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LOKPAL RESOLUTION
Act now to continue global recovery, says IMF chief
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Reliance Entertainment
gets court order against piracy of ‘Bodyguard’
Tax Advice
personal finance Bottomline growth not much to cheer about Short-term volatility to continue
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LOKPAL RESOLUTION
New Delhi, August 28 Making his stand clear in favour of a strong Lokpal Bill, Godrej Group Chairman Adi Godrej also suggested reducing the number of government permissions required could help curb corruption. "I feel the best way to tackle corruption is to drastically reduce issues on which government permissions or discretionary decisions are required and make all government sales and purchases of assets, goods and services by a transparent auction,” Godrej said. Bharti Enterprises Chairman and Group CEO Sunil Bharti Mittal described the developments that led to Anna Hazare calling off his fast as "a defining moment and marks the beginning of a new chapter in the history of our democracy". "We commend the spirit of the people of the country and the lawmakers for their determination to take this major initiative to root out the evil of corruption from our system," he said.
While most corporate leaders stayed away from making direct comments on the ongoing issue, top industrialists like UB Group Chairman Vijay Mallya, Mahindra & Mahindra Vice-Chairman and MD Anand Mahindra and Biocon's CMD Kiran Mazumdar Shaw have been expressing their views through social media like twitter. “I support Team Anna' movement against corruption which must be (sic) eradicated. But this takes time n (sic) patience n (sic) a careful approach. Not this,” Mallya tweeted. SP Hinduja of the Hinduja Group suggested confiscating black money generated by corrupt politicians and bureaucrats as one of the steps to tackle the black money issue.— PTI
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Act now to continue global recovery, says IMF chief
Jackson Hole, Wyo, August 28
Two years after the end of the worst of the financial crisis, growth in the United States and Europe is sputtering as government debt burdens surge. Borrowing costs for European banks are rising as lenders balk at providing any but the shortest maturity funds on fears over bank exposure to shaky euro zone sovereign debts. Sharp swings in global financial markets have intensified strains. Complicating the picture is policymaker indecision on both sides of the Atlantic. European leaders are fighting over who should pay the bill for taming a raging sovereign debt crisis. In the US, lawmakers and President Barack Obama fought a contentious budget battle earlier this summer that resulted in the loss of the nation's coveted "AAA" debt rating from Standard & Poor's. Federal Reserve Chairman Ben Bernanke warned here on Friday that the fight had shaken confidence and sapped US growth. Lagarde said the Group of 20 leading economies should use a meeting in November to address the global economy's woes in a convincing fashion, and she used her speech— her first major policy address since taking the helm at the IMF in July — to open a new front in dealing with strains at European banks. She called for a "mandatory substantial recapitalization," through private channels if possible, but otherwise through some form of public, Europe-wide funding, such as the European Financial Stability Facility.— Reuters
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US stock market indices debut on NSE today
Mumbai, Aug 28 The Dow Jones Industrial Average (DJIA) and the S&P 500 — the two of the most followed indices of the US stock — would start trading from tomorrow on the NSE, India's biggest bourse. The move would allow investors to take positions on trends thousands of miles away in the US market on Dalal Street, the commonly used term for the Indian stock market by virtue of being its traditional address. The S&P 500 is an index of the 500 leading companies of the US economy, while the DJIA comprises of the 30-most liquid blue-chip companies based in the US. This is also the first time in the world that futures contracts on the S&P 500 index are being introduced and listed on an exchange outside the US.— PTI
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Reliance Entertainment
gets court order against piracy of ‘Bodyguard’
New Delhi, Aug 28 The company said it has procured a 'John Doe Order' from the court restraining websites, cable operators and Internet Service Providers (ISPs) and others from infringing or violating Reliance's copyright by illegally showing the movie. "The order is a measure to prevent piracy of 'Bodyguard' that releases on August 31... With this, we expect piracy levels for the film to come down by 60 per cent," Reliance Entertainment Vice-President Music and Anti-Piracy Sanjay Tondon told PTI. This John Doe Order gives protection to the intellectual property owner, Reliance Entertainment, from copyright violation by prospective anonymous offenders.— PTI |
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Tax Advice Q I retired from Punjab government service on 31-01-05, but did not file the income tax return. After retirement, I received Rs 82,527 as pension for the year 05 -06, Rs 92,993 for 06 -07, Rs 1,11,341 for 07-08, Rs 1,32,865 for 08-09 , Rs 1,36,014 for 09-10, Rs 1,87,365 for 10-11 plus Rs 20435 as pension arrear of 43 months from Jan 06 - July 09. I also received Rs 1,54,116 as arrear from 1-1-1978 to 1-1-04 decided by the court. The total amount received during 2010-11 is Rs 3,61,916. Can I split the above arrear 20, 435+1,54,116 in previous five year. I also purchased an ICICI life insurance policy in October 2007 of Rs 30,000 annually & have paid four installments till date. I also purchase NSC worth Rs 30,000 in 2010-11. Kindly guide & let me know my tax liability & what would happen for those years in which I did not file the ITR earlier. Am I to liable to be penalized for this. — Inder Singh A You have not indicated the total income in respect of various years. I presume that the pension income is the only income for the years referred to in the query. The reply is therefore based on this presumption. a) Pension income for the financial year 2005-06 & 2006-07 being less than Rs 1 lakh there would be no tax liability. b) Pension income of Rs. 1,11,341 for the financial year 2007-08 being more than the taxable limit of 1,10,000/- the amount of tax payable would be Rs. 138/-. c) Pension income of Rs. 1,32,865/-, 1,36,014/- for financial year 2008-09 and 2009-10 respectively being less than the taxable limit of Rs. 1,50,000/- no tax would be payable. d) Pension income of Rs. 3,61,916/- for financial year 2010-11 being more than the taxable limit of Rs. 1,60,000 you will be liable to pay tax. The total income would work out at Rs. 3,01,916 (3,61,916-60,000). Tax payable would be Rs 14,618. e) It may not be possible to split the arrears as the date for filing the return/revised return has expired for assessment year 2006-07 (2005-06), 2007-08 (2006-07) 2008-09 (2007-08) and 2009-10 (2008-09). You can file the revised return for the assessment year 2010-11 by March 31, 2012. f) I do not think any penalty would be levied for non-payment of Rs 138 for assessment year 2008-09. Invesment in
insurance
Q Suppose one is investing Rs 10,000 a year in LIC Market Plus Pension Plan (Purely Pension Plan without Life Cover) from November 2007 and has paid four consecutive premiums up to November 2010 and claimed deduction u/s 80CCC. Now according to LIC policy, one can surrender the policy at any time after the completion of three years. Now the surrender value of this policy is say Rs 48,000. So please clarify the tax applicability if one is wishes to surrender this policy now and what will be the tax liability. Whether all the proceeds of Rs 48,000 will be taxable or the difference amount (Rs 8,000/-) will be taxable in the hand of assessee. — Sanchay A Sub section (2) of section 80CCC of the Income-tax Act, 1961(The Act) provides that any amount deposited under the aforesaid section to effect or keep in force any annuity plan of LIC for receiving pension from the fund and deduction in respect of such an amount has been claimed under the aforesaid section by an assessee, then any amount received on surrender of the annuity plan shall be treated as income of the previous year in which such amount is received. In view thereof, the amount of Rs. 48,000 would be taxable as income of the previous year in the year in which it is received by you. Tax computation Q For 2010-11, I have income from three sources as under: 1. Rs 1.20 lakh from short term capital gains in shares. 2. Rs 1.10 lakh from technical fees paid for technical writing in journals/magazines. 3. Rs 1,15,20 interest on deposits in bank. Tax deducted at source is Rs. 13,330.00 I think income under 1 is taxable @ 15% while that at Sr. 2 and 3 @ 10%. Am I correct? How shall I compute my tax and which Income Tax Return form should I use to file my return? — Er Sushma Bansal A a) Rs 1.20 lakh would be chargeable at a lower rate of 15% provided the transaction in respect of sale of such shares is entered into after the date on which Securities Transaction Tax became leviable and Securities Transaction Tax has been paid on such transaction of sale. In case the capital gain in question is of the nature referred to hereinabove, the same will be taxable at 15% .b) There is no provision in the Act which provides for the applicability of lower rate of 10% on technical fee referred to in the query. c) The interest on deposits would be chargeable at the normal slab rate in case the total income including such interest exceeds the maximum amount on which tax is not chargeable. |
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personal finance The challenge for investors lies in identifying companies where the underlying business and stock price will grow manifold, rewarding investors in the process. There are a few basic principles of investing, which an investor should adhere to while investing in businesses. There should not be any compromise on quality of the management of the company or business. A good management is one which appreciates the value equity can create, while respecting minority shareholders. Market participants’ use this barometer extensively and reward good quality management, handsomely. A second major checkpoint before putting money in should be to assess the Margin of Safety, while evaluating a proposal. This is a principle of investing in which an investor only purchases securities when the market price is significantly below its intrinsic value. In other words, when market price is significantly below your estimation of the intrinsic value, the difference is the Margin of Safety. This difference allows an investment to be made with minimal downside risk. This, in fact, should be the cornerstone of one’s investing philiosophy. The selection of companies to invest in is of paramount importance and allows a fair idea of investment return. This article aims to help the reader decide how to invest by detailing the characteristics that one should look for in the companies before investing. Companies with Non
Linearity of earnings These are the companies where earnings grow faster than the revenue or little capital expenditure is required for future earnings. Companies in brand, consumer, technology, intellectual property with huge up-front infrastructure cost will have a lot of expenses, which are expressed or capitalised in the Profit and Loss account, but are not generating adequate returns, currently. With time, benefits of those expenses result in earnings growing faster with little additional capital expenditure and more earnings become available to the investors . A lot of companies in consumer, technology and financial services businesses have similar characteristics. The history of Indian markets suggest that these companies have generated stellar return for their investors. Companies with possibility of
Earnings Turnaround These companies give a good opportunity to invest in when the business is going through a cyclical downturn. The investor needs to carefully evaluate whether the business is approaching an upturn in the next one or two years. The usual sign of this are that the value of equity is depressed and margin of safety on equity price is the highest. This becomes a classic contrarian or value investing. Investors will find companies in capital intensive, commodity etc business having very cyclical earnings and would be rewarded, if a well-timed investment is made. The downturn should be used as an opportunity to own a proven business model. My experience suggests that caveat is that you should prefer a business with sizable revenue and market leadership to a small-sized business while investing. Companies where business dynamics have changed favourably For these firms, there has been a change due to external environment like regulation, new technology, problem with substitute leading to market share gain for use of its product. These kinds of opportunities are only available to vigilant investors, who keep a close watch on industry and regulatory developments. This helps in judging which companies would be the winner in a changing regime. The Indian power sector is a perfect example, when the Electricity Act was passed in the 2002. The Indian equity markets offer tremendous opportunities for investors. It is blessed with breadth of companies backed by the entrepreneurial zeal of number of promoters. The last decade has been an era of wealth creation for a few who invested with a long-term horizon. For those who got sucked into the euphoria of 2007-08, there has been little else, but disappointment. I am equally sure about this opportunity thrown by this decade for the Indian equity investors. Wealth creation will only happen if they remain invested in good
companies over a long time and let go short term temptations. I would suggest that an investor should get the direction and approximation right while forecasting or scenario building on earnings of the company rather attempt to reach precise figures. I have no debate in my mind that investing is an art which blossoms with reading, practising, learning, and experiencing. I am reminded of an interesting saying by Yogi Berry “In theory there’s no difference between theory and practice, but in practice there is”. I request all readers to start practicing the above mentioned tenets of investing. This would surely put you on to the path of successful investing in Indian markets. Manish Bhandari is also an advisor to
Mumbai-based Vallum India Discovery Fund, a portfolio management scheme for investors. Views expressed are his own Consumer, technology and financial services businesses Large up-front cost, but earnings grow faster with little capital expenditure in future. More earnings are available to
the investors over time Companies in commodities dealings In these firms, the downturn should be used as an opportunity to own a proven business model Companies where external
environment has changed Eg Power sector after 2002, when the Electricity was, 2002 was passed
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Bottomline growth not much to cheer about The bottomline growth of companies in the BSE Sensex moderated to a seven-quarter low on account of persistent input cost inflation and rising interest rates, according to a research note by IDFC Securities.
Earnings growth of 7.9% yoy for the Sensex companies was in line with expectations of 6.4%, driven by robust performances by Consumer Goods (up 20.9%) and Petrochemicals (16.7%). A strong demand environment translated into healthy top-line growth for the Sensex (25.9% yoy). However, raw material cost pressures and higher wage costs led to a sharp contraction in EBITDA margin for
the Sensex. Despite strong top-line growth across sectors – Petrochemicals (39.1% yoy), Metals (24.1% yoy), IT Services (23% yoy), and Automobiles (22.7% yoy) – bottom-line growth skidded to 7.9% yoy in Q1FY12 from 9.7% in Q4FY11 and 32.5% in Q1FY11. According to IDFC Securities, sharp contraction in NIMs and higher provisions for restructured portfolio and NPAs hit the bottom line of financials. In telecom, 3G-related depreciation and interest expenses and expiration of tax holidays dented profitability. Bottom-line growth of metals was muted on account of rising input costs and sluggish demand, while real estate was affected by input cost inflation and recognition from low-margin past projects. The weakening global macro environment has resulted in a sharp correction in the prices of global commodities (including crude oil), giving a much-needed reprieve from the persistent inflationary pressure. While higher ‘core inflation’ would prompt RBI to hike policy rates by another 25-50bp, the note says that it is almost the end of the rate hike cycle. Lower commodity prices and lag impact of monetary policy tightening would moderate inflation to 7-8% by March 2012. On the earnings front, domestic demand drivers continue to be strong, as reflected
in strong top-line growth of our broader universe. Profitability is likely to improve as moderation in commodity prices allays margin concerns. Further, it expects policy triggers from the government to revive the sentiment and kick-start investment spends. Petrochemicals (39.1% y-o-y) Metals (24.1% y-o-y) IT Services (23% y-o-y) Automobiles (22.7% y-o-y) Bottom-line growth skids 7.9% in Q1FY12 from 9.7% in Q4FY11 and 32.5% in Q1FY11 Profitability likely to improve as
moderation in commodity prices allays margin concerns.
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Short-term volatility to continue Global markets abated the negative sentiment observed post US downgrade and surged to close in the green.
This week saw a rating downgrade of Japanese government bond from AA3 to AA2 by the global rating agency Moody’s, which raised concerns about the health of global economy. Slowing job growth and plunging confidence amid political gridlock and financial-market turmoil this month threatens to weigh on consumer and business spending for the rest of the year. US & EU macroeconomic data are confirming the descent towards a mild recession in H2. Asian markets opened on a negative note and saw the Indian market to follow suit. Gold and silver hit record high in the beginning of the week but by the end of the week reacted in the downward direction with the rise
in equities and the increase of future margins. The BSE Sensex fell 292.84 points or 1.81% to 15,848.83 in the week ended Friday, August 26, 2011. While the S&P CNX Nifty fell 97.85 points or 2.01% to 4,747.80. In a contrast to Asian and US markets, which saw a marginal increase in their levels from last week. The NIFTY saw some crucial support levels being breached this week and ending below the 4,800 level at 4,747.80. The market during the week had faced expiry on August 25 and thus witnessed lot of volatility. FIIs continued to add pressure on the local indices and the outflow. The domestic market is facing challenges from political issues, economic slowdown and global uncertainty. Food inflation continues to be high at 9.8%. In addition to that savings rate has dipped to 9.7% of GDP in FY 11 from 12.1% in FY10 portrays that inflation is eating up the disposable income. The banking sector took a pounding during this week with the Bank Nifty falling by 4.58%. Concerns on slowdown on growth, increasing NPA’s and worries over implementation of Basel III norms shook the investor confidence. Auto and metal sectors have also fallen by 2.39% and 4.08 % on negative sentiment. The FMCG, Pharma and Telecom were comparatively less damaged. The global events would set the tone for the domestic markets next week. However with downgrades in EPS, the market continues to trade at premium to other emerging markets. The risk reward ratio is favourable from investment perspective but short-term gyration would continue to prevail in the market. Gajendra Nagpal is the Founder and Chief Executive Officer of Unicon Financial Intermediaries Pvt Ltd, a financial services company. Views expressed are his own) The BSE Sensex fell 292.84 points or 1.81% to 15,848.83 in the week ended Friday, August 26. While the S&P CNX Nifty fell 97.85 points or 2.01% to 4,747.80. The Sensex has tanked 3,022.46 points or 16.01% in one month from a recent high of 18,871.29 on 25 July FII outflow in August Foreign institutional investors (FIIs) sold shares worth net Rs 1440.55 crore on Thursday, August 25, as per provisional data from the stock exchanges. FII outflow in August 2011 totalled Rs 12167.19 crore, till August 25, as per data from the stock exchanges.
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Inflation at 6% by Mar’12: Goldman Sachs Allahaband Bank eyes four Asian cities Hyundai boss gives $462 mn to charity India-South Africa CEOs forum today ONGC to start KG Gas Production Titan eyes Rs 3,500 cr turnover BSE assures govt on small exchange
Aman Singla MD of SBP Group (first from left) with Kareena Kapoor at the launch of SBP housing project
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"The stakes are clear; we risk seeing the fragile recovery derailed. So we must act now," she said.
For an investment to be reliably successful, an accurate estimate of intrinsic value of the instrument is the indispensable starting point. Without this knowledge, any hope of consistent success as an investor is just that: Hope. In the past, the Indian stock market has given the investor an opportunity to generate superior returns over other asset classes, if the holding period is more than five years. This holds true
for the future also. 
Meanwhile, one does need to be a professional investor, if he/she can follow the basic tenets of investing and build on your experience.
THE COMPANY YOU CAN KEEP
Top line growth across sectors
Sensex down 16% in a month
SBP Group’s housing project