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Current account deficit to fall below 3.8% in FY14: Montek
Tata Motors’ JLR to hire 1,000 Chinese workers
Tatas, SIA get approval for airline venture’s name
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Indirect tax collection up 5.1% in Apr-Sept
BIZ TALK
Investor Guidance
personal finance
Value investing: An exciting opportunity for investors
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Current account deficit to fall below 3.8% in FY14: Montek
"The bottom line on CAD is that news is very good. It will be lower than 3.8 per cent," Ahluwalia told reporters here. The current account deficit is the difference between inflow and outflow of foreign exchange. During 2012-13, the CAD was at an all-time high of 4.8% of GDP or $88.2 billion. Government proposes to bring it down to $70 billion or 3.8% of the GDP. Elaborating further Ahluwalia said: "Taper is delayed. Secondly the CAD looks good. By the time taper happens, we are going to look in much better shape.. now rupee has come to a much more maintainable position. So the threat on the rupee will be much less as and when the taper happens. So we will be in a better situation (next year)." Tapering refers to gradual withdrawal of monetary stimulus by the US Federal Reserve. The reversal of the easy money policy by the US is expected to impact the global markets as well as the economy. Asked about the Planning Commission Member Saumitra Chaudhuri's projections that CAD will be 2.5% or range between $40-45 billion, Ahluwalia said: "It is not a Planning Commission's estimate. This is his personal estimates." However, supporting Chaudhuri's estimates, he said: "If you view the growth grooming because of agriculture and (its) impact on non-agriculture demand which is not very import-intensive then current account deficit may be lower." Elaborating further he said: "Finance Ministry made this projection (of CAD) six months ago...When Finance Ministry made its projection, may be, it had higher assumption of growth. The problem is that growth is low. The imports are affected because of growth." During the first quarter (April-June) this fiscal, Indian economy grew at 4.4% lower than 4.8% in the previous (January-March) quarter. Economy has grown at a decade-low rate of 5% last fiscal. The government expects the growth to range between 5 to 5.5% this fiscal.
— PTI |
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Tata Motors’ JLR to hire 1,000 Chinese workers
London, October 20 The West Midlands based car maker has been training 50 of those workers at its Halewood plant in Merseyside, according to 'The
Sunday Times'. The workers are due to return to China at the end of the month, where they will pass on their skills to others. JLR wants to cash in on the huge demand for its vehicles in China by launching its own giant manufacturing operation in Changshu
near Shanghai. Its best-selling Evoque "baby Range Rover" will be the first car to roll off the
production line. Sources told the newspaper that the factory, built under a joint venture with Chery, the Chinese car manufacturer, will produce up to 130,000 cars a year, rising to 200,000. This would put it on a par with JLR's operations at Solihull, which builds Range Rover and Halewood. The iconic luxury car brands clocked up record pre-tax profits of £1.7 billion in the financial year 2012-2013. The firm has also signed a letter of intent with the government of Saudi Arabia and is in "intensive" discussions with Brazil. The talks could lead to new factories in these countries. "We expect the Brazil decision before Christmas," said Ralf Speth, CEO of JLR. The company under the Tata Group's ownership is now Britain's biggest exporter of manufactured goods, generating export revenues of 11 billion pounds a year. It has also hired more than 11,000 people in the past three years, including last month's announcement of an additional 1,700 at
Solihull. — PTI |
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Tatas, SIA get approval for airline venture’s name
New Delhi, October 20 Starting the process of incorporating a new company for this joint venture, Tatas had applied late last month on the Ministry's electronic platform, MCA21, to register this name. According to the latest information available with the Ministry, the name has been approved now and the company, Tata SIA Airlines Limited, stands registered from Delhi. The application for registration of this name was filed through submission of form '1A', which is the first step towards incorporation of a new company. The registration is generally followed by submission of various other documents, including the Article of Association, and details of the company's Board of directors, share capital, business areas etc. Tata SIA Airlines is among the first major companies to be incorporated under the new Companies Act, 2013, that came into effect earlier this month. The airline's brand name is yet to be announced. Tata Sons Ltd, the holding company of salt-to-software conglomerate Tata group, will hold 51% stake in the new company, while Singapore Airlines would have 49%.
— PTI |
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Unitech inks Rs 1,000-cr office leasing deal with Accenture
New Delhi, October 20 Unitech and its group firm Unitech Corporate Parks (UCP), which is listed in London, last week signed the lease deed with Accenture, sources said. Unitech and UCP, listed on the AIM of the London Stock Exchange, are in talks to sell their entire stake in the special economic zone (SEZ) being built for IT companies in Gurgaon. The duo are in talks with private equity firm Blackstone and Singapore's sovereign wealth fund GIC for selling their stake in the IT SEZ for an estimated Rs 2,700 crore. The leasing agreement with Accenture could help Unitech and UCP get better valuation for their SEZ 'IST Infospace Gurgaon', which has a total leasable area of 36 lakh sq ft.
— PTI |
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Indirect tax collection up 5.1% in Apr-Sept
Excise collection dropped 6 per cent during the period to over Rs 89,000 crore, against the same period in the last fiscal year, reflecting slump in manufacturing activity. Customs mop up was up 10 per cent to Rs 80,550 crore during the period, the official said. Service tax collection, which has become a new focus area for revenue officials, grew by 16 per cent to Rs 59,000 crore during the period. In September, total indirect tax collection stood at Rs 42,700 crore, up 13 per cent from the same month last year. Government has set indirect tax collection target of Rs 5.65 lakh crore for 2013-14, up from Rs 4.73 lakh crore in the last fiscal.
— PTI |
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BIZ TALK
Q: What are the prospects and challenges for flexi-staffing? A: Organised flexi-staffing is here to stay. It’s an integral part of any economy in today’s time, providing for much required flexibility, facilitating job creation and giving first time job seekers their stepping stone. The archaic labour laws, the lack of awareness about the benefits of organised flexi-staffing for a job seeker for our economy and for society and the execution deficit of our politicians are probably its biggest challenges. Q: What are the objections on raising salary cap to get Employees State Insurance Corporation
(ESIC) benefits? A: By increasing an employer’s cost by Rs 1,500 (leaving aside the additional administrative burden) and decreasing the net pay of an employee by Rs 450 for a gross salary of Rs 25,000 a month is really not benefitting anyone. Rather it is yet another impetus to allow informality to creep in even at higher salary levels. Given that ESIC deductions are not a saving, it is kind of hard to understand this patronising move which is targeting that category of employees who probably can afford to choose their own medical care. More so, ESIC has a claim ratio of a meagre 47% as against every other insurance scheme across the world which has claim ratio of over 100% and have clocked a turnover of over Rs 7,000 crore in the last financial year. To add to that the facilities, doctors and medicines provided by ESIC is far below basic expected standards. Q: What are the reasons for labour problems being seen in the manufacturing sector? A: Our current labour laws are more of a patch work on our colonial inheritance than an original piece of work reflecting the aspirations and realities of an independent India. Despite many periodic amendments and additions, the superstructure of the labour laws has remained rooted in the British colonial times. Moreover, most of them were enacted in the pre-liberalisation era. A case in point is that of the 44 Central labour laws in force - only three were enacted post 1990, barely one-third of nine such Central laws which came into force in 1947 or earlier. Of the 35 post Independence Central labour laws, 26 came in between 1948 and 1979 period, and six more in the 1980s. It is then not a surprise that a large part of our labour laws is currently quite out of touch with the changed socio-economic reality and the needs of the employers, employees and society at large. This needs to change. The labour laws should reflect the needs, aspirations and realities of the current times and should not be prisoner of our past. Historically, India had a mixed nature of the economy, with joint participation of both public and private enterprises in the economic activity. But the strict sectoral delineation and close government controls limited private participation. Moreover, prior to the economic reform initiatives since the 1990s, India had a largely closed economy with little linkage to the world economy. Both these scenarios have changed post liberalisation. Private participation is increasing and the Indian companies, large or small, public or private, now need to prove their competitiveness internationally to ensure their long-term survival. But, the existing labour laws have remained impervious to the changed business dynamics. Q: What are the trends in employment opportunities being created? A:
Opportunities are being created across 67 industries in India. Functionally, the largest requirements are in the area of sales, customer support, data entry, logistics, plumbers, electricians etc. Q. How does Employees' Provident Fund Organisation (EPFO) claim settlement in three days benefit contract labour? A: If it actually lives up to this claim then it shall actually, over a period of time, discourage jobs moving into the informal sector. It shall address the short-term workforce’ apprehensions around the difficulty in getting their PF contributions withdrawn on time without much delay and actually being able to claim it back. |
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Investor Guidance
Q: A minor child has inherited Rs 15 lakh as gift which is tax free. Now if he were to invest this money in any product, can he submit Form-15G to avoid tax deduction at source on the income accrued on investments?
— Suri A: All the income earned by a minor child is taxed in the hands of the parent who has an Indian income more than that of the other, unless the child has a physical or mental handicap or the child earns an income by virtue of its special skills or knowledge. There is an exemption of Rs 1,500 per year per child. Once the child becomes a major, the amount that was being clubbed when he was a minor, ceases to be clubbed. Since the interest will be clubbed in the hands of the guardian, the guardian can file form 15G if the tax payable by the guardian on his or her total income, including the clubbed income from the child is nil and his/her income from interest is less than the threshold applicable to him/her. Q: If one is invested in a debt fund with the dividend payout/reinvestment, the dividends are tax free as the dividend distribution tax has been paid. Now suppose the individual chooses to exit the fund, either at a higher or lower NAV than he bought it at, is he liable to long/short-term capital gains or loss, as may emerge due to difference of purchase/sell NAVs ? — Hathiram A: Yes, regardless of the option chosen, there is short or long-term capital gains tax incidence upon sale of mutual fund units. In the case mentioned by you, there may arise a notional loss on account of the dividends already received. However, the law does not allow a notional loss booking to save on tax immediately after dividend has been paid. This practice is called dividend stripping. Sec. 94(7) has been introduced by the law to curb dividend stripping. As per this section, where any mutual fund units have been bought three months prior to the record date and sold within a period of nine months after the record date, any loss arising from the transaction up to the amount of dividend received will be ignored for the purposes of computing taxable income. Q: In the case of futures and options, STT will be calculated on the premium amount and not on the value of the premium multiplied by strike price. What does this mean? — Dalal A: Your query is related with option contracts where the purchaser of an options contract has an option either to buy or sell a pre-determined quantity of a share (or index) at an agreed price within a prefixed future date. For this, the holder pays a one-time, non-refundable fee (option premium). When the holder of an option exercises the option, he either pays the agreed-upon price if it is a call option or receives payment in the case of a put option. If the holder decides to waive his option, which he can, he only loses the option premium. In contrast, the writer of the option is obligated to make or receive delivery, depending upon whether he wrote a call or a put option. In either case, the writer of the option has no authority or right to determine whether or at what point, will the option be exercised. The right rests only with the purchaser of the option. The potential loss to an option writer is unlimited. In contrast, if the holder chooses not to exercise his right and lets the option expire; his loss is limited to the premium paid. The STT is charged on the premium and not on the price of the share or commodity. |
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personal finance
Bank accounts
Before settling abroad, you need to convert your savings account to NRO (Non Resident Ordinary) account, so that the income that you earn in India through sources like dividend, interest and rent etc. can be deposited in this account. You can also consider opening a NRE (Non Resident External) account before you settle abroad, for depositing the income that you earn outside India. NRE account allows repatriation i.e. take back the money deposited in the account outside India. Please note, you can deposit only the money earned outside India in NRE account. PPF account
NRIs are not allowed to open fresh PPF account. But if you already have existing PPF account you can continue the same. So you should make sure you deposit at least Rs 500 in a financial year to keep the account active. You should also note, NRIs are not allowed to extend their PPF account, thus on maturity you should withdraw the proceeds and should not extend the account even by mistake. Life insurance
Most of the life insurance companies ask you in the proposal form that "Are you currently or do you intend to live or travel outside of India for more than 6 months?" So if you are buying a life insurance policy, you need to disclose the same while buying the policy if you know you are going to settle abroad. Also, it is better if you buy life insurance (especially Online Term Insurance) since some companies do not provide it to NRIs. You also need to update your KYC status as non-resident in your existing policies. Health insurance
You should make sure you have adequate health insurance cover for yourself and family in India before you settle outside India, if you are planning to come back after few years. If you already have an health insurance cover in India, you should check the terms and conditions of the policy because some insurance companies do not allow health insurance to NRIs and the most dangerous part is even if you are an existing policyholder, the policy ceases once you are a non-resident. Mutual fund
You should update your residential status in KYC of mutual fund. If you have ongoing SIPs you should update the bank details, if you want to use your new NRE account for auto-debit of your SIPs, so that your SIPs don't bounce and your investment continues. Shares
You cannot transact with your existing demat account once you are a non-resident. So before you settle abroad, you need to open a new designated Portfolio Investment Scheme (PIS) account and transfer your existing equity shares to this new account to transact in future. NRI can buy and sell equity shares only through PIS route. To make things simpler it is always advisable to have a 2nd holder in your investments with mode of holding "Either or survivor", so that the 2nd holder can transact in your absence. Also, where online facility is available; like net banking, demat, mutual fund folios, etc. you should opt for it so that you do not have to undergo paper work when you are sitting outside India. You can transact online, no need to send physical transaction forms. One more thing that you can consider is executing a "power of attorney", so that certain transactions where your signature is mandatory (for example buying/selling real estate) and it cannot be executed. So, it is better to appoint a trustworthy near and dear person (for example spouse or parents) as power of attorney, who can transact on your behalf in your absence. These are the points which you should check out and make modifications/ updations in your different investment instruments. So, you must be excited to fly abroad and live a luxurious life, but now you know you have to do some home work before you turn an
NRI! The author is a Research Analyst, Apna Paisa. The views expressed in this article are
his own |
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Value investing: An exciting opportunity for investors
About value investing
Value investing is an investment strategy that seeks to buy stocks of companies that have been undervalued by the market. The basic theme of this investment strategy is buying stocks at less than their intrinsic value as it generally involves buying securities whose shares appear underpriced by fundamental analysis. Value investing focuses on the business and its fundamentals rather than external influences on the stock's price. It does so as it believes that the market overreacts to good and bad news, resulting in stock price movements that are not in sync with the company's fundamentals. The result is an opportunity for investors to profit by buying when the stock is
underpriced. Genesis
Benjamin Graham is considered the father of value investing. He along with David Dodd, both professors at Columbia Business School, advocated the concept of 'Margin of Safety' which is the cornerstone of value investing. This concept was first introduced in Security Analysis, a book co-authored by them in 1934. Margin of safety is the difference between the market price and the calculated (intrinsic) value of the stock. Recognising value stocks
Important stock indicators considered for value investing are price to earnings (PE) ratio, price to book value (PB) ratio, P/E/ (projected growth in earnings) or PEG ratio factors and dividend yield ratio. Lower the number, better the opportunity in terms of value investing. However, recognising a value stock is the key to value investing. There appears to be some confusion even among fund managers in recognising value stocks. For instance, is a stock available at a P/E multiple of say 15 a value stock? To recognise true value, one needs to take a step back and ask oneself, 'Based on the stock's fundamentals, am I getting say, Rs 100 worth of assets at say, Rs 70?' If the answer to this question is in the positive, then in all likelihood, one has spotted a value stock. Usually value stocks are available during times of controversy or a mishap that the market has not assessed in terms of its impact. As against this, growth investing would imply that a stock is available at a reasonably high P/E multiple but with the potential of growing even more or faster than the overall market growth over a period of time. However, since the margin of safety is compromised in this case, the risk levels move up. Value investing in India
Value investing is one of the most popular investment themes globally. For instance, the proportion of assets in Value Funds and Growth Funds is nearly equal. As against this, in India, the proportion of assets in Value Funds is merely 10% of assets invested in Growth and other strategies. While most investment gurus would proclaim India to be a growth market where growth investing is the most suited investment style, the truth is that Indian markets offer a good opportunity to use value investing. In fact, value investing can be successfully applied in all types of markets - developed or high growth ones such as India or China. The contention for this view is that the investing strategy is not impacted by the type of market in order to be successful but by factors such as market sentiment, knowledge levels, industry life cycles, etc. Using the mutual fund route
Value picking is an art which is acquired with long-term investment experience. This necessitates retail investors to preferably use the mutual fund route to invest in value funds to profit from this investment strategy. However, investors should keep in mind that the fund manager of a value fund expects the fund's investors to stay invested for the long term till the market recognises the value of the stock and price discovery takes place. This requires patience, which eventually leads to significant gains. In conclusion, value investing focuses more on the investor's cost; lower the cost, higher the margin of safety. The key to profit from this investment style is to stay with the investment for the long
term. The author is Managing Director & CEO, ICICI Prudential
AMC. The views expressed in this article are his own |
OVL, OIL to split Videocon stake
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New Delhi, October 20
New Delhi, October 20
A survey by Indian Staffing Federation (ISF), an apex body of temporary staffing industry, shows the number of contract workers in the organised sector could rise to 10% by 2025. More than 1.2 billion young people will enter the labour market in the next 10 years with only 300 million jobs awaiting them. The survey showed that India is among the top five nations in terms of flexi worker base and 27% of Indians joined the flexi workforce due to lack of any alternative opportunity in the formal sector. Rituparna Chakraborty, vice-president, ISF, talks to
Sanjeev Sharma about the need to revamp labour laws and challenges for the industry.
Today in the world of opportunities, many of you must be getting offers from employers to work abroad or must be planning to settle out of India after completing higher studies. Once you settle out of India, your residential status changes to Non-Resident (NRI) after few months. But does it impact your finances? The answer is YES. A lot of paper work has to be done, as new regulations are applicable to you. Whether your money is lying in savings account or your investment is in mutual funds and other similar investments. So what should you do before settling abroad and you turn non-resident?
Among the numerous strategies conceptualised for stock selection, over the years, two strategies have emerged to be among the most popular - growth investing and value investing. Both these investment styles are based on a stock's P/E multiple. The key difference between the two is the price at which the stock is available. While a growth stock will be available at a relatively higher P/E multiple, a value stock will be available at a low P/E with the potential of significant gains over time.
