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Maruti lockout may hit vendors’ contract staff
HCL Tech beats slowdown blues; focus on deal renewals
Ignoring concerns, FIIs pump
Rs 8,400 cr in stocks in July
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India’s shopping malls lose bustle as economy cools
Petronet in talks for
Rs 3k cr power plant at Kochi
Tata Power turns to overseas for expansion
Tax Advice
personal finance
Unforgettables in your income tax return
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Maruti lockout may hit vendors’ contract staff
New Delhi, July 29 "If there is prolonged lockout at Maruti's Manesar plant, there is no doubt that there would be layoffs of contract workers in the ancillaries," said a senior official with an auto component maker, who asked not to be identified. Describing the situation as unfortunate, the company official said it has come at a time when the automobile market is struggling with sluggish demand. "Whenever there is a ramp up in production of automobiles, there is a proportional increase in the rate of employment of contract labourers in many of the component suppliers. When the production is down, it goes down," said the official. When contacted, Automotive Component Manufacturers Association of India (ACMA) executive director Vinnie Mehta said: "This lockout is happening against the backdrop of an overall market slowdown. Maruti has redefined the automotive landscape in Indian, particularly in the Gurgaon-Manesar belt, and a lot of component makers are dependent on it." Mehta, however, declined to comment on the possible impact of the lockout on contract labourers in parts makers. "We need to understand that the safety and well-being of employees are more important than production," he added. Yet, auto component makers are not willing to take the risk of letting inventories pile up and hence are reducing production. Suspension spring maker Coventry Coil-o-Matic executive director Raja Bafna said: "Earlier we were working 24x7. Now we have stopped working on Sundays at our plant in Rewari but we are not laying off any people." He said the company has been affected by the lockout at Maruti Suzuki's Manesar plant as well as drop in sales of MSI's small car Alto. "We were supplying springs worth Rs 35 lakh per week. Now it has come down to Rs 15 lakh as we are now supplying to only Gurgaon plant," he added. An official in another component firm that supplies parts to Maruti Suzuki also expressed similar views. "In the past, we used to have about 10% margin but today with so much of competition it is not even 2%. In such a scenario, we can't let inventories pile up. Obviously, we need to cut production, which mean we can't have excess employees who are idle," the official said. While no official figures of contract workers employed by component makers are available, industry sources said that at any given factory it could be 50% of the total workforce employed and in some cases even 80-90%. Maruti Suzuki had declared an indefinite lockout at the Manesar plant on July 21 following violence in which one senior executive was killed and 100 others were injured. — PTI |
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HCL Tech has posted another strong quarter of financial results? What have been the highlights? This quarter HCL Technologies posted a fivefold jump in 100 million-plus clients, a 31 per cent increase in revenues and 48 per cent rise in net income year-on-year. This has therefore established that industry leading growth can be achieved profitably. HCL Tech registered 17.1 per cent revenue growth in FY12 despite uncertainty in demand environment, while FY12 EBIT margins expanded 250 bps YoY to 16.0%. Further, all service lines have witnessed growth which was led by infrastructure services at 9.2%, enterprise application services at 4.8% and engineering and R&D services at 3.9%. Overall growth in all verticals was healthy in all geographies. HCL Technologies is now consistently outperforming its peers. What are the reasons? We’re confident of our growth trajectory and this has been due to strategic choices adopted by us. The focus has be on the restructuring market where significant amount of renewals are up for grabs and secondly, on vendor consolidation especially in financial services where customers were unhappy with the existing vendors. Thirdly, the whole philosophy of “Employee First”, which created a motivated work force and lastly, to incubate new businesses such as infrastructure services (which is now a billion dollar vertical), enterprise application services and engineering and R&D services through acquisitions, which is also close to a billion dollar now. Thus the combination of these four strategies worked in favour of HCL Technologies and added fuel to the company’s growth. There now seems to be clear demarcation between the top rung IT companies. While some like Infosys are lagging, others like HCL are growing strongly? What explains this? We’ve never seen before the amount of churn taking place in amongst the Fortune 500 category companies, which is a cause of concern for some. However at HCL, we saw this as an opportunity and attributed our focus on services that help businesses restructure their operations as the reason for not diluting margins. HCL Tech has been talking about grabbing market share from other companies. How is that strategy working? The market is witnessing a double-dip recession, which was never seen before and the growth is coming from market share churn. At the same time this environment also presents opportunities for innovative vendors like HCL Technologies and as long as we continue executing our strategy well, while retaining the paranoid culture within our company, our profitable trajectory of growth will continue. What does the weak global economic environment mean for the IT industry? Though the macroeconomic indicators continue to be weak, however we remain optimistic on account of vendor churn and S&P 500 firms that are the company’s target clients, reporting 20% higher profits than in the pre-recession years.
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Ignoring concerns, FIIs pump
Rs 8,400 cr in stocks in July
Mumbai, July 29 Market experts said foreign investors have sidelined concerns over weak monsoon, slowing economic growth and a high interest rate regime, mainly on hopes that government would initiate fresh reforms initiatives as Prime Minister Manmohan Singh had taken the additional charge of the finance portfolio. Besides, investors are expectig that the government would initiate a few key reforms before the start of the monsoon session of Parliament on August 8. During July 3-27, foreign institutional investors were gross buyers of shares worth Rs 44,192 crore, while they sold equities amounting to Rs 35,768 crore, translating into a net inflow of Rs 8,424 crore. In addition, FIIs have also invested Rs 3,187 crore in the debt market so far this month. Buoyed by strong inflows, BSE's benchmark Sensex surged 591 points or 3.3% so far this month to settle at 16,839.19 points on July 27. After taking the latest inflows into account, FIIs investment in the equity market stood at Rs 50,417 crore so far in 2012 and Rs 24,048 crore into the debt market during the same period. As on July 27, 2012 the number of registered FIIs in the country stood at 1,756 and total number of subaccounts were 6,341 during the same period. — PTI |
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India’s shopping malls lose bustle as economy cools
Mumbai, July 29
"We’e holding back on new store openings and focusing on our existing stores," said Ramesh Tainwala, chairman of Planet Retail, which has leased shops in Phoenix Market City and is the Indian partner of global retail brands, including Body Shop, Next, Nautica and Debenhams. "We’re shutting down some of our stores in areas where rentals are too high, and with the slowdown in consumption complicating things further," he said, adding that the company is also asking landlords to renegotiate rents. Consumer spending is on track to grow just 5.7% this year, compared with 24% in 2010, according to Euromonitor International, a feeble pace for a domestic demand-led economy. Nationally, retail vacancy rates are 20% and will likely rise to 25% by 2014, according to property consultants Jones Lang LaSalle, as floor space in malls grows to 100 million square feet from 66 million now. More than 90% of shopping in India is still done at unorganised one-off shops. By comparison, Thailand's capital of Bangkok alone has 62 million square feet of mall space, of which only about 7% is empty, according to a report by CB Richard Ellis. — Reuters
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Petronet in talks for
Rs 3k cr power plant at Kochi
New Delhi, July 29 Kerala, which faces power shortages, is willing to partner Petronet and the land it will give for setting up of the power plant would be considered as part of its equity contribution in the project. Also, the state government has shown inclination towards accepting Petronet's condition of buying at least 75% of the power generated at the power plant under a long-term power purchase agreement or PPA. Sources said the power generated at the plant, which would use LNG imported from Australia as fuel, would be priced at less than Rs 7 per unit, much cheaper than Rs 11 per unit Kerala is currently paying. — PTI |
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Tata Power turns to overseas for expansion As project awards and execution have been down to trickle for quite some time for want of regulatory approvals, apart from the mounting challenges on the fuel supply front, Tata Power has decided to focus on overseas opportunities to meet its 2020 vision. The country's largest private sector power utility, which is fourth largest among the Tata Group firms in terms of topline, has a 26,000 MW generation target by 2020. "Considering the present situation (coal availability and delay in decision-making), I don't believe that this target can be achieved from the domestic market, even though the country needs those kinds of capacities," Tata Power managing director Anil Sardana said. Hence, the company is devoting a good part of its time and energy in identifying opportunities in foreign lands to meet its ambitious target of 26,000 MW by 2020, he said. Accordingly, Tata Power has shortlisted some places abroad to scout for suitable projects and partners. "We’re certainly looking at the shortlisted geographies that include Africa, Southeast Asia , the Middle East and the Far East starting from Indonesia, Vietnam, etc," Sardana said. — PTI, Mumbai
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Tax liability on withdrawal of Provident Fund deposits
By S.C. Vasudeva Q: I recently resigned from an organization in which I had been working for the past three years and have now joined another organization. The latter has very few employees (less than ten) and does not have an Employees’ Provident Fund policy. As I do not have the option of getting my PF deposits transferred to my new employer I was planning to withdraw them. Since my new organization also does not have an Employees’ Provident Fund policy how can I withdraw my Provident Fund deposits that are with my previous organization? Also, if I withdraw will I be getting the share that has been contributed by first employer towards my Provident Fund? I have worked with the first organization for three years. In case I withdraw my Provident Fund will it be taxable and if yes at what rate will it be taxable? Moreover, is there any time limit in which I have to withdraw my Provident Fund deposits from my previous organization? And, after what time should I withdraw the funds? — Saurav Dhiman A: It has not been clarified in your query as to whether the amount of Employees’ Provident Fund money that you intend withdrawing is in respect of a recognized Provident Fund or in respect of an unrecognized fund. Presuming the Provident Fund contributions were made to a recognized fund, you can definitely withdraw your amount from the previous organization. Since you have served the organization for the period of three years only, the accumulated balance received by you will be taxable. Such an accumulated amount will be included in your total income which would be taxable at the applicable slab rates. Therefore, it would be advisable to withdraw the PF deposits as early as possible. Q: I am aware that when a person gifts money to his wife or daughter-in-law, the interest income earned on the gifted money is taxable at the hands of the donor. What would be the tax implications in situations where a wife gifts money to her husband or a daughter-in-law gifts money to her mother-in-law? — V. K. Kansal A: In case a wife gifts money to her husband, the interest earned on such gifted amount would be clubbed with the income of the wife. In case the daughter-in-law gifts any amount to her mother-in-law, there would not be any tax liability either in the hands of daughter-in-law or in the hands of mother-in-law. Q: I have a Public Provident Fund account and operating an account opened in the name of my minor daughter under her mother’s guardianship. Every year she gets gift cheques from her relatives, which are deposited in my bank savings account. Rs 1 lakh is transferred by cheque to the minor's Public Provident Fund account from the bank savings account. Also, can I also deposit the funds in my Public Provident Fund account up to the limit prescribed and, if not, can I claim Section 88 benefits under the Income Tax Act for the Public Provident Fund contribution deposited in my minor daughter’s account? — Bhavna Joshi A: The deduction allowable under Section 80C of the Income Tax Act, 1961 is subject to a maximum limit of Rs 100,000. Therefore the deduction allowable under section 80C of the Act (earlier Section 88) would be restricted to Rs 1 lakh only.
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The 2 axioms of successful financial planning Adapt or perish One must prepare an action plan that conforms to the modern-day tested mantras of investing to ensure that one is not left high and dry Akshay Gupta Financial planning and bringing up children have similarities in many ways: one needs to plan and plan well in advance; one needs to handle them (investment and kids) with a lot of care; and one needs to be very patient with both during the years that they grow. Financial planning in Indian society has never got its due - most investors do not want to plan methodically and scientifically. The high interest rate scenario and subsidized instruments in India have meant that this method and science be ignored for many years. That said, the subsidized instruments are slowly fading away from the market. For the remaining, returns on them have been linked to the yield generated on the funds managed. Increasingly, like in the developed markets, one would see emergence of variable return products and eventually a lower interest rate regime. Assuming the above scenario happens sooner than later, one must prepare an action plan which conforms to the modern-day tested mantras to ensure that one is not left high and dry. Broadly there are only two mantras that can help us control our financial destiny in times of variable returns and lower interest rate regime: Invest in all asset classes Equity investments Investment in equities is meant for giving a high growth booster to your portfolio. This is akin to multivitamins. You need small doses of these at regular intervals. Too much may cause some other complications. The investor must realize that equities market in the short run tends to be volatile, but its long-term return potential remains high. Thus "equity" as an asset class is considered a viable medium for investors wishing to build a large corpus over the long term. For example, an equity investor who would have invested Rs 10,000 in January 1980 when the BSE Sensex was at 100 points would have built a corpus of Rs 16.45 lakh by the end of March 2012, at an average return of 17.73% per annum. Gold investments Gold investments are profitable in the long run and are the closest hedging tool to inflation and uncertainty. If one were to observe the price movement of gold over the past years (that have been highly uncertain and, interspersed with periods of high inflation), one will notice a continuous uptrend. So, investors have benefited greatly by holding gold for a longer term. The price of gold was Rs 1,607 per 10 grams in March 1981 which has skyrocketed to Rs 29,800 in March 2012, at an average return of 11.79% per annum. Debt investments Debt investments mainly consist of bank fixed deposits, corporate bonds, government securities and bank certificates of deposits. These generate a stable return and generally carry much lower price risk as compared to equities and commodities like gold. Over the last ten years fixed income on an average has given a 7.5% return. Fixed income securities In an extremely volatile environment, par for the course may seem to be to invest in fixed income securities like FDs, corporate deposits, fixed income mutual funds, etc, but that may not be an ideal situation in the long run. The best way to achieve an above par risk-adjusted return is to invest in a combination of correlated and inversely correlated products. Investors need to find out mutual fund schemes, which have a judicious mix of all three asset classes, that is, debt, equity and gold in varying proportions depending on their risk profiles. Invest systematically & regularly The fact remains that whenever the western world sneezes the world catches a cold. Investors seeking long-term aggressive returns and possessing the appetite to stomach the volatility considered technology funds during the 1990s. Funds from this industry sector emerged as a category to reckon with and enjoyed the tremendous growth in the years that followed, but their subsequent decline in 2000-01 due to the IT bubble burst has kept the risk-averse investor away. The next biggest turmoil in the history of stock markets in the year 2008 was the subprime crisis. Equity and balanced mutual funds generated negative returns during both these turmoil periods. However, one could ride these turmoil periods also smoothly. Let's take an example which clearly shows that investing through systematic investment plans (SIPs) keeping a long term perspective in any market conditions are fruitful vis-à-vis investing through a lump sum even if we invest in the sectors badly affected during such market crisis. In fiscal 2000-01 the technology sector funds, on an average, returned about (-) 64.36 %. The NAVs of some of these funds were ruling at around 60-80% below par levels. If we had invested a lump-sum sometime before the technology bubble burst, we could have lost 60%-80% of our money. Most of us would have exited seeing the loss. Even some of the brave-hearts who stayed on, the lump-sum investment would have yielded only 6% p.a. till date. Whereas the SIPs option would have generated more than 10.4% p.a. Investing a fixed amount every month(popularly known as SIPs) is a safer way of investment because nobody can afford to invest his entire savings one day and lose it the next (in the event of a crash). Investing all at once can be extremely profitable if the market moves up, but most people who don't want to spend much time studying the market should endeavour to enjoy the benefit of cost averaging. If we follow these two mantras regularly, chances are we might be able to overcome financial planning anxieties and concentrate more on bringing up the more important aspect of our life - our children. The author is managing director & CEO of Peerless Funds Management Co. The views expressed are his own
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Unforgettables in your income tax return
If tax is the hardest thing for Einstein to understand, what to say of ordinary mortals. As there is no escape from two things - death and tax, hence one should prepare for these two certainties with due care. However the preparation for death I leave it to spiritual gurus, but I take the liberty to make you prepare for taxes, that is, income tax returns. In this article I have covered some of the aspects, which we normally forget or ignore while filing our tax returns, thus ending up filing incorrect returns. Income normally not included:
The Finance Act, 2012 has proposed that interest on bank savings accounts will be eligible for deduction of income tax up to Rs 10,000 for the financial year beginning April 2012. So for the year ended March 2012, all the interest on savings bank account is taxable and you are liable to pay tax on such interest. Since it is highly improbable that you would not have reported your savings bank interest to your employer for the purpose of tax deducted at source, but it is important that you include such interest in your tax returns. A lot of people who invest in bank FDs are under the impression that since tax is deducted by the bank, this interest need not be included in our income. This is incorrect. The tax on your FD interest will depend on your slab rate and you will get credit for the tax already deducted by the bank. In all likelihood you forget to take into account the interest accrued on the bank FD that has been renewed during the year without it having been routed through the bank account. You also need to take into account the accrued interest on your NSCs during the year. Except for the last year you can claim the amount of interest accrued under Sec. 80C of the IT Act as deemed to have been invested in NSCs. Notional income in case you own more than one house property In case you own more than one house property and both are occupied by you for your residence, the income tax laws requires you to treat one of the properties as deemed to have been let out. The logical consequence of deeming is that you are required to offer rental income on such house on a notional basis though actually you have not received any rent. The amount of the rent should be the rent for which the property is expected to be let out, this the market rent which you are supposed to show as your income. Income earned of minor child's investment Also, you often forget to take into account incomes credited on various small investments made in the name of your minor child. Since any income received by a minor in excess of Rs 1,500 is required to be included in the income of the parent whose income is higher, please ensure that such income in the hands of a minor child are clubbed with the parent applicable. This is very important in view of the practice of Indian parents keeping moneys received by the minor on various occasions like festiivals and birthdays in their separate bank savings or fixed deposit account. Capital gains on switching mutual fund schemes Many of you must be investing in miutual funds. You often review the performance of the funds you have invested in and based on the performance you decide to shift your investment from one scheme to another. In case we shift from one fund house to another, the same transaction is routed through your bank and gets reflected in your bank statement and your chartered accountant is sure to question you on the profits made on such scheme. However in case you have shifted from one scheme of the fund house to another scheme, the transaction does not get routed through your bank account and thus it is highly probable that you will forget to offer the gains on such schemes you have redeemed for tax. You are supposed to offer for tax, the profits made on shifting of mutual fund schemes. Please note that the capital gains made on such shifts affected by you, may or may not be liable for tax depending on the period for which the units were held and the nature of investments. In case the latter were in equity funds and were held for at least one year, the gains are exempt from payment of tax. The author is CFO of Apnapaisa.com, an online insurance price & features comparison engine. The views expressed are his own
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Contract labourers working in factories of component suppliers to Maruti Suzuki Ltd could bear the brunt of the lockout at the Manesar plant of India's largest carmaker.
Working on wafer thin margins amid stiff competition, many of the component suppliers which have been already feeling the heat due to an overall slowdown in the automotive market, are considering to reduce their workforce.
Financial planning and bringing up children have similarities in many ways: one needs to plan and plan well in advance; one needs to handle them (investment and kids) with a lot of care; and one needs to be very patient with both during the years that they grow.
Financial planning in Indian society has never got its due - most investors do not want to plan methodically and scientifically. The high interest rate scenario and subsidized instruments in India have meant that this method and science be ignored for many years.
In the past few quarters, HCL Technologies Ltd, among the top 4 IT companies has been outperforming its peers and has become a street favourite. While companies like Infosys have been struggling in a tough global macroeconomic environment, HCL Technologies is emerging as among the bellwethers of the IT industry.
In an interview with Sanjeev Sharma, Vineet Nayar, vice chairman & CEO of HCL
Technologies, talks about the unprecedented vendor churn in the Fortune 500 companies and how the company is grabbing renewal contracts.
After three consecutive months (April-June) of selling, overseas investors infused Rs 8,424 crore into the equity market till July 27, according to the data available with the Securities & Exchange Board of India.
Asia's third-largest economy is growing at its slowest pace in nine years and sluggish consumer spending is forcing mall developers to scale back plans. It will take years for the glut of retail space conceived during headier times to be absorbed by tenants, even as India fine-tunes rules to make it easier for foreign shops to enter the country on their own, analysts say.
Interest earned on bank savings account & FDs