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Gold gaining ground as stocks lose lustre: Experts
BIZ TALK
Tax Advice |
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SEBI set for major overhaul of role, vision
New guidelines on cards for independent directors at PSUs
Personal finance
Asset allocation through mutual funds
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Gold gaining ground as stocks lose lustre: Experts
New Delhi, August 4 Gold prices are already moving fast to the key level of Rs 30,000 per 10 gms ahead of the busy marriage and festival season. The rates in the national capital on Friday rose by Rs 450 to Rs 28,800 per 10 gms. Market experts also noted that global rates, which profoundly influence domestic prices, are on firming trend, too. The translational cost due to depreciation of rupee will also make the precious metal dearer, they added. To arrest steady fall in rupee, earlier this month the RBI under the liquidity adjustment facility had made MSF rate 300 basis points above the policy repo rate, resulting in bank rate raising to 10.25 per cent. RBI measures like a hiked MSF (Marginal Standing Facility) had "triggered a series of events impacting the bottom line of safe investors - country's core investment populace", experts said, adding that investors are likely to park their money in gold now, considered safer than stocks and bonds. "Overnight, investors in safe havens lost 5-7 per cent across the board. In an already faltering economy, this move may have triggered an event that has been blamed for falling rupee - our appetite for gold. The fallout of this action may push Indians to the only option they understand - gobbling gold," said Samar Vijay, Director of InvestCare. The fall in the markets during the week has come about despite good gains in global markets, indicating the pre-dominance of domestic concerns, said Dipen Shah, head of Kotak Securities. Dragged down by a weak rupee and FII selling, the BSE benchmark Sensex closed with 153-point loss at 19,164.02, on Friday, registering losses for eight straight days. The Sensex had lost a massive 1,138.11 points, or 5.61 per cent, in eight days. "Stocks have seen a bad time recently, so is with bond market. On the other hand, there is a huge demand for gold in the domestic market, indicating that prices could go up sharply," said CP Krishnan, whole-time director, Geojit Comtrade. If global gold rates go above $1340 per ounce, they could rally to $1,500 levels soon, impacting domestic gold prices, he added. Gold in New York rose by $4.60 to $1,313.50 an ounce. "Investors are left with no plausible avenues. They are not likely to invest in equities because it is considered risky. Investing in commodities is too complex for simple investors. Real estate may just be too overwhelming because of huge entry ticket size," Vijay said. Investors are possibly scared of bonds too considering the news of RBI contemplating rate hike. Indians may revert to what they know the best - buy gold, the only asset they understand, and to certain extend has delivered the desired result during uncertain time, he added.
— PTI Some Triggers
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Hero Cycles eyes double-digit growth
Hero Cycles, the world’s largest manufacturer of bicycles, is looking at a double-digit growth this year on the back of expansion in capacity, technology upgrade and focus on high-end segment. Pankaj Munjal, co-chairman and managing director, Hero Cycles, talks to Sanjeev Sharma about how cycling is emerging as a recreational activity and increasing penetration in the rural areas through micro finance collaborations. Q: What are the investment plans for Hero Cycles? A: Investments are majorly lined up in the areas of bicycle technology upgrade, establishment of new plants (Bihar), increasing geographical footprint and investment fuelled by high growth in premium bicycles segment. Q: What are the growth targets since last year was flat? A: Hero Cycles is targeting a robust two-digit growth this year, riding on plans to expand manufacturing, producing bicycles of latest technology and focusing on the high-end segment. The growth of the cycle industry was stagnant in 2012-13, but this year Hero Cycles intends to grow by 10 to 15% primarily focusing on the fancy segment. We are working on ways to drive up demand in the rural areas and increase penetration in the urban areas. The primary growth drivers of the company would be driving rural demand through micro finance tie-ups with major Non-Banking Financial Companies (NBFC) and driving greater penetration in the urban areas through new launches and aggressive media campaigns. Q: What is the strategy for exports? A: There is a two-pronged exports strategy — high growth in established markets and penetration in new markets. We are experiencing a great success in both and exports, anyway, is going to be a high growth segment for the entire industry. Q: How will Hero Cycles leverage the lifestyle segment? A: The premium high-end segment is an area we are looking to tap in a big way. Last year, Hero Cycles entered the high-end bicycles segment with the launch of their brand ‘Urban Trail’. Urban trail, our premium range, will continue to focus on the performance of the biking segment which is growing in India. Since a lot of people are taking up cycling as a recreational activity, this segment is no doubt growing increasingly important. The demand in this segment is for technology driven world-class cycles and to meet this, we are making sure a lot of emphasis is given to innovation and engineering designs. Hero Cycles recently opened its flagship retail store Hero ONE in Delhi. The company plans to launch 200 similar stores across the country by the end of 2014 in metros and other tier-II cities. By launching our own retail franchises, we are trying to revolutionise the face of cycle retail in India and bring it at par with other lifestyle products. Q: What are your plans for international markets and tie-ups? A: We are evaluating alliances with global players. The key to Hero Cycles’ future plans is an increasing emphasis on engineering and design set-up. We are not only planning to indigenise production of key components of manufacturing but also increase emphasis on inducting latest technology in production. For this, we are looking at tie-ups with international players. We have set up a new aluminium plant facility in Ghaziabad, through which we will cater to international market and even do contract manufacturing for international brands. The markets which are under focus are Africa, parts of Europe and South-East Asia. Q: What is the outlook for the industry? A: The industry is looking to pick up growth after a year of decline. Lots of design and innovation efforts would be undertaken to generate market pull. Optimisation of product portfolio to focus on high-growth segments will be required for growth. Overall, the industry is optimistic of going back to the growth curve it was following before this temporary stagnation.
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Interest income from fixed deposits taxable
by SC Vasudeva Q. I have a query regarding filing of IT return. My details are as under: a) I am an employee of a market committee in Punjab (an autonomous government body). What is the employer category in my case? (PSU or others) b) I have earned an interest of Rs 2,925 on fixed deposits. Would this be counted as income in financial year 2012-13? — Pritpal Singh A. a) I presume a Market Committee is formed under the State Act. If that is so, it will not be considered a public sector undertaking. d) Interest earned on a fixed deposit account is taxable. Q. I am a senior citizen and have income from pension and bank interest only. I understand that I need not pay advance tax and can pay it before filing my I-T return. Will this payment be treated as self-assessment tax? — Jagdish Mittar Wasdev A. You are required to pay the due amount of tax as self-assessment tax and have to give the information in respect of such deposit in the relevant column of return which can now be filed by August 5. You can also file return up to March 31, 2014, without any penalty. Q. My date of birth is May 6, 1933. I had attained the age of 80 years on May 6, 2013. Kindly advise me on the following points: a) I had opened an account in my name under the National Savings Scheme, 1987. Now, I want to close it and withdraw the balance. Kindly calculate my tax liability. My account balance is around Rs 7 lakh. b) What will be my tax liability for the financial year 2013-14? — Dr ML Sharma A. You have not indicated in the query whether you have any other income except the amount of withdrawal from your NSS account. Presuming that your total income was Rs 7 lakh only, you will be liable to pay an income tax of Rs 40,000 plus an education cess of 3% thereon. Accordingly, your total tax liability would be Rs 41,200. Q. My PPF account got matured in the year 2010. I got it extended for a block of 5 years with contribution through a PPF agent. I asked him to do this with Form ‘H’. He told me firmly that no such form is required in Post Offices. The Post Office has also accepted my continuation request without insisting on Form ‘H’. With this, I presumed that everything is in order. While going through your column, it appears that Form ‘H’ is a must. I made efforts to get Form ‘H’ in about three post offices but to no avail. I don’t know how to go about this at this stage. Kindly advise on the following: a) Is Form ‘H’ not required in a post office? b) In the absence of Form ‘H’, can I give my intention in the form of an application at this stage. c) If possible, kindly indicate the format of Form ‘H’ for the use of subscribers like me. — Hardeep Singh A. a) Form ‘H’ is prescribed by the Public Provident Fund Scheme, 1968, and therefore should be applicable to a PPF account whether maintained with a post office or with a bank. b) In case the post office has accepted your contribution for the extended period and Form ‘H’ has not been sought from you, you need not worry as the post office has granted due extension to you. c) It is not possible to give the pro forma of Form ‘ H’ in the reply to your query on account of space constraint. However, the same is contained in Public Provident Fund Scheme, 1968, and can be viewed on the Internet.
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SEBI set for major overhaul of role, vision
New Delhi, August 4 To reach this goal, the Securities and Exchange Board of India (Sebi) is considering a 'triple-A approach' of spreading awareness among investors, promoting appropriate products and ensuring proper audit of the marketplace. This is one of the key suggestions made by an independent consultant for an overhaul of SEBI’s functions, role, structure and vision, a senior official said. The proposals, which have been made after extensive consultations with top officials from SEBI, finance ministry, RBI, IRDA and large market intermediaries, will take the final shape after incorporating the suggestions made by the board of capital markets regulator. After consulting the internal and external stakeholders, the global consultancy major, Oliver Wyman, has suggested eight key goals for SEBI over the next five years, the top-most being 'increasing mobilisation of household savings into capital markets'. The other goals identified in this project are building a diversified and balanced investor base in the country, developing viable alternatives to bank credit, enhancing ability to prevent and respond to crises, empowerment o investors and ensuring full trust and confidence of investors in the securities market. Besides, it also wants SEBI to become a 'centre of excellence' for conducting supervision functions and achieve best in class efficiency, knowledge institution and employer of choice status. A 15-point agenda has also been suggested for SEBI to achieve these eight goals. According to officials, some of the recommended measures are either already in place or are in the advanced stages of implementation, while others might be adopted in due course. It has been suggested that SEBI should pursue the government and other regulators to address the gaps in the existing setup with proposals like supervision of all investment schemes through a single body and creation of a separate regulator for auditors.
— PTI Identified goals
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New guidelines on cards for independent directors at PSUs
New Delhi, August 4 According to a government official, the decision has been taken amid reports that independent directors were unable to give adequate time to understand issues pertaining to the PSU concerned and "were not aware of the developments taking place in the company". "Therefore, the Appointments Committee of the Cabinet (ACC) has approved the proposal for laying down a limit of not more than 10 private companies (with the existing ceiling of not more than 3 for CPSEs remaining unchanged) for non-official director," the
official said. The limit would be applicable for an individual being considered for being appointed as a non-official director in a in a
CPSE, he added. The Department of Public Enterprises (DPE) has defined independent directors' roles and responsibilities who are being appointed on boards
of CPSEs. Under the norms, non-official directors should have a candid view of the faults or shortcomings of company's plans and accordingly suggest measures for improvement. The changes in guidelines for appointment as non-official directors at
public sector entities also comes at a time when there are rising concerns over corporate governance practices in the private
sector. — PTI |
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Insure your home from the wrath of monsoons
Sanjay Datta
The monsoon fury has been at its peak this year. It has already wreaked havoc in the North and Eastern states of India, especially Uttarakhand and Assam, leading to floods and landslides. The 'killer rains' have claimed innumerable lives and damaged properties and valuable assets. In urban locations such as Mumbai, Chennai and Secunderabad, the rains have led to building collapses at several places.
A lot has already been written about the need to avail products like home insurance, personal accident insurance etc. However, there still remains a gap in terms of making people aware about the conditions under which an insurance policy would be applicable and the exclusions thereof. Similarly, one needs to be aware about the covers that such policies provide. Take the case of home insurance. It is extremely important to know and avail the right home insurance policy to ensure that your most-valued protection is well protected. A comprehensive policy will offer financial protection to your house in case of natural calamities or acts of God. This would include instances of lightning, storm, cyclone, typhoon, tempest, hurricane, tornado, flood and inundation, subsidence, landslide and rockslide and earthquake. In case of damage to the structure due to any of these perils and instances like fire, your home insurance policy would compensate for the expenses incurred on the repair or reconstruction of the same.
In addition to providing cover for the structure of the house, a home insurance policy also provides cover for the content. In general, these policies cover the contents under four sections i.e. furniture fixture and fittings; jewellery and precious stones, durables and electronic items; and clothing, utensils and miscellaneous items. Even if you have rented out the property, you will continue to enjoy the benefit of cover for structure and the contents that belong to you. Do note that your tenant would need to separately avail of a home insurance policy to cover his own belongings. Apart from knowing the coverage spectrum, it is equally important to note the claim settlement process. There are certain documents that have to be submitted while claiming for loss of content. Depending on the type of claim, you would need to submit some of the following documents: First Information Report, Investigation Report from the designated police station, Fire Brigade report, invoice of owned articles, bill of repairers etc. Specifically with respect to the content, it is advisable to prepare an inventory list (detailed list, videos or photographs of the valuables) and register the same with the insurer at the time of policy purchase to ensure a quick and hassle-free claim settlement. Your policy must also specify the events when a cover is not applicable. In general, policies do not provide cover in case of loss and destruction due to war-like situations, wear and tear, loss or damage due to radiation and radioactive or nuclear activities, damage due to pollution or contamination, electrical and mechanical breakdown (unless specifically covered) and wilful destruction by the policy purchaser or his/her domestic staff. Similarly, illegal dwellings and 'kutcha' construction are not covered by most policies. As real estate prices grow astronomically, a home is and will continue to be the most aspired possession. With most individuals opting for a home loan, loss of property due to natural calamities can have a significant impact on one's resources given the home loan burden. A home insurance policy thus becomes an extremely critical cover to mitigate the risks associated with nature's fury. The author is Head, Underwriting and Claims, ICICI Lombard General Insurance. The views expressed in this article are his own
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Asset allocation through mutual funds
For long, Indian saving habits have been predisposed in favour of largely non-financial assets, namely gold and real estate. Within the ambit of financial savings, the preference has largely been towards deposits, insurance, currency holdings, pension and provident funds, govt claims and share/debentures. This is in significant contrast with the trend in a developed economy like the US, or a peer society like China, wherein the preponderance is largely towards shares, mutual funds and bonds etc. Much of the Indian retail investments still tend to be arbitrary; inadequately researched, and/or, unappreciative of the actual investment horizon and expectations. It is, therefore, essential for Indian investors and financial professionals, alike, that they come to appreciate the necessity of methodical approach to investments. The basic idea of investments is to deploy a saved corpus into such a medium that can enable reasonable income and/or accumulation without minimal intervention or effort from the investor. This, while also ensuring that such an investment also factors-in the risk appetite of the investor. Most importantly, such an investment approach must also build-in the restrictions (or opportunities) placed by the investment horizon of the investor. Mutual funds play a significant role in addressing these requirements. Mutual fund, in its essential detail, is a pass-through vehicle through which an investor can invest in professionally managed portfolio of disparate asset classes. Among the key benefits of investment in a mutual fund is the potential of risk-adjusted return, objective-driven investment, professional portfolio management service, competitive investment costs, and potential tax benefits. More crucially, through mutual funds, an investor can invest in asset class portfolios comprising domestic equities, gilt, corporate bonds, money market instruments, gold, overseas equities, etc. These asset classes may be constituents in a mutual fund portfolio in varying ratios and combinations; and are managed within the broad framework of legally regulated investment objectives and investment strategies. Thus, the investor's allocation between varying asset classes (by means of these funds), can be dependent on investors' own unique circumstances and requirements. The choice herein may be dependent on the fair compatibility of investment objective, time horizon and the overall risk profile of the investor. The idea behind employing asset allocation as an investment strategy through mutual funds evolves from the fact that various asset classes behave differently, and have disparate influencing factors at any given point of time. In other words, the assets involved tend to have a weak to incidental correlation among each other, and therefore, hedge the concentration risk of the overall portfolio. To carry the idea forward, the asset allocation reduces the overall risk of the portfolio of the investor, since the volatility and the return impact of the underlying asset is limited to the extent of its exposure. Thus, it becomes statistically possible to estimate, and to strive, to reduce the portfolio volatility. This, while maintaining the prudent risk exposure also provides the potential for relatively high returns. The author is Head, Fixed Income & Product, Kotak Mutual Fund. The views expressed in this article are personal |
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OBC seeks capital support from govt Panasonic plan 4G services in Delhi NTPC to raise over
Rs 1 lakh crore Central Bank CMD
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Gold prices are likely to rise sharply in the short-term as RBI’s recent liquidity tightening measures have made other investment options like stock and bonds less attractive, experts have said.
Gold prices are already moving fast to the key level of Rs 30,000 per 10 gms
ahead of the busy marriage and festival season. The rates in the national
capital on Friday rose by Rs 450 to Rs 28,800 per 10 gms.
Hero Cycles, the world’s largest manufacturer of bicycles, is looking at a double-digit growth this year on the back of expansion in capacity, technology upgrade and focus on high-end segment. Pankaj Munjal
(pic), co-chairman and managing director, Hero Cycles, talks to Sanjeev Sharma about how cycling is emerging as a recreational activity and increasing penetration in the rural areas through micro finance collaborations.
In the past few years, occurrence of natural calamities has increased significantly not just across the world but in India as well. Incidents of torrential rains, floods, earthquake are being heard of at regular frequency. Amid this scenario, it is extremely important that one insures important assets and the lives of self and dependents.
In an extraordinarily complicated environment, the challenge of ensuring a long-standing financial security, freedom and prosperity still continues to be determined by two invariable fundamentals - 'optimal savings' and 'prudent investments'.
