INVESTORS UPDATE by Cj Singh

JULY AUGUST 2009

RNI No. CHAENG00938/27/1/2009 - TC

investors UPDATE

03 Home Loans Have the banks burnt their fingers?

05 Financial Crisis Is it over?

15 Indian Retail in the Post-Economic Meltdown Period

*Impact of 10

Recession on Indian Economy

Investor alert : Do you understand Risk Management? A brochure that helps you understand Risk Management system is available on the BSE website (www.bseidnia.com) For a printed copy of the b rochure, please write to your broker/ BSE at is@bseindia.com

Do’s and Don't’s

! Buy and sell securities only through SEBI registered intermediaries. ! Enter into an agreement with your broker setting out terms and conditions clearly. Ensure that you provide all details in the “Know Your Client” form ! Insist on a contract note issued by your broker and ensure that you receive the contract with 24 hours of the transaction. ! Ensure that you receive payment/deliveries from your broker within one working day of the payout date. ! Don’t delay payment/deliveries of securities to your broker. ! Insist on a periodical statement of accounts of funds and securities from your broker. ! Familiarise yourself with the rules, regulations and circulars issued by Stock Exchange/ SEBI before carrying out any transaction.

Bombay Stock Exchange Limited

Issued in the public interest

The edge is efficiency

Contents 02

SME Stock Exchange :

Have Banks Burnt Their Fingers on House Loans ?

Is Financial Crisis bottoming out leading to Economic Recovery in 2009-10?

Informed Investor is Protected Investor

SEBI Guidelines

Misconceptions of a Credit Cards :

Emergence of Energy Labelling in India - II :

Impact of Recession on Indian Economy

Indian Retail in the Post Economic Meltdown Period

Message

Editor Speaks

It gives me immense pleasure to know that Citizen Awareness Group has started a bi monthly magazine Investors Update for the investors of this region. I appreciate the endeavor of CAG to facilitate the emergence of vibrant and well educated investors. I hope that this magazine will further empower the investors of this entire region. The report of the association suggest that they have been doing a good job in past and I hope that they continue with that. I wish the organization my very best in its endeavor to create more and more educated investors. Sanjay Kumar, IAS Finance Secretary, Chandigarh Administration

We need your Inputs Letters, Ideas, Comments, Articles, feedback and contributions for publishing in the magazine, should be sent to: The Editor Investor’s Update #2812, Sector 38-C Chandigarh Mobile: 094170 08805 E-mail: citizenawarenessgroup@yahoo.com Website: www.cagchandigarh.org

Dear readers, I heartly thank Mr. Sanjay Kumar for his appreciation and support for the magazine. In this issue, after an overwhelming response to the energy labeling issue, we had shared other aspects on this topic with more details. With this I am extremely delighted on sharing the thoughts about the credit cards and the misconceptions regarding them and also about the SIP. The year 2009 has so far been an extremely difficult for the global economy, with investors, corporate and policymakers more or less struggling to find strong signs of recovery after an extraordinary year of financial disorders and sharp economic downturn. Effect of recession on Indian Economy and Indian Retail Market are major areas of concern now a days. The unstable share market and rising inflation left consumers confused about how to survive and not suffer losses is a real matter to discuss This time we had engaged pros and cons regarding personal finance. This issue is just one step forward in helping you to make the right investment and also updating you on the share market happenings. We shall appreciate your feedback and suggestions to help us in helping you. Any queries regarding share markets are also welcome. Surinder Verma

EDITORIAL TEAM “There are three classes of people who don't think markets work: the Cubans, the North Koreans and the active fund managers.” - Rex Sinquefield Dimensional Fund Managers

Editor : Mr. Surinder Verma

All editorial and advertising material should be forwarded to:

Co-Editors : Mrs. Sudesh Kumari Ms. Richa Priya

Surinder Verma, #2812, Sector 38-C, Chandigarh Mobile: 094170 08805 investorupdate2008@gmail.com

Processed and Printed at :

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SEBI Guidelines

SME Stock Exchange

EBI has issued a framework containing guidelines for setting up a stock exchange for small and medium (SME) sector. According to the guidelines, the SME exchange can be set up either by using the existing stock exchange platform or as a new stock exchange after getting registered under the Securities Contracts ( R e g u l a ti o n ) Ac t 1956 (SCRA). The proposed SME stock exchange will function as a corporatized entity. The decision to make it a corporatized entity is driven by the fact that corporatization enhances the flexibility and efficiency of capital markets thereby making them more responsive to market needs. The stock exchange will also need to function as a demutualized entity in compliance with the Securities Contracts (Regulation) (Manner of Increasing and Maintaining Public Shareholding in Recognized

Stock Exchanges) Regulations, 2006 within a specified period (1-2 years) from the date of commencement of trading. As a demutualized entity, it will no longer be restricted to working for the mutual benefit of the trading members alone but work to fulfill the larger objective of becoming a system with adequate checks for proper mobilization of capital and protecting the interests of investors and other stakeholders at large. In order to be recognized by the SEBI the exchange should have a balance sheet net worth of at least Rs.100 crore. The minimum trading lot will be Rs.1 lakh. Trading system may either be order driven or quote driven. The settlement may either be on rolling, trade for trade or call auction basis. Information about trades, quantities, and quotes should be disseminated by the exchange in real time to at least two information vending networks which are accessible

to investors in the country. Registration with the exchange and SEBI is imperative for all the trading members. SEBI has also made it mandatory for the exchange to have nationwide trading terminals, an online screen-based trading system and a disaster recovery site. To keep a check on market manipulation the exchange should have online surveillance capability. The exchange will also need to set up an investor grievances redressal mechanism operative in all the four regions of the country. Parties interested in setting up a dedicated stock exchange for the SME sector may apply to Market Regulation Department, SEBI, in the manner prescribed under the Securities Contracts (Regulation) Rules, 1957. Existing exchanges intending to set up a platform for the SME sector may submit a detailed application demonstrating their compliance with the eligibility criteria.

What is IPO ? An IPO or Initial Public Offering is referred to the issue of shares to the public by the promoters of a company for the first time. The shares are made available to the investors at the face value of the share or with a premium as per the perceived market value of the share by the promoters. The IPO can be in the form of a fixed price portion or in the form of Book Building portion. How to Apply: You need to obtain an IPO Application Form through a Share Broker or your Investment Consultant or they are available at the collecting banks. Then fill up the form, remit the amount after calculating the number of shares applied for in the bank that is designated as collecting center for that particular Initial Public Offer. If you have a demat account, then you can apply for the shares directly through your demat account or there is an option of physical delivery of share certificates. Some IPOs offer only Demat form of shares and many other IPOs offer both Demat as well as regular Shares. Care should be taken to provide all the details specified in the application form, because the application form has the chance of gettting rejected due to not providing of the complete details.

Be Visible Be Wise The magazine is the right media to reach out to the investor community at a most cost effective manner. As a regular advertiser you can avail of a special discounted rates too.

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Have Banks Burnt Their Fingers on House Loans ? Sh.Prem Parkash Pahwa

he banks, private banks in particular, for the purpose of dispensation of credit, have found the safest and secured area in the field of house financing. Perhaps the private sector banks have considered that housing sector is the safest and secured area of financing because there can be no bad debts and there can be no recovery problem and this sort of financing can never go bad, whereas in other areas of financing such as industry, agriculture, trade etc. there are high risks of bad debts and there are recovery problems too. That is why, they have financed to the tune of crores of rupees for construction activities in unauthorised areas and illegal colonies, which are always under the risk of demolition, today or tomorrow or day after. The public sector banks have also followed the suit. In fact, the private sector banks have appointed various agents and agencies for the purpose of processing the housing loan proposals on fixed remuneration or commission or contract basis, per housing loan case. Such agents or agencies are not at all serious in careful and thorough scrutiny of the proposals, rather they take it as a formality, upon completion of which they would get their commission and their job is over. Just for their small amounts of commission, they have prompted the banks to finance for housing in areas o u t s i d e t h e c i t y, i n unauthorised areas and illegal colonies set up by certain colonisers. Once the funding is done and the amount of commission goes into the pockets of the agents, the rest is between the bank and the borrower. This resulted into

various frauds in the banks in the home financing field, because the fraudsters come out with banish thoughts and doing vanishing tricks to avail of the lavishing funds from these banks under their liberalised (so called, safe and secured) housing loan scheme. This is because the Banks have to depend and rely upon whatever the documents are produced before them by the prospective borrowers without verifying their genuineness because the State machinery is not at all cooperative in furnishing the confirmation to the banks regarding the genuineness of particular documents. The financing banks must consider not going in for financing the home loans in unauthorised and illegal colonies, allegedly set up by PUDA, HUDA or any other State authorities. The banks can further consider to take the following steps to ensure that their financing in the home loans is based on sound principles and the real objective of financing under this scheme is achieved :An equitable mortgage is created when a borrower deposits title deed of a property with a Bank as security for the loan taken. As the situation stands now, the borrower could sell the property or take loan from other banks using duplicate or fake title deeds, notwithstanding the fact that charge on the property is with another bank. Therefore, the equitable mortgage of the property must be created at the State Registrar's office by deposit of title deeds so that the Bank can run an online check to know whether another bank has a lien on a prospective borrower's property. Once the lien noting

is done by the Registrar's office, all the Bank would be able to check online the status of the property, whether it is e n c u m b e r e d o r unencumbered. ! To prevent title documents from being forged and curb multiple financing, the committee called for tracking and sharing of all information among banks and housing finance companies about names of blacklisted builders and developers. Therefore, the banks should have sale agreements/ documents in dematerialised form to prevent forgery of title documents and multiple financing ! The banks disburse loans by way of cheques or demand drafts, which can easily be encashed by third party or agents etc. Therefore, the banks must ensure that the cheques are issued in the name of the Seller or Agency or the authority with account number duly written on it. The Bank's marketing officials should be sent for delivery of such cheques to the Agency or the authority or the seller concerned. ! There is invariably an overvaluation of the property. It is suggested that in respect of the properties valuing Rs.20 lakh and above, the valuation should be done by two independent valuers. ! There is always collusion between the prospective customers and builders for the reason that the builders are the highly interested parties. Therefore, it is suggested that the receipts issued by the office of the Registrar must bear hypothecation clause as is

being done in the case of certificate of registration of auto loans. ! There is always collusion between the prospective customers and builders for the reason that the builders are the highly interested parties. Therefore, it is suggested that the receipts issued by the office of the Registrar must bear hypothecation clause as is being done in the case of certificate of registration of auto loans. What is stressed here is that the Banks have not only burnt their fingers but also their hands, rather arms too, not only in the matter of financing house loans in and around Chandigarh but also in other major cities of Punjab like Ludhiana, J a l a n d h a r, A m r i t s a r, Patiala, Bathinda, Ferozepur etc. The fraud minded talented brains have made hey from the liberal housing loan schemes of the Banks, with particular reference to private sector banks, who consider the financing to housing loans as the most easy and secured area of financing. The modus operandi adopted by cheaters in most of the cases is as under :PRODUCTION OF FAKE INCOME DOCUMENTS LIKE INCOME-TAX RETURNS, SALARY SLIPS, BALANCE SHEETS ETC. In quite a good number of cases of housing loans, fake income documents like income-tax returns, salary slips, balance sheets etc. are on record. Such documents are blindly relied upon by the banks and no attempt whatsoever is made to verify

INVESTORS UPDATE | JULY AUGUST 2009 | 3

the genuineness or correctness of these documents, perhaps for the reason that the Government authorities do not cooperate with the Banks to enable them to verify the genuineness or correctness of such documents. Whatever documents in this regard are submitted to the Banks, the same are taken as accepted on its face value. The reality comes to light only when the recovery is not forthcoming and the Bank initiates recovery proceedings or initiates process of taking over of the property under the Securitisation Act. In such circumstances, when the Banks initiates criminal proceedings, their FIRs are not lodged by the authorities concerned for obvious reasons and they themselves fall within the net. Fake and forged title deeds

substantial fee, but who actually bothers to visit the Sub Registrar's office and to actually verify the genuineness of the legal documents furnished to him for the purpose. Multiple Financing Several instances of multiple financing have come to light, when followed up in the event of there being no repayment of loan installments and willful default on the part of the borrowers. The cunning persons have well recognised the fact that sale of property can take place via duplicate or fake title deeds even though the title deed is with the Bank. In fact, an equitable mortgage is created when a borrower deposits title deed of a property with the Bank as security for the loan taken. As the situation stands now, the borrower could sell the property or take loan from other Banks using duplicate or fake title deeds, notwithstanding the fact that charge on the property is with another bank.

In substantial number of cases the title deeds on the record of the Banks as security of their loans are fake and forged. Fabricating a title deed on stamp papers worth Rs.15,000/- to Rs.20,000/- for raising loan to the tune of Rs. 8 to 10 lakh is not at all an expensive exercise for the borrowers. Here again, the Banks never bothered to verify the genuineness of the title deeds from the office of the Sub-Registrar of the area concerned where the title deed is registered. Even if the Banks want to verify the genuineness of the title deeds, the officials of the office of the Sub-Registrar would never cooperate. Even when the frauds committed on the basis of such fake and forged title deeds come to light, the references made to the SubRegistrar of the area concerned went unresponded. Such references made to the Sub-Registrar are invariably filed.

Loan amounts disbursed by way of cheques or demand drafts got encashed by third party or the agents.

No doubt, reports regarding the genuineness of legal documents are obtained from the Advocates, who, obviously furnish the reports on the specified format in a routine and mechanical manner, of course, after charging

The loans are invariably disbursed by the financing banks by means of cheques or pay orders or demand drafts. Such instruments are got encashed by the third parties or the agents, thereby leaving no evidence as to by whom and

Sale of property by loanees without clearing existing bank loans. There are several instances where the borrowers, after taking loans from Banks, have sold away the properties without clearing the existing bank loans, without the knowledge of the Banks concerned. The Banks come to know about the fact when the property stands already sold or alienated and the whereabouts of the original loanees are not known and they are not traceable. In certain cases the purchasers of such properties have also raised loans from certain other banks again by following the same modus operandi.

4 | JULY AUGUST 2009 | INVESTORS UPDATE

where the proceeds of such instruments have gone. Vervaluation of Property In order to avail of the maximum amount of loan from the Banks the valuation of the property against which the loan is sought to be raised is highly exaggerated by the valuers, though approved, who are in no way answerable to any authority and whose valuation is always considered as supreme and final. While furnishing the valuation reports, no details or reasoning is furnished by the valuers. The valuers invariably furnish the valuation reports as per the wish of the prospective borrowers, which are always far from reality. In respect of financing for flats,there is cancellation of booking in collusion between the borrower and the builder. In respect of the financing done by the Banks for the purchase of flats, the borrowers after availing of the loan from the Banks, get the booking cancelled, which is done in collusion with the borrower and the builder. When the flat in respect of booking stands cancelled, goes to another person, he makes arrangements for raising loan from some other Banks, leaving the previous financing bank in lurking situation.

without clearing the bank loans raised for the purpose of construction, thus leaving the Banks in complete darkness. These are only a few modus operandi points which have put question marks on the house financing by Banks, with particular reference to the private sector banks, who consider the financing under this sector safe and sound and acclaim that they disburse housing loans within 48 or 72 hours. It is high time that the Banks should stop acclaiming that they sanction and disburse the housing loans within 48 or 72 hours, blindly relying upon the documents furnished by the borrowers, and without conducting any verification about their genuineness and correctness. While some of the Banks have felt the pain of this burning, the others are yet to feel the same. The author is a banker, working in UCO Bank at Chandigarh. The views expressed herein are out of his experiences and study of Home Loan Sector Advances.

Quotes for Fun

Is representation of end use of loans After the financing is done and loan is disbursed, the financing Banks go in a sleeping mood. They then await the repayment of loan installments after the gestation period. There are no reports on the record regarding the enduse of loans. In many cases the loans availed of for housing finance, are diverted to other channels without the knowledge of the financing banks. Ale of property by builders without clearing the bank loan raised for construction. There are several cases in which even the builders have sold away the properties

Every once in a while, the market does something so stupid it takes your breath away. - Jim Cramer If you don't follow the stock market, you are missing some amazing drama. - Mark Cuban The market does not beat them. They beat themselves, because though they have brains they cannot sit tight. Jesse Livermore In this business if you're good, you're right six times out of ten. You're never going to be right nine times out of ten. - Peter Lynch Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception. - George Soros

Pankhuri Kapoor

Is Financial Crisis bottoming out leading to Economic Recovery in 2009-10? Harjit Singh Sidhu, Executive Director, Delhi Stock Exchange

he biggest question before everybody today is whether the wretched economy has bottomed out? The recession is already in sixteenth month, job cuts still taking place, stock markets struggling, real state painfully down, whether the woos of the last sixteen months are over? The year 2009 has so far been an extremely difficult for the global economy, with investors, corporate and policymakers more or less struggling to find strong signs of recovery after an extraordinary year of financial disorders and sharp economic downturn. With aggressive fiscal and monetary policies as well as combined global efforts to streamline the economy, the policy makers have projected that global economy is poised to experience a gradual recovery in 2009-10. However, the future outlook is still uncertain, and the timing and pace of the recovery depend critically on strong factors and policy actions. Amidst of crumbling stock markets, mounting bad debt and rising unemployment, and future is still uncertain. The policymakers are working hard to devise strategies to restore stability for laying the groundwork for new growth. Every country in the world is in the midst of crisis with huge debts and in grip of depression. Whether in banking, housing, retail, or commercial real estate, all parts of the economy have been hit hard. There is no doubt that this world economic situation is both historic and extraordinary. There is no question for the policymakers world over that this situation is testing a number of permutations and combinations of economic principles. Surely, the ongoing recession has reached downwards as one of the worst recession since the Great Depression. Unemployment, auto sales, industrial production, exports, consumer spending, and confidence measures, all have reached to record lows not seen in several decades. Now even if a

recovery arrives by end-2009 or in 2010, it could take years to repair damages to the financial system and deriving safeguards to prevent another meltdown. But as historic this recession turn out to be, the government's response has also been exceptional. To combat the downturn, many governments announced fiscal packages to boost their economies. One of the major forces pushing the economy back on a growth track is a historic series of moves by the Federal Reserve to pump trillions of dollars into the financial system. Another is the huge package of tax cuts and government spending nearly approaching to a figure of $1 trillion by the US elect Obama's administration. In this way, policymakers are doing aggressive efforts to break the logjam that exists in financial markets. The Federal Reserve has also let interest rates fall to near zero and announced a variety of measures to flood the economy with cash, while President Barack Obama signed a $787 billion stimulus package to revive the economy. As per Federal Reserve chairman Ben Bernanke, "If actions taken by the administration, the Congress, and the Federal Reserve are successful in restoring some measure of financial stability -and only if that is the case, in my view -- there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery,". These actions of policymakers are a vital part of the international economic recovery program. A fastest Government response around the world is one of the mega drivers responsible for r e c o v e r y. A m o n g o t h e r s , consumers spending activity, aided by the fiscal stimulus, is now boosting industrial production which may act as an ultimate aid to recovery. Smart money is coming back to the market with stock exchanges at

historic low P/E ratios. Strong demand from emerging nations like China and India will also be a factor in reviving the global economy. Chinese Premier Wen Jiabao in his recent interview at Xenhuanet admitted that financial crisis has not yet bottomed out and its impact is still spreading. He also promised that China is ready to take firmer and stronger actions whenever necessary. He also admitted that some of the key indicators showed the economic situation has somewhat turned better. He was of the view that private capital, businesses should be boosted to cope up with financial crisis. On domestic front, the world economic crisis jolted the Indian economy by damaging both its immediate and longer term prospects. On the GDP front, the g o v e r n m e n t o ff i c i a l s a r e expecting GDP growth of about 7 per cent in FY09, given the healthy economic performance in the first half. The International Monetary Fund (IMF) is expecting the Indian economy to grow at just 5.1 per cent in 2009, which is far lower than 9-10 per cent growth seen in FY08. Among other factors that indicate a rebound of economy include rebound in credit, stability in domestic housing market, persistent rise in industrial output, better employment outlook and improvement in consumer and business confidence. The stimulus packages along with interest rate cuts announced by the Government and monetary measures of the RBI such as cut in the cash reserve ratio, repo and reverse repo rates and statutory liquidity requirement towards improving liquidity and lowering interest rates, should help corporate to raise funds and save on interest costs. The full impact of these moves can be seen, only if consumers start spending, leading to improved demand, which is a prerequisite for companies to make new investments. These fiscal and

monetary measures taken by the Government and the Reserve Bank of India seem to be showing results. But there is still a long path to go. Increasing demand domestically can also be a major driver for recovery as we have no control on the demand in other countries as most of these countries are facing a far worse situation than our country. Indian exports have been suffering for this reason only as the US, UK the European countries and Japan, which account for more than half of India's exports, are already in the grip of a recession. Therefore until these economies show a turnaround we have to wait longer than expected for the export sector to recover. As a result Indian Government is also focussing on stimulating the domestic demand by ensuring smooth flow of credit in trade, industry, infrastructure and Real Estate. Finally, on assembling all the major determinants talked above, the key variables in determining the timing and the rate of the recovery can be gauged on the basis of the effectiveness of economic policies and packages in establishing trust in the economy, the global political and security climates, trade & industry output, stock prices, the oil & commodities prices, the currency exchange rate, the interest rate and the inflation rate etc. But in current circumstances, giving the exceptional nature of the present economic crisis, problem cannot be resolved with the standard set of tools at the disposal of the Governments only. What's required is a sustainable, renewable approach, which can proactively deal with this new pattern of economic crisis. Most of the economists and market experts feel that bottom is not yet over and it might take one or two quarters more, and when the recovery starts, it would rebound at much faster speed. So be prepared. Let's hope for the best.

INVESTORS UPDATE | JULY AUGUST 2009 | 5

Informed Investor is

Protected Investor - Poonam Sachdeva

It is indeed a strange situation that investors find themselves in the present scenario of competition, insecurity and emerging financial crises. They are not confident in their decisions and objectives and sometimes do not have adequate knowledge of precautions before entering into a deal with market intermediaries for their investment plans

Understanding the need, Securities and Exchange Board of India (SEBI) has mandated to protect the interests of investors in securities SEBI strongly believes that investors are the backbone of the securities market. They not only determine the level of activity in the securities market but also the level of activity in the economy.

The key to successful investing is not blindly participating in every trend. On the contrary, it's about adhering to one's risk profile, having in place well-defined investment objectives and investment plans to achieve those objectives. There is a need for investors to appreciate the importance of pursuing their investment goals with single-minded dedication and blocking all the noise.

In this backdrop, SEBI launched a comprehensive education campaign aimed at creating awareness among investors about securities market, which has been christened “Securities Market Awareness Campaign” (SMAC). The motto of the campaign is 'An Educated Investor is a Protected Investor.' The campaign was launched at the national level by the then Prime Minister, Shri Atal Bihari Vajpayee, on

January 17, 2003. The structural foundation of the campaign is based on workshops that are being conducted all across the country with the continued and active participation of market participants, market intermediaries, Investors Associations etc., to spread SEBI's message of “Invest with knowledge”. SEBI started special Financial Literacy Programme for school children and teachers which will be added in the curriculum as an addition selective subject for the students of 9th standard onwards. The project aimed at reaching out to the common investor and educating the masses about the investors do's and don'ts. The programme is divided in two modules: teachers training programme and basic knowledge for students. SEBI has taken several initiatives to reach out to the

investors through NGOs and even directly including advertisements, investor's website, AIR, Campaign on TV etc and the workshops aiming at reaching out to the common investors are being held primarily in small and medium towns and cities all over the country. In addition, reference guides on topics concerning investors have also been prepared for investor's education and protection. SEBI has also prepared simple “dos and don'ts” for investors relating to various aspects of the securities market. While these simple messages have been put on the investor website and have been printed in the form of leaflets to be distributed across the country, it was felt that these messages could be spread across the investor base by way of advertisements in newspapers, especially in the regional newspapers.

FOR FINANCIAL LITERACY AND INVESTMENT PROBLEMS WITH REGARD TO PUBLIC ISSUES (INITIAL PUBLIC OFFERING) CAPITAL MARKET (EQUITY) MUTUAL FUNDS INSURANCE POLICIES BANKING SCHEMES DEPOSITORY ACCOUNTS AND ANY OTHER MAJOR /MINOR DIFFICULTIES FACED BY THE INVESTORS. Contact your sincere and friendly financial partner.

CITIZENS AWARENESS GROUP Investors Association recognized by Securities Exchange Board of India Room No: 3 (Basement), Karuna Sadan Chandigarh-160011

6 | AUGUST 2008 2009 | CAG| INVESTORS’ UPDATE JULY AUGUST INVESTORS UPDATE

Misconceptions of a

Credit Card Pankhuri Kapoor

y tradition, Indians have been moderately reluctant to buying on credit. Don't gaze too far; just inquire from your dad if he bought as much on credit, as you possibly are now, thanks to your credit card. Your dad probably on no accounts possessed a credit card and if he did, he favoured to utilize it only in a crisis situation. However that was in times of yore; among the countless customs and trends that have undergone a modification over the last few years in the country, credit card usage in all probabilities has exceedingly elevated. Technically talking, a credit card is an unsecured loan. This means that unlike a secured loan, which is advanced by a bank/financial institution against a security like property for instance, a credit card is offered without any security. Not surprisingly, many of the negatives that get written about credit cards are related to the expenses, hidden or otherwise, that the user did not know (or was not informed) at the time of opting for the card. To avoid distress at a later date, we have listed down some points that must be noted while using the Credit card: Terms and conditions How many times have you read this before - read the terms and conditions carefully before signing up for anything. For every product you purchase or service you opt for, always read the terms and conditions and that includes credit cards also. If you find anything in the terms and conditions of the credit card that was not conveyed to you or is contrary to what was

conveyed to you, then seek a clarification from the bank. If you are not satisfied with the clarification, dump the card.

what the executive has promised you about the whole annual fees being waived off.

It's important that you read up on the terms and conditions before you use the card and not after. Once you use the card, it is assumed that you have read the terms and conditions and have accepted the same.

Minimum payment

Twelve-monthly fees It is common for banks to waive o f f t h e a n n u a l fees/membership fees in the first year (cards are usually issued for at least two years). The second year fees are usually charged. It is possible that you are promised that the second year's fees will be waived off as well. The only way to find out is to check with the bank in the second year. It is possible that the bank may waive off the fees based on your track record of making timely payments. If the bank does not waive off the fees in the second year, you can cancel the card. However, if you wish to cancel the card in the second year ensure you do so before using it, because using the card indicates that you have agreed to pay the fees/charges for the second year's subscription. Lifetime complimentary cards Offering 'lifetime free credit cards' is a relatively new trend in the credit card industry. While there was a time when most banks charged annual fees on their credit cards, the industry is graduating to a level where annual fees are being phased out. In effect, clients are being given lifetime free cards i.e. no annual fees are charged. However, its best to double-check with the bank

One detail you will find relatively well highlighted in your monthly account statement is the Minimum Payment Due. This is the minimum amount that you must pay for the purchases done in that month so as to not attract a penalty for default on payment of card dues. We would recommend that you pay the entire sum to the extent possible. Buying on a credit card is okay till the time you pay your bills religiously. The moment you carry forward your payment to the next monthly cycle, you will have to pay interest on the unpaid amount along with taxes. In the final analysis this turns out to be very expensive. Payment by EMI On the same lines, whenever you make a large purchase (usually over Rs 10,000, although the amount varies across banks) you may get an offer from the bank to opt for the EMI (equated monthly installment) facility to make the payment. This facility does not come cheap and the interest on the EMI is prohibitive. Again to the extent possible, we recommend that you make the payment before the due date in one go and give the EMI facility a miss.

very expensive affair. Avoid borrowing cash on your card; use the card to the extent possible for making purchases. Try to avoid being a defaulter, and pay the bills by your allocated 52day period, otherwise you'll end up paying more for a less priced item. Insurance advantage Many credit cards are known to offer an insurance cover. We recommend that you ignore this benefit and go for the core offering - credit card. If the card has features that suit you, then you can opt for it even if there is no insurance cover. On the other hand, if the card features are not to your liking then reject it regardless of the insurance cover. In any case, on most occasions the insurance cover is usually linked with so many terms and conditions that it is very difficult to claim the same. It is on the whole a different thing that the insurance cover is unlikely to be sufficient for you.

Funny Abbrevations BSE

- Bombay Se Exit

NSE

- Nation Se Exit

F/O

- Future Over

NIFTY

- No Income For This Year

FII

- Fraud International Investor

- Plunge Endless

EBITDA - Exit Before It Tumbles Down Again QIB

Borrowing cash is pricey Credit cards can be used for making purchases on credit as also for borrowing cash. While making purchases on your credit card (so long as you pay on time) is okay, borrowing cash on your credit card is a

- Quixotic Indian Blunder

HNI

- Has No Idea

FII

- Furious Impoverished Investors

PMS

- Premeditated Scam

SIP

- Suicide By Investing Patiently

Fund

- Last Year's Ace Stock

INVESTORS UPDATE | JULY AUGUST 2009 | 7

Emergence Of Energy Labeling In India

Energy Labeling : A Hallmark of Energy Efficient & Quality Product The rate of economic development of a country is directly linked with the supply of energy. In fact, so important is energy to human society that the magnitude of energy consumed per capita is one of the indicators of a country's modernization. Countries like India are in the midst of an energy crisis resulting from booming economic growth that led to rapid growth in the use of energy. However, the increasing demand of energy in these countries often outstrips limited supply.

Energy conserved is energy saved The cost of electric energy production is staggering. The simplest way out of this development challenge is to use energy more efficiently. Electricity conservation measures are typically cheaper than building new power plants. Energy demand can be managed most efficiently through a mix of energy conservation measures. Using more efficient lights and appliances, agricultural and industrial motors, better insulation etc. can significantly reduce the energy supply needed

Saving Energy and saving the Environment Production of energy by various means is associated with many environmental problems. For example, coal power plants have local effects such as air

pollution particularly nitrogen oxide and sulphur oxide. They also have medium-distance effects such as acid rain along with longrange and long-term climate change impacts such as global warming from the emission of carbon dioxide and other 'greenhouse gases' Nuclear power plants have their own environmental consequences related to the handling of nuclear materials and the disposal of radioactive waste. For example, some radioisotopes have half-lives of thousands of years and need to be stored in geologically stable locations. To save our environment, it is all the more necessary to adopt energy conservation measures.

Energy-efficiency Labels Energy labels (or more explicitly called energy-efficiency labels) are informative labels affixed to manufactured products to indicate the product's energy performance (usually in the form of relative rankings of energy performance, energy parameters that indicate quantitatively how much energy is consumed or the energy efficiency rating of that product and/or, other related requirements). Energy labels can stand alone or complement energy standards (which typically set maximum levels of energy consumption for a product).

Significance of Energy Labeling Aims to shift markets for energy-using products and appliances toward greater energy efficiency. Helps consumers to understand which products are most efficient

8 | JULY AUGUST 2009 | INVESTORS UPDATE

and hopefully influence him/her to choose more energy-efficient products. Creates competition among manufacturers to produce and market the most energy-efficient models and thus promotes energy efficiency. Energy labeling is generally linked with the general performance and safety parameters as prescribed in the national standards. Products qualified for the energy labeling are first supposed to meet these requirements, thus linking energy efficiency and highquality performance.

Benefits of Energy Efficiency Labels When designed and implemented well, their advantages are that: - they can produce energy savings;

large

- they can be very cost effective and helpful at limiting energy growth without limiting economic growth; - they require change in the behavior of a manageable number of manufacturers rather than the entire consuming public; and - the resulting energy savings are generally assured, comparatively simple to q u a n t i f y, and readily verifiable. Further, significant benefits can accrue in terms of: - reducing capital investment in energy supply infrastructure; - enhancing national economic efficiency by reducing energy bills;

- enhancing consumer welfare, they provide consumers with data on which to base informed choices and encourage selection of the most efficient and suitable product available; - strengthening markets;

competitive

- meeting climate change goals; and -A v e r t i n g u r b a n / regional pollution. Harmonization of elements of the energy labeling programs among nations often brings additional benefits primarily: - reducing program costs by adopting program elements from trade Partners; - avoiding or removing indirect barriers to trade; and - avoiding the dumping of inefficient products on trading partners.

Procedure followed by BEE For Energy Labeling The manufacturers of appliances are empowered to test their appliances and affix labels based on the agreed categorical star rating plan in the BEEprescribed format. The veracity of the labels and their levels are verified by BEE through check testing and challenge testing in assigned NABL accredited laboratories. If the test results are not consistent with the declared star rating on the label, BEE informs the concerned manufacturer. The manufacturer has an option to go in for second verification testing. In this case, the sample size is twice the number of the

first test and all the sample need to pass the test. If the appliance fails the second verification test, the concerned manufacturer has the option to: i) correct the label level or remove defects or deficiencies found; or ii) change particulars/information on the advertisement material and the label. In addition to the check tests carried by BEE, consumers through consumer associations or any manufacturer or any person can challenge the star rating label. In this case, the BEE Implementation Committee would look into the history of verification test results and see if it is a fit case for taking up the challenge. If the manufacturer fails to comply with the directions of BEE, then the use of the label for that model is prohibited, and wide publicity about the failure can be made in the press. In addition, the manufacturer would be debarred from participating in public tenders. Current Bee Energy Label Coverage BEE has selected target products for the energy labeling program based on the criteria that: (1) the appliance uses a significant amount of energy, (2) it contributes to the peak load and (3) it is commonly used in households. BEE has already launched energy labeling for refrigerators, tubular fluorescent lamps and air-conditioners. The schedule of products to next be targeted include: compact fluorescent lamps, general purpose electric motors, ceiling fans, ballasts for fluorescent lamps to be followed by geysers, gas stoves etc.

Refrigerator Labelling : Energy efficiency standards and labelling for refrigerators in India was implemented initially, as a pilot project, for frost free refrigerators, keeping in view the growing market share of this category. For refrigerators, comparative labelling was considered and implemented (and not endorsement labeling) keeping in view of the wide range of energy consumption of different brands. The energy label affixed to refrigerators includes information

on brand, model, T=type, gross & storage volume as well as the standard test method used for arriving at average annual energy consumption as marked on the centre of the energy label. Due to the encouraging response from manufacturers, most of the brands manufactured in India are covered under the energy labelling scheme of BEE. Energy labelling for the direct cool category of refrigerators has also been implemented This extends the star label to the product category (Direct Cool refrigerators) that presently has the major market share. Since refrigerators remain switched-on throughout the year, the nominal consumption and star rating has been calculated based on the annual electricity consumption.

Air Conditioners : The key measure of energy performance for labelling of air conditioners is the product's EER (Energy Efficiency Ratio). EER is the cooling capacity versus the power consumed. Thus, the higher the EER, the higher the energy efficiency of an air conditioner. Both types of air conditioners (window and split) are covered by BEE energy labelling program. Due to the presence of large and organized manufacturers, some major brands have already qualified for a 5-star rating. Potential Savings of Money on Efficient Products More star means more energy efficiency and more savings on your monthly energy bill! On an average, there is an annual savings of about Rs.2800/- saving in the use of a 5 star refrigerator versus a 1 star refrigerator and about Rs.3500/- saving in the use of 5-Star air conditioner versus a 1 star air conditioner. That mean saving to individual consumers of about 700 units (Kwh) of electricity use on most efficient refrigerator and 750 units (kWh) on use of most efficient air conditioners. Since refrigerators & air conditioners constitute more than 50% of the domestic electricity consumption, can significantly bring down India's national electricity consumption and energy costs.

Feedback Form Your valuable feed back on energy labeling scheme & suggestion on how more benefits can be passed on to you, is desired. (Please [ tick mark on right option) 1. Before you read this article, had you ever heard of the BEE Star Label? Yes

2. Did this article provide you with information that was helpful and/or interesting? Yes

3. Did this article improve your understanding of the BEE Star Label? Yes

4. In a sentence or two, what do you think is the main purpose of the BEE Star Label?

5. Have you seen products with the BEE Star Label in Stores? Yes

6. Will you recommend your Friends/Relatives to buy labeled products? Yes

Yes

7. Do you think the BEE Star Label is a good idea?

Name & address :

VOICE 441, Jangpura, New Delhi 110 014. or Email to : cvoice@vsnl.net (The above outreach material has been made possible by the generous support of the US government through the AsiaPacific Partnership on Clean Development and Climate. The study is also supported by the Renewable Energy and Energy Efficiency Partnership (REEEEP). The contents are the responsibility of VOICE and the Collaborative Labeling and Appliance Standards Program (CLASP) and do not necessarily reflect the views of any of the APP partner countries.

INVESTORS UPDATE | JULY AUGUST 2009 | 9

Impact of Recession on Indian Economy Dr. Dharm Bir Singh, Director, MBA Institute, GNIT Ms. Mohita Maggon, Faculty, Department of Management Studies, NIET, Greater Noida

he world economy is faced with a downturn. International Monetary Fund (IMF) declared that world was entering a â&#x20AC;&#x153;Great Recessionâ&#x20AC;? of below zero growth. That is the lowest level since World War II ended in 1945. This paper is an attempt to measure the breadth and depth of it & the government measures being taken to manage it. It has been suggested that India would not be affected by the downturn in the US economy which, according to some analysts, is already in a recession. A US recession would affect surplus countries (whose exports are linked to US growth). Examples are Canada and Mexico. The impact of a US downturn on China and India is the most worrying as this would also affect the countries' demand for other developing countries' products. The stock markets over the world are indicative of the negative mood of the investors. Adverse news is being greeted by huge declines in the indices. The US Central Bank, the Fed, has already cut interest rates twice in quick succession by a total of 1 per cent (unprecedented in recent history) acknowledging that the things are in bad shape indeed. In the US, for the first time in many years, employment is falling. The Indian stock markets have also followed the overseas markets in the rapid fluctuations and more so because it was way beyond what the fundamentals justified. Indian industry and exports have been showing signs of slowing down. Due to rising inequality, the market in India is narrow and dependent for growth on investments and exports. Without doubt, exports will be a d v e r s e l y a ff e c t e d b y t h e slowdown in the US. As the effects would be serious and even devastating, we call for a coordinated approach to the management of the global economy and the correction of global imbalances by the largest

20 economies. Global Recession There is no commonly accepted definition of a global recession, IMF regards periods when global growth is less than 3% to be global recessions. The IMF estimates that global recessions seem to occur over a cycle lasting between 8 and 10 years. During what the IMF terms the past three global recessions of the last three decades, global per capita output growth was zero or negative. Economists at the International Monetary Fund (IMF) state that a global recession would take a slowdown in global growth to three percent or less. By this measure, three periods since 1985 qualify: 1990-1993, 1998 and 2001-2002. According to economists, since 1854, the U.S. has encountered 32 cycles of expansions and contractions, with an average of 17 months of contraction and 38 months of expansion. However, since 1980 there have been only eight periods of negative economic growth over one fiscal quarter or more, and four periods considered recessions: ?

January-July 1980 and July 1981-November 1982: 2 years total

July 1990-March 1991: 8 months

March 2001-November 2001: 8 months

December 2007-current: 15 months as of March 2009

From 1991 to 2000, the U.S. experienced 37 quarters of economic expansion, the longest period of expansion on record. The 2001 recession did not involve two consecutive quarters of decline; it was preceded by two quarters of alternating decline and weak growth. Weakening of the American economy is bad news, not just for India, but for the rest of the world too. Here we would discuss what is recession, what causes it and how much of an impact does it have on India. Technically, Recession is a decline

10 | JULY AUGUST 2009 | INVESTORS UPDATE

in a country's gross domestic product (GDP) growth for two or more consecutive quarters of a year, as mentioned above. To understand what causes recession, we need to know that economy follows a natural cycle wherein growth cannot be sustained forever and a slow down is an expected phenomena. An economy typically expands for 610 years and tends to go into a recession for about six months to 2 years. A recession normally takes place when consumers lose confidence in the growth of the economy and spend less. This leads to a decreased demand for goods and services, which in turn leads to a decrease in production, lay-offs and a sharp rise in unemployment. Investors spend less as they fear stock values will fall and thus stock markets fall on negative sentiment. It is quite interesting to know that this is not the first time that recession has hit the markets hard. US has had 10 recessions since second world war. Stock Market and Recessions Some recessions have been anticipated by stock market declines. In Stocks for the Long Run, Siegel mentions that since 1948, ten recessions were preceded by a stock market decline, by a lead time of 0 to 13 months (average 5.7 months), while ten stock market declines of greater than 10% were not followed by a recession. The real-estate market also usually weakens before a recession However real-estate declines can last much longer than recessions Since the business cycle is very hard to predict, Siegel argues that it is not possible to take advantage of economic cycles for timing investments. Even the National Bureau of Economic Research (NBER) takes a few months to determine if a peak or trough has occurred in the US. During an economic decline, high yield stocks such as fast moving c o n s u m e r g o o d s , pharmaceuticals, and tobacco

tend to hold up better However when the economy starts to recover and the bottom of the market has passed, growth stocks tend to recover faster. There is significant disagreement about how health care and utilities tend to recover Diversifying one's portfolio into international stocks may provide some safety; however, economies that are closely correlated with that of the U.S. may also be affected by a recession in the U.S. There is a view termed the halfway rule according to which investors start discounting an economic recovery about halfway through a recession. In the 16 U.S. recessions since 1919, the average length has been 13 months, although the recent recessions have been shorter. Thus if the 2008 recession followed the average, the downturn in the stock market would have bottomed around November 2008. Identifying the Recession In a 1975 New York Times article, economic statistician Julius Shiskin suggested several rules of thumb to identify a recession; these included the rule of 'two successive quarterly declines in GDP'. Over time, the other rules have been largely forgotten, and a recession is now often identified as the reduction of a country's GDP (or negative real economic growth) for at least two quarters.Some economists prefer a more robust definition of a 1.5% rise in unemployment within 12 months. In the United States the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) is generally seen as the authority for dating US recessions. The NBER defines an economic recession as: "a significant decline in [the] economic activity spread across the country, lasting more than a few months, normally visible in real GDP growth, real personal income, employment (non-farm payrolls), industrial production, and wholesale-retail sales." Almost universally, academic economists,

policy makers, and businesses defer to the determination by the NBER for the precise dating of a recession's onset and end. Impact of a US recession on India A slowdown in the US economy is bad news for India. Indian companies have major outsourcing deals from the US. India's exports to the US have also grown substantially over the years. The India economy is likely to lose between 1 to 2 percentage points in GDP growth in the next fiscal year. Indian companies with substantial business deals in the US would see their profit margins shrinking. The worries for exporters will grow as rupee strengthens further against the dollar. But experts note that the long-term prospects for India are stable. A weak dollar could bring more foreign money to India. So all in all, though these are trying times financially, there is no reason to lose hope. For the first time in three years, India, Asia's third-largest economy, will grow at just over 8 per cent, although it will still remain the fastest growing nation after China among the world's biggest economies. High interest rates, lack of consumer demand for goods, skyrocketing real estate prices, rising rupee value, crashing stock market, declining exports in terms of value, soaring oil prices, and a looming US recession have all come together to create a situation which can cause a deceleration in the nation's galloping economy. India GDP growth pegged at 8.7 per cent India's gross domestic product is now forecast to grow at 8.7 per cent. Growth in the last financial year was at a stunning 9.6 per cent. Most economists believe that the US recession might still not hurt India too much as the country's economy is slightly decoupled from America's and also because India's domestic growth engine is powerful enough to churn up a high growth rate, with the spending power of its 300 million-strong middle class rising. India's growth can further accelerate if Indian government takes necessary fiscal and monetary measures to boost higher growth, like beefing up government spending on social and infrastructural projects, cutting taxes to give more money to the masses to spend and getting the Reserve Bank of India to reduce interest rates. Economists at global investor DSP Merrill Lynch

peg India's economic growth at just above 8 per cent, similar to that of rating agency CRISIL, and merchant bankers JP Morgan, Yes Bank, and other financial institutions. None of them believe that India will face a recession similar to that of the United States. Yet, a slowdown is a slowdown and the nation needs to be ready with a plan to ride out the storm. 'We forecast India's GDP growth to slip to 8.5 per cent in the first quarter 2009 and pick up to 9 per cent and above thereafter,' Macquarie Research analysts said in a recent note. The media now looks to US-related economic data with growing concern, particularly in relation to its impact on two of the world's fastest growing economies - China and India. And while the debate continues on whether to announce the condition in the US as a 'recession' or a 'slowdown,' the crucial issue is how much the Indian economy will be impacted by the US factor. India: Challenges in Software Exports India's exports have already faced the brunt of a weak dollar, having decelerated 21.7 per cent during the April-December period last year from 23.9 per cent in the year to March 2007, hit by the strong rupee which rose 11 per cent against the dollar. India's software industry, which accounts for 5 per cent of gross domestic product and employs 2 million workers, also showed signs of strains. Recent third quarter earnings data ending December, of top companies revealed some pressure of a weakening dollar (against the rupee) and a strain on billing rates. Most of India's software companies bill their clients in dollar terms, which would impact their foreign currency earnings. The shares of India's top software exporters - Tata Consultancy Services, Infosys and Wipro - have languished in recent months and the sectoral BSE - IT index has fallen just over 29 per cent from a year ago. Nasscom officials mentioned that the sector would meet its software export target of $60 billion and overall software and services revenue goal of $73-75 billion by 2010. The Better Side India's economy expanded by 9.6 per cent in the last fiscal year, its fastest since 1989 and second only to China, according to data which the Indian government released earlier this year. Union finance minister commented that he was

optimistic that the economy would grow by near nine per cent this financial year. India's central bank has pegged a GDP growth of 8.5 per cent for the year to March 2008. India's economy had expanded by 9.1 per cent in the first half. The Concerns In 2008, the stock markets reacted sharply to global economic concerns, with key emerging markets seeing their largest monthly fall in seven years, since September 2001. Almost every emerging market fell including Turkey (-24 per cent), China (-22 per cent), Russia (-16 per cent), India (-14 per cent) and Korea (-14 per cent) after 2-3 years of sharp gains. "If the US were to go into a profound recession and the world does follow her in the deep pit, India may still grow 6.5 per cent," - DSP Merrill Lynch's research report. But this is the worst-case scenario, which Merrill Lynch economists do not forecast. The highly uncertain external environment and risk aversion amongst global fund managers may keep emerging markets, including India, volatile for next few months. Exports would continue to be hit and the mood would be of risk aversion. While India's earnings are being impacted, risk aversion is prompting overseas funds to pull out moneys from emerging markets (where they made a windfall in earlier years) to repatriate it back home, where recessionary conditions loom. Credit rating agency CRISIL stressed that the US's demand for imports will slow down and there would be an increasing shift in mood towards risk-aversion, which may also impact capital fund flows to emerging markets like India. Slowing industrial production: should India worry? India's latest industrial production data showed a growth of just 7.6 per cent in December last year, far below last year's double-digit expansion. The fall was due to a fall in manufacturing growth to 8.4 per cent from 14.5 per cent a year earlier. Theoretically, a fall in manufacturing sector growth does not necessarily mean that the economy is slowing down. In India's case, analysts say, the fall was due to RBI's current monetary policies which seek to curb inflation and credit growth, which had surged to over 30 per cent last year. India's central bank has hiked interest rates nine times since

2004, to push inflation down, which is at just above 4 per cent. The RBI has kept its repo rate - the shortterm lending rate to banks unchanged at 7.75 per cent, and left the amount of cash banks must set aside in reserve at 7.50 per cent. It maintains that the risks to inflation are high, even while analysts say India is approaching the stage where a boost needs to be given to maintain higher growth momentum. On the exports front, India's domestic demand story is expected to sustain against any US-linked pressures, analysts say. The key point in India's favour is that it is less exposed to the external macro risks than faced by China and other Asian economies, which have a huge exposure in terms of exports and trade links with the US. Also, India's percentage of exports-to-GDP through goods and services constitutes just about 20 per cent of GDP, amongst the lowest in the region. Fundamentals remain sound Analysts now await direction from the nation's Budget this year. It is suggested that the move should be to boost infrastructure spending, which would bring momentum to goods, services, rural and urban housing sector. Economists expect the RBI to lower interest rates by 25 basis points in the second half of 2008. "By June-July this year, the RBI would be in a better position to decide on rate cuts. It would have time to evaluate and analyze the global credit scenario, central bank rate cuts and oil price trends.â&#x20AC;? CRISIL and equity research firm Macquarie Research also believe that a rate cut will come soon. Most economists believe the US economy may not go through a deep and prolonged phase of recession. Markets: choppy but not sinking Global investor Morgan Stanley Asia Pacific, in a recent report on India's equity earnings, said the aggregation of analysts' estimates for the third quarter ending December 2007, showed an 18 per cent year-on-year growth expectation in net earnings for 103 companies in the bank's coverage zone. This would mean a deceleration in growth from 49 per cent to 22 per cent levels in the June and September quarters. From an equities perspective, the Indian markets will continue to remain volatile and nervous, in the absence of sustained overseas inflows. Overseas funds have sold

INVESTORS UPDATE | JULY AUGUST 2009 | 11

Indian equities worth nearly $3 billion in 2008. While India's economy is relatively well insulated from the global economy, its earnings are not. Merrill Lynch believes that earnings will slow from 36 per cent in FY 2007 8 to 16 per cent in FY 2008 - 9, a note to the bank's clients said. Interest rate sensitive sectors like property, auto, banking and steel stocks have turned volatile even as India has embarked on a tight monetary policy to curb rising inflation and credit growth. "There's no reason at all to allow the worries of the Western world to overwhelm us," Revisiting Japan's Crisis When the financial crisis began in the US and Europe in August 2007, there was a lot of commentary about the lessons that could be learnt from Japan's financial crisis. Most commentators argued that Japanese policy makers made things in Japanese economy a lot worse than they needed to be. That belief brought comfort to the rest of the world, such as India, China and other emerging markets, suffering in the wake of the US crisis: At least this time the mistakes could be avoided. The biggest mistake that the Japanese ministry of finance is accused of having made is that it took too long to recognize that the banking system was insolvent. The stock-market bubble burst in 1990. The property market bubble burst in 1991 92. Yet the ministry did not start to nationalize banks or recapitalize them for more than five years. Time has moved far more quickly for the US and European policy makers. They started nationalizing certain financial institutions in 2007 -08 and provided public money to boost some banks' capital during October and November 2008 and again during February 2009. They have tried to use big programmes of public spending. Japanese interventions in the 1990s seemed to be inadequate. But that's because the problem kept on getting bigger. And the policymakers of Japan faced the second biggest problem: public opposition to use public money to rescue the banks and other financial institutions, combined with the growing concern about the future size of public debts. Both these problems confront the US and Europe. They have injected public money into banks but are reluctant to nationalize them. They have produced many plans to deal with bad debts. The

US and Europe are caught in Japanese trap. They are doing too little for the fear of public opposition and in the hope that economies will improve. The Final Point The optimists have been suggesting a decoupling between the US economy on the one hand and the EU and Asian economies on the other hand. It was being suggested that the growth momentum in the latter would compensate for the downturn in the US so that the world economy would still sail through with a minor slowdown. Indian analysts depending on this have been arguing that India would not be badly hurt by the slowdown in the US economy. They argue that India is not a large exporter and so the effect of slowdown would be small. This line of argument misses the central point that now many of the markets are fairly integrated with the international markets. That has been the central point of the Structural Adjustment Package (SAP) being implemented in India since 1991. Even without full capital account convertibility, we have had elements of it. FIIs and NRI funds can come in and go out. Indian businessmen have been allowed to keep capital abroad, etc. Thus, the financial and real estate markets have been substantially integrated with the world markets. No wonder what happens abroad has immediate impact on Indian markets. It is a known fact that energy and food markets are integrated the world over. We have been a witness to the impact of oil prices and rise in wheat prices. Thus, many of our markets are now open to influences from abroad. While it is true that we are not as open as many other economies (like Germany or Sri Lanka), we are twice as open today as we were in 1991. Hence the US economy has a much bigger impact today than earlier. Given the size of the US economy, a 1 per cent reduction in its rate of growth would be bigger than a 10 per cent increase (to 20 per cent and that is unlikely) in the rate of growth of the Indian economy. It may be argued that the cutting of the interest rates in the US and actions elsewhere will have a positive effect and prevent a downturn there. President Bush has announced a $150 billion package. He is putting purchasing power into the hands of individuals to boost demand. This would be about 1 per cent of the US GDP.

12 | JULY AUGUST 2009 | INVESTORS UPDATE

However, what individuals may have lost in the sub-prime markets may be much larger and hence inadequate. Further, the decline in the stock markets and the fall in the paper wealth is also likely to far exceed this amount. In other words, some feel that this effort may be too little, too late. There is nothing unusual in this since in business cycles it has been mostly found that in the downturn, intervention is usually too little & too late so that the downturn becomes inevitable. In Japan, in the nineties when the interest rates even turned negative, the economy could not pull itself up. The reason is that once the investors' sentiments turn negative, there is little that the government can do to turn them around. This situation is currently aggravated by the free market philosophy where any form of government intervention is seen to be bad and, therefore, resisted till it is too late. Even when it does come, it is of the wrong variety. Governments following free market philosophy give concessions to the investors, hoping that they would invest more. However, because demand does not rise and unutilized capacity continues to rise, they invest little and the concession simply ends up raising unutilized capacity further. Usually, in the downturn, the poor and the poorer countries are affected worse than the rich ones. For instance, the impact of the sub-

prime crisis has been the greatest on the poor and the blacks in the US. The situation is being aggravated by the environmental consequences of the development path being followed in the recent past. With environmental costs of growth rising in a recession, the poor will suffer even more. In India, where large infrastructure projects had been planned and companies were rushing to raise capital from the booming stock markets, there would be overcapitalization and consequent losses. Indian companies have also been rushing to acquire expensive overseas assets. Such companies are likely to suffer substantial losses. For India, the negatives seem to far outweigh any positives. Further, the impending slowdown/ recession/ depression in the world economy is likely to be quite different than the earlier ones since it is being driven by substantial unresolved problems in the financial sectors. No one, not even the largest actor on the scene, the Fed, understands what is going on so the correctives are simply hard to devise. Once the economy starts going downhill, many actions that would have been normal in a rising economy, like acquisitions through leveraging, investments in risky instruments, turn out to be mistakes. The various mistakes cumulatively amount to huge mistakes. Indian financial markets, substantially integrated into the world markets, are unlikely to be able to escape the impending crisis.

Awareness of Consumer Rights Among Women Need of Hour : Surinder Prathana Foundation in collaboration with Chandigarh Social Welfare Board organized Awareness Generation Programme for rural and poor women in Govt. High School Dadumajra on 24 March 2009. About 60 women participated in the programme. Welcoming the guests and participants Meena Sharma Chairperson Prathna Foundation said that her organization is a Charitable Trust which has been working for the poor and needy patients by providing free medicines in different hospitals. It has also been working on women empowerment, female feticide, drug de-adication and female literacy since its inception

September 2004. Sh. Surinder Verma Chairman of Citizen Awareness Group said that objective of this workshop was to induce rural women to thank of their problems to analyze them and to initiate action to tackle them. He also said that Awareness of consumer rights among women was the need of hour. He discussed in detail about the importance of standardization in day to day life by giving various examples. He also informed about the regular use of standard mark on the products. Misuse of its standard mark with our valid license was a punishable offence under the BIS Act 1986.

Today's Investment Mantra - S.I.P. Geetu Batra

he recent volatility in the markets brought upon by host of factors like Inflation accompanied by global economic downturn has make the investments a precarious task especially for first timers who lack the basic information about the workings of the complex stock markets. There is one way out of this impasse and beat the uncertainty of the markets and that is by using suitable investment plan that insures you against all the possible risk. One such plan is Systemic Investment Plan or SIP offered by mutual funds to invest in equity funds. The amount invested varies from Rs 500- Rs 1000 and is invested regularly every month in post offices and banks, Also you can invest by issuing post dated cheques or by authorizing your banker to debit your account on a specific date. SIP is not a mutual fund but it is a

method of investing in a mutual fund. It is offered by all mutual funds for investing in e q u i t y f u n d s . Simply put, investing via an SIP e n t a i l s m a k i n g regular investments (generally) in smaller denominations as opposed to making a one-time lump sum investment. The intention is to capitalize on the volatility in equity markets by lowering the average purchase cost. SIP is a great way to channelise your savings and is a best way to

invest a fixed sum of money regularly. SIP investments allow the investors the benefit of entering market early. The equities are bought in bullish and bearish phases both ensuring a balance in the portfolio. It is easy to buy an SIP form or booklet as every Mutual Fund has got a separate SIP application form. Ascertain your monthly contribution, chose the SIP date and mention the number of years for which you need to do an SIP if you are investing afresh in a fund and wish to do it through an SIP agent or financial planner whether your scheme mandates you to invest a minimum token amount first and then start your own SIP

next month or you can start right way. Professional fund managers manage the SIP portfolio and this ensures that the money is looked after all the time. Also instead of giving out cheques every month, give bank a mandate to withdraw money and invest in the SIP fund. Increase your monthly contribution if there is increase in your monthly income and try to invest for a period of 5 years and above. Tips to Reduce Risk

+ Chose an SIP for a period of 612 months

+ Extend the SIP gradually for a period of more than a year.

+ Long term ensures less risk + For optimum benefits, do a Sip for at least five years, but review the chosen funds at least once a year or every two years to make a change, if needed.

Personal Finance : What not to do Not having ?

a financial plan The biggest mistake in financial planning is not having any plan. Most of us are too busy or just casual to devote the required time to plan our personal finances. This cannot be the way ahead. We have to have a financial plan.

Putting all eggs in single ? basket The first quality in a good financial plan is diversification. We start by having too much of insurance or sticking to just bank FD's. Some people have too much of an affinity for PPF or Equity or may be Post Office. It is important to diversify among different investment categories i.e. shares, mutual funds, cash, real estate, bank deposit etc. We also need to diversify within each of these types of investments. Being too ?

conservative or t o o a m b i t i o u s Most of us are risk aversive and it usually reflects in our financial plan. The biggest risk we can take is of being â&#x20AC;&#x153;Too conservativeâ&#x20AC;?. Shying away from equity or equity based mutual funds is not a healthy symptom for your financial plan. Define your risk appetite

and allocate funds to equity accordingly. You can avoid direct equity exposure and go through professionally managed equity mutual funds, if you want to a bit cautious. But equity has to be an important part of your overall portfolio. The allocation should vary as per your age and risk appetite. The inherent risks can also be minimized by various systematic investment methods available.

? Equally

big risk can be too much of a risk appetite. Your plans and targets should be realistic. Having too high targets or trying make up for inaction in early stages of life by taking extra risks is also not a healthy sign.

? Trying

to time the market Every time the equity market falls or climbs, we are tempted to make money based on the simple theory of buy low, sell high. This strategy may work once in a while, but can never be the way to build wealth. Remember, the markets are always smarter than you and I, or for that matter the so-called timing experts.

Letting money stay idle in a ? savings

Your money loses its value everyday, without you realizing it, just because inflation is acting every day, around the year. Never let your money stay idle. Always have it in some instruments to beat the inflation, if not better.

? Not having

a contingency

fund. The reverse of the previous mistake is equally big a mistake. Either we leave a lot of money in liquid cash or don't have adequate cash to meet the emergencies. Every family must have a well calculated contingency fund, depending on the critical expenses and lifestyle.

? Following the herd mentality Just because 3 of your friends made a lot of money in the share market does not mean that is also the right thing for you to do. Never invest in any instrument unless it is a part of your financial plan. Remember there are no shortcuts to creating wealth. Your friends are too eager to tell you of their bounty may not be equally eager to come to you next week and share the event of losing all the profits made last week.

Not saving ?

enough / under estimating future needs More often than not, we end u p saving less than needed for a future goal. It might be child's education, your retirement or purchase of a house. Assess the future value of your financial goal properly and estimate the growth of your investments while staying realistic.

Insuring minors/ non earning ? f a m i l y m e m b e r s Insurance is a tool to take care of financial needs in case of the loss of an earning member and not an emotional gift to be given to your family members. Such insurance policy becomes a burden if the earning member dies since the income stream dries up the policy premiums of family members are still to be paid. Trying to ?

do everything on

your own. No amount of research done by you cannot substitute the expertise of full time professionals who specialize in the field of financial planning. So take advice of a financial planner or a company specializing in the field of

account.

INVESTORS UPDATE | JULY AUGUST 2009 | 13

Indian Retail in the Post Economic Meltdown Period Dr. Rahul Bhardwaj, Mr. Pradeep Shukla, Mr. Anchal Rastogi, Ms. Neha Gupta â&#x20AC;&#x153;A recession is a decline in a country's gross domestic product (GDP) growth for two or more consecutive quarters of a year. A recession is also preceded by several quarters of slowing downâ&#x20AC;?.

he ripples of crumbling USA market can be witnessed all over the world. Whatever happens in America, its impact can be felt way beyond the United States. Indian economy is no exception to this rule. World over, companies are biting dust including lions of financial world like, Lehman Brothers, Bear Sterns, AIG, Merill Lynch etc. The sudden erosion of stable economic status and unbalanced income has made the consumers all the more cautious in their purchase commitments and they are now deferring many decisions. The reduction in disposable income by way of high prices and wage cuts has hit the real economy. It is known that the recent boom in the retail sector particularly the organized retail sector was mainly attributed to greater disposable income available with youths, due to the growth in the IT, BPO and KPO sector before the recent slowdown in the economy. But since the fear of retrenchment looms large in case of employees in these industries, nobody is relieved from the tension of losing jobs as part of austerity measures by these companies and as a result consumerism is undergoing changes. The organized retail in the country had been heavily targeting these groups for their growth, and hence is now experiencing a major set-back. For example: Subhiksha, which seemed to have an edge as an early bird, is closing down. Vishal is another chain in distress. Reliance Retail is clearly in retreat. Introduction The current global scenario is not something we have experienced in our lifetime. Comparisons are being made

with the great depression of 1930s. It is clear, that the environment is challenging and the impact is felt not only by the financial services but is now spreading slowly to other parts of the economy. And it is global, so is not just the US. The unpleasant news emanating from the industrialized countries is displaying no signs of easing out. The impact can be seen on the Sensex. Blue chip stocks have crashed by 40-50 per cent and the investors are at the receiving end. Project deferment, price cuts, output reduction, workforce retrenchment, freezing of recruitments and reduction in advertising budgets are the strategies that companies are adopting in one or combination of these as a survival strategy to overcome the current crisis. Like other industries the retail industry is also sitting on the lap of recession, which is being mirrored in the news coming from retail business houses around the world. a number of US retail giants have reported a fall in their earnings and sales, The current industrial slowdown and the slack in retail pose a question mark to the fate of the Indian retail industry as well. What is 'Economic Meltdown' or 'Recession'? According to 'The National Bureau of Economic Research' Recession is defined as "a significant decline in economic activity spread across the economy, lasting more than a few months." In general, recession affects a country's overall economic activities, including, investment, employment rate, profits data of companies etc. Recession is almost always accompanied by sharp increase in prices of

14 | JULY AUGUST 2009 | INVESTORS UPDATE

commodities. When recession continues for a long duration and with severe implications, it's termed as economic depression whereas complete breakdown of economy is referred as economic collapse. Few major causes of recession are; inflation, currency crisis, speculation, national debt etc. It could also be caused by cyclical movement of economy or by some external elements like war and other factors like high oil prices etc which are beyond the control of a particular economy. The role of money supply is also very crucial in causing recession. Inflation of money supply or mishandling of excessive liquidity or even crunch of liquidity also invites recession. Impact of recession on Indian Economy The ripples of crumbling USA market can be witnessed all over the world. Whatever happens in America, its impact can be felt way beyond the United States. Indian economy is no exception to this rule. Indian financial system has very little exposure to foreign assets and their derivative products and that's the prime reason India won't be as adversely affected as other major countries. Revival of world economy will take a long time. Though, India will be affected in certain aspects like, low investments by foreign companies. The industries with the major impact of recession are IT, ITES, BPO, textile, retail, real estate, steel, cement, hospitality and logistics. A weakening of demand in the US affected our IT and Business Process Outsourcing (BPO) sector and the loss of opportunities for young persons seeking employment

at lucrative salaries abroad. India's famous IT sector, which earned about $ 50 billion as annual revenue, is expected to fall by 50 percent of its total revenues. This would reduce the cushion to set off the deficit in balance of trade and thus enlarge our balance of payments deficit. It has now been estimated that sluggish demand for exports would result in a loss of 10 million jobs in the export sector alone. Also, textile companies will find themselves with low top line and bottom-line growth in their balance sheets because of less demand from foreign countries and consequently less revenue from exports. As India's economy feels the impact of the global recession, Indian consumers are cutting back on spending, and retailers are facing a major slowdown. Government Measures To lift the economy out of the recession the Government announced a package of Rs 35,000 crores in the first instance on December 7, 2008. The main areas to benefit were the following: a) Housing : A refinance facility of Rs 4000 crores was provided to the National Housing Bank. Following this, public sector banks announced to provide small home loans seekers loans at reduced rates to step up demand in retail housing sector. (i) Loans up to Rs 5 lakhs: Maximum interest rate fixed at 8.5 per cent. (ii) Loans from Rs 5-20 lakhs: Maximum interest rate at 9.25 per cent. (iii) No processing charges to be levied on borrowers. (iv) No penalty to be charged in case of pre-payment.

(v)Free life insurance cover for the entire outstanding amount. (b) Textiles Due to declining orders from the world's largest market the United States, the textile sector have been seriously affected. An allocation of Rs 1400 crores has been made to clear the entire backlog in the Technology Upgradation Fund (TUF) scheme. (c) Infrastructure The government has been proclaiming that infrastructure is the engine of growth. To boost the infrastructure, the India Infrastructure Finance Company Ltd. (IIFCL) has been authorised to raise Rs 14,000 crores through tax-free bonds. These funds will be used to finance infrastructure, more especially highways and ports. (d) Exports Exports which accounted for 22 per cent of the GDP are expected to fall by 12 per cent. The government's fiscal package provides an interest rate subsidy of two per cent on exports for the laborintensive sectors such as textiles, handicrafts, leather, gems and jewellery. (e) Small and Medium Enterprises (SMEs) The government has announced a guarantee cover of 50 per cent for loans between Rs 50 lakhs to Rs 1 crore for SMEs. The lockin period for loans covered under the existing schemes will be reduced from 24 months to 18 months to encourage banks to cover more loans under the scheme. Just within a month, the government announced another package to bail out the Indian economy. The purpose of the new package announced on January 1, 2009 was to minimize the pain. The new package included the following measures:1.To boost investment and spending to revive growth, the RBI cut the repo rate, which it charges on shortterm loans to banks from 6.5 per cent to 5.5 per cent and also reduced the Cash

Reserve Ratio (CRR)the share of deposits which has to be kept with the RBI from 5.5 per cent to five per cent. 2.To help the realty sector, realty companies have been allowed to borrow from overseas to develop â&#x20AC;&#x153;integrated townshipsâ&#x20AC;?. 3.To boost infrastructure, the India Infrastructure Finance Company Ltd. (IIFCL) has been allowed to raise Rs 30,000 crores from tax-free bonds. 4.To m a k e m o r e f u n d s available, ceiling on foreign institutional investments (FIIs) in corporate bonds has been increased to $ 15 billion from $ 6 billion. The purpose is to seek much bigger FII investment. 5.To stimulate the Commercial Vehicles (CVs) sector, depreciation benefit on commercial vehicles has been increased form 15 per cent to 50 per cent on purchases. Impact of recession on Indian Retail The retail market in India is facing slowdown with the ongoing financial crisis happening across the world markets. Since the markets always have internally linked with each other, the impact of the crisis is generally shared among all. The following circumstances are creating unwelcome interruptions to the Indian retail industry. The industry hopes for the best alternations to overcome the acrimonious situations. The inflation or the economic slowdown is adversely affecting the retail industry. With the suddenly disturbed economical status, consumers are gradually losing interest on buying. And for the interested, the unbalanced income, followed by the economic slowdown, is not meeting their buying requirements. This evolution had soon disappointed the hopes of retail industry. Anyhow, it's all a short-term crisis for the retail industry until the things turn around. Indian Retail Changing it's Strategies a)Subhiksha Trading Services,

which operated about 1,600 discount stores across India, ran out of cash last October. The unlisted company's operations are nearly at a standstill and it is undergoing a "debt restructuring exercise." b)India's largest listed retailer, Pantaloon Retail, faced with falling sales in various products and high inventory costs, is reworking its strategy. It is focusing on cost and supply chain efficiencies, high-margin private labels, better credit terms and prices from vendors and re-negotiating lease rental agreements. Pantaloon sales, which dipped in February from the previous month, saw an uptrend in March due to aggressive discounts and promotions. Its shares have risen some 60 percent from a record low hit on March 9. c)Cash-strapped Vishal Retail is closing stores and has no plans to open more next year, but will expand through the franchisee route, says Manmohan Agarwal, Chief ExecutiveCorporate Affairs. d)British retailer Marks and Spencer, facing falling sales at home, is repositioning itself in India, and is looking at larger format stores to attract more people. "We have not been able to take advantage of the opportunities we had so f a r, " s a i d N a n d i n i Sethuraman, head of marketing at Marks and Spencer, India. Bigger stores with a good catchments area are seen attracting more customers, she said. "Lower rentals help us identify more viable properties.â&#x20AC;? Future of Retail in India India's retail sector has been growing at 30-40 percent annually over the past decade, according to KPMG. It is now expected to grow at a more sedate 15-20 percent for the next 2-3 years, but the India retail story is still intact. Real estate rentals, a high

component of cost, have fallen by up to a quarter from their peaks in November 2007, which will work in the retailers' favor, analysts said. Consumer spending meanwhile is expected to pick up later in the year. Analysts say the economic slowdown is likely to lead to more focus on value-retailing in clothing and food in coming months and a shift away from lifestyle retailing, a strategy that should benefit local retailers. French retailer Carrefour, which, media reports say is searching for a joint venture partner for its India retail operations, plans to open its wholesale outlets in the country by the end of 2009 or early 2010. "Value-retailing players like Pantaloon, Reliance, etc, are more likely to benefit in the current scenario than lifestyle players like Shoppers Stop," Angel Broking said in a report. Reliance Retail, a subsidiary of top conglomerate Reliance Industries Ltd, had announced plans in recent years to spend more than $5 billion to roll out hundreds of supermarkets across India. Though a thin margin business, the food and beverages sector is seen doing well, said Anand Raghuraman, partner and director, BCG's. S u g g e s t i o n a n d Recommendation A retailer must adapt following measures to cop-up with current economic crisis (a) L o w m a r k e t i n g a n d advertising budgets will work out : To rectify the things, right solutions are always excavated. Whether the market growth is slower or faster, its potential should not be left unused. Anyway, new and innovative solutions must be invented to answer the current market slump. Cutting down the marketing and advertising budgets will reduce the financial burden on r e t a i l i n g i n d u s t r y. Marketing and advertising Contd. on Page 17

INVESTORS UPDATE | JULY AUGUST 2009 | 15

Workshop On 'financial literacy for school teachers'

workshop on 'Financial Literacy for School Te a c h e r s ' w a s conducted on May 16,2009 at Vivek High School,Sector 38-B Chandigarh,courtesy the efforts of Surinder Verma and Mr.H.S Mamik, Chairman of Vivek High School and of Independent School Association,Chandigarh. Stock Exchange Board of India (SEBI) is working towards introducing Financial Literacy Program in school for children of class VIII upwards and has collaborated with National Institute of Securities Market (NISM) and IMS Learning Resource Ltd. in developing a concerned program. The main aim of this program is to impart money skills to students and help them inculcate financial discipline in their day-to-day life. The workshop's aim was to train teachers to enable them to implement the program in their respective schools. Over 20 schools from

Chandigarh and surrounding areas like YPS, Patiala; Bishop Cotton, Shimla; Pinegrove School, Dist. Solan and Punjab Public School, Nabha attended the workshop. The welcome address was given by Mrs. Daman Dugal, Principal Vivek High School, Chandigarh. Thereafter Mr Amarjit Singh, Regional Manager, SEBI threw light on the concept of financial literacy and briefed allpresent on the purpose of the workshop. Mr Rakesh Bhanot, AGM, SEBI, Ms. Sarika Kataria, AGM, SEBI and Mr Anshul Srivastav Executive,IMS Learning Resources Pvt Ltd conducted the workshop covering diverse topics such as Money Matters, Budgets , Investments , Basics of Banking , Stalking the Stalks and Borrowings . There was also an informative video clip on the need and role of SEBI in regulating stock markets. Mr Singh then gave a sample presentation of the way these

difficult topics can be introduced to a child of VIII or IX in simple language. The participants were given reference material, which was a specially designed tool kit at the beginning of the workshop. IMS in collaboration with NISM designed this kit, which included notes for instructors and a Family Activity Booklet . Besides learning financial discipline the aim of the programe instill attitudinal changes, general discipline and logical and responsible thinking and behavior in the

participating students. A certificate of participation was given to all the teacher participating in the workshop. The participating schools were advised to implement the program as a SUPW activity in schools in either an 8 capsule or 16 capsule modes. Everybody found this concept highly relevant in the today's financial world. SEBI would provide back up for this program in terms of web source and resource material. All in all it was an enlighten day for the teachers and a novel

Indian Retail in the ...

Contd. on Page 17

are the supreme factors for the retail industry to penetrate more into retail market. Following innovative marketing and effective advertising at low prices will be a brilliant move for the present day market trends. (b) Challenge to get more customers at low cost : In this current meltdown, driving the customers to the retail stores seems high and dry. But, the markets always have the hidden potential despite the slump. Today, the changing market trends demand the retail industry to expand its reach to the more customer touch points so as to drive them to the retail points. 'Low investments and high

returns' is now made possible with the arrival of technology enabled marketing services. The retail industry should realize that it would be at a fair advantage of including technology enabled marketing services to unfold the immense retailing opportunities. (c) Online branding and marketing through effective presence : Now it is the time to find the right alternative for the retail industry to bring down the expenses and to move up in the market. With the lacs of online searches, happening daily for the different products, online market is now creating enormous opportunities in

16 | JULY AUGUST 2009 | INVESTORS UPDATE

retail business. To reach the online shoppers, online retailing is the best alternative solution for the retail industry, through which online branding can be achieved. Online branding and online marketing are the on going retail business trends. Conclusion The reduced purchasing power of Indian consumers in the current situation has revived up competition among shopping malls. They now have to step up their ad spend along with discounts to lure consumers who have restricted their shopping list to essentials, such as food and other consumables. After all, the purchasing power of 350

million Indians cannot be glossed over. Together with the package of incentives offered by the government to kick-start t h e e c o n o m y, g o o d management practices and self-imposed check on profiteering, the retail sector can hold its own. Dr. Rahul Bhardwaj (Head, Deptt. Of Business Studies, CERT, Meerut) Mr. Pradeep Shukla (Lecturer and Programme Coordinator, Deptt. Of Management Studies, Dr. KNMIET, Meerut ) Mr. Anchal Rastogi (Lecturer, Deptt. Of Business Studies, CERT, Meerut ) Ms. Neha Gupta (Lecturer, Deptt. Of Business Studies, CERT, Meerut)

Investorsâ&#x20AC;&#x2122; Awareness Awareness Workshops Investors Workshops

Sh. R.K. Nair, WTM of SEBI inspects stall of SBI during SME Workshop organiesed by ASSOCHAM at Hotel Shivalikview, Chandigarh

Audience present at the workshop organiesed by ASSOCHAM at Hotel Shivalikview, Chandigarh

Investor Awareness Workshop with BSE at Hotel Shiraj Residency, Panchkula on

Mr Surinder Verma addressing Investor Awareness Workshop with BSE at Hotel Shiraj Residency, Panchkula.

Inaugurating the Awareness Generation Programme Camp for women organised by Citizens Awareness Group at Chandigarh.

Mr. Surinder Verma lightning the lamp at Investor Awareness Workshop with BSE at Panchkula.

INVESTORS UPDATE | JULY AUGUST 2009 | 17

Investors Awareness Workshops

The seminar on “Investors Awareness” was organized in collaboration with Bombay Stock Exchange and Central Depository Services Limited, at Hotel Presidency Hoshiarpur.

The seminar on “Investors Awareness” was organized in collaboration with Bombay Stock Exchange and Central Depository Services Limited at Hotel Shiraz, Panchkula.

The seminar on “Investors Awareness” was organized in collaboration with Bombay Stock Exchange and Central Depository Services Limited, at Sethi Banquet Hall, Ambala Cantt.

Audience present during the Seminar on Investor Awareness at Ambala Cantt.

The seminar on “Investors Awareness” was organized in collaboration with Bombay Stock Exchange and Central Depository Services Limited, at Hotel President Jalandhar City. 18 | JULY AUGUST 2009 | INVESTORS UPDATE

Presenting the bouquet to dignitaries during the seminar on Investor Awareness Seminar at Jalandhar City.

News Update Regional Seminar on rural banks

A two day seminar was inaugrated by the Vice Chancellor, Dr. S. K. Kak on “Role of regional rural banks in economic uplifment of weaker section of rural society” at KNGD Eng. College Auditorium, Merrut in which around 250 economists and experts participated. Dr. Kak said that the rural banks

had contributed lot in the development of rural society. These banks had brought in the awareness among rural society about their rights and also help to improve the economic conditions of weaker section of society. During the seminar it was stressed that an attitudinal change is needed to ensure overall growth and development of villages.

Surinder Verma Retires

Making Senior Citizens’ Day Special

Sh. Surinder Verma, Secretary PR, along with other office bearers of Chandigarh Senior Citizens Association at Press Conference in Press Club Chandigarh.

Workshop on drug de-addiction Drug de-addiction workshop was organized jointly by 'Citizen Awareness Group' and 'Dainik Jagran' in Govt. Primary school of Bapu Dham colony. Ms. Meenakshi Sharma, bureau chief of Dainik Jagran was the chief guest of the event while Area counselor, Mrs Sarla Sharma presided over the event. While addressing a gathering of more than 100 persons, Sh. Surinder Verma, Chairman of the Citizen Awareness Group (CAG) said

that the consumption of drugs by our youth is a sad spectacle indicative of a degradation that will ultimately cause an irreparable loss to our nation. Hence we must take steps to prevent drug addiction among youth. During the workshop Ms. Meenakshi Sharma urged the people to abstain from deadly intoxicants and Mrs. Sarla Sharma stressed the need to initiate an awareness drive regarding the ill-effects of drug addiction.

Camp on need and importance of self help groups

Mr. Surinder Verma, Manager (Accounts) Food Corporation of India has retired after putting in 36 years of service. A function at Chandigarh Press Club was organized to honour him at having attained this milestone in life. Union Minister, Water Resources & Parliamentary affairs Mr. Pawan Kumar Bansal, Ex-MP Sh. Satyapal Jain and various other senior Congress & BJP leaders were present at the occasion. Appreciating him for the services rendered by him,

they added that he must now spare some time for the political welfare of the nation. Currently Mr. Surinder Verma is serving as the Chairman of Citizen Awareness Group, an NGO which is recognized as the Investor Association by SEBI and registered as consumer advocacy group with TRAI. He is also associated with national and international organizations and NGOs like those working for AIDS control and eradication of illiteracy among women.

Awareness Generation Programme for Rural & Poor women at GGSS, Dhanas, Citizens Awareness Group organised an awareness generation camp in collaboration with Chandigarh Social Welfare Board in Shree Sanatan Dharam Mandir Dhanasin which about 60 women's from village / colony attended the camp. During the 10 days training programme representatives of Panjab National Bank and Insurance Companies issued the need and impotence of self-help groups and gave a brief account of schemes launched by the Govt. for the welfare of rural and poor women.

Sh. Surinder Verma Chairman Citizens Awareness Group spoke about the legal service Authorities Act. 1987 and consumer protection Act. 1986 and gave certain guidelines for filling complaints in Lok Adalat and Consumer Courts Lectures of Sh. S.K. Mehta on Food & Nutrition, Ms. P. Madhu Singh on Legal Rights of Women, Ms. Renuka Salwan on importance of ISI Mark, Dr. Anuradha Sharma onEmpowerment of Women were of special interest to target audience.

INVESTORS UPDATE | JULY AUGUST 2009 | 19

Feedback

Disclaimer The publishers regret that they cannot accept liability for error omissions contained in this publications, however caused. The options and views contained in this publication, however are not necessarily those of the publishers. Readers are advised to seek specialist advice before acting or information contained in this publication, which is provided for general use and may not be appreciate for the readers’ particular circumstances. The ownership of trademark is acknowledged. No part of this publications or any part of the contents thereof may be reproduced, stored in retrieval system or transmitted in any form without the permission of the publishers in writing. An exemption is hereby granted for extracts used for the purpose of fair reviews.

Publisher's statement Statement about ownership and other particulars about “Investors Update” required to be published under Rule 8 of the registration of Newspapers (Central) Rule, 1956 FROM IV (See Rule 8) 1. Place of Publication : Chandigarh 2. Periodicity of its Publication : Bi-Monthly 3. Printer's Name : Yugmarg Media Printers a) Nationality : Indian b) Whether a Citizen of India : Yes Address : Plot No. 146, Industrial Area, Phase 1, Chandigarh 4. Editor/Publisher's Name : Surinder Verma a) Nationality : Indian b) Whether a Citizen of India : Yes Address : #2812, Sector 38-C, Chandigarh (M) 094170-08805, 093177-25073 (O) 0172 - 3250462, (F) 0172 - 2692147 Email : citizenawareness@yahoo.com citizenawarenessgroup@gmail.com Www.cagchandigarh.org www.cagchandigarh.com

Letters to Editor It has been a great work done by Citizens Awareness Group (CAG) and BSE has the pleasure and honour to do many Investor Awareness Programmes in coordination with CAG, which, gauging from the feedback we receive, have been hugely successful. Moreover, CAG is also functioning as the medium to convey and transmit the work done by BSE in this direction, to its fullest extent, which is laudable.With all best wishes for success in keeping up the good work. P R Prasad Head (Northern Region) Bombay Stock Exchange Ltd The article on Business Crime was very informative and interesting and deserves appreciation. I hope the next issue will contain more of such articles. - Neha, Chandigarh

I, Surinder Verma hereby declare that the particulars given above are true to the best of my knowledge and belief. Sd/Mr. Surinder Verma Dated : 15 April 2009

I found your publication 'Investor Update' worth readable and useful. The information collated is informative. Kindly make it more investor specific particularly the smaller investors, who are always at stake as compared to the bigger ones.The language should be more simpler so as to reach to wider readers. Since your organisation is also working on telecom related issues, so you may think of including those issues also. Deepak Saxena CUTS Centre for Consumer Action, Research and Training Jaipur

The coming issues of the magazine should also contain information regarding upcoming workshops. Prior knowledge of these workshops will enable one to participate in them and benefit from them. - Rajbir, Ludhiana Thank You very much for putting so much of efforts and bringing out an issue which common people like me can relate to and understand. The August's issue of CAG Newsletter was really informative and the special interview of Mr.H.S.Sidhu ,Executive Director,Delhi Stock Exchange cleared my doubts about capital market to an extent . Wishing you all the best and hope to see more of good work. Retd. Colonel Raman Sethia Chandigarh Congratulations on release of your 2nd newsletter. It is highly appreciable especially the fact that your magazine covers the stories which are beneficial in day to day routine . I really liked the article on Emergence of Energy Labeling in India. All the best for future. B.Vaidyanathan, Chief Mentor Consumer Protection Council, Chennai As the name Investors Update suggests, the magazine is actually keeping the investors updated about the current issues and trends prevailing in the financial markets. The content is useful as well as understandable. Keep up with the good work. - Suresh, Delhi

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