THE ECONOMIC TIMES

wealth
www.economictimes.com/wealth | Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi, Pune | September 18-24, 2017 | 32 pages | `7
IMAGES BAZAAR

HOW TO
BARGAIN
...and get what
you want
Find out how to hone your
haggling skills so that you
can land the best deals while
shopping this festive season.
PAGE 2

LOW
INFLATION
MEANS MORE
CAPITAL
GAINS TAX
P 15

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02 The Economic Times Wealth, September 18-24, 2017 Cover Story

RIJU MEHTA

B
e it the planned
purchase of a
house or a hurried
hop to the fruit
vendor, if you
don’t take a calculated shot at
bargaining, you probably can’t
stake claim to the Indian genet-
ic pool. Haggling, after all, is
such an integral part of the
shopping experience in the
country that even a salesper-
son would feel cheated if you
docilely accepted the product
at MRP, without whipping out
a strategy or two to wear him
down with bargaining. Though
online sales and snooty malls
have drastically pared down
this opportunity to negotiate,
there’s still scope to hone your
skills while purchasing high-
value items like houses, cars,
white goods, electronic items,
even furniture and apparel.
Bargaining is an art that can
help you bring down the price
of a product in direct propor-
tion to your skills. Ironically,
despite hordes of self-pro-
claimed master bargainers,
very few actually manage to
snare a good deal. This could
be for various reasons, be it
lack of research or poor com-
munication skills. “Whether
you are buying potatoes or a `2
crore house, it is important to
talk to a minimum of 4-5 deal-
ers to gauge the price and dis-
counts,” says Anil Agrawal,
V-P, retail, in a private organi-
sation, and a good bargainer
when it comes to electronic ap-
pliances. Without this basic re-
search, you cannot be on firm
ground to negotiate your way
to a good deal.
The other decider is the ca-
liber of your communication
and ability to read people. If
you cannot convey what you

HOW TO
BARGAIN..
GETTY IMAGES

...AND GET WHAT YOU WANT

Find out how to hone your haggling skills so that you
can land the best deals while shopping this festive
season.
04 The Economic Times Wealth, September 18-24, 2017 Cover Story

want for the price you want, or

lack the conviction to do so, it is
unlikely you will cut a good deal.
Narendra Agarwal
Connecting well with people and
having a psychological advantage
39, Doctor, Gurugram
over salespeople also result in a
good negotiation and can fetch you CLAIM TO FAME
a better price than you had bar- Knack for buying second-
gained for. hand cars at a bargain.
“It is, however, important to un- Has bought eight cars for
derstand the difference between himself and has helped
negotiation and bargaining,” says friends and relatives buy
Prerna Kohli, Delhi-based psychol- Never nearly 20 cars since
ogist. “Bargaining means you are 2007.
trying to get the best price without criticise the BARGAINING CHIPS
compromising on any features or
benefits. It is competitive, aggres-
car if you ���
Goes for less popular
sive and a win-lose strategy, and buy it from models that are
neither party is generally satisfied. technically sound.
On the other hand, negotiation
the end user.
���
Looks for more
happens in an environment of Appreciate it expensive cars as the
trust and openness. It is a win-win
strategy where both the parties
and speak depreciation is
higher.
leave the table satisfied,” she adds. nicely, but at the
Whether you are looking for sat- ���
If the car is not up to
isfaction or the best value for your
same time, be ASHWANI NAGPAL the mark, gives a
money, here is a strategy that will firm.” quote that the seller
help you in every situation. Follow will never accept.
these 10 tips and it’s a cinch you
will nail the art of bargaining by
the time you start shopping for the
festive season.

Psychological tricks: Customer vs Salesperson

Find out the tactics and mind games that dealers or salespeople resort to and the ones that you as a consumer can equip yourself with.

SALESPERSON CUSTOMER
STRETCH THE NEGOTIATION
According to Delhi-based psychologist, Prerna Kohli, some
salespeople extend the negotiation till you get tired, frus-
trated and thirsty. This weakens you and you may give in.
“Be particular about how much time you spend in the store
and leave if the deal is not done. Ask them to e-mail the
revised quote after discussing with manager,” she advises.

PSYCHOLOGICAL PROFILING
Vs SPEAK QUICKLY
If you want to corner the salesperson into agreeing to your
price, speak a little fast. According to research, if you
speak quickly, the other person has less time to process
and formulate a response. It is more likely that he will
agree to your spiel and price point.

TIME YOUR ENTRY

The salesperson or dealer is trained to persuade people
and know their weak spots and desires, says Kohli. They do
this through the process of questioning. “Your strategy
should be to stay focused and say, “We’ll get to that later.
Let’s focus on this now.” Or, you can go out of the way to
counter their questions with questions of your own.
TALKING TO DECISION-MAKER
If you and your spouse go shopping together, understand
that salespeople are adept at identifying the decision-
maker and will try to convince that person. So make sure
you work as a team and put off the decision for later.
SCARCITY OR DEADLINE
The threat of shortage or time-bound availability for the
product you want is a typical trick used by stores to create
a sense of urgency and force you into buying a thing.
Counter this by checking its availability with other dealers.
REVERSE PSYCHOLOGY
Almost everyone comes across the salesperson who says,
“You don’t have to agree with me or buy the product, but…”
This is a smart strategy to create trust by telling the
customer he has the option to walk away. It often results in
the customer obliging the salesperson and buying the item.
It’s a good idea to go to a store at the close of the day
because it is easy to coerce a dealer or salesperson to
agree to your price when he is tired and is not keen to
argue with you.
STAY SILENT
When the salesperson quotes a price, stay silent for some
time. Most people do not like awkward silences. So the
salesperson will be unsure and either repeat the offer or
try to sweeten the deal. Most often than not, silence is
golden and gets you the desired product for a bargain.
DON’T BE IMPULSIVE
If you like something, don’t let the salesperson know it
because it places you at a disadvantage and gives him a
chance to push the product. Be firm and let him know
that you will buy it only at a particular price.
SHOCKED LOOK
When the shopkeeper quotes his price, it’s a good idea to
display shock and dismay as if the offer is nothing short of
outrageous. This immediately puts the salesperson on the
back foot and makes him defensive. This is the right time to
wedge your foot in and launch an offensive about the
unfairness of the price and the need to downgrade it. Most
times, it works.
Cover Story The Economic Times Wealth, September 18-24, 2017
05

DO YOUR HOMEWORK
Whether you are looking for a
Shikha Nayyar
house, car or an appliance, re-
search is the foundation on which
46, Entrepreneur, Noida
bargaining power rests. Never go
blindly into a negotiation. “Go with CLAIM TO FAME
enough preparation of products Buys bulk appliances
and market pricing. The more the at very low EMIs.
preparation, the lesser the risk of
being taken advantage of,” says
BARGAINING
CHIPS
Kohli. Narendra Agrawal, a sur-
geon at a renowned hospital in the
��Approaches the
NCR, agrees. His passion for cars stakeholder
has spurred him into honing his Bargaining (owner) directly;
avoids middle-
bargaining skills and has helped
nearly 20 of his family and friends
is a battle of men like dealers,
purchase pre-owned cars since wits. While salesmen and
2007. He buys one for himself eve- shop managers.
ry two years and conducts clinical
I’m firm
��Is clear about
research for extensive spans of about how the spending
time to ensure a bargain each time.
“Even if you don’t have to buy, you
deal needs to be capacity and
should constantly keep searching, done, I am very doesn’t waver.
comparing prices, checking mile- ��Exhibits high
age, etc. Cars should not be bought
polite and con-
confidence and
in a hurry,” he says. sider the seller’s ASHWANI NAGPAL
conveys she is a

FIX YOUR BUDGET

interests as well.” serious buyer.
Outlining a budget and sticking to
it is essential because this will de-
fine the extent to which you stretch
a negotiation. The ability to say no
and walk away is a powerful lever-
age and can turn the talks in your
06 The Economic Times Wealth, September 18-24, 2017 Cover Story

favour. Noida-based Shikha Nay-

yar, an entrepreneur, never swer-
ves from her budget. “I don’t beat
around the bush and if the dealer
Listen to the body talk while buying
Non-verbal communication is often a big indicator of whether a sale will take place or not. Find out the meaning of
doesn’t agree, I simply go to the
next dealer.” She doesn’t have to
various gestures and facial expressions and how these tell if you are going to get a good deal.
do that often as the seriousness of
her intent and past record of fair-
ness almost always get her a good FIDGETING OPEN BODY CLOSED
deal. “Besides, it’s not worth risk- If the dealer or Open palms, APPROACH
ing your financial status by breach-
salesman is restless sweeping arm Crossed arms or
ing the budget,” says Agarwal.
and touches his movements and legs, clenched or
mouth, chin or ears, relaxed, calm curled up fists
GET THE TIMING RIGHT
The bargaining skills are almost as
he is definitely not behaviour often indicate the dealer is
important as the time at which you comfortable talking to indicate an honest, not open to the
apply them. So, while it’s a good you and could even be open and more reli- negotiation and is
idea to shop during the festive sea- lying about what he is able approach. So unlikely to agree to
son, you could get better discounts selling. you are more likely your offer. Time to
on cars at the end of the year be- to believe the sales- shop elsewhere.
cause the new year means the next person and buy.
year’s date on registration, which
will fetch a better price in a resale.
But if you want to use the car for
the long term, it makes sense to
purchase it in December at a high
HAPPY/SCOWLING FACE
discount. Month-end or year-end An unhappy face, with pursed lips,
are also good times to go on a buy- clenched jaw or a scowl definitely shows
ing spree as stores have to meet no interest in forging a deal or conceding
their targets and would be more to your bargaining. Don’t waste your time
willing to get rid of the inventory at here. Similarly, a happy face, where the
a higher-than-normal discount. salesperson is smiling and nodding,
Another good trick is to approach a shows he is open to your proposal.
salesperson at the close of the day
as he would be too tired to indulge
in a long-winded negotiation. Simi-
larly, early mornings may work for
some as salespeople may be keen
to initiate the day’s sales. Anil Agrawal,
BE POLITE, NOT IMPULSIVE
“At all times, be respectful and
43, Salaried, Noida
speak nicely to the end user,” says
Agarwal of the used car owners he CLAIM TO FAME
interacts with. It never pays to lose Brings down price by a
your cool because you cannot take huge margin for
the right decision when angry or appliances and gadgets.
upset. Besides, you may have to re-
turn to the same shop or salesman BARGAINING CHIPS
for other purchases and a bad rap- Non-verbal ���
Researches
port never made for a good bar- extensively.
gain. Also, make sure never to be cues are
impulsive. Even if you like some-
important. ���
Maximises discounts
thing, don’t let the salespeople in through offers on
on it as it puts them at an advan- The price cards and wallets,
tage. Even if they realise you are
keen on something, “don’t give
beyond which cash discounts, free
EMIs, etc.
them the advantage of knowing the retailer’s
that you’re hiding the need to have
it. Be upfront about wanting it, but
body language ���
If the salesperson’s
body language turns
only at a particular price, thus giv- turns negative negative, he goes
ing an impression that you are not
an impulse buyer and mean busi-
is the best price ASHWANI NAGPAL
elsewhere.
ness”, says Kohli. that he’ll offer.”
FOCUS ON BODY LANGUAGE
“Non-verbal cues like gestures and
postures communicate your true
attitudes and intentions and ac-
count for about 55% of the message
conveyed,” says Kohli. These, that is, he starts looking away or with the salesperson in a way that fer a deep discount. “Since my your bargaining power is to zero in
along with facial expressions, can scowls, it’s a clear sign he is not in- he is willing to offer you more than business required me to buy LCD on any flaws or defects that may
not only give the salesperson cues terested in making a deal. That’s he would other customers. There TVs in bulk, I offered to pay via not affect the product’s functional-
about your intentions, but also vice the point till which you can bargain are two ways you can do this: find a EMIs without a down payment. ity or usage, but is nevertheless
versa (see ‘Listen to the body talk…’). with him and can decide to exit,” way that will offer him long-term Since the shopkeeper knew I enough to demand a sizeable dis-
“So, as long as the salesperson is says Anil Agrawal. benefits or charm him in a way that would come back for more busi- count. It could be as small as a
maintaining eye contact and smil- he finds it difficult to refuse. For in- ness, he agreed,” says Nayyar. scratch or dent, or even an unsuit-
ing at you, he is paying attention BUILD A RELATIONSHIP stance, if you agree to buy in bulk able location for a house. However,
and is interested, but the moment It often pays to bargain hard, but it or provide regular long-term busi- LOOK FOR FLAWS you’d be doing the salesperson or
his body language turns negative, is equally important to connect ness or purchases, he is sure to of- Another good strategy to increase dealer a favour by taking such an
Cover Story The Economic Times Wealth, September 18-24, 2017
07

item off his hands and can rightful- of making the payment. “Look for
ly ask for a discount for it. discounts if you make on-the-spot
payments by cash, cheque or
DIRECTION MIMICKING HAGGLE UP THE HIERARCHY RTGS, instead of credit card,” says
OF FEET BEHAVIOUR After you and the salesperson have H.C. Sogani, a 65-year-old char-
If the dealer’s feet The moment a salesperson agreed upon a price, a smart move tered accountant, who is adept at
is to climb up the ranks and press getting good bargains for white
are pointing towards starts to mirror your body
for a further cut. “Once the sales- goods, electronics and furniture.
you, he is interested language, gestures or tone,
person has been stretched to the “At the time of billing, I check for
in continuing with know that you will end up
maximum, I make him speak to free EMI and cashback offers. If
the deal. If the feet becoming more agreeable the store manager, who has the au- the seller accepts cards, I check
point away from you, to his sales pitch and will thority to offer additional dis- with him if he can offer any cash
he is probably no close a deal. counts,” says Anil Agrawal. Nayyar discount in lieu of the card fees. Fi-
longer keen on agrees. “I almost always eradicate nally, I check the offers on cards
serving you and the middleman and go directly to and wallets like Paytm, PayZapp,
looking for an exit. the stakeholder, be it the house etc,” says Anil Agrawal.
EYE CONTACT owner/builder or the shopkeep-
Lack of interest in serving a er,” she says. This is probably the BE PREPARED TO WALK OUT
customer is clearly reflected in reason that she managed to get a Despite prolonged discussions on
reduced eye contact. Greater `12 lakh studio apartment for `10 price, there may be times when
eye contact by the salesperson lakh after insisting that the proper- the deal falls through. Don’t feel
will create greater trust and ty dealer speak directly to the guilty about taking up too much of
you are more likely to end up builder, even though he persisted the dealer or shopkeeper’s time,
buying something. that the price could not be brought and simply leave. At other times,
down below `11.5 lakh. “When I you may have played up the attrac-
LEANING told him that I would pay the en- tive prices by a rival dealer, threat-
Leaning forward or coming tire sum instantly if he agreed on ening to take up his offer. If the
closer indicates definite interest, `10 lakh, the owner perceived my salesperson does not budge, be
while leaning backward shows seriousness and agreed,” she says. prepared to walk away. Don’t get
disengagement. So if you are at so attached to a product that you
a price point where the dealer MAXIMISE YOUR DISCOUNTS find it difficult to leave. “I am very
starts to lean towards you, go Even after the final price has been confident and know my limits. So
agreed upon and the deal sealed, if one dealer doesn’t give me what
for the closure.
do not give up. There is scope for a I need, I simply move to the next
further discount at the final stretch one,” says Nayyar.
08 The Economic Times Wealth, September 18-24, 2017 Cover Story

Strike a bargain: steps in the right direction

Find out how to manage the best deal while buying a car, house or appliances.

USED CARS STEP 1 STEP 2 STEP 3 STEP 4 STEP 5 STEP 6

Fix a Check OLX, online Go for expensive or Don’t buy in a Inspect the car for paint If the car is up to the
financially forums for pre-owned high-end models hurry. Keep jobs and repair work mark and you are
viable cars, newspaper which see a high looking all year and mention it to the interested, quote a
budget and advertisements, or depreciation (typically round and zero in owner. If he accepts it, price lower than
stick to it. one of the best 30% in two years), or when you spot a leverage it to lower the demanded. Raise the
options, talk to popular models that bargain. Keep price. If not, quote a bar only till the point
people with will retain value in comparing prices. price that he will not be it is within your
multiple cars. secondary market. interested in, and leave. budget.

NEW CARS STEP 1 STEP 3

Fix your budget, get loan If buying a new
STEP 1 STEP 5
approval and have the down house, consider the
Fix the purchase price While finalising a deal, payment ready. At the same builder’s track
and do not go beyond it. ask for freebies or time, be on the outlook for a record, location of
goodies, and avail of good deal. House purchase the property,
cash discounts or doesn’t happen overnight. documentation and
STEP 2 credit card schemes. other legalities.
Go to several dealers,
even rivals, to check
the prices and
STEP 2
discounts. Ideally buy While word of mouth works best, you can check portals
around festive season, like MagicBricks, 99Acres, Sulekha, etc, or approach a
before December or property agent for resale property. Buying directly from
financial year-end the developer or owner is always advisable.
when you can get the STEP 4
maximum discounts. You can avail of at least seven types of discounts
from dealers, which they may not reveal. These
range from dealer discounts (manufacturer gives a
HOUSES
STEP 3 discount or target incentive to dealers) and
Approach the dealer who gives the best corporate discounts, to exchange bonus, loyalty
offer or go back and forth between dealers discount, discounts on financing and insurance
to play one against the other. This will help premium, discounts on registration or handling
you lower the price. Also consider those charges, etc. While some may reveal the dealer
who can give you good after-sales service. discount, you can maximise this by bargaining hard.

APPLIANCES STEP 1
Find out about
STEP 2
Go to 4-5 dealers or shops and
product specification, understand the prices and
brands, models and discounts they are offering.
prices by searching STEP 4 STEP 6
on the Internet, with For good discounts, conduct a Once you are
e-retailers and thorough research on prices in the satisfied
company websites, STEP 3 area. Get back to the developer if with the
in newspapers and Pick the shop that offers the he has quoted a higher price than is deal, close it
by talking to the best combination of low prices the norm in the area. quickly.
people in the know. and product features.

STEP 5
If an agreement is reached, ask for
further discount by talking to the
shop owner or the manager.
STEP 4
Bargain hard by quoting a price much lower than the one
offered. If the salesperson does not relent, look for other
freebies or discounts. If even this doesn’t work and the
salesperson doesn’t budge, go to some other dealer.
STEP 6
While making the payment, avail of cash
discounts, credit card or wallet schemes,
free EMIs, or any other goodies.
STEP 5
Check if there is unsold inventory and the developer’s
financial position is weak. In both cases you can
leverage for a high discount. Showing seriousness to
make a quick purchase will also earn you a good
discount, and so will cash payment. If owners are
desperate to sell, the distress sale can also get you a
good bargain.
Please send your feedback to
etwealth@timesgroup.com
Guest Column
BARGAINS ARE THE
KEY TO INVESTING
MONEY It is simply not possible to judge an investment without the context of its
MYSTERIES price, at least in the positive sense, says Dhirendra Kumar.
6,000
10,00
P
eople’s instincts about
what makes a purchase
worthwhile can have
harmful side effects if
applied to investing.
However, overcoming these in-
stincts can be very profitable. This
is what the powerful concept called
value investing is all about.
There are two opposite instincts
that govern how people spend their
money. One is to buy expensive
things in order to signal status, and
the other is to get a good bargain.
Ideally, we would like to combine
both. We would like status-symbol
possessions that normally cost a lot,
but we would like to get them at a
good bargain. That sounds like an
The author is the
impossibly good deal but then, the
Founder and fun of getting a deal is the maxi-
CEO of Value mum when it’s good.
Research It’s a basic human instinct to use
3,000
15,00 9,000
the price of something to judge its
intrinsic value. People express their
wealth and their status in society by
buying things that are more expen-
sive. Whether it’s something trivial
like a shaving blade or some sub-
stantial expense like a car, or even a
massive layout on a house, rich peo-
ple spend more on the same kind of
things. This behaviour is a part of
human nature and really, there’s
nothing fundamentally wrong with
it. People acquire wealth to signal
status and it brings them a feeling of
fulfilment to be able to do so.
This belief that expensive things
are better, shapes human behav-
iour in some surprising ways. The
most surprising example that I have
found is that in drug testing, pa-
tients have been observed to im-
prove more if they are told that the
medicine that they are being given
The Economic Times Wealth, September 18-24, 2017
09
fining value investing, but they all boil down to
the fairly simple concept of buying quality stocks
that are undervalued. It’s about buying cheap,
and about being aware (and suspicious!) of the
idea that if something is expensive, then it must
be good.
Look at it another way. Investing in a stock is an
exercise in accepting uncertainty. You can analyse
the likely future and hope that the company will
do better and the stock will rise. When the stock
rises you will be able to sell it a higher price even-
tually. These future events are not dependent
upon anything you can do. Anything could hap-
pen to the company, its market, its industry, the
country’s economy and indeed the global econo-
my that could derail your expectations.
All this is in the future and you have no control
over it. The only thing you can control is the price
at which you can buy the stock, or rather, whether
you buy it at all at a given price. Everything that
happens in the future gets shaped by the price.
The same investment can be good or bad depend-
People look for bargains,
but they don’t necessarily
make correct judgements
about the inherent
value of things.
7,000
ing on what your price was. It is simply not possi-
ble to judge an investment without the context of
its price, at least in the positive sense. I mean there
are equity investments which are bad regardless
GETTY IMAGES
of the price. However, there aren’t any invest-
ments that are good regardless of the price.
Which is why the instinct of buying only at a bar-
gain—and not investing unless there is a bargain to
be had—is the most important thing in investing.
is more expensive. It sounds unbe-
lievable but the same medicine ap-
pears to have a more beneficial ef-
fect on disease if the patient be-
lieves that it’s more expensive.
That means that although people
instinctively look for bargains, they
don’t necessarily make correct
judgements about the inherent val-
ue of things. Instead, they use price
itself as an input for whether some-
thing is a good bargain. That sounds
like circular logic, and it is.
If this is what human nature is
like, then what is its effect on invest-
ing? The more a stock rises, the
more people believe, instinctively,
that there must be something good
about it. In a sense, the cause and
effect is reversed. At its heart, value
investing is the style of investing
that does the opposite.
There are a variety of ways of de-
10 The Economic Times Wealth, September 18-24, 2017 Financial Planning

THE MONEY QUESTION

How to generate a monthly investible surplus?
Paper
Work

Managing SIPs
The Systematic Investment Plan is a
powerful tool to create long-term wealth
by starting with as little as `500. To
build a sustainable corpus, one should
top up these investments as income
rises. However, investors must not
compromise their current cash needs
with too restrictive SIP commitments.
Mutual funds have tailor-made SIPs to
help investors efficiently manage them.
The facilities allow investors to alter
SIPs according to different life situations.

Registration
An enrolment form must be filled up to
register for an SIP. The scheme, SIP
date, amount, start date and frequency
must be added. It is a good idea to opt
for the “perpetual” option so that the SIP
does not stop midway. If this option is

IMAGES BAZAAR
not available, a date long enough to
complete the goal may be chosen.

Aarav is 30 and single. He has no responsibility other than taking care of his own needs. Despite Step up SIP
As and when incomes rise, a step up SIP
working for the last four years, he has no savings or investments except for some money in Ulips and can be used to increase the SIP amount.
ELSS funds. While he has not begun planning for the future, the fact that he has nothing left in his The SIP instalment will increase at
predetermined intervals to match the
bank account at the end of a month is bothering him. He blames it on casual spending on weekends rise in income level of the investor. A step
and impulse buys. Aarav wants to know how he can stop spending and start saving. up SIP form needs to be filled at the time
of SIP registration to use this facility. This
facility is also known as top up SIP.
arav’s tendency to spend balance when he uses the card. His de- maining funds should be invested imme-

A
habits.
can be blamed on easily ac-
cessible money that has not
been earmarked for a specif-
ic purpose. He needs to ad-
dress the issue to resolve his poor money

Keeping all his money in the savings

bank account is not advisable for two rea-
sons. Very often, the thought of a good
amount of money in the bank encourages
unnecessary and irrational spending.
Aarav must switch to using a debit card
linked to his account and sign up for an
SMS intimation of expense and account
SMART THINGS TO KNOW: Income-oriented investment products
pleting balance every time he spends will
act as a strong de-motivator for unneces-
sary spending.
Moreover, the low interest rate that
banks pay on balances in savings ac-
counts is also an important reason to not
hold too much money in such accounts. It
is time Aarav deploys the surplus towards
generating wealth. In the time that it takes
to plan his future goals, he must initiate a
few things. He should make an estimate of
his monthly expenses including money
required for things he enjoys doing and a
margin for unexpected expenses. The re-
diately. He should identify a couple of di-
versified equity funds and start a system-
atic investment plan (SIP). Or he can sign
up for the excess funds to be automatical-
ly transferred to a fixed deposit with the
bank. Once he decides on goals for which
he wants to save, he can assign the invest-
Pause SIP
In a cash crunch, one may not want to
completely stop SIPs but put them on hold
for a while till the situation eases. A pause
SIP form may be used to do this. The peri-
ments he is making to them.
od for pausing the SIP can be mentioned in
Knowing that money has already been
the form. A bank mandate also needs to be
allocated and not available to him will filled and submitted.
curb Aarav’s spending habits. Over time,
as he sees wealth being created, savings
will become a habit with him.
Flexi SIP
Many fund houses provide flexible SIP
options that allow changes in SIP amounts
based on occurrence of certain events or
triggers. These triggers may be based on

1 2
Products with
income-orientation
are designed to
provide regular
income to investors
and are suitable for
investors with lower
risk and return
specifications.
3 4 5
certain pre-determined formula (eg. index
level or target amount). Flexi SIP forms
need to be filled with minimum and
maximum SIP instalment that can be opted.
Deposit products of banks, These Liquidity in such Income earned
post offices and investments investments in the form of
companies, government typically do not may be affected interest is
savings schemes, bonds provide capital by the penalty subject to tax
issued by the government, appreciation associated with on accrual at Points to note
companies including infra since the focus is withdrawing the marginal � Registering an auto debit mandate
companies and debt funds on generating and funds from most rate of tax ensures continuity of SIP instalments.
of mutual funds are distributing of the deposit applicable to � It is important to read instructions
income oriented products. income. products. the investor. applicable to each of these facilities
before enrolment.
The content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
Financial Planning
Teach kids good cash habits
A child’s money habits are shaped by the family environment. Be a responsible role model so that
when the time comes for children to be independent, they won’t flounder, says Uma Shashikant.
L
ast week we met friends whose
children had just joined college.
They remained anxious about
how the 18-year old young adults
would manage their lives indepen-
dently after leaving home. Every action has a
consequence, most parents tell their chil-
dren. Perhaps several times over. However,
in their heart they would like a world where
their children could grow up into responsi-
ble adults, without being bruised by ill-
thought out actions that bring about regret
and remorse. They asked me to make my
usual list of points for parents and children
to think about.
First, the attitude of your children towards
money is shaped mostly by your family envi-
ronment. If you have been the type of person
who considers the merit of every financial
decision and consistently makes it only after
deliberation, your children would have
picked it up. Swiping your card carelessly for
impulsive purchases, and hoping that the
children will somehow turn out to be better
versions only because you extolled on the
virtues of careful spending, is expecting too
much. Consider your money habits as a fam-
ily, so you know what to expect from the chil-
dren you have sent to college.
Second, unlimited cash out of the ATM
and unquestioned replenishment of the
bank account so that you do not displease
your child, are harmful for their well-being.
The single-most important money lesson to
learn early is that it is but a limited resource,
and even if you had plenty it always comes
with alternative uses. Agree on a monthly al-
lowance and stick to it. Make sure you have a
good idea of all the other extraordinary costs
for books, memberships, travel and other
big-ticket items and provide for it in advance.
Third, make the budgeting exercise a joint
affair in which your child agrees on how
much will be spent and on what. Make it an
exercise of assessment of the cost of living,
including mandatory expenses and discre-
tionary expenses, so your child knows how
to allocate between eating out and paying
the cellphone bills. If there are other little
luxuries that your child wants to indulge in,
encourage the possibility of taking on part-
time work. Even if it is a menial task of wait-
ing tables, they will learn how to show up on
time, do what is expected, perform to a
standard, and earn money they can call their
own. Do not dismiss it as not worth the few
rupees it fetches.
Fourth, teach your child the use of online
software that will account for their expenses
under multiple heads. Teach them how to
make electronic transactions, how to keep
the account secure, how to manage an elec-
tronic wallet, and minimise the use of cash
so that accounting becomes easy. Ask for the
accounts to be shared with you, so you know
what is going on. You don’t have to question
each spend, but since you are the one financ-
ing it all, do not give up the authority to hold
them accountable. Little amounts add up,
and children will be able to better appreciate
how their lazy take-outs for food have snow-
balled into a hefty sum.
Fifth, remind the child that the money
habits they display are noted by their peers
and friends, and will lay the foundations of
how money transactions will happen in a
group. Many are shy about bringing up the
question of how to split the grocery bills, or
The Economic Times Wealth, September 18-24, 2017
IMAGES BAZAAR
how to pay for joint trips and eating out.
Since no one is earning most of the money
that is being spent, it is better to split the ex-
penses equitably. Lending to friends is an
avoidable habit, as one loses both the money
and the friend, unless recovery is prompt.
There are many mobile apps that help board-
ers manage group expenses efficiently.
Sixth, allow the child the dignity of not
having to ask and remind you about sending
them the allowances you had agreed. Set a
specific date and make sure you have remit-
ted the money as promised, so that they
learn to await the credit and manage them-
selves better. A fixed sum that will pay for
their transport back home, in case there is an
emergency, can be left in the bank account
or with a trusted relative or friend who is
willing to take on the responsibility. Such
amounts are also useful in case of any medi-
cal or other emergencies, and provide a
sense of comfort to the child.
Seventh, teach the child the basic rules of
11
safe banking, using a credit card, and online
transactions. These conversations tend to be
boring and the child might protest. Ensure
that you create an environment of learning,
even if it means the child will teach you or
your spouse, about how to do these transac-
tions safely. Ensure that they know what they
should do if they lose their debit cards or
identify any misuse. Financial literacy is an
essential skill and the minimum the child
should know are operational and security
features associated with the financial prod-
ucts that they use.
Eighth, if there are investments back home
in which they are first or second holders, af-
ter they reach the age of 18, these folios, ac-
counts and other investments will not be ac-
cessible to you. Before they leave home, en-
sure you have converted them all from minor
accounts into major accounts, by completing
the paperwork. You will not be able to ac-
cess, redeem or close any of these accounts
without their consent and signature. Their
signatures have to be attested by the bank,
and submitted to the concerned institutions.
Ninth, let them know that you will wean
away from their finances over time, and look
forward to them leading their independent
financial lives when they graduate and find a
job. Do not be too eager to know what their
salary would be, or compare them with oth-
ers, or brag about their earnings. Allow them
to enjoy the financial freedom for which they
have worked hard. Do let them know that de-
faulting on their educational loan will hurt
their credit score, and if you are the guaran-
tor, make sure the loan is repaid.
When the children turn 18 and leave the
house, you have to also move from the arena
where you worked with them, and sit in the
gallery to watch and cheer, coach and en-
courage. Do not yearn to be their friend, or
be scared about offending them. Parental
love allows authority that you must exercise
without being overbearing and intolerable.
Tread responsibly.
The author is Chairperson,
Centre for Investment
Education and Learning.
12 The Economic Times Wealth, September 18-24, 2017 Review Preview

Tax lens on cash deposits Product launches

Explanations sought for deposits made in 2010-11. Notice sent to homebuyers.
MUTUAL FUNDS

I
f you thought cash deposits made pri- 148 of the Income Tax Act. SBI Mutual Fund has launched SBI
or to 8 November last year—when the Formal notices will be issued if the ex- Dual Advantage Fund Series XXIV. The
government announced its demoneti- planation is found to be unsatisfactory. scheme will invest in a portfolio of
sation exercise—will escape the eagle eye In the case of property transactions, the fixed income securities maturing on or before the
of the tax department, you are mistaken. authorities have sought to add the differ- maturity of the scheme. The minimum investment is
Tax authorities have sought explana- ence between guidance value and the de- `5,000 and the scheme closes on 25 September.
tions related to deposits of cash made in clared value to the assessed income.
2010-11. Not only that, notices have also Their argument is that the difference ICICI Prudential Mutual Fund has launched ICICI
been sent to homebuyers where the de- would have been paid but hadn’t been Prudential Sensex Index Fund. The open-ended index
clared value of a purchase has been declared, putting both seller and buyer linked growth scheme will track the returns of the
found much lower than the guidance, or under the scanner. BSE Sensex through investments in a basket of
SL SHANTH KUMAR

indicative prices based on past transac-
tions in the area.
A reassessment can be ordered if the
tax authorities don’t receive a response
or they don’t find the reply satisfactory.
“Cases on the basis of information
available have been classified into two
categories—high risk and low risk,” said a
tax official. “High-risk category cases
have to be immediately attended to.”
Cases from 2010-11 will soon become
time-barred owing to the statute of limi-
tations, hence the rush, the official add-
ed. These have been classified as high pri-
ority and general queries issued.
The department has asked these indi-
viduals and entities to furnish permanent
account numbers as well as returns filed
for the financial year in question.
Tax authorities have the power of as-
sessment or reassessment of any income
chargeable to tax under Sections 147 and
The income tax department is getting
information from multiple sources in-
cluding banks and financial institutions
as part of its anti-black money drive
aimed at nabbing tax evaders.
“This is a clear evidence of enhanced
data mining capabilities of the tax de-
partment,” said Amit Maheshwari, part-
ner, Ashok Maheshwary and Associates
LLP. “This kind of targeted approach
would lead to widening of the tax base
and increase in tax collections.”
—Deepshikha Sikarwar
stocks drawn from the constituents of the index. The
minimum investment is `5,000. The NFO closes on
18 September.
UTI Mutual Fund has launched UTI Equity Focused
Fund Series IV (1,104 days). The scheme will invest
predominantly in equity and equity related securities
of listed companies. The minimum investment is
`5,000 and the scheme closes on 25 September.
BANKING
Equitas Small Finance Bank is
offering 6.5% interest on savings bank
deposits of above `10 lakh. The inter-
est is 6% on deposits below `10 lakh. It is also offer-
ing FD rates of 7.25%. The deposit rates are upwards
of 7.75% for senior citizens.

`4 lakh Restaurants slapping service domestic calendar

crore charge face income tax blow Monday Monday Monday
was the amount of SEP
SEP
DEC
18 SEP
18 18
T
he Department
money held by of Consumer Af-
Indians in off-shore fairs has written
tax havens in 2015. to the Central Board of Trade balance Exports y-o-y Imports y-o-y
Direct Taxes for the in- figures to be figures to be figures to be
That’s about 3.1% of clusion of service announced announced announced
India’s GDP in 2015, the charge levied by hotels
GETTY IMAGES

and restaurants in the

latest year for which assessment of tax. This
data is available. Over was revealed by Minis-
half this wealth was in ter of Consumer Af-
fairs, Food and Public
Asian tax havens. Distribution Ram Vilas
Paswan in a tweet.
The move comes af-
ter the department is-
Petrol price at 3-year
not abiding and con- basically evasion of
tinue to levy service tax. This is more of a high, but daily price
charge. Especially in detrimental take, after
five-star hotels, where continued efforts to revision to stay
the amount is very stop the practice,” the

sued advisories for
New `100 coins making service charge
voluntary, and restau-
on the way rants continued to ig-
nore the government’s
T
large,” said an official official added. he government will not go back on reforms
in the know. The Department of in the fuel retail market and the daily revi-
The department Consumer Affairs had sion of petrol and diesel prices introduced
wrote to the CBDT earlier this year issued from 16 June will continue, Oil Minister Dharmen-
chairman last week, an advisory stating dra Pradhan has said, amid growing public clam-

T
he Centre is all set to roll out directive. stating since hotels that service charge lev- our for a reduction in Central excise to arrest ris-
`100 coins for the first time in “We have been pur- and restaurants are ied at hotels and res- ing pump prices since July.
the country. The Ministry of Fi- suing the service taking money from taurants should not be Petrol has become costlier by `7 per litre since
nance has issued a notification re- charge issue for some customers, it is part of mandatory and ought July, pushing pump prices to a three-year high in
garding the introduction of `100 time now and the de- their income, the offi- to be voluntary basis, cities like Mumbai as high level of state taxes am-
coins to commemorate the birth cen- partment had also is- cial added. “But they depending on the ex- plified the impact of rise in international prices.
tenary of AIADMK founder M.G. Ra- sued guidelines, but don’t show it as part of perience of a consum- Though the Centre and states both make hand-
machandaran and renowned Carnat- still some people are their income, which is er. —Nishtha Saluja some gains from fuel sales, the continuous rise in
ic singer M.S. Subbulakshmi. pump prices has turned the focus on the Centre
The obverse side of the coin shall raising excise duty on nine occasions between No-
bear the Lion Capitol in the centre vember 2014 and January 2016 to keep part of the
with Satyamev Jayate inscribed be- savings from falling global crude prices. These
low, flanked by the words Bharat in
Devnagari and India in English. It will
“Stop this subversion of the debate that hikes pushed up excise duty on petrol by `11.77
per litre and by `13.47 on diesel.
bear the Rupee symbol and denomi-
quote of money is going into the pocket of the Remaining non-commital on excise cut, Prad-
national value “100”. The reverse
side shall bear the portrait of M.S.
the week government. It is not. The government han turned the government’s criticism on its head
to make a case for bringing petrol and diesel un-
Subbulakshmi. In the second design, has no pocket.” der GST—something the Centre has been trying
the face of the coin will bear the por- ARUN JAITLEY, FINANCE MINISTER hard to do—and indirectly shift the blame on high
trait of M.G. Ramachandran. state taxes.
Insurance
IMAGESBAZAAR
NARENDRA NATHAN
I
n an unusual move, the Insurance Regu-
latory Authority of India (Irdai) has
asked LIC to review the return on its
flagship immediate annuity product
Jeevan Akshay, because it is too high.
The regulator wants the insurance company
to ensure that returns are in line with yield on
LIC’s investments. “The rates offered by LIC
now match that of the 10-year yield. Since LIC
also has to incur additional expenses for
managing the portfolio, paying distribution
charges, etc., they have no choice but to low-
er the rate,” says Ankur Agrawal, Category
Head, Life Insurance, Bank Bazaar.
“It makes sense to invest before the rate
comes down, but no need to rush because
LIC may take some time to review it,” says
Abhishek Mishra, CEO, Bonanza Insurance.
LIC is not as proactive as its private sector
counterparts but it may not take very long for
the rates to come down this time, since the
push has come from the regulator. Insurance
companies usually review their annuity rates
on a monthly basis, so the reduction may
happen at the beginning of next month.
Here are the factors you should consider
before locking in to very long term annuity
products like Jeevan Akshay.
Returns: Immediate annuity products used
to give low returns compared to market
rates. However, with the market rates coming
down, the returns offered by these products
is now comparable with that of others. For in-
stance, the rates available for annuity with re-
turn of premium after the death of the annui-
tant works out to be 6.48% for someone aged
60 (the rate is calculated after adjusting for
the 1.8% GST payable when buying annuity).
This 6.48% return is similar to long term fixed
deposit (FD) rates offered by SBI.
The Economic Times Wealth, September 18-24, 2017
13
Should you buy
annuities when
rates are high?
Annuity products are becoming more lucrative as
the rate gap narrows. Find out if they will pay off.
Why you should wait and watch Diversification: “Guaranteed annuity for life
Annualised LIC Jeevan Akshay rates show that annuity is a very big positive feature, but that doesn’t
mean you should invest everything in it,”
rates increase significantly with age.
says Agrawal. Diversification is necessary be-
cause one can’t rule out an increase in inter-
est rate. Experts suggest locking in no more
than 33% of your retirement corpus. “Given
the falling interest scenario and the fact that
the return offered is similar to that of bank
FDs, it makes sense to invest around 50% in
annuities. The remaining 50% can be invest-
Options* ed in other instruments,” says Yohannan.
AGE 40 AGE 50 AGE 60 AGE 70
1 6.95% 7.57% 8.77% 11.44% Taxation: The annnuity amount is treated as
pension and taxed at marginal rates. Howev-
2 6.90% 7.40% 8.24% 9.29% er, investors in annuity for life will be at a dis-
advantage because annuity includes a part of
3 6.36% 6.40% 6.48% 6.61% their principal, which is taxable. “Debt mu-
4 tual funds score from the taxability perspec-
5.14% 5.80% 7.01% 9.65%
tive,” says Amol Joshi, Founder, PlanRupee
5 6.75% 7.20% 8.07% 9.95% Investment Services. Since the capital gains
from debt mutual funds are taxed at 20% af-
6 6.56% 6.87% 7.49% 8.81% ter indexation, the tax incidence is lower.
Therefore, this is a good option for investors
7 6.32% 6.36% 6.41% 6.50% in the highest tax slab. However, the tax inci-
Source: LIC India website; Annuity returns calculated after adjusting for GST. dences of debt mutual funds have been going
*1. Annuity payable for life at an uniform rate. up in recent past.
2. Annuity payable for 15 years certain and thereafter as long as the annuitant is alive.
3. Annuity for life with return of purchase price on death of the annuitant. Age: You are eligible to buy annuities from
4. Annuity payable for life increasing at a simple rate of 3% p.a. the age of 30, but it pays to wait, especially if
5. Annuity for life with provision of 50% of annuity payable to spouse for his/her lifetime on death of the annuitant. you opt for annuity for life, since the rates in-
6. Annuity for life with provision of 100% of annuity payable to spouse during his/her lifetime on death of annuitant.
crease significantly with age. However, this
7. Annuity for life with a provision of 100% of the annuity payable to spouse during his/her lifetime on death of
annuitant. The purchase price will be returned on the death of last survivor. holds only if the interest rate structure re-
mains stable in the interim.
Restrictions: Although other schemes like Safety: “Safety is paramount for older in- Though rates move up slowly with age for
Senior Citizen Savings Scheme offer higher vestors, so they look for assured return return of premium annuities as well, the dif-
yield (8.3% ), there are restrictions on tenure products like annuities,” says Mishra. This is ference is very low, so it doesn’t make sense
and amount invested (maximum of `15 lakh why the rates are comparable to SBI FD to wait. “The decision to lock in should be
for 5 years). Another good option is the rates. If you increase the risk level a bit and based on age and the rates available. Since
Pradhan Mantri Vaya Vandana Yojana (PMV- go with FDs from a smaller private sector the rate offered is good and expected to fall
VY) by LIC, which also offers 8.3% returns, banks, you can get slightly higher returns. further, this is a good time to invest,” says
but here again the time period is restricted Debt mutual fund is another option that Agrawal. However, younger investors also
to 10 years and maximum amount one can generates similar returns now. However, the need to consider the issue of taxability be-
invest is `7.5 lakh. “The main advantage of returns are not guaranteed and it carries the fore the take the plunge.
annuity is that it offers guaranteed rates for interest rate risk and re-investment risk.
life. Every other product comes with some Even if you go with liquid fund, the safest op-
restrictions or the other,” says Deepak Yo- tion, there is the risk of returns coming Please send your feedback to
hannan, CEO, My Insurance Club. down if broad market rates fall. etwealth@timesgroup.com
14 The Economic Times Wealth, September 18-24, 2017 Stocks

Should you bet on holding

companies or subsidiaries?
Valuation discount of some holding companies has widened. But that‘s not reason enough to invest in them.

NARENDRA NATHAN
Holding companies’ stocks are usually less

E
ven though the stock market has
been rising and the benchmark in-
dices, Sensex and Nifty, are close
to all-time highs, the valuations of
holding companies are not in sync
with that of their subsidiaries. In fact, the dis-
counts at which parent companies are trad-
ing, compared to the valuations of their hold-
ings, have widened further. This phenome-
non usually happens when the market is hot.
“Typically holding companies quote at a dis-
count. Since the holding companies don’t
move up in line with underlying companies in
a rising market, the discount usually widen,”
says Ravi Gopalakrishnan, Head, Equities, Ca-
nara Robeco Mutual Fund. He advises that in-
vestors should look beyond just the discount
when making an investment decision.
A big reason for the valuation discount is
the diversified portfolio of a holding compa-
ny. Not all the subsidiaries of a holding com-
pany fare equally well and the poor perform-
ers pull down the valuations of holding com-
panies. “So, if you are bullish on one
particular company, buy that company—not
its parent,” says Gopalakrishnan.
INTERESTED IN HOLDING COMPANIES?
Investors can bet on holding companies with
only limited subsidiaries in their kitty. Balmer
Lawrie Investments is one such company.
“Since a major portion of the dividend re-
ceived from Balmer Lawrie & Company is dis-
tributed as dividends, the dividend yield at
Balmer Lawrie Investments is high,” says
Rajesh Agarwal, Head of Research, AUM Capi-
tal. Besides limited number of subsidiaries,
investors also need to take into account the
quality of holding companies’ management.
“Sometimes promoters get greedy and decide
the swap ratio (the ratio in which a company
offers its shares in exchange for the shares of
the company it is acquiring) in their favour,”
warns Daljeet S. Kohli, an independent mar-
ket analyst.
Due to a lack of liquidity and low institu-
GETTYIMAGES
tional participation in Indian holding compa-
nies, buying holding company shares also
poses a problem. “Due to low liquidity, the
bid-ask spread will be high and some discount
will go in that,” says Gopalakrishnan. Howev-
er, this should not be a big issue for long-term
investors. “While short-term investors should
avoid this segment (holding companies), long-
term investors with 3-5 year holding period
can consider them,” says Agarwal.
volatile because of their high promoter hold-
ing—and limited trading in the market. This
also means that they may not see a sustained
rally. However, there are exceptions. For in-
stance, Maharashtra Scooters’ stock price has
almost doubled in the past one year. Experts
are still bullish on this company whose hold-
ings include Bajaj Auto, Bajaj Finance, Bajaj
Finserv, Bajaj Holdings, Bajaj Hindustan,
among other. “Despite the recent rally, Maha-
rashtra Scooter is worth investing because all
the companies it holds are doing well,” says
Agarwal.
NEW DEVELOPMENTS
The merger between Grasim Industries with
Aditya Birla Nuvo has created a mega holding
company which has stakes in companies
across industries—cement, textiles, chemi-
cals, insulators, solar, retail, telecom and fi-
nancial services. Will this massive merger
help reduce the holding company’s discount?
Experts do not think so. “The new exercise is
likely to attract a higher discount than earlier.
We thus value its stake in Ultratech Cement
and Aditya Birla Capital at a 45% discount,”
says a recent Motilal Oswal report. However,
analysts are bullish on CESC because the com-
pany is looking to undergo a demerger. “The
proposed demerger and restructuring would
create four distinct entities and unlock sub-
stantial value for investors,” says a recent
HDFC Sec report. Its subsidiaries include First
Source Solutions (55% holding), a profit-mak-
ing business process outsourcing firm with
several Fortune 500 companies as clients.

MAHARASHTRA SCOOTERS CESC GRASIM INDUSTRIES BALMER LAWRIE INVESTMENTS

Focused holdings to Demerger will help Merger with Birla Nuvo Has consistently offered
boost stock further unlock value will widen the discount high dividend yield
250
195.23 250 250 250

Maharashtra 163.88
200 Scooters 200 CESC 200 132.95 200
Grasim Industries 120.14
150 150 150 150
Balmer Lawrie

100 100 100 100

113.52 113.52 113.52 113.52
SENSEX SENSEX SENSEX SENSEX
50 50 50 50
12 Sep 2016 13 Sep 2017 12 Sep 2016 13 Sep 2017 12 Sep 2016 13 Sep 2017 12 Sep 2016 13 Sep 2017

Stock price (`) 2,898 BUY Stock price (`) 1,046 BUY Stock price (`) 1,230 BUY Stock price (`) 409 BUY
Market cap (`cr) 3,312 NA Market cap (`cr) 13,862 20 Market cap (`cr) 80,854 9 Market cap (`cr) 907 NA
PE 270.09 SELL PE 15.99 SELL PE 19.76 SELL PE 23.23 SELL
NA 1 1 NA
PBV 10.21 PBV 1.30 PBV 2.57 PBV 9.87
HOLD HOLD HOLD HOLD
Div yield 1.04 NA Div yield 0.96 6 Div yield 0.32 5 Div yield 4.16 NA
Figures in the charts have been normalised to a base of 100. Source: BSE, Bloomberg. Compiled by ETIG Database
Taxation The Economic Times Wealth, September 18-24, 2017
15

Low inflation means you

pay more capital gains tax
With inflation coming down, the effective tax rate on capital gains after indexation has steadily moved up.

Lower inflation, higher tax

When inflation was high, investors booked loss and claimed benefits.

*Average Gain (`)on Cost Gain/loss

Period debt fund investment of Inflation (`) after
return `1 lakh Index indexation

April 2008-11 6.8% 21,921 10.3% -12,385

April 2009-12 6.6% 20,965 10.6% -14,170

April 2010-13 7.9% 25,691 9.6% -6,045

April 2011-14 8.7% 28,401 9.3% -2,034

April 2012-15 9.4% 30,862 8.3% 3,862

April 2013-16 8.7% 28,366 6.3% 8,366

April 2014-17 8.9% 29,076 4.3% 15,742

GETTYIMAGES

Notional losses can be adjusted *Short-term debt funds.

Returns and CII
against long-term gains or carried
figures are annualised
forward for up to eight years. Source: Ace MF. Compiled by ETIG

SANKET DHANORKAR
with the cost inflation index (CII) This year, investors would have such as purchase of gold jewel- slab,” says Joshi.

P
rices rising at a slower
rate should be good
news. But not if you
have earned long-
term capital gains.
The consistent decline in infla-
tion in the past 3-4 years means
that long-term capital gains can
no longer escape tax through in-
dexation. Indexation takes into
account the inflation during the
holding period and accordingly
adjusts the purchase price of cer-
tain assets. This upward revision
in purchase price reduces the
capital gains and brings down the
tax liability.
Between 2008 and 2012, con-
sumer inflation was raging in
double digits, which meant that
debt fund investors were earning
tax free gains. In fact, the infla-
tion was so high that they could
book notional losses and adjust
them against other taxable long-
term capital gains.
Someone who invested `1 lakh
in a debt fund on 1 April 2011
would have earned `28,400 over
the next three years. However,
shooting up 9.3% during the same
period, the investor would have
booked a notional loss of `2,034
on the investment. This loss could
be set-off against other long-term
capital gains. What’s more, the
unadjusted loss could be carried
forward for up to eight financial
years.
Low inflation, lower benefits
Declining inflation has ended this
party. The government-notified
CII figure for the current year
(2017-18) stands at 272. This puts
the rise in inflation over past one
year at 3%. The rise in the CII has
consistently slowed down since
2013-14 when it had shot up 10%.
Accordingly, the incidence of
capital gains tax has steadily ris-
en. An investment of `1 lakh
made in April 2012 would have
earned around `30,000 for the
investor over the next three
years. But inflation was lower at
6.3% during this period, so the
investor was saddled with a small
taxable amount of `3,862 after
indexation.
to shell out even higher tax. Short-
term bond funds clocked an aver-
age 8.9% return as on 1 April, over
a three-year period, but inflation
for the corresponding period was
4.3%. This translates into an effec-
tive capital gains tax of 10.4%.
With inflation expected to re-
main muted in the near term,
higher capital gains tax is likely to
continue. “Due to the higher infla-
tion few years ago, investors got
used to zero tax incidence on cap-
ital gains. They are now likely to
face a higher tax burden on their
investments,” says Manoj Nagpal,
CEO, Outlook Asia Capital. “All in-
struments where indexation ben-
efit is available will see their post-
tax return come down,” says
Amol Joshi, Founder, PlanRupee
Investment Services.
Keeping record of transactions
It is easy for mutual fund inves-
tors to calculate their tax liability.
Nearly all fund houses allow in-
vestors to download yearwise
statements of their capital gains.
But records of other transactions,
lery, will have to be maintained
by the investor himself.
Many mutual fund investors
also do not claim the tax benefits
available on capital losses be-
cause it complicates their tax re-
turn. Unfortunately, tax rules do
not allow an asseessee to revise
his tax return after the assess-
ment is over. So, if someone did
not mention a capital loss booked
a few years ago, it is gone forever.
What investors should do
Experts maintain that investors
still stand to benefit from these in-
struments, given that indexation
helps bring down the tax liability.
“Investors are still better off with
the indexation benefits they enjoy
under the new debt fund taxation
regime,” says Nagpal. Without in-
dexation, the tax incidence would
be much higher. “Those who have
invested in bond funds over the
past 6-12 months should stay in-
vested until the three-year hold-
ing period is complete. Else the
gains will be taxed at the rate cor-
responding to their income tax
For those looking to deploy
fresh money in safe alternatives,
Joshi suggests arbitrage funds.
The returns are slightly lower
than those of short-term debt
funds, but they are tax free after
one year. This means the inves-
tor does not have to stay invest-
ed for three years just to ensure
a lower tax liability.
Change in rules
Some of the rules for capital
gains have changed in recent
years. Three years ago, the mini-
mum holding period for debt
and debt-oriented mutual funds
to be classified as long-term as-
sets was extended from one year
to three years. On the other
hand, the minimum holding pe-
riod for real estate has been re-
duced from three years to two
years. So, keep an eye on the cal-
endar when you invest in a capi-
tal asset.
Please send your feedback to
etwealth@timesgroup.com
16 The Economic Times Wealth, September 18-24, 2017 Learn & Keep

Child’s higher education more important

than retirement for Indians
Family is a huge part of our lives. The HSBC Power of Protection study analyses how much members of a family
67%
in India depend on and support each other financially. of those with parents would give priority
to parent’s health and social care rather
than their own retirement.
Nine out of 10 people (87%)
are providing financial Supporting family Supporting
assistance to someone or members is a strain and others call
68% 52%
of those with children of those with parents
the other in the family. a source of satisfaction for hard would give priority to and children would
their children’s higher choose child’s higher
financial
61%
have put off
choices
education than to their
own retirement fund.
education over parents’
welfare.

If they had to choose, people would prioritise

their
their family over themselves.
aspirations to
support others

For 38% fear a sharp increase in cost of living would impact financial security
75%
are assisting
76%
give financial
63%
provide aid to
51%
feel guilty
financial 27% fear reduced income
their children help to parents partner
spending money aid givers,
on themselves threat of 27% feel unemployment is a threat
Family’s health and well-being is of
utmost importance. unforeseen 25% are wary of an economic downturn
risks loom
24% are anxious about increasing or unexpected bills
There are plus points
People are spending a
significant portion of their Planning for the unexpected remains poor among
disposal income on others 78%
feel appreciated for
those providing financial support to others
39% the support they give
60% 53%
of disposal income is spent supporting children under 18
61% don’t have a don’t have a
don’t have a policy to policy that
38% policy that cover an would pay
is for grown-up children (above 18) would pay illness or out a lump

77% them a lump accident sum to take

GETTY IMAGES
sum if they that can care of their
31% feel they are good contracted a prevent family in the
is for parents
providers serious them from event of
illness. working. death.

The time toll is high too The monetary

28% have withdrawn money from savings and investments THE STEPS TO TAKE
cost of IDENTIFY ASSESS PLAN FOR THE TALK ABOUT
providing 23% have cut back on treats for self PRIORITIES FINANCES FAMILY THE FUTURE
financial 23% Think about your Think if any Unexpected life Talk to your family
have had to take on more work priorities. Make sure financial support events can have about the future.
40% 31% 28% support to you have a financial you are giving knock-on effects for Discuss what could
of non-working time for grown for parents family 20% say they have less money to do what they want plan that addresses others is likely to the whole family. happen to them if
is spent supporting up children your needs as well increase or Bear this in mind you experience a
children under 18 members is 18% feel financially drained as those of your decrease in the when reviewing if life-changing event
high family. Don’t future and if you you have enough and what financial
The commitments take a toll on
the giver’s finances, lifestyle and
15% have incurred debts neglect your own need to update your financial protection safeguards you
aspirations. financial plan. in place. have in place.
emotional well-being. Source: HSBC’s Power of Protection study. This report, Facing the future, is the third in the series. The study covered 1,000 people above the age of 25. Answers don’t add up to 100% due to multiple choices.
18 The Economic Times Wealth, September 18-24, 2017
“Expect rebound in earnings
in second half of 2017-18”
Sanjay Kumar
CIO, PNB MetLife
Equities generate robust
risk-adjusted returns in the
long-term. However, there may
be some years of sub-optimal
returns. Investors should stay
invested in equities for a longer
period to earn expected returns,
Sanjay Kumar tells
Hiral Thanawala.
Where are the equity markets headed?
Equity markets have run up significantly this
year, led by high domestic and global liquid-
ity. This has been despite disruptions like
demonetisation and GST implementation.
While the impact of demonetisation is be-
hind us, GST-led disruptions should normal-
ise over the next few months. We expect a
rebound in corporate earnings in the second
half of 2017-18. It will be led by pick up in
consumption, supported by low interest
rates, robust government spending and a fa-
vourable base. Increasing formalisation of
the economy and continuing shift in house-
hold savings from physical to financial assets
bode well for equity markets in the medium-
term. This, along with robust domestic li-
quidity, is likely to keep investor sentiments
strong, providing support to current market
valuations. In the near-term, we expect eq-
uity markets to consolidate at current levels.
With GDP growth rate at 5.7%, do you think
there are flaws in India’s growth model?
GDP growth has slowed to a three-year low.
The slowdown is largely attributed to inven-
tory destocking in the run-up to GST imple-
mentation. This, in turn, dragged manufac-
turing sector growth to a five-year low. Fur-
ther, gold demand surged in the June
quarter as consumers and traders advanced
their gold purchases ahead of the GST roll-
out. This led to a meaningful negative contri-
bution of net exports to the headline GDP.
Both these events are expected to normalise
over the coming months. As such, GDP
growth seems to have bottomed out and is
expected to recover gradually on inventory
re-stocking, pick-up in consumption, gov-
ernment capex and a favourable base.
What sectors are you investing in now?
We remain positive on India’s consumption
story. Low interest rates, a normal monsoon
and government thrust on
the rural sector are likely
to drive consumption “The expected
growth, benefiting the housing boom,
consumer discretionary
space. amid the
We are positive on pri-
vate banks which have lev-
government’s
eraged well on rising con- strong push for
sumer affordability in the
wake of low interest rates. low cost housing,
Retail assets of private
banks such as auto loans,
augers well for
personal loans, consumer housing finance
durable loans, credit cards
and housing loans have
companies.”
grown at a robust 20-25%.
This trend is likely to continue given low
penetration levels. We expect a shift in mar-
ket share from PSU to private banks.
The expected housing boom, amid the
government’s strong push for low cost hous-
ing, augers well for housing finance compa-
nies. These companies have delivered
strong loan growth and have fairly robust as-
set quality. We are positive on cement, as
well as good quality infrastructure and con-
struction companies, given the govern-
ment’s focus on roads and infrastructure.
We also have an overweight stance on oil
marketing companies (OMCs) and gas
stocks. A dynamic fuel pricing regime, cou-
pled with robust growth in fuel consump-
tion, is driving earnings growth for OMCs,
while the government’s thrust towards
cleaner fuel is beneficial for gas stocks.
Do you think the merger of PSU banks will
benefit investors?
We see the proposed merger of PSU banks as
a positive development. First, it is likely to
improve the government’s fiscal balance.
Investing
The weak fundamentals of mid-size and
smaller PSU banks would make fund raising
a challenge for these banks. As a conse-
quence, the government would have been
required to periodically infuse capital in
these banks which would have adversely im-
pacted its fiscal situation. Bigger PSU banks
would be better positioned to raise capital.
Secondly, the bigger PSU banks have been
able to demonstrate higher non-performing
loan recovery and upgradations in the past.
As such, bigger banks are likely to be better
placed to enforce NPL recovery mechanisms
post consolidation, particularly given that
these banks would have a larger share of
loan composition (collaterals) with them.
Lastly, consolidation of PSU banks may
prevent market share loss facilitated by crea-
tion of a stronger balance sheet, fresh capital
and bigger scale post consolidation.
What’s your view on the
telecom sector?
The telecom sector has
been undergoing consoli-
dation over the last cou-
ple of years. From 10-12
players, the telecom in-
dustry now has three
large players.
Post the entry of new
incumbents with signifi-
cant 4G capacity; we have
seen a sharp increase in
competitive intensity in
the sector. Falling tariffs,
increasing leverage and
decline in profitability
have compelled several small players to
scale down expansion plans. Bigger players
with strong balance sheets have started the
process of consolidating into nationwide
players. Industry dynamics are likely to re-
main challenging in the near-term given
high competitive intensity. We continue to
remain cautious on the sector.
What is your advice for investors?
Equities, as an asset class, generate robust
risk-adjusted returns in the long-term. How-
ever, there may be some years of sub-opti-
mal returns. Investors should, therefore,
stay invested in equities for a longer period
to earn expected returns. Additionally, in-
vestors should invest on a regular basis so as
to generate superior returns in the long run.
Investors with limited market information
should seek guidance of experienced advis-
ers to understand their risk-return profile.
Please send your feedback to
etwealth@timesgroup.com
Banking The Economic Times Wealth, September 18-24, 2017
19

Need money in a hurry?

Here are 7 easy options
From salary advance to loans against shares, the cash-generating options to explore are many.

NAMRATA DADWAL While money pundits say you must have how urgently you want the funds. “The BankBazaar.com.
an emergency fund equal to six months’ ex- key things that will determine where you Before you opt to borrow money, be sure

A
financial emergency can hit
any time—a sudden hospitali-
sation, a natural calamity or
even an unexpected celebra-
tion at short notice.
penses in place, not everyone follows this
rule diligently. So, where do you get cash in-
stantly to tide over a financial disaster?
Don’t despair. There are a few ways you
can get money in a pinch, depending on
get the money from are how urgently you
want the funds, the tenure of the loan, the
interest and how expensive will it be to
source the funds,” says Navin Chandani,
Chief Business Development Officer,
that it is really needed. Even then, borrow
as little as possible. Remember, it is a loan
and you need to ultimately repay it. If you
are unable to do it on time, you could end
up in a debt trap.

BORROW FROM YOUR EMPLOYER CASH WITHDRAWAL ON A CREDIT CARD

“If you need funds ASAP, consider
your workplace first. Many compa-
nies extend an advance on sala-
ries,” says financial trainer P.V.
Subramanyam. The funds could
be equivalent to 1-6 month’s take-
home pay and will be deducted
from the salary over 3-24 months.
Upside: The loan can be custom-
ised to your needs, and you
will be able to get the money
within three days.
Downside: The loan will be
taxable as part of your salary.
It will be exempt only if the
funds are used for certain
medical treatments or if the
amount is less than `20,000.
Interest rate A credit card can be used to withdraw Upside: Instant cash, available any-
money from an ATM, the amount being where, anytime.
5-8% equivalent to 40-80% of your card limit.
However, there might be a cap on daily
Downside: A transaction fee of 2.5-3%.
Could also be Interest is levied on the money from the
cash withdrawal. Most banks will allow day it is withdrawn until it is fully repaid.
interest-free.
you to over-extend your limit on a case-
to-case basis. Be ready to cough up an
over-limit fee over and above the usual Interest
interest rate on cash advance. rate 2-3.5% a month

TOP-UP LOAN PERSONAL LOAN

Already have a home loan? If yes, you can One of the quickest options for borrowing money.
use it to get a top-up loan of up to `50 lakh You can get a loan within 30 minutes to three
for a maximum of 20 years or till the bal- days, depending on your relationship with the
ance tenure of your original home. This bank. In fact, you might already have a pre-
option works if you have repaid the original approved loan in your name from your bank
home loan for some years as the combined which will make the process faster.
value of the home loan and the top-up can- Upside: Quick disbursement if you borrow from
not exceed 75% of the value of the house. your own bank.
Upside: You can get a loan quickly, in three Downside: High interest rate and processing fee
days, since the bank has your documents. of 2-3%. You will also have to pay GST on EMIs.
Downside: Any default in repayment could For prepayment, a foreclosure fee of 2.5% of the
cost you big. outstanding amount is charged.

Interest Interest
rate 9-13% rate 13-24%
IMAGES BAZAAR

LOAN AGAINST PROPERTY LOAN AGAINST SECURITIES LOAN AGAINST GOLD

If you want a large loan and own a house, you could take a
loan against property. You can loan `5 lakh to `10 crore,
depending on the market value of your house. The loan
tenure varies between 2 and 15 years. Both residential and
commercial properties can be used as collateral. Banks
could to lend you up to 65% of the value of your property.
However, the house must be insured. Processing fee is 1.5-
2% while prepayment charges are 2-3% of the outstanding.
Upside: Lower interest rates, larger loans.
Downside: Longer process of 3-10 days to get the loan.
You can pledge your shares, mutual funds, FDs and
insurance policies as collateral. In case of mutual
funds and shares, banks will loan you funds equal to
50% of their value, while they will offer you up to
75% of a fixed deposit (FD). The funds are trans-
ferred into a current account from where you can
access them.
Upside: Quick disbursement, lower interest charges.
Downside: If portfolio value declines, you will have to
put in the differential or pledge more funds/shares.
You can get 60% of the value of your gold and can
borrow from `10,000 to `25 lakh. The tenure is usu-
ally 6 months or 12 months but you can renew the
loan at a nominal charge. While you can repay part
of the loan whenever you want, gold you have
pledged as collateral is released only after you
repay the entire loan.
Upside: You can get funds within a day.
Downside: Gold appraisal charges of `250-2,500. If
you are unable to repay loan, you will lose the gold.

Interest Interest Interest 14-26 %

rate 9.5-13% rate 9-15% rate 10-17% banks (non-banking financial
companies)
20 The Economic Times Wealth, September 18-24, 2017 Retirement

Where to live after retirement

Senior living housing projects and assisted living facilities are transforming the way senior citizens live.

IMAGES BAZAAR
NILANJANA CHAKRABORTY

W
hile many of us
have grandiose
notions about
settling into a
cottage in the
hills or travelling the world after
retirement, the reality is often
very different. The need for secu-
rity and stability trumps all else.
Retirement planning is therefore
crucial, but finances are not the
only thing to worry about.
In 2011, roughly one in 11 Indi-
ans were over the age of 60. Ac-
cording to projections by Census
of India, this figure is expected to
grow to around one in eight by
2025. This calls for major socio-
logical changes to accommodate
the needs of senior citizens.

What is senior living?

Given that India has no social se-
curity framework to offer senior
citizens the support they need,
both financially and socially, the
private sector has stepped in.
“Senior living options are defi-
nitely on the rise in India, particu-
larly in the past few years, pro-
pelled not only by the growth of
nuclear families with children liv-
ing abroad or away from their
parents, but also by the increase
in the number of seniors who are
financially independent,” says
Pavithra Gangadharan, Director,
Heritage ElderCare Services.
These facilities feature conveni-
ences like security services,
cleaning and maintenance facili-
ties, medical care and meals.
There are two categories of
senior living services: independ-
ent living and assisted living. The
former includes housing units de-
signed with seniors in mind.
These projects have special fea-
tures like skid-proof tiles, ramps
for wheelchair access, grip rails,
panic buttons, etc.
Assisted living, on the other
hand, feature round the clock
care and is more suitable for old-
er seniors or those with ailments.
There are attendants present to
assist residents with tasks like eat-
ing, dressing and getting around.
Lifestyle upgrade
A group of niche developers
across the country have come up
with residential projects aimed at
senior citizens. These are typical-
ly equipped with facilities like
health centres, specialised kitch-
ens, gyms and recreational spac-
es. Most offer housekeeping,
Senior living: What are your options?
Facilities offer a choice of renting, leasing or buying specially designed units.
Option 1: Rent
Pay a registration fee of
`5 lakh.
Refundable deposit of
`20 lakh.
Also pay `25,000
for services each month.
Our assessment
This option allows you to
test the waters before
you make a decision. You
can choose to have your
deposit refunded and
leave if the lifestyle or
facility doesn’t suit you.
Offered by Jagriti Dham, Kolkata
maintenance and laundry servic-
es as part of a service package.
Some have doctors, therapists
and dieticians on site to help their
residents with physical and men-
tal health concerns. Needs like a
specific diet or exercise regimen
are also accommodated.
Option 2: Lifetime lease
Register with a fee of `5 lakh.
Pay a monthly rent of `30,000
for the rest of life.
Also pay `25,000 for services
each month.
Our assessment
This is a major commitment.
Once you lease the unit, you’re
tied in for the rest of your life. It
would be wiser to rent first and
then migrate to a lifetime lease
when you see fit.
Offered by Jagriti Dham, Kolkata
A wide range of options
The options range from luxury to
low budget. While the more ex-
pensive can be priced in crores,
there are also plenty of reasona-
bly priced options. Ashiana Hous-
ing Limited’s senior living pro-
jects, Jagriti Dham in Kolkata,
Option 3: Buy
Pay between `45 lakh and
`1 crore to buy 2BHK unit.
Pay nominal charges of
`500 for meals, cleaning.
All other services are
charged individually.
Our assessment
This gives you complete own-
ership of the property and you
can choose to sell it or pass it
on to your legal heirs. Howev-
er, some facilities have condi-
tions about only senior citizens
being eligible to buy or occupy
the units. Carefully study the
agreement to know your rights.
Offered by facilities like Oasis Senior
Living, Ashiana and Dignity Lifestyle
Township
Kshetra in Hyderabad, Oasis Sen-
ior Living Communes and Dignity
Lifestyle Township, in Neral, Ma-
harashtra, and are a few exam-
ples. These facilities offer rentals,
leases and residential units for
sale at slightly higher prices than
market rates, complete with a
lifestyle element and opportuni-
ties to socialise.
However, this might not work
as a permanent arrangement.
“Many seniors who are currently
in independent living facilities
would need more care as they
age,” says M.H. Dalal, Chairman
and MD of Oasis Senior Living.
For that there are assisted living
facilities like Vardaan Senior Citi-
zen Centre in Delhi, which charg-
es anywhere between `50,000 to
`1 lakh for care services, depend-
ing on the needs of each resident.
Choose carefully
While there are various advantag-
es of moving into a senior living
facility, there are also a few down-
sides that you should consider.
For instance, while most such fa-
cilities promise medical attention
in emergencies, the facility can
deny having any direct responsi-
bility for critical care unless oth-
erwise specified in the contract.
Some facilities can even have
hidden charges, clauses that don’t
allow you to resell an unit you
own, or rules that curb your inde-
pendence as a resident. Study the
terms of the contract carefully be-
fore making a final decision.
Please send your feedback to
etwealth@timesgroup.com
smart stats
In Mutual funds 22
This Loans and deposits 25
Section Alternate investments 26

ET WEALTH TOP 50 STOCKS

Every week we put about 3,000 stocks through four key filters and rate them on a mix of factors. The end result of this
exercise is the listing of the top 50 stocks based on the composite rating to help ease your fortune hunt.
RANK PRICE ` GROWTH%* VA L UAT I O N R AT I O S RISK R AT I N G Fast Growing Stocks
Current Previous Stock Revenue Net Div Downside Bear No. of Consensus Top 5 stocks with the highest expected revenue
Rank Rank Price Profit PE PB Yield PEG Risk Beta Analysts Rating % growth over the previous year.
Power Grid Corporation 1 2 213.30 30.26 33.21 15.03 2.25 2.04 0.44 0.88 0.70 40 4.53
Oberoi Realty 144
Vedanta 2 1 319.70 25.32 109.64 17.18 1.96 5.95 0.27 1.61 1.40 22 4.82
Apollo Tyres 3 3 259.60 15.04 359.76 12.06 1.82 1.15 0.03 1.37 1.66 23 4.30 Havells India 54
Gujarat State Petronet 4 4 196.35 35.85 62.55 20.52 2.49 0.76 0.33 1.39 1.11 29 4.07 J Kumar Infraprojects 41
GAIL India 5 5 400.95 32.34 38.57 20.13 1.72 2.22 0.47 1.01 1.18 38 3.50
Motherson Sumi Syst. 41
PTC India 6 NR 124.40 38.86 25.47 8.89 0.96 2.48 0.35 1.41 2.34 12 4.67
PTC India 39
ONGC 7 6 159.35 9.22 19.91 9.96 0.92 4.61 0.43 0.94 0.49 36 4.28
J Kumar Infraprojects 8 7 213.05 41.06 38.43 15.22 1.16 0.95 0.35 2.36 2.92 13 4.77 See revenue column in the adjacent table.
CESC 9 9 1,058.90 15.64 40.40 20.34 1.39 0.95 0.25 1.44 1.63 27 4.33
Hindalco Inds 10 12 247.05 14.09 153.68 26.70 1.19 0.44 0.20 1.51 1.80 31 4.58
NMDC 11 11 133.05 20.28 47.28 16.50 1.86 3.12 0.23 1.43 2.32 25 3.28 Least Expensive Stocks
VA Tech Wabag 12 10 630.05 22.69 90.83 33.50 3.46 0.63 0.37 1.31 0.91 20 4.65 The 5 stocks with the lowest forward PE.
Oberoi Realty 13 NR 388.65 143.91 175.60 34.85 2.30 0.50 0.20 1.72 2.20 18 4.17
PTC India 8.89
Cyient 14 13 509.55 15.90 25.97 16.90 2.74 1.53 0.64 1.07 -0.13 25 4.56
ONGC 9.96
NTPC 15 17 168.65 19.78 15.09 13.02 1.43 2.83 0.87 0.90 1.08 36 4.44
Tata Power 16 16 85.25 15.98 134.42 36.37 1.73 1.53 0.22 0.98 1.63 26 3.19 IRB Infrastructure 10.77
JK Cement 17 15 1,038.45 22.78 73.00 32.45 4.18 0.76 0.44 1.31 1.81 25 4.44 Apollo Tyres 12.06
Kalpataru Power 18 14 349.45 11.19 59.22 28.79 2.22 0.57 0.32 1.11 1.18 21 4.67 NTPC 13.02
BHEL 19 18 136.85 17.62 204.69 74.14 1.04 1.19 0.36 1.32 2.06 45 2.18 See PE column in the adjacent table.
Oil India 20 19 318.10 29.35 10.07 15.82 0.86 4.79 1.14 0.99 0.43 31 3.77
Cadila Healthcare 21 24 480.50 35.31 50.82 33.18 7.09 0.66 0.67 1.54 1.61 40 4.13
DB Corp 22 21 367.30 17.29 23.31 18.09 4.25 2.26 0.73 0.83 0.51 22 4.50 Best PEGs
Jain Irrigation Systems 23 20 104.30 26.67 106.65 29.62 1.21 0.48 0.32 1.84 3.12 10 4.40 Top 5 stocks with the least price earning to
growth ratio.
Cipla 24 23 565.95 21.66 86.99 45.13 3.63 0.36 0.50 0.99 0.53 43 3.56
ACC 25 25 1,844.85 26.97 85.60 57.27 4.01 0.92 0.73 1.02 1.41 40 3.15
Hindalco Inds Tata Power
IRB Infrastructure 26 22 219.95 5.81 23.18 10.77 1.46 3.52 0.45 1.56 3.19 25 4.40
Sobha 27 27 401.70 20.12 34.87 24.15 1.46 0.62 0.60 1.42 1.57 18 4.50
0.20 0.22
Trident 28 26 98.60 16.41 30.57 14.93 1.83 1.39 0.49 1.75 3.05 12 4.83
JSW Steel 29 30 265.20 19.35 31.00 18.00 2.80 0.85 0.58 1.33 1.40 32 3.66 0.03
JK Lakshmi Cement 30 35 426.50 33.04 198.06 58.30 3.57 0.18 0.30 1.42 2.11 25 3.68 0.20 0.23
Dr Reddy's Lab 31 28 2,253.35 14.43 41.71 31.22 3.01 0.90 0.79 1.16 0.17 45 2.73
Coromandel International 32 39 420.50 21.55 41.68 25.71 4.24 1.18 0.61 1.46 2.41 16 4.13 Apollo Tyres Oberoi Realty NMDC
Jubilant Life Sciences 33 33 707.20 22.10 39.09 19.21 3.29 0.43 0.48 1.62 2.52 13 4.92
See PEG column in the adjacent table.
India Cements 34 31 196.05 14.19 124.68 40.03 1.17 0.53 0.25 2.03 3.78 22 4.00
KEC International 35 37 329.65 20.75 39.53 27.38 5.26 0.50 0.69 1.46 1.23 30 4.47
Gujarat Gas 36 36 835.70 30.14 124.11 52.12 6.91 0.30 0.44 1.05 0.68 20 3.90
Ambuja Cements 37 38 283.55 20.25 64.20 50.48 2.90 0.98 0.87 1.11 1.60 39 3.03
Income Generators
Top 5 stocks with the highest dividend yield.
Persistent Systems 38 29 620.10 14.05 21.08 16.35 2.51 0.97 0.79 0.91 0.64 35 3.89
Arvind 39 34 409.30 22.93 52.34 33.73 2.97 0.58 0.65 1.38 2.60 18 4.22 Vedanta | 5.95
Engineers India 40 40 157.20 38.66 25.14 32.14 3.73 1.89 1.50 1.52 1.82 21 4.43
Oil India | 4.79
Exide Inds 41 32 220.45 13.24 36.97 23.39 3.72 1.10 0.64 1.32 2.17 34 3.97
ONGC | 4.61
InterGlobe Aviation 42 41 1,184.50 34.29 20.40 25.86 11.36 2.84 0.65 1.21 1.04 18 3.83
IRB Infrastructure | 3.52
Havells India 43 43 504.85 54.03 77.04 65.23 9.61 0.70 0.80 1.44 1.69 43 3.09
NMDC | 3.12
Container Corporation 44 49 1,364.25 20.71 21.33 48.11 3.74 1.11 0.73 1.08 0.79 31 3.39
Grasim Inds 45 45 1,233.15 32.77 25.45 17.97 1.81 0.45 0.78 1.27 1.92 15 3.93
Dalmia Bharat 46 NR 2,798.00 25.23 139.23 71.87 5.00 0.08 0.52 1.72 3.01 23 4.65
Dividend stocks are considered
Larsen & Toubro 47 42 1,214.20 17.48 16.15 28.28 3.40 1.14 1.64 0.76 0.77 42 4.24 safe stocks during a downturn.
VRL Logistics 48 46 348.50 15.05 65.98 44.92 5.85 1.16 0.53 1.20 1.41 10 4.20 Figures indicate what an investor
can earn as dividend for every
Motherson Sumi Systems 49 NR 330.25 40.53 17.35 43.77 8.44 0.60 0.71 1.27 2.06 36 4.11 `100 invested.
Apollo Hospitals 50 NR 1,063.10 23.26 46.50 67.07 4.04 0.56 1.33 1.10 1.14 22 4.27
* The figures under this head are for expected growth. NR: Not in the ranking. Data as on 13 Sep 2017. Source: Bloomberg
Least Risky
Top 5 stocks with the lowest downside risk.
expected to show growth in revenue, net weight to net profit growth and 10% to analysts covering the stock (the
Methodology profit and EPS (earnings per share) in the growth in EPS (the higher, the better, higher, the better) and 10% to Persistent
in the next four quarters. The final two for each parameter). Growth is consensus rating (a composite rating Systems
The four filters used to arrive at filters were that the companies should calculated by comparing the based on the recommendations by all 0.91
NTPC 0.90
the Top 50 stocks have made profits in the past four ’consensus estimate’ for the next 12 analysts who track a stock. Again, the
Only traded stocks: Of the about 7,000 quarters and have a positive net worth. months with the historical 12-month higher, the better).
listed stocks, only actively traded stocks Rating rationale values. 4. ... and so do the risks.
were considered. Having arrived at the final stocks 2. ... but only at reasonable valuation. Total weight: 10%. Two kinds of risks DB Corp Power Grid
Only big stocks: Only companies with universe, we ranked them using the Total weight: 40%, which comprises were considered. A 5% weight was 0.83 Corp
an average market capitalisation and following four principles. 10% weight to PE ratio, 10% to PB assigned to downside risk and bear
revenue of over `1,000 crore were A percentile rating (on a 1-100 scale) is ratio, 10% to PEG ratio (the lower, beta each (the lower, the better, in 0.88
considered. given to each parameter and the the better, for all three parameters) both cases).
composite ranking is arrived at using the and 10% to dividend yield (the higher, Larsen &
Only well tracked: We picked stocks
weighted average of these parameters. the better). Toubro
that are tracked by at least 10 analysts.
1. Growth is the key... 3. Analysts’ views matter... The ranking methodology has been developed 0.76
Only profitable and growing: We by Narendra Nathan. A detailed explanation
considered only those stocks that are Total weight: 30%, which comprises Total Weight: 20%, which comprises of the methodology is available at See downside risk and bear beta columns
10% weight to revenue growth, 10% 10% weight to the total number of www.economictimes.com/wealth in the adjacent table.
22 The Economic Times Wealth, September 18-24, 2017 Smart Stats

LAGGARDS & LEADERS

ETW FUNDS 100
B E S T F U N D S T O B U I L D Y O U R P O R T F O L I O
Taking a long-term view of fund returns, here is a list of 10 funds
in each category—five leaders (worth investing) and five laggards
(that may be a drag on your portfolio).

LAGGARDS LEADERS

ET Wealth collaborates with Value Research to identify the top-performing 100 funds Equity: Large cap 5-year returns
across 10 categories. Equity funds and equity-oriented hybrid funds are ranked on 3-year 11.91 22.05
returns while debt-oriented hybrid and income funds are ranked on 1-year returns. HSBC Dynamic Fund Mirae Asset India Opportunities Fund

11.98 21.86
LIC MF Index-Sensex Plan JM Core 11 Fund
VALUE NET R E T U R N S ( % ) 12.27 21.42
RESEARCH ASSETS EXPENSE
FUND RATING (` cr) 3-MONTH 6-MONTH 1-YEAR 3-YEAR 5-YEAR RATIO Tata Index Sensex Fund JM Multi Strategy Fund
Equity: Large Cap
JM Multi Strategy Fund ���� 151.56 8.17 22.02 29.07 15.69 21.42 — 15.7%
The 3-year
12.37
Reliance Index Fund Sensex Plan
19.93
SBI Bluechip Fund
Mirae Asset India Opportunities Fund ����� 4510.08 7.54 18.93 24.87 15.47 22.05 2.35
return of JM Multi 12.67 19.72
Motilal Oswal MOSt Focused 25 Fund* ����� 771.24 5.93 18.47 22.18 15.09 — 2.52 Strategy Fund is
the highest in its Taurus Nifty Index Fund Aditya Birla Sun Life Top 100 Fund
Invesco India Growth Fund ����� 208.79 8.7 19.42 22.56 14.42 19.66 2.47
category.
SBI Bluechip Fund* ����� 15,569.99 5.55 15.04 16.17 14.15 19.93 1.97
DSP BlackRock Focus 25 Fund* ���� 2,860.32 6.36 15.46 14.84 13.16 18.55 2.47
Aditya Birla Sun Life Frontline Equity Fund ���� 18,948.38 6.48 15.25 17.66 13.13 19.62 2.14
Equity: Multi cap 5-year returns
Aditya Birla Sun Life Top 100 Fund ���� 3,335.67 7.68 15.25 19.54 13.02 19.72 2.27
11.21 25.16
Invesco India Dynamic Equity Fund ���� 368.11 9.4 18.18 21.93 12.5 17.76 2.41
LIC MF Equity Fund Aditya Birla Sun Life Advantage Fund
Reliance Top 200 Fund ���� 4,588.8 4.93 15.78 20.5 12.41 18.68 2.01
13.34 23.93
IDBI India Top 100 Equity Fund ���� 456.05 4.51 17.29 16.95 12.28 18.02 —
Edelweiss Prudent Advantage Fund Franklin India High Growth Companies Fund
Edelweiss Equity Opportunities Fund ���� 260.62 6.61 17.74 17.52 11.93 17 2.54
ICICI Prudential Focused Bluechip Equity Fund ���� 14,336.63 6.47 14.59 19 11.76 17.84 2.09
13.45 23.73
UTI Dividend Yield Fund Aditya Birla Sun Life Equity Fund
Invesco India Business Leaders Fund ���� 133.18 4.41 13.38 13.33 11.68 16.62 2.64
Franklin India Flexi Cap Fund* ����� 2,883.21 3.72 11.14 13.79 11.34 19.38 2.32 13.50 23.54
Reliance NRI Equity Fund ���� 91.01 5.43 14.6 20.76 10.96 16.85 2.68 Union Equity Fund Reliance ETF Junior BeES

DHFL Pramerica Large Cap Fund* ���� 319.75 4.09 13.52 15.1 10.87 16.65 2.53 13.92 23.05
Aditya Birla Sun Life Int Fund ICICI Prudential Nifty Next 50 Index Fund
Equity: Multi Cap
Motilal Oswal MOSt Focused Multicap 35 Fund
Aditya Birla Sun Life Advantage Fund
�����
�����
8,677.83
4,258.08
8.73
10.17
24.03
23.93
32.75
25.72
25.52
20.17
—
25.16
2.09
2.3
25.5%
The Motilal Oswal Equity: Mid cap 3-year returns
Tata Retirement Savings Fund Progressive Plan ���� 265.11 10.42 24.04 31.75 18.77 19.94 2.75 MOSt Focused
Multicap 35 is
Reliance ETF Junior BeES ���� 151 8.38 20.28 27.76 18.07 23.54 0.42 the highest in its 0.88 23.96
ICICI Prudential Nifty Next 50 Index Fund ���� 89.45 8.19 20.25 28.17 17.88 23.05 0.81 category. Baroda Pioneer Midcap Fund Mirae Asset Emerging Bluechip Fund

Aditya Birla Sun Life Equity Fund ���� 6,915.94 7.56 17.32 24.35 17.35 23.73 2.24 9.90 23.04
Aditya Birla Sun Life Special Situations Fund ���� 169.51 9.26 18.66 21.86 17.31 22.57 2.63 HDFC Core & Satellite Fund Escorts High Yield Equity Fund

SBI Magnum Multicap Fund* ����� 2,954.72 6.46 16.93 21.81 17.17 21.7 2.06 10.57 21.66
Kotak Select Focus Fund Regular Plan ���� 1,3491.91 6.26 17.01 23.07 17.12 22.56 1.97 Aditya Birla Sun Life Dividend Yield Plus Fund Canara Robeco Emerging Equities Fund

IDBI Nifty Junior Index Fund ���� 41.34 8 19.51 26.71 16.99 22.49 — 11.21 20.84
DSP BlackRock Opportunities Fund* ���� 3,363.83 7.45 16.64 22.89 16.64 21.71 2.52 DHFL Pramerica Midcap Opportunities Fund Principal Emerging Bluechip Fund
Kotak Opportunities Regular Plan ���� 1823.4 5.65 17.03 22.59 16.16 20.39 2.12 11.33 20.29
Invesco India Contra Fund ���� 635.85 5.59 16.47 22.89 15.19 22.45 2.4 SBI Magnum Global Fund Kotak Emerging Equity Scheme

BNP Paribas Dividend Yield Fund* ���� 427.94 8.64 21.67 25.85 15.08 20.47 2.57
SBI Magnum Multiplier Fund* ���� 1,925.51 4.72 13.9 15.75 13.96 20.47 2.11
Franklin India Prima Plus Fund* ���� 1,1362.56 4.47 11.16 15.26 13.75 20.13 2.26
Equity: Small cap 3-year returns
Franklin India High Growth Companies Fund* ����� 6,850.69 1.65 10.18 15.8 13.51 23.93 2.33

11.29 25.54
Equity: Mid Cap
Mirae Asset Emerging Bluechip Fund ����� 4,304.67 5.22 20.31 31.68 23.96 31.86 2.41 23.9%
The 3-year
Union Small and Midcap Fund SBI Small & Midcap Fund

Escorts High Yield Equity Fund ���� 8.79 4.28 13.54 23.71 23.04 24.96 — 16.24 24.42
return of Mirae
Canara Robeco Emerging Equities Fund ���� 2,291.44 6.12 21.63 31.08 21.66 30.08 2.33 HDFC Small Cap Fund L&T Emerging Businesses Fund
Asset Emerging
Principal Emerging Bluechip Fund ���� 1,207.46 8.31 21.92 28.47 20.84 29 2.42 Bluechip is the 17.28 22.91
highest in its
Kotak Emerging Equity Scheme ���� 2,303.8 3.33 13.78 21.61 20.29 26.41 2.09 HSBC Midcap Equity Fund L&T Midcap Fund
category.
L&T India Value Fund ����� 5,256.3 6.13 18.11 30.74 20.28 27.24 2.02 18.65 22.9
HDFC Mid-Cap Opportunities Fund* ���� 17,714.71 4.23 15.3 21.13 18.15 26.36 2.23 Sundaram S.M.I.L.E. Fund DSP BlackRock Micro Cap Fund
Franklin India Prima Fund* ���� 5,983.52 3.24 14.32 19.32 18.08 27.01 2.39 18.98 22.54
SBI Magnum Midcap Fund* ���� 3,779.01 1.2 11.23 12.65 17.32 27.82 2.03 Franklin India Smaller Companies Fund Aditya Birla Sun Life Small & Midcap Fund

Equity: Small Cap

SBI Small & Midcap Fund* ���� 727.34 10.52 23.08 35.11 25.54 33.1 2.36
Hybrid: Equity oriented 5-year returns
DSP BlackRock Micro Cap Fund* ���� 5791.12 -2.67 10.29 19.58 22.9 30.27 2.45
Franklin India Smaller Companies Fund* ���� 6,160.81 3.77 16.66 21.01 18.98 31.12 2.41 7.72 20.54
Principal Equity Savings Fund Tata Retirement Savings Fund
Equity: Tax Planning
Tata India Tax Savings Fund
Aditya Birla Sun Life Tax Relief 96
����
�����
803.15
3,776.07
7.66
7.09
21.31
18.76
24.2
21.83
17.86
16.95
21.58
22.43
2.52
2.31
17.9%
The 3-year return
8.31
Tata Regular Saving Equity Fund
19.78
L&T India Prudence Fund

Aditya Birla Sun Life Tax Savings Fund ���� 25.44 7.48 18.69 22.44 16.7 18.92 2.7 of Tata India Tax 9.30 19.35
Savings Fund is
Aditya Birla Sun Life Tax Plan ���� 575.87 7.03 18.65 21.43 16.24 21.65 2.61 DHFL Pramerica Equity Income HDFC Balanced Fund
the highest in its
IDFC Tax Advantage Fund ���� 674.53 8.2 23.6 29.17 15.9 22.2 2.39 category. 9.50 19.34
DSP BlackRock Tax Saver Fund* ���� 3,137.88 6.99 16.61 21.16 15.8 22.23 2.52
L&T Equity Savings Fund ICICI Prudential Balanced Fund
L&T Tax Advantage Fund ���� 2,488.5 5.7 19.41 26.62 15.46 19.55 2.08
10.7 18.83
Axis Long Term Equity Fund ����� 14,362.68 6.79 20.01 19.67 14.34 23.91 1.97
LIC MF Balanced Fund HDFC Childrens Gift Fund
IDBI Equity Advantage Fund ���� 655.26 3.58 17 16.03 14.34 — —
Franklin India Taxshield Fund* ���� 3,201.95 3.94 11.01 13.88 12.98 19.53 2.36 Annualised returns in % as on 13 Sep 2017.
Smart Stats The Economic Times Wealth, September 18-24, 2017
23

ETW FUNDS 100 Top 5 SIPs

VALUE NET R E T U R N S ( % )
RESEARCH ASSETS EXPENSE Top 5 equity schemes based on 10-yr SIP returns.
FUND RATING (` cr) 3-MONTH 6-MONTH 1-YEAR 3-YEAR 5-YEAR RATIO
Hybrid: Equity-oriented
Tata Retirement Savings Fund Moderate Plan ����� 211.63 8.25 19.28 26.86 17.8 20.54 2.8 17.8%
The 3-year return
DSP BlackRock Micro Cap Fund
25.61
L&T India Prudence Fund ����� 6,425.61 3.83 14.85 19.7 14.73 19.78 2.01
of Tata Retire- Canara Robeco Emerging Equities Fund
Aditya Birla Sun Life Balanced '95 Fund ���� 10,821.09 5.22 13.83 16.91 14.33 18.68 2.26
ment Savings 25.12
HDFC Balanced Fund* ���� 14,766.71 4.08 13.7 18.67 13.41 19.35 1.95 Fund is the high-
ICICI Prudential Balanced Fund ���� 18,096.78 3.48 9.13 16.66 13 19.34 2.21 est in its category. Franklin India Smaller Companies Fund
SBI Magnum Balanced Fund* ���� 14,418.63 5.15 12.39 14.07 12.04 18.68 1.97 24.18
HDFC Childrens Gift Fund* ���� 1,706.98 3.72 13.67 16.97 11.99 18.83 2.18 HDFC Mid-Cap Opportunities Fund
23.14
Hybrid: Debt-oriented Conservative L&T Midcap Fund
SBI Magnum Children's Benefit Plan* ���� 48.48 4.73 10.37 17.12 14.24 14.94 2.45 22.88
ICICI Prudential MIP 25 ���� 1,439.54 2.03 9.44 12.67 11.97 12.55 2.16
SIP: Systematic investment plan % annualised returns
ICICI Prudential Child Care Plan ����� 122.94 1.53 8.05 11.33 12.61 15.78 1.39
UTI MIS Advantage Fund* ���� 1,069.77 3.2 8.02 10.76 10.58 11.73 1.6 As on 13 Sep 2017
SBI Magnum Monthly Income Plan* ���� 1,428.27 1.71 7.02 10.42 11.69 11.45 1.94
ICICI Prudential Regular Income Fund ���� 2,413.32 1.93 4.16 8.28 10.18 9.05 1.46
SBI Magnum Monthly Income Plan* ����� 265.43 1.72 4.64 7.74 10.05 11.09 2.3

Debt: Income
SBI Regular Savings Fund* ���� 1,123.92 1.73 5.65 11.21 10.45 10.56 1.2 11.2%
The 1-year return
Top 5 MIPs
Top 5 MIP schemes based on 3-year SWP returns.
Franklin India Income Builder Fund* ���� 968.9 2.06 5.09 9.62 9.64 9.62 2.11
of SBI Regular
ICICI Prudential Banking & PSU Debt Fund ���� 9,538.44 1.74 5.85 9.21 10.12 9.74 —
Savings is the SBI Magnum Monthly Income Plan
UTI Medium Term Fund* ���� 177.42 2.13 5.27 9.08 — — 1.25 highest in its
BNP Paribas Corporate Bond Fund* ���� 97.19 1.98 4.85 8.66 9.37 8.85 0.76 category. 12.11
HDFC Medium Term Opportunities Fund* ���� 12,150.06 2.06 5.15 8.59 9.58 9.39 0.36 ICICI Prudential MIP 25

DHFL Pramerica Medium Term Income Fund ���� 604.81 1.79 5.7 8.51 10.6 — 1.03 12.04
Kotak Medium Term Fund ���� 4,577.08 1.61 4.87 8.28 10 — 1.7 Kotak Monthly Income Plan Regular Plan
Kotak Corporate Bond Fund ���� 1,068.58 1.82 4.19 8.19 10.11 8.73 0.55 10.92
Invesco India Medium Term Bond Fund ���� 1,220.13 1.83 4.05 7.93 8.87 8.38 0.9 UTI MIS Advantage Fund
10.81
Debt: Short Term
Franklin India Short Term Income Plan*
Franklin India Low Duration Fund*
�����
�����
8,704.73
4,797.32
2.51
2.21
5.53
4.8
10.34
9.52
9.65
9.71
9.66
9.7
1.57
0.78
10.3%
The 1-year return
Reliance Monthly Income Plan
10.67

UTI Banking & PSU Debt Fund* ���� 1,208.51 1.65 4.35 8.9 9.33 — 0.3 of Franklin India SWP: Systematic withdrawal plan % annualised returns
Low Duration Fund
DHFL Pramerica Short Maturity Fund* ���� 1,888.29 1.93 4.97 8.81 9.3 9.18 1.3
is the highest in its As on 13 Sep 2017
Baroda Pioneer Short Term Bond Fund ����� 619.46 1.92 4.3 8.75 9.05 8.92 1.25 category.
BOI AXA Short Term Income Fund ���� 392.7 1.65 4.25 8.48 9.21 8.61 1.25
HDFC Regular Savings Fund* ���� 5,281.89 1.81 4.28 8.45 9.65 9.26 1.72
HDFC Short Term Opportunities Fund* ���� 9,628.46 1.91 4.18 7.94 8.91 9.02 0.37
IDFC Money Manager Fund ���� 1,767.41 2.1 4.03 7.94 8.61 8.65 0.45 Mid & Small Cap exposure
Reliance Medium Term Fund ���� 1,2309.28 1.89 4.08 7.76 8.66 8.69 0.9
of Multi Cap funds
Debt: Ultra Short Term 57.46
BOI AXA Treasury Advantage Fund ����� 557.68 1.93 4.16 8.55 8.89 8.99 0.55 8.5%
The 1-year return
55.69
53.81 53.25 52.55
L&T Floating Rate Fund ���� 516.59 1.99 4.15 8.33 8.56 8.83 0.7
of BOI AXA Treas-
Baroda Pioneer Treasury Advantage Fund ����� 2,845.27 1.9 4.16 8.26 8.96 9.09 0.81
ury Advantage is
Kotak Low Duration Fund ���� 6,074.14 1.83 3.98 8.03 9.07 8.59 1 the highest in its
Indiabulls Ultra Short Term Fund* ���� 2,155.38 1.8 3.84 8 8.56 8.76 0.73 category.
DHFL Pramerica Low Duration Fund* ���� 1,265.48 1.81 3.88 7.91 8.9 8.98 1.13
JM Floater Long Term Fund ���� 186.72 1.85 3.83 7.83 8.47 8.39 —

Debt: Dynamic Bond

Exp ratio as on 31 Aug 2017
UTI Dynamic Bond Fund* ���� 1,662.61 1.05 5.94 11.1 11.05 10.49 1.62
*Exp ratio before 31 Aug 2017
ICICI Prudential Long Term Fund ���� 3,134.43 1.16 7.96 10.95 12.35 11.98 1.26 ICICI Parag Temple- Temple- BNP
Returns as on 13 Sep 2017
SBI Dynamic Bond Fund* ���� 3,576.84 0.64 5.52 10.34 11.15 9.22 1.58 Assets as on 31 Aug2017 Prudential Parikh ton India ton India Paribas
Indo Asia Long Term Equity Growth Dividend
All equity funds sorted on 3-year returns; debt funds ranked on 1-year returns Rating as on 31 Aug 2017 Equity Value Income Fund Yield
Fund Fund Fund Fund
% as on 31 Jul 2017
Did not find your fund here?
Log on to www.wealth.economictimes.com for an exhaustive list.

Methodology
The Top 100 includes only those funds that have a 5- or
EQUITIES (figures over the past one year) Debt: Short Term
4-star rating from Value Research. The rating is determined
Large-cap: Mostly invested in large-cap companies. Expense Ratio
by subtracting a fund’s risk score from its return score.
The result is assigned stars according to the following
Multi-cap: Mostly invested in large- and mid-cap
companies.
FUND 0.37
distribution: Mid-cap: Mostly invested in mid-cap companies.
RAISER 0.30 0.31
0.29
����� Top 10% Small-cap: Mostly invested in small-cap companies. 0.26
����
���
Next 22.5%
Middle 35%
��� Next 22.5%
(Not covered
in ETW Funds
100 listing)
Tax planning: Offer tax rebate under Section 80C.
International: More than 65% of assets invested abroad.
Income: Average maturity varies according to objective.
50%
Is the likely reduction in
� � Bottom 10% Gilt: Medium- and long-term; invest in gilt securities.
the number of mutual
Fixed-income funds less than 18 months old and equity Equity-oriented: Average equity exposure more
than 60%.
fund schemes available
funds less than three years old have been excluded. This UTI Bank- Aditya Birla HDFC Short
HDFC Sundaram
ensures that all the funds have existed long enough to be Debt-oriented aggressive: Average equity exposure in the market, once Floating Banking & ing & PSU Sun Life Term Op-
tracked for consistency of performance. Given the focus on between 25-60%. Sebi’s stricter criteria Rate PSU Debt Debt Fund Short Term portunities
long-term investing, liquid funds, short-term funds and FMPs Income Fund Fund Fund
are not part of the list. For the same reason, we have con-
Debt-oriented conservative: Average equity exposure for defining mutual fund Fund
less than 25%.
sidered only the growth option of funds that reinvest returns schemes come into play. % as on 31 Jul 2017
instead of offering dividends that increase the NAV of funds. Arbitrage: Seek arbitrage opportunities between equity
and derivatives.
Despite these rigorous filters, the list includes 2/3 funds of % expense ratio is charged annually.
each category to maximise choice from the best funds. Asset allocation: Invest fully in equity or debt as per
market conditions. Methodology of Top 100 funds on www.wealth.economictimes.com
The fund categories are:
24 The Economic Times Wealth, September 18-24, 2017 Mutual Funds

DSP BLACK ROCK TAX SAVER

A conservative tax-saving pick

ET Wealth collaborates with Value Research to analyse top mutual funds. We examine the key fundamentals
of the fund, its portfolio and performance to help you make an informed investment decision.

HOW HAS THE FUND PERFORMED? BASIC WHERE DOES THE

With a 10-year return of 13.68%, the fund has outperformed the benchmark
(8.89%) and the category average (11.06%) by a wide margin.
FACTS FUND INVEST?
DATE OF LAUNCH
18 Jan 2007
Fund
Portfolio asset
Growth of `10,000 vis-a-vis category and benchmark `36,048 CATEGORY
allocation Debt & Cash
Fund style
Equity
TYPE
4.06% box
Category
Tax Planning Growth Blend Value
`28,552

Small Medium Large

CAPITALISATION
AVERAGE AUM 4.64%
SMALL CAP
`3,137.88 cr
`10,000 BENCHMARK
Nifty 500 Index
23.50% 71.86%
MID CAP LARGE CAP
INVESTMENT STYLE
Index
`23,444 WHAT IT Equity
95.94%

Aug 2007 Aug 2009 Aug 2011 Aug 2013 Aug 2015 Aug 2017
COSTS The fund maintains a
NAVS* heavy large cap tilt.
As on 12 Sep 2017
GROWTH OPTION
The fund has beaten both the category average `46
and the index comfortably over the past decade. DIVIDEND OPTION Top 5 sectors in portfolio (%)
`18 Financial 35.37
MINIMUM INVESTMENT
Energy 10.74
`500
Construction 9.64
Fund MINIMUM SIP AMOUNT
Annualised performance (%) `500 Metals 8.90
Index
Category average EXPENSE RATIO^ (%) Automobile 8.01
2.52
The fund is heavily
22 22.03 22.42 EXIT LOAD
19.81 19.33 invested in financials.
17.77 NIL
17.42 16.09
15.30 15.84
13.93 *As on 12 Sep 2017
10.58 ^As on 31 Jul 2017
Top 5 stocks in portfolio (%)
HDFC Bank 5.69
ICICI Bank 4.34
Yes Bank 4.14
6 month 1 year 3 year 5 year Tata Steel 3.84
As on 12 Sep 2017 ITC 3.46
The fund has outperformed
over 3- and 5-year periods. The fund is heavily diversified but
takes healthy exposure in top picks.

Yearly performance (%) HOW RISKY IS IT?

Fund Category Index

52.21 51.14 Standard Deviation 14.48 14.20 13.49

37.82
29 27.32 29.47

4.40
-0.72 3.55
11.27
3.84 4.90 FUND Sharpe Ratio 0.83 0.72 0.51

Mean Return 16.57 14.78 11.35

2014 2015 2016 2017 MANAGER Based on 3-year performance. As on 31 Aug 2017.
Rohit Singhania
TENURE: 2 YEARS The fund’s risk-reward profile is
The fund has mostly outperformed As on 12 Sep 2017
Education: MMS superior to many of its peers.
its category in recent years.
Wherever not specified, data as on 31 Jul 2017. Source: Value Research

This fund enjoys an impressive higher compared to peers in the tion bets on portfolio returns. The er alpha than many of its peers,
SHOULD track record, having outper- same category. With around 70 portfolio turnover is on the higher despite its large-cap tilt. With a

YOU formed its category average in

seven of the past nine calendar
stocks, the fund’s portfolio is
heavily diversified but it retains a
side, which suggests the fund
manager churns stocks often to
healthy risk-reward profile, this
fund is a worthy pick for conserv-

BUY? years. It maintains a heavy large-

cap bias, where its exposure is
healthy exposure in its top picks,
allowing higher impact of convic-
capitalise on market trends. The
fund has managed to deliver high-
ative investors looking for a tax-
saving fund.
Smart Stats The Economic Times Wealth, September 18-24, 2017
25

LOANS & DEPOSITS

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

Top five bank FDs Top banks for 2 years

Interest rate (%) What `10,000
Tenure: 1 year compounded qtrly will grow to
BANK NAME MCLR WITH EFFECT FROM
IDFC Bank
RBL Bank
7.50
7.20
10,771
10,740
Bank MCLR State Bank Of India 8.10 1 September 2017
City Union Bank 7.10 10,729 Marginal Cost of funds-based Lending Rate HDFC Bank 8.25 7 September 2017
Lakshmi Vilas Bank 7.00 10,719 (MCLR) is the new benchmark lending rate Union Bank Of India 8.25 1 September 2017
DCB Bank 6.85 10,703 designated by RBI and will replace the base
Tenure: 2 years rate for new borrowers. Axis Bank 8.30 18 August 2017
RBL Bank 7.30 11,557 IDBI Bank 8.60 7 September 2017
IDFC Bank 7.25 11,545
DCB Bank 7.00 11,489
Karur Vysya Bank
Lakshmi Vilas Bank
7.00
7.00
11,489
11,489
Top banks for 6 months Top banks for 3 years
Tenure: 3 years BANK NAME MCLR WITH EFFECT FROM BANK NAME MCLR WITH EFFECT FROM
IDFC Bank 7.20 12,387 HDFC Bank 7.95 7 September 2017 State Bank Of India 8.15 1 September 2017
RBL Bank 7.20 12,387
DCB Bank 7.10 12,351
State Bank Of India 7.95 1 September 2017 Punjab National Bank 8.30 1 September 2017
Karur Vysya Bank 7.00 12,314 Union Bank Of India 8.05 1 September 2017 Union Bank Of India 8.30 1 September 2017
Lakshmi Vilas Bank 7.00 12,314
Punjab National Bank 8.10 1 September 2017 Axis Bank 8.35 18 August 2017
Tenure: 5 years
IDFC Bank 7.20 14,287
Axis Bank 8.15 18 August 2017 HDFC Bank 8.45 7 September 2017
RBL Bank 7.20 14,287
DCB Bank 7.10 14,217
Karur Vysya Bank 7.00 14,148 Top banks for 1 year Top banks for 5 years
Lakshmi Vilas Bank 7.00 14,148
BANK NAME MCLR WITH EFFECT FROM BANK NAME MCLR WITH EFFECT FROM

State Bank Of India 8.00 1 September 2017 Punjab National Bank 8.45 1 September 2017
Top five senior citizen bank FDs HDFC Bank 8.15 7 September 2017 Bank Of Baroda * 8.65 7 September 2017
Interest rate (%) What `10,000
Tenure: 1 year compounded qtrly will grow to Punjab National Bank 8.15 1 September 2017 Indian Bank 8.75 7 September 2017
RBL Bank 7.70 10,793
ICICI Bank 8.20 1 September 2017 Karur Vysya Bank 9.10 7 August 2017
City Union Bank 7.50 10,771
Lakshmi Vilas Bank 7.50 10,771 Union Bank Of India 8.20 1 September 2017 Punjab & Sind Bank 9.10 7 September 2017
IDFC Bank 7.50 10,771
DCB Bank 7.35 10,756 * Strategic Premium of 0.25%. # Business Strategy Spread of 0.30%.
For any changes in MCLR rates, please email us at etigdb@timesgroup.com
Tenure: 2 years
RBL Bank 7.80 11,671
IDFC Bank 7.75 11,659
DCB Bank 7.50 11,602 Your EMI for a loan of `1 lakh
Karur Vysya Bank 7.50 11,602 TENURE 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS
Lakshmi Vilas Bank 7.50 11,602
@ 8% 2,028 1,213 956 836 772
Tenure: 3 years
IDFC Bank 7.70 12,571 @ 10% 2,125 1,322 1,075 965 909
RBL Bank 7.70 12,571 @ 12% 2,224 1,435 1,200 1,101 1,053
DCB Bank 7.60 12,534
Karur Vysya Bank 7.50 12,497
@ 15% 2,379 1,613 1,400 1,317 1,281
Figures are in `. Use this calculator to check your loan affordability. For example, a `5 lakh loan at 12% for 10 years will translate into an EMI of `1,435 x 5 = `7,175
Lakshmi Vilas Bank 7.50 12,497

Tenure: 5 years
IDFC Bank 7.70 14,642 Post office deposits Interest (%)
Minimum
invt. (`)
Maximum
investment (`)
Features
Tax
benefits
RBL Bank 7.70 14,642
DCB Bank 7.60 14,571 Senior Citizens’ Saving Scheme 8.3 1,000 15 lakh 5-year tenure, minimum age 60 80C
Karur Vysya Bank 7.50 14,499 Sukanya Samriddhi Account 8.3 1,000 1.5 lakh per year One account per girl child 80C
Lakshmi Vilas Bank 7.50 14,499
Public Provident Fund 7.8 500 1.5 lakh per year 15-year term, tax-free returns 80C

5-year NSC VIII Issue 7.8 100 No limit No TDS 80C

Top five tax-saving bank FDs Time deposit 6.8-7.6 200 No limit Available in 1, 2, 3, 5 years 80C #

Interest What `10,000

Post Office Monthly Income Single 4.5 lakh 5-year tenure, monthly returns Nil
Tenure: 5 years and above rate (%) will grow to 7.5 1500
Scheme Joint 9 lakh 5-year tenure, monthly returns Nil
IDFC Bank 7.20 14,287
RBL Bank 7.20 14,287 Kisan Vikas Patra 7.6 1,000 No limit Can be encashed after 2.5 years Nil
DCB Bank 7.10 14,217 Recurring deposits 7.1 10 No limit 5-year tenure Nil
Karur Vysya Bank 7.00 14,148
Lakshmi Vilas Bank 7.00 14,148 Savings account 4 50 No limit `10,000 interest tax free Nil

All data sourced from Economic Times Intelligence Group (etigdatabase@timesgroup.com). # Benefit available only for 5-year deposit
26 The Economic Times Wealth, September 18-24, 2017 Non-traditional Investments

Alternative investment
returns monitor
The scope and attractiveness of alternative investments is increasing. Here’s a weekly tracker of returns from such investments. But don’t
compare these with returns from traditional investments since the proportion and purpose of alternative investments is vastly different.

Diamond Index Precious Metals Index Wine Index Coin Index

350.39
1,753.29 13 Sep 2017 19,540
121.36 13 Sep 2016 1,746.34 13 Sep 2016
17,500
13 Sep 2016 115.3 13 Sep 2017 13 Sep 2017
13 Sep 2017
317.22
13 Sep 2016
CHANGE

1 WEEK -0.68% 1 WEEK -0.76% 1 WEEK -0.08% 1 WEEK 0.0%

1 YEAR -4.99% 1 YEAR -0.40% 1 YEAR 10.46% 1 YEAR -10.44%
Overall Diamond Index is based The S&P GSCI Precious Metals The Liv-ex Fine Wine 50 Index The Krugerrand Coin index
on actual transactions from 20 Index comprises gold (91.33%) and tracks daily price movement of the represents the denomination of a
different market players and silver (8.67%) and provides a bench- most heavily traded commodities in 22 carat gold bullion coin weighing
reflects price movements in the mark for investment performance in the wine market. It includes only the one troy ounce that is listed for
global diamond market. The the precious metals commodity 10 most recent vintages and is trading on the Johannesburg
index is updated daily. markets. It is updated daily. updated daily. Stock Exchange.

Penny stocks update

Penny stocks as a recommended non-traditional investment? Not exactly. ET Wealth neither has the expertise nor
does it recommend investing in such stocks. But since the relatively ‘low’ cost of investment attracts some investors
to penny stocks, we provide a weekly snapshot of this most volatile and uncertain type of stock investing.

Top Price Gainers Top Volume Gainers

Stock Market price 1-week (%) 1-month (%) 1-month 1-month Market cap Stock Market price 1-week (%) 1-month (%) 1-month 1-month Market cap
(`) change change average volume average volume (` crore) (`) change change avg volume avg volume (` crore)
(lakh) change (%) (lakh) change (%)

Ashirwad Capital 5.15 2.79 84.59 5.06 975.90 20.60 Metkore Alloys & Ind. 3.40 -17.27 -11.69 0.93 1,315.14 23.95
Dolat Investments 4.25 24.63 72.76 1.24 203.63 74.80 Ashirwad Capital 5.15 2.79 84.59 5.06 975.90 20.60
Cranes Softwares 1.51 25.83 60.64 0.38 -15.76 17.78 ACI Infocom 5.39 -0.37 -25.96 0.01 716.22 59.56
Sharon Bio-Medicine 8.75 47.31 49.83 1.69 280.94 104.08 Amsons Apparels 9.35 5.17 20.18 2.64 682.99 20.83
Toyam Industries 7.90 11.74 46.84 9.21 26.21 167.88 Global Capital Markets 5.69 1.61 7.36 0.10 460.45 14.16
Shree Bhawani Paper 3.99 15.32 46.15 0.00 -47.98 13.90 Lycos Internet 6.09 1.16 -11.99 8.71 432.60 290.04
Techindia Nirman 9.68 6.02 45.56 0.09 37.42 13.87 Tarapur Transformers 8.52 26.79 29.68 0.12 417.09 16.61
Jaiprakash Power 8.05 18.21 41.98 20.02 -55.25 4,826.78 Frontline Business 7.09 -0.98 1.29 1.63 300.87 15.12
Karuturi Global 1.55 7.64 33.62 5.22 14.74 125.50 Sharon Bio-Medicine 8.75 47.31 49.83 1.69 280.94 104.08
CNI Research 3.32 25.28 32.80 0.47 97.63 38.11 ANG Industries 7.65 23.79 19.72 0.22 266.21 12.31

Top Price Losers Top Volume Losers

Virtual Global Education 1.26 -10.64 -39.71 22.69 0.77 53.39 Swadeshi Ind. & Leasing 5.38 -5.61 -19.94 1.03 -89.78 58.21
Panafic Industrials 1.77 0.00 -33.21 1.70 -63.49 14.53 Gujarat NRE Coke 1.80 1.12 -0.55 2.37 -82.38 288.82
Capital Trade Links 4.64 -3.13 -23.56 1.00 -11.32 23.66 Subex 8.57 -2.28 -0.23 3.87 -81.08 481.63
Swadeshi Ind. & Leasing 5.38 -5.61 -19.94 1.03 -89.78 58.21 Lanco Infratech 1.03 24.10 13.19 33.79 -76.27 341.35
Gammon Infra. Projects 3.18 -16.54 -19.49 16.05 -21.10 299.51 JMT Auto 3.96 -2.46 -9.17 1.92 -72.00 199.50
IVRCL 4.55 1.11 -13.17 2.48 -70.57 356.22 IVRCL 4.55 1.11 -13.17 2.48 -70.57 356.22
VKJ Infradevelopers 5.61 3.70 -12.89 6.70 -11.70 100.14 Unitech 7.46 -6.75 -5.33 43.25 -66.80 1,951.76
Lycos Internet 6.09 1.16 -11.99 8.71 432.60 290.04 Tata Teleservices 6.70 -4.56 -0.74 3.37 -66.60 1,309.80
JCT 3.60 3.15 -11.33 5.22 0.51 215.32 Alok Industries 2.81 -1.40 -3.44 9.80 -65.53 387.03
Assam Company India 4.64 -5.69 -11.28 3.49 20.20 143.75 GTL Infrastructure 6.56 -6.15 -9.27 10.27 -65.20 2,724.23

The stocks have been selected using the following filters: Price less than `10, one-month average volume greater than or equal to 1 lakh and
market-capitalisation greater than or equal to `10 crore. Data as on 13 Sep 2017. Source: ETIG Database and Bloomberg
Pick of the Week The Economic Times Wealth, September 18-24, 2017
27

Power Fin Corp: Sectoral woes abate

The company will be a major beneficiary of the turnaround in the power sector.

P
ower Finance Corporation (PFC), a Navratna alysts’ consensus estimate, PFC’s net profit should climb Fundamentals
company, reported 17% year-on-year (y-o-y) net back to `6,572 crore in 2017-18—it was `6,113 crore in 2015-16.
Actual Consensus estimate
profit fall in the first quarter of 2017-18. However, Though the central government’s Uday scheme is playing
analysts are happy with the company’s results as a positive role in transforming the financials of state elec- 2015-16 2016-17 2017-18 2018-19
they were better than expected. Improved mar- tricity boards by reducing their borrowing costs and there- Revenue (` cr) 11,343.65 10,721.18 11,374.09 12,317.55
Operating profit (` cr) 9,408.11 5,102.24 10,170.34 11,203.03
gins and lower provisioning helped PFC surpass market ex- by improving the power sector prospects, it is adversely im-
Net profit (` cr) 6,113.48 2,126.39 6,572.19 7,087.88
pectations. After falling to abysmal levels of 2.57% in the pacting PFC’s margin. Due to Uday and intensified competi- EPS (`) 23.16 8.05 23.60 27.02
fourth quarter of 2016-17, net interest tion—general fall in interest rates—
margin (NIM) returned to its normal PFC was forced to reduce its rates for Dividend
Valuation
level of 4.44% in the first quarter. Analysts’ views almost 60% of its loan book. With the
Power Finance Corporation
PBV
0.94
PE
18.78
yield (%)
3.88
The recovery in the power sector rates settling now, analysts don’t
PNB Housing Finance 4.89 44.52 0.36
and the resultant robust business think PFC will be forced to reduce Indiabulls Housing Finance 4.44 17.55 2.12
growth during the first quarter was 6 10 them further. LIC Housing Finance 2.99 16.71 0.94
another reason for PFC’s improved The downside for the counter from Shriram Transport Finance Company 2.16 23.75 0.38
Sell Buy
performance. The company’s loan the current level is limited because Rural Electrification Corporation 0.99 5.44 4.09
sanctions rose 47%, taking its out- the stock now trades at a price-to-
standing sanctions to `1.84 lakh book ratio of 0.94. Significant under Latest brokerage calls
crore. Disbursements grew 66% and performance in the past four
Reco date Research house Advice Target price (`)
net loan assets increased 10% to `2.47 months—the counter fell 21% com- 6 Sep ’17 HSBC hold 150
lakh crore. Since the outstanding pared to the 7% rise in the Sensex—is 1 Sep ’17 Axis Capital buy 150
loan sanctions now are placed at 3 another reason for limited downside. 17 Aug ’17 Quantum Securities buy 158
0.74-times its loan book, there is clear Hold 11 Aug ’17 Edelweiss Capital buy 173
growth visibility for the next few Selection Methodology: We pick the 11 Aug ’17 Daiwa Securities buy 155

years. stock that has shown the maximum

The massive 65% net profit fall in Better-than-expected results, growth increase in ‘consensus analyst rating’ Relative performance
2016-17 was triggered by the Reserve visibility, stabilising interest rate environ- in the past one month. Consensus rat- Market price: `131
Bank of India’s stricter provisioning ment and a sharp fall in the counter in recent ing is arrived at by averaging all ana- 113.64
norms, that led to additional provi- months have made it analysts’ top pick. lyst recommendations after attribut-
sioning by PFC in the fourth quarter ing weights to each of them (5 for
of 2016-17. The reversal of the provi- strong buy, 4 for buy, 3 for hold, 2 for 100
sions, especially on account of the NPAs from government sell and 1 for strong sell) and any improvement in consensus
sector, has already started. For instance, an outstanding analyst rating indicates that the analysts are getting more
loan of `11,000 crore from MP Genco was upgraded on 15 bullish on the stock. To make sure that we pick only compa-
July (this will reflect in the second quarter numbers). Ana- nies with decent analyst coverage, this search is restricted
lysts expect NPAs worth `7,000 crore will be upgraded in to stocks that are covered by at least 10 analysts. You can see
109.25
the third quarter. This means normalcy is expected to re- similar consensus analyst rating changes during the past 14 Sep 2016 Sensex PFC 14 Sep 2017
turn in 2017-18, after the deep cut in 2016-17. According to an- week in the ETW 50 table. —Narendra Nathan
Performance of PFC compared with the Sensex. Figures
are normalised to a base of 100. Source: ETIG Database & Bloomberg

BUY
What experts advise
Stock Research house Advice Market 1-year target
price* (`) price (`) Comment

Initiate 'buy'. With Shankara Building Products' focus on expanding

Shankara Building Products ICICI Direct Buy 1,436 1,725 business in the asset-light retail store business, it is in a sweet spot
to capture the growing organised home improvement market.

Initiate 'buy'. Seeds that were sown 6-7 years ago are now yielding
Dishman Carbogen Amcis HDFC Sec Buy 293 405 results and with strong visibility on commercial launches and future
orders, Dishman will sustainable growth in 2017-18.

Initiate 'buy. The domestic defence sector is at an inflexion point with

Bharat Electronics JM Financial Buy 190 220 investment by foreign majors. Among listed firms, Bharat Electronics
is likely to be the biggest beneficiary of these investments.

Initiate 'buy. Torrent Pharma’s domestic formulation business will

Torrent Pharma Reliance Sec Buy 1,218 1,450 improve owing to increased focus on brand building, improvement in
field force productivity and higher focus on specialty business.

Initiate 'buy'. Tata Comm's shift towards infrastructure-bundled

Tata Communications BOB Caps Buy 705 740 telecom services is expanding its market, and should drive stronger
ROCE and EBITDA between 2016-17 and 2019-20.

SELL *Market price as on 14 September

Stock Research house Advice 1-year target

price (`) Comment

Initiate 'sell'. Though its auto division will see strong growth, the
Amara Raja Batteries Anand Rathi Sell 785 683 telecom division would arrest industrial revenue growth and margin
expansion. Eearnings growth will be slower than revenue growth.
Downgrade to 'reduce'. Colgate is likely to disappoint on sales and
Colgate India IIFL Reduce 1,141 1,110 profit growth in the near and medium term. Penetration-led growth
has petered out and company does not have other levers to grow now.
28 The Economic Times Wealth, September 18-24, 2017 Your Queries

QUESTION OF THE WEEK

Q A
Q My 35-year-old son and 30-year-old daughter-in-law want to buy a
health insurance policy. They have a cover of `3 lakh each, provided

& by their employers. They want to buy insurance that provides coverage
against critical ailments. What kind of a policy should they buy?

Healthcare costs have risen significantly in the past decade and will
continue to increase. Therefore, employer-provided cover of `3 lakh will
not be sufficient. There is also the possibility of change in HR policies of the
employer or shift to another job, and the new employer may not have a
group mediclaim policy in place. So, it is best to buy individual health
covers. Considering the age of your son and daughter-in-law, they could buy
a family floater super top policy worth `5 lakh with a `3 lakh deductible.
The premium would be between `2,000 and `3,500. To safeguard against
critical ailments, it is advisable to have a separate family floater critical
illness policy. The premium for a `10-lakh critical illness cover would range
between `5,600 and `9,000. Some of the options they can look at are
Apollo Munich Optima Vital, Max Bupa Health Assurance Critical Illness
and Religare Health Insurance Assure.

YASHISH DAHIYA
Our panel of experts will answer questions CO-FOUNDER AND CEO,
POLICYBAZAAR.COM

related to any aspect of personal finance.

If you have a query, mail it to us right away.

Q I want to invest `15 lakh, for a five year period, towards my

daughter’s wedding and my retirement. I am 56 years old. Q I am 34 years old and have a 3-year-
old daughter. I want to invest a lump Q I am 23 and invest `2,500 each
in Reliance Tax Saver and Birla
Please suggest investment options. sum `1.5 lakh straightaway and `1.5 lakh SL Tax Relief via monthly SIPs. I
in the next financial year, for 15 years, to can invest `25,000 more per month
fund her education and wedding. Please for 5-10 years. Please suggest
You may invest in equity mutual funds through monthly SIPs, as you suggest where to invest this sum. schemes.
have a five year investment horizon. Three diversified equity
schemes should suffice. The monthly amount could be in the range
of `25,000 to `31,250, based on whether you want to invest the sum Considering your time frame, you can Considering your age and assuming
over 60 months or 48 months, respectively. In the fifth year, park the consider a 75:25 equity-debt portfolio. that you will need the money at the
sum in a liquid fund, in order to reduce the risk of any sudden loss. While you can invest a lump sum amount or end of 10 years, SIPs in equity mutual
You may either park the principal (`15 lakh) in liquid funds of three stagger your investment in debt, you must funds is the best option. Within
mutual funds and opt for systematic transfer into equity schemes of invest in equity funds via SIPs or systematic equity funds, focus on diversified
those funds or retain the money in your savings bank account to pay transfer plan. HDFC Balanced (40%), DSP equity funds in the large-, flexi- and
for the SIPs. However, please ensure that you have adequate liquidity BR Opportunities (20%), Franklin India mid-cap space. The `25,000 can be
to meet emergencies, before commencing the SIPs. Otherwise, you Prima (15%) and UTI Income Opportunities allocated as follows: `9,000 each in
may be compelled to redeem your fund units prematurely. (25%) are good schemes to invest in. large- and mid-caps and `7,000 in
flexi-caps. You may choose from
among the following: Birla Sun Life
JAYANT R. PAI Frontline Equity, HDFC Top 200 and
CFP AND HEAD OF C.R. CHANDRASEKAR ICICI Prudential Focused Bluechip
MARKETING, PPFAS CEO AND CO-FOUNDER, Equity for large-caps. Mirae Asset
MUTUAL FUND FUNDSINDIA.COM India Opportunities, SBI Magnum
Multicap and UTI Opportunities in
the flexi-cap space. Birla Sun Life
Pure Value, HDFC Midcap
Q I forgot to switch off the headlights of
my car which drained its battery. I had Q My mother received `30 lakh after my father passed away.
Of this, she wants to invest `24 lakh for 3-5 years. The goal Opportunities and Franklin India
a comprehensive car insurance plan but is capital appreciation. Please suggest funds to invest in. Smaller Companies Fund for mid-
was not reimbursed for the cost of a new caps. Please shift your investments
battery. How can I claim the expenses? from equity funds to fixed income
She may invest in a fund each from the large-cap, multi-cap and funds 1-2 years prior to exiting the
balanced fund categories through systematic transfer plan (STP). market. This will help avoid any
Your car insurance contract comes with She can consider from among SBI Bluechip, Reliance Top 200 and negative surprises arising from
certain exclusions for which you cannot make Birla Sun Life Frontline Equity for investments in the large-cap short-term volatility.
a claim. This includes cases of mechanical or category. Franklin India High Growth Companies, Kotak Select
electrical breakdown. Since the car battery Focus and ICICI Pru Value Discovery for multi-cap category. And
failure is due to a handling error and not due ICICI Pru Balanced, SBI Balanced and Birla Sun Life Balanced ’95
to any untoward incident, your insurer may for the balanced fund category. Under the STP route, her surplus RAHUL PARIKH
reject your claim. Please check the terms and will be invested in a lump sum in ultra-short term debt funds of CEO, BAJAJ
conditions of your policy for greater clarity. the respective fund houses. A pre-determined amount will be CAPITAL
transferred from the debt funds to the chosen equity funds.

Ask our experts

NAVEEN KUKREJA
RAKESH BHARGAVA CEO AND CO-FOUNDER, Have a question for the experts? Mail it to
DIRECTOR, TAXMANN PAISABAZAAR.COM etwealth@timesgroup.com with Query as subject.
Technology The Economic Times Wealth, September 18-24, 2017
29

SIX ANDROID ALTERNATIVES

TO APPLE iPHONE X
Apple’s latest flagship device, iPhone X, comes with a number of firsts in awe-inspring features
for an iPhone. However, Android fans need not despair. There are devices available on Android
too that boast of enviable features at a cheaper price, says Karan Bajaj.

2
SAMSUNG GALAXY S8
APPLE IPHONE X
`89,000
1 `57,900 HTC U11 `51,990
HTC’s flagship
The S8 is not the top-of-the-line device features the
SCREEN: 5.8-inch OLED offering from Samsung and yet highest rated rear
RESOLUTION: 2,436 x 1,125 it compares with the iPhone X. camera on a
pixels It has a gorgeous 5.7-inch super smartphone till
amoled Infinity display with date. You get a 12MP
PROCESSOR: 6-core curved screen and a resolution camera with f1.7
RAM: 3GB of 2,960 x 1,440 pixels. aperture, phase
Powered by an octa core detection autofocus
STORAGE: 64/256GB
processor, the S8 has 4GB RAM, and optical image
REAR CAMERA: dual 12MP 64GB storage and a 3,000mAh stabilisation. On the
with OIS on both lenses battery. On the rear, it has a front is a 16MP
12MP camera with f1.7 aperture camera with f2.0
FRONT CAMERA: 7MP
and optical image stabilisation. The front has a 8MP autofocus aperture. The U11 has a 5.5-inch
CONNECTIVITY: 4G, VoLTE, camera with f1.7 aperture for low light. The phone is water SuperLCD5 screen with a resolution of
WiFi ac, Bluetooth 5.0, NFC and dust proof, has Iris scanner, dual SIM slot, expandable 2,560 x 1,440 pixels and is IP67 certified
storage, 4G with VoLTE, dual band WiFi ac, Bluetooth 5.0 and for dust and water resistance. Inside is
OTHER FEATURES:
wireless charging support. the top-of-the-line Snapdragon 835
Wireless charging, dust &
processor, 6GB RAM, 128GB storage
water resistant, single SIM,
and a 3,000mAh battery. The phone
Face ID unlock also features expandable storage, dual
speakers, 4G with VoLTE, dual band

3 ONEPLUS 5 `32,999 WiFi ac, Bluetooth 4.2, NFC and runs

Android 7.1.
There is no phone we have seen
so far that can beat the OnePlus 5
in terms of sheer power and
performance. Powered by a
Qualcomm Snapdragon 835

5 processor, the OnePlus 5 comes in

two variants—6GB RAM with 64GB
storage or 8GB RAM with 128GB
4
storage along with a 3,300mAh
LG G6 `37,990 battery. It has a 16MP + 20MP rear HONOR 8 PRO
LG G6 gets the credit
camera setup (no OIS) along with a
16MP front camera with f2.0
`29,999
for bringing the non- aperture for superior low-light This is one of our
curved 18:9 aspect ratio performance. The dual SIM phone has a 5.5-inch favorites in the sub
display which has Amoled screen with a resolution of 1,920 x 1,080 pixels `30,000 price segment.
become a trend. The G6 and runs Android 7.1. Other features include fingerprint The Honor 8 Pro comes
features a HDR 10 scanner, dual band WiFi ac, Bluetooth 5.0, NFC and GPS. with a 5.7-inch IPS
compliant 5.7-inch IPS
display with a
resolution of 2,880 x
6 display with a
resolution of 2,560 x
1,440 pixels and runs
1,440 pixels plus it is Honor’s custom user
water and dust proof. It
runs Android 7.1 on a MI MIX 2 `35,000 EXPECTED interface based on
Android 7.0. It has one
Snapdragon 821 Unlike the Mi Mix, Xiaomi will launch the Mi Mix 2 in India. of the best dual camera
processor, 4GB RAM, The Mi Mix 2 has an edge to edge 5.99-inch IPS display with a system (dual 12MP with phase and laser
64GB storage and a 3,300mAh battery. resolution of 2,160 x 1,080 pixels and a ceramic body. autofocus) and also an excellent 8MP
You get a dual 13MP camera with optical Powered by Qualcomm Snapdragon 835 processor, the Mix front camera. Inside is an octa core
image stabilisation on the rear while the 2 has 6 RAM and 64/128/256GB storage variants along with a HiSilicon Kirin 960 processor, 6GB RAM,
front has a 5MP selfie shooter. Other 3,400mAh battery. It comes with a 12MP rear camera with 128GB storage and a 4,000mAh battery.
features include fingerprint scanner, 4-axis optical image stabilisation and a 5MP front camera. Other features include expandable
wireless charging support, dual SIM slot, Other features include dual SIM slot, fingerprint scanner, storage, dual SIM slot, fingerprint
expandable storage, 4G with VoLTE, dual dual band WiFi ac, Bluetooth 5.0 and NFC connectivity. The scanner, IR blaster, 4G, VoLTE, WiFi and
band WiFi ac, Bluetooth 4.2, NFC & GPS. phone runs the latest MiUi UI based on Android 7.1. Bluetooth connectivity.
30 The Economic Times Wealth, September 18-24, 2017 Taxation

TAX OPTIMIZER

Opt for NPS to cut tax

Sudhir Kaushik of Taxspanner.com
advises readers on how to restructure
their income, investments and
expenses to optimise their tax.
INCOME
FROM EMPLOYER

M
rinmoy Saha pays a high tax be-
cause he has not availed of all the
INCOME HEAD CURRENT SUGGESTED ACTIONS TO TAKE tax-saving avenues open to him.
Taxspanner estimates that Saha can
Basic salary 5,31,744 5,31,744 cut his tax by almost `40,000 if he
Reduce this
House rent allowance 2,12,700 2,12,700 taxable portion
takes the NPS benefit offered by his company, in-
of the pay vests in the scheme on his own and opts for tax-ef-
Special allowance 7,56,000 7,02,826 package. ficient debt funds instead of fixed deposits.
Transport allowance 19,200 19,200 Saha’s company offers him the the option to put
10% of his basic pay in the NPS under Sec
Medical allowance 15,000 15,000 80CCD(2d). This will cut his tax by roughly
Conveyance reimbursement 72,000 72,000 `16,430. However, this will bring down his take-
home salary by `3,000. Another `15,450 can be
Newspaper and magazines 12,000 12,000 saved if Saha invests `50,000 in the NPS under Sec
Leave travel assistance 52,000 52,000 80CCD(1b) on his own.
He is only 34, so Saha should opt for an aggres-
Employer's contribution to 63,810 63,810 sive asset allocation with the maximum 50% in eq-
Provident Fund uity funds. But NPS investments get locked up for
Performance bonus 56,000 56,000 Up to 10% of the long term and are available only at the time of
basic salary put retirement. Also, up to 40% of the corpus has to be
Contribution to NPS under Sec in NPS is tax
0 53,174 invested in an annuity to earn a monthly pension.
80CCD(2d) deductible.
Saha does not have a health insurance plan of
TOTAL 17,90,454 17,90,454 his own. He should buy a medical insurance plan
of about `5 lakh for his family. If the premium is
`15,000, his tax will come down by around
INCOME FROM OTHER SOURCES Shift FDs to tax `4,500. Another `3,000 will be saved if he invests
efficient debt in debt funds instead of fixed deposits.
Interest income 9,200 Nil funds.

Capital gains Nil Nil

Rental income NIl Nil SAHA’S TAX
All figures are in `
TOTAL 9,200 Nil
TAX ON TAX ON
TAX ON
OTHER CAPITAL
SALARY
INCOME GAINS

TAX-SAVING INVESTMENTS
CURRENT (`) SUGGESTED (`)
CURRENT
Provident Fund contribution 63,810 63,810 `1,78,430 2,843 Nil
Insurance policies 25,000 25,000 Invest in this
`1,81,273
PPF 1,00,000 1,00,000 new tax saving
option.
NPS under Sec 80CCD(1b) Nil 50,000
SUGGESTED
`1,41,914 Nil Nil
TOTAL ADMISSIBLE 1,50,000 2,00,000
WRITE TO `1,41,914
US FOR
HELP
OTHER DEDUCTIONS Paying too much TOTAL TAX SAVED

House rent
CURRENT (`)
2,04,000
SUGGESTED (`)
2,04,000
Buy health
insurance for
tax? Write to us
at etwealth@
timesgroup.com with
`39,359
‘Optimise my tax’ as PER YEAR
your family.
Medical insurance under the subject. Our experts
Nil 15,000
Sec 80D will tell you how to TAX RATIO
reduce your tax by (Total tax as % of annual income)
TOTAL ADMISSIBLE 2,04,000 2,19,000 rejigging your pay and CURRENT SUGGESTED
investments.
Denotes suggestion to increase Denotes suggestion to reduce 10.1% 7.9%
Your Feedback The Economic Times Wealth, September 18-24, 2017
31

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

Reduce taxes always known right? overall tax burden has only Tech to the rescue
on gold to stop Alpesh, e-mail increased. The hidden agenda
of the Finance Ministry is to
The story, ‘Settle car insur-
ance claim in an hour’, was
smuggling Hold to winners as
long as you can
levy more taxes.
Naresh Juneja, e-mail
interesting. It proves if used
correctly, technology can
This refers to the cover story, ‘Will Apropos of the column, ‘How ease processes in every busi-
gold shine?’ Gold ETFs should be long is long-term investing?’ I No time to look ness.
scrapped, considering the poor re- think the one who chooses While the jobs listed in the Zahid Qureshi, e-mail
turns they have given. If the govern- the right stock is king. If you article, “Travel and make
ment is not going to reduce taxes on have a winner in hand, you money’, sounded great, one More on tax
gold, illegal gold smuggling and asso- can stay invested for even a needs time to sit and find This refers to the cover story,
ciated evils will flourish. Sincerely decade. If you hold shares of such opportunities and then ‘Don’t slip on tax’, dated 4
hope sense shall prevail among poli- companies like TVS Motors, go about bagging them. How- September. While the story
cy makers sooner rather than later. Eicher, TCC or Titan, hang on ever, for people like me who was very informative, the
Kanniahhari, e-mail to them for a long time. Never already have full-time jobs, writer missed taking into con-
ever invest in penny stocks. put back into the portfolio. commute for four to six hours sideration the tax rebate of
Buying gold as investment made However, there is one prob- Investments never end. All a day, where is the time to `2,500 available under Sec
sense in an era where the threat of lem with long-term holding. If you need is to pass them on search for such jobs? 87A for individuals whose
war or a similar national calamity we sell after five years and to the next generation with Guru Kalle, e-mail total income does not exceed
was real. Since we are better earn good returns, where the right mindset and educa- `3.5 lakh. This is applicable to
equipped to deal with any such should we reinvest the tion to take over. When I started out on my regular taxpayers below 60
emergencies now, gold has lost its money? Vijay Kant, e-mail career 30 years ago, hardly years as well as senior citi-
lure as an investment option. Prabu, e-mail any opportunities existed like zens above 60 years. Hence
Ajai Pillai, e-mail Just another tax slap the ones mentioned in the for people having net taxable
Long term is a lifetime. The In reference to the article, atory for working abroad. income, eligibility for filing
With sovereign gold bonds under- equity portfolio I built in my ‘After GST, govt must bring in Envy the people today who Form 15 G would be `3 lakh
performing and gold ETFs giving 30s is still going strong and DTC’, I think it would just be can choose to travel the world and Form 15 H would be `3.5
poor returns, buying physical gold growing even after my retire- another move by the govern- and earn at the same time. lakh. This is not applicable
seems to be the best option. But ment. It pays me enough divi- ment to fool the people. Kedar Bhatt, e-mail for very senior citizens.
that is something Indians have dends to live on as well as to Under this government, our Aloysius Xavier, e-mail

HIRING OUTLOOK IMPROVES

OVER PREVIOUS QUARTER
Indian employers expect hiring to remain positive in the Oct-Dec timeframe,
finds the Manpower Group Employment Outlook survey.

Of the 5,005 employers asked how they expected total The hiring outlook
employment in their current location to change in the has rebounded slightly
next three months compared to the current quarter from the prior quarter.
Once the data is adjusted
24% 4% 56% 16% to allow for seasonal
variation, employers
said they expect to see no are
plan to decrease change unsure report an outlook
increase workforce of +19%
workforce

Employers in all 7 industry

sectors expect to add to payrolls
THE TOP HIRING SECTORS ARE
21% of large-scale 10% of medium Small-scale Services Mining and
organisations scale employers organisations construction The strongest labour
(hiring 250+ (50-249 (10-49 market is anticipated by
Transportation employers in the North, who
employees) employees) are employees) and utility Whole sale
reported positive optimistic about expect a reported a net employment
and retail
hiring plans over hiring plans in the shrinking Public administra- outlook of +27%.
trade sectors
Oct-Dec. coming quarter. payroll tion and education Source: Manpower Group Employment Outlook survey.

The Economic Times Wealth, published by Bennett, Coleman & Co. Ltd. exercises due care and caution in collecting the data before publication. In spite
of this, if any omission, inaccuracy or printing errors occur with regard to the data contained in this newspaper, The Economic Times Wealth will not be
held responsible or liable. The content hereof does not constitute any form of advice, recommendation or arrangement by the newspaper. The Eco-
nomic Times Wealth will not be liable for any direct or indirect losses caused because of readers’ reliance on the same in making any specific or other
decisions. Readers are recommended to make appropriate enquiries and seek appropriate advice before making any specific or other decisions.
PUBLISHED FOR THE PROPRIETORS, Bennett, Coleman & Co. Ltd. by Rajeev Yadav at Times House, 7, Bahadur Shah Zafar Marg, New Delhi-110 002,
Phone: 011-23322000, Fax: 011-23323346 and printed by him at The Times of India Press, 13 & 15/1, Site IV, Industrial Area, Sahibabad, UP. Regd. Office: Dr
Dadabhai Naoroji Road, Mumbai 400 001. EDITOR: Babar Zaidi (Responsible for selection of news under PRB Act). © Reproduction in whole or in part
without written permission of the publisher is prohibited. All rights reserved.
RNI NO. DELENG/2011/37994. MADE IN NEW DELHI VOLUME 07 NO. 38
32 The Economic Times Wealth, September 18-24, 2017
Helping garment makers cut cost
This startup offers tech solutions to help garment manufacturers check fabric wastage.
VINAY DWIVEDI
aving been associated with the
H garments industry for 12 years,
Mausmi Ambastha had seen at
close quarters the amount of
fabric being wasted every day.
“I realised that there was a dire need for an
advanced and a practical software that
could optimise the usage of fabric,” says
Ambastha, a postgraduate in fashion tech-
nology and graduate in computer science.
The scope for boosting the fabrics industry
by cutting wastage and saving on labour and
time offered a promising business opportu-
nity. And Ambastha was quick to capitalise
on it. She teamed up with her husband Ma-
nasij Ganguli and his colleagues Abhishek
Srivastava and Bratish Goswami to found
Threadsol in March 2012. The startup pro-
vides enterprise material management tech-
nology to enable manufacturers buy just the
right amount of fabric and use that fabric
with minimum wastage. “Our product has
managed to cut down wastage to less than
1%. This translates into savings of up to
10%—millions of dollars for manufacturers,”
says 38-year-old Ambastha, Co-founder and
COO.
Initially, the uniqueness of Threadsol’s so-
lution, says Ambastha, also made it difficult
to pitch the solution to clients. It took some
time to explain the viability of their product
and how it could help companies save mon-
Bitcoins lose lustre in the face of flak
China has taken steps to curb bitcoin trading and the cryptocurrency has been facing criticism from various quarters.
ET WEALTH
itcoin prices in India have
B fallen 48% in September
and the cryptocurrency is
now trading at `2,29,417
per unit. The fall comes
amid crticism of the unregulated cur-
rency from various quarters. A major
Chinese bitcoin exchange, BTC China,
last week said it will stop all trading ac-
tivities by the end of this month as Chi-
nese regulators have directed the coun-
try’s cryptocurrency trading platforms
to close down by end-September. BTC
China will immediately stop accepting
new account registrations, said Bobby
Lee, CEO. China accounts for 23% of all
bitcoin trade and the move by the Chi-
nese regulators is being seen as the ma-
jor reason for the 27% fall in bitcoin’s
value in the past 10 days.
The Reserve Bank of India (RBI) has
also been cautioning people against bit-
coin trading though, unlike China, it
hasn’t asked trading platforms to close
operations. Speaking at the India Fin-
tech Day conference last week, Sudar-
shan Sen, Executive Director, Reserve
Threadsol co-founders (from left): Bratish Goswami, Abhishek Srivastava, Mausmi Ambastha and Manasij Ganguly.
ey and improve operational efficiency. “At
first, many apparel manufacturers were
skeptical about our product, but once we ex-
plained how it functioned, they were willing
to try us. We may have received a delayed re-
sponse, but we never faced rejections,” says
Ambastha.
Now the company, which operates out of
Bengaluru and Delhi, has a presence in 15
countries. It’s more than 85-strong client list
includes manufacturers of Zara, Adidas,
Nike, Levi’s, Victoria’s Secret, JC Penny and
Walmart products. Indian client list has Adi-
tya Birla Fashion and Retail (formerly Panta-
loons), Blackberry’s and Raymond, among
others. Despite this impressive list of custom-
ers, getting the garments industry adopt
technology is still a challenge for Threadsol.
“It’s the problem of being the first-mover.
Very few technologies exist in the garment
and apparel domain, so many big players are
still reluctant in adopting technology, de-
spite its compelling value proposition,” says
Ambastha.
The startup, which has drawn investments
of more than `20 crore from Blume Ventures
Bank of India, said: “As regards non-fi-
at cryptocurrencies, I think we are not
comfortable.” Non-fiat currency refers
to currency that is not regulated by a
central bank.
The RBI’s stance has been criticised
by the Indian bitcoin trading plat-
forms. They argue that the opposition
to the digital currency is largely due to
its novelty. “Any history textbook will
reveal how any disruptive and radical
transformations were written off, in
the beginning, only to become a part
of our lives eventually. The criticism of
Bitcoin is in line with the same inertia
that resists change,” said Hesham Re-
hman, Co-Founder and CEO, Bitxoxo.
Trading platforms have been
demanding that the government
come out with a clear policy on bit-
coin trading and their regulation.
“Government has set up a committee
to prepare a framework and guide-
lines on to how regulate bitcoins. Ex-
GETTY IMAGES
changes are waiting for the outcome
of this committee’s report,” said
Sandeep Goenka, Co- Founder and
COO, Zebpay.
Last Word
and Narayna Murthy’s Catamaran Ventures,
at one time struggled to stay afloat. “When
we started out, we worked hard, tried to ac-
quire customers and get investors, but
things weren’t working out for us,” says Am-
bastha. Each time the founders had to take
out their debit cards to finance the startup’s
operations, they felt a little bit more reluc-
tant to carry on. But they didn’t give up.
“With just 28 days of money (to run opera-
tions) left in our bank, we had to make a
tough choice. Keep going or close down. We
decided to give one last push. And then it all
just clicked. We went to the brink and came
back,” recalls Ambastha.
Threadsol, which offers its solutions both
as a one-time buy and on a monthly sub-
scription basis, generated a revenue of close
to `13 crore in 2016-17. Its staff strength
across the globe has swelled to 130, and the
startup has added several awards to its kitty:
Microsoft Bizspark 2012, Grace Hopper
Women Entrepreneur of the Year, 2013, Ven-
ture Engine 2014, Parivartan Award for sus-
tainability, among others.
“We are constantly innovating our current
products, updating and upgrading every
three months to offer better solutions. Our
approach makes us unique and has helped
us scale new heights,” says Ambastha.
Please send your feedback to
etwealth@timesgroup.com
Bitcoin trading has also faced serious
flak by investment advisers and financial
services executives. “It won’t end well.
Someone is going to get killed,” said
Jamie Dimon, CEO, JP Morgan. He also la-
belled the cryptocurrency a ‘fraud’ and
said he would fire any person in his com-
pany found trading in bitcoins. “It’s
against our rules and they (bitcoins) are
stupid,” he said.
Though the RBI has cautioned against
bitcoin trading, the central bank is open to
the idea of introducing its own digital cur-
rency. “Right now, we have a group of peo-
ple who are looking at fiat cryptocurren-
cies. Something that is an alternative to
the Indian rupee, so to speak. We are look-
ing at that closely,” said Sen.
But till such time as the government
comes out with a regulatory framework
cryptocurrency enthusiasts would do well
to heed the RBI’s advice: “Any user, hold-
er, investor or trader dealing with virtual
currencies is doing it at their own risk.”
Please send your feedback to
etwealth@timesgroup.com