousand
           tonnes of secondary nutrients and water-soluble primary
           fertilizers per year. Net profit of Aries Agro rose 41.64
           per cent to Rs 4.83 crore in the quarter ended September         crore in the quarter ended September 2010 as against Rs
           2010 as against Rs 3.41 crore during the previous quarter        33.59 crore during the previous quarter ended September
           ended September 2009. Sales rose 38.85% to Rs 46.64              2009.

                                  Ruchira Papers                            ture yarn. It is used in the manufacturing of textile tubes
                                                                            and in wrapping of different types of yarn. The compa-
                                                                            ny had started its Kraft paper production way back in 1983
           Market Cap: 39.01                                                with capacity of just 2300 tonnes per annum. Now the
           Book Value: 26.10
                                                                            capacity has been expanded to 52,800 tonnes. In 2008,
                                                                            Ruchira diversified into writing and printing paper. It start-
           High/Low: 24.45/7.20
                                                                            ed commercial production of WPP with installed capac-
                                                                            ity of 33000 tonnes per annum. Ruchira has also set up
                                                                            power cogeneration plant of 7.20 MW. Ayear ago, Ruchira
                                                                            Papers started its chemical recovery plant to comply with
                                                                            water pollution norms. Chemical recovery plant has no
           Ruchira Papers Limited is engaged in the manufactur-             direct relation with production of paper but it improves
           ing of Kraft paper, which is commonly used writing and           bottomline of the company. Now, present capacity of the
           printing paper. In addition, it is used as a raw material in     company is 85,800 tonnes per annum. However, Ruchira
           the packaging industry. This product is used in the man-         Papers had incurred losses last year. But now with com-
           ufacturing of corrugated boxes and corrugated rolls for          missioning of Cogen and chemical recovery plant, its oper-
           industrial packaging. In addition, Ruchira Papers also           ations have turned highly profitable in the last
           makes a special grade of Kraft Paper known as draw tex-          few quarters.

           The scrip of LIC Housing Finance Limited has faced a
           steep fall due to the news of scam. LIC Housing Finance's                       LIC Housing Finance
           stock had tanked more than 31 per cent in four trading
           sessions after this news came out. Recently, the company
           was involved in a controversy due to the arrest of its Chief     Market Cap: 8921.77

           Executive Officer in a bribe-for-loans case. LIC has set         P/E: 10.97
           up an internal enquiry committee to look into the scam           EPS: 85.67
           that led to the arrest of two of its senior officials. The       Book Value: 356.84
           tainted CEO R R Nair was replaced by V K Sharma. The
                                                                            High/Low: 1497/778
           company had cleared that loans worth 3.89 billion ($85 mil-
           lion) issued by the company were under probe by the CBI
           in the financial bribery scandal. The company said the
           outstanding loans under scrutiny were performing and the
           value of securities against the loans was at over Rs 10 bil-     ing of LIC Housing Finance's non-convertible debentures
           lion. LIC Housing Finance Limited has raised Rs.750 Crore        (NCDs) aggregating to Rs 18,322 crore. CARE has also
           through a bond issue. The amount raised is over three            reaffirmed the ‘AAA' rating for upper Tier-II bonds of Rs
           times its intended issue size of Rs.200 Cr. The original issue   1,600 crore and tier-II bonds of Rs 750 crore of LIC HF.
           size also had a green-shoe option, allowing it to retain         A few days back, rating agency Crisil had reaffirmed its
           over subscriptions. Net profit of LIC Housing Finance            highest rating on LIC HF's debt instruments, bank loans,
           rose 36.8% to Rs. 234.21 crore on 33.1% rise in operat-          commercial papers and fixed deposit programme. The
           ing income to Rs. 1050.16 crore in Q2 September 2010 over        agency said that the parent LIC's continued support works
           Q2 September 2009. CARE has reaffirmed the AAA rat-              in the housing finance company's favour.

                                                                                                          1-15 January, 2011   MONEY MANTRA   43
EP 36-51- alok- edited.qxd           12/25/2010        6:10 PM        Page 10

                               Madhumita Ghosh, VP-PMS & Research, Unicon Financial
           GAIL has a huge          Stock             Weightage CMP       Target   Crore to increase it's capacity to move gas from west
           expansion plan           GAIl (India)      15%      513.80     580      coast to markets in the north to 35 mmscmd from 24
           which will drive                                                        mmscmd. In the second phase, a 48-inch parallel line is
                                    Biocon            15%      408.20     500
           its earnings over                                                       being laid that will raise the capacity to 75 mmscmd by
           the next few years.      HCL Tech          15%      454.85     540      April 2011. It has also awarded contracts for laying Dabhol
           It has completed         Sintex Ind.       13%      179.85     220      to Bangalore and Bangalore to Kochi gas pipelines and first
           the first phase of       Tata Steel        12%      673.35     750      phase is expected to be commissioned by March 2012. It
           expansion       of       Eros Int. Media   10%      151.50     200      plans to invest Rs 6,200 crore in capital expenditure this
           Dahej-Vijaipur           Exide Ind.        10%      164.40     195
                                                                                   fiscal and plans to borrow Rs 4,000 crore in the next to meet
           pipeline with an                                                        expenditure on pipelines and petrochemical businesses. At
                                    IDBI Bank         5%       164.25     242
           estimated invest-                                                       the CMP, the stock trades at PE of 15x its FY12E
                                    Yes Bank          5%       307.85     340
           ment of Rs 980                                                          earnings.

                                                                                   Biocon Limited is a leading Indian biotechnology compa-
                                        Bicocon                                    ny with strategic focus on biopharmaceuticals and research
                                                                                   services. It is the largest manufacturer of insulin in Asia and
                                                                                   a leading global producer of Statins and Immuno-suppresants.
           Market Cap: 8164
                                                                                   The company has successfully maintained its growth trajec-
           P/E: 27.40                                                              tory through organic and inorganic growth. Acquisition of
           EPS: 14.9                                                               AxiCorp GmbH (a German biosimilar company) and market-
           Book Value: 78.27                                                       ing alliance with Pfizer provide immense potential for future
           High/Low: 465/264
                                                                                   growth of Biocon. Biocon is expected to register a CAGR
                                                                                   growth of ~20% in sales and profits each till FY12E. It is
                                                                                   currently trading at 20x its FY12E earnings.

           HCL Tech is in a good position compared to its large cap
           peers, as it is a leader in the infrastructure management                                      HCL Tech
           services (23% of its revenues comes from infrastructure man-
           agement services). The company has seen robust client addi-
                                                                                   Market Cap: 31096.91
           tions apart from signing multi-year multi-service deals which
           should provide revenue visibility for the company going                 P/E: 32.70
           forward. We expect the margins to come under pressure due               EPS: 13.91
           to INR appreciation in this quarter. However, keeping in view           Book Value: 72.18
           the strong expected topline growth backed by infrastruc-
                                                                                   High/Low: 459/355
           ture management services & custom applications, we remain
           positive on the stock with a target price of INR 540.

                               Sintex Industries                                   Sintex Infra Projects Limited, the subsidiary of Sintex
                                                                                   Industries Ltd (SIL), recently acquired a minority stake (30%)
                                                                                   in Durha Constructions Pvt. Ltd (DCPL) engaged in EPC proj-
           Market Cap: 4909.74
                                                                                   ects. This acquisition, in our view, should help strengthen
                                                                                   SIL's monolithic and prefab business. Over the last two years,
           P/E: 15.83
                                                                                   DCPL's revenue grew by 40% annually and has current order-
           EPS: 11.36                                                              book of INR 7.5bn. At the CMP, SIL trades ~9.9x its consen-
           Book Value: 68.95                                                       sus FY12e earning (excluding earning from DCPL). Buy for
           High/Low: 237/121                                                       price target of 220 (upside of 21%). Key risks to target price
                                                                                   could be higher depending on orders from public sector, ris-
                                                                                   ing working capital and further slowdown in Europe.

           Eros International Media Ltd has over 50 films slated for release                    Eros International Media
           in FY11 and FY12, adding to its 1,000 plus library that gener-
           ates high margin revenues. A transfer pricing mechanism with
           its parent company for overseas rights covers ~38% of costs which       Market Cap: 1384.82
           gives it an added advantage. The company has pre-sold TV/music          Book Value: 20.07
           rights of Rs2.4bn from its FY11 and FY12 release slate, partly de-
                                                                                   High/Low: 218/149
           risking variable box-office returns. We expect margins to increase
           going forward by improving realisations on TV/music licens-
           ing, while costs remains largely range bound. At the CMPthe stock
           trades at PE multiple 9.9x for its FY12E earnings.

           44   MONEY MANTRA     1-15 January, 2011
EP 36-51- alok- edited.qxd        12/25/2010       6:10 PM      Page 11

           Tata Steel is our next bet. Demand for steel is expected to remain                          Tata Steel
           robust on the back of huge infrastructure spends of government.
           We still have a bullish view on the global steel industry. We
           believe that steel prices would continue to rise going forward       Market Cap: 60750.59
           due to strong demand and higher liquidity flowing towards com-
                                                                                P/E: 8.68
           modities. The Brownfield expansion at Jamshedpur is on track
           and 2.9 MT of capacity would be commissioned by Dec 2011.            EPS: 77.57
           This would take the total capacity to 9.7 MT from 6.8MT cur-         Book Value: 412.14
           rently. The company is also in the process of setting up a new       High/Low: 737/543
           6 MT integrated steel plant in Orissa. The capacity utilisation
           at Corus has reached 80-85% and we expect it to achieve 20-
           25% integration in iron ore and coking coal. At the CMP, stock       trades at PE of 7x FY12e EPS.

                               Exide Industries                                 motive segment. The company has already commissioned the
                                                                                Ahmednagar plant for motorcycle batteries and additional
                                                                                production lines at Shamnagar and Haldia factories for 4-
           Market Cap: 13974
                                                                                wheeler batteries. Margins remained firm due to rising con-
                                                                                tribution from the high margin replacement segment and
           P/E: 21.72
                                                                                increased usage of lead from its captive mines. The compa-
           EPS: 7.57                                                            ny has a plan to increase its captive sourcing of lead & lead
           Book Value: 25.76                                                    alloys from 45% to 50%. We believe this would further
           High/Low: 180/112                                                    expand margins going forward on higher captive consump-
                                                                                tion at cheaper prices as lead constitutes ~70% of material
                                                                                cost of a battery. We believe Exide would post INR 8.0 and
           Exide Industries Ltd has announced to invest INR 3.7-4bn             INR 10.3 EPS for FY11 and FY12. The stock is currently
           in FY11 on capital expenditure to enhance the production             available at FY12 PE multiple of 16x as per our earnings
           capacities to meet up the increasing demand from the auto-           estimate which is attractive.
           IDBI Bank Ltd (IDBI) in the last five years has transformed                                 IDBI Bank
           itself into a full fledged commercial bank. The merger of
           IDBI Gilts & Home-Finance with IDBI Bank will give it bet-
           ter synergies. To raise the Tier I capital, the government infused   Market Cap: 16169
           INR 31 Bn, increasing the Tier I capital to 8%. With this cap-
                                                                                P/E: 12.58
           ital infusion, IDBI now is in position to grow its business above
           the industry average. We believe IDBI's total business to reg-       EPS: 13.06
           ister strong growth at CAGR of 29% from FY09 to FY12E.               Book Value: 86.21
           In FY11, the bank is expected to open ~260 branches with             High/Low: 202/111
           80% in the CASArich northern and southern region of the coun-
           try. Thus CASA ratio is expected to improve to 22% by FY12E
           from 14.59% in FY10. This will help the cost of deposits             at Dubai and also plans to open representative offices across
           decline to 5.8% by FY12E from 6.56% in FY10 and result in            the globe. IDBI as group is present in capital market servic-
           improvement of net interest margins (NIMs) from 1.23% in             es, insurance, asset management, home finance etc. All this
           FY10 to 2.31% by FY12E. IDBI has set up an overseas branch           would help in increasing revenues in the ensuing future.

                                   Yes Bank                                     port the NIM (~3%) in the long term. Large corporate loans
                                                                                constitute about 70% of the bank's loan book while mid cor-
                                                                                porate and retail loans comprise 20% and 10% respectively.
           Market Cap: 10628.52
                                                                                Going forward, the bank's management plans to increase
                                                                                the proportion of loans to the high-yielding retail and SME
           P/E: 17.75
                                                                                segments to 30% (currently about 10%). The bank's man-
           EPS: 17.34                                                           agement has ambitious plans to open 150 branches per year
           Book Value: 89.65                                                    and increase the tally to 750 by FY2015. Currently, the bank
           High/Low: 388/241                                                    has 73 branch licences which will be consumed by
                                                                                Q1FY2012, thereby increasing the network to about 250
                                                                                branches. In addition, CASA mobilisation will also improve
           Yes Bank has grown its advances at a CAGR of 74% over                with branch expansion. Though the CASA ratio for Yes Bank
           FY2006-10. Going ahead it is expected to sustain the growth          remains lower compared to other banks, rapid branch addi-
           momentum with a targeted growth of 35% CAGR in the                   tions will improve the CASA mobilisation and margins. In
           advances over FY2011-15 led by the corporate and SME                 Q2FY11, the total Advances grew by 86% as compared to
           segments. We believe the increase in the deposit base led by         the same period of corresponding year. Total deposits of the
           robust branch expansion and higher advances growth to the            bank grew by 107% in September 2010 quarter as compared
           relatively high-yield segments like retail and SME would sup-        to same quarter last year.

                                                                                                             1-15 January, 2011   MONEY MANTRA   45
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                               Jagannadham Thunuguntla, Head, Research, SMC Global
           Hindustan Unilever              Stock            Weightage    CMP        in other income and higher advertising spend to support
           (HUL) is India's                HUL              6%           295.30     brand activities. The long-term story for HUL remains
           largest         FMCG            M&M              8%           760.75     intact but an upside risk market share gains, return of
           Company, touching               HDFC Bank        7%            2216.05   pricing power, and benign input cost environment. The
           the lives of two out of         Siemens          8%           809.50     company has completed buyback offer of 200000 shares
           three Indians with over         HDFC             8%           698.95     under the scheme of consideration of Rs 534 lakhs. The
           20 distinct categories          L&T              7%           1956.90    average price was Rs 266.75 per share. According to esti-
           in Home & Personal              TCS              9%           1140.70    mates, net sales and operating profit of the company are
           Care Products and               Wipro            7%           481.95     expected to grow at a CAGR of 9% and 10% over 2010
           Foods & Beverages. In           RIL              7%           1059.55    to 2012E respectively. The EPS of the company for the
           FY 2011, HUL's                  JSW Steel        6%           1170       earnings for FY11E and FY12E is seen at Rs 10.85 and
           Earnings was impact-            Bharti Airtel    7%           348.50     Rs 11.89 respectively. Hindustan Unilever has paid an
                                           ITC              5%           169.85
           ed largely due to high-                                                  advance tax of Rs 220 crore as against Rs 175 crore in
                                           Cash             15%
           er tax rate, sharp drop                                                  the same period last year.

                                            M&M                                         M&M has also forayed into two wheeler segment and
                                                                                    has majority stakes in various listed companies in other sec-
                                                                                    tors, including technology, property and finance. The new
           Market Cap: 45120.75                                                     product launch in the M&HCV space would position it well
           P/E: 19.58                                                               in line with other major domestic CV players like Ashok
           EPS: 38.86                                                               Leyland and Tata Motors over the next 2-3 years. The high
                                                                                    growth potential of M&M's subsidiaries is expected to unlock
           Book Value: 131.92
                                                                                    actual value of the stock over the years. Listing of its sub-
           High/Low: 826/503                                                        sidiaries has been supporting M&M's valuation in the recent
                                                                                    past and likely to continue in the long term as well.

                HDFC Bank is well positioned for high qualitative                                           HDFC Bank
           growth, with the CASA and cost-to-income ratio returning
           to pre-CBoP levels. With strong capital adequacy and sub-
           stantial branch expansion, the bank is set to further gain cred-         Market Cap: 102644.23
           it and CASAmarket share accompanied by reduction in NPA                  P/E: 30.38
           provision costs, as the economic environment continues to
                                                                                    EPS: 72.95
           improve. In 2QFY2011, the CASA ratio improved to 50.6%
           of total deposits, while NIM stood at 4.2%. The bank's asset             Book Value: 464.78
           quality remained stable during the quarter, with net NPAs                High/Low: 2518/1577
           at 0.3%.

                                        Siemens                                         Siemens has planned to invest Rs 1,600 crore in India
                                                                                    in the next 3 years. The investment will be used to set up
                                                                                    six hubs of base-level products. These products will cater
           Market Cap: 27293.12
                                                                                    to the mid and low end segments which constitute around
                                                                                    70% of the total market in India. The inauguration of the
           P/E: 33
                                                                                    second phase of stream turbine and compressor unit has added
           EPS: 24.53                                                               three production bays to the existing production factory and
           Book Value: 111                                                          tripled its output capacity. Siemens has won an order of
           High/Low: 856/582                                                        Rs.127 crore from Jaypee Sports International for equip-
                                                                                    ping the country's upcoming first Formula 1 race track at
                                                                                    Noida with electronics race control management systems.

               HDFC is trading at higher PE, but one should remem-                                            HDFC
           ber that this high-priced stock have always delivered better
           returns than the market. Companies with good corporate gov-
           ernance have a better valuation in the market. HDFC is such              Market Cap: 102278
           an example. The company sees loan growth at 22 per cent                  P/E: 33
           for the fiscal year ending March 2011. The leader in the
                                                                                    EPS: 21.18
           sector is expected to continue with an edge over its peers in
           near future also. HDFC posted a good growth for the three                Book Value: 103.90
           month period ended September 2010. During 2QFY201,                       High/Low: 780/474
           the company's profit grew by 21.63% to Rs 8.08 billion.

           46   MONEY MANTRA      1-15 January, 2011
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           L&T is in an enviable position, given the apparent short-                                        L&T
           age of good quality constructors in India. L&T's strong bal-
           ance sheet, integrated operations tailored to suit India's infra-
           structure growth story and multiple, recurring value unlock-         Market Cap: 118941.36
           ing triggers over the medium term, lead us to place faith in         P/E: 32.78
           this default India's infrastructure story. Further, L&T has          EPS: 59.69
           an order book of more than Rs1trillon, lending revenue
                                                                                Book Value: 300.50
           visibility. It also has a well-capitalised balance sheet, at a
           debt-equity ratio of 0.4x as of FY2010. Investment in the con-       High/Low: 2212/1438
           struction segment is expected to double over the Eleventh
           Plan period. The government, through Regulatory changes,            mode of investment. It expects the PPP share in the eleventh
           is focusing on the construction segment through the PPP             Plan to be 30%, as against a mere 19.8% in the tenth Plan.

                                        TCS                                    TCS bagged eight large deals in 2QFY2011 itself, with two
                                                                               each in the banking and retail segments and one each in insur-
                                                                               ance, life sciences, media and government. On the back of
           Market Cap: 223260                                                  a strong deal pipeline, TCS has raised its hiring target for
           P/E: 35.09                                                          FY2011 yet again from 36,000 at the start of the year to
                                                                               40,000 at the end of 1QFY2011 and 50,000 plus currently.
           EPS: 32.51
                                                                               TCS is witnessing a trend of clients looking out to spend
           Book Value: 76.72
                                                                               on IT to drive operational efficiencies and prepare for future
           High/Low: 1174/715                                                  growth, which is leading to a surge in transformational proj-
                                                                               ects of large sizes. The retail vertical is emerging as a strong
                                                                               growth driver for the company.

           Outsourcing/offshoring component for Wipro is expected to
           rise in CY11. Besides, the next budgeting cycle might see                                      Wipro
           higher component of discretionary spending compared to the
           previous year. The company is expecting price increment
                                                                                Market Cap: 118174.14
           in FY12. It is likely to absorb incremental impact of grant
           of RSU's on the back of margin levers. The normal cycle              P/E: 24.88
           is in February, so we can expect increases in February 2011          EPS: 19.37
           or April 2011 depending upon the supply side constraints             Book Value: 71.02
           at that point of time. Wipro has reduced exposure to R&D
                                                                                High/Low: 500/393
           and has started providing more of IT services for clients in
           telecom vertical which has led to reasonable growth.

                           Reliance Industries                                 While E&P disappointment is now fully priced in the cycli-
                                                                               cal businesses of RIL offset most of the negatives. RIL is
                                                                               in dialogue with the government for higher gas prices for new
           Market Cap: 346725.26                                               production. Also, the government has recently allowed
           P/E: 18.75                                                          ONGC to charge a price of $5.25 for non-priority customers,
                                                                               further indicating its willingness to raise prices. It is expect-
           EPS: 56.51
                                                                               ed that higher prices would drive E&P value for RIL. Demand
           Book Value: 392.28
                                                                               for petroleum and petrochemical products is set to improve,
           High/Low: 1187/841                                                  which may improve RIL's profitability. In last few quar-
                                                                               ters, strength in the polyester margins has helped maintain
                                                                               margins of the petrochemical and polyester segments.

           JSW Steel is set to acquire controlling stake in Ispat Industries
                                                                                                        JSW Steel
           through fresh issuance of 108.6cr equity shares for Rs.2,157cr.
           Post acquisition, JSW Steel will hold 41.29% of expanded
                                                                                Market Cap: 26104.71
           equity. The acquisition is positive for JSW Steel in the long
           term, as it will become India's largest steel company with total     P/E: 12.88

           capacity of 14.3mn tones. The commissioning of the bene-             EPS: 90.84
           ficiation plant of JSW by March 2011 is expected to lower            Book Value: 421.41
           iron ore cost for the company. Going ahead, performance of           High/Low: 1400/999
           the company's US subsidiary is expected to improve.
           Mr. Thunuguntla is Head of Research, SMC Global Securities                                                   -MM Bureau Report
                                                                                                              1-15 January, 2011   MONEY MANTRA   47
EP 36-51- alok- edited.qxd          12/25/2010       6:10 PM   Page 14

                                                                                                    Easy way to accumulate funds by
                                                                                                    investing small amount regularly

                                                                                                    No need to time the market

                                                                                                    A disciplined investment approach

                                                                                                    Gives investors freedom to choose
                                                                                                    from a range of stocks i.e. Exchange
                                                                                                    Traded Fund, gold funds etc.

                                                                                                    Averages the cost of purchase.
                                                                                                    Since investors invest in both ups
                                                                                                    and downs, equity SIP averages the
                                                                                                    cost of purchase. In short, whenev-
                                                                                                    er the market goes down, NAV of the
                                                                                                    scheme will be lowered and the
                                                                                                    investor will buy more units. And, if
                                                                                                    the market goes up, the NAV of the
                                                                                                    scheme will be raised and the
                                                                                                    investor will get fewer units. It helps
                                                                                                    lessen the average cost of the pur-

                                                                                                   Quantity based equity SIP allows the
                                                                                                   investor to buy a fixed quantity of
                                                                                                   shares of his preferred scrip at fre-
                                                                                                   quency chosen by him.
                                                                                                   Difference between Equity

                                                        SIP IN                                     MF SIP and Equity SIP
                                                                                                       Stock ownership: In equity MF
                                                                                                   SIP, investors don't own any particu-
                                                                                                   lar stock. Rather they hold units of

                                                                                                   mutual fund. In equity SIP, investors
                                                                                                   own the stocks.
                                                                                                   Charges Little cheaper than equi-
                                                                                                   ty SIP: In equity MF SIP, usually,
                                                                                                   the mutual fund distributor charges
                                                                                                   1% of the total value as advisory fees
                                                                                                   and 2-2.5% recurring charge on every
                                                                                                   installment.In equity SIP, brokerage
                Shilpy Arora                                                                       charges depend on investor's contract
                                                         Long-term investment in                   with the broker. For an investment

                     quity SIP is a systematic           equity has always given                   of Rs.10,000, brokerage charge

           E         investment in a specified
                     stock or ETF over a specific
                     period of time. It is an ideal
           option for retail investors who are plan-
           ning to invest in specified shares.
                                                         higher returns to the
                                                         investors. Equity SIP is,
                                                         therefore, an ideal way to
                                                                                                   ranges from Rs 50 to Rs.600.
                                                                                                       Choice of stocks: In equity MF
                                                                                                   SIP, investors can't choose their
                                                                                                   stocks. In Equity SIP, investors can
                                                                                                   choose from a range of stocks i.e ETF,
           Investors are given a list of shares and      invest systematically and                 gold funds and so on.
           asked if they want to make payments                                                         Despite equity MF SIP being
           on daily, weekly, fortnightly or month-       get maximum value from                    cheaper than equity SIP and involves
           ly basis.                                     the accumulated funds.                    less risk, the major advantage of equi-
               Currently, ICICI Direct, the online                                                 ty SIP is that it gives more returns can't
           retail broking arm of ICICI Securities,                                                 be underestimated. If we look at his-
           provides Equity SIP. The company                  Amount-based equity SIP: As           tory, long-term investment in equity
           gives two options to place order, either      the name suggests, it is an SIP that      has always given higher returns to the
           (1) on the basis of fixed amount or           allows investors to invest a fixed        investors. Equity SIP is, therefore, an
           (2) on the basis of fixed quantity. At        amount in their preferred scrip at fre-   ideal way to invest systematically and
           present, minimum period of equity             quency chosen by them.                    get maximum value from the accumu-
           SIP is from one month to a year.                  Quantity-based equity SIP:            lated funds.

           48    MONEY MANTRA   1-15 January, 2011
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                                                                                          ENTREPRENEURSHIP TOOL KIT

                                       PRICING SYSTEM
           NOT PRICE                                    The branded jewellary are                    Syracuse I observed that they are con-

                                                                                                     tended with the purchase and return they
                                                        disproportionately priced                    get. There sale per footfall is decent. I
                                                        and we can offer a bargain                   wonder what is the experience of shop-
                                                                                                     sowners in Indian Malls? If I go by my
                                                        price. But that is possible                  observation in Washi, the other two
                                                        at his existing level of                     Malls are already on the decline. The
                                                                                                     Malls seem to have just taken the place
                                                        operations. We observed                      of Pragati Maidan, India Gate and
               G Ramesh                                 that the moment he                           Beaches as venues for picnic. The foot-
                                                                                                     falls are not getting translated into sales
                 t is better to understand pricing as   decides to scale up his                      and profits.

           I     pricing system. Economics talks
                 of only one price at which equi-
                 librium is reached. In reality
           there is a price band and we end up
           with a range of price depending on
                                                        operations, the costs keep
                                                        adding up one by one. The
                                                        moment he scales it up, his
                                                                                                          Many times I have seen people tak-
                                                                                                     ing photos against the glittering back-
                                                                                                     ground of Swarovski shops at airports.
                                                                                                     This is the farthest anybody can go near
                                                                                                     these shops. The middle class is not
           market segment, quantity, location,          cost will be neck to neck                    getting translated into footfalls, footfalls
           quality etc. For example, the strate-        with branded jewellery.                      are not getting converted to wallet share,
           gists and researchers look at the rela-                                                   and wallet shares are not translating into
           tionship of price of toothpaste                                                           returns. There are huge missing links still
           between 50 gms and 100 gms. The              observe in the market and understand         in India. In India, we attract huge clien-
           incremental cost of 100 gms over 50          it rationally.                               tele but these do not bring in bottom line.
           gms will be just incremental and def-             Malls Recently, I had been to                Also, the expectations of return are
           initely not double. If the price of 100      Mumbai on a personal visit. Only when        high in India as risks are high. Once one
           gms is disproportionately less than          you are on a personal visit, you see the     leading cardio thoracic surgeon said that
           50 gms, then 50 gms will go out mar-         various dimensions of a city. It is nice     when he goes aboard and when he tells
           ket. They have to ensure that both the       to hang around at Nariman Point with         them that he does daily at least three
           sizes survive. When the Civil Aviation       family and a camera instead of being         surgeries, they then immediately think
           Ministry instructed the airlines to          in business suit. I happened to visit the    he should be a billionaire. The number
           bring down the price, it was not clear       largest shopping Mall in Washi. I learnt     of surgeries that a doctor in the US does
           to the users which price they were dis-      quite a few things. It seems other malls     in their entire career is done by our doc-
           cussing. The check fares are way             took a beating once this Mall came. It       tors by the time they are 40. It is a strug-
           below card price. In the same travel,        was a Sunday and the footfalls it attract-   gle for everybody. The Malls are still not
           an economy passenger may be pay-             ed was quite impressive in contrast to       a threat to neighbourhood shops.
           ing more than the business passen-           what I observed in the US and Canada.             My observation is -- middle class
           ger. Above all, the airlines seem to be      I was in a small town in the US, Syracuse    in India is a mirage. Don't equate poten-
           more engaged in collecting taxes than        which has a population of 150,000. It had    tial with actual. Have reasonable expec-
           fares. I prefer to call it as a Price        a couple of Malls of the size I saw in       tations of return. Everybody looks for
           System than Price and pricing comes          Washi and six Wal-Marts. I think the         a bargain whether they come by Merc
           with all its anomalies.                      population of Washi itself should be         or Bike.
               The critical question is do you          more than this place, not to speak of Navi
           have correct understanding of pricing?       Mumbai. Even on a Sunday the Mall in         Price and Quality
           If you intend to become an entrepre-         Syracuse did not attract the sort of foot-       Price is supposed to communicate
           neur it is important you become con-         falls that the Mall in Washi attracted. In   many things. It is supposed to commu-
           scious of the various anomalies you          my conversation with the shops in            nicate its quality, target customers, dis-

                                                                                                              1-15 January, 2011   MONEY MANTRA   49
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           suade unintended customers, and in the        Harley bike will start at Rs 11 lakhs.      plementary. If you sell a truly brand-
           final analysis everybody expects a value      Harley is shoulders above all; it is 11     ed shirt at platform, consumer will
           for money. Hamam used to advertise its        times better is a matter of opinion. You    think it is a duplicate. If you sell an
           soap as honest soap. It is an interest con-   can get a shirt stitched with excellent     unbranded shirt in a five start hotel, the
           cept. What has soap to do with honesty?       material and best fit at price lower than   consumer will think it is a signature
           Their Market Research might have              the lowest range of branded readymade       edition. Price has to be backed with
           found that people expect products to          shirts with average fit. You can get best   all the features and ambience. In fact,
           stand by its features. Some financial         of the shoes at Agra at one fourth of       in all my training programmes I ask the
           services firm advertise saying there are      price of branded shoes. How much are        question why coffee costs Rs 10 in
           no hidden charges. This is because peo-       you willing to pay for brand which we       ordinary hotels and Rs 160 in five star
           ple suspect hidden charges. I have            often tend to equate with quality?          restaurants. The participants will
           stopped suspecting my credit card             Brands do communicate quality but           invariably say the difference we pay for
           statements because they only give ten-        comes at disproportionate price.            the ambience. So, you pay Rs 20 for
           sion. Gold brands advertise saying no             However, it does not mean the           coffee (since it comes in a mug) and Rs
           wastages are charged. Wastages do             branded manufacturers walk away             140 for the ambience. Any way who
           occur and where do they hide it. The          with huge margin. Recently, I sat with      pays for himself in a five star hotel? But,
           rates, fares and price always come with       a jewellary manufacturer to decide          you cannot start with such a pricing pro-
           caveats and risk factors. However, like       about marketing and pricing strategies      gramme. Price has to be thought in total-
           risk factors of IPO advertisements            for him. We found that the branded          ity.
           these are in fine prints and glossed          jewellary are disproportionately priced
           over.                                         and we can offer a bargain price. But         Pricing Conscious
                So, we are in an era where price         that is possible at his existing level of        There are still many issues attached
           do not convey anything. There is a gen-       operations. We observed that the            to pricing. The reason for dilating on
           eral belief that quality comes at a cost.     moment he decides to scale up his           this aspect is to bring it to table all the
           It is true but it does not necessarily        operations, the costs keep adding up        issues relating to pricing. You do
           mean quality comes at a price. You may        one by one. The moment he scales it         observe all these day to day but tend
           pay the price and end up with a poor          up, his cost will be neck to neck with      to ignore it or fail to appreciate the com-
           product like it happens in five star          branded jewellery. Challenge is how do      plexity. Pricing is finally by hunch and
           hotels. In some cases, quality comes          you grow and still remain lean. It is not   gut feeling, but it is better if it is backed
           at disproportionately high prices.            like the brands have a choice or they       by analysis and understanding.
           While you can get best of bike at Rs          don't know.                                      (The author is Associate Professor with
           1 lakhs, the basic vanilla product of             Of course, we say strategy is com-                                  IIM, Bangalore)

           50   MONEY MANTRA   1-15 January, 2011
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    FINANCIAL PLANNING                              TAXATION                        STOCK MARKET                                COMMODITIES

                   BEWARE OF BANK

                Shilpy Arora
                                                         Not just cash withdrawal                    withdrawal. The matter
                                                                                                     of concern is not that

                                                         through ATM, consumers                      whether the bank is
                       ow many times your bank                                                       charging for cash withdrawal

           H           has offered services without
                                                         are unaware of a host of                    or not, it is that consumer has never
                       your request and weeks later,     services that are                           been informed about the service
                       you discovered that service       chargeable such as SMS                      charges," says a consumer activist
           charges were deducted from your                                                           requesting anonymity.
           account? A lot of customers confront          alert, cash withdrawal,                          Not just cash withdrawal, consumers
           this kind of situation. We spoke to a few                                                 are unaware of a host of services that
           consumer activists about it. In this arti-
                                                         money transfer and much                     are chargeable such as SMS alert, cash
           cle we will discuss when is a bank liable     more. These charges can                     withdrawal, money transfer and much
           to charge; and how can you avoid these                                                    more. These charges can range anywhere
                                                         range anywhere between                      between Rs 10 to Rs 5,000. Let us have
                Until 1997, charges levied by banks      Rs 10 to Rs 5,000.                          a look how you can avoid banks' charges:
           were kept under the vigil of Indian                                                                 Charges for unwanted serv-
           Banks' Association. Later on, the
           Reserve Bank of India (RBI) gave lib-
           erty to individual banks to decide charges
                                                         moved to her village and withdrew cash
                                                         from the ATM of HSBC from her PNB
                                                                                                     1.        ices: Don't trust your bank if it
                                                                                                               says it would give you a debit
                                                                                                     card without even asking for it. The bank
           but, at the same time, the central bank       Debit card, was charged Rs 20. She had      may deduct charges from your account
           asked all the banks to keep account hold-     never been informed by the bank about       for immediate issuance of debit card. In
           ers aware of these charges. The banks can     any charges on withdrawal. "Like            addition, you may have to pay charges
           provide a list of service charges for all     Sulekha, a thousand of consumers have       for services on the debit card you have
           banking transactions either on its web-       filed complaints with us regarding cash     never asked for. Even public banks are
           site or via making personal calls to the      withdrawal through ATM. According to        charging fees for such unsolicited serv-
           account holders.                              RBI guidelines, five withdrawals in a       ices. Since the charges are very nomi-
                The banks, however, have not been        month from any ATM are free of charge.      nal, they are not noticed by the customer.
           able to comply with RBI guidelines.           But foreign banks are not directed by RBI   But, if you sum up the annual account,
           Sulekha, a resident of Delhi, when            and thus deduct service charges for cash    it may be shocking. As the consumer

           52   MONEY MANTRA   1-15 January, 2011
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     MUTUAL FUND                             INSURANCE                                    BANKING                                 INDIA POST

                                                        is situated 15km away," says another         come as a surprise that some private
                                                        consumer activist working with Citizen       banks have started charging fine as per
                                                        Consumer and Civic Action Group.             their discretion. "Recently, we regis-
                                                                 Fine for cash deposit in col-       tered a case where a private bank

                                                        3.       lector box: As collector box is
                                                                 only for depositing cheques,
                                                        some banks have imposed a penalty on
                                                                                                     allegedly charged Rs.1,000 on the clo-
                                                                                                     sure of account in less than six months
                                                                                                     of opening it," says Geeta.
                                                        depositing cash in collector's box. ICICI             Paid services: Now many
                                                        has imposed a penalty of Rs100 for the
                                                        cash deposits of less than Rs 500 in the
                                                        collector's box while cash deposit of
                                                                                                     6.       banks are charging for the cus-
                                                                                                              tomer care services. So it is
                                                                                                     advisable to dial toll-free number to
                                                        more than Rs 500 would cost Rs 300.          check your account balance or to file a
                                                                 Charges for Internet bank-          complaint. If possible, ask bank to pro-

                                                        4.       ing: Go through Bank's tariff
                                                                 sheet given on the website of all
                                                        banks for Internet banking charges.
                                                                                                     vide you updates every time it reviews
                                                                                                     charges for phone calls.
                                                                                                              Maintaining a minimum bal-
                                                        Check out the fees charged by the bank
                                                        for bill payment service and other serv-
                                                        ices. You will be surprised to know that
                                                                                                     7.       ance: If your account balance
                                                                                                              falls short than the minimum
                                                                                                     limit set by your bank, you will be
                                                        if you fail to pay such charges before       charged penalty that can be up to Rs
                                                        the specified date, you will be liable for   1,000. Minimum balance required by
                                                        payment of interest at rate fixed by the     some banks for a saving account can
                                                        bank and the service will be withdrawn       be as high as Rs 5,000 (on a quarterly
                                                        automatically without any notice to you.     basis). Make sure your account bal-
                                                        Worst is that the Bank has the right to      ance never falls short than Rs.100.
                                                        make changes in its tariff without any       According to Raja Reddy, branch man-
                                                        notice to the customers.                     ager of OBC, "The only way you can
                                                                 Penalty on closure of an            avoid such charges is to read the

                                                        5.       account: As per guidelines of
                                                                 the Reserve Bank of India
                                                        (RBI), an account holder has to pay a
                                                                                                     account registration document careful-
                                                                                                     ly. All banks mention balance limit set
                                                                                                     by them in the forms. Also, the mini-
                                                        fine if he/she closes the account before     mum limit is mentioned on bank's web-
                                                        six months of opening it. Penalty for        sites." Moreover, if you fail to main-
                          activist explains, "If        an individual account holder is Rs.150       tain balance in your account for a long
                           charges for weekly SMS       while for non-individual account hold-       time, the bank will continue to deduct
                             alert service of the       ers have to pay Rs 500. However, it may      amount from your account until the bal-
                               bank are Rs 20, you                                                   ance becomes zero.
                                 have to pay Rs 240
                                   in a year for such           CHARGES                                  Despite RBI has laid down strict
                                                                                                     guidelines for services charged by the
                                     service. It is                                                  banks, customer complaints are on a
                                                         Don't trust your bank if it says it would
                                        the responsi-    give you a debit card without even
                                                                                                     rise. The number of complainants to the
           bility of the                                 asking for it. The bank may deduct          banking ombudsman's office in RBI has
           bank          to                              charges from your account for imme-         been increasing. According to a release,
           inform the cus-                               diate issuance of debit card.               in 2008-09, a total of 66,823 customers
           tomer before put-                                                                         filed complaints against banks. Banks,
           ting them in the sub-                         Every time you go to a bank branch          however, argue that they clearly men-
                                                         to transfer funds, make sure the bank
           scribers' list."                              doesn't charge for the core banking         tion service charges and penalties in
                    Charges       for                                                                their tariff sheets and as and when

           2.       money transfer:
                    Every time you go to
           a bank branch to transfer funds, make

                                                         Go through Bank's tariff sheet given
                                                         on the website of all banks for
                                                         Internet banking charges. Check out
                                                                                                           "Since RBI has left it to individ-
                                                                                                     ual banks to decide the charges, it
           sure the bank doesn't charge for the core     the fees charged by the bank for bill
                                                                                                     becomes the responsibility of the banks
           banking services. "Some banks have            payment service and other services.         to make aware their customers about
           started charging for core banking serv-                                                   various fees and penalties," says an offi-
           ices. Recently, a case has come into lime-    If your account balance falls short         cial of RBI while adding that the banks
           light where a woman was asked to pay          than the minimum limit set by your          should also be transparent and reason-
           Rs 100 for transfer of funds from a           bank, you will be charged penalty that      able while imposing charges
                                                         can be up to Rs 1,000.
           branch of HDFC bank to a branch which                                                     on customers.

                                                                                                             1-15 January, 2011   MONEY MANTRA   53
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          BANKING WITH

         VK                                        Sir, I had taken a loan from a private bank.       Sir, I am applying for a home loan. I had

                                                   Due to some problems, I was unable to              defaulted on my loan payment once. Will
                                                   pay my March EMI on time. Later, I did             it have a negative impact? If so, how can
                                                   pay the amount in April with a small late          I convince the bank that the same will not
           Government of India                     fine. While I was paying the next EMI in           happen again?
                                                   May, the banker refused to have received                            -Manoj Sharma, Mumbai
           and RBI have issued                     any payment for March. Sir as I always             Your track record is very important while
           directives to all the                   pay my installments in cash, I somehow             approaching the bank for any further loan.
           nationalised banks to                   misplaced the receipt of the payment I             If you have defaulted in payment of one
                                                   made for March. Now my bank is refus-              installment only and subsequently cleared the
           give preferred                          ing to accept my payment I want to know            arrear without any chase from the lender, in
           attention for                           how can I resolve the matter; and what are         my opinion the bank may not consider it as
           financing of small                      my rights as a customer?                           an intentional default. It could be circumstan-
           scale industries on                                             -Kasturba, by e-mail       tial for which you can always convince
                                                   If you have paid EMI in cash along-with late       your bank.
           liberalised terms.                      fee and have misplaced the cash receipt, you
           These banks will meet                   may visit the parent branch of the bank and        Sir, I am running a small scale industry
           all kind of your                        submit the details about the deposit of install-   and in need of a loan for working capital
           financial                               ment in the form of an application, the date       of around Rs 30 lakhs. Someone told me
                                                   of deposit etc. The information provided by        to approach DIBI and NSIC. Kindly tell
           requirements viz. long                  you will facilitate the bank`s branch to go        me what are the benefits of these bodies
           term and short term.                    through their record to find out if credit has     over normal/ scheduled banks?
           Also, it has been                       been given to some other account or the                                     -Almeida F, Mumbai
           made mandatory for                      amount has been kept in miscellaneous                  Government of India and RBI have issued
                                                   account for lack of complete information           directives to all the nationalised banks to give
           the banks not to take                   in the voucher. After investigating the mat-       preferred attention for financing of small
           collateral security for                 ter and getting satisfactory reply to their        scale industries on liberalised terms. These
           financing Micro and                     queries, the bank will take necessary steps to     banks will meet all kind of your financial
                                                   take corrective action. As a customer you          requirements viz. long term and short term.
           Small Enterprises up                    have every right to make the claim                 Also, it has been made mandatory for the
           to Rs. 10 lakhs.                        but it is absolutely necessary to prove you're     banks not to take collateral security for financ-
                                                   bona fide.                                         ing Micro and Small Enterprises up to Rs.

          54   MONEY MANTRA   1-15 January, 2011
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           10 lakhs and advised these banks to
           consider the loan requirements of                                                     Home Loan Junction
           small scale industries on priority and        Home Loan EMI/Rs 100,000 for a loan amount of Rs 30 Lakh as on December 21, 2010
           preferably without insisting for col-
           lateral up to loan requirements of                                            5 years           10 years          15 years            20 years
           Rs 100 lakhs. To facilitate easy avail-                                       FIXED FLOATING FIXED FLOATING FIXED FLOATING FIXED FLOATING
           ability of loans, government of India        Allahabad Bank                   2212 2100         1449 1322         1233    1090        1119    998
           has created a Credit Guarantee Fund          Axis Bank                        2327 2064         1553 1253         1332    999         1244    884
           Trust which serves as guarantee to           Bank of Baroda                   DP 2100           DP 1308           DP      1059        DP      965
           the lending institution and borrow-          Bank of Maharashtra              2137 2100         1363 1308         DP      1075        DP      965
           er has to proportionately bear the           Canara Bank                      DP     2076       DP     1280       DP      1044        DP      932
           burden of guarantee fee. However,            Central Bank of India            DNA 2100          DP     1308       DP      1075        DP      965
           you can obtain the details of financ-        HDFC Limited                     2187 2100         1392 1294         1152    1044        1049    932
           ing from SIDBI and NSCI also and             ICICI Bank                       2432 2100         1675 1294         1469    1044        1391    932
           make comparative analysis to suit
                                                        IDBI Bank                        2187 2088         1392 1280         1152    1029        1049    916
           your requirements.
                                                        Indian Bank*                     2076 2076         1267 1267         1014    1014        900     900
                                                        LIC HF New Fix-O-Floaty*         DP     2071       DP     1261       DP      1008        DP      893
           Sir, I fixed Rs 75,000 in an FD
           scheme of SBI for three years. But           Oriental Bank of Commerce 2137 2112                1335 1308         1105    1075        998     965
           I have urgent need of Rs 50,000.             Punjab National Bank*     2076 2076                1267 1267         1014    1014        900     900
           If I redeem it, what will be rate            SBI Easy Home Loan*              2028 2028         1213 1213         956     956         836     836
           of interest applicable on it and             UCO Bank                         2162 2088         1378 1294         1152    1059        1066    965
           what is the penalty bank charge?             PN: The rates given above are for the 1st year of the loan tenure. For the subsequent years, the interest
                               -Mala, by e-mail         rates vary from bank to bank. * These banks have interest rates fixed for the initial few years and thereafter
           You have to visit the branch and just        then prevailing rate are applicable.The home loan rates are indicative rates, which may change according
           make a request to en cash the FD             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
           before maturity. Bank will check             Bank remain fixed during the entire tenure of the loan
           from their records that how long the         DP - Do Not Provide        DNA: Data Not Available
           deposit was maintained with them                       Fixed Deposit Interest Rates (upto - Rs. 15 lakhs as on 20th Dec. 2010)
           and what was the interest rate appli-
                                                        BANKS                    6mths - < 1       1 – < 2 Year     2 – < 3 Year      3–<5            5 Years &
           cable for the deposit of this maturi-                                 Year                                                 Year            above
           ty on the date of issue. It will deduct
                                                        Bank of Baroda           6.00% - 6.25% 8.00% - 8.35% 8.25%                    7.50%           7.50%
           1% from the applicable rate on the
           deposit for the period for which             Bank of India            6.50% - 6.75% 8.25%                8.25%             7.25% -         7.00%
           deposit was held with them and                                                                                             8.25%
           credit the amount to your a/c or issue       Bank of Maharashtra 7.25%                  8.30%            8.30%             8.30%           8.00%
           payment advise as per your instruc-
           tions. But if your requirement is            Canara Bank              7.25%             8.25% - 8.30% 8.25% - 8.60% 8.25%                  8.00%
           temporary in nature, then you may            Central Bank of India 8.00%                8.25%            8.25%             8.50%           8.60%
           request to raise a loan of Rs 50000          Corporation Bank         7.40% - 8.00% 8.10% - 8.40% 8.10%                    8.20%           8.20%
           on which the bank will charge you            Dena Bank                7.50%             8.25%            8.25%             8.25%           7.75%
           2% more than the interest being paid         Indian Oversea Bank 7.25% - 7.75% 8.25% - 8.60% 8.25% - 8.50% 8.25%                           7.75%
           to you on deposit. But charging
                                                        Oriental Bank of         7.25% - 7.75% 8.00% - 8.25% 8.25% - 8.75% 8.50%                      8.50%
           interest of 2% above your deposit            Commerce
           rate is at the discretion of the bank;
                                                        State Bank of India      7.25%             7.75% - 8.50% 8.25% - 8.50% 8.25%                  8.50% - 8.75%
           they may charge you even
           higher.You may also consider rais-           Syndicate Bank           6.50% - 6.75% 8.20%                8.25%             8.50%           7.75%
           ing a loan against FD if the origi-          Union Bank of India      7.00% - 7.25% 8.00% - 8.60% 8.00%                    7.50%           7.50% - 8.00%
           nal date of maturity of your deposit         Vijaya Bank              7.00%             7.75% - 8.25% 8.15%                7.50%           7.50%
           is in near future or you are in a posi-      Axis Bank                6.25% - 7.25% 8.00% - 8.25% 7.75%                    7.00%           7.00%
           tion to adjust your loan out of the          Development Credit       6.50%             7.50% - 7.75% 7.75% - 8.50% 7.75%                  7.50%
           surplus every month. In such a sit-          Bank
           uation, you may work-out that
                                                                                                                                                                         Source: Apnapaisa Research Bureau

                                                        HDFC Bank                5.50% - 6.75% 7.50% - 7.75% 7.75% - 8.25% 8.25%                      8.25%
           which option will be to your
                                                        ICICI Bank               5.75% - 6.50% 7.25% - 8.00% 7.50% - 8.25% 8.25%                      8.25%
                                                        ING Vysya                6.50% - 8.00% 7.75% - 8.75% 8.25%                    8.25%           8.50% - 8.75%
           Virendra Kumar Dhingra is a post-graduate    IDBI Bank                7.25% - 8.15% 8.15% - 8.50% 8.25%                    8.25% -         8.50%

           in Commerce with over forty years of expe-                                                                                 8.75%
           rience in banking. He retired as Executive   The Federal Bank         5.50% - 8.25% 8.60%                8.60%             8.75%           8.75%
           Director, UCO Bank. Currently, he is
           Director, Industrial Investment Bank of      Kotak Mahindra           6.00% - 7.25% 8.00%- 8.25% 8.25%                     8.25%           8.25%
           India Ltd.                                   Bank

                                                                                                                            1-15 January, 2011   MONEY MANTRA      55
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       FINANCIAL PLANNING                               TAXATION                    STOCK MARKET                          COMMODITIES

                                                                       A CLOSER LOOK AT

                                                          In Capital Protection         is the reason why understanding this
                                                                                        issue is very important.

                                                          Funds, there is no            Capital protection schemes
                                                          guarantee that capital            Capital protection schemes are those
                                                          protection will take place mutual fund schemes that seek to ensure
                                                                                        that the investors get back at least the
                Arnav Pandya                              but there will be an effort   capital that they have invested after a cer-
                                                          to ensure that this effort is tain period of time. The meaning of the
                     he Securities and Exchange                                         term is simple to understand as the cap-

           T         Board of India (SEBI) has been
                     paying close attention to the
                     New Fund Offers (NFO) that
           is being launched by mutual funds. One
           particular segment of schemes that has
                                                          actually successful. There ital protection schemes will try to man-
                                                          is a slight difference
                                                          between ensuring capital
                                                          protection and assuring
                                                                                        age the funds in such a way that if the
                                                                                        investor has put in a sum of Rs 10,000,
                                                                                        then this is the minimum amount that
                                                                                        they will get back. There is always a
           come under the lens is the capital protec-                                   chance that a higher sum can be earned.
           tion scheme. The manner of operation of        capital protection but it is The manner in which this position is
           these funds and the way in which they          a very important              achieved is by ensuring that there is a
           will ensure the protection of the                                            portfolio structured in such a manner that
           investors' capital is something that is cru-   difference.                   it will at least yield the desired amount
           cial to the working of these funds. This                                             of money.

           56   MONEY MANTRA   1-15 January, 2011
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           BANKING                                INSURANCE                                    MUTUAL FUND                                INDIA POST

           Common understanding                           all circumstances.                              is nothing but the manner in which the
                One of the first things that the               The safety is not sure under all cir-      entire portfolio of the fund will be invest-
           investor has to keep in mind is that they      cumstances because there can be a fall          ed. There are two stages of investment
           must not get misled by the name of the         in the price of debt securities due to a        where the first part is when the fund is
           scheme. This is called capital protec-         rise in the interest rate and hence these       actually started; so this will be the ini-
           tion and what this means is that the fund      instruments will have an interest rate risk.    tial allocation pattern. The second stage
           will try and seek to ensure capital protec-    At the same time there is also the credit       is the allocation on an ongoing basis.
           tion. There is no guarantee that the cap-      risk that is associated with the debt secu-     There are often situations when the ini-
           ital protection will take place but there      rities as the issuer of the instrument can      tial investment is changed to reflect a dif-
           will be an effort on the part of the mutu-     default on the repayments. Thus while           ferent situation and hence the composi-
           al fund to ensure that this effort is actu-    individual instruments might have risk,         tion of the allocation pattern across asset
           ally successful. There is a slight differ-     the fund on the whole tries to ensure that      classes and securities is also a very
           ence between ensuring capital protection       the net effect is that at least the capital     important point as far as the investment
           and assuring capital protection but it is      is protected.                                   is concerned.
           a very important difference. In the for-
           mer the end result is not certain while        Theoretical consideration                       Derivatives
           in the latter this is certain.                      Alot of the arguments that have been           Even though the aim of the plans is
                                                          made against the ability of the capital         to have capital protection, there would
           Actual Strategies                              protection schemes to fulfill their objec-      be a wide usage of instruments as well
                The investor who goes and invests         tives are theoretical in nature. What this      as asset classes to achieve this objec-
           say a sum of Rs 10,000 expects that the        means is that there are chances that the        tive. The situation has to be considered
           fund will operate in such a manner that        situation may not work out as has been          on a larger level rather than just look-
           the entire Rs 10,000 is protected on the       planned and this is in theory. In reality,      ing at various instruments on their own.
           downside while there is a chance to earn       this might not take place at all and in such    The portfolio could also include deriv-
           a higher amount if things turn out to be       a situation there would not be a prob-          atives where the aim might not be to
           well. The manner in which this is sought       lem and the fund would be able to               make speculative gains but to ensure that
           to be achieved is by using two types of        achieve its aims. However, if in theory         the downside is protected. This is done
           strategies. The first one involves a posi-     things can go wrong, then with large            by carefully creating strategies that
           tion where there is a large part of the        amounts of uncertainty and risk present         ensure that there is some hedge against
           amount of the fund invested in debt. The       in the real world, there are chances that       sharp movements in the value of the
           gain in this portion over the time frame       sometimes the situation may not turn out        holdings.
           available will ensure that the final amount    to be favourable.
           will equal the initial amount invested.                                                        Safety
           The remaining part of the portfolio            Allocation pattern                                   One of the reasons why capital pro-
           invested in equities will seek to earn high-       The investor has to check the allo-         tection process can get derailed is due
           er returns. On the other hand the other        cation pattern that will be followed by         to the poor quality of the debt portfo-
           strategy is that of ensuring that the entire   the fund that they are considering for          lio. This can have an adverse impact on
           investment of the funds is in safe debt        investments. The term allocation pattern        the overall investment because the debt
           instruments so that there is no loss that                                                      part of the portfolio is a large part of the
           will occur and this itself will ensure cap-      Capital Protection Scheme                     entire portfolio and this is the part that
           ital protection for the funds. Most mutu-       Schemes that seek to ensure that the           provides stability as well as backing for
           al funds that offer capital protection          investors get back at least the capital        the safety and security of the fund. If
           schemes follow the first strategy.              that they have invested after a certain        there are any problems with this segment
                                                           period of time.                                of the portfolio, then there can be a ques-
           Nature of protection                            There is no guarantee that capital pro-        tion mark on the overall position of the
                The most important point in the entire     tection will take place but there is an        portfolio. This also requires that the cap-
           case of the capital protection fund is that     effort on the part of the mutual fund to       ital protection schemes have additional
           there might not be protection of capital        ensure that this effort is actually suc-       safeguards in place. Additional rating for
           for all the investments made under its                                                         the debt instruments or restriction in
           portfolio. This is because the assets that      MF houses adopt two strategies. In             terms of the equity exposure can be a
           are selected for the purpose of investment      the first strategy, major portion is invest-   route that will add some extra layers of
           in the fund are not guaranteed to be free       ed in debt and the rest in equities. In the    safety. This will still not ensure that there
                                                           second one, money is only invested
           from losses in case there is something that     in debts. Most fund houses adopt the           is foolproof security to guarantee that
           goes wrong. A part of the portfolio of          first strategy.                                there will not be erosion in the capital.
           these schemes is in equities and there is                                                      With uncertainty in all markets becom-
           risk that is present in this investment and     Equities come with risk but debts too          ing the norm it is better to be aware of the
                                                           are risky. Interest rate risk and credit
           this is known by one and all. On the other      risk are always there in debt instru-          risks that this can throw up.
           hand, the remaining investment is in debt       ments, so claiming to ensure capital
           and this amount is also not safe under          protection may be difficult at times.                             (The writer is Chief Coach
                                                                                                                                at FinCare Consulting)
                                                                                                                   1-15 January, 2011   MONEY MANTRA   57
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   FINANCIAL PLANNING                               TAXATION                                STOCK MARKET                                     COMMODITIES

           Keep Reviewing
           Insurance Cover
                                                         would suggest you to go through the
                                                         policy wordings provided to you by
                                                         your insurance company. You will find
                                                         more details about the coverage of your
                                                         two-wheeler policy from the same.

                                                         Q3. Sir, I am 24 years old and work-
                                                         ing in an MNC for the last two years.
                                                         I am unmarried and don't have any
                                                         plans to settle down in the near
                                                         future. I have a term insurance pol-
                                                         icy of Rs 4 lakh and health cover of
                                                         Rs 1 lakh. My take home salary is                     on your income or else you have a lia-
                                                         Rs 21,000 per month. One of my                        bility on your head like any type pf loan.
                                                         friends who is into insurance contin-                 In case you don't have any of the two,
                                                         uously argues with me that the cover                  you don't need life insurance. In case
                                                         I have taken is not enough. How can                   your parents are dependant on you, then
                                                         a person decide that he is having an                  take a life insurance of around 8 to 10
                                                         adequate cover or not?                                times your annual income and add your
           Q1. One of my friends bought endow-                             -KP Sharma, Patna                   outstanding liabilities to this amount.
           ment policy of LIC for a ten-year             Life insurance cover is for providing                 Or else your current life insurance cover
           period. He paid premium continu-              financial security to dependent family                is more than enough.
           ously for three years and after that          members, so that they can live with                        However, you need to review your
           stopped making payments. He wants             peace of mind in your absence. Life                   insurance cover once you marry or take
           his money back. What is the proce-            insurance is needed only in case there                any kind of loan commitment. In
           dure for getting it back and how              are family members who are dependent                  regards to health cover, your current
           much the company will return?                                                                       Rs 1 lakh cover may not be sufficient.
                                                        Insurance             Yearly Premium Renewable
                               - Kirti Das, Siliguri    Company               (in Rs.)       till what age     As health and age is in your side, it
           Your friend needs to fill up a "Surrender    Bharati AXA -         2,729          70
                                                                                                               would be advisable to increase your
           Application" and submit it along with        Smart Health                                           health cover to at least Rs 3 lakhs.
           original policy document at the near-        Plan Premium                                           Premium quotation for 24-year-old
           est LIC office. The applicable surren-                        Co pay       Not Applicable           health person looking for health cover
           der value cheque will be normally                             Sub Limits   Room rent- 1% of SI      for Rs 3 lakhs is as follows :
           couriered at policyholders' registered                        PED Coverage After 4 contin-
                                                                                      uous       policy
           mailing address. The complete process                                      years.                   Q4.Sir, my father-in-law bought an
           may take 2 to 3 working weeks time           Royal Sundaram - 2,776        70                       endowment policy with critical ill-
           from the date of submitting the applica-     Health Shield                                          ness cover. He is suffering from coro-
           tion. Please note that the surrender                          Co pay       Not Applicable           nary problems and the doctor has
           value is likely to be much lower than the                          Sub Limits   Doctor fees -       suggested him to go for an angiog-
                                                                                           40% of SI,
           acutal amount of premiums paid for                                              Room rent -
                                                                                                               raphy. Will the insurance company
           the 3 years.                                                                    1.5% of SI, ICU     pay for this?
                                                                                           Rent - 3% of SI.             -S. Rangnathan, Coimbatore
           Q2.I bought a motor vehicle policy                                 PED Coverage After 4 continu-    Coronary angioplasty is a test to check
                                                                                           ous policy years.
           from United India Insurance                                                                         whether there are any blockages in any
                                                        Apollo Munich -       3,626        Renewable till
           Company for my bike. Are pillion             Easy Health                        Lifetime            of the coronary arteries. If the test finds
           riders also insured in this policy?          Individual Standard                                    any blockages and if the doctor thinks
                      -Arun Bhalla, Chandigarh                               Co pay         No Limit           it is advisable they may also do a pro-
           Pillion rider will be covered in case you                         Sub Limits     No Limit           cedure called PCTA to remove the
           have taken a two-wheeler comprehen-                               PED Coverage After 3 contin-      blockage and may also place a stint at the
                                                                                            uous     policy
           sive policy for your bike. Coverage may                                          years              site to prevent re-blockage. The critical
           depend on company-to-company. We             PED: Pre-existing Disease, SI = Sum Insured.           illness rider will need to be studied to

           58   MONEY MANTRA   1-15 January, 2011
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           INSURANCE Q&A                                                              Medical Insurance
                                                                                     Age : 30 years Sum Insured Rs.300,000
                                                                                     Compare your Health Insurance Policy
                                                            Name of the Name of the Premium*                  Rene Pre Existing Sub Limts
                                                            Companies Policy                                  wable disease
                                                                                                              Upto Covered
                                                                                                              Age After
                                                            Bharati AXA Smart Health 2,729/-                  70    4 continuous Room rent of 1% of
                                                                        Plan Premium                                policy year Sum Insured per day
                                                            ICICI            Comprehensi 3,046/-              70      4 continuous No Sub- Limit
                                                            Lombard          ve Health                                policy year
                                                            United India Mediclaim             3,609/-        Life Covered             Room rent 1% of Sum
                                                            Insurance    Policy                               Time from day one        Insured per day or the
                                                                         Platinum                                  (Congenital         actual amount whichever
                                                                                                                   diseases not        is less.
                                                                                                                   covered)            I.C.U expenses : Room
                                                                                                                                       rent 2% of Sum Insured
                                                                                                                                       per day or actual amount
                                                                                                                                       whichever is less.
                                                            Apollo           Easy Health 3,626/-              Life  3 continu-         No Sub- Limit
                                                            Munich           Individual                       Time ous policy
                                                                             Standard                              year
           check if PCTA is covered or not. Most            Star Health      Medi Classic 3,640/-             80    4 continu-         Room rent of 2% of
           critical illness riders do not cover it.                                                                ous policy          Sum Insured per day
                If the rider covers it the term nor-                                                               year                maximum to Rs 4,000/-
           mally provided that the amount will              HDFC Ergo Health                   3,653/-        75       4 continu-      No Sub- Limit
           normally be paid if he survives the stip-                  Suraksha                                        ous policy
           ulated period after occurrence of dis-                                                                     year
           ease. This is generally for a period of          Future           Health            3,932/-        70       4 continu-   Room rent 1% of Sum
           15-30 days in most of the cases. We              Generali         Suraksha                                 ous policy    Insured per day and
                                                                             Golden                                   year          I.C.U expenses :Room
           would suggest you to inform the insur-                                                                                   rent 2% of Sum Insured
           ance company as they can give you                                                                                        per day to a maximum of
           more details of the same. The lump sum                                                                                   35%. Surgeon fees up to
           benefit you will get from the insur-                                                                                     35% of the Sum Insured
           ance policy is irrespective of the cost                                                                                  per claim. OT Charges :
           of operation.                                                                                                            Up to 40% of the Sum
                                                                                                                                    Insured per claim.
           Q5. Sir, I purchased a car 11 months             National         Mediclaim         3,988/-        80       4 claim free Room rent 1% of Sum
           ago. Till now, I have never claimed              Insurance        Policy                                   policy year Insured Per day to a
                                                                                                                                    maximum of Rs
           insurance which makes me eligible                                                                                        5000.I.C.U expenses
           for no claim benefit. I have to renew                                                                                    :Room rent 2% of Sum
           my car insurance next month. My                                                                                          Insured per day to a
           car urgently needs a servicing for                                                                                       maximum of Rs.10,000.
           which I will have to claim to insur-                                                                                     Surgeon fees :
           ance. What should I do now? Should                                                                                       Maximum limits per ill-
           I wait and first take the no claim ben-                                                                                  ness- 25% of Sum
           efit on renewal (of the policy) and                                                                                      Insured. OT Charges :
                                                                                                                                    Maximum limits per ill-
           then claim insurance? Will the insur-                                                                                    ness- 50% of Sum
           ance provider have any objection to                                                                                      Insured
           it?                                              IFFCO Tokio Individual             3,990/-        70      Not covered Room rent 1% of Sum
                             -M. Jacob, Mumbai                          Medishield                                                  Insured Per day
                                                                                                                                                                     Source: Apnapaisa Research Bureau

           Motor car insurance does not reim-                                                                                       I.C.U expenses :Room
           burse claim arising for "servicing your                                                                                  rent 2.5% of Sum
           car". So you can go ahead and get your                                                                                   Insured per day.
           car servicing done now only. It won't            Cholamanda Individual              4,377/-        69      3 continuous Medical and OT

           affect your claim history since you can-         lam MS     Health                                         policy year Charges: Maximum
           not make a claim for the same.                   General                                                                limit per illness - 15%
                                                            Insurance                                                              in AC Single Room
                (Harsh Roongta is CEO, Apnapaisa.com a
                      search comparison engine for loans,   All policies come with cashless facility in the network hospital, specific to each company
                    insurance and investments. He can be    * Premium is inclusive of service tax
                                                            ** No claim discount of 5 per cent for every claim free year to a maximum of 25 per cent
               reached at moneymantra@apnapaisa.com)
                                                                                                                            1-15 January, 2011   MONEY MANTRA   59
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      FINANCIAL PLANNING                             TAXATION                            STOCK MARKET                                   COMMODITIES

                          TRACKING HIGH VALUE FINANCIAL
           TRANSACTIONS                                  tion of some proactive sensitivity to tax-
                                                         payer concerns.
                                                              Although not connected, both mes-
                                                         sages underscore the philosophy of
                                                                                                        needs some demystification. What are
                                                                                                        these transactions, how the department
                                                                                                        gets information about these, and more
                                                                                                        importantly how does the department
                                                         encouraging voluntary compliance. That         deals with the information?
                                                         approach requires that while on the one
                                                         hand the department simplifies procedures      PAN - a breather
                                                         and sets up mechanisms that make it eas-            Historically, in order to bolster the
                                                         ier for the large body of honest taxpayers     anti-tax evasion effort, the department had
                                                         to comply with tax laws, it simultaneous-      been gathering financial information from
                                                         ly raises the deterrence levels against non-   a large variety of sources -- both public and
                SS Khan                                  compliance to make such behaviour              private such as departments of Central and
                   wo interesting advertisements         uneconomical. The department handles           State Governments, Regulatory agencies,

           T       issued by Income Tax department
                   have caught everyone's attention in
           the last few days. One, repeated on TV
                                                         a steadily increasing taxpayer base and
                                                         huge volumes of information implemen-
                                                         tation of these policies require massive
                                                                                                        Public Corporations, Banks etc. However,
                                                                                                        with increased economic activity and tax-
                                                                                                        payer mobility, the exercise became com-
           channels and in print media in the con-       induction of Information Technology            plicated, the volumes unmanageable and
           text of December installment of Advance       across the department along with the           the utilisation of information ham-hand-
           Tax, ominously informed all and sundry        change of mindset of its workforce. The        ed. The situation changed dramatically
           that Income Tax Department keeps track        good news appears to be that IT depart-        with the introduction of Permanent
           of high value financial transactions.         ment now seems to have crossed the             Account Number (PAN), opening up of
           Though rather cryptic, the message was        inflexion point in adoption of Information     the procedure for allotment of PAN, and
           loud and clear. The other was rather          Technology tools in its functioning.           the legal changes requiring mandatory
           extraordinary. It asked "if your IT refund         The constant refrain of Income Tax        quoting of PAN in certain types of trans-
           for e-filed return hasn't reached you, here   Department in its media blitz that it keeps    actions. Rule 112B of Income tax Rules in
           is how to find out why ------", an indica-    track of high value financial transactions     1998 made it obligatory for all persons

           60   MONEY MANTRA   1-15 January, 2011
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        MUTUAL FUND                                    BANKING                                           TAXATION                                INDIA POST
                                                                                                                 Rule 114E of Income Tax Rules identifies
           to quote their PAN in 16 types of trans-          assessees, Registrars of immoveable prop-
                                                                                                                 these and lays down following monetary
           actions ranging from purchase of                  erties, Registering authority for motor             limits for various types of transactions
           immoveable property, motor vehicle or             vehicles, Post Master General, Reserve              required to be reported in the AIRs:
           shares etc to opening of bank account and         Bank, Stock exchanges, and Depositories
                                                                                                                 Cash deposits aggregating Rs 10,00,000
           applying for a phone connection etc. The          etc to furnish an AIR of specified trans-           or more in a year in any savings account
           list of these transactions was wide-reach-        actions entered into by them during the             with Banks
           ing across the financial spectrum.                year.
                                                                  "Specified financial transaction" were         Payments against credit card aggregat-
           AIR makes things less                                                                                 ing Rs 2,00,000 or more in a year
                                                             defined to mean transaction of purchase,
           clumsy                                            sale or exchange of goods or property or            Investment aggregating Rs 2,00,000 or
                However, the mere quoting of PAN             right or interest in a property; or for ren-        more for acquiring units of Mutual Fund
           in transactions between parties did not           dering any service; or under a works con-           Investment aggregating Rs 5,00,000 or
           allow the department to access this infor-        tract; or an investment made or an expen-           more for acquiring bonds or debentures
           mation without recourse to manual inter-          diture incurred; or for taking any loan or          Investment aggregating Rs 1,00,000 or
           vention. Finance (No.2) Act 2004 made             deposit, etc of over Rs 50,000, as may be           more for acquiring shares issued by a com-
           a singular change in this area. It brought        prescribed.                                         pany
           in the concept of Annual Information                   Thus, the department acquired legisla-
                                                                                                                 Purchase or sale of immovable property
           Returns (AIR) of high value financial             tive sanction to obtain information about           valued at Rs 30,00,000 or more
           transactions, as distinct from the Returns        a large gamut of transactions in an organ-
           of Income. These did not involve payment          ised manner from a host of agencies                 Investment of amounts aggregating Rs
           of any tax and were to be filed by pre-           (called Third Parties in common parlance)           5,00,000 or more in a year for RBI bonds
           scribed Third Parties with whom such              which are nerve centres of financial activ-                  These AIRs are required to be filed in
           transactions had taken place. Section             ities in the country. However, in exercise               electronic format by August 31 of the year
           285BA of Income Tax Act obliged                   of this power it has so far restricted itself                           following the financial year.
                                                                                                                to seven types of transactions.
                                                                                                                Role of NSDL
                How the process works?                                                                                IT department appointed National

                  he data is identified by PAN of the       or from the returns of Tax Deduction at             Securities Depository Limited (NSDL) as
                  transacting parties and TAN of the        Source, get appended to the 'Individual             the agency to receive these electronic
                  party filing the AIR. Since application   Transaction Statement' of the PAN-holder.           AIRs. Their mandate requires NSDL to
           of these rules is countrywide and the data is    It is these 'Individual Transaction                 ensure that the AIRs filed electronically
           uploaded in a central database, it is possi-     Statements' to which the department is              conform to prescribed format and that the
           ble to collate information about different       referring to in its media advertisements
           transactions made by a person at different       rather coyly.
                                                                                                                data is clean and free of virus etc before
           times, at different places, or with different          Further, since these 'Individual              it is uploaded on the department's central
           parties. Thus, information about multiple        Transaction Statements' are based on PAN            system. Since the AIRs do not involve
           credit cards or different bank accounts or       and since PAN database has the informa-             payment of any tax, the filing requirement
           different investments in mutual funds or in      tion about father's name, office/residential        is annual and relatively hassle-free, and
           immovable properties in different cities         address, and names of firms/companies               the designated Third Parties are them-
           made by a person becomes available in a          etc in which one is partner/director, it is only
           single database. Advances in the field of IT     a few short steps on the central system to
                                                                                                                selves large entities maintaining electron-
           have made it possible to handle such             create the family tree of a taxpayer along          ic records, the compliance levels have
           humongous volumes of data in a single            with names/ addresses of the concerns               been high. The decision of Finance
           database and electronically extract taxpay-      with which he is associated, and then to get        Ministry to make PAN as the single unique
           er-wise information (using PAN as the            the 'Transaction Statements' of such con-           identifier for financial markets has made
           unique identifier) from the Annual               cerns. Once these statements are electron-          the task of the department easier though
           Information Returns filed by different Third     ically linked with the data of
           Party filers for a given year. The stage is      returned/assessed incomes and tax pay-
                                                                                                                the data volumes have multiplied. The ini-
           thus set for the department to receive this      ments of the taxpayer from the relevant             tial problems of data quality in the AIRs
           data and populate it on an 'Individual           databases, the department has an access             have got steadily sorted out as the Third
           Transaction Statement' in respect of each        to what it calls a 360 degree profile.              Party filers have become more tuned to the
           transacting party based on its PAN. This is            The department utilises this informa-         requirements of data standards and as
           supplemented by information coming from          tion at the first level, to widen its tax base,     NSDL has made available various facili-
           the electronic TDS returns where too infor-      i.e. to identify non-filers. At the next level it
           mation about various payments subjected          uses this to identify and select cases for
                                                                                                                ties making it easier to file these returns
           to deduction of tax at source is available       scrutiny using a computer assisted risk             correctly. The result is that the depart-
           with the PAN of the deductee. Even where         management program. In appropriate                  ment is getting clean and structured infor-
           PAN is not given or incorrect PAN is given       instances this information is also used by its      mation in electronic format in a central
           it becomes possible to identify the transact-    Investigation wing for anti-tax evasion work.       database on a regular basis.
           ing party using advanced IT tools. Thus all            The moral of story is that the use of IT
           transactions of a year in respect of a partic-   tools is enabling the tax system to shift           The writer has served as Member,
           ular PAN-holder whether coming from AIR          towards the honest taxpayer - albeit slowly.        Central Board of Direct Taxes,
                                                                                                                Government of India
                                                                                                                         1-15 January, 2011   MONEY MANTRA      61
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       FINANCIAL PLANNING                            TAXATION                           STOCK MARKET                                 COMMODITIES

           All That Glitters Is Not Pur
                                    Pu                   Commission said, "We are constrained
                                                         to observe, however, that the practice
                                                         of selling ornaments of gold and/or pre-
                                                                                                       directed the jeweller to take back the
                                                                                                       jewellery and pay the consumer Rs
                                                                                                       33,000 and costs of Rs 5000.
                                                         cious metals and stones without proper            In response to the revision petition
                                                         hallmarking and warranty regarding the        filed by the jeweller, arguing that he had
                                                         levels of purity is, unfortunately, a wide-   not promised 24 carats purity, the
                                                         ly prevalent malpractice across the entire    National Commission examined the
                                                         country. Clearly, such practices need to      facts of the case afresh and held that the
                                                         be curbed with a heavy hand".                 order of the State Commission did not
                                                             It even expressed the view that it        call for any interference. Said the
                Pushpa Girimaji                          would take a very serious note of jew-        National Commission: "…in the test by
                                                         ellers who cheated on the quality of gold     MMTC Ltd., the purity of the gold in
                         ith gold prices skyrocket-      sold by them and where such cases were        the locket of the ornament

           W             ing, one needs to be
                         extremely careful while
                         buying gold jewellery. At
           the rate of Rs 20,000 for ten grams of
           gold, even if you are cheated of one
                                                         brought before it, would be inclined to
                                                         impose punitive damages (in addition
                                                         to compensation). Punitive or exempla-
                                                         ry damages are usually meant to act as
                                                         a deterrent.
                                                                                                       ('Mangalsutra') was found to be 760.6
                                                                                                       while that of the chain was 885.8. The
                                                                                                       State Commission, therefore, found that
                                                                                                       the purity of the gold in the ornament
                                                                                                       was much below the promised purity of
           gram of gold, the loss is as much as Rs                                                     24 carat…."
           2,000 And add to this, the making             Pulled up for purity                              Observing that the level of purity
           charges and taxes, the loss is even               In this case, the complainant, Mr         of gold in the Mangalsutra sold by the
           greater.                                      Harish Misra, District President, Akhil       petitioner to the complainant was much
                                                         Bharatiya Upbhokta Congress, Sidhi,           below even 22 carat, the National
           Concern over hallmarking                      Madhya Pradesh, had alleged that the          Commission dismissed the petition of
                Unfortunately, hallmarking, which        chain and the locket (Mangalsutra) pur-       the jeweller. (RP No 3688 of 2008)
           ensures that you get the purity that you      chased locally on September 10, 2000,
           pay for, is not mandatory in the coun-        for Rs 14,016 from Mohite Ornament            The authenticity check
           try. In fact in a case decided in January     House, was not of the purity promised             Following consumer complaints on
           2009, the highest consumer court in the       by the jeweller. The State Commission,        the purity of gold sold by jewellers, the
           country expressed concern over this. The      after getting the jewellery tested for its    government introduced in the year 2000,
           National Consumer Disputes Redressal          purity at the MMTC assaying centre, had       hallmarking, an authentic method used

           62   MONEY MANTRA   1-15 January, 2011
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          MUTUAL FUND                                BANKING                                  Consumer Law                               INDIA POST

                                                           ellers in 16 cities, conducted in 2006 by     and international brands selling artisti-
                                                           the Bureau of Indian Standards (BIS),         cally crafted gold jewellery and many of
                                                           revealed a shocking state of affairs. Out     them do not have their jewellery hall-
                                                           of a total of 162 samples tested, only        marked, the argument being that their
                                                           16 were found to be of the caratage           brand name is the guarantee for the puri-
                                                           claimed. In other words, only 9.88 per        ty of gold.
                                                           cent of the samples were found to be of            Now frankly, I would like those jew-
                                                           claimed purity and the rest -90.12 per        llers too to give the hallmark guaran-
                                                           cent - failed the purity test. This got the   tee - after all, hallmarking is done by a
                                                           government re-thinking on its decision        third party - by an independent party
                                                           to make hallmarking voluntary.                other than the manufacturer, while the
                                                           However, an expert committee consti-          guarantee in case of branded jewellery
                                                           tuted by the government to examine the        is given by the manufacturer himself. So
                                                           issue was of the view that the govern-        obviously, the third party guarantee is
                                                           ment has to first create the basic infra-     far better. In fact, if branded jewellery
                                                           structure necessary for making hall-          also carries the third party guarantee
                                                           marking mandatory. Or in other words,         (hallmarking), then it would add to con-

t Pure Gold
                                                           it is not feasible to make hallmarking        sumer confidence.
                                                           mandatory without first setting up the
                                                           necessary infrastructure.                     Get better deal
                                                                So the next time you buy jewellery,           I must also tell you that at any time
                                                           remember to ask and buy only those            you want to pledge your gold to take a
                                                           pieces of jewellery that carry the BIS        loan, you will get a better deal with hall-
                                                           hallmark logo. The licensed jewellers         marked gold. In fact, the Reserve Bank
                                                           will display a board, specifying their BIS    of India in a communication addressed
                                                           license number, besides indicating the        to all scheduled commercial banks on
                                                           various hallmark components such as           November 2, 2005, told the banks: "As
                                                           the BIS mark, the fineness number (rep-       you are aware, hallmarking of gold jew-
             worldwide for testing and certifying the      resenting the purity of gold), hallmark-      ellery ensures the quality of gold used
             quality of gold.                              ing centre's mark, jewellers's mark. The      in the jewellery as to caratage, fineness
                  Hallmarking basically involves           board will also mention the availability      and purity. Therefore, banks would find
             analysing or assaying jewellery in a lab-     of magnifying glass for viewing the hall-     granting advances against the security of
             oratory (assaying centre) to ascertain        mark on jewellery.                            such hallmarked jewellery safer and eas-
             its purity and certifying it. And since                                                     ier. Preferential treatment of hallmarked
             the certification is done not by the jew-     Give brand a boost                            jewellery is likely to encourage prac-
             eller selling the jewellery but by an inde-       There's another related issue here        tice of hallmarking which will be in the
             pendent agency - the Bureau of Indian         that pertains to branded jewellery.           long term interest of consumers, lenders
             Standards - it provides a third party guar-   Today, you have a number of national          and the industry." You can, in fact, quote
             antee on quality. But more important,                                                       this letter to get a better deal from banks
             unlike certain other methods of check-          Buy authentic gold                          for hallmarked jewellery.
             ing the caratage, which only gives you
             the purity on the surface to a depth of         Hallmarking involves analysing or           Don't let them cheat you
             25 microns or so, assaying is a more            assaying jewellery in a laboratory to            If you go on to the website of the
             authentic method of testing the purity          ascertain its purity and certifying it.     Bureau       of      Indian     Standards
             of gold.                                        BIS first examines the quality manage-      (www.bis.org.in ), you can get a list of
                  Under the hallmarking scheme, the          ment system followed by jeweller and        jewellers who sell hallmarked jewellery
             BIS will first examine the quality man-         issues him a license or a certificate.      in your city and also more information
             agement system followed by the jeweller          Only BIS certified jewellers can get       on hallmarking.
             and issues him a license or a certificate.      their jewellery tested and hallmarked            As far as the jewellery that you have
             Only such BIS certified jewellers can get       at any of the recognised Assaying and       already bought is concerned, if you have
             their jewellery tested and hallmarked           Hallmarking Centres.                        any doubts about its purity, you can get
             at any of the recognised Assaying and           Some countries like the UK have             it tested at any of the assaying centres
             Hallmarking Centres. While some coun-           made hallmarking mandatory, but             (you will get their addresses on the BIS
             tries like the United Kingdom have made         India introduced the system on a vol-       website). If you find the caratage to be
             hallmarking mandatory, India intro-             untary basis.                               much less than claimed, you can always
             duced the system on a voluntary basis.          It is always better to buy jewellery that   file a complaint before the consumer
                                                             bears the BIS hallmark logo as it           court and get compensation.
             Buy the best                                    ensures that you get the purity that you
                 However, a sample survey of jew-            pay for.                                        (The writer is a columnist on consumer
                                                                                                                                        right issues.)
                                                                                                                  1-15 January, 2011   MONEY MANTRA   63
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           Wealth Management
               Alok Dwivedi
                           mit, a marketing guy aged 26, is always out of cash. He is always seen

           A               borrowing cash from his colleagues and friends. Reason is very simple
                           -- he is living on a shoestring. He tries very hard to balance income and
                           spending but all his efforts go in vain. Saving money is the most diffi-
                           cult task for him. If financial planners are to be believed, Amit is not the
           one who is facing this problem; there are many like him. They say managing finances
           is not as tough as it seems and a few minor changes can do the trick. Anshika Mehra,
           Financial Planning Analyst at Ameriprise Financial, says, "It is just a matter of com-
                                                                                                                   MONEY IS
           mitment. For this, one has to just take a good look at his/her spending and lifestyle.
           After that, there are a few steps to be followed." Srinivasan TS, Certified Financial Planner
           & Chief Consultant at WealMan Associates, says, "There are two types of expenses -
           fixed expenses and variable expenses. Again fixed expenses are of two types - fixed
           and essential and fixed but not essential. The first type -- fixed and essential -- can't be
           changed. But the second one -- fixed but not essential -- can be managed if one tries.
           For instance electricity bill can be reduced by using power saving devices and by tak-
           ing a few cautious steps."

                                           First and foremost thing is to make a monthly budg-
                                                                                                                   NOT AS
                               TAND Y
                                       OUR and likely expenses for the month, though it may

                                                et. Monthly budget consists of probable income

                                               be a bit tentative as we can't decide about unex-
                                               pected expenses. "Before making the budget, it
                                                                                                                   DIFFICULT AS
                                              is always better to understand spending. One
                                             should plan ahead for things on which spending is
                                            forseen," says Mehra. As far as variable expenses are
           concerned, these can be managed up to optimum levels. "For instance, the expense
           of auto which we use from office to home can be reduced by the use of public
                                                                                                                   YOU THINK
           transport," says Srinivasan. Deciding about spending includes identifying those items
           which one really needs. One should not go for those items, which are just nice to
           have, but are of no use. But we all are human beings and it is difficult for most of
           us to keep ourselves away from such things. One should stay away from buying
           unless he/she has a specific reason to go for purchasing that item. Curbing unnec-
           essary spending is the key to saving money.

                       It is a human tendency to get attracted to the boards displaying 'buy
                                     one get one free', '60% plus 30% discount', 'discount
                 GO BY T
                          HE LIS
                                        for just three days' etc. On numerous occasions we
                 A               T      start buying things just because they are on sale. One
                     VOID shouldn't be pulled to these attractive boards and hoard-
                HEAP      I            ings. 'Discount for just three days' doesn't mean that you
                          TEAMS need that item and buy it in haste. Srinivasan says,
                                      "Always go with a list of items which are                                       MAKE SUR
                                     to be bought. If one doesn't go with a list of                                             E YOU RE
           items, he/she increases his/her bill of shopping."
                                                                                                                       NEED THE CASH    ALLY

              "It is a good strategy to save little money. The plan of action is                ATMs are everywhere and
           very simple -- don't come out from home with change money," sug-                     withdrawing money from an ATM
                   gests Mehra. After returning home, one should put all the                    has become a very convenient way to get
                                 coins and notes, which are less than Rs 50 in                  cash. But this habit of frequent visits
                S AVE TH                  a piggy bank. This way you will not                   to ATMs proves to be an expen-
                          E CHAN          go to work with change money the                      sive practice. One should
                 MONEY                                             next day. It
                                                                   is not sur-
                                                                   prising to
                                                                                                make sure that he/she
                                                                                                really needs the cash
                                                                                                before making the
                                                                   find that one                withdrawal.       The
                                                                   saves a good                 message is very clear-
                                                                   amount after                 keeping enough cash
                                                                   a        few                 in wallet provokes for
                                                                   months.                      extra spending.

           64    MONEY MANTRA   1-15 January, 2011
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                                                                                                                       TRY TO NEG
                                              T IN S
                                                  FD                Investment is                                    PURCHASES
                                   CLOSE-ENDED MF      AND the next step after saving. A number
                                                               of investment avenues can be used for
                                                              saving some amount. Fixed deposits
                                                             offered by various banks and close-                   It     may
                                                             ended mutual fund schemes are a few              seem a bit awkward but one should try
                                                            instruments which can save you a good             to negotiate prices of items he/she buys.
                             amount of money. Since money can be withdrawn only after a period                After you start doing it, you would find
                             of time, it reduces the temptation of withdrawal. Mehra says, "If one            that you have succeeded to get a num-

                             has Rs 50,000 in his/her savings account, he/she can go for an FD of             ber of items/services at lower prices.
                             Rs 15,000 for a year. Rest should be kept idle in the savings account            It is not only possible with the items
                             for emergencies. Next FD of Rs 15,000 may be done after six months.              which are sold in shops and malls, it can
                             In the next six months, the first FD will mature which can be fixed              also be done while dealing with banks,
                             for another one year again. Such strategy not only offers a mix of               broking houses etc. This habit may help
                             liquidity and investment, but return on these investments is also greater        you save a bit.
                             than the average savings account." In addition, these may help in get-
                             ting tax benefits as well.

                                   Many times in a couple one partner is more careless in

ULT AS                         the matters related to money in comparison to the other one.                           NVOLVE    I
                                                                                                                              A FRIEN
                               If you are similar to the former, you can talk to your part-                                           D OR
                               ner about your spending habits. He/she can be a very good
                                   guide. Mehra says, "If your friend or partner is carful regarding money,
                                        making him/her aware of your spending pattern would be very help-

 INK                                       ful." On the other hand, if you are carful regarding money and your partner
                                              is not listening to you, it is would be helpful to open a separate bank account and
                                                show the miracle of small savings. That would inspire the other partner towards saving.

                                                              AVOI            It is always a good option for working peo-
                                                                 D FR
                                                           OUT       EQU
                                                                               ple to carry homemade lunch with them. On
                                                                                      one hand, you get nutritious and fresh
                                                                                ING food and on the other you save a few
                                                                     SID                 extra bucks on what you would have
                                                                        E              spent on eating outside. Also one
                                                                                     shouldn't go for shopping empty stomach.
                                                                                  It is usual for all of us to complete shopping
                                                                                with dinner or lunch outside. This habit not
                                                           only increases the bill, but also our waistline. "It is not that
                                                           one should stop such things but one can reduce the frequency
                                                          of such dinners and lunches in order to increase the savings," sug-
                                                         gests Srinivasan.

                                                           Almost all of us have
                                                       a few debts and we try to               The                                     S
                                                                                                                                      ET UP
                                                       repay those on monthly              plan-                                                     ATIC
                                                      basis (EMI). Here the idea
                                                     is to start saving the same
                                                                                           ners say
                                                                                           that enough
                                                    amount when EMIs of the                money in savings account leads
                                    THINK TH                  debt are complete.           to more expenses. We spend more
                                              AT DEB          Suppose you have             if we have more liquidity. Mehra says, "One way
                                   R E PAY M E N T I S        a loan, for which the        of saving money is by setting up automatic savings." It
                                                         ON  repayment is to be
                                                            completed         next
                                                                                           is important to note that one should start with a smaller
                                                                                           amount per month. Saving smaller amount doesn't tempt
                 month. So far, you have                                                   us towards making frequent withdrawals. Quantum of
                 arranged the EMI for the loan every                                       amount can be increased gradually when one is ready
                 month. "Continue managing the same amount, which was paid                 to afford more. This would save a good amount which can
                 as EMI despite the fact that the process of repayment is com-             be very much helpful for rainy days. Various banks pro-
                 plete. This thinking would save you a good amount," says                  vide this facility and one can opt for it. This can be done
                 Mehra.                                                                    for mutual fund schemes as well.

                                                                                                                       1-15 January, 2011   MONEY MANTRA   65
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                     Raghvendra, aged 39 years, is a Project                              Your Current Retirement Goals
                                                                  Retirement Plan Starting Year                         2011
                     Manager with a reputed MNC in Bangalore.     Current Age - Years                                   39
                                                                  Retirement Age - Years                                60
                     Wife Sudeshna, aged 37 years, works for      Assumed Joint Life Expectancy - Years                 90
                     a mid-sized Indian software company and      Years Until Retirement - Years                        21
                                                                  Years of Retirement                                   30
                     planning to quit. They have two chil-        Plan period - Years                                   51
                              dren, Deepa, aged 6 years and       Retirement Plan Ending Year                           2062
                                                                  Annual Spending in today's Rupees                     7,20,000
                              Divya, aged 3 years. Raghvendra     Post Retirement, expenses will come down by (%)       0%
                              earns Rs 40 lakhs and Sudeshna      Retirement Corpus at the beginning the plan - Rupees 0
                                                                  Corpus to be left to legatees - Future Rupees         0
                              Rs 12 lakhs a year, both before     Pre-Retirement
                              taxes. Raghvendra is a conser-      Inflation Rate (%)                                    6.00%
                                                                  Return on Investments (Average %)                     12.00%
                              vative investor who does not like   Transition Period
                              the volatility of the stock mar-    No. of Transition years                               3
                                                                  Inflation Rate (%)                                    6.00%
                              ket much. He, however, has indi-    Return on Investments (Average %)                     8.00%
                                                                  Post Retirement
                              cated that he is willing to take    Inflation Rate (%)                                    4.00%
    Investment Clinic

                     a bit more risk with his investments than    Return on Investments pre-tax (Average %)             6.00%
                                                                  Marginal Tax Rate including Surcharge & Cess %        30.90%
                     what is being done presently.                Return on Investments post tax (Average %)            4.15%

                        Income & Expenses                         combined net worth at Rs 72 lakhs,          Children Education
                            Considering only Raghvendra's         out of which Rs 31 lakhs accounts               Funding the collegiate education of
                        income, going forward, from Rs 40         for worth of investment assets.             their children, they must start an invest-
                        lakhs income before tax we arrive at                                                  ment plan right now.
                        a net surplus of Rs 4.12 lakhs after      Emergency Fund
                        taking into account the expenses              Currently, they have Rs 1.5 lakh        Retirement Plan
                        (Income Tax Rs 10 lakhs,                  in their savings account and Rs 3                Raghvendra would like to contin-
                        Contribution towards PF Rs.2.4            lakhs in bank fixed deposit. This bare-     ue to work till the age of 60. They cou-
                        lakhs, Home Loan EMI Rs.9.6 Lakhs,        ly covers their necessities for 2           ple has an accumulated balance in PF
                        household expenses Rs.7.2 Lakhs,          months and to be increased to Rs 11         account to the tune of Rs 18 lakhs. With
                        School expenses Rs 2 lakhs, Spend on      lakhs to take care of the necessities for   salary increasing at clip of 5% per
                        Travel,     Communication         &       6 months.                                   annum, his on-going contribution
                        Entertainment Rs 1.8 lakhs, Car EMI                                                   would take him to a final corpus of Rs
                        Rs.2.4 lakhs, and salary to two           Risk Cover                                  4 Crores at an average rate of return
                        domestic servants Rs 1.68 lakhs).              Raghvendra is provided with a          of 8% per annum. With 30 years of
                                                                  life risk cover of Rs 80 lakhs and fam-     retirement period (likely to increase in
                        Assets & Liabilities                      ily floater cover of Rs 5 lakhs by the      case life expectancy improves at age 60
                            They own an 1800 sq. ft. apart-       Company. This cover is linked to the        or later), they may need a corpus of Rs
                        ment in Bangalore valued at Rs.1.2        employment status and hence not a           7 Crores to sail through their retirement
                        crores, against which a loan of Rs.80     durable cover. Looking at the needs         period keeping their lifestyle needs at
                        lakhs subsists. They also own a plot      of soon to be out of job spouse, grow-      the level of Rs 60,000 per month in
                        of land in nearby Mysore, the cur-        ing up children and outstanding loans,      today's cost. It should be possible to
                        rent market value of which is Rs 8.5      we arrive at a life insurance require-      achieve this target with an investment
                        lakhs. The outstanding car loan is        ment of Rs.3.4 Crores. The suggest-         of Rs.3.5 lakhs per annum (see retire-
                        Rs 4 lakhs and the depreciated value      ed life risk cover for Raghvendra is Rs     ment plan parameters given above).
                        of the car is Rs 5 lakhs. They have       3 Crores which can only be obtained
                                                                                                              NarendraN Kondajji is the Promoter and
                        kept Rs 1.5 lakhs in their savings        through a term cover.                       Director of Procyon Financial Planners Pvt
                        account and another Rs 3 lakhs in an           Similarly, he must obtain a fam-       Ltd, a financial planning services providing
                        FD. The combined balance in their PF      ily floater health insurance for Rs 5       company. He can be reached at knnaren-
                        account is Rs 18 lakhs. This puts their   lakhs.                                      dra@procyonfp.com

           66   MONEY MANTRA    1-15 January, 2011
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           Income                                      Varun                        Rekha
           Monthly Salary                           Rs     22,000                    15,000               Varun Garg is from a middle class fami-
           Income from MIS                           Rs 1,000                           -
           Total Monthly Income                     Rs 23,000                         15,000
                                                                                                          ly and is a software engineer, by profes-
           Personal Expenses (Varun)                     Rs 3,000
                                                                                                          sion. He is 35 years of age and is mar-
           Personal Expenses (Rekha)                     Rs 2,500                                         ried to Rekha (31) with two kids, Saumya
           Children's Education                          Rs 3,500
           Children's Expenses                           Rs 1,500                                         (8) and Rohan (6). They reside in
           House Rent                                    Rs 3,000
           Household Expenses                            Rs 3,000                                         Varanasi in a two-bedroom flat
           Other Petty Expenses                          Rs 1,500
           Premium of ULIP                               Rs 5,000                                         on rent. Varun was introduced
           Total Monthly Expenses                       Rs 23,000
           Varun and Rekha have a Post Office MIS Account of Rs. 1,50,000 which earns them an income of   to me by a friend of mine.
           Rs. 1,000 per month. They have Rs.40,000/- in the bank savings account. They don't have any
           other investments. They have not taken any loan either.                                        When he learnt that I am a
           When asked about their financial goals, Garg family provided the following information:
           Estimated Expenses (Current)                                                                   financial Planner, he showed
           Financial Goals                      Years
           Saumya's Education                   10                                Rs 200,000              his interest in meeting me up
           Rohan's Education                    12                              Rs 200,000
           Retirement Planning                  25                            Rs 1,00,00,000              for a detailed discussion on his personal

                                                                                                                                                         Investment Clinic
           House Property                       10                            Rs 2,000,000
           Varun wants to work till the age of 60.
                                                                                                          financial planning.

           1) The family has Rs.40,000/- only                 cost them about 10,000.00 yearly.              for Rs 11,000 every month. The sur-
              in their savings account which                  It's advisable to surrender the ULIP           render proceeds of their ULIP can
              would not be enough to meet any                 which has completed 3 years and                also be invested in building the cor-
              urgent requirements of the family.              has a surrender value of approx.               pus for purchasing a flat. This will
           2) The family has no provision for                 2,20,000 at present. It is advisable           enable them to have Rs 40 lakhs
              medical insurance. The ULIP is for              for the family to buy a floater med-           after 10 years, which is the esti-
              a sum assured of Rs 3 lakhs on the              ical policy for Rs 5 lakh.                     mated cost of flat with an estimat-
              life of Varun which has a fund value         c) Saumya's Education: It is estimat-             ed inflation of 7% and return of
              of Rs 2,20,000/- as of now.                     ed at Rs 2 lakh currently. Taking              15% on the equity mutual fund.
           3) Varun has invested only 1,50,000/-              inflation into account at a rate of 7%      f) Retirement Planning: The cou-
              in POMIS which earns him 8% tax-                a sum of Rs 4 lakh would be                    ple's post retirement expenses are
              able income.                                    required after 10 years. This can be           estimated at Rs.10,000 per month,
           4) The family do not have a habit of               taken care of by an SIP in a large cap         at current levels. This will grow to
              spending much and they save                     oriented equity fund for Rs 1,450              Rs 55,000 at the time of retirement.
              Rs.15,000/- per month after paying              per month, which is expected to                A corpus of Rs 1crore would be
              off all the expenses and premium.               give a return of 15% in the next 10            enough to fund their retirement.
                                                              years.                                         The couple should start with a
           RECOMMENDATIONS:                                d) Rohan's Education: It is estimat-              monthly SIP of Rs 1,500 and
           a) Contingency Fund: Varun needs                   ed at Rs 2 lakh now which is like-             increase it year on year with an
              to keep at least six months expens-             ly to be Rs 4,50,000 by the time he            increase in their income. POMIS
              es in a contingency fund. This can              starts going to college with infla-            will mature after completing its age
              be put in a Liquid Plus/Ultra Short             tion at a rate of 7%. An SIPin a large         of six years and the maturity pro-
              Term Fund of a Mutual Fund.                     cap oriented equity fund for Rs                ceeds can be used for the retirement
           b) Insurance Planning: The couple                  1,150/- per month can be started               fund.
              does not need any insurance poli-               to fund his education expenses.
                                                                                                          Raajeev Chawla is into financial planning
              cy, as they both are earning.                e) House: Varun and Rekha want to
                                                                                                          and investment advisory since 2005.
              However, Varun can take an online               buy a residential flat, which costs         He is also a part of "Edge" - a learning
              term policy of Rs 20 lakhs and                  Rs 20 lakh at present. They plan to         academy of Reliance Mutual Fund, and
              Rekha for Rs 10 lakhs - both for a              buy it after 10 years. The couple can       imparts knowledge of financial planning and
              term of 25-30 years, which will                 plan for this again through an SIP          taxation to the mutual fund fraternity.

                                                                                                                          1-15 January, 2011   MONEY MANTRA   67
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                                                                                                             Office Affairs

           DEALING WITH A
           DIFFICULT BO
                Renu Baliyan
                                                         A bad boss makes the
                                                                                                        Other colleagues would always

                                                                                                   get away with easily no matter how
                       ow healthy and peaceful                                                     many mistakes they committed. The

           H           your life is, sometimes and
                                                         workplace conditions                      boss never criticised them. And, to
                       many would say most of            miserable. In such                        make situation worse he was quite lib-
                       the times, depends on how         situation, the performance                eral in granting them leaves. On the
           good your big boss is. A grumpy boss                                                    other hand, my single leave would
           can screw your career and life. In            of the subordinates take a                leave him fuming, she says.
           today's fast life, having a supportive        dip and they become under                      A bad boss makes the workplace
           boss is nothing less than a blessing                                                    conditions miserable. In such situa-
           in disguise. But if you are not that          confident which leads to                  tion, the performance of the subor-
           lucky, you need to handle your high-                                                    dinates take a dip and they become
           er ups diplomatically or else in no
                                                         dissatisfaction among                     under confident which leads to dissat-
           time you will turn into a depressed           them.                                     isfaction among them. If they are
           soul.                                                                                   unhappy, their performance will be
               "I used to reach office always two        became quite taxing for me mental-        hampered and it will lead to attrition.
           hours early and leave an hour late. My        ly. I was unable to concentrate on my     "I shout at my employees when they
           office hours were odd and there was           work and slowly I became so cyni-         lie and don't behave properly. As there
           no cab facility. My boss started taking       cal that I would always assume that       are some targets to meet, due to this
           all this for granted and always tried         whatever I would do, it will draw crit-   behavior we miss those deadlines,"
           to find problems in my work. He was           icism," says, a mediaperson on con-       says an executive editor of leading
           never happy with whatever I did. It           dition of anonymity.                      daily requesting anonymity.

           68   MONEY MANTRA   1-15 January, 2011
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                                                      point he wants to put across and dis-        sonal remarks on my editor. He got
                                                      cuss it calmly with him without los-         so furious that then on he started
                                                      ing your cool. Don't get offended in         checking my work minutely and find
                                                      such situations. "There are mainly           mistakes. I was getting scolded every
                                                      two reasons which makes a boss               day from my editor and chief-sub-
                                                      shout at his employee. The boss may          editor. The situation became so worse
                                                      have higher expectations from his            that one day my chief-sub-editor
                                                      employees and may have low toler-            abused me in front of my col-
                                                      ance for mistakes," says a senior            leagues," says Ramesh Chandra, a
                                                      police official in Delhi police              sub-editor.
                                                      requesting anonymity.                              Pay attention to boss' words and

                                                            Don't be personal with your
                                                            boss. Try to strike a balance
                                                            between your professional and
                                                                                                   8     make him feel that the employ-
                                                                                                         ees are working hard to get
                                                                                                   things in place. Never take his friend-
                                                      personal approach. Try to maintain           ly behavior for granted. He is behav-
                                                      a professional approach as much as           ing in such way to get the best out
                                                      possible.                                    of you. And listen carefully what he
                                                            If you are unable to take it any-      wants from you. Try to meet the goals

                                                      5     more, you can take up the mat-
                                                            ter with the human resource
                                                      department. They may resolve the
                                                                                                   which he has set for you. After all
                                                                                                   he is also answerable to someone
                                                      issue and find a solution to put an end            Stick to deadlines and you
                                                      to this situation. "I used to feel vul-
                                                      nerable when my boss used to hurl
                                                      negative comments at me. At one
                                                                                                   9     should be ready to work in short
                                                                                                         notice. "I used to work in a
                                                                                                   newspaper and I was given foreign
                                                      point of time he crossed all his lim-        page. I was supposed to complete it
                                                      its and said 'do you know English?'          by 6:30 pm. But, for some reasons I
                                                      when I was not able to convert my            could not stick to that deadline. And,
                                                      call into sale. I later took up the issue    my editor took the foreign page back

                                                      with HR," says Sabiya Khan, a BPO            from me and gave it to a junior col-
                                                      employee.                                    league and made me scan foreign
                                                            Check the behaviour of your            news. It was quite embarrassing and

                                                      6     boss with other employees. See
                                                            if he is harsh with every one or
                                                      only you are being targeted. Try to
                                                                                                   this continued for two months," says
                                                                                                   Varsh Sinha, a sub-editor.
                                                                                                                Have an informal discus-
                                                      know the reason from other employ-
                                                      ee with whom he has no problems.
                                                      You may come to know what is the
                                                                                                   10           sion with your boss in case
                                                                                                                his behaviour is harsh
                                                                                                   towards you. Let him know how you
                                                      source of the problem and why are            felt when he grilled you over some-
           Ways to deal with a                        you being scolded. It may also give          thing. When is in a bad mood, main-
           difficult boss:                            you a chance to improve upon your            tain silence or, if possible, tell him that
                 Make sure that you execute each      mistakes.                                    you will discuss those things with him

           1     and everything perfectly. Don't
                 leave any stone unturned when
           it comes to perfection. This will ulti-    7
                                                            Don't enter into unnecessary
                                                            altercation. It will lead to bitter-
                                                            ness and the boss will make it
                                                                                                   when he calms down. If he gets angry,
                                                                                                   it will not be bad for you. It may bring
                                                                                                   the best out of you. And, you can con-
           mately reduce the chance of pin point-     tough for you to survive in the organ-       tribute your best to the organization.
           ing mistakes in your work.                 ization. Many employees have to              Thus, it will make you and your boss
                 Observe the behavior of your         struggle in such situations when their       happy with the result in the end. You

           2     boss minutely. Check where he
                 loses his temper. Find out his
           likes and dislikes and where he gets
                                                      bosses are hell bent on making their
                                                      professional lives miserable. "Two
                                                      years back when recession hit the
                                                                                                   can face such situations efficiently
                                                                                                   and effectively, provided you main-
                                                                                                   tain calm. If you always deliver
           irksome. On the basis of this obser-       economy we did not get our salary for        what your boss expects from you, it
           vation, avoid those things where he        five months. I was living away from          will build a positive image in the
           can get hyper and get a chance to yell     home. In this situation, it became           long run.
           at you.                                    very difficult for me to meet my                         If none of these solutions

                 If your boss criticise you, don't
                 lose your patience as it is likely
                 to aggravate the situation fur-
                                                      expenses and at the same time I could
                                                      not ask for money from my parents
                                                      every month. One day we all assem-
                                                                                                   11          work and still you are being
                                                                                                               attacked for no reason
                                                                                                   whatsoever, it is better to quit job and
           ther. Don't give any clarification in      bled and went to our editor demand-          hunt for a new job. It's better to avoid
           your defense or retaliate. Keep your       ing the back log. Without realizing          such situation and maintain your
           cool in such a situation. Find out what    the consequence, I made some per-            piece of mind.

                                                                                                            1-15 January, 2011   MONEY MANTRA   69
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           70   MONEY MANTRA   1-15 January, 2011
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                                                1-15 January, 2011   MONEY MANTRA   71
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           CHARGED FOR 8 HOURS
               MM Bureau
                      notebook as a travelmate

           A          sounds funny. But in the
                      days of modern gadgets,
                      Acer travelmate makes
           your travel hot and happening. It
           gives you company by entertain-
           ing you with spicy videos, melo-
           dious music and lets you work
           simultaneously. Acer TravelMate
           8472T, which once charged, works
           for almost 8 hours without any hic-
               The gadget is a super-slim note-
           book that features 14.0" inch HD
           1366 x 768 pixel resolution of
           high-brightness LED
           backlit TFT LCD


           with Intel HD Graphics
           with 128 MB of dedicated sys-
                                            Acer TravelMate 8472T                             tem memory and Microsoft
           Processor                      Make                               Intel            DirectX 10. It is equipped with
                                          Processor Name                     Intel Core i7    Dual-channel DDR3 SDRAM
                                          Cache Memory(KB)                   4096             expandable memory up to 4 GB of
                                          Front Side Bus                     1066             DDR3, 8X DVD-Super Multi dou-
                                          Processor Speed(MHz)               2660.00          ble-layer drive, two built-in stereo
           System Memory                  Standard RAM (GB)                  2.00             speakers with high-definition audio
                                          Upgradeable RAM (GB)               4.00             support, enhanced Acer DASP sup-
           Hard Disk Drive (HDD)          Installed Capacity (GB)            160.00           ported with Optional Acer Bio-pro-
           Display                        Screen Size (Inches)               14.00            tection fingerprint solution, 9-cell
                                          Maximum Display Resolution (dpi)   1366 x 768       Li-ion battery, and many more
                                          Screen Type                        HD Led TFT LCD   other features. It is powered by Intel
                                                                                              Core i7-620M processor of 2.66
           Internet Utilities             Internal Modem                     NA               GHz with Turbo Boost up to 3.33
                                          WiFi                               802.11b/g/n      GHz and works with Genuine
           Multimedia Info                Sound Card                         Yes              Windows 7 Home Premium oper-
                                                                                              ating system. The 32-bit Windows
                                          Microphone                         Yes              7 operating system makes comput-
                                          Speakers                           Yes              ing effortless.
           Security                       Fingerprint Reader                 NA                   The shortcoming of the device
                                                                                              is that its audio quality is not up to
           Web Cam                        Builtin Camera                     Yes              the mark and it takes too long to
           Battery                        Battery (Type)                     Li-ion           charge, almost over an hour.

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                                                1-15 January, 2011   MONEY MANTRA   73

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