Moneylife 4 February 2016

SUCHETA DALAL ON: ALGO LENDING: AN INCLUSION TOOL

BLOCKCHAIN TECH: SIGNALS FUTURE TREND

Personal Finance Magazine

WILL BANKERS ACT ON DR RAJAN'S MISSIVE?

4 February 2016

Pages 68

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BEST STOCKS FROM TOP EQUITY SCHEMES STOCK WATCH JK Tyre: Chinese Threat

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Zee Entertainment: Strong & Steady

Indraprastha Gas: Benefits Unfolding?

Eveready: Flash or Flicker?

IndusInd Bank: Profit Growth, Again

Manipulation: Dhoot Industries

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ISSUE CONTENTS

4 February 2016 Cherry-picking Works!

M

utual fund managers, with their skills and expertise, are expected to pick topquality stocks that will deliver superior returns. Yet, time and again, we find most mutual fund (MF) schemes picking from a common set of stocks. Therefore, while there may be some good-quality stocks in the schemes’ portfolios, these may also contain stocks that can be a drag on the portfolio performance. Through our research and unique stock-picking formula, we have experimented with picking top stocks from the top equity schemes to create a portfolio that is expected to outperform the average equity scheme. We started our study in 2013, and have handsomely outperformed not only the benchmark, but majority of equity schemes in each and every year. This time, we pick 20 stocks. Which are these? Turn to our Cover Story to find out. Even top MF schemes have a high proportion of stocks in their portfolio that are picked by other schemes. Yet, there are a few schemes that have identified stocks ignored by most other schemes and succeeded. Read our analysis on stocks that are common to MF scheme portfolios. On the topic of investing, for those looking to make money in equities, R Balakrishnan outlines a few simple steps one should follow. As with all equity investments, time and patience are important. Most investors get impatient, especially when they start losing money temporarily. In his New Year email to bank officers, the RBI governor, Dr Raghuram Rajan, has pointed out several issues that ail the system. Sucheta, in Different Strokes, writes that though he has correctly identified all the shortcomings, will this lead to the much needed change? In Crosshairs, Sucheta writes on how RBI should consult its own regulated entities with on-ground experience first when looking for innovative ways to lend to the MSME (micro, small and medium enterprises) segment. She writes how one finance company is able to drive loan growth and keep loan defaults low, through the use of financial modelling. As always, do write to us to with your views and suggestions. Debashis Basu 

32 Cover Story Best Stocks from Top Equity Schemes Our selection, which is based on a formula that combines value and return, has worked very well, again. Jason Monteiro explains

14

– Innovating with Algo Lending – Digital Currency Future

16 Different Strokes

When the Going Gets…

20

Moneylife Quiz no

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21 Your Money

– PFRDA Issues Draft Norms for NPS Retirement Advisers – Negotiable Instruments (Amendment) Act, 2015, Notified – eNPS-Online Subscriber Registration Developed – 10-year National Savings Certificate Discontinued

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 FUND POINTERS

FIXED INCOME

Schemes, Popular 24 Top Stocks

You Invest in a 27 Should Recurring Deposit?

Most stocks are common across different equity schemes, points out Jason Monteiro

– Yields Down Past Fortnight – G-Sec Yields Flat

FUND FACTS

& Worst 26 Best Mutual Fund Schemes STOCKS

22 Smart Money Time in the Market To make money in equities, be patient and make time your friend

INSURANCE

30 Insurance Trends

JK Tyre and Industries Cheaper imports a worry but more than compensated by lower rubber prices

at Moneylife 56 Queries Foundation’s Tax Helpline HEALTH

58 NothisPillIll for

Regulations – IRDAI Wants Wider Cashless Network Life Insurance – Don’t Fall into ULIP Trap Again – BHARTI AXA Life Invest Once Fine Print

TECHNOLOGY: MOBILE

40 Stock Watch

TAX HELPLINE

You Ready for 50 Are Netflix?

Does the medical profession really want society to be healthy? Pulse Beat: Medical developments from around the world

YOU BE THE JUDGE

for 59 Punishment Honest Mistake The law allows a lot of leeway

Zee Entertainment High valuation comes from predictability Indraprastha Gas Limited Measures to curb pollution may help the gas distribution company Eveready Industries Extraordinary share price growth does not appear justified IndusInd Bank Fantastic revenue and profit growth, again Market Manipulation: Dhoot Industries Market Trend: Slow Realisation Fund managers are beginning to see the reality

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HOW I WORK

On-demand O On n-d deman eman em and nd stre sstreaming st treeam amin ami ing sounds sso ou un n nd ds ggreat; ds reat re at; at; butt sl bu slow ow IInternet nter nt erne nett sp spee speeds eeds ds aand nd h high ig gh data charges will afflict Netflix

Burst 61 Fast Camera The app is great for sports shots, pictures of kids or pets or even to analyse your cricketing action, frame by frame!

EARNING CURVE

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Low Value, High Returns

Undervalued stocks fetch higher returns

BEYOND MONEY

Access for the 66 Equal Disabled EKansh Trust believes that the first step towards inclusion of people with disabilities is creating awareness

LEGALLY SPEAKING

Hospital To 54 Bombay Pay for Negligence NCDRC orders Hospital to pay Rs40 lakh to doctor-parents who lost their daughter

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

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foundation.moneylife.in

Anniversary

Saturday, 6 February 2016

TRANSFORMING INDIA FROM WITHIN Some unusual Indians are bringing about transformation working within the same dysfunctional system. Moneylife Foundation’s 6th Anniversary celebrates them.

Dr RC Sinha will preside over the function advisor, ministry of road transport & highways; ministry of shipping; former addl chief secretary, Maharashtra

Dr Praveen Gedam

chief guest & keynote speaker

The dynamic municipal commissioner of Nashik, Dr Gedam has used technology for better governance, while tackling entrenched corruption in each of his jobs. A physician who joined the IAS, Dr Gedam is known for his honesty, fearlessness and dogged pursuit of his goals. Come and hear him explain how transformation is possible from within. Show your support for his incredible work.

Panel Discussion: “Governance and Transformation from within the System”

Presided over by Dr RC Sinha

Panelists Dr Praveen Gedam

Dr Anupam Saraph

former CIO of Pune city and former IT advisor to CM Goa.

Shailesh Gandhi former central information commissioner

Registration: 2.30pm | Session Time: 3pm to 5pm Register online at moneylife.in/event/116.html Venue: YB Chavan Hall, 1st Floor, Yashwantrao Chavan Pratishthan, Gen. Jagannathrao Bhosale Marg, Nariman Point, Mumbai - 400021. Landmark: Opp Mantralaya

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Volume 10, Issue 25 22 January – 4 February 2016

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MISSED OUT SOME FINER POINTS! The Cover Story on Fixed Income (Moneylife, Issue 24 December 2015) is obviously a wellresearched piece. But I feel that Jason Monteiro has missed out some of the finer points on some recent developments in this space. He has argued that 10-year G-Sec yield movement in the past 10 months has been ‘sideways’. But the reality has been that the yield has actually strengthened after the 50bps (basis points) rate cut from Reserve Bank of India. There has been no explanation for this. The cause of this anomaly seems to be the supply-demand equation; this factor fails to get attention in the article which focuses only on a simple reasoning of the timeline involved in impact of the rate cut on the yield. Balaji Balagopalakrishnan, by email

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

Write to the Editor!

WIN a prize

Jason Monteiro replies: Thank you for your feedback. For any market-linked security, the price is determined by demand and supply of the securities. Specifically, this equation is influenced by the level and changes in interest rates, macro-economic factors and developments in other markets—money, foreign exchange, credit and capital markets. We have kept the Cover Story simple and focused on the main factors he m ain ai n fa fact ctor ors (interest rates and demand from foreign institutional investors) which influence yields over a longer period and which retail investors can keep a track of. From the beginning of 2015, the yields have declined by just about 13bps—from 7.88% to 7.75% on 23 December 2015. Yes, over this period, the benchmark yield has moved between 7.50% and 8%; this volatility is defined by supply and demand.

INADEQUATE COMMUNICATION BY THE DOCTOR This is with regard to “Diagnosing Medical Negligence” by Prof BM Hegde. As a physician, I agree with Dr Hegde. This article



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LETTERS

the

Best letter

Anomaly in Online Booking System of Rail Tickets

O

ne would have thought Indian Railways are as eager as our honourable prime minister, Narendra Modi, to usher in ‘digital India’. But the fact is otherwise. Let me illustrate: Recently, I travelled from Bengaluru to Palakkad and back. While I had confirmed reservation for my onward journey, my return journey was waitlisted as PQWL3 (pooled quota waiting list). On the date of the return journey, i.e., 8 December 2015, I was still waitlisted at number 3. However, I boarded the train and was asked by the TTE (travelling ticket examiner) to wait in the 3A (three-tier airconditioned sleeper) compartment until he checked the availability of berths. After about an hour or so, he came to me and asked for my ticket. When I told him that I had booked my ticket online and showed him the confirmatory message on my mobile phone, he told me that it was no more valid, since it had already been automatically cancelled by the ticketing system. He said only for those who have booked tickets manually from the ticket counters, would the waitlist be applicable. Not only that, but he also asked me to disembark from the train at the next station as I was, technically, a ticket-less traveller. I protested that even after the chart was prepared, when I had checked online, my ticket was still shown as WL3. The TTE showed me the hard copy of the chart and my name was not included even in the waiting list that he had. The reason for this, he explained, was that after preparing final chart at the commencement of the train’s journey, all unconfirmed (or waitlisted) online tickets get automatically cancelled by the system and the money would be refunded through the corresponding payment portal. If the online waitlisted passengers are allowed to travel, the railways have no means to recover the fare as it is already refunded. He then proceeded to give the available berth to another wait-listed passenger, who had booked the ticket from the railway counter. Here I would like to point out following: a) I remember, on earlier occasions, I was given

Mutual Fund investments

confirmed berths are subject to market risks, read all scheme related on the basis of documents carefully. tickets booked online. b) The new procedure Hoshang R Nekoo is putting those who book tickets online YOU WIN A at a disadvantage. PERSONALISED This, in turn, CLOCK will lead to more people opting to book tickets from railway reservation counters. This is against the BV Krishnan avowed goal of the railways, and indeed that of the government of India, which wants to mak make digital access more ke d ke igit ig git ital tal al a cces cc esss mo es m mor ore universal. This particular TTE, in fact, agreed with this point. My suggestion to the railways is to discontinue this procedure. Instead of automatic cancellation of unconfirmed online reservations at the time of chart preparation, they should include these online bookings also in the physical chart given to the TTE. If the TTE gives confirmed berth to any such ticket-holder, it should be updated in the system the next day and only after that, they should cancel unconfirmed tickets and refund the amount. Alternatively, the passengers themselves should be asked to claim the refund via the IRCTC (Indian Railway Catering and Tourism Corporation) portal, as was the case earlier. This procedure used to work without any problem and I wonder why this was changed. Is it to save extra work for the railway staff (as there will be no need to update on the next day)? If so, it is at the cost of hapless passengers who put their trust on the online reservation system! BV Krishnan, by email

Congratulations

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LETTERS

 describes the problems in making a diagnosis and

assuring optimal treatment. I feel, the main problem is inadequate communication by the doctor. Doctors either do not wish to spend the time to explain to patients or lack the skill to do so. If the problem is the former, it could be rectified by having a well-trained nurse or physician assistant who can decode the cryptic doctor’s notes and give enough time to the patient to ask questions, suggest

resources to get better informed and be available to answer doubts that may arise after the patient has left the clinic/hospital. A second opinion is valuable only if the referring physician has no conflict of interest with the second physician. I am afraid that the only way to force the doctors and hospitals to change their behaviour is through litigation. And, yes, this will hurt the honest doctors but that is unavoidable. Meenal Mamdani, online comment

OUR READERS WHO CLICK WITH US Here’s a sample of the kind of feedback that we receive from our readers on our vibrant website, www.moneylife.in

MOST IMPORTANT FACTOR IN BUYING SMARTPHONES This is with regard to “Buying Tech Devices” by Yogesh Sapkale. The most important factor while buying a smartphone is its CPU (central processing unit) architecture. Always check the CPU architecture type either on Google or specific sites such as GSMArena. An example of architecture: ARM A6, A9, A15, etc. The higher the number, the better the performance and the more expensive the phone. For any comparison, use Google. A 2GB RAM on A9 will be much better than a 3GB RAM on A6 type. Lastly, if you are not into technically modifying your phone, ensure that you buy a phone which has at least 4GB of system reserved memory (this is unavailable to you for your use). Of course, RAM is important. Vaibhav Trivedi

COMMENDABLE WORK! This is with regard to “Taking Stock of 2015 Preparing for 2016” by Sucheta Dalal. Moneylife has been doing commendable work in creating awareness among savers and investors not only about their rights and possible precautions they

can take while making investment decisions, but also in helping those whose decisions subsequently turn out to be wrong because of inadequate preinvestment study or the institutions in which money was invested. Moneylife has also been encouraging investors to share their good and bad experiences with banks and other financial institutions. I am not aware of any other organisation engaged in educating savers and confronting institutions, including regulatory bodies, when they do not play their mandated roles or play them inefficiently. It is in this context that one should view the observations on transparency and accountability here. Because of our pre-independence legacy, our civil and criminal statutes, including those applicable to the financial sector, have provisions which insulate the rich and the powerful from punishment, or at least help them in getting the final punishment delayed. A section of the media also plays into the hands of the rich and the powerful by blacking out the names of celebrities and the rich when they are involved in unethical practices. In such situations, the presence of institutions like Moneylife is comforting to the victims. MG Warrier

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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400 028 or call 022-49205000 or fax to 022-49205022. Advertising: For information and rates, email us at [email protected] or call 91-022-49205000.

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www.moneylife.in Exclusive news & views with a big difference The commission or remuneration for individual agents cannot be more than 20% of the first year’s commission or remuneration and 40% of the first year’s commission or remuneration, in the case of insurance intermediaries. It means corporate agents, brokers and other insurance intermediaries will end up getting much higher rewards than individual agents. The reference is to rewards which are over and above the commissions!

EXCLUSIVE NEWS News you had better not miss

IRDAI’s stick for individual agents and carrot for big players

titled “Payment of commission or remuneration or reward to insurance agents and insurance intermediaries, regulations, 2016” caps the reward based on an objective and transparent criteria to individual insurance agents.

The Insurance Regulatory and Development Authority of India (IRDAI) has ushered the New Year with bad news for agents. The IRDAI draft

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Debt restructuring is a Band-Aid for a bullet wound Religare’s analysis of 10 out of 15 strategic debt restructuring cases suggests that this scheme won’t improve Indian banks’ deteriorating asset health

Moneylife Foundation’s 6th Anniversary Event

November’s negative IIP, December’s 15-month high CPI inflation shocking The sharp decline in IIP numbers in November 2015 and retail inflation during December to a 15-month high have got investors deeply worried

Is Champcash app a new form of chain-money scheme? The Champcash app on Google Play store wants you to install 10 other apps and refer it to others to earn unlimited money, much like money circulations schemes

“Transforming India from within” is the theme of the 6th Anniversary celebrations of the Foundation on 6th February 2016. Dr RC Sinha will preside over the function. Dr Praveen Gedam will be the chief guest and keynote speaker. You too can benefit from these programmes by registering at www. mlfoundation.in Membership is free

SEBI fails to address doubts over listing regulations

HAVE YOUR SAY

The FAQs released by SEBI on the new listing regulations do not address any of the issues the listed companies have been grappling with

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On issues that matter to you

Homeopathy is dead; Ayurveda needs a science test, Nobel Uvaacha? – Prof BM Hegde

Can governor Dr Rajan’s challenge make the RBI staff usher in efficiency in work culture at the 81-year old central bank?

Tax benefit for differentlyabled in India – Chirag Chauhan

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Worry about tomorrow’s China, not today’s – Sunil Mahajan

Why BCCI needs to come under RTI – Vinita Deshmukh

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MONEYLIFE FOUNDATION THE RIGHT THING TO DO

Moneylife Foundation’s

CREDIT HELPLINE The main objective of this helpline is to provide information, advice and preliminary guidance to indiv individuals needing help in credit-related areas. Our objective is to arrive at a solution that is acc acceptable to both the borrower and the lender. We encourage responsible borrowing.

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Every new query posted will be sent to our panel of experts When we get the opinion/advice from our expert, we will post the reply You can access similar issues faced by other borrowers Set also up a one-o-one meeting with our counsellors either at Moneylife Foundation’s Mumbai office or by Skype.

www.moneylife.in/credithelp hel To use our credit helpline, please confirm that you have read our terms and conditions.

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CROSSHAIRs

Innovating with Algo Lending Profit motive and competition funnels funding to the unfunded

T

he Reserve Bank of India’s (RBI’s) College of Agricultural Banking has announced a case study competition for bankers to find innovative ways of lending to the MSME (micro, small and medium enterprises) segment. The objective of sensitising bankers and getting them to think innovatively is laudable; but RBI officials would probably learn more about innovative lending by speaking to their own regulated entities in the private sector. Last week, I was talking to the head of a rapidly growing finance company with a massive year-on-year growth in loans to first-time borrowers. He told me about the big increase in loans to micro-borrowers

Private sector has better options.

that included hawkers, small shopkeepers and nonsalaried individuals, who were shut out of the formal borrowing system. Typically, these were loans of Rs30,000 to Rs1 lakh with tenure of about 12 months. He called it ‘algo lending’. His lending is based on evolving a proprietary model that minimises the risk of default, having

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

identified the common characteristics of borrowers trying to fudge while taking a loan, or more likely to default. Simply put, he arrived at these characteristics by first giving loans to a bunch of people, profiling them under numerous parameters, and then studying their repayment patterns. This model, based on the law of probability, works better when more data of borrowing and repayment continues to be added. Some of the findings are material for further research by those keen on financial inclusion and its cost. For instance, the company discovered that borrowing through equated-monthly instalments (EMIs) for high-end, large-screen televisions are a cover for un-banked persons to get a formal loan. The shopkeeper colludes with the borrower to create loan records for EMI payments, but no TV is sold. Instead, the borrower gets the cash and the shopkeeper a nice commission. While many borrowers diligently pay back their loans, some default. The trick is to minimise the risk on such loans. By matching income and social profiles of the borrowers, the company found that, often, when the customer was trying to buy an unusually large television, it represented a financing deal and could be weeded out. Another tiny scam that the company discovered was that borrowers tried to use the same know your customer (KYC) data with two different identities, and a minor misspelling of the name (Rajiv or Rajeev). This would, often, fly under the radar of the lending agency as a typographical error, allowing the person to avail two separate loans. A de-duplication effort, as well as a scan for past record flags such cases. A trick by those who have a previous loan default to avoid detection by credit bureau records is to apply for a new PAN card and submit it with fresh loan applications. The company had to develop a way to flag such cases through its algorithm. Their data analysis showed that a fresh PAN, obtained by people who were 45+, was a red flag. Yet another finding, that is being analysed, is the distance between the borrower and his place of 

MONEYLIFE | 4 27February November 2016 2014 | 14 | 14

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 work with that of the lending organisation. When a

borrower sought out a lender, whose office was far away, it raised a red flag. The work being done by this finance company, and its success at keeping bad loans to the minimum, only proves that profit is the best driver of high-quality research, innovation, as well as risk-taking—something that will not be possible through case study contests or government-mandated programmes.

Digital Currency Future RBI acknowledges possibilities for blockchain technology

O

n 24 December 2013, RBI officially warned the public about the potential financial, operational, legal, customer protection and security-related risks they are exposing themselves to by using virtual currencies such as Bitcoins. Specifically, it warned that transactions were on a peer-to-peer basis and there was no underlying backing for the digital currency, or central registry, nor any recourse, in case of disputes. RBI took note of Bitcoins and their use, nearly five years after the crypto-currency was launched and because it was fast gaining ground through social media and Bitcoin exchanges. RBI’s warning had an immediate impact and the spread of Bitcoins slowed down considerably. Some exchanges also shut down. But, in December 2014, RBI governor, Dr Raghuram Rajan, indicated a change in stance. In a television interview, he said that digital currency was getting safer and, over time, could be an acceptable form of transaction. By December 2015, there has been a further change of heart at RBI, when its financial stability report said, “With its potential to fight counterfeiting, the ‘blockchain’ is likely to bring about a major transformation in the functioning of financial markets, collateral identification (land records for instance) and payments system.” This has caused a lot of excitement among Bitcoin enthusiasts around the world, since India’s large population and record of quick adaptation of technology makes it a fertile ground for the proliferation of this new currency. Technically, Bitcoins and crypto-currency can grow without any reference to the regulator. However, it is important to remember that RBI’s warning in 2013 triggered raids on a Bitcoin exchange. Anything that is not formally regulated in India faces the risk of harassment by investigation agencies and even a shut down, when regulators decide to take note of it or choose to disapprove. Blockchain technology is attracting the attention of global regulators because it is distributed ledger technology, which adds verified blocks of transactions

and allows payment systems to operate in a decentralised way without the need for a centralised registry or ledger. This allows multiple entities to rely “on the same, shared, authenticated information and drastically reduce the cost of record keeping.” Banks and financial companies, now, believe that the technology in various forms will transform financial sector architecture and offer a new way of trading financial instruments without the need for expensive central depositories that are also prone to cyber fraud. A complex process of validating transactions by globally distributed ‘miners’, adding blocks to a dispersed chain, makes it almost impossible to go back on a transaction, say experts. Major finance companies around the world are devoting significant resources to study the technology and its uses—and regulators are watching developments very closely to study the risks associated with the systems. One key issue is the scalability of the technology, if it is to be used for global financial transactions. What is certain is that the technology is evolving fast and companies such as Deloitte Consulting are predicting that 2016 will see the emergence of new uses of blockchain technology as various experiments and prototypes become a reality.

RBI thinks digital currencies are getting safer

An article by David Wessel, posted on the Brookings.edu website, puts the hype and the hope that is built around this ‘disruptive’ technology in perspective. He says, “The evolving technology faces risks and obstacles. Some of these stem from the public impression of Bitcoin, a currency created with this new technology. These problems include hacking attacks on Bitcoin wallets, governance challenges, threats to consumer protection, money-laundering concerns, resistance from entrenched financial institutions and raised regulatory eyebrows. It could turn out to be an infant technology, one that most of us don’t yet understand, one that is about to change the world; think the Internet before browsers. Or it could fizzle out.”  15 | 4 February 2016 | MONEYLIFE

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DIFFERENT STROKES SUCHETA DALAL

When the Going Gets… RBI governor’s New Year missive promises radical change, but the odds seem to be stacked against him

“I

t has often been said that India is a weak a denial of access to journalists and internal vilification, State. Not only are we accused of not having while amplification of its point of view ensured interviews, the administrative capacity of ferreting out exclusives and tip-offs about press statements issued after wrongdoing, we do not punish the wrongdoer, unless newspaper deadlines. We are extremely keen to see whether he is small and weak,” said Reserve Bank of India (RBI) this will change in the rest of Dr Rajan’s current tenure governor, Dr Raghuram Rajan, in a New Year email to which ends in September 2016. bank officers. Excerpts of the email have been published However, the issue of larger national importance is by The Economic Times and other media. whether RBI, or the banks and financial institutions that it The governor goes on to say, “This belief feeds on regulates, will dare to punish or act against powerful and itself. No one wants to go after the rich and well-connected mighty borrowers whose loans continue to be restructured wrongdoer which means they with impunity through multiple get away with even more. If we corporate debt restructuring are to have strong sustainable (CDR) schemes and under growth, this culture of impunity RBI’s 5:25 scheme (five-year should stop. Importantly, this moratorium on payments and a 25-year loan tenure), which does not mean being against riches or business, as some has even been described as ‘The would like to portray, but Great Indian Banking Ponzi being against wrongdoing.” Scheme’! As always, Dr Rajan’s words, Significantly, the governor’s and their expression, have a New Year email follows a way of gladdening our hearts. landmark order of the Supreme The email reveals that in just Court of India (SC) which over two years, the governor demolished the central bank’s has, correctly, identified all frequent denial of information the shortcomings or a sense of on the grounds of having been The issue is whether RBI, or the hubris that seems to envelop received from regulated entities banks and financial institutions regulatory bodies in India. in a ‘fiduciary capacity’. The that it regulates, will dare to punish apex court reminded RBI of Here are some other issues highlighted by Dr Rajan, but or act against powerful and mighty “its statutory duty to uphold paraphrased by me: lack of borrowers whose loans continue to public interest and not the be restructured with impunity clarity in regulations; many illinterest of individual banks” informed, complacent and selfand also expressed surprise styled officials who have no desire to improve themselves; that RBI, as a ‘watchdog’, was not “more dedicated extraordinarily slow and bureaucratic responses (a serious towards disclosing information to the general public” issue); and not adhering to timelines. under the RTI (Right to Information) Act. Some of the The letter also highlights the governor’s keen apex court’s observations are a serious indictment of how understanding of how the media works. He asks for better RBI functions. For instance, the order said, “We have communication that highlights specific achievements or surmised that many financial institutions have resorted regulations rather than ‘starting with irrelevant history’. to such acts which are neither clean nor transparent. The He wants press releases sent out by 5.30pm in order to RBI in association with them has been trying to cover up show up in the press the next day. These observations are their acts from public scrutiny. It is the responsibility of extremely interesting, because access to RBI’s top brass— the RBI to take rigid action against those banks which and its external communication—has been under the iron have been practising disreputable business practices.” grip one individual for 25 years. Criticism of RBI led to In these circumstances, can we hope that the governor’s 

MONEYLIFE | 4 February 2016 | 16

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14-01-2016 22:29:39

DIFFERENT STROKES SUCHETA DALAL

 brutally frank New Year missive promises a radical

chance to give shape to an international bank (offered by change in the central bank’s regulation, supervision and S Venkitaramanan, the then RBI governor, who joined communication? Dr Rajan, with his formidable reputation the Reliance board after his retirement). IDBI chairman, and global standing, is certainly capable of reshaping RBI. SS Nadkarni and N Vaghul, who headed ICICI, turned But consider the odds. brusque in their attitude towards him. The LIC chairman, Having just read the memoirs of DN Ghosh, a highly AS Gupta, not-so-subtly warned him of rough times and regarded bureaucrat and former chairman of State Bank controversies. There was even a suggestion that his family of India, the task seems gigantic, if not impossible. The could be harmed. The powerful West Bengal chief minister, centrepiece of Mr Ghosh’s book, No Regrets, is a ringside Jyoti Basu, was also co-opted to convey Reliance’s view account and superb narration of the three extraordinary that he was being ‘obstructive’. days that forever changed the face of Indian banking with If that weren’t enough, members of L&T’s management the nationalisation of 14 banks in 1969. committee began to receive investigation notices from the However, the most dramatic part, to me, is his candid income-tax department. When Mr Ghosh approached the account of his short tenure as the chairman of Larsen & revenue secretary about it, he did not even bother with a Toubro, when he reversed a dramatic coup of the blue-chip denial. It later turned out that the secretary owned 50,000 engineering firm by Dhirubhai shares of Reliance Industries. The Ambani’s Reliance group in the bulk of the media was hostile, but late 1980s. a leading newspaper’s editor went Mr Ghosh, who took charge so far as to have his correspondents of L&T at the instance of prime ask for a meeting with Mr Ghosh, minister VP Singh, ensured that at which the latter asked if the editor was acting at the behest L&T remained an independent, of S Gurumurthy (who had led professionally-run company, The Indian Express campaign but not without being singed by against Reliance for its owner Reliance’s machinations. For those who are too young to remember, Ramnath Goenka). Finally, finance minister Yashwant Sinha called for the chapter on this sordid saga illustrates how powerful corporate Mr Ghosh and told him, “Whichever houses control the government post you have held, you have shown more effectively than the hundreds remarkable dignity and finesse. of leaked conversations of lobbyist Sometimes circumstances become Niira Radia with the movers and unfavourable and it is better not to While Raghuram Rajan may shakers of India. allow it to tarnish your reputation.” be well-meaning, read DN Reliance acquired control DN Ghosh quit the next day, but Ghosh's memoirs No Regrets his letter made it clear that he L&T by getting Premjit Singh, the then chairman of Bank of Baroda, was leaving at the ‘request of the to know that nothing has to accumulate a substantial changed in the past 25 years. government’. shareholding from public sector Nothing has changed in the past It will require a lot more than entities (through a subsidiary 25 years. If anything, the collusion a blunt email from the RBI called BOB Fiscal which was between business and politics governor to change the system shut down) and transfer it to three reached a new high under the United Ambani entities. The venal heads Progressive Alliance and even their of our powerful public sector financial institutions and the roles had become inter-changeable as they worked to Controller of Capital Issues were a willing party to the corner national resources such as coal, steel and telecom coup, but did a swift about-turn to save their skins when spectrum. It will require a lot more than a blunt email VP Singh chose to halt the brazen takeover. They changed from the RBI governor to change the system. Does he have sides again as soon as Mr Singh’s government collapsed. a game plan? Or is the missive a nice way of distancing Mr Ghosh has done well to expose the brazen complicity himself from the mess that he is presiding over?  of the top guns in government and their dubious tactics to get him to resign from L&T. The lures he was offered Sucheta Dalal is the managing editor of Moneylife. She was included an ambassadorial assignment (offered through awarded the Padma Shri in 2006 for her outstanding contribution the brother of Congress politician ML Fotedar) and the to journalism. She can be reached at [email protected]

17 | 4 February 2016 | MONEYLIFE

DIFFERENT STROKES.indd 3

14-01-2016 22:29:56

BOTTOMLINE BY MORPARIA

CURRENT ACCOUNT

MONEYLIFE QUIZ

Moneylife Quiz no

224

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 3rd March. Send in your answers to quiz@moneylife. in with the Quiz no., name, address & telephone number before 10 February 2016.

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!

E Krishna Variar

5. What is the name of the editor of Journal of Dental 1. What was the average return delivered by 196 equity Research? diversified MF schemes over the period 19 September 2014 a. Grace Chan b. William Canning to 31 December 2015? c. William Giannobile d. Tracy Streep a. 9.44% b. 14.41% c. 14.19% d. -3.59% 6. How many large- and multi-cap MF schemes were able to outperform the Moneylife portfolio of top stocks, over the 2. In the portfolios of how many equity MF schemes does Hindustan Zinc figure? past 15 months? a. 10 b. 14 a. Two b. Five c. Six d. Ten c. 15 d. 20 3. In which year did EKansh Trust conduct its first job fair for people with disabilities? a. 2005 b. 2008 c. 2010 d. 2013 4. What is the meaning of dolus eventualis? a. Manifest intention b. Unintended crime c. Punishment for crime d. Innocent action In all, 24 readers got all the answers right last time. The winner of Quiz-222 is E Krishna Variar from Kozhikode (Calicut). Congrats! You win a personalised clock with an investment quote!

7. How many years ago was ICICI Bank iWish launched? a. One year b. Two years c. Three years d. Four years 8. Which state government in India has been the first to recognise ‘e-motor insurance policies’? a. Delhi b. Goa c. Maharashtra d. Telangana The answers to Moneylife Quiz-222 are: • 1- b. Two months • 2- c. 90 schemes • 3- a. Rs1.94 lakh crore • 4- c. Florida • 5- g. Himanshu Rath • 6- d. 2,900 • 7- b. University of Oxford • 8- a. 9.37%

MONEYLIFE | 4 February 2016 | 18

Current Account.indd 2

14-01-2016 22:36:30

In an era of paid news & half-baked analysis who tells you the truth about financial products?

M

oneylife has always put the reader first. Launched in 2006 by Debashis Basu and Sucheta Dalal, Moneylife delivers brutally honest opinion and hard facts about financial and consumer products. Our deep research and unbiased articles on all aspects of personal finance, such as gold, insurance, saving for your children, Wills & nomination, mis-selling and money circulation scams and even medical malpractices,, have stood the test of time. Unlike other media, we refused to accept paid news. Regular readers know that we argued that unit-linked insurance plans were harmful for your wealth, when others were handing out ‘Best ULIPs’ awards with big sponsorship funds. Naturally, there

was a cost attached to our pro-customer stand. But policy changes implemented by various regulators (usually after the horses had bolted) have proved us right many times over—on ULIPs, on misuse of the Pow of Attorney, on implications of SEBI rules on Power co commissions, or collective investment schemes, etc. M Moneylife Foundation is probably the only nonpr profit trust from a media house. We offer oneonn-one help to savers by handling grievances and on-one c counselling. M Moneylife s subscribers a automatically b become m members of M Moneylife F Foundation. If y are new you t Moneylife, to p please explore t content the Y won’t wo on’t find anything that’s biased of our website. You produucts or compromises comprom in favour financiall products your interests You will find loads lo interests. of pro-investor and proconsumer information.

Moneylife: A completely pro-investor and pro-consumer publication I am a regular subscriber to your magazine. I really enjoy and appreciate the articles that are published with such truthfulness and integrity. Truly, Moneylife stands head and shoulders above of all other personal finance magazines”

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Your Money RETIREMENT

RETIREMENT

PFRDA Issues Draft Norms for NPS Retirement Advisers

eNPS-Online Subscriber Registration Developed

T

he Pension Fund Regulatory and Development Authority (PFRDA) is framing rules for ‘retirement advisers’ who are expected to play a major role in

propagating the New Pension System (NPS). The regulations provide a framework for their eligibility, registration process, fees and define the scope of their work

and responsibility, PFRDA said in a press note. As per the draft, an individual, firm or a corporate body, acting as a retirement adviser on NPS, will have to obtain a certificate of registration from PFRDA. The individual, proprietors, partners and representatives of a retirement adviser should be at least graduates. Advisers, which are a body corporate or partnership firm, would have to provide a security deposit or performance guarantee of Rs1 lakh to PFRDA; in case of individuals, the amount proposed is Rs10,000. Educating and making people aware of the benefits of the retirement planning and creating awareness about pension schemes is critical for increasing participation in the voluntary segment of NPS.

BANKING

Negotiable Instruments (Amendment) Act, 2015, Notified

T

he government has notified the Negotiable Instruments (Amendment) Bill, 2015 to clarify the jurisdictional issue for filing of cheque dishonour cases that was approved by parliament in its recent winter session. “The provisions of the Negotiable Instruments (Amendment) Act, 2015 shall be deemed to have come into force on the 15th day of June, 2015, the day on which the Negotiable Instruments (Amendment) Ordinance, 2015 was promulgated to further amend the Negotiable Instruments Act, 1881,” a finance ministry release said. The amendments to the Negotiable Instruments Act, 1881, clarify jurisdiction-related issues for filing cases for offence committed under Section 138 of the Act. The amendment provides that the jurisdiction for filing a case of cheque dishonour will be a court in whose jurisdiction the bank branch of the payee is located.

A

n online platform has been developed for registration of subscribers and receipt of contribution under NPS, called eNPS, through the NPS Trust at www.npstrust.org.in. Through this platform, subscribers can register for NPS and contribute to their permanent retirement account. Subscribers who already have an NPS account can make contributions through eNPS directly. While registering, a subscriber needs to provide his/ her name and PAN (permanent account number) details which will be validated online with the income-tax department. The subscriber has to then select the bank, fill up personal details and upload a photograph and signature. After filling up the details, the subscriber can contribute through netbanking.

FIXED INCOME

10-year National Savings Certificate Discontinued

N

ational Savings Certificate (NSC) issue IX, which had a term of 10 years, has been discontinued. The move was approved and notified by the ministry of finance on 1 December 2015. The postal department stopped issuing these certificates 20 December 2015 onwards. Observers believe that the instrument was discontinued because it locked the government into a long-term commitment in a falling interest rate regime.

21 | 4 February 2016 | MONEYLIFE

Your Money.indd 2

14-01-2016 21:40:10

SMART MONEY R BALAKRISHNAN

Time in the Market To make money in equities, be patient and make time your friend “Alice: Would you tell me, please, which way I ought to go from here? The Cheshire Cat: That depends a good deal on where you want to get to. Alice: I don’t much care where. The Cheshire Cat: Then it doesn’t much matter which way you go. Alice: ...So long as I get somewhere. The Cheshire Cat: Oh, you’re sure to do that, if only you walk long enough.”

T

o me, this exchange, from the best book ever written, is an excellent way to define ‘investment’, especially when it comes to equities. Read it a few times. Maybe the message becomes very clear. As the calendar changes its year, we are bombarded with ‘lists’ of: 10 best stocks, 10 worst stocks, 10 best mutual funds and so on. To me, these are pointless exercises, unless there is a context. When we take a particular period and calculate returns, we deliberately choose a specific start date and an end date. We have an undervalued market, fair value market and overvalued market. The start and end could be in a combination of these three. Depending on that, asset classes will turn out to be superior or inferior. These lists cannot be used to decide your investment strategy or choices. These are nothing but noise. Exactly the way the media and the investment industry come up with screaming headlines like ‘The Best Performer of 20XX’, etc. My point is that a good selection of quality stocks can give returns in excess of 15% per annum. (I think it is a fair assumption, if you take only high-quality companies with a great track record). Provided you hold them for a period of 10 years or more. However, it does not automatically follow that you buy some shares on any given day, at any

given price, and wait for a pre-determined period and get the return. We still have to take some efforts to get there. Some of the things we should keep in mind are: 1. If we can figure out a fair ‘buy’ price, the probability of getting the expected returns over a 10-year period goes higher. If we cannot figure it out, the best way to get these returns is to buy the stock in the form of a systematic investment plan (SIP) over a 10-year period. 2. Stocks can be overpriced, underpriced or ‘fairly’ priced. For companies with a great track record, the chances are very, very low that we can buy them at ‘below’ fair value. High-quality stocks are always the last to crack and, unless there is a catastrophe, their prices are not likely to go below the ‘fair’ value. Thus, we have to look at other ways to buy them. I use the P/E (price-to-earning) band while deciding to buy. For example, if a stock like Hindustan Unilever (HUL) has traded between a 25 to 50 P/E in the past 10 years or so, then I am better off buying the stock closer to 25 P/E rather than 50. It is likely that, if the going is good, the stock may never see a 25 P/E; so I may have to buy it when it is, say, around 30 to 35 P/E rather than 40 to 45 P/E. By acquiring the stock closer to the lower P/E, I am trying to protect my prospective return. In other words, when the earnings increase over time, the stock needs to trade at closer to the lower P/E for me to get my return. The risk I run is if the growth rate decelerates or the RoE (return on equity) declines permanently, the stock now shifts to a lower P/E band. To avoid such a sharp decline, I have to just choose the right sector and the right company. History helps. 3. If the above-mentioned exercise seems confusing to you, the option is to go in for an SIP route. Keep buying, over time. For SIP route, 

MONEYLIFE | 4 February 2016 | 22

column_Balakrishnan.indd 2

14-01-2016 22:04:15

SMART MONEY R BALAKRISHNAN



it is essential to start early and you should have the hold on to it. In 10 years, the stock’s earnings would money to buy regularly. Often, financial surplus starts have grown and, if it commands the same P/E, we have to arise only later in life, since a lot of people buy a got our returns. Thus, we are likely to end up owning property early these days and pay out huge amounts stocks with P/E far above the ‘market’ P/E. as equated monthly instalments (EMIs), leaving little Using the P/E band comes later—after you have selected investible surplus. If you wish to take the SIP route, I the stocks. For this, shortlist companies, based on their would urge you to take some effort in understanding RoE. Then look at the company’s history, dividend, debt the point above. You make a list of, say, 20 stocks equity, product, management, etc. You want companies that you like. Check the current P/E in relation to the will live for 20-30 years. You will end up picking companies historical P/E band. Put more in consumer and pharmaceuticals money into those stocks where space, some banks, some great There are two options with a the prevailing P/E is closer to manufacturing companies, etc, high-quality portfolio. Either the lower end of the P/E band. and technology companies, if you you keep it alive for your On stocks where the current have the ability to visualise and lifetime and pass it on to your understand. P/E is closer to the higher end family or charity as it is. The of the P/E band, buy small Of course, such investing other choice is that you may quantities. Wait until you see demands a lot of understanding decide to liquidate some stocks and very little action. You do not a better opportunity to add to in your lifetime. For this, do not have to trade day in and day out, that stock. It may take you a wait for a precise date in future nor keep shuffling your portfolio couple of years to build your investment portfolio. each time you get a new calendar. 4. There are two options with a high-quality portfolio. Yes, if you can, try and read their annual results. Or, if there Either you keep it alive for your lifetime and pass it is a merger, acquisition and restructuring or a corporate on to your family or charity as it is. The other choice action, which is not in the investors’ favour, you need to is that you may decide to liquidate some stocks in analyse and then act. If the company you own is being your lifetime. For this, do not wait for a precise date acquired by a larger company, it is generally good to in future. Once you have made up your mind to take exit. Of course, exit is something that we should discuss some money off the table, use the P/E bands to help and I leave it for another occasion. Exit is an important choose which stocks to sell. Sell those that are closer thing, if we do not want value erosion. But, for now, let to the upper end of the P/E band. us just leave it at this, with one more dialogue from the 5. The most important thing to get a satisfactory return best book in the world: from any investment is time. I say: Look to invest for “Alice: Where should I go? The Cheshire Cat: That depends on where you want at least 10 years. We are not skilled enough to precisely time every up or down move in a stock. Thus, we buy to end up.”  at what we calculate to be a ‘reasonable’ price and The author can be reached at [email protected]

Invite your friend to subscribe to Moneylife at 25% discount. Get in 4 friends at 25% discount & your subscription is free. Everybody wins! Log in or register with h w ww.m mone ey liife e.in n/reffe rre r.h htm ml to avail this offer

23 | 4 February 2016 | MONEYLIFE

column_Balakrishnan.indd 3

14-01-2016 22:05:00

MUTUAL FUNDS POINTERS

Top Schemes, Popular Stocks Most stocks are common across different equity schemes, points out Jason Monteiro

T

ime and again, we have found that equity mutual fund (MF) schemes invest in the same set of wellknown stocks. Most often, the common stocks are those which are a part of the benchmark index. Equity schemes rarely stray away from the benchmark stocks. Though there may be hundreds of listed stocks to choose from, fund houses usually limit their research to the top 300 stocks. This time, we examine the portfolio of the top-10 schemes of each category (based on their five-year quarterly rolling return as on 31 December 2015)—large-cap, multi-cap and mid- and small-cap—to analyse whether their selection of stocks was any different from the rest. Based on the November 2015 portfolio, the entire set of 193 open-ended equity diversified schemes had invested in 701 stocks. Of these, 235 stocks are common to 10 or more schemes, while 50 or more schemes invest in a set of just 36 stocks. The list of most popular stocks does not spring any surprises. HDFC Bank tops the list as it is present in the portfolio of as many as 135 schemes. Of these, 102 schemes have an exposure of over 5% to this stock. Axis Bank is the next most popular stock; 120 schemes have invested in it. Infosys is the third most-picked stock by 119 schemes. As many as 73 schemes have a weightage of

Common Stocks Company Name

Total No. of Schemes

Schemes with Exposure >5%

HDFC Bank

135

102

Axis Bank

120

9

Infosys

119

73

ICICI Bank

115

28

Maruti Suzuki India

111

19

Larsen & Toubro

110

10

State Bank of India

104

24

IndusInd Bank

97

8

Tata Motors

93

13

Reliance Industries

91

17

HCL Technologies

87

7

TCS

86

5

Sun Pharma

85

3

ITC

83

7

Ultratech Cement

79

1

HPCL

77

11

Bank of Baroda

75

2

Kotak Mahindra Bank

74

5

HDFC

71

11

Coal India

69

6

over 5% to Infosys. ICICI Bank comes next in the list of popular stocks; 115 schemes have included the stock in their portfolio. Maruti Suzuki, Larsen & Toubro and State Bank of India are present in the portfolio of over 100 schemes. IndusInd Bank, Tata Motors and Reliance Industries follow closely behind. Is the stock selection of the top-30 schemes any different? Not really. The schemes invested from a set of 468 stocks; 29 stocks were present in the portfolio of 10 or more schemes. HDFC Bank continues as the most-picked stock among the top schemes, followed by Infosys. Axis Bank was present in the portfolio of 16 schemes. IndusInd Bank, ICICI Bank and Federal Bank were picked by 18 schemes, while 16 schemes invested in Sun Pharma and Britannia. In the large-cap schemes category, Tata Motors and Infosys were present in each of the 10 schemes. Reliance Industries was present in nine schemes; the only exception was Quantum Long Term Equity. Larsen & Toubro, State Bank of India, HDFC Bank and ICICI Bank were present in the portfolio of nine schemes. Canara Robeco Large Cap+, ICICI Prudential Bluechip Equity, Quantum Long Term Equity and SBI Bluechip have invested in stocks that were common to all the 

MONEYLIFE | 4 February 2016 | 24

Fund Pointer.indd 2

14-01-2016 22:57:15

MUTUAL FUNDS POINTERS

Multi-cap Schemes

Large-cap Schemes Scheme Name

Scheme Name

Unique Stocks/ Total Stocks

Weight to Unique Stocks

Return*

HDFC Capital Builder

8/56

6.18%

12.37%

L&T India Value

Edelweiss D.G.E Top 100

5/64

4.51%

10.90%

Birla Sun Life India Opp.

Reliance Top 200

1/37

2.29%

12.35%

Reliance Equity Opportunities

Unique Stocks/ Total Stocks

Weight to Unique Stocks

Return*

17/86

11.56%

17.53% 15.67%

4/26

10.21%

13/57

8.79%

15.32%

2/38

5.04%

18.63%

Axis Equity

1/40

0.82%

10.66%

SBI Magnum Global 94

Birla Sun Life Top 100

2/74

0.48%

12.44%

SBI Magnum Multiplier

3/43

3.13%

13.33%

Birla Sun Life Frontline Equity

1/73

0.04%

11.58%

BNP Paribas Dividend Yield

1/42

1.01%

13.79%

SBI Bluechip

0/47

0.00%

13.12%

Franklin India Prima Plus

4/64

0.91%

14.08%

Quantum Long-Term Equity

0/24

0.00%

11.21%

1/60

0.78%

13.92%

ICICI Prudential Focused Bluechip Equity

0/55

0.00%

10.91%

Mirae Asset India Opportunities Kotak Select Focus

1/51

0.30%

13.07%

Canara Robeco Large Cap+

0/40

0.00%

10.10%

BNP Paribas Equity

0/40

0.00%

13.04%

*Five-year annualised rolling return as on 31 December 2015

 10 large-cap equity schemes. In other words, there were

no unique stocks in the portfolio of these schemes. HDFC Capital Builder had eight stocks which were not present in the portfolio of any scheme. Interestingly, it was among the top performers. Edelweiss D.G.E Top 100 had five unique stocks in its portfolio. In the multi-cap schemes category, the top schemes form their portfolio out of a set of just 269 stocks. As many as 20 stocks were present in the portfolio of five schemes or more. HCL Technologies and Infosys top the list with nine schemes investing in these stocks. Axis Bank, ICICI Bank and Sun Pharma were among the top five stocks common to the portfolio of top-10 multi-cap schemes. BNP Paribas Equity did not have a single stock common with others. L&T India Value had as many as 17 unique stocks, while Reliance Equity Opportunities had 13. Interestingly, both were among the top-five schemes, based on returns. The remaining schemes had less than five stocks which were unique. In the small- and mid-cap schemes category, the variety of stocks increases. The combined portfolio of the 10 schemes has a total of 341 stocks. Only a few stocks are common to other schemes of the category. Atul was the most-picked stock of small- and mid-cap schemes; it was present in the portfolio of seven schemes. Fag Bearings, Britannia and Federal Bank were present in the portfolio of six schemes. DSP BlackRock Micro Cap had as many as 25 unique stocks, Reliance Small Cap and UTI Mid Cap had 23 and 21 unique stocks, respectively. Franklin India Smaller Companies had as many as 14 unique stocks.

*Five-year annualised rolling return as on 31 December 2015

Schemes with more unique stocks may not necessarily do well. Schemes with common stocks, too, may do well, based on the fund managers’ timing of entry and exit and weightage of each stock in the portfolio. The 30 schemes we have analysed have all done well, based on fund managers’ selection of the portfolio and asset allocation. While some have done well by picking stocks that were common to other schemes, a few have ventured to discover stocks that are rarely picked by others and have done well, if not, better than the rest. 

Mid- and Small-cap Schemes Scheme Name

Unique Stocks/ Total Stocks

Weight to Unique Stocks

Return*

Reliance Small Cap

23/65

30.30%

23.90%

DSP BlackRock Micro Cap

25/61

29.83%

22.64% 22.63%

SBI Small & Midcap

8/26

19.02%

14/71

12.93%

22.42%

21/104

12.69%

20.42%

Canara Robeco Emerging Eq.

6/61

8.97%

22.76%

Religare Invesco Mid N Small Cap

6/48

6.07%

19.84%

SBI Magnum Midcap

6/54

4.55%

20.86%

BNP Paribas Mid Cap

3/48

4.04%

20.97%

Mirae Asset Emerging Bluechip

2/62

1.19%

23.43%

Franklin India Smaller Comp. UTI Mid Cap

*Five-year annualised rolling return as on 31 December 2015

25 | 4 February 2016 | MONEYLIFE

Fund Pointer.indd 3

14-01-2016 22:57:26

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 Smart Savers - savers.moneylife.in Equity Schemes (Quarterly Rolling Returns) Large Cap (Category Avg: 2.93%, Sensex: 1.96%)

Launch Date

Corpus (Rs Crore)*

Avg. Quarterly Rolling Returns

HDFC Capital Builder

01-Feb-94

1,035

4.28%

SBI Bluechip

14-Feb-06

3,624

Birla Sun Life Top 100

24-Oct-05

1,822

Reliance Quant Plus

18-Apr-08

HDFC Large Cap Sundaram Growth

1-Year 3-Years**

Exp Ratio

-0.11%

18.27% 2.67%

4.23%

4.58%

18.03% 2.04%

3.76%

-3.55%

15.91% 2.46%

1,087

1.69%

-10.11%

6.94% 2.22%

18-Feb-94

1,139

1.54%

-9.09%

6.29% 2.47%

24-Apr-97

224

0.43%

-20.07%

1.72% 2.93%

Birla Sun Life India Opportunities

27-Dec-99

113

6.35%

9.83%

27.90% 3.23%

L&T India Value

08-Jan-10

881

6.11%

9.69%

26.76% 2.36%

SBI Magnum Global 94

30-Sep-94

2,474

5.51%

4.23%

23.95% 2.08%

IDFC Equity

09-Jun-06

253

1.96%

-9.96%

8.08% 2.30%

Principal Dividend Yield

15-Oct-04

109

1.95%

-8.11%

8.04% 2.99%

IDFC Imperial Equity

16-Mar-06

115

1.72%

-9.62%

7.06% 2.31%

18.11%

38.52% 2.37%

Multi-cap (Category Avg: 3.40%, BSE 200: 2.37%)

Mid-and Small-cap (Category Avg: 5.87%, CNX Midcap: 3.68%) SBI Small & Midcap

09-Sep-09

786

8.49%

Reliance Small Cap

16-Sep-10

2,017

8.00%

9.76%

36.07% 2.10%

DSP BlackRock Micro Cap

14-Jun-07

2,413

7.81%

16.53%

35.11% 2.58%

Tata Equity Opportunities

25-Feb-93

1,130

4.23%

3.13%

18.00% 2.46%

IDFC Sterling Equity

07-Mar-08

1,435

3.95%

-1.57%

16.77% 2.02%

SBI Emerging Business

17-Sep-04

1,628

3.38%

1.47%

14.21% 2.13%

Debt Schemes Income (Category Avg: 1.97%, Crisil Composite Bond: 2.09%) ICICI Prudential Long Term Plan

20-Jan-10

862

2.75%

5.84%

11.45% 1.18%

Tata Dynamic Bond

03-Sep-03

1,015

2.36%

7.36%

9.77% 1.66%

UTI Dynamic Bond

23-Jun-10

900

2.27%

7.10%

9.41% 1.67%

L&T Triple Ace Bond

31-Mar-97

857

1.59%

4.68%

6.49% 1.49%

Religare Invesco Active Income

02-Aug-07

315

1.58%

5.58%

6.49% 1.70%

DWS Premier Bond

21-Jan-03

907

1.76%

7.28%

7.24% 1.58%

Liquid (Category Avg: 2.13%, Crisil Liquid Index: 2.13%) Escorts Liquid Plan

03-Oct-05

217

2.26%

8.79%

9.34% 0.50%

Franklin India Treasury Management Account

30-Apr-98

2,688

2.19%

8.50%

9.03% 0.20%

Taurus Liquid

01-Sep-06

1,691

2.19%

8.47%

9.04% 0.20%

Reliance Liquid - Cash Plan

07-Dec-01

4,665

1.98%

7.61%

8.18% 0.99%

L&T Cash

27-Nov-06

828

1.96%

7.37%

8.09% 0.83%

HDFC Cash Management - Call Plan

06-Feb-02

105

1.91%

7.26%

7.88% 0.20%

# 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

MONEYLIFE | 4 February 2016 | 26

Fund Facts.indd 2

12-01-2016 17:21:09

FIXED INCOME

Should You Invest in a Recurring Deposit? Make use of the flexibility of the product to earn higher returns

B

ank interest rates are on a decline. It means that interest on fixed deposits (FDs) and recurring deposits (RDs) is lower than what was offered a year ago. RDs give the same interest rate as FDs, for the same period. If you want to invest periodically and lock-in at the current rate, RD is a good option. ICICI Bank’s iWish was launched three years ago. It is an RD offering flexibility of the amount you pay each month, deposit multiple times in a month, and have the ability to skip an instalment. The product is innovative, considering that regular RD accounts expect a fixed instalment to be paid on the same day every month. Offering flexibility of the instalment amount can lead to customers taking advantage in a

falling interest rate scenario. Savers need to understand the fine print on the upper limit of monthly savings. iWish is an online product for those who already have a savings account and use Internet banking. It is not a product that you can purchase at a branch; also, it is not

for NRIs (non-resident Indians). It is targeted for the younger segment which needs to save to realise various financial goals at different stages of life. Savers can monitor the goal and know exactly how much they are ahead, or behind, in realising the goals. There can be only 10 active goals at a time and the goal amount can be up to a maximum of Rs10 lakh. The maximum initial deposit amount is Rs49,999. You can pay higher—or lower—than the monthly instalment; but you cannot pay after the goal amount limit is reached. The term of the RD can be six months to 10 years; you can set the goal duration anywhere in this period. Central Bank of India (CBI) has a scheme called ‘Cent Swa-Shakti’ Flexi RDS. This scheme allows depositors the flexibility to deposit up to 10 times the originally decided minimum amount every month. It does not offer the flexibility of skipping an instalment.

Yields Down Past Fortnight

G-Sec Yields Flat

B

T

ond yields have headed down in the past fortnight. You can expect to get less than 8.50% for AAA rated bonds and around 9% for lower than AAA rated bonds. Issuer

Maturity Date

Next Last Yield Coupon (%)

ISIN

Rating

LIC Hsg Fin 9.76%

08 Mar-19 10 Mar-16

8.47

INE115A07FB2

CRISIL AAA

HDFC 8.57%

12 Jun-18

13 Jun-16

8.46

INE001A07NY0

CRISIL AAA

HDFC 8.43%

04 Mar-25 04 Mar-16

8.45

INE001A07NP8

CRISIL AAA

NSE data as of last trade date of 8 January 2016

Shriram Transport Finance 10%

13 Nov-24 13 Nov-16

9.41

INE721A07IO4

CAREAA+

Aditya Birla Finance 9.75%

28 May-19 28 May-16

8.90

INE860H07441

CARE AA+

PNB HSG FIN 8.23%

09 Apr-19 31 Mar-16

8.43

INE572E09296

CRISIL AAA

BSE data as of last trade date of 8 January 2016

he 10-year benchmark G-Sec yield has been unchanged over the period of past fortnight to end at 7.74% on 8 January 2016. Inflation in November 2015, with consumer prices rising 5.4%, is above RBI’s (Reserve Bank of India’s) comfort level of 5%, thus reducing hopes of further rate cuts in the near future. The manufacturing PMI (Purchasing Managers Index) slipped into contraction territory, at 49.1 in December, from 50.3 in November. It may be due to the massive floods in Chennai in December, apart from the persistently muted domestic demand. The rupee has extended its losses to close at a three-week low of Rs66.93/ US$ on 7 January 2016.

27 | 4 February 2016 | MONEYLIFE

Fixed Income.indd 1

12-01-2016 18:37:06

INSURE CORRECTLY: MSSN Benefit #1-3 The Right Life Insurance • Life Insurance Surrender Tool • The Right Health Insurance • Health Insurance Selection Tool • Free Accident Insurance We are not agents, distributors, brokers or lead generators; so, you get ethically correct advice

1. Right Life Insurance Insurance is supposed to protect you. But the real business of insurance companies is pooling money; they earn fees and their agents earn commissions. All their income and expenses come out of your money, ‘invested’ with them. And you get poor returns, after all the costs and charges.

Which insurance product then is right for you? As a member of Moneylife Smart Savers, 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 Smart Savers will help you decide easily and quickly.

MSSN GB (Insurance 1-3 ).indd 2

18-11-2015 20:41:50

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.

3.Personal Accident Cover of Rs2.5 Lakh Bundled with your MSSN membership is a Rs2.5 lakh of accident insurance.

This is all you need on the insurance front. Be an MSSN member today and stay safe. MSSN is a no-bias, no-conflict platform. We are not in the business of selling any financial product and so can advise you ethically.

Subscription to Moneylife magazine is included in MSSN Premium Membership About MSSN MSSN 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. MSSN was set up to help investors and savers make the right financial decisions and handhold them through the entire process.

MONEYLIFE SMARTSAVERS FIX YOUR FINANCES, FOREVER

www.savers.moneylife.in

MSSN GB (Insurance 1-3 ).indd 3

18-11-2015 20:42:13

INSURANCE TRENDS New products, regulations, features and options, interpreted from your perspective Regulations

IRDAI Wants Wider Cashless Network Regulator woken up by two high courts judgements

I

nsurance Regulatory and Development Authority of India (IRDAI) wants health insurance providers to bring more hospitals under the preferred provider network (PPN) to offer cashless facility. It seems to be another feeble attempt to nudge government insurers to bring more hospitals under PPN for retail customers. Nothing much has been done to restart the cashless facility after government insurers stopped it in

Fine Print Vehicle Insurance Premium To Go Up in Metros?

V

ehicle insurance premium may increase up to 15% in metro cities due to the perceived risk of insuring in metros after the floods in Chennai resulted in over Rs1,500 crore worth of claims—double the claims those for the 2005 Mumbai

July 2010 for retail policyholders in Mumbai, Delhi and other metros, but continued it for group insurance customers. Government insurers did bring under PPN a few hospitals which agreed to offer treatment at the negotiated rates for 42 or more specified procedures. Private hospitals in Pune and Pimpri-Chinchwad in Maharashra discontinued cashless treatment facility for individuals policyholders of government insurers from 1 December 2014 while the bigger hospitals continue to offer cashless facility to corporate policyholders. The regulator has, finally, been nudged into action by judgements from two high courts; but whether IRDAI’s circular will have any impact on government insurers is the moot point. The circular directs insurers to tie up with a sufficient

floods. The premium increase may be justified by insurers’ business needs, but what about the rejection of claims due to consequential loss exclusion clause? It is often misused by insurance companies to deny genuine claims. For example, if you try to start the car which is submerged in rainwater, it can lead to the water entering the engine and causing major damage. Such engine damage is ‘consequential loss’ and the claim

number of service-providers for cashless treatment facility. IRDAI’s circular argues that, under Regulation (10) (c) of the IRDA (Health Insurance) Regulations, 2013, the insurance company shall endeavour to enter into agreements with an adequate number of both, public and private sector, providers with adequate geographical spread. These are the views of Bombay High Court while closing public interest litigation (PIL) 12 of 2011: “The Insurance companies have provided cashless facility at about 250 hospitals/clinics in Mumbai under the PPN facility. There are in all 3,000 hospitals/public clinics in the city of Mumbai and that therefore more and more hospitals and clinics ought to be brought under this PPN facility.” The Gujarat High Court’s views, while closing PIL 81 of 2011 and asking the petitioner to make a representation to IRDAI were: “Very few hospitals for mysterious reasons known only to insurance companies or TPA are empanelled which definitely raises eyebrows and it seems that they are favoured by the Insurance Companies/TPAs. This makes the limited choice of the hospitals. Again Ahmedabad is a Metro city where from one corner of city to 

will be rejected by Indian insurance companies. But international insurers do pay such claims after considering their genuineness.

IRDAI to Crack Down on Uninsured Vehicles

I

nsurance Regulatory and Development Authority of India (IRDAI) plans to act on the menace of nearly 55% uninsured vehicles plying on the roads. Third-party  (TP) insurance is mandatory. The 

MONEYLIFE | 4 February 2016 | 30

Insurance.indd 2

14-01-2016 22:11:19

INSURANCE TRENDS

 other will take minimum 1.5 hours

so at the time of emergency it will be difficult to reach hospital having PPN facility, thereby we feel that there should be empanelled hospitals in each and every corner of city. Insurance companies/ TPAs have enrolled under PPN network only 98 hospitals which are approximately 0.5% of the total number of hospitals situated in the Ahmedabad Municipal Corporation Limits.”

L i f e I ns u r anc e

Don’t Fall into ULIP Trap Again You will soon get surrender value for units surrendered five years ago

I

nsurance companies will start giving back the surrender value of new ULIPs ((unit-linked insurance policies) which were sold

 ministry of road transport and

highways has agreed to share data on vehicles with IRDAI to identify those without TP insurance. The data will be shared with the Insurance Information Bureau (IIB), an advisory body of IRDAI which has now become independent. The data will help state police to detect the owners of uninsured vehicles and take necessary action. The pilot system has been already introduced in the national

after September 2010. The product has a lock-in period of five years. This means that if you surrendered the new ULIP five years ago, you will get the surrender value back. When you stopped paying the premium for a new ULIP, the funds were moved to a discontinuance fund after deducting surrender charges, which was capped at Rs6,000 for premium over Rs25,000 and Rs3,000 for premium up to Rs25,000. The discontinuance fund was mandated by IRDAI to earn minimum returns of 4% per annum (pa). If your policy has earned more than 4%pa after being discontinued, it is good for you. While ULIPs may have performed well in the past couple of years due to a rally in the equity market, do not fall for the pitch of putting back the surrendered money into another ULIP or traditional life insurance policy. While ULIPs sold prior to September 2010 had cover continuance feature,, new ULIPs have it. It means do not hav that if you stopped premium, the paying pre policy will autosurrender if you surr have completed ha five policy fiv years. ye

capital region (NCR) and in Telangana.

Are You Ready for e-Vahan Bima?

T

he Telangana government has become the first state to recognise ‘e-motor insurance policies’. It may be adopted by other states like Madhya Pradesh, Rajasthan, NCR, Kerala and Karnataka. It offers benefits like faster issuance of policies, reduction of fraud, higher customer

Life Insurance

BHARTI AXA Life Invest Once Tax benefits only if you pay optional premium

B

harti AXA Life Invest Once is a single-premium traditional, non-participating endowment plan. There is no bonus declaration; only fixed benefits are paid. Moneylife does not suggest buying anything other than a term plan for life insurance needs; hence, you may skip this product. If you wish to buy it, be aware that full tax benefits are not possible by just paying the single premium. The product has introduced a feature called ‘mortality premium’ to enhance the life cover. It means that you will have to pay the optional ‘mortality premium’ to ensure that you have 10 times the premium as life cover to get the full tax benefit. If you don’t, the policy will not qualify for tax benefit under Section 10(10D) and will have only a fraction of tax benefit on under Section 80C. Be aware of this as life insurers push their products to those who are eager to save taxes. 

satisfaction, elimination of revenue leakages, analytics and so on. The e-motor insurance policy would be issued in digital format which can be stored in any smartphone. A ‘Quick Response Code’ would also be issued that can be scanned for verification of policy details. The initiative was a joint effort of IRDAI with IT department, police and transport department of Telangana. 

31 | 4 February 2016 | MONEYLIFE

Insurance.indd 3

14-01-2016 22:11:39

COVER STORY

BEST STOCKS FROM TOP EQUITY SCHEMES Our selection, which is based on a formula that combines value and return, has worked very well, again. Jason Monteiro explains

T

he year 2015 may have been disappointing for most equity mutual fund (MF) investors. Those who invested in large-cap-oriented schemes would have suffered a decline in their portfolio value. Only those who had invested in select mid- and small-cap schemes would have earned a decent return. In 2015, the S&P BSE Sensex declined by 5%, while the BSE Mid and Small Cap index was up by 8%. This year bucked the general trend that mid- and small-cap stocks turn out to be the worst performers during periods of broad market

declines. This was not the case over the past year. Picking the right stocks was crucial. Multi-cap schemes, which were oriented to mid-cap stocks, did well too. For savvy investors, this automatically raises the question: Should one rely on the skills of the fund manager or should one create one's own portfolio of undervalued stocks? There is a way to combine the two. For this, we return to our annual study that we initiated some years ago: selecting the best stocks from top-performing MF schemes and creating a portfolio that tries to do better than most MF schemes. In other words, the attempt is to 

MONEYLIFE | 4 February 2016 | 32

Cover Story.indd 2

14-01-2016 22:15:45

COVER STORY

The Super Stock Portfolio Company Name

Present in

3-Q Revenue Growth*

P/E^

RoCE#

TVS Srichakra

L&T India Value

Indo Count Industries

L&T India Value & UTI Mid Cap

7%

13.63

33%

32%

21.85

30%

Cadila Healthcare

Edelweiss D.G.E Top 100 + 8 more

Sun TV Network

HDFC Capital Builder

53%

17.09

31%

9%

20.16

25%

Glenmark Pharmaceuticals

Mirae Asset Emerging Bluechip + 2 more

Hindustan Zinc

Birla Sun Life India Opportunities + 5 more

197%

17.72

28%

13%

7.45

Alembic Pharmaceuticals

20%

BNP Paribas Mid Cap

33%

27.19

46%

Yes Bank

Franklin India Smaller Companies + 8 more

22%

13.19

19%

Indiabulls Housing Finance

Edelweiss D.G.E Top 100

35%

16.08

31%

Hexaware Technologies

SBI Magnum Midcap + 3 more

18%

22.99

32%

Supreme Industries

SBI Magnum Global Fund 94 + 3 more

5%

27.39

21%

Axis Bank

ICICI Prudential Focused Bluechip + 15 more

19%

13.02

18%

LIC Housing Finance

Religare Invesco Mid N Small Cap + 4 more

17%

16.68

19%

Mindtree

Franklin India Smaller Companies

15%

22.38

27%

Infosys

Quantum Long-Term Equity + 18 more

10%

20.16

25%

Ajanta Pharma

Edelweiss D.G.E Top 100

18%

33.51

40%

GIC Housing Finance

Reliance Small Cap

21%

11.42

17%

Persistent Systems

SBI Magnum Midcap + 3 more

12%

18.58

20%

7%

31.81

32%

10%

22.19

20%

Credit Analysis & Research

Canara Robeco Emerging Equities + 5 more

Century Plyboards

Franklin India Smaller Companies

* Past three quarters revenue growth as on September 2015; ^Price-to-earnings ratio as on 5 January 2016; #Return on capital employed is based on trailing four quarters net profit. Return on net worth mentioned for banks and finance companies

 use our stock-picking skills and cherry-pick stocks from

the best equity schemes, leaving out the stocks whose performance has been nothing to write home about. As in the previous years, our portfolio continued to do well in the past year. Our equal weighted portfolio delivered a return of 14.41% during 19 September 2014 to 31 December 2015. Over this period, the Nifty Midcap 100 delivered a return of 14.19% and the S&P BSE Sensex returned -3.59%. Our portfolio outperformed both the indices. The 196 equity diversified schemes delivered an average return of 9.44%. Our portfolio was able to outperform nearly 75% of the 196 equity schemes. The schemes that did better than our portfolio were only small- and mid-cap schemes. Our selection, which is based on a formula that combines value and return, along with insight into industry trends and corporate governance, has worked well again. This is the strategy we apply to stocks selected for Moneylife Stockletters. This Cover Story offers a fresh listing of the best stocks based on the latest portfolios of best-performing schemes. We consider a mix of large-cap, multi-cap and

mid-cap schemes. Refer to our Methodology on page 37 for details. Many of the stocks found in the portfolio of MF schemes would not find a place in our portfolio. Out of the 30 schemes, we got a base of 304 stocks compared to a list of 268 stocks last year. Of these 300-odd stocks, just 166 stocks made it to the final ranking after applying our stringent short-listing criteria. Below is the list of top-20 stocks, based on our ranking.

Cherry-picking This year, only one stock from our previous analysis will continue in the portfolio as many companies’ ranking has either gone down, or they are no longer present in the portfolio of top equity schemes. Compared to last year’s 17 stocks, we now have 20 stocks on our list. As we have highlighted in our prior analyses as well, this is not our list of recommended stocks. We are merely compiling the best stocks present in the portfolio of top mutual fund schemes, leaving out the possible laggards. With this exercise, we expect our cherry-picked portfolio to outperform most equity schemes; it has done so in the past. In this year’s list, we have four companies each from 

33 | 4 February 2016 | MONEYLIFE

Cover Story.indd 3

14-01-2016 22:16:13

COVER STORY

Top Large-cap Schemes Scheme Name

No. of Stocks Return*

SBI Bluechip

48

13.12%

Birla Sun Life Top 100

75

12.44%

HDFC Capital Builder

56

12.37%

Reliance Top 200

38

12.35%

Birla Sun Life Frontline Equity

74

11.58%

Quantum Long-Term Equity

25

11.21%

ICICI Pru Focused Bluechip Equity

55

10.91%

Edelweiss D.G.E Top 100

64

10.90%

Axis Equity

40

10.66%

Canara Robeco Large Cap+

40

10.10%

*Five-year annualised rolling return as on 31 December 2015

 pharmaceuticals, software & IT services and financial

services and two banks. The remaining six stocks are from different sectors. Topping our list is TVS Srichakra, the only autocomponents manufacturer on the list. TVS Srichakra manufactures two-wheeler and three-wheeler tyres and enjoys a market share of about 25%. For exports, this mid-cap company manufactures industrial pneumatic tyres, farm and implements tyres, skid steer tyres, multipurpose tyres and floatation tyres, among others. It exports to the United States, Europe, South America, Africa and Australia. Over the past three quarters ended 30 September 2015, TVS Srichakra reported a sales growth of 7% and an operating profit (OP) growth of as high as 83%. Natural rubber prices have fallen over the past year, leading to tyre manufacturers reporting high margins. The price-to-earnings (P/E) ratio of the stock is 13.63 and it has a high return on capital employed (RoCE) of 32.84%. From the textiles sector, Indo Count Industries (ICI) makes it to our list. ICI exports its combed cotton yarn to various countries and has established a niche in the global market. In 2006, the home textiles division was set up making it a vertically integrated textiles manufacturing and exports company. It operates in three business segments—home textiles, yarn and consumer goods. The US is its largest market, accounting for a major share in the total exports of home textiles products. ICI has a total of 80,016 spindles producing around 14,000 tonnes of combed cotton yarn per annum. It is the third largest exporter of bed linen from India and the fourth largest bed-sheet exporter to the US. It is a net exporter with nearly 70% of its clientele in the international markets. Apart from the US, it also exports its products to Europe,

United Kingdom, Japan, Latin America, the Middle East, Canada and Australia. ICI reported a strong sales growth averaging 32% and an operating profit growth averaging 60% for the three quarters ended 30 September 2015. It has a strong RoCE of 29.91%. Cadila Healthcare, Glenmark Pharmaceuticals, Alembic Pharmaceuticals and Ajanta Pharma are the four drug manufacturers that make it to the list. All four have strong domestic as well as global presence in the drug formulation business. Cadila’s formulations exports to the US grew at a compounded rate of 38% over the five-year period ending 31 March 2015. Sales to the US now constitute 39% of the company’s total turnover. It is also the third largest player in the domestic formulations market with a market share of 3.73%, as per All Indian Origin Chemists & Distributors. Cadila averaged a sales growth of 53% for three quarters ended 30 September 2015. Operating profit grew @125% over this period. Cadila has a P/E of 17.09 and high RoCE of 31%. On 31 December 2015, Cadila received a warning letter from the US Food and Drug Administration (USFDA) relating to its Moraiya, Gujarat, formulation facility and Ahmedabad API (active pharmaceutical ingredient) facility. This hit the stock price hard. Glenmark Pharmaceuticals markets over 350 products in India and ranks 16th in the domestic formulations business. It has a strong research pipeline which focuses 

Top Multi-cap Schemes Scheme Name

No. of Stocks Return*

SBI Magnum Global 94

38

18.63%

L&T India Value

86

17.53%

Birla Sun Life India Opportunities

26

15.67%

Reliance Equity Opportunities

57

15.32%

Franklin India Prima Plus

66

14.08%

Mirae Asset India Opportunities

60

13.92%

BNP Paribas Dividend Yield

42

13.79%

SBI Magnum Multiplier

43

13.33%

Kotak Select Focus

52

13.07%

BNP Paribas Equity

40

13.04%

*Five-year annualised rolling return as on 31 December 2015

MONEYLIFE | 4 February 2016 | 34

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COVER STORY

Top Mid- and Small-cap Schemes Scheme Name

No. of Stocks Return*

Reliance Small Cap

65

23.90%

Mirae Asset Emerging Bluechip

62

23.43%

Canara Robeco Emerging Equities

61

22.76%

DSP BlackRock Micro Cap

61

22.64%

SBI Small & Midcap

26

22.63%

Franklin India Smaller Companies

71

22.42%

BNP Paribas Mid Cap

48

20.97%

SBI Magnum Midcap

54

20.86%

104

20.42%

48

19.84%

UTI Mid Cap Religare Invesco Mid N Small Cap

*Five-year annualised rolling return as on 31 December 2015

 on niche areas: dermatology, respiratory diseases and

cardiology. The US and India are the largest markets and contribute to 16% of the company’s revenues. Brazil, Mexico, Russia and east European countries contribute to its international presence. The pharma stock averaged a sales growth of 197% and an operating profit growth of 167% over the three quarters ended 30 September 2015. The stock is quoting a P/E of 17.72 and has RoCE of 28%. Alembic Pharmaceuticals created a niche in the antiinfective and cough & cold segments. Its formulations business accounts for 82% of revenues, while the rest comes from APIs. Domestic formulations constitute 53% of its revenues, the rest being contributed by export formulations. Nearly 90% of export formulations are generics catering to the regulated markets of the US, Canada and Europe. For the three quarters ended 30 September 2015, Alembic averaged a sales growth of 33% and an operating profit growth of 75%. Its valuation is high with P/E of 27.19 while its returns are exceptional with RoCE of 46%. A top wealth creator, Ajanta Pharma continues to hold its ground. Its domestic formulations constitute 32.7% of total revenues; with the export formulations constituting 65% of the total revenues. It currently derives almost its entire export revenues from emerging regions like Africa (Franco-Africa), Asia and Latin America and has a presence in more than 35 countries. Its export formulations have grown at an annual rate of 30% over the five-year period ended 31 March 2015. In the three quarters ended 30 September 2015, Ajanta Pharma reported a revenue growth of 18% and an operating profit growth of 20%. Its P/E is high at 33.51, but its RoCE is exceptional at 40.18%. The two banks that make it to the list are Yes Bank

and Axis Bank. Yes Bank has grown its credit almost entirely from the corporate sector which constitutes approximately 65% of its outstanding credit of Rs75,550 crore in FY14-15. In September 2015, its gross NPA (non-performing assets) and net NPA ratios were at 0.61% and 0.20%, respectively, compared to 0.46% and 0.13%, respectively, in the sequential previous quarter. The profit of Yes Bank has grown at a compounded rate of 33.2% for the five years ended 31 March 2015. The Bank reported a revenue growth of 22% for the three quarters ended 30 September 2015. The stock is quoting at a P/E of 13.19. Yes Bank has a return on net worth (RoNW) of 19.29%. Axis Bank is the third largest Indian bank in terms of credit and profitability. As on 30 September 2015, its loan book was Rs2.98 lakh crore. The Bank’s loan book grew at 30% annually over the past eight years, higher than the average industry growth (which was 19% annually). In the past five-six years, the gross NPA ratio has stayed in the range of 0.8%-1.3% while the net NPA ratio has consistently stayed at approximately 0.4%. Axis Bank’s income growth averaged 19% over the three quarters ended 30 September 2015. The Bank has P/E of 13.02 and RoNW of 17.85%. The price of Axis Bank has crashed from over Rs600 in March 2015 to below Rs400 in January 2016. Other than banks, four companies from the financial services sector make it to our list. These stocks include: Indiabulls Housing Finance, LIC Housing Finance, GIC Housing Finance and Credit Analysis and Research. Stocks focused on housing finance are better than other non-banking financial companies (NBFCs). The asset quality of the housing finance companies is relatively better and the gross NPAs for the industry are around 0.8%. A steady demand has pushed up the revenues of this sector. In addition, the government has announced ‘Housing for All by 2022’ as one of its missions, along with the plan for creating 100 smart cities. If wellimplemented, this will boost the demand for housing finance. However, a slow recovery in demand for real estate and adverse regulatory changes can affect the sector. In the housing finance space, Indiabulls Housing Finance (IHF) is one of the largest among private sector companies with a net worth of Rs10,367 crore on 30 September 2015. Its loan book grew @26% compounded annually over six years, ended 30 September 2015. IHF has a network of 220 branches and provides home loans to salaried and self-employed individuals. As of FY14-15, IHF has a loan book mix of 50% home loans, 27% loan against property (LAP), 22% commercial credit and, approximately, 2% for 

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COVER STORY

 commercial vehicles. For the three quarters ended

30 September 2015, IHF had an average income growth of 35%, while operating profit grew @60% over this period. The stock is expensive, with a P/E of 16.08, but a good return ratio—RoNW of 31%. LIC Housing Finance (LICHF) has a loan book of Rs1.14 lakh crore, making it the second largest housing fi nance company among NBFCs and third largest, if banks are included. Over the past eight years, LICHF’s

loan book has grown by 25% annually. Its market share nearly doubled bringing it to, approximately, 10% now. Its lending rates, too, are among the lowest in the industry, making it highly competitive. Salaried individuals account for nearly 85% of its retail loan

Methodology How we picked the best stocks from the best schemes

W

e first ranked equity diversified mutual fund schemes on the basis of their performance in the past five years, based on their quarterly rolling returns. We picked the top-10 schemes each from the large-cap, multi-cap and mid- and small-cap category. We assume that the quality of the stock-picks of these schemes has helped them beat their peers over the past five years that we have analysed. What do these top performers hold now? That takes us to the second part of our analysis: the stocks we select are from the top stocks that make up 75% of the portfolio

book. LICHF averaged an income growth of 17% for the three quarters ended 30 September 2015. Over this period, the housing finance company averaged operating profit growth of 25%. LICHF’s P/E is 16.68 and RoNW is 19%. The third housing finance company on our list is GIC Housing Finance (GICHF). The focus of GICHF is mainly the middle-income group where the average ticket size of loans is Rs12 lakh-Rs13 lakh approximately; 95% of individual borrowers are from the salaried income group. Its major business is focused in western and southern India. GICHF averaged an income growth of 21% over the three quarters ended 30 September 2015. Its operating profit grew at an average rate of 13%. Valuations are low, with a P/E of 11.42 as against RoNW of 16.99%. Rating agency Credit Analysis & Research (CARE) ranks 19th among the top-20 stocks. Six out of the 30 equity schemes have CARE in their portfolio. It is the second largest rating company by market share. It has reported strong margins and has improved its market share over the past few years. However, compared to other rating agencies, almost its entire revenue is derived from the rating business. CRISIL and ICRA derive only round 37% and 58% of their revenues, respectively, from the rating business, according to research by ICICI Securities. In the past six years, CARE outpaced the industry in terms of rating revenue growth, growing at 28% annually. CARE has high P/E of 31.81 and high 

of each scheme. This gave us 304 stocks. We then excluded stocks which did not meet our parameters defined for short-listing good-quality companies. We then ranked the remaining 166 according to our own formula and picked the top-20 stocks. With a methodology of combining value and return, fortified by insights into industry trends and corporate governance, we have been able to choose stocks that have done well. Fund managers do not stray away much from benchmark stocks which constitute half of their portfolio allocation. However, a few stocks from the remaining part of their portfolio can deliver substantial value. On taking the latest portfolio of the top mutual funds, we leave out stocks that will not create wealth because of specific reasons, and apply our methodology that combines growth and value, to pick the best stocks from the best schemes’ portfolio.

37 | 4 February 2016 | MONEYLIFE

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COVER STORY

 RoCE of 32.37%.

Hexaware Technologies, MindTree, Infosys and Persistent Systems were the four stocks that made it to the list from the software and IT services sector. Hexaware Technologies ranks the highest among these and continues on our list from the previous year. Out of the top-30 schemes, four have Hexaware in their portfolio. Hexaware provides enterprise solutions, infrastructure management services and business process services. Approximately 80% of its revenues are derived from the US and 13% from Europe, based on the September 2015 quarter data. The banking and financial services sector contributes the maximum, approximately 38%, to its revenues. It has averaged sales growth of 18% for the three quarters ended 30 September 2015. Operating profi t grew @22% over this period. Valuation is high with a P/E of 22.99, but its RoCE is strong at 31.69%. Mindtree is a global provider for application development, maintenance and infrastructure management services. While about 60% of its revenue is derived from the US, Europe contributes nearly 25%. The technology, media and services sectors contribute the maximum to its revenues, at 30.4%. The banking

and financial services sector contributes 25%. Mindtree reported average sales growth of 15% and an operating profit growth of 12% for the three quarters ended 30 September 2015. Franklin India Smaller Companies is the only scheme among the top-30 MF schemes that has Mindtree in its portfolio. Mindtree has a P/E of 22.38 and RoCE of 27.17%.

Infosys still remains one of the top most-picked stocks; as many as 19 of our selected top-30 equity 

31 December 2015). Our ‘Super Stock Portfolio’ delivered an absolute return of 14.41% over this period. The 14 schemes that outperformed our portfolio Our portfolio beat 101 out of the 115 largedelivered an average return 19.57%. The 101 schemes and multi-cap schemes last year delivered an average return of just 6.75%. Even if we consider small- and mid-cap schemes, the average return of the 159 schemes worked out to just ust 14 large- and multi-cap schemes were able to 10.12%. Our portfolio was diversified across stocks outperform our portfolio of top stocks over the of all market-caps and still managed to do past 15 months (19 September 2014 to well. Compared to the benchmark indices, the Nifty Midcap 100 delivered a return of 14.19% and the S&P BSE Sensex returned How Our Portfolio Fared -3.59%. Our portfolio outperformed both the indices. We have not factored in costs 16% but costs are negligible today, if your do not 12% churn your portfolio. Our portfolio was a buy-and-hold portfolio, with just 17 stocks. 8% Among the stocks present, as many as nine stocks delivered a return in excess of 4% 15%. Even though six stocks delivered negative returns, the remaining stocks on 0% the list were able to balance the portfolio. Among the top performers were: Vardhman Average Return of -4% Super Stock Large- & Multi-cap Textiles (75%), TV Today Network (51%), Portfolio Schemes S&P BSE Sensex eClerx Services (38%), Ceat (32%) and  Lupin (31%). Among the underperformers

Market-beating Portfolio

J

MONEYLIFE | 4 February 2016 | 38

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COVER STORY

 schemes have Infosys in their portfolio. Client additions

and order bookings growth have become healthy after the change in top management, two years ago. The business IT services segment, which includes application development, application maintenance and infrastructure management services, contributes the maximum to the revenues, followed by consulting and package implementation. The banking and financial services sector contributes 33% to the revenues followed by the manufacturing sector. Revenue growth for the three quarters ended 30 September 2015 averaged 10%, while operating profit growth averaged 9%. Infosys has a P/E of 20.16 and RoCE of 25.48%. Persistent Systems derives the bulk of its revenues (85%) from the US. Over the past five years, it has reported 23% compounded growth in revenues. Persistent Systems averaged revenue growth of 12% for the three quarters ended 30 September 2015. Operating profi t growth averaged 25% over this period. It has a P/E of 18.58 and RoCE of 20.32%. Four schemes have Persistent Systems in their portfolio. Sun TV Network is the only media firm on our list. HDFC Capital Builder is the only scheme that has

 were IPCA Laboratories (-5%), Finolex Industries

(-10%), Goodyear India (-18%) and Gujarat Mineral Development Corporation (-43%).

Portfolio Performance* Vardhman Textiles TV Today N etwork Eclerx Services Ceat Lupin MRF Indraprastha Gas Hexaware Tech Atul City Union Bank HCL Technologies Excel Crop Care Swaraj Engines IPCA Laboratories Finolex Industries Goodyear India GMDC -50%

-25%

0%

25%

*Return from 19 September 2014 to 31 December 2015

50%

75%

invested in this stock. Sun TV dominates the Tamil and Kannada markets and boasts strong ad revenue growth. Subscriptions revenues, too, have grown at a good pace—of 20%—for the two-year period ended 31 March 2015. The September 2015 quarter witnessed continued strong ad revenue growth of 15.8%. For the three quarters ended 30 September 2015, revenue growth and operating profit growth averaged 9% each. The megacap company has a P/E of 20.16 and RoCE of 24.64%. Hindustan Zinc Limited (HZL) produces zinc, lead and silver. Zinc and lead have reported a strong production growth of 13% year-on-year for the September 2015 quarter. The production volume of silver grew at 40% over this period. HZL’s management expects a 32 50% increase in the production of silver to 350-400 tonnes in FY15-16. HZL averaged revenue growth of 13% over the past three quarters ended 30 September 2015, while operating profit growth averaged 15% over this period. It has a P/E of 7.45 and RoCE of 19.80%. The stock is present in the portfolio of six equity schemes. Supreme Industries has a diversified product portfolio which includes udes plastic piping division, packaging products, industrial ndustrial products and consumer products that contribute 54%, 23%, 16% and 7%, respectively, to its revenues. Supreme has 23 plants across 11 states. Revenue growth declined over the past two quarters; thus, the average growth rate over the three quarters ended 30 September 2015 works out to just 5%. Operating profit growth averaged 27% over this period due to lower raw material costs. Supreme Industries is quoting a P/E of 27.39 and RoCE of 21.49%. Just four of the top-30 schemes invest in the stock. Plyboard manufacturer Century Plyboard (CPL) is present only in the portfolio of Franklin India Smaller Companies. CPL is one of the largest producers of plywood in India and has as many as seven manufacturing plants. Apart from plywood, CPL manufactures laminates and decorative veneers. After increasing its laminates capacity recently, it became one of the largest producers of laminates in India as well. For the three quarters ended 30 September 2015, the stock averaged a sales growth of 10% and operating profit growth of 53%. CPL has a P/E of 22.19 and RoCE of 19.74%. 

39 | 4 February 2016 | MONEYLIFE

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StockWatch A section on stocks and sectors that catch our eye

J K T y r e a nd Indus t ries

Chinese Threat Cheaper imports a worry but more than compensated by lower rubber prices

J

K Tyre is an old and established tyre manufacturer with the latest manufacturing know-how. The company went through a difficult patch, a few years ago. But, in 2014-15, according to the management, all categories, other than light commercial vehicles (LCVs), did very well. India is now the sixth-largest automobile market, behind China, the United States, Japan, Brazil and Germany. So the demand for new and replacement tyres is high. But Indian tyres are threatened by imports from China. As the chairman of the company, in his statement to shareholders, points out: “Despite the emphasis laid on infrastructural development by the newly-instated Central Government primarily via the ‘Make in India’ campaign, the threats posed by Chinese manufacturers and the inverted tax duty structure showed no sign of abatement. The low import tariffs in India encouraged large volumes of imported tyres. Despite India possessing adequate domestic capacity as well as investments in new capacity creation, Chinese tyre imports into India increased to Rs800 crore during 2014-15, adversely affecting the prospects pects of Indian tyre makers.” In an interview with a business TV channel in early January 2016, AK Bajoria, president of JK Tyre, complained that a further devaluation of the Chinese Yuan will be terrible for the industry. Tyre imports into India account for 25%-30% in the truck/bus radial segment and up to 45% in the passenger cars segment. The industry also claims that China has 50% surplus tyre capacity and has doubled its exports to India in 2015,

Will It Skid? Volume

Price in Rs 130

1,556,400

120

1,167,300

105

778,200

90

389,100

75

0

Jan-15

Jul-15

Jan-16

Shares Traded

Adjusted Closing Price

Key Financials Stand-alone (Rs Cr)

Mar-15

Jun-15

Sep-15

Revenue

1,503.56

1,502.08

1,506.83

OP

205.17

256.32

261.33

OPM

14%

17%

17%

Y-o-Y Revenue growth

-5%

-4%

-2%

Y-o-Y OP growth

32%

58%

41%

FY13

FY14

FY15

15%

16%

23%

March Ending RoNW

OP: Operating Profit, OPM: Operating Profit Margin, RoNW: Return on Net Worth

which has cut into the production of Indian tyre companies. The situation is exacerbated by the fact that the main export market for Indian companies, Brazil, has suffered a I 49% currency devaluation making Indian tyres less competitive. However, the industry has benefited hugely from a sharp drop in rubber prices. This dichotomy—of sluggish sales due to global factors and higher profits due to lower raw material prices—is reflected in the financial results for the r quarter ended 30 September 2015. qu JK Tyre recorded quarterly sales of



MONEYLIFE | 4 February 2016 | 40

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STOCK WATCH

 Rs1,506.83 crore (Rs1,531.86 crore), down 1.63%,

but quarterly net profit, of Rs109.70 crore (Rs58.20 crore), was up a huge 88.49%. For the year ended March 2015, the annual sales were Rs6,125.23 crore (Rs5,951.08 crore), up 2.92%, and the annual net profit was Rs253.30 crore (Rs134.68 crore), up 88.08%. The shareholding pattern of JK Tyre includes 52.34% shareholding with promoters, 10.75% with foreign institutional investors, 2.39% with domestic institutional investors and 34.52% with retail investors. Over the past five quarters, quarterly sales have remained flat and the average growth in operating profit was 34%. The average operating margin is 15%. Valuation is reasonable, mainly because growth has

Ze e E n t e r t ainm ent

Strong & Steady

been sluggish. The market-capitalisation is just 0.44 times sales and 2.86 times operating profit. The return on net worth (RoNW) is 23%. Cash earnings per share are Rs17.30. The debt-equity ratio is 2.69 and the return on capital employed (RoCE) is 15%. The company distributed dividends of 75% for FY14-15 and 50% and 35%, respectively, for FY13-14 and FY12-13. In December 2014, there was a stock split from Rs10 to Rs2. The share price hit a 52-week low of Rs78.25 on 30 June 2015 while it hit its 52-week high of Rs133.65 on 15 April 2015, in expectation of better prospects. The book value of the company’s share is Rs48.12. The company’s share was trading at around Rs98 on 14 January 2016. 

organisations are struggling. This is thanks to careful strategies deployed for each category, or genre, of business. For instance, on the digital media front, ZEEL is running ‘Ditto TV’ which is a subscription-

High valuation comes from predictability

Z

ee Entertainment Enterprises Limited (ZEEL), one of India’s leading television media and entertainment companies, has risen sharply from a low of Rs106 on 18 January 2011 to Rs437 on 31 December 2015. It has been among the best value creators among large-cap stocks. It trades at around 39 times consolidated earnings for 12 months ended 30 September 2015. Its market-capitalisation stands at around 34 times operating profit. Can such high valuations be justified? Yes, if strong earnings growth continues. The management believes that advertisement revenue momentum is strong and subscription revenue will pick up in H2FY15-16. Institutional investors are betting that the management, which is extremely focused on the bottom line, will deliver. So far, it has. ZEEL has had the distinction of outperforming the benchmark Nifty for the past five calendar years, at a time when most media

based model. This is completely different from the competitor, Star TV’s ‘Hotstar’ app, which is free, supported by advertisements. ZEEL has also launched saturation coverage for a movie cluster comprising Zee Cinema, & Pictures, Zee Classic and Zee Action.  Thanks to its strategy, ZEEL’s advertising revenue

Exits & Returns from Erstwhile Street Beat Stocks: We continue to monitor stocks featured in the erstwhile Street Beat section. We will suggest an exit when they are no longer undervalued or not performing as per expectations. Keep an eye on this space. | 43% Return: Our recommendation has so far fetched 43% average annualised return since January 2012, based on booked profit and open positions of more than one year. 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.

41 | 4 February 2016 | MONEYLIFE

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18-11-2015 20:38:17

STOCK WATCH

Beating Sensex Easily 350 300 250 200 150 100 50 0 Jan-11

Jun-13 Zee Entertainment Enterprises Ltd

Jan-16 S&P BSE Sensex

 grew by a stellar 35% y-o-y (year-on-year), rising

to Rs843 crore, based on consolidated numbers for the quarter ended 30 September 2015. This revenue growth was aided by advertising for its newly-launched general entertainment channel (GEC) ‘&TV’. If the new launches were excluded, revenue growth would be in the mid-twenties (presumably in the range of 23%-27%), as per recent analysts’ reports based on discussions with the management. Sports business did not add much to the bottom line for that quarter—its revenues were Rs128 crore and costs Rs126 crore. Since the India-Pakistan cricket series is not expected to resume soon, given the current political scenario, sports business will be a drag on Zee’s bottom line this financial year. However, this is a segment with excellent long-term potential. As per the results for FY14-15, advertising contributes 54% of its revenues, subscription 37% and the balance is contributed by sales: media content, which includes syndication sale of sports rights, programmes and film rights. The domestic market contributes around 78% of its total subscription revenues; the balance comes from international market, mainly West Asia and North America.

Virtually Debt-free The company’s return on capital employed (RoCE) on the basis of consolidated earnings for year ended 30 September 2015 is a healthy 21%. The corresponding return on equity (RoE) is an impressive 29%. It is virtually debt-free and has cash & cash equivalents of Rs1,551 crore. Several media companies are listed on the Indian bourses, but not many have focused on entertainment. News channels are doing badly, including Zee News, listed as Zee Media. Zee Entertainment is doing

far better than Colors, being one of the few media companies that has consistently generated profits over the years. Edelweiss analysts have compared Star India and Zee TV and come up a few interesting insights. Zee TV’s advertisement rates are estimated to be around 0.75 times Star Plus’ rates which is the market leader in GEC space. Star Plus has around 38 hours of original programming compared to Zee’s 32 hours. Revenues of Star India’s and Zee Entertainment were roughly similar in FY09-10 at Rs233 crore and Rs220 crore. Thereafter, revenues of Star India have more than tripled up to FY13-14, while Zee Entertainment’s corresponding revenues have doubled. But Zee Entertainment scores over Star India in terms of profitability. Based on the operating profit numbers (FY13-14) from the report, Zee Entertainment’s operating profit margins were at a robust 27% compared to Star India’s 9%. With respect to the future, Edelweiss analysts believe that Star India’s strong focus and aggression in sports and digital media will give it an edge over Zee in these segments. We disagree with this assessment. Zee is a better allocator of capital and that is what matters to investors. The stock has attracted tremendous interest from institutional investors over the years because of its visibility. However, investors need to make a fair comparison with other companies across the sector. For the quarter ended 30 September 2015, 43.07% of the company’s shares were held by the promoters, 48.39% by foreign institutional investors, 3.53% by domestic institutional investors and 5.01% by others. As much as 35.74% of promoter holding was pledged on 30 September 2015. 

Indraprastha Gas Limited

Benefits Unfolding? Measures to curb pollution may help the gas distribution company

T

he Supreme Court has asked the ministry of petroleum and natural gas to set up 104 new compressed natural gas (CNG) pumps in the NCR (national capital region). The management of the gas distribution company, Indraprastha Gas Ltd (IGL), has indicated that this mandate can be executed in one year. Analysts estimate the incremental investment



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STOCK WATCH

 per CNG outlet to be Rs2 crore. This implies that the

company will have to invest an additional Rs208 crore, approximately, in the next year for these 104 outlets. IGL has already received proposals from around 150 fuel outlets belonging to oil marketing companies (OMCs) to set up CNG-dispensing machines. The details of these proposals are not yet fully available. The administration of Gautam Buddh Nagar district in Uttar Pradesh, falling under the NCR, has directed all industrial units in Noida to switch to piped natural gas (PNG) by 31 March 2016, on pollution concerns. Although this move is being treated with scepticism, many industrial units are likely to switch to PNG in the next few years, benefiting IGL. At present, it is estimated that out of the 8,000-odd industrial units in Noida, around 330 are running on PNG. IGL is likely to gain due to increasing focus on cleaner fuels to tackle pollution. This is expected to give a fillip to its sales volumes which have been stagnant. CNG prices during non-peak hours have been reduced by Rs1.5/kg, to avoid queuing. This may

E ve r e a dy Indus t ries

Flash or Flicker? Extraordinary share price growth does not look justified

T

he stock of Eveready Industries Ltd has had an extraordinary run over the past two years. From a price of Rs35 on 1 January 2014, it skyrocketed to Rs301 on 31 December 2015, after touching a high of Rs374 in mid-July 2015. On what basis? Eveready is a market leader in flashlights—with a whopping 70% market share—and in dry batteries in India: its core business. It has more than 50% market share in this segment, but is facing challenging times due to the dumping of Chinese batteries. The management’s guidance for FY15-16 has been that volumes are expected to remain flat due to dumping by China. The company has entered the light-emitting diode (LED) bulb segment and analysts are going ga-ga about this high growth area. At present, LED segment accounts for 7%-8% of the revenues of the company. The management is bullish on this business and expects this segment to contribute a much higher proportion. The management strategy is to focus on the

affect the company’s margins a tad, in the short term, as more consumers are likely to fill their CNG tanks during non-peak hours. The company had a superb return on capital employed (RoCE) of around 27% for the 12 months ended 30 September 2015. With the political consensus behind cleaner fuel, has IGL been given a good long-term competitive advantage? 

organised bulb segment. It believes it can leverage its distribution network and brand to expand its topline for LED business. However, the company will have to compete with major players like Philips, Osram, Bajaj Electricals, Havells and Syska in this segment.

Flashing Warning Sign? Price (in Rs) 420

320

220

120

Adjusted Closing Price

20 Jan-14

Jan-15

Jan-16

The company’s outsourced manufacturing facility in India for LED lighting products, commencing operations from January 2016, as per the management, will aid in increasing manufacturing for this segment. The company will bid for government tenders in the LED category. 

45 | 4 February 2016 | MONEYLIFE

StockWatch.indd 5

14-01-2016 23:02:18

STOCK WATCH



The share price hass risen entirely on hope. So far, it has had a low return on capital employed (RoCE) and return on equity (RoE). ). Its RoCE stands at 11% and RoE at 8% based on stand-alone numbers for the 12 months ended 30 September 2015. Though its profitability y has risen over the past three years, it has delivered a marginal sales ales growth of around 5% CAGR (compound annual growth owth rate) over this period. Its results sults for the quarter ended 30 September ember 2015 were unimpressive with the net profits dipping 21% on a y-o-y (year-onyear) basis. On the valuations front, the stock looks hugely expensive with a price-to earnings (P/E) ratio of around 43 times based on trailing earnings for the

12 months ended 30 September 2015. The stock seems to have run up too fast, despite the tepid sales growth, near-term headwinds in its low RoCE and RoE and near-te core business of batteries. batteri Promoter holding past two years from has risen over the p 40.86% on 31 December 40.86 2013 to 43.92% on 30 20 JJune 2015. Subsequently, it increased to 44.01% on 30 September 2015. The stock seems to have attracted the interest interes of foreign institutional investors (FIIs) over the past two years. FII holding on 31 December 2013 201 stood at 0.53%. It has increased over the years to 16.89% on 30 September 2015. Will FIIs continue to enjoy a dream run or will it end badly, as has often happened in the past? 

I ndu s I nd B ank

y-o-y. However, the adjusted loan book growth, after accounting for migration from Royal Bank of Scotland (RBS) of Rs4,100 crore, was at around 23%. The retail loan book grew at around 27%, greatly aided by its commercial vehicles loan book, which expanded at an impressive 32%. The robust growth in retail loan book is in line with the management’s strategy of rebalancing its portfolio in favour of retail lending. On the revenue front, its fee income rose by a whopping 39% y-o-y, aided by rise in loan processing fees. Are these numbers sustainable? We don’t know

Fantastic Revenue and Profit Growth, Again It is the most expensive stock among the large listed banks. Why?

T

he stock of IndusInd Bank has been trading at premium valuations, with a price-to-earnings (P/E) ratio of around 28 times its trailing 12-month earnings. It is the most expensive stock, among the large listed banks. Why? Incredible growth, quarter after quarter. Take a look at its December 2015 quarter results.

IndusInd Bank reported stellar Q3FY15-16 numbers; its net profits rose 30% on a year-on-year (y-o-y) basis. Its overall loan book grew at around 29%

On Sterioids Particulars Net Revenue (Rs crore) Net Profit (Rs crore)

Q3FY15-16

Q3FY14-15 Growth

2,012.00

1,510.00

33%

581.00

447.00

30%

how IndusInd is able to grow the topline as well as the bottomline, at a time when competition in retail lending is intense. Stressed assets are a major problem with the Indian banks, but IndusInd claims to have very good asset quality; its gross non-performing assets (NPAs) constitute only 0.83% of its total assets. Net interest margins (NIMs) during the December 2015 quarter improved to 3.91%. Only time will tell if this trend will continue. Institutional investors seem to believe that the robust growth of IndusInd will not slow down. If they are mistaken, they will pay a heavy price. The stock is priced to perfection. 

MONEYLIFE | 4 February 2016 | 46

StockWatch.indd 6

14-01-2016 23:02:33

STOCK WATCH

UN UOTED STORIES OF PRICE MANIPULATION

Dhoot Industries (Rs9)

T

he main business of Dhoot Industries is financing—loans and project finance—according to its annual report for FY14-15. Strangely, on the company’s website (dhootindustries.net), it is mentioned that it deals in real estate development and granite trading. Not surprisingly, there is no mention of the projects financed, or any details of trading activities— neither in the annual report nor on its website. For the year ended 30 September 2015, it reported revenue of just Rs40 lakh and a net profit of Rs5 lakh. Revenues were Rs39 lakh—the same as in the same period in the previous year; net profit

(Rs) 10.25 8.40

697%

6.55 4.70 2.85 1.00 May-15

Sep-15

Jan-16

was Nil. The company’s business may be skeletal but the stock price shot up an astonishing 697%, to Rs9.17 on 6 January 2016, from Rs1.15 on 4 May 2015. Strangely, institutional

shareholders, such as PNB Capital Services, Central Bank of India and UCO Bank together hold a stake of about 7%. Trading was infrequent and trading volumes were low in the months prior to May 2015 compared to the six-month period ended 31 December 2015. Only one or two trades were conducted each day over this sixmonth period. The average trading turnover was just Rs3,400 over the same period. Huge gains were posted as the stock was up nearly 1.50%-2% in each trading session. In November 2007, Dhoot Industries was suspended by the BSE for not complying with the listing agreement. Will the regulator investigate this brazen price-rigging? 

MARKET TREND

Slow Realisation Fund managers are beginning to see the reality

G

lobal stock markets are in the grip of a major selloff. We have been bearish on the market for most of 2015. In October, we did a Cover Story titled, “Bulls ot been able to able on the Backfoot”. The bulls have not ce, since then. to step forward with any confidence, gish, and In December, the market was sluggish, foreign institutional investors (FIIs) were light sellers throughout. In January 2016, they started selling heavily. In nine trading days (as we go to press), they have already ares, sold more than Rs5500 crore of shares, ember. Domestic following over Rs2300 crore in December. institutional investors are trying to match them but have failed, so far. What makes it worse for the bulls is that emerging markets, like Brazil and Russia, are crashing, while China, the source of much of global growth over the past decades, is stumbling. What should we expect? It will not be easy for

the bulls to push the market much higher because the three factors that drive market prices—liquidity, earnings and sentiment—have been severely damaged. Liquidity is reducing; companies are not showing any earnings growth; and sentiment is distinctly bearish. Fund managers, who had bet on the ‘India Story’ under the new look government, are looking foolish. A slow realisation is sinking in root that lit little can be expected from this gove government to create conditions for sustained growth. The way the government has grabbed all the b benefits of falling oil prices, the an announcement of many schemes that will have no impact on job grow the lack of accountability of growth, public sector banks—all paint a very p sorry picture of a clueless government. Investors too their eyes off hardcore data Investors, who took and believed in the story, are paying the price. Pity that this includes millions of mutual fund investors who believed that fund managers will invest their money intelligently. — Debashis Basu 

47 | 4 February 2016 | MONEYLIFE

StockWatch.indd 7

14-01-2016 23:02:52

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12-01-2016 15:13:39

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How can I buy the stockletter? You can buy online at https://savers.moneylife.in/prelogin/stockletters. html or you can send us a cheque or a demand draft by using the form below. More info at: https://savers.moneylife.in/sldownload/ Caution: The returns shown here are much higher than average. Average annual rise in the Nifty/Sensex is likely to be 12%-14% per annum over 10 years and more. Well-chosen stocks may rise by 20%-22% per annum over five year and more. Disclaimer: The stockletters are for information purposes only and none of the stock information, data and company information presented constitutes a legally binding recommendation or a solicitation of any offer to buy or sell any securities. Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalised recommendation to you. Individual stocks presented may not be suitable for you. Moneylife is a media and information company and not investment advisor. Please consult an advisor about the appropriateness of your investment decisions. Cancel within two issues: You can cancel your subscription within two issues. We will return your money after deducting Rs150 for payment gateway and handling charges. You can cancel by email or phone.

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12-01-2016 15:13:56

TECHNOLOGY MOBILE

Are You Ready for Netflix? On-demand streaming sounds great; but slow Internet speeds and high data charges will afflict Netflix, says Yogesh Sapkale

N

etflix, the on-demand streaming service that allows people to sign up and decide what, where and when to watch TV shows and films, is now available in India. Netflix has changed the way people consume entertainment; will it fly easily in India? For one, the service may have been launched in a hurry. Peter Theobald, a senior executive from IT industry, found it very difficult to connect with Neflix from his smart TV, Win10 running PC, smartphone or even XBox gaming console. After spending over two hours in vain, his son suggested that he create a new Hotmail account and a new XBox live account with a US address, link both these accounts, and then log in to his existing XBox. In a post on Facebook, Mr Theobald said, “...Voila, Netflix shows up, we can download, create a Netflix account in India, finally, we are on. Is it worth it? We are not interested in TV shows, and the English movies available don’t seem worth it. But, surely, Netflix should have taken more efforts to see that their users in India had a more seamless experience connecting to their service.” However, interconnecting Netflix with other devices is only one of the problems. The more important ones are: data consumption and Internet speed. We know that, in practice, we never get the speeds that service-providers claim. And I am talking only about the situation in metros. So imagine what would be the

speed in Tier-II and Tier-III cities. Next is the issue of data tariff. Consumers, especially mobile users, are being fleeced by all telcos under the garb of 3G and 4G data connection. For example, charges for a prepaid 3G mobile service are over Rs250 (for actually 28 days, another kind of fleecing). Internet connection at home can go anywhere towards Rs1,000 per month with a limit either on downloads or data speed. But, even after spending the money, there is no guarantee that you would receive the promised speed. According to Netflix, watching films or TV shows on its site can exhaust about 1GB of data per hour, for each stream of standard HD (high definition) video, and up to 3GB per hour for each stream of ultra HD video. In addition, you need to have a minimum connection speed of 0.5 megabits per second (Mbps). But even for watching standard quality content, the required speed is 3Mbps, which goes towards 25Mbps for ultra HD quality streaming. So if you are on a limited data plan, please take note. Another issue: Netflix is a streaming service. This means, you are watching it online and there is no provision for download and to watch the content later. This is what we Indians love to do the most. We download content, especially videos and songs, and watch or listen later as per our time schedule. Netflix is offering free subscription for one month to users. After that, three monthly paid plans are available: Rs500, Rs650 and Rs800, which can be paid with an international credit card via Netflix, through the iTunes app store in most markets and via PayPal. Although these plans are given in Indian rupees, under the billing section on its website, Netflix says that it submits an authorisation for a certain dollar amount which can vary by region or by financial institution. Netflix is great streaming service which will work only when we have seamless connectivity with high speeds and lower data tariff. 

MONEYLIFE | 4 February 2016 | 50

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11-01-2016 20:42:22

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Earning Curve Fresh investing insights

negative P/E ratios, where a company with a P/E of -100 is ‘cheaper’ or more undervalued than one with a P/E of -3. The returns of the 10 portfolios created were then compared to the unweighted FTSE (Financial Times Stock Exchange) All-Share Index. The returns were compared over a nine-year period from November 2006 to November 2015. All the portfolios delivered an annual return of 10.45% over this period. The most undervalued portfolios, ranging one

Distribution of Returns Decile

P/E Lower Quartile

P/E Median

Annual Return over Index

1

4.16

5.77

3.70%

2

7.98

9.39

1.07%

3

10.08

11.81

2.10%

4

12.04

14.24

0.61%

Undervalued stocks fetch higher returns

5

14.10

16.50

-0.41%

6

16.19

19.10

-0.79%

I

7

19.00

22.59

-0.44%

8

24.16

29.48

-2.29%

Low Value, High Returns n the investing world, the price-to-earnings (P/E) ratio is often used as an indicator to value a company or to predict stock market direction. The P/E ratio can be a good measure of the level of stock market valuation, when properly calculated and used. However, can a portfolio of undervalued stocks (low P/E ratio) outperform the market over the long term? Multiple research studies have found that

9

40.98

73.47

-1.72%

10

-30.70

-10.03

-0.11%

to four, earned more than the expensive ones and performed a lot better than the unweighted portfolio of all stocks. The portfolios numbered five and above started to underperform the market. This meant that stocks with a P/E value of more than 14, or negative P/E stocks, performed poorly. The researchers, then, created an unweighted index of each portfolio and compared it to the unweighted FTSE All-Share Index over the same nine-year period. The indices of first three most inexpensive portfolios remained for the maximum time above the FTSE all-share index. The index of the third portfolio (‘cheap stocks’) remained 75% of the time above the index of all stocks. Of course, even expensive portfolios, from six to eight, were able to outperform the FTSE all-share index more than 50% of the time. This meant that even higherpriced stocks were able to create value for investors, if investing in undervalued stocks may deliver significant returns over the long term. In a new research, published they had earnings momentum. To factor this in, the researchers tried to identify the by bargainvalue.co.uk, the authors created 10 portfolios number of ‘pearls’—stocks that earn 50% and more based on the P/E ratio of stocks listed on the London Stock Exchange. The portfolios ranged from ‘extremely in each portfolio—and bad stocks which performed cheap stocks’ to ‘extremely expensive stocks’, and were poorly. For each portfolio, they then calculated a ratio of pearls to bad stocks, to identify in which P/E numbered 1 to 10. The first portfolio started with the portfolio the chances of picking good stocks are higher. lowest positive P/E stocks and the very expensive and The first three portfolios of stocks contained more  the extremely expensive portfolios included stocks with

MONEYLIFE | 4 February 2016 | 52

Earning Curve.indd 2

12-01-2016 15:06:18

EARNING CURVE

‘Pearls’ Minus ‘Bad’ Stocks Distribution for P/E

The Worst Year of Folio vs Market 0%

3% On calculating the ratio of ‘pearls’ to ‘bad’ stocks, the researchers found the best ratio in the first two portfolios

2%

-4%

1%

-8%

0%

-12%

More undervalued stocks lose more value than more expensive stocks, during bad years. Therefore, in bear market periods, it may make sense to shift to higher P/E stocks, especially large blue-chip companies

-1% -16% -2% -20%

-3% 1

2

3

4

5

6

7

8

9

10

 than 10% of pearls. At the same time, these portfolios

contained more bad stocks than portfolios numbered four to eight. The reason may be that low valuation can identify bad companies that don’t have negative earnings yet, but no one may believe that they would maintain their earnings growth in the future; so they don’t create value. Portfolios numbered four to nine had less than 10% each of pearls. However, the 10th portfolio threw up some surprising results. It had a fair share of pearls, despite the stocks delivering negative returns. Reason: There were companies, like Twitter, which have been plagued by negative earnings for a very long time, but investors believe that the business will do well, eventually, given that it has millions of users. Or it could be that the portfolio had good companies with temporary problems. The last two portfolios, with the most expensive stocks, had a lot of underperformers. This is logical, because they include stocks with negative earnings which indicate that these companies may be having trouble. On calculating the ratio of pearls to bad stocks, the researchers found the best ratio in the first two portfolios, indicating that there is a lot higher likelihood to find a ‘pearl’ among very undervalued stocks. Portfolios three and four contain almost the same amount of good and bad stocks. The rest of the portfolios include more bad stocks than good stocks, with the exception of portfolios nine and 10, as explained above. While it may be clear that stocks with a low P/E, as seen in portfolio numbered one and two, offer a better chance of picking outperformers, the researchers went on to check the riskiness of each portfolio. For this, they examined how badly the portfolios performed during their worst year. It was clear that

1

2

3

4

5

6

7

8

9

10

more undervalued stocks lose more value than more expensive stocks, during bad years. This trend can be seen from portfolios one to eight. Portfolios seven and eight, which had a median P/E of 23 and 30, respectively, declined the least. Portfolios nine and 10, which contain the stocks of many troubled companies, were not a good investment when the market was going down. Therefore, in bear market periods, it may make sense to shift to higher P/E stocks, especially large bluechip companies. This study throws up some interesting insights. While inexpensive stocks have the potential to deliver higher returns, they also come with higher risk. These are usually smaller-cap stocks with low liquidity. Stocks with high P/E are supported by strong investor sentiment marked by expectations of higher and consistent earnings growth. Therefore, in hard times, stocks with a P/E between 20 and 40 tend to do well. But if you are looking to create a long-term portfolio of stocks, identify stocks available at a discount and with a sound management. The researchers performed a similar exercise with the price-to-sales (P/S) ratio. Their findings were similar. The first five low-value portfolios earned more than the last five. The best results were achieved by portfolios numbered two and three, while portfolios eight and above underperformed the FTSE all-share index. Stocks with P/S below 0.91 were considered undervalued, while stocks with a P/S over 2.19 were seen as expensive and to be avoided. However, it may not always be that a low P/S stock will outperform— because more inexpensive stocks with a P/S of less the 0.26 were not among the best performers. The authors further say that compared with P/S, analysis of P/E gives the most straightforward results. It shows that the most undervalued stocks are the best ones. 

53 | 4 February 2016 | MONEYLIFE

Earning Curve.indd 3

12-01-2016 15:06:45

LEGALLY SPEAKING SD ISRANI

Bombay Hospital To Pay for Negligence NCDRC orders Hospital to pay Rs40 lakh to doctor-parents who lost their daughter

T

he daughter of a doctor couple, Kaberi Roy, 29, suffered acute abdominal pain on 27 June 2002. Their family physician diagnosed it as ‘acute appendicitis’ and advised immediate surgery at any hospital. Her parents took her to Bombay Hospital (run by Birla Hospital Trust) and sought to admit her in a semi-private

room. It was claimed that the admission was delayed by the Hospital’s authorities by about 1½ hours for want of a deposit amount. Her mother was carrying a cheque for Rs35,000 which the Hospital refused initially, but, finally, she was admitted at 10.30pm, under Dr BL Chitlangia (senior surgeon) and Dr Vikram Agarwal (clinical assistant). The medical officer at the casualty desk examined her and diagnosed it as a case of acute appendicitis. The clinical assistant also examined the patient and confirmed the diagnosis. The patient was investigated for routine complete blood count (CBC) and X-ray of chest and abdomen. The results of the investigations indicated severity of appendicitis and possibility of perforation. There was rapid increase in the abdominal pain during the waiting period of 1½ hours. The concerned doctor allegedly failed to care for the emergency condition of patient, ignored the vital lab reports and the need for urgent surgery to prevent perforation. The patient was only given pain-killer (injections) and made to sleep. Thus, the initial treatment was against the standard

medical practice, it was claimed. She was operated upon and, yet, lost her life. The parents filed a complaint with the National Consumer Disputes Redressal Commission (NCDRC), on the following grounds of negligence: 1. The Hospital and its doctors did not take proper care and precautions which led to death of their daughter; 2. There was an inordinate and unexplainable delay in performing the surgery after the patient’s reporting to the Hospital, which caused perforation and spread of infection to the peritoneal cavity; 3. The Hospital and its doctors ignored crucial laboratory findings which diagnosed acute appendicitis, but unnecessarily administered pain-killers without performing emergency surgery; 4. It was a case of gangrenous appendicitis and was not managed properly post-operation. NCDRC observed that for it to establish the liability of a doctor for medical negligence, the complainant must prove that the doctor deviated, or departed, from accepted standards of practice and that such departure was the proximate cause of the patient’s injuries. It held: “An appropriate standard of care had not been met as surgery took place after 17 hours.” The core issue was: whether the doctors and others breached their duty of care towards the patient by failing to provide an adequate system for the diagnosis and treatment. They failed to foresee the risk that a patient with acute appendicitis, having a ruptured appendix, was at least 1% and probably nearer to 3%. “A one per cent risk of serious harm is not inconsequential.” The NCDRC held (vide judgement on 5 January 2016) that the patient was a victim of medical negligence. Considering her life expectancy, future prospects and mental agony suffered by the parents, NCDRC directed Bombay Hospital to pay Rs40,00,000 to the complainants, with interest @6% per annum from the date of filing of the complaint, within 90 days from the date of receipt of the copy of the order. Otherwise, further interest @12% per annum will apply till its realisation. In this case, the parents—themselves being doctors—were knowledgeable about the applicable medical procedures and it was much easier for them to gather evidence and fight the case. For a layman, it would be almost impossible to bring the negligent doctors and the Hospital to book and get justice, especially since doctors have a policy of not testifying against others in their profession, no matter how horrible the case of negligence. 

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

MONEYLIFE | 4 February 2016 | 54

Legally Speaking.indd 2

12-01-2016 15:14:54

HANDHOLDING: MSSN Benefit #11

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MSSN Handholding.indd 1

20-11-2015 17:04:55

Supported By

Queries At Moneylife Foundation’s

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

Taxation for Disabled Persons

I

n 2008, I met with an accident that left me a paraplegic due to head and spinal cord injury, which is permanent 80% locomotive injury. Last year, I was awarded Rs25 lakh from MACT (Motor Accident Claims Tribunal), including interest of 12% for eight years. In November 2015, I opened a fixed deposit (FD) account with this amount in a bank with interest @9% per annum. I receive monthly interest of Rs18,750. Do I have to pay any income-tax on this amount? If yes, can I avoid it by submitting any form like 15H? I have no job and no other income and now I live with my retired parents. Ameet Patel’s Reply: I am restricting the answer to the taxability of interest on the FD that you have placed with your bank. I am not commenting on the taxability of the grant that you have got. Interest on bank FD is taxable income. By giving Form 15H, it does not become tax-exempt. Form 15H only prevents TDS (tax deduction at source) from the income by the payer of the income. You can submit Form 15H only if your total income from all sources, including the bank interest is below the

threshold limit. For the current year, the threshold limit is Rs2,50,000. So, if you feel that your total income will be below this amount, you could consider submitting the Form to the bank, in which case,

the bank will not deduct TDS. Please note that this still does not mean that your income is exempt. It only means that because it is below the threshold limit, you don’t need to pay tax and, therefore, the bank need not deduct tax at source based on your declaration. In addition, you can claim deductions of up to Rs75,000 to Rs1,25,000 under Section 80U, depending on the type of disability.

Validity of Form15H for Bank FDs

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give Form 15H for all bank FDs held by me and also the post-office deposits, though my gross annual income is above the threshold limit. I pay all taxes dues

on the interest earned, based on the interest certificates issued by individual banks for my deposits after the end of March of the respective financial year. I do this to prevent banks and, particularly, the post-office, from deducting tax as they do not always reconcile with 26AS data. The post-office and some government banks are particularly found wanting in this. I ensure that all taxes are paid before the due date. I want to know if this is correct because in Form15G/H there is a declaration to the effect that the annual income is below taxable limits. Nikhil Vadia’s Reply: I agree with your issue that some banks and post-offices are among the biggest defaulters in reporting correct data for 26AS. However, while signing the Form 15H, you are certifying that your income is below the taxable limit after due deductions and, hence, not liable for TDS. This statement itself is not true. The declaration can only be given in cases where the tax on estimated total income of the previous year in which such income is to be included in computing total income will be nil. Though you are paying taxes on all such income, it is not advisable to give a false declaration through these forms. You may become liable for penalty and prosecution for submitting false and incorrect information knowing it to be false. In case neither the PAN (permanent account number) nor the Form 15H/G are submitted and interest exceeds Rs10,000 on FDs, the bank deducts TDS @20%. In both cases, banks are mandated to provide the TDS certificate to the FD-holder. Using the TDS certificate, you can file your tax returns and claim refunds, if any. 

MONEYLIFE | 4 Feburary 2016 | 56

Tax Queries.indd 2

12-01-2016 15:07:29

Supported By

Moneylife Foundation’s

TAX HELPLINE This helpline is for tax-related queries for individuals and small businesses who file their own tax returns or want to double-check the advice they have received from others. It will not attempt to substitute a tax advisor or tax expert whose help is required for complex issues. Nor is it a grievance redress forum.

OUR EXPERTS

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HOW IT WORKS

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Every new query posted will be sent to our panel of tax experts

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When we get the opinion/advice from our expert, we will post the reply

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You can access similar issues faced by other taxpayers

www.moneylife.in/taxhelp elp To use our tax helpline, please confirm that you have read our terms and conditions. Also, this is only for individual taxpayers and small businesses.

Tax Helpline.indd 1

14-01-2016 22:51:36

HEALTH BM HEGDE

of normalising the bowel flora of seriously infected child with excreta from the mother of the child—or from any healthy person—fed through the Ryle’s tube to the sick child. She found it to be remarkably successful; this has Does the medical profession really want now become a routine, called by a very dignified name— society to be healthy? faecal microbiota transplant (FMT). The non-science of Western medicine treats the human oes this world, where business and money body as machine made from bits and pieces (parts of an interests are supreme, want society to be healthy engine). The human body is a dynamic whole working and tranquil? The answer is a big NO. No one in tandem with its consciousness and environment. Most wants to break her/his own rice bowl. The pharmaceutical of our interventions upset both these tenets and land industry, the most powerful lobby in the world today— the poor patient in soup. Western medicine thinks that thrice as big and powerful as there is a ‘pill for every ill’ and the oil industry—will certainly a surgical correction for every not want people to be healthy. defect. While this is not true, there The medical profession is trying is an ill following every pill, thus its best to make more and more getting us, doctors, more clients people come into their net by to sell our wares. Therefore, most ‘regular health check-ups’ of of what we do does not seem to the healthy, run for the heart, do much good and, at times, run for cancer and so on; it more harm. Faith in the doctor is also doing its best to create is the one factor that stimulates our inner healer to heal the sick; iatrogenic illnesses. Hospitals, thank God for that! especially the corporate ones, seek more surgical post-operative Our ancient healers had divine blessings and they did complications, as the latter nets more money into their kitty than not charge any money from the the original surgery itself. patients. It was believed that if Last year’s budget to treat the healer charges for his services, non-fatal adverse drug reactions his healing powers will decrease and, eventually, vanish! Today’s (ADRs) in Europe alone was The pharmaceutical industry, world believes that the more you $80 billion! Please give me one good reason why anyone should the most powerful lobby today— charge, the better doctor you are. want to treat simple acne with The root cause of all ills in society thrice as big and powerful as azithromycin; but that is exactly is human greed. A doctor, or the oil industry—will certainly what is done and on a long-term not want people to reduce their engineer, is valued by the income that he makes. basis. A recent issue of The Times dependency on drugs of India, in a front page news I was reminded of the time report, mentioned a study done when the ‘New World’ was in one Delhi medical college hospital, which showed that discovered, thanks to India, the poor in Europe were trying all (did I say all?) germs in the acne now have become to go the ‘New World’ in search of greener pastures. King resistant to azithromycin, a high-end antibiotic reserved Ferdinand, in France, made a statute which prohibited for respiratory infections like pneumonia! Antibiotics are anyone who had learned jurisprudence to be barred from the time bombs waiting to explode anytime now. going there—to let people there remain happy and tranquil. Super-bugs, produced in hospital environments, are How I wish he had barred the medical profession as well!  now threatening to make every hospital a death trap for terminally ill patients. Children in intensive care units Professor Dr BM Hegde, a Padma (ICUs), in American hospitals, are dying like flies even Bhushan awardee in 2010, is an MD, with such silly germs like Clostridium difficile. This made PhD, FRCP (London, Edinburgh, a professor at Johns Hopkins recall an old Indian system in Glasgow & Dublin), FACC and FAMS. veterinary science—of feeding cows with severe infection He can be reached at [email protected] with the dung of a healthy cow. She tried the same logic

No Pill for this Ill

D

MONEYLIFE | 4 February 2016 | 58

BM Hegde.indd 2

12-01-2016 16:53:52

HEALTH BM HEGDE

MOTHER’S CHEST IS THE BEST PLACE FOR HEALTHY INFANTS

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MEDICAL DEVELOPMENTS FROM AROUND THE WORLD

his old granny’s wisdom has recently been reinforced by an elegant study of newborns conducted at the Harvard School of Public Health and Boston Children’s Hospital. Grace Chan, who led the study, says that, each year, four million babies die worldwide during their first month. Premature babies are more vulnerable. Mother’s chest, with skin-to-skin contact, is the best place to be in, if the child does not need any emergency procedure which may require separation/ isolation. Skin-to-skin contact, also known as kangaroo mother care (KMC), is often encouraged after birth as a way to improve breastfeeding practices. According to the Centre for Disease Control and Prevention (CDCP), immediate skin-to-skin contact between the mother and child is associated with longer duration of breastfeeding.

COMMON COLD: UNCOMMON BREAKTHROUGH

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espiratory syncytial virus (RSV) is the usual culprit for common cold in infants, young children and elderly people. This could lead to pneumonia and respiratory infection.

A new study from The Imperial College (London) has discovered that there are special immune cells that prevent, or protect against,

RSV. Until now, we knew that these cells are seen in mice; but this study show that these cells are very active in humans. Resident memory T-cells are immune cells that appear at the site and then, as and when needed, recruit other immune cells to the battle. This has provoked the usual suspects to finding a vaccine— aka making very big money—as common cold is almost ubiquitous in winters in the West and not uncommon in other parts. The vaccine-wallahs have discovered a nasal spray vaccine which you would take easily in place of a jab. Only time will tell what this vaccine does to the human system.

CAN SALIVA TEST INDICATE FUTURE HEALTH RISK?

illness, but our general state of health can also affect their levels; stress, diet, exercise, alcohol and smoking can all influence those levels.”

PAYING THROUGH YOUR TEETH?

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am a sceptic and was always cautious about dental implants which have become a big moneyspinner all over the world. Now, an exhaustive study of implantology, reported by international and American associations for dental research (IADR/AADR) has published articles in the January 2016 issue of Journal of Dental Research (JDR) that explore new evidence on the biological complications of dental implants and the great challenges. “While dental implant therapy remains an

S

eems too good to be true; let’s not get carried away. The antibodies against external invaders are secreted mainly in the saliva, gut and the eyes. Measuring the levels of IgA (Immunoglobin A) antibodies might give us an idea about the status of the body’s defence mechanism. IgA secretion rate was negatively associated with all-cause mortality. Further analysis revealed an underlying association with cancer mortality and, in particular, with non-lung cancers. Low levels of antibodies in saliva appear to indicate a greater risk of mortality and could be an early warning sign, according to research published in PLOS ONE. However, “There are a number of factors that can affect how well we produce antibodies and maintain their levels. There are some that we have no control over, such as age, heritability or

important treatment modality to replace missing teeth, these studies also underscore the importance of tooth preservation in patients susceptible to gum infections such as periodontitis. The caution is that careful assessments and treatment planning amongst dental generalists and specialists should be performed to optimise the clinical decisionmaking for patients receiving advanced reconstructive implant or periodontal therapy,” said JDR editor William Giannobile. “We believe the outcomes of these studies will be beneficial to patient care and oral health.” 

59 | 4 February 2016 | MONEYLIFE

BM Hegde.indd 3

11-01-2016 20:20:48

YOU BE THE JUDGE BAPOO MALCOLM

Punishment for Honest Mistake The law allows a lot of leeway

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vent 1: A boy of 15 is offered a choice of presents. An Agfa camera or a Diana air rifle. The father prudently advises against the camera, photography being an expensive hobby. It is early 1957. One day, the boy wants to discharge the only pellet in the gun. He casually aims it at a metal corrugated door. He fires. The bullet ricochets and hits the father, standing next to the boy, in the chest. Fortunately, little damage is done: except a ‘birth-mark’. The father sets the boy down and tells him a story. Event 2: This is his story. y. A kid of 10 years, son of the father’s friend, was as fond of the game of darts. Innocent fun. The board was hung on a door oor curtain, separating two rooms ms in the home. One day, the boy oy throws a dart. His sister, entering tering the room, shifts the curtain. The dart penetrates her eye. She is blinded, in that eye, ye, for life. Event 3: A world-renowned ned athlete deified for his disability, a grown-up rown-up man, fires his high-powered rifle into nto a closed bathroom door, of his own home. The gun is aimed at the toilet. The he shots kill his girlfriend. He claimed d that he thought his girlfriend d was in bed at the time and he mistook her for an intruder. The trial court finds him guilty of culpable homicide. It means death without intent to kill. Minimal punishment. You be the judge. Event 1 saw, thankfully, small damage. Moreover, the law was not as developed then as it is now. Event 2, the kid was too young to foresee the danger, though his parents should have. Family matter; end of story. Event 3 saw ups and downs. In an appeal preferred by the South African state, the man is convicted of murder. The verdict hinged on the ‘Doctrine of Intent’, in the form of dolus eventualis, or manifest intention, or reasonable knowledge, that an action would have necessary consequences. The law allows one to protect his life and property; but not rashly. The reaction to the threat needs be measured. It must be just enough to protect oneself, disarm the aggressor or

neutralise the threat. Here, one is reminded of Gilbert & Sullivan’s ‘Mikado’. It has a delightful piece called ‘Let the punishment fit the crime’. In the same way, let the response suit the danger. No more. Shooting several times, through a locked door, not stopping on hearing screams, is definitely an over-reaction, even to a supposedly perceived threat. “A man’s home is his castle. He can, and must, protect it with any means at his disposal.” Brave words, quoted by many. Yet, bravado must not blinker sense. To be sure, the time between threat and response is, often, a micro second. Reflexes outrun rational thought. One shoots first and asks questions later. That could lead to trouble. What should a person do under such difficult circumstances? Unfortunately, there is no formula; there never will be. The normal answer, to a sudden fraught situation, is reaction. If attacked, an unarmed man will raise his hand in self-defence. He may take shelter behind a tree or a wall or under a table. He may turn about and run, if the situation permits perm and he is capable. Or he may hit back. It’s this hitting back, and the intensity h of the counter-attack, that weighs in court. And, if the defendant is proved to be short of temper or prone to aggression, the scale will not tilt in his favour. The law distinctly allows for a genuine mistake. It also allows for an exaggeration of the threat, if it is unseen o or unfathomable. If the attack is in the dead of night, one cannot gauge the danger. Is the attacker bare-handed or armed? If armed, does he have a gun or a knife? Is he alone or with someone? Or are there many? Thought, at the speed of light, may be too slow. Quicksilver response is the need of the hour; rather, of the split second. Preservation is the overwhelming emotion. In such cases, the court understands. A word of caution, though. Do not take the court for granted. 

Bapoo Malcolm is a practising lawyer in Mumbai. Please email your comments to [email protected]

MONEYLIFE | 4 February 2016 | 60

You Be the Judge.indd 2

13-01-2016 18:00:19

USEFUL APPS YAZDI TANTRA

Fast Burst Camera The app is great for sports shots, pictures of kids or pets or even to analyse your cricketing action, frame by frame!

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any costly phones have this feature: in a single click, you take many shots (as many as 30 per second) and then select the best one—maybe where the smile is the best or the eyes are not closed. This is especially useful in group photos when all the heads keep moving one way or the other and there is probably only one shot which is just right! This simple app allows you to achieve just that. It takes up to 30 shots per second. Just hold the shoot button for continuous burst. There is no lag. The lite version is sufficient and free. The full, paid, version also supports flash, focus and zoom, for a nominal price. The app is great for sports shots, pictures of kids or pets or even to analyse your cricketing action, frame by frame! It is recommended that you should shoot in good light conditions, not shake the camera (although the subject may keep moving), hold the shoot button for continuous burst shots and then pick the best one later. It is a must-have for those who want great photos with no second-chances. https://goo.gl/km3SLS

Remember the Milk This is one of the popular task managers: simple in its approach and extremely user-friendly. You can enter the tasks by date and time, give priority ty to each task by assigning colours and, best of all, you can manage your tasks from anywhere: your phone (there is a version each for Android,, iPad & Blackberry phones) or your ur computer. You can manage your tasks ks offline and also integrate them with th Google calendar. Sharing of tasks is easy and so is getting reminders—by email, by Instant Messenger or by SMS. Here, again, the free version is great for day-to-day use. If you are a professional user, you get unlimited autosyncing with Remember the Milk online, get reminded

with notifications for tasks due or nearby and more! See www.rmilk.com/pro for details. In short, it is the best way to manage tasks: Never forget the milk or anything else again! https://goo.gl/cTwMtM

I’m Sleeping I, often, get disturbed late night by unwanted, unimportant calls. Also, many a time, I get a wrong number at 2.30am! Sounds familiar? Well, this app helps you avoid such situations. Aptly called ‘I’m Sleeping’, once you activate it and set your sleeping time (going to bed and waking up), it will put your phone automatically in silent mode during those times. So, no more annoying late-night calls! But what if there is an emergency? Well, you have an option for setting a ‘white-list’ of numbers that can call you any time of the day or night. So you need not worry about missing a single call from your old mother or your loving son, from anywhere in the world. There is also another setting which allows calls to get through, if the caller is repeatedly dialling your number. A great app for sleeping soundly! https://goo.gl/XKfuzR

India Newspapers This nifty app helps you read major Indian newspapers, magazines and news sites online. You can find news from The Times of India, Dainik Bhaskar, Dainik Jagran, Malayala Manorama, The Hindu, Hindustan Times, Mathrubhumi, The Telegraph, Samachar, Sakal, MidDay, Dataquest, TechCrunch, Mumbai Mirror, Gujarat Samachar, etc, etc... Many Indian language newspapers are included and the list seems endless. You can define your favourites, so that you are not bothered with unwanted newspapers. You can sort the list by name or by ‘frequently read newspapers’. It also allows you to adjust the font size and share the news with others. All in all, a very useful app to get news on the go! https://goo.gl/cEhOYh 

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.

61 | 4 February 2016 | MONEYLIFE

Tantra - column.indd 2

14-01-2016 23:19:35

BOOKS

LEFT BRAIN, RIGHT STUFF

Better Decisions Why business leaders can’t learn from behavioural research

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ognitive biases leading to human misjudgement and errors have emerged as a major area of study over the past decades. Behavioural research experiments, under which humans have been put through systematic analysis and investigation under controlled and naturalistic observation, have shattered the illusion that our decision-making is rational. Biases, such as following the herd, overconfidence, fear, greed, etc, lead us to making gross errors in judgement all the time, no matter how sophisticated our knowledge base. The entire global financial crisis was a live example of such a misjudgement on a global scale. Our realisation, that irrationality of decision-making in certain circumstances is LEFT BRAIN, RIGHT STUFF the norm, has spawned PHIL ROSENZWEIG many interesting books, Hachette fetched Daniel Kahneman Pages 322 pages; Rs399 a Nobel Prize and led to even policy prescriptions

JOHN BOGLE ON INVESTING

Industry Legend Speaks

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ohn Bogle is an institution in the US financial market. He is a true pioneer, having created index funds (under the Vanguard label) and having led a lifelong battle for the small investor by advocating low-cost funds. He has also been a powerful writer; his books are now being re-issued as investment classics. John Bogle on Investing: The First 50 Years offers insights into his guiding principles. It consists of the most important essays organised into five sections. The first deals with investment strategies for the intelligent investor, emphasising simplicity in investing. It argues that experts like fund managers,

to take advantage of our behavioural flaws buy nudging us to do the right things. (Britain has an official ‘Nudge Unit’ to steer citizens toward better choices). In his 2007 book, The Halo Effect, Phil Rosenzweig addressed how our biases find their way into studies of business performance, leading us to glorify successful companies. His 2014 book, Left Brain, Right Stuff: How Leaders Make Winning Decisions, details the enormous influence of decision research in domains from finance to public policy but notes that business leaders haven’t taken advantage of it. The book explores the many reasons for this. For instance, while it is easy to condemn a decision that fails, it is hard for experts in decision-making to suggest what the business leaders should do in real-life situations, to avoid disastrous decisions. Indeed, it is not possible to apply most of the experiments from which we learn about our cognitive biases, in highstakes business situations such as a takeover or bidding for a big new project. These experiments (would you have $90 for sure or a 90% chance of getting 100% and 10% chance of nothing) are not only simplistic but also, we cannot alter the terms of the deal. If you could, the decisionmaking would become infinitely more complex—exactly what happens in the business world. Also, what behavioural science suggests we do to improve ourselves is difficult for business leaders to apply. One idea is ‘deliberate practice’—improve yourself through action, feedback and adjustment. This can work for simple tasks of life, such as memory games or musical instruments, but it is tough to apply in business situations, since feedback from a crucial action can come years later. Rosenzweig has many real-life cases and advice on what to do in certain situations. They are all eye-opening and challenging. A very useful read. — Debashis Basu 

investment newsletters, etc, have not been able to beat the benchmark index returns. He, thus, builds the case for investing in index funds. The section explains that risk keeps on moderating as the time horizon for investing increases, while time magnifies the impact of costs. The second part deals with the past trends and future prospects p p of the mutual fund industry, emphasising the importance of keeping fund costs down. It moves on to corporate governance issues and explains the role of mutual funds on corporate governance of companies they invest in. The book also deals with the evolution of Vanguard mutual fund and the challenges faced by Bogle in creating it. It ends with the ‘economic role of investment company’, a lofty idea that will put many in mutual fund industry to shame. — Ram Bhimani 

MONEYLIFE | 4 February 2016 | 62

Book Review.indd 2

14-01-2016 22:44:43

UNIQUE BOOKS FROM MONEYLIFE/KENSOURCE The most thrilling business book ever written in India. A fast, colourful narrative knitting together the life and times of all stock market players involved in two of India’s biggest stock market scams.

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These commonsense guides tell you in an inimitable easy-to-understand, peppered with lots of real-life examples, what you must know to make successful investments in stocks and funds.

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LIST PRICE: `1,300 MONEYLIFE PRICE: `650

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Two priceless books of autobiographical narrative that candidly reveal the unique thought processes, untiring efforts and colourful anecdotes of top achievers such as Ratan Tata, Amitabh Bachchan, Mukesh Ambani, Aditya Puri, Rajiv Bajaj, RA Mashelkar, Keki Dadiseth, Geet Sethi and others.

COMBO PRICE `1,250

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AVAILABLE AT CROSSWORD BOOKSTORES Contact details: Mail in your remittances to Moneywise Media Pvt Ltd, 315, 3rd Floor, Hind Service Industries Premises, Off Veer Savarkar Marg, Shivaji Park, Dadar (W), Mumbai 400028. Credit card orders can be faxed to Mumbai 022-49205022. In case payment is made by credit card, date of birth should be mentioned. Rates and offers are valid in India only. This offer is valid for a limited period. Please allow 4-6 weeks for the delivery of your personal copy. All disputes shall be subject to Mumbai jurisdiction only.

Book Ad.indd 1

31-10-2015 12:24:40

MONEY FACTS STOCKS

INDIAN MARKET TRENDS

FUND FLOWS

The Sensex and the Nifty were down 5% each during the fortnight ended 13 January 2016. ML Mega-cap Index, ML Small-cap Index and ML Large-cap Index were down 5% each, while ML Mid-cap Index was down 6%. 

Foreigners: Foreign institutional investors were net sellers of stocks (Rs5,486.87 crore). They sold shares worth Rs33,375.59 crore. 

Share prices, July 2015=100

0 -265

130

-530 -795

115

FII Net Investments (Rs Crore)

-1,060 -1,325

100

4 Jan-16

13 Jan-16

Indians: Domestic institutional investors were net buyers of stocks (Rs3,222.85 crore). They bought shares worth Rs15,744.37 crore. 

85 Jul-15

Oct-15 ML Large-cap ML Mid-cap

ML Small-cap ML Mega-cap

Dec-15

DII Net Investments (Rs Crore)

765

ML Micro-cap

Nifty Sensex

1,015

515

+/-

265

123.82

5%

15

93.94

-5%

26,160.90

24,854.11

-5%

7,963.20

7,562.40

-5%

ML Small-cap Index

111.96

106.14

-5%

ML Large-cap Index

112.68

106.74

-5%

4,090

ML Mid-cap Index

108.76

102.33

-6%

3,860 3,630

Index

01-Jan

13-Jan

ML Micro-cap Index

118.24

ML Mega-cap Index

98.47

Sensex Nifty

Mega-cap Gainers/Losers Torrent Power IDBI Bank Large-cap Gainers/Losers Balrampur Chini Mills Marksans Pharma Mid-cap Gainers/Losers Dalmia Bharat Sugar & Inds Ess Dee Aluminium Small-cap Gainers/Losers Arrow Textiles Piramal Phytocare Micro-cap Gainers/Losers

01-Jan

13-Jan

Change

180.75

237.55

31%

89.90

70.30

-22%

01-Jan

13-Jan

Change

72.05

87.85

22%

104.60

75.80

-28%

01-Jan

13-Jan

Change

65.05

75.75

16%

264.30

173.45

-34%

01-Jan

13-Jan

Change

33.55

56.75

69%

118.35

87.20

-26%

01-Jan

13-Jan

Change

Texmo Pipes & Products

16.40

28.23

72%

Valecha Engineering

53.45

39.75

-26%

(All Prices in Rs)

-235 13 Jan-16

4 Jan-16

GLOBAL MARKET TRENDS Shanghai Composite

3,400 3,170 2,940 Jul-15

Oct-15

Jan-16

The FTSE, Nikkei and S&P 500 fell 5%, 7% and 8%, respectively. NASDAQ and Bovespa declined 10% each, while Shanghai Composite tumbled 17%.  Index

01-Jan

13-Jan

+/-

Korean Composite

1,961

1,916

-2%

FTSE

6,242

5,961

-5%

Taiwan Weighted

8,338

7,825

-6%

19,034

17,716

-7%

S & P 500

2,044

1,890

-8%

Hang Seng

21,914

19,935

-9% -10%

Nikkei

Nasdaq Composite Bovespa Shanghai Composite

5,007

4,526

43,350

38,944

-10%

3,539

2,950

-17%

MONEYLIFE | 4 February 2016 | 64

Money Fact.indd 2

14-01-2016 22:45:50

MONEY FACTS STOCKS



What’s H

T

ML SECTORAL TRENDS

Sugar companies were in demand during the fortnight. Balrampur Chini Mills, KM Sugar Mills, Oudh Sugar Mills and Rana Sugars advanced 22%, 20%, 16% and 15%, respectively.  Companies

Shares of sugar companies and refineries were up 6% and 4%, respectively, while shares of oil & gas services companies and airlines companies ended flat. Stocks of construction, engineering and infrastructure companies and telecom services companies declined 10% each. 

01-Jan

13-Jan

+/-

ML Sugar Index

Balrampur Chini

72.05

87.85

22%

175

KM Sugar Mills

5.21

6.25

20%

36.65

42.35

16%

4.26

4.91

15%

46.40

53.05

14%

ML Sectoral Trends

101.90

113.90

12%

Sugar

6% Con_EPC_Infra

-10%

34.10

37.35

10%

Refineries

4% Telecom Services

-10%

Oil & Gas Services

0% Printing & Publishing -10%

Oudh Sugar Mills

150

Rana Sugars Triveni Engineering

125

Dwarikesh Sugar Sakthi Sugars

100

Rajshree Sugars

32.45

35.50

9%

KCP Sugar & Inds

27.60

30.15

9%

75 Jul-15

Oct-15

Jan-16

Bannari Amman

1,061.75

1,159.65

9%

Airlines

0% Trading

Glass

-9%

-1% Packaging

-9%

What’s



All Prices in Rs

URBAN INFLATION

N T

Construction, engineering and infrastructure companies tumbled. Valecha Engineering and Shriram EPC fell 26% and 18%, respectively. Supreme Infrastructure India and Vascon Engineers declined 16% each.  Companies

01-Jan

13-Jan

+/-

53.45

39.75

-26%

ML Con_EPC_Infra Index 110

Valecha Engineering Shriram EPC

35.45

29.05

-18%

Jaiprakash Assoc

12.40

10.20

-18%

148.10

123.80

-16%

Vascon Engineers

36.80

30.80

-16%

Tantia Constructions

27.80

23.45

-16%

Welspun Enterprises

63.90

54.20

-15%

165.30

140.50

-15%

Supreme Infra India

ABG Infralogistics Unity Infraprojects

16.55

14.10

-15%

267.55

230.20

-14%

100

Inching Up 90 6% 80

Annual Change

4%

70 Adani Ports

Combined inflation for urban and rural areas increased to 5.61% in December 2015, from 5.41% in November 2015. Inflation in urban areas increased to 4.73% in December, from 4.71% in November. Food inflation in urban areas declined marginally to 6.05% in December from 6.30% in November. In urban areas,

Jul-15

Oct-15

Jan-16

All Prices in Rs

2%

BULK DEALS

Dec-14

Date

Company

Buyer

Seller

13-Jan-16

Rajapalayam Mills

PV Abinav R Raja

The Ramco Cements

08-Jan-16

Aptech

Sameer K Koticha

Ask Sec Advisory Serv Pvt

5.02

08-Jan-16

PPAP Automotive

Smart Commotrade Pvt

Vinay Kumari Jain

2.64

11-Jan-16

Intellivate Capital Ventures Team India Managers

Vipul Jayantilal Modi

2.50

08-Jan-16

Intellivate Capital Ventures New Berry Advisors

Vipul Jayantilal Modi

2.50

04-Jan-16

Intellivate Capital Ventures Team India Managers

Vipul Jayantilal Modi

2.50

Ojas Consulting Pvt

0.72

11--Jan-16 National Fittings

Vinithra Sekhar

Rs Cr 25.44

Jun-15

Dec-15

prices of vegetables increased by 5.67% since last year. Inflation related to fuel & power increased marginally, to 2.65%, in December. Inflation for housing increased marginally to 5.06%. Inflation for clothing hovered around 4%; for miscellaneous items, it increased to 2.91% in December. 

65 | 4 February 2016 | MONEYLIFE

Money Fact.indd 3

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BEYOND MONEY

Equal Access for the Disabled

An office in the heart of Pune is the nucleus of its diverse activities. EKansh conducts workshops at colleges of management, design and communication, to sensitise people. It has story and colouring books for children in schools so that they grow up as sensitive adults. The Pune Municipal Corporation (PMC) has printed its colouring EKansh Trust believes that the first step for PMC schools. Many other private schools are towards inclusion of people with disabilities is books adopting its story books for their students. EKansh also creating awareness works in slums and semi-rural areas spreading disability awareness through anganwadi workers. However, awareness and sensitising is not the whole s a child, I had watched a group of men who were hearing-impaired signing animatedly story. Anita adds, “This work for people with disabilities outside the park in Mumbai that I used to led to many candidates approaching us for jobs. We frequent with my grandfather. It had always fascinated conducted our first ‘job fair’ for them, in 2010. We’ve me. It stayed in my memory and, when I moved from had two such fairs, in 2013 and 2015, in which all major Gurgaon to Pune, I set up a group and decided to teach ‘equal opportunity employers’ participated. We believe, we ‘hearing’ people to sign (using sign language) so that we have changed mind-sets in the corporate world and among can communicate with the deaf. people with disabilities too. They now “At different times in my life, my aspire for bigger and better things, husband with his broken foot, the just like everyone else. However, with their basic education and two of us with our baby daughter in a stroller and my grandmother with her training being substandard, thanks illness in her last days, all struggled to archaic methods of teaching, their employability levels suffer. with the physical infrastructure in India. The condition and design of We conduct training programmes built-up spaces, including footpaths, for them in basic English language public areas, parks, etc, are not really communication, soft skills and people-friendly. The last straw was computer operations.” EKansh’s future plan is to have when my grandmother could not a full-fledged, well-equipped, stateuse her wheelchair in the lift of the of-the-art training centre for people building because it was too small. She had to undergo the indignity of with disabilities. It is not only about being taken down three floors on computers, but also other employable a makeshift stretcher,” says Anita skills. Anita feels that scribes scoring Narayan, founder and managing on behalf of candidates, who are trustee of EKansh Trust, musing visually or physically challenged, is a about the factors that motivated trend that should not be encouraged. her to set up the Trust along with Bhakti Karia (a silent She proudly continues with her ambitious goals by saying, partner). “We need to ensure that candidates are well qualified so EKansh works for people with physical/mobility and that equal opportunity does not mean allowances. Often, sensory impairments in several ways. People with disabilities we are asked to focus on ‘low hanging fruit’; it is not just are entitled to the same courtesies you would extend to offensive but also discriminative. We are here to help those anyone, including personal privacy. Their simple message who are denied help elsewhere.” is: “If you find it inappropriate to ask people about their However, funding is a constraint at EKansh and Anita sex lives, or their complexions, or their concludes by saying, “We hope a patron incomes, extend the courtesy to people with deep pockets and a big heart will come forward to fund such a training with disabilities.” It works at making centre and partner with us so that we this happen through advocacy for equal EKANSH TRUST are able to rope in the best trainers in access for people with disabilities as nd Amit Samruddhi 2 floor, the country and equip our candidates well as early intervention, education, Jungli Maharaj Road, employment, entertainment, recreation, with all the skills they need to progress Pune -411004, Maharashtra legal and medical aid. in life.”  Telephone: 020-30241273 Mobile: 09503715015 Email: [email protected] Web: http://www.ekansh.org/

“A

MONEYLIFE | 4 February 2016 | 66

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