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UB Group loses over $4 billion market wealth from 1-yr peak
Govt, industry to discuss declining IIP
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India to grow at 7.6% in FY12
despite industrial slowdown: Citi
PSU banks speed up NPAs recovery
New oil subsidies could aggravate inflation: PM
Focus on SMEs aims to create jobs: CII
Markets to remain vulnerable on
global cues Tax Advice
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UB Group loses over $4 billion market wealth from 1-yr peak
New Delhi, November 13 As per the stock exchange data, the combined market value of the group's six listed firms — Kingfisher, UB Holdings, United Breweries (UBL), United Spirits (USL), Mangalore Chemicals and Fertilizers (MCFL), and UB Engineering (UBEL) — currently stands at about Rs 22,850 crore. This marks a fall of about Rs 21,800 crore (US $4.4 billion) from the total market value of these six at their peaks in the past one year. Out of this collective loss, the promoter holdings in the six companies account for more than half at about Rs 11,500 crore, while the remainder has been in the portfolio of other shareholders including banks, retail and other investors. Adding to the group's troubles in the market, promoters have heavily pledged shares in most of its listed companies, including Kingfisher, the stock exchange data showed. According to the latest shareholding patterns available till the end of July-September 2011 quarter, the total shares pledged by the promoters is worth over Rs 4,000 crore, but the actual value at which these shares were pledged could be much higher as the stocks have fallen sharply in recent past. While queries sent to a group spokesperson regarding the various aspects of the shares pledged by promoters remained unanswered, the shareholding patterns filed with the stock exchanges show that the promoters pledged further shares in three group companies during the July-September 2011 quarter. The total shares pledged by the promoters during the latest quarter are worth over Rs 100 crore at current prices. The companies where promoters pledged more shares in the last quarter included USL, MCFL and UBEL. However, the level of shares pledged by the promoters in three other companies — Kingfisher, UB Holdings and UBL — remained unchanged during the period. The group is currently facing troubled times with regard to its aviation venture Kingfisher, which has cancelled a number of flights due to factors like increased costs. The airline has said that it has requested banks for a higher borrowing limit due to rising operating, costs caused by costlier fuel prices and rupee devaluation. Kingfisher Airlines had effected a loan recast earlier this year, wherein some banks were given certain equity stakes, but its debts are still estimated to be about Rs 7,000 crore. According to the airline's shareholding pattern as on September 30, 2011, the promoters have pledged 90.17 per cent of their holding. These shares are currently worth over Rs 500 crore. — PTI
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Govt, industry to discuss declining IIP
Mumbai, November 13 "It’s a matter of concern. I have called for a review meeting in Delhi to look at all aspects like how the industry can get opportunities and climate to invest more," Sharma said here at the World Economic Forum summit. Sharma also asked the RBI to urgently review its monetary policy to tackle the issue. India Inc, which has been demanding lowering of interest rates by RBI, has also asked the central bank to reverse the trend of raising interest rates now. The Reserve Bank has hiked interest rates 13 times since March, 2010, to tame inflation. Headline inflation has been above the 9%-mark since December last year and stood at a 13-month high of 9.78% in August before moderating slightly to 9.72% in September. The continuous hike in the key policy rates are counter-productive for industrial growth and capital formation, the minister said. Meanwhile, India warned on Sunday against protectionism as the world grapples with the sovereign debt crisis, portraying itself as a relative haven of stability in troubled economic times. Commerce minister Anand Sharma said India was an influential emerging economy and that the country "will be part of the stabilisation process when it comes to what's happening in Europe". However, he warned: "In difficult times, the tendency to look inwards, to have protective measures... is something the G20 must reassure the world that we will not allow that to happen. "We need it (the G20) to engage more, not going for protectionism because that has happened since 2008-09," he told delegates at the India Economic Summit in Mumbai. — PTI, AFP
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India to grow at 7.6% in FY12
despite industrial slowdown: Citi
Mumbai, November 13 Good performance by the agricultural sector is expected to offset slowdown in the industrial sector, Citi said. While continued weakness in industrial production data could add downside risks to our FY12 industry growth estimate of 6.5 per cent, these may be offset by higher agri growth, thus supporting our FY12 GDP forecast at 7.6 per cent for now," Citi Investment Research & Analysis said in its issue of India Macro Flash. Reflecting slowdown, factory output growth slipped to a two-year low of 1.9 per cent in September compared to 6.1 per cent in the same month of 2010. This is the third consecutive month industrial growth has declined. During the April-September period of this fiscal, the growth of the Index of Industrial Production (IIP) stood at 5 per cent as against 8.2 per cent in the same period last year. Citi's 7.6 per cent growth projection is in line with the revised forecast of the Reserve Bank. Last month, the central bank revised downwards its estimates for the gross domestic product (GDP) expansion to 7.6 per cent for 2011-12, down from the previous estimate of 8 per cent, on account of global slowdown and high domestic inflation. The Indian economy had grown by 8.5 per cent in fiscal 2010-11. During the first quarter (April-June) of the current fiscal, economic growth slowed down to 7.7 per cent, lowest in six quarters. Citi, however, said that economic growth in fiscal 2013 will fall to 7.5 per cent. "Going forward, recessionary global conditions coupled with domestic factors, including the lagged impact of tightening and sluggish reform progress, are likely to result in FY2013 GDP coming in a tad lower at 7.5 per cent," it said.
— PTI |
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PSU banks speed up NPAs recovery
Mumbai, November 13 Some banks are even mulling offloading some of the nonperforming assets to asset reconstruction companies in the fourth quarter, to clean up the balance sheets. "We have a high focus on recovery. We’ve instructed teams of general managers to work towards this. In some cases, we are trying to recover the loan amounts through compromise settlements and one-time settlement schemes," Indian Overseas Bank chairman & MD M Narendra said.
— Agencies |
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New oil subsidies could aggravate inflation: PM
New Delhi, November 13 "If (fuel) prices go up, we have to either raise domestic prices or absorb the increased cost in asking the oil marketing companies to subsidise other elements of the petroleum sector, or from the budget we give additional subsidies," he said. ".... Further subsidies can only aggravate the budgetary problem, and if the budgetary problem gets aggravated, inflation will again raise its ugly head," Singh said during his interaction with journalists on Saturday while returning from the SAARC summit in the Maldives. Singh said one of the reasons for inflation becoming a major problem that concerns "everybody is the rise in prices of fuel products." He said 75 per cent of the country's total petroleum product requirements was imported and the government had no control over international prices beyond a point. "Already the budgetary subsidies amount to Rs 150,000 crore. And quite frankly that is an unsustainable burden. Therefore, I would like all our countrymen to recognise that when international prices are rising, and we have no control over international prices beyond a point," he said. State-owned oil firms recently hiked the petrol price by Rs 1.80 per litre, the fourth increase this year, largely because of rising international crude prices and fall in the rupee valuation. — PTI
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Focus on SMEs aims to create jobs: CII
New Delhi, November 13 CII has mentioned that one of the major challenges faced by SMEs is inadequate access to adequate and timely finance, mainly due to lack of financial information and non-formal business practices, as they are largely dependent on promoter's resources and loans from financial institutions and banks. According to CII, the capital markets are difficult to access, due to high costs, difficulties in complying with regulatory requirements, etc. Bank finances access is limited, due to the inability of small and medium units to create tangible assets, as also the debt-equity ratio norms followed by banks. Welcoming the national manufacturing policy proposals for improving access by the MSME sector to finance, Ramesh Datla, chairman of CII's national MSME council, said the measures such as the rollover relief from long-term capital gains tax to individuals on sale of residential property (house or plot of land), in the case of reinvestment of sale consideration in the equity of a new startup MSME unit in the manufacturing sector for the purchase of new plant and machinery, will enable a large number of entrepreneurs to raise equity by selling of ancestral properties. TNS adds from Chandigarh: The CII Avantha Centre for Competitiveness for SMEs, based in Chandigarh, is now all set to help entrepreneurs in South Africa and Malawi to adopt a “cluster approach”. The centre is likely to start this programme in South Africa next year.
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When you buy a health insurance policy you pay a "premium" to the insurance company. A number of people view health insurance premia they pay as an additional expense. Many ask the question, "What would I get in return if I pay this premium?" Another view that is occasionally aired is that "I can save the sum insured amount myself, so why should I pay the insurance firm this premium every year?" There is another common thought about a lack of visibility or immediacy of the perceived value - "What would I get back?"
Hence, the perception about health insurance being is an annual recurring expense with no returns holds many people back from purchasing a health cover. Is health insurance premium really an expense? There is growing awareness in India on the need and importance about financial planning. People are becoming more and more aware about their financial requirements across different life stages. For example, financial needs relating to children’s basic and higher education, marriage, purchase of property, creation of a retirement corpus, etc, are considered quite seriously by people when they prepare their short and long term financial plans. The absence of a structured and mature social security system in India makes proper financial planning imperative. Unfortunately, funding for various healthcare requirements across the same life stages does not feature, at times, as part of the financial plans that people prepare. The reasons for this could be lack of awareness about (a) one’s own healthcare needs along with its associated costs and (b) about health cost funding options available through health insurance. Using own funds for meeting health needs If you choose not to take health insurance and use your own money instead for paying your hospitalization and other healthcare costs, in essence you are making a critical choice. Funds that you would have saved for some other life stage requirements would need to get diverted to fund healthcare costs in the absence of health insurance. If your life savings are insufficient, there might be a need to take out an expensive loan by mortgaging another asset (could be a house or the family jewellery) to take care of healthcare bills. However, this "self funding" could be done only once or, may be, twice. What happens if hospitalization is a result of some recurring disease management requirements and becomes a frequent necessity? Ensuring optimum returns on health cover investment The author is chief financial officer,
Max Bupa Health Insurance Co. Ltd. The views expressed are his own |
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Markets to remain vulnerable
on global cues
The saving grace was the short week where we had two trading holidays on Monday and Thursday. Had Thursday not been a holiday, India would also have been part of the worldwide carnage that hit the markets globally.
The big sectoral losers were the BSE Realty that lost 5.98%, the BSE Bankex that lost 5.44% and the BSE Metal that lost 4.84%. The fall was led by SBI that declared results better than expected but saw a sharp rise in its NPAs and lost Rs 166 or 8.45%. ICICI Bank lost 7.01%. In individual stocks SKS Micro lost Rs 51 or 24.40% to close at Rs 158. Kingfisher was another stock that got battered following the large scale cancellation of its flights and lost 16.91%. Though the global markets have recently been in a tailspin, there was a sharp recovery in the US markets on Friday evening. One is not sure whether a one-day recovery was enough to pull the markets out of its current mess. However, with the yearend round the corner, things could remain bad as fund managers worldwide would like to book profits and whatever is left of it with just about four weeks before the Christmas holidays begin. On the macro front things are turning bad in India with the auction of treasury bills devolving on four of the past five occasions. India's fiscal deficit is likely to jump further by about 40-50% with a fertilizer subsidy of Rs 95,000 crore, shortfall of divestment proceeds of about Rs 35,000 crore and petro products subsidy and oil companies compensation of Rs 70,000 crore yet to be provided in the budget. All this totals a massive Rs 200,000 crore and would be almost half the fiscal deficit. The markets have reached a stage where looking at them on a daily or weekly level is very confusing and difficult to predict simply because events seem to be unfolding at a very fast pace and change on a daily basis. The week ahead would be very choppy and extremely volatile and investors would be looking at global markets and local events as well. The BSE Sensex has support at 17,100, then at 16,973, then at 16,917, then at 16,752 and finally at 16,669 points. It has resistance at 17,282, then at 17,464, then at 17,535, then at 17,658 and finally at 17,813 points. The NSE Nifty has support at 5,141, then at 5,084, then at 5,101 and finally at 4,926 points. It has resistance at 5,197, then at 5,253, then at 5,276, then at 5,317 and finally at 5,360 points. The market is looking very vulnerable and is ready to crack at the slightest negative news. As mentioned earlier there is confusion about the daily movement but the medium term trend over the next few weeks is likely to remain downwards and one should be very cautious about investments going forward. Trading cautiously in the days ahead is the key to survival. The author is founder of KRIS, an investment advisory firm. The views expressed are his own
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Tax Advice
Q: I'm a senior citizen who is drawing a government pension. My annual income during fiscal 2011-12 is expected to be over Rs 2.50 lakh. I recently gifted a cheque of Rs 70,000 to my married daughter on her birthday. Is this amount of money gifted exempted from tax payable by me or my daughter? If not then whose liability will it be to pay tax, that is, mine or my daughter's?
— Narain Singh A: The amount of money gifted to your daughter is not taxable and there is no liability to pay tax on the gifted amount, either by you or by your daughter. You will, however, be liable to pay tax on your total income exceeding Rs 2.5 lakh. Q: The Central Board of Direct Taxes has (vide its notification dated June 23, 2011) exempted people having a salary income of up to Rs 5 lakh from filing their tax returns. Is this notification also applicable to government pensioners like me? My total income from pension, interest income and income from property is far below Rs 5 lakh. Am I required to file a tax return? Also, according to a news report that appeared in June this year, interest earned from a bank savings account is taxfree up to Rs 10,000. In this fiscal I earned Rs12,000 interest from my bank savings account. Will I have to pay tax on Rs 12,000 or on Rs 2,000? — Harbans Singh A: The CBDT notification dated June 23, 2011with regard to exemption granted from the requirement of furnishing return of income is applicable to an individual whose total income does not exceed Rs 5 lakh and such income consists of income chargeable under the head "salaries and interest from saving account" not exceeding Rs 10,000. Pension income would be covered under the head "salary" and therefore an individual who is in receipt of the income referred to hereinabove would not be required to file a return of income for assessment year 2011-12. However, you will not be covered in the said category as you have income from property that would not entitle you to claim exemption under the CBDT notification. As to your other question, the amount of interest of Rs 10,000 received from the bank is not exempt from tax. However, tax is not required to be deducted at source by a bank in case the interest income of an individual does not exceed Rs 10,000. Q: I filed an income tax return for financial year 2007-08 without mentioning savings interest and tax deducted at source (10.3%) by the bank on a fixed deposit. This fixed deposit was going to mature after March 31, 2008. Meanwhile, I received a notice issued by the income tax department and revised my return by including interest income and the tax paid on it, including interest payable under section 234B & C during September 2009. However, the department considered it as a case of concealment of income and imposed a 100 per cent penalty. You are requested to give your views on this matter. — Daljeet Kaur A: You have not provided the complete facts and have not indicated the contents of the notice received by you from the income tax department. It is therefore not possible to give my views as to whether the amount of interest not disclosed earlier would be covered within the provisions of section 271 (i)(c) of the Income Tax Act, 1961 dealing with concealment of income. |
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Expressing concern over declining industrial production, Commerce & Industry Minister Anand Sharma on Sunday called for an urgent meeting of industry leaders next week in New Delhi.
When you buy a health insurance policy you pay a "premium" to the insurance company. A number of people view health insurance premia they pay as an additional expense. Many ask the question, "What would I get in return if I pay this premium?" Another view that is occasionally aired is that "I can save the sum insured amount myself, so why should I pay the insurance firm this premium every year?" There is another common thought about a lack of visibility or immediacy of the perceived value - "What would I get back?"
Like any other financial asset it is important to understand the quality of the asset that you would acquire when you pay the cost, hence impacting returns. Some critical factors that determine returns on a health insurance asset, through the service experience you would get, are:
At the end of the short week, the Bombay Stock Exchange Sensex lost 369.79 points or 2.11% to close at 17,192.82 points. The National Stock Exchange Nifty lost 115.35 points or 2.18% to close at 5,168.85 points. The broader indices like the BSE 100, BSE 200 and BSE 500 fell almost identically by 2.33%, 2.32% and 2.32%, respectively, reflecting on the enormity of the slide.
Add to this figure or concern is that profits of companies are falling which would impact the tax revenues in the December quarter and the IIP or industrial output index is at its lowest in over 2 years. All these are ominous signs and do not augur well for the Indian economy and the stock markets. 
