The Finapolis May 2016 by The Finapolis

Special Issue

Finapolis The

www.thefinapolis.com

1st May 2016 `60

Your Personal Finance Advisor

India Inc. envisions the road ahead

The Finapolis l May 2016

EDITOR’S DIARY

The

Your Personal Finance Advisor

Volume 10

Issue 02

May 2016

Editor Mandar M Bakre editor@thefinapolis.com

Editorial Board Phani Sekhar Amit Saxena KP Jeewan Jagannadham T

Design & Production Guru Prasath R Vijayendra Kumar Ch Kerthi Saikumar

Advertising & Circulation Shabna R Iyer Anamika Mitra Vijayendra Kumar Ch

Readers, Rejoice!

nnual issues make for a thrilling time in the newsroom. This is because they offer a break from routine for everybody involved. Print publications operate on consistency (of design, of style and of content positioning) to ensure their continued appeal to the target au-

dience and familiarity to readers, and those who have worked in newsrooms understand the tyranny that such consistency creates, and the sacrifices it sometimes demands. So annual issues act like a breather — the journalists get to cover different content, the designers get to play around with design, production gets even-higher quality paper for the cover… everybody gets to tap something new, and the final product, although ‘different’ from all other issues, still bears the stamp of the masthead under which it is published.

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The Finapolis put out its first annual issue last year, when we asked captains of India Inc. how to unleash the spirit of enterprise. This year, we’ve

Printed & Published by Mubashir Ansari on behalf of Karvy Consultants Limited. Karvy House, 46 Avenue 4, Street 1, Banjara Hills Hyderabad - 500 034. AP.

Printed at Kala Jyothi Process Pvt. Ltd Regd.Office: 1-1-60/5 RTC Cross Roads, Musheerabad, Hyderabad - 500 020. AP. SVPCL Limited Regd.Office: 206/A, Concorse 7-1-58, Greenlands, Ameerpet Hyderabad - 500 016. AP. Published for the month of May 2016 Printed on May 1, 2016 Total No. of pages 76

All charts and tables are sourced from Bloomberg, unless otherwise indicated.

left the subject open to both selection and interpretation. India needs to progress on many metrics, but it might not be possible for this to happen concurrently. If that is so, is it possible to identify a set of priorities? And do our captains of industry have any view about which priority? Naturally, we expected diverse views. Firstly because many of the subjects are interconnected: we are unlikely to achieve financial inclusion without digital connectivity, for example. Also, people who have expertise in a particular area are more likely to dream about that particular area, which means they will likely write accordingly. Therefore, we listed down the core metrics, and asked the leaders to pen their views. The resultant diverse opinion pieces make up the content of this annual issue. Promoters, head honchos and consultants from across the arc have written. They have selected different topics, and they have laid down different roadmaps. All are concerned with the same goal, though: they are about making India a better place. A place of their dreams. As usual, The Finapolis has more: the Shanbhags tell us how to kickstart savings

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in the new financial year, which is only a month old. In the spirit of the cricket season, the Variety page quiz is based on India’s Test captains. Happy reading!

The Finapolis Karvy Centre, 8-2-609/K, Avenue 4, Street No.1, Banjara Hills, Hyderabad-500 034 Tel: +91 40 66072560 Copyright The Finapolis. All rights reserved throughout the world. Reproduction in any manner is prohibited. The Finapolis does not accept responsibility for returning unsolicited manuscripts and photographs. All unsolicited material should be accompanied by self addressed envelopes and sufficient postage.

Mandar M Bakre

The Finapolis l May 2016

CONTENTS Direction Defined

Ensuring Financial Literacy

Our second annual issue. India needs progress on many fronts (Eg: health, cleanliness, environment, poverty, manufacturing and infrastructure). Which ones are close to India Inc.’s heart? The Finapolis decided to find out. Here are their answers.

Access to a Financial Ecosystem

Ashish Chauhan

Responsible Institutions, Progressive Society

Removing the Fear of Finance

44 Vivek Kulkarni

Kailash Kulkarni

Claiming our Place in the World

Bharat in Full Bloom

Making Affordable Housing Feasible

46 Harshil Mehta

Chandra Shekhar Ghosh

Financial Fitness for the Layman

36 Prithvi Haldea

*T&C apply

An Economy Powered by Knowledge

26 Harshendu Bindal

#Contest 1) What is your dream for India? Tell us on https://twitter.com/ KarvyFinapolis or www.facebook. com/The Finapolis 2) Post on the Twitter timeline tagging @KarvyFinapolis, or the Facebook contest post using ‘#DreamsFor My Country’ 3) Win a prize and have your dream featured in our next issue

V S Parthasarathy

Anuj Puri

May 2016 l The Finapolis

We Are Digital 56

Technical Analysis

We list some short term stock picks you can profit from

With the proliferation of smartphones and tablet devices, reading habits are slowly but surely changing. We understand the importance of giving readers a cross-platform choice to access the magazine. The Finapolis is now available in a digital avatar as well via a global publishing platform such as Magzter and Indiamags. Besides allowing you to read on the go, the digital version offers an enhanced reading experience. It also eliminates delivery delays. You can download the digital magazine on the first day of every month. Go to www.magzter.com, Indiamags.com or Rockstand mobile app, search for ‘The Finapolis’, sample some pages of the digital magazine, and buy a subscription through your netbanking or credit card account. A one-year subscription for The Finapolis digital costs only Rs 540. You need to have a device that runs on Apple’s iOs, Android or Windows 8 operating system. Do let us know what you think of the digital experience by writing in to feedback@thefinapolis.com

18 Newsmaker

Rajan and the Reserve Bank of India took centre stage in April

20 The Chartist

Emerging Consumer Survey 2016

Buy on

73 Bookmark

Business Battles

Columns

There is no compulsion that tax saving investments need be done towards the end of the year. A more efficient strategy is to invest throughout the year in a staggered manner

twitter.com/KarvyFinapolis facebook.com/TheFinapolis linkedin.com/company/karvy

The Finapolis l May 2016

inbox Is the Reserve Bank protected from hackers? It is shocking that online thieves

together. This money is now mostly

have raided the Bangladesh Cen-

lost and it could be used for any

tral Bank. The fact that they sent

purpose. What if this was done by

instructions to the Federal Reserve

a terrorist network? RBI’s statistics

Bank [of New York] in America and

show we have foreign reserves of

then sent the money to Philippines

around $360 billion. RBI needs to

and Sri Lanka show that there

work and make sure this money is

are international thieves and it is

kept safe from such online fraud.

probably a ring or cartel acting

— D Mahesh, Navi Mumbai

Equity is best for long-term Disclaimer: The technical studies / analysis discussed here

Balwant Jain’s article explaining where one can invest money and which is

can be at odds with our fundamental views / analysis. The

best solution was very nice. Even though I invest in equity, I did not know

information and views presented in this report are prepared

about keeping at least seven years for full returns. Most of the times, I have

by Karvy Consultants Limited. The information contained

exited within one year or little more. I will consider waiting with some invest-

herein is based on our analysis and upon sources that we

ments that I have made.

consider reliable. We, however, do not vouch for the accura-

— Prabha Raut, Indore

cy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred

I really liked the tear chart for people who are investing for the first time.

based upon it. The investments discussed or recommended

I have taken it out and given to my son who will start working this year. It

in this report may not be suitable for all investors. Investors

should help him decide his investments.

must make their own investment decisions based on their

— Vijayanand V, Bengaluru

specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every

Dump Trump I read Donald Trump’s insulting quote in your magazine, it is true the man has no taste and no sense. I think Peter Schiff is correct in his article when he argues that the rise of Trump and Sanders is a sign of citizen dissatisfaction within the United States of America. Nobody in his right mind would vote for Trump, who has shown himself to be all theatrics and no substance. — V Gangadharan, Thane

employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All em-

Priyanka is the best! Priyanka Chopra is the best actress in the industry today. She has shown how to succeed in Bollywood without having any godfather or connections inside the

ployees are further restricted to place orders only through

industry. She is also hardworking and sincere. None of the other actresses can

Karvy Consultants Ltd. This report is intended for a restrict-

act as well as she can act.

ed audience and we are not soliciting any action based on

— Parul Roy, Kolkata

it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Send your feedback and views on The Finapolis to feedback@thefinapolis.com

The Finapolis l May 2016

 Free flow

BANGLA BANK Theft At least 20 foreign citizens involved, says Bangladesh

India gets a cashless payment gateway

Building strength

he National Payments Corporation of India (NPCI) launched a unified payment interface (UPI) on Monday, taking the country closer towards becoming a cashless economy. UPI will make e-commerce transactions easier and also facilitate micropayments and person-to-person payments, but acting as a single virtual ID. Customers will be able to transfer an amount of up to Rs 1 lakh across different banks without having to divulge their bank account numbers. So far, 19 banks have signed on with NPCI to offer financial transaction services based on the UPI platform. RBI governor Raghuram Rajan, present at the launch, said the move would benefit consumers. “There is collaboration in this

Airtel buys 4G in eight circles, gets pan-India presence Bharti Airtel has agreed to buy 4G spectrum belonging to Aircel in eight circles — Tamil Nadu (including Chennai), Bihar, J&K, West Bengal, Assam, North East, Andhra Pradesh and Odisha. The deal was announced its filing with stock exchanges. The purchase, for

revolution but there is also immense competition and the winner is the customer. We hope customer experience with developments like today’s improves tremendously and the ease of making payments, the ease of saving and the ease for buying financial products also improves tremendously,” Rajan said at the launch. “What we have in India is the most sophisticated public payments infrastructure in the world. (But) It is not just the payments that are part of the revolution; it is a whole new set of banks that are coming in.” UPI has been developed under the guidance of Nandan Nilekani, former chairman of the authority issuing Aadhaar cards and co-founder of Infosys Ltd.

Bangladesh said investigations into the $81 mn cyber theft at Bangladesh’s central bank reveal that at least 20 foreign citizens were involved in the crime. Shah Alam, additional deputy inspector general of Bangladesh’s Criminal Investigation Department, told reporters in Dhaka that the names of 12 Philippine nationals and eight Sri Lankans had come up during the official visits to the Philippines and Sri Lanka. “We may have to visit those countries again, but we can’t disclose the names at this moment for the sake of the investigation.” In early February, hackers attempted to steal almost $1 billion from the Bangladesh central bank’s account with the Federal Reserve Bank of New York. While most of the transfers were blocked, about $81 mn ended up in the Philippines, and most of that is missing. Another $20 mn sent to a bank in Sri Lanka was returned. The case has sparked investigations in the Philippines and Bangladesh, and p ro m p te d central banks to d o u ble-check cyber security systems.

Rs 3,500 crore, will give Airtel a pan-4G India footprint ahead of the launch of Reliance Jio, the only other player with pan-India 4G airwaves. For Aircel, the deal will help to pare debt and could also help it to fulfil requirements for its merger with Reliance Communications. Aircel had debt of Rs 18,000 crore, and needed to reduce around Rs 4,000 crore. In March this year, Airtel announced a deal to buy the entire spectrum of Videocon for Rs 4,428 crore.

The Finapolis l May 2016

 Month Gone by

Boom Time

Mallya loses diplomatic passport, could lose Rajya Sabha seat as well

RIL posts highest profit in eight years

The ethics committee of the Rajya Sabha decided unanimously to expel Vijay Mallya from the house, while giving him a week’s time to explain his conduct in the default on over Rs 9,000 crore of bank loans made to his Kingfisher Airlines Ltd (KFA). The committee made the decision after it received replies from 13 banks to whom KFA owes money. Mallya’s Rajya Sabha membership as an independent MP ends on June 30 this year. The decision by the Rajya Sabha came a day after the government revoked Mallya’s diplomatic passport in an effort to secure his return to India. Mallya, who has said he is an NRI, flew to the UK on March 2. Sharad Yadav, a Rajya Sabha member of the Janata Dal (United) and member of the ethics committee, told reporters over the phone that the committee would meet again on May 3, following which it would recommend Mallya’s expulsion from the chamber. He added that the panel’s discussion was limited only to whether or not Mallya’s membership should continue;

Reliance Industries Ltd posted net profit of Rs 7,398 crore in Q4FY16, its highest in eight years, supported by strong margins in its refining and petrochemicals business. RIL’s refineries earned $10.8 per barrel of crude processed, up from $10 a year earlier. Revenue, however, declined nearly 9% to Rs 64,569 crore as benchmark (Brent crude) oil prices declined 41% in the last one year. Exports declined by 18% to Rs 30,935 crore, owing to lower product prices. For the whole of the financial year 2016, the company’s consolidated profit climbed 17% y-o-y to Rs 27,630 crore, while revenue rose 24% to Rs 2,96,091 crore. Its gross profit from refining increased by 49% y-o-y to Rs 23,598 crore, while that of the petrochemicals division climbed 23% to Rs 10,221 crore. This was RIL’s highest quarterly net profit since the Rs 8,079 crore it posted in Q3FY08.

not on whether he should be brought back to India. Mallya was elected to the Rajya Sabha for the first time in 2002, and elected for a second term in 2010. Mallya is also facing a non-bailable warrant issued against him by a special court under the Prevention of Money Laundering Act after the Enforcement Directorate alleged he had siphoned off Rs 430 crore from an IDBI Bank Ltd loan to KFA to purchase properties overseas. He has not heeded three summons from the Enforcement Directorate to appear before it personally.

Summer shortage Dairy prices likely to rise in May Dairies are likely to review their prices next month, as milk supplies traditionally drop 15-20% during summer. This summer, the shortage is compounded by rising fodder and cattle feed costs, owing to drought in many parts of the country. Prices of fat and skimmed milk powder (SMP) have also started climbing. “Commodity prices were down last year but have started firming up since the past 15-odd days,” R S Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation (GCMMF), the country’s largest dairy cooperative, told reporters.

Sodhi said that procurement of milk was down by 15-20% on an average across the country, except in Gujarat. “In Gujarat, supplies are up by 10%,” he said. The GCMMF procures around 18 mn litres a day, of which 15-20% comes from outside the state of Gujarat.

Maharashtra, normally the country’s seventh largest producer of milk, has a particular problem this year due to drought. Devendra Shah, chairman of private dairy Parag Milk Foods, told reporters: “We have already increased the procurement costs (prices) to farmers by 10%. The input cost of fodder has witnessed a significant increase of 15-20%.” Tamil Nadu is in a better position, having got good rain during the northeast monsoon. “We are already paying more to farmers at Rs 26 a litre, compared to what they are getting in states like Maharashtra, where it is as low as Rs 18 a litre. Hence, we do not have a supply crisis, as of now,” said R G Chandramogan, managing director of Hatsun Agro.

The Finapolis l May 2016

 Record payout

Under stress

Rs 65,385.21 crore of dividend paid out in Jan-March

Rs 3.8 lakh crore of corporate debt downgraded in FY16

Indian companies listed on the stock exchanges paid dividend of Rs 65,385.21 crore during the January-March quarter in 2016, the highest paid out in this quarter. Companies are paying dividends early so as to shield shareholders from a dividend tax that came into effect from April 1. Finance minister Arun Jaitley in his budget speech on February 29, had introduced a 10% tax on dividend income in excess of Rs 10 lakh per annum. In particular, promoters with a large shareholding can expect significant savings through an early payout. Data showed that almost 70% of the dividend payout, or ~Rs 45,000 crore, was announced within a month of the Budget. Market experts said that the large dividend payouts, uncommon this time of the year, were to be expected.

survey results Bank customers: Who’s more satisfied? Foreign banks HSBC, Standard Charclose by at 74 and 73, respectively, tered and Citibank outperform they study found. Kotak MahinBANK Indian banks in customer satisfacdra Bank, with a score of 71, was tion, according to reports of a ranked fourth, followed by ICICI study by the Indian Customer SatBank (70), and Bank of Baroda, isfaction Index (ICSI). The survey Axis Bank and HDFC Bank (all at polled close to 7,000 bank customers of 68). Punjab National Bank, Canara 12 large Indian banks for their satisfaction. Bank and Bank of India followed in deHSBC topped the survey list, scoring a creasing order, while State Bank of India customer satisfaction rating of 76, while (SBI), the country’s largest bank, received Standard Chartered and Citibank followed a score of 62.

Quote of the month

CRISIL Ltd, the country’s largest rating agency, downgraded debt worth Rs 3.8 lakh crore in FY16, the highest it has downgraded in any single year. The agency also said it expects credit quality for India companies to remain under pressure in the near term. “Debt of firms downgraded by CRISIL in fiscal 2016 has risen to an all-time high of Rs.3.8 trillion (1 trillion = 1 lakh crore), underscoring that credit quality pressures continue to mount for India Inc,” the rating agency said in a report. More than half of the Rs 3.8 lakh crore debt that was downgraded belonged to firms in the metal sector, while the second biggest chunk of about a quarter belonged to the infrastructure sector, the report said. “Debt under stress at infrastructure and metal-linked firms is at a record level because there hasn’t been any meaningful deleveraging of balance sheets, and metal prices continue to be low,” said Somasekhar Vemuri, senior director, CRISIL Ratings. CRISIL said the debt-weighted credit ratio in the second half of FY16 (the amount of debt upgraded to amount downgraded) stood at 0.2, the lowest in the last three years. “The ratio can turnaround only if there is a substantial deleveraging of stressed balance sheets through sale of non-core assets, or a sharp reversal in metal prices. A broad-based improvement in credit quality will depend on pick-up in investment demand, favourable monsoon and the government’s ability to continue to push reforms,” it said in the report.

It is a fallacy to regard fundamental rights as a gift from the State to its citizens and that irrespective individuals possess basic human rights independently of any Constitution by reason of the basic fact that they are members of the human race. — Ram Jethmalani, delivering the Delivering the 12th Nani Palkhivala memorial lecture at Thanjavur

May 2016 l The Finapolis

 briefly

Sweet & Sour

Govt to divest 10% in NMDC

EPF: Inactive accounts to earn interest, but rate of interest for FY17 lowered

The Department of Investment and Public Asset Management (DIPAM) kicked off the disinvestment process for 2016-17, inviting applications from I-banks for the sale of a 10% stake in NMDC, which could raise over Rs 4,000 crore. The disinvestment will take place through the offer-for-sale mechanism, DIPAM said, adding that bids should be submitted by May 16. Further, 5% of the offer size will be reserved for NMDC employees, who will also be eligible for a 5% discount of the discovered price.

Sebi may open commodities to banks, MFs, foreign investors The Securities and Exchange Board of India (Sebi) might open the commodity market to new participants such as banks, mutual funds and foreign portfolio investors, as part of its effort to increase participation in the segment. Participation from these entities and other sources in commodity derivatives trading has been awaiting Sebi approval for a while. The regulator is also planning measures to reduce risks and improve liquidity in the commodity market.

Edelweiss buys JPMorgan MF Edelweiss has agreed to buy the mutual fund business of JPMorgan Asset Management India Pvt Ltd, which is almost five times the size of Edelweiss’ MF business, housed under Edelweiss Asset Management Ltd. Although the transaction is for an undisclosed sum, news reports indicated it was an all-cash deal valued at 1.5-2% of JPMorgan Asset Management’s asset size of Rs 7,501 crore. That would work out to a price of Rs 112-150 crore. Meanwhile, Edelweiss’ assets under management averaged Rs 1,632.36 crore for the quarter ended December 31.

There was good and bad news for investors on the EPF front. The government rolled back a move by the previous government and said inactive EPF accounts would receive interest from April 1, 2016. This was good news for salaried employees, as EPF accounts largely turn inactive because companies prefer to open new accounts for joining employees rather than transfer the earlier accounts, because of the tedious process involved. The previous government had decided to halt interest payments on inactive EPF accounts from the financial year 2011-12. Accounts in which no contribution is made for 36 consecutive months are deemed to be inactive. There was sour news too. The finance ministry set the FY16 interest rate for

EPF at 8.7%, lower than the 8.8% that was recommended by the labour ministry and the EPF Organisation. This is the lowest interest rate in three years. Subsequently, however, the ministry seemed to soften its stand, with reports quoted a senior finance minister saying it was not a rate cut, but “advice” based on arithmetic calculation. D L Sachdeva, general secretary of the All India Trade Union Congress, told reporters that based on the income estimates of the EPFO, the interest rate had been calculated at 8.95% for 2015-16. “However, the labour minister said given the changing market conditions, we should take precaution and save something for the future. So we all agreed to provide interest rate of 8.8%,” he said.

No discounting Apple seeking uniform prices as it prepares to open stores in India Apple is seeking to implement a uniform pricing structure for its iPhones, which could lower the difference between the online and offline cost of the mobile phones. According to reports, the pricing decision was triggered by flagging offline sales and ahead of Apple’s plans to launch its own retail stores in the country. “… Offline sales… had taken a hit due to the huge online discounting, which Apple headquarters has not taken in good spirit and hence the company now wants to correct and bring about a

common pricing,” the chief executive of a leading cellphone retail chain was quoted telling reporters. Most online resellers obtain the phones cheaper by buying them in Hyderabad and Bengaluru, where value added tax on mobile phones is 5%, and then sell them to customers in New Delhi and Mumbai, where VAT is higher at 12.5-14.5%. Because the sellers get the phone cheaper, they are able to offer it at a discount, which creates a price difference between the retail stores and the online marketplace.

The Finapolis l May 2016

 news scan better Oversight

Banks Board to start process for selection of PSB heads The BBB’s first meeting was held on April 8, and was attended by Minister of State for Finance Jayant Sinha and RBI Governor Raghuram Rajan in Mumbai. Members such as ICICI Bank’s former joint MD H N Sinor, Bank of Baroda’s former CMD Anil K Khandelwal and rating agency Crisil’s ex-chief Rupa Kudwa were present in the meeting. Its ex-officio members -- Ameising Luikham, Secretary Department of Public Enterprises, and Financial Services Secretary Anjuly Chib Duggal also attended the meeting. The BBB has three ex-officio members and an equal number of expert members. At a convocation address in Pune, Rai had said that BBB was working on designing compensation packages that are comparable to those in private sector banks. Observing that an adequate reward structure around ESOPS, performance-linked incentives and other benefits could be designed to attract talent. World Economic Forum

The newly-constituted Bank Board Bureau (BBB) will start the process for selection and appointment of managing directors for public sector banks, BBB Chairman Vinod Rai told reporters on April 23. “Tangible decision is selection of MDs, we will start that immediately,” Rai told reporters after the second meeting of the high-powered panel. BBB was constituted earlier this year to help the government select heads of public-sector banks and financial institutions and assist banks in developing strategies and capital-raising plans. It will also constantly engage with the board of directors of all PSBs for their Vinod Rai growth and development. There are 22 stateowned banks in the country. The Bureau is looking at a host of issues, including consolidation, stressed assets and capital infusion. Further, it is looking at bringing down NPA levels in public lenders and ways to resume the lending process.

weet up The ‘I think you should, I think you shouldn’t’ blame game is endless. I should or I shouldn’t. For myself. That’s hard enough –@kalkikanmani

In half a decade, Water Management will be the dominant theme in Indian infra, surpassing the current attention on Energy & Transportation –@Infra_VinayakCh

Litmus test of a good startup board member: He/she should be able to run at least one function of the company better than the entrepreneur –@1kunalbahl

Desperate appropriation of #Ambedkar by rival politicians is today just like the legend of Hindus & Muslims fighting for Bhakt Kabir’s body –@ShekharGupta

The Finapolis l May 2016

 newsmaker Raghuram Rajan

The Governor of the Reserve Bank of India and the institution he heads took centre stage in April. Top of the list of what put them there was an expected 25 basis point reduction in the repo rate on April 5. The RBI also raised the reverse repo rate by 25 bps, while reducing the daily cash reserve ratio requirement by five percentage points to 90% from April 16. Rajan was also a part of the newly-formed Bank Board Bureau’s first meeting on April 8. Headed by former comptroller and auditor general Vinod Rai, the bureau will help the government select heads of public-sector banks and financial institutions, while engaging with PSB boards. Towards the end of the month, a Bloomberg survey of 15 economists saw 13 say Rajan would get an extension at the RBI, one say it’s unlikely and one said it could go either way. Rajan’s term ends in September, but Finance Minister Arun Jaitley has refused to comment on the topic. Meanwhile, at the institutional level, it emerged that the RBI, Sebi and Irda were in talks to institute common KYC norms for the financial sector, so that investors would only have to register with one of the three agencies. The central bank also issued a circular asking Indian banks to hive off their investment advisory services into an existing or separate subsidiary, so to ensure an “arm’s-length relationship” between the two. The RBI did throw one googly: Responding to an RTI query filed by a newspaper, the central

bank declared that it does not have a list of willful defaulters and claimed that compilation of the same “would disproportionately divert” its resources. The response came even as the central bank opposed a Supreme Court move for a list of willful defaulters to be made public, because it would violate the confidentiality clause of the loans.

20 The Finapolis l May 2016

the chartist Emerging Consumer Survey 2016 India tops the Emerging Consumer Survey for 2016, which involves nearly 16,000 detailed face-to-face interviews with consumers across Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa and Turkey to map sentiment. We look at the survey results for emerging markets and India

Survey sentiment indicators average readings Personal finances Indicator

Inflation expectations

Net balance, Net balance, better vs. worse higher vs. lower

Income change in last 12m

Income expectations

Good time to make a major purchase

Weighted % change

Net balance, excellent time vs. bad time

2015

16.2%

45%

-1.7%

2.7%

-9.1%

2014

26.0%

45.9%

0.9%

3.8%

-4.4%

2013

26.0%

50.1%

0.5%

3.7%

-5.3%

Emerging Consumer Survey Scorecard 2016 Personal finances

Inflation expectations

Household income expectation

Time for a major purchase

Income history

Rank based on 5 factors

India

China

Saudi Arabia

Indonesia

Turkey

Mexico

Brazil

South Africa

Russia

Rankings (6-12 m horizon)

First Rank

Second Rank

Third Rank

May 2016 l The Finapolis

The Chartist Global Consumer Confidence Survey Q42015 Nielsen Consumer Confidence Index* Decrease

-3

+2 -3

-2 -3 -6

0 -5 -1

I EM

TE RA

IN DI C

-3 +2

BIA

-13

( -2 change from Q3-2015 )

10 0

-2 -19 0 +2 +6 +5 -2 +1 +2 +3 +1

-7 +4 -3 -1

-7

-5

-1

+10

North America Latin America Asia-PaciямБc Africa, Middle East

Europe

*Survey based on 61 Countries, three-month trend and respondents with internet access. China Survey results reflect a mixed methodology. Index level above and below 100 indicate degree of optimism / pessimism. **Morocco was a new market in Q3 2015

Source:

GLOBAL AVERAGE

-5

T EN ID NF

-3

MO RE CO

NT IDE NF O

SWEDEN

-3

LE SS

D. UT

E ZU

BO VE

M IS

NE VE

-1

IM PT O

-1

XE SA

E AT

-1

IND E

No change

Increase

The Finapolis l May 2016

The Chartist India: Personal finances over next 6 months 45% Balance better vs. worse 40% 35% 30% 25% 20% 15% 10% 5% 0% <6250

8750

12,500

17,500

This survey average

Income (INR)

25,000

35,000

>40,000

Last survey average

India: Consumer confidence indicators 50% Net balance 40% 30% 20% 10% 0% -10% -20% India

Personal finances

Inflation Income change expectations in last 12m

Income expectations

Good time to make a major purchase

Emerging Market Average

India: Nominal growth in household income 12% Nominal growth (%) in household income â&#x20AC;&#x201C; next 12 months 10% 8% 6% 4% 2% 0% <6250 This survey

8750

12,500 Last survey

17,500

25,000

35,000

>40,000 Income (INR)

May 2016 l The Finapolis

The Chartist India: Personal finances over next 6 months 12% Recorded spending in 2015 vs. 2014 Internet access TV 10% 8% 6% Smartphone 4% Beer Cars 2% Spirits Jewellery 0% -2% Extra education -4% -6% Holidays -8% -10% 10

Dairy

Carbonated drinks Mobile phone

100

2015 respondents that own or have bought each item (%)

India: Monthly spending by category 25%

Indian monthly spending

Overall survey average

20% 15% 10% 5%

India: Savings by distribution channel (%) 90% Percentage of respondents saving by each method 80% 70% 60% 50% 40% 30% 20% 10%

No extra money for saving

Gold and jewelry

Collectables

Property

State Treasury bill-bond

Mutual fund

Cash

Stock market

Life insurance

Bank account

Other

Clothing

Property + local taxes

Savings

HPC

Education

Healthcare

Autos

Travel & entertainment

Food

Housing + public utilities

Source: Credit Suisse Emerging Consumer Survey 2016 & Nielsen Q4 2015 Consumer Confidence Report

Cosmetics Two-wheelers Property

24 The Finapolis l May 2016

Mandar M Bakre Editor, The Finapolis

Direction Defined

reams are the stuff lives are made of. Without them, we would have no notion propelling us to a future we plan to create, no goals to look up to. Subconsciously or otherwise, they guide our actions. It is our dreams that tell us what we want to be, which tells us want we need to do. Our ambition, for example, is powered by our dream of success. Our financial plans are premised on the dream of financial freedom. Then there is the other kind of dream; the one we wish for our country. When you think of India of the future, what do you see? What do you wish to see? How far apart are those two visions? And what can be done to bridge the gap between the two? This is the topic The Finapolis picked for its second annual issue. And we asked India Inc. to tell us its dreams of how India can become better. This is not a subject seeking a resolution, so it is open to both selection and interpretation. Across a range of topics, from digital connectivity and financial inclusion to education, housing and transport, we all have dreams

The gold standard for a dream for India was probably laid down by JRD Tata in 1992, at a function after being awarded the Bharat Ratna. “An American economist has predicted that in the next century India will be an economic superpower,” the Grand Old Man said to those who had assembled. “I don’t want India to be an economic superpower. I want India to be a happy country.” for our country. We would like less poverty and more cleanliness, better roads and more opportunities. And the India of our dreams should progress on all fronts — nobody likes their country to have lop-sided development. But reality, as usual enforces choices, and we must select our priorities and find an optimal balance. To find that balance, we must start somewhere. And take

those first steps. What should those be? In this special issue, chieftains at India Inc. pick their choices and lay down their views. They tell us what they see and what they wish to see. Read their pieces to find what India is today, and what it can become tomorrow. We are confident it will help you select your priorities and discover an optimal balance for the India of your dreams. f

26 The Finapolis l May 2016

Harshendu Bindal President, Franklin Templeton Asset Management (India)

Ensuring Financial Literacy

he Organisation for Economic Co-operation and Development (OECD) defines financial literacy as a combination of financial awareness, knowledge, skills, attitude and behaviours necessary to make sound financial decisions and ultimately achieve individual financial wellbeing. Simply put, financial literacy is all about being â&#x20AC;&#x2DC;financially smartâ&#x20AC;&#x2122;.

Why do we need financial literacy? Financial literacy helps us to efficiently articulate the path that our money needs to take once it enters our bank account. It also helps us assess the risk of various investment avenues better as well as mitigates the fear of investing in market linked capital market instruments. For example, a financially literate person understands that derivatives are far riskier than direct stocks, which in turn

May 2016 l The Finapolis

are far riskier than equity mutual funds. Without financial literacy, all three would have been clubbed in the same basket and one would have mostly refrained from investing in any for fear of losing money. It is the financially illiterate that are targeted by Ponzi finance schemes operated by ‘fly by night’ operators wherein gullible investors have poured lakhs and crores in lure of high returns. Besides this, there are some simple day-to-day examples which point to the need for better financial literacy. For example, if an investment has doubled in six years, some may say that the returns are 16.67% per year or 100% in six years (100% / 6 years = 16.67%) when the actual returns are 12.3% compounded annually. The financially illiterate fall prey to higher returns shown by such calculations while the financially literate; in contrast, end up questioning the period of compounding (whether quarterly or half yearly). Thus financial literacy not only lies at the bottom of the pyramid but across the wealth hierarchy though the proportions may vary.

How does financial literacy help?

I have observed that most Indians follow a ‘one size fits all’ approach when it comes to investing. The preference is for stereotypical investments like gold, real estate, bank fixed deposits and postal savings. While gold and real estate are long-term investments, the rest are used on an ‘as and when needed’ basis. The biggest risk of an ‘aggregated’ approach like this is that many a times, investments end up being utilised for early or front-end goals with very little left for rear-ended goals like retirement. Financial literacy helps one to move from an ‘aggregated’

investment approach to a ‘segregated’ investment approach wherein each goal is backed by a separate investment portfolio. Though it may not have a big theoretical backing, the ‘segregated’ approach is practically better as there is no overlap or spillover happening from one goal to another. Along these lines, financial literacy helps to understand the risk based approach to investing, meaning that one should invest in less risky investments

in the short term and target relatively riskier avenues like equity for the long term and benefit from their higher wealth creating potential for crucial goals like child’s education/ marriage, retirement, etc. Unlike those who feel that equity markets are risky, a financially literate person would understand that one can invest in equities through mutual funds which are professionally managed. One can further reduce risk by increasing the tenure of equity investments to five, ten, 15 or 20 years to reduce the chances of any negative returns. One also builds awareness about facts like ‘one must not time the market’ but invest in small amounts, regularly and over the long run. One must also be aware of tax efficiencies (post tax returns) which financial literacy clearly highlights. While returns from traditional investments are taxed every year, returns from mutual funds are taxed only on redemption. Further, returns from equity funds are tax-free after one year while debt funds enjoy the benefits of indexation which is nothing but paying tax only on returns earned over and above inflation.

A financially literate person understands that derivatives are far riskier than direct stocks, which in turn are far riskier than equity mutual funds. Without financial literacy, all three would have been clubbed in the same basket and one would have mostly refrained from investing in any of them

28 The Finapolis l May 2016

If we want our next generation to be financially literate, we need financial education to be part of school and college curriculum. It is important that this not be a tick-box initiative. Students must understand the basic nuances of investments so that they can take informed investment decisions in future to meet their life goals Even when it comes to insurance, traditional insurance is the favourite, while term insurance is discouraged as the premium is non-refundable. But, one does not look at the larger cover from term insurance for the same premium. Financial literacy is needed to communicate that insurance is for protection or risk mitigation and not for investment.

Change in investment psyche The poor financial literacy in the country is seen by the fact that mutual funds have been bought by only about 1.5 crore Indians so far. The biggest challenge thus is to change the investment psyche first from ‘physical assets’

to ‘financial assets’ and within financial assets from ‘assured returns’ to ‘market linked returns’. For example, the Employees Provident Fund corpus is predominantly debt oriented and declining interest rates would lead to a lower corpus for retirement. Supplementing this corpus by regular savings in market-linked investments has the potential to provide higher inflation-adjusted returns, which could solve the issue.

What is the solution? 1. Basics First: If we want our next generation to be financially literate, we need financial education to be part of school and college curriculum. The basic lessons of investments must be taught in school/ colleges. Once again, it is important that this is not a tick-box initiative. Students must understand the basic nuances of investments so that they can take informed investment decisions in future to meet their life goals. 2. Use of technology and social media: These can be big enablers in increasing the ambit of financial literacy. The mobile phone would be the key driver for this change. All stakeholders could pool resources and encourage ‘fin-lit’ start-ups to help

build scale. Besides, technology can be used to spread financial literacy in a ‘fun’ way through games using mobile apps. 3. Public-Private partnerships: Increasing financial awareness in a large and diverse country like India will have to be a long-term effort built on a public–private partnership involving the government, regulators, industry associations, financial sector players like banks, mutual funds, insurance companies, and financial product distributors. 4. Simplified messaging: The communication to investors must be very simple, consistent and de-jargonised.

Conclusion A well informed and fully aware investor base is important for a growing economy like India, as it fosters financial stability. While SEBI and RBI have their own financial literacy initiatives, we need many more hands to build the momentum. While the Jan Dhan Yojana launched by our Honourable Prime Minister tries to address financial inclusion on a war footing, we need a similar ‘magnum opus’ in the financial literacy space as well. f

30 The Finapolis l May 2016

Ashish Chauhan CEO, BSE Ltd

An Economy Powered by Knowledge

t BSE, we believe that a stock exchange must act as a catalyst for nation building, not just as an exchange platform and BSE has a 140 year old track record in this regard. We are one of the oldest working public institutions in India and have constantly reinvented ourselves and been a pioneer in promoting an investing culture.

Promoting Reach For example, the BSE Star MF platform is India’s leading platform for mutual funds distribution and is accessible “anytime” from “anywhere”. The platform is connected to all the stakeholders required for transaction processing i.e. AMCs, RTAs, depositories, clearing banks at backend and a single interface to mutual fund distributors. The platform processes 90% of the demat transactions of the MF industry today. In FY16, we processed over 29.22

May 2016 l The Finapolis

lakh orders, amounting to Rs 40,000 crore, with over 4 lakh registered SIPs. We are introducing new features to make the platform even more investor friendly and have completely enabled digital non-demat mode keeping in with all the benefits of physical mode by introducing features like 24X7 order acceptance and others.

Skilling India The government is committed towards youth empowerment, through enhancing quality of education, funding higher education and upskilling the Indian youth. The Skill India programme, with various initiatives, is aimed specifically at enabling our youth to upgrade their skills. With these initiatives, it is clearly up to the institutions to encourage and drive the issue of job creation for our youth as the government alone cannot be expected to shoulder this responsibility. At BSE, the BSE Institute addresses the issue of enhancing quality of education by offering financial and leadership learning and promotes an open learning environment that brings together people, cultures and ideas from around the world, changing lives and helping transform organisations through innovative learning programmes. Ryerson University has set up an incubation centre in BSE, which is aimed at helping entrepreneurs hone their business models. We intend to help several such entrepreneurs in the future which will not only generate employment but also help in nation building.

Support for SMEs The SME sector in India has the biggest potential to create jobs and is among the biggest contributors to GDP.

The SME sector in India has the biggest potential to create jobs at various levels and is amongst the biggest contributors to the GDP. Our platform is an attractive source of funding for SMEs, as it offers a respite from high interest rates and restrictive financing norms Our SME platform is an attractive source of funding for SMEs, as it offers a respite from high interest rates of money lenders and restrictive financing from the banks and various financial institutions. The platform facilitates equity financing opportunities that brings together private investors and these companies, which gives them a significant advantage over the traditional methods of raising capital and help them to grow their business and encourage innovation and entrepreneurial spirit. The BSE is a market leader in SME category with a market share of 91%, and has raised over Rs 900 crore for SMEs. In the adverse economic conditions seen over last two quarters or more, India has remained relatively insulated from the â&#x20AC;&#x153;troubledâ&#x20AC;? state of the global economy. Yes, the consumption story is flat due to a combination of global recessionary conditions that has decreased global demand and a stress in the domestic rural economy due to two consecutive years of below average rainfall. But the government has announced a slew of measures for the rural, agri-

cultural and the exports sector. Some of them include proposals for doubling farmers income by 2020, the highest-ever budgetary allocation for MGNREGA, focus on upskilling the Indian labour market and incentives for start-ups. These steps will empower the various strata of the society and ensure higher rural disposable income, which in turn will provide further stimulus to the economy. By 2020, the average age in India will be 29 and it is set to become the worldâ&#x20AC;&#x2122;s youngest country with 64% of its population in the working age group with a strong knowledge base and English speaking adeptness. With Western Europe, the US, South Korea, Japan and even China ageing, this demographic potential offers India and its growing economy an unmatched edge that economists believe could add a significant 2% to the GDP growth rate. India has the best economic and demographic conditions to support industry growth and consumption story. That, and a greater emphasis on social sectors, education, skill building and job creation will lead to building a knowledge based and productive economy. f

The Finapolis l May 2016

Chandra Shekhar Ghosh Chairman & MD, Bandhan Bank

Access to a Financial Ecosystem

am a strong believer of the words of our late president Dr. APJ Abdul Kalam â&#x20AC;&#x201C; â&#x20AC;&#x153;You have to dream before your dreams can come true.â&#x20AC;? A country cannot progress until its residents dream a better tomorrow and put their best efforts to make it real. As a nation we have progressed fast, especially during the past decade. We reached many milestones, and missed a few. Managing such a huge population is no mean task. But there are certain aspects of development for which there should not be any compromise. Removal of poverty tops the list. We are living in a highly

May 2016 l The Finapolis

fragmented society, where the divide between the rich and the poor, urban and rural, and even men and women is widening. The differences are present at every level â&#x20AC;&#x201C; family, society and the country as a whole. My dream India will not have such boundaries. Chalking the path of life is a personal journey, but none should be deprived of the opportunities. Cities and metros flourish, because they are the hubs of financial activities. Better infrastructure, superior amenities for day-to-day life, jobs, and an attraction towards glitz of city life make millions of people settle down in cities and metroes. We need to create many new financial hubs in rural India. Access to financial services is a pre-condition for growth in rural economy. The trinity of Jan Dhan, Aadhar and mobile connectivity, popularly called JAM, is already showing its impact. Around 21.51 crore new bank accounts have been opened under the Prime Ministerâ&#x20AC;&#x2122;s Jan Dhan Yogana (PMJDY) scheme, having more than Rs 36,600 crore deposits in them. Indeed many of them are the so-called zero-balance accounts, but the proportion of funded accounts has been rising from 55% in September, 2015 to 73.37 % as on April 6, 2016. But this is not the end of our journey for inclusive finance. For reaching financial inclusion in the truest sense of the term, we need to go further. Account opening is the first step in the world of financial transactions. People have to use the services repeatedly for their own good and financial viability of the service providers. The challenge is to ensure the usage. Also, bank accounts are only one aspect of financial inclusion. People must have access to bank credit and other financial products such as mutual

To reach financial inclusion in the truest sense of the term, we need to go further than just opening accounts. People have to use the services repeatedly for their own good. The challenge is to ensure the usage funds and insurance. The microfinance sector in India has been on a roller-coaster ride. After the Reserve Bank of India (RBI) issued a universal banking licence to Bandhan, eight microfinance entities have received in-principle licence for small finance banks from the Indian central bank. The financial sector is betting on the microfinance way of financial inclusion. The microfinance model has proved that poor are bankable and financial services could be provided to unbanked population in a sustainable way. Our own experience in the

past 15 years has taught us that the banking at the bottom of the pyramid is different. It cannot be dealt the same way as banks operate at posh metro locations. The people are different; their lifestyle, needs, issues and problems â&#x20AC;&#x201D; everything is very different from the upper echelons of the society. Trust and relationship play a major role in monetary transactions on this turf. That is why a friendly money lender, despite charging exorbitant interest rate, is preferred over a grumpy bank manager. Travel time to bank branch and time-consuming paper works are other deter-

34 The Finapolis l May 2016

Banking at the bottom of the pyramid is different from banking at posh metro locations. On this turf, trust and relationship play a major role. That is why a friendly money lender, despite charging exorbitant interest rate, is preferred over a bank manager rents. The opportunity cost of the time spent in a bank branch sometimes equals a day’s wage, and that is a costly proposition for any individual. Taking banking at the doorstep of such customers is a way out. The banks have to find out their own low-cost, high-efficiency channels of delivery. We have figured out our own. In the past eight months, we have opened 661 branches of Bandhan Bank. Meanwhile, the erstwhile 2,022 microfinance branches have been converted into low-cost doorstep service centres (DSCs) which are attached to the bank branches. In the so-called hub and spoke model, each bank branch is attached to three or four DSCs, which are being serviced by

4-5 doorstep banking officers, carrying point of sale or POS machines. Products designed keeping in mind the need of end-users always have more takers. When my team was designing the recurring deposit product, they wondered what should be the minimum threshold. Recurring deposits at Bandhan Bank could be opened with Rs 100 and there is flexibility of depositing in multiple of Re 1 thereafter. Not only that, an overdraft facility has been inbuilt in the product after six months. This flexibility is helping those customers who have irregular source of income. Naturally, the product has become popular. Deliveries of right products at right time help customers. A farmer who needs Rs 15,000 to buy seeds cannot wait indefinitely for the loan. Similarly, a small-time tea shop vendor in need of Rs 5,000 to repair his shop will find it difficult to visit bank branch multiple times, leaving his business behind. Digital innovation has accelerated financial inclusion like never before, smartphones being the game changer. According

to global technology research firm Gartner, smartphone sales in India will be 29% in 2016 and continue its double-digit growth for next two years. RBI data also supports the changing role of mobiles in banking. In December 2014, we had 1.68 crore mobile transactions, and this grew 135% in a year’s span to 3.95 crore in December 2015. Aadhar enrolment has already crossed the 100-crore mark. With direct benefit transfer of more than Rs 40,000 crore already taking place, the Indian banking landscape is poised for a big change. The innovations in digital space will transform the way of banking is done. We love to use cash. The increasing use of wallets is paving the way for a cashless society. The launch of the Unified Payment Interface, which is nothing but a virtual debit card on our mobile phones, will speed up the process. I am hopeful that such excellent technology-based services will not remain restricted to the city dwellers alone. With the penetration of such services in semi-urban and rural areas, banking will transform our lives. The other day when I was leaving office I saw the panipuri vendor at the corner of the street had a notice written in bold letters on his trolley – “paytm is accepted here.” My dream India has started taking shape. f

36 The Finapolis l May 2016

Prithvi Haldea Founder-Chairman, Prime Database

Responsible Institutions, Progressive Society

uring 62 years of my consciousness of independent India, I have witnessed profound changes in our country, and we have come a long way forward. There are several fronts, like our dominance in IT, the green and the white revolutions, and the huge mobile network, which would do us proud. Yet, it is about what we could have achieved and not about what we have achieved. I have only seen a decline around me on almost every front, and significantly in values. Today, as some examples, are we not ashamed that worldwide, we rank first in people living below the poverty line, second in unemployment rate, 76th in the corruption index, 130th in ease of doing business, 133rd in the press freedom index and 118th in the happiness index? As such, I have a dream for just about everything. I am not limiting myself here to my field of the capital markets or even to the econ-

May 2016 l The Finapolis

omy. My other dreams would all help grow our economy and hence also our capital markets. Here are a few of my financial dreams: v Greater financial literacy: Economies grow when household savings are channelised into the capital markets. Regrettably, our investing population continues to be dismally low. One of the biggest reasons for this is the widespread financial illiteracy. Random efforts have not yielded any worthwhile results. If not ingrained early in life, finance appears daunting to most people, leading to apathy in investing. I dream of an India where financial education is imparted right from the school level and continued into colleges. In fact, we need a National Financial Literacy Mission.

v Encouraging domestic investors: India continues to be an FII-dependent country with respect to its capital markets. It is their sell/ buy decisions that move our markets. I dream of an India where our dependence on FIIs goes down significantly, and our domestic investor base (institutional and retail), grows dramatically.

Derivatives, algo-trades and day trades are now dominating the market. We have converted our capital market into a casino! I dream of an India which provides huge facilities and incentives for long-term equity investing of running all businesses, save a few strategic ones.

v Lesser insider trading: Illegal insider trading is rampant in our country. Smart solutions, invented by accountants and lawyers, to undertake big ticket insider trades through multi-layer operations, are difficult to track. I dream of an India where the regulators go full-steam after a few big cases and punish them heavily to create a deterrent for potential offenders. I also hope for abolition of the shrouded-in-mystery P-Notes.

v More long-term investing: v

PSU divestments for retail investors: The government is missing its divestment targets year after year. This is mainly because of wrong methods being used. I dream of an India where PSU divestment happens only in favour of the retail investors, at a huge discount; this is public wealth being shared with the public at large. On the other hand, scarce resources are being wasted both on loss-making PSUs as well as non-strategic PSUs. I dream of an India where the government gets out

We have been told that equity is a long-term instrument; that if one has to create wealth, one should remain invested long. However, over the years, technology and over-emphasis on instant and periodic disclosures, including quarterly results and continuing ticker of share prices, have turned equity into a short-term instrument. Derivatives, algo-trades and day trades are now dominating the market. On any given day, even within the cash segment, nearly 70-80% are day trades. We have convert-

ed our capital market into a casino, people just lose money in this addiction. Luck, as we all know, is rare. I dream of an India which provides huge facilities and incentives for longterm equity investing.

v More mutual funds: For too long, mutual funds have been marketed more as capital market products, quite like shares. On one hand, this misdirects investor expectations. On the other, it keeps away millions of potential investors; people who averse to the markets. Easy exits, daily NAVs, using stock exchangesâ&#x20AC;&#x2122; platforms etc all work against long-term investing. I dream of an India where mutual funds become the preferred vehicle for the small investors, and the fund industry behaves and works in their sole interest.

v Enforcing disgorgement: Financial scams have only increased by the day. The rare indictments are delayed and minor. Worse, we rarely see disgorgement of ill-gotten gains from the scamsters and its distribution to the losing investors. I dream of an India where investors have the assurance that in case they are defrauded, not only will the fraudster be punished but that they will get their monies back. This is the

38 The Finapolis l May 2016 only way to restore faith in the financial system.

v Regulating financial media: While there are several anecdotal reports about a large number of journalists playing in the markets, media houses also have a clear bias in reporting, especially those that have bought into the equities of several companies. On another hand, one sees scores of so-called experts giving free advice to investors through print and electronic media. One wonders why do they spend so much time day after day giving free advice? It is surely not just for popularity. I dream of an India where financial reporting becomes well-regulated. Let me now focus on my dreams in other areas: v Limiting corruption: Corruption has now become a way of life. Bribes are demanded even for a rightful activity. Though reportedly corruption is presently not being heard of at the very high levels, things have become only worse down below. Corruption is rampant in the private sector and NGOs too. I dream of an India where the corrupt are not only punished very swiftly and heavily but are also shamed widely in the public.

v Enforcing better political system: Our political system is ridden with huge deficiencies. I dream of an India where the funding of political parties is transparent and auditable, where the politicians are subjected to greater scrutiny of their financial assets, extended to their close relatives, and disclosure of source of income for additions in assets, and where law makers are indicted instantly and severely for breaking laws.

We are increasingly becoming a nation of educated unemployed. I dream of an India where vocational education is made compulsory in Class 11 and 12 I dream of an India where central and state elections are held together to allow parties to focus on governance and not just fighting elections, and of a parliament where there is no disruption or walkout, but only debate.

v Having only economic reservations: In the name of social justice, reservations have become a sordid tool in the hands of politicians. I dream of an India where reservations are based only on economic status, not on caste or religion.

v Widening tax payersâ&#x20AC;&#x2122; base: We still have a minuscule population which pays income tax. The black cash economy continues to be extremely huge. I dream of an India where incomes are captured correctly and those liable are taxed; and where income tax is levied based upon income and not the source of income. Why exclude rich farmers, for example? I also dream of a regime where tax is not on income but consumption, and to capture consumption correctly, we have a law requiring transactions above Rs 1,000 to be paid through credit/ debit cards.

v Regulating real estate: Real estate is the biggest den of black money. I dream of an India where all land/ real estate records are digitised, and a

special team uncovers the beneficial owners of all these assets. Moreover, the circle rates are frequently revised and the government has the right to acquire properties which come for registration below the circle rates. On the other hand, I dream of an India with a very strong real estate regulator to take care of the buyers of homes/ apartments who are often given a raw deal in terms of delivery schedules and quality.

v Personalising religion: Religion now dominates our public life; especially ever since it has become a strong political tool. I dream of an India where religion becomes a personal, and not a public, issue: religion-based national holidays are converted into restricted holidays, places of worship encroaching public places are moved away, and all religion based parties are closed down. I also dream of the implementation of the uniform civil code.

v An accountable judiciary: One of the biggest disappointments in India has been the delayed justice system. There are more than 3.5 crore cases pending across various courts. Worse is the scenario where judicial orders are not even implemented. I dream of an India where the judiciary starts believing in

40 The Finapolis l May 2016 the dictum of “Justice delayed is justice denied”, and where there are heavy penalties on the executive for not implementing judicial orders.

v Creating fear of the law: Finally, what we have witnessed in India is a rapid erosion in the fear of the law. People break laws by the minute. They have the hope of never being caught; if caught they would escape by either bribing or using influence; if that does not work, they know the judicial process would take ages and if they do get finally indicted, the punishment would be very meagre. I dream of an India where every citizen fears the law, and the offenders are not only punished swiftly and substantially, but are also put to public shame. We love democracy, but we need people to respect laws.

I dream of an India where PSU divestment happens only in favour of the retail investors, and at a huge discount. This is public wealth being shared with the public at large ry in Class 11 and 12. Also, to prevent excessive brain drain, there should be a 5-year ban on students from government-aided medical, engineering and management schools from going abroad.

v New role of the general

have travelled to over a hundred countries across all continents, and can easily say that India is surely the dirtiest country. Any government-led persuasive campaign can only yield limited results. I dream of an India where there is a severe penalty against any one dirtying public spaces.One of the major reasons for diseases is the unhygienic food. I dream of an India where all street food vendors are provided by the government spaces and facilities to serve hygienic food.

media: Our general media, especially electronic media, has become a victim of sensational reporting. Even very small incidents are projected for days together, and depending upon the bias, instantly crucifying someone or the other in the process. Unfortunately, media has gone much beyond reporting; it has become an investigator and a trial court, and very shrill with the “one bulldog and eight puppies” discussion format. I dream of an India where media rethinks its role, limits itself to reporting and also devotes a significant time on the good things happening in our country.

v Providing right education:

v Controlling car popula-

We are increasingly becoming a nation of educated unemployed. While there are not enough jobs, the education that is being imparted is of little use to the employers. I dream of an India where right and quality education assumes top priority, where, for example, vocational education is made compulso-

tion/ pollution: The number of private cars and vehicles is rising rapidly. Most roads cannot be widened any more. Commuting in almost all cities has become a nightmare. The man-hours being lost, es-

v Enforcing cleanliness: I

pecially most of these being of the most productive people, are colossal, besides diminishing family life and of course the pollution and idle burning of precious fuel. I dream of an India where cars are taxed heavily and public transport improves dramatically. I also dream of an India which limits air, water and noise pollution.

v Encouraging tourism: India is a country of great history and heritage, and diversity. We have innumerable natural and man-made sites. Countries with far lesser attractions get more tourists, and people pay heavily even to see ordinary places. I dream of an India where tourism is a top earner, which can be achieved only by better infrastructure and facilities. Concluding, we finally have a government with the right intentions and integrity. However, on the one hand, things have become so bad that it is a Herculean task even to make a dent. Sadly, this government has not shown the requisite management bandwidth to accomplish this. I believe in rebirth. In this life, I do not hope for any noticeable improvement in any area. You have to dream before your dreams can come true. May be in my next birth, I see India again as a “sone ki chidiya”. f

42 The Finapolis l May 2016

Kailash Kulkarni CEO, L&T Mutual Fund

Financial Fitness for the Layman

hen we talk healthy, we usually mean a balanced diet, regular workout sessions and most importantly, a disciplined approach – these mantras are universally acclaimed to lead to a healthier life. But ‘healthy’ is not just a bodily depiction, it is actually an all-encompassing state of mind that comes from the strength to withstand pressure, being equipped for unforeseen circumstances and the capability to withstand more of the adverse circumstances. Being financially fit is more than anything else, a necessity today. We can no longer swear by the traditional bank savings account to fund our retirement goals; a child’s education planning will require more than just a mere fixed deposit; and our overall financial health requires us to do more than just earn well. Tragically, more than 70% Indians fare below average when it comes to being fi-

May 2016 l The Finapolis

nancially aware, one of the main reasons being our limited access to investment avenues and above all, the looming ignorance. In the US, April [when I am writing this] is considered the official Financial Literacy Month. So let’s take these steps to not only inculcate financial literacy as a goal, but to pursue it as a movement towards becoming a healthy nation.

1. Do you know your FHI? The FHI, short for Financial Health Index, is similar to BMI (Body Mass Index), but for your finances. Financial health may mean different things for different individuals. To know your FHI, first determine what motivates you to be financially healthy. The answer is your goals. Big or small, short-term or far-fetched, your goals are what drive you to plan in advance so that you do not fall short of funds. Having set goals makes it a lot simpler to plan for and work towards their achievement.

2. An apple a day ... Regular investment could help keep your financial woes away. One of the rules of healthy living is discipline. An apathetic approach is what distracts most individuals from their plan. Cut down on preventable expenses, make investing a monthly habit and revise your returns on a periodic basis – get back in your financial shape! Remember, you cannot run a marathon if you are not able to sustain a 100-metre run. Your long-term financial health too, starts with regular financial training.

3. Lose your weight, not your mind If you believe ads that claim 10 kg weight loss in a month, your goal is unrealistic. Imagine a similar scenario when you see ads that offer to multiply

Our overall financial health requires us to do more than just earn well — a child’s education planning will require more than a fixed deposit, and the traditional bank savings account cannot be relied on to fund our retirement goals your money in no time. Financial goals ideally should be set for the long term. This in turn means that they should be set early on in your life so that they qualify to be long-term.

4. Steer clear from junk The thumb rule of fitness is to steer clear from the junk food, which gives you only the illusion of a good meal. To be financially fit, steer clear from hoax investments that boast of accelerated returns with no risk, and undue credit – these too are junk for your finances and could gradually deteriorate your financial health.

5. Your financial fitness coach The main function of a trainer is to guide, watch and correct you in your actions. Get someone similar for your money. Solicit advice from a professional financial advisor, who would guide you in investing for your long-term goals, help you review your finances from time to time, and keep you from making mistakes in investing.

6. Diversify your routine Most health gurus recommend a mix of workout routines – aerobics, yoga, zumba, cycling etc. Reason being, different routines work on your body in different ways and each one has

its unique benefit, adding to the overall result. Similarly, in investing, diversify. Different investment avenues entail different benefits that could render your resultant portfolio wholesome and reduce overall risk.

7.Fitness is not the end, it’s a journey Being healthy – financially and physically, is a journey. You may stumble, even fall, but getting back on track is what being healthy is all about. To keep from stumbling in your finances, keep an eye on the performance of your investments by regularly tracking, reviewing and reassessing them. Focus on the long-term goals and hold your investments despite market ups and downs to build consistency in pattern. With the increasing number of investment avenues and their complexity, being aware is a must. And there are multiple ways to do it. A major catalyst in this process is digital technology – the methods and information available is immense and has contributed hugely to how people learn and participate in their financial growth. With the multitude of efforts being put in by financial intermediaries to drive this vision, I am certain that we will well be able to drive and achieve financial fitness for all. f

44 The Finapolis l May 2016

Vivek Kulkarni IAS (Retd) and founder of Brickwork Ratings

Removing the Fear of Finance

y dream is to see that every Indian has adequate finance skills, so that they can take the right decisions for themselves, their spouse, their children and their parents. If not, they would take the wrong financial decisions and waste their familyâ&#x20AC;&#x2122;s lives and wealth. I have come across several instances where people do not get their financial basics right. While poor people, who are unaware, are often cheated, the rest also might not have the right knowledge. The middle class, in particular youngsters, are more focussed on health than finance. They know how to avoid saturated fats and do regular exercise, but they donâ&#x20AC;&#x2122;t have adequate finance skills. The situation of the poor is even more pitiable. Consider a few cases:

v A beggar in Dharavi worked very hard all her life and collected alms every day. She was thrifty and spent much less, than she would collect and saved most of her earnings. She

May 2016 l The Finapolis

was separated from her son 50 years ago and was still hoping he would return. That day never came and the old woman died. When it was time to move the body, the neighbors discovered that she had stored over Rs 3,50,000 under her mattress. She did not know of her wealth, nor could she trust a bank where she could have earned much more interest and lived more comfortably. She was a thrifty woman with high integrity, but low financial literacy.

v Many people take car loans. They select the loan just based on interest rates. A bank offers a car loan at 10%, but charges 3% upfront fee. Another bank gives the same loan at 11%. The customer goes to bank that gives him a three-year loan at 10%. What he does not get is that the effective rater of those loans are 12.8% and 11.6%, respectively. Highly educated engineers, MBA, often don’t get this math right. Poorer, less educated people are waiting to be robbed.

Involve the youngsters Our youngsters need all our help since education is expensive and jobs are not easy to find. Our labour laws make it tough to hire youngsters in permanent jobs. Many firms are leasing workers, which gives flexibility to hire and fire. I would like every finance professional to spread his talents to people around him. Inform students how they can win scholarship for college education. Students should know that they can do MBA in the US and some universities give 100% tuition waiver. Inform those going abroad how to finance higher education in dollars. Help budding graduates to choose their careers. Let them know that last year, over 90% engineers found no jobs. Every graduate needs to learn soft skills for interviews

Adequate finance skills will ensure people take the right decisions for themselves, their spouse, their children and their parents. If not, they would waste their family’s lives and wealth. My dream is to motivate people around me to spread finance skills to everyone and choose right companies. Help the young graduates to plan their work life retirement cycle early. Many of them have no idea of financial markets. All they have seen in their life is bank account and bank FD. They need to understand the importance of financial planning to buy their car at the right time, save for their marriage, and plan their house, marriage expenses and later kids’ education. All along, they need to plan their retirement.

Beating inflation The RBI Governor promises on a Rs 100 note: “I PROMISE TO PAY THE BEARER A SUM OF HUNDRED RUPEES” The cash that we all have is a promise by the RBI Governor to pay us that money. Is that promise worth its money in gold? Not really. In 1969, I could buy a masala dosa for 25 paise. Today, that dosa costs Rs 35. A person could have bought 400 dosas with Rs 100 in 1969. Today, the same person can buy approximately three dosas with the same money. That means the money has lost value. Today, when you want to buy 400 dosas, it would cost you Rs 14,000. Had you kept your Rs 100 of 1969 under the mattress and taken it to the RBI Governor now, could

you expect Rs 14,000? No. The Governor can give you a new Rs 100 note or two Rs 50 notes. Thus, the value of money in India goes down with inflation, which was about 11% during 1969 to 2016. All of us have to beat the inflation while investing our nest egg. We have a menu of financial asset options in fixed deposits in banks or highly-rated companies, debt mutual funds, treasury bonds, commercial paper, equity mutual funds etc. Apart from the financial assets, there are real assets. Indian investors have shown a preference for real assets like gold and real estate. These two assets have consistently beaten inflation. Equity mutual funds have been a mixed response with great returns sometimes and unexpected losses other times. We must educate investors in understanding their risk profiles and plan their portfolio carefully. My dream is to motivate and enthuse people around me to spread finance skills to everyone — students, young graduates, working mothers, poor car driver, maids, our colleagues, and more. If we do this consistently, everyone will be more confident of the financial markets. f

46 The Finapolis l May 2016

Harshil Mehta CEO, DHFL

Claiming Our Place in the World

s we enter the new fiscal year, new hopes and dreams have once again come alive in our hearts for our country. The India of my dream is a nation-state founded on justice and honesty of purpose, as all great nations of the world thrive on justice. I want an India that is loved and respected by other countries, has zero tolerance for corruption, religious and ethnic prejudice; an India where there is economic prosperity, access to healthcare and good educational system. The India of my dream is therefore one in which all Indians join hands to build the India we earnestly yearn for since government alone cannot do it. It is possible for us to achieve this vision by reaping the benefits of â&#x20AC;&#x153;demographic dividendâ&#x20AC;? to not only expand the production possibility frontier but also emerge as a cost-effective knowledge hub for meeting the skilled manpower requirements in In-

May 2016 l The Finapolis

dia and abroad. In this context, creation of a comprehensive National Skill Development Mission and various strategies for improving access to quality education, enhancing skills and faster generation of employment are steps to ensure greater productivity of Indian workers. This will make available 40-50 million of skilled manpower to businesses over the next decade, thereby supporting economic growth. Rule of law and getting the policies right is a precondition for economic growth. The important thing, on this account, is efficient administration of justice to ensure stability. The current government’s attempts to improve the ease of doing business have yielded good results with the country, with us jumping 12 ranks to 130th from 142nd in the latest ranking compiled by the World Bank. I am sure we can further improve our position as a business-friendly destination with compassionate and fair economic policies to support business environment in the country. The India of my dream is a country where citizens enjoy access to good healthcare and education. This will lead to the development of a skilled, talented and healthy pool of human resources which will act as a catalyst for effective policy formulation and implementation, thereby ensuring less government and more governance. Government is already making investments towards meeting the full range of child and adult education and health needs to ensure that they contribute more significantly to the country’s economic growth. Business can make a big impact on the environment, for the better. I therefore dream of India where both business and environment can co-exist. Through efforts such as clean

We can become the global leader of the 21st century as we have the resources, talent, expertise, and ingenuity of the Indian people. The only thing we need to do is tap that power and put in place policies in the public interest energy initiatives, water conservation and recycling, businesses can play a major role in environmental protection. With growing consciousness about environment, business owners are fast realising their ethical and moral obligation to protect the environment. Many businesses have already taken the lead on this objective by promoting green practices and encouraging customers to do the same. This has been made further possible by strict implementation of environmental laws by law enforcement agencies. India needs to transform into a global design and manufacturing hub to attain the next phase of growth. Realising this, our government has taken the baton of leadership to spearhead a change that is needed to ensure that India is on its path to

attain the next phase of growth. The Make in India program launched by the Prime Minister in September 2014 as part of a wider set of nation-building initiatives is an important and timely initiative in realising this objective and in addressing India’s growth rate. As SMEs contribute maximum to the India’s export basket and are among the largest job creators, so initiatives like Start-up India scheme and relaxation in labour laws for SMEs are also commendable. It will encourage budding entrepreneurs to take risks and will make my India a nation of entrepreneurs. Connectivity is vital not only for business and society in India, but also for improved governance. There is rapid growth in information technology-related business in India. But only a meagre percentage of Indians

48 The Finapolis l May 2016

have Internet connection at their residence. In this context, the governmentâ&#x20AC;&#x2122;s initiative to make India fully digital by developing 100 smart cities and pushing the use of technology to connect and empower people in areas relating to health, education, labour and employment, commerce etc. is commendable. These initiatives comprise several projects which will focus on better governance, knowledge and universal phone connectivity across the country. Under this programme, the government plans to introduce Broadband Highways, Universal Access to Mobile Connectivity, Public Internet Access Programme, IT for Jobs and much more. The governance is also shifting from e-governance to m-governance, thereby helping in creating a participative, transparent and responsive government. Government initiatives to foment financial inclusion are expected to make significant changes in the economy, especially the rural economy, by ensuring that benefits of social schemes reach the in-

I dream of India where both business and environment can co-exist. Through efforts such as clean energy initiatives, water conservation and recycling, businesses can play a major role in environmental protection tendedbeneficiary and there is availability of financial instruments. This has been made possible further with schemes like Pradhan Mantri Jan Dhan Yojana, Gold Monetisation Scheme, Micro Units Development & Refinance Agency Ltd and Direct Benefit Transfer. In this context, recent government initiative to ensure housing for all by 2022 is commendable. These schemes will ensure development of affordable housing for low and medium income category customers, economically weaker section and low income group segment of the society. I am hopeful that these measures with active private participa-

tion will usher financial inclusion and bridge the gap between India and Bharat. India today is at an inflexion point where we have the opportunity to be a Global leader of the 21st century. My belief is that we can become the global leader of the 21st century as we have the resources, talent, expertise, and ingenuity of the Indian people. The only thing we need to do is to tap that power and put in place policies in the public interest to achieve our goals of financial inclusion, energy independence, world class healthcare and the best educational system in the world. f

50 The Finapolis l May 2016

V S Parthasarathy Group CFO & Group CIO, Mahindra & Mahindra

Bharat in Full Bloom

s I think about this topic “Dreams for My Country”, a song from one of Manoj Kumar’s movies comes to my mind, “Mere desh ki dharti… Mere desh ki dharti, sona uagle, uagle here moti. Mere desh ki dharti”, which depicts India as a golden ground, and that’s my dream as well! Let India be the place where its soil leads to the prosperity of ‘Bharat’ (rural India) leading to the prosperity of the country as a whole. As Rabindranath Tagore might have said, “Where the head is held high and a prayer in my heart and pride in myself”. The Indian looks up to the sky, not with ego, but with fond hope for a life of self-reliance. Only, dreaming doesn’t help. Dreams happen when you sleep. When you dream in the corporate or real world, then this has to convert to a vision. You must dream that which is possible, one that you have the ‘Right to Dream’ and based on that, you must build your philosophy.

May 2016 l The Finapolis

So my dream is that digital connectivity will help transform the landscape in Bharat into modern India. Rural will lead urban in many senses, because they will be able to take a quantum leap. This shall result in prosperity which would help India become an inclusive and prosperous nation. Digital transformation, therefore, is the vision. And the question is, do we have a ‘right’ to this vision? When India went through the transformation in IT, we gave ourselves the possibility to leapfrog technology. If we can prove that an IT-lead transformation can also change the rural landscape, then I feel, we certainly can have the ‘right to win’. Today, urban India may have some lines laid out — old wired networks that are helping urban India and the metros. But rural India is untouched by this. Everything that reached metros does not reach rural areas. But digital can create a solution for this because the tyranny of wired networks can be avoided when we go completely digital and completely wireless. And I think this could be the game changer. Connectivity will be the key and that will be the ‘death of distance’. 4G is a clear start and the Digital India initiative launched by the Government of India augurs well for a connected, collaborated and converging world. You could think of Digital India as the ozone layer which will support and protect the country from the external environment. Just as the ozone layer protects the earth and helps it to sustain life and growth, so also digital will be the backbone that will provide the same effect for India. Digitally, we can connect process, people, machines, business or things. This includes

Connectivity, which can lead to the ‘death of distance’, will be key. 4G is a clear start, and the Digital India initiative augurs well for a connected, collaborated and converging world farmers and their lands, the machines being used by them. For example, think about accurate weather forecasts, which should enable farmers to protect their crops, help avoid any losses due to hail storms and also help them to plan their harvest. An early warning system can help save millions of tonnes of food grains. Secondly, in the digital era, distance will no longer will be relevant and there may not be any separation between rural and urban India. Both will be on equal ground, enabled by technology. This will allow rural populations to remain in their area, helping control the rapid and unsustainable growth of our urban centres, and will also

generate many employment opportunities at rural areas itself. Think of BPOs not only in metro areas, but also in rural areas, and imagine how that will transform the rural landscape. Soon we may even talk about migration of jobs to rural areas, instead of the current scenario where millions are moving into our big cities. This kind of convergence would make a difference and collaboration will become more meaningful. Also, those who are educated need not move to the cities to get jobs; they could stay in their communities, which would help to bring prosperity to the entire country. Finally, the sharing economy is a growing trend across the world. Think of apps like Uber and Airbnb, which are transforming the way people think about mobility and hospitality. But what about rural areas? Could tractors be available on rent? Can solutions be available for farmers as they require them? A shared ecosystem of knowledge, processes and machines in rural areas can and will be enabled through the digital revolution. The cumulative effect of this would be huge and benefitting previously inaccessible parts of rural India. When rural India becomes increasingly connec ted and empowered, then I can truly say “Mere desh ki dharti sona ugle, ugle here moti.” f

The Finapolis l May 2016

Anuj Puri Chairman & Country Head, JLL India

Making Affordable Housing Feasible

arge-scale affordable housing in cities is the greatest necessity of urban India today. Because Indian cities have such a severe shortfall on this front, we are seeing the proliferation of slums and unorganised real estate. These are detrimental to planned growth of our cities. Large-scale urban developments – the only way to create affordable housing in the required magnitude in our major cities – are becoming increasingly difficult due to lack of land parcels, congested transit routes, lack of finance, rising input costs and regulatory hurdles. If we take a bird’s-eye view of the problems plaguing this sector, the vision of Housing for All by 2022 becomes a hazy one at best. It is vital that these issues are addressed on a priority basis urgently so that a comprehensive framework can be established for ensuring the development of affordable housing.

May 2016 l The Finapolis

On analysing the bottlenecks that currently hold affordable housing in India to ransom, it emerges that any approach towards a workable solution will have to encompass at least seven important functions. These are:

1. Guidelines to identify beneficiaries It is important to formulate guidelines that will identify the appropriate beneficiaries for affordable housing projects. This is critical, as the involvement of speculative investors in such projects defeats to whole purpose. The National Population Register and issuance of unique identities via the Unique Identification Authority of India will become crucial elements in identifying the right beneficiaries if they are linked with income levels.

2. Innovative micro-mortgage financing mechanisms Effective financing through micro-mortgages by utilising the reach of self-help groups and other innovative financing mechanisms can ensure that housing finance is available to large sections of lower income groups and economically weaker sections. Flexible payment mechanisms should be put into place, as households in low-income groups typically have variable income flows.

3. Incentivise affordable housing Urban local bodies can develop guidelines by giving free sale areas, extra floor space index (FSI) and other policy-level incentives to real estate developers, thereby attracting them to develop affordable housing. Schemes for redevelopment and slum rehabilitation should be developed with incentives that generate sufficient returns for the developers, while simultaneously controlling the development density. A cost-benefit analysis of regulations should be carried out from a develop-

Large-scale urban developments â&#x20AC;&#x201D; the only way to create affordable housing in the required magnitude in our major cities â&#x20AC;&#x201D; are becoming increasingly difficult due to lack of land parcels, congested transit routes, lack of finance, rising input costs and regulatory hurdles ment perspective to ensure that schemes to facilitate affordable housing development are actually realistic and feasible.

4. Deploy well-researched rental housing schemes in urban areas Authorities like the Mumbai Metropolitan Region Development Authority (MMRDA) have experimented with rental housing schemes in the past. However, these have not been very successful as a proper framework for such schemes was missing. The most visible limitations were that development took place in far-flung areas unsuitable for affordable housing.

5. Streamline land records Adequate availability of land for housing and infrastructure can be ensured by computerisation of land records, use of geographical information systems, efficient dispute redressal mechanisms and implementation of master plans. The central government and some state governments have already begun work on this front, but there is still a lack of required pace.

6. Mass housing zones in master plans Additionally, ensure that these zones are developed within

a pre-determined schedule, accounting for the future requirement of affordable housing. Some cities have dedicated zones for development of affordable housing in their master plans. This needs to be replicated in other cities and towns.

7. Private sector participation

The private sector can play a big role in affordable housing, most notably in terms of providing technological solutions, project financing and delivery. Disruptive innovations on these fronts, with a specific focus on affordable housing, are the need of the hour. We need imaginative, workable solutions to reduce the costs of construction in the face of rising input costs. As construction costs account for a significant portion of the selling price of affordable housing units, savings accrued on the back of such innovations can immensely benefit the occupier. None of these solutions will work well in isolation. Only a multi-pronged approach with equal weightage to each element can hope to break the deadlock. Housing for All by 2022 is a workable vision if a determined and focused effort based on these solutions is employed â&#x20AC;&#x201D; and it will definitely yield the desired results. f

54 The Finapolis l May 2016 AN Shanbhag and Sandeep Shanbhag

expert speak

Start Your Tax-Saving Investments Right Away

ost taxpayers tend to defer their tax saving investments till March and then rush into putting their money into something with the sole objective of saving tax for the current year. As long as investing in the chosen instrument results in getting the tax deduction, their immediate purpose is solved. The instrument of choice is more often than not something recommended by a colleague or promoted heavily in the media as the flavour of the season. The result of this is, at the end of the day, you end up tax saving but do not properly do tax planning. Therefore, this financial year, we suggest that instead of waiting till the end of the fiscal, you conduct your tax planning exercise throughout the year in a systematic and logical fashion. This point is further amplified later on in the article.

However, first let’s start with putting into place an efficient tax saving strategy. Take for example Section 80C, which is

There is no compulsion that tax saving investments need be done towards the end of the year. A more efficient strategy is to invest throughout the year in a staggered manner the most popular tax saving deduction. Under this section, as most of you would know, any investment up to Rs 2 lakh made in certain specified instruments can be reduced from your taxable income. There is a long list of eligible investments including an employee’s provident fund

contribution, tuition fees paid for children, principal portion of housing loan installments, investments made in Public Provident Fund (PPF), Equity-Linked Saving Scheme (ELSS), National Savings Certificates (NSC), Senior Citizen Savings Scheme, Post Office Term Deposits, Life Insurance Premiums paid, etc. These are the very investments that anyone anyway makes and therefore, are no different than one’s regular investments. All you need to ensure is that these are integrated into the larger picture in line with your risk profile and financial goals.

Using Section 80C optimally So how should an investor choose from among the various choices available? Here’s what you should do: First, take into account mandatory payments like employees provident fund,

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housing loan EMIs and tuition fees if applicable. Reduce the total amount spent from the Rs 2 lakh limit. Distribute the balance in a combination of ELSS and PPF. If you are relatively young and just starting out, put 70% into ELSS and 30% into PPF. As you advance, lower the ELSS and increase the PPF, eventually reaching a 30% ELSS and 70% PPF combination. Why PPF? Well, PPF is one of the best fixed income investment that you can make in spite of the fact that the interest rate has been reduced of late. However, it has to be remembered that the alteration in the interest rate of PPF is going to be market determined – which is to say that the rates of other fixed income instruments too (like bank and corporate FDs etc.) would also have reduced in line with the then existing interest rate scenario. And of course, if we happen to be in a rising rate environment, PPF too would yield higher in line with the same. However, the tax-free nature of its interest will always make PPF score over other taxable fixed income avenues. An annual contribution of Rs 2,00,000 will get you around Rs. 91 lakh in 20 years. Of course, this number is not precise but more of a ball park. As mentioned before, the rate of interest is market linked now and not static as it was all these years. We have assumed an average rate of 8% per annum for the above calculation. Also, the annual limit of Rs 2 lakh can undergo changes over an extended period of time. Be that as it may, basically it gives us an idea about how compounding works. So, look at PPF as a fund for the education or marriage needs of your children. If your children don’t need it, you would have a retirement fund ready. Also note that though PPF is essentially a 15-year scheme, we have used 20 years in the example. This is to showcase a small but important tip. Basically, after the first 15 years, the PPF account can be extended indefinitely – for a period of five years at a time. So, in effect, after the first 15 years, it becomes a recurring five-year deposit. So no need to open a fresh PPF account and wait for 15 more years for it to mature

Recycling old investments

Deduct mandatory payments like employees provident fund, housing loan EMIs and tuition fees from the Rs 2 lakh limit under Section 80C. Then, distribute the balance in a combination of ELSS and PPF depending on your age: Lean towards ELSS is you are young, and towards PPF if older – you can simply use your already matured PPF account but this time like a five-year deposit. An ELSS is nothing but an equity mutual fund that offers a tax deduction. On account of the tax deduction, there is a lock-in of three years on the investment. This lock-in enables the fund manager to take long-term calls on the market which is essential for any equity investment. ELSS investments are the most preferable and profitable way to build long-term wealth. However, this investment comes along with the inherent risk of the stock market. Hence the suggestion that the proportion of ELSS in your total tax saving investment should come down as age advances and your risk taking ability declines.

Take the case of one of our friends, Amit, who is into web design. Amit’s lament was that he had over Rs 5 lakh in receivables but customers in general were holding out for higher credit periods. Since our income tax law taxes income on accrual and not on receipt, this means he has to pay the tax on the Rs 5 lakh not yet received. He was finding difficulty in arranging funds required to pay his employees for the month, so to keep anything aside for tax saving was a long shot. In such cases, one can use another tax planning tool. We call it recycling. Amit can simply withdraw an earlier investment (say from ELSS or PPF) and redeposit the money, even in the very same instrument. He will get the tax deduction for no additional outlay – in other words, his savings remain the same, but without investing a rupee, he can avail himself of the 30% tax saving.

Last, but not the least As mentioned earlier, your tax-saving investments are no different than your regular ones. Consequently, the basic principles of investing remain the same for both sets of investments. Therefore, this year, instead of waiting till the fag end, start by investing in tax-saving avenues in the very beginning of the financial year, from the month of May itself, in case you haven’t started from April. Doing so has a two-fold advantage. Firstly, these investments would earn a return from the beginning of the financial year (Apr-Mar). Secondly, often, many end up simply not having the lump sum required at one go for 100% tax saving. Realise that there is no compulsion that tax saving investments need be done towards the end of the year. A more efficient strategy is to invest throughout the year in a staggered manner so that by the time the year comes to an end, full advantage of the tax saving opportunity has been taken. And don’t worry about how much or little you save each month. As Benjamin Franklin has so succinctly put it, “A penny saved is a dollar earned!”

The authors are leading financial advisors. Write to them at wonderlandconsultants@yahoo.com

56 The Finapolis l May 2016

equity number game

Technical Analysis Our team of analysts pore through technical charts to offer some smart trading tips for the next couple of months By Team Finapolis

rvind Ltd is the largest cotton textiles manufacturer and exporter in India. They are the leading player in the branded garments in the domestic market. The companyâ&#x20AC;&#x2122;s principal business consists of manufacturing and marketing of Denim Fabric, Shirting Fabric, Shirts, Knitted Fabric and Garments. The company having the rights to market international brands such as Lee, wrangler, Arrow and Tommy Hilfiger in India.

Current Market Price Stop Loss Target Price 1, 2

Rs 284.20 Rs 248 Rs 340, Rs 342

Points of Observation XX ARVIND has been making repeated cycles of higher highs and higher lows on the weekly & charts. The counter has

370 345 320 295 270 245 220 Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

zoomed over 350% in the small time frame of only three years clocking an all time highs of 365.70 levels in the month of August 2015. XXAfter clocking an all time high of 365.70 levels, the counter witnessed a round of profit booking which dragged the stock towards lower levels of 245-250 which is 78.20% retracement level drawn between swing low of 216.30 and all time high of 365.70 levels. It also coincides with same levels from where the counter took support for multiple times in medium term past. XXThe stock managed to form base around the said support levels for 8-9 weeks and gave to breakout above 283 levels in the

current week. Analyzing the recent volume price action, the volumes have been encouraging in the recent consolidation on the weekly charts indicating strong hands have started accumulating the stock at lower levels. XXAt current levels, the stock is expected to re-gain its bullish momentum and move towards the higher levels of 340-342 in medium term perspective. We recommend medium term investors to buy the stocks at current levels and accumulate more on any dips towards 262 levels with stop loss placed below 248 levels.

May 2016 l The Finapolis

equity

he monthly chart structure of this fundamentally strong stock, suggests formation of cycles of higher highs and higher lows, supported by correction in the past few months which has found support near 438 levels, clearly indicating there is a lot of demand for the stock even at higher levels which is a positive sign in itself. BATA is in a structural uptrend and looks well set to march steadily towards the Rs.650-660 mark over the next 9-12 months. 610 585 560 535 510 485 460 435 Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

et Airways is the second largest airline in India, both in terms of market share and passengers carried. With the aviation sector continuing to see a spurt in traffic and recent fall in ATF prices has provided significant room for margin expansion to the airline industry. In the recent past company announced formal merger between Jet Airways (India) Ltd and its wholly owned subsidiary Jet Lite (India) Ltd. Currently stock is under focus and witnessed buying spurt in last couple of sessions, and it seems that momentum is likely to continue over the coming months, hence any dip in stock price provides an opportunity to accumulate stock for medium to long term perspective. 770 680 590 500 410 320 230 Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

Current Market Price

Rs 566

Stop Loss

Rs 494

Target Price

Rs 660

Points of Observation XXOn the weekly charts, the stock is trading above its short and long term moving averages, indicating the bullishness in the counter. XXOn quarterly charts the stock is finding support at middle of the Bollinger band (20, 2, S) and stock has formed a bullish hammer on the quarterly charts. XXThe stock has seen fresh accumulation in the recent past as it has witnessed a bullish rectangle pattern in the range of 438-506 and break out from the same has been given. XXOn Elliott wave front, the stock has completed an ABC Zig -Zag pattern from the highs of 738 made on 22 January 2015 to Points of Observation XXIn less than a year time frame stock gained significant momentum. In the mid of Juneâ&#x20AC;&#x2122;15 after placing a swing low of 248 stock price witnessed stellar rally towards 796.40 placed in the mid of Janâ&#x20AC;&#x2122;16, gained over 220% in very short span of time. Post registering 52-week high of 796.40, stock entered in to a profit booking mode in last few months.

Current Market Price

Rs 634

Stop Loss

Rs 475

Target Price 1, 2

Rs 850, Rs 900

XXTechnically stock retraced slightly more than 50% of move projected from swing low of 248 to swing high of 796.40, while in the correction phase stock found support near its 200-DEMA which halted the further fall, and subsequently stock once again started gaining momentum in last couple of weeks. XXCurrently stock is well poised above its 200-DEMA (508) and also above its 21 & 50-DEMA which is placed near 599 & 580 levels respectively, hence any dip towards its average provides an entry

the lows of 438 made on 21 January 2016. From there the stock has seen an impulse indicating fresh up trend has resumed after the larger degree corrective phase. XXAmong oscillators, the MACD is in buy mode in daily and weekly time frame indicating bullish bias. XXWe therefore recommend long term investors to go long in the stock around Rs.556, and average the long position on dips, if any, around the level of Rs.530 for the above mentioned target levels with a strict stop loss placed below the level of Rs. 494 on a weekly closing basis.

point for accumulation. On the weekly technical setup momentum oscillator 14-period RSI formed base near equilibrium level in the correction mode, and currently it is gradually inching higher towards overbought territory, reflecting stock is well placed with supportive momentum to trigger further price rise over coming months. XXFrom the above observations, after price correction stock resumes its uptrend and which is likely to continue over coming months as well. Hence, one may buy stock on any dip near 610 levels and average the stock price if it corrects towards 550 levels keeping a stop loss below 475 levels, for an upside target of 850 and 900 levels over next 6-9 months time frame.

58 The Finapolis l May 2016

equity can be accumulated from a medium to long term perspective.

ARUTI has been in a secular uptrend, forming higher highs and higher lows on the weekly chart making for an excellent chart structure to buy on substantial corrections. Appreciation of yen along with the judgment passed by the Supreme Court banning the registration of new diesel-guzzling luxury cars and SUVs with engine capacity of over 2000 cc put pressure on the stock in the last four months dragging it lower. However, the stock has recovered after testing the support at 3200-3300 and moved up. With the management announcing double digit growth in its guidance for FY17, the stock is well placed and 4760 4500 4240 3980 3720 3460 3200 Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

LENMARK has outperformed Nifty Pharma last month generated more than 4% return whereas Nifty Pharma generated around 2.50%. The stock witnessed V-shape recovery after it made a panic low of 758.60 on daily chart. The stock has also given horizontal trend line breakout from 822 levels on daily chart. Points of Observation XXThe stock witnessed sharp correction from its all time high of 1262.90 levels to 671.10 levels which was also its 78.20 1190 1105 1020 935 850 765 680 Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

Current Market Price

Rs 3858

Stop Loss

Rs 3200

Target Price 1, 2

Rs 4850, Rs 5000

Points of Observation XXRetracement levels drawn from the low of 900 to the high of 4790 marks the zone of 3330 as 38.20% of the up move, where the stock has taken support and moved higher along with good volumes after a spike to 3200 levels. This indicates the correction in the stock is probably over, making for an ideal level to accumulate at current price from 9-12 month perspective. XXThe stock has given a consolidation break out at 3800 supported with volumes. On the weekly chart the stock is trading tad below the center line of the Bollinger band that coincide with the 52 & 21 week EMA marked by 3900-3920. Thus a move and close above this level

Current Market Price

Rs 834

Stop Loss

Rs 670

Target Price 1, 2

Rs 1082, Rs 1100

% Fibonacci retracement support level (663.96) drawn from low of 507.10 to high of 1262.90. In last two months, the stock has tested its said Fibonacci levels and confirmed after making a bullish candlestick formation at 795 levels .On the other hand, the stock is trading above from its all short term and long term moving averages which shows that the stock has still potential to go further upside XXPreviously, the stock was consolidation in range between 758 to 844 levels with positive bias and witnessed breakout from the said range and closed over it and made high of 845 .The stock has also respected its 100 week EMA (691.85) on closing basis. XXAmong the indicator, 14 week RSI is trading above its signal line pointing

will provide further steam to the price propelling it higher. XXOn the indicator front, the weekly RSI has moved away from its oversold zone and is trading at 46-50 levels after a technical â&#x20AC;&#x2DC;Buyâ&#x20AC;&#x2122; signal came in post a bullish cross over was made, where as the daily RSI is placed at 60-62 levels, last seen in November 2015. XXWe recommend accumulating Maruti as the stock is likely to resume its larger trend and move higher in the future, re testing its all time highs. Thus, with stop loss placed below 3200 the stock can be accumulated for higher levels of 4850-5000 from medium to long term perspective.

northward .The RSI has also taken support around 40.62 levels and currently trading around 48.97 levels this means the stock has still a lot of room on the upside. XXOther indicator like Bollinger Band (20,2) on monthly chart shows that the stock may have formed bottom around 670-680 levels and the stock touched its lower band and started to move towards its upper band which lies around 10801114 levels. We recommend to medium term investor to buy the stock at current level and accumulate the stock at dip near 750 levels and keep a strict stop loss at 670 level.

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DETAILS FOR NEFT

60 The Finapolis l May 2016

STAT DOSSIER All figures as on April 22, 2016

Indian Indices: Performance Close April 22, 2016

Close March 31, 2016

Return (%)

Return 6 M (%)

Return 12 M (%)

PE Ratio

Sensex

25838.14

25341.86

1.96

-5.94

-5.83

19.50

Nifty

7899.30

7738.40

2.08

-4.78

-4.89

20.07

BSE 500

10468.76

10185.12

2.78

-4.20

-3.18

22.72

BSE Auto

18700.37

18001.76

3.88

1.60

2.40

22.89

BSE Bankex

19035.40

18391.96

3.50

-7.04

-7.93

16.08

BSE Capital Goods

13365.01

12861.33

3.92

-14.51

-19.79

37.27

BSE Consumer Durables

11936.22

11480.50

3.97

0.66

13.22

30.89

BSE Oil & Gas

9458.66

9161.61

3.24

1.30

0.77

13.21

BSE Metal

8020.47

7540.75

6.36

6.49

-19.78

BSE Realty

1307.63

1228.35

6.45

-8.18

-16.87

35.55

BSE PSU

6354.16

6106.65

4.05

-9.92

-17.52

12.28

BSE Power

1888.03

1775.73

6.32

-3.44

-9.74

20.36

BSE Teck

6102.61

6104.86

-0.04

-1.38

4.01

20.38

Global Indices: Performance Close April 22, 2016

Close March 31, 2016

Return (%)

Return 6 M (%)

Return 12 M (%)

PE Ratio

MSCI World Index

1686.17

1648.12

2.31

-1.20

-6.32

20.20

MSCI Asia Pacific Ex Japan

423.50

417.11

1.53

-2.29

-18.62

13.90

Hang Seng

21467.04

20776.70

3.32

-7.28

-23.50

10.51

Singapore Straits Times (STI)

2940.43

2840.90

3.50

-4.17

-16.30

12.26

S. Korea

2015.49

1995.85

0.98

-1.22

-6.68

14.65

17572.49

16758.67

4.86

-6.65

-12.23

19.74

18003.75

17685.09

1.80

2.02

-0.42

16.85

S&P 500

2091.58

2059.74

1.55

0.79

-1.23

19.13

NASDAQ

4906.23

4869.85

0.75

-2.50

-3.65

31.46

52907.88

50055.27

5.70

11.16

-6.51

6310.44

6174.90

2.20

-2.07

-10.75

30.88

DAX 30

10373.49

9965.51

4.09

-3.90

-12.17

23.93

CAC 40

4569.66

4385.06

4.21

-7.19

-12.15

22.25

Asia

Nikkei 225 America Dow Jones

Brazil Bovespa Europe FTSE-100

May 2016 l The Finapolis

STAT DOSSIER All figures as on April 22, 2016

April International Commodity Futures Price Trends Close April 22, 2016

Close March 31, 2016

% Change

52 Week High

% Change from 52 Week High

52 Week Low

% Change from 52 Week Low

LME Lead 3 Month ($/t)

1791.00

1705.00

5.04%

2162.50

-17.18%

1551.50

15.44%

LME Zinc 3 Month ($/t)

1909.00

1817.00

5.06%

2404.50

-20.61%

1444.50

32.16%

9090.00

8490.00

7.07%

14585.00

-37.68%

7550.00

20.40%

16.90

15.46

9.29%

17.72

-4.63%

13.64

23.95%

5031.00

4847.00

3.80%

6481.00

-22.37%

4318.00

16.51%

43.73

38.34

14.06%

62.58

-30.12%

26.05

67.87%

1652.50

1520.00

8.72%

1978.25

-16.47%

1432.50

15.36%

15.26

15.35

-0.59%

16.75

-8.90%

10.13

50.64%

1228.70

1234.20

-0.45%

1287.80

-4.59%

1046.20

17.44%

CBOT Soy Oil (cents/lb)

33.99

34.22

-0.67%

35.29

-3.68%

25.38

33.92%

ICE Coffee (cents/lb)

122.75

127.45

-3.69%

145.00

-15.34%

111.05

10.54%

ICE Cotton (cents/lb)

63.08

58.44

7.94%

68.30

-7.64%

55.66

13.33%

453.30

444.70

1.93%

467.80

-3.10%

329.00

37.78%

2.14

1.96

9.24%

3.11

-31.08%

1.61

32.84%

987.00

910.75

8.37%

1060.25

-6.91%

844.25

16.91%

CBOT Corn (cents/bushel)

371.75

351.50

5.76%

438.75

-15.27%

346.50

7.29%

CBOT CORN

371.75

351.50

5.76%

438.75

-15.27%

346.50

7.29%

CBOT Soy Meal ($/t)

311.70

270.30

15.32%

382.50

-18.51%

255.70

21.90%

467.00

473.50

-1.37%

615.75

-24.16%

435.25

7.29%

LME Nickel 3 Month ($/t) Comex Silver (S.oz) LME Copper 3 Month ($/t) Nymex Crude Oil (S/bbl) LME Aluminium 3 Month ($/t) ICE Sugar (cents/lb) Comex Gold (S/oz)

LIFFE Sugar (S/t) Nymex Natural Gas ($/mmbtu) CBOT Soybean (cents/bushel)

CBOT Wheat (cents/bushel)

Commodities: April Gainers and Losers (%) MCX

NCDEX RM Seed 9.74%

Crude Oil 14.15% Cardamom 13.64% Aluminum 11.09%

Soy Oil 6.51%

Cotton, 10.37% Natural Gas, 9.78%

Wheat, 6.39%

Nickel, 9.26% Silver, 8.80%

Turmeric 5.40%

Zinc, 7.40% Mentha Oil, 5.92%

Soybean 5.11%

Lead, 5.80% Copper, 4.12% Gold, 1.65%

Barley 2.84%

62 The Finapolis l May 2016

STAT DOSSIER All figures as on April 22, 2016

Nifty top

Company

April 22, 2016

Vedanta

March 31, 2016

104.90 101.10

87.95

14.95

127.55

113.85

12.03

NTPC

143.65

128.85

11.49

Tata Steel

353.65

319.70

10.62

March 31, 2016

(%) Change

Ambuja Cements

220.90

232.55

-5.01

Tata Consultancy

2417.05

2520.30

-4.10

Cairn India

151.65

153.85

-1.43

Coal India

287.80

291.95

-1.42

Wipro

557.95

564.25

-1.12

nIFTY MOVEMENT

14150 13700 13250 12800 12350 11900 11450

Oct-15

Jan-16

Apr-16

bse bankex

Jul-15

Oct-15

Jan-16

Apr-16

Oct-15

Jan-16

Apr-16

Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

Jul-15

Oct-15

Jan-16

Apr-16

28500 26750 25000 23250 21500 19750 18000 Oct-15

Jan-16

Apr-16

Apr-15

11.1% Aluminium prices rallied on better than expected industrial production and PMI numbers from China.

HANG SENG

18310 17875 17440 17005 16570 16135 15700 Jul-15

Gain in MCX Aluminium.

18800 17525 16250 14975 13700 12425 11150

Dow Jones

Apr-15

bse Capital Goods

22250 21100 19950 18800 17650 16500 15350 Jul-15

Nifty Bottom

CNX-MIDCAP MOVEMENT

8880 8550 8220 7890 7560 7230 6900

Apr-15

16.75

Bharat Heavy Electricals

April 22, 2016

Jul-15

89.85

Hindalco Industries

Company

Apr-15

(%) Change

May 2016 l The Finapolis

STAT DOSSIER CURRENCY

ENERGY

Rupee Movement

Brent Crude (US$/bbl)

68.6 67.5 66.4 65.3 64.2 63.1 62.0

14.1%

71.5 64.5 57.5 50.5 43.5 36.5 29.5

Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

METALS Gold (US$/OZ)

Crude oil prices surged due to increase in consumption demand and decline in production

Silver (US$/OZ)

1275 1235 1195 1155 1115 1075 1035

17.80 17.10 16.40 15.70 15.00 14.30 13.60

Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

Apr-15

Jul-15

Oct-15

Gain in MCX Crude oil.

Jan-16

Apr-16

economy IIP (%)

6.1

7.0

7.4

7.3

22500 14500 6500 -1500 -9500 -17500

Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Prior (%)

6.75 6.50

Oct-15

Jan-16

Feb-16

Oct-15

Nov-15

Sep-15

Dec-15

10500 7000 3500 0 -3500 -7000 -10500 -14000

DII (RHS)

RBI Monetary Data

8.00 7.90 7.80 7.70 7.60 7.50 7.40 Jul-15

Jul-15

FII

10-year bond yield (%)

Apr-15

Aug-15

FII vs. MF (Rs cr)

Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16

7.5

Jun-15

Apr-15

Real GDP Growth

May-15

Feb-15

0.0 -1.0 -2.0 -3.0 -4.0 -5.0

10 8 6 4 2 0 -2 -4 Mar-15

Feb-16

Mar-16

Jan-16

Nov-15

Dec-15

Sep-15

Oct-15

Aug-15

Jun-15

Jul-15

Apr-15

May-15

Mar-15

Inflation (%)

Apr-16

Repo

Latest (%)

5.75 6.00

Reverse Repo

Gain in MCX Cardamom. 21.50 21.25

4.00 4.00

Cash Reserve Ratio

13.6% Cardamom prices surged due to expectation of export demand from Middle East ahead of Ramdaan

SLR

All figures as on March 21, 2016

64 The Finapolis l May 2016

STAT DOSSIER Performance of Mutual Funds Equity Diversified Mutual Fund Scheme

elss NAV

1 yr 2 yr 3 yr

Mutual Fund Scheme

NAV

1 yr 2 yr 3 yr

DSP-BR Micro Cap Fund - Direct (G)

44.20

6.6 44.3 42.3

Axis Long Term Equity - Direct (G)

30.96

-1.6 24.9 28.5

DSP-BR Micro Cap Fund - RP (G)

43.22

5.8 43.3 41.4

Axis Long Term Equity Fund (G)

29.76

-2.7 23.4 27.0

Reliance Small Cap - Direct (G)

26.22

5.3 36.3 39.9

Reliance Tax Saver(ELSS)-Dir (G)

45.47

-5.6 24.7

Reliance Small Cap Fund (G)

25.55

4.3

Reliance Tax Saver (ELSS) (G)

44.45

-6.2 23.8 25.2

Franklin (I) Smaller Co -Direct (G)

41.62

6.3 34.7 37.9

Birla SL Tax Relief 96-Direct (G)

21.99

-0.1 25.3 24.9

SBI Midcap Fund - Direct (G)

63.25

9.6 34.3 36.4

ICICI Pru RIGHT Fund (G)

28.07

-7.7

Franklin (I) Smaller Cos (G)

40.23

4.8 32.9 36.4

Birla Sun Life Tax Plan-Direct (G)

27.88

-0.3 24.6

SBI Magnum Midcap Fund (G)

61.59

8.4 33.0 35.3

Religare Invesco Tax Plan - DP (G)

36.24

Mirae Emerging Bluechip -Direct (G)

32.27

Birla SL Tax Relief 96 (G)

21.42 -0.8 24.4 24.0

SBI Tax Advantage Sr-2 (G)

22.31

-2.5 22.4 23.9

SBI Tax Advantage Sr-1 (G)

22.19

-2.8 22.3 23.5

62.05

3.5 26.3 23.4

433.73

1.9 23.4 23.4

Escorts Tax Plan (G)

61.48

3.3 25.6 23.2

Birla Sun Life Tax Plan (G)

27.04

-1.2 23.5 23.0

422.87

1.0 22.4 22.4

Can Robeco Emer-Equities-Direct (G) 60.90

8.1

35.1 38.7

34.1 35.3

1.9 36.0 35.2

UTI Mid Cap - Direct (G)

80.05

-0.1 30.5 35.2

UTI Mid Cap (G)

78.20

-1.0 29.4 34.2

Can Robeco Emerg-Equities (G)

59.23

1.0 34.9 34.1

31.21

7.1 32.8 33.9

Mirae Emerging Bluechip Fund (G) Birla SL Pure Value - Direct (G)

40.63

5.6

ICICI Pru Exp&Other Services-DP (G)

45.34

2.8 24.7 33.6

Birla SL Opportunities -Direct (G)

117.85

9.7 26.8 33.3

Sundaram SMILE Fund -Direct (G)

68.49

Birla SL Pure Value Fund (G)

-4.4

29.1 33.9

34.1 33.0

39.61

4.6 28.0 32.8

ICICI Pru Exp&Other Services-RP (G)

44.36

2.0 23.8 32.7

Birla SL (I) Opportunities (G)

115.58

8.8 26.0 32.5

JPMorgan (I) Mid and Sm Cap-DP (G)

19.48

0.4

Sundaram SMILE Fund (G)

67.39

-4.8 33.4 32.3

Franklin Build India - Direct (G)

29.80

31.9 32.3

Escorts Tax Plan - Direct (G) Franklin (I) Tax Shield -Direct (G)

Franklin India Tax Shield (G)

26.1

18.9 24.3 24.1

1.1 23.6 24.0

ICICI Pru L-Term Eq-Tax Svng-DP-G 272.27 -0.4

18.1 22.4

BNP Paribas L-Term Equity-DP (G)

29.34

-1.0

22.1 22.4

DSP-BRTax Saver Fund -Direct (G)

32.81

2.5

21.7 22.3

34.66 -0.6

21.6 22.3

Religare Invesco Tax Plan (G)

Equity (Banking) Mutual Fund Scheme

NAV

1 yr 2 yr

3 yr

Religare Invesco Banking - Dir (G)

34.24

-2.8

17.8

13.8

-- 33.4 32.0

ICICI Pru Bkg&Fin Serv -Dir (G)

35.70

-3.3 19.4

17.4

699.48

4.2 30.5 31.5

ICICI Pru Bkg & Fin Serv-RP(G)

34.67

-4.3

18.2 16.4

Kotak Emerging Equity - Direct (G)

27.41

5.0 36.0 31.4

Religare Invesco Banking - RP (G)

32.74

-4.6

15.8

L&T Midcap Fund -Direct (G)

87.95

1.3 30.5 31.4

UTI Banking Sector - Direct (G)

63.40

-5.4

13.9 10.0

Tata Mid Cap Growth - Direct (G)

99.95

Reliance Banking Fund - Direct (G) 167.83

-5.8

16.9 14.0

BNP Paribas Mid Cap Fund -Dir (G)

25.56

UTI Banking Sector (G)

61.39

-6.4

12.8

8.9

JPMorgan (I) Mid and Small Cap (G)

18.81

164.99

-6.4

16.1

13.4

Franklin (I) Prima - Direct (G)

-3.9 30.3 5.3

31.1

31.1 30.9

-0.3 30.4 30.9

Reliance Banking Fund (G)

Source: moneycontrol.com; Note: All returns are annualized and expressed in percentage; all NAVs as on April 22, 2016

12.2

May 2016 l The Finapolis

STAT DOSSIER Performance of Mutual Funds Equity (FMCG)

Equity (Tech)

Mutual Fund Scheme

NAV

1 yr 2 yr 3 yr

SBI FMCG Fund - Direct (G)

78.01

4.1

14.7

SBI FMCG Fund (G)

75.47

ICICI Pru FMCG Fund (G)

158.85

ICICI Pru FMCG Fund - Direct (G)

162.33

Mutual Fund Scheme

NAV

1 yr 2 yr 3 yr

14.9

DSP-BR Technology.Com -Dir (G)

57.73

11.7

18.2 25.6

3.1

13.7 13.9

DSP-BR Technology.Com -RP (G)

56.71

11.1

17.5 25.0

-0.7

12.7 14.0

Birla SL New Millennium-Dir (G)

37.22

7.7

17.8 27.0

Birla SL New Millennium (G)

36.38

7.3 16.9

ICICI Pru Technology - Direct (G)

42.88

7.1

ICICI Pru Tech. Fund (G)

41.83

6.1 16.8

-- 13.4 14.7

Equity (Pharma) Mutual Fund Scheme

NAV

1 yr 2 yr 3 yr

SBI Pharma Fund - Direct (G)

142.99

3.4

31.8

31.7

SBI Pharma Fund (G)

138.33

2.0 30.2 30.3

Reliance Pharma Fund - Direct (G)

137.93

1.9 23.8 26.3

Reliance Pharma Fund (G)

134.45

0.9 22.8 25.3

UTI Pharma & Health - Direct (G)

90.68

-6.1 20.7 23.3

UTI Pharma & Health (G)

88.19

-7.0 19.6 22.2

Balanced Mutual Fund Scheme

NAV

1 yr 2 yr 3 yr 3.1

Franklin Infotech Fund (G)

17.8 30.0 29.1

118.29

5.3

14.1 24.5

116.21

4.5

13.4 23.8

Miscellaneous Mutual Fund Scheme

NAV

1 yr

2 yr

3 yr

Reliance Media & Enter. -Dir (G)

55.55

8.8

17.7

15.2

Reliance Media & Entertain (G)

54.18

7.9

16.9

14.4

UTI Transport&Logistics -Dir (G) 89.75

4.8

35.8 43.2

UTI Transport & Logistics (G)

87.13

3.7 34.4

Birla SL Buy India -Direct (G)

92.57

1.7

36.5 24.8

Birla Sun Life Buy India (G)

90.93

1.0

35.7 24.0

Religare Invesco PSU Eq-DP (G)

13.85

-1.2

16.2

12.1

JM Basic Fund -Direct (G)

21.22

-1.5

19.4

17.5

Religare Invesco PSU Equity (G)

13.30

-2.8

14.5

10.7

41.9

L&T India Prudence Fund -Dir (G)

20.20

HDFC Balanced Fund - Direct (G)

112.03

2.4 20.2

22.1

Escorts Balanced Fund - Direct (G)

103.17

1.5

18.7

21.9

Escorts Balanced Fund (G)

102.75

1.5

18.5

21.7

L&T Dynamic Equity Fund -Dir (G)

20.00

-2.3

18.8

21.4

SBI Balanced Fund - Direct (G)

99.29

2.7 20.2

21.2

L&T India Prudence Fund (G)

19.58

2.0 20.3

21.1

Mutual Fund Scheme

21.1

Tata MIP Plus Fund - Direct (G)

25.38

14.7

17.3

21.3 20.7

Tata MIP Plus Fund (G)

24.80

13.8

16.2

12.1

12.9

9.8

HDFC Balanced Fund (G)

109.28

1.3

Tata Balanced Fund - Direct (G)

169.45 -0.8

21.5 22.3

Franklin Infotech Fund -Dir (G)

26.1

19.1

MIP NAV

1 yr 2 yr 3 yr

Franklin India Bal Fund-DP (G)

94.76

4.5

21.7 20.5

ICICI Prudential Reg Income-Dir (G)

15.47 10.6

HDFC Childrens Gift - Direct (Inv)

86.31

2.2

16.7 20.5

Franklin (I) Low Dura. -Direct (G)

17.04

9.6 10.0

9.9

ICICI Pru Balanced Fund- Dir (G)

95.66

3.0

18.7 20.2

ICICI Prudential Regular Income (G)

15.09

9.2

12.0

9.0

SBI Magnum Balanced Fund (G)

96.68

1.4

19.1 20.2

Sundaram MIP-Conservative-Dir-G

14.70

9.2 10.9

7.1

19.39

-3.4

17.6 20.2

Franklin (I) Low Duration (G)

16.88

9.2

9.7

9.6

103.45

1.1

16.4

SBI Magnum MIP Floater -Dir (G)

22.41

9.1

13.8

12.7

L&T Dynamic Equity Fund (G) ICICI Pru CCP - Gift Plan -Direct

20.1

Source: moneycontrol.com; Note: All returns are annualized and expressed in percentage; all NAVs as on April 22, 2016

66 The Finapolis l May 2016

FUND REPORT CARD DSPBR India T.I.G.E.R Fund-Reg (G) Fund Objective/Mission To generate capital appreciation from a portfolio substantially constituted of equity and equity-related securities of corporates which could benefit from liberalisation in economic policies and/or from continuing investments in infrastructure.

Fund House Details AMC Name: Website:

DSP BlackRock Investment Managers www.dspblackrock.com

Scheme Performance as on April 22, 2016 Period

Returns

B'mark

Rank

3 Months

4.28

6.74

41/(56)

6 Months

-6.04

-4.20

41/(52)

1 Year

-8.58

-6.33

48/(52)

3 Years

15.62

11.12

24/(45)

5 Years

6.93

6.25

27/(43)

Since Inception

17.06

15.21

SIP Details: Invested Rs 5000 Every Month

Financial Details

Period

AUM As On (March 31, 2016) NAV As On (April 22, 2016) Min Investment (in Rs.) Lumpsum SIP NAV (52WeekHigh){August 10, 2015} NAV (52WeekLow){February 25, 2016}

1319.88 64.88 1000 1000 74.34 55.55

1 Year

Investment Information Scheme

Open ended scheme

Launch Date

June 11, 2004

Fund Manager

Rohit Singhania

Bench Mark

S&P BSE 100

Max.Entry Load(%)

Max.Exit Load(%)

1.00

Scheme (`)

Bench mark

60,000

56,881

55,973

3 Years

1,80,000

2,14,346

1,98,536

5 Years

3,00,000

4,00,858

3,80,723

10 Years

6,00,000

9,28,604

11,00,809

Fund Structure

Volatility Measures

Total Stocks

Fama

-0.01

Total Sectors

Beta

1.02 1.23

P/E Ratio

22.51

Std Dev

P/B Ratio

2.75

Sharpe

Top 10 Companies Name

Total Invest (`)

-0.04

Top 10 Sector Wise Holding (%)

Industry Name

(%)

ICICI Bank

7.4



Engineering - Construction

21.2



State Bank Of India

5.9



Bank - Private

17.6



HDFC Bank

5.7



Refineries

8.3



IndusInd Bank

4.5



Cement & Construction Materials

6.8



Larsen & Toubro

4.4



Bank - Public

5.9



Ultratech Cement

4.0



Power Generation/Distribution

4.8



Bharat Petroleum Corporation

3.7



Port

3.5



Ashoka Buildcon

3.4



Construction - Real Estate

3.4



Sadbhav Engineering

3.3



Electronics - Components

2.3



3.1



Electric Equipment

2.1



Techno Electric & Engineering Company

5 Years History Financial Year NAV in ` (as on 31st March) Net Assets (` Crores.) (as on 31st March)

2015-16

2014-15

2013-14

2012-13

2011-12

63.93

71.36

45.35

39.88

40.61

1320

1648

1050

1224

1629

Returns(%)

-11.89

57.97

12.88

-2.71

-10.22

CNX NIFTY Returns(%)

-9.87

26.33

17.53

6.86

-9.11

36/(57)

10/(55)

28/(51)

25/(50)

Category Rank Latest As on 18 March, 16

*Absolute Returns

26/(56) Source: ACEMF

May 2016 l The Finapolis

FUND REPORT CARD SBI Emerging Businesses Fund-Reg (G) Fund Objective/Mission To provide investors maximum growth opportunity through equity investments in stocks of growth oriented sectors of the economy and also to participate in the growth potential presented by various companies that are considered emergent and have export orientation/ outsourcing opportunities.

Fund House Details AMC Name: Website:

SBI Funds Management Private Limited www.sbimf.com

Scheme Performance as on April 22, 2016 Period

Returns

B'mark

Rank

3 Months

9.28

6.54

20/(272)

6 Months

1.06

-3.96

47/(266)

1 Year

3.53

-4.79

55/(255)

3 Years

19.65

12.88

80/(163)

5 Years

17.73

6.65

25/(152)

Since Inception

21.46

13.82

SIP Details: Invested Rs 5000 Every Month

Financial Details

Period

AUM As On (March 31, 2016) NAV As On (April 22, 2016) Min Investment (in Rs.) Lumpsum SIP NAV (52WeekHigh){August 19, 2015} NAV (52WeekLow){February 29, 2016}

1594.55 94.24 5000 1000 96.01 82.20

1 Year

Investment Information Scheme

Open ended scheme

Launch Date

October 11, 2004

Fund Manager

R Srinivasan

Bench Mark

S&P BSE 500

Max.Entry Load(%)

Max.Exit Load(%)

1.00

Total Invest (`)

Scheme (`)

Bench mark

60,000

59,756

52,023

3 Years

1,80,000

2,27,427

1,86,809

5 Years

3,00,000

4,57,347

3,35,488

10 Years

6,00,000

14,25,219

6,96,035

Fund Structure

Volatility Measures

Total Stocks

Fama

0.02

Total Sectors

Beta

0.67

Std Dev

0.88

P/E Ratio

36.69

P/B Ratio

6.69

Top 10 Companies

Sharpe

Top 10 Sector Wise Holding

Name

(%)

Industry Name

(%)

Procter & Gamble Hygiene & Health Care

11.4

HDFC Bank

10.1



Bank - Private

14.3





Household & Personal Products

11.4



Solar Industries

7.6



Consumer Food

8.8



Adani Ports and Special Economic Zone

5.7



Pharmaceuticals & Drugs

8.3



Manpasand Beverages

5.6



Chemicals

7.6



Dr. Lal Pathlabs

5.2



Port

5.7



Divis Laboratories

4.9



Hospital & Healthcare Services

5.2



3M India

4.7



Plastic Products

4.7



Navkar Corporation

4.7



Diversified

4.7



Kotak Mahindra Bank

4.3



Logistics

4.7



5 Years History Financial Year

2015-16

2014-15

2013-14

2012-13

2011-12

90.02

91.33

59.39

53.76

44.54

1595

1634

1308

1234

561

Returns(%)

-2.49

54.26

10.12

18.27

8.29

CNX NIFTY Returns(%)

-9.87

26.33

17.53

6.86

-9.11

33/(289)

69/(274)

189/(217)

1/(204)

NAV in ` (as on 31st March) Net Assets (` Crores.) (as on 31st March)

Category Rank Latest As on 18 March, 16

*Absolute Returns

2/(207) Source: ACEMF

68 The Finapolis l May 2016

FUND REPORT CARD Sundaram S.M.I.L.E Fund (G)

Scheme Performance as on April 22, 2016 Period

Fund Objective/Mission To primarily achieve capital appreciation by investing in diversified stocks that are generally termed as small and mid-caps and by investing in other equities.

Fund House Details AMC Name: Website:

Sundaram Asset Management Company www.sundarammutual.com

Returns

B'mark

Rank

3 Months

4.17

4.53 249/(272)

6 Months

-5.46

-4.18 242/(266)

1 Year

-4.90

-2.20 223/(255)

3 Years

32.49

22.46

13/(163)

5 Years

15.83

4.52

39/(152)

Since Inception

18.59

10.29

SIP Details: Invested Rs 5000 Every Month

Financial Details

Period

AUM As On (March 31, 2016) NAV As On (April 22, 2016) Min Investment (in Rs.) Lumpsum SIP NAV (52WeekHigh){August 05, 2015} NAV (52WeekLow){February 29, 2016}

966.75 67.38 5000 250 76.56 56.18

1 Year

Investment Information Scheme

Open ended scheme

Launch Date

February 15, 2005

Fund Manager

S. Krishnakumar

Bench Mark

S&P BSE Small-Cap

Max.Entry Load(%)

Max.Exit Load(%)

1.00

Total Invest (`)

Scheme (`)

Bench mark

60,000

56,144

62,484

3 Years

1,80,000

2,57,274

2,07,916

5 Years

3,00,000

5,18,691

3,79,613

10 Years

6,00,000

14,01,577

9,37,082

Fund Structure

Volatility Measures

Total Stocks

Fama

0.01

Total Sectors

Beta

1.04 1.36

P/E Ratio

26.75

Std Dev

P/B Ratio

2.87

Sharpe

Top 10 Companies

-0.02

Top 10 Sector Wise Holding

Name

(%)

Industry Name

(%)

Strides Shasun

4.4

V-Guard Industries

3.8



Cement & Construction Materials

8.9



Engineering - Industrial Equipments

7.5



Karur Vysya Bank

3.2



Engineering - Construction

6.9



Ashoka Buildcon

3.2



Pharmaceuticals & Drugs

6.3



PNC Infratech

2.9



IT - Software

5.5



Rane Holdings

2.8



Bank - Private

5.2



Navin Fluorine International

2.8



Construction - Real Estate

4.3



Praj Industries

2.7



Bearings

4.1



JK Cement

2.7



Electronics - Components

3.8



Gateway Distriparks

2.6



Engineering

3.5



5 Years History Financial Year

2015-16

2014-15

2013-14

2012-13

2011-12

63.77

70.87

34.48

27.95

28.50

967

969

276

317

458

Returns(%)

-11.43

105.82

21.95

-3.36

-8.16

CNX NIFTY Returns(%)

-9.87

26.33

17.53

6.86

-9.11

244/(289)

5/(274)

70/(218)

185/(204)

151/(207)

NAV in ` (as on 31st March) Net Assets (` Crores.) (as on 31st March)

Category Rank Latest As on 18 March, 16

*Absolute Returns

Source: ACEMF

May 2016 l The Finapolis

FUND REPORT CARD Tata Equity P/E Fund (G)

Scheme Performance as on March 18, 2016 Period

Fund Objective/Mission To provide reasonable and regular income and/or possible capital appreciation to its unit holders.

Returns

B'mark

Rank

3 Months

7.49

5.74

79/(272)

6 Months

-0.85

-5.31

72/(266)

1 Year

Fund House Details AMC Name: Website:

Tata Asset Management www.tatamutualfund.com

-5.13

-7.36 228/(255)

3 Years

22.54

10.45

58/(163)

5 Years

11.47

5.67

83/(152)

Since Inception

19.85

15.22

SIP Details: Invested Rs 5000 Every Month

Financial Details

Period

AUM As On (March 31, 2016) NAV As On (April 22, 2016) Min Investment (in Rs.) Lumpsum SIP NAV (52WeekHigh){August 07, 2015} NAV (52WeekLow){February 25, 2016}

565.21 85.04 5000 500 91.71 72.72

1 Year

Investment Information Scheme

Open ended scheme

Launch Date

June 29, 2004

Fund Manager

Sonam Udasi

Bench Mark

S&P BSE SENSEX

Max.Entry Load(%)

Max.Exit Load(%)

1.00

Total Invest (`)

Scheme (`)

Bench mark

60,000

57,645

59,379

3 Years

1,80,000

2,24,133

2,15,672

5 Years

3,00,000

4,39,481

4,42,011

10 Years

6,00,000

12,34,419

15,19,997

Fund Structure

Volatility Measures

Total Stocks

Fama

Total Sectors

Beta

1.03 1.24

P/E Ratio

18.15

Std Dev

P/B Ratio

2.80

Sharpe

Top 10 Companies

-0.03

Top 10 Sector Wise Holding

Name

(%)

Power Grid Corporation Of India

6.2



Bank - Private

12.1



Yes Bank

6.1



IT - Software

10.0



HCL Technologies

5.8



Power Generation/Distribution

8.2



Repo Instruments

4.8



Refineries

5.8



Bharat Electronics

4.3



Automobiles-Trucks/Lcv

5.5



4.1



Gas Transmission/Marketing

5.0



UPL

3.4



Engineering - Construction

4.8



Mahindra & Mahindra Financial Services

3.2



Other

4.8



Coal India

3.1



Finance - NBFC

4.8



2.9



Electronics - Components

4.3



Tata Motors - DVR Ordinary

Gujarat State Petronet

Industry Name

(%)

5 Years History Financial Year NAV in ` (as on 31st March) Net Assets (` Crores.) (as on 31st March) Returns(%) CNX NIFTY Returns(%) Category Rank Latest As on 18 March, 16

2015-16

2014-15

2013-14

2012-13

2011-12

82.08

90.12

55.87

45.59

46.48

565

636

390

451

652

-10.00

61.12

21.39

-2.29

-2.99

-9.87

26.33

17.53

6.86

-9.11

219/(289)

51/(274)

72/(217)

183/(204)

72/(207)

*Absolute Returns

Source: ACEMF

70 The Finapolis l May 2016

personal finance

advisor Every month an expert on personal finance will answer all your queries related to the world of investments, taxation and financial management. The personal finance advisor will diagnose the health of your portfolio and offer better advice. In current edition, your questions have been answered by Col. Sanjeev Govila (retd), CEO, Hum Fauji Initiatives. He is Certified Financial Planner and SEBI Registered Investment Advisor. Write in to feedback@thefinapolis.com National Pension Scheme I want to invest in National Pension Scheme (NPS). It’s in limelight after the Union Budget 2015-16 announced additional benefit of Rs 50,000 beyond Section 80/C for tax saving purpose. Please advice is it prudent to invest in NPS. Also, when I can start withdrawal from NPS? – V Swamy, Secunderabad Under the new rules, a subscriber who has contributed for at least 10 years will be allowed to withdraw up to 25% of the contribution for specific purposes, including children’s higher education or marriage, construction or purchase of first house and medical treatment of self, spouse, children or dependent parents. The medical treatment is only for 13 critical illnesses and life threatening injuries sustained in an accident. An investor can withdraw three times during his tenure in the scheme but there should be a gap of at least five years between each withdrawal. However, this gap will not apply in case the withdrawal is for a medical treatment.

Transfer of Savings I am working in India since last two years. Now I am leaving back to my country and will transfer my savings back. I want to know, is there any special tax I will have to pay on the transfers? – Julia S, South Africa Since you’ve been working in India for two years, it is assumed that you must have paid your Income Tax for all the income that you have earned in India. Please remember that even though you are a citizen of South Africa, any income which is earned by you in India shall be taxable in India. This income may have been earned by working or by providing services in India and this income is taxable in India irrespective of your citizenship or residential status.This payment may also be subjected to TDS (Tax Deduction at Source) in India.If your total income is less than the minimum exempt income (Rs 2,50,000 for FY 2015-16), you can get a refund of this TDS by filing an Income Tax Return in India. If you have made any capital gains or earned money which has not been tax accounted for before you move back home, you will have to do that.If there is an accumulated amount which you wish to repatriate to your native place, you may have to file Forms 15 CA and CB with the Income Tax Authorities in India, depending on a host of factors. I would recommend you to contact a good Chartered Accountant (CA) and get it sorted out if you feel there are likely to be any issues in this regard. Income Tax Do I have to pay inheritance tax or some other tax on amount received after demise of my father? – Sunil Vanwari, Kota

May 2016 l The Finapolis

personal finance advisor than the market is daily tanking or jumping and not showing any steady movement? – Praveen V, Nagaur

There is no concept of inheritance tax in India, unlike most other developed countries where it is also referred to as the ‘Death Tax’! If you inherit anything from your father after his demise, there is no tax to be paid by you. Universal Account Number Recently, my employer has given me my Universal Account Number (UAN) which it says remains unique to each employee and there is no need to break or transfer PF. Is it true? What are the benefits of UAN and what needs to be done when one changes one’s job? – Javed Khan, Mumbai What your employer has told you is correct since all your past and future PF accounts get linked to your UAN now. UAN is a 12-digit number allotted to each Employee Provident Fund member by the Employee Provident Fund Organization (EPFO) which gives him control of his EPF account and minimises the role of employer. All employees will now have only one UAN which will never change. When you change a job and your new employer gives you a member ID, it will also get linked to your UAN. It is like having multiple savings bank accounts which are tied to your single PAN numbers. Benefits of UAN are many. Earlier, transferring EPF account from one employer account to another was a tedious process. But the UAN will do away with this need. All you have to do is furnish your UAN and KYC details to new employer. Secondly, at present any request for EPF withdrawal has to be signed by your previous employer and then sent to the EPFO. There would be no need for transfer requests as money lying at your previous account would automatically get transferred to your new account once your present employer verifies your KYC details. Thirdly, every month when you and your employer contribute to your EPF account, you will receive an SMS alert from the EPFO. This will be similar to the SMS alerts you receive every time your bank account is credited or debited. You can even check your total balance by downloading the EPF passbook. Lastly, there

will be better utility of the employee pension scheme. Earlier, due to the tedious process of transfer of fund from one account to another, members preferred to withdraw their EPF money. When you withdraw your PF money, you also withdraw the fund contributed to Employee Pension Scheme. This affects the pension that you ultimately receive after retirement. With UAN, your EPF money along with that under EPS is automatically transferred. Transferring the money instead of withdrawing will result in better pension money when you require it most. PPF Recently I was told that I should make investment regularly in PPF because this account cannot be attached. Please tell me what this means – RuchiTalwar, Thane What you’ve been told is correct. Since the PPF account is a scheme meant for social security, government has given it this immunity that no court can attach your PPF account. Thus, the amount in a PPF account cannot be attached under any court order with respect to any debt or liability of the account holder, even if she defaults. This is the biggest safety government has given to this account. However the government can recover tax from the PPF account if the situation arises. Also, wife or husband can claim maintenance from the PPF account. Investment Is this a good time to invest in market given

Markets have always gone down and come up, and vice versa. This volatility is what gives you their good returns in the longterm. If they were to be flat, or steady as you’ve mentioned, they would only give you fixed income type of returns. Their volatility is the risk-premium that you pay. If you’re looking at short term returns, the premium paid may or may not pay back. If you show the patience that is typically required of such investments, it will almost always pay off in the long term – you are likely to get very good tax-efficient returns. Hence, get into the equity only if you are comfortable with an investment with such a profile. If you want to get into equity but do not like the volatility, get into Systematic Investment Plans (SIPs) of a portfolio of good equity mutual funds with long term aim and get on, unmindful of the short term market gyrations. Do review the funds and re-balance the portfolio for asset allocations typically twice or thrice a year.

The Finapolis l May 2016

Variety Know Your Country

ANSWER BACK # 3 It’s only a few questions long, but the Finapolis quiz will still test the mettle of the best: we ask anything on everything. This month, we ask about India’s Test captains. 1) The first-ever captain of an Indian cricket team was

Arshiya Urveeja Bose

A) C K Nandu C) Maharajkumar of Vizianagram

B) Polly Umrigar D) C K Nayudu

2) The first Indian captain to win a test series against Pakistan in Pakistan?

Meghalaya’s living bridges

Quotable

he East Khasi Hills District and West Jaintia Hills District in Meghalaya are home to living tree bridges, developed by the Khasi tribe. The Khasi do this using the roots of the fig rubber tree, a type of Banyan which grows in abandon in the districts. Fig rubber trees have aerial roots, meaning living roots drop down from its branches. Using the hollow trunks of a betul nut tree, the Khasi direct the root of a tree at one river bank to grow all the way to the other river bank, instead of letting it reach the ground as it would do in normal times. The process can take close to 15 years before the bridge is fully functional. According to reports, some of these bridge are over 100 feet long and can support the weight of up to 50 people at a time. A few of the bridges are thought to be more than 500 years old. There is even a double decker bridge, known as the “Umshiang Double-Decker Root Bridge” (pictured), which features two bridges — one grown on top of the other. It is thought to be the only bridge of its kind in the world. Since they are built using living roots, the bridges are alive and grow stronger with the passage of time. They are also capable of repairing themselves. Although not much is known about the origin of these bridges or how they were conceived of, many of them are reportedly facing destruction and could soon vanish. A number of factors, including arson, floods, negligence, and local villages deciding to remove them and replace them with steel bridges, which come about quicker, is said to be reducing the numbers of such living bridges.

Successful people do what unsuccessful people are not willing to do. Don’t wish it were easier; wish you were better — Jim Rohn, Motivational Speaker

A) Sunil Gavaskar C) Mohd. Azharuddin

B) Saurav Ganguly D) Kapil Dev

3) This captain’s career ended after an injury sustained during a test tour of West Indies. Who was he?

A) Ajit Wadekar C) Nari Contractor

B) Panjak Roy D) Hemu Adhikari

4) Which of the following has not captained India

A) Hemu Adhikari C) Rusi Surti

B) Pankaj Roy D) Dilip Vengsarkar

--------------------------------------------------------------------------------------------------------Send your answers to Answers to Answer Back #2 feedback@thefinapolis. 1- A; 2- A; 3-A; 4-C; 5-C com latest by May 31, 2016. Winners will be acknowlWinners: Shivanand Pandit, edged in the quiz Pratap Singh, Amrish Kawali section of the subsequent month’s issue.

See and Smile

May 2016 l The Finapolis

BOOKMARK

When bonds loosen

Business Battles should satisfy our desire to know more about the lives — and especially the battles — of the super-rich, says Mandar M Bakre

here’s a reason war movies do well and crowds gather at every altercation. We love to watch people fight. Big business battles have the added attraction of being between wellknow, identifiable people and having fabulous sums of wealth hanging in the balance. Whether it is Ambani vs Ambani or Bajaj vs Bajaj or Chhabria vs Chhabria, we like to know what’s going on, why it’s going on and how it came to this. Business Battles by Shyamal Majumdar is a collection of all the business battles that matter in India Inc. As an financial journalist who is currently editor at Business Standard, Majumdar is on ground he is familiar with. That he is based in Mumbai, where most of these battles took place, and often reported on them as part of his job, gives him an excellent feel and account of the battle. This lovely first person account he transfers to us. Business Battles should satisfy our compulsive desire to know more about the lives of the super-rich. But there’s more to be gleaned. The book also serves as a primer to the complexities that underlie big businesses and the travails of un-entangling them. Take one of the many Modi vs Modi battles, for example. The Modi group was partitioned between two groups of cousins totalling eight brothers. One company was split between two cousins, with each getting a business

division (the name of the resolved and his money was unlocked. company and brothers is In effect, one brother was asked to buy immaterial to the telling) shares for another and hold them in and stakes of ~9% and trust. ~13%, respectively. There is also the case of sibling Now the twist. In the rivalry. YK Modi’s businesses did better middle of the untangling than his two brothers, which caused his of shareholdings, the father to seek a redistribution of assets. Uttar Pradesh State YK reluctantly agreed to part with some Industrial Development of his assets. But when he continued Corporation (UPSIDC) to generate more money than his decided to sell its 16.6% brothers, his father demanded another stake in the company, redivision. This time YK refused, and issued a tender telling his father he made more money inviting bids for the than his brothers simple because he ran entire stake. That meant his businesses better. whoever bought UPSIDC’s shares would Just how did doing business become become the single largest shareholder so complicated? You can blame our in the company. The implications of socialist policies for that. Businessmen an outsider purchasing the stake were in pre-liberalisation India could not clear -- the brothers would lose control deploy surplus cash into existing of their company. One of the two cousins businesses due to license-quota heading a division of the company restrictions, so the only way a group promptly moved court for permission could expand was by investing in to bid for the stake. His cousin sued to another business, regardless of whether block him. His reasons? He wanted to the new business had any synergies bid for the stake too, but because his with the old. This is what gave birth to cash was locked up in litigation (cases such diversified business groups with and countercases between the brothers convoluted corporate structures. had caused a lot of assets to be frozen We are unlikely to see such battles until the courts reached judgements) again as the compulsions that lead to such he was legally restricted from doing corporate structures recede (or move so. Now the fun: The court into the shadows). But when allowed the cousin to bid for the winds of liberalisation and buy UPSIDC’s stake in made the disentangling of full. But he could exercise shareholdings an imperative the voting rights on only in the early 1990s, Indian half the block. The other business houses had to do half of the shares would go a lot of bloodletting and to the cousin who had sued Majumdar had a ringside him, who was asked to view of the happenings. We Business Battles make good on the payment are the luckier spectators Author: Shyamal Majumdar once his court cases were for it. f

Price: ` 350

Published on 1st May 2016 Total No. of pages 76, including cover pages

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RNI No: APENG/2007/20461 Regd. No.: L II/RNP/H-HD-1087/2014-16