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Monday,
January 13, 2003, Chandigarh, India  
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ADVANTAGE CONSUMERS
Keep an eye on Canara Bank’s share
Tisco good for long term |
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Want to
buy geyser? Get tips
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ADVANTAGE CONSUMERS Ludhiana Fortunately for middle class investor, the real estate prices have nearly remained constant in and around Ludhiana. The number of sellers and buyers has swelled, but a majority of buyers comprise the employees who dreaming of building homes or those wanting to make investments taking advantage of soft loans. Deals connected with the commercial properties are concentrated around bungalows on prime locations that can be pulled down and converted into shopping arcades. The Mall Road, Maharani Jhansi Road, College Road, Ghumar Mandi, etc comprise the areas that have been declared commercial. Barring half a dozen odd localities that have seen marginal upward mobility in prices over the past six months, the prices of real estate have almost remained static since August, 2002, in most PUDA approved colonies and other areas when the district administration fixed the minimum price at which the registration of the property would be undertaken. Though this has resulted in higher revenue earnings for the government, but various property dealers and colonisers give this as a major reason for price control. There has been a persistent demand for allowing registration of properties at the allotted rates rather than the price fixed by the administration. Considered to be an excellent time for investing in real estate due to the availability of soft loans, housing loans have dropped below the 10 per cent mark and are expected to go down by 0.5 per cent every year till they stabilise to around 5 per cent, the prevalent rate in North America and some other western countries today. The government's policy on home loans too has made investment in real estate very lucrative as up to Rs.1,50,000 of interest repaid each year towards servicing a home loan can now be set off against taxable income. This limit was earlier Rs 1,00,000. Further, up to Rs. 20,000 per annum can be availed under Section 88 for principal repayments made each year. In and around Ludhiana the areas that have registered the maximum increase in price over the past few months include Sarabha Nagar, Bhai Randhir Singh Nagar, Rishi Nagar, Raj Guru Nagar, Aggar Nagar, Urban Estate Dugri, Bhagat Singh Nagar, Sunil Park, Samsher Avenue and Mahavir Nagar. The last four are the newly developed areas, while the others are the old residential areas. These newly developed areas being a fraction in cost compared to the other old residential areas are much in demand and have seen hectic buying and selling activity. While, the financial advantage holds true for every area in the city, the areas east of Humbran Road up to Pakhowal Road are the ones that are most in demand due to several reasons. To begin with this area is pollution free owing to factories being far away, secondly most of the educational institutions like PAU, Government Colleges for Girls and Boys, schools such as the Sacred Heart, Guru Nanak Public School, Christian Fellowship College, besides others are located in this area. Before August, 2002, when the district administration had not fixed the rates for registry, people tried to strike a deal for property in the existing developed colonies, but the administration fixed the area wise rates, PUDA approved colonies evoked a lot of interest among buyers. During the last one year the number of registries being done by the district administration has increased from about 100 to 135 each in both East and West zones of the city. Mr. Pritam Singh Bharowal, Chief Patron of the Punjab Property Dealers and Colonisers Association says, "main buyers comprise employees who fill income tax returns and can procure loans easily. Their effort is to quickly build houses and shift into them with a view to saving the rent. This has resulted in the rents coming down in most areas of the city". However, not all areas of the city are in demand. The areas like Haibowal, Salem Tabri, Bhadaur Ke Road, Kakowal Road, Rahon Road, Tajpur Road, Delhi Road, Gill Road, the areas East of Dugri up to Humbran Road are low on demand owing to pollution and being predominantly migrant living here. Mr. Bharowal says, "all unwanted traits in a residential location like industry, hosiery, milk dairies make these areas disease-infested with migrant labourer contribute towards pollution. The Satluj threatens the area between Rahon Road to Humbran Road that continues to be vulnerable". With loans forming a bulk of the transaction, the ratio of black money to white involved in these deals has reversed. Earlier a deal comprised two parts of unaccounted money and one part of white money, but now property dealers says the black money involved in any transaction is limited to less than one-third of the deal. This has resulted in higher earnings for the government that collects a 6 per cent stamp duty for every property registered, besides a 1 per cent registration fee. Buyers should be extra careful while buying a plot from a PUDA-approved coloniser. Many colonisers have failed to make the payments to original land owners but are selling plots to unsuspecting clients. This can lead to undue complications in terms of litigations. It is, therefore, important to verified the background of the coloniser and to see if coloniser is selling property that actually belongs to him.
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Keep an eye on Canara Bank’s share As I browsed through the prospectus of Canara Bank on the morning Jet Airways flight to Bangalore, I got the feeling that this was definitely among the better banks to hit the IPO market in recent times. Having driven straight to the bank from the airport, my meetings with Mr Shenoy and Mr Shastri, the CMD, only confirmed this feeling. As I opined thereafter on the CNBC tele-show, this issue could yield investors fair returns. It thus came as no surprise to my team and me, when this stock not only opened well, but also rose sharply thereafter. Having advised our clients to take profits once the stock crossed the Rs 50 mark following frenzied post-listing buying, we recently advised them to start re-accumulating the stock once the inevitable correction sets in and the price dips to around the Rs 42 level. On offer in this issue were 11 crore shares of Rs 10 priced at a premium of Rs 25 per share aggregating Rs 385 crore. This issue was being made to augment the long-term resources of the bank and meet its future capital adequacy requirements. Acquisitions have also enabled the bank to accelerate its growth. Over its 96 operative years, the bank has grown steadily and has 2,409 branches with a total business size of over Rs 97,000 crore and an employee strength of over 47,500. On the flip side, the bank’s subsidiaries and associate concerns have not exactly covered themselves with glory, rapped as they have been on the knuckles by the Janakiraman report committee, SEBI and other regulators. In this day and time where corporate governance is a key issue for evaluating companies, this is a definite disadvantage for the bank. Furthermore, a closer look at the accounts for FY02 makes it clear that the bulk of the bottomline contribution came from profit on sale of investments, which is very clearly, unlikely to be repeated in the coming fiscals. Having returned equity to the tune of Rs 277 crore to the government just prior to the IPO, the bank’s offer P/E multiple had dipped to 1.9 while its book-value jumped to around two and a half times the offer price at Rs 84. Nevertheless, even at the offer price of Rs 35 it did seem that there was icing left on the IPO cake for investors to skim. Having completed an overview of this new PSU bank on the block at the bourses, we will zoom in on the key issues that make it a potentially good long-term investment prospect. But for that, you will need to wait until next week. In the meanwhile though, keep an eye on the share price movements of this bank.
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Tisco good for long term The third quarter results so far announced have been below the market expectations. Sensex has moved down from 3412 points to 3359 points. Infosys announced a 24 per cent net profit, with additional 23 clients and 1,133 more employees in its third quarter results. But its market price declined by 7.5 per cent. Hero Honda net profit was up 15 per cent on higher sales. Hero Honda’s third quarter results were also satisfactory but not much to the market’s expectations. There was, however, some good news. TE CMIE has raised India’s GDP growth target to 3.7 per cent in the current financial year from 3.1 per cent which was its earlier projection. The exchange rate of rupee against the dollar has also improved and the Finance Minister has now allowed full capital convertibility. Companies with overseas offices can now acquire immovable property abroad. Individuals have also been permitted to invest abroad in listed companies. The industrial growth rate for November has been estimated at 3.7 per cent which is higher than the corresponding period last year but lower than it was in October. It appears that during this week the market will move within the narrow range awaiting the announcement of more third quarter results. There is, however, no doubt that market will keep up its upward march during the next fortnight and later in expectation of soft and market-friendly Budget in February. Elections to the Himachal Pradesh Vidhan Sabha will he held in the last week of February and the Union Government cannot afford to ignore the Kelkar Committee’s recommendations on tax-free dividend income in the hands of shareholders. Even the proposal regarding no tax on long-term capital gains on sale of shares may be retained. But the recommendations regarding standard deductions and those relating to Sections 80 L and 88 are bound to be modified and these concessions may be partially restored. There is strong market rumour that Hindustan Ink Industries is being taken over by BASF at Rs 420 per share. It is for this reason that market price of this scrip is climbing up from Rs 200 to around Rs 370. When the market price was about Rs 210, this share had been recommended in this column. Another rumour is that Novartis will soon announce buyback of equity shares at around Rs 320. This scrip which at one time was quoting at Rs 230 per share is now around Rs 270. There is, however, still scope for raise in its market price. Reliance has discovered large gas deposits in the sixth well in the KG region in Andhra Pradesh and Gujarat. Reliance shares are a good long-term investment. The market also expects excellent returns from Tisco. Many analysts are strongly recommending it as a medium and long term investment. The SBI has further reduced the deposit rates. This may displease those who are interested in making fixed deposits in the banks but it is good news for the market because the net returns from the equity shares can be higher than the fixed deposits interest in the banks.
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by Pushpa Girimaji Want to buy geyser? Get tips As day temperatures drop and chilly winds blow across the north, geysers, room heaters and warm woollen clothing have become hot selling products. In other parts of the country too, these are some of the fast selling goods of the season. So here are some essential tips to help you make an informed choice while purchasing them. Let me begin with geysers. While purchasing these "storage type water heaters" as they are called, one has to look at not only their performance vis-à-vis heating and reheating water, but also their safety and energy efficiency features. An unsafe geyser can burst, inflicting grievous burn injuries, while those which are not energy efficient can cause an alarming rise in your power bills during the cold winter months. Warranties and guarantees, particularly in respect of the heating element, are also important. Since there are a number of popular brands in this segment, consumers have to compare them on the basis all these factors and choose the best. However, such comparison can be made only on the basis of label information. If one wants to go beyond the claims of manufacturers and judge the geysers on the basis of their actual performance in respect of all these quality parameters, then one needs to get them tested in a laboratory. Since this is not possible for an individual consumer, a Delhi-based consumer group, "Voice" has actually got tested in an independent laboratory, 10 popular brands of 25-litre geysers and rated them on the basis of their performance under various heads such as the time taken to heat the water, the temperature at which it is heated, reheating time, energy efficiency, safety features, warranties and guarantees and their price. Voice has also drawn up a chart indicating what your energy bills will be for each of these brands and you will be surprised to know that the actual cost of running the geyser for a day (at Rs 4 per unit) varies from Rs 3.16 to Rs 5.78, depending on the energy efficiency of the
geyser. This has been calculated by running the heater continuously for 24 hours, but without taking out the water during this time. In other words, your power bill could well double if you choose the wrong geyser and since these last a long time and power tariffs keep going up, you will probably end up paying a lot more on electricity than you should. In fact following the tests, "Voice" has strongly recommended that the brands spruce up on their energy efficiency levels. So if you are buying a geyser, I would suggest that you first look at the results of the tests and comparative analysis put out by "Voice". The consumer group, which chose 10 popular brands of 25-litre geysers on the basis of market surveys conducted in Bangalore, Mumbai, Delhi and Kolkata, said Bajaj-Energy Smart stood first in the overall ranking. It heated water to an acceptable temperature of 52.8 degrees, had one of the lowest heating time of 34.45 minutes and did well in safety tests too, but its "energy smart" label is really not appropriate as it has a lot of scope to improve in its energy efficiency, the report says. You can get a copy of the detailed test results and the ratings of various brands from the office of "Voice" at 441, Jangpura, Mathura Road, New Delhi-110014 (website : www.consumer-voice.org ) As far as room heaters and radiators are concerned, these days you have a wide variety, with many new features that enhance their performance. But here too, besides their heating efficiency, it is extremely important to find out how much power they consume, as otherwise your power bills may well shoot up. Safety is another important criteria. It will be advisable, therefore, to compare the various brands on these aspects, besides their warranties and guarantees and the after-sales service. Hopefully by next winter,"Voice" would have tested these too, to give consumers authentic information on their overall performance, safety and energy efficiency. When it comes to winter clothing, consumers have a wide variety to choose from, but it is difficult to make an informed choice because of lack of label information. In fact today, barring those that carry the pure wool or blended wool labels given by the International Wool Secretariat, most warm clothing do not give any information on the fibres used, nor do they give wash care instructions. Most garments do not even carry the full address of manufacturer. Neither do they specify the date of manufacture or the retail price. Consumers should, therefore, demand proper labelling laws to ensure that consumers' right to information is respected. Meanwhile, do not hesitate to ask the retailer about the fibres used and wash care instructions. Remember, under the Consumer Protection Act, if the retailer misleads you on the quality or the product turns out to be different from what the retailer claimed, it becomes a defective product and you have the right to seek redress against it. But do keep the cash receipt safe. |
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Some other buyers comprise the businessmen who have interest in commercial properties and want to relocate their businesses to the areas outside the city that have been declared commercial by the district administration. A majority of the real estate business in the city is connected to residential property and is confined to the sale and purchase of small plots on the outskirts of the city in PUDA approved colonies.