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Wal-Mart lobbying on for India entry
Washington/New Delhi, February 3
Amid a probe being initiated into Wal-Mart's US lobbying with regard to its India entry, the global retail giant has continued to lobby with the American lawmakers on this issue, as also others, and spent a total amount of $6.13 million on the same during 2012.

BIZ TALK
L’Oreal targets 150 million consumers in India by 2020
L’Oreal expects India to become the sixth largest beauty market in the world by 2020. In an interview with Sanjeev Sharma, Dinesh Dayal, COO, L’Oreal India, talks about the new research centre and investments and how India is becoming one of the top markets and local innovation.

personal finance
Investment in gold speculative, not inflation hedge
old — India’s favourite investment asset — has caught the government’s attention with import duty rising for the third time in the past one year. The import duty has been hiked in a quick succession, with the first one from just Rs 300 per 10 grams to flat 2 per cent in January 2012 and then to 4 per cent in March 2012 followed by a recent increase to 6 per cent.

It pays to be financially well organised
After a chance meeting in a nearby cafe with my long-lost friend Queenie, who was looking completely drained out after her mall shopping spree, I could guess her life was all about shopping, dining and enjoying life in general. In her scheme of things there was no room for planning of any sort, forget financial planning.



EARLIER STORIES


Tax Advice
TDS mandatory if interest income exceeds  Rs 10,000
Q. My wife is working in a Punjab Government department. She has been getting salary through a bank and earning interest on the available balance in her account. She also has fixed deposits (FDs) in her name in the same bank. Please let me know how to calculate interest accrued (on savings account and FDs) during the period 01.04.2012 to 31.03.2013 for the purpose of income tax. My other queries are as under:

 





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Wal-Mart lobbying on for India entry

Washington/New Delhi, February 3
Amid a probe being initiated into Wal-Mart's US lobbying with regard to its India entry, the global retail giant has continued to lobby with the American lawmakers on this issue, as also others, and spent a total amount of $6.13 million on the same during 2012.

As per the latest Congressional records of lobbying disclosure reports, the US-based Wal-Mart Stores spent a total amount of $1.48 million (about Rs 8 crore) on lobbying for various issues, including on "discussions related to FDI in India", during the last quarter ended December 31, 2012.

This has taken the total lobbying bill of the company for entire 2012 to $6.13 million (about Rs 33 crore), the lobbying disclosure records available with the US Senate show.

Wal-Mart has been lobbying with the US lawmakers on dozens of issues every quarter, whose disclosures it is mandatorily required to make under the American regulations.

Recently, the Indian government initiated a probe into the lobbying activities by Wal-Mart in the US for gaining access to Indian market, after disclosures about these activities caused a furore and a political debate in India.

Wal-Mart has been waiting for years to open its supermarkets in India and it has been lobbying with the US lawmakers since at least 2008 to facilitate its entry into the highly lucrative Indian market.

Its total bill on these activities has now crossed $34 million (about Rs 180 crore) since 2008, which has been incurred on account of lobbying for more than 50 issues every quarter, including the issues related to "enhanced market access for investment in India".

The companies are allowed to lobby for their cases in various departments and agencies in the US, but they are required to file their lobbying disclosure reports every quarter with the US Senate.

As per Wal-Mart's lobbying disclosure reports, the company has continuously lobbied for its India entry since 2008, except for a few quarters in 2009.

Indian government recently opened up its multi-brand retail sector for foreign companies after years of political opposition and a Parliament motion against this decision was defeated last week in both the Lok Sabha and the Rajya Sabha.

The US-based supermarket chain operator Wal-Mart Stores, which has an annual turnover of $444 billion and a worldwide headcount of 2.2 million, has been waiting for a long time to enter India.

The Indian retail market is estimated to be worth about $500 billion currently and is pegged to cross $1 trillion mark by 2020, given the rising personal income and growing consumer spending trends.

India is one of the most favourable destinations for international retailers and an accelerated retail growth of 15-20 per cent is expected over the next five years. — PTI 

The great indian pie

At present, Indian retail market is estimated at $500 bn and is pegged to cross $1-trillion mark by 2020

Wal-Mart Stores has an annual turnover of $444 bn and a worldwide headcount of 22 lakh

Wal-Mart has been lobbying with the US lawmakers for India entry since 2008

The global retail giant spent Rs 33 crore on lobbying during 2012

Its total bill on these activities has crossed Rs 180 crore since 2008

India recently opened up its multi-brand retail sector for foreign companies

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BIZ TALK
L’Oreal targets 150 million consumers in India by 2020

L’Oreal expects India to become the sixth largest beauty market in the world by 2020. In an interview with Sanjeev Sharma, Dinesh Dayal, COO, L’Oreal India, talks about the new research centre and investments and how India is becoming one of the top markets and local innovation.

Q. What is L’Oreal’s India strategy through organic and inorganic growth?

L’Oreal is on an assertive expansion mode in India, which is set to become the sixth largest beauty market in the world by 2020. L’Oréal is investing Rs 970 crore from the period 2011 to 2016 which will help us reach our target of Rs 70 billion in sales and 150 million consumers by 2020. As a first step of our strategy in India, we were first to market and create a market from scratch in categories such as hair color, face wash, conditioners, anti- perspirants, the modern hair salon - all categories where we are market leaders today.

Today, as we are going deeper as we get bigger; we are creating more accessible products. Our new Research & Innovation centre in India will help us accelerate innovations from India. Our job is to create more sophisticated beauty products, grow the category and create new categories.

In terms of inorganic growth, we are always open to looking at opportunities in brands that have international growth potential and complement our portfolio of brands.

Q: How does the company view the Indian market in its global operations?

India is a strategic market for L’Oreal and is one of its fastest growing subsidiaries in the world. We expect India to emerge in the top five markets globally with 70 billion sales and 150 million consumers by 2020. The new Research and Innovation hub will enable L’Oreal to boost its local innovations that will cater to the unique needs of the Indian market. We are also heavily investing in training and grooming Indian talent to become managers for the world.

Q: What are the investments lined up?

L’Oreal is investing Rs 970 crore between 2011 and 2016. The focus of the investment will be on setting up of the Mumbai and Bangalore R&I centres, a new head office in Mumbai, factory expansion for the 3rd time in Pune and a national distribution centre in Pune.

Q: What will be the focus on localisation of products, including ayurvedic cosmetics?

At L’Oreal, we believe in both India-inspired innovation and India-specific innovation. While the former is incremental in nature by customising global products to suit the needs of the Indian market, the latter is focused on breakthrough innovations developed from scratch to cater to the unique Indian needs.

Q: What are the company’s plans for opening of boutique outlets in India?

By the end of 2012 we will have 13 point of sales in Lancôme, 6 boutiques on Kiehl’s and over 100 point of sales for Giorgio Armani and Ralph Lauren fragrances. While we have developed mainly in Mumbai and Delhi it is our aim to extend our reach to other cities.

Q: How do you see the growth of consumer cosmetics market and luxury market in India given the rising inflation and economic slowdown?

L’Oréal has not been impacted much with the economic downturn globally or even in India. In fact, as per our estimates, the market growth in India may continue to outpace that of most major economies for a while.

The Indian beauty market is one of the fastest growing in the world and is expected to grow from 2 billion Euros in 2011 to 10 billion Euros in 2025. Beauty consumption is also expected to grow three-fold and India will become the 6th largest beauty market in the world.

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personal finance
Investment in gold speculative, not inflation hedge
Jayant Manglik

Gold — India’s favourite investment asset — has caught the government’s attention with import duty rising for the third time in the past one year. The import duty has been hiked in a quick succession, with the first one from just Rs 300 per 10 grams to flat 2 per cent in January 2012 and then to 4 per cent in March 2012 followed by a recent increase to 6 per cent.

Of late, the government has been trying several tactics to reduce gold imports as it has started taking toll on the country’s current account deficit. Apart from hiking the customs duty, the government recently barred banks from financing gold purchases. To dissuade retail investors from buying physical gold, the RBI is considering promoting gold investment in a dematerialised form. While most of these investment alternatives do prove to be viable investment options, they fail to address the fundamental reason for the surge in gold imports like high inflation and macro-economic instability.

The move to curtail demand and pressure on the rupee vis-à-vis the US dollar is understandable. With gold imports in the range of US$ 50 billion a year, it eats away about 20% of the dollars earned from exports and is almost 80 per cent of our current account deficit.  It would seem if nobody imported gold, we would be financially healthier – which is debatable because it is essentially diversification of risk and well even our own government buys gold for the same reason. But the biggest question is does it makes sense to invest in gold.

India has been thriving on its domestic gold demand advantage for a long time now. However, a large part of this strong demand is focused on buying gold that is hurting foreign exchange reserves.      

The big question first. Will the hike in import duty curb demand? Unlikely, if you go by historical trends because as prices rose dramatically over the last decade, so did our gold consumption. The year 2011 saw a steep increase in prices with a record 970 tonnes being imported by India. While 2012 too saw imports exceeding 800 tonnes even though gold hit new peaks with domestic prices exceeding Rs 30,000 per 10 grams.

The depreciation of the rupee against the dollar has always played a significant role in the rising price of gold and while it was due to other reasons earlier, today the import of gold itself has become one of the reasons for pressure on the rupee against the US dollar. So, in a sense, the investment feeds on itself. And in any case, in India we like it both ways –gold is an attractive investment because it is a hedge against a weak rupee and it is cheaper to buy with a stronger rupee. So whether there is a fall or a rise in prices, we convince ourselves that we must buy gold.

This unique philosophy has made us the largest gold consuming country in the world. And we have money going into gold in all forms, be it physical gold bars and coins or jewellery from the local jeweller, demat gold through commodity and spot exchanges, ETFs through equity exchanges and Gold Fund of Funds through your financial adviser, broker or agent.

Fixed income and equities have generally found more favour with investors as these are income-generating assets. Fixed income provides interest; equities provide dividend. Gold generates neither. However, things have been changing with real interest rates moving into the negative territory across the globe and dividend yield on equities being far from encouraging further investments. With even currencies being consciously devalued, gold is emerging as an alternative to fiat money with more fundamental value to provide to investors. In fact, gold has also been an attractive investment option, handsomely outperforming the 50-stock S&P Nifty and the 30-stock BSE Sensex in recent years and ahead even over a period of 10 years.

Yet, gold remains one of the under-invested assets. Currently, around 1 per cent of global financial assets are invested in gold. We believe gold is far from being in a bubble phase. Gold price performance in all G7 currencies in the past 5 to 10 years stands testimony to the fact that it’s a broad-based rally.

International factors continue to drive gold prices rather than just the demand in India even though we are the world’s largest consumers of gold. But currently all macro-economic factors are in favour. First, the US dollar will likely continue to be weak because their economy is still struggling to show a stable, positive trend and a weak US dollar always means firm gold prices. Secondly, negative real interest rates across the world combined with continuing economic instability in Europe will ensure firm gold prices in dollar terms for the year. Finally, demand in China is increasing and likely to cross India’s in this calendar year which will stabilise demand. Also, it is too early to say that investors around the world have enough confidence in other investment avenues like equity and real estate prices seem to have peaked and leaving money in the bank may have inflation eat into its value.

The gold bull-run since the beginning of the new millennium may or may not be petering out but we will continue to buy gold. Since our gold demand is largely inelastic due to social compulsions, raising duties is a fair try so long as it doesn’t encourage smuggling. If the gold demand remains the same, the government earns revenue. On the other hand, if gold demand falls then the pressure on the rupee against the US dollar will decrease. Now that’s a golden opportunity for the government!

The author is President, Retail Distribution, Religare Broking. The views expressed are his own

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Home Loan Floating interest rates for loan amount Rs 30 Lakh as on January 31, 2013
PN: The rates given above are for the initial period only. For the subsequent period, the interest rates vary from bank to bank. * These lenders also have floating interest rate scheme where the interest rates are fixed for the initial few years and thereafter the then prevailing floating rates are applicable. The home loan rates are indicative rates, which may change according to the credit profile of the customer. Source: ApnaPaisa Research Bureau www.apnapaisa.com

What are Options & Futures*

An option gives you the right to buy or sell the underlying asset . A call option gives you right to buy the underlying asset while a put option gives you the right to sell. An option contract specifies the strike price, that is, the price at which you can buy or sell the underlying asset. 

In Futures, you buy a contract which will have a specific lot size of shares. When you buy a Futures contract, you don’t pay the entire value of the contract but just the margin. Open interest is the the total number of contracts not closed or delivered on a particular day.

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It pays to be financially well organised
Bienu Vaghela

After a chance meeting in a nearby cafe with my long-lost friend Queenie, who was looking completely drained out after her mall shopping spree, I could guess her life was all about shopping, dining and enjoying life in general. In her scheme of things there was no room for planning of any sort, forget financial planning.

Just out of curiosity I asked her, “How are you prepared for your daughter’s higher education?” On this, she shot back: “What’s there to be prepared about? It’ll happen and it’s a good two years away”. I knew this would come from her, so I wasted no time in apprising her how important it is to be well planned with your expenses, savings and investments so that you remain worry free when the time comes.

I could sense she would find it difficult to scrutinise her income, micromanage her expenses, maintain an account of where and on whom she had spent money during the month — which was the first step towards financial planning. Oh yes, all these sacrifices and that too at a cost. But this is not true!

I planned to meet her again as I wanted her to put her money to better use say for her daughter’s higher education or good retired life. Luckily, we met over dinner at the sports club in the vicinity. I would like to share with you what transpired between two friends over the sumptuous dinner. Here it goes…

Queenie asked: “OK will you help me with that?”

To this I replied I was not a financial planner and only the latter could help her given her financial state of affairs. She was quite surprised at that.

I told her financial planners are professional practitioners who work on your financial plans by taking your risk profile and investible income into account. Now her question was - How will he know how much I want to spend on my daughter’s higher education? Or how much am I going to spend on my next vacation to Vegas? To this, I replied that a financial planner will plan your investments according to your goals in various asset classes.

A financial planner will look at your spendings, investments, insurance, small savings, debt investments and draw a blueprint of aligning your investments in such a way that they grow at a desired speed and your journey towards your goal is smooth. Not only this, he will also address situations when financial needs exceed available cash from income (a cash-flow deficit) which can be supplemented by withdrawing savings from your plan.

He will ask you to think in terms of both want and need so that he can work accordingly on some goals which lean towards the “want” side, while others can be closer to the “need” side. She was amazed at the role of a financial planner.

So how do I proceed? Queenie questioned. Probably I was waiting for this opportunity. I informed her that a financial planner will give you a data sheet in excel which you will have to fill spelling out all your assets, liabilities, income, insurance and investments. “Oh! This is quite a task,” she said as “I have never done this before”.

“Do it now, it will change your life (financial) for ever,” I quipped. How can it be a life altering activity? She questioned.

To this my answer was, “Having a financial plan will give you a sense of safety and security. It eases your mind from many worries like when the stock market tends to look like a roller coaster.” “Great…so I will have more money to splurge!” This was Queenie - My incorrigible shopaholic friend.

Till the time dinner was over, she had made up her mind to go in for a financial plan. I convinced her that her sacrifices will be miniscule as compared to the direct financial benefits like remaining fool proof from stock market maneuverings, investing in investments giving reasonable returns, be adequately insured, better priced loans etc. which she will be able to enjoy. Not to forget fringe benefits like peace of mind, guilt-free spending and smooth sail towards her goals.

But there was another glitch… that she will have to follow his financial planner’s recommendations life time to remain in sound financial health. I silenced her with my argument, “It is like your morning jog which you do to remain physically healthy for lifetime”.

“Not bad. Anything for health, be it financial or physical,” my friend was convinced. She is all set to follow the dictum - Better late than never! Hope my other friends are listening.

The author is Chief Editor, Apnapaisa.com. The views expressed are his own

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Tax Advice
TDS mandatory if interest income exceeds 
Rs 10,000
By S.C. Vasudeva

Q. My wife is working in a Punjab Government department. She has been getting salary through a bank and earning interest on the available balance in her account. She also has fixed deposits (FDs) in her name in the same bank. Please let me know how to calculate interest accrued (on savings account and FDs) during the period 01.04.2012 to 31.03.2013 for the purpose of income tax. My other queries are as under:

(a) Is it mandatory for the bank to deduct income tax on the interest accrued on FDs? If yes, at what rate?

(b) Can we ask the bank not to deduct income tax on the interest accrued on FDs and savings account and get a statement of interest for the financial year 2012-13 so that the interest income could be declared to the employer?

(c) Is the benefit of rebate of Rs 10,000 on interest income applicable both on FDs and savings account? (d) Is it advisable to include the interest so accrued under the head “income from other sources” with salary and thereafter income tax should be calculated so that interest income may also be highlighted in Form No. 16A. Please advise.

— JKM

A. a) It is mandatory for the bank to deduct tax at source if the amount of interest exceeds Rs 10,000 in a year. In case your wife is a senior citizen and her total income does not exceed the maximum amount on which tax is payable by a senior citizen, she can file Form 15H with the bank for not deducting tax at source from her deposits. The bank would not deduct tax at source from interest in such a case.

b) Benefit of deduction of Rs 10,000 is available in respect of interest earned on savings account with post office as well as a savings account with a bank. It is not applicable for the interest earned on fixed deposits. The amount of interest should be included in the total income under the head ‘income from other sources’.

Interest on a savings bank account is calculated by the bank taking into account daily balances. It is, therefore, not possible to calculate interest which would be allowed by bank in a savings bank account until the complete details of the account are available. The interest on a fixed deposit is on the basis of stipulated rate and, therefore, cannot be calculated till such time the relevant details in respect of the rate of interest and the period for which the fixed deposit has been maintained with the bank are available.

c) You can inform the employer about the interest earned in the savings account and interest earned on fixed deposits. The employer can include the same for the purposes of computing tax at source on the total income. The employer will also have to be informed about the tax deducted at source by the bank on the interest amount so that necessary credit can be afforded to you.

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