CONTENTS
LETTER
ISSUE CONTENTS
10 January 2013
FROM THE
EDITOR
Currying Favours: Role of Industry Associations; Retail Investors: Not Biting Yet; Directed Do-gooding: Why Is Industry Silent?
Long-term Wealth Creation
DIFFERENT STROKES
H
ow time flies! We look back at 2012 as the year in which investors saw the Nifty go up from 4,636 to 5,888 (at the time of writing), giving an impressive 27% return, despite economic headwinds. However, what is important is not how much you made in one year but over the long term. Which companies have generated the most wealth for shareholders over the past 10 years? In our annual issue on Wealth Creators, we bring you the performance of some of the biggest wealth creating companies. Based on our methodology of calculating ‘total shareholder returns’, our findings will surprise you. Turn to page 28 to find out. Apart from individual stocks, Jason Monteiro analyses the performance of equity mutual funds during 2012, in our Fund Pointer section. How have mutual fund schemes performed in the face of heavy redemptions and withdrawals? Turn to page 24 and see whether the scheme you have invested in is among the best. Sucheta Dalal, in her Different Strokes column, highlights the breathtaking arrogance of Sahara which has cocked a snook at all the regulators, especially the Securities & Exchange Board of India (SEBI) and gotten away so brazenly. The fallout? Every dubious money circulation scheme is able to do exactly the same, undermining SEBI’s authority. But do the PM or the FM of the country care? On a related note, SD Israni, in his column, tells you what you need to do to avoid becoming a victim of such schemes. Moneylife Foundation continues to scale new heights. Over the past year, our membership has more than doubled to 17,561 members. We have conducted 145 events in less than three years and hosted several well-known figures. As we step into 2013, we are committed to organising more events to spread financial literacy and increase awareness about savings products. We thank each one of you for making the Foundation a success and we look forward to your cooperation and ideas to become a much stronger voice of savers. Debashis Basu
MONEYLIFE | 10 January 2013 | 10
20 of Sahara’s 22 Fallout Defiance
MUTUAL FUNDS POINTERS
Winners & 24 The Losers of 2012
the Power of 55 Unlock Your Daily Spending
Which schemes did well under different categories?
Mileage credit cards are the best option for shopping and spending
SMART MONEY
Wealth Creators 2003 - 2012
56 Moneylife Foundation Events
Good time to buy stocks? Only if you are willing to take extra risk
– At Moneylife Foundation’s 142nd seminar, former IPS officer Yogesh Pratap Singh decoded the draconian Section 66 (A) of the IT Act
Over the past 10 years, companies from banking & finance, consumer products and consumer durables have created maximum shareholder value. A Moneylife annual study, by Jason Monteiro and Pratibha Kamath
14
Your Interest
FIR against Top Bharti Airtel Officials; HC Imposes Cost on Lawyer; Government To Tackle Chit Fund Menace; Transactions on Mobiles To Grow 20%; Nationwide Mobile Number Portability by February
16 Your Money Mutual Funds: SEBI Defines Mis-selling; Banking: Issue Debit Cards with Photograph: RBI; No Guarantor for Shifting to SBI Home Loans; e-payment: Bangloreans To Pay Water Bills Online; Insurance: Doctors Won’t Be Involved in Claims: IRDA
18 Current Account What Makes Switzerland Tick?
19 Loose Change Moneylife Quiz; Sound Bites: Press Council of India chairperson Markandey Katju; UK Sinha, chairman, SEBI; Speculator Rakesh Jhunjhunwala; PV Indiresan, former Director, IIT, Madras Disclaimer: Moneylife has a policy of not allowing its editorial staff to buy and sell stocks that are written about in the magazine. All personal transactions in individual stocks are subjected to internal disclosure rules.
48 Insurance Trends Cocking a snook at multiple layers of regulation and oversight, dubious schemes from Sahara to MPG Greenery are thriving STOCKS
38 Value Picks Banking on Value
40 Street Beat – Ador Fontech – Unquoted: Yuvraaj Hygiene Products
– Life Insurance: Bharti AXA Life Launches Improved eProtect – Mediclaim: Should Mediclaim Cover Surgery for Obesity? – Pension: HDFC Life Pension – Will It Attract Customers? – Fine Print AUTO
50
Running in Circles
India continues to bumble along about High Security Number Plates (HSNP). Here is a real life story HEALTH
42 Which Way Market-players are usually clueless about politics which has caused bulls much anguish in the past. Will it happen again?
43 Popular Picks Building Blocks
52
Facts about Salt
Is consumption of salt really good for health? What you need to know about salt – Pulse Beat: Medical developments from around the world
46 Medium Term Chettinad Chement shot up 10%, Mahindra & Mahindra went up 1% while Kajaria Ceramics tanked 9%
47 Long Term Mahindra & Mahindra Financial Service and Bajaj Auto rocketed up 9% while ITC went down 5%
EVENTS
Risky 26 AProposition INSURANCE
28 Cover Story
AIR TRAVEL
LEGALLY SPEAKING
Ponzi & 54 Dubious MLM Schemes What investors should keep in mind to avoid being taken for a ride
– 2nd RTI Workshop for Advanced Users
EARNING CURVE
58 Flawed Thinking Global Learning Hedge Funds Under-perform, as Usual; Young Americans Will Not Have Enough for Retirement; Advisors need to go online to embrace the next generation of savers BEYOND MONEY
66 Taming Disability Taming disability has always been a concern. NGOs such as Impact India Foundation seek to provide easier access to healthcare especially to habitations away from medical facilities, writes Aditya Govindaraj
DEPARTMENTS Letters............................. 4 Book Review.....................60 Money Facts.....................63