The Tribune, Chandigarh, India

	Retail investors may recover over Rs 12k cr from relisting Funds blocked after suspension of trading in 1,450 cos Mumbai, January 27 Retail investors, who lost a whopping Rs 61,000 crore in blocked funds due to suspension of trading in 1,450 companies during 1992-2009, could get back Rs 12,145 crore on relisting of some these firms, says a report by CNI Research. Between November 2009 and November 2012, as many as 250 companies (out of the 1,450 firms which were suspended) got relisted, as a result of which investors could recover their blocked funds, said CNI Research chairman & MD Kishor P. Ostwal in the report. "During the past three years close to 250 companies have come out of trading suspension and shares of many of them are at 52-week high and many have changed hands. As a result, these companies today have a combined market cap of Rs 12,145 crore," he said. The report further says the balance Rs 58,296 crore blocked in such stocks could also be recovered if the regulators allow the remaining 1,200 companies to relist. Going by the success of relisting, the actual value of money locked in the system could be as high Rs 1 lakh crore, it said. In November 2009, CNI Research, which deals with capital markets, had in a report said that BSE and NSE had suspended trading in 1,450 firms for not meeting the listing norms. Of these companies, the details about as many as 574 were missing from the exchanges. Of such 574 companies, 536 were on the BSE and the rest 38 were on the NSE. The present report suspects that as considerable time has lapsed, this could be one of the backdoor delisting routes, where promoters sell shares in the open market, following violation of the listing norms which prompts the exchanges to suspend them from trading. The common feature of most of the companies was that the promoters, before violating listing agreements, sold entire stakes. This leads to obvious conclusion that promoters dumped their shares in the market before getting suspended, the report added. — PTI
	Reforms seen to help economy gather pace Bangalore, January 27 India's economy will pick up steam this year after its worst performance in a decade as a slew of reforms take hold and the central bank eases policy to spur growth, a Reuters poll found. But the poll also showed inflation will remain persistently high, preventing the Reserve Bank of India from cutting rates too aggressively, and that economic growth will not soon return to levels as strong as just few years ago. The poll of 28 economists, taken in the past week, showed India's gross domestic product will grow 6.4% in the year to March 2014 after likely expanding at a decade-low of 5.5% in the current fiscal year. That is down from the median consensus of 6.6% for 2013-14 and 5.7% for 2012-13 in a poll in October, marking the seventh straight set of downgrades in Reuters polls for Asia's third-largest economy. Correspondingly, analysts are not exactly brimming with optimism. "We expect a shallow growth recovery," said Sonal Varma, economist at Nomura in a note to clients. Wilting demand for Indian goods and services from abroad has been a major contributor to the slowdown as many developed economies are either in a recession or close to one. But one source of good news has been a recent shift in government policy. The government announced reforms late last year which opened up the supermarket and aviation sectors to overseas investors, a move many businesses had been clamouring for, and says more policy moves are in the pipeline. "A lot of economic reforms are being undertaken. The Ministry of Finance has moved very decisively on certain issues. They are small steps but at least it shows the commitment," said Vishnu Varathan, economist at Mizuho Corporate Bank. Even though the proposals met some stiff political and public opposition, the Congress party-led coalition was able to get a vote of confidence in parliament and implement the reforms. Still, some analysts worry the government may lose its appetite for more politically difficult measures ahead of elections in 2014. UP TO THE RBI NOW: After the RBI refused to lower interest rates, leaving the onus on the government to pull the economy out of a slump, the focus this year will likely return to the central bank. Wary of stubbornly high inflation, the RBI has kept the repo rate on hold since cutting it by 50 basis points in April, in contrast to other big emerging market central banks in China, Brazil and South Korea that have eased policy more aggressively. But most economists in a separate poll taken last week expect a 25 basis point (bps) interest rate cut to 7.75% at the RBI's next policy review on January 29 and medians from the latest poll show the repo rate falling to 7.00% by the end of September. "We expect the RBI to restart its easing cycle in January but cautiously, with a 25-basis-point repo rate cut. Softer inflation offers the RBI room to rebalance its growth-inflation priorities," said Siddhartha Sanyal at Barclays Capital However, relaxing monetary policy will not be easy for the RBI as wholesale price inflation, the country's main inflation indicator, is expected to remain above the central bank's perceived comfort level of around 5% through to at least March 2014. Prices are expected to rise on average 6.6% in the year to March 2014 compared with 6.9% in an October poll. Headline inflation eased to a three-year low in December from a year earlier, though it remained elevated at 7.18%. In the latest move to reduce its subsidy bill, the government last week deregulated the price of diesel. — Reuters
	Don’t relax, WEF warns on global economic crisis Davos, Switzerland, January 27 The world's political and business elite headed home Sunday from this year's Davos forum with warnings that while the worst of the financial crisis seems over there is still much to be done. International Monetary Fund chief Christine Lagarde said in the closing moments of the annual gathering in the snowy Swiss ski resort on Saturday that she recommended the "do not relax principle" for the coming year. Where for the two previous years a sense of crisis had hung over the World Economic Forum, the mood was sunnier at the 2013 edition as speaker after speaker said they were now cautiously optimistic. "I feel the circumstances in which I'm addressing you today are very different than 12 months ago," said Italian Prime Minister Mario Monti in his opening speech, following a torrid year dominated by the euro crisis. European central banker Mario Draghi meanwhile hailed 2012 as the year that the troubled single currency was "relaunched", even as others were hailing him as the man who had saved the eurozone from catastrophe. The Chinese economy's slowdown seemed less serious than a year ago to the participants while the step back from the fiscal cliff in the United States also eased minds. But as the 2,500 world leaders, financial officials, tycoons and journalists departed the picture-postcard Alpine resort, they may have felt a chill that was not just down to the subzero temperatures. Lagarde said the IMF's forecast of a "very fragile and timid recovery for 2013" was based on "eurozone leaders, the US authorities on the other hand and the Japanese authorities making the right decisions." She added: "And that's what I mean by 'do not relax' because some good policy decisions have been made in various parts of the world. In 2013, they have to keep the momentum." Organization for Economic Cooperation & Development (OECD) head Angel Gurria, warned meanwhile that countries had exhausted most room for manoeuvre in terms of fiscal and monetary policy. "We should be very worried because the lack of room for some of the more traditional tools has gone and we’re left with very few of these tools," he said. As in previous years the Davos forum was partly hijacked by external events, particularly after British Prime Minister David Cameron vowed to hold a referendum on European Union membership by the end of 2017. The move threatened to cause a stir, with Cameron's European counterparts worried about the effect the uncertainty would have on the euro's already fragile recovery, but they left any rows for another day. The turmoil in the Arab world also took centre stage for a time as officials including Jordan's King Abdullah II urged "desperately needed" action over Syria's civil war, though none came. — AFP
	Maruti Suzuki buys land for 4th plant, to go on stream in 2017 Tokyo, January 27 Maruti Suzuki India Ltd, India's biggest carmaker by sales volume, has purchased the land for its fourth plant in India, with a view to roughly doubling annual production capacity to about 3 million units, the Nikkei business daily said on Sunday. The company purchased the land in the western state of Gujarat for a new factory with capacity of about 750,000 units a year, the company's chairman, R.C. Bhargava, told the Nikkei. The fourth plant is slated to begin production in 2017 at the earliest and help expand exports to Europe and the Middle East, the report said. Maruti Suzuki is set to begin work by March on its third plant in Mehsana district, also in Gujarat, with production to begin in 2015, it added. Maruti, controlled by Japan's Suzuki Motor Corp, is the leading producer of small cars in India. Two years ago, it produced every other new car sold in the nation. — Reuters
	Morgan Stanley to let India banking licence lapse Mumbai, January 27 Morgan Stanley intends to allow its banking licence in India to lapse as part of its changed business strategy, according to a media report. However, the Wall Street bank will continue to run its investment banking business and stay registered as a nonbanking finance company with the Reserve Bank of India, the report said, citing an unnamed senior banker. Morgan Stanley declined to comment on the report. In March 2012, it received the licence to set up a bank in the country. "It’s now planning to let the licence lapse as it does not want to tie up capital and other resources on account of a review of its strategy," a senior banker reportedly said. The licence would enable Morgan Stanley to expand its offerings to corporate banking and foreign exchange from its current services such as advising clients on takeovers. Last November, sources told Reuters that Morgan Stanley had launched the sale of its India private wealth management unit, which manages about $1 billion including loans, after entering the highly fragmented and competitive market just four years earlier. — Reuters
	SBI set to open 2nd branch in China Beijing, January 27 State Bank of India's second branch in China with a capital of $50 million, is set to open at the port city of Tianjin, close to Beijing. The new branch with capital of about 300 million yuan, will open towards the end of February, Dinesh Sharma, CEO of SBI’s Shanghai branch, told reporters here Sunday. SBI, which opened its first branch in Shanghai in 2006, has a representative office in Tianjin, from where the bulk of trade from China to the rest of the world is handled. — PTI
	BIZ TALK Spice Mobile plays the price game in smartphone wars Spice Mobile has been a low-key telecom operator but has with the right focus on planning and innovation, enabling it to raise its market share. Having launched a slew of devices, it is gearing up to compete with the likes of Samsung, Nokia, Apple and BlackBerry maker RIM in the fast growing smartphone market. T.M. Ramakrishnan, CEO (devices), S Mobility Ltd, talks to Girja Shankar Kaura about the company’s ability to deliver premium quality devices with cutting-edge technology at aggressive prices. Q: What are S Mobility’s future plans? S Mobility has shifted its focus to Android handsets during the past year. Combined with this focus on value added phones, we have also striven to concentrate our energies on premium products. Taking into account the varied demographics and the socioeconomic categories of the country, we are placing our products in all the price segments catering to the needs of the consumer. From Rs 900 to Rs 13, 000 we have products at each price point within this price segment. The products range from basic feature phones to touch phones to smartphones. While there is an increasing growth in the smartphones segment, the feature phone category still remains the most popular. While we have a strong presence in this segment, we are also focussing on the smartphones category. The overall target of the company is to sell 7 million handsets in the current fiscal, including 6 million 2G handsets from domestic sales. Q. How do you feel S Mobility is different from the competition? We continuously access market needs to provide cutting-edge product and services, and constantly seek new ways to serve our customers. Spice has always been pro-active about its product offerings and we are in constant pursuit of developing the best so that the customers feel well served and satisfied. We had launched India’s first 3D phone as well as the first-ever dual core smartphone. Spice was also the first company to launch a 2G & 3G duSecurities Transaction Taxal SIM Android phone — the Mi-350 —in India. We will continue to build upon our strengths in the future as well and that will continue to differentiate us from the rest. Q: What role has IT played in the company’s evolution? IT has been playing a key role in any business lately and is in fact an important determinant in a firm’s operational efficiency and effectiveness, making the processes user friendly. Hence, we have also leveraged IT to make our business operations efficient and user friendly. We have put in place a system wherein we can track the transactions till the end consumer and also record the details for future processes. Q. What is your current market share? We have a portfolio of more than 16 new products currently and nearly 40 products overall in the market. We are clearly among the top players in the market. We have a market share of about 4-5%. Q: In a highly competitive environment, how do you ensure constant differentiation? In a competitive environment, differentiation is the key to survival. Customers’ needs keep on evolving with time and technology. Therefore, we also need to keep up with latest and also need to be proactive about customers’ demands. Our smartphones are proving to be the best buy as they promise a splendid smart experience at affordable cost. Our smartphones are innovative and pocket friendly. This ensures the customers are getting best at a price they are comfortable with. Afterasales service is also a big differentiator for the smartphone category and to keep it aligned we have a worked out a completely different strategy in this segment. Q. What’s your plan to address the metros? The country’s metropolitan areas have witnessed the shift from feature phones to smartphones at a very fast pace. The people have become more tech savvy in metros and smartphones are the need of the hour. Spice has already forayed into smartphone category as we intend to cater to all types of customers. Our main focus will be on the top 25 cities which contribute around 60% of our smartphone sales in India. In the future also, we will keep coming with new products to provide what’s desired and what’s needed by the customers.
	Investor Guidance Tax on insurance maturity proceeds By A.N. Shanbhag Q: In the case of single premium insurance plans, I am told in some cases the maturity proceeds may be taxable. Can you throw some more light on the tax provisions that are applicable? Most agents or even brochures are silent on this point. — Juned A: Though it is generally believed that insurance policy proceeds are free of tax, as per Sec. 10(10D), if the premium payable on any insurance plan exceeds 20% of the sum assured, the proceeds cease to be exempt and instead will be fully taxable. In the case of Jeevan Aastha, the single premium will always in all cases be more than 20% of the maturity proceeds. Hence in our opinion the maturity proceeds are taxfree for the policy holder or his nominee. It would have been better if LIC had positively stated so. Q: What is STT and what is the relevant scheme of taxation of long-term and short-term gains? A: Securities Transaction Tax is payable on transactions in equities traded on a recognized stock exchange in India. There are 3 tax concessions on such transactions: (i) dividend is taxfree for the investor in every case, equities as well as all MF schemes; (ii) long-term capital gains for shares sold on recognized stock exchanges and equity based units of MF sold to the MF is exempt and therefore, it cannot be setoff against any other losses, including the carried forward losses of yesteryears. Consequently long-term capital loss is also exempt and is not available for any setoff; (iii) Short-term capital gains enjoy the concessional flat rate of tax @15%. Sec. 36 is amended to allow deduction of STT against income from such transactions only when the income from such transactions is included under the head ‘profits and gains of business or profession’.
	personal finance Analyse your insurance needs It's not enough just to buy insurance. There are many types of policies and it's just as important to make sure you've chosen the right one, especially because buying insurance is a long-term decision Deepak Mittal Since Edelweiss Tokio Life Insurance began operations, I have been trying to understand customers' needs and the ways in which we can fill them. I have met many insurance buyers over the course of the last year. The results have been an eye-opener. Here are some examples: Customer A has a 17-year-old daughter. A year ago, he bought an education plan. Customer B is a 26-year-old IT professional, new to his job. He bought a ULIP plan that requires him to invest about 30%of his monthly salary. Customer C is 48-year-old doctor with an annual income of over Rs 50 lakh and a net worth of Rs 10 crore. He has bought a savings plan. It is clear these are not the optimal insurance decisions for these people, but what exactly is the problem? The fact is that neither the buyer nor the financial advisor who sold these plans analyzed the needs of the customer. Insurance is one of the most important tools for anyone trying to secure the future for themselves and their family. But it is not enough just to buy insurance. There are many types of policies and it's just as important to make sure you have chosen the right one, especially because buying insurance is a long-term decision. The wrong policy might conflict with your financial goals and be a hindrance to your financial planning. Your insurance needs are defined by the circumstances of your life: how old you are, whether you have children, and any other responsibilities or goals that you may have. Typically, insurance needs fall under one of six categories: Protection, wealth accumulation, wealth enhancement, education funding, living with impaired health and retirement planning. Different needs take priority for different people or for the same person at different stages of his or her life. Take the examples above. Education plans are typically long-term, with premiums paid over ten years or more. They work best if bought when a child is very young, giving a parent several years to plan and fund a professional course when their child is old enough. Similarly, Customer B is new to his job, unmarried, and living with his parents. He has many years ahead of him, in which he may want to marry, start a family, and buy a house. He may not always be able to spend so much of his income on insurance. If the policy lapses, it will prove expensive. Customer C, on the other hand, has a comfortable income and a sizeable net worth. He can afford to be aggressive with his savings habits and should be looking at a wealth enhancement option which will give him better return than a savings plan. So what kind of an insurance plan should be you looking at? To decide that it is important to analyze your needs. Here is an easy guide. Income replacement/protection If your most important goal is to securing your family's wellbeing even if you are not there anymore, what you need is a protection plan. This will ensure that your family is financially secure even if you're not around to provide for them. No amount of money can make up for losing a loved one, but a good insurance plan will ensure that a grieving family doesn't need to cope with financial strain. Protection plans have no savings element and are cost-effective as they provide only life cover and no returns. Wealth accumulation A number of people want to save up money for a specific goal. It could be buying a house, staring a business or children's marriages. To make sure that you can achieve these goals when the time comes, you need to start planning and saving for them today. Savings plans let you save small amounts of money over an extended period of time, so that when the time comes for a major expenditure, you're prepared to meet it. Wealth enhancement In a world of rising prices, it is not enough just to save. High inflation means that the real value of what you can buy with your savings decreases with the passage of time. If you have a large sum of money that you want to invest, a wealth enhancement plan will ensure that your savings grow. Wealth enhancement plans are best for people who have a reasonable amount of money that they can afford to set aside. Education funding A good education costs money today and will cost more money tomorrow, but it is vital to give a child a strong foundation on which to build his or her future. To ensure that financial considerations do not prevent their children from attending the best colleges possible and fulfilling their dreams, parents must start planning while the children are still young. Often, a premium waiver is a feature of education plans, ensuring that premiums are waived and the future benefit is protected in the event of the premature death of the child's parent or guardian. Education plans are a great opportunity for parents to save for their children. Retirement planning Everyone looks forward to the day they can finally go on that world tour or spend more time with the family. You might not be going to work after you retire, but that does not mean that, with careful planning, you can't have a regular income that is more than sufficient to maintain your lifestyle. The author is CEO of Edelweiss Tokio Life Insurance. The views expressed in this article are his own