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Monday,
December 9, 2002, Chandigarh, India  
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REAL ESTATE/PATIALA
Invest where return is guaranteed
Don’t accept insurance claim under pressure |
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High hopes for Opto Circuits
Bourses extend gains
FIIs net sellers in equities
HDFC keeps ‘healthy’ growth
Inflation up again
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REAL
ESTATE/PATIALA REAL estate fortunes of Patiala seem to be hinged on the fortunes of State Chief Minister Capt Amarinder Singh. Real Estate speculation, which was virtually extinct a year back mainly due to lack of an industrial climate in the town, is abuzz with activity now. Property rates have jumped the ceiling on the Sirhind road doubling in only six to eight months. This is mainly due to the decision of the Chief Minister to establish a township on the road near Baran village under the National Capital Region plan. A self integrated township has been planned with the Patiala Development Authority (PDA) moving to acquire 300 acres of land. The project is being developed as a Counter Magnet Town according to four other towns being developed on similar lines in the country under a Central Government plan to make integrated townships to decrease the pressure on the national capital. Due to this and the fact that Central funds are going to be provided for it, there is a general belief that the project may be carried out smoothly. More so people feel with Capt Amarinder Singh at the helm of affairs the project may be put on fast forward mode which has increased prices all along its proposed area. PUDA Additional Chief Administrator Hussan Lal feels that the development of the township as well as a commercial centre spread over 3.15 acres on the Mall Road would catalyse business activity in the city. Property rates have increased in other areas of the city also mainly because of talk of development in the town and massive funds being earmarked under another Central Government scheme for laying of a sewerage network to cover the outer colonies. This as well as the presence of the upcoming Mini Secretariat has jacked up prices on the Bhadson area part of the city. Gurpal Juneja from Juneja Realators said the prices in this part of the town had increased by one and a half times during the last six to eight months. Other parts of the city which have witnessed a recent hike include the Rajpura Road area where also prices have increased by nearly one and a half times during the last one year and Century and Majithia Colonies on the Nabha road where also the rate has shot up from Rs 1500 per square yard to Rs 2000 to Rs 3000 per square yard. Area ahead of Railway Crossing Number 22 near the Sham Bagh Marriage Palace has also registered an increase mainly due to the feeling that work on the overbridge project nearby would start soon. Commencing of work on the overbridge project is also being awaited by the owners of shops on the Surya Complex. Amidst a boom in property, this complex has failed to live up to its expectations with property selling at nearly the same rates it was bought around five years back. This, however, is mainly due to lack of adequate parking facilities in the Complex which has 120 shops, 80 per cent of whom are still lying vacant. Lack of parking facilities has also spelt doom for the Downtown shopping complex built in the Sheranwala Gate area. Here only two to three shops out of nearly 50 odd ones are running presently. While the outskirts of the city are experiencing a boom, ahead of Sheranwala Gate in the traditional Adalat Bazar market of the city also things are not looking up. This again in due to severe traffic congestion due to narrow lanes and lack of proper parking facilities. Nabha Road area in the inner city which has the Modi Plaza is also virtually empty with no takers for shops in the complex. The property trend in the city shows that people are taking up property at places where development is either on the cards or is already taking place. Two vantage places, including area on the Sanour Road and area opposite the Punjabi University are losing out due to this reason. Lack of creation of development facilities has resulted in dismal collections for private colonisers who have cut up plots in both the areas. Finally market forces have the final say with even a PUDA developed area where the now demolished Kaurji Ki Haveli used to stand not getting any buyers despite two auctions and even lowering of rates. PUDA ACA Hussan Lal said it was now envisaged to replan the plots and offer some of them adjoining the road to mechanics who are already doing good business in the area.
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Invest where return is guaranteed LUDHIANA: Decreasing ability to earn coupled with ageing, in the post-retirement era of ones life makes saving or earning every single rupee becomes an achievement. Financial savings made during the pre-retirement life become the retiree’s most valuable assets that fetch those much needed returns for a smooth and financially independent retired life. It would be a nightmare even to think that the savings have stopped bringing you returns, and are on the other hand themselves fast depleting. This is not a hypothetical situation, but the reality that is bound to stare many in the face sooner or later due to falling interest rates and rising inflation in the country. From a return of about 10 to 12 per cent not to far ago, the bank interest rates have almost dropped to half and are still falling. Where would they go? From here is for anyone to answer. If looking at developed economies like the United States or Canada helps to predict, the current interest rates there are around 0.25 per cent.
Where to invest
So then what does one do? Logically, one should look for something that at least guarantees assured returns and at the same time promises more. Fortunately, there are several options available in the Indian market that offer an assured return at a promised rate, some of them in the form of Insurance Bonds. It may however, be pertinent to mention here that post office savings, considered to be old fashioned in the era of hi-tech banking, still offer a higher rate of interest as compared to most modern banks, besides offering a security backed by the government.
Kotak Insurance Bond
One such investment that ensures a guaranteed return and at the same time insures you is the Om Kotak Insurance Bonds. This investment-cum-insurance product, offering twin benefits of fixed returns at the end of the term while also providing risk cover. After the Om Kotak Insurance re-launched its bonds in October this year after keeping in mind the market fluctuations, it has introduced the 15-year lock in period, besides the existing 7 and 10-year plans. Keeping tax benefits under section 88 of the Income Tax Act, the interest rate on the insurance-cum-investment bonds works out to around 10 per cent, considered very good by the current market standards. The exact, interest however, varies according to the term and plan selected.
Single premium required
The Om Kotak Bonds require a one-time premium payment. For example if you invest say Rs 60,000 for a period of 10 years, a return of Rs 1,28,000 is guaranteed. After a tax benefits of Rs 12,000 under section 88, the actual investment works out to Rs 48,000 assuring a return of Rs 1,28,000 - a good return by any calculations.
Insurance cover increase every year
When you purchase the Kotak bonds, the linked insurance or death cover benefits increase by 10 per cent every year (other than the second year wherein the increase is to the order of 5 per cent) to combat inflation. In a 15-year term plan, from the ninth year to the 14th year however, the increase is to the extent of 15 per cent while in the 20th year it is 20 per cent. Also the death benefit during the initial four years is greater in case of accidental death than in case of death due to other reasons.
Loan facility offered
The Om Kotak Bonds offer the facility to take a loan against the insurance-cum-investment bond in the first year itself. Up to 80 per cent of the surrender value at the market interest rate is offered. You also have the option of surrendering the plan, but then you lose out on your valuable life cover
Who can avail of this plan?
To avail of this plan, a person has to be between 18 and 60 years of age. A minimum investment of Rs 25,000 and maximum of Rs 20 lakh can be made for the 7, 10 or 15-year plans.
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by Pushpa Girimaji Don’t accept insurance claim under pressure WHENEVER an insurance company settles a claim, it gets the signature of the insured or the nominee on a printed voucher, saying the amount being received is in “full and final settlement” and that there are no further claims on the insurer. Normally, this discharges the insurer from any further liability under the terms of the contract and extinguishes the right of the insured or the nominee to make further claims. However in certain circumstances, even though consumer is unhappy with the assessment of the loss or the amount being paid, he or she is forced to accept the amount on account of financial constraints. This is particularly so in cases where an insurance company would have taken a long time to come up with a settlement offer. In such situations, the person signing the discharge note is supposed to write on the voucher that the money is being accepted under protest and without prejudice to the right to represent the case. But this is easier said than done because in most cases, if you write that, the insurer will not hand over the cheque to you. And if you do not, then you have lost the right to take up your case before a consumer court. Realising the predicament of the insured in such situations, the National Consumer Disputes Redressal Commission came to the rescue of consumer when it held in the case of the National Insurance Company vs Lal Chand Jain that if a consumer has no option but to accept the settlement as “full and final” on account of financial constraints or other compelling reasons, then he or she may lodge a protest immediately on receipt of the amount and then file a complaint before the consumer court at the earliest. However, it made it clear that the conduct of the insured becomes relevant on the facts of each case to find out whether the discharge note was given voluntarily or was coerced into it.This point got strengthened further by an order of the Supreme Court where it held that the mere receipt of the claim amount without any protest would not always debar a claimant from filing a complaint before the consumer court. However, in such cases, consumer has to prove that his or her signature on the discharge note was obtained by the insurance company by fraud or misrepresentation, undue influence or the like or coercive bargaining compelled by circumstances. Subsequently, in October, 2001, in the case of the United India Insurance vs Gurbachan Kaur, when the company argued that the widow had not satisfied any of these conditions laid down by the Supreme Court, the National Commission pointed out that when an insurance company decides to settle a widow’s claim after a delay of two years and asks her to sign the printed voucher before handing over the cheque, it could be said it was obtained by coercion. More recently, the National Commission went one step further when it said the insurer cannot withhold the release of the cheque made out towards the insurance claim, as a pressure tactics to get the insured to give it a receipt of full and final settlement. Said the commission: “This practice of the insurer ( of withholding the amount to pressure the claimant to sign the discharge voucher) should stop forthwith”. In this case, (K.L.Malhotra vs Oriental Insurance Company), following an accident involving Mr Malhotra’s car, the insurance company’s surveyor assessed the damage at Rs 20,868. However, an authorised agent of Maruti Udyog, who undertook the repair, gave a bill for Rs 37,557. This was, however, not accepted by the insurer. Since he had to settle the bill of the workshop, Mr Malhotra accepted the offer, but under protest. However, because he wrote the words “under protest” on the receipt, the insurance company did not make the payment. Subsequently, it even reduced its offer to Rs 19,268. The District Consumer Disputes Redressal Forum before which Mr Malhotra filed a complaint, directed the insurer to pay Rs 34,519. It also directed the workshop to pay Rs 5,000 to the consumer for the delay in repairing the vehicle. The State Commission, however, disagreed with this decision, forcing the consumer filed a revision petition before the National Commission. The apex court, while upholding the order of the District Forum, said when the repairs were carried out by an authorised agent of the manufacturer, there was no justification for the State Commission to ignore the amount specified by the dealer and to agree with the amount decided by the insurer. It also criticised the insurance company for not paying the insurance amount decided by it and said “it cannot withhold the amount as a pressure tactics requiring the insured to give it a receipt of full and final settlement and only then to release the amount of compensation”. It’s in the interest of insurance companies to remember this. |
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High hopes for Opto Circuits THOSE who keep track of this column will remember that I had indicated that we had purchased the shares of Opto Circuits at Rs. 32. The scrip rose to Rs. 43 soon thereafter yielding an annualised return gain of 35 per cent soon thereafter. The re-tracement in the price to around Rs.32 again is a re-adjustment to the handsome 30 per cent dividend payout and a bonus issue in the ratio of 1 share for every 10 shares held. Opto Circuits (India) Ltd was established in the year 1992 by Mr. Vinod Ramnani. With his vast experience in the field of opto-electronic devices manufacturing, Mr. Ramnani decided to tap the manufacturing potential in India. The company’s state of the art microelectronic assembly area is located in Bangalore. The company has been accredited with ISO 9001 certification. The Company is listed with Federal Drug Authority, USA and has been maintaining strict quality control by benchmarking the facilities and the products to international standards. Opto Circuits has a presence in America and to cater to the customers in that region, the company works closely with Elekon Industries USA Inc. for Design / Development and sourcing of materials. Opto Circuits caters to the South - East Asian Market through Opto Systems which is situated in Singapore. Opto’s sales in the US are through business associate, Elekon Industries USA, Inc. with minimum assured sales of US $ 5 million per annum. It sells directly through marketing presence in Europe and Asia. The company will continue to enhance its sales to OE manufacturers worldwide, both through Elekon, USA and direct sales. Opto is the only manufacturer of its kind in India and among few in the world. The company undertakes design of Opto electronic products for its clients and that requires immense technical expertise. The company has R & D facilities, which enables the company to target the niche market of customised designing of the products to suit the requirements of the customers. This results in the high client retention due to the company’s deep insight and knowledge of its client’s requirements. Last year it picked up a majority stake in Bangalore based Advanced Micronic Devices. Then it took over the digital thermometer line from Hindustan Lever. And now it is eyeing a US firm making patient monitoring systems which, we feel, can possibly add Rs. 25 crore to its turnover. In my interaction with the company’s management, I got the distinct impression that the recent and planned additions could enable it to raise its group revenues to Rs.100 crore from the current level of around Rs. 56crore, thus pushing it up on the size scale. Well, now you see why we rate this relatively low profile company quite highly. There’s more to his story, but for that, you will have to wait for a week.
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Bourses extend gains THE month old rally continued unabated on the bourses last week. The market has staged a comeback during this period on the back of a number of factors such as stronger-than-expected second quarter results of India Inc., a recovery in US markets, a 25 basis point cut in the bank rate by the RBI, a slight increase in India’s rating by the Morgan Stanley Capital International (MSCI) in mid-November 2002, the passing of a key legislative measure — Securitisation and Reconstruction of Financial Assens and Enforcement of Security Interest Bill — and finally the positive news on disinvestment. The 30-share Bombay Stock Exchange Sensex closed at its five month high 3306 points gaining 77.47 points for the week. Punjab Tractors An advertisement in the The Economist of London inviting initial bids for the Punjab State Industrial Development Corporation’s 23.49 per cent stake in Punjab Tractors Ltd has propelled the scrip on the bourses. The scrip, which is currently trading at Rs 150, has gained over 33 per cent from its one-year low of Rs 112. The scrip gained further ground when the news of foreign companies like Ford New Holland, bidding for the PSIDC’s stake hit the bourses. It is widely believed that the foreign companies would bid more aggressively for the stake, as the control of PTL would give them a foothold in the tractor industry of India, which is currently dominated by Mahindra and Mahindra, PTL and Eicher. L&T The L&T gained ground on reports that the leading national institution Life Insurance Corporation (LIC) has hiked its stake in the company from 17.4 per cent to 18.5 per cent by mopping up additional shares from the market. Buoyancy in the scrip can also attributed to the fact that the L&T’s management is said to have revived the plan to de-merge the cement business with a view to make the company less attractive to the A.V. Birla Group, even though the company board could not take a decision on this behalf last Saturday. It may be recalled that the SEBI has directed the A.V. Birla Group flagship, Grasim, to put on hold its open offer to acquire additional 20 per cent stake in the L&T as it has to carry out a probe regarding violation of the takeover regulations while acquiring the Reliance group’s 10.05 per cent stake in the company. Zee Tele Zee Tele gained close to 6 per cent last week to close at Rs 103.45. Infact, the upward move on Friday was on the back of very heavy volumes. The activities in the scrip is due to the reports that the company’s revenue from subscriptions has already crossed its full year target of Rs 16o crore — a growth of 53 per cent over the last year. The scrip has gained close to 35 per cent from its yearly low of Rs 77 in the last week of October 2002. Coming fortnight Hopes of the divestment programme getting back on the track have lifted the market. The Sensex ended last week on a five-month high. The current upmove is likely to stretch to 3368 or 3388. These are the highs touched during last June and July. The 3285-3295 range is likely to provide support to the index. Infosys, which plunged by $ 11.68 or 14.5 per cent in a single trading session last Friday on Nasdaq (USA), may see some decline during the coming week.
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FIIs net sellers in equities
Mumbai, December 8 FIIs abstained from any activity in the debt market for first three days but netted purchases worth Rs 122.2 crore ($ 25.3 mn) on December 5, according to data available with SEBI here. Mutual funds (MFs) were net sellers in equities at Rs 40.40 crore and net buyers in debt at Rs 220.31 crore in the period under review, it said. On December 5, the foreign funds bought and sold equity instruments to the tune of Rs 225.7 crore and Rs 443.8 crore respectively, thus recording net outflows worth Rs 218.1 crore ($ 45.2 mn), it added. FIIs also registered net sales of Rs 42.8 crore ($ 8.9 mn) on December 2 while remaining net buyers at Rs 1.9 crore ($ 0.4 mn) and Rs 10.5 crore ($ 2.2 mn) on December 3 and 4 respectively. MFs netted their highest outflow of the week in equities on December 3 at Rs 50.39 crore followed by Rs 94 lakh on the previous day. On the debt front, they were net purchasers on three trading days and recorded their highest inflow of the week at Rs 149.65 crore on December 5. Fluctuating erratically during the week, the BSE barometer rallied sharply at the last day to close the week at 3306.29 as against last weekend’s close of 3228.82, netting a rise of 77.47 points.
PTI
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HDFC keeps ‘healthy’ growth
Kolkata, December 8 Stating this at the inauguration of the ‘HDFC Property Fair’, Company Managing Director Keki M. Mistry said, “The growth rate in the retail business of home loans has been about 40 per cent plus growth each year for the last five years. The cumulative loan approval was Rs 45,431 crore and the disbursement amount Rs 37,791 crore, thus helping nearly 2.11 million families nationwide to own houses.” “The loan approval in the retail business for the first six months has been Rs 5,294.81 crore compared as against Rs 4,083.59 crore in the corresponding period last year, representing a 30 per cent growth. Loans disbursed for the same period is at Rs 4,221.83 crore as against Rs 3,207.57 crore for the corresponding period last year, registering a growth of about 32 per cent,” Mr Mistry added. Stressing on the fact that the Housing sector is the second largest employer contributing to 5.7 per cent in the national GDP, he said 269 industries were dependent on the housing industry and that meant a huge employment generation and growth. “The level of penetration has been extremely low in case of house loans. The GDP of house loans in the country is one per cent, compared to 15 to 20 per cent in Korea and Thailand and 57 per cent in the USA.,” he said.
UNI
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Inflation up again
New Delhi, December 8 It was 2.47 per cent during the corresponding week last year. The inflation rate had fallen by 0.13 per cent at 3.14 per cent mainly due to decline in petroleum prices the previous week. Before that the rate had risen for four consecutive weeks.
UNI
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