Wealth: He Conomic Imes

wealth THE ECONOMIC TIMES

www.wealth.economictimes.com | Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi, Pune | July 8-14, 2013 | 32 pages | `7

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Assisted-living projects offer independence with companionship. Should they be your post-retirement abode? Here’s what you should know before you decide. PAGE 2

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If you pick wisely, you can not only get a constant stream of dividends, but also high capital appreciation. PAGE 8

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02

  Cover Story

The Economic Times Wealth, July 8-14, 2013

Are

retirement

homes for you?

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These are not rundown old-age homes, where people live in pitiable conditions. Today’s retirement homes take care of all the needs of senior citizens, and do it in style. Here’s why you could consider this option.

Amit shAnbAug And sAnjAy kumAr singh

W

ho doesn’t dream of a re­ tirement free of worries? For Suresh Goswami, this meant a luxurious retire­ ment home, just like the plush, assisted­living complexes he had seen in western countries. The former sail­ or’s search for such a home for himself and his wife ended at the Lavassa retirement re­ sort near Pune. “I had never thought such places existed in India,” he says.

As more affluent Indians join the ranks of retirees, the demand for housing projects catering exclusively to this category is on the rise. There are at least 30 such projects and an equal number is on the drawing board. Most of these retirement homes are located in suburbs of metros, but some are being developed at well­known retirement destinations, such as Coimbatore, Goa and Dehradun. Don’t think of these housing projects as run­down old­age homes, where the aged and abandoned live in a pitiable state. Today’s retirement homes are vibrant

30 is the estimated number of retirement housing projects in india and about 30 more are on the drawing board.

Cover Story

The Economic Times Wealth, July 8-14, 2013

03

Ramdas Aggarwal age

75 Bhiwadi

Aggarwal initially took an apartment on lease for six months in the retirement housing project. Only after he was sure about the project and facilities on offer did he sell his house in Chhattisgarh and settle at Bhiwadi.

“Staying at a place that took care of all our daily needs appealed to me after I turned 70. The assisted-living centre takes care of requirements like bill payment, and is senior citizen-friendly in terms of construction.”

A lot of developers re-brand their projects as senior citizen homes just because these are located far away and the project is not selling.” Vishal Gupta

mAnAging dirECTOr, AsHiAnA HOusing

complexes that take care of food, house­ keeping, health care and security, allow­ ing senior citizens to enjoy their sunset years. This is precisely why Max India is promoting its retirement home business with the catchline ‘Fun and laughter, 60 and after’. Growing demand Several factors are driving the demand for retirement housing in India. India’s so­

called demographic dividend will soon turn grey. Right now, nearly 98 million In­ dians (or roughly 8% of the population) are above 60 years of age. This number is expected to soar to 240 million by 2050. The country’s overall population is grow­ ing at 1.8% annually, but the ranks of sen­ ior citizens are swelling at a much faster clip at 3.8% every year. Sensing the oppor­ tunity, several large corporate groups, such as the Tatas, LIC Housing Finance and the Max Group have forayed into the development of these complexes. Many senior citizens are financially in­ dependent when they retire, but the ques­ tion that confronts them is, how they will manage when their grown­up children move to another city, or country, for work. Safety concerns, healthcare needs and loneliness are pushing these people to retirement resorts that offer convenient solutions to these problems. Safety & security Safety and security are important con­ cerns, especially because of the rise in crime against senior citizens in cities. Many assisted­living centres provide 24­ hour security and some even have the CCTV facility—not to spy on the senior citi­ zens, but to make sure that all is well. There is also the provision of emergency healthcare services. If there is an accident or some medical emergency, the senior citizen can be quickly taken to a hospital or given first aid. Such an assurance is also a big relief for the retirees’ children, who may have moved to another city or country for work. Loneliness is the scourge of old age, though very few people see it as a problem and even fewer admit they are affected. Isolation can play havoc with a person’s

04

  Cover Story

The Economic Times Wealth, July 8-14, 2013

ASSISTED-LIVING PROJECTS some of the senior citizens’ projects around the country that you could look at...

Outright purchase model Project

developer/managed by

Location

Options

Cost (` lakh)

maintenance charges (` per month)

Panchavati

sB dharmik samaj

Bangalore

studio, 1- & 2-BHK, cottage

12-50

1,500-4,500

Ashiana utsav

Ashiana Housing

Bhiwadi

1-, 2-, 3-BHK

21-45 (r)

1.75*

Ashiana utsav

Ashiana Housing

Jaipur

2-BHK

25-35

1.55*

Bahri Beautiful Country-Anandam

Bahri Estates/Aamkosh One Eighty

Kodaikanal

1-, 2- and 3-BHK

29-80

1,500-2,500

Ashiana utsav

Ashiana Housing

Lavassa

1-, 2-, 3-BHK villa

35-111

4*

golden nest

Vascon/golden nest marigold Trust

Pune

studio, 1-Br

45-60 (r)

none

Aamkosh One Eighty retirement Community

Aamkosh One Eighty Hospitality

Kasauli

studio, premium studio, 1-Br & 2-Br

45-95

35,000-50,000

Antara senior Living

Part of max india

mussoorie

units, penthouse

150-700

29,000

Upfront deposit model Project

Developer/managed by

Location

Size (sq ft)

Initial deposit (` lakh)

Living expenses (` per month)

riverdale resorts

riverdale

Cochin

300-600

1,500*; 15% higher on each higher floor

6,500

The golden Estate

uCC Care Pvt Ltd

Faridabad

300-600

15-27

15,000

godhuli

godhuli senior Citizens’ Home

naihati, Kolkata

200-700

6-18

10,500-26,500

* Figures are in `/sq ft. r indicates resale price. The above table is indicative.

THREE WAYS TO BUY A RETIREMENT HOME senior housing projects are tailored to the needs of the aged. One can choose from any of the three financial models on offer. source: JLL india

Outright sale

Deposit model/ payback schemes

Lifetime lease

The units in retirement projects are sold to customers above the age of 50 or 55 on a per sq ft basis. The entire housing complex is professionally maintained, with services offered on a monthly payment. A son/daughter, whose age is less than 50 years, can also buy such a unit, but only a senior citizen is allowed to stay permanently in the society.

An upfront deposit, which is a percentage (60-70 %) of the sale value of the unit, is charged according to the size of the unit. This includes residence charges only. Charges are levied as actuals for food, electricity, water, etc. The deposit charges are paid back to the successor with some deductions for administration/cancellation charges.

A small deposit is charged on handing over the unit to the customer. A recurring monthly rent is levied for the duration of stay (this includes rent, electricity and water charges). The rest of the facilities (food, health care, security and social engagements) are paid as actuals. One benefit of this option is that the unit holder doesn’t have to pay property tax.

with unit sizes varying from 300 sq ft to health and push him into depression. 2,500 sq ft. A basic apartment costs up to Living in a residential complex, where `33 lakh, while a mid­sized unit can cost neighbours are in constant touch, can be `50­60 lakh. For those with deep pockets, uplifting. The residents in a retirement there are luxury villas with price tags of `1 complex may not exactly be family, but crore and above. Apart from this, there are they provide the much­needed charges for the services offered. The companionship that seniors are looking monthly charges for a couple come to for. The opportunity to interact and enjoy `15,000­25,000 for standard services, together improves the quality of life. Says and `35,000­50,000 for luxury services Sanjay Lakhotia, founder, Aamoksh One (see table). Eighty, a company that manages homes for seniors: “We see a growing need for Before you opt for it... assisted­living centres in the country Reading the fine print in any due to the changing demogr­ Tax filing agreement is critical; more aphics, migration of children for mistakes to so, when you are investing work, breaking down of the avoid this year in a retirement home. joint family system, and diffi­ Page 11 These projects offer a culty in managing by them­ number of facilities, but they selves in cities.” come at a premium com­ In the past, there was a social pared to regular housing pro­ stigma attached to abandoning jects. Instead of focusing on the one’s parents in a retirement home. luxury aspects and premium fittings, you However, attitudes have changed over the need to make sure that the project is well­ years. Says Shveta Jain, executive director, connected and offers all essential ameni­ residential services, Cushman & Wake­ ties within the campus (see graphic). field: “Though this concept is still in a Do the math while buying a house in a nascent stage, at least it is not looked down project. The cost of the services will rise upon anymore.” every year. Since you will be living off your A considerable portion of the demand savings, don’t over­extend and buy into a for posh retirement homes is coming from project you can’t afford. non­resident Indians (NRIs). “Senior NRIs It’s equally important to conduct some accustomed to top­end facilities in devel­ background checks. Go for a company that oped countries and returning to their has developed a senior citizens’ project home country, or those whose children and has some experience in the field. If have turned NRIs, are significant potential services have been outsourced, examine customers,” affirms B Sridhar, national the reputation of the service provider. If director, social infrastructure practice possible, visit the company’s older (education, healthcare & senior living), projects and enquire from residents how Jones Lang LaSalle India ( JLLI). satisfied they are. In particular, find out A recent report from JLLI puts the about the service provider’s level of spe­ current demand for retirement housing in cialisation in geriatric care. India at approximately 3 lakh units. Check whether the developer is getting There’s an option to suit every pocket,

Cover Story

The Economic Times Wealth, July 8-14, 2013

IS IT A SOUND INVESTMENT? Can a retirement home be a sound investment? not really. According to Vishal dhawan, chief financial planner at mumbai-based Plan Ahead Wealth Advisors, “A retirement home should be bought primarily for end-use. it is more of a consumption asset. Buy the house because you like living there. Focus on the benefits you are likely to derive from it, not so much on its price appreciation.” As with all real estate, whether you (or your heirs) get price appreciation from the house will depend on demand and supply. Currently, there is a limited supply of senior citizen projects, while the demand is growing. if this continues, you may earn good returns. However, if supply increases, the returns may not be so good (as has happened in the case of commercial real estate in many cities). in india, most people want to bequeath a house to their children. if you buy a retirement home, you can pass it on to your children, but they will not be able to live there till they are of a certain age (usual-

05

Suresh Goswami age

63 Lavassa

goswami chose a retirement community near Pune after living in gurgaon and mumbai for some time. He was looking for a quiet place away from the traffic and pollution in a city, and decided to settle at Lavassa. ly 50 or 55). This is one factor that works against the popularity of retirement homes. gupta of Ashiana Housing admits that the investment return from retirement homes is lower than that from normal residential housing. He, however, believes this could improve as social attitudes towards shifting to a retirement home change.

“There is hardly any interference by the staff, so it is as good as living in a regular housing colony. There is round-the-clock access to medical and other facilities. Besides, I am surrounded by like-minded people.”

FACTORS TO CONSIDER WHILE CHOOSING A PROJECT

Access to health care

Crime rate

Typically, the site should be within 20–30 minutes of a good secondary and tertiary care hospital.

incidence of crime or the perceived sense of security is important. An underdeveloped suburban area can be risky despite the in-campus security.

Social ecosystem

Congestion

There should be parks, clubs, malls and other recreation facilities in the vicinity of the housing complex.

The infrastructure should be good so that there is low traffic congestion and pollution by industries.

Connectivity

Employment opportunities

The area should be wellconnected to the city. Consider both existing and proposed developments.

it should have access to employment hubs if you plan to work after retirement for an independent income.

into the development of seniors’ housing projects for the long term, or whether he is undertaking a one­off project. “A lot of developers may re­ brand their project, claiming these are for senior citizens just because the land is situated in a far­off location and is not selling,” says Vishal Gupta, managing director, Ashiana Housing. It is a good idea to live on rent for some time before you take the plunge. Ramdas Aggarwal (see picture) initially took an apartment on rent at Bhiwa­ di. “Many people find it difficult to live in assisted care centres. They are used to hectic life­ styles, so they are unable to adjust to such a quiet place,” he says. It may even make sense to live on rent forever. As financial planner Vishal Dhawan points out, “This is the best model from the point of view of flexibility. You also get to keep your capital and can use it to generate a cash flow. If the service provider does not deliver, you have the option to exit.” Assess your needs Your choice will also depend on the level of care you need. This progressive­ ly changes as you grow older (see box). Most of the retirement homes that are coming up cater only to those in sound health. Some are also for those who can manage most of their tasks, but need help with a few chores. However, there is very little choice for invalids who need help with all activities. At that stage, one may need full­time care, which costs a packet. What do you plan to do with your house after you move into a retirement

06

  Cover Story

The Economic Times Wealth, July 8-14, 2013

HOW TO MAKE A HOUSE FRIENDLY FOR SENIOR CITIZENS? While shifting into an assisted-living facility may not be an option for everyone, small modifications to any house can make it more livable for the aged. here are a few changes that can be made.

Anti-skid tiles Fittings Bathroom basins can be fitted lower for easy access to wheelchair users, and taps can have lever handles. People with motor problems can handle levers more easily than ordinary knobs.

Avoid glossy tiles with polish. Put slip-free carpeting or matting for those who use crutches. For the visually impaired, bright coloured floor tiles can help identify rooms.

Emergency call bell Lower platform For wheelchair users, lower the height of work platforms. don’t have cabinets at the bottom, so the wheelchair can move in.

Lights

An emergency call bell near the bed and main door is a good idea. For the hearing impaired, connect the doorbell to flashing lights in all the rooms.

With advancing years, people need more light as peripheral vision is impaired and long-sight sets in. Lighting should be of medium brightness to avoid areas of brightness and shadows.

Wider doors standard doors are 27-inch wide, while wheelchairs need 34-inch doorways for access.

Grab rails install rails around the washbasin, WC and bath area for support.

Sliding door These are not just spacesavers, but also easy to open for someone in a wheelchair.

Switchboards use big switches and put switchboards at a height that is convenient for wheelchair users. in bedrooms, ensure that the fan, light and AC switches are near the headboard.

Avoid split levels get one smooth surface throughout the home for unhindered movement.

Furniture Chairs should have armrests that can be used to lever the person into a standing position.

Fire and smoke alarm install smoke & fire alarms in the house to warn neighbours in case of a mishap.

ASSISTED LIVING CHANGES AS YOU AGE As the retirement home market matures, projects will offer more focused facilities depending on your needs and age. Here are some practices being adopted in mature markets abroad.

50-70 years

60-75 years

Above 70 years

You are active and able to take care of yourself and may have no serious ailments.

You are still active, but may need some support systems during the day.

You may need continuous medical attention and care in a homely environment.

Independent living

Assisted living

Skilled nursing care

no different from traditional housing, but with senior-friendly features, such as better lighting, mobility facilitation, bathrooms and kitchens designed for wheelchairs. socialisation uplifts the atmosphere.

These allow residents to have access to care workers, who can assist the residents in day-to-day activities. This reduces the need to travel to hospitals and also instills a healthy form of lifestyle.

Offer nursing facilities and can take care of physical or mental disabilities. services increase considerably in this stage, with availability of nurses, social workers and transportation.

source: JLL india

home? If it is in the city, it could fetch you enough money to buy the retirement apartment and live comfortably for the rest of your life. It also means that you will have no back­up options. What if you don’t like the life away from the city you have lived in for 50­60 years? What if you miss your family and friends? Some people retain their houses in the city. This can lead to a situa­ tion where the person is asset­ rich, but cash­poor. He may be a crorepati three times over, but won’t have enough to pay for his medical bills or buy groceries. One more problem is that a re­

tirement home is not as liquid as other real estate. Banks and hous­ ing finance companies, too, are not as willing to extend loans be­ cause the buyer is well past his earning years. It is not possible to reverse mortgage a property where the ownership comes with strings attached. So the decision to shift to a re­ tirement home is not one you can take lightly. Weigh the pros and cons, conduct thorough research, and only then make the move.

Please send your feedback to [email protected]

Review Preview  Weekly wealth monitor 3.69 1.26

10-yr Goi bond yield

1-week change (%)

Balanced funds

The top three stocks

1.13 -10.69

2.35

equity funds

1-year change (%)

11.16

10.55

7.95

7.49 7.93

07

The Economic Times Wealth, July 8-14, 2013

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Gold

income funds

2.83

Price (`)

62.20

31.22

PineBridge World Gold St

8.62

54.50

25.43

BSL Commodity Equities

7.24

9.22

NCC

26.90

23.11

DSPBR World Gold Reg

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5.65

Japan [Nikkei]

Weekly % change

Argentina [Merval]

provident fund

EPFO unveils revised transfer claim form Taking the first step towards the launch of online PF transfer claim facilities, retirement fund body EPFO unveiled the revised transfer claim form. The full-fledged service of online transfer of PF accounts on changing jobs will be possible only after employers have digital signatures. This is estimated to cost around `700 for an employer. The launch of the service will take more than a month.

regulation

Irda extends deadline for group products The Insurance Regulatory and Development Authority (Irda) extended the deadline for re-filing group products under the new traditional product norms for life insurance from 1 July to 1 August. Irda had clarified that no new members could be enrolled for old policies after 31 July. The existing customers will be given an option to switch over to the modified policy. Customers can choose to switch or can continue to renew it under the old regime. However, these existing group policies would be closed to new members and specific written consent will have to be obtained from existing group policyholders to stay with the new regime.

12.69

L&T Gilt Investment

28.98

1.16

6.10

Motilal Os. MOSt 10 Year Gilt

11.51

1.07

4,743.88

5.27

ING Glit PF Dynamic Cyclical

10.40

1.02

Stocks are from the BSE-500. Source : ETIG Database/Bloomberg

Market pulse As expected, the market continued with its positive bias last week. Though there was a broadbased sell-off on 3 July, the market was able to recover, helping the Sensex to end the week with a modest gain of 100 points. ■ The market is likely to be relatively stable in the first half of this week, but expect increased volatility in the second half due to the heavy dose of data expected. Two data points that are critical for the interest rate decision by the RBI (consumer price inflation and industrial production data) will come on 12 July. While the consumer price inflation, at

■

insurance

HDFc Life has launched two traditional pension plans—Personal Pension Plus, a participating plan, and Guaranteed Pension Plan, a non-participating plan.

Liberal compensation for road victims

payment soLution

MF corpus rises for fifth straight quarter The average assets under management (AUM) of the mutual fund industry moved up 3.68% to touch a new high of about `8.47 lakh crore in April-June. The increase was led by heavy inflow to debt mutual funds due to the interest rate cuts by the Reserve Bank of India (RBI). The assets of long-term debt and gilt funds rose in the June quarter due to the continued inflow to the category, with investors expecting the interest rate scenario to ease in the coming months The AUM of longterm debt funds has recorded an increase for the past eight consecutive quarters. The category’s average AUM jumped by around `26,500 crore, or 31%, during the quarter.

9.31% last month, is well above the RBI’s comfort zone, the industrial production was still at a low level of 2.2% last month. The impending results season, which will be kicked off by Infosys on 12 July, is another factor that will raise volatility at the individual stock level. ■ On the global front, the data points worth watching out for are comments from the EU finance ministers, who meet in Brussels on 9 July, release of the US Fed meeting minutes on 10 July, the Eurozone industrial production data, and the US wholesale inflation data, on 12 July.

Product launches

insurance

mutual funds

Weekly % change

542.79

icici Lombard has launched ‘Secure Mind’, a general health insurance policy offered with mutual fund investments. The policy offers multiple covers, including those for accidental death, permanent total disability and critical illness. The cover will be equal to the cumulative value of investments through fund SIPs and no medical tests are required for policy issuance.

The road accident victims who survive the traumatic experience could get a higher compensation from now onwards as the Supreme Court expanded the scope of its computation by asking the Motor Accident Tribunals and courts to factor in both disability and loss of future income caused by the injury. The case pertained to S Manickam, who was seriously injured and suffered amputation of his right leg below the knee, when a bus ran over his leg. The judgement added that while computing the compensation, the approach of the tribunal or court has to be broadbased and, sometimes, it would involve guesswork since there cannot be any precise formula to determine the quantum of compensation.

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e-meditek Global, in association with Ratnakar Bank and Visa, has launched the country’s first prepaid card for healthcare needs. The card, which will be offered in five different variants,

“Yes, the RBI’s mandate is price stability, containing inflation & maintaining fiscal stability, but this must be understood as part of a larger mandate of growth and creation of jobs.” p Chidambaram FInancE MInIstEr

car

nissan india has launched two variants of its topselling hatchback, Micra. The Active has a starting price of `3.5 lakh, and the Sporty is for `4.79 lakh, in both petrol and diesel categories.

weekly calendar Thursday

Flipkart has launched PayZippy for Indian merchants, which powers card payments for domestic merchant websites and mobile sites.

quote of the week

will have a minimum value of `1,250 and a maximum value of `18,000.

july

11

IndusInd Bank to announce its quarterly results.

wealthwise

Friday july

12

Infosys to announce its quarterly results.

08

  Stocks

The Economic Times Wealth, July 8-14, 2013

Time to opt for dividend yield stocks If you pick wisely, such companies can not only fetch a constant stream of dividends but also result in high capital appreciation. sanket dhanorkar

its profitability is taking a hit, the dividends will also dry up in the future. The high dividend could also be a one-off event t’s that time of the year again. Compaonly for that year and unsustainable in nies are paying dividends to shareholdthe future. Baliga says, “Though opportuers, and by mid-August, the amount is nities abound, investors could lose more likely to be credited to their accounts. money via capital loss than dividends.” So, if you can zero in on some quality Given these pitfalls, it is critical pick high dividend yield stocks now, you can exstocks wisely. To start with, the company pect a good return from your investment. should have a consistent track record of Here’s how you can identify such stocks and dividend payout, at least for the past five why you should adopt this strategy now. years. Mehta says, “It should have a sustained dividend strategy. Omit one-time Why is it a good strategy? dividend payers and those that stop payGiven the market volatility and uncertainty ing or give lesser dividend during bad peabout the economy, investors are running riods.” This would weed out firms that out of sound investment ideas. Hence, it is have paid dividends from their extraordiadvisable to fall back on tried and tested nary income. Also, the payout ratio, that strategies. Says Ambareesh Baliga, managing is, the proportion paid as dividend from partner, Global Wealth Management, Edelprofit, should be high, suggesting that the weiss Financial Services: “In the current company is profitable year after year and market conditions, when several largeis likely to continue paying divicaps are available at low prices, dividends. Baliga asserts, “It should dend yield makes sense.” not only have a stable, consistThis strategy is advisable not Countdown ent dividend policy, but also just for the current scenario, to smart exhibit sustainable growth in but as a long-term play too. Not finances profitability.” only do such stocks provide a Page 16 However, these tips are not constant stream of dividends, meant for trading or short-term but the likelihood of capital apinvesting. If you are thinking of preciation is also high. Such combuying a stock now, squeezing out panies dole out regular dividends the dividend and dumping it, you are likebecause they boast strong fundamentals. ly to burn your fingers. This is because They typically enjoy high cash flows, healthy once the dividend is paid, the stock price profit margins and maintain revenue growth takes a hit. So even if you earn a 5% return across different market conditions. This through dividend, the subsequent dip in growth is often rewarded by the market with price is likely to negate the money you a rise in its stock price. made. However, if you hold the stock over However, this strategy works best when several quarters and the dividend paythe market is down. The stock prices are low out remains healthy, the stock and since the dividend is high, investors can earn a handsome return. These also provide a degree of safety during uncertainty. Besides, the dividend is tax-free for the investor, which makes it tax-efficient. A 30-40% exposure to quality dividend yield stocks is a good PSU ploy for the medium-to-long term.

I

price will also bounce back. Another option is to buy the stock after the dividend has been paid, when the price is likely to be lower. You may lose out on the dividend, but gain from a lower entry price. Take your pick Among the stocks that offer a good dividend yield are PSU stocks, which are traditionally among the highest dividend payers. However, lack of growth is a big concern, so picking the right stocks is crucial. Mehta says, “At a time when growth companies are not offering good dividend yield, PSUs provide a hiding place. But buy only those trading at a pricebook value of less than 1.” NMDC, IDBI Bank, Power Finance Corporation, REC, Bank of India and Punjab National Bank are sound long-term bets. Besides, there are some private firms that make for good picks. These are fundamentally strong, boast a consistent dividend track record and show continued growth in profitability. Hero Motocorp, Tata Chemicals and Hindustan Unilever offer good opportunities. The mid-cap segment also offers the ideal hunting ground for stocks at cheap valuations, but make sure of the dividend track record and firm’s fundamentals.

Dividend yield stocks

How to spot a good stock While there are several stocks in the BSE-500 universe yielding 4% or more on the prevailing stock price, the dividend yield investing is not just about numbers. Says Kartik Mehta, vice-president, research, institutional equities, Sushil Finance, says, “Hunting for dividend yield is the primary reason for wealth erosion among investors. Poorly picked stocks are likely to see the price slide, eating into the yield earned as dividend.” The yield may be high for several reasons. When the stock price is depressed, the yield is bound to be higher. So, one should try to understand why the price is low. If the company is facing issues, it is likely that the stock price may remain subdued or fall further. If

Private sector

Company

Div yield (%)

PBV

Div rate (%)

Company

Div yield (%)

PBV

Div rate (%)

NMDC

6.66

1.51

450

Cairn India

3.93

1.17

115

IDBI Bank

4.81

0.50

35

Hero Motocorp

3.69

6.48

2250

Power Finance Corporation

4.80

0.80

60

Tata Chemicals

3.46

1.15

100

Coal India

4.68

3.86

100

Hindustan Unilever

3.13

31.60

750

Rural Electrification Corporation

4.33

1.07

75

Tata Steel

2.94

0.77

120

Union Bank of India

4.14

0.73

80

Sterlite Industries

2.85

0.50

200

Bank of India

4.10

0.66

100

Cummins India

2.84

5.32

550

Punjab National Bank

4.05

0.71

270

Ashok Leyland

2.82

1.79

100

NTPC

4.02

1.45

41

ACC

2.57

2.97

300

Bank of Baroda

3.91

0.72

215

Bajaj Auto

2.46

6.57

450

PBV: Price to book value ratio. Dividend rate is expressed as a % of face value of each share. Data as on 24 June 2013. Source: ETIG Database

Mutual Funds 

The Economic Times Wealth, July 8-14, 2013

09

Fish for unique opportunities for good returns Find out how to tap investment ideas across market segments by opting for opportunity funds.

Opportunities fund schemes AUM (` cr) Scheme

I

nvestors are always on the lookout for good investment ideas, and the market occasionally throws up some that are either sector-specific, like FMCG, or theme-related, like consumption, exports or digitisation. These also come up due to structural changes in the economy, and you can tap them even if the broader market is in a rut. If spotted at the onset, you can make a lot of money, but this is easier said than done. To help zero in on such unique ideas and make the most of emerging trends on a sustained basis, mutual funds have come up with ‘opportunities funds’. How do these differ from equity funds? Why should one go for a dedicated opportunities fund when all equity funds are supposed to look for sound investment ideas? The answer—and the difference between the two types of funds—lies in scope. Traditional equity funds are limited in their mandate, investing mostly in a narrow set of stocks defined by market capitalisation or sector. So, some schemes invest within the large-cap universe or from a set of stocks belonging to, say, the banking sector. Their task is to identify the best opportunities here. Opportunities funds, on the other hand, are mostly broad-based. Most of the funds in this category are free to pick from across the market, though each scheme may have a tilt towards a particular basket, say, the largeand mid-cap segment. Says Harsha Upadhyaya, head, equities, Kotak AMC, and fund manager of Kotak Opportunities Fund: “These funds generally have more flexibility in portfolio construction within an overall

3-year

5-year

Reliance Equity Opportunities Fund

4,988.36

8.61

23.49

126.07

UTI Opportunities Fund

3,530.82

9.90

28.78

108.45

Kotak Opportunities Fund

618.51

11.16

9.32

56.23

L&T India Spl Situations Fund

590.69

12.54

18.69

81.33

DSPBR Opportunities Fund-Reg

500.75

15.61

8.20

70.53

Tata Equity Opportunities Fund

466.54

11.96

10.17

47.11

Mirae Asset India Opportunities Fund-Reg

285.85

12.00

20.00

112.01

Franklin India Opportunities Fund

280.23

9.00

6.61

34.57

HSBC India Opportunities Fund

211.07

3.14

9.18

32.53

Birla SL Special Situations Fund

135.95

6.39

-4.82

27.15

DWS Investment Opportunities Fund-Reg

56.85

13.89

0.49

31.90

Birla SL India Opportunities Fund

34.44

3.03

-2.24

32.17

10.96

4.68

23.37

BSE-100

sanket dhanorkar

Return (%) 1-year

Data as on 2 July 2013. Source: Accord Fintech

broad framework. They are ‘no bias’ funds and can invest wherever opportunities arise. Kotak Opportunities, for instance, moves across market capitalisation and sectors without any bias, but within the broad framework of maintaining an exposure of not less than 60% in the large-cap segment.”

change colours at frequent intervals. Such is the level of flexibility that at one moment, the portfolio could be tilted in favour of banking stocks, but a few months later, you may see a shift towards the consumption sector. Since investment opportunities come and go, the fund manager has to move deftly to catch new ones as and when they arise. It is this investment approach that allows them access to—and benefit from—opportunities across market segments.

Watch out for Before you blindly bet on opportunities funds, ask yourself whether it will add value to your portfolio. It’s also important to be Opportunities aware of the risks involved. The modus opThis category of funds is made up of starkly erandi of such funds boils down to the fund different flavours. The opportunity that each manager’s stock-picking ability and nose for scheme alludes to is distinct from the others. sniffing out good opportunities. If Mirae Asset India Opportunities While a well-managed fund can Fund aims to dig out ideas from Inadd significant value over the dia’s economic growth and its Will Real Estate long run, a poorly managed one structural shifts, L&T India SpeBill increase could erode your capital. The cial Situations Fund mines for realty prices? enhanced flexibility in the inundervalued companies in situPage 13 vestment approach also preations that are out of the ordisents a higher level of risk for the nary, and which, therefore, preinvestor. This fluidity often leads sent interesting stock-picking opto a higher portfolio churn as the portunities. Says Gopal Agrawal, CIO, fund manager attempts to deliver good reMirae Asset Global Investments: “We have a turns. A higher turnover means more transmix of core and tactical approach, where a action costs, which eat into returns. chunk of the portfolio focuses on stable busiSustainability in performance is another nesses for the long term, and the rest is dithing to watch out for. There are funds that rected towards short-term opportunities due pick up a few ideas and do well over a parto policy changes, global events, etc.” ticular period, but miss out on sound ideas Given the nature of these schemes, it is not later or make wrong bets, resulting in a surprising to see the underlying portfolio

downturn in performance. Performance The basket of opportunities funds has around 12 schemes, and as with their differing investment focus, the performance is also a mixed bag. The ones that stand out include Reliance Equity Opportunities, UTI Opportunities, Mirae Asset India Opportunities and L&T India Special Situations (erstwhile Fidelity, which have done well across time frames. “What has worked for us is the focus on stock selection, identifying businesses which generate strong cash flow and boast healthy return ratios,” says Agrawal. Kotak Opportunities and DSP BlackRock Opportunities have also delivered decent returns. However, some like Birla SunLife Special Situations, HSBC India Opportunities and DWS Investment Opportunities have struggled to deliver good performance. Final word Though these dedicated funds have the required expertise and research capabilities to mine ideas round the clock, you should be choosy while taking your pick. First, understand what the fund is trying to do in terms of its investment focus. This will be explained in its investment objective. Then check the consistency in performance, so that you know if the fund can identify and make good of opportunities continuously. Also check if the performance is sustained across market cycles. Lastly, make sure the fund is not taking too high a risk to capture emerging ideas and check the scheme’s risk profile through online research portals like Value Research.

10

Stocks

The Economic Times wealth, July 8-14, 2013

Tap the midcap space The recent correction in the mid-cap segment offers a chance to pick players with good prospects. Here’s what the experts suggest.

Kajaria Ceramics

Raj

TargeT PriCe

CMP

`

nikhil walavalkar

I

ndian equity investors have been on a roller-coaster ride for the last one year. The BSE Sensex and the BSE Mid-cap Index were at 17,425 and 6,238, respectively, a year ago. On 17 May 2013, the Sensex touched a high of 20,286, recording a gain of 16%. The BSE Mid-cap rose faster. It peaked on 8 January 2013, up 17% at 7,336. While investors were busy predicting higher levels for the indices, the market

Bajaj Corp CMP

250

`

Eclerx Services

TargeT PriCe

TiMe FraMe

300

1 year+

`

caught them off-guard. When the US Fed spoke of tapering its quantitative easing programme, and the rupee tumbled, the equity market followed suit. As foreign institutional investors withdrew money from India, even quality scrips fell. The toll was severe for mid-caps: in June, the Sensex fell 1.84%, but the mid-cap index lost 6.65%. Savvy investors, however, are treating the fall as an opportunity to buy quality mid-caps. ET Wealth approached experts to recommend stocks that have sound fundamentals within this space.

CMP

743

`

TargeT PriCe

TiMe FraMe

950

1 year+

`

why iT’s a good buy

why iT’s a good buy

Bajaj Corp is among the larger players in the hair care segment, with sales of `600 crore in a `8,000 crore market. It has a 55% share in the light hair oil category, which constitutes 16% of the market. The positives include its dominant position in the light hair oil category, likely earnings growth of about 20% in 2013-14E, likelihood of a high dividend payout, and a return on equity (RoE) above 30%.

Eclerx is a KPO catering to the media, BFSI, cable and telecom sectors, with close to 5,900 employees. Its clients operate in financial services and brand-based marketing. The company stands to gain from the rupee’s depreciation. The earnings per share is expected to grow at a CAGR of 20% over 2012-13 and 2014-15. A dividend payout of `25 per share offers good yield and downside protection.

Supreme Industries CMP

335

`

TargeT PriCe

TiMe FraMe

415

1 year+

`

why iT’s a good buy It manufactures plastic pipes, furniture, pallets for manufacturing and retailing

industries, protective films and composites. It has a 3.5% value share of the `1,00,000crore plastics industry. Its turnover is nearly `3,000 crore, having grown at a CAGR of 17.5% over 10 years. Its profit is expected to grow at a CAGR of 17% over 2011-12 and 2014-15.

Bajaj Corp, Supreme Industries, and Eclerx Services, recommended by Ravi Shenoy, Motilal Oswal.

234

CMP

267

305

`

`

why iT’s a good buy

TiMe FraMe

Kajaria Ceramics is a leading player in the vitrified tiles industry, with an installed capacity of 44 million sq m, up from 23.4 million sq m in 2009-10. Riding on its enhanced capacity, Kajaria Ceramics is expected to emerge as the number one player. Due to aggressive branding and strong distribution, it enjoys higher retail sales at 70% of total sales, compared to the industry average of 50%. This, along with the usage of low-cost LNG, will keep its operating margins healthy. The demand remains positive due to increasing urbanisation and rising aspirations. At 234, the stock trades at PEs of 13x and 10x 2013-14 and 2014-15, and EV/ EBITDA of 6.8x and 5.4x.

1 year

Natco Pharma CMP

440

`

Amara Raja Batteries

TargeT PriCe

TiMe FraMe

540

1 year

`

why iT’s a good buy Natco Pharma is the largest generic player, with a 30% share of the Indian market. It has developed products for the US market. It’s expected to exit non-core businesses and focus on its core competencies, such as oncology and the US products pipeline. This will lead to better financials: margins are expected to improve from 20-21% at present, to 22% in 2014-15; RoE & RoCE are likely to rise from 15.5% and 14.1%, respectively, in 2012-13, to 16.8% and 16.3% in 2014-15. At `440, it trades at PEs of 14.7x 2013-14 and 12.4x 2014-15 earnings, versus a three-year average of 13.5x one-year forward PE.

Kajaria Ceramics and Natco Pharma recommended by Sandeep Shenoy, anand Rathi Financial Services

TargeT PriCe

TiMe FraMe

340

1 year

`

why iT’s a good buy The replacement demand for both automotive batteries (due to strong automotive sales in financial years 2009-12) and industrial batteries (demand from telecom towers) is likely to rise. Amara Raja will expand capacity in all segments by 50% by H2 2014-15. At `267, its valuation is attractive at a PE of 10.9x 201415E EPS.

Talwalkars BV Fitness CMP

`

128

TargeT PriCe

TiMe FraMe

200

1 year

`

CMP

why iT’s a good buy

128

` Talwalkars is the largest listed gym operator, with 144 gyms. Besides adding gyms, it has launched initiatives to accelerate same-store sales. Its revenue and earnings are expected to grow annually at 21% and 23%, respectively, over the next two years. It is currently attractively valued at 6.9x 2014-15E PE.

KPIT Cummins CMP

120

`

TargeT PriCe

TiMe FraMe

141

1 year

`

why iT’s a good buy KPIT Cummins is expected to do well in 201314 due to its domain expertise, sustained demand and synergistic acquisitions. It has offered estimates of 14-16% revenue growth. With cash and investments at 20% of market cap, more acquisitions can’t be ruled out. Its current PE of 8x 2014-15E is attractive.

amara Raja Batteries, Talwalkars and KPIT recommended by amar ambani, India Infoline

Taxation 

5

The Economic Times Wealth, July 8-14, 2013

11

tax filing mistakes to avoid this year As the 31 July deadline approaches to file your returns, here’s how to ensure you don’t commit errors and receive a tax notice.

1

2

Availing of deduction twice

Not mentioning exempt income

This is a common error that many salaried taxpayers commit. If you had switched jobs during the previous financial year, you might have got the Form 16 from both employers. While the first company may have deducted the tax correctly, the second might have deducted very little. It would have considered only the income for the rest of the year and given you the basic exemption of `2 lakh, as also the deduction under Section 80C. However, these must have already been factored in by the previous company. “You might have to pay additional tax in such a situation,” says Sudhir Kaushik, co-founder of tax filing portal, Tax­ spanner.com. Don’t think you can escape by ignoring the previous income in your tax return. The computerised scrutiny will immediately detect the discrepancy. There will also be a mismatch in your TDS details because the previous employer would have deposited the TDS on your behalf, along with your PAN and other details.

5

Not mailing ITR V in time The ITR V is the acknowledgment of your tax return. It is to be submitted along with your return if you file offline. If you have efiled your return without a digital signature, you need to take a print of the ITR V, sign it and send it to the CPC in Bangalore by ordinary mail. This should be done within 120 days of uploading your return. The filing process is complete only after the ITR V is received at the CPC. You can check the status of your ITR V on the official website of the Income Tax Department. If it has not been recieved within 7-10 days of mailing, call up the Ayakar Sampark Kendra or send another copy.

Dividends are tax-free. So are longterm capital gains from stocks and equity funds, as well as the interest on your PPF investments and tax-free bonds. There is also no tax to be paid on agricultural income and gifts from specified relatives. Even though these are tax-free, all exempt incomes must be mentioned in the tax return. Ignore this at your peril. The new rules for tax filing announced this year state that if the total exempt income during the year exceeded `5,000, you will have to use ITR 2 to file your return.

Things to know before investing in debt funds Page 15

3 Not including interest

4

Not checking TDS details Before you file your returns, check whether the tax you had paid for last year has been correctly credited to your name. The Form 26AS has details of the tax deducted on behalf of the taxpayer and can be easily checked online. It is easier if you have a Net banking account with any of the 35 banks that offer this facility. Otherwise, you can go to the official website of the Income Tax Department and click on ‘View your tax credit’. The first-time users will have to register, but it takes less than 5 minutes before you can log on and view your details.

Last year’s budget had introduced a new Section 80TTA, which gives a deduction of up to `10,000 on interest earned on your balance in the savings bank account. Many taxpayers think this deduction also includes the interest earned on bank deposits. The interest earned on fixed deposits and recurring deposits is fully taxable at the normal rate. You have to mention it under the head ‘Income from other sources’ in your tax return. Tax is payable even if the TDS has been deducted. TDS is only 10% (20% if you haven’t submitted your PAN details), and if you are in the 20-30% bracket, you need to pay additional tax. The interest on NSCs is also taxable.

Please send your feedback to [email protected]

12

  Financial Planning

The Economic Times Wealth, July 8-14, 2013

Is your city money smart? Mumbai investors are the most financially intelligent in the country, but the score of 5.8 on a scale of 10 leaves a lot of room for improvement, according to a recent study. Financial Intelligence Index 2013

I

ndian investors do not score very high on financial intelligence, according to a recent study by Ameriprise India. The study was conducted by TNS India on behalf of the financial planning firm in six major cities across India. It assigned equal weightage to five parameters: the age at which you start investing, portfolio diversification, longterm horizon, goal-based investing and seeking professional help. While Mumbai investors are the most savvy, their score of 5.8 on a scale of 10 is not very impressive. Delhi ranks second on the Financial Intelligence Index with a score of 4.5, followed by Hyderabad, Pune, Bangalore and Chennai, in that order. “There are potential areas of improvement across these cities. Mumbai investors need to diversify their portfolios more, Delhi and Hyderabad should start investing earlier, Pune should focus on goal-based investing, while Bangalore and Chennai would do well to seek professional advice,” says Kapil Narang, chief operating officer of Ameriprise India Advisory Services. Here’s how investors in these six cities fared on the five parameters.

5.8

`

Mumbai

Delhi

Single women more focused while investing

Hyderabad

3.9 4.5

Pune

3.8

A key finding of the study is that single women tend to be more focused while managing their investments. They seek guidance from parents, friends, professionals and other quarters, and are financially confident. However, this changes when they get married. They no longer seek outside guidance on financial matters and leave the decisions to their husbands. The study found that 72% of married women thought they would fare as well as their husbands, or even better, when it came to investing, but don’t assert themselves to maintain peace in the family. “This has a profound effect on their confidence,” says Kim Sharan, president, financial planning and wealth strategies, Ameriprise Financial. In Bangalore, for instance, 82% of single women respondents were financially confident, but only 50% of married women were as sure about the future.

3.3 Chennai

3.5

Bangalore

The study had 700 respondents with an annual household income of `12.5 lakh and in the age group of 28-45 years.

Scores are on a scale of 10. Equal weightage was given to the five parameters given below.

8.2

Early start 4.4 2.5

Mumbai

2.5

1.9

2.7

Delhi Hyderabad Mumbai investors are the most diversified, but show a marked preference for FDs and RDs. Hyderabad is the least diversified, which brings down its overall score.

Pune Bangalore Chennai

Portfolio diversification

Mumbai tops the list on this crucial parameter, with over 80% investors starting before the age of 26. In Hyderabad, just one out of five investors wakes up so early.

6.7

3.0

1.9

2.7

2.8

2.9 One in four respondents said that retirement planning was their key financial goal. In 2012, only 1 in 10 had listed retirement as a priority.

Long-term planning

7.3 4.6

5.3

24%

3.6

Goal-based planning 8.2

Sharper focus on retirement

6.1 3.9

4.9

6.8

Professional advice

5.4 4.2

4.1

3.7

4.0

3.1

3.2

2.6 1.0

Most Delhi respondents invest with a goal in mind, which is something their counterparts in other cities should emulate.

Hyderabad investors redeem themselves by taking a long-term view. Paradoxically, financially savvy Mumbai investors score low on this front.

While Mumbai investors understand the importance of professional advice, most Chennai respondents adopt the do-it-yourself approach to investing.

Real Estate

The Economic Times Wealth, July 8-14, 2013

13

Will the Regulatory Bill see a rise in property prices? With the Real Estate Regulatory Bill awaiting the final nod in the monsoon session of Parliament,

speculation has begun on its impact on the realty prices. Amit Shanbaug talked to some of the leading experts in the real estate space and here’s what they had to say on the subject...

Niranjan Hiranandani Managing Director of Hiranandani Group of Companies

Yes Once implemented, the Bill will bring a lot of transparency in the sector, and all the developers support and appreciate it. Since the incidental However, one needs to undercosts have gone up stand that there and the project will are certain sticky be sold on a carpet points. Take the deposit of 70% of area basis, we the cost of the expect a prise rise project, which of 25-30%. includes the land and construction cost, in an escrow account, which would suck up the liquidity from the market. The land cost is the highest one has to bear today, and currently, most developers are facing liquidity crises, which will be heightened due to the bill. The developers would have to approach the banks to fund the construction cost. It is virtually impossible for banks to fund hundreds of crores of rupees as there is an RBI cap on lending. So, they would have to consider expensive sources of credit like private money lenders, and the cost of these high interest rates would have to be passed on to the customer. The incidental costs, such as for raw material and land, have also gone up, and the developer needs to recover these from each flat. Since the project would also need to be sold on a carpet area basis, he would have no option but to factor in all the costs in a smaller area. This will give an illusionary view of price rise. So, we anticipate a rise of 25-30% in property prices for projects. Another factor is that fewer projects would come in the market as the developer won’t be able to advertise before he gets all the approvals. So a lower supply would lead to a rise in demand and, ultimately, a price rise.

Before 1981, it would take just three months for the developer to get all the approvals, whereas now it takes 2.5-3 years. We have to face around 40 authorities to get 52 different types of approvals to start construction. With the Bill, we will have to face one more authority, so the developers’ work will increase. The Bill should also impose penal action for the government authorities that fail to give approvals on time. Rather, the regulator should take on the task of clearing approvals so that lesser time is taken for clearances. The Bill also doesn’t have any feature to promote construction activity and doesn’t take into account the problems faced by developers.

Pankaj Kapoor Founder & Managing Director, Liases Foras, a real estate rating and research agency

No The pricing for any product needs to be seen in relation to the demand-supply mechanism. However, real esThe Bill will result tate is one in better regulation sector that does not adof prices as the here to any developer won’t be rule of ecoable to leverage the nomics. Realty prices in advance money some of the and other malpra- top metros ctices will also stop. have always risen exponentially at around 3% every quarter even when there was virtually no demand. So, it would be wrong to say that prices will rise only if the Real Estate Regulatory Bill is enforced because prices have always risen regardless of the reasons. In fact, the Bill would result in better regulation of property prices. Currently, the developer leverages the advance money, which gives rise to spec-

ulative activities. For instance, if he gets `100, he pays `10 as token money at 10 places, and to fund the rest, he takes expensive loan at rates as high as 30%. Or, he may call for investors for the 10 places he has paid the token money. These speculators, too, keep the prices high as they have to recover their costs and make profit. The interest on the loan is ultimately passed on to customers. Once the Bill is passed, such leveraging opportunities will cease to exist as the developer will have limited resources to leverage. For instance, if he were to get `100 as advance money, nearly 70% of this would have to be deposited in an escrow account. The Bill would also ensure that the project would be completed on time and the developer takes the necessary permissions and clearances before the project is marketed. Another major aspect is the carpet area rate on the basis of which the developer would have to sell his project. The super built-up area, which was around 40-45% of the carpet area, has gone up to 65-70% of the carpet area. Such malpractices would come to an end. Also, there would be a lot of hidden costs that the developer would add to the cost of the project. So, when such practices are done away with, the customer would get a much cheaper property and would only pay for what is on paper. The Bill would also usher an era of transparency in the real estate sector. However, the Bill also needs to focus on accountability on the part of the governing authority. It needs to ensure a time frame during which the authorities approve or disapprove the clearances for the project.

Anuj Puri Chairman & Country Head, Jones Lang LaSalle India

May be The Bill will pave the way for transparency by regulating the housing sector. It covers all projects over 4,000 sq m in size and seeks to cover major private residential developments across the country. It will provide considerable relief to the ordinary buyer/inves-

tor, who faces innumerable obstacles while buying property and is duped even by small developers, builders and brokers. The strict regulation for promoters means that the construction will not only be completed on time, but the buyer will get the property as per the promised specifications. Besides, the setting up of the Regulatory Authority and the Appellate Tribunal will create a dispute resolution mechanism and address the grievances of the consumer who had recourse either to a prolonged litigation in a court of law or consumer courts. However, it does not provide any relief to developers in terms of expediting the approvals and permissions process. Developers face long and inordinate delays, besides the difficulty in obtaining approvals from While the multi-headed govunorganised ernment agencies, developers may and have stressed on the need for a increase their single-window prices, the clearance to cut organised ones through the red tape. with transparent As for the real practices, will not. estate prices, one cannot say whether these will go up or down once the Bill is passed. It would depend on the project and the developer. The unorganised developers, who have just one or two projects in their hands and don’t follow the rules of transparency, will certainly witness an impact on their bottom lines. They will increase the prices as their margins are bound to take a hit and they don’t have a reputation to build. However, the organised developers, who are known to be transparent in their dealings, follow the construction norms and prefer to have the transaction through cheques, will not be increasing their prices because they won’t be impacted once the Bill comes in force. So the price hike in property would have to be seen purely on a case-to-case basis.

14

  Financial Planning

The Economic Times Wealth, July 8-14, 2013

THE MONEY QUESTION

Paper Work

What are the conditions under which borrowing is a good option?

Opening account under NPS The NPS is a defined contribution scheme, which was launched in May 2009, for all citizens on a voluntary basis. An individual can make regular contributions to the NPS account, which is managed to create a retirement corpus. One can open the account by completing the documentation and formalities with the Points of Presence (PoPs). A PoP is the first point of interaction between the subscriber and the NPS.

Conditions An Indian citizen between 18 and 55 years of age can join the NPS. It offers two types of accounts—Tier I, where the contribution cannot be withdrawn, and Tier II, where it can be withdrawn anytime. To have a Tier II account, one must have a Tier I account.

Form raj

Ashwin Murthy, who works in a multinational company and earns a decent salary, believes that he does not need a credit card. He is single and looks ahead at his life with the confidence of a disciplined saver. He thinks he should save money, instead of borrowing it, in order to buy the things he needs. Murthy is of the opinion that loans are traps laid out by lenders and wonders why one should borrow at all. What are the possible flaws in Murthy’s way of thinking?

A

shwin Murthy follows the rule book of the righteous elders, who strongly discourage borrowing. There are, indeed, instances where people have suffered because they have borrowed. To save is to set aside money for yourself, but to borrow is to use money that you have not earned. However, this conservative reasoning may not always help in asset building. Borrowing offers the benefit of leverage, which, if used judiciously,

could turn out to be a smart way to build assets. For instance, buying a home might be tough if Murthy plans to fund it entirely with his savings. In the period that he accumulates this amount, the housing prices could move up, making it tough for him to buy this asset. He may find that borrowing, especially with the tax concessions, might result in a low-cost loan to acquire an appreciating asset such as property. While Murthy may want to avoid

needless loans, he may find it useful to take the ones that can help him tide over temporary requirement without much pain. He must remember that in order to be able to access loans, when needed, he will need a credit track record. A credit card, for which payments have been made regularly, provides the required credit history to take a loan. It will do Murthy well like to consider the advantages of reasonable amounts of borrowings without completely closing himself to the possible benefits.

SMART THINGS TO KNOW: Home equity loans

1

The value of a property, minus any outstanding loans on it, is regarded as home equity. Banks and non-banking financial companies (NBFCs) may be willing to lend using this equity as collateral.

2

If the value of your property has appreciated since it was purchased, it can be used as a collateral to take an additional loan.

3

Home equity loans rates are reasonable since they are backed by a collateral. However, they are large, lumpsum loans ideally suited for substantial needs.

4

Home equity loans can be repaid as EMIs. The consent of all joint owners is required before a house can be offered as a collateral for a loan.

5

Home equity loans are also offered to lure customers to switch their home loans to a new bank, and get a higher amount as a fresh loan.

The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre and Arti Bhargava.

An individual who wants to open a Permanent Retirement Account (PRA), be it Tier I and/or Tier II, has to submit the form with other supporting KYC documents to the POP service provider. The form can be downloaded from http://tinyurl.com/ ntzxa2u.

Contribution The first contribution to the account has to be made at the time of registration. The minimum amount is `500 and the minimum contribution in a year is `6,000. This should be done for at least four years, while there is no maximum limit. The contributions can be made by cash, local cheque, demand draft or through an electronic transfer.

PRAN After submitting the form and documents, NSDL, the central record-keeping agency (CRA) for NPS, allocates a Permanent Retirement Account Number (PRAN) to the individual. This card is despatched within 20 days of the day of receipt of the form.

Points to note  A subscriber can go to https://cra-nsdl. com/CRA/ and check the status of PRAN kit using the 17-digit receipt number provided by the POP service provider.  If the minimum annual contribution of `6,000 is not made to the account, the account becomes dormant.

Financial Planning 

The Economic Times Wealth, July 8-14, 2013

15

Things to know before investing in debt funds It is important to know about the returns you can earn and risks you are likely to face while investing in various categories of debt funds, says Uma Shashikant.

D

ebt funds have been sold to a large number of retail investors in the past two years. The investors who bought on the basis of high returns earned in the past, have lost money in the last one month. Why do debt funds make losses? How should investors choose? First, a debt fund is a portfolio of debt instruments. Therefore, the return you earn from such a fund is primarily made up of interest income, which is not accounted for on the day it is received in the bank account, but is accrued every day. In other words, if a debt fund buys a bond that pays 9% interest, it would accrue an interest of 75 paisa every month, or 2.5 paisa every day. The amount that accrues to a debt fund depends on the bonds it holds on a given day. This is why a debt fund’s NAV will show an upward slope, unlike an equity fund, which does not earn a regular income. Therefore, the investors who chose a debt fund because it provides a regular income and is less risky are correct in their assumption. Second, several debt funds are openended. This means that the fund manager does not receive all the money he has to invest at one point, nor does he hold all bonds to maturity and sell them when the fund matures. A fund that does this is a fixed maturity plan (FMP). All other funds receive money and service redemptions on an ongoing basis. This means that the investors choose the time for which they want to be invested in a fund. The return they get will depend on the period for which they stay in a debt fund. For example, a liquid fund, which is a very-shortterm debt fund, is run like an interest-bearing current account. It invests as it receives money, and the interest income it earns is accrued every day. An investor who leaves idle cash in a savings bank account earns only 4%, but the same money in a liquid fund or an ultra short-term fund will earn a daily interest income based on the market rates. Most investors will find ultra shortterm funds an efficient vehicle for shortterm investments. Third, debt funds are subject to market risk. This means that they may hold bonds paying various rates of interest, while the market interest rate might be changing. This is the source of ‘mark-to-market’ risk in a debt fund. When interest rates go up, the value of existing bonds in a debt fund falls, and vice versa. A debt fund will rework the value of all the bonds it holds, depending on the current market rates. That is why its NAV moves up and down.

GETTy IMaGEs

does for a short-term bond that will mature Fourth, the return in a debt fund does in a shorter period. not comprise interest income alone. Fifth, debt fund names are not To this income, any gain or loss simple to understand. An investor from the change in interest rates Time to opt who chooses to put his money in is added. This is why debt funds for dividend yield stocks an open-ended debt fund has become very attractive when inPage 8 three choices. A very short-term terest rates are falling. The debt fund earns only interest bonds they already hold appreciincome and, therefore, it would ate in value, and this adds to the incur low risk. A very long-term return for the investor. The extent of debt fund earns both interest and this appreciation depends on the cash capital gains, and would come with a highflow from the bond due in the future. This er risk. All the funds that lie between these is why long-term bonds tend to be more two types are combinations of interest involatile than short-term bonds. Any change come and gains, complicated further by in market rates impacts a long-term bond dynamic bond funds, where the fund manwith several cash flows in the future, than it

ager can alter the proportion based on his views. A simpler way to understand how a debt fund works is to see how its NAV has behaved over a long period of time, say, three years. Low-risk funds will have a steady growth in NAV; high-risk funds will show volatility. The time it takes for a volatile NAV to return to its upward normal slope is the minimum time an investor should stay invested. What resulted in annual returns of debt fund to be in the range of 12-14% in May 2013? Interest rates in the debt market were falling, and the 10-year rate (called the benchmark) was down to 7.2%. This meant that all debt funds that held longterm bonds made a mark-to-market gain. To the simple accrual, they were able to add significant gains from appreciation in the value of the bonds they held. However, it is only interest income that persists and is steady. The 10-year rates went up to 7.7% in June. This meant that debt funds lost on a mark-to-market basis as the value of their bonds dropped. So, what is the moral of the story for the investor? First, do not buy a long-term bond fund on the basis of past performance. Only a part of it is interest, and sustainable. The other part, which is made up of market gains, can disappear if rates begin to increase. Second, allow time for the losses to be compensated for by the steady interest income. In a bond fund, staying longer will make it better. Third, debt markets are institutional markets and more efficient. A fund manager may not be able to do much better than his peers unless he takes risks. Choose carefully. While buying debt funds, the investors who do not want mark-to-market risks, should choose the ultra short-term funds, and be content with lower returns. This is a low-risk choice, and investors can stay as long as they wish. Those who like to take a view on interest rates, and try to make more out of changes in market rates, should choose long-term funds. This is a high-risk choice and requires investors to time the market. The investors who want their fund managers to take a view and make choices in the markets should choose other product combinations that fall between these two extremes.

The author is Managing Director, Centre for Investment Education and Learning.

1

MEhar gUsaIn

Graphics

2

The 7% inflation rate may appear high, but the prevailing consumer price inflation is actually higher at over 9%. It is better to err on the side of caution.

3

These rules will have to be tweaked in certain situations. For instance, if your target price is achieved, you could exit a stock or equity fund earlier or hold for the long term if the goal is far away.

...years is the minimum time frame you should have when you invest in stocks and equity mutual funds.

5

`1 crore will last 16 years if a family needs `60,000 a month, investment earns 9% and inflation is 8%.

Equities are inherently volatile and may not yield desired results in the short term.

...times your annual income is the life cover you should buy. Term plans make it possible to take a large cover at a low price.

You may not be able to follow all the 10 rules mentioned above. However, even if you have complied with 6-7 tenets, it will ensure that your finances are on the right track.

6

Ulip charges are high in the initial years, so short-term plans will yield poor returns.

Education costs are rising by 12% every year. In 6 years, the cost doubles.

More than this number will only duplicate the holdings and make the portfolio difficult to track and monitor.

...is the long-term inflation rate that you should factor into your financial planning. This is especially important for longterm goals such as child education and retirement.

...is the maximum number of funds that a small investor should have in his portfolio.

BaBar zaIdI

TexT

%

7

8

...years is the minimum term after which a unitlinked plan becomes profitable for the investor.

9

4

...months' worth of your living expenses should be in a contingency fund, which can be accessed at short notice.

5

Don't let your contingency fund idle in a savings bank account. Start a sweep-in account or invest in a debt fund, which will pay within a day of submitting the redemption request.

Credit card rollovers are costly. More importantly, it shows you are spending more than you can afford.

3

Even a 0.5% difference in the expense can widen the gap to 10-15% over 20-25 years.

...is the maximum you should pay as annual fund management expense on an average. A higher expense could prove costly in the long term.

The annual review is critical for maintaining the asset allocation of your portfolio.

...is the maximum number of times you should roll over credit card bill in a year. If you do it more often, you could be headed for a debt trap.

4

1 ...time a year you should review your investments. Throw out underperformers and add more to the high performers.

You will not be forced to break other investments in an emergency.

`

Increasing lifespan means you must have enough to sustain for 20 years in retirement.

A life insurance cover of 6 times the annual income does not include outstanding loans and other liabilities. One needs to take additional insurance to cover one's liabilities.

...of your income is the minimum you should put away for retirement every month.

%

10

While financial planning is unique to each individual, there are certain rules that apply to all of us. Find out how many of these 10 tenets you are following while planning your investments.

%

2

Learn & Keep

Countdown to smart finances

The Economic Times Wealth, July 8-14, 2013

Points to keep in mind

16

18

  Family finances

The Economic Times Wealth, July 8-14, 2013

Manish Sakhare

Net worth of the SakhareS Asset

Current value (`)

Real estate

40 lakh

Cash

4 lakh

Insurance SV

3.65 lakh

PPF

1.8 lakh

Gold

1 lakh

Equity MF

36,000

Total

50.81 lakh

Liabilities

Current value (`)

Home loan

20 lakh

Total

20 lakh

“I used to invest in equity, but decided to redeem some of my manish sakhare investments when I wanted to buy a house.”

Approximate net worth

`30.81 lakh

Sakhares’ cash flow Inflow

Total monthly income `1 lakh

funds needed to achieve goals Goal

Manish `1 lakh

Outflow

Total monthly expenses `57,082

Household expenses

`25,000 Investible surplus

A comprehensive plan has been mailed to the Sakhares.

Insurance premium

`10,000

EMI

`22,082

`42,918*

Years to achieve

Future cost (`)

Resources used

Further investment (`/month)

Contingency fund

-

1.8 lakh

Insurance SV

-

Buying a house

7

90 lakh

Property, insurance

24,568

Future child’s education

20

60 lakh

-

6,000

Retirement corpus

25

3 crore

PPF

18,000

Investible surplus needed

48,568

Cost of additional insurance

2,000

Total

50,568*

Surplus

350

* Surplus will grow to `50,918 after most of the insurance policies are surrendered. Equity and debt funds are expected to give returns of 12% & 10%, respectively. Inflation assumed at 8% per annum.

Family finances

The Economic Times Wealth, July 8-14, 2013

19

Ample time, high income will push through goals Requisite equity exposure and overhauling of insurance portfolio will help Manish Sakhare meet his goals.

eXPert aDVICe ExISTInG aSSET alloCaTIon

5% 14%

Equity

Gold

25% debt

56% Cash

PRoPoSEd aSSET alloCaTIon

5%

Gold

40% debt

5%

Cash

50%

Equity

Proposed asset allocation to be achieved over time.

SAkInA bAbWAnI

SAkhAreS’ GOOD MOVeS ...

inancial planners typically urge clients to deploy idle cash in more lucrative investment options. However, a vast majority of Indians would rather earn negligible returns than expose themselves to risk. Having a high amount of cash is certainly not the best way to plan one’s finances and a more balanced approach needs to be adopted by diversifying across asset classes. This is something Manish Sakhare, a 30-year-old merchant navy officer, needs to learn. With 56% of his portfolio in cash, 5% in equity, and about 13% in gold, Manish has chosen to ignore the better-yielding assets. He has, however, invested close to 25% in debt. “I used to invest in equity, but decided to redeem some of my investments when I wanted to buy a house,” he explains. The good part is that Manish is young and has opted for financial planning before starting with his responsibilities. This means that he will have ample time to correct his skewed portfolio. Manish lives with his parents, Padamkar, 65, and Kalpana, 58, in Nagpur. He expects to be married by the end of this year and earns about `1 lakh every month, of which `20,000 is incurred as household expenses. Another `5,000 is spent on travel, while insurance premium is as high as `10,000 every month. Apart from this, Manish is servicing a home loan of `20 lakh, which he took last year, and its EMI is `22,082. After accounting for these expenses, Manish is left with a monthly surplus of `42,918. This is a little more than 40% of his salary, and must be invested wisely to achieve all goals. Manish’s parents are not dependent on him financially as his father is a retired government official and receives a monthly pension. Hence, Manish can focus on building a corpus for all his requirements. An important thing to remember is that planning without protection is futile. Hence, Manish must ensure that he builds a

having a very high rate of savings. Investing early in real estate.

F

… AnD The bAD OneS

buying expensive and inadequate life insurance policies. holding too much cash. contingency fund and buys adequate insurance to meet emergencies. On reviewing his existing life insurance portfolio, Charul Shah of Greshma Wealth Advisors found that Manish has several traditional plans, which are expensive and do not cover him adequately. His four traditional plans and one Ulip provide him with an insurance of `35 lakh, but cost him `10,000 a month. Shah recommends that Manish surrender four of these plans—LIC Bima Gold, LIC Jeevan Saral, Bajaj Allianz Insurance and the Ulip—as they do not serve any purpose. Surrendering these will fetch a total of `3.6 lakh, of which `1.8 lakh can be earmarked as contingency fund for about three months’ expenses, while the rest can be invested in other instruments. More importantly, surrendering the insurance policies will help Manish save almost `8,000 per month, which can be used to invest for one of his most important goals. Shah has not suggested the surrender of LIC Jeevan Astha since it is a single premium plan. To acquire the requisite life cover, Manish must buy an online term plan worth `1 crore, which will cost him about `1,000 every month. He has also faltered when it comes to health insurance. So, Shah recommends Manish buy a family floater policy worth `5 lakh after he gets married. This will cost him

`1,000 every month. Now, Manish can plan his investment for goals, which include generating funds for his future child’s education, buying a larger house, and taking care of his post-retirement expenses. Of these, the most pressing one is buying a house worth `90 lakh in seven years. The sale of his current house and settlement of the outstanding loan will fetch him about `40 lakh. He can also allocate `1.85 lakh from the surrender value of his insurance policies for this goal. By investing it in a debt fund, he can add `3.5 lakh to the kitty. Apart from this, he will have to start a monthly SIP of `24,658 in a debt mutual fund, which is expected to fetch about `30 lakh in seven years. For the balance `20 lakh, Manish will have to take a home loan. To amass `60 lakh in 20 years for his future child’s education, he will have to start a monthly investment of `6,000 in equity mutual funds. Assuming a growth rate of 12%, the investment is likely to generate the desired corpus in the given time frame. Finally, Manish needs to build a corpus of `3 crore in 25 years for retirement. For this, Shah recommends a monthly SIP of `12,000 in equity funds. This is expected to fetch `2.25 crore in 25 years. In addition, he can start a monthly SIP of `6,000 in debt mutual funds, which is likely to yield another `79 lakh. His existing PPF investment of about `1.8 lakh is also expected to swell to `14 lakh, which will generate a total retirement corpus of `3.18 crore. As for the high cash balance of `4 lakh, Manish can use a portion for his wedding and put the rest in a short-term debt fund.

Financial plan by  Charul Shah, Director,  Greshma Wealth Advisors Please send your feedback to [email protected]

20

  Technology

The Economic Times Wealth, July 8-14, 2013

How to share big files over the Internet To overcome the limitation of size that one faces while sending files over e-mails, Karan Bajaj suggests convenient and viable alternatives that you can try out.

File hOstiNg Websites If you want to avoid the tedium of signing in to your accounts and sharing files with someone over a few days, file hosting websites are the best choice. Rapidshare and Mediafire are well known, but here are five others you can try.

1

Bayfiles.net

2

Filedropper.com

3

Slingfile.com

4

Yourfilelink.com

5

Filewire.me

Over FacebOOk With a new free app called Pipe (www. pipe.com), you can send files as large as 1 GB to any of your Facebook friends. The recipient just needs to have the app installed. The process is simple—launch the app, choose the friend you want to send the file to, and select the file. It will be transferred directly and securely from your computer to your friend’s without being stored online. In case your friend is not online, a file up to 100 MB can be uploaded to Pipe’s cloud storage locker. Your friend can then download the file whenever he is online.

With NetWOrk Drives Network drives, such as the WD MyBook Live and Seagate GoFlex Home, are not only great for data back-up, but can also be used to access files over the Internet. You can use the settings to place the files and folders you want to be accessible over the Internet. Then share the link to access the drive, as well as log-in credentials, with your friends and they can get the files directly from your computer.

via skype Skype messenger allows files to be sent over the instant messenger (IM) window. You can transfer files as large as 100 MB at one go from one computer to another. Just log on to www.skype.com to install the desktop client, start an IM conversation with the friend you want to share files with, and then select the option to send files.

UsiNg persONal clOUD stOrage If you use cloud storage sites, such as Google Drive, Dropbox, Box.net, Mega.co.nz or Skydrive, you can easily share files with anyone. Just select the file or folder you want to share, and enter the e-mail address of the person with whom it is to be shared. An e-mail with a special access link is then sent to the person, or the specific shared folder shows up in his cloud storage drive. You can then upload large files to the shared folder and your friend can instantly download them.

Bayfiles has no limit to the number of downloads for your uploaded files and supports sizes up to 5 GB. The interface shows upload speed and remaining time, but doesn’t support multiple file uploads. The site removes your stored files after 30 days of inactivity. Once the file is uploaded, you can send the sharing and delete links to your e-mail from the site.

This one has a clean and easy-to-use interface and it’s one of the best free services for file sharing. No sign-up is needed and you can upload files as big as 5 GB. Your files are not deleted if they are not being downloaded on a regular basis and are deleted only after they stay on their server for 30 days. Here again, you can only upload one file at a time.

This relatively unknown file hosting service lets you upload files as big as 50 GB (with a free account). It also lets you upload multiple files at once. Files are only deleted after 180 days of inactivity. Once uploaded, you can send the download and delete links to your e-mail and also share the download link with three other people. There is no limit to the number of file downloads per month.

This also doesn’t require a sign-up. You can upload files up to 5 GB with unlimited downloads. However, unlike the other sites mentioned here, this one deletes the file if it has not been downloaded in 15 days. It also shows multiple advertisements, giving it a cluttered look. However, uploads move a bit faster.

This is used to transfer files, not store them. You can upload 5 GB of files without registration, while a free account raises the limit to 30 GB. Any uploaded file is removed after 24 hours. You get a personal share ID for the website and can be used by others to connect with your account and download shared files.

Stocks 

The Economic Times Wealth, July 8-14, 2013

Reversal patterns

formed by two candles

In the first part of reversal patterns, we consider harami, dark cloud cover and piercing formations.

NARENDRA NATHAN

continues to move up after the formation of a bullish harami. Since this pattern is frequent, investors/traders common reversal pattern should focus on it only when the formaformed by two candles is tion occurs after a continuous fall. A ‘harami’, which means bullish harami formation coinciding ‘pregnant’ in Japanese. with other bullish signals, such as breakThis pattern occurs when a outs from a falling trend line and upside candle with a small body is formed after breakout of long-term moving averages, a long candle, and the body of the secalso increases its bullish strength. ond candle is completely contained The bearish harami, on the other within the range of the previous body. hand, is formed by a long green candle According to definition, it is not compuland a small red candle. The sell signal sory for the bodies of these candles to be occurs here when the price starts falling of opposite colours. However, harami after the harami formation. The imporformation with opposite colours intance of a bearish harami increases creases the dependability and, therewhen it occurs after a continuous rally fore, traders usually ignore the or when it coincides with other pattern when both are of the bearish signals like breakouts of same colour. How to gain from a rising trend line, downside Just like other reversal opportunities breakout of long-term moving patterns, harami too has funds averages, etc. bullish and bearish verPage 9 sions. In the bullish version, Dark cloud cover the first candle is long-bodied This is another bearish reversal and red in colour, indicating pattern formed by two candles. In that the selling pressure is continuthis case, the body of the first candle is ing. However, the price gap is up the green and also long. Though the market next day compared to the previous day’s opens with an upward gap compared to closing price. The harami formation is the previous day’s close (a normal occomplete if the closing occurs at the currence in any bull market), it loses opening price or slightly above it, that is, steam and fills the gap immediately, when the body of the candle is small and which is a bearish sign. However, to its colour is green. According to techniform a dark cloud cover, the fall should cal rules, the smaller the body of the seccontinue and price should close the day ond candle (green), the more likely is below the middle of the previous day’s the reversal. A buy signal in a bullish body. This increases the bearishness harami pattern occurs when the price

A

Harami pattern

It occurs when a small-bodied candle is formed after a long one and is contained in the latter.

Other patterns

While the dark cloud cover is a bearish formation, the piercing pattern is bullish.

Bearish harami 1,800

Dark cloud cover 1,900

1,780

1,850

1,760 1,800 1,740 1,750

1,720

1,700

1,700

Bullish harami 1,780 1,760

Piercing pattern 1,700 1,650

1,740 1,720

1,600

1,700

1,550

1,680

1,500

and, therefore, is the major rule for this pattern. For example, the middle value of the first candle in the dark cloud cover chart is `1,843 and the actual closing on the second day is at `1,840. Though stronger than harami, this pattern is also not very strong and investors/ traders should wait for the confirmation the next day. If the price continues to fall with high volume on the day after the dark cloud cover completion, it is a good sign to sell/initiate a short position. Investors/ traders should act only on the formation that happens after a long rally. Piercing pattern This is a bullish pattern and is almost the inverted version of the dark cloud cover mentioned above. It is common to have long red candles in a bear market and the first candle in this pattern will be this. Like a normal bear market day, the price opens

21

lower compared to the previous close. However, bears lose control and the gap is filled fast. With the bulls taking the driver’s seat, the price continues to rise and closes the day above the halfway mark of previous day’s long red candle. The middle value of the first candle in the piercing pattern chart is `1,537 and the actual closing on the second day is at `1,540. Like the dark could cover, wait for confirmation before taking a trading position. The buy signal is generated when the price continues to rise after the piercing pattern occurs. The latter is also significant only if it occurs after a continuous fall.

Next: Engulfing and kicker reversal patterns Please send your feedback to [email protected]

22

  Your Queries

The Economic Times Wealth, July 8-14, 2013

Question of the week 1

2

3

Q&a

4

6

5

panel members 1. Taxation Vaibhav sankla, Director, H&R Block

2. Mutual Funds Dhirendra Kumar, CEO, Value Research

3. Insurance pankaj mathpal, CFP, Managing Director, Optima Money Managers

4. Banking Vn Kulkarni, Chief Counsellor, Abhay Credit Counselling Centre

5. Real Estate (Legal) Dhiraj D Jain, Partner (Real Estate), SNG & Partners

6. Real Estate Gulam Zia, Executive Director, Retail &Hospitality, Research & Advisory Services, Knight Frank India

ET Wealth brings the collective wisdom of six investing experts to help answer readers’ queries on issues related to personal finance.

insurance

I am 46 years old and recently underwent treatment for cancer. I need about `8-10 lakh in 7-8 years for my daughter’s wedding. Where and how much should I invest to achieve this goal? I bought the ICICI Pru Pinnacle Super policy for 10 years at a premium of `50,000 for five years. Can this help me achieve my goal? - B K Dhar

ICICI Pru Pinnacle Super is a Ulip, which offers the option to invest in a fund with the highest NAV, or any other fund that is available under the plan. The returns for such policies are linked to the market. This plan may not meet your financial objective of building a corpus of `8-10 lakh with an annual premium of `50,000 for five years. However, you should consider the benefit of life insurance under the plan.

real estate

In 2005, my ex-wife and I had purchased a flat, which is held jointly. I have repaid the loan. We got divorced in December 2010 and she transferred her property rights to me. The court has also informed the society about our divorce as it was mentioned in the consent terms. I have got the power of attorney from her and a no-objection certificate to remove her name. What is the procedure for removing her name from the society’s records and other documents? Do I have to pay the stamp duty and register again? - J Kapadia

You should get a gift deed for your wife’s share in your name. The stamp duty and registration charges shall be applicable as per the circle rate on 50% of your wife’s share. Presuming that there is a society and the transfer charges being referred to pertain to the society, the same shall not be applicable.

taxation

I am a government employee in the 20% tax

bracket. My wife, who is a homemaker, opened a demat account in her name this year. It’s in the same bank in which I have a corporate savings account. She traded stocks on a small scale as a beginner. Will the profit be counted as my income? - S Arora

As per the tax laws, the income from assets that are transferred to the spouse for an inadequate consideration will be added to the taxable income of the transferor. Therefore, the short-term capital gains from the sale of listed shares would be taxable in your hands. The demat account charges, to the extent to which they can be related to the purchase and sale transactions, and the brokerage on these transactions, can be reduced from the gross gains to arrive at the taxable gains. I have held the shares of a private limited company since 2004. Now I plan to sell my stake to one of the directors. What will be the capital gain? Will I have to pay any other tax? How can I save on these taxes? - T N Verma

The sale will result in long-term capital gains, which will be taxed at 20.6%, subject to the indexation benefit. You can save tax by making certain investments either under Section 54EC or 54F. You can claim exemption under the former if you invest in capital gains tax-saving bonds within six months of the date of sale. This investment should not exceed `50 lakh in a financial year. The exemption will be the least of the amount invested in such bonds within the prescribed period and the longterm capital gains. The interest on such bonds is taxable. The exemption under Section 54F can be claimed if you buy a house within two years of the date of sale of shares, or within a year before this date. Alternatively, you can construct a house within three years of the date of selling the shares. To be eligible for claiming such an exemption, you should not own more than one house at the time of the sale. The exemption can exceed the long-term capital gains.

banking & finance

My wife is 59 years old and retired a year ago. She wants to open a fixed deposit for 10 years with a government bank, but the bank says she will get only 9.25% interest for the given term, not the additional 0.5% that is available to senior citizens. I argued that since she would turn 60 after a year, she should start getting the additional 0.5% interest from that date, but to no avail. If the bank is correct, then the rule needs amendment in favour of senior citizens. Can I approach the bank, or the RBI, or any other agency to resolve this issue? - N Singh

Your wife’s current age is 59, not 60 years. Only those who are 60 years old and above are considered senior citizens as far as banks are concerned, and also as per the Income Tax Act. The banker enters into a contract and, accordingly, the rules prevailing on the date of contract will be applicable. You can certainly get the benefit of the additional rate of 0.5% when she completes 60 years, but these will not be offered now. I opened a term deposit account with a private bank and, at the end of the term, the amount was paid without the deduction of tax (TDS). There was a shortfall of a few hundred rupees, and when I questioned it, the bank said that since it had paid income tax every year during the tenure of the deposit and, hence, the maturity value was reduced by this amount. Is the bank right in doing so? - P Sequiera

A term deposit account is a contract between a bank and a client. Hence, no amount other than the TDS can be deducted from the maturity value. You can write to the nodal officer of the bank about the wrongful practice being followed by the branch and also ask for a refund of the amount that has been deducted. I took a housing loan from a private bank to buy a residential plot in 2002. In 2005, I

Someone withdrew `21,000 from my account by using a cheque leaf that was stolen from my shop and forging my signature. Though it is easy to make out that the signature was forged, the bank did not ask the person to furnish any identity proof. How can I resolve this issue? -M Mahajan

I assume that you lodged a timely complaint with the bank to enable it to investigate. The payment is generally made by a bank after due verification of the signature. However, it is usually difficult for people to reproduce and match the signature with the one in the bank’s records. Also, the onus of keeping the cheque book safe lies with the account holder and the bank cannot be held responsible for a stolen cheque leaf. You can take up the issue with the nodal officer of the bank if it is a recent incident, besides approaching the police to investigate the matter. You may also be able to nab the culprit if you investigate the matter internally.

pre-closed the loan because I intended to sell the plot. The bank assured me that I would get the original documents within a week. Later, I was told that the original papers were missing. I filed an FIR against the bank. I had to pay a penalty to the party to whom I had wanted to sell the plot as I had failed to give them the original documents. After more than four months, the bank gave me the documents and promised me a compensation, but has not honoured it till now. Can I approach the bank’s officials at the head office for compensation? - V K Malhotra

According to the Code of Banks’ Commitment to Customers, a bank has to compensate a client for any delay in returning securities/documents/title deeds of a property beyond 15 days of repayment of all dues. Even the compensation policy of the bank in this case states that the objective is to establish a system, whereby the bank compensates the customer for any financial loss he might incur due to deficiency in service on its part. By quoting the relevant portion of the bank’s own policy, you can take up the matter with the bank, if you have not done so already. If the matter is not more than a year old, you can file a complaint with the banking ombudsman or file a complaint before the consumer redressal forum.

Ask Experts Have a question for our experts? Post it at [email protected]

smart stats ET WEalTh Top 100 sTocks Every week we put about 3,000 stocks through four key filters and rate them on a mix of factors. The end result of this exercise is the listing of the top 100 stocks based on the composite rating to help ease your fortune hunt.

In This Section

ETW Funds 100 Loans & deposits Insurance ranking

Fast Growing Stocks top 5 stocks with the highest expected revenue growth (in %). Radico Khaitan

161

DEN Networks

152

Rain Commodities rank Current Rank

price ` Previous Rank

Stock Price

Growth% Revenue

Va l uat i o n r at i o s

Net Profit

EPS

PE

risk

PB

Div Yield

PEG

Downside Risk

r at i n G Bear Beta

25 27 28

No. of Consensus Analysts Rating

Gujarat State Fertilisers

1

2

61.70

110.17

99.85

99.85

7.78

1.58

2.44

0.08

1.27

0.60

12

4.42

Nava Bharat Ventures PTC India Dalmia Bharat

2 3 4

1 3 4

171.40 49.35 124.35

75.69 44.05 23.86

53.84 38.31 48.27

52.91 37.80 50.16

8.07 7.41 5.11

0.62 0.56 0.32

2.32 3.05 1.16

0.15 0.20 0.10

1.21 1.50 1.75

0.58 1.54 0.57

7 24 8

4.57 4.58 5.00

Kalpataru Power Transmi.

5

15

65.70

16.71

53.89

57.61

7.78

0.52

2.21

0.14

1.60

0.59

15

4.53

JK Lakshmi Cement

6

9

92.85

24.14

45.32

45.41

6.25

0.87

2.04

0.14

1.88

1.37

19

4.68

127

Housing Dev. & Infra.

119

Gujarat State Fertilisers

110

See revenue column in the adjacent table.

Least Expensive Stocks the 5 stocks with the lowest forward pe.

Ballarpur Industries

7

5

12.45

11.98

60.38

60.01

6.63

0.21

3.85

0.11

1.14

0.71

6

4.50

Opto Circuits India

Power Finance Corp

8

10

136.80

84.40

20.23

19.04

4.07

0.75

4.68

0.21

1.74

2.24

35

4.60

Rain Commodities

Oberoi Realty

9

6

208.75

68.41

64.42

62.48

13.49

1.64

0.96

0.22

1.34

0.91

41

4.61

Sintex Industries

India Cements

10

8

56.25

10.50

50.69

59.98

9.25

0.44

3.40

0.15

1.58

1.17

41

4.10

Deepak Fertilisers

11

7

94.75

7.82

50.18

44.88

6.44

0.65

5.84

0.14

1.05

0.76

12

4.42

J Kumar Infraprojects

12

NR

170.95

48.46

31.14

28.41

6.17

0.93

1.33

0.22

1.14

0.72

10

5.00

KEC International

13

11

32.80

16.67

165.82

169.95

13.04

0.74

3.57

0.08

1.91

1.38

26

3.85

Rain Commodities

14

17

37.80

126.69

19.67

17.03

2.89

0.51

2.80

0.17

1.53

0.88

5

5.00

Ashoka Buildcon

15

16

63.10

36.79

29.12

28.75

11.66

0.93

2.13

0.41

1.40

0.26

13

4.85

Sobha Developers

16

27

341.45

28.68

50.83

52.22

15.23

1.55

1.99

0.29

1.66

1.03

38

4.37

Opto Circuits India

17

NR

20.90

27.47

34.03

33.96

1.33

0.24

13.13

0.04

3.62

2.53

9

4.11

SJVN

18

12

19.55

25.04

9.10

38.14

7.78

0.97

4.81

0.20

0.83

0.29

5

4.80

Gateway Distriparks

19

19

105.00

27.57

22.49

22.31

8.94

1.44

5.60

0.40

1.12

0.67

23

4.70

NCC/India

20

14

26.95

13.86

92.82

85.33

12.20

0.26

1.10

0.14

2.36

1.71

31

4.58

Coromandel International

21

20

180.00

24.11

39.22

39.13

11.79

2.32

4.16

0.30

1.22

0.67

24

4.00

Indian Oil Corp

22

21

224.40

8.57

66.84

70.64

12.31

0.87

2.11

0.17

1.22

0.83

43

3.81

Jaiprakash Associates

23

22

52.40

26.47

151.59

182.18

24.49

0.93

0.88

0.13

2.13

1.55

37

4.19

Cummins India

24

23

443.00

60.90

63.96

91.81

26.38

8.22

2.45

0.29

0.93

0.59

42

3.93

Sadbhav Engineering

25

26

91.40

56.36

787.03

501.23

181.43

1.12

0.64

0.36

1.17

0.65

17

4.53

Aurobindo Pharma

26

28

185.00

22.82

109.00

108.20

18.37

2.07

1.08

0.17

1.78

1.08

26

4.62

PI Industries

27

30

133.35

27.75

47.85

596.86

17.39

3.39

0.46

0.03

1.54

0.43

17

4.65

Jaiprakash Power Ventures

28

29

17.55

91.50

121.57

95.07

13.34

0.80

0.00

0.14

2.17

1.67

21

4.29

Escorts

29

25

72.55

22.16

96.01

85.77

11.71

0.54

1.59

0.14

1.49

1.39

10

3.80

Eros International Media

30

31

130.50

29.18

29.38

28.93

7.73

1.43

1.16

0.27

1.29

1.12

16

4.63

1.33 2.89 3.81 4.07

Power Finance Corp

4.46

Dishman Pharma

See PE column in the adjacent table.

Best PEGs top 5 stocks with the least price earning to growth ratio. PI Industries

Opto Circuits India

0.03

0.04

0.01

0.03

Jindal Saw

0.05

Housing Dev. & Infra.

Aban Offshore

See PEG column in the adjacent table.

NIIT Technologies

31

NR

264.85

17.99

19.43

19.08

7.46

1.46

3.12

0.39

1.21

0.07

31

4.58

Income Generators

Supreme Industries

32

24

335.00

42.85

41.90

39.72

17.61

6.11

1.91

0.44

0.85

0.54

15

4.87

top 5 stocks with the highest dividend yield.

Puravankara Projects

33

40

79.15

24.52

25.32

27.39

6.92

0.89

3.03

0.25

1.95

1.27

6

4.83

Heidelberg Cement

34

38

42.15

64.34

161.53

161.51

31.08

1.13

0.00

0.19

1.58

0.75

8

4.75

Jain Irrigation Systems

35

39

49.05

18.78

9162.05

8628.08

700.00

1.03

1.99

0.08

1.91

1.44

12

4.42

Praj Industries

36

35

37.85

15.65

35.38

32.75

9.88

1.18

4.08

0.30

1.45

0.95

5

5.00

Tilaknagar Industries

37

36

49.00

24.37

31.07

34.57

9.80

1.11

1.59

0.28

1.70

1.30

6

5.00

Oil India | 4.94 SJVN | 4.81

Radico Khaitan

38

33

95.80

161.40

183.34

119.24

25.54

4.92

0.81

0.21

1.11

0.88

13

4.38

Jubilant Life Sciences

39

41

123.80

21.18

30.51

29.42

12.91

0.79

2.28

0.44

1.78

1.09

14

4.64

Aban Offshore

40

37

249.15

3.15

93.57

124.13

6.71

0.33

1.40

0.05

1.43

1.53

11

3.36

Steel Authority of India

41

43

48.25

13.85

29.16

29.33

9.11

0.49

4.60

0.31

1.37

1.38

49

2.61

Bhushan Steel

42

32

461.10

45.99

49.36

57.26

11.08

1.09

0.11

0.19

0.69

0.27

14

2.57

Jaypee Infratech

43

34

25.30

26.66

25.92

25.69

5.07

0.57

1.87

0.20

2.04

1.53

12

3.83

Dishman Pharmaceuticals

44

NR

54.90

14.86

26.03

24.55

4.46

0.43

2.11

0.18

1.97

1.69

14

4.29

Anant Raj

45

46

50.85

20.64

106.22

106.48

13.98

0.38

0.74

0.13

2.38

1.77

10

4.10

KSK Energy Ventures

46

62

52.85

92.64

74.77

74.48

12.87

0.61

0.00

0.17

1.73

1.52

5

4.20

Bajaj Electricals

47

52

177.55

24.83

149.19

148.76

34.74

2.44

1.60

0.23

1.32

0.58

24

3.04

Opto Circuits India | 13.13 Deepak Fertilisers | 5.84 Gateway Distriparks | 5.6

Dividend stocks are considered safe stocks during a downturn. Figures indicate what an investor can earn as dividend for every `100 invested. See dividend yield column in the adjacent table.

JSW Steel

48

60

611.75

9.02

83.90

90.38

14.67

0.79

1.17

0.16

1.41

1.34

49

3.02

Tata Motors

49

44

292.30

15.94

31.79

31.23

9.44

2.48

1.40

0.30

1.42

1.17

61

4.33

HSIL

50

57

89.25

25.44

14.34

12.35

7.22

0.58

3.36

0.58

1.63

1.06

12

4.92

Shree Cement

51

45

4554.00

41.30

283.87

281.31

59.37

7.98

0.34

0.21

1.17

0.26

44

3.86

JK Cement

Oil & Natural Gas Corp

52

56

309.10

9.02

25.27

26.00

10.98

1.74

3.42

0.42

1.09

0.95

60

4.35

Finolex Cables

53

55

53.15

15.10

25.10

25.19

5.60

0.88

2.32

0.22

1.64

1.38

5

5.00

15

Jindal Saw

54

42

57.60

16.48

1797.17

1795.65

23.61

0.43

1.66

0.01

1.59

1.93

11

2.91

HEG

55

48

163.80

8.33

35.59

35.51

6.56

0.70

3.03

0.18

1.14

0.49

6

3.17

Biocon

56

53

281.65

20.66

29.64

30.95

10.89

2.10

1.75

0.35

1.18

0.90

33

3.94

Sterlite Technologies

57

49

22.75

23.95

318.73

208.65

35.39

0.77

1.45

0.17

1.75

1.42

9

3.67

McLeod Russel India

58

54

282.45

17.37

35.27

34.94

11.28

1.59

2.04

0.32

1.47

1.45

14

4.50

HDIL

59

51

38.40

119.38

775.48

765.98

22.14

0.16

0.00

0.03

3.00

2.34

15

2.67

Birla Corp

60

58

232.75

15.51

16.13

16.93

6.63

0.73

3.06

0.39

1.38

1.02

11

4.82

IL&FS Transportation

61

70

143.70

12.23

11.70

11.19

5.41

0.77

2.76

0.48

1.18

1.14

27

4.85

Graphite India

62

50

75.20

6.12

29.59

29.09

10.93

0.86

4.65

0.38

0.75

0.05

7

4.00

Analysts’ Pets top 5 stocks with only buy recommendation.

J Kumar Infraprojects Dalmia 10 Bharat

8

Tilaknagar Rain Industries Commodities

6

5

Figures are number of analysts tracking the stock. See the last column in the table.

24

  Smart Stats

The Economic Times wealth, July 8-14, 2013

rank Current Rank

price ` Previous Rank

Stock Price

Growth% Revenue

Va l uat i o n r at i o s

Net Profit

EPS

PE

PB

Div Yield

PEG

risk Downside Risk

Least Risky

r at i n G Bear Beta

No. of Consensus Analysts Rating

Kajaria Ceramics

63

59

237.00

24.29

34.58

34.37

16.69

4.83

1.26

0.49

1.13

0.38

17

4.71

Ambuja Cements

64

61

188.65

19.93

49.27

47.66

22.47

3.31

1.93

0.47

1.18

0.42

60

3.02

Divi's Laboratories

65

66

962.65

41.25

39.48

40.36

21.26

5.12

1.33

0.53

1.14

0.53

30

4.13

Adani Enterprises

66

63

205.95

30.86

75.09

66.17

14.06

1.06

0.46

0.21

2.04

1.82

13

3.92

Unichem Laboratories

67

64

172.50

20.31

33.46

33.91

13.71

2.14

1.80

0.40

1.42

1.33

13

4.69

DEN Networks

68

65

174.05

151.96

136.71

122.99

37.77

2.66

0.00

0.31

1.75

0.64

11

4.45

VA Tech Wabag

69

NR

448.85

22.21

24.47

25.26

13.16

1.66

1.32

0.52

1.02

0.51

17

4.71

top 5 stocks with the lowest downside risk. Bhushan Steel

0.69 Supreme Industries

Graphite India

0.85

0.75

Navneet Publications

0.90

SJVN

Vardhman Textiles

70

67

265.80

19.13

8.75

9.58

4.75

0.66

1.67

0.50

1.26

0.24

7

4.86

Financial Technologies

71

72

760.40

44.66

99.96

34.70

15.42

1.93

1.02

0.44

1.51

1.73

8

4.50

Zensar Technologies

72

68

255.80

14.64

20.21

18.85

6.38

1.53

2.88

0.34

1.22

0.22

5

4.60

JK Cement

73

47

225.95

15.44

11.67

11.86

6.85

0.93

2.18

0.58

1.71

0.26

15

5.00

Motherson Sumi Systems

74

77

209.10

19.31

99.55

96.04

27.84

5.41

0.77

0.29

1.43

1.53

26

4.73

Sintex Industries

75

78

39.40

13.49

27.85

10.28

3.81

0.39

1.52

0.37

1.95

1.85

19

4.47

Oil India

76

79

567.90

19.98

12.24

11.68

9.49

1.77

4.94

0.81

1.03

0.77

48

4.31

Prestige Estates Projects

77

73

155.55

39.06

43.37

36.85

17.82

1.96

0.76

0.48

1.90

1.88

28

4.32

What is Hot

Simplex Infrastructures

78

NR

83.75

8.03

15.87

27.12

7.81

0.32

2.44

0.29

1.46

0.79

19

3.63

stock whose analyst rating improved in one week.

Jyothy Laboratories

79

81

180.55

27.33

488.05

447.05

153.73

4.58

0.70

0.34

1.42

0.40

21

3.52

Jindal Steel & Power

80

84

216.85

20.49

26.39

27.33

6.97

0.95

0.75

0.25

1.92

1.89

35

3.80

CMC

81

71

1319.50

27.19

34.80

34.01

17.27

4.20

1.34

0.51

1.01

0.01

12

4.00

Godrej Properties

82

85

523.30

82.35

74.53

76.57

29.38

2.85

0.75

0.38

1.00

0.88

22

2.73

Power Grid Corp

83

74

107.65

18.46

15.98

13.91

11.53

1.88

2.62

0.83

0.92

0.89

43

4.65

Balkrishna Industries

84

80

219.30

21.86

11.65

11.56

6.06

1.47

0.71

0.52

1.19

0.40

22

4.73

Navneet Publications

85

75

59.55

24.35

28.76

26.46

13.15

3.41

1.35

0.50

0.90

0.94

9

4.89

Persistent Systems

86

86

492.25

19.26

20.32

16.11

10.28

1.93

1.69

0.64

1.26

0.53

47

4.19

ACC

87

76

1236.00

15.96

41.36

40.00

22.00

3.16

2.43

0.55

0.93

0.91

59

3.27

DLF

88

90

178.55

20.34

68.49

63.92

42.76

1.11

1.09

0.67

1.81

2.17

44

4.16

Kirloskar Brothers

89

87

152.20

7.36

81.62

81.72

18.29

1.30

1.30

0.22

1.60

0.30

5

4.00

Ipca Laboratories

90

88

684.75

23.20

49.71

44.41

26.77

5.58

0.47

0.60

1.29

0.02

35

4.40

Arvind

91

95

74.30

16.62

22.62

21.46

7.76

0.86

1.28

0.36

1.59

1.47

9

4.78

Redington India

92

99

70.10

16.99

25.26

22.06

8.62

1.70

0.56

0.39

1.28

0.87

15

4.87

eClerx Services

93

89

735.00

17.54

26.97

23.68

12.75

5.07

2.37

0.54

1.29

0.30

20

4.35

Kaveri Seed Co

94

93

1644.25

38.29

37.37

37.01

17.78

6.54

0.49

0.48

1.41

0.64

8

4.88

United Phosphorus

95

NR

134.70

17.30

20.44

22.82

7.88

1.29

0.36

0.35

1.45

1.31

27

4.78

Greaves Cotton

96

82

60.05

14.04

19.96

19.97

9.97

2.01

2.18

0.50

1.16

0.99

14

4.86

Mahindra Holidays

97

83

252.10

20.55

35.88

45.16

23.21

3.45

1.58

0.51

0.97

0.65

11

4.36

Raymond

98

100

240.95

15.42

405.95

410.35

51.49

1.07

0.40

0.13

1.65

1.84

11

4.18

DB Corp

99

92

237.00

22.87

31.14

27.77

20.19

4.28

1.48

0.73

1.21

0.98

31

4.55

Greenply Industries

100

NR

449.20

17.84

24.18

37.53

9.12

2.30

0.44

0.24

1.65

0.41

8

4.38

0.83

See downside risk and bear beta columns in the adjacent table.

Indian Oil Corp 0.16 Power Grid Corp of India 0.05 JSW Steel 0.04 United Phosphorus 0.04 Cummins India 0.03 Figure shows improvement in rating on a scale of 0-5.

What is Not stocks that have gone down in analyst rating in one week. Birla Corp Ltd -0.18 Deepak Fertilisers & Petrochem -0.17 Tata Motors -0.06 Persistent Systems -0.04 Ambuja Cements -0.03

NR: Not in the ranking. Data as on 4 July 2013. Source: Bloomberg

MethoDoloGY The four filters used to arrive at the Top 100 stocks only traded stocks: Of the about 7,000 listed stocks, only actively traded stocks were considered. only big stocks: Companies with a market capitalisation below `500 crore were dropped. However, if a company had a market cap higher than this, but its annual revenue was lower than `500, it was not considered. only well tracked: We picked stocks that are tracked by at least five analysts. only profitable and growing: We

Figures show dip in rating on a scale of 0-5.

total weight: 30%, which is further split into 10% weight to revenue growth, 10% weight to net profit growth and 10% to growth in EPS (the higher, the better, for each parameter). Growth is calculated by comparing the ’consensus estimate’ for the next 12 months with the historical 12-month values.

considered only those stocks that are expected to show growth in revenue, net profit and EPS (earnings per share) in the next four quarters. The final two filters were that the companies should have made profits in the past four quarters and have a positive net worth. Rating rationale

2. ... but only at reasonable valuation. total weight: 40%, which comprises 10% weight to PE ratio, 10% to PB ratio, 10% to PEG ratio (the lower, the better, for all three parameters) and 10% to dividend yield (the higher, the better).

Having arrived at the final stocks universe, we ranked them using the following four principles. A percentile rating, that is, on a 1-100 scale is given to each parameter and the composite ranking is arrived at using the weighted average of these parameters.

covering the stock (the higher, the better) and 10% to consensus rating (a composite rating based on the recommendations by all analysts who track a stock. Again, the higher, the better). 4. ... and so do the risks. total weight: 10%. Two kinds of risks were considered. A 5% weight was assigned to downside risk and bear beta each (the lower, the better, in both cases).

The ranking methodology has been developed by narendra nathan. A detailed explanation of the methodology is available at www.wealth.economictimes.com

3. analysts’ views matter ... total weight: 20%—this consists of 10% weight to the total number of analysts

1. Growth is the key ...

Top 5 Large-cap Stocks

Top 5 Mid-cap Stocks

Top 5 Small-cap Stocks

top 5 weekly gainers (price)

top 5 weekly gainers (price)

top 5 weekly gainers (price)

United Breweries Price: 839.8 | % chg: 23

Jaypee Infratech Price: 25.3 | % chg: 23.11

GlaxoSmith C H L Price: 5551.4 | % chg: 16.91 Reliance Comm. Price: 134.1 | % chg: 15.95 United Spirits Price: 2556.25 | % chg: 14.85 Essar Oil Price: 66.2 | % chg: 13.84 Stock prices in `, as on 4 July 2013. Source: ETIG Database

C & C Constructions Price: 29.6 | % chg: 48

Indian Infotech Price: 29.6 | % chg: 17.69 TTK Prestige Price: 3530.75 | % chg: 17.2 Era Infra Engg. Price: 150.35 | % chg: 15.3 IFCI Price: 25.35 | % chg: 14.19

AGC Networks Price: 75.8 | % chg: 45.77 Shasun Pharma. Price: 62.2 | % chg: 31.22 Reliance Media Price: 55.05 | % chg: 28.77 Caplin Point Lab Price: 57.05 | % chg: 27.34

Smart Stats 

The Economic Times Wealth, July 8-14, 2013

etw fUNDS 100 B e S t

F U N D S

t O

B U I L D

Y O U R

LEADERS & LAGGARDS taking a long-term view of fund returns, here is a list of 10 funds in each category—five leaders (worth investing) and five laggards (that may be a drag on your portfolio).

P O R t F O L I O

Laggards

ET Wealth collaborates with Value Research to identify the top-performing 100 funds across 10 categories. Equity funds and equity-oriented hybrid funds are ranked on 3-year returns while debt-oriented hybrid and income funds are ranked on 1-year returns.

1.52 JM Equity

2.21 HSBC Dynamic

4.44

Equity: Large Cap BNP Paribas Equity ICICI Prudential Focused Bluechip Equity Reg ICICI Prudential Top 100 Reg

NET ASSETS (` cr)

3-MONTH

R E T u R n s

( % )

6-MONTH

1-YEAR

3-YEAR

5-YEAR

ExPENSE RATIO

««««

119.26

4.52

-2.96

11.19

7.59

8.95

2.82

«««««

4335.85

4.11

-4.10

9.96

7.36

14.60

2.31

««««

379.24

0.57

-7.35

4.70

5.59

10.07

2.61

4.71

7.59%

The 3-year return of BNP Paribas Equity is the highest in the category.

HSBC Equity

5.08 Religare Invesco AGILE

HDFC Index Sensex Plus

«««««

75.69

4.39

-2.54

10.62

5.50

11.35

1.05

Franklin India Bluechip

«««««

5003.70

1.78

-5.73

6.70

5.33

12.60

1.97

UTI Master Plus '91

««««

860.47

4.42

-4.56

11.23

5.14

8.46

2.11

IDFC Equity Regular

««««

309.58

6.55

-0.50

11.94

5.13

7.70

2.77

-12.13

Reliance Quant Plus Retail

««««

52.65

3.55

-5.43

6.76

4.63

10.08

2.97

JM Core 11

Goldman Sachs Nifty ETS

««««

451.49

5.39

-3.51

9.90

4.34

8.56

0.54

1.73

SBI Magnum Equity

««««

1055.45

2.62

-3.85

8.82

4.33

11.25

2.27

ING OptiMix Multi Manager Equity Option A

UTI Mastershare

««««

2261.39

3.40

-3.71

7.85

4.05

9.44

1.88

DSPBR Top 100 Equity Reg

««««

3276.31

3.04

-8.73

5.55

3.70

10.37

2.25

HDFC Top 200

«««««

11334.77

1.08

-9.42

4.12

2.96

12.81

2.22

HDFC Top 200

««««

12016.86

-1.13

-8.50

5.29

2.21

11.81

2.22

Equity: Large & Mid Cap UTI Opportunities

«««««

3520.34

4.77

-4.68

8.38

8.50

15.25

1.85

UTI Equity

«««««

2269.26

4.92

-4.04

10.77

6.95

13.12

1.90

Quantum Long Term Equity

«««««

174.37

0.96

-5.90

7.78

6.27

15.75

1.25

Franklin India Prima Plus

««««

1893.36

2.23

-6.16

9.51

6.17

11.84

2.08

Birla Sun Life Top 100

««««

308.84

3.61

-6.58

10.49

6.13

11.19

2.82

«««««

284.02

2.96

-6.33

10.02

6.05

15.26

2.68

Mirae Asset India Opportunities Regular

2.73 HSBC Unique Opportunities

3.53

8.50%

The 3-year return of UTI Opportunities is the highest in its category.

Taurus Bonanza

4.1

Principal Growth

««««

266.83

3.47

-3.86

10.54

5.99

9.67

2.50

-3.71

3180.48

4.46

-4.13

15.23

5.91

13.17

2.35

HDFC Premier Multi-Cap

Canara Robeco Equity Diversified Regular

«««««

653.09

3.49

-6.54

7.10

5.06

14.56

2.62

-3.49

Religare Invesco Growth

««««

32.52

2.88

-2.37

10.69

4.35

10.33

2.92

Franklin India Flexi Cap

««««

1532.60

0.23

-8.58

8.25

3.90

11.46

2.10

L&T India Large Cap

««««

313.22

4.75

-4.37

7.31

3.38

11.86

2.72

-1.55

ICICI Prudential Dynamic Reg

««««

3571.82

-1.11

-8.43

1.92

3.37

11.02

2.25

Reliance Growth

HDFC Capital Builder

««««

431.52

1.76

-4.74

6.87

3.25

12.20

2.68

L&T Equity

««««

2175.11

3.86

-6.20

6.58

3.11

11.77

2.22

UTI Dividend Yield

««««

3284.72

1.30

-8.56

2.28

2.92

13.07

1.83

HDFC Equity

««««

10823.95

0.02

-10.74

2.83

2.28

13.58

2.18

Templeton India Equity Income

HDFC Core & Satellite

-1.38 Reliance Growth Inst

-1.17 Tata Equity PE Plan A

Tata Ethical Plan A

««««

941.79

3.29

-6.69

14.81

7.39

10.26

2.22

«««««

103.22

4.52

0.54

16.69

6.29

11.55

2.90

L&T India Special Situations

««««

586.65

3.36

-6.43

9.65

5.45

11.50

2.59

BNP Paribas Dividend Yield

«««««

27.18

1.42

-8.63

9.07

4.69

15.73

2.83

ING Dividend Yield

«««««

68.79

-0.21

-8.36

5.63

3.24

15.64

2.84

««««

47.53

-1.90

-12.81

0.78

-0.74

12.01

2.95

Religare Invesco Contra

-12.33 HSBC Progressive Themes

-11.91 HSBC Midcap Equity

SBI Emerging Businesses

«««««

1305.61

-0.61

-14.61

10.93

13.55

15.88

2.36

IDFC Premier Equity Regular

«««««

3343.72

2.17

-9.18

9.89

7.61

15.60

2.25

««««

870.54

0.63

-6.33

12.81

7.14

12.34

2.29

Reliance Equity Opportunities

«««««

5005.71

-2.65

-11.94

5.47

6.67

16.55

2.35

HDFC Mid-Cap Opportunities

««««

2745.50

0.50

-9.17

5.06

6.47

16.02

2.47

Franklin India Prima

««««

772.93

3.59

-5.88

17.16

6.29

13.88

2.33

-7.36

Franklin India Smaller Companies

««««

297.29

3.75

-5.84

18.44

6.20

12.87

2.50

Birla Sun Life India Reforms

Religare Invesco Mid Cap

««««

50.62

0.95

-11.09

8.70

5.68

12.23

3.04

Franklin India High Growth Companies

««««

523.62

2.10

-5.96

14.47

5.16

11.38

2.40

Tata Dividend Yield Plan A

««««

319.58

-0.13

-7.93

1.97

4.20

13.69

2.72

ICICI Prudential Discovery Reg

««««

2632.52

-3.67

-12.93

2.92

4.13

17.06

2.37

IDFC Sterling Equity Regular

««««

1349.62

-1.61

-12.79

4.34

3.82

17.88

2.37

Birla Sun Life Dividend Yield Plus

««««

1201.66

-2.78

-14.12

-1.48

1.48

15.71

2.51

Axis Long Term Equity

««««

589.69

7.03

-0.48

15.10

9.85

—

3.00

Franklin India Taxshield

Equity: Tax Planning «««««

924.16

2.19

-5.10

8.53

7.20

12.94

2.26

BNP Paribas Tax Advantage Plan

««««

123.11

3.24

-6.44

9.21

6.15

8.71

2.91

Tata Tax Saving

««««

123.19

4.45

-3.91

10.37

5.09

9.99

2.86

Religare Invesco Tax Plan

«««««

134.97

2.58

-4.41

10.35

4.80

14.36

2.91

Canara Robeco Equity Tax Saver Regular

«««««

569.74

2.31

-6.85

6.06

4.61

16.14

2.67

HDFC LT Advantage

««««

820.39

1.57

-4.50

8.09

4.55

11.08

2.58

HSBC Tax Saver Equity

««««

182.94

3.83

-7.52

10.38

4.37

11.03

2.72

Reliance Tax Saver

««««

1958.24

1.39

-13.18

2.18

3.35

12.57

2.41

14.59 ICICI Prudential Focused Bluechip Equity Reg

12.81 HDFC Top 200

12.6 Franklin India Bluechip

11.64 ICICI Prudential Top 100 Inst I

15.75 Quantum Long Term Equity

15.26 Mirae Asset India Opportunities Regular

15.25 UTI Opportunities

14.56 Canara Robeco Equity Diversified Regular

13.58 HDFC Equity

7.39 Templeton India Equity Income

6.29 Tata Ethical Plan A

5.45 L&T India Special Situations

5.04 IDFC India GDP Growth Regular

4.69 BNP Paribas Dividend Yield

Equity: Mid & Small cap 3-year returns

Equity: Mid & small Cap

SBI Magnum Global

ICICI Prudential Focused Bluechip Equity Inst I

Equity: Multi cap 3-year returns

«««««

Equity: Multi Cap

15.58

Equity: Large & Mid cap 5-year returns

Birla Sun Life Frontline Equity

L&T Indo Asia

Leaders

Equity: Large cap 5-year returns

Sundaram Select Focus Reg VALUE RESEARCH FUND RATING

25

-10.37 HSBC Small Cap

-8.24 Sahara Star Value

17.88% The 5-year return of IDFC Sterling Equity is the highest in its category.

13.55 SBI Emerging Businesses

7.61 IDFC Premier Equity Regular

7.45 BNP Paribas Midcap

7.14 SBI Magnum Global

6.88 Reliance Equity Opportunities Inst

Hybrid: Equity oriented 5-year returns 2.96 Escorts Balanced

3.76 Principal Retail Savings

3.96 JM Balanced

4.75

Baroda Pioneer Balance

4.93 LIC Nomura MF ULIS

14.86 HDFC Prudence

14.22 HDFC Balanced

13.89 Reliance Regular Savings Balanced

13.88 Birla Sun Life 95

13.41 Tata Balanced Plan A Returns as on 4 July 2013

26

Smart Stats

The Economic Times Wealth, July 8-14, 2013

etw fUNDS 100 VALUE RESEARCH FUND RATING

NET ASSETS (` cr)

R E T u R n s 3-MONTH

6-MONTH

( % )

1-YEAR

3-YEAR

5-YEAR

Top 5 SIPs

ExPENSE RATIO

L&T Tax Advantage

««««

1102.08

3.54

-6.03

7.27

3.30

12.35

2.35

ICICI Prudential Tax Plan Reg

««««

1406.56

-0.42

-11.23

4.28

3.11

11.57

2.48

«««««

269.97

2.59

-10.92

16.83

9.99

—

2.97

««««

55.40

3.04

-10.82

11.52

7.34

—

3.08

Franklin Build India

«««««

60.18

0.56

-7.97

9.57

2.07

—

2.61

Canara Robeco Infrastructure Regular

Top 5 equity schemes based on 10-yr sIP returns. SBI Magnum Global

17.37

Equity: Banking ICICI Prudential Banking and Financial Services Reg Religare Invesco Banking

Sundaram Select Midcap Reg

17.35 Birla Sun Life Frontline Equity

16.08

Equity: Infrastructure «««««

87.20

-1.93

-12.75

-5.66

-2.96

6.39

2.95

PineBridge Infrastr. and Economic Reform Standard

««««

75.30

-2.31

-14.45

-6.17

-5.41

4.16

2.84

DSPBR T.I.G.E.R. Reg

««««

1208.17

-0.55

-17.35

-2.90

-5.68

3.33

2.33

Birla Sun Life Infrastructure

««««

310.62

-2.15

-16.53

-4.20

-6.97

3.57

2.76

HDFC Top 200

15.85

HDFC Equity

15.65 SIP: Systematic investment plan

% annualised returns as on 4 July 2013

Hybrid: Equity-oriented ICICI Prudential Eq Volatility Advantage Reg ICICI Prudential Balanced Reg Tata Balanced Plan A

«««««

251.97

3.28

-2.69

12.89

9.67

11.90

2.77

««««

501.94

2.97

-2.45

13.37

9.52

11.28

2.92

««««

545.88

4.04

-3.06

11.36

7.33

13.41

2.65

HDFC Balanced

«««««

1139.23

0.80

-6.40

2.94

6.27

14.22

2.39

Equity: SWPs

Birla Sun Life 95

««««

585.45

2.95

-3.91

10.53

5.48

13.88

2.77

Top 5 MIP schemes based on 3-year sWP returns.

Canara Robeco Balance Regular

««««

200.20

1.35

-6.31

4.65

5.39

12.95

2.65

HDFC Prudence

««««

5785.31

0.10

-9.48

2.58

4.40

14.86

2.24

Hybrid: Debt-oriented Conservative FT India MIP Birla Sun Life MIP II Savings 5 Birla Sun Life MIP

««««

298.29

4.63

3.67

12.14

7.81

8.84

2.14

«««««

286.27

3.05

3.65

10.46

8.75

10.50

1.34

««««

135.69

3.48

2.74

10.15

7.65

9.69

2.75

ICICI Prudential Blended Plan B Option I Reg

«««««

1753.19

2.78

4.85

10.15

8.94

7.49

0.34

Reliance MIP

«««««

3382.32

3.13

1.67

9.73

7.77

12.83

2.14

UTI Monthly Income Scheme

««««

297.06

2.25

2.76

9.27

7.09

9.29

1.80

DSPBR MIP

««««

549.99

2.74

0.88

9.23

7.82

9.32

2.54

Birla Sun Life Monthly Income

««««

362.68

2.54

1.85

8.63

7.18

9.81

2.69

HDFC Multiple Yield Plan 2005

««««

287.48

0.73

-0.48

5.55

7.02

9.78

1.89

Debt: Income Canara Robeco Dynamic Bond Regular

«««««

126.44

5.07

7.97

13.68

9.24

—

1.53

Templeton India Income Builder

«««««

1372.28

4.87

6.47

13.53

10.24

9.34

1.77

««««

6827.32

3.61

6.05

13.23

11.34

7.47

1.74

SBI Dynamic Bond Tata Dynamic Bond Plan A Birla Sun Life Medium Term Birla Sun Life Dynamic Bond Ret HDFC Medium Term Opportunities Templeton India Corporate Bond Opportunities Templeton India Income Opportunities Birla Sun Life Short Term

««««

323.68

4.24

6.66

12.79

8.64

6.21

—

«««««

825.96

3.60

6.46

12.08

10.06

—

1.50

««««

16203.34

3.29

5.55

11.39

9.27

9.61

1.17

««««

2012.24

2.34

4.64

11.10

9.25

—

0.27

«««««

4298.12

2.46

4.97

10.85

—

—

1.65

««««

3412.25

2.67

5.03

10.83

8.75

—

1.56

«««««

5347.06

2.32

4.73

10.29

8.84

8.54

0.28

Reliance Regular Savings Debt

««««

2548.32

2.44

4.74

10.08

8.17

7.58

1.79

BNP Paribas Bond

««««

279.35

1.96

4.10

9.43

8.64

—

1.93

ICICI Prudential Long-term Reg

««««

578.88

2.06

4.24

9.30

8.09

—

0.28

«««««

9.38

1.39

8.33

11.91

7.72

5.40

0.51

14.86

%

Birla Sun Life MIP II Savings 5

8.82

The 5-year return of HDFC Prudence is the highest in its category.

Edelweiss MIP

8.64 IDFC Monthly Income Plan Regular

8.33 DSPBR MIP

8.18

BNP Paribas MIP

7.71 SWP: Systematic withdrawal plan

% annualised returns as on 4 July 2013

13.68

%

The 1-year return of Morgan Stanley Bond is the highest in its category.

Debt - Income: Lowest Expense Ratio 0.15

0.15

0.12

0.10 0.09

0.11

0.11

BOI AxA Treasury Advantage Inst

Tata Fixed Income Portfolio Scheme B3 Plan A

0.08

0.06

Debt: Gilt short Term

0.03

Religare Invesco Gilt Short Duration IDFC GSF Short-term Regular

««««

24.81

2.27

4.34

9.95

5.73

4.64

0.38

SBI Magnum Gilt Short-term

««««

112.05

2.76

4.85

9.75

8.29

7.72

0.84

Birla Sun Life Gilt Plus Liquid

««««

7.58

1.67

3.47

7.59

7.17

6.06

0.48

0.00

All equity funds including balanced equity funds sorted on 3-year returns; all others ranked on 1-year returns.

HDFC Floating Rate Income LT

Tata Fixed Income Portfolio Scheme B3 Reg

As on 31 March 2013

Did not find your fund here?

Log on to www.wealth.economictimes.com for an exhaustive list.

Methodology

EQuITIEs (figures over the past three years)

The Top 100 includes only those funds that have a 5- or 4-star rating from Value Research. The rating is determined by subtracting a fund’s risk score from its return score. The result is assigned stars according to the following distribution:

Large-cap: More than 80% assets in large-cap companies.

««««« Top 10%

Mid- & small-cap: At least 60% assets in small- and mid-cap companies.



«««« Next 22.5%



««« Middle 35%



«« Next 22.5%



(Not covered in ETW Funds 100 listing)

« Bottom 10%

Fixed-income funds less than 18 months old and equity funds less than three years old have been excluded. This ensures that all the funds have existed long enough to be tracked for consistency of performance. Given the focus on long-term investing, liquid funds, short-term funds and FMPs are not part of the list. For the same reason, we have considered only the growth option of funds that reinvest returns instead of offering dividends that increase the NAV of funds. Despite these rigorous filters, the list includes 2/3 funds of each category to maximise choice from the best funds. The fund categories are:

Tata Fixed Income Portfolio Scheme A1 Plan A

Large- & Mid-Cap Cash Holdings 37.21

Large- and mid-cap: 60-80% assets in large-cap companies. Multi-cap: 40-60% assets in large-cap companies.

Tax planning: Offer tax rebate under Section 80C. International: More than 65% of assets invested abroad. Income: Average maturity varies according to objective. Gilt: Medium- and long-term; invest in gilt securities.

17.09

Returns as on 4 July 2013 Assets as on 30 June 2013 Rating as on 30 June 2013 Expense ratio as on 31 March 2013

15.14 10.50

9.20

Equity-oriented: Average equity exposure more than 60%. Debt-oriented aggressive: Average equity exposure between 25-60%. Debt-oriented conservative: Average equity exposure less than 25%. Arbitrage: Seek arbitrage opportunities between equity and derivatives. Asset allocation: Invest fully in equity or debt as per market conditions.

Why have debt funds made losses? Page 15

Religare Invesco Equity

Sahara Growth

Motilal Oswal MOSt Focused 25 Reg

Kotak Classic Equity

ICICI Prudential Dynamic Reg As on 31 May 2013

Methdology of selected Top 100 funds on www.wealth.economictimes.com

Smart Stats 

27

The economic Times Wealth, July 8-14, 2013

loans & DEPOSITS

ET Wealth collaborates with ETIG to provide a comprehensive ready reckoner of loans and fixed-income instruments. Don’t miss the information on investments for senior citizens and a simplified EMI calculator. Cheapest personal loans

Top five FDs 9.00 9.00 9.00 8.75 8.75

10,931 10,931 10,931 10,904 10,904

Tenure: 2 years City Union Bank Karur Vysya Bank Lakshmi Vilas Bank Tamilnad Mercantile Bank Bank of India

9.50 9.25 9.25 9.25 9.00

12,066 12,007 12,007 12,007 11,948

Tenure: 3 years Development Credit Bank City Union Bank Tamilnad Mercantile Bank State Bank of Mysore Corporation Bank

9.30 9.25 9.25 9.10 9.00

13,176 13,157 13,157 13,099 13,061

Tenure: 1 year Dhanlaxmi Bank Indian Bank State Bank of Hyderabad IDBI Bank Yes Bank

Tenure: 5 years City Union Bank Tamilnad Mercantile Bank Andhra Bank Bank of India Bank of Maharashtra

9.25 9.25 9.00 9.00 9.00

INTereST rATe (%)

Tenure: 2 years City Union Bank ING Vysya Bank Karur Vysya Bank Lakshmi Vilas Bank Bank of Maharashtra

What `10,000 will grow to

9.50 9.50 9.30 9.25 9.00

10,984 10,984 10,963 10,958 10,931

9.75 9.75 9.75 9.75 9.50

12,125 12,125 12,125 12,125 12,066 13,370 13,253 13,253 13,253 13,253

Tenure: 5 years Andhra Bank Axis Bank Bank of India Bank of Maharashtra Canara Bank

9.50 9.50 9.50 9.50 9.50

15,991 15,991 15,991 15991 15991

Bank of India

13.25 - 15.25

IDBI Bank

13.25 - 15.25

Central Bank of India

13.75 - 14.75

ICICI Bank

14 - 19 11

13

14

15

16

9.95 10.15 10.20 10.25 10.25 9.95 10.15 10.20 10.25 10.25

Allahabad Bank

10.70 - 12.2 10.7 9

10

11

12

13

14

15

16

17

18

19

Minimum loan: `50,000; Maximum loan: `2 lakh Margin money: 15%

Interest rate (%)

State Bank of India HDFC Allahabad Bank Bank of Baroda Canara Bank

9.95 10.15 10.20 10.25 10.25

16 15

State Bank of India HDFC Allahabad Bank IDBI Bank Punjab National Bank

9.95 10.15 10.20 10.25 10.25

10.25 12.25%

12

11.713.2%

11.75 -12.5%

11.25 11.5%

11 10

Minimum Invt. (`)

Interest (%)

11.45 13.45%

14

Central Bank of India

Maximum Investment (`)

8.40

1,500

recurring Deposits

8.30

10

IDBI Bank State Bank of India

Allahabad Bank

Union Bank of India

Tax Benefits

Features

Single 4.5 lakh

5 year tenure; monthly returns

Joint 9 lakh

5 year tenure; monthly returns

Nil Nil

No limit

5 year tenure

Nil Nil

Savings Account

4.00

50

No limit

`10,000 interest tax free

5-year NSC - VIII Issue

8.50

100

No limit

No TDS

80C

10-year NSC - IX Issue

8.80

100

No limit

TDS applicable

80C

Time Deposit

8.20 - 8.40

200

No limit

Available in 1, 2, 3, 5 years

80C

Senior Citizen Saving Scheme

9.20 payable quarterly

1,000

15 lakh

5 year tenure; minimum age 60

80C

Public Provident Fund

8.70

employees' Provident Fund

8.50*

Home loan base rate (%)

500 -

1 lakh a year

15-year term; tax-free returns

80C

-

Till retirement

80C

Base rates are reference rates for all floating-rate home loans.

As on 4 July 2013 10.15

10.2

10.25

10.25

10.25

10.25

10.25

10.25

10.25

10.25

10.25

10.25

Bank of Baroda

Bank of India

Bank of Maharashtra

Canara Bank

Central Bank of India

Corporation Bank

Dena Bank

IDBI Bank

Punjab National Bank

10.25

10.25

9.7 What `10,000 will grow to

9.25 9.25 9.25 9.25 9.00

15,797 15,797 15,797 15,797 15,605

Bank

State Bank of India

Axis Bank

State Bank of Mysore

Allahabad Andhra Bank Bank

15 yEars

20 yEars

25 yEars

2,028

1213

956

836

772

2,125

1,322

1,075

965

909

@ 12%

2,224

1,435

1,200

1,101

1,053

1,613

22

10.50 - 10.55

Bank of India Star Autofin

Monthly Income Scheme

@ 10%

2,379

21

Bank of Maharashtra

These are average rates for the entire tenure

@ 8%

@ 15%

20

10.45

Cheapest education loans

Postal deposits

Interest rate (%)

10 yEars

19

10.25 - 11

State Bank of India

13

Your EMI for a Loan of `1 lakh 5 yEars

18

Corporation Bank

20 yEars

Up to `30 lakh State Bank of India HDFC Allahabad Bank Central Bank of India Corporation Bank

Top five tax-saving FDs

Tenure

17

Interest rate (%)

10

Tenure: 5 years and above City Union Bank Deutsche Bank Tamilnad Mercantile Bank Vijaya Bank Axis Bank

12

Up to `10 lakh State Bank of India HDFC Allahabad Bank Bank of India IDBI Bank

Interest rate (%) compounded qtrly

9.80 9.50 9.50 9.50 9.50

13 - 14.55

10 yEars

15,797 15,797 15,605 15,605 15,605

Tenure: 3 years Development Credit Bank Axis Bank Bank of India Bank of Maharashtra Canara Bank

Dena Suvidha

INTereST rATe (%)

Cheapest home loans

Top five senior citizen deposits Tenure: 1 year Indian Bank Yes Bank State Bank of Hyderabad IDBI Bank Bank of Maharashtra

Cheapest auto loans LoAN AMoUNT: `5 LAKH

What `10,000 will grow to

LoAN AMoUNT: `2 LAKH

Interest rate (%) compounded qtrly

1,400

1,317

1,281

Choose this calculator to check your loan affordability. For example, a `5 lakh loan at 12% for 10 years will translate into an EMI of `1,435 x 5 = `7,175

Cheapest gold loans

Syndicate Union Bank Bank of India

INTereST rATe (%) Allahabad Bank

10.2 - 14.2

Central Bank of India

11.25 - 12.25

Tamilnad Mercantile Bank

11.25 - 15

Syndicate Bank

11.50

Corporation Bank

11.6 - 12.6 9

10

11

12

13

14

15

16

17

18

19

All data sourced from Economic Times Intelligence Group ([email protected])

  Smart Stats

The Economic Times Wealth, July 8-14, 2013

best HEALTH InsurAncE

every week ET Wealth brings you the rankings of one financial product done by i-save*. In this issue we look at the best individual health insurance plans available in the market. ««««« ««««« «««« ««« ««««« «« ««« ««««« «« « «« « ««««« «««« «««« ««« ««« «« «««« « ««« ««««« «« «« «« ««« «« « ««« « « No Star ««««« «««« «««« «««« No Star No Star NA NA NA NA «««« ««««« «««

Coverage: Comprehensive. All health insurance products (individual) whose prices and features data is available in the public domain have been covered. Some plans may have been excluded on account of not being comparable with the peer group as they may be targeted towards a specific customer segment.

High scores across parameters helps Apollo Munich get superior ratings in 3 products.

Ratings: : i-save Health Insurance Ratings use a relative rating methodology to rate health insurance products on a 1-5 star scale. The product ratings are a weighted aggregate of the product price, product features and company service data, each rated on a relative 1-5 star scale. The star ratings assigned correspond to the following:

High scores on pricing and servicing gets Bajaj a superior rating on one of its products.

«

High scores on on all parameters ICICI Lombard an excellent rating for its new offering iHealth. Max BUPA products balanced across pricing and features.

0

10

20

««« ««««

30

40

«««««

50

60

70

80

90

High scores on both pricing and features gets Religare a superior rating.

Parameters considered

Price: Lower premiums get higher scores. Premiums are compared across multiple age bands (young, middle and mature) and multiple covers (`1-10 lakh). Product features: Features are assigned a numerical score based on product benefits, customer availability and flexibility. Servicing capabilities: Scores are awarded to customer servicing and claims settlement statistics. These are not product-specific and the data published by Irda for the past two years is used to compare and allocate a relative numerical score, adjusted for age. For detailed methodology, visit i-save.com.

premiums of individual health insurance plans of all companies

Premiums in ` for 25-year-old male

Insurance cover (`)

««

The relative position on the distribution curve highlights the overall ranking of the product relative to its peer group based on a comprehensive product score of its price competitiveness, features and flexibility, and servicing capabilities.

l Service Scores and ratings are based on IRDA published data for 2010-11 and 2011-12 l Where a company has recently commenced operations, service scores have not been considered for rating; where service scores could not be calculated due to lack of publicly available information, service stars are marked 'NA'. l i-save ratings are at a product level and provide a relative ranking to products in their peer group. They do not take into account personal or individual financial needs, circumstances or objectives. It is important to review and compare benefits, exclusions and limits on sub-benefits for each product. l i-save ratings are not financial advice or guidance or a recommendation to purchase, hold or terminate any policy. Data as on 5 May 2013.

premIum rEckonEr

Superior product Excellent product Good product Average product Below average product Low rating

««««« «««« ««« «« « No star

Superior

Overall rating

«««« «««« «««« «««« «««« «««« ««««« ««««« «« «« «« «« «««« «««« «««« «««« «««« «««« «««« No Star «««« «««« «« «« «« «« « ««« «««« No Star No Star No Star Recent Launch ««««« Recent Launch «« «« «« NA NA NA NA ««««« ««««« No Star

Excellent

Service rating

«««« «««« «««« No Star ««««« ««««« «« « «««« ««« «««« «««« «« «« ««« ««« «« «««« «««« « ««««« «««« «««« «««« ««« ««« «« No Star No Star «« ««««« ««« «««« « «« ««« «« « «« «« «« «««« « «««« «

Good

Features rating

««« «««« «« ««««« ««« No Star ««« ««««« « « « « ««««« «««« ««« «« ««« No Star «««« «««« « «««« « «« ««« ««« «««« «««« ««««« «« No Star No Star «««« «««« «««« ««««« No Star No Star « « « ««« «««« «««« «««««

Average

Price rating

Apollo Munich Easy Health Standard Apollo Munich Easy Health Exclusive Apollo Munich Easy Health Premium Apollo Munich Insure Health Apollo Munich Optima Restore Apollo Munich Maxima Bajaj Allianz Individual Health Guard Bajaj Allianz Health Ensure Bharti AXA Smart Health Cholamandalam MS Individual Healthline Standard Cholamandalam MS Individual Healthline Superior Cholamandalam MS Individual Healthline Advanced Future Generali Health Suraksha Basic Plan Future Generali Health Suraksha Silver Future Generali Health Suraksha Gold Future Generali Health Suraksha Platinum HDFC Ergo Health Suraksha Individual ICICI Lombard Health Advantage Plus ICICI Lombard iHealth IFFCO Tokio Individual Medi Shield L&T Insurance Medisure Prime L&T Insurance Medisure Classic Max Bupa Heartbeat Silver Max Bupa Heartbeat Gold Max Bupa Health Companion Silver Max Bupa Health Companion Gold National Insurance Individual Mediclaim New India Assurance Individual Mediclaim Policy Oriental Insurance Individual Mediclaim Policy Reliance Healthwise Standard Reliance Healthwise Gold Reliance Healthwise Silver Religare Health Religare Care Royal Sundaram Family Good Health - Single Adult SBI General Insurance Health Insurance Star Health and Allied Medi Classic Star Health Gain Insurance Star Unique Insurance Tata AIG Wellsurance Classic Tata AIG Wellsurance Supreme Tata AIG Wellsurance Elite Tata AIG Mediprime United India Health Insurance Gold United India Health Insurance Platinum Universal Sompo Individual Health Insurance

No star

Product name

rating methodology

Below average

28

Premiums in ` for 35-year-old male

Premiums in ` for 45-year-old male

1 lakh

2 lakh

3 lakh

5 lakh

1 lakh

2 lakh

3 lakh

5 lakh

1 lakh

2 lakh

3 lakh

5 lakh

Apollo Easy Health Standard Apollo Easy Health Exclusive Apollo Easy Health Premium Apollo Munich Insure Health Apollo Munich Optima Restore Apollo Maxima Bajaj Allianz Health Ensure Bajaj Allianz Individual Health Guard Bharti Axa Smart Life Chola Standard Individual Healthline Chola Superior Individual Healthline Future Generali Health Suraksha Basic Plan Future Generali Health Suraksha Silver Plan Future Generali Health Suraksha Gold Plan HDFC Ergo Health Suraksha Individual ICICI Lombard Health Advantage Plus ICICI Lombard iHealth Iffco Tokio Individual Medishield L&T Insurance Medisure Prime L&T Insurance Medisure Classic Max Bupa Heartbeat Silver Plan Max Bupa Heartbeat Gold Plan Max Bupa Health Companion Silver Max Bupa Health Companion Gold New India Assurance* Individual Mediclaim National Insurance Individual Mediclaim Oriental Insurance Individual Mediclaim Policy Reliance General Healthwise Standard Plan Reliance General Healthwise Gold Plan Reliance General Healthwise Silver Plan

1,784 N/A N/A 1,193 N/A N/A 1,229 1,574 2,289 3,611 N/A 1,414 1,556 1,696 N/A N/A N/A 1,716 N/A 2,240 N/A N/A N/A N/A 1,427 1,179 1,472 N/A N/A N/A

2,843 N/A N/A 1,791 N/A N/A N/A 2,627 3,209 4,212 N/A 2,323 2,554 2,785 3,217 15,280 N/A 2,503 N/A 2,827 3,436 N/A 2,263 N/A 2,843 2,219 2,774 2,893 6,045 4,039

3,878 4,601 N/A N/A 5,041 15,500 N/A 3,715 4,359 4,719 4,966 3,199 3,520 3,836 3,721 15,280 3,313 3,492 5,449 3,507 4,267 N/A 2,828 N/A 3,967 3,096 3,870 4,073 8,522 5,691

6,017 6,902 8,628 N/A 6,303 N/A N/A 5,892 5,750 7,059 6,728 5,347 5,881 6,411 7,254 N/A 4,039 5,223 8,413 5,035 N/A 7,288 N/A 4,734 5,933 4,629 5,787 6,770 14,185 9,467

1,784 N/A N/A 1,193 N/A N/A 1,424 1,960 2,289 4,320 N/A 1,676 1,843 2,008 N/A N/A N/A 2,203 N/A 2,240 N/A N/A N/A N/A 1,427 1,547 1,472 N/A N/A N/A

2,843 N/A N/A 1,791 N/A N/A N/A 3,689 3,209 5,050 N/A 2,598 2,858 3,115 3,217 15,280 N/A 2,860 N/A 2,827 3,964 N/A 3,152 N/A 2,843 2,912 2,774 3,455 7,163 4,803

3,878 4,601 N/A N/A 5,041 15,500 N/A 4,977 4,359 5,661 6,338 3,589 3,948 4,304 3,721 15,280 4,775 3,990 6,575 3,507 5,066 N/A 3,966 N/A 3,967 4,062 3,870 4,803 9,994 6,691

6,017 6,902 8,628 N/A 6,303 N/A N/A 6,917 5,750 8,544 8,764 5,827 6,411 6,987 7,254 N/A 6,195 5,968 10,174 5,035 N/A 8,490 N/A 6,506 5,933 6,076 5,787 7,837 16,365 10,939

2,933 N/A N/A 1,850 N/A N/A 1,824 2,510 N/A 5,761 N/A 1,963 2,160 2,354 N/A N/A N/A 2,709 N/A 2,703 N/A N/A N/A N/A 2,129 2,081 1,760 N/A N/A N/A

3,101 N/A N/A 2,387 N/A N/A N/A 4,842 6,072 6,765 N/A 3,233 3,556 3,876 4,037 15,280 N/A 3,459 N/A 3,433 5,348 N/A 4,976 N/A 4,017 3,919 3,316 4,803 9,994 6,691

4,130 4,955 N/A N/A 5,368 15,500 N/A 6,815 7,349 7,606 8,194 4,265 4,692 5,113 4,479 15,280 6,236 4,812 8,950 4,290 7,078 N/A 6,303 N/A 5,601 5,467 4,627 6,422 13,393 8,956

6,842 8,094 10,079 N/A 7,186 N/A N/A 10,759 10,224 11,610 11,526 7,223 7,945 8,660 8,137 N/A 7,902 7,197 13,608 6,212 N/A 12,085 N/A 9,780 8,377 8,177 6,919 10,421 21,793

Religare Care

N/A

3,474

3,922

5,162

N/A

3,474

3,922

5,162

N/A

4,513

5,137

6,788

* Premiums as applicable for Delhi taken into account. For the complete list of family floater health insurance premiums visit www.wealth.economictimes.com  Premiums sourced from quotation engines on each individual company website. Premiums are inclusive of service tax except in cases where this information may not have been available at individual websites.  Given the nature of health insurance and varied benefits and exclusion related terms, it is important to review what each product does or does not offer.

Buying Guide l Health insurance protects you against

rising healthcare costs and financial uncertainty due to unforeseen hospitalisation. l Treating an illness that requires prolonged

medical care can sometimes be expensive, so consider carefully how much cover will be adequate for you. l It is always better to start your health

insurance cover at an early age:  With age the risk to our health

increases, making insurance more expensive too.  Most companies now provide

guaranteed renewals for life.  Most policies have an exclusion period

(usually 2-4 years) for certain illnesses. l When deciding how much health insurance

to buy, take into account the cost associated with the treatment of major illnesses. l Do not restrict your cover just to meet your

tax-exemption limit. l Compare products not just on price, but

also on features, benefits, age till when renewability is available, day care procedures, sub-limits, etc. l Read the key features and the terms and

conditions carefully. Also, check for policy exclusions.

14,556 * i-saveTM ratings have been sourced from i-save.com, a unit of MAGI Research and Consultants Private Limited which analyses and rates financial products

Travel 

The Economic Times Wealth, July 8-14, 2013

trip planner

Belgium

Bruges

Ghent

antwerp Back

Culture, architecture, naturescapes, chocolates…this tiny country packs quite a punch. Since Wallonia, the southern half of Belgium beyond Brussels, is French-speaking, we focus on the northern half, called Flanders.

staRt

Brussels

trip

trail Don’t miss... Flanders is the ultimate festival destination, with over 280 lined up through the year. There’s a dance festival in late July, a jazz festival in August, and one dedicated to beer and hop in September. One of the major events in 2014 is ‘The Great War Centenary’, a project by the Flemish government to commemorate the victims of World War I who perished in Flanders Fields, including over 57,000 Indian soldiers. A recent consumer survey by Tourism Flanders shows that 76% of participating Indians are interested in the event.

29

Beer and hop festival best time to visit April to December each year is the best time to visit, and many Indian honeymooners like the winters in Flanders.

According to Tourism Flanders and Brussels (Belgium), the ideal trip duration is 4-5 nights. After landing in Brussels, make time for sights like the Museum of Ancient Art, Cathedral of St Michael and Grand Place. On Day 2, spend a few hours at Mini-Europe to see perfect scaled-down replicas of the best monuments and attractions in the continent. Also consider visiting Cantillion—The Brussels Gueuze Museum, which includes a brewery tour. The following day, take a train or bus to Antwerp, the birthplace of Rubens, and a world-famous diamond centre. A night’s stay would be enough to catch the local sights. On Day 4, move on to Bruges via Ghent. A few hours will suffice for the latter, the must-dos being Castle of the Counts, St Baafs Cathedral and St Michael’s bridge. Move on to Bruges, 30 minutes away, known as the Venice of the North. Apart from being home to Europe’s best-preserved medieval buildings, it’s a chocolate lover’s paradise. On Day 6, time your train ride back to Brussels with your flight back home. Also check out http://www.visitflanders.in.

before you leave...

tourist

attractions FREE l l l l l l l l l

The Grand Place, Brussels The Atomium, Brussels Manneken Pis, Brussels St Michael and St Gudula Cathedrals, Brussels Royal Palace, Brussels (only during summer) Lover’s Lake, Bruges Burg Square, Bruges Historic Centre of Bruges Minnewater Lake, Bruges

Paid (approximate per person rates)

l Mini-Europe: €14.20 (`1,115) l Cantillon Brewery, Brussels: €6 (`470) l Horta Museum, Brussels: €8 (`630) l Antwerp Cathedral, Antwerp: €5 (`400) l Rubens House, Antwerp: €8 l Gruuthuse House and Museum, Bruges: €6 l The Belfry, Bruges: €5 l Castle of the Counts, Ghent: €8 l St Baafs Cathedral, Ghent: €4 (`315)

saving tips Air fAre

exchAnge rAte

VisA

trip expense

AccommodAtion

LocAL commute

There is a good flight connection between the two countries. Jet Airways and Brussels Airlines offer direct, daily flights between Delhi and Brussels (`60,000 for a round trip). If you are willing to have a stopover, air fares drop to around `50,000 per head. A Mumbai-Brussels return flight will cost upwards of `43,600.

Belgium uses the Euro. Currently `100 will fetch Euro 1.28. The depreciating Euro forecast should bring cheer to Indians. According to a July 2013 report by The Bank of Nova Scotia (Scotiabank), ‘The Euro will be immersed in a gradual depreciation phase due to poor growth dynamics and relative monetary policy.’

Unfortunately, there is no e-visa option for Indian nationals to enter Belgium. One needs to apply for a Schengen visa through the VFS Global Visa Application Centers. The visa fee is €60, or `4,692.

If breakfast is included in accommodation, you could spend about €7075 (`5,500-5,900) per person, per day, on an average, covering meals, transportation and sightseeing. That’s for a mid-range budget. For a luxury break, it will cost €200 (`15,700) per person, per day.

According to Tourism Flanders and Brussels, tourists have a wide choice of hotel rooms available across different categories and price segments. For budget travellers, there are bed-and-breakfast options starting from €50 (almost `4,000) per person, per night. On the other hand, luxury hotel rooms start from €150 (close to `12,000) per person, per night.

An extensive rail network connects all of Belgium. Purchase train tickets after you arrive in the country. Use the train planning tool on www.visitflanders.in to figure out connections. All the cities and towns have good local bus networks, including hopon, hop-off tours.

l To explore each city, invest in separate city cards that cover most tourist attractions and public transportation. They promise discounts on F&B and shopping. The 48-hour Brussels card costs €34. l As towns and cities are small in area, consider walking tours. l Belgian Rail is offering a summer deal, whereby you can buy a single 2nd class ticket to any place for €7.50 (`590). The offer is valid for Monday-Friday till 30 August.

30

The Economic Times Wealth, July 8-14, 2013

  My Enterprise

Rising to the occasion Starting as an entrepreneur as a 17-year-old, Avinash Jain has built Arise India into a `855 crore company by constantly improvising and introducing new products to his repertoire. AshwAni nAgpAl

Avinash Jain 42 years Company

Arise India Headquarters

Delhi Seed capital

`5,000 Age at starting business

17 years Source of funds

Loan from parents Turnover in the first year

`2 lakh Current turnover

`855 crore

I took a loan from my parents and started a hardware shop with my brother. I was still studying, but within the first few months, I started drawing `2 lakh a month.

An important decision was to introduce inverters to our repertoire. We invested `15 lakh in 1995, and by year-end, the turnover had jumped to `30 lakh.

Today, we have nearly 45 offices across the country and 3,000 employees. Now, we plan to explore untapped markets beyond north India.

I

back into the business. Since we did not have probably inherited the entrepreneur spare capital for advertising, I relied on the gene since it runs deep in my family. I plumber network to get customers. was an average student in school, but Even as I was pursuing a commerce degree what I lacked in academics, I more than at Delhi’s Motilal Nehru College, I zeroed in made up in business acumen. This is the on the company’s future—electronics. The reason it didn’t come as a surprise when I idea was borne of experience. When my TV started my first venture when I was only 17 needed repair, I took it to a nearby shop but years old. was disappointed by the shopkeeper’s Since my father was in the business of unprofessional and non-cooperative supplying construction material, I thought I attitude. I realised that there was a shortage would do something along similar lines. So, of good electronic products backed by my brother and I started a small hardware prompt customer care. While the Indian store, Amit Brothers, in a rented 120 sq ft electronic products were of inferior space at Palam, Delhi, in May 1988. I quality, the imported ones did not took a loan of nearly `5,000 from How to share offer good after-sales service. It my parents to buy raw material, big files over was a gap we could easily fill such as paints and adhesives, for the Internet once we were ready. the shop, and to pay rent. We Page 20 However, before I could exehired two people and were off to a cute this business idea, I wanted running start. to complete my education. After I Since motors were used in the graduated in 1992, we purchased a construction business, we soon de540 sq ft plot at Palam for `50,000, cided to sell assembled, waterproof verwhich is now our corporate office. Three sions of these—and immediately hit a goldyears later, we started manufacturing invertmine. In fact, this has been one of our most ers. This had tremendous business potential successful products till date and it helped us given that many areas in north India suffered garner good revenue. Within a few months, I long power cuts. We invested around `15 started taking home a salary of `3,000 a lakh in the venture, raising the money from month, which was good money considering internal accruals, and the company turnover that I was still studying. I continued with my jumped to `30 lakh before the year was out. education while managing the shop. To mark the launch of the new business, we One of the problems that we faced initially decided to brand our product and rename was the default in payments by clients. Since our company. We wanted something that sigwe had a hard time recovering the cost, we nified growth, so we chose ‘Arise India’ as decided to be very selective in offering credour brand name in 1995. However, we have it. The policy paid and in the first year of opretained our first shop, Amit Brothers, which erations, we posted a turnover of around `2 is still doing good business. lakh. However, we channelised this money

After inverters and chargeable batteries, we added motor pumps to our product repertoire in 1999. Since water is a basic necessity and the country’s water table is dropping significantly, this product became the obvious choice for us. However, it was only in 2003 that we had our first major brush with electronic products, when we entered the mobile phone market. Recognising that the youth wanted budget mobile devices to communicate and connect with friends, we introduced a range of such devices to take care of all their needs. Within four years, we made a name for ourselves. Since people had begun to trust Arise as a brand, I felt confident about diversifying into various verticals, be it ceiling fans, air conditioners or LED TVs and kitchen/ home appliances. Today, we have nearly 3,000 employees and posted a turnover of around `855 crore in 2012-13. We have around 45 offices across the country, some of which are owned, while others follow the leased model. We also have two factories, one each in Haryana and Himachal Pradesh. This has also meant that my monthly income has jumped to `10 lakh. Next on the cards is the plan to expand our footprint beyond north India. We are currently exploring the untapped markets in the west, east and south India. This is bound to take some time, but we are confident of getting there fast, hoping to achieve a turnover of `6,000 crore by 2020.

Please send your feedback to [email protected]

Your Feedback 

The Economic Times Wealth, July 8-14, 2013

wealth THE ECONOMIC TIMES

Readers’ response, online and in print, to ET Wealth stories has been overwhelming and enlightening. We pick some that add information and perspective to our articles from previous issues.

Monday, July 8-14, 2013

Help taxpayers to understand e-filing better

best of archives is pre-eMi option better than the full eMi? While the former option to repay a home loan may appear more attractive, it can be expensive in the long run. Read the story to know why. customise your tax planning: Go through the article to find out how you can distribute your tax-saving investments depending on your requirements as well as goals.

Pranay Mishra, Kolkata

The article ‘Are mirror wills for you?’ made for an interesting read since it focused on a relatively unknown subject. I and my wife have opted for separate wills since we had no idea that there was such a category. However, after reading the story, we are now considering a mirror will. It is important to remember that given the high cost of most assets, it has become common for couples to jointly own them. In such cases, I believe mirror wills serve an important purpose. However, considering the immense amount of trust that is required for such wills, I think it will not gain in popularity in the near future. Narendra Sinha, Thane

Which 3G plan is right for you? If you are confused due to the wide variety of plans available, read on to know how to pick the one that suits your needs the most.

Jewellery stocks not Good insurance for low-risk investors cover is affordable The story ‘Is it time to sell jewellery stocks?’ focused on the recent freefall witnessed by these companies. What was more interesting was the fact that the factors that impacted the share price are well beyond the control of the company management. While experts have varied opinions on the subject, I feel the decision to hold or sell these stocks should not depend only on the direction of gold prices. Among these companies, one should invest only in fundamentally strong ones like Titan, which is debt-free. Also, it makes sense for retail investors to avoid such stocks as they are too risky to bet on.

Readers would do well to learn important lessons from the story ‘5 insurance covers to buy’. As pointed out in the article, even if one were to buy all the options to build a comprehensive health cover, the monthly premium would be equal to or less than that for the average endowment/money-back policies that Indian investors prefer despite low returns. They have no qualms about mixing investment and insurance. Given the ease with which one can buy these insurance plans, it is high time that we moved from Ulips and other similar policies to plain vanilla ones that are much more useful and essential.

Mridula Mukhopadhyay, Hyderabad

The life insurance sector’s new business premium has grown at 22% CAGR between 2000-1 and 2012-13. After the sector was opened up, 23 players entered the sector and their market share increased to 39% in 2008-9, primarily driven by Ulips. However, these players have had to concede the market share in the past couple of years as new Ulip regulations forced a slowdown in the new business premium growth. However, the traditional products have also witnessed a deceleration in the past three years because of the economic slowdown.

36%

870

35%

21%

1%

0% 196

200

285 160

0.1 2000-1

3

10 2002-3

342

384

394 321

20%

308

194

173

97

30%

532

337

207

29%

40%

715

600

562

762 28%

26%

12%

6%

400

0

819 31%

800

600

10%

103 56

24

2004-5

LIC

2006-7

Private players

learn & keep also take a look at:  How much tax are you

paying?  Which franchise is

best for you?  8 ways to cut your tax.

2008-9

Private market share

2010-11

2012-13

Source: Irda, SSL, Espirito Santo Securities

india: pay less, eat better: India is the cheapest major economy in the world, reveals ‘Mapping the World’s Prices 2013’, a survey conducted by Deutsche Bank across 57 countries.

 Make the right

retirement moves.  Is it better to rent or

buy?  Why you need the

reforms. The Learn & Keep section is available at www.wealth.economictimes.com

new rules of tax filing: The tax authorities have issued new guidelines this year. Read the story to find out how these will change the way you file your returns.

50%

39%

26%

All these stories are available at www.wealth.economictimes.com

Most read of the Week

private players’ market share touched 39% in 2008-9, but fell to 29% in 2012-13. NBP growth trend (` billion)

should you pay tax on receiving a gift? If the value of the gifts received by you during a year is above `50,000, you will have to pay tax on it. Read to know about the exceptions.

Vinay Krishna, Lucknow

Private insurers’ market share falls after Ulip regulations

1,000

fro the WM eb

www.wealth.economictimes.com

The story ‘New rules of tax filing’ can prove an invaluable guide to hundreds of taxpayers across the country. Like many others, I have always been stumped by the onerous task of filing tax returns. While I have been e-filing my returns for the past few years and find it extremely convenient, I feel this rush to make everyone file e-returns is uncalled for. Why shouldn’t it be left to the discretion of taxpayers to decide how to file their returns? My father, who is 65 years old and works as a businessman, knows nothing about computers. For people like him and countless others, e-filing is a major hurdle in the process of filing returns. In fact, this model helps the numerous websites, which charge a fee in return for helping them file their returns. However, since e-filing is the future, it will be a good idea for the Income Tax Department to conduct workshops in order to help people learn it and highlight the advantages of e-filing over conventional methods.

Mirror wills may not become popular

31

0%

is it time to sell jewellery scrips? In this article, we analyse whether it is a good idea to hold on to gold jewellery stocks considering the recent, drastic drop in gold prices. five insurance covers to buy: To guard against the unforeseen, scan this article to find out the essential covers that you should have in your portfolio. are mirror wills for you? If you, as a couple, hold most of the property jointly, read the story to know how such wills can be a costeffective way of bequeathing it to your heirs.

Your feedback Please send your feedback to [email protected] ,or you can write to us at Times House, 7, Bahadur Shah Zafar Marg, New Delhi-110002 Note: The letters have been edited for grammatical errors and better reading.

32

Last Word

The Economic Times Wealth, July 8-14, 2013

Financial wizards of the week Bring out the planner in you and suggest a strategy for a financial problem to one of our readers. The winners will receive gift vouchers worth

`5,000 and will be crowned the ET Wealth Financial Wizards of the week. The decision of ET Wealth regarding the winners of ‘Financial Wizard’ will be final. The vouchers will be e-mailed to the winners. Allow at least 30 days for the dispatch of the voucher.

Last week’s winner D S Rao, chennai

Last week’s question I am a 32-year-old engineer and will be filing my tax returns soon, but don’t know

Winner `3,000

which route to take. My colleagues say that e-filing works best as it is very convenient. However, my brother thinks it is better to do so offline since the former method can make me more vulnerable to a scrutiny. Which option should I choose? Please advise. B N Sharma, Jaipur

Rao’s solution Income tax returns are picked up for scrutiny through a computer-based selection procedure. If the computer detects any discrepancy, it raises the alert and you might get a notice. Even if you file returns offline, the information is fed to the computer by the operators. Hence, the chances of getting scrutinised and receiving a notice remain the same, irrespective of the method you choose. Filing returns online is more convenient and enables you to get the refund faster. Any corrections can be made subsequently without much hassle.

Solutions from the following were also useful Prateik Dhatrak , Pune B Sengupta, Delhi Solution: Since you have the choice to Solution: If your taxable income file offline or online returns, I am asduring 2012-13 is more than `5 lakh, suming that your income is less than `5 you will have no option but to e-file lakh. With regards to scrutiny assessyour returns. However, if your ment, verify your TDS status taxable income is less than `5 Winners through Form 26AS. You are open lakh, it makes more sense to e-file your return as it is the `1,000 to scrutiny if false information is filed in the return with respect to most reliable and secure methany deduction and the chances of this od. Your brother’s concerns are are higher if it is fed manually by operaunfounded as the acknowledgetors. Since offline filing is likely to be ment of ITR submission is quick and the withdrawn in the next few years, it refunds are processed faster by the IT makes sense to start e-filing now. Department for such returns.

this week’s situation

I have decided to buy a house worth `50 lakh and have taken a loan of `38 lakh, for which the EMI comes to `40,000 per month. Since the EMI is about `6,000 beyond my budget, I want to sell my wife’s gold jewellery worth `8 lakh. If I don’t sell the gold, I will have to reduce my SIPs in equity funds. However, since gold prices are at an all-time low, I am not sure what to do. Please advise. K N Bhargav, Delhi send your solutions to [email protected]

Beginning with a Bang Asvin Simon has people eating out of his hands, as he creates a new domestic fried chicken brand. amit shanbaug

A

n engineering graduate dec­ laring his intention to launch a food­based enterprise may seem incongruous to a lay per­ son; to the parents, it would be downright blasphemous. This is the reason Chennai­based Asvin Simon was served an ultimatum by his parents: look for an alter­ native business plan or join the corporate world. So the then 23­year­old Simon decid­ ed to start an IT firm. “In 2005, my parents gave me around `7 lakh to start the venture, E Valley Career Solutions. I wanted the firm to generate money from day one, so we got into software training, in addition to provid­ ing software solutions,” he says. By 2007, the firm had started generating a turnover of around `1 crore and employed 20 people. “I now had enough money to start my own food business without having to depend on anyone for the capital,” he says. So, he threw himself into research for his new venture without shutting down the IT firm. The firm has now been scaled down, employing 10 people, but still generates a turnover of `1 crore annually. “Though there were several multinational brands offering fried chicken and burgers, there wasn’t a single Indian one catering to

The Economic Times Wealth, published by Bennett, Coleman & Co. Ltd. exercises due care and caution in collecting the data before publication. In spite of this, if any omission, inaccuracy or printing errors occur with regard to the data contained in this newspaper, The Economic Times Wealth will not be held responsible or liable. The content hereof does not constitute any form of advice, recommendation or arrangement by the newspaper. The Economic Times Wealth will not be liable for any direct or indirect losses caused because of readers’ reliance on the same in making any specific or other decisions. Readers are recommended to make appropriate enquiries and seek appropriate advice before making any specific or other decisions.

s vardharajan

the needs of the domestic consumer. The MNC brands primarily catered to European customers, who are used to bland food,” says Simon. So he decided to offer fried chicken and burgers with Indian curries and spices. “Eight months on, I managed to bring out six varieties of burgers, two types of wraps, and an Indian version of fried chicken,” adds the 27­year­old. The idea was to start small and scale up operations once it succeeded. So he pulled out only `5 lakh from his IT venture’s prof­ its. Of this, `2 lakh was used as deposit mon­ ey for an 80 sq ft space on Manickam Road, Chennai, and the rest in constructing a ki­ osk. “The location was prominent, close to a popular fast food restaurant. I installed two fryers, a small fridge, an exhaust and a cash machine in the kiosk. In June 2009, Bangs Fried Chicken was up and running, manned by two helpers,” he says. By starting small, Simon avoided most overheads borne by bigger outlets. “We managed to price our products at just around `15, while the competition next door was selling at `60,” he says. The pricing and taste of Bangs worked, and in the first year, the venture generated a turnover of nearly `60 lakh. By 2010, we had set up seven more outlets in Chennai. “Our model was simple. We

would take a prime place with low over­ heads on lease, check the business potential and start operations. So if the business did not generate business, we would close it down and shift,” explains Simon. In 2011, he set up his first outlet in Chen­ nai, which was an instant hit. “The people were used to our food, but families needed a place to relax and enjoy food rather than settle for the takeaway,” he says. Today, Bangs Fried Chicken has presence in 13 states, with around 40 outlets, and only one kiosk in Chennai. Along the way, the menu has also been expanded to include sand­ wiches, pastas, salads and desserts. Of course, Simon had to overcome chal­ lenges. “There were customers who would leave due to a minute’s delay, but would willingly wait 30 minutes at MNC joints. We had to work hard to create a brand,” he points out. The company’s current turnover is `20 crore, with plans to expand the foot­ print overseas. “A few months ago, we launched our first overseas outlet in Doha, Qatar,” he says. More outlets are set to fol­ low, and Simon has had no reason to regret his decision to follow his passion. Please send your feedback to [email protected]

Published for the proprietors, Bennett, Coleman & Co. Ltd. by Balraj Arora at Times House, 7, Bahadur Shah Zafar Marg, New Delhi­110 002, Phone: 011­23302000, Fax: 011­23323346 and printed by him at (A) The Times of India Press, 13 & 15/1, Site IV, Industrial Area, Sahibabad, UP (B) Vardhaman Publishers Ltd, Vejalpur, Ahmedabad. Office: 139, Ashram Road, Ahmedabad­9. Ph: (079) 67773300, Fax (079) 26574485 (C) Bennett, Coleman & Co. Limited, No 9/10/11­A, 4th Main Bommasandra Industrial Area, Hosur Road, Bangalore 560099, Ph: (080) 22899999. (D) The Times of India Press, No. 140, Old Mahabalipuram Road, Chemmenchery, Chennai 600119, Kacheepuram District (E) The Times of India Print City, Plot No.4, TTC Industrial Area, Thane Belapur Road, Airoli, Navi Mumbai 400708. (F) Times Press, Plot No. 5A, Road No. 1, IDA Nacharam, Hyderabad 500076. (District Rangareddy) (G) Times House, Plot no. 2, Block­ EM, Sector­V, Salt Lake City, Kolkata 700091. Regd. Office: Dr Dadabhai Naoroji Road, Mumbai 400 001. Editor: Rakesh Rai (Responsible for selection of news under PRB Act). © Reproduction in whole or in part without written permission of the publisher is prohibited. All rights reserved. RNI No. DELENG/2011/37994. MADE IN NEW DELHI Volume 3 No. 27