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27 December 2012-9 january 2013

` 30

anoop bhaskar

chirag Setalvad

maneesh Dangi

Sachin Padwal-Desai

r.j. Shiller


The road ahead

Global thought leader Robert J. Shiller brainstorms about the course of stocks, gold and the economy in a televised panel discussion with Arun Maira and Anup Bagchi



The best in managing your money: Anoop Bhaskar; Chirag Setalvad; Maneesh Dangi; and Sachin Padwal-Desai

26 PLUS His views on the future of finance

Cover Design: MANOJIT DATTA HEAD OFFICE AB-10, S.J. Enclave, New Delhi 110 029; Tel: (011) 33505500, Fax: (011) 26191420 OTHER OFFICES Bangalore: (080) 33236100, Fax: (080) 25582810; Kolkata: (033) 33545400, Fax: (033) 22823593; Chennai: (044) 33506300, Fax: 28582250; Hyderabad: (040) 23371144, Fax: (040) 23375676; Mumbai: (022) 33545000, Fax: (022) 33545100. Printed and published by Vinayak Aggarwal on behalf of Outlook Publishing (India) Pvt. Ltd. Editor: Udayan Ray. Printed at IPP Limited, C4-C 11, Phase-II, Noida and published from AB-10 Safdarjung Enclave, New Delhi 110029 For Subscription queries, please call: 011-33505653, or email: Published for the fortnight of Dec 27, 2012 - Jan 9, 2013; Release date: Dec 26, 2012. Total no. of pages 88 + Covers Outlook Money does not accept responsibility for any investment decision taken by readers on the basis of information provided herein. The objective is to keep readers better informed and help them decide for themselves.






A house sale doesnt end with handing over the keys to the buyer. Heres why Bajaj Allianz Life Assure Tax benets of life insurance policies LIC Housing Finance



New bank licenses are up for grabs. How should you play the sector? A roadmap for the Jasuds Take care of your child in your absence by having a hassle-free succession plan


The Outlook Money Awards were presented in Mumbai on 13 December to companies that provided the best customer value in banking, home and educational loans, life and health insurance, e-broking and mutual funds. A report on the event and the profile of the winners in their respective categories



The Fiscal Cliff is posing a threat to the commodities market, but alls not lost Build a strong stock portfolio



Your home decor this new year Share personal nance thoughts


K.V. KAMATH, Chairman, ICICI Bank



4 Internet Contents Action in our Web world 6 Editors Note 8 Letters 85 Fortnight Figures 88 Sunnys Money Bad Than Worst?

10 Newsroll EPFOs controversial circular has been put on hold, till further orders; RBI puts rate cut on hold, despite easing inflation; Sun Pharma shares rise

following news of US acquisition; M&M to buy out US partners stakes in joint ventures 16 Queries Your queries on matters affecting your personal finance answered




9 JANUARY 2013 l

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Join our individual groups: click on the DISCUSSION tab, start a NEW TOPIC and post queries to members. Sukhvinder Sidhu: As per a global study, Indians are living longer than they did 40 years ago. How far is it good news? Is there any abnormality associated with the rise in life expectancy? Whats the message for citizens for improving their life quality? 16 December L. Krishnamurthy: My car was purchased in 2004. How do I determine the premium at the time of renewal? OLM Replies: Premium depends on factors, such as age of the car, type of engine, renewal year, etc. Most insurers have a facility to renew the cover online, where you get the idea of the premium amount by filling the details. 19 December

14 december 2012

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IPO Financing Risks IPO financing may look attractive in terms of the profit you could make from it. But does it really pay? Which Way? Inflation is not showing any signs of abating even as our cost of living is going up steadily Eased KYC Norms RBI revises know your customer (KYC) process for convenience of new accountholders FDI in Insurance Proposal to allow foreign institutional investors (FIIs) to enter insurance sector in India

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Log in to Twitter and search for us or visit Follow us for updates and articles. Naveen Kumar: RBI keeps rates unchanged. No respite of lower interest in the near term for borrowers. Existing rate on FDs to continue 18 December



9 JANUARY 2013 l Editors Note

A Long View

he parliamentary approval of the Banking Laws (Amendment) Bill, 2011, was, perhaps, last fortnights most important economic event and set the scene for entrants in the sector. In this issue, we analyse its impact on the stocks of companies most likely to apply for banking licences (page 62). New banks, it has been argued, are needed for the huge credit disbursal required to fund Indias growth over the next decade, but, at the same time, the size of Indian banks will also be critical for them to be globally competitive. So, we may see banks, old and new, taking over others. The proliferation of new banks will also dovetail with the effort towards greater nancial inclusion through the use of Aadhar. This had taken centrestage ACE fund managers lately with the Centres decision to undertake direct cash transfers using this route to plug leakages from subsidies to the poor and control the subsidy bill. Going forward, apart from subsidy payments into new bank accounts 2 1 many of them in new banksmicroinsurance, micropensions and microinvestments, such as small-ticket systematic investment plans of mutual funds and gold, will make the make these accounts viable. No wonder then that in a televised panel dis3 4 cussion on Bloomberg Television India 1. Anoop Bhaskar 2. Chirag organised by Outlook Money and featuring emiSetalvad 3. Maneesh Dangi nent panellists Arun Maira, member, Planning 4. Sachin Padwal-Desai Commission, and Anup Bagchi, managing director and CEO, ICICI Securities, Robert J. Shiller, one of worlds foremost economists and thought leaders called Aadhar the biggest recent reform measure in India, far ahead of others such as FDI in retail (page 18). Shiller, in India at the invitation of Outlook Money and the guest of honour at the Outlook Money Awards 2012 held in Mumbai on 13 December, however, remains wary of the course of the world economy in the immediate future and argues that global nancial crisis is still not behind us. In his awards address, he gave the audience a fascinating peek into the future of our nancial world. Dont miss the excerpts (page 26). Lastly, like every year, the best in personal nance, who create value for you, be it through loans, banking, life insurance, health insurance, mutual funds, or e-broking, were felicitated at the prestigious Outlook Money Awards in a glittering ceremony attended by the whos who of Indias nancial world. Of particular interest to you would be the award winning fund managers who have made your money grow and taken you closer to your dreams. We prole them in our second cover story (page 48), a must-read for you. r

Top: Thought leader Robert J. Shiller speaks at the Outlook Money Awards Above: At the Bloomberg TV panel discussion on the Future of Finance


(Udayan Ray)


9 JANUARY 2013 l


Sachin Agarwal, email

Apropos The High Price Of Low Risk (12 December), traditional plans, though relatively less risky, are not rewarding, while term plans dont pay anything. Unit-linked insurance plans (Ulips) provide a mix of insurance and investment, but can never be as rewarding as equity mutual funds (MFs) or stocks. In my opinion, its better to invest in stocks or equity MFs and partly in debt instruments, such as Public Provident Fund (PPF) and gradually shift the equity investments to debt as one nears his goals. One should buy a term plan only to offset a liability such as a home loan or to provide for the familys expenses in the event of his demise. Otherwise theres no need to make the insurers rich if one doesnt have any liability. A health plan is advisable unless one is adequately covered for medical expenses for his entire life.

12 December 2012
12 DECEMBER 2012


Udayan Ray

Abhijit Mitra, Clifford Alvares


Pankaj Anup Toppo, Sunil Dhawan Mohit Satyanand, Swami Saran Sharma Samarpan Dutta



Anagh Pal, Kundan Kishore, Teena Jain Kaushal Kavya Balaji



Rajiv Bose (L), 39, is using Ulips to save for retirement and Manish Dak, 33, took a pure term plan to get a high risk cover. Both gave traditional plans a miss

Ashwini Kumar Sharma, Naveen Kumar, Pheji Phalghunan CORRESPONDENT Deepali Penkar Lakshmi Krishnakumar, Sutirtha Sanyal (Dy. Copy Editors), Shinjini Ganguli (Assistant Copy Editor) Manojit Datta (Art Editor), Anil Panwar (Assistant Art Director) Saji C.S. (Principal Designer), Bhoomesh Dutt Sharma (Sr. Designer), Varun Vashishtha (Chief of Graphics) Soumik Kar (Photo Editor), Bhupinder Singh (Chief Photographer), R.A. Chandroo (Principal Photographer), Nilotpal Baruah, Vishal Koul, Tushar Mane (Sr. Photographers) Anwar Ahmed Khan, Hasan Kazmi, Manav Mishra, Raman Awasthi, Suraj Wadhwa

Insurance Plans
M. Rao Gopidalai, email

Loan Realities
Rajeev Srivastava, email

This is regarding the article Invest Early For Your Child (14 November). I didnt get the meaning of reduction in yield (RIY) mentioned in the table, Childrens Plan: Whats On Offer. Is this the policy charge which exists in the life insurance plans or something else? How can I compare the performance of unit-linked insurance plans (Ulips) across companies? Is there any methodology to do it?
OLM Replies

For unit-linked plans we have calculated returns at an assumed annual growth rate of 10 per cent as they do not offer any guaranteed returns. Reduction in yield shows the net return after deducting policy charges from the assumed annual rate of 10 per cent. For instance, if the stockmarket rises by 10 per cent then your investments will grow by 7 per cent (assuming charges are 3 per cent), as companies invest your premium money after deducting various policy charges. There is no website where you can compare their performance.

I have been a regular reader of Outlook Money. I took a home loan from LIC Housing Finance (LICHFL) in March 2010, which is on a fixed interest rate up to March 2013. I want to transfer the loan to State Bank of India, which has a floating interest rate of 10.15 per cent up to 31 December 2012. LICHFL is charging 2 per cent of the outstanding amount as account closure charges and a further `22,000 as broken period interest. Is LICHFL justified in doing so? I understand that the Reserve Bank of India (RBI) has banned prepayment penalty on housing loans.
OLM Replies

the waiver will not be applicable. It will be better for you to wait till your loan enters the floating rate regime and then go for the refinancing.

Sunnys Money
B. Bandyopadhyay, email

Waiver of prepayment penalty is only applicable to floating rate home loans. For the dual rate (fixed for initial few years and then floating) home loans, this penalty waiver works only after the loan has completed the fixed rate tenure and entered into the floating rate regime. In your case, since the rate is applicable till March 2013, till that time your loan will be considered as a fixed rate loan and, hence,

I have been a regular subscriber of Outlook Money since the very first issue and I eagerly wait for the forthcoming issues as I like the different type of informative and serious topics you bring out in your issue every time. That said, I like the one particular illustration feature in the Sunnys Money series (The Idiot Box Story, 12 December). I thought of sending my appreciation to the editor for the concept and the illustrator for the sketch. I had a hearty laugh while going through the story and shared the same with many of my friends, who also liked it very much. I hope you will bring out some well-conceptualised illustrated feature in the forthcoming issues too.
Letters must be addressed to: The Editor, Outlook Money, AB-5, 3rd floor, Safdarjung Enclave, New Delhi 110029 Please mention your full name and residential address.


Johnson Dsilva CFO Vinodkumar Panicker Kabir Khattar (Corp) Manoj Nair (West)


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James V Jose (East) MANAGERS Suchitra Vaidya (West), Suneel Raju (South), Ankur Srivastava (North) Devesh S Shetty (West)

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9 JANUARY 2013 l

x Newsroll


EPFOs controversial circular has THE IMPACT EXISTING PROPOSED been put on hold with immediate SALARY STRUCTURE (`) (`) effect till further orders Basic salary (BS) 40,000 40,000
he new Central Provident Fund commissioner, Ravi Mathur, has put the controversial Employees Provident Fund Organisation (EPFO) circular on hold. It, experts say, would have otherwise increased the cost of hiring and decreased the take-home salary for employees. The 30 November circular issued by the former PF commissioner R.C. Mishra, stated that all allowances which are uniformly paid to employees should be included in the denition of basic salary. At present, employees and employers contribute 12 per cent of the basic salary each. So, going forward, if the circular gets implemented, even regularly paid allowances, such as special and transport allowance would be added to the salary while calculating PF contribution, which would leave employees with reduced take-home salary (see The Impact). With increased cost to company (because of higher matching PF contribution), employers may also restructure the salary of employees to minimise the impact of the cost to company. Manish Sabharwal, CEO, TeamLease,


x Queries


Dearness allowance (DA) House rent allowance* (HRA) Special allowance (SA) Transport allowance (TA) Total salary Provident fund contribution Take home Employers contribution

10,000 10,000 10,000 800 70,800

10,000 10,000 10,000 800 70,800

8,496 (BS 6,000 + DA + HRA + SA + TA) 64,800 6,000 62,304 8,496

*Inclusion will depend on the interpretation of the circular

a stafng company said: If the circular gets implemented the gross salary of employees would go up, but, at the same time, their take-home will come down. Moreover, this will give rise to informal employment as people wont trust EPFO with their money. Further, you wouldnt have enough money left to make your own investments in funds

offering higher returns. EPFO currently offers 8.25 per cent to its members. Mukul Asher, a social security expert and professor at National University of Singapore, said: The proposed measure can be interpreted as being designed to fetch additional revenue in the short term to the EPFO at a time when its nances are constrained. The circular goes on to add: Confusion in denition of wages primarily arises from the expression commission or any other similar allowance payable to the employee as commission and any other similar allowance are read as two separate expressions. The expression commission or any other similar allowance payable to the employee is one continuous term meaning commission or any other commission like allowance by whatever nomenclature referred. Asher further said: The EPFO circular is unfortunately, not well-drafted and throws light on the outdated nature of the 1952 Act under which it continues to operate. The circular stops EPFO ofcials from acting against companies that defaulted on employees dues unless it can be proved that the worker is cheated. It also says that no inquiry should go beyond seven years. This was to stop open-ended assessment investigations which have gone beyond seven years as EPFO insisted it only harasses employers. If an organisation cant ensure recovery of dues after seven years it is EPFOs gross failure and calls for a drastic restructuring, said Asher r



9 JANUARY 2013 l

The government is planning a number of schemes to unlock some of the huge domestic savings held in gold. The schemes may redirect demand from gold to gold-backed products


The Banking Laws (amendment) Bill, 2011, and the Enforcement of Security Interest and Recovery of Debts Laws (amendment) Bill, 2011, gets Parliamentary approval in its winter session



With RBI putting rate cut on hold despite easing inflation, borrowers wait for respite
n the recent past, though inflation went down from the earlier double digits it is still a factor for the Reserve Bank of India (RBI) while considering rate cuts. The central bank has yet again put policy rate cut on hold in its mid-quarter monetary policy review on 18 December. We tell you how the no policy rate cut decision will affect you. What lies ahead? Inflation has been a major concern for the RBI and it has hinted that going forward the inflation situation may improve, which might lead to a rate cut. RBI in its review says: Headline inflation has been below the Reserve Banks projected lev-

els over the past two months. The decline in core inflation has also been comforting. These emerging patterns reinforce the likelihood of steady moderation in inflation going into 2013-14, though inflation may edge higher over the next two months. In view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards. Industry experts feel that an opportunity has been lost. However, they hope that in its next review the RBI would bring down the interest rate. Naina Lal Kidwai, president of Federation of Indian Chambers of Commerce and Industry, says: With the inflation numbers showing a decline and the global economy still in a difcult situation, industry is crying out for an impetus for investment and growth and lower interest rates would

Small Change by VaRun Vashishtha

Time for another squeeze, guys?

be oxygen to the sentiment which is beginning to look positive. So, if you are waiting for rates to come down you would have to wait a little longer. Impact on borrowers. If you are an existing borrower with a floating rate loan or are planning to take one with the expectation of interest rate cuts, then you will have to wait a while. In all likelihood, RBI may cut rates in the January review as it is set to focus on growth. So, if you have done all your groundwork for a home loan or an auto loan and are comfortable with the downpayment charges and equated monthly instalment servicing, go ahead with your loan. However, if you are still in the initial stages of exploring loan options, then it would make more sense to wait for the rates to come down. Impact on depositors. The interest rate on deposits, after reaching its peak of around 10 per cent, has started coming down. Most banks are now offering their highest interest rates on deposits typically around 9-9.5 per cent. If you are a senior citizen you would be able get an additional 0.5 per cent interest above the normal rate. Now, with no rate cut in the picture, the only way to benet from the existing rates is through deposits, at least till the next rate cut is announced. So, if you have surpluses or funds maturing it would be a good idea to park your funds in xed deposits as the rates are still attractive. Debt funds. The return of debt funds depends on the movement of interest. Therefore, as the key policy rate remains unchanged there was no impact on such funds. Experts suggest that investors with investment horizons of less than a year can stick to shortterm debt funds. r
 Naveen KumaR



9 JAnUARY 2013 l

The Insurance Laws (amendment) Bill will not be taken up for passage in the ongoing winter session of the Rajya Sabha. The Bill has been passed in the Lower House of the Parliament


The Securities and Exchange Board of India is investigating the share price movement of Karnataka Bank driven by speculation about its possible merger with a leading bank


SEBI Alert
SEBI HAS revised the base minimum capital (BMC) requirement for stockbrokers to a maximum of `50 lakh. Earlier, a flat BMC of `10 lakh was levied on members of stock exchanges. It is mandatory for all the members to maintain a minimum capital deposit with the regulator

Street Talk
Sun Pharma shares rose after it announced US acquisition
fter Sun Pharmas US subsidiary Caraco Pharmaceutical Laboratories announced it will buy the generic drugs business of Philadelphiabased URL Pharma from Japans Takeda Pharmaceutical Company, its stock rose. On 18 December its shares went up 2.33 per cent to `736.3 from `719.55 on the BSE.

On the Curve
5,950 5,925 5,900 5,875 5,850 105 103 101 99

URL Pharmas leading product Colcrys net sales in 2011 was more than $430 million and revenue was nearly $600 million. This is Sun Pharmas second acquisition in the US within two months. In November it had bought US-based DUSA Pharmaceuticals for `1,251 crore. More than 60 per cent of its revenue comes from international markets. Sarabjit Kaur Nangra, vicepresident, research, Angel Broking, says: URLs acquisition will strengthen Sun Pharmas foothold in US. r

M&M to buy out US partners stakes in joint venture
ollowed by reports of Mahindra & Mahindras (M&M) plan to buy out its US partner Navistar Group for `175 crore its shares shot up 0.89 per cent to `967.68 from `959.13 on the BSE on 18 December. In the utility vehicle making joint venture (JV), M&M will acquire the 49 per cent stake held in both JVs by the Navistar Group and make them wholly-owned subsidiaries. The JVs for trucks and engines were formed in 2005 and 2007, respectively. In the quarter that ended September, Navistars numbers were disappointing struggling to stay aoat in the US business environment. It reported a loss of $100 million in Q3 2012. Its revenues in the Q3 were $3.3 billion, down 6 per cent from Q3 2011. It will thus, be difcult for Navistar to invest in the joint venture. Navistar will, however, continue to supply technology to M&M on the basis of its indenite licence. r




Shree Cement stock hit a high on demand and positive measures

05 Dec 2012 Auto Index BSE Sensex

08 Dec 2012


99.86 100.00
05 Dec 2012 08 Dec 2012

The stockmarket dipped substantially and gained slightly during the fortnight. The BSE Auto surged well above the Sensex

n hopes of rising demand Shree Cement rose as much as 0.25 per cent to `4,496.65 from `4,485.35 on 17 December. In three consecutive trading sessions its stock rose 4.35 per cent from `4,309.45 to 4,496.65 (13-17 December). Post monsoon, things have turned positive for

cement stocks. Improving supply-demand dynamics and government measures to boost infrastructure projects are driving the cement stocks upwards. The company improved its capacity utilisation to meet the rising demand. Demand surged as construction activities in both the housing and infrastructure segments picked up. Analysts and broking rms are positive about the stock and believe that location advantage, strong management team and strong earnings growth will support the stock in the future. r



9 JANUARY 2013 l



Please advise me about tax rebate on purchase of a new property?

OLM Replies Per se, there



wish to do so. However, in case tax has been deducted at source by either the tenants or the bank, your father must le his return to claim the refund of tax deducted. In case your father is aged 60 or above, he will not be required to pay any tax up to `2.50 lakh per annum. r
GAURAV THAPAR, email If I purchase two insurance policies on my house, can I make a claim under both policies in case of any loss incurred? OLM Replies You can have two insurance poli-


is no provision under the Income Tax Act, 1961, for rebate on property purchase. However, there are certain benets which are ancillary to the purchase of property. For example, if you buy a property for a business purpose, you can claim a prescribed percentage of its cost as depreciation, which will be treated as a business expense. If you buy a property by raising a loan and generate rental income from it, you can claim the payment of interest as an expense for earning that income. If you buy property in the form of a house for self occupation, you can claim rebate for repayment of the principal amount of the home loan subject to limits under Section 80C of the I-T Act, 1961, as well as on the interest paid on that loan, up to `1.5 lakh per annum. r

cies on your property covering different types of risk, such as a re insurance and a burglary insurance for the contents of your home. In that case, any loss will be classied under one policy or the other. However, if you have two policies covering the same risk, say both policies cover the risk of re, the loss shall be shared by both the policies in the ratio of the sum insured under each policy. One basic premise of a general insurance contract is that no insured can make prot out of an insurance policy. Therefore, the insured only has to be indemnied for the loss incurred. In case there is more than one company covering the loss, the loss will be shared between the companies. r
LOKESH SINGH, email I have recently bought a second-hand car, which has a no-claim bonus attached with the insurance taken by the previous owner. Will this benefit be transferred to me when I take a fresh insurance for the car? OLM Replies No-claim bonus (NCB) is a

HARSH SINHA, email My father is retired and has no pension. His only source of income is rent from property, which is about `2.10 lakh per annum, and bank interest of `50,000 a year. Does he need to file his income tax returns? Is there any way he could be exempted from taxes? OLM Replies As you have stated, the income of

your father falls under two heads, namely income from house property and income from other sources (bank interest). The income from rent is subject to a standard deduction of 30 per cent and, therefore, his taxable income under this head will be only `1.47 lakh. Income from bank interest being fully taxable, the gross total income of your father will work out to `1.97 lakh. A gross income of under `2 lakh is exempted from tax. Therefore, your father need not le his income tax return in case he does not

reward which is given to the owner of the vehicle for safe driving. It is not attached with the vehicle. Therefore, as soon as the vehicle changes hands, the insurance companies withdraw the no-claim bonus. The original owner, however, can retain the bonus and transfer it to his next buy (vehicle). A purchaser of a secondhand vehicle will not get the benet of NCB when he or she renews the policy. r
SHILPI GUPTA, email What is the legal status of a life insurance policy during the grace period for payment of premium?



9 JANUARY 2013 l


OLM Replies Life insurance companies usually

give a grace period of 30 days for depositing a premium of a life insurance policy after the due date of payment, without any charge or interest. During this grace period, the policy remains in force. In case a death occurs during this grace period, the insurance company would, typically, deduct the outstanding premium and the interest thereupon from the death claim proceeds and pay the balance proceeds to the beneciaries. This provision has been made to avoid the unintentional lapse in an insurance policy. The grace days are normally one month, but not less than 30 days for all modes of payment except in a monthly mode where only 15 days are allowed as grace days. r
AMIT PATHAK, email I earn `2.1 lakh annually and wish to save and invest on a regular basis. Apart from some fixed deposits I do not have any investments. I would like to take a life insurance policy. Please advise. I am 30 years old. OLM Replies Considering your age and income

NAVEEN BHASKAR JHA, email With so much of controversy around unitlinked insurance plans (Ulips), is it advisable to buy Ulips? What factors one should know before investing in unit-linked schemes? OLM Replies The choice of investing in unit-

you should go for a term insurance plan for yourself. This is a pure risk cover that takes care of the risk to your life. In simple words, if anything happens to the policyholder his or her nominee would receive the sum assured. Term insurance is more economical than other insurance plans because it has lower premiums. Often, the idea is to go with a cheaper term insurance and invest the difference in regular savings and investment plans. The main benet of taking a term plan is that it provides more insurance coverage at lower premiums and also there is no-lock in period. Thus, the policyholder has nothing to lose if he or she wishes to switch to some other insurance plan. r

Log on to www.outlookmoney. com and post your queries at the Expert Advice box or mail at letters@outlookmoney. com

linked investment schemes will depend on your investment requirements and your insurance needs. A Ulip provides both insurance and investment benets. So, if you are looking for insurance as well as appreciation of your money and are willing to take risks, you can consider investing in Ulips. In a Ulip, the insurance company invests the amount you pay as premium in different funds after deducting administration and other charges. So, the policyholders money is invested in different funds which invest in equities, debt instruments, money market instruments, government securities and so on. Also, the policyholder determines the appropriate ratio of investments into these funds. r



9 JANUARY 2013

OUTLOOK MONEY 17 Cover Story


Anup Bagchi, Managing Director & CEO, ICICI Securities

Robert J. Shiller, Arthur M. Okun Professor Of Economics, Yale University


Arun Maira, Member, Planning Commission

s 2012 heads towards an end and you wonder what 2013 has in store for you, Outlook Money, in association with Bloomberg Television India got three eminent experts to brainstorm on the likely course of the economy, stocks and gold in a televised discussion last fortnight. Participating in the discussion moderated by Vivek Law, editor, Bloomberg Television India, were Robert J. Shiller, one of the worlds foremost economists and thinkers, who correctly predicted the current nancial crisis and the dotcom bust of 2000. Besides Shiller, the other participants were Arun Maira, member, Planning Commission and Anup Bagchi, managing director and CEO, ICICI Securities. Here are excerpts from their discussion.


Real Estate Cover Story

(R-L): Shiller, Bagchi, Maira, (video link from Delhi) and Law at the televised discussion

more comfortable about the global economy? Shiller: Well, one thing we know about nancial markets is

x Vivek Law: Is it still a long way from feeling a little


that there is uncertainty, but we still see the overhang from the crisis. We still see damaged nancial institutions with balance sheet problems, households who are under water and have negative net worth. We have long-term unemployment and we have people who are giving up on nding jobs. All these are weighing on condence and that damage in condence might last a long time.
x Vivek Law: You recently said you were hopeful that the

could unfold. We can just go over the cliff, but only for a short time and then there could be some corrections. That wouldnt be so bad. Its so hard to predict right now, but I think it does reflect a deeper mood of austerity that is driving the US and the economy of other countries in the world. This austerity is dragging the economies back and it is affecting the whole world.
x Vivek Law: What about Europe? How bad is the situa-

tion there? Shiller: Well, I have seen recent reports that have described

US will go over the fiscal cliff. Whats your view now? Shiller: I am hopeful that some kind of compromise will be

reached. The problem is that there is such a polarisation in US politics, it would be tough. We have the Republican Party, which has a low tax priority. Its very difcult for them to give in and President Obama has said that he wont compromise on raising taxes on the rich. Therefore, we surely have a battle and we have no idea how it is going to come up. If it drags on, it can hurt condence and hurt the economy as a whole. There are so many scenarios that

the nancial sector as very fragile. We have banks that are in trouble. They have been encouraged to hold the debt of governments whose debt is not entirely viable. We have a possible break-up of the eurozone area and the important psychological consequences in that. It is very unpredictable and it has the potential to develop into a serious crisis that would drag down the world economy.
x Vivek Law: Do you believe that there is a bigger

chance of things going wrong from here on? Shiller: I think the most likely course for the world econo-

my is that it will be steady and at lower growth. There is a


9 JANUARY 2013 l Cover Story

times, where there was a massive upsurge in the index. All the four times, it has been driven by liquidity(quatitative easing) QE1, QE2, Japanese Tsunami and then QE3. We must keep that in mind that liquidity is driving a lot of this upsurge that is coming in. Second, I think the whole market moves in expectation, not what happens in the real economy, but the expectations on the real economy. So, I think, the last 3-4 years, the index hasnt gone anywhere, but the earnings have increased. And, to that extent, I think there is a decompression, so monies have started to come in, but I would say that it is largely driven by liquidity. The bulk of the money that is coming in the country is of an ETF (exchange traded fund) variety, which is essentially allocation money and it is not so much India-dedicated active investing money. So, we have to keep in mind that these are the two factors for the inflows. In the Indian context, FIIs (foreign institutional investors) are looking at reasons and places to invest.
x Vivek Law: Dr. Shiller, you are visiting India at a time

robert j. shiller

Stockmarkets can still give 3-5 per cent real returns. From a value perspective, it is still a good investment
substantial chance of a world recession, but I am not predicting it as of now.
really happening in the global world? Maira: We foresee three scenarios for India. One of the scex Vivek Law: Mr. Maira, what is your reading on whats

when the government has announced big bang reforms in the last 2-3 months. How does India look to you? Shiller: Well, I am impressed with some of the new

narios is that we keep muddling along because of the logjam in the system caused by lack of trust in institutions, which, in turn, disables the policy-making machinery from getting things done. The other scenario which can emergea worse one at thatis, if this logjam continues for much longer, then the condition of the system deteriorates much further, both in the nancial and economic conditions, as well as the lack of trust in institutions. We could then witness the falling apart of Indias growth story. There is another scenario that is possible, and there are forces which suggest that if they are taken advantage of, a flotilla advancing, the flotilla of various states, various interest and various stakeholders lining around strategies, would produce benet for the whole system. We have calculated gross domestic product (GDP) growth numbers within these three scenarios. And we do foresee that if we get the flotilla aligned and moving, for which we determine what needs to be done, we could see in the next ve years growth of over 8 per cent. This means, going from where we are at 5-6 per cent, towards 9-10 per cent by the end of the ve years. The second scenariothe falling apart scenariowhere the growth would be around 5-5.5 per cent on an average, in the next ve years. And, the in-between scenario, where we just keep muddling along and dont fall apart entirely, it could be 6-6.5 per cent GDP growth in the ve-year period.
x Vivek Law: Anup, over $20 billion have been invested

reforms, one of them being this new unique identity number, Aadhar, which I think is revolutionary (in terms of the very concept and the intended application). We dont have that, by the way, in the United States, not a biometric system connected with an identication system that allows and, eventually, connects with databases across the country. This is powerful and, I think, it will help lead India to a new and better future. So, in order to keep the economy advancing and to keep preventing the loss of trust and condence that Mr. Maira was talking about, it would help.

arun maira

in the country this year. How would you explain that in the context of whats going on globally? Anup Bagchi: In the Indian context, there has been four

We have not been able to get a large flow of foreign investments because the money gets stuck and doesn't produce results. Aadhar and other administrative reforms will enable people to see benefits of growth


9 JANUARY 2013 l
Shiller: Its fundamental because it changes the information structure. It brings people into the nancial system who are now anonymous and unidentied. Now they have got an account, they have the ability to act as an economic agent on their own. That is fundamental, and it works at benetting all levels of the Indian society.
x Vivek Law: Mr Maira, with the kind of decisions gov-

Anup Bagchi

ernment has taken recently, do you think that the government has created a better opportunity to not fall in the worst case scenario? Arun Maira: There has been a lot of focus on opening up

Improved feel good and liquidity have driven up the market. If there is time gap between the real economy moving and this enthusiasm, there will be a correction
x Vivek Law: What you are really saying is that this is

perhaps something which could change India in the next 5-10 years. Its a far bigger reform than throwing open an odd sector to foreign direct investment.

the countrys markets to outside investments previously. And, the truth is that most of our sectors are already opened to outside investments and only a few remain, and we are talking about opening those up. But, we havent been able to get a big flow of investments into the country except under conditions where everywhere else is depressed so short-term money would come here for a while perhaps. And, why it has not happened though India is a large market with a lot of potential is because when money comes in things dont get done here. The money is sort of stuck. It doesnt repay and produce results. So, people have been saying why dont you concentrate on getting things done




Real Estate Cover Story

within the country? Therefore, Aadhar and other administrative reforms, which will enable people to see the benets of growth, are very important. If you do these reforms, people will not only directly benet, but even the projects will get implemented (on time), money will produce returns faster and you would be able to draw in more money from investors both in India and from elsewhere in the world.
x Vivek Law: Will the recent (reform) announcements

take us to next level of high in the market? Anup Bagchi: If you look at the markets construct as of

now, it is tripolar. You have cash-rich companies and companies which are generating cash. Then, you have very asset-heavy and investment-heavy companies, such as those in infrastructure. Then, you have companies which are very exposed to global factors like the IT sector. If you see, massive underperformance has happened on the investment side and on the capital-heavy sectors. And, if you look at that sector, it hasnt moved much because the real stuff has to get done. I think, so far what has happened is that the feel good factor has improved. So, (recent market upmove) is a factor of two things: a general feel good and liquidity which drives the market. The second one is the critical factor. But, the real economy has to catch up. When you speak to corporates and when you look at promoters, I dont think much has changed. But, I think condence is coming back. Now its a very good start for the market always, because, when condence comes back, expectation of returns on investment comes back (with it) and things start to move. Cash-rich companies are sitting on cash, but not investing. If they see that there is less policy volatility, they will start to invest. While on the ground nothing much has improved, I think sentiment has improved a great deal. People are waiting with bated breath that things might move, going ahead. And, trust me, if it moves, I think we will have a big jump,

arun maira

If we have a flotilla of various states, interests and stakeholders aligned with strategies that would produce benefit for the whole system, we could see a growth rate of 8 per cent in the next five years.
as the two sectors, as you know, havent participated much in the overall rally. So, I think, we can see a good run up if real economy starts to move. If there is time gap between real economy moving and this enthusiasm, there will be a correction for sure.
x Vivek Law: Dr. Shiller, do you think gold is where the


next bubble is? Shiller: Well, gold has already been in the bubble and I

have to admit I missed this one. I didnt predict it. But, I have a lot of company. There are lot of other people who didnt predict it, including some very successful money managers. You cant get everything (right). The problem with gold is it has very little intrinsic use. It has a stored value, but it doesnt generate earnings. So, I would like to compute a price-to-earnings ratio for gold, but we dont have that. I study behavioural economics and human psychology, but I nd it inscrutable. So, if you ask me to predict when this gold bubble will end I cant do it.
x Vivek Law: What about equities?


Shiller: I have my CAPE, Cyclically Adjusted Price

robert j. shiller

I think the most likely course for the world economy is that it will be steady and at lower growth. There is a substantial chance of a world recession
9 JANUARY 2013 l

Earnings ratio, which is little over 20 in the US. It varies by countries and, in the UK, it is lower. But, it is high and its a sign that we dont probably expect as good returns as we have got historically. It is just suggesting something like 3-4-5 per cent a year real returns, which is pretty good in this environment. And, moreover, you can go into lower price sectors of any economy and, maybe, do even better than that. So, I think the stockmarket, if you take it from a value perspective, is still a good investment. r


9 JANUARY 2013 l Cover Story

The economic crisis is not quite over yet

Robert j. shiller Professor of Economics, Yale University

In his address at the Outlook Money Awards 2012, the economic visionary mentioned how our financial future will pan out and what we should prepare for. Excerpts
n the future, I think, that the next course of action can do it. We can enforce the contracts, we can see it actushould be to continue the expansion of our use of ally fullling its plan. And we will see more use of electronmodern nancial theory including behavioural ic money; the paper money that we have is gradually disapnance, and a better understanding of how people pearing. We will see more, I am hopeful, of what I call actually think and behave. One thing thats happening 'index units of account'. I have talked about this in my variis we are entering the age of big data, where we have ous books. I think that we will see the decline of convenexpanding databases that allow better risk management. In tional money and we will have more different kinds of order to make these work better we also needand this is money indexed to economic variables, better than anything something that I know you are very much aware of here in we have seen so far. Indiabetter individual identication systems, biometrics, The next few years are possibly difcult. ...Unemployment identication cards and numbers and ways of interacting rate can stay up for a decade or more in the time of econancially with these numbers. So, I think that the new nomic slowdown. It is irregular and you see ups and downs identication system being developed in India is extremely within that, but I think the slowdown that we see in the important. I talked about this in one of Indian economy is just one example of my earlier books, New Financial Order, the kinds of slowdown that may still be and I think its very important because ahead of us because of this crisis it allows people to link to data and (which started in 2008), which is not The future depends on automatic processing of data that over yet. We are still in the aftermath improving and extending allows systems to manage their risks of a bubble and the effect depends on use of financial theory and to incentivise people better. It is condence, on animal spirits, on how n Expanding databases allow absolutely fundamental. people are thinking. Fortunately, the better risk management At the same time, I believe there is a G-20 nations responded very well to n Individual identification (as trend in the world today that we will the crisis that developed in 2008. They ongoing in India) will allow see evolving over the next half century, did expansionary scal and monetary databases to be linked better of a decline of the underground or parpolicy. The problem has been that since n Decline of underground allel economy. More things would be then there has been a tendency economy will continue above ground and quantiable and towards austerity because when you do n Much more complex conidentiable, which would mean better get into a crisis like this and you use tracts will be drawn up risk management and better incentiviexpansionary scal policy, it tends to n Electronic money and sation. Another thing you hear talked put governments greater in debt. And indexed units of account will about now is that we have more comthere has been an absolute panic about become more common plex contracts because with computers that leading to austerity campaigns and databases and identication we around much of the world.




9 JANUARY 2013 l OUTLOOK MONEY 27 Cover Story

I have been arguing in various newstainty. I dont know how we can get paper articles and in my books that international agreement to prevent this governments shouldnt be afraid of worsening, but I do know how we can stimulus anymore and that the balensure people against suffering from it. The next few years to anced budget stimulus can still be Now the environmental risk affects the depend on consistent applied. That means raising taxes and whole planet, but it doesnt affect the application of economic raising expenditures to invest in infrawhole planet equally. So there are stimulus because of structure and other important activimany risk management contracts that n Fundamental instability of ties that are neglected in a time of ecoought to be made, long-term risk mancapitalist economy nomic austerity. It doesnt look like we agement contracts. n The G-20 nations responded have the political will to do this. So, it is Another one is when you think about well to this crisis (after 2008) not a forecast to say that we would not the distant future there is a worry n The tendency towards be using economic stimulus to put us about war and terrorism. I have NBCR, austerity in aftermath of budout of this slow period and I am worthats nuclear, biological, chemical and get crises is major threat (to ried that this slow period will continue. radiological risks. These are risks that the global economy) But I wanted to just say nally and we need to talk about and develop longn Balanced-budget stimulus conclude that it is important also to term risk management contracts can still be applied today think about the longer term and not against them. lose sight of the exciting, truly exciting There is also a risk going forward revolution thats going on in nance around the world. The about increasing economic inequality. With the informalittle downturn that we are going throughlittle, maybe tion revolution going at the a pace that it is going at, there not so littlebut the downturn we are going through now is uncertainty of people as to whether they would be able to will be forgotten. There will be new bubble and busts like earn a decent income. I am not saying that I know that the one that we have now. inequality will increase, there is a risk that will increase. The important thing to keep in sight is to keep the revoluAnd this is something again that we can help devise nantion, the nancial revolution going. And this means that cial or insurance products (to mitigate the risk of). And if we need to be positive about the development of new nanwe develop nance further with advanced risk managecial derivatives to deal with important risks. The important ment and incentivisation methods, it will create a very risks tend to be long-term risks to the income streams. I tell positive future for ourselves and for our children. Because my students that the next half century is going to be an ultimately what nance releases is human achievement so adventure for the next century. Its a serious uncertainty that their activities are not diminished by excessive or about whats coming up. The horizon, as I tell my students, unnecessary fears. that one should have is about a hundred years. My students When you have a nancial system that is attentive to peowill live the better part of the century ple and makes complex contracts to themselves and we care about our chilprotect them and to incentivise them, it dren. So, we have a 100-year horizon. will create amazing new things. One What is going to happen in the next thing that is being happening during Financial predictions for 100 years nobody knows. The last centhis immediate nancial crisis is we the next century tury had enormous uncertainty have seen our communications techn Increased speculative actirevealed. This coming century will as nology move ahead amazingly. If you vity will bring about more well. We have to think about our nancompare our telephones, our mobile bubbles and busts cial system as a system that insures phones from ve or 10 years ago with n Financial derivatives against risks that are important to us today's, they have just advanced so required to deal with longand allows us also to incentivise people much in spite of the nancial crisis. term risks to income streams to move ahead in a risky world. What this means is that the nancial n Protections against nuclear, So, some examples of the kinds of system, I believe, incentivises human biological, chemical and radiothings that we are to be thinking about behaviour and incentivises people to logical risks to evolve that are even more important than the work better in groups. This is somen Insurance against environcurrent economic slowdown is how we thing that is amazing, its the story of mental risks can insure against the major risks comour times, we have to see it continue. n Insurance against rising ing up. One of these is environmental But the important lesson is that naninequality risk. It looks like global warming is not cial innovation, which is discredited n Advanced risk management being solved, this is just one example, and doubted by so many people, is alive will make for better achieveby international treaties. Its getting and well and has to be promoted for ment of personal goals worse. Maybe there will be some treaty. the future. r We dont know, but its a major uncer-





9 JANUARY 2013 l Conversations

It was a high-powered high tea at Mumbais ITC Grand Central on 13 December 2012, in honour of global thought leader Prof. Robert J.Shiller from the prestigious Yale University, who was visiting India at our invitation. The countrys best finance brains came to spend some quality time with Prof. Shiller to discuss emerging trends in world finance. Among them were Subir Gokarn, deputy governor, Reserve Bank of India; O.P. Bhatt, former chairman, State Bank of India; K.V. Kamath, chairman, ICICI Bank; Y.H. Malegam, noted tax and financial regulation expert; and Anup Bagchi, managing director and CEO, ICICI Securities. They were joined by Vinod Mehta, editorial chairman of the Outlook Group and Akshay Raheja, vice-chairman of the Outlook Group. Before the eminent gathering left after a stimulating conversation, they posed for our shutterbug. r
From left: O.P. Bhatt, former chairman, SBI; Y.H. Malegam, financial expert; Subir Gokarn, deputy governor, RBI; Robert J. Shiller, noted economist; Akshay Raheja, vice-chairman, Outlook Group; K.V. Kamath, chairman ICICI Bank; Vinod Mehta, editorial chairman, Outlook Group; and Anup Bagchi, MD & CEO ICICI Securities

a different tea Party





The Co

year of volatile markets, stubbornly high ination and poor investor sentiment: thats how many of us would describe 2012. But even this bleak backdrop threw up its set of shining stars. The Outlook Money Awards 2012 was held to honour those who had delivered exceptional service to the man on the street. The evening began with Outlook Money editor Udayan Ray welcoming the stalwarts of Indian nance. That was followed by a talk by Robert J. Shiller, one of the foremost economic thinkers of our time and the only person to have predicted both the dotcom bust as well as the 2008 crash, on the future of the nancial world. A Q&A session moderated by journalist Govindraj Ethiraj was next. The Outlook Money Childrens Special Collectors Issue 2 was launched at the ceremony by Vinod Mehta, editorial chairman, Outlook Group, Harshendu Bindal, president, Franklin Templeton Investments (India), and Shiller. This was the second of the Collectors Issues, with the rst being the successful Womens Special and more to follow. The Awards evening was rounded off by the induction into the Outlook Money Hall of Fame of K.V. Kamath, a legend of Indian nance, who, with his foresight and acumen built up the countrys second-largest commercial bank, ICICI Bank, of which he is now the chairman. That was, indeed, a rare privilege.

The winners with their trophies at the Outlook Money Awards 2012 ceremony at the ITC Grand Central, Mumbai, on 13 December 2012


9 JANUARY 2013 l

The Ceremony

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1 K.V. Kamath, chairman, ICICI Bank (L), who was inducted into the Outlook Money Hall of Fame in 2012, with the 2011 Hall of Fame awardee and tax and financial regulation expert Y.H. Malegam. 2 Robert J. Shiller, Arthur M. Okun professor of economics, Cowles Foundation for Research and Economics, Yale University, delivers his address. 3 (L-R) Harshendu Bindal, president, Franklin Templeton Investments (India); Vinod Mehta, editorial chairman, Outlook Group, and Shiller launch the Outlook Money Children's Special Collectors' Issue 2. 4 Udayan Ray, editor, Outlook Money, delivers the welcome address. 7 (L-R) O.P. Bhatt, chairman, Awards jury, and former chairman, State Bank of India; Mehta; Akshay Raheja, vice-chairman, Outlook Group; and Ray on the dais. The Outlook Money Awards 2012 winners: 5 Keki Mistry, vice-chairman and CEO, Housing Development Finance Corp.; 6 Hemant Bhargava, executive director (marketing & product development), Life Insurance Corporation of India; 8 M.V. Tanksale, chairman & managing director, Central Bank of India; 9 Antony Jacob, CEO, Apollo Munich Health Insurance Co.; 10 V. Philip, managing director & CEO, Bajaj Allianz Life Insurance Co.; 11 Vibha Padalkar, executive director and CFO, HDFC Life Insurance; 12 R.K. Bammi, executive director (retail banking), Axis Bank; 13 G. Srinivasan, chairman cum managing director, New India Assurance Co.; 14 Anup Bagchi, managing director & CEO, ICICI Securities; 15 Aseem Dhru, managing director & CEO, HDFC Securities; 16 Amandeep S. Chopra, president & head (fixed income), UTI AMC, (L) and Imtaiyazur Rahman, acting CEO, UTI AMC (R); 18 Nimesh Shah, managing director & CEO, ICICI Prudential AMC; 19 N. Seshadri, executive director, Bank of India; 20 (L-R) Lakshmi Iyer, senior vice-president & head (fixed income & products), Kotak Mahindra AMC, and Sandesh Kirkire, CEO, Kotak Mahindra AMC; and 21 Prashant Jain, executive director & CIO, HDFC MF. 17 Johnson D'silva, vice-president, Outlook Group, & associate publisher, Outlook Money, delivers the vote of thanks. 22 (L) Indranil Roy, president, Outlook Group, and Manoj Nair, assistant general manager, Outlook Money






9 JANUARY 2013 l














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Up next x OLM Awards: Best Education Loan Provider pg 36




aXIS bank
Managing Director & CEO


shikha sharma



IndIan bank
Chairman & Managing Director


ompetition was tough and Indian Bank performed well across all parameters, topping the list on reach. Axis Bank and ICICI Bank also scored similar points, but Indian Bank won the award on the ground that it provides services such as phone banking, mobile banking and Netbanking along with the fact that it opened a large number of no-frill accounts. That is what worked in its favour. Indian Bank also boasted of a healthy increase in its savings bank accounts in FY12 compared to FY11 and a large number of new customers in the last three years. The bank also scored on the cost and convenience criterion. The bank has the minimum average quarterly balance requirement for a savings account with cheque book facility, the lowest charge for non-maintenance of the average quarterly balance and the lowest annual charges for debit cards. Where it lost a little ground was in the nancial performance. Not that it did not perform well in this parameter, only it fell below its performance in other parameters. r

t.m. bhasin

Winners edge

as phone, mobile and Netbanking n Their no-frill accounts n Minimum average quarterly balance requirement

n Services such

his bank has been on the winners podium for a second year in a row, only that it was the topper last year. In the reach parameter its performance was on a par with Indian Banks, but it faltered in cost and convenience. The average quarterly balance needed to maintain a savings account is high compared to Indian Bank as are the charges for not maintaining the average quarterly balance. Even the annual debit card fee and the interest in rollover credit charged by Axis Bank is high compared to Indian Bank. But where it made up for lost ground was in the nancial performance parameter. In fact, it topped the tables in the nancial performance category by a big margin. One of the major reasons for this was healthy fee-based income, CASA and low NPA among others. r

Winners edge

financial performance category by a big margin n Good reach


n Consistent performance n It topped the tables in the


9 JANUARY 2013 l

Education Loan

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education loan ProVider ider


education loan
CEnTRaL Bank of india
Chairman & Managing Director

M.V. tanKsale




education loan
Bank of india

ank of India (BOI) has driven ahead of the competition and won the best education loan provider award by proving its worth across parameters. So, what is it that BOI did and others could not? For starters, the banks extensive network worked in its favour. The number of loans disbursed by the bank further strengthened its cause. While BOI registered a positive growth rate with regard to the number of loans disbursed in FY12 over FY11, many of the competing institutions struggled to even maintain the levels of FY11. Not only that, it left the competition way behind in the value of the loans disbursed. It more than doubled the value of loans disbursed in FY12 compared to FY11. On the cost and convenience parameter, the bank fared well, thanks to its low interest rate and eet-footedness in disbursing loans. It also earned points on the disclosures and good governance parameters for its openness about providing quality information to education loan seekers, both on its website and in the product brochure. r

n. sesHadri
Executive Director

n Extensive network n High loan disbursement n Value of loans disbursed better than peers n Good governance

winners edge

entral Bank of Indias performance was only second to that Bank of India. It disbursed higher number and value of education loans in FY12 as against FY11 compared to its competitors. The bank has a low default rate compared to institutions competing in the same category. It scored the highest on the cost and convenience parameter. The low cost of interest and quick loan disbursal were the major reasons for Central Bank of India topping the tables in this category. Further, higher number of repayment options of the education loan for customers convinience also worked in the banks favour. It, however, faltered a bit in the disclosures and good governance criterion. r

winners edge
n n n n

High loan disbursement Low default rate Low cost of interest Quick loan disbursal n Higher repayment options



9 JANUARY 2013 l

Home Loan Provider

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Up next x Life Insurer pg 38


Home loan provider


Home loan provider

Chairman & Managing Director

m.v. TanKsale




Home loan provider
Vice-chairman & CEO

DFC made it to the top for the second consecutive year. This year, however, the competition was really tough with the runner-up, Central Bank of India, breathing down the neck. Yet, at the nishline, HDFC was the undisputed king with its sound performance and reach. The value of loans disbursed by the private sector player was far higher than its peerseven beating that of State Bank of India, which has the largest branch network in the country. The average number of loans disbursed per branch by HDFC was also the highest among competing institutions. HDFC also topped the table in terms of cost and convenience, but the margin between the runner-up and the winner was very thin. What worked in HDFCs favour in this category, though, was the fact that it provided greater convenience to loan applicants. In the disclosures and good governance front, HDFC did fairly well, but was not good enough to beat Central Bank of India, which kept its nose ahead. r

KeKi misTrY

n Highest loan disbursed in value terms n Table-topper in cost and convenience n Gives more convenience to loan applicants

winners edge

he bank has been a steady performer at the Outlook Money Awards in this space. Though the value of loans disbursed by the Central Bank of India was on a par with its peers, the increase in the number of loans disbursed in FY12 over FY11 exceeded expectations. It did reasonably well in the performance and reach parameter and gave a run for the money to HDFC in the cost and convenience category. Central Bank not only charged the least, but was eet-footedsomething that is not associated with PSU banks. The disclosures and good governance parameterwhere it toppedhelped it make up for lost ground elsewhere. The banks good show across parameters helped it get the second spot. r

n Year-on-year increase in the number of loans disbursed n Table-topper in disclosures and good governance n Lowest cost

winners edge




Life Insurer

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HDFC lIFE InsuranCE Company


Managing Director & CEO


ife Insurance Corporation of India continues to be the market leader in the life insurance industry in India. In FY12 it sold over 35.7 million individual policies with total premium collection at `2,02,889 crore. Add to that its extensive reach with 2,048 branches, 109 divisional ofces, eight zonal ofces, 992 satellite ofces and the corporate ofce in Mumbai. It also has the strong agency force of 1.28 million during 2011-12, of which 1.21 million are the active agents. To its credit, the company manages to deliver good returns to the majority of its policyholders, for both unit-linked and traditional plans. Few surrenders and low percentage rise of complaints to Ombudsmen also gives it an edge. In terms of reach, disclosures and product innovation the company scores well. Despite a fall in its total agent count and even on the active agent front the company has managed to pull off a win. r



ts a joint venture between Housing Development Finance Corporation (HDFC) and Standard Life. Its reach, customer education programmes, persistence and product innovation makes it our next best in the business. In terms of premiums collected (excluding renewals), the insurer has fared better than most peers. r


n Consistent performance n Gives good returns to policyholders n Few surrenders and low percentage rise in complaints to ombudsmen


baJaJ allIanZ lIFE InsuranCE Company

Managing Director & CEO




ajaj Allianz is a joint venture between Bajaj Auto and Allianz AG, a German company. It has also offered good returns to its policyholders with high bonus rates and good fund performance. On the basis of improved customer service, the decline in the number of awards against the insurer from the ombudsman also makes Bajaj Allianz Life the frontrunner. r



9 JANUARY 2013 l

Health Insurer

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Up next x e-brokerage pg 40


healTh insurer


apollo munIch health Insurance company

Chief Executive Officer

healTh insurer



he New India Assurance, a leading global insurance group with 1,068 ofces, bagged the rst prize in the inaugural edition of best health insurance award. With approximately 21,000 employees, it has the largest number of technically-qualied personnel at all levels of management. It is also the only Indian insurance company to have an A- (excellent) rating by A.M. Best, an international rating agency. Health continues to drive the insurance companys growth story, signicantly supported by the motor and the re segments. The healthy top-line growth for two consecutive years has helped the company continue as the market leader with a global premium of `8,225.51 crore. In terms of reach, it is way ahead of its peers, not only in terms of its network, but also in terms of number of lives covered. It also maintains high standards of customer service and regulatory compliance. r

the new IndIa assurance company

Chairman cum Managing Director

healTh insurer

g. sriniVasan

n High number of technically qualified employees n High number of lives covered n High standard of customer service

winners edge

pollo Munich Health Insurance is the runner-up in this category. A joint venture between the Apollo Hospitals Group and Munich Health, a company of the Munich Re Group, Apollo Munich operates as a standalone health insurer and offers innovative health, accident and travel insurance solutions. The company scored well across all the four parametersreach, product portfolio, customer service and complying with regulatory norms. It, in fact, showed remarkable determination in extending its cashless services across the entire country. The companys underwriting practices, bouquet of innovative products and features, and prompt customer responsiveness helped it tally up its score. r

winners edge

n Extensive network n High customer responsiveness n Varied product portfolio n Promoted cashless services n Underwriting practices





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Managing Director & CEO

aseeM dHrU


or the fth consecutive time, ICICI Direct has bagged the best e-Brokerage Award. It is one of the fastest-growing e-broking companies, serving 2.4 million retail customers across the country. Of course, being backed by a strong parent, ICICI Bank, helps, with the bank offering services across investment transactions. But thats not all. ICICI Direct, which was the rst to introduce a mobile trading platform, has been taking giant strides in investor outreach by tapping a growing list of customers. Besides offering equity and derivatives in the local market, it facilitates trading on major US exchanges, including the New York Stock Exchange. The bank rationalised its brokerage costs last year and rolled out a stream of products and incentives to facilitate more trading for retail investors. It also offers special incentives such as no depository sell charges and interest on idle money in a trading account. Little surprise then that ICICI Direct won our coveted award. r


anUP bagCHi
Managing Director & CEO

n Investor outreach n Trading on US exchanges n No depository sell charges n No interest on idle money

winners edge

he runner-up in the e-brokerage category, with a strong banking parent (HDFC Bank) is HDFC Securities. Incorporated in April 2000, the rm expanded from being a single-product broking house to a full-service nancial intermediary. HDFC Securities has more than 180 branches and over 1.4 million customers. It is a fast-growing brokerage with a healthy retail customer acquisition strategy. Its diversied product suite aims at reducing costs and overheads for investors. The rm has been among the top eight distributors of IPOs and FPOs across India and pioneered NCD applications online. This is one securities rm we would be watching in the ensuing years. r

winners edge

tion strategy n Diversified product suite n Reduced costs and overheads

n Extensive network n Strong retail customer acquisi-



9 JANUARY 2013 l

Fund House

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Up next x Fund House-Equity pg 42


FUnd HOUse



FUnd HOUse
Acting CEO




et again, HDFC Asset Management Company clinched the rst place in the best fund house category. In its equity category, all the 12 schemes outperformed the category average, while in its debt category, six out of nine schemes outperformed on a risk-adjusted basis. HDFC mutual fund is one of the most conservative asset management companies in the market. Yet, what sets it apart is its uncanny fund management acumen. It has consistently outperformed its peers in most categories. Its stellar performance in equity and the above average performance in the debt space have been its trump cards. Some of its equity and hybrid schemes such as HDFC Equity, HDFC Top 200, HDFC Balanced and HDFC Prudence and debt schemes, such as HDFC MIP, HDFC HIF S/T Fund, have consistently been a part of OLM 50; Outlook Moneys recommendation of 50 schemes across categories. The fund house backs up its performance with high service standards. r


FUnd HOUse

MiLind BArVe
Managing Director

n Consistent performance n Star rated schemes n Above-par returns

winners edge

TI Asset Management Company has unparalleled brand recall among retail investors. It is virtually synonymous with the term mutual fund, at least in the Indian MF industry. The fund house bagged the second position in the best wealth creator category for its superior performance across both equity and debt funds. In the equity category, a total of 15 schemes qualied for the award. Of those, eight outperformed the category average. In terms of star rating, six of them are either four-or ve-star rated. In the debt category, six out of seven schemes outperformed on a riskadjusted basis, ve of which are either fouror ve-star rated. The fund house is well established across cities and towns in India with 124 branches outside metros. It has more than 5.3 million folios with the AAUM of `14,000 crore beyond the top 15 metros. r

n Strong performance n Extensive reach


winners edge

Star-rated schemes




Fund House-Equity

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Managing Director & CEO

niMesH sHAH



DFC MF truly justies its win in the best fund house-equity category. Its outstanding performance on the equity side has ensured that it leads the equity pack for the second consecutive year. On the performance parameter, it scored a perfect 100. In the equity category, all the 12 schemes taken into consideration outperformed the category average. All the schemes have a four-or vestar rating, giving HDFC MF a winning edge. HDFC MF has exhibited exemplary commitment to ensuring good performance by focusing on its existing schemes instead of going on new fund offer (NFO) launching sprees. The decision bodes well for both the MF and its investors. The equity schemes of the fund house are on top of the chart, be it the equity-diversied category (both large-cap oriented as well as mid-and small-cap oriented), equity-linked saving schemes (ELSS), balanced funds or others. All its funds have consistently outperformed peers funds. Can it repeat its performance next year? It will be worthwhile to watch. r


MiLind BArVe
Managing Director

n Consistent performance n Star-rated schemes n Focus on existing schemes n Capital safety

winners edge

ver the years, ICICI Prudential MF has forged a position of pre-eminence in the Indian mutual fund industry and has evolved into an esteemed value creator for investors. Its efforts in consolidating its product range and a strong investment performance backed by processes favoured its case. The fund house bagged this award for the second time in a row. Eight of its 10 equity schemes that made the cut have outperformed the category average. This is an impressive gure given the tough market conditions. Of these, ve schemes were rated with four or ve stars. Four of ICICI MFs equity schemesICICI Dynamic, ICICI Discovery, ICICI Focused-Blue chip Equity and ICICI Tax Plan have consistently been featured in Outlook Moneys OLM 50. r

winners edge

ment performances n Star-rated schemes n Above-par returns

n Wide product range n Process-backed strong invest-



9 JANUARY 2013 l

Fund House-Debt

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FUnd HOUse-deBT



FUnd HOUse-deBT
Acting CEO





FUnd HOUse-deBT
sAndesH KirKire

otak Mahindra Asset Management Company has been one of the most consistent performers at the Outlook Money Awards. This year, it did it again. Its debt schemes continue to impress across all categories, with four out of its six debt-oriented schemes outperforming the category average and maintaining a low expense ratio. Since returns in debt funds are modest, having a low expense ratio helps prop up returns. It has also left its mark in terms of innovation and launching of new products. It was the rst to launch gilt funds in December 1998 and a serial plan in the following year. A well-managed debt fund is also characterised by low credit risk and, so far, the fund house has successfully managed the credit risk by investing in better rated paper as compared to its peers. It has also been able to deliver better returns and earn higher yields. The fund houses debt fund managers have worked wonders with their portfolios. r

n Four out of six schemes beat category average n Low expense ratio, better returns n Innovation, new product launches

winners edge

TI Asset management Company has come a close second in this years Outlook Money Awards in this category. Its debt side, headed by Amandeep Chopra, has made a serious comeback. UTIs MF has comfortably raced to the topway ahead of its peersand its debt investing is now one of the best in the industry. Out of its seven schemes, ve have outperformed their respective category averages and four are either four- or ve-star rated schemes. Its debt scheme, UTI Bond Fund, has consistently been a ve-star rated scheme in OLMs rankings. Its expense ratio (1.39 per cent) for the period under consideration was below the category average (1.45 per cent). A low expense ratio has always been a feature across its debt funds and has, therefore, resulted in good returns. r


n Debt investing one of the best in the industry n Five out of seven schemes outperformed category averages n Many four- or five-star schemes

winners edge




The Pat
Kamath, an engineering gradua


ou may call it an enhanced access to banking and nancial services, someone else may term it as nancial inclusion, while others may prefer democratisation of nance. Since the underlying theme of the Outlook Money Awards 2012 was the increasing outreach of personal nancial services to the Indian masses, it is only tting that the Outlook Money Awards Jury unanimously decided to induct K.V. Kamath, chairman, ICICI Bank, into the Hall of Fame. For many of us, ATMs, credit cards, home and other loans might be a way of life today. However, things were quite different even in 1994, when ICICI Bank was set up. Then you had to be a client of a foreign bank to get access to an ATM. Otherwise, you waited in serpentine queues at teller counters for cash. As new private banks, such as ICICI Bank, hit the scene, all this began to change. And what is important is that you need not have a large bank balance to be eligible to access the services. If ATMs and phone banking brought banking closer to you, ICICI Bank also aggressively opened branches across the country. These efforts picked up great momentum after Kamath took over the reins in 1996. Yet another lasting contribution of Kamath is in ensuring that ICICI Bank took the lead in bringing home and car loans closer to the customer from the early part of the decade of the noughties. He was in no small measure helped by the low interest regime, which, when combined with the handsome tax breaks provided by the government on home loan principal and interest repayment, made peoples life dreams of buying a home not only achievable, but that too at a time when one was fairly young. In a very short period of time, the average age of the home owner went down from early 40s to early 30s. The economic boom during 2004-08 was also marked by a rapid rise in income and savings that led to many Indians moving on to their Chairman, ICICI Bank second or third homes. Then, as the life insur-





9 JANUARY 2013 l

Hall Of Fame

n B.Tech, Karnataka Regional Engineering College, Surathkal n MBA, Indian Institue of Management, Ahmedabad

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te and IIM-A alumnus, has taken banking to the people

ance sector opened up, ICICIs entry into the space and its aggressive approach to reaching out helped people get life insurance covers in a badly underinsured country. Even as all this was happening, ICICI Banks e-broking company was reaching out to a whole class of investors who wanted to get a share of the India growth story by investing in stocks and other products available online. Born on 2 December 1947 in Mangalore, Kamath nished his primary and intermediate education from St. Aloysius School. Then he pursued his mechanical engineering degree from the Karnataka Regional Engineering College, Surathkal (presently known as National Institute of Technology, Karnataka). His formal education culminated with a masters degree in Business Administration from the IIM, Ahmedabad. Under Kamaths stewardship, the growth of the retail business, in what was an essentially an organsation relying on institutional business, catapulted ICICI Bank to the number two slot among Indian banks, just behind behemoth State Bank of India. But, the impact of fast-paced growth by private sector groups, such as ICICI Bank and HDFC, is more far-reaching than just this. They have ended up forcing the public sector banks and other players to keep up with the times and provide their customers with nothing less than what is provided by private sector players. The impact and benet of Kamaths leadership went far beyond the customer of ICICI Bank. Kamaths ICICI growth story also established one more model in India without doubt. Before, there were companies who would be in stand alone car or home nance, or broking services, and there were banks providing pure banking services. Kamaths ICICI Bank journey established banks as one-stop shops that provide for all the nancial needs of a customer. Kamaths contribution to Indias personal nancial services does not stop there. He managed to groom a school of future top executives in retail nance, thus leaving behind an unmatched legacy of talent that will continue taking personal nancial services across India. Today, Kamath is more in the news for his role as the Chairman of the Board of Directors, software major Infosys, though he continues to be the chairman of ICICI Bank. He is making other signicant contributions, all of which will be difcult to list here. Even at 65, Kamaths innings is going ahead briskly, for there are few in India, who can match his accomplishments for engineering growth and creating a world-class bank that reaches out to the masses. r

at ICICI n In 1988, he moved to the Asian Development Bank and spent several years in SouthEast Asia n Returned to ICICI Bank as its managing director and CEO in 1996 n Retired as managing director and CEO in April 2009 and took up his present position as Chairman n Joined the Board of Infosys in 2009 and took over as the chairman of the Board in 2011

n Started his career in 1971



Whether the stockmarket is up or down, they are among the best in making your money work for you
anaging others money is never easy. You have to look closely at which sectors to invest in, analyse thousands of stocks to pick one that will outperform the rest and what should be the composition of your portfolio. Every move of a fund manager has a cost and a bearing on a portfolio. A decision could make or break it. Hence, fund managers have to take more than a little extra care when making that crucial investment decision. Outlook Moneys Best Fund Managers didnt have it all on a platter when they began trading last year. The economy was weak, GDP growth was falling (to below 6 per cent), capital investment trickled down and companies held back

By kunDAn kISHoRe



their investment plans while prot growth began to falter (dipped below 18 per cent). But by mid-2012, the investment climate started to change as foreign investment began pouring in and stock prices commenced their long upward climb. In this seemingly contrary environment, fund managers had to initially protect their portfolios from a market fall; then quickly U-turn their strategy to rake in the gains in the rising market. It's a challenge to do both, protect against the downside and capture the upside. But our winners have. This years winners have delivered against a very difcult and uncertain climate, at least initially. They have truly managed their portfolios in the best possible way. Our congratulations! r


9 JANUARY 2013 l

Fund Managers

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fund manager equiTy

anoop bhaskar
Head-Equity UTI AMC


he Best Equity Fund Manager Award at the Outlook Money Awards was the rst for Anoop Bhaskar, 46, the man who changed the fortunes of many who had invested in UTI MFs equity funds. His focus has always been to beat the benchmark during an 'uptrend' with little concern for the downside. He points to the 'madness of 2007', when high-beta and stocks with corporate governance issues rocked the charts. Not surprisingly, his funds underperformed massively, Its a badge of honour, I wear with pride, he says. This belief was justied when these stocks tumbled in 2008 and 2009 while his funds escaped relatively unscathed. Similarly, we were cautious in October-December 2010, when markets were frothy. This helped in outperformance during 2011. Bhaskar, an MBA, worked for various companies before kicking off his career with Kothari Pioneer Mutual Fund as a research analyst. Becoming a fund manager after a 10 year stint as a research analyst is similar to being selected for the Indian (cricket) test team after playing on the domestic circuit and scoring over 5,000 runs in the Ranji Trophy, he quips. It makes you respect the opportunity more; you try a bit harder, he adds. Having managed midand large-caps funds, he nds investing in large-caps more macro (economics) based and mid-caps more micro (economics). Bhaskar says: Developing an investment style is a slow process, which one imbibes over a long time. r
Experience 16 years Total Assets Managed `7,500 crore
SCHEMES MANAGED PERFORMANCE* 1-year 29.66 26.42 28.65 2-year 4.29 -0.18 4.43 -0.83 OLM 3-year RATING


UTI Equity Fund UTI Master Value Fund BSE 100

9.34 8.74 9.69 4.77 NA#

UTI Mid Cap Fund 36.39

*Percentage returns #Not Applicable Returns as on 17 December 2012 Source:



Fund Managers

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fund manager equiTy

Chirag seTalvad
Senior Fund Manager HDFC AMC


o accelerate and decelerate is easy but maintaining the momentum is the tricky bit. If you want to learn the art, we strongly recommend you learn from Chirag Setalvad of HDFC MF. For the second time in a row, Setalvad bagged the second position in the best equity fund manager category at the Outlook Money Awards. Setalvad,38, a BBA graduate from the University of North Carolina, believes managing a fund in a bull market is much harder. In a bear market there is a plethora of investment opportunities. Thus, you are spoilt for choice and the challenge is to pick and choose, which seems like a good place to be in, says he. Setalvad started as a research analyst with HDFC MF in 2000. Within a few years, he had his hands on few small funds. He quit the job in 2005 to work with a hedge fund, but returned soon, in 2007. Currently, he is managing seven funds which have consistently performed well. The credit for this goes to his investment philosophy of buying quality businesses at fair valuations and hold on to them. Setalvad says: We try and buy high-quality businesses at a reasonable price and hold onto them for an extended period of time. We aim to stay within our circle of competence and take advantage of adverse market conditions. Chirag is obviously valued in his fund house. Chirag is an extremely talented fund manager who has fully imbibed the HDFC philosophy and shown outstanding results, says Milind Barve, managing director, HDFC MF. r

Experience 16 years Total Assets Managed `5,311 crore

SCHEMES MANAGED PERFORMANCE* 1-year 34.53 26.01 28.65 2-year 7.61 -0.34 -0.83 OLM 3-year RATING


HDFC Mid-Cap Opportunities HDFC Capital Builder BSE 100

15.22 8.43 4.77 NA#

*Percentage returns #Not Applicable Returns as on 17 December 2012 Source:


9 JANUARY 2013 l

Fund Managers

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fund manager debT

maneesh dangi

Co-Chief Investment Officer Birla Sun Life AMC

e is undeterred by the highs and lows of life. He also knows to hold his oars steady in a stormy sea. Maneesh Dangi, co-chief investment ofcer at Birla Sun Life AMC, has proven his mettle and won the top honours in the best Debt Fund Manager category. Former ex- nancial intermediary, Dangis past experience has taught him that the size of a fund has nothing to do with its performance. For him, managing smaller funds is as challenging as managing larger funds. He says: We take a long-term view (our denition of long term is longer than the term most of our competitors are thinking of) and avoid hectic trading. The market is generally smart, but we dont rely on it blindly. If everybody is buying, we want to avoid. We generally add risks by going contra instead of trading momentum. For him, prices or their direction or their acceleration doesnt matterthey always revert to their mean. Dangi feels 2012 was better than 2011 since trends began to emerge clearly. He says, Beginning 2012, growth began to decelerate and ination started moderating, albeit slowly. In 2011, the trend was just the reverse. 2012 was enriching as markets gave space to create value for our investors, both in bonds and equities. His outlook for 2013 is bright. He expects the RBI to cut rates further. We see the repo rate 50 basis points lower by March and CRR at the current levels as RBI should choose open market operations to inject liquidity in the markets, predicts Dangi. r
Experience 12 years Total Assets Managed `15,213 crore
SCHEMES MANAGED PERFORMANCE* 1-year 10.13 8.84 2-year 9.85 8.05 OLM 3-year RATING



Birla Sun Life Dynamic Bond Fund Crisil Composite Bond Fund Index

8.35 6.98 NA#

*Percentage returns #Not Applicable Returns as on 17 December 2012 Source:


9 JANUARY 2013 l

Fund Manager Debt

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fund manager debT

saChin padwal-desai
Assistant vice-president Franklin Templeton AMC


or Sachin Padwal-Desai, assistant vice-president at Franklin Templeton Asset Management Company, devising an investment strategy for the safety of his investors money is key. The metallurgical engineer and IIM Bangalore alumnus has not only been able to consistently deliver the goods for his clientele for 12 years, but has also bagged the runner-up trophy at the Outlook Money Awards for the second consecutive year in this category. Desai always plays it by the rules and does not take undue risks. The objective is to limit the downside and exploit opportunities available, while remaining within prudent limits, says Desai. His constant effort has been to optimise the trade-off between safety, liquidity and returns within the investment objective and positioning of the product. Desai feels managing debt in a volatile interest-rate scenario is challenging and one must have well-planned strategies to counter it. He focuses on intense research before taking a call. Says Desai: All investments go through the lters of credit risk, industry and sector exposure, liquidity and interest rate risk norms. Portfolios are constructed accordingly to meet specic fund objectives over the long-term. Desais mantra for his clients is simple: Investors must look at xed income funds positioned to take advantage of high interest rates and potential capital appreciation. r

Experience 12 years Total assets managed ` 10,000 crore

SCHEMES MANAGED Templeton India STIP PERFORMANCE* 1-year 9.95 11.46 9.72 8.84 2-year 9.47 10.86 8.95 8.05 8.16 8.80 7.10 6.98 NA# OLM 3-year RATING


Templeton India IBA Plan A Templeton India Income Fund Crisil Composite Bond Fund Index

*Percentage returns #Not Applicable Returns as on 17 December 2012 Source:



Future hotspot
Hosur is bound to gain from the high cost of land and infrastructural bottlenecks that plague Bangalore
ith the real estate prices in Bangalore soaring high, real estate developers are now looking at cheaper locations. In the last few years, Mysore has benetted from the high cost of land in Bangalore. Now, Hosur is the new kid on the block. The location. Hosur is located in Krishnagiri district, Tamil Nadu. Located at a distance of 294 kilometers from Chennai, Hosur is only 40 kilometers away from Bangalore. Like Bangalore, Hosur has a pleasant climate with the temperature ranging between 15 and 30 degree celsius. Why Hosur? There are many reasons why Hosur should be included in your investment zone. For starters, IT companies are looking at locations beyond Bangalore, thanks to the rising cost of land and infrastructural nightmares in the city. On the other hand, Hosur has a sound infrastructure as it has been an industrial hub for over two decades. Greater Bangalore Eco Assets Pvt Ltd, formerly Greater Bangalore Estates, as one of the leading land developers and builders in Bangalore we understand that our Mr. Raaj Murugan role is to create peace Managing Director Greater Bangalore Eco of mind by creating Assets Pvt. Ltd. an effortless, stress free environment that ensures that the client receives what they want, each time - every time. The testimonials of our customers are a proof of our efciency, transparency and integrity.

Hosurs proximity to Bangalore, the upcoming Special Economic Zone and the IT Parks have enhanced its potential as a possible real estate destination. It houses the SIPCOTs industrial estate and many major oriculture export units of Tamil Nadu. Once the proposed SEZ becomes a reality, Hosur is expected to draw an investment of Rs2,000 crore with major IT companies expected to set up their campuses here. Electronics Corporation of Tamil Nadu (ELCOT) has already allocated land in the Hosur IT SEZ to six companies. As a result, the requirement for residential as well as ofce spaces has gone up. The potential for increase in capital values, especially of the residential units is huge. The investment options. Hosur offers a range of investment options, especially in the residential property space. You can choose from apartments, row houses and plots of land. of Tamilnadu Industrial Development Corporation and Electronic Corporation of India) and the Multiproduct SEZ at Hosur along with already successful SIPCOT Phase I and Phase II, Hosur has turned out to be a hot destination for investments out of Bangalore.

Where in Hosur? If you want to invest for the long term, Ring Road should be your rst priority. While the road, which will connect NH-7 to Thally Road, is under construction, it will be ready soon. You could also invest in NH-7 towards Krishnagiri, as many industries are coming up in that area along with a third SIPCOT. If you are short on budget, you can look at properties located at Avalapalli Dam Road, Rayakottai Road and Chinna Elaththagiri (near TITAN Industries). For short or medium term investments, look at plots near VS TVS, Sanasandhiram, Anand Nagar (Behind TITAN), TVS Nagar and Muneeshwar Nagar. If you want to invest in farmlands, look at areas near Denkanikottai, Thally, Krishnagiri, Dharmapuri and Kelamangalam. Depending on location, capital values of plots ranges between Rs300-Rs1200 per sq.ft. Hosur certainly looks like a winner in the years to come. Multiproduct solar SEZ and opposite HOSTIA (Hosur Small and Tiny Industries Association). Now the price is quite affordable. Once these Industrial parks become completely functionally we are expecting a huge demand of over 5,000 houses in this area. The prices then would appreciate exponentially as it happened in OMR Road, Chennai where the price have multiplied over 20 times in recent years. We have designed two more farm land projects with less than 40 min drive from Bangalore Electronic city with tree plantations at a most affordable price one can expect.

Advantages of buying a property in Hosur.

Hosur is conveniently situated close to Electronic city. People working in Electronic city, Biocon and Bommasandra Industrial Area nd it more convenient and faster to commute to Hosur rather than negotiate the Bangalore Trafc. The Six lane high way connecting Chennai has made the travel even more comfortable.

Why you chose Hosur?

With the advent of Hosur as a major Automobile and IT hub, the focus of the company turned to Hosur. The proposed TIDEL IT Park ( A Joint venture

What does your company offer to investors?

The company offers three projects. Eco vista which is located adjoining the

What would your advice be?

Hosur will denitely be to Bangalore what Gurgaon and Noida are to Delhi. Do give a serious investment thought on Hosur. Do not miss the bus!

54 OUTLOOK MONEY 9 January 2013

x Real x Bank

Estate 56 x Decoder 58 x Insurance Made Easy 59 x Stock Pick 60 Stocks 62 x Avant Garde 64 x My Plan 66 x Headstart 68

Real Estate


Handover of keys and receipt of sale proceeds from property sale dont end the sell process. Find out what follows


elling a house is actually the transfer of the property title to the buyer by the seller. According to the sales contract, the buyer receives the title of a property while the seller receives the sale proceeds. As simple as it may sound, there are numerous procedures associated with the sale of property that sometimes makes selling more complex than buying. The process of selling takes time and doesnt just end with handing over the keys. In fact, there is much a seller needs to take care of even after he has transferred the possession of the house to the buyer. Maintaining documents, managing

9 JANUARY 2013 l

Real Estate
sale considerations, calculating taxes, ling tax returns and reinvesting money are some of the key items on the to do list of a seller after the property sale. Here is a primer on how a seller should proceed after his property is sold. Documents. Keep copies of all the paperwork pertaining to the closing and settlement in a separate le. Santhosh Kumar, CEO-operations, Jones Lang LaSalle India, says: This payment towards property, items included in the sale price, such as parking space, structural modications or additions which enhanced the value of the property, society charges and property taxes paid till that year. Besides documents pertaining to the property sale, you should also keep copies of money spent on renovation, repairs, extensions and prior purchases. There should also be a clear record of home loan closure if you bought the sold property this way, added Kumar. Maintaining documents and a seamless nancial record make the process of ling tax returns easy. However, before you le your income tax returns for the nancial year, remember to keep the fund received from sale in a specic bank account.
Open a Capital Gain Saving Scheme account. Put your sale con-

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Things to do after you sell your house

Keep copies of all the

AFteR Sell

paperwork pertaining to closing and settlement Keep proof of renovation, extension, repairs and prior purchases Put your sell consideration in a Capital Gain Saving Scheme before the due date of filing the tax return Reinvest sale proceeds to save on long-term capital gains or pay the tax Take time to choose the best avenues to reinvest Consult a chartered accountant and take appropriate guidance

will ensure that you are able to address all future queries by the buyer, the bank involved and the municipal or tax authorities. Typically, once a deal is nalised between parties, the buyer pays a token money and decides on a date and the amount for subsequent payment. On receipt of the token money, the seller generally issues ordinary cash receipts. Based on the receipts, total payment and receivables are mentioned on the agreement for sale at the time of nal payment. After this the receipts become invalid and thus, can be destroyed. The document (agreement for sale) should include proof and receipts of

sideration into a Capital Gain Saving Scheme (CGSS) account with a bank. The amount deposited under this scheme, if utilised by the assessee within a specied period either for acquisition of a new asset, or for investment in specic bonds under Section 54 and Section 54EC of the Income Tax Act, 1961, lets the seller avail tax exemptions on long-term capital gains (LTCG). Under this scheme, the taxpayers can get exemption benets from capital gains if the amount of capital gains or the net sale consideration is deposited in the bank on or before the due date of ling returns, which is typically 31 July every year. It is, however, advisable to seek clarication regarding applicable sections in your case from a charted accountant before you open a CGSS account. Taxation. Any gains arising out of property sale is taxed under the head income from capital gains. Shortterm capital gain (any gain arising from the sale of property within 36 months of its purchase) tax is calculated according to the income tax slab of the assessee, while LTCG is taxed at 20 per cent with indexation or at 10 per cent without it. However, if you intend to reinvest the sale proceeds, you can save on LTCG. But you should

evaluate your nancial position before you take the decision to reinvest. If you require funds to meet other important goals in the near future, paying capital gains tax might be a better option than reinvesting the fund. Reinvestment. In case you do not require the money in the near future, you can decide to reinvest the capital gain arising out of the property sale. There are instruments such as capital gains bonds in which such gains can be reinvested in order to avoid taxes. However, you can claim exemption only if the investment in these bonds are made within six months from the date of transfer of the assets. These bonds typically have a lock-in period of three years and the maximum limit for investment in such bonds is `50 lakh in a nancial year. Currently Rural Electrication Corporation Capital Gain Tax Exemption Bonds Series-VIII and National Highways Authority of India 54EC capital gain bonds (Series XIII) are available for investment. Coupon rate in both these bonds is 6 per cent, payable annually. The interest is, however, taxable. Kumar advises: Discuss all nancial movements resulting out of the property sale with a chartered accountant and take appropriate guidance. Besides reinvesting in bonds, you can also reinvest money in a residential property to avoid paying taxes on long-term capital gains. However, it needs to be clearly shown on papers that the proceeds from the property sale have gone into the purchase of a new home within two years (three years for constructing a new house) from the date of sale. You can also set off the tax on LTCG if you have bought a residential house in the last one year with your purchase amount. Meanwhile, keep the proceeds from the property sale in a CGSS account. If you decide to reinvest in a residential property with the sale proceeds, do not rush into buying a house if you are unable to nd a suitable one immediately. You can, instead, consider renting a house until you identify a suitable option to buy. r






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This plan from Bajaj Allianz Life is available at a monthly premium of `1,000 a month and comes in two variants
he Life Assure plan offers you two variants to choose from Sure and More. Under the Sure option, premiums are invested in the assured return fund which offers a guaranteed value on maturity. Under the More variant, premium is invested according to your choice of funds or the portfolio strategy selected by you.

By teenA JAIn kAuSHAl

Entry age > Maturity age > PT* > Premium payment term >

1-65 years 18-75 10, 15 and 20 years 10 years PT*: 5 & 10 15 years PT*: 10 & 15

will be the higher of the guaranteed maturity value or the fund value as on maturity date. Guaranteed maturity value is the total premium paid (less all charges, including the cost to guarantee) at the rate of 3 per cent per annum compounding monthly. Under the More variant, fund value is paid on maturity.


Minimum sum assured times AP**

20 years PT*: 10, 15 & 20 years Under 45 years: 10 45 years and above: 7 50 years and below: 50 times AP** Over 50 years: 20
times AP times AP**


You can change the frequency of premiums paid according to the minimum premium limit. You could also change the premium payment term. Also, the SA, too, can be cut up to 115 per cent.

Maximum Sum Assured >

*Policy term **Annual premium

The plan is available at a minimum annual premium of `10,000, halfyearly `5,000, quarterly `2,500 and `1,000 for monthly premium. There is no limit on maximum premium paid.

You can withdraw not less than `5,000 after ve policy years and the fund value should not fall below three times the annual premium.

Premium Allocation (% of AP) Year 1> 20 Years 2-5 > Year 6 onwards >

There are two portfolio strategies Investor Selectable and Wheel of Life. Investor Selectable portfolio strategy is for those interested in investing in any of the listed funds. While for Wheel of Life the premium is allocated in a predecided ratio in various funds depending on its outstanding years to maturity and the fund value gets reallocated each policy year.

If a 35-year-old pays annual premiums of `50,000 every year under the More variant for 15 years and for a SA of `5 lakh in an all equity fund, the policy will pay `9.96 lakh and `13.91 lakh at assumed annual growth rates of 6 per cent and 10 per cent respectively. The corresponding net yields come to 3.47 per cent and 7.40 per cent.

Policy Administration (% of AP)

4 Nil

5% per annum Fund Management (% of fund value)

charge at 2% of premium paid
Equity Exposure (%)

Year 6 onwards `10 p.m, inflating at

It ranges from 0.95-1.35. Guarantee


Its a type-II policy where sum assured (SA) plus fund value is paid on the death of the life assured. The death benet is not less than 105 per cent of the total premiums paid to preserve the capital. For accidental deaths (after you turn seven) you get an additional SA.

For a similar type-II plan, such as Kotak Lifes Wealth Insurance, the net yield comes to 6.80 per cent at the growth rate of 10 per cent.

Considering the high cost of guarantee the promised return of 3 per cent doesnt fetch much. We suggest you invest in an all-equity fund under the More variant as equities perform better in the long-run. r

60100 Accelerator 0Mid-Cap Fund II 100 Pure Stock 60-100 Asset Allocation 0-100 Bluechip Equity 60-100 Liquid 0 Bond 0 Assured Return 0-50
Equity Growth Fund II
As on 30 November, 2012

12.20 8.20

Returns (% since inception)

14.80 7.60 -0.80 8.70 9.10 7.70

Under the Sure variant, the fund value



9 JANUARY 2013 l

Insurance Made Easy

Insurance Made Easy


Update Awards Start Manage Spend

Up next x Stock Pick: LIC Housing Finance pg 60



Life insurance policies are useful tax-planning tools, but the choice of plans must be on the basis of your goals

ax benets from insurance policy acts as a sweetener by reducing your overall tax burden. You must, however, choose the product on the basis of your long-term goal, while enjoying the tax breaks.

is not more than 10 per cent of the sum assured. Money received as claim, including bonus, is exempted from income tax. All life insurance plans, including pure term, childrens and whole-life plans, give tax benets. For policies bought before 1 April 2012, the limit is 20 per cent of the sum assured for both Section 80C and 10(10D).

limit of Section 80 C upto `1 lakh. Commuted amount on vesting is taxfree, however, the annuities received under such plans are taxable.

Pension plans are eligible for deductions under Section 80CCC within the overall

The service tax rate is 12. 36 per cent. For life insurance plans, such as term or endowment, where the entire premium is not towards risk cover, the rst years premium is taxed at 3 per cent, while subsequent premium at 1.5 per cent. r

Under the present tax laws, a life insurance policy features under the exemptexempt-exempt (EEE) tax structure, wherein the rst E gives tax benets at the initial stage of investment (under Section 80C of the Income Tax Act, 1961), the second E doesnt levy tax during the growth phase and, lastly, the third E provides tax-free returns on maturity under Section 10 (10D).

I have saved tax. Have you?

At the time of buying or renewing a policy, the premium qualies for deduction under Section 80C within the overall limit of `1 lakh per year. The maximum tax one can save varies on the tax bracket one belongs to, i.e., `10,300, `20,600 and `30,900, for the 10.3 per cent, 20.6 per cent and 30.9 per cent tax rates, respectively. However, to get deduction the sum assured must be at least 10 times the premium.

Optimize your Health & Wealth with Bajaj Allianz Tax Gain Comprehensive Health Cover

Tax Benefits under section 80 D of IT Act OPD / Hospitalization expenses covered Pre-existing Diseases are covered after 4 years continuous renewal Family Floater for self & Spouse Separate plan for Senior citizens covering both OPD & Hospitalization benefits Health Check up at designated Bajaj Allianz Empanelled Diagnostic center after every 4 claim free policy periods

The maturity proceeds from life insurance policies are exempt under Section 10(10D) if the premium paid in a year

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Insurance is the subject matter of the solicitation

Bajaj Allianz General Insurance Co. Ltd., G.E. Plaza, Airport Road, Yerawada, Pune - 411006. Reg No.: 113.




Stock Pick Stock Pick


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Up next x Bank Stocks: New Licence Boost pg 62

lIC HouSInG FInAnCe x ` 282.75 x PE 13.8

LICHFs profitability is set to improve as rates fall and yield rises. Home in
f any segment of the loan market can be truly said to be the safest and least prone to defaults, it is clearly housing nance. Yields here are typically low. Combine that with safe lending to builders where yields are signicantly high and the business can enjoy visibly high returns on assets. Thats what Life Insurance Corporation Housing Finance (LICHF) has been doing successfully. With the rise in urbanisation, higher disposable incomes and a housing shortage, housing nance companies have registered growth. LICHF is the second-largest housing nance company (HFC) in India with an 11 per cent market share. Its individual loan portfolio registered a 29 per cent compound annual growth rate (CAGR) in the last ve years. Its builder loan portfolio took a knock in the last two years because of the slowdown in real estate. In the next two years, however, it plans to raise its developer loan book from the present 4 per cent of its

n LICHF is one of the

WHy Buy

large players in housing finance and has a strong backing from its parent n Its margins should improve on the back of low costs and high yields n LICHF is focussed on middle-income and lowcost housing which is seeing good growth
n The company incurs


high costs for sourcing its business through third-parties and direct selling agencies

total income (`cr) net proft (`cr)
6,215.1 3,469.2 662.2 974.5 51,089.8 4,868.7
Graphics: SAJI C.S.

loan book. Around 94 per cent of its outstanding loans are to the retail segment; the rest to builders. This is set to tilt marginally towards higher-yielding assets. Over the years, LICHF has been investor-friendly and done really well in shareholder returns. The business has slackened somewhat in the last two years because of low builder loans, high interest rates and new retail hybrid loan products (xed and oating) that yield lower returns in the rst few years. Its net interest margin, therefore, lately contracted to 2.13 per cent. But that is more than likely to be the lowest in a while. Interest rates are widely expected to slide next year. LICHFs teaser rate loans are expected to start being converted from xed to oating

rate next year. LICHF should be able to reduce its cost of borrowing even as it focuses more on offtake. Further, its builder loans should take off on more construction activities. This is likely to further boost its returns. LICHFs net interest margin could also rise to around 2.3 per cent next year, and even higher thereafter. LICHFs income has been growing steadily in the last few quarters averaging 5.2 per cent quarter-onquarter. Driven by the demand in smaller housing, this trend is likely to continue. Its net prot for September 2012 was `243.06 crore. At the current earnings per share of `20.4, the stock trades at a price-to-earnings ratio of 13.8 times. Comparable HDFC trades at 28.7.

fY 2010



FY 2010 2011




FY 2010



FY 2010 2011



LICHFs non-performing assets were a low 0.6 per cent in September 2012, quite healthy after its strong retail loan growth. LICHF is strong in tier-II and tier-III cities, where demand is high. And with its clear focus on the middleincome segment, its stock is surely one of the cheapest of the housing nance companies even as it likely to capitalise on the housing boom. We suggest you buy it for the long term. r



9 JANUARY 2013 l

63,080.2 2.58

expenses (`cr)

loans (`cr)

914.2 NBFC Stocks



With new bank licences up for grabs, theres a buzz in financial counters. Heres how to play the sector

ver since erstwhile nance minister Pranab Mukherjee in February 2010 suggested that banking licences to private players were up for grabs, there has been a palpable buzz among nonbanking nance companies. The draft initial guidelines suggested that licences would be given to entities with not more than 10 per cent income from broking and focused on nancial inclusion. The thrust was clearto create more banks and drive penetration. The passage of the Banking Bill in the Lok Sabha has now set the ball rolling. And the buzz has increased, stirring up a host of non-banking

nancial companies and bank counters. Stocks, such as Cholamandalam, M&M Finance, Shriram City Union Finance and L&T Finance, have been on a tear. Most of these stocks have given high double-digit returns, some even manifold returns. One possible reason could be that some of these non-banking nancial companies (NBFCs) are run by promoter groups, which was one of the main criteria set in the draft guidelines. Promoter groups should have successfully run their businesses for 10 years. Some of these promoter groups have strong NBFCs. Of course, even other promoter groups can potentially bid for a licence, especially those that have been in business for over 10 years. So, not only NBFCs, but even corporate houses have a chance of snagging a licence. Says Shinjini Kumar, director, Pricewaterhouse-Coopers India, a consulting rm: There are many candi-


Many Indian business houses are in a position to apply for a banking licence. Heres a low-down
Business and promoter groups should have a minimum track record of 10 years in running their businesses Groups which have a significant exposure to real estate and capital markets will not be eligible for a license The new bank will have to be set up through a wholly-owned non-operating holding company (NOHC) All existing businesses that can be transferred to a bank should be held within the NOHC

ALL FOR a Bank

The minimum paid up capital is `500 crore, with 40 per cent held with a lock-in of five years At least 50 per cent of the NOHCs board of directors at least should be independent directors, and not of the promoter group The banks exposure to any single promoter group company should be capped at 10 per cent Within two years of obtaining the license, the bank will have to list on a stock exchange

dates who can qualify for the licence. With so many difcult conditions set for it, I am happy that there are so many candidates. 2011s draft banking licence guidelines stipulated that entities will have to create an NOHC (wholly-owned nonoperating holding) structure. Capital required is `500 crore and, at least, 25 per cent of branches should be in unbanked areas. Thus, the government is attempting to ensure nancial inclusion. Besides, the Reserve Bank of India can supersede the board of directors and appoint an administrator if the board functions in a manner detrimental to depositors. These sweeping powers are meant to ensure that the interests of depositors are protected. Some NBFCs have turned really large in the last couple of years, with asset books running into several thousands of crore of rupees, while others are run by good promoter groups. In some ways, many of these NBFCs are regulated by the RBIs guidelines, such as having a minimum capital adequacy, etc. Says Kumar: There are large NBFCs that are well run. Theres no reason for them not to put their candidature forward. They are already subject to many regulations by another arm of the RBI.


9 JANUARY 2013 l

NBFC Stocks

Update Awards Start Manage Spend

Up next x Avant Garde: Holding Operation pg 64

There are many in the reckoning, but go easy

L&T Finance Holdings



Price `92.75 PE 193.08 Gains (%) 115.45

The stock is quoting at an astronomical valuation currently

The allure of a bank licence could alter the fortunes of quite a few. Banks are allowed access to low-cost funds (such as savings accounts) at signicantly cheaper rates, while they can lend at higher rates to businesses and individuals. (Most NBFCs source a good chunk of their liabilities from banks.) This tends to increase the margins and protability, but the question is, do all NBFCs want to turn into banks? Which of them stand the best chance of snagging a licence? Businesses that are specialised those lending solely for housing or for gold or autosare unlikely to apply for such a licence. Thats because banking laws mandate that 28 per cent of a banks liabilities should be in: cash reserves (5 per cent at zero interest rate) and government bonds (23 per cent, at very low interest rates). One reason is that a bank should be solvent and largely invested in safe securities to guard it from future nancial shocks. This ensures greater safety of liabilities. But it restricts their ability to maximise earnings from their liabilities. Specialised lending institutions, such as home-loan lenders or auto-nance companies, would be hard-pressed to maintain such high

Mahindra & Mahindra Fin. Services

Price `1,078.75 PE 16.79 Gains (%) 70.42
Has a good rural presence and backed by a strong promoter

Bajaj Finance
Price `12,90.75 PE 11.15 Gains (%) 105.16
One diversified financial conglomerate in the finance space

Cholamandalam Investment and Fin.

Price `274.75 PE 14.82 Gains (%) 145.20
Well-entrenched in the South and growing rapidly in finance PE: Price-to-earnings ratio %Gains in the last one year Return as on 18 Dec 2012 Source: CMIE

statutory deposits at such negligible rates as they borrow at signicantly higher rates. Banks, having diversied lending business practices straddling a gamut of loans from housing to personal to business, stand a better chance and are most likely to apply for a licence, depending on how many licences the RBI issues.

NBFCs with a signicantly diversied business are frontrunners for banking

licences. Some businesses not only lend to housing, but also make business, auto and personal loans. It makes more sense for them to bid for a banking licence. There is also the stipulated minimum capital requirement. There could be numerous licence hopefuls, but only a few candidates. The most probable are L&T Finance Holdings, M&M Financial Services, Cholamandalam Investment and Finance, and Bajaj Finance. Some are diversied; some have notable operations in rural India. L&T Finance has a diversied business in mutual funds and business loans, while M&M Financial is predominantly into auto loans, but has since branched out into other loans. Cholamandalam has a diversied loan book. The stocks of many of these have already run up. So, playing for gains from the banking licence may not be a good idea. It would take time and cost to set up a new bank. Some of these businesses command sky-high valuations. L&T Finance Holdings has surged and is now trading at a priceto-earnings ratio of 187. M&M Financial Services and Cholamandalam are reasonable at 16.8 and 15.7 times. But, it would be prudent to await a correction. Given the huge entry barriers in banking, investing in an existing growing private bank could work out well too. For now, though, since its too early to tell which NBFCs could bag a banking licence, investors should invest carefully in the sector. The buzz of a banking licence is driving some of these stocks crazy. Says Rajat Rajgarhia, director research, Motilal Oswal Financial Services: The banking licence cant be the basis of investing in these stocks. Ultimately you will have to look at these companies on their fundamentals. If some of them dont manage to get a licence, the frenzy could disappear and they could tumble. So, look for ones that can grow at a rapid pace even if they dont bag a licence. That should ensure that wyour downside is protected. r




Avant Garde Avant Garde


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Up next x My Plan: A Start Thats Begun Right pg 66

Holding Operation
The drive among Indian companies to shed non-core assets to trim their balance sheet is gathering momentum. But will it lead to protability?
the week before Christmas, real estate major DLF are trimming their balance sheets is a good sign. announced the nalisation of a contract to sell Aman Companies which fall prey to the seduction of a Resorts back to its founder, Adrian Zecha. DLF had bought the nancial boom need to do this to recover nancial luxury chain at a reference price of $400 million, and is now sellhealth. My belief is that they deferred the process ing it for $300 million. Since the reverse deal excludes the Delhi far too long. property, one cant make a like-for-like comparison. That deferral lies in the past though and the quesHowever, it would be safe to assume that DLF has not made tion for the future is whether the current pace of money on the deal. Add to that, the interest cost of holding assets divestment is rapid enough to dramatically change VARUN VASHISHTHA for ve years and you get a their protability. whole new meaning to the To a large extent, this will depend on the state of term, holding company. health of the retail real estate markets, which conIn a very similar developtinue to be sluggish. Players in the business have ment a few weeks earlier, long been looking to the Reserve Bank of India to textile manufacturer Alok provide some relief on the interest rate front, but Industries had ofoaded a that hope just got postponed once again by the huge chunk of its investreality of rising consumer prices. ment in Mumbai real That said, the outlook on the price front is still estate to the developer, far from clear, though the mood of equity markets Peninsular. Alok took a seems to be that an interest rate cut in January small hit on the capital 2013 is a done deal. RBI deputy governor Subir cost of the investment, but Gokarn, who has represented the Banks interest once you add the interest rate policy, holds out hope that a combination of a burden, Aloks excursion into real estate was an stronger rupee and softer international commodexpensive one. ity prices should help. Obviously, a combination of Incidentally, both DLF and Alok have been strugthe two dynamics would be extremely welcome, but it is far from gling with their debt burden for the last several clear that they are a certainty. years and interest payments have swallowed up a The twist in the tale is Prime Minister Manmohan Singhs signicant share of their operating prots. recent statement that his government needs to trim the scal deIn the case of DLF though, the ratio of interest cit if the ination battle is to be convincingly fought. One way to payments to gross prot has been steadily increasdo this, he said, is to rationalise energy prices. ing. This made it imperative that it trim the balance This could be read as a signal that we will see another diesel sheet. A look at the realty majors quarterly numprice hike. On the one hand, I see that as a difcult political decibers would also indicate that the pace of retail sales sion. On the other, it will be the only meaningful signal that the was not rapid enough to achieve this in the normal PM means what he says. If the latter is the case, then it means course of business. Thus, it became necessary for price levels will go higher before they begin to atten. it to hack off large clumps of assets. Even earlier In that event, the DLFs and the Aloks of our business world this year, DLF had sold a chunk of its Mumbai land need to keep those trimming shears sharpened. r to the Lodha group. So, the liquidation process is The author is an investment advisor and posts stockmarket comments clearly ongoing. on He can be reached at The fact that DLF, Alok and other business houses




9 JANUARY 2013 l
On stands NOW NO N OW O W

A bright future requires a head start!

Outlook Money presents every parent's guide to providing a better future for your children How to cover financial and health risks How to build a portfolio to fund your child's education How to smartly finance your childs marriage


Wealth for your Childs Future

Presented by-

- Partnered by -

My Plan



A balanced approach to expenses is all that the Jasud couple needs to fulfil their dreams. Heres the way ahead
Jasud, 34, an IT professional with Indusind Bank, stays with wife Pallavi, 26, a teacher, in Thane. His sister also lives with them. His parents are nancially dependent on the couple, but stay at their home town. The couple earn `72,500 a month of which they spend `65,300 on household and lifestyle expenses, equated monthly instalments (EMIs) on home loan and insurance premiums. Of the surplus `7,200 each month, they invest `1,500 in a gold fund through a systematic investment plan (SIP). Their investments are `1 lakh in Public Provident Fund (PPF), `35,000 in Employees Provident Fund (EPF), `3 lakh, `1.50 lakh and `20,000 in savings account, xed deposit and cash-in-hand, respectively, and `1.30 lakh in equity mutual funds (MFs). They have an outstanding home loan of `25.50 lakh. Ramchandra has a total life cover of `84 lakh consisting of a whole-life, an online term plan and two more plans. He pays an annual insurance premium of `68,700. He also has a health/hospitalisation cover of `2 lakh each for himself, his wife and each of his parents. His lists his sisters wedding as his rst priority. The couple are yet to start a famiIf, like Ramchandra and Pallavi, you would like to share your story and have a financial plan made by a financial planner, write in to us with your contact number at

ly, but want to provide for the childs education and wedding at the appropriate time, besides having a safe retirement corpus for their own. Heres the way. r


The planner can be reached at




9 JANUARY 2013 l

My Plan

Update Awards Start Manage Spend

Up next x Head Start: Will For Sucessors pg 68


` 1.17cr

` 68.50 lakh
YEAR 2037



` 4.66 cr
YEAR 2038

2025 Inflation @ 8 per cent per annum *For child




*All figures according to future prices


Contingency planning. Their monthly expenses will come down to `61,000 if they follow our recommendation. They can keep their FD and cash-in-hand in their bank to build a corpus equal to three months expenses. Insurance planning. Jasud can continue the whole-life plan, but surrender his endowment plans as their performance is poor compared to the Nifty and ongoing charges will further reduce returns. He can continue his unit-linked pension plan without further contribution till the completion of five years and then review the fund performance. Jasud and his wife will require additional life covers of `50 lakh and `15 lakh, respectively, and they should buy online term plans for `8,000 per annum for both. Health insurance. Jasud should utilise the health cover from his employer for his parents only and further buy top-up plans of `5 lakh with deductibles of `3 lakh for them. This will cost `8,700 per annum. As for himself and his wife, Jasud should buy individual health covers for `3 lakh and top-up plans of `5 lakh with deductibles of `3 lakh. This will cost them `9,600 per year. Additionally, Jasud should take an online critical illness

policy of `50 lakh and an accidental deathcum-disability cover of `25 lakh for `18,500 per annum. He should disclose all the facts correctly while buying new insurance plans. Retirement planning. The couple will need `1.78 lakh a month by the time Jasud retires. By then, his EPF will grow to `93 lakh, if he continues his job till retirement and his PPF to `7.40 lakh. The inflation-linked corpus will suffice till Pallavi is 80 years old. For the rest, they should invest `11,000 each month in equity MF and PPF in the 90:10 ratio after an increase in income. Having repaid the loan, they can also reverse mortgage the house in retirement to partly meet this goal. Childs future planning. They are planning for their first child after a year and want to provide for his or her higher education and wedding after 20 and 25 years, respectively. Besides their investment in Reliance RSF Equity Fund, maturity proceeds of LIC policy and value of Ulip pension policy, they must invest `8,500 a month in equity MF and PPF in the 90:10 ratio after a year. For the wedding, they should invest `2,800 in an equity MF and a gold fund in the 90:10 ratio after a year. They should reduce their existing SIP in gold ETF to `300 per month and start an SIP of `2,500 in a diversified equity MF.

They should shift to a floating rate home loan of 10 per cent for 20 years after paying a penalty of 0.56 per cent of the balance. Jasud can use his savings balance for his sisters wedding and redeem all his MFs except Reliance Regular Savings Fund for buying a new vehicle. The surrender value of two Ulips can help him buy agricultural land and for his self-education. Besides, he should also save `10,000 a month for one year to fund these goals. Jasuds contribution to EPF, PPF, home loan and insurance premium makes up his tax saving requirements. He can take further benefit for his family and parents for health insurance premium.






9 JANUARY 2013 l OUTLOOK MONEY 67 Head Start


To truly take care of your children after you are gone, pen down a Will and make the succession hassle-free
aving for your future goals is crucial, but what is more important is a plan to ensure a hassle-free transfer of your life savings to your children when you are no more. So, if you have done your bit of savings, it is time you carve out a road map for your assets, investments, bank accounts for a smoother transition to your legal heirs. If your child is a minor, you need to put in place a mechanism to ensure your child is taken care of till he or she becomes an adult and responsible enough to manage his or her money. In fact, even in case of a grown-up child, some like to pass on the inheritance in a certain manner. This is where succession planning comes in.

Succession planning at an early stage will ensure that your children do not have to face rough weather while inheriting your property. The planning, however, needs to be done in a systematic manner. The way forward is to write a Will for all your xed and nancial assets. Nomination could also be a good starting point as it simplies the transfer of nancial assets. However, assigning a nominee is only a step towards a foolproof succession plan as a nominee is only a trustee who takes care of the fund in your absence till the legal heirs come of age.

It is better to go for an either or survi-

vor joint account with your spouse for your bank and investment accounts. Such joint accounts hold signatures of either holders valid to carry out a transaction. Having a joint account with your spouse nominating your child is a better way to ensure easy transfer of your nancial assets as the surviving members get seamless access. If both account holders die, the nomination helps the child get imme-


9 JANUARY 2013 l

Head Start

Update Awards Start Manage Spend

Up next x Commodities: Year-end Jitters pg 76

it with the new one. Keep the Will in a safe place such as a locker and make sure your heirs have access to it.


diate possession of the funds.


A Will is perhaps the most efcient way to transfer assets. It makes it easier for your children to get legal rights on your assets in the event of your death. You may take professional help of a lawyer to pen down your Will. A Will has to be made in the presence of two independent third-party witness-

es, not aligned to any family member. Preferably, a Will should be typed, notarised by an independent notary and left with the solicitor. Once you register a Will, you can only add codicils, i.e., make amendments to the Will, but cannot replace it. You can update the terms and conditions in the Will as and when the need is felt. It is better to write a copy of a Will and, every time you need to revise it, replace

Creating a trust, too, is part of your succession planning. Doing so ensures both your children and the assets are taken care of and the Will is executed within the specied time. The ownership of your assets can remain with you as long as you live and, in the event of your death, can be allotted in the way outlined by you in the trust deed. You have to nominate your heirs as beneciaries of the trust and specify what each would get. However, the most crucial aspect is to choose the right trustees. Trustees play an important role. Therefore, you must appoint someone you trust. He or she can be a relative or friend, or you can even take help from professional institutions. You can also specify how you would like the property or money to be managed in case the heir is a minor.

All your hard work in putting together your savings could become meaningless if your savings fail to make it to your children. So, plan well and help your children inherit your assets without any legal trouble . r





ou have successfully established and run your small or medium enterprise (SME) and now you want to take it to the next level. But to do that you need funding. Banks are doing their best to understand the specic funding needs of various businesses and coming up with specic products to meet them. Some of these have been in place for quite some time now while some are pretty new and innovative. We tell you what all options you have in the form of bank funding and how to go about it. BE FUNDING READY. Unlike the initial capital which you might have arranged through your own sources or as loans from friends and relatives, bank funding will depend on the soundness of your business model, track record and future growth plans. Typically, a bank will provide you with a traditional bank funding option, such as a term loan, overdraft, working capital loan and so on only after you

Bank funding will depend on the soundness of your business and your rapport with the bank

have protably run a business for at least three years. If you need bank funding for expansion of operation, launch of new product or modernisation, you will need to come up with a feasibility plan and convince the bank to extend you a loan. Depending upon your requirement you may also have to arrange the margin money. This is typically between 5-20 per cent. As a rule, banks ask for collateral such as land, building or equipment and also ask for a charge on the assets created through their funding. So you should have an encumbrancefree asset to offer as a collateral. LOAN TO MANUFACTURERS. An SME manufacturer may either work independently or as a vendor for a larger enterprise. In case of the former, you will have to convince the bank with your business plan and past record for a loan. But if you are a vendor, banks will be more comfortable in giving you a loan for meeting your capital expenses. FUNDING FOR TRADERS. A

trader involved in domestic and overseas trading will require funds, such as working capital or term loan, as well as non-fund based nance, such as letter of credit (L/C) and bank guarantee (BG). An L/C or BG will require you to pay a fee in the 0.050.25 per cent of the involved amount. L/Cs are typically issued for 3-6 months while BGs could be for up to 10 years. For new traders with small scale operation, the banks would typically issue the L/C or BG after taking a collateral. An established trader may get them unsecured as well. LOAN FOR SERVICE PROVIDERS. Besides other services, banks are now providing loans to doctors wanting to buy equipment or for opening a nursing home, hospital or a laboratory. Many banks are also providing professional loans to CAs (chartered accountants) while some are extending specialised nance for schools and colleges. FOREX REQUIREMENTS. SMEs involved in import and export of products and services or trading need foreign exchange. An exporter or importer should choose a bank based upon its


9 JANUARY 2013
reach and expertise in the particular country and currency they are dealing in. Some Indian banks have branches abroad while some work through a representative ofce or a partner foreign bank. Keep in mind the cost of the forex funding, which could be based on the banks margin and commission, while choosing a bank. PRIORITY-SECTOR LENDING. The Reserve Bank of India has included nancing to small scale industries (SSI) in the list of priority-sector lending. Typically, banks are required to extend 40 per cent of their advances to priority-sector lending. For a manufacturing unit to be eligible for this funding, its total investment in plant and equipment should not be more than `5 crore. For a small (service) enterprise, its total investment in Funding option Specications

equipment should not be more than `2 crore, while for micro enterprises this limit is `25 lakh and `10 lakh for manufacturing and service, respectively. For a medium enterprise, its total investment in plant and equipment should be between `5 crore and Security/other requisites Bill of exchange or promissory note Unsecured Stocks of goods or commodities Tenure 90-180 days before the bill due date 1-5 years Renewed every year

Business receivables such as bills or credit card receivables are bought by the Bill discounting bank, which gives you cash advance after discounting charges Business loan Bank issues a term loan after conducting due dilligence on the business Similar to an overdraft account, it is usually taken by businesses involved in manufacturing to manage their working capital requirements

Cash credit

Export nance

It is for export activities in the form of preshipment and post-shipment credit. Up to 180 It is also available for the puposes of pro- Firm export order days (can be curing raw material, manufacturing goods, or letter of credit extended) processing and packaging them and even shipping them Secured or unsecured 3 to 6 months for L/C and 1-10 years for BG 1-5 years

It is used for nancing imports and Letter of Credit depending upon the creditworthiness, (L/C)/Bank the bank issues L/C to pay on the client's guarantee (BG) behalf or BG to guarantee to pay if the client defaults Loan against Property It is a secured loan offered against the property of the business or that of the directors'/promoters' It refers to a credit that is unsecured or issued against various securities. The bank charges an agreed interest on a monthly basis on the net amount withdrawn



Shares, bonds, mutual funds, Renewed every debentures, xed year deposits

Bank funding is usually available after three years of successful commencement of the enterprise and in majority of the cases banks demand that the business should have been protable for the last two years. Interest rates vary according to the tenure of the loan/advance and amount

`10 crore for a manufacturing unit, while for a service enterprise it should be in the `2 crore-5 crore range. COLLATERAL-FREE FUNDING. In the past, many new businesses failed to get bank funding for want of collaterals. It was then that the Government of India and SIDBI realised that availability of bank credit without the hassles of collaterals or third party guarantees should be a major source of support to rst-generation entrepreneurs willing to set up their own micro and small enterprises (MSEs). Keeping this objective in mind, the Ministry of Micro, Small & Medium Enterprises (MSME), Government of India launched the Credit Guarantee Scheme (CGS) in a bid to strengthen the credit delivery system and facilitate ow of credit to the MSE sector. Its main objective is that the lender should give more emphasis on the viability of the project and extend credit as well as retain the charge of the asset nanced till the loan is repaid in full. The other objective is that the lender, who is getting the guarantee facility, should try to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency. The CGS seeks to reassure the lender that if the borrower fails to repay the loan then the trust will repay a majority portion of the loss to the bank. As such, banks are now more comfortable in extending loan to the SME sector without any collateral. However, a charge is created for the bank for the asset created through the banks funding.


9 JANUARY 2013

to repay the loan then scenario, it the is entrepreneurs under rower Micro fails economic Some of the other major has crossed Rs. 3,40,000 It refers to a credit that is unsecured trust will repay a majority portion of Shares, bonds, quite possible that some and Small Enterprises awards won by the Bank in the crores. The Bank celebrated or issued against various securities. 72 OUTLOOK MONEY 9 JANUARY 2013 the loss to the bank. As such, banks mutual funds, sector Renewed every of the MSME units may are granted at last two years areThe : bank charges an its Platinum Overdraft agreed interest Jubilee year, are now more comfortable in extenddebentures, xed year be facing difculty for concessional rate of Best Public Sector Bank tagline Touching on a monthly basiswith on the the net amount ing loan to the SME sector without deposits withdrawn valid reasons. Subject interest of 0.50% in the under Micro Credit category Hearts, Spreading Smiles, any collateral. However, a charge is Bankfor funding is usually available after three years and of successful commencement of the enterprise majority of the cases to establishing viability, applicable rate along with Dun & Bradstreet and continues its journey, with and in created for the bank for the asset crebanks demand that the business should have been protable for the last two years. Interest rates vary according to the tenure the Bank is extending a NIL processing charges, Polaris Software Banking a mission to excel in all key of the loan/advance and amount ated through the banks funding. need based restructuring for loans upto Rs 5 lakhs. Awards 2011. parameters and to provide package to MSME units. Bank has tailor made loan Skoch Award 2012 for value to all its stakeholders.

reach and expertise in the particular country and currency they are dealing in. Some Indian banks in have branches reach and expertise the particular abroad while some work through a country and currency they are dealing representative ofce or a partner in. Some Indian banks have cost branches foreign bank. Keep in mind the tarting its Financial Inclusion of Nilgiri abroad while some work through of the forex funding,operations which could be a schemes for extending anara Bank was Tribals representative ofce or a and partner based on the banks margin comneed based credit started in the year in the year Best Bank Award 2012 by foreign bank. Keep in a mind the cost mission, while choosing bank. Assistance to MSME 1906 at Mangalore, in the 1937, Indian SME Chamber of India PRIORITY-SECTOR LENDING. The could be of the forex funding, which sector including Area/ state of Karnataka by Sri A O India v e r has s e included a s Skoch Challenger Award Reserve Bank of based on the banks margin and comCluster specific loan Subba Rao Pai, an eminent Bank nancing to small scalerecently industries mission, while choosing a bank. 2012 for Corporate Social Shri.M.Narendra - CMD (SSI) in the list completed of priority-sector lend- Responsibility schemes. Educationist. As at March 75 PRIORITY-SECTOR LENDING. The ing. Typically, banks are required to 2012, the total clientele Providing information of glorious years banking Responsible Business Reserve Bank ofof India has included extend 40 per cent of their advances equipment should not be more than crore for a manufacturing unit, MSME schemes on our base of the `10 Bank is 42 service totothe nation. IOB Awards 2012 from World nancing small scale industries to priority-sector lending. For a manu`2 crore, while for micro enterprises while for a service enterprise it should Website. million. Canara Bank is one has been a front-runner Education Congress (SSI) in the list of priority-sector lendfacturing unit to be eligible for this this limit is `25 lakh and `10 lakh for be in the `2 crore-5 crore range. Facility online the leading Banks in the FUNDING. in credit to required the to Sri Visvesvaraya Industrial ing.extending Typically, are COLLATERAL-FREE In the for funding, its totalbanks investment in plant manufacturing and service,of respecsubmission loan Country, having market personal and the Award 2012 from All past, a many new businesses failed to of unit, and equipment not be more tively. For a medium enterprise, extend 40segment per should cent of their advances equipment should not beits more than `10 crore for a manufacturing get bank funding fora want of collaterthan `5 sector. crore. For a small total investment in plant equipapplications and it should their share of around 4.75 % in for priority IOB has (service) also India Manufacturers to priority-sector lending. For a manu`2 crore, while forand micro enterprises while service enterprise It wasbe then Government enterprise, its total investment in thisOrganisation mentthis should be `5 crore and online tracking. facturing unit to be eligible for limit isbetween `25 lakh and `10 lakh als. for in that the the `2 crore-5 crore range. terms of total business. been consciously extending of India and SIDBI realised that COLLATERAL-FREE FUNDING. In thewith funding, its total investment manufacturing and service, respecentered Canara Bank has a long MOUs credit to the MSME Sector. in plant The Sunday Standard availability of bank credit without the Security/other past, manyCRISIL new businesses failed to and equipment should not becations more tively. For a medium enterprise, its Ltd, CARE Ltd, standing commitment to Many credit products have Funding option Speci FINWIZ 2012 Best Banker Tenure hassles of collaterals or third party requisites get bank funding for want of collaterthan ` 5 crore. For a small (service) total investment in plant and equipRating MSME sector and the Bank been designed catering to Awards under Best Indian should beSME a major source Agency of receivables such bills or ment should be between `5 croreguarantees als. It was India then that the Government enterprise,segments its Business total investment in as and Bill of exchange 90-180 days Ltd (SMERA) and has been taking a number of specic under Banker and Best Public of support to rst-generation entrecredit card receivables are bought by the Bill discounting or before the bill of India and SIDBI realised that India preneurs willing up their own Ratings initiatives to increase credit to setBrickworks MSME Sector. bank, which gives you cashSector categories advanceBanker after promissory note due date availability of bank credit without the micro and small enterprises (MSEs). discounting charges Private Ltd, the external sector. Banks IOB Urban Horticulture IOB, presently has anSecurity/other MSME ow to this Funding option Specications Tenure Keeping this objective in mind, the hassles of collaterals or third party requisites Credit Rating Agencies for an innovative scheme of Rs. 20,000 crores initiatives for Development Bank issues a term loanportfolio after conducting Business loan Unsecured 1-5 years Ministry ofguarantees Micro, Smallshould & Medium a major source due dilligence on the business rating of be MSME units, with for developing rooftop and aims to double the same of MSME sector:Business receivables such as bills or Enterprises (MSME), Government of Bill of exchange 90-180 days of support concessional to rst-generation credit receivables are it bought by the Similar tocard anetc. overdraft account, is ve fees.entre The Bank has an exposure gardens, landscaping, in the next years. Many India launched the Credit Guarantee Bill discounting orgoods before the bill Stocks of preneurs willing to set up their own usually taken by businesses involved in Renewed every bank, which gives you cash advance after scheme for Rs.31200 crores inin a OD-MSME IOB Micro One for initiatives have or been taken noteof due (CGS) bid to strengthen Cash credit promissory date Scheme micro and small enterprises (MSEs). manufacturing manage their working year discountingto charges commodities the credit delivery system and faciliextending working capital MSME sector. extending collateral-free by the Bank to boost credit capital requirements Keeping objective in mind, the tate ow of credit to this the MSE sector. issues a termto loan after conducting credit to fresh Bank Micro MSME sector. Some of Business loan It is for export activities in the form of preUnsecured 1-5 years Its main Ministry Micro, objective of is that the Small lender & Medium due dilligence on the business entrepreneurs them are : shipment and post-shipment credit. Enterprises (MSME), Government of should give more emphasis on the Up to 180 IOB SME Mahila Plus puposes SME Credit campaigns with It is also available for the of proSimilar to an overdraft account, it is Firm export order days (can be launched the Credit Guarantee viability ofIndia the project and extend Export nance Stocks of goods curing raw taken material, goods, or of credit usually by manufacturing businesses involved in letter recently launched specic targets at Regional extended)Renewed every credit as well as retain the charge Scheme (CGS) in a bid to strengthen Cash credit or processing and packaging themtheir and even manufacturing to manage working year product to cater to women level of the asset nanced till the loan is commodities the credit delivery system and facilishipping them repaid in full. The other objective is MSE sector. entrepreneurs capital in the requirements Lending under Government tate ow of credit to the It is used for nancing imports and that the lender, who isnance getting the MSME units 3 to 6 months Bank has 41 SME Sulabhs It is for export activities in the formschemes of pre- like manufacturing and service sponsored Its main objective to is that the lender Letter of Credit depending upon the creditworthiness, guarantee facility, should try to give crores per Secured or for L/C and shipment and post-shipment credit. upto Rs.3 (centralized processing sector. PMEGP (L/C)/Bank the bank issues L/C to pay on the client's should give more emphasis on the Up unsecured 1-10 years forto 180 composite credit to the borrowers so It is or also for the puposes guarantee (BG) behalf BG available to guarantee pay if the of pro- Firm export order borrower with liberalized Units), for processing of IOB Engineer for financing to Online submission and viability of the project and extend Export nance days (can be that the borrowers obtain both term curing raw material, manufacturing goods, or letter of BG credit lending norms. MSME credit proposals engineers client defaults e-tracking of MSME extended) credit as well as retain the charge loan and working capital facilities processing and packaging them and even It is a secured loan offered against the To improve the operational across the country headed IOB CA for extending applications of the asset nanced till the loan is from a single agency. The CGS seeks Loan against shipping them property of the business or that of the Property 1-5 years reassure the that if the borefciency of our workforce Property by Senior to Executives tolender repaid in full. The other objective is credit to Chartered Cluster approach for SME directors'/promoters' It is used for nancingcredit. imports and rower failsthat to repay the thenis the the lender, who getting inloan catering to the the needs ensure faster delivery of Accountants. 3 to 6 months Letter of Credit It refers depending upon the to a credit that is creditworthiness, unsecured trust will repay a majority portion of guarantee facility, should try to give Shares,Secured bonds, or for L/C and of MSME entrepreneurs, credit. As a recognition to the IOB has embarked on an or the issued against various securities. (L/C)/Bank bank issues L/C to pay on the client's the loss to the bank. As such, banks mutual funds, Renewed every unsecured 1-10 years for composite credit to the borrowers so the Bank is imparting Banks contribution to nancing expansion during the Bank has 69 Specialized Overdraft bank charges an agreed interest guarantee (BG) The behalf or BG to guarantee to pay drive if thedebentures, are now more comfortable in extendxed year BG that the borrowers obtain both term on a monthly basis on the net amount specialised on SME branches MSME sector, IOBclient was awarded past two years.deposits The Banks defaults ing which loan tocater the SME sector without training withdrawn loanHowever, and working capital facilities MSME nancing to its to the needs of MSME the rst prize under National total number of branches in any collateral. a charge is It isafter a secured offered against the Bank funding is usually available three yearsloan of successful commencement of the enterprise and in majority of the cases from a single agency. The CGS seeks Loan against the asset crestaff. Award for in MSE India has beyond 2,700. banks demand thatExcellence the business should have been business protable for or the last gone two Interest Property rates vary according tounits the tenure property of the that ofyears. the 1-5exclusively. years created for the bank for to reassure the lender that if the borProperty of the loan/advance and amount ated through the banks funding. difficult to women Under the present lending for the year 2010-11. The business of the Bank Loans Indian Overseas Bank Canara Banks

75 glorious years of banking

Initiatives For Promoting MsMe sector


72 OUTLOOK OUTLOOK MONEY MONEY 74 9 January JANUARY 2013 2013 l 9


5,400 `/barrel

MCX Crude

MCX Gold


`/10 g




31,056 27,382

02 Jan 2012

18 Dec 2012




02 Jan 2012

18 Dec 2012


The fiscal cliff posing a threat to the US economy and the commodities market is unlikely to impact precious metals

he scal cliff in the US continues to make the commodities market nervous. It refers to the situation in the US where, by the end of 2012, certain tax breaks are about to come to an end, even as spending cuts for the US government

kick in from January 2013. Says Nalini Rao, senior research analystcommodities & currencies, Angel Broking, According to the latest US Congressional Budget Ofce projections, if the combination of higher taxes and spending cuts come into

effect, the US gross domestic product (GDP) will decline by 4 percentage points. Adds Tapan Trivedi, senior research analyst, Inditrade Derivatives and Commodities, The scal cliff issue has increased volatility among metals and other commodities. Their prices are affected by positive and negative updates on the scal front. There are three possible outcomes from here on. First, the tax breaks and spending cuts come into effect. Second, only a part of it comes into effect. Third, neither sees the light of the day. If the rst or the third happens, it could negatively impact a number of commodities including base metals and energy. Demand for these commodities depends on large nations like the US. Muted demand would ultimately lead to lower prices. However, this might be good news for precious metals. Economic uncertainty typically leads to an increase in demand for gold. Says C.P. Krishnan, whole-time director, Geojit Comtrade, Due to its safe haven appeal, gold will benet in the immediate run on anticipation that growth will erode. Silver is likely to follow suit. In case of an orderly settlement of the issue, the second scenario, a positive impact on base metals and energy is likely. But warns Rao, The continuing debt crisis in eurozone and contraction in GDP projected by ECB for 2013 shall exert downward pressure on the base metals pack. Gold and silver are likely to move up if the eurozone continues to struggle. It is reasonable to conclude that whatever be the outcome of the scal cliff, precious metals are likely to outperform other commodities while the fate of the base metals pack remains uncertain. r


9 JANUARY 2013 l

DIY Money


Update Awards Start Manage Spend

Up next x Interiors: Time For A New Look pg 80


If you are ready to invest in the volatile stockmarket, build a strong portfolio to reap in the benefits

nvesting in the stock market may seem easy with a click of a mouse, but building a stock portfolio can throw you out of gear. Stocks are a volatile asset class and theres no guarantee of returns. The only silver lining is that over long periods equity has been able to deliver higher returns. If you wish to try your hand, keep track of certain things. The first step. Before you start zeroing in on stocks, ensure youve identied your long term goals as equities take time to deliver results. Earmark separate stock portfolios for different goals. There are several ways to build a portfolio, but the basic idea behind all

is optimising the risk-return tradeoff. At the very basic level, you can do that by putting your money in different stocks, which is called diversication. The diversication should happen across sectors and also across the market capitalisation of stocks i.e. large, mid and small companies. Concentrating in one sector, or putting all your funds in mid-cap stocks may not be the right thing. Spreading your money helps as it diversies the risk. For starters, its better to stick to large-cap stocks which mostly comprise the index. The mid-cap index can work well for those buying into midcap stocks. Over time you can look at emerging companies, but after careful analysis. Ideally, small-caps should form only a small part of the portfolio. Weights. Not all stocks in a portfolio should have equal weightage. You may be holding more of a particular stock compared to others. Use Microsoft

Excel to review performances. This way you can have a better control over your portfolio. The right weightage goes a long way in determining returns on a portfolio. Stock selection. This requires knowledge on a vast range of subjects such as economics, nance and corporate law. However, if you lack training in these subjects, you can use some basic principles. First, you should try to understand a companys business. If you cannot understand it, refrain from buying its stock. Dont just focus on a companys earnings; instead read its nancial statements. Second, look at its valuation; a strong balance sheet, coupled with lower valuations compared to peers or the index makes a strong case for buying. Taking call. At times, the stock market remains at, while at others it can be extremely volatile. Your decision to exit should, ideally, not be based on shortterm market movements. If theres no fundamental change in your stocks, including their nancials and businesses, stick with them. Risk is inherent to stock investing and, hence, one should be able to stomach the risk of a 10-20 per cent downside. Keep around 5 per cent of investible corpus in cash to make use of market opportunities. If your stock has performed well, booking a prot and putting it into debt paper may not be a bad idea. Align investments with goals. Avoid. If you merely go with the momentum, you end up buying stocks when they rise and selling them when they fall. You should actually be doing the opposite, especially to accumulate existing stocks at lower levels and bring average cost of holding down through cost averaging. Conclusion. Invest in an individual stock only if you think you can outperform a market index. Else, it is wise to invest in an index where your risk gets diversied. Dont worry about mistakes, learn from them. r





Indias Best in

Personal Finance

The Outlook Money Awards 2012 felicitated excellence in the world of Personal Finance. The 11th edition of the coveted Awards were presented to companies that provided the best customer value in Banking, Home & Education Loans, Health & Life Insurance, e-Broking and Mutual Funds. Also, at the event, Mr. K. V. Kamath, Chairman, ICICI Bank, was inducted into the Hall of Fame for his path-breaking work, which has been a beacon of light for others to follow.

Interiors 80




A new year brings in a lot of expectations and promises and theres no place better than our home to ring in the changes
9 JANUARY 2013 l

nother year draws to a close and its time to ring in the new. So, what better place to start than our home? It mirrors us and our personality. How we decorate reveals the kind of person we are. Here are some of the things we can do to create a new look across our home. Ambience. Choose a dcor you are most at home with for a distinctive ambience to reect your personality. Blend. Country chic and contemporary can coexist if blended well. Get an

eclectic style for a unique look. Colour. Colour affects mood, emotions and health. Get your favourite colours on walls, furnishings and accessories. Drama. Paint a wall in a bright colour; get designer wallpapers or a bold rug. Donate. Donate things that you dont need, such as old furniture, toys, utensils, appliances, books and magazines. Entrance. The first impression is very important. Organise to show off your style and to ensure that the last-minute rush for things is a past thing. Green. Switch to CFLs, buy appliances with high energy ratings and replace when needed. Conserve water. If you can, instal rainwater harvesting and solar heating systems. Indulge. Splurge on one feature that you have always wanteda breakfast counter, a silk carpet, a swanky bar, a home theatre, bunk beds for the children, a built-in barbeque,think up. Light. Ensure a mix of light fittings and controls to provide enough ambient, task and mood lighting. Multitask. Invest in a multifunctional space for the family to use at different times of the day. Multifunctional furniture provides both seating and storage. Natural. Flowers ensure a festive spirit round the year. Stack fruits and vegetables in bowls; display a collection of leaves and branches in vases. Organic. Use natural fibres and mate-

Update Awards Start Manage Spend

Ring out 1 Replace old cabinets and faucets in kitchen, if needed, for a new look 2 Choose a decor you are most at home with






Update Awards Start Manage Spend

Up next x Your Space pg 84

Ring in 1 The right window treatment can do wonders to your room 2 Create space such as by using bunk beds for children
colourful shower curtains and antiskid mats or area rugs. Twine a string of lights around the mirror. Repair. Paint over cracks in walls, fix broken furniture, replace burned-out bulbs and fix up broken accessories. Replace. Replace toilet seats and faucets in bathrooms, cabinets and hardware in kitchen, and mirrors and cushions in bedrooms for a peppy look. Simplify. If you havent used something in three years, chances are you never will. Clean up closets and storage areas. Take an inventory stock. Storage. If theres anything no home has enough of, its storage. Think outof-the-box and tap walls, nooks and crannies, and unused areas. Thrift. Hit the ea markets and bazaars for one-of-a-kind furniture, artwork, frames, lighting and memorabilia. Update. Give your furniture a makeover by updating it. Go for new upholstery and colourful cushions. Window treatment. The right window treatmentbe it a billowing pair of sheers, smart wooden blinds or luxurious valancescan create a new look. Zen. Overdoing anythingcolour, texture or materialcreates a sense of clutter. Ensure that your space is calm and restful, one that traverses the distance from house to home. r

rials. Use accessories such as rocks, pebbles, shells, branches, driftwood and twigs for a trendy, organic look. Photos. Create a collage of photos and set them in unusual frames or use them to jive up mugs and coasters. Plants. Besides owering plants and shrubs, try growing herbs and vegetables. DIY-ers can try a terrarium, a tiny garden inside a glass jar. Retro. Look for vintage artwork, lamps and accessories, or try kitschthe options are many. Paint. A coat of paintfor the entire house or a few wallscan give your home a new look. Or, try wallpaper. Repurpose. Things that you have no use of can be repurposed. Recycle old fabric into patchwork quilts; rethink furniture arrangements for a new feel. Rest rooms. Jazz up bathrooms with


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n common parlance, the stockmarket is often regarded as the satta bazaar (gamblers den). This could be both true or untrue depending on ones approach to investing. If one invests merely on the basis of street rumours without due knowledge of stocks or the companies, then it is not much different from taking a gamble. While it is true that the stockmarket is guided to an extent by emotions and news, from my own limited experience, long-term investment with reasonable study and knowledge of the company and the promoters track record is rewarding. Here are some points one could consider while investing in stocks. n Identify some stocks in your area of interest; follow their market price and trend for a few days. Consider the promoters track record and the line of business, daily trade volume, dividend yield, earnings per share, book value and future developments, such as restructuring, bonus issues and so on. n Always purchase and sell in smaller lots and keep on reviewing the holding periodically. n Keep the portfolio diversied, but limit it to 15 companies or so. n Nobody can predict the right timing for entry or exit from the stockmarket and the price of a scrip. However, as a

rule of thumb, the price of scrips should be reasonable when the stockmarket is declining because of some depressing news or poor sentiment. This is the time to purchase your choicest scrips. In other words, purchase stocks when others are mostly selling theirs and sell your stocks when everybody else is rushing to buy, or taking a wait & watch position. n The Sensex and the Nifty are the barometers of the stockmarket, but do not follow blindly either of these two indices or a particular sector, such as realty, or automobiles. Its immaterial whether a scrip belongs to the largecap, medium or small cap category. Often people advice giving preference to blue chips, but one could make more money by wisely investing even in small- or medium-cap stock if their fundamentals and the business model look promising. For instance, I picked up Yes Bank and Union Bank when their price was below `50 and I am holding these for more than 30 months with rich gains. Similarly, I got decent returns from M&M and Tata Motors. Now I am following Suven Life Sciences, Specialty Restaurant and Visa Steel for over a year. Based on my limited experience in the stockmarket, I may vouch that a slow, staggered, systematic and watchful investment can prove rewarding. r
The author is an OLM reader

I have recently starting using an online budgeting tool which helps me keep track of all my expenses under different heads. It has even got an Android app and so I can use it on my cellphone too. There are several similar tools one can use and they are all free! Pooja Kar 20 December

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Stretching your finances to buy a car is a bad idea. Its better to have a fixed budget and not fall for salesmen talk

Money Tips Sonali Malhotra

To buy the things you desire, maintain a grownups piggy bank. Withdraw a particular amount every month for your piggy bank. Once a sufficient amount is accumulated, splurge and acquire



9 JANUARY 2013 l Fortnight Figures

Location Bedrooms Area (sq ft) Rate (`/sq ft) Price (`lakh)1 Location Bedrooms Area (sq ft) Rate (`/sq ft) Price (`lakh)1

Under `50 LAKH BPTP Nehar Par Sector 88 Faridabad Above `50 LAKH Charmwood Village Green Field Sector 86 Faridabad Sector 87 Faridabad 3 4 4 4 1,400 1,600 1,600 1,600 8,960 4,760 3,600 3,280 125.44 76.16 57.60 52.48 3 3 3 1,400 1,400 1,200 3,470 3,340 3,030 48.58 46.76 36.36

Palam Vihar Sector-47 Gurgaon Sector-66 Gurgaon SOHNA ROAD South City Sushant Lok Vatika City

4 3 3 4 3 3 3

1,600 1,400 1,400 1,600 1,400 1,200 1,200

7,350 7,200 7,170 7,450 10,980 9,010 8,950

117.60 100.80 100.38 119.20 153.72 108.12 107.40

Under `50 LAKH Noida Extension Sector-129 Noida Sector-134 Noida 4 3 3 4 3 3 3 4 3 4 3 4 3 3 3 1,600 1,200 1,200 1,600 1,200 1,200 1,200 1,600 1,200 1,600 1,200 1,600 1,200 1,200 1,200 2,800 4,000 3,400 4,400 4,900 4,400 4,400 4,270 4,400 4,400 4,340 6,900 7,470 7,100 6,650 44.80 48.00 40.80 70.40 58.80 52.80 52.80 68.32 52.80 70.40 52.08 110.40 89.64 85.20 79.80

Under `50 LAKH Sector-103 Gurgaon Sector-37 Gurgaon Sector-68 Gurgaon Sector-84 Gurgaon Sector-86 Gurgaon Sector-91 Gurgaon Sector-92 Gurgaon `50 LAKH to `75 LAKH Manesar NH-8 Sector-69 Gurgaon Sector-70 Gurgaon Sector-71 Gurgaon Sector-81 Gurgaon Sector-82 Gurgaon `75 LAKH to `1 Crore Nirvana Country Sector-52 Gurgaon Sector-56 Gurgaon Sector-67 Gurgaon Sector-33 Gurgaon Sector-57 Gurgaon `1 Crore and Above DLF CITY PHASE II DLF CITY PHASE IV DLF CITY PHASE V Golf Course Ext. Road GOLF COURSE ROAD MG Road 3 3 3 4 4 3 1,200 1,200 1,200 1,600 1,600 1,200 12,500 11,290 12,580 8,000 12,750 11,500 150.00 135.48 150.96 128.00 204.00 138.00 3 3 3 3 3 3 1,200 1,200 1,200 1,200 1,400 1,400 8,170 6,480 6,670 7,020 7,000 7,130 98.04 77.76 80.04 84.24 98.00 99.82 4 3 3 3 3 3 3 1,600 1,400 1,200 1,200 1,200 1,200 1,400 3,700 4,900 5,400 5,570 4,950 5,000 4,350 59.20 68.60 64.80 66.84 59.40 60.00 60.90 3 3 3 3 3 3 3 1,200 1,200 1,200 1,200 1,200 1,200 1,200 3,910 4,060 4,050 4,150 3,590 3,500 3,300 46.92 48.72 48.60 49.80 43.08 42.00 39.60

`50 LAKH to `75 LAKH Noida-G. Noida Expressway Sector-110 Noida Sector-137 Noida Sector-168 Noida Sector-74 Noida Sector-76 Noida Sector-77 Noida Sector-78 Noida `75 LAKH and Above Sector-128 Noida Sector-50 Noida Sector-61 Noida Sector-93 Noida

Under `40 LAKH A.S Rao Nagar Kukatpally Madinaguda Manikonda Miyapur Nizampet `40 LAKH and Above Banjara Hills Chandanagar Gachibowli Hi-Tech City Kondapur KPHB 3 4 4 4 3 3 1,200 1,600 1,600 1,600 1,600 1,600 5,560 2,599 3,600 3,330 3,200 3,500 66.72 41.58 57.60 53.28 51.20 56.00 3 3 3 3 3 3 1,200 1,200 1,200 1,200 1,200 1,200 1,900 2,800 2,700 2,300 2,620 1,950 22.80 33.60 32.40 27.60 31.44 23.40

Source: 1These are average indicative prices





City Petrol diesel auto lpg

52.37 51.41 49.90 47.89 50.16 47.15 50.68 51.35 50.78 52.63 48.42 50.56 38.17 50.05 51.64 47.92 39.11 50.24 53.01 52.28
5 years Fixed Floating 10 years Fixed Floating 15 years Fixed Floating 20 years Fixed Floating

Ahmedabad Bengaluru Bhubaneswar Chandigarh Chennai Delhi Guwahati Hyderabad Kolkata Mumbai

71.27 74.22 66.82 68.50 70.57 67.24 73.83 73.73 74.55 73.53

Allahabad Bank Axis Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Federal Bank HDFC ICICI Bank* IDBI Bank LIC Housing Finance* Indian Overseas Bank Indian Bank Jammu & Kashmir Bank Oriental Bank of Commerce Punjab National Bank State Bank of India Syndicate Bank UCO Bank Union Bank of India

NA 2,212 NA NA 2,197 NA NA 2,319 NA NA 2,353 2,199 NA NA 2,199 NA NA 2,174 NA 2,224 NA 2,237

2,149 2,149 2,149 2,149 2,149 2,149 2,149 2,149 2,161 2,137 2,137 2,149 2,144 2,149 2,149 2,187 2,149 2,149 2,125 2,162 2,149 2,149

NA 1,420 NA NA 1,432 NA NA 1,544 NA NA 1,583 1,406 NA NA 1,406 NA NA 1,378 NA 1,435 NA NA

1,349 1,349 1,349 1,349 1,349 1,349 1,349 1,349 1,362 1,335 1,335 1,349 1,344 1,349 1,349 1,392 1,349 1,349 1,322 1,363 1,349 1,349

NA 1,184 NA NA NA NA NA 1,322 NA NA 1,366 1,168 NA NA 1,168 NA NA 1,137 NA NA NA NA

1,105 1,105 1,105 1,105 1,105 1,121 1,105 1,105 1,120 1,090 1,090 1,105 1,099 1,105 1,105 1,152 1,105 1,105 1,075 1,121 1,105 1,105

NA 1,084 NA NA NA NA NA 1,233 NA NA 1,280 1,066 NA NA 1,066 NA NA 1,032 NA NA NA NA

998 998 998 998 998 1,015 998 998 1,014 982 982 998 992 998 998 1,049 998 998 965 1,015 998 998

Price in `/ltr as on 20 December 2012


1-2 years 2-3 years 3-5 years >5 years

Allahabad Bank Andhra Bank Axis Bank Bank of Baroda Bank of India Bank of Maharashtra Central Bank of India Citibank Corporation Bank Dena Bank Deutsche Bank Dev. Credit Bank Federal Bank HDFC Bank HSBC ICICI Bank IDBI Bank Indian Bank Indian Overseas Bank IndusInd Bank ING Vysya Bank Karur Vysya Bank OBC PNB South Indian Bank State Bank of India Syndicate Bank UCO Bank Union Bank of India

9.00 9.00 8.50-9 9.00 9.00 8.75 8.75 7.25 8.75 8.75 7.25 8-9.25 8.75 8.75 7.25-7.50 7.50-8.75 9.00 9.00 9.00 9.00 9.00 9.00 8.75 9.00 8.50 8.75 9.10 9.25

9.00 9.00 9.00 9.00 9.00 8.75 8.75 7.25 8.75 8.75 8.00 8.00 8.75 8.75 7.25 8.75 9.00 9.00 9.00 9.00 9.25 8.75 9.00 8.75 8.75 7.50 8.50 8.50 9.10 9.25

8.75 9.00 9.00 9.00 9.00 8.75 8.50 7.25 8.75 9.00 8.50-9 8-9.30 8.75 8.75 7.25-7.50 8.75 9.00 9.00 9.00 8.75 8.75 9.00 8.75 9.10 8.75 8.50 7.50 8.50 8.50 9.00 9.00

8.75 9.00 8.50 9.00 8.75-9 8.75 8.50 7.25 8.75 8.75-9 9.50 8.00 8.75 8.25 DNP 8.50 8.5-8.75 9.00 9.00 8.5-8.75 8.50 9.00 8.50 9.10 8.50 8.50 DNP 8.50 8.50 8.75 8.75-9

NA: Not Available *Offers special rates Figures in ` EMIs per `1 lakh

Source: Apnapaisa Research Bureau

Lowest term insurance cover premiums in ` for the different sum assured from age 30 to 50. The policy term is 60 minus your age

10 304 344
Age in years

2,640 3,080 3,680 4,450 5,450 6,770



15 3,960 4,620 5,520 6,675 10,063 10,155



sum assured (` lakh)



35 10,800
Aegon Religare MetLife

Aegon Religare Aegon Religare Aegon Religare

40 10,160 11,365 13,662 16,711 20,440 25,360




4,860 5,720



Aegon Religare ICICI Pru. ICICI Pru.

10,935 11,177 12,786 13,207 15,370 16,078 18,800 19,889 22,995 24,592 28,530 31,571

Aegon Religare Aegon Religare



10,788 10,247 12,533 15,330 19,020


ING Vysya

10,010 11,954

384 424 464 504


10,760 10,445 12,775 15,850


ING Vysya

9-9.25 8.75-9.25

Kotak Mahindra


14,622 17,885 22,190


Aegon Religare Kotak Mahindra Kotak Mahindra Kotak Mahindra Kotak Mahindra Kotak Mahindra ICICI Pru.

10,580 13,480

Kotak Mahindra Bank 8.90-9

Aegon Religare Kotak Mahindra Kotak Mahindra Kotak Mahindra Kotak Mahindra Kotak Mahindra ICICI Pru.

Note: `10 lakh cover for 30-year-old, the lowest annual premium is `2,640 is offered by Aviva. Excluding LIC, Tata AIG, IDBI Federal, Future Generali and Canara HSBC. Online term plans have lower premiums than the above. Min. premium varies. Edelweiss Tokio Life Insurances term plan has lower preimums across most categories. These are the second best rates.

Standard Chartered 7.50-8.50



Interest rates in per cent per annum, only for deposits of less than `15 lakh. Interest rates as on 20 December 2012; OBC: Oriental Bank of Commerce; PNB: Punjab National Bank; DNP: Do not provide

Figures are in %, annual change in the monthly food articles index Source:

OPEC daily basket price ($/barrel)

Graphics: SAJI C.S.


9 jANUARY 2013 l


COMPaNy sHare PrICe (`)1 GaIN (%)2


COMPaNy sHare PrICe (`)1 lOss (%)2

BSE Sensex

Kolte Patil Developers ess Dee aluminium Brigade enterprises JM Financial amtek India ansal Properties & Infra. tube Investments Of India Jindal Drilling & Inds. adhunik Metaliks Greenply Industries

129.35 382.30 95.75 22.75 114.20 39.30 204.05 268.15 47.25 344.20

25.64 21.17 15.71 15.19 14.89 13.42 12.27 11.61 11.57 11.43

Gtl Infrastructure CCl International Jaiprakash Power Ventures IrB Infrastructure Developers Man Industries (India) Gokul refoils & solvent sKs Microfinance Fertilisers & Chem., travancore shree Global tradefin Claris lifesciences

4.53 -18.82 131.55 -8.17 38.70 -7.75 128.95 -7.60 132.30 -7.58 43.30 -7.18 167.65 -6.45 30.00 -6.40 34.35 -6.02 216.85 -5.12

Dow Jones

1As on 18 Dec 2012 2Between 04 and 18 Dec 2012

1As on 18 Dec 2012 2Between 04 and 18 Dec 2012


COMPaNy MKt. CaP (`cr)1 sHare PrICe (`)1


INDex ClOsING1 GaIN lOss2

reliance Industries tata Consultancy services ItC Coal India ONGC HDFC Bank sBI ICICI Bank HDFC Infosys
1As on 18 Dec 2012

2,68,272.75 2,36,999.89 2,31,055.22 2,22,778.17 2,19,234.43 1,59,832.77 1,59,131.68 1,32,469.00 1,30,405.80 1,30,385.22

830.95 1,210.90 293.55 352.70 256.25 675.65 2,371.40 1,148.75 846.25 2,270.60

Metal auto realty Bankex Healthcare Oil & Gas Capital Goods FMCG Power Consumer Durables

10,946.67 11,286.70 2,120.67 14,322.15 8,071.19 8,383.60 11,065.15 5,964.05 1,983.38 7,803.83

5.25 4.63 3.83 2.30 1.05 -0.45 -0.46 -1.12 -1.32 -2.67

Percentage gain/loss of the rupee from 4-18 December 2012. Exchange rate in `


1As on 18 Dec 2012 2Between 04 and 18 Dec 2012

Lowest health insurance cover premium in rupees for the different sum insured from the age between 30 and 70 years. The premiums are for individual health plans

0.5 lakh

1 lakh
Apollo Munich

2 lakh
Bharti Axa

sUM INsUreD (`)

3 lakh

4 lakh

5 lakh
Bharti Axa

7.5 lakh
Apollo Munich

10 lakh

304 404
aGe IN years

Oriental Insu.

677 809 809

1,095 1,350 1,350 2,347 2,793 4,547

1,771 2,400 2,600 4,200 5,300 8,677

Bharti Axa

2,474 3,283 3,283 6,000 6,983

Bharti Axa

3,115 4,500 4,500 7,300

3,292 5,400 5,400

6,800 7,510 7,510

8,081 9,163 9,163

Oriental Ins. Oriental Insu. Oriental Insu.

Star Health Star Health

Apollo Munich Star Health

Bharti Axa Bharti Axa Apollo Munich Bajaj Allianz Bharti Axa

Star Health Star Health

Star Health Star Health

Bajaj Allianz Bajaj Allianz

Bajaj Allianz Bajaj Allianz

454 504 604 704

1,265 1,803 2,688

Royal Sundaram Apollo Munich Bajaj Allianz Star Health Star Health Bharti Axa

Apollo Munich Apollo Munich Cholamandalam Cholamandalam


13,065 15,490 25,059

14,543 19,757 28,224

Oriental Insu. Oriental Insu.

Bajaj Allianz

10,416 14,229
Bharti Axa

Bajaj Allianz

Bharti Axa

Bajaj Allianz

Bajaj Allianz




Cholamandalam Cholamandalam

The prices are in ` per 10 gram Source:

How to read this table: If a 30-year-old wants a cover of `1 lakh, the lowest premium on offer is by Apollo Munich at `1,095. These are only base premiums. Check for actual rates with the specific insurer.

FIIs & MFs


The prices are in ` per kilogram Source:

FIIs & Domestic MF net equity investment (`cr) Source:







n Its website is a good place to find out a banks charges n Keep the necessary
account balance to avoid non-maintenance charges

Sunnys boss tries to motivate him in vain. As always, trouble is round the corner with a triple whammy this time
Sunny you really need to lift your game. Times are tough. How will I execute our vision, mission, goals and objectives? Which one, sir? Chairmans, the presidents or yours? You mentioned 3 plans in the last 10 minutes. You are really incorrigible! By the way, the accounting department credited your salary twice this time by mistake You will have to return the money, NOW! But they have deducted the taxes! And this is the least they owe me after putting me through so much misery all through the year. Sunny! Dont be funny! The times are tough. We should be strong to take the punches on our chin just like Stallone did in Rocky. Part I,II,III?...

n Keep funds so that all cheque payments, standing instructions and ECS debit clearances are honoured n Keep contact updated to avoid courier return charges n Check whether bank
services free

I know. Didnt you get my little thank you note? Sunny, you are getting on my nerves! There goes your mobile again, ringing all day. Go ahead, check.

Financial and non-financial transactions are

A) Free at all ATMs B) Chargeable if exceeds the limit at your bank ATM C) Free at other ATMs for 5 financial and 5 nonfinancial transactions D) Free at other ATMs for total 5 transactions in all Answer to last issues question: Index of eight core industries in the IIP has the base year as 2004-05 Correct answer by Srinivas Shukla
Send in your replies to the quiz at


What?!! Message from my bank! They have deducted massive amounts for charges I cant figure!

Oh! I thought you received a message from Santa Claus. There you go, your phone again! Uggh! What is it now?! My son wants me to message Santa to gift him the latest gaming console in town! Really?!! Upturn or downturn, Mr Sunny Singhs life goes on!

The first correct answer gets a free copy of




9 JANUARY 2013 l

RNI NO. DELENG/2002/8292