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Bumpy road ahead for auto parts industry
FIIs pull out Rs 18,500 cr from markets in July
BIZ TALK
IT sector to hire 1.20 lakh this year: Experts
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SpiceJet eyes Bangkok, Macau
M-cap of top firms down Rs 44,127 cr
No limit on gift to mother
Personal
finance
MIP good for conservative investors
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Bumpy road ahead for auto parts industry
New Delhi, July 28 The automobile industry has been facing uncertain future with the decline in sales over successive quarters, putting pressure on the auto components manufacturers as well. According to ICRA’s latest study on 35 listed auto components manufacturing companies, the revenue growth of Indian auto components industry in 2012-13 was the slowest in past five years as suppliers battled weak demand from domestic original equipment manufacturers (OEMs), sluggish export volumes starting from Q2 of 2012-13 and tepid replacement market sales. Revenue growth (YoY) was particularly weak in Q4 of the last financial year due to the unusually high base of Q4 2011-12 and propagation of demand weakness across all automobile segments. Suppliers of parts to the medium and heavy commercial vehicle (M&HCV) segment and the passenger car segment were the most severely hit, while suppliers to the light commercial vehicle and utility vehicle segments were relatively better off. As per the study, the average revenue growth of these select entities (during the past eight quarters) has been steadily declining with YoY growth being lower in each passing quarter since Q1 2011-12 and turning negative for the first time in Q4 2012-13. Nevertheless, there were notable exceptions in this otherwise grim milieu with the revenue growth of select auto components manufacturers being much higher than the industry on the back of market share gains, favourable change in model mix, rise in content per vehicle, besides revenue accretion due to corporate actions such as acquisitions and amalgamations. While revenue growth and operating profit growth of auto components industry came under pressure in 2012-13, operating profit margins of industry participants in the study sample stayed relatively stable. The margins of suppliers dependent on the M&HCV segment bore the biggest brunt in 2012-13 as weak demand scuttled the potential gains that could have arisen from a relatively benign raw material cost environment. The sale of the commercial vehicles has been falling for 15 consecutive quarters now. The aggregate net profit of auto components manufacturers declined by around 7 per cent in 2012-13 as compared to previous year. One of the primary reasons for this decline was depreciation of the rupee against the dollar, besides earnings weakness due to weak demand and increase in operating costs.
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FIIs pull out Rs 18,500 cr from markets in July
New Delhi, July 28 The outflows as of July 26 were about Rs 12,081 crore from the debt market and Rs 6,394 from equities, according to data on net FII investments with Sebi. Foreign institutional investors (FIIs) had withdrawn a record Rs 44,162 crore from the debt and equities markets in June. The weakness in the Indian currency was instrumental in overseas investors exiting the debt markets as the rising cost of hedging a volatile rupee hurts the yield differential the FIIs work with, according to market experts. The rupee slumped to a lifetime low of 61.21 (intra-day) against the US dollar on July 8. Since April 30, the rupee has depreciated by about 13 per cent. — PTI |
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BIZ
TALK
Spanning 16 diverse fields, serving over 6 million customers across the nation and an assortment of industries, the Muthoot Group, with its network across 21 states and four Union Territories, serves over 80,000 customers everyday. Muthoot Group Chairman MG George Muthoot shares company’s vision with Girja Shankar Kaura. Q. How will you describe the journey of the Muthoot Group over the years? A: My grandfather late Ninan Mathai Muthoot had set up a small trading business enterprise in Kozhencherry, a remote village in Kerala, in 1887. Since its formation, the company has broadened its scale and widened its geographic scope of retail operations. Today, our business empire comprises 16 divisions, including financial services, plantations & estates, education, leisure & hospitality, healthcare, housing & infrastructure, infotech, wealth management, money transfer, forex, media, power generation, precious metals, securities, vehicle & asset finance, travel services, Muthoot Global and Muthoot Money. The turning point for the company, which till then was a close-held family owned business, came in 2011 when it launched its first IPO. This year, the company has further consolidated its leadership position in the gold finance market by becoming the first-ever NBFC to join the ‘Rs 1000 crores net profit club’, thereby demonstrating its strong growth momentum. Presently, we serve around 80,000 customers every day who seek loan against gold ornaments through our 4000-plus branches. We have a customer base of over 24 million which continues to increase daily. Q With Muthoot Finance, you have often talked about contributing towards greater financial inclusion in the country. Can you elaborate on this? A: As Dr C Rangarajan, Chairman of the Prime Minister's Economic Advisory Council, says, ‘financial inclusion’ is mainly providing timely, adequate and affordable credit to the needy person who may or may not have a bank account. It is one of the most critical aspects in the context of inclusive growth and development of a country. Financial inclusion can not only bring tremendous gains to the disadvantaged, but also contribute in the creation of a more vibrant and stable financial system, thus, benefiting the society as a whole. Another significant role played by Muthoot is the digital inclusion through the adaptation of the latest information technology devices that have brought a tremendous change in the organisation. Q What are the key challenges you face? What is your strategy to sustain the growth momentum in these difficult times? A: The key challenges we currently face is to get the right type of manpower in the rural and semi-urban areas, availability of connectivity in remote branches and retention of trained employers. Basically our model of doing business depends on trust of the people and our strategy to sustain the growth momentum in these difficult times is to consistently retain that trust through our core principles of ethics, values, reliability, dependability, trustworthiness, integrity and goodwill. We plan to further strategize this by reaching out to the remotest of the remote area through our vast distribution of network and provide immediate financial assistance to all unbanked population of the country. Q What is your vision for the brand Muthoot? How do you plan to take it to the next level? A: Our vision is to be the best institution to every unbanked Indian and raising the economic stature of aam aadmi. We also want to be known as a company that is committed to the principles of corporate governance and responsible for the economic growth of the country. To achieve this, we plan to go beyond the geographies of the world and revolutionise the financial services provided to the aam aadmi. Q What about your future plans? A: We have plans to set up 300 branches this fiscal year. We have also plan to increase our loan portfolio by 25-30 per cent, identify sponsor banks and finalise the ATM network across India post-receiving the RBI’s in-principal approval on the White Label ATMs and strengthening our corporate governance, technology and risk management process and collection mechanisms so as to have better work efficiency and restrict the increase in NPA accounts. Considering the large penetration of the Muthoot Group across India with more than 4,000 branches and the ability to serve the unbanked Indian, we have also applied for the banking licence. Q. You had recently announced the financial results for Muthoot Finance. Can you talk about the current financial position of the company and the group? A: Actually the growth in gold loan business has been flat and the asset under management has come down by 2 per cent. Also, we lowered our interest rate to 19.5 per cent from 21 per cent in the last eight months. Yet we have increased our branches by 81 and customers have increased to 65 lakh from 63 lakh in the previous quarter. Our gold tonnage has increased to 137 tonnes from 134 tonnes. We expect asset under management in FY14 to be flat or grow by 10 per cent if the economy improves in the second half of the year.
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IT sector to hire 1.20 lakh this year: Experts
New Delhi, July 28 "Last year, the campus hiring numbers had dipped from the normal and this year, it is not going to be any different. We estimate that there will be around 1,20,000 jobs created this year," talent assessment company Merit Trac Head of Innovation and Corporate Business Rajeev Menon said. The IT sector is set to grow by 12 to 14 per cent this year, as per Nasscom estimates. Over the years, large IT companies have relied on campus hiring for large-scale recruitment. However, since 2008, these companies had been trying hard to adjust to changing economic and business landscape and campus hiring had been impacted. Last year, around 1.8 lakh graduates were placed in the IT sector. The number, however, is expected to be 30 per cent less this year. The changing economic scenario is the most compelling reason why hiring from campuses are reducing and these are causing inconsistencies in the business demand which is reflecting in hiring, particularly at the entry level. — PTI
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SpiceJet eyes Bangkok, Macau
Mumbai, July 28 "We are all set to expand our overseas operations. As a part of this, we plan to launch flight services to Bangkok, Muscat and Macau," airline sources told PTI here. All the three proposed flights are expected to be added to the airline's network within the summer schedule, the sources said, adding that, "We are quite steady on our international operations expansion." The airlines' summer schedule in the country typically begins from late March and lasts till October. — PTI |
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M-cap of top firms down Rs 44,127 cr
Mumbai, July 28 In the stock market, the benchmark S&P BSE Sensex tanked 402 points to close at a two-week low of 19,748.19. RIL's market cap dropped by Rs 10,762 crore to Rs 2,88,014 crore last week, taking the biggest hit among top-10 companies. Its shares lost 3.6 per cent to end at Rs 889.90. Similarly, the value of ONGC slipped by Rs 10,566 crore to Rs 2,60,044 crore. The value of Coal India plunged Rs 8,748 crore to Rs 1,78,374 crore and HDFC Bank lost Rs 8,619 crore to Rs 1,53,918 crore. HUL's m-cap tanked Rs 5,037 crore to Rs 1,43,394 crore and the valuation of ITC fell by Rs 395 crore to Rs 2,91,182 crore. In contrast, TCS added Rs 5,979 crore to Rs 3,46,907 crore in its value, Infosys's m-cap soared by Rs 4,002 crore to Rs 1,67,418 crore, Bharti Airtel's market value surged Rs 2,918 crore to Rs 1,34,852 crore and HDFC's m-cap climbed Rs 326 crore to Rs 1,24,881 crore. Meanwhile, in the list of top-10 companies, TCS stood at the number one position, followed by ITC, RIL, ONGC, CIL, Infosys, HDFC Bank, HUL, Bharti and HDFC. Market capitalisation or the value of a listed company is arrived at by multiplying the total number of its shares with its stock price on a particular day or time. — PTI
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Tax Advice by SC Vasudeva Q. I am a retired Centre employee, who is paying Income Tax (IT) on pension and interest on fixed deposits (FDs) done out of savings, gratuity and allowances received on retirement. My wife is a homemaker and her income is NIL. Even though late in life (60s), my wife is considering generating her income and accordingly utilize her IT rebate slab of Rs 2.5 lakh. In this regard, following actions are being considered : (a) Pin money out of the monthly household expenditure amount of Rs 43,000 given to wife, she plans to save Rs 5000 and invest in Recurring Deposit in a bank. On maturity, amount will be reinvested in non- cumulative FD for 3/5 years, so as to get regular income for home. Interest income will be reflected in IT Return (ITR) to get rebate. Over a period of five years, she plans to have her FD of Rs 5 lakh or so. Please advice as also give suggestions. (b) Gift from Sons- I have two sons who are well-placed in companies of repute and filing ITR. They wish to give cash as gift to my wife (their mother), so that she invests the same in FD and gets interest as additional income for us, as also reflects the same in ITR to get rebate. This will enable me and wife to meet our ever-increasing cost of living due to inflation. Please clarify following as also give comments/suggestions :- (i) What amount can be given as gift (in a financial year) by son to mother? Is their any limit? (ii) Can both sons give this gift? (iii) Can this gift be given every year — Surinder Singh A. Your wife will have to make out a complete account of money saved out of PIN money of Rs 43,000 provided by you. The evidence will have to be produced before the tax authorities so as to prove that she could have saved Rs 5,000 every month to enable her to deposit Rs 5,000 in a recurring deposit account. There is no limit to the amount which can be gifted by your son to his mother. It would be advisable to make such gift through banking channels. Both sons can give gift to their mother. The gift can be made every year without any difficulty. TDS
Q. I am a govt employee. My DDO deducted my TDS every month and at the end of the year, he gave me the 16A form for filling of income tax in which it was given the deducted amount of my TDS in a year which was more than Rs 9,000 from my actual tax. I deposited my income tax return in time in which I show my refund of more than Rs 9000. The Income Tax Department refunded me Rs 2,930 only. Now, when I registered myself with department online they showed that one quarter of my TDS is not shown in their statement. From my path, I deposited my whole tax amount in a year. So I want to know who is responsible for that one quarter TDS which is not shown on the income tax department online status as I have deposited it on time. Please tell what further steps should be taken? — Nidhi A. You should approach your assessing officer to give you credit for the entire tax deducted at source as per Form 16A. The department has recently issued a circular based on the Delhi High Court decision that in the cases where the deduction of TDS is supported by the relevant tax deduction certificate full credit of such tax deducted at source should be provided to the assessee. This is in accordance with Instruction No. 5/2013 dated 8th July, 2013. These instructions have been given to all Chief Commissioners of Income-Tax and all Directors General of Income-Tax. The relevant paragraph of the said instruction is re-produced hereunder:- In view of the order of the Delhi High Court, it has been decided by the board that when an assessee approaches the assessing officer with requisite details and particulars in the form of TDS certificate as an evidence against any mismatched amount, the said officer will verify whether or not the deductor has made payment of the TDS in the government account and if the payment has been made, credit of the same should be given to the assessee. |
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Personal
finance
The awareness to buy a health insurance plan is increasing but do you devote reasonable time to research and compare the features before finalising the plan? The answer is no. We have seen that people make a major mistake while opting for a health insurance plan. It is surprising to know that most of the people think that the plan of one company is similar to the plan of other company and decide buying a health plan only on the basis of the premium payable. This is not the correct way of buying health insurance. The most important thing before buying a health plan is to know the features which can affect your claim amount in the future. It is important to know the basic difference in features while buying a new plan. You have to do some home work on it and know all exclusions and restrictions on the claim before finalising a health plan. Buying a health insurance plan without knowing the dangerous provisions can really hit you when the actual claim comes. The following are the three major clauses you must read carefully before signing the application form. The premium comparison should be the last criteria for selecting any health insurance plan. Room rent sub-limit This is the most dangerous provision in a health insurance policy where the claim amount is decided on the basis of room rent you stayed in while hospitalised for some illness. The sub-limit is per day and fixed at percentage, 1 per cent or 2 per cent, of the sum assured. There is also an upper cap of amount say Rs 3,000 or Rs 5,000 per day depending on a plan. The room rent sub-limit is the ceiling in the policy on the room rent payable per day in which you are supposed to stay when you or any of your family member is hospitalised. As we all know, hospitals have different types of rooms available like general ward, twin sharing room and single room. The charges of any illness is decided on the basis of room you opt even though there is no difference in treatment and medicines given and even the doctor is same. This simply means if you stay in a room costing higher than sub-limit, all other hospital expenses will also be reduced proportionately by an insurance company on the basis of what you would have incurred had you stayed in a room that costs below your room rent sub-limit. In other words, you are unlikely to get the full amount of claim even if the claim amount is well below actual sum assured. Co-payment There are some policies available in the market in which co-payments are required to be paid by a policy holder which is 10 per cent to 20 per cent of the claim amount. Co-payment means part of the claim is to be compulsorily borne by the policy holder. Co-pay is levied when you or any of the family members is hospitalised in any of the non-network hospitals. It is also applicable compulsorily for claims made if a patient is of 65 years or more. If you don’t know this provision well before you buy any health insurance plan, then you will have to bear part of the claim every time when the claim arises. Again you will not get the full claim amount even if the claim amount is well below the sum assured. You can opt out of this by paying an additional premium in few cases which you need to check before buying a plan. Premium loading after claim You should also know before buying a health insurance whether the plan has claim related loadings or not. Most of the time people buy a health policy based on the lower premium but fail to understand the impact of premium loading in case of claim. There are some policies available in the market where there is a provision of loading the premium in case of claim which is up to 200 per cent of the premium amount. The loading happens at the time of next renewal and automatically cheaper policy becomes a more costly product available in the market. What is the solution now? If you are looking out to buy a fresh mediclaim policy, avoid any policy that has such a restriction. There are 23 companies which offer health insurance in India. You have too many options available at present and many companies do not have such restrictions in the plan. All details related to plans are now also available easily on the Net and now it’s your duty to do some work so that there is no hassle at the time of claim. If you already have such a policy, then use the recent portability guidelines to shift to any insurance company that does not have any such restrictions. Of course if you are older than 45 years or have made claims in earlier years, the new companies may not be willing to accept your proposal. In such cases, you will have no option but to continue with older company and also plan a medical contingency fund to deal with these extra expenses that are not reimbursable. It is always advisable to disclose all facts correctly while applying for the fresh insurance plan, including health history, if any, so that claim is not rejected in future. You must also fill the proposal form yourself and it is not advisable to just sign the form and give blank form to any agent. If we devote some time before buying any health insurance plan then definitely there won’t be any problem when the actual need arises. The writer is the head, Financial Planning, Apnapaisa.com. The views expressed in the article are his own.
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MIP good for conservative investors
MIPs of mutual funds are one such investment. With a majority of their portfolio in debt and a small part in stocks, these funds tend to utilize the generally negative correlation between stocks and bonds to lower the risk of the overall portfolio and add that extra 1-2 percentage points to overall returns that are needed to beat inflation. The name MIP is, however, a misnomer. MIPs of mutual funds should not be confused with the monthly income plans, as these are not the schemes where returns are assured on a monthly basis. These should actually be seen as marginal equity plans, where a majority of the investment goes into debt and only a small part goes into equity. These schemes are suitable for conservative investors, who have a time horizon of 2-3 years. Thus, if you are a conservative investor who does not want to take undue risk and if you have a short-term financial goal, arriving anytime between 2 and 3 years, then an MIP is may be an appropriate plan for you. These plans are suitable for those investors who are wary of the volatility associated with equity markets and, at the same time, want to get an upside from the same. Also, investors, who want slightly higher returns than that of pure debt fund, generally go for these plans. Moreover, MIPs are open-ended, a feature that gives the investor the flexibility of exiting the plan at any point of time, unlike some of the close-ended schemes. However, for early exit, exit loads are imposed which normally range from 12 to 18 months.
MIPs are usually of two types
Aggressive MIPs About 70 per cent of the money is invested in debt, government securities or debt-oriented schemes, and the remaining 30 per cent is invested in equity. Thus, the chances of upside returns are good, due to 30 per cent allocation to equity. But at the same time, risk is also slightly higher. Conservative MIPs In these, the allocation to equity is only about 10-15 per cent and 85-90 per cent goes into debt schemes, bonds or government securities, etc. The equity part is managed very well by investing mainly into blue chip stocks of large cap companies. MIPs have been quite popular with investors over the years. As on May 31, 2013, there are around 54 MIPs in existence, belonging to various mutual fund houses and with a combined corpus of more than Rs 16,700 crore. Out of these, 27 schemes are classified as aggressive and an equal number as conservative. Out of the total corpus of Rs 16,700 cr, around Rs 13,000 cr is in aggressive MIPs, whereas conservative MIPs account for the balance Rs 3,700cr. Of the 54 schemes, two schemes (Reliance MIP and HDFC MIP-LT) are the largest in terms of the corpus size with assets under management of Rs 3,382 cr and Rs 5,158 cr, respectively, (as on May 31, 2013). Together these two schemes constitute around 51 per cent of the total category corpus. No other MIP has a corpus of even Rs 1,000 cr. Going forward, most experts feel that debt funds should deliver superior returns because of the currently prevailing high interest rates and also because there is an expectation that the interest rates will go down. Experts also feel that equity markets are due for a rally, because they have been flat and lacklustre for many years now. MIP investors stand to benefit if the expected scenario pans out, as they will earn from both debt and equity, with debt portion giving steady returns along with low volatility and equity portion providing the upside boost. Under favorable circumstances, the overall returns from MIPs can range from high single digit to low double-digits. Risk factors: Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully. Past performance may or may not be sustained in future. The writer is Group CEO, Bajaj Capital. The views expressed in the article are his own. |
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A mediclaim or health insurance is way of covering yourself and your family against any medical emergency arising out of any disease or illness or accident. It is rightly said, “Health is Wealth”. But, truly speaking, how many of you are really serious when you plan to buy a new health insurance plan?
In an environment where both equity and debt markets are displaying high volatility and outlook for both debt and equity is clouded by weakness in macro-economic indicators, investors are understandably finding it tough to allocate the investments among debt and equity. Whereas the last one year has generally been good for debt investors, the last one-and-a-half months have seen high volatility in bond yields resulting in sub-par returns from most debt funds. The uncertainty over further rate cuts by the RBI has also played a role in adding to the confusion. In this scenario, the common investor is searching for an investment instrument which has the potential to give inflation beating returns without taking too much risk.
