Moneylife - 15 Sept. 2017

SUCHETA DALAL ON:

CLEARING JAYPEE MESS: CRUCIAL FOR REALTY

Personal Finance Magazine

STOP MIS-SELLING, PROTECT WHITE MONEY Rs 45

15 September-28 September 2017

Pages 68

(SUBSCRIBER COPY NOT FOR RESALE)

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STOCKS Sintex Plastics

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Shivam Autotech

Sobha

Sarda Energy & Minerals

PCBL

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ISSUE CONTENTS

15-28 Sep 2017 Bad Loan Law Going Bad?

T

o deal with the mounting bad loans that mainly afflict public sector banks (PSBs), the government has set up an elaborate machinery under a new law called Insolvency and Bankruptcy Code (IBC). As with other previous legislations, the new law will work only if crooked corporate debtors, bankers and insolvency players don’t manage to game it. Dr Rajendra Ganatra, an IRP (insolvency resolution professional) with a deep knowledge of the sector, is concerned that the system is being subverted by companies and creditors who are playing the proxy for the borrower. If this remains the trend, the new law may not help to reduce bad loans. IBC is a great tool for banks to recover their money from the builders who are not paying back. According to one estimate, a massive Rs10 lakh crore is stuck in incomplete realty projects whose developers are at a financial standstill. Irresponsible lenders are now moving to National Company Law Tribunal to recover their money. But if their assets are seized and auctioned and banks take away the money due to them, what happens to the home-buyers who have borrowed money from banks and fully paid for their flats, asks Sucheta, in her Crosshairs column. We recently met Deepak Parekh, the doyen among the financial leaders, and were surprised to find him deeply concerned about the rampant mis-selling of mutual fund schemes and insurance products. This is an issue on which Moneylife has been making a lot of noise for the past 10 years but the regulators are moving one inch at a time. Sucheta, in her Different Strokes, points out that while an attack on black money is laudable, what about stopping the loot of white money of middle-class people? SD Israni, in his column, explains that consumers have very little recourse against couriers if an article is delivered late, lost or damaged. They insert fine print to completely absolve themselves from any liability. I look forward to your feedback on the two newly introduced columns and also on what else you think we should cover. Debashis Basu 

32 Cover Story NPA Clean-up Off to a Poor Start The Insolvency and Bankruptcy Code will work only if crooked corporate debtors, bankers and insolvency players don’t game it. Has the rot already started, asks Dr Rajendra Ganatra. IBC will not lead to a drastic improvement in the bad loans situation

12 Public Interest

– Unfair GST Rates: No Lobby for Ordinary Citizen – Technology & Social Media as Disaster Management Tools

14 Your Money

– SEBI Likely To Bring in Rules for Merger of Mutual Fund Schemes – Employees’ Fringe Benefits To Be Taxed under GST – Deadline for Banks To Set Up Aadhaar Enrolment Centres Extended to 30th September – SBI MD Says Home-buyers Too Would Have To Bear the Brunt of Bankruptcy in Real Estate Sector – Supreme Court Assures Unitech Buyers–Flat or Refund, Your Pick

16

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Disclaimer: Moneylife has a policy of not allowing its editorial staff to buy and sell stocks that are written about in the magazine. All personal transactions in individual stocks are subjected to internal disclosure rules.

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CONTENTS

20

FUND FACTS

Affordable Housing Plans Can Be Derailed by the Jaypee Mess

22 Different Strokes

Stop Mis-selling, Protect White Money from Being Looted

FUND POINTERS

Equity Schemes 24 Why with Dividend Option Make Little Sense

xSTOCKS

26 Smart Money

& Worst Mutual 25 Best Fund Schemes INSURANCE

30 Insurance Trends Health Insurance – Mediclaim: Do Insurers Have Robust Medical Underwriting? Fine Print

xUSEFUL APPS

Your 58 Findo: Smart Search Assistant

– Photoscan by Google: Revive Old Memories & Store Them – Google Maps: Comprehensive Accurate Maps in 222 nations – YouTubeKids: Let Your Kids Discover and Explore

TAX / FIXED INCOME

51

Black Money Act and Declaration of Foreign Accounts

PULSE BEAT

Fat Diet Could Be 59 High A Good Idea!

– G-Sec Yields Down

‘Professional Management’ Is Not a Panacea

40 Stock Watch Sintex Plastics: Interest Cost Devouring Profits

CYBER SECURITY

Theft in 52 Data Organisations and Legal

– Sugarcane for Sound Sleep

Issues

LEGALLY SPEAKING

and Courier 60 Postal Services Offer Poor

Shivam Autotech: Turning Around?

Redress for Service Deficiency

Sobha: Developing Interest

PS

Sarda Energy & Minerals: Will the Growth Continue? BLOCKCHAIN

PCBL: Perils of Cut & Paste

54

Improving Financial Safety with Blockchain

Market Manipulation: Blue Pearl Texspin TAX HELPLINE

Market Trend: Temporary Blip?

Content.indd 4

at Moneylife 56 Queries Foundation’s Tax Helpline

Ends at 66 Loose Infosys – Tax Reminder or Threat? hreat? – Drop CSR Hypocrisy y

DEPARTMENTS Readers’ Response ........... 8 Book Review ....................62 Money Facts ....................64

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Prof Sanjay Bakshi: “What Happens After You Buy a Stock?”

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Volume 12, Issue 16 15 September–28 September 2017

Debashis Basu

Editor & Publisher [email protected]

Sucheta Dalal

Managing Editor [email protected]

Editorial Consultant Dr Nita Mukherjee [email protected]

Editorial, Advertisement, Circulation & Subscription Office 315, 3rd Floor, Hind Service Industries Premises, Off Veer Savarkar Marg, Shivaji Park, Dadar (W), Mumbai - 400 028 Tel: 022 49205000 Fax: 022 49205022 E-mail: [email protected]

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Moneylife is printed and published by Debashis Basu on behalf of Moneywise Media Pvt Ltd and published at 315, 3rd Floor, Hind Service Industries Premises, Off Veer Savarkar Marg, Shivaji Park, Dadar (W), Mumbai - 400 028 Editor: Debashis Basu

Total no of pages - 68, Including Covers

RNI No: MAHENG/2006/16653

CONGRATULATIONS FOR REACHING 300TH ISSUE! First of all, let me congratulate the entire Moneylife team for bringing to us the 300th issue of the magazine. It is really a mature decision not to publish a bulky issue on this occasion. I Mutual Fund investments would like to offer my comments on some of the are subject to market risks, read all scheme related th articles in the 300 issue. documents carefully. Ups and Downs of Infosys: Who is right and who is wrong, Mr Murthy or Mr Sikka, can have different perceptions. One of the issues under dispute is the fat salary. I always wonder whether Write to the Editor! the salaries/ packages offered to the top level officials and CEOs in the corporate sector should be so high! How many of them are really doing a prize some extraordinary work? I think this trend has come to India from Western countries. Manpower in most of these countries is very poor which is not the case with India. We observe that most of the people in service leave home at a fixed time; but nobody knows when they will be back; their earnings are not very high. This class works under great stress because of job uncertainties. Whenever there is any cost-cutting, this class is axed first, but the top brass rarely cuts its own salary. I recall the case of a young girl that I read in the beginning off 20 2008. inn nin nin ni ngg o 008 08. 8. Lehman Bros interviewed this young girl at IIM-Ahmedabad med dabad bad ccampus ampu am pus and then offered a hefty yearly package of Rs1.25 crore! This girl may be extraordinary; but is it proper to offer such a fat package at such a young age to a boy or a girl? And, within two months came the news of the total collapse of Lehman Bros. What happened to this girl? Nobody knows. 

WIN

MONEYLIFE | 15–28 Sep 2017 | 8

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LETTERS

the

Best letter

Bank Strike Brings Banking Mayhem

D

uring the last week of August 2017, there was banking mayhem and bank customers have had to suffer shabby treatment. Take my own experiences during this week with the banks. a) I had issued a cheque to a party who had deposited it on Monday (21st August). The money was to move from HDFC Bank to Corporation Bank. There was no news up to Thursday. Yes, on Tuesday, there was a bank strike. Finally, on Friday morning, when I checked my account, I noticed that my account in HDFC Bank had been debited with the value-date of Friday. I promptly checked if the credit had happened with my counter-party in his account, as it was an important matter. It has not happened at all until Sunday evening. So, one of the banks is enjoying an illegitimate float of three days with customer’s funds. In short, a cheque deposited with the bank on Monday is getting credited to the other party on next Monday. So, banks will go on strike and rub further salt on the wounds by enjoying illegitimate float with

 Crosshairs: Sucheta Dalal has taken up the issue of

DS Kulkarni Developers in a very balanced manner. Instead of making any allegations, she has tried to put forth some facts. The fall of investors in the so-called ‘high returns’ trap is age-old. It appears that even the well-educated people as well as the wealthy ones do not want to learn anything from the past reports of many such cases which appeared in newspapers. Filing ITR: I am filing the ITR (income-tax return) of my wife and mine online for the past six years using MS-Excel platform (I never try the html version). There is a utility to save this MS-Excel file in .xml format, before uploading the returns. At the time of filing a fresh return, I import basic data from the .xml format of my earlier ITR. After feeding all the required and relevant details, I calculate the tax and, if anything has to be paid, I pay it online and upload the .xml file without any hassle. This whole exercise requires a bit of practice. One does not need to be techno-savvy or be an expert in income tax laws, but should know at least basic provisions of the Income-tax Act. One should have a fair knowledge of MS-Excel. This is

customer’s funds. b) A cheque issued to me by a credible party surprisingly bounced. When I called him, he was hopping mad that three cheques that he had deposited on Monday had not yet cleared and the bank had the cheek to return to me the cheque he issued as ‘funds insufficient’. There may be tens of thousands of cases in Mumbai itself like mine—bank customers bearing this sort of pain for no fault of theirs. G Ravishankar, by email

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Congratulations G Ravishankar

YOU WIN A PERSONALISED CLOCK

G Ravishankar

particularly important, if one’s sources of earnings are not complicated. One should go for this, at least for ITR-1 and ITR-2. Crypto-currency: Yogesh Sapkale’s article on cryptocurrency theft comes out with the finding that a new avenue is now open for the hackers. I feel that the anti-social elements are always miles ahead in any new technology. Every effort to fill up the loopholes makes the hackers find out new loopholes. This is an unending war on the technology front. Yazdi Tantra, as usual, has brought to the readers new features and new apps. SD Israni’s article “Consumers must know when to appeal” is an eye-opener. Abhay Datar, by email

CONSOLIDATION NEEDED AMONG COOPERATIVE BANKS? This is with regard to “Cooperative Banks: Outright Loot” by Sucheta Dalal (Moneylife, 14 September 2017). This article gives a broad picture of the messy situation in which cooperative banks have landed. There are multiple categories of cooperatives doing



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LETTERS

 ‘banking’ in India and a multiplicity of regulatory and

supervisory arrangements for these institutions. In 1966, certain provisions of Banking Regulation Act, 1949 (BR Act) were made applicable to cooperative societies through an amendment to the BR Act. Since then, we have three categories of cooperative banks, state cooperative banks, district cooperative banks and primary (urban) cooperative banks. While district cooperative banks (DCBs) are, in a sense, federations of primary cooperatives in districts, and state cooperative banks (SCBs) are apex banks at state level for DCBs, primary (urban) cooperative banks are mini commercial banks working in the cooperative sector. While SCBs and DCBs are regulated/ supervised by RBI (Reserve Bank of India)/ NABARD, primary (urban) cooperative banks are regulated/ supervised by RBI. All cooperatives are under the administrative control of respective state governments. During demonetisation days, we have seen the problems faced by cooperatives which were short-circuiting legal provisions using political clout and state government support. Kerala has initiated a process of consolidating all cooperative banks (except urban cooperative banks) and having one large Kerala Bank. If the experiment succeeds, it will be another ‘Kerala model’ worth emulating by other states. MG Warrier, online comment

WHY DID INFOSYS GO PUBLIC WITH ITS PROBLEMS? This is with regard to “What’s going on in Infosys” by Sucheta Dalal (Moneylife, 14 September 2017). It is most unfortunate that the private matter of a company become public. The acts of wrongdoing of a company have internal (by board) or legal recourse. Then, why should the seniors of the company go public? The

goodwill of a company is adversely affected when internal matters are made external ones. Who was at fault and why has this kind of situation come up? It is a matter of investigation by the board of directors and corrective legal measures can be taken. Now, an older executive of Infosys, Nandan Nilekani, has come back to take charge. Hope, this matter is closed forever and the company will do better in all aspects under his leadership! M Kumar, online comment

BYGONES IN MEDICAL PROFESSION? This is with regard to “Produce Evidence To Prove Medical Negligence” by SD Israni. It is a very informative write-up. I have observed many of my acquaintances, who have lost their near and dear ones by the sheer negligence of the medical professionals, letting off the guilty. They generally blame their own fate and support their view by claiming that the incident of negligence has to be ignored, as it will not serve the purpose of the dead coming back to life. Srinivas Shenoy, online comment

INFORMATIVE ARTICLE This is with regard to “Your Friendly Bankster” by Sucheta Dalal and Debashis Basu. What an informative article and I have experienced such mis-selling. PNB Metlife proposed to sell me their traditional insurance product called Endowment Savings Plan Plus saying it will fetch returns of 7% as reversionary bonus. However, when I checked their website for previous results, it was a mere 2.13% and, when I countered the agent with this information, he simply hung up. He wanted me to first buy the policy and, in case I don’t like it, return it in 15 days in which case also the insurance company would get some selling benefit. Ravi Kalia, online comment

HOW TO REACH US Letters: Letters to the Editor can be emailed to editor@moneylife. in or can be posted to: The Editor, Moneylife Magazine, Unit No. 316, 3rd Floor, Hind Service Industries, Off Veer Savarkar Marg, Dadar(W),

Mumbai 400 028 or faxed to 02249205022. Letters must include the writer’s full name, address and telephone number and may be edited. Subscription Service: For new subscription requests,

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11 | 15–28 Sep 2017 | MONEYLIFE

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Public Interest Unfair GST Rates: No Lobby for Ordinary Citizen

W

hile industry has been in direct touch with the government to lobby for concessions in the Goods and Services Tax (GST), there is no lobby for the ordinary, tax-paying, and aspirational citizen of India. In most democracies, it is the elected representatives who take up such issues, but middle-class Indians are not relevant to politicians, mainly because we are not an organised vote bank. The consequence is that we are paying more for many things. For several years now, banks, which earn a fat spread on our money (difference between their lending rate and deposit rate paid to us), have begun to fleece us on every service that ought to be covered by the income they earn on our money.

This includes cheque-leaves, ATM transactions beyond three, cash deposit charges, debit card fee, SMS fee, minimum average balance and many more. Now, for want of a lobby, our interest is being neglected when it comes to GST as well. We learn from social media that consumers are being charged anywhere between 18% to 28% GST for repairs of microwaves, refrigerators, washing machines, etc. Since repairs of home appliances are not tax-deductible, the temptation to ditch formal service companies and move to cash payments to informal technicians will be high. A sensible government would have kept GST on repairs at 5%. Large cooperative housing

societies (CHSs) are also up in arms about the 18% GST and the accompanying paper work. Some argue that services to members, by a voluntary committee, cannot be considered a service at all. But this issue has not received much attention, probably because there is no powerful body to represent the cause of affluent middle-class Indians living in CHSs, especially the larger ones. Remember, CHSs with revenue of up to Rs10 lakh (in any financial year) are exempt from service tax; this further divides those affected by GST. Mumbai activist Kamlakar Shenoy has raised another important issue about how GST affects ordinary people. In a letter to the prime minister, he has pointed out that there should be no distinction between air-conditioned (AC) and non-AC restaurants for levy of GST. Today, AC restaurants have to pay 18% GST, while non-AC ones pay 

Technology & Social Media as Disaster Management Tools

W

hen the skies opened up on 29th August and brought Mumbai to a grinding halt, the only wing of the government that earned the gratitude of ordinary people was the Mumbai police. The traffic cops were at every trouble spot, in their fluorescent yellow rainwear, patiently guiding people, helping them navigate flooded streets or even helping to push a stalled vehicle to the side, to clear the roads. Like the people of Mumbai, the traffic police invariably do a brilliant job of managing large crowds during planned events (the annual Ganesh immersion day, Ambedkar Jayanti or various public rallies). But their performance, this time, was also attributed to two other factors—the

electronic eye that was providing feedback to the control room from over 4,700 CCTV (close circuit television) cameras in 1,510 locations across the city, combined with the excellence nce of its social media handle dle (@MumbaiPolice) iPolice) which continually relayed feedback to and from m the control room to people eople who tagged it with messages ssages of distress. Wouldn’t it be wonderful to amplify the e benefits of technologyy and

social media for better policing and other situations? Dr Pradnya Saravade, additional director general, already has Maharashtra police, a interesting ideas put out some inte about what can be done. She are reports of says, “There a presence of the city the good pres through police on the roads r work in the night and their t keeping the traffic traf situation in control, control despite very movement of slow mo vehicles through vehicle waist-deep waters waist at many places. m The sensitivity and responsiveness res of the Mumbai Police Twitter P 

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Public Interest.indd 2

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 12%. In fact, GST on fine dining

hotels was reduced from 28% to 18%, while this helped five-star hotels, it is still too high for ordinary AC hotels. “Why can’t an ordinary person enjoy AC comfort for 30 minutes while satisfying his hunger

houses? We certainly think Mr Shenoy has a point in demanding uniform GST, at least at the lowest end applicable today. Several activists who we spoke to concurred with

the view. Tax expert, Nikhil Vadia, says that a uniform 12% rate for all restaurants seems fair, since they get input tax credit and no longer pay the 6% service charge applicable earlier. Also, there is a 5% GST available for small restaurants with a turnover of up to Rs75 lakh in most states—the distinction of AC and non-AC must, however, go. Dr VG Patel, chairman of the Consumer Education & Research Centre of Ahmedabad, a leading consumer organisation, also agrees that this issue should be pursued at least to the limited point that “AC facilities at any place for any service or business should not be treated as luxury or meant for higher income group and, hence, must not be charged higher GST… on that account.” Incredibly, even businessclass tickets in airlines, a true luxury, are taxed at 12% while economyclass tickets attract 5%. Let’s hope the government listens. 

hand, his colleague, who started half an hour later, took over seven hours to reach Prabhadevi, by not relying on Google maps and getting further stuck in traffic by experimenting with different routes. Incidentally, traffic updates from @MumbaiPolice on the closing and, later, the opening, of the Worli sea-link as well as trains was a huge help to people. Pushing information faster to the social media handle by linking CCTV cameras would certainly be a big disaster management tool. Communicating information captured by CCTV cameras to policemen on the ground would also help them guide people and help divert traffic away from trouble spots and clogged routes. The fact that most people have mobiles and their networks performed admirably was also an important factor this time.

Dr Saravade also suggests posting GIS map-based visual information on the police website “to display information on food/water/shelter sites across the city.” While citizens did an admirable job of circulating such information on WhatsApp and Twitter, an official source for updates would be more credible and reassuring, she says. Dr Saravade also suggests a larger deployment of electronic information boards across the city which could be used for information on traffic, trains/buses as well as food and shelter with appropriate hashtags. Dr Saravade, correctly, says people look to the government for credible information in times of disaster and technology now provides “that single-point authentic source for coordinating an effective response.” 

such distinction between AC and non-AC barber shops, hospitals, or those selling shoes, clothes, medicine, gold or anything else. Even ATMs for withdrawing money are invariably air-conditioned. So why this distinction only for eating

AC restaurants attract 18% GST. Incredibly, even business-class tickets in airlines, a true luxury, are taxed at 12% while economy-class tickets attract 5% without being burdened with a hefty tax?” asks Mr Shenoy. He points out that an AC is hardly a luxury in hot and humid Indian cities. More importantly, Mr Shenoy points out that the government has made no

 handle during the entire ordeal was really good and has been much appreciated by the users. What does this episode of natural disaster teach us to do better next time? ”She suggests that images captured by over 4,700 cameras should be linked @MumbaiPolice Twitter handle so that live information can be communicated to people even faster. Dr Saravade also suggests integrating Google maps with the CCTV network, to get more accurate information. But Google maps are already highly accurate. We know at least one instance, of an IT executive travelling from Bandra-Kurla starting at 2pm that day reached Pune by 6pm by faithfully following the roads suggested by Google maps, although it was completely different from the normal, most direct route to Pune used by him every week. On the other

13 | 15-28 Sep 2017 | MONEYLIFE

Public Interest.indd 3

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Your Money MUTUAL FUNDS

TAX

SEBI Likely To Bring in Rules for Merger of Mutual Fund Schemes

S

EBI (Securities and Exchange Board of India) intends to introduce rules that will force mutual funds (MFs) to merge schemes in the same investment category, driving long-pending consolidation in an industry that has hitherto ignored informal requests for ending the surfeit of plans. If a fund house has two equity schemes with mandates to invest in largecap stocks, the asset manager will have to merge the investment products, once the new rules

proposed by SEBI are implemented. In India, 42 asset managers handle more than Rs19.5 lakh crore across 2,000 MF schemes. SEBI has maintained that the number is high and is causing confusion among investors who have to choose between too many similar products.

BANKING

Deadline for Banks To Set Up Aadhaar Enrolment Centres Extended to 30th September

Employees’ Fringe Benefits To Be Taxed under GST

T

he Goods and Services Tax (GST) will be applicable on any nonmonetary fringe benefit an employee gets from his employer, the government said. Monetary compensation paid to employees is not considered supply and will not attract GST, the Central Board of Excise and Customs (CBEC) said in the latest round of clarifications issued in the form of frequently asked questions (FAQs). The monetary income will, however, continue to attract incometax. “The compensation to employees in the form of money is not a supply. However, fringe benefits are a supply of goods or services and are liable to tax if not exempted,” the CBEC said. Fringe benefits are transactions in furtherance of business. “Even if supplied without consideration, the same are deemed supply” and will attract GST, it said. On rental income, CBEC said GST will not be levied on the rental income of less than Rs20 lakh in a year.

REAL ESTATE

P

ublic sector and private banks have got a month’s extension to establish Aadhaar enrolment centres within their premises. The Unique Identification Authority of India (UIDAI) said that, on the requests of the banks, it has extended the deadline up to 30 September 2017. The extension has come with the condition of “financial disincentives for every uncovered branch per month,” if banks don’t meet the criteria of establishing Aadhaar centres in at least 10% of their branches. UIDAI said that to ensure compliance of its directives issued on 14 July 2017 and in accordance with the Aadhaar (Enrolment & Update) Regulations 2016, a financial disincentive of Rs20,000 per uncovered branch shall be levied on the bank for failing to adhere to the target of setting up of enrolment and update centres in 10% of its branches by 30 September 2017.

SBI MD Says Home-buyers Too Would Have To Bear the Brunt of Bankruptcy in Real Estate Sector

H

ome-buyers and lenders will have to bear losses in bankruptcy cases in the real estate sector, India’s largest bank SBI (State Bank of India) said. The Bank’s managing director (national banking group), Rajnish Kumar, said no one should expect recovery of their full investment in cases of losses. Mr Kumar was speaking at the annual convention of National Real Estate Development Council, a builders’ lobby group.

MONEYLIFE | 15-28 Sep 2017 | 14

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Your Money BANKING

Supreme Court Assures Unitech Buyers–Flat or Refund, Your Pick

T

he Supreme Court (SC) assured flatbuyers in Unitech schemes that it will ensure relief according to their choice— getting the money back or allotment of a flat, according to a report in the Economic Times. The SC repeatedly referred to flat-buyers as ‘investors’ and sternly told incarcerated Unitech managing director, Sanjay Chandra, that grant of interim bail will depend on his giving possession of 125 flats in housing projects in Noida and Gurgaon to investors on ‘as is where is’ basis. The Court placed another condition for interim bail—Mr Chandra must deposit

with the Court Rs5 crore more within a week. SC asked Unitech to allot 125 flats, which are nearing completion in three projects—‘Vistas’ (Gurugram) and

MONEYLIFE QUIZ

‘Burgundy’ and ‘Amber’ (Noida)—to establish its bona fides. This has to be done within a week after verifying authenticity of payments by flat-buyers.

Moneylife Quiz no

267

Another quiz to tease your brain. The answers are in this very issue. The winner will be chosen by a lucky draw from correct entries and answers published in the issue dated 26th October 2017. Send in your answers to [email protected] with the Quiz no., name, address & telephone number before 4 October 2017. 1. Of all mutual fund (MF) schemes that have declared dividend between September 2016 and August 2017, what is the highest dividend as a percentage of the scheme’s net asset value (NAV)? a. 37% b. 36% c. 32% d. 16%

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Answer Correctly! Win a personalised sed clock with an investment nt quote!

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5. Of the MF schemes in the Moneylife study that have paid dividend, what is the maximum increase in the scheme’s NAV? a. 19.10% b. 21.39% c. 31.26% d. 13.46%

6. How many of the 207 open-ended equity MF schemes 2. Which of the following advantages do MF schemes that pay (under dividend option) have not paid out any dividend in dividends lose out on? the past one year? a. Capital growth b. Arbitrage opportunities a. 50 b. 60 c. Hedging d. Investing in debt c. 75 d. 100 3. Who is the author of Advice & Dissent: My Life in Public Service? a. Dr YV Reddy b. Dr Raghuram Rajan c. Dr D Subbarao d. S Venkitaraman

7. When was the Indian Post Office Act enacted? a. 1857 b. 1898 c. 1947 d. 1975

8. How many countries are covered by Google Maps? 4. Which hacker group unleashed the WannaCry ransomware? a. 100 countries b. 150 countries a. Federal Bureau of Investigation b. Shadow Brokers c. 190 countries d. 220 countries c. Alpha Bay d. Charles Ponzi In all, 10 readers got all the answers right last time. The winner of Quiz-265 is Raykumar Panyam from Hyderabad. Congrats! You win a personalised clock with an investment quote!

The answers to Moneylife Quiz-265 are: • 1-a. Securities’ value rises • 2-d. August 2017 • 3-d. Interest rates will fall sharply boosting the equity market • 4-b. 153,000 ether • 5-b. 1 August 2017• 6-a. Gary Anderson • 7-b. Video-calling over Internet • 8-a. a particular way or method of doing something

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www.moneylife.in News & views with a big difference NDTV wants to ban mobile phones at its AGM New Delhi Television Ltd (NDTV), which projects itself as the champion of free speech and public causes, has decided to bar its shareholders, who are co-owners, from carrying mobile phones, bags and other accessories at its annual general meeting (AGM) scheduled for 21 September 2017 at Delhi. This is,

probably, the first time that a listed company wants to go to such extremes to prevent deliberations at the board meeting from being known to the outside world, including potential investors. This

How to use RTI for income-tax refunds

RERA effect: Builder refunds over Rs26 lakh to buyer for failing to hand over possession of a flat

Although income-tax refunds are now processed faster, several taxpayers are awaiting refunds or resolution of other tax-related issues. There are simple and effective ways to resolve issues by following systematic process, making a cogent application and persistent follow up, explained Rajesh Gada, chartered accountant (CA) and a certified financial planner (CFP). He was speaking at a daily clinic organised by Moneylife Foundation

The Maharashtra Real Estate Regulatory Authority (Maha-RERA), in its first ruling, had helped a buyer get refund of entire booking amount of Rs26.15 lakh paid from a developer for failing to hand over possession of the flat within stipulated time. This case will help other buyers seek refund from builders or developers for failing to hand over possession of their flats

Complicated paperwork and bureaucratic impediments affecting household savings: Report

Aadhaar apps eco-system is vulnerable to malware: Report

Indian households can benefit greatly by re-allocating assets towards financial markets and away from gold. However, high transaction costs and bureaucratic impediments create a nuisance factor for households hoping to engage in formal financial markets, says a report

The application eco-system built around Aadhaar is vulnerable to malware as conflicting requirements between utility, security, delegation and profit-making, have created the perfect environment in the unique identification (UID) system, says a report from Medium.com

EXCLUSIVE VIEWS Mumbaikars should ask BMC to publish details of all civic works on its website under Section 4 of RTI Act Vinita Deshmukh

On issues that matter to you How Maharashtra government tried to Influence Bombay High Court on noise pollution Sudhir Badami

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will be a bad precedent, which will be quickly adopted by most companies, especially those who have a lot to hide. Normally, the media is allowed to attend AGMs; it is not clear whether NDTV, a media house, will bar the media from attending, or from carrying their mobiles, recorders and cameras to the meeting. So far, mobile phones are only barred at meetings where senior politicians, facing a security threat, are in attendance and it causes great irritation. Is NDTV also trying to discourage investors from attending?

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CROSSHAIRs

Exclusive news, the stories behind the headlines and the truth between the lines by Sucheta Dalal

Affordable Housing Plans Can Be Derailed by the Jaypee Mess

I

n 2008, when the global financial crisis hit India, the government granted massive concessions to the realty sector to bail it out. Unfortunately, instead of giving limited support and forcing them to clean up their act, most bankers colluded with shady builders, allowing them to expand recklessly. In most cities, prices raced past what the market could afford and it remains that way. Through all this, builders continued to hold up the prices of unsold property. With banks on the verge of going bust themselves, the music has stopped; developers are bankrupt and saddled with incomplete projects. Caught in the crossfire are lakhs of home-buyers, who invested their lifetime savings, or took huge loans to book their dream house in such mega projects. The government is doing its best to kick-start the market, but it is now clear that, unless it sorts out the existing mess, there is unlikely to be a new beginning. Deepak Parekh, chairman of Housing Development Finance Corporation (HDFC), and one of the most respected names in corporate India, says, the government’s ‘affordable housing’ plan announced in the 2017 Union Budget has some incredible incentives for both, real estate industry and home-buyers. Along with the consumer protection offered by the Real Estate Regulatory Act (RERA), it could have paved the way for a clean-up and revival of demand. Mr Parekh says that a decent-sized 2-bedroom apartment, which also fits the definition of ‘affordable’ homes, would fulfil the dreams of a growing middle-class. Unfortunately, barring a few large and well-run corporate groups, the industry is in an awful financial mess. Things came to a head after the government pushed banks and lenders to step up loan recovery efforts through the Insolvency and Bankruptcy Code (IBC).

IDBI Bank set the ball rolling when it approached the Allahabad bench of the National Company Law Tribunal (NCLT) to file IBC proceedings against Jaypee Infratech for a Rs526-crore default. This subsumes any other existing litigation against the company. IBC proceedings against the company would have left the home-buyers of Jaypee’s projects without any recourse. They quickly came together to protect their interest through litigation. The NCLT bench ordered insolvency proceedings. The government chipped in to help by amending the Insolvency Resolution Process for Corporate Persons Regulations, 2016, to allow homebuyers to file their claim as creditors. However, treating home-buyers on par with other creditors could also mean taking a similar haircut on their investment. The home-buyers approached the Supreme Court for a stay on the insolvency proceedings ordered by the NCLT’s Allahabad bench. Although the Court initially granted a stay and had posted the hearing for 10th October, it has, since, agreed to hear IDBI Bank’s plea to modify its order on 11th September. This has put home-buyers, lenders, the realty industry and the government on edge. IDBI Bank has pointed out that the apex court’s stay order put the promoters of Jaypee, who are squarely responsible for the colossal mess, back in charge of the company. Home-buyers are concerned that lenders would think nothing of compromising their interest again. An opinion piece in The Financial Express (dated 6th September) alleges that home-buyers’ move to protect their flats could derail the insolvency process itself. The claim that Jaypee’s home-buyers could derail the IBC seems rather silly. This peculiar problem pertains only to the realty industry, where dubious developers, on the verge of bankruptcy, have also 

MONEYLIFE | 15-28 27 November Sep 2017 2014 | 20| 14

Crosshair.indd 2

07-09-2017 21:15:47

 short-changed lakhs of home-buyers—many of whom

to owning a home are rather different. have paid over 90% of the cost of their home and have • Home-buyers will stop buying under-construction projects and not only other realty projects, but the not received possession of their flats. One solution government’s ambitious and politically important suggested by bankers is that home-buyers, as creditors, ‘affordable homes’ plan will not take off. may also “need to take big haircuts if need be.” In my view, this mess needs a political solution. Consider the enormity of what this would mean. India is notorious for having super wealthy promoters • Home-buyers put their faith in government heading sick companies. A government, which has processes and in bankers and mortgage financiers promised to go after black money, has to find a way having honestly discharged their responsibility to deliver on this promise. The Jaypee issue, which of appraising the project, ensuring regulatory clearances and monitoring the use of funds. It seems involves around 30,000 persons in 27 projects is both, complicated and political, and home-buyers are preposterous that they should now be asked to mere scapegoats. Jaypee and other projects at Noida take a haircut on par with lenders who are really received exceptional concessions from the Mayawati responsible for the bad loan problem. government including land • If IDBI Bank and other at a throwaway price. It lenders agree to give up obviously had a quid pro quo. anywhere between 50% Over the past few years, to 70% of what they the Noida Authority has been are owed (yes, initial working to sort out issues proceedings before the involving Jaypee as well as NCLT indicate that the the Amrapali group which haircut will be as steep as has 40,000 buyers and is that), a home-buyer will in a similar financial mess. be told that the Rs1 crore, Amrapali investors, too, have he has already paid the joined hands to protect their builder for her home is investment. According to now worth Rs30 lakh to reports, some investors have Rs50 lakh. This mess needs a political paid as much as 90% or more • In effect, the least solution. India is notorious for empowered person in the having super wealthy promoters for their apartments while others were due to receive chain will be made to pay heading sick companies. A their completed flats only by for the collusion of banks government, which has promised 2021. Since the numbers are for lending recklessly to go after black money, has to large and the entire industry and failing to monitor or deliver on this promise will be affected by the recovery of funds. Builders reputation damage, industry also sank into a deeper organisations are also trying mess by refusing to clear to work out a deal with the government for another unsold inventory by cutting property prices which developer to step in and complete the unfinished bankers knew and condoned but over which homeprojects. As always, they want more concessions. And buyers had no control. • Many are continuing to pay EMIs (equated monthly all this pertains only to Noida. There are similar issues instalments). Defaulting on a home loan is, in fact, a with very large and high-profile developers in Mumbai and Pune as well. financial hara-kiri, because a default in one’s credit According to one estimate, a massive Rs10 lakh record makes one ineligible to get a credit card, crore is stuck in incomplete realty projects whose personal loans or even open trading account. developers are at a financial standstill. Finding a • Lakhs of home-buyers all over the country are solution that neither lets off the corrupt buildertrapped in this absurd situation and an order on banker-neta-babu nexus, nor inflicts damage on buyers Jaypee Infratech will affect their interests as well. is admittedly a challenge. One of the ways to do If home-buyers are hurt, there will be political this is for the government to put pressure on Jaypee repercussions too. Until now, political parties have promoters personally and real estate biggies to step in ignored concerns of the middle-class, unless there is and find a solution or ban sales of under-construction a huge public uproar. Those who have followed our projects. Indeed, as we go to the press, we hear that the writings would know how callously governments government-owned National Building Construction have ignored the plight of those who are struggling Company will be asked to step in and complete the to get companies to redeem corporate fixed Jaypee projects.  deposits. But the emotions and aspirations attached 21 | 15-28 Sep 2017 | MONEYLIFE

Crosshair.indd 3

07-09-2017 21:16:10

DIFFERENT STROKES SUCHETA DALAL

Stop Mis-selling, Protect White Money from Being Looted

L

ast week, I caught up with Deepak Parekh, chairman Coincidentally, Ajit Dayal, until recently the head of of the Housing Development Finance Corporation Quantum Mutual Fund, has already lashed out at what (HDFC), who is known for his wise counsel and he calls the decline in HDFC’s ‘ethical and transparent for taking the lead in flagging policy issues that most standards’ in his newsletter called The Honest Truth. industrialists are hesitant to raise. We had met Mr Parekh Mr Dayal wrote, “HDFC Mutual Fund was party to to seek his guidance on how to push the government to the persistence (sic) survival of a scandalously profitable frame basic guidelines for retirement homes. A study distribution mechanism for mutual funds. Commissions conducted by Moneylife Foundation underlined this to paid to distributors were never disclosed. Worse, rewards be an important market segment, but the government were given to distributors for selling the most products needs to put in place a regulatory framework to protect within a timeframe. Greed was effectively encouraged. The the rights and safety of elders. fact that this was the standard in the industry is no excuse Mr Parekh surprised us for the subsidiary of an HT Parekh by going on to discuss the created firm.” He is especially mis-selling of mutual fund riled at the directors of HDFC (MF) schemes and insurance Bank and the HDFC Mutual Fund for their acquiescence policies by banks including the continued practice of offering through silence which encouraged foreign junkets as incentives to a policy of enhancing AUM agents and distributors. This (assets under management) at any is an issue that Moneylife has cost. He expects the inheritors been campaigning against for of HT Parekh’s legacy to lead years! Mr Parekh said that he the activism to “clean up messy had discussed his concerns with practices in the distribution Mr Parekh surprised us by all three financial regulators— system.” going on to discuss the misgovernor RBI (Reserve Bank of Mr Dayal, probably, has India), chairman SEBI (Securities selling of mutual fund schemes the right to criticise because Quantum Asset Management & Exchange Board of India) and and insurance policies by chairman IRDAI (Insurance banks including the continued led by example and kept away Regulatory & Development from distributors. But, like us at practice of offering foreign Authority of India). Another Moneylife (we say no to native junkets as incentives surprise! advertising and advertiser-driven He raised two key issues. ‘content’), he has had to sacrifice First, MF industry’s practice of pampering distributors growth for ethics. Is it realistic to expect the industry to take through foreign junkets which are passed off as education on an activist role? Shouldn’t Mr Dayal’s ire be targeted trips. The lure of these trips to select performers decides at the government and its multiple financial regulators which scheme is sold to the customer, rather than the whose primary duty is to protect investor interest through suitability of products or performance of fund houses. The sensible regulation and strict supervision? Ajit Dayal takes second issue is mis-selling of insurance products (especially credit for regulatory changes that broke the stranglehold of the sale of insurance as single-premium policies to senior distributors on the MF industry; but Quantum’s policy of citizens). When we pointed out that banks are the biggest doing away with distributors hasn’t met with thundering culprits in such sales tactics, he readily agreed and said that success either. his group (bank, mutual fund and insurance) was just as Mr Parekh’s initiative of raising the issue of mis-selling responsible as other financial sector biggies. That is why with the regulators is important. The huge gush of money he wanted regulators to initiate a clean-up. I am sure, into MFs has set the stage for the industry to voluntarily many will react to Mr Parekh’s comments with scepticism. end the dubious inducements to bank employees and 

MONEYLIFE | 15-28 Sep 2017 | 22

DIFFERENT STROKES.indd 2

08-09-2017 18:54:46

DIFFERENT STROKES SUCHETA DALAL

 distributors to sell unsuitable schemes. What we need is a

internal AUM targets. What is good for the investor or big shove in the right direction from the financial regulators suitable for her profile is, usually, not in the equation. If FSDC decides to follow the path taken by the UK to end malpractices. Will they act, now that an industry stalwart is asking for a clean-up? Let’s look at where we regulator, mis-selling can be stopped very quickly. In the UK, banks, such has Lloyds, Barclays, HSBC, RBS, etc, stand with each regulator. • RBI has been the most hypocritical, so far. In February have been forced to pay up close to £40 billion for mis2016, Raghuram Rajan said that he had warned banks selling insurance, writes Financial Times. They are likely of regulatory action for ‘mis-selling’ of third-party to cough up another £500 million before August 2019, products like insurance. RBI did nothing of that sort. says The Times UK. At the very least, a start must be made It asked the Indian Banks Association (IBA) to come to stop the most egregious targeting of senior citizens. If out with an appropriate industry policy regarding the insurance companies are asked to file information on all life sale of third-party products. IBA operates like a cartel policies, other than term insurance, sold to people over 60, and will not do anything until pushed. the government would have a quick database of potential • Dr Rajan also came up with a cosmetic Consumer mis-selling. Cross-checking this with all complaints filed Charter (which it now admits will never have teeth, by senior citizens, with the banking ombudsman or the but only articulate guiding principles). Secondly, he said nodal officers of all banks, will probably identify cases of banks would have an internal ombudsman (IO) to hear mis-selling with 90% accuracy. If the regulator orders a refund of premium paid in all consumer complaints. Details about IOs are hard to find on bank websites, although RBI says (in response to an these cases with interest and imposes exemplary damages on them, it will end the practice RTI application) that all banks have created these positions. fast enough. The clean-up needs Their role and responsibility to start at insurance but cannot is also not known. Thirdly, on stop there. Mis-selling by banks the eve of his departure, Dr extends far beyond insurance (the Rajan launched sachet.rbi.org. most egregious) and mutual funds. in, which is a grievance filing Moneylife had seen cases where mechanism for all financial relationship managers have opened regulators. The website is unwanted brokerage accounts not even updated regularly, for customers, by reusing KYC apart from occasional, documents, because they earn an inconsequential additions to incentive from the bank. Bank RBI has been the most some sections. officials actively accost customers hypocritical, so far. In • In 2016, RBI had also said and offer personal loans, by quoting absurdly low interest that it wanted the Financial February 2016, Raghuram Stability and Development rates through misrepresentation. Rajan said that he had Council (FSDC) to initiate A blogger writes about how he was warned banks of regulatory action against mis-selling by tempted by a personal loan offered action for ‘mis-selling’. RBI banks. But it wants other at 7.9%; but his own calculations did nothing of that sort showed that the lady was quoting regulators to raise the issue. This remains its position even a simple interest, while the actual under governor Urjit Patel. The only positive action payment, at compounded interest, worked out to 14%. on this front came in July 2017, following Moneylife There is plenty more. Foundation’s public campaign when RBI allowed This government has promised us all kinds of complaints against insurance mis-selling to be heard crackdowns. With less than two years to the next general by the banking ombudsman. election, it is time it begins to protect people who believed • In July 2016, the media reported that the insurance its promises. While an attack on black money is laudable, regulator was actively planning to ban incentives to bank stringent action to protect hard-earned, tax-paid money is staff—insurers would only be allowed a commission. what the middle-class will really appreciate.  It has not happened. • As for the MF industry, fund houses offer quarterly Sucheta Dalal is the managing editor of Moneylife. She was incentives for select schemes and junkets for selling awarded the Padma Shri in 2006 for her outstanding contribution specific schemes in a given timeframe that helps their to journalism. She can be reached at [email protected]

23 | 15-28 Sep 2017 | MONEYLIFE

DIFFERENT STROKES.indd 3

08-09-2017 18:55:08

MUTUAL FUNDS POINTERS

Why Equity Schemes with Dividend Option Make Little Sense

C

hoosing dividend option in a mutual fund’s equity scheme for the sake of fetching regular income while obtaining growth in value may sound like a good deal, and may even boost your confidence in the scheme, if the dividends received are better than your expectations. But you need to check closely what to expect. The first table below lists the schemes which have offered the highest value to their subscribers in the form of dividends as a percentage of the purchase price of the scheme’s NAV (net asset value). All diversified equity schemes, which have declared dividends between September 2016 and 31 August 2017, are considered for this analysis. As can be seen, high returns through dividends may seem attractive, such as getting back 37% of your invested money in the first year itself; but don’t be surprised to see your investment value down by 30%. Only three schemes have managed to give you ‘income + positive growth’. The second table lists schemes that have given an astounding growth in the value of investments, and simultaneously offered a decent rate of dividend.

High Dividend, Poor Performance Scheme

There are a few schemes which have been excluded here that showed increase in their NAVs, but sadly these didn’t pay out any dividend. So, while the idea of getting dividend from a scheme may be attractive, remember, it’s your own money that is being paid out. What you gain in dividends, you will lose in capital appreciation. So, if your objective of investing in an equity scheme is to attain some regular income and, at the same time, achieve growth in the principal invested, avoid the dividend option altogether and choose a growth option with a systematic withdrawal plan (SWP) to get that ‘income’ factor. You can choose the frequency (weekly, monthly or half-yearly) and the amount of income you want from your investment, say 1% of the total present value. This way, you don’t have to wait for your scheme to pay out a ‘dividend’. Around 60 of the 207 open-ended equity schemes under dividend option that we found hadn’t paid out any dividend in the past one year, while only 10 had paid dividends every month. 

Modest Dividend, Good Performance

Dividend Per Unit (Rs)

Dividend as % of NAV

NAV Change

Scheme

JM Equity – Half yearly

6.10

37.43

-30.60%

Taurus Bonanza Fund

23.35

35.64

-29.35%

Principal Emerging Bluechip

16.60

32.44

-13.54%

Principal Growth Fund

13.54

31.90

-12.16%

Principal Dividend Yield

6.77

26.41

-6.48%

Principal Large Cap

7.10

23.32

-12.02%

Aditya Birla Sun Life Small & Midcap

4.46

20.65

10.82%

Aditya Birla Sun Life Mid Cap

6.71

20.51

9.17%

JM Equity – Quarterly

4.40

18.84

-8.71%

Sundaram Rural India Fund

3.50

15.89

3.28%

Dividend Per Unit (Rs)

Dividend as % of NAV

NAV Change

DSP BlackRock Natural Resources

1.7

10.70

31.26%

L&T Emerging Businesses

1.5

8.45

27.76%

1.31

7.54

24.96%

4

10.53

22.81%

IDFC Sterling Equity L&T Midcap Fund IDFC Focused Equity L&T India Value Mirae Asset Emerging Blue-chip Tata Equity P/E (Option B)

1

8.01

21.39%

1.75

7.77

19.10%

2.5

10.33

16.27%

4.15

8.57

15.90%

Templeton India Growth

5

7.67

14.00%

Aditya Birla Sun Life Pure Value

3.23

11.73

13.46%

MONEYLIFE | 15-28 Sep 2017 | 24

Fund Pointer.indd 2

08-09-2017 15:14:10

MUTUAL FUNDS FUND FACTS

Best & Worst Mutual Fund Schemes The best# three and the worst three schemes over the past three years ranked by their quarterly rolling returns. Premium members get access to a more refined list of top schemes by logging in to Moneylife Advisory - advisor.moneylife.in Equity Schemes (Quarterly Rolling Returns) Large Cap (Category Avg: 3.94%, Sensex: 2.24%)

Launch Date

L&T India Value

Corpus (Rs Crore)*

Avg. Quarterly Rolling Returns

1-Year

3-Years**

Exp Ratio

08-Jan-10

4903.11

6.18%

26.86%

24.70% 2.02%

Tata Equity P/E

29-Jun-04

1628.55

5.78%

24.98%

23.10% 2.31%

Aditya Birla Sun Life Pure Value

27-Mar-08

1455.82

5.33%

25.31%

21.32% 2.46%

UTI Dividend Yield

03-May-05

2752.23

3.06%

14.86%

12.25% 2.12%

ICICI Prudential Select Large Cap

28-May-09

729.91

2.95%

8.39%

11.82% 2.65%

HDFC Large Cap

18-Feb-94

1312.43

2.72%

13.68%

10.87% 2.18%

Multi-cap (Category Avg: 4.04%, BSE 200: 3.18%) Motilal Oswal MOSt Focused Multicap 35

28-Apr-14

7880.05

7.43%

31.14%

29.72% 2.09%

Aditya Birla Sun Life Advantage

24-Feb-95

4077.08

5.58%

20.76%

22.33% 2.30%

Franklin India High Growth Companies

26-Jul-07

6922.82

5.48%

15.02%

21.91% 2.33%

LIC MF Equity

15-Apr-93

352.84

2.05%

4.62%

8.19% 2.82%

UTI Wealth Builder

17-Dec-08

934.76

2.03%

8.11%

8.13% 2.57%

Tata Regular Saving Equity

23-Jul-97

206.69

2.01%

5.20%

8.05% 1.76%

Mid-and Small-cap (Category Avg: 6.07%, Nifty Midcap 100: 8.65%) SBI Small & Midcap

09-Sep-09

729.65

8.18%

28.10%

32.72% 2.36%

DSP BlackRock Micro Cap

14-Jun-07

5974.52

7.64%

16.29%

30.58% 2.45%

Reliance Small Cap

16-Sep-10

4261.30

7.38%

33.21%

29.51% 2.02%

IDFC Premier Equity

28-Sep-05

5966.46

4.79%

14.86%

19.15% 2.00%

Axis Midcap

18-Feb-11

1230.06

4.54%

14.29%

18.16% 2.20%

DHFL Pramerica Midcap Opportunities

02-Dec-13

147.80

3.97%

11.94%

15.90% 2.62%

Debt Schemes Income (Category Avg: 2.37%, Crisil Composite Bond: 2.64%) ICICI Prudential Long Term Plan

20-Jan-10

2480.01

3.03%

11.24%

12.13% 1.26%

ICICI Prudential Income

09-Jul-98

1854.56

2.81%

9.98%

11.25% 1.86%

DHFL Pramerica Dynamic Bond

12-Jan-12

179.65

2.72%

11.69%

10.87% 1.74%

L&T Triple Ace Bond

31-Mar-97

553.65

2.01%

4.64%

8.06% 1.18%

DHFL Pramerica Premier Bond

21-Jan-03

1511.69

1.96%

7.15%

7.83% 1.58%

Invesco India Bank Debt

29-Dec-12

174.53

1.74%

6.70%

6.96% 0.65%

182.79

2.02%

6.97%

8.07% 0.90%

Liquid (Category Avg: 1.90%, Crisil Liquid Index: 1.91%) Escorts Liquid Plan

03-Oct-05

Indiabulls Liquid

25-Oct-11

6797.10

1.95%

6.92%

7.82% 0.23%

JM High Liquidity

31-Dec-97

4792.90

1.95%

6.89%

7.78% 0.27%

Reliance Liquid Fund - Cash Plan

07-Dec-01

4866.12

1.74%

5.86%

6.95% 1.06%

HDFC Cash Mgmt Fund - Call Plan

06-Feb-02

108.98

1.68%

5.99%

6.74% 0.31%

L&T Cash

27-Nov-06

468.86

1.67%

5.49%

6.66% 0.78%

# Please note the table represents a comparative performance of mutual fund schemes over a three-year period and it is not a recommendation; * Latest quarter average assets under management; We have only considered schemes having a corpus above Rs100 crore. **Annually compounded

25 | 15-28 Sep 2017 | MONEYLIFE

Fund Facts.indd 2

08-09-2017 15:04:29

SMART MONEY R BALAKRISHNAN

‘Professional Management’ Is Not a Panacea

A

company is an entity whose ownership is represented by share capital. Share capital is controlled by many, including the ‘promoters’ who are also the founders, managers and shareholders. When I buy even one share in a company, I become equal to the promoter or manager. That is what we all understand, in theory. Yet, to get some legal rights that can be enforced, or to question the company, we should collectively own a minimum of 10% and, if we have to block the company from doing anything, a minimum of over 25% is needed. First, let us get real. Irrespective of the percentage holding, it is the promoter who calls the shots. He decides on everything, from appointing key executives to auditors to ‘independent’ directors. He takes ALL the policy decisions and, in some cases, they can be so handson that every small transaction will go through them. By virtue of the largest shareholding, he has “skin in the game.” But he also does not distinguish between what is a joint stock company (where he is accountable to other shareholders) and a proprietary concern. He is building the company and growing it for his children, his family. In the process, if other shareholders get treated unfairly, it does not matter to him. The excesses flowing from this kind of thinking are there for all to see. Shareholders of many well-known, large, family-owned businesses have lost heavily over the past two decades. Some people think that a ‘professionallymanaged’ company would be much better. From what I have seen, in many companies, professionals are in a game of showcasing better quarterly results so that he or she can take performance bonuses. The board is supposed to have ‘independent’ directors who monitor performance

and can sack the CEO (chief executive officer). We have seen this happening in some global companies. However, in India, if we consider a company like Larsen & Toubro (L&T), the management is very different. The incumbent stays on till retirement and he will choose the successor. The board does not matter much. The CEO builds the business and decides what businesses to diversify into, etc. He is the king of an empire he does not own. Capital allocation is his call. Yes, there will be some longrange planning; but, as the mercenary hiring and firing takes hold, long-range plans will take a backseat. We have the example of L&T where there was some strategic planning for the long term; but we are also seeing the sorry state of affairs in Infosys, a template of governance at one time. Maybe Infosys is a unique case; but the mercenary hiring of the CEO and his imprint on key hiring, etc, is very visible. So, as a minority or a small shareholder, you do not have much leeway. You cannot do much legally. A small shareholder cannot afford even the litigation costs. The Indian regulator has realised this and is trying to make ‘motherhood’ changes in micro management to favour the small or ‘retail’ shareholder. Apart from this being questionable, it does not achieve the objective of actually protecting or helping the small shareholder. When the regulations were drafted, the influencers have been a set of people who thrive on the benevolence of the promoters and the CEOs. Obviously, laws are always drafted in favour of those with money. And, before we deride our nation’s regulators, let me hasten to add that it is no better anywhere else in the world. We still have well-managed and well-run companies. Management competence and integrity are, in some way, 

MONEYLIFE | 15-28 Sep 2017 | 26

column_Balakrishnan.indd 2

06-09-2017 18:44:24

SMART MONEY R BALAKRISHNAN

 closely linked. There may be marginal shades of grey; but

I find that good cash flows, high return on equity (RoE) and consistent growth are hallmarks of good management. Wise managements know the importance of a clean image and the rewards that flow from it. Management integrity fetches a premium valuation. A solid cash flow, no repeated capital-raising (unless you are a growing bank or a financial institution), no fear of hostile takeover, etc, are all hallmarks of good management. I feel strongly about some great managements issuing warrants to promoters; but the markets are happy to ignore this trespass. Investors seem to think, ‘let us not crib them the odd dipping into the till’. The recent Infosys boardroom peep show is something peculiar: a co-promoter who refuses to fade away, a new and ‘professional’ board whose actions are questionable and business conditions that are challenging. What is obvious out there is that there is a crisis of management that is going to fester. Re-installation of any founder would amount to a temporary fix and nothing more. The distinction between the management structure at TCS and Infosys is remarkable. TCS has a single dominant owner who is removed from the management. The management has been professional, with none of the owners getting into executive roles. This has brought forth talent from inside and the company is the industry leader. Infosys, on the other hand, burst like a star on the horizon, with handson promoters. Once they decided to step down, there is a vacuum. Probably talent from inside was never allowed to grow, with the founding partners allocating various key roles for themselves. Instead of a long transition, it was like an abrupt change. In the manufacturing sector, companies have survived bad managers. The first set of promoters has set up great businesses and, for some time, they can suffer the burden of

poor managers. Serendipity and lack of complexity work in favour. In a service sector company, with rapidly changing dynamics, management quality becomes extremely important. It would have been different if the founders of Infosys had left a 20-year vision plan for execution. They just walked out. Infosys has been a special company for the investors. Does this crisis mean that we chuck the shares out of the window? Is it so bad that the business of the company is headed to extinction? Maybe we need to look at the financials again. It can probably be a low-growth company for some more time until a new fix is administered. However, the company has a suite of businesses that gives it a solid base. Yes, the ‘wow’ factor in Infosys may have come down, but business capabilities have not diminished. The one issue which, probably, we could debate is whether the company should have gone ahead with the ‘buyback’ plan. With the management team’s continuity in question, this decision should have been left to the next team that will hold the reins. The decision to adopt the buyback, just a day or two after the controversies surfaced, raised eyebrows. The board, being a professional one, surely, should have deferred this call. It is unfortunate that Infosys is caught in this imbroglio at a time it is facing business headwinds. Its growth is not guaranteed. It is not just a question of rising wages in India and increasing global protectionism. It is also a fact that business models will keep changing rapidly and, to adapt to that, management continuity and long-range planning seem to be critical. One thing is for sure. The premium that we gave to the price of this stock is certainly in the fourth quadrant now. Disclosure: I own some shares in Infosys Ltd.  The author can be reached at [email protected]

What’s Your Bahana for Not Subscribing? I am not interested in honest & insightful advice on money matters I never have any problems with banks, credit-cards or insurance companies I always invest on the basis of tips from friends and brokers Finance bores me to tears I would rather spend two year’s of knowledge on one evening of eating out I always buy from the newsstands

For subscription offers that are a steal, look for a form elsewhere in this issue or our website at www.moneylife.in

27 | 15-28 Sep 2017 | MONEYLIFE

column_Balakrishnan.indd 3

06-09-2017 18:44:41

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Which insurance product then is right for you? As a member of Moneylife Advisory, you get advice on selected term insurance products, identified after deep, unbiased research. Most importantly, you will get special support during your claims, as long as you make the right declarations. + Tool Advises on Your Existing Insurance Worried that the ‘investment’ you had made in insurance is a dud? You can surrender, go paid-up or continue. What should you do? If you surrender, where do you invest and what new insurance do you buy? What are the tax implications? This tool from Moneylife Advisory will help you decide easily and quickly.

MSSN GB (Insurance 1-3 ).indd 2

16-12-2016 17:29:15

2. Right Health Insurance es differ Health insurance products are complex. Policies in exclusions, conditions and fine print. If you slip up on even one of the conditions, your claim may be rejected or cut down. A large number of cases generate disputes and some end up as complaints with the Insurance Ombudsman or consumer courts. We cut through the hype, hyperbole, duplication and complex fine print to help p you select the most suitable products. To help h you decide quickly, we have launched a health insurance selector tool.

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Subscription to Moneylife magazine is included in MAS Premium Membership About MAS MAS is a SEBI-registered investment adviser and part of Moneylife, India’s most unbiased and pro-investor research and information group. We run India’s best personal finance magazine, Moneylife. We are not afraid to call a spade a spade. We are India’s only media company to have set up a non-profit trust, Moneylife Foundation, which is now the largest savers’ and investors’ association with more than 35,000 members. MAS was set up to help investors and savers make the right financial decisions and handhold them through the entire process.

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MSSN GB (Insurance 1-3 ).indd 3

16-12-2016 17:29:45

INSURANCE TRENDS New products, regulations, features and options, interpreted from your perspective H e a lt h I n s uranc e

Mediclaim: Do Insurers Have Robust Medical Underwriting?

T

he Hindu reported a case of policyholder of the Varistha Mediclaim policy of the National Insurance Company who was refused reimbursement of medical expenses on the ground of pre-existing diseases (PED) of hypertension and diabetes and that

Fine Print IRDAI Central Database of Insurance Agents

T

he Insurance Regulatory and Development Authority of India (IRDAI) has launched a central database of all insurance sales persons in India. The database, called ‘Envoy’, is supposed to ensure that all licensed insurance sales persons working for insurers and intermediaries, including entities such as insurance agents, broker qualified persons, specified persons of corporate agents, authorised verifiers of web aggregators, point of sales persons (POS), etc, do not work with multiple insurers and intermediaries

the cardiac problems arose from complications of such PED. Kerala State Consumer Disputes Redressal Commission upheld a compensation of Rs1.57 lakh awarded by a district consumer forum. The Commission pointed out that the certificate issued by the doctor after medical examination of the insured had noted such PED and also diastolic dysfunction on echo cardiogram. In case any extra premium was required for coverage of the PED, the insurance company should have demanded and collected it. While declaration in utmost

in the same business category. With so many cases of fraudulent selling by unlicensed personnel to dupe customers with false promises, IRDAI’s focus should be to curb the menace of deceit instead of

good faith in the proposal form is important, medical test done by the insurance company is also a proof of existing ailments. The insurance company cannot pretend to be ignorant of the medical test reports. The customer has done the medical tests at the location of the insurer’s preference; hence, the insurer needs to crosscheck the reports with the proposal form and get it updated from the customer, if necessary. It will help to complete robust underwriting. Any new revelation in the report should be updated in the proposal and policy document, to clearly define the PED. Unfortunately, there have been cases wherein an insurance company may keep quiet until the claim is lodged. The policyholder keeps paying premiums over the years only to get claim rejection under the garb of non-declaration of PED. It is unfair on the part of the insurance company to feign ignorance about PED issues evident from medical test reports. The insurer should use the medical 

fraudulently sold policies, IRDAI is interested in licensed agents do not work with multiple insurers and intermediaries.

No Health Fund for Senior Citizens

A

trying to ensure that licensed agent works only for one insurer or intermediary. Instead of questioning the insurers who underwrite such

ddressing a seminar on “Insurance the Saviour in Healthcare, The Horizon and Best Practices” under the aegis of PHD Chamber of Commerce and Industry, secretary, ministry of health and family welfare, CK Mishra, ruled out the possibility of setting up of ‘Health Fund’ in the immediate future. This is due to experience of the Centre which reflects that the health fund created for senior citizens has not been appropriated as intended



MONEYLIFE | 15-28 Sep 2017 | 30

Insurance.indd 2

06-09-2017 19:37:22

INSURANCE TRENDS

 tests to ascertain the PEDs and,

if necessary, collect additional premium as underwriting loading. Moneylife had written about Star Health’s claim rejection case in September 2015 Cover Story “6 Mediclaim Blunders To Avoid” (http://tinyurl. com/ybq4fjhj). The heart ailment was revealed during the medical examination which was evident from the noting in his report. The medical examination report also confirms ‘TMT STRONGLY POSITIVE FOR INDUCIBLE ISCHEMIA’. When the first policy was issued, NIL was mentioned in PED column. This matter was brought to the notice of the agent. The insured was assured by the agent that necessary rectification will be effected and that note has been made about the medical condition. A claim made in fifth year was rejected on the

 and desired in the past and,

therefore, the government is not contemplating it any more.

Unclaimed Insurance Benefits To Go to SCWF

J

ust like unclaimed bank accounts, there are crores of unclaimed amounts with insurance companies. Around Rs6,700 crore was lying unclaimed with Indian private and public insurance companies at the end of 31 March 2014. The amount, payable as death claim, maturity claim, survival benefit, premium due for refund, premium deposit not adjusted against premium and indemnity claims that have remained unclaimed beyond six months are defined as unclaimed insurance amounts.

grounds of concealment of medical condition and suppression of facts. The case shows both the apathy of the agent who fooled the customer about PED declaration and also the customer’s lack of

understanding. It also casts a shadow on the insurer who did the medical tests which had revealed the medical condition. It is, indeed, baffling that PED is not specified in the policy when medical tests clearly show it. The lesson is: You

IRDAI has asked all insurers having unclaimed amounts of policyholders for a period of more than 10 years as on 30 September 2017 to transfer them to the Senior Citizens’ Welfare Fund (SCWF) on or before 1 March 2018.

will have to help yourself and ensure your proposal has all the declarations and these also appear in the policy document. If not, make a written complaint to the insurer or even cancel the policy as it is worthless without proper PED declarations. You need to keep a copy of the proposal received by the insurer and not just the copy of what you had submitted. It may be difficult for you to fathom; but there are devious agents who tear off your PED declarations and substitute them with a blank PED declaration so that the insurer will not reject the proposal. After all, the agent gets commission only if the insurer underwrites the proposal. If there is a serious ailment, the insurer is likely to reject the proposal. 

and income as well as increase of health-related issues and medical costs. Moneylife’s view is that, for children’s education, one should avoid buying child plans from life insurance companies. It will only

Savings for Child Education Is a Worry

A

survey conducted by Birla Sun Life Insurance Company finds uncertainty of life a worry among the respondents. The triggers for worry lie in priorities: providing for child’s education (35%), live a long, healthy and active life (32%), buy a dream house (22%), improve standard of living (22%) and live debt-free (22%). The leading causes of uncertainties are stability of jobs

add to your worry rather than reduce uncertainty. Don’t fall prey to the slick advertisements pushing for child plans from life insurers. 

31 | 15-28 Sep 2017 | MONEYLIFE

Insurance.indd 3

06-09-2017 19:36:40

The Insolvency and Bankruptcy Code will work only if crooked corporate debtors, bankers and insolvency players don’t game it. Has the rot already started, asks Dr Rajendra Ganatra. IBC will not lead to a drastic improvement in the bad loans situation

I

ndian banks, particularly the public sector banks (PSBs) including SBI and its associates, have been victims of very high non-performing assets (NPAs) and other distressed assets camouflaged as restructured assets. The malaise has been compounded by the extremely slow legal process for recovery. PSBs’ gross NPAs and restructured assets stood at dangerous 18.5% of total loan outstanding as on 31 March 2017 (see graph on the next page). The asset quality is deteriorating rapidly, as is evident from worsening of asset quality indicator (AQI) of the Reserve Bank of India (RBI), from 0.68 in March 2016 to 0.90 in March 2017. This calls for drastic measures to avert a banking crisis. Towards this end, the seven-point Indra-dhanush framework for revamping PSBs was announced in 2015. However, after adoption of the easier part, the framework has been forgotten and NPA resolution under the Indian Bankruptcy Code, 2016 (IBC) is being treated as a panacea.

Robust Legislation Under IBC, the process to fix financial distress has to be

mandatorily completed in a maximum of 270 days after admission of an application by National Company Law Tribunal (NCLT) for insolvency resolution, failing which, the corporate debtor has to be necessarily liquidated. The creditors can practically decide to liquidate the company in less than two months of admission of the insolvency application. In other words, certainty and speed of resolution through restructuring or liquidation is the hallmark of IBC, unlike previous credit recovery legislations. While the financial creditors can file for insolvency resolution under Section 7 of the IBC, the operational creditors and the corporate borrowers can file under Section 9 and 10, respectively. Upon admission of the application, the borrowing company’s board of directors is suspended and the control passes on to the insolvency resolution professional who must execute the mandate in terms of IBC and under the guidance and supervision of the committee of creditors (COC). The resolution professional, initially, joins as interim resolution professional (IRP) for 30 days and, thereafter, may continue as regular resolution professional (RP) or be 

MONEYLIFE | 15-28 Sep 2017 | 32

Cover Story.indd 2

08-09-2017 19:13:48

COVER STORY

PSBs: % Gross NPA & Restructured Loans to Gross Advances 20%

18.5% 17.2%

16% 12.7% 12%

10.6% 8.9%

8% 4% 0% 2013

2014

2015

2016

2017

 replaced by the COC. While the COC drives the decisions

about the restructuring or liquidation, the adjudicator’s role is limited to compliances with the provisions of IBC and dealing with questions of law. Hence, this legislation will not degenerate like Sick Industrial Companies Act (SICA), The Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI) and The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) each of which had created endless delays.

IBC: Restructuring / Liquidation Under IBC, the IRP/RP in control of the company’s operations must protect and preserve the value of the property of the corporate debtor and manage its operations as a going concern while he presents two major deliverables for insolvency resolution. The first deliverable is the information memorandum (IM) under Section 29 of the IBC and Clause 36 of Corporate Insolvency Resolution Process (CIRP) regulations. The IM is expected to carry complete details of the financial position, operations, shareholding pattern, company’s guarantee obligations, litigations and other relevant information. The second deliverable is the resolution plan (RPlan), which the RP must catalyse through transparent bids for submission of RPlans under Section 30 of IBC by the resolution applicants (RAs). Efficient due diligence by RAs can be facilitated by comprehensive and credible IM which must go beyond the mandatory requirements in terms of IBC and CIRP, and make time and data available to the bidding RAs for efficient due diligence. If the RP does an efficient job, the process can lead to rigorous bidding and acquisition of the corporate entity by an RA, and maximised recovery for the lenders. In

spite of catalysing significant interest of the RAs, if an acceptable RPlan does not emerge, COC can liquidate the assets, with RP acting as liquidator. Since the RP works under COC’s supervision, the liquidation process is also speedy. As IBC in India focuses on competitive bidding, Section 30 auctions can also catalyse acquisitions from operating buyers and financial investors. Since auctions of NPAs under 15:85 structures to asset reconstruction companies (ARCs) have tapered down, it is expected that, for survival and growth, ARCs would be in fray with competitive RPlans to take over the distressed assets. The major challenges in IBC process are: how the IRP/RP can ensure that the operating unit continues with normal operations, understand the business and catalyse an optimum RPlan. Acquisition entails rigorous due diligence and bottom-up analysis by the bidders. To make the auctions within statutorily limited period of 180-270 days under IBC successful, the RP must display the skill and speed comparable with that of an investment bank. The skill requirement increases exponentially with the size of the corporate creditor. Limitations of RP can result in adoption of the process for its sake and acceptance of sub-optimal RPlan. The process is likely to see significant change, based on experience.

Banks’ Response to IBC As the IBC process is time-bound and under COC’s control, banks were expected to adopt IBC enthusiastically. However, the banks’ response to IBC has been muted. So far, seven benches of NCLTs have disposed of 22 applications (Section-7: 13, Section-9: 8 and Section-10: 1) for an amount of Rs14,423.60 crore, 97.5% of which is accounted for by two financial institutions which were not banks. RBI’s guidelines for 100% provisioning on IBC-driven accounts in two years causes disincentive for banks for the adoption of IBC for new NPAs. However, there is no such disincentive for NPAs that are two or more years old. Yet, banks do not seem to have adopted IBC enthusiastically due to low liquidation values expected under the IBC process and the resultant provisioning for the entire asset shortfall, aside from possible accountability issues. No wonder, an ordinance amending Banking Regulation Act, 1949 was passed in May 2017 authorising RBI to issue directions to banks for the speedy resolution of distressed assets or adoption of IBC. Simultaneously, RBI’s circular of 5 May 2017 laid strong emphasis on banks adopting restructuring under the existing RBI schemes within the prescribed timelines, or face penalty. 

33 | 15-28 Sep 2017 | MONEYLIFE

Cover Story.indd 3

08-09-2017 17:42:21

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MSSN GB Ad_invest.indd 2

15-12-2016 18:28:46

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15-12-2016 18:35:28

COVER STORY

 IBC Restructuring: A Double-edged Sword?

Will such moves work? Resolution of distressed account entails trimming liabilities to a serviceable level so that operations remain financially viable. The critical parameter which separates restructuring from liquidation is the difference between the restructured loan amount over the estimated liquidation value of the assets, and the sacrifice that the lenders are willing to make. The extent of lenders’ acceptable sacrifice in restructuring has been left to the empowered group of banks for corporate debt restructuring (CDR) and corrective action plan (CAP) structures under joint lenders forum and other structures introduced by RBI periodically since 2002 when CDR was introduced. But CDR/CAP have largely failed. This was due to the inability of promoters to meet restructuring parameters. The recent schemes, viz., strategic debt restructuring (SDR), introduced in June 2015, and scheme for sustainable structuring of stressed assets (S4A), introduced in June 2016, have also failed, since the distressed companies did not have sustainable debt of even 50% prescribed in the schemes. This establishes recoverability of less than 50% of the loan. IBC is free from such parameters and can even provide for waiver of past and future government dues in terms of clause 37(1)(j) of CIRP regulations. This flexibility and accent on competitive RPlans has the potential to catalyse optimum price discovery and give to the lenders the maximum possible recovery, notwithstanding significant write-offs. The key, however, lies in transparent and competitive bidding by multiple RAs. Restricted and opaque bidding can induce the corporate borrower’s moral hazard and result in heightened losses to the lenders. Will the sale under IBC improve recoveries from NPA signifi cantly beyond the current 10.3% (see graph below)? It is a matter of months before the figure emerges

with the resolution of 12 large accounts, with total debt of Rs2.50 lakh crore (25% of gross NPAs), put under IBC. If the solitary NCLT RPlan of Synergies Dooray Automotive Limited approved by NCLT in August 2017 is a precursor to NPA recovery levels from IBC process, it is worrisome for the banking sector. Let’s see the astounding features of Synergies RPLan. Synergies Dooray made an application to NCLT Hyderabad under Section 10 of the IBC. RPlans under Sction 30 of IBC were submitted by the three RAs The COC composition as formed by the RP and accepted by NCLT was as follows: RA

Paid-up Capital (as on date)

SMB Ashes Industries

Not Available

Synergies Castings Ltd

Rs23.11 Cr (31/3/2016)

Remarks

•

• Suiyas Industries P Ltd

Rs0.25 Cr (31/3/2016)

•

Group/ holding company of corporate debtor Significant debt availed from banks Too small to bid for such a large borrower

The COC rejected the RPlans of the first two RAs and accepted that of SCL, a promoter group company. The RPlan involved payment of a small fraction of the debt outstanding. Creditors

Debt

% Voting Share in COC

Edelweiss ARC Ltd (EARC)

Rs86.92 Cr

9.84

Alchemist ARC Ltd (AARC)

Rs122.06 Cr

13.83

Millennium Finance Ltd (MFL)

Rs673.91 Cr

76.33

Rs89.26 Cr

0.00

Rs972.15 Cr

100.00

Synergies Castings Ltd (SCL) Total

Recovery from NPAs 20%

22% 18.4%

16% 12%

12.4% 10.3%

8% 4% 0% 2012-13

2013-14

2014-15

2015-16

In effect, the RPlan delivered to secured lenders just 4.8% of the debt outstanding. As a precedent, this is very damaging to banks. EARC contested the classification of MFL as a financial creditor and abstained from voting at the COC meeting which accepted the RPlan with 90.16% vote. EARC argued that the loans from five banks bought over by SCL were assigned to MFL through three assignment deeds. Since SCL was a related party, the debt assigned by it to MFL could not be treated as financial credit (this was not akin to assignment of receivables in normal course of business). Besides, even the assignment deeds were not executed as per the law, since the assignee (which had a paltry paid-up capital 

MONEYLIFE | 15-28 Sep 2017 | 36

Cover Story.indd 4

08-09-2017 17:38:22

COVER STORY

RPlan for Synergies Dooray Creditors

Debt Outstanding

Amount as per RPlan

% of Debt Outstanding

# Present Value as per RPlan

% of Debt Outstanding

EARC

Rs86.92 Cr

Rs4.89 Cr

5.6

Rs4.19 Cr

4.8

AARC

Rs122.06 Cr

Rs6.86 Cr

5.6

Rs5.89 Cr

4.8

MFL

RS673.91 Cr

Rs37.91 Cr

5.6

Rs32.52 Cr

4.8

SCL

Rs89.26 Cr

Rs3.51 Cr

3.9

Rs2.49 Cr

2.8

Rs972.15 Cr

Rs53.19 Cr

5.5

Rs45.10 Cr

4.6

Total # Discount rate: 10% pa.

Figures in shaded columns are calculated

 of Rs65.94 lakh as on 31 March 2016) had not paid

consideration for the assignments. NCLT rejected EARC’s appeal on 2 August 2017. EARC has appealed. Interestingly, the RPlan allowed netting of MFL’s unpaid assignment value of Rs37.91 crore against interest-free instalments for three years after a one-year moratorium. Let’s look at what this means. A buyer of non-performing loan expects a significant return from such risk-proven assets and would price them at the present value of anticipated cash flow discounted at the required rate of return. Assuming a modest required return of 20%pa, the present value (PV) of the above-mentioned cash flow to MFL works out to just Rs24.98 crore, only 66% of the assignment value of Rs37.91 crore. In other words, MFL accepted an RPlan with huge loss within months of executing assignment deeds. However, this loss is notional, since the receipts by MFL were to be fully netted with his payables in terms of the RPlan. So, the debt assignment to MFL reflected zero, or negative, consideration, having regard to the transaction costs. Following EARC’s objections, the RPlan has been reportedly modified and requires MFL to pay the debt

assignment value first and recover later in terms of RPlan. In such a case, based on discount rate of 20%pa, the PV of receivables works out to around Rs29 crore reflecting a loss of Rs8.92 crore to MFL within months of the transaction. It is inconceivable that a finance company will settle for such losses without a murmur sans a sweetheart deal to compensate for such accommodation through a carefully structured invisible deal. IBC is of help to genuine as well as crooked corporate debtors. Where there is a likelihood of a significant asset shortfall, banks have no incentive to adopt IBC. In such cases, for a promoter whose account has turned non-performing due to factors beyond his control, IBC provides a vehicle for speedy discharge. IBC permits avoidance of undervalued or extortionate credit transactions up to two years preceding the insolvency commencement date. A crooked promoter, who has done such transactions earlier than two years, can adopt IBC for a speedy exit or continued control with substantial haircut by banks. The role of RP is, therefore, crucial for maximising value for the banks from the distressed assets. The Synergies matter, as and when disposed of, would 

Present Value Computations (Rs Crore) Present Value on Lenders / RP

24/11/2016*

Repayment as per RPlan (Interest-free)

09/08/2017**

31/8/2017

RP

0.49

50

-

EARC

4.14

-

1.63

AARC MFL

24.98***

31/3/2018

31/3/2019

31/3/2020

31/3/2021

31/3/2022

-

-

-

-

1.63

1.63

-

-

5.89

-

2.28

2.28

2.28

-

-

32.52

-

12.63

12.69

12.63

-

-

Deferred ST

2.49

-

-

-

1.17

1.17

1.17

Statutory Dues

.019

-

-

-

0.12

0.12

0.12

Other Liabilities

0.008

-

-

-

0.004

0.004

0.004

* Date of assignment of loans from SCL to MFL ** Date of NCLT order *** Discounted at 20%

37 | 15-28 Sep 2017 | MONEYLIFE

Cover Story.indd 5

08-09-2017 17:38:42

COVER STORY

Bankruptcy Resolution: Global Experience

I

n the paper, titled “Cashing Out: The Rise of M&A in Bankruptcy”, Stuart Gilson, Edith Hotchkiss, and Matthew Osborn studied a large sample of 350 filings for Chapter-11 bankruptcy protection in USA during 2002-2011, significant acquisitions under bankruptcy auctions (table-1).

Recovery from NPA 100% 80% 60%

Table-1 Category Sold as going concern - To financial investors (PE/ hedge funds, etc.) - To operating buyers for synergy Adopted reorganisation plan Liquidated and wound up Total Sample

40%

Number

%

30

8.6

45

12.9

237

67.7

20% 0%

38

10.9

350

100.0

Overall, 52.6% of the companies sold some or all the assets for cash, indicating significant role of mergers & acquisitions (M&A) in Chapter-11 process. The auctions involved multiple biddings. The secured creditors catalysed the asset sale and use of M&A, particularly for the going concerns in many cases. Secured creditor recoveries often exceed 50% in USA.

 set a precedent for the transparency and quality of

transactions, and conduct of intermediaries and COC, etc. A look at some of the advertisements inviting RPlans shows opacity in the process to thwart competition. This would mean banks living with the same promoters or their proxies with maximum haircut or head-cut! If that is the case, a robust legislation like IBC will be undermined. India has the dubious distinction of being the slowest in credit recovery as is evident from World Bank study (See graph Average Recovery Time). This has resulted from extremely tardy process in SICA (Sick Industrial Companies Act) /BIFR (Board for Industrial and Financial Reconstruction) since repealed, and RDDBFI and SARFAESI Acts. With creditor-driven IBC, India is expected to substantially improve the recovery duration. While this will minimise asset impairment and enhance recovery, it cannot improve the inherent asset quality, since low NPA recovery of PSBs is primarily due to asset overstatement which has often come to light in the past. It is unlikely that the Synergies recovery figure would prove to be an outlier. My sense is that IBC will speed

Japan

OECD East Asia & South Asia Countries Pacific Region Region

India

Under the UK bankruptcy code, 50% of the distressed companies were sold as going concerns and over 40% liquidated piecemeal. The liquidation process gets concluded in about 1½ years and delivers, to the lenders, recovery of about 75%, with recovery cost of about 15%, of the asset value. Overall, 75% of the distressed assets undergo bankruptcy and the rest are restructured, reflecting the lenders’ preference for restructuring viable businesses. India’s situation was among the worst.

up and may improve the recovery significantly, it will not resolve the NPA problem which has resulted from PSBs’ management and organizational inadequacies Assuming an optimistic recovery of 22% (FY12-13) from NPAs and restructured assets of Rs11.50 lakh crore as on 31 March 2016, the government will have to recapitalise PSBs by Rs8.97 lakh crore in short to medium term due to growing NPAs, notwithstanding provisionings. How will the epoch-making IBC reduce this? To save banks from the coming crisis, it is necessary for the government to go beyond IBC urgently, even as it tries to plug attempts to game it. To begin with, the government should immediately implement PJ Nayak committee’s recommendations by professionalising PSB top management and boards, apart from reducing the government stake below 50%, and removing compensation and operational constraints. Subsequently, PSBs must be privatised. Right now, the policy-makers and investors are complacent that the IBC will speedily shrink the mountain of NPAs and also prevent a growth of bad loans. This may be misplaced optimism with dangerous consequences. 

MONEYLIFE | 15-28 Sep 2017 | 38

Cover Story.indd 6

08-09-2017 17:39:07

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StockWatch Stocks and sectors that catch our eye

S I N T E X P L AS T IC S

Interest Cost Devouring ng Profits

S

intex Plastics Technology echnology (SPT) recently demerged from Sintex Industries ustries which was into two businesses—textiles sses—textiles and plastics. The idea a was to unlock the value of the plastics business and give it a clear focus and identity. SPT has two o subsidiaries, viz., Sintex tex BAPL and Sintex Prefab fab Infra. The custom moulding oulding business is operated under Sintex BAPL while the he prefab, infrastructure and monolithic onolithic construction are operated rated under Sintex Prefab Infra. SPT has operations across cross nine countries--16 manufacturing acturing locations across Europe, ope, two in the United States, two in i Africa Af i and d 16 across India. Now that the dust has settled on the demerger and both the companies are listed, is Sintex Plastics worth looking at for the long term? Sintex’s custom moulding business can be categorised under industrial and retail sector. Industrial custom moulding has applications in automotive, aerospace, electrical, mass-transit, off-the-road vehicles and medical imaging products. The major driver for market growth is the rise in demand for electrical, wind energy, pipe and tank applications due to increase in the number of government projects like smart cities development, eco-friendly energy generation, fresh

water transportation, sewage water ater transportation, sewage treatment systems, etc. In n retail custom moulding, Sintex manufactures manufactu water storage solutions, sub-ground structures, false ceilings,, d doors and cabinets aimed at low-cost and mass housing solutions. Sintex started prefabricat prefabricated structures business in 2000. The prefabricated sstructures are completely knocked-down kits that can be assembled at the site by trained professionals ther thereby minimising wastage. benefits of prefabricated The benefit structures position Sintex as the structure preferred solution in India’s prefer effort towards strengthening social infrastructure such as toilet blocks, healthcare centres, blo police ch chowkis, labour camps shelters, among and temporary temp started the monolithic others. Sintex Sin construction business in 2007. It constructi fabrication and casting involves fa walls and slabs together of four wa by pouring cement concrete into a while using nominal quantity mould, whi 

Margin Comparison 25% 20% 15% 10% 5% 0% OPM% Sintex Plastics

NPM% Supreme Industries

Wim Plast

Disclaimer: None of the stock information presented constitutes a recommendation or a solicitation of any offer to buy or sell any securities. Information presented is general in nature that does not take into account your individual circumstances, financial situation or needs Although information has been obtained from and is based on sources we believe to be reliable, we do not guarantee its accuracy and the information may be incomplete or condensed. All opinions and estimates constitute our judgement as on the date of the report and are subject to change without notice. Past performance is no indication of future results. Investors must do their own research before acting on them. Data Source: Centre for Monitoring Indian Economy’s Prowess database.

Those who have subscribed to the stockletters should only follow the stocks recommended there.

MONEYLIFE | 15-28 Sep 2017 | 40

StockWatch.indd 2

08-09-2017 17:01:41

STOCK WATCH

 of metallic Company MC/Sales OPM reinforcement bars to form Sintex Plastics 0.97 20% a single multiSupreme Industries 3.32 16.39% storeyed Wim Plast 4.65 23.67% building. The business is certainly booming. Its FY16-17 revenues were Rs6,029.7 crore, a 52% jump over FY15-16 revenue of Rs3,958 crore. Its operating profit was Rs782.8 crore and net profit was Rs419 crore. The return on capital employed (RoCE) was a modest 13.2% and return on equity (RoE) 13.5%. The operating profit margin is 20% while net profit margin is 7% which is due to the high debt the company has on its balance sheet. Compared to its peers, Sintex Plastics is highly leveraged with debt:equity ratio of 1.3, which has led to the company not receiving higher valuation like that of its competition such as Supreme Industries and Wim Plast. The table above gives a comparison of various factors with competitors

S H I VA M A U T OT E C H

Turning Around?

A

fter two successive quarters of losses, Shivam Autotech has made Rs2 crore profit in the June quarter. Is it on the verge of a turnaround? Shivam is an auto-ancillary company of the Hero group, based in New Delhi, with manufacturing operations in Gurugram, Manesar and Rohtak (Haryana), Haridwar (Uttarakhand) and Bengaluru. It is one of the largest manufacturers of transmission gears and shafts used by two-wheeler companies, auto-electrical components, steering components and various precision engineering components. The Bengaluru and Rohtak plants have been commissioned recently with a capital expenditure of Rs200 crore. These two plants have been set up to manufacture import substitute products, such as alternators, starter motors and electric steering components. Most of these are meant for four-wheelers. Hero MotoCorp accounts for nearly 78% of company’s revenue which eliminates any volatility in revenue. Other customers of the company

As can be seen, Sintex is doing much 7% 13.2% 1.31 13.82 better than its 8.5% 38% 0.18 41.77 peers at the 13.6% 31.76% 0 34.22 operating level but, due to high debt, much of the profits are consumed by interest cost. While its operating profit is 20% of sales, interest cost as a percentage of operating profit is 22% compared to just 3% of Supreme Industries. This is one of the several reasons why its price-to-earnings ratio (P/E) is much lower than that of Supreme and Wim Plast. The debt is in the form of foreign currency convertible bonds; hence, the risk of equity dilution also remains if bondholders exercise their right to conversion. Wim Plast’s P/E is multiple of 34 because of higher net profit margin and zero debt. The key factor to watch out for in case of Sintex is a gradual reduction in debt which will help the company receive higher valuation.  NPM

RoCE

D/E Ratio

P/E Ratio

include: BOSCH, DENSO, Maruti Suzuki and India Nippon etc. For the past few quarters, Shivam has been doing badly—sales growth had come down and margins contracted. However, things have looked up in the June quarter. Year-on-year sales growth was 16.9%, following 3.3% for December 2016 and just 1.5% for March 2017. With growth picking up and product changes, can we expect better margins at least at the operational level in the coming quarters, though interest cost will keep the net margins subdued until the debt comes down. The key to Shivam’s future is the how quickly it starts sweating the assets of Bengaluru and Rohtak. Higher capacity utilisation of these plants will mean multiple positives. One, much higher contribution to profits because these plants produce higher-margin products. Two, a move to a higher growth four-wheeler sector. Three, opening up of the export market for these new products. Better utilisation of these assets is critical for Shivam’s shareholders because the company has taken more than Rs200 crore debt to set up the new plants. This has brought down the interest coverage ratio of 

41 | 15-28 Sep 2017 | MONEYLIFE

StockWatch.indd 3

08-09-2017 17:03:01

STOCK WATCH

Asset Turnover Ratio

Operating Profit Margin

1.76

17.50% 15.50%

1.52 13.50% 1.28

11.50% 9.50%

1.04 7.50% 0.80 Mar-07

5.50% Mar-12

Jun-17

 the company from 2.75 (FY14-15) to 1.65 (FY15-16)

and 0.5 (FY16-17). The graphs show operating margin and interest coverage ratio for the past six quarters. Given the signs of improvement and operational

SOBHA

Developing Interest

R

eal estate stocks have shot up over the past six months, much to the surprise of many (including Moneylife) who believed that, post-demonetisation, attack on cash-based transactions and under the regime of Goods and Services Tax (GST), one of the biggest losers will be the real estate sector. The buoyancy in the real estate sector is partly due to the ambitious scheme, Pradhan Mantri Awas Yojana (PMAY), under which the government has set in motion the goal of achieving housing for all by 2022. Under the scheme, a buyer with income of up to Rs12 lakh can buy a house of 90 square metres and avail interest subsidy of 4%. A person with income up to Rs18 lakh can buy a house of 110 square metres and avail 3% interest subsidy. Those with income of up to Rs6 lakh can avail an interest subsidy of 6.5% for a house of 60 square metres. Our discussions with Deepak Parekh, chairman of India’s largest home loan company, Housing

Mar-16

Jun-16

Sep-16

Dec-16

Mar-17

Jun-17

efficiency, FY17-18 revenues can grow in double-digits while the company also repays debt. If the new assets start yielding revenues, the stock may do well over the medium term. 

Development Finance Corporation (HDFC), indicated that real estate companies are excited about this opportunity because it is a truly attractive scheme for home-buyers as well as builders. If it does turn out to be so, some of the better-run real estate companies are likely to do well. One such company is Sobha Limited, headquartered in Bengaluru, with a presence in 26 cities across 13 states. Since inception in 1995, it has completed 406 projects, own as well as contracted projects, with a total developed area of 86.73 million square feet. It is a rare real estate company which has a training academy, viz., Sobha Academy, for training all employees, ensuring that they are abreast of the latest developments in their fields of work. Sobha has two divisions. Its contractual segment, which works for large companies like Infosys, Biocon, Bayer and Taj Hotels, provides end-toend solutions starting from the conceptualisation of a project to completion with civil, mechanical and electrical engineering, plumbing, interiors, glazing, metal works and landscaping. Sobha’s manufacturing vertical provides the raw materials for construction. It has an interiors division with one of the largest woodworking 

MONEYLIFE | 15-28 Sep 2017 | 42

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08-09-2017 17:03:39

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STOCK WATCH

 factories in the country, a glazing and metal works

factory and a concrete products division. In an attempt to diversify further, it has also ventured into the retail space with the launch of ergonomic spring mattresses under the brand name Sobha Restoplus.

on 11 March 2017, talks about the categorisation of affordable housing and loans. Another factor that will help better quality of builders is the Real Estate Regulation & development Act (RERA). The Act will make it tough for many smaller and shady players to survive.

Affordable Housing PMAY is one of the biggest drivers of its business. In Strong Cash Flows a recent media interview, vice chairman and managing The management has mentioned that the earnings director of Sobha, JC Sharma, said that “the definition would continue to be under stress for some time, of carpet area up to 60 square meters, to the best of though FY17-18 is likely to be better. Revenue from my knowledge, will ensure that all developers should the real estate operations rose 21% yer-on-year (y-o-y) be having this kind of a product because it will bring to Rs506 crore in the June 2017 quarter from Rs418 down their construction cost, improve their volume crore and revenue from contracts and manufacturing and give them the income-tax benefits as well.” He operations was up 11% y-o-y to Rs173 crore (Rs156 added that the company is doing two roadshows at its crore). Total revenues went up 18% y-o-y to Rs674 two projects in Bengaluru crore (Rs570 crore) along with HDFC, while net profit jumped supported by National 33% y-o-y to Rs48 crore Revenue June 2016 Revenue June 2017 Quarter Quarter Housing Bank (NHB), for (Rs34 crore). The share 1% 1% the Awas Yojana. Sobha, is trading at a price-toin its analyst conference earnings ratio (P/E) of call for 4QFY16-17, 21.48. said that it is aiming at In an industry 25% 27% 1 million square feet burdened with high 72% 74% of affordable housing debt, Sobha reduced its products in Bengaluru borrowing cost during (North) which it will try the June 2017 quarter to launch in FY17-18. by more than 50 basis Sobha has also launched a points to below 10.5% low-cost housing project per annum. Its net debt Real Estate Contracts & Other Income Operations Manufacturing in Cochin for which it remained at around expects sales to pick up Rs2,025 crore. The soon. The margins in the debt:equity ratio has fallen affordable housing segment are the highest for Sobha. from 0.78 in the June 2016 quarter to 0.75 in the June The other positive for companies like Sobha is that 2017 quarter. Sobha has also generated positive cash the housing sector has been given infrastructure status flows for the past eight quarters after meeting interest which would help companies with good governance and tax expenses. The operational cash flow jumped practices to raise funds at lower interest rates. 30% y-o-y from Rs77 crore in the June 2016 quarter Another driver of the housing sector is the decision to Rs100 crore in the June 2017 quarter. of the labour ministry to amend the law and allow In an another positive sign, on 23 August 2017, subscribers to withdraw up to 90% of their provident ICRA revised the long-term credit rating for Sobha and fund to buy or build homes. It also plans to allow upgraded its long term credit rating for non-convertible Employees’ Provident Fund Organisation (EPFO) debentures (NCDs) and line of credit from A to A+. On users to pay their equated monthly instalments (EMIs) 7 April 2017, its shares fell over 9% as the company’s of home loans through the employee provident fund promoter Sobha Menon sold her 4.15% stake. The accounts. With 400,000 subscribers and Rs9 lakh total promoter shareholding declined from 60.24% in crore plus corpus, provident fund will be a big driver the March 2017 quarter to 56.08% in the June 2017 for the coming housing boom. Among the interested quarter. In August 2017, it also approved a buyback of will be those in the public sector and government 1,458,823 equity shares for an amount not exceeding employees, according to Mr Sharma. He mentioned Rs62 crore, being 1.5% of the total paid-up equity that a notification, which has already been gazetted share capital, at Rs425 per equity share. 

MONEYLIFE | 15-28 Sep 2017 | 44

StockWatch.indd 5

08-09-2017 17:04:34

MONEYLIFE ADVISORY FIX YOUR FINANCES, FOREVER

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This is a basic resource for stock-related queries for retail investors under the initiative of ace investor Vijay Kedia. Our aim is to foster cautious and long-term investment in stocks for wealth creation. We will not offer buy/sell advice or stock recommendations and tips. Mr Kedia’s sole aim is to prevent retail investors from making careless mistakes and stay on the path of patient long-term investing in stocks. http://www.moneylife.in/askvijaykedia

Sample Questions How do you collect the data for understanding the industry or interpreting on which stage of the business cycle it is currently moving around? Also, industries such as publishing and media are difficult to interpret, how does one link the industry prospects with revenue and growth? It would be an honour, if you could provide answers to these questions. Read annual reports, attend annual general meetings, read investor presentations, brokerage reports, listen to conference calls and watch interviews. If you find a particular industry difficult to interpret, then move on to another industry, as there are a lot of opportunities available. If a stock is not doing well, should one book loss or hold? Find out the reason why the stock is not doing well. If a stock is not doing well in spite of good performance, it should be watched closely. If the

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problem is temporary, one may hold. If there is a structural problem in the company, one may sell. If a small-cap company has metamorphosed into either a mid-cap or a large-cap over time, will it be prudent as a long-term investor, to sell during market highs and buy again during the market lows, to get better returns? Only two people can know the lows and highs of the market. One is god and the second is a liar. We can see lots of news about buy this and that stock but not much news about sell stock and why. What should be the parameter to sell a stock? One should exit the stock when the focus of the management changes (unrelated diversification), product is becoming obsolete and the valuation is too high compared to the leader in the industry, its peers and the sector.

28-07-2017 17:00:56

STOCK WATCH

S a r da E ne r gy & M ine ral s

Will the Growth Continue?

S

arda Energy & Minerals Limited (SEML) produces steel (sponge iron), billets, ingots, thermomechanical treatment (TMT) bars and ferro-alloys. In the boom years of 2004-2008, it entered into backward integration (iron and coal mines) with power generation. In April 2017, it commissioned the 24MW hydro power plant at Gullu (Chhattisgarh). SEML’s subsidiary, Madhya Bharat Power Corporation Limited, is implementing 96MW Rongnichu hydro electric plant (HEP) near Gangtok, that is expected to be operational in FY18-19. Riding on a buoyant market for steel, SEML’s sales rose 34% y-o-y (year-on-year), from Rs284 crore in the June FY15-16 Segmental Revenue 2016 quarter to Rs381 crore, and operating 1% profit jumped 42% y-o-y, from Rs51.21 crore in the June 2016 14% quarter to Rs72.64 crore. Net profit shot up to 55% 30% almost Rs61 crore, up from an average of Rs14 crore over the previous three quarters. The June quarter net profit alone is Ferro-alloys more than the full year’s Steel net profits of 2014-15 and 2015-16. Ferro-alloys and steel—billets, wire rods and hard bright (HB) wire contributed approximately 32% each in the revenue of FY16-17. Sarda’s rising fortunes are linked to the steel sector that has revived over the past 18 months, due to anti-dumping duty on Chinese steel, removal of differential railway freight for the transportation of iron ore and pellets for domestic use and exports and due to shutting down of steel capacities in China which has pushed up steel prices. Chinese steel prices are at a three-year high. Among all major steel-producing

countries, India is in a sweet spot. Steel production reported a growth of 8.50% in FY16-17 with a production of 97.40 million tonnes (MT), whereas finished steel consumption grew by just 2.6% y-o-y for the same period. The domestic consumption was lower due to poor offtake from end-use segments like construction, automobiles and white goods. Sarda’s attempt to get into mining and power had created its own challenges which have been sorted out now. For the past several years, companies working in the mines of Andhra Pradesh, Chhattisgarh, Madhya Pradesh and Maharashtra have faced the brunt of multiple attacks—from the Naxals, regulatory authorities and courts which tried to clamp down on illegal mining. In FY1516, the realisations and margins were impacted due to de-allocation of coal mines with effect from 1 April 2015 after a Supreme Court order and temporary suspension of operations in the iron-ore mines owing to Naxal attacks. SEML’s iron-ore FY16-17 Segmental mine was attacked by Revenue Naxals in March 2016 1% leading to the death of an employee and damage to 12% property. SEML resumed operations in its iron-ore 55% mines and achieved the 32% highest ever production of pellet, sponge iron wire rod and HB wires. It has installed a new turbine which will effectively Power Unallocated improve efficiency by 12%. Having gone through tough times after 2008, SEML is now in a consolidation mode. SEML’s annual sponge iron making capacity is 360,000MT (metric tonnes) and crude steel making capacity is 240,000MTPA. SEML’s long-term plan involves gaining 100% raw material self-sufficiency such as in coal, iron ore and manganese ore (the latter for ferro-alloys). The company has already acquired two mines with estimated coal reserves of nearly 308MMT. The total estimated coal reserves of SEML are 236MMT. SEML’s operational iron-ore mine is located in the 

MONEYLIFE | 15-28 Sep 2017 | 46

StockWatch.indd 6

08-09-2017 19:16:22

STOCK WATCH

 Rajnandgaon (Chhattisgarh) with potential reserves of

20MMT and annual output of around 200,000MT. Additionally, it has got an in-principle approval from the government of India for five more mines, possessing sufficient reserves to meet its requirement for the next 25 years. It has also acquired mining rights for manganese ore from private parties in Goa with potential reserves of nearly 6MMT. Also, in-principle approvals have been granted in favour of the company for three mines in Madhya Pradesh.

Steel Outlook The government has proposed over Rs3.96 lakh crore investments in the infrastructure sector for the current fiscal which will result in substantial increase in steel consumption, going forward. The Union Cabinet has approved the National Steel Policy, 2017, which aspires to achieve 300MT of steel-making capacity

to meet the entire demand for high-grade automotive steel, electrical steel and special steels from domestic sources. It further aims to increase domestic availability of washed coking coal and reduce imports from about 85% to around 65% by 2030-31. The policy is expected to result in a reduction in imports and increased offtake of steel from domestic steel players. With effective policy measures restricting the inflow of steel imports in the domestic market, demand/supply equation will determine the fortunes of steel companies. The debt:equity ratio for the company was 0.23 in FY15-16 and 0.16 in FY16-17. The company’s interest coverage ratio increased from 3.08 in FY15-16 to 7.59 in FY16-17. The company’s market-capitalisation to sales is 1.12. The operating profit margin for the June 2017 quarter was 19.05% and the operating profit was Rs72.64 crore. The net profit for the June 2017 quarter was Rs60.94 crore. 

P CB L

Perils of Cut & Paste

P

hillips Carbon Black (PCBL), the largest manufacturing of carbon black and specialty black in India has seen phenomenal growth in revenue, operating profit and net profit in the past few quarters. The stock price has already surged over 190% (in absolute terms) in calendar year 2017. You wish PCBL had taken some care to present financial information correctly. Take a look at the fixed asset schedule in its annual report for FY15-16. Data of fixed assets of 2014-15 has simply been copied and pasted. If you check the annual report, you will be able to clearly see that the company has not cared to change even the headings (with incorrect dates) let alone the numbers under them. Recently, we had mentioned about a similar error at another company. 

Fixed Asset Schedule FY2014-15

Fixed Asset Schedule FY2015-16

47 | 15-28 Sep 2017 | MONEYLIFE

3 Long-term Stockletters for Excellent Returns Panther

Antelope

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(includes dividend)

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For small-cap/ low-price stocks with big growth potential

Long-term value stocks. More of midcap stocks to be held for 1 year or more

Long-term value stocks. Usually large companies are selected

• A shortlist of stocks to invest in • Fundamental data we rely on • Brief description of the companies • Weekly updates on all stocks

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Facts about the Stockletters What is the difference among these stockletters? The stockletters are for stocks for long term but with specific emphases. We hope to have a maximum of 25 stocks at any time. What is the investment horizon for these stockletters? The best results from good stocks come when they are held for five years or more. What is the investment strategy? Our investment strategy for the long-term stockletters is to select quality stocks at a reasonable price. We identify companies that are reporting high return on capital but are available cheaper than similar high-quality stocks. We then apply our knowledge of managements, including corporate governance. How much should one invest in each stock? You should invest equal amount in every single stock suggested. What if I cannot invest in all the stocks? If you cannot invest in all the stocks, invest equal amounts in as many stocks as possible, starting from the lowest in rupee terms to the most expensive in ascending order. It is also very important that you invest in stocks ONLY the money you will NOT NEED to touch for the next 5 years. Good quality stocks are likely to grow at 20%-22% annum but not in a smooth fashion. If some stocks have already run up sharply, will it be wise to invest in them still? These are all excellent stocks we have selected in long -term stockletters.

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14-07-2017 07:57:15

STOCK WATCH

UN UOTED STORIES OF PRICE MANIPULATION

Blue Pearl Texspin (Rs18)

B

lue Pearl Texspin Limited was formerly known as E-Wha Foam India Limited. It started off with the setting up a unit in Goa to produce 1,500TPA (tonnes per annum) of polyethylene foam products in collaboration with E- Wha Foam Korea Co (South Korea). In 2012, it changed its name to Blue Pearl Texspin Limited and started a textiles business completely different from the earlier business of manufacturing foam and foam-based products. As per Watchoutinvestor.com, E-Wha Foam India ran into various issues with the authorities. In 2005, the Bombay Stock Exchange (BSE) charged the company for not being traceable at its last known address. In 2006, it did not comply with listing agreement and the BSE gave it a notice for delisting. In 2007, the stock was suspended

(Rs) 40

0 30

908% 0 20

0 10

0 3 Aug-16

3 Feb-17

3 Aug-17

from trading. The suspension was later revoked. In 2011, it did not submit its shareholding pattern to the BSE for the September 2011 quarter and the corporate governance report for the March 2012 quarter. In 2016, it reduced its equity share capital from Rs5.12 crore to Rs25.60 lakh and cancelled equity share capital amounting to Rs4.86 crore which was utilised to write off the debit balance in the profit and loss account. Blue

Pearl also has had frequent changes in directors. In 2014, four directors— Nijal Navinchandra Shah, Narendra C Solanki, Deepak Rane and Shankar Pandare—resigned. The promoter shareholding is also only 21.62%. The company has seen no growth over more than 14 quarters. The average sales of the past 14 quarters were Rs5 lakh and not exceeded Rs6 lakh in these past 14 quarters. The sales for the June 2017 quarter were Rs6 lakh. In these 14 quarters, the company has made no profit. It has made a marginal loss in 4 out of the 14 quarters. In the June 2017 quarter, operating profit margin was -16.67% and the margin for FY15-16 was -5.56%. Despite such a dismal performance and compliance issues, the price of the stock rose 908% from Rs2 on 3 August 2016 to Rs20.15 on 5 September 2017. Something is clearly fishy and the regulatory authorities are fast asleep. 

MARKET TREND

Temporary Blip?

Tlater, it was about 100 points higher. Meanwhile, the wo weeks ago, the Sensex was at 31,596. A fortnight

major data-point of last fortnight was the announcement that India’s GDP (gross domestic product) grew by just 5.7% in the June quarter, its slowest west pace since the January-March quarter 2014. A Reuters’ poll had forecast a growth of 6.6%. In the e JanuaryMarch period, it was 6.1%. Remember, ember, GDP growth is being measured by a new formula for the past two years. The growth, by the old formula, would be about 3.5%. It is the industry sector which hich dragged draggge ged d the Q1FY17-18 GDP growth to itss lowest level in 13 quarters. Already, IIP (index of industrial ndustrial production) was down to 1.7% in May and, actually, lly, contracted by 0.1% in June, the first time in four years that it has contracted.

Now, we have both macro data and micro data (earnings of listed companies) turning very tepid. However, the market only dipped a little as a result of this poor macro news. From a peak of 32,686 on 2nd August, the Sensex is down to around 31,700, about 1,000 points, or just about 3%, so far. It appears that dire macro data and poor corporate data are of little importance to investors who seem to be imp convinced that these are temporary blips. This is partly true. In the June quarter, the economy was coming out q of the t impact of demonetisation and then had to handle the issue of Good and Services Tax. The next two quarters will show whether the bulls are right to assume that earnings growth is just round assu the and will justify the strong run-up over th he corner an the past three years. — Debashis Basu 

MONEYLIFE | 15-28 Sep 2017 | 50

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08-09-2017 17:05:22

TAX/ FIXED INCOME

Black Money Act and Declaration of Foreign Accounts

T

he Black Money (Undisclosed Foreign Income and Assets) Act aims to curb black money, or unreported assets, and imposes tax and penalty on such income. For FY14-15, the central board of direct taxes (CBDT) has directed all resident Indians to disclose their foreign accounts in their returns. The idea is to find unaccounted wealth of resident Indians stashed in a foreign country. Amounts in an undeclared foreign account can be considered to be black money, even if it is a legitimate account. Today, it is no longer just about taxation but also compliance. This can be a cause of worry as the Black Money Act has hefty penalties for violations. But non-resident Indians (NRIs) were not covered by the directive to disclose foreign accounts. The government, initially,

G-Sec Yields Down

T

he 10-year benchmark G-Sec yield, which sets the tone of the fixed-income market, has decreased by three basis points (bps) in the last fortnight to end at 6.48% on 6th September. G-Sec Maturity Date

Yield to Maturity

01 December 2044

7.21

19 December 2034

7.07

02 June 2028

7.01

G-Sec yields on 6 September 2017

refused to spell out whether the need for inclusion of NRI foreign accounts in income-tax return (ITR) was inserted into the forms for FY16-17 ITR filing inadvertently or intentionally. It led to NRIs

and foreigners, who file tax returns in India, to interpret it in different ways. There were also several representations as the new requirement lacked any statutory provision. Finally, days before the filing deadline of 31 July 2017, chairman of CBDT clarified that it is not mandatory for NRIs to

provide details of their overseas bank accounts when they file tax returns; only those who seek refunds need to do so. However, the NRIs who are claiming refund and do not have bank accounts in India may, at their option, furnish the details of one foreign bank account in the return of income for issuance of refund. NRIs need not give account details if they are not seeking refund. It will be interesting to see if anything new comes up next year to bring NRIs under the ambit of disclosing their accounts abroad. With strict steps taken by the government to curb black money and unearthing undisclosed foreign accounts of resident Indians, you can never know if NRIs are also put through similar checks. It appears that this government is keen to pull out black money from every place possible.

Issuer

Maturity Date

Next Last Yield Coupon (%)

ISIN

Rating

Axis Bank 8.75% perpetual

28 Jun-22

28 Jun-18

8.63

INE238A08443

CRISIL AA+ (unsecured)

Indiabulls Hsg Fin 8.90%

26 Sep-21

26 Sep-17

8.02

INE148I07GF5

Reliance Jio Info 9.25%

16 Jun-24

16 Jun-18

7.62

INE110L08037

CRISIL AAA (unsecured)

CARE AAA (unsecured)

NSE data as of last trade date of 5 September 2017

HDFC Ltd 1.50% & 11.73% 16 Sep-20

16 Sep-17

7.96

INE001A07QR7

CRISIL AAA

Shriram Transport Fin Comp 8.10%

27 Mar-20

27 Mar-18

7.60

INE721A07LX9

CARE AA+

HDFC Bank Ltd 7.95%

21 Sep-26

21 Sep-17

7.46

INE040A08369

CRISIL AAA (unsecured)

BSE data as of last trade date of 5 September 2017

51 | 15-28 Sep 2017 | MONEYLIFE

Fixed Income.indd 1

08-09-2017 11:08:16

CYBER SECURITY PRASHANT MALI

Data Theft in Organisations and Legal Issues

D

ata theft is defined in Section 43 (b) of the Information Technology Act, 2000 (IT Act) as follows: “If any person without permission of the owner or any other person who is in charge of a computer, computer system of computer network, downloads, copies or extracts any data, computer database or information from such computer, computer system or computer network. It is the term used when any information in the form of data is illegally copied or taken from a business or other individual without his knowledge or consent.” In the era of information technology (IT), data is an important raw material for all businesses, including brick and mortar companies, business process outsourcing units, banking, media and IT companies. Data has become an important tool as well as a weapon for corporates to capture larger market share. Given its importance, data security has become a big concern for all businesses. Data theft and piracy are huge threats that are forcing companies to spend millions of rupees on data analytics. In many cases, the bottom-line of a business depends on the security of its data. A recent episode of the popular television series, Game of Thrones, had kindled a huge discussion on data theft. Let us look at some of the issues involved in data security Mobility-related Issue: The problem with data theft is that it has no international borders. For example, a computer system may be accessed in the US, its data manipulated in China and the consequences of that action felt in India. The fact that cyber criminals can operate across different sovereignties, jurisdictions, laws and rules is an issue in itself. Collection of evidence, in such circumstances, is complex. It requires investigations to be conducted in three different countries which may not even be on talking terms with one another; poor technical know-how of our cops only adds to the woes. Lack of coordination between various investigating agencies and navigating the extradition process of various countries is another headache. The absence of specific laws to deal with the crime of data theft is, however, the biggest problem; it allows a culprit to get away by picking and choosing from various legal loopholes, even after being caught. Our Data Protection Laws: Data theft has emerged as one of the major cyber crimes worldwide. India does not have specific laws to deal only with data protection, but

we have the IT Act. Here are a few Sections of this Act that are significant. Section 43 (b) of the IT Act provides protection against unauthorised downloading, copying, extracting information, data or a database, by imposing heavy civil compensation which could run into crores of rupees. Section 43 (c) provides for compensation in case of unauthorised introduction of computer viruses or other contaminants. Clause (i) provides compensation for destroying, deleting or altering any information residing on a computer or diminishing its value. Data is an intangible asset whose value could run into millions of dollars, but Section 43 does not quantify the compensation to be paid. Hence, a complainant is dependent on the mercy of our courts and the intelligence of his lawyer. Section 66 of the Act protects against data theft, while Section 72A deals with the punishment for disclosure of information in breach of a lawful contract. Both these Sections provide for a penalty that includes imprisonment of up to three years or fine of up to Rs5 lakh or both. In a recent judgement, Canara Bank Vs CS Shyam & Another, the Supreme Court (SC) held that service details of an employee also amount to ‘personal information’ and cannot be furnished even under the Right to Information Act. Similarly, in another case, it was held that an employer couldn’t use, or ask for, bank statements of an ex-employee. These two cases are an indicator of the rights of individuals, even before the recent SC upheld right to privacy as a fundamental right. So, the next time you plan to copy or download data from the computers or network of your friends, clients, teachers or employers, please remember that your actions can put you behind bars for up to three years. And you could lose even more, if a compensation claim suit is also filed in a civil court. Corporates, as victims of data theft, have the option of filing both, a civil and criminal case, simultaneously with injunction remedies.  Advocate Prashant Mali is the President, Cyber Law Consulting, author & speaker. Email: prashant.mali@ cyberlawconsulting.com

MONEYLIFE | 15-28 Sep 2017 | 52

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08-09-2017 19:15:46

BLOCKCHAIN DEBANJAN CHATTERJEE

Improving Financial Safety with Blockchain

I

n October 2013, the FBI (Federal Bureau of Investigation) bust the first modern market, SilkRoute. The website had sold stolen credit cards, weapons, drugs and other illegal products. In May 2017, the hacker group ‘Shadow Brokers’ unleashed the WannaCry ransomware, infecting computers across 150 countries. In July 2017, the online black-market, AlphaBay, was shut down by law enforcement. What was common to the three crime rings? Usage of Bitcoin as the mode of transaction. Consequently, Bitcoins have entered popular consciousness as a facilitator of criminal activities. Bitcoin is a crypto-/digital currency that is built on blockchain technology. Blockchain is a public ledger that tracks and conducts all transactions in a decentralised fashion. The Center for a New American Security (CNAS) stated, in a May2017 report, that terror groups are not yet using digital currencies in large scale, because traditional means of transferring value such as cash, pre-paid cards and hawala are continuing to serve the funding needs satisfactorily. Similarly, recent findings of the British think tank, RUSI (Royal United Services Institute), do not show a strong link of crypto-currency with organised terrorism. People familiar with the evolution of financial crime landscape are sure to view this as an anomaly because, typically, criminals are among the first ones to adapt and leverage new technology. To illustrate, as the Internet grew in visibility, the menace of cybercrime multiplied manifold. Blockchain is, often, referred to as ‘the greatest invention since Internet’. Hence, now might be good time to examine the repercussions blockchain technology can have on financial crime risk. The unique feature of crypto-currency that attracts criminals is the ease of transferring value across entities/ international borders without being regulated by banks. This is a stark change from fiat money, which has to pass through bank-enabled channels (such as SWIFT),

and, hence, is susceptible to detection. So there may be clandestine exchanges helping crooks transact in such currency. In India, there is uncertainty about the legality of crypto-currency. The Reserve Bank of India (RBI) has set up a committee to examine it. Consequently, current investments carry the risk of being declared illegal. Also, there is always the additional risk of getting hacked. Riding on the wave of interest in such currencies, there has been an uptick in phishing attacks, deceiving people into sharing confidential information. Also, Ponzi schemes have mushroomed, luring hapless investors with the promise of phenomenal returns. As the debate on the criminal implications of crypto-currency rages on, a consensus seems to be emerging on the potential of the underlying blockchain technology to deter and detect crime. Most cryptocurrencies offer pseudo (and not complete) anonymity. On the one hand, it might be difficult to map individuals to their blockchain wallets. But, on the other hand, since each transaction is broadcast on the blockchain, the entire deposit/ withdrawal activity of each and every blockchain wallet is public information. Consequently, for a prospective money-launderer, the entire process will be publicly transmitted and recorded for posterity in a form that is immune to forgery. Intuitively, this can act as a deterrent to using Bitcoins for criminal purposes, provided blockchains are continuously scanned by crime fighting entities. Currently, there are security firms that leverage attributes such as transaction patterns, IP addresses and information from Internet service-providers to help authorities manage financial crime risk on the blockchain. But, on the other hand, criminals can avail services of a ‘crypto-currency tumbler’, to confuse the trail back to the funds’ original source. Some websites, like ShapeShift.io, help users convert one digital currency into another, thereby potentially aiding currency layering. But the crucial point is, all of the above 

MONEYLIFE | 15-28 Sep 2017 | 54

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BLOCKCHAIN DEBANJAN CHATTERJEE

 automatically gets recorded on the blockchain; hence, it

towards a new type of application called ‘smart contract’. is quite easy for a forensic agency to get accurate data. These are user-defined programs which contain rules that However, it must be mentioned that there are specific govern transactions. To illustrate, in blockchain networks crypto-currencies (notably, Zcash and Monero) which offer such as Ethereum, credit card issuers, acquirers and a greater level of anonymity than Bitcoin. Interestingly, in merchants can all come together and place in production May 2017, the shadow brokers switched to Zcash as the a multitude of predictive analytics algorithms that would preferred means of payment, for their monthly supply of approve a transaction in real-time only if certain riskhacking resources. control parameters are satisfied. A point worth noting is that blockchain transactions Similarly, to curb risk of money laundering, there is a potential for regulatory bodies to be are irreversible. In traditional banking, merchants can be charged back party to every transaction. Banks could if banks detect fraud charges. If a still perform know your customer There is a lack of (KYC) checks while onboarding criminal uses a fraud credit card to sharing of intelligence buy digital currency on any exchange, customers. But when transactions are across banks, due to generated, the regulator and the bank the owner of the exchange has to bear the loss since the bank would reverse can jointly analyse them from multiple fear of confidential the payment made to the merchant perspectives and decide whether or not data leakage. Private, (exchange), but the merchant cannot to raise a red flag. distributed ledgers can initiate a reversal of the blockchain Crypto-currencies have emerged transaction. Moving on, let us focus on as facilitators in some pockets of the help in this regard the potential of blockchain technology criminal world. However, key features to systematically curb financial crime of the blockchain, such as transparency risk. and trust protocols, can go a long way in deterring and Currently, most financial organisations individually detecting financial crime. Some believe that the current employ data science to detect fraud charges. However, encryption techniques driving blockchain technologies there is a lack of sharing of intelligence across banks, due would become obsolete in a world with affordable to fear of confidential data leakage. Private, distributed quantum computing. In such a future, criminals might ledgers can help in this regard. Consortiums with in-built try to create counterfeit blocks. That is a whole new transparency controls, where access levels of participating story arc—one that moves to the next level of the catbanks are coded (and monitored), along with foolproof and-mouse game perennially played between criminals audit trail of how the data is being used, can help bridge and custodians.  the trust gap. Fraud detection models of the future, built on such humungous data, would naturally be more adept in recognising crime patterns. In February 2017, State Debanjan Chatterjee is an alumni of the Delhi School Bank of India announced Bankchain, an initiative to share of Economics and has been part of fraud analytics team information between banks on blockchain. of a multinational bank for the past decade. The second generation of blockchains has moved

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08-09-2017 10:55:58

Supported By

Queries At Moneylife Foundation’s

Tax Helpline Ask tax-related questions at moneylife.in/taxhelp. It’s free

Tax on Compensation Money

I

have been awarded compensation from the Motor Accident Claims Tribunal (MACT) for an accident case. I want to know whether the compensation, which includes the actual compensation as well as the interest, is taxable. Ameet Patel’s Reply: The compensation can be considered as a capital receipt. Capital receipts are generally not taxable, unless there is a specific provision to tax such a receipt. You can, therefore, claim that the compensation is not taxable. If it is not taxable, then the question of any TDS (tax deduction at source) on it by the insurance company will not arise. As regards interest, one will need to read the Tribunal’s order in detail to decide. My personal view is that the interest would also be a capital receipt. However, this stand may not necessarily be accepted by the income-tax department. The insurance company may deduct tax under Section 194A because that Section deals with interest payments. If they do deduct tax, then it will be a Herculean task for you to convince the income-tax officer that it is not taxable in your hands.

Wrong Challan

I

calculated the bank interest for the FY13-14 and paid self assessment tax of Rs6,000 online but I made a mistake in selecting the challan type. When CPC processed my return, they raised a demand of Rs6,000. I realised my mistake and replied to them with the copy of online challan but they are not convinced. The assessing officer also closed my complaint saying the he cannot rectify it. What is my recourse? Ameet Patel’s Reply: Since you are willing to pay the tax, you do not need to file any revised return. Simply pay the outstanding demand and select “Tax on Regular Assessment” while paying the tax. Once you pay the tax, automatically, the demand will get knocked out in the system after the bank uploads the information. You can then check your online e-filing account after about twothree weeks. The demand should get deleted from it by then.

Taxability of Notice Period Pay

M

y previous employer deducted two months salary as I had to switch jobs before serving my notice period. However, in Form 16, they have indicated the deducted amount

and it shows up as salary given. I believe, from recent news reports, that the income-tax department allows for this amount to deducted from salary income for filing returns. Is this true? Subodh V Shah’s Reply: The income-tax appellate tribunal at Ahmedabad, in the case of Nandino Rebello, has recently held that notice pay deducted by the employer is not liable to tax. Only the actual salary paid is taxable. Placing reliance on this judgement, we may say that only actual salary received is taxable. The actual salary received after deduction of notice pay may be reflected in your income-tax return (ITR) amendment.

Sale of 10-year Old Shares

I

am a senior citizen, have a permanent account number (PAN) and have been paying income-tax for many years. I wish to sell shares that I have held for over 10 years. Will long-term capital gain be applicable to me? Can you guide me to a web-link explaining this? Ameya Kunte’s Reply: Gain from sale of shares after 10 years would be regarded as longterm capital gain. If these shares are of a listed company and are now sold through the stock exchange, the entire long-term capital gains would be fully exempt from tax. On a separate note, you can refer to the tax calculators available on income-tax department’s website: http://tinyurl.com/ycpskmd7 

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USEFUL APPS YAZDI TANTRA

Findo: Your Smart Search Assistant

Google Maps: Comprehensive Accurate Maps in 222 nations

W

I

ww.Findo.com is your smart search assistant—across email, files and personal cloud. Our data storage has now permeated across multiple media. And, very often, we know the name of the file, but do not remember where we had stored it–on GMail, Dropbox, Evernote or Google Drive. Sometimes, we may not even remember the name of the file, just a vague description. Findo runs through all your storage and locates the desired files in a jiffy. You can search everywhere from one place—save time and frustrating moments when your boss is in urgent need of that contract or presentation. When you can’t remember the name of the person or file, Findo uses artificial intelligence (AI) to build a knowledge graph of your contacts, places, events, files, invoices, etc, and understands what you are looking for. The more you use it, the more accurate it gets! And the entire operation is quick and secure. Now search intelligently across your storage locations—head to http:// www.Findo.com now!

Photoscan by Google: Revive Old Memories & Store Them

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ll of us have a large bunch of old photos either in old photo albums or just bound together lying somewhere in our cupboards or attics, unseen, untouched for years. We have tried digitising them so that they are available on the cloud, but the results have been atrocious! Photoscan by Google solves this problem. Just scan the photos using this app and you get excellent, scanned photos, worth preserving online. You will get glare-free scans with an easy, step-by-step capture flow with automatic cropping and perspective correction. Once they are scanned, you can automatically back up your scans with the free Google Photos app to keep them safe, searchable and organised. Now, bring your scans back to life with movies, filters and advanced editing controls. And share them with anyone, just by sending a link. Revive old memories and store them in eternally perfect condition—download Photoscan now! Android: https://goo.gl/U9QoqT iOS: https://goo.gl/gcRd9g

have tried many apps for maps but I always come back to Google Maps—very accurate and providing a host of features rarely matched by the other apps. Apart from turn by turn navigation, now Google Maps also takes voice commands—once in the driving mode, you can ask questions like: ‘What’s my next turn?’ ‘What’s my ETA?’ ‘How’s the traffic ahead?’ etc. You have the option to explore alternative routes, avoid tolls and highways and also set your favourite routes. And, in case you are visiting your favourite restaurant, you can even browse the menu and place orders before you reach there! Google Maps boasts comprehensive, accurate maps in 220 countries, over 15,000 cities and detailed business information on over 100 million places. No wonder. I keep coming back to Google Maps! Android: https://goo.gl/SKUZQB iOS: https://goo.gl/ZfXmJp

YouTubeKids: Let Your Kids Discover and Explore

T

hese days, all our kids need and want a Smartphone. And, with the type of videos available online, it could get dangerous. Kids.youtube.com helps them to dive into a new world of discovery, learning and fun. YouTubeKids gives your family an easy way of watching favourite shows/movies, discovering science or exploring anything that catches one’s imagination. It is free, simple to use and very, very safe! YouTubeKids is made for curious minds and is safe for the entire family. They have even given a link to parental guidance on how to use YouTube Kids effectively for the entire family. Happy Viewing!! https://kids.youtube.com/ 

Yazdi Tantra is a chartered accountant by training, computer consultant by profession, entrepreneur-developer by hobby and trainer in his leisure time. He is currently the vice-chairman of Zoroastrian Co-operative Bank Ltd and has been running a medium-sized computer company ON-LYNE for the past 24 years.

MONEYLIFE | 15-28 Sep 2017 | 58

Tantra - column.indd 1

08-09-2017 10:59:18

HIGH FAT DIET COULD BE A GOOD IDEA!

in light of these findings.” What are these guidelines? Eat less fat. A MEDICAL DEVELOPMENTS FROM sub-branch of this here is never an end AROUND THE WORLD approach also says to arguments over eat less animal protein the relative importance because it is associated with association between consumption of the three macro-nutrients our cancer. All medical practitioners of carbohydrates, total fat and each body needs, namely, carbohydrates, and cardiologists repeat this like a type of fat with cardio-vascular proteins and fat. Some experts have mantra to their patients but a large argued that we need to be on a low- disease and total mortality. During observational research like PURE, the follow-up, the researchers fat diet; others argue that we need obviously, tells us something else: documented 5,796 deaths and to be low in carbohydrates. Within fat is not so bad; high carbs are bad. 4,784 major cardio-vascular disease this discussion, the relationship In the light of the findings of PURE, events. Here are the stunning between macro-nutrients and many scientists have been asking results: cardio-vascular disease and whether standard dietary guidelines, • Higher carbohydrate intake was mortality is most controversial. To that limit the total fat intake to less associated with an increased add more fuel to the controversy, a than 30% of energy and saturated risk of total mortality but not recent study titled “The Prospective fat intake to less than 10% of with the risk of cardio-vascular Urban Rural Epidemiology” (PURE) disease or cardio-vascular disease energy, should be revised came up with some results that mortality. overturn conventional ideas about

T

SUGARCANE FOR SOUND SLEEP

I

fat. The results were uploaded on the website of The Lancet on 29 August 2017. PURE is a large, epidemiological cohort study of individuals aged 35-70 years (enrolled between 1 January 2003 and 31 March 2013), in 18 countries, with a median follow-up of 7·4 years. For this study, dietary intake of 135,335 individuals was recorded using validated food frequency questionnaires. Participants were categorised into quintiles of nutrient intake (carbohydrates, fat and proteins) based on percentage of energy provided by the nutrients. The researchers assessed the

• Intake of total fat and each type of fat was associated with lower risk of total mortality. • Higher saturated fat intake was associated with lower risk of stroke. • Total fat and saturated and unsaturated fats were not significantly associated with risk of myocardial infarction or cardio-vascular disease mortality. Put it simply, high carbohydrate intake was associated with higher risk of total mortality, whereas total fat and individual types of fat were related to lower total mortality. The researchers note “global dietary guidelines should be reconsidered

n today’s stressful world, sleep deprivation is common. Lack of sleep causes many problems such as fatigue, higher blood pressure, cardio-vascular diseases, diabetes, weight gain and so on. Sleep deprivation leads to stress; and stress itself leads to loss of sleep. The healthcare industry’s response to this has been to come up with sleeping pills that have severe sideeffects. A research group led by Mahesh K Kaushik and Yoshihiro Urade of the International Institute for Integrative Sleep Medicine (WPIIIIS), University of Tsukuba, found that a compound called octacosanol reduces stress and restores stressaffected sleep back to normal. Octacosanol is abundantly present in various everyday foods, such as sugarcane (thin whitish layer on surface), rice bran, wheat germ oil, bee wax, etc. The crude extract is policosanol, where octacosanol is the major constituent. Policosanol and octacosanol have already been used in humans for various other medical conditions. 

59 | 15-28 Sep 2017 | MONEYLIFE

Health.indd 3

08-09-2017 17:43:53

LEGALLY SPEAKING SD ISRANI

Postal and Courier Services Offer Poor Redress for Service Deficiency

T

he past 25 years have witnessed dramatic changes in India’s postal scenario. Although the private sector has to operate in a restricted environment dictated by the government, it has made huge inroads into the postal department’s domain. Consumers now have many options and are no longer dependent on ‘snail mail’ of the postal service. India Post responded to the challenge and revenue loss that it suffered by introducing ‘speed post’ services which soon became very popular. Millions use speed post service in the expectation that their letters/packages will be delivered quickly. Unfortunately, this does not always happen. Since volumes are high, invariably, there are glitches, leading to delays, damage or even loss of letters/packages. What is the liability of postal authorities for such delays? This is a question that arose in a complaint filed by Bhanwarlal Gora of Jaipur before the district forum against the manager, speed post and the postal department of Jaipur. Mr Gora sent an application for appointment to the post of a gram sewak / ex-officio secretary, by speed post addressed to the chief executive officer, Pali, on 03.04.2008. The letter should have been delivered in two days; but it was delivered only on 07.04.2008. The last date for submission of the application was 05.04.2008; hence, Mr Gora’s application was not considered. His complaint before the district forum claimed this as a ‘deficiency in service’ and sought compensation. India Post responded with a written statement denying any liability to pay compensation. The district forum, on consideration of the pleadings and evidence, ruled in favour of Mr Gora and asked India Post to pay him Rs50,000 as compensation for mental tension, harassment and economic loss. It also awarded Rs10,000 for costs. The total amount was payable within a month or 12% interest was payable thereafter. India Post appealed before the state commission which dismissed it. The postal department then approached the National Consumer Disputes Redressal Commission (NCDRC) challenging the orders passed by the lower authorities. India Post’s counsel argued that Section 6 of the Indian Post Office Act, 1898, as also the circular issued in 1999 by the general manager (business development) addressed to all chief post master general which, inter-alia, provides that, “in the event of delay of delivery of domestic speed

post articles beyond the prescribed delivery norms as part of the money back guarantee, the speed post charges paid by the customer would be refunded.” NCDRC was informed that, in accordance with this circular, Rs22 was offered and paid to the complainant. A few other cases were also cited, to make the same point. NCDRC noted that Section 6 of the Indian Post Office Act provided immunity to the government, i.e., postal department, from any liability by reason of loss, mis-delivery, delay or damage to any postal article in the course of transmission, except in cases where a liability is undertaken by Central government in express terms. NCDRC also referred to the relevant rules, circulars and clarifications and concluded that the consumer was only entitled to a refund of costs. Accordingly, on 28 August 2017, NCDRC set aside the orders of the state and district forums and ruled in favour of India Post with the observation that speed post charges must be refunded to the complainant if they had not been paid as yet. Following this order, we need to be aware of the risk of delay. This is with regard to India Post; but private couriers are no better when it comes to restricting their liability for deficiency in service. Here is what I found on reading the fine print regarding liability printed by Vichare, a local courier in Mumbai. It has limited its liability to Rs50 only. However, if you are willing to pay 3% extra at the time of couriering an article, the liability increases to Rs50,000. Vichare will independently decide the value of the package; moreover, if it is insured, the consumer must make a claim with the insurance company and Vichare will only provide a certificate of damage/loss; it has no further obligation. In other words, the next time you want to courier or post something important, please remember that we, as consumers, have very little recourse if the article is delivered late, lost or damaged. 

SD Israni is a corporate lawyer & Fellow of ICSI. Email: [email protected]

MONEYLIFE | 15-28 Sep 2017 | 60

Legally Speaking.indd 2

06-09-2017 18:21:33

Pathbreakers.indd 2

06-09-2017 16:24:34

BOOKS

Advice & Dissent: My Life In Public Service

Selective Memories

I

t is raining books by bankers and former governors of the Reserve Bank of India (RBI). Quick on the heels of Duvvuri Subbarao’s book (Who Moved My Interest Rate. Leading the Reserve Bank through Five Turbulent Years), we have Yaga Venugopal Reddy’s Advice & Dissent: My Life In Public Service. Even before we digest this, the high-profile Dr Raghuram Rajan’s book (I Do What I Do), was released on 5th September. It promises to stir up a debate, going by its provocative James Bondish title derived from his much-quoted answer to a media query: “My name is Raghuram Rajan and I do what I do.” The three governors headed RBI in succession and their books are bound to evoke comparisons. Dr Reddy is globally renowned and feted for withstanding political pressure and protecting India from the global economic crisis. Dr Subbarao was left with the tough tasking of dealing with the aftermath of the crisis as inflation went out of control and the charismatic Dr Raghuram Rajan, who succeeded him, enjoyed a star status and ADVICE & DISSENT: MY brought new glamour to LIFE IN PUBLIC SERVICE the staid image of the Mint YV REDDY Street regulator. Harper Business Both, Dr Subbarao Pages 480; Rs799 and Dr Reddy, had fiveyear terms compared to Raghuram Rajan’s three years. Dr Subbarao’s book is clearly focused on his five years at RBI; but Dr Reddy’s book, with a far broader autobiographical sweep, is rather disappointing in its very selective memories. If you are expecting to hear some trenchant advice for the government or even the incumbent at RBI, or juicy details of his dissent with then finance minister, or anybody else, you would be sorely disappointed. In Dr Reddy’s book, RBI comes across as a perfect institution with brilliant colleagues who did not miss a trick. We know that is untrue. He is less effusive about his time at the finance ministry. But, again, only an inside circle of those who understand the power play which goes on in North Block, can probably read between the lines

and understand the very subtle hints or what Dr Reddy has left unsaid. In the effort to achieve that ‘balance’, the book seems to have lost out on the sharp wit and humour that Dr Reddy was known for. The memoir of every IAS officer, with a career worth writing about, has large tracts on their early days as collectors when they were testing their newly acquired powers. Dr Reddy is no exception. But the account of his childhood and family end up as a distraction from the latter half of the book which is more of economic history starting with the crucial years from 1989 to 1993, when India was on the verge of a default and the liberalisation process that it triggered. To many of my vintage, Dr Reddy’s account of how the 1990-91 balance of payments crisis unfolded and the options discussed, make for interesting reading. That some policy-makers were in favour of defaulting on their obligations is generally known. But Dr Reddy chillingly writes that his opinion was sought on temporarily freezing NRI (non-resident Indian) deposits! Given the devastating impact it would have had in terms of loss of confidence of the Indian diaspora, he correctly advised that this should neither be contemplated, nor even mentioned in background papers. At a time when nationalised banks are in a crisis and we have a government that did not hesitate to eliminate 85% of currency, one can only pray such thoughts for domestic maladies are never contemplated! Dr Reddy tells us about the desperate attempts to raise foreign exchange, including thoughts such as by selling Indian embassy in Tokyo and the eventual decision to revalue gold reserves and to raise $200 million by leasing RBI gold to the State Bank of India (SBI). Much of this is unknown to the general public, although the shipping of 47 tonnes of gold to Bank of England to raise 405 million dollars was widely reported. The story of how India’s balance of payments crisis, coming from an insider like Dr Reddy, would have made riveting reading. But there is very little. For instance, you have a line, which says, “In my view if there is one person who showed extraordinary leadership in managing the balance of payments crisis, it was (S) Venkitaraman as Governor, RBI.” Disappointingly, no other details. There are some perplexing omissions as well. Dr Reddy was the joint secretary capital markets when the Harshad Mehta scam of 1992 happened. This monumental event does not find even a passing mention, although this event alone paved the way for Securities & Exchange Board of India (SEBI) Act, which led to the transformation and modernisation of India’s capital market. All we have is one shady comment alluding to an ego tussle over seniority between GV Ramakrishna (the uncompromising SEBI chairman who led the capital market transformation and 

MONEYLIFE | 15-28 Sep 2017 | 62

Book Review.indd 2

08-09-2017 10:56:49

BOOKS

 was Dr Reddy’s senior from

there is nothing there, except the Andhra Pradesh cadre of to tell us that Dr Reddy received a threat of sorts the IAS) and RBI governor S Venkitaraman. Similarly, from Subrata Roy (or rather, the Ketan Parekh scam is a letter denying any threat dismissed with a superficial to the then governor), even account of the disastrous though the Supreme Court failure of Global Trust Bank of India defanged the once(GTB), headquartered in powerful Saharashri and put Andhra Pradesh without any him behind bars in 2014. Yes, Dr Reddy deserves mention of how shockingly the Bank was colluding with all the accolades for Ketan Parekh’s corporate safeguarding India from the cronies to divert funds. global financial crisis; but On Sahara: At one stage, I RBI’s failure to detect the book would have been received a hand-delivered letter, this so much more valuable had misuse of overseas corporate purported to be from the chief bodies (OCBs) to invest in it dispassionately dissected the capital market was a big some of RBI’s big failures of the company, saying they blot. Some of these were set in financial supervision had heard that I believed my life or had given us an inside up with only $10 capital. But Dr Reddy’s memoirs do not account of how North Block was under threat from them. I even allude to any failure really works, instead of the was assured that there was no of supervision; he merely subtle hints about things basis for such fears. I handed discusses what he did to shut left unsaid. The discussion them down. on interest policies and the the letter over to my deputy Similarly, the book deep thought behind each governor and told him to keep touches upon the dubious speech by an RBI governor decision to grant a sovereign or deputy governor or it, and forget about it guarantee to Enron public statements, would be Corporation’s Dabhol power essential reading for all those project which set back the power sector in India by a who are interested monetary economics and public policy. decade. This happened while Dr Reddy was at the North Especially since Dr Reddy livens up the narrative with Block. All we get is a couple of paragraphs on how he had interesting anecdotes and events that happened during and opposed the sovereign guarantee, to put it on record that around the decisions. These chapters are the best part of he had no role in that scandalous clearance. One would Dr Reddy’s memoirs. One cannot help wondering also have liked to hear more on the Sahara group, which how much better it would have been had he been less was asked to refund deposits of over Rs75,000 crore circumspect about key economic and financial milestones raised under a residuary non-banking finance company. in India’s history and a little more dispassionate and open This was subsequent to a detailed RBI inspection. But no, about his colleagues and bosses at RBI. — Sucheta Dalal 

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63 | 15-28 Sep 2017 | MONEYLIFE

Book Review.indd 3

08-09-2017 10:57:09

MONEY FACTS STOCKS

INDIAN MARKET TRENDS

FUND FLOWS

The Sensex ended flat and the Nifty inched up 1% during the fortnight ended 6th September. ML Large-cap Index and ML Mega-cap Index rose 3% each, while ML Mid-cap Index and ML Small-cap Index advanced 4% each. 

Foreigners: Foreign institutional investors were net sellers of equities (Rs4,958.16 crore). They sold shares worth Rs38,779.90 crore. 

Share Prices Index, March 2017=100

100 -220

120

-540 -860

110

FII Net Investments (Rs Crore)

-1,180 -1,500

6 Sep-17

28 Aug-17 100

Indians: Domestic institutional investors were net buyers of equities (Rs3,876.63 crore). They bought shares worth Rs21,883.27 crore. 

90 Mar-17

Jun-17 ML Large-cap ML Mid-cap

ML Small-cap ML Mega-cap

Sep-17

DII Net Investments (Rs Crore)

1,100

ML Micro-cap

Nifty Sensex

1,400

800

24 Aug

6 Sep

+/-

500

98.07

103.79

6%

200

ML Mid-cap Index

114.17

118.81

4%

ML Small-cap Index

106.08

110.31

4%

ML Large-cap Index

112.65

116.12

3%

ML Mega-cap Index

114.95

118.00

3%

9,857.05

9,916.20

1%

31,596.06

31,661.97

0%

Index ML Micro-cap Index

Nifty Sensex Mega-cap Gainers/Losers

24 Aug

6 Sep

Change

Central Bank of India

73.55

98.80

34%

Idea Cellular

90.05

81.80

-9%

24 Aug

6 Sep

Change

85.05

146.40

72%

147.50

123.10

-17%

24 Aug

6 Sep

Change

Nitco

68.00

102.90

51%

Religare Enterprises

57.95

40.45

-30%

24 Aug

6 Sep

Change

38.65

62.40

61%

Large-cap Gainers/Losers

-100 6 Sep-17

28 Aug-17

GLOBAL MARKET TRENDS 2,500

Kospi 2,300

2,100

1,900

Bombay Dyeing & Mfg Kwality Mid-cap Gainers/Losers

Small-cap Gainers/Losers New Delhi Television Shilpi Cable Technologies

Mar-17

Jun-17

Sep-17

Hang Seng and Nikkei ended flat, while the FTSE fell 1%. Bovespa and Shanghai Composite advanced 3% each. NASDAQ Composite rose 2%.  Index Bovespa

24 Aug

6 Sep

+ / (-)

71,133

73,412

3%

Shanghai Composite

3,272

3,385

3%

NASDAQ Composite

6,271

6,393

2%

S&P 500

2,439

2,466

1%

Taiwan Weighted

10,489

10,548

1%

Hang Seng

27,519

27,614

0%

27.20

22.60

-17%

24 Aug

6 Sep

Change

Indo Thai Securities

33.00

59.70

81%

Nikkei

19,354

19,358

0%

Servalakshmi Paper

1.92

1.31

-32%

FTSE

7,407

7,354

-1%

Korean Composite

2,376

2,320

-2%

Micro-cap Gainers/Losers

(All Prices in Rs)

MONEYLIFE | 15-28 Sep 2017 | 64

Money Fact.indd 2

08-09-2017 19:17:19

MONEY FACTS STOCKS



What’s H

T

ML SECTORAL TRENDS

Textiles companies were in demand during the fortnight. Bombay Dyeing & Mfg, Mandhana Industries, CIL Nova Petrochemicals, Ester Industries and Himatsingka Seide soared 72%, 45%, 25%, 24% and 21%, respectively.  Companies

ML Textile Index

Bombay Dyeing & Mfg

110

Mandhana Industries

24 Aug

6 Sep

+/-

85.05

146.40

72%

5.90

8.57

45%

CIL Nova Petro

27.70

34.75

25%

JBF Industries

153.15

190.85

25%

Ester Industries

31.65

39.40

24%

105 Himatsingka Seide

100

311.05

376.80

21%

Eastern Silk Inds

5.13

6.19

21%

Winsome Yarns

2.10

2.50

19%

10.93

13.00

19%

733.75

857.40

17%

Soma Textiles & Inds

95 Jun-17

What’s

Sep-17

Raymond All Prices in Rs



Mar-17

Telecom service companies were a mixed bag. Idea Cellular, Bharti Airtel, Bharti Infratel and Reliance Communications declined 9%, 7%, 3% and 2%, respectively.  24 Aug

6 Sep

+/-

Idea Cellular

90.05

81.80

-9%

Bharti Airtel

432.95

402.95

-7%

Bharti Infratel

383.90

371.45

-3%

ML Telecom Service Index 120

22.90

22.55

-2%

MTNL

19.55

20.00

2%

642.10

659.35

3%

6.75

7.02

4%

Tata Comm Tata Teleservices

-6%

12% Oil & Gas Services

-1%

Textiles

9% Software & IT Serv

-1%

Printing & Publishing

9% Pharma

0%

Steel Products

8% Diversified

0%

Urban inflation rose to 2.17% in July 2017 from 1.41% in June 2017. Combined urban and rural inflation was at 2.36% in July 2017, increasing from 1.54% in June 2017. Inflation for clothes and footwear items in urban areas was 2.76% in July 2017 compared to 2.84% in June 2017. Inflation for household goods

4.45% 100 3.40%

90

2.35% Jun-17

Sep-17

All Prices in Rs

1.30% Jul-16

BULK DEALS Date

Company

Buyer

Seller

Rs Cr

29 Aug-17

RBL Bank

Cartica Capital

Cartica Capital 2 Limited - FDI

413.25

28 Aug-17

Dion Global Solutions

Ralph James Horne

Cresta Fund

2.75

04 Sep-17 Aryaman Capital Markets Holly Enterprises Pvt

India Finsec

0.40

06 Sep-17 Vaksons Automobiles

Yogeshkumar B Shah

Overskud Multi Asset

0.38

06 Sep-17 Relicab Cable

Aryaman Broking

Pratik Paresh Shah HUF

0.28

31 Aug-17

AG Shares And Sec

Hem Sec

0.19

Ishita Gaurav Mohatta

Cerebral Securities Pvt

0.13

05 Sep-17 Sam Industries

14% Telecom Services

Odds

5.50%

Mar-17

OP Chains

Trading

Crawling Up? 110

Reliance Comm

ML Sectoral Trends

URBAN INFLATION

N T

Companies

Shares of textiles companies and printing & publishing companies advanced 9% each, while shares of steel products companies rose 8%. Stocks of telecom service companies declined 6%; stocks of oil & gas services companies and software & IT services companies fell 1% each. 

Jan-17

Jul-17

and services in urban areas was marginally higher at 3.00% in July 2017 compared with 2.92% in June 2017. Inflation for housing in urban areas increased to 4.98% in July 2017 from 4.70% in June 2017. In urban areas, inflation for personal-care and effects was lower, at 2.00% in July 2017, decreasing from 3.11% in June 2017. 

65 | 15-28 Sep 2017 | MONEYLIFE

Money Fact.indd 3

08-09-2017 19:17:39

PS Loose Ends at Infosys

N

ow that R Seshasayee and the two foreign directors on the Infosys board have hit back at NR Narayana Murthy (NRN), we have a few new questions. Mr Seshasayee has called NRN vindictive, slanderous and, effectively, a liar. NRN has not responded. What does it say about the much-admired NRN’s judgement about people? Remember, both, Vishal Sikka and Mr Seshasayee, were hand-picked Ravi by him as was Rav Venkatesan, who w was inducted as the vicechairman problems after problem with the board boar began (but Mr Venkatesan seems see to have gone go along with the t board’s boar

formal letter, blaming NRN for Vishal Sikka’s exit). It is fairly certain that the two foreign directors, Jeffery Lehman and John Etchemendy, were inducted to the board with Mr Murthy’s consent. What is forgotten by most is that Infosys has made many mistakes with its board. These controversial directors were persuaded to make a quiet exit. I remember, the dean of a global business school telling me that decisions in Infosys were influenced by the expression on NRN’s face. If he appeared to be positive, the independent directors would vociferously support the decision, or do the opposite. Incidentally, many corporate watchers have noticed that two former independent directors, with a long stint on the board during Mr Murthy’s active leadership, had been the strongest voices asking him to back-off and leave Mr Sikka alone. Neither of them raised the issue of hefty compensation and huge exit packages which were so contrary to the Infosys culture. On the other hand, hundreds of

Tax Reminder or Threat?

A

lthough the government talks of treating honest taxpayers with respect, the income-tax (I-T) department, obviously, thinks differently. The easiest way for the I-T department to meet the steep tax collection target set by the finance ministry is to hustle and frighten existing taxpayers to cough up more. Many companies have just got letters from the department reminding them to pay advance tax by 15th September. But, instead of sending out a friendly reminder, the letter threatens them with penal interest as per Section 234C of the Income-tax Act for failure to pay advance

tax. Did the I-T department have reason to suspect that companies are likely to dodge tax payment? No; in fact, it chose the highest tax-paying companies in Mumbai for their pay-up threat! An angry businessman tells us, “I find it insulting. Nobody needs to remind us to comply; else we wouldn’t be in the top taxpayers’ list.” Also, he says, the government is unconcerned that its own economic decisions have adversely impacted his business; so he will earn less and pay less tax than last year. “No wonder, nobody feels like paying tax in India. The more you pay, the more you are harassed,” he ends. Is the government listening?

former employees came out to back the chairman. Does this mean that Infosys employees imbibed the organisation’s culture far better than its board? Media reports now tell us that a corporate governance committee, headed by Uday Kotak, will recommend rules on what information the company’s management and board of directors can share with founders and what they cannot. This probably covers situations like Rupa Kudva (former chief of CRISIL) allegedly asking NRN to sign a non-disclosure agreement to get access to an Infosys investigation into severance pay and other issues. It would make more sense if the Kotak committee asks such reports to be made public. It is good that NRN is happy with the return of Nandan Nilekani as vicechairman; but it will be a travesty if the ‘full investigation’ report is buried just because one of the founders is back at the helm. In fact, NRN’s own credibility lies in ensuring this, especially in the face of Mr Seshasayee’s allegations.

Drop CSR Hypocrisy

W

hile on Infosys and good governance, how about the company ending the tradition of having the CEO’s wife head Infosys Foundation? Vishal Sikka’s wife headed Infosys Foundation implementing the company’s corporate social responsibility (CSR) initiatives and resigned soon after he did. How does this practice go with a public limited company? Since Infosys was the benchmark for good governance, this dubious practice has been quickly adopted by many listed companies and wives/daughters of many promoters/ founders now control 2% of the profits earmarked as CSR spend and have lavish offices and expenses to do so. It’s time to scrap the hypocrisy of mandatory CSR.

MONEYLIFE | 15-28 Sep 2017 | 66

PS.indd 1

08-09-2017 10:57:59

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06-09-2017 14:17:19

REGISTERED WITH THE RNI UNDER NO. MAHENG/2006/16653. Postal Registration No: MCW/184/2015-2017. POSTED AT PATRIKA CHANNEL SORTING OFFICE, MUMBAI 400001. Date of Publishing 8 September 2017. Date of Posting Alternate Tuesday & Wednesday.

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