SUCHETA DALAL ON:

ON THE DIGITAL HIGHWAY WHY THE STRIKE AGAINST BLACK

WITHOUT A SEAT BELT MONEY FALTERED SO QUICKLY
Personal Finance Magazine 9 December-22 December 2016 Rs 45

Pages 68 (SUBSCRIBER COPY NOT FOR RESALE) www.moneylife.in

BUYING
LIFE INSURANCE
RIGHT
How to buy life insurance correctly
for safeguarding your assets and
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Cover Page_282.indd 1 02-12-2016 18:55:51

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 ISSUE CONTENTS
9-22 Dec 2016

Buying Life Insurance Right

T erm life insurance is a must-have cover

for those with dependents. The product
is easy to understand and meets your life
insurance needs. New online term plans are
launched with lower premium, higher term
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30 Cover Story
not necessarily help you. A plain-vanilla term
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Sucheta Dalal, in her Different Strokes even when you are not there. Raj Pradhan offers key lessons for
column, analyses the impact of the buying life insurance properly for safeguarding your assets
demonetisation exercise and why a decision

12 Your Money
that found a huge support among ordinary
Indians is now faltering and may have missed
the target. In her Crosshairs column, she talks Rs1 Crore Health Insurance Policy Soon
about the prime ministers effort to push India Benami Property Owners under Watch by I-T
to use less cash. However, there are issues with Department
Jitendra Jain of Kamlashri Builders Held
the digital worldwe need better protection, RBI Counters Will Allow Exchange of the Demonetised
effective grievance redress, financial literacy Currency Notes
and more incentives to switch to electronic Realty Law Finalised in Delhi
payments. EPFO Pensioners Are Required To Submit Life Certificate
With our popular columnist R Balakrishnan by 15th January
also analysing the impact of demonetisation
on various important sections of the economy
and businesses, we have a whole package on an
event that has shaken the country.
We have been exploring momentum in
14 MONEYLIFE

QUIZ
stocks, for some months now. Momentum
strategies work when the market is trending
higher or if there is a correction, as is
happening now. I have listed a few stocks that 18 On the Digital Highway without a Seat Belt
seem to have bucked the market downtrend
and headed higher. Those interested can explore
these strong stocks.
As always, please do write to us with
comments on the published articles and about
20 Different Strokes
Why the Strike against Black Money Faltered

what you would like to read.

Disclaimer: Moneylife has a policy of not allowing its editorial staff to
Debashis Basu buy and sell stocks that are written about in the magazine. All personal
transactions in individual stocks are subjected to internal disclosure rules.
MONEYLIFE | 9-22 Dec 2016 | 4

Content.indd 2 02-12-2016 17:59:00

Advertisements.indd 3 30-11-2016 19:58:26
 CONTENTS
FUND POINTERS INSURANCE HEALTH

22 Time for Pharma &

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58 How
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TAX / FIXED INCOME
YOU BE THE JUDGE

40 Shift from Bank FDs to

Liquid/ Ultra-short-term 59 Smart Man,
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24 Smart Money
25
Demonetisation ML FOUNDATION EVENTS
& Stocks

44 Stock Watch G-Sec Yields Decline Steeply

Transformers
& Rectifiers:
Getting
TAX HELPLINE 60 Domonetisation:
You Need To Know
What
Transformed?
50 Queries at Moneylife
Foundations Tax Helpline BEYOND MONEY
Bodal
Chemicals:
Strong Growth 66 Tribals Benefit from
Scientific Approach and
Spiritual Outlook
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IFB Agro:
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52 Skyscanner:
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Cozi: The Ultimate Family
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Apcotex: Swipes: A Better To-do App
Short-term
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LEGALLY SPEAKING DEPARTMENTS

Market Trend: Slow Realisation Readers Response ........... 8
for the Bulls
54 Open Offer, Once Made,
Cant Be Withdrawn
Book Review ....................62
Money Facts ....................64

Content.indd 4 02-12-2016 17:59:29

Advertisements.indd 5 01-12-2016 20:42:09
 Volume 11, Issue 22
9 December22 December 2016
Debashis Basu
Editor & Publisher
editor@moneylife.in
Sucheta Dalal
Managing Editor
sucheta@moneylife.in
Editorial Consultant
Dr Nita Mukherjee
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Total no of pages - 68, Including Covers
RNI No: MAHENG/2006/16653
MONEYLIFE | 9-22 Dec 2016 | 8
Letters.indd 2
SAD HAPPENINGS AT THE HOUSE
OF TATAS: ML BHAKTA
I compliment Debashis Basu and Sucheta Dalal
for their articles in Moneylife on the recent sad
happenings at the house of Tatas. The articles
provide a fair and unbiased review of the known
Mutual Fund investments
facts and an independent assessment of the exact are subject to market risks,
read all scheme related
situation. documents carefully.
I am not a friend or a foe of Ratan Tata or Cyrus
Mistry. Even as a professional, I do not have
any association or relationship with Tata group Write to
of companies, except that I served as a director the Editor!
of one of the small Tata group companies, Hitech
Drilling, for a brief period, as a nominee director
WIN
a prize
on behalf of Schlumberger which had a stake in
the company. However, as a corporate lawyer and
a person who has served on the boards of many
Indian, and some multinational, companies as an
independent director, I have keenly observed the
Tata-Mistry episode. The purpose of this letter is
to share with the readers of Moneylife how I, as
an outside observer, view the matter.
It is apparent that after taking over as the
chairman of Tata Sons, Cyrus Mistry went
deeper into the workings of the various group
companies and started taking remedial action on the
decisions taken by Ratan Tata which, to him, looked
to be bad and un-businesslike. Corus, which was acquired d iin
uired 2007,
n 20
200707
continued to be in bad shape and could not be turned around in spite
of all efforts. Cyrus Mistry decided to stop the daily losses suffered
by Tata Steel and announced liquidation of assets. It is reliably learnt
that the acquisition of Pierre Hotel in USA was done by Ratan Tata at
a very high value against the advice of some of the senior executives
of Indian Hotels. After realising the loss-making investment done by
Ratan Tata, Cyrus Mistry seems to have decided to sell off the Hotel.
It is understood that one personal friend of Ratan Tata was made a
highly paid executive at Tata Power without being required to render
29-11-2016 15:56:44
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 LETTERS

Why a Public Execution?

the
Best
letter T his is with regard to the
series of articles in Moneylife
on Ratan Tata asking Cyrus
investigation. But,
I am pretty sure,
the Tata brand shall Mutual Fund investments
are subject to market risks,
read all scheme related
Mistry to step down. Here is a never, ever get the documents carefully.
quote from the Mint newspaper cherished coveted
(on its website):
Cyrus was fired in October,
position of excellent
brand in my lifetime. Congratulations
his contract ends in April. They could have simply Why? If the Tata group Sharad Shah
said look your contract ends in April and its not can do this to the single
working out, so lets figure out a way for you to step largest shareholder
YOU WIN A
PERSONALISED
down. Instead, what they did is public execution and and its own chosen CLOCK
humiliated a gentleman who didnt deserve it. chairman, I am sure,
As an investor in mutual funds of Tatas and in TCS they are capable
shares, I would like to state: of going very far
1) WISDOM: Better wisdom should have prevailed in playing devils
upon all the persons involved in this decision. Any games in their
organisation, small or big, listed or otherwise, can hearts & minds.
get simple counsel to just buy time or grace from the Earlier, I have Sharad Shah

presiding chairman of the organisation. If you cant heard from a very

buy either, you can always persuade the chairman to
stay till the end of the contract with least damage to
all stakeholders. But, alas!
2) PATIENCE: Patience is called a virtue. One can
really see, feel and deeply appreciate it is a virtue,
in the light of the saga at Tata. An organisation that
has a history of 100+ years did not have patience
of five months, for its chosen chairman. And, on
top of it, I am sure, Tatas are not going to get a
reasonable person to wear the crown before that
time, i.e., before end of FY16-17, anyway. So, why
this hurry? Sad, really, sad!
3) FAIR & JUST: I personally think, Tatas are not
fair & just to the outgoing chairman, let alone
to all stakeholders. How & why? After showing
the door to the chairman, Tatas have failed to give
accurate, correct and reasonable account of why they
had to take the precipitous decision, on the spot, at
the board meeting. As far as all other stakeholders
(government., media, shareholders, vendors,
customers, investors, etc) are concerned, we need to
know real & honest truth before we take economic
decisions. They (Tatas themselves) are destroying our
faith in the Tata brand. Kalyug! Really, bad omen!
4) BRAND: I really dont know what is going on
inside Bombay House, other than the media blitz
that is more on guess, opinions & conjectures
rather than facts, figures (data), analysis &
senior working
professional
(MD) in Tata
group, that they
are not as ethical as
I was led to believe. I
did not dig into it and here we are! Bad. Really bad!
5) TRUTH: Satyamevjayate. In the first bench of the
high court, I have personally seen how this emblem
of our faith gets tossed around in the name of
justice by lawyers, judges, etc.
Now, you can see how casually truth is sidelined
in the biggest corporate conglomerate of India,
boasting of being a home-grown multinational
corporation. All agencies of overnment and the
people are sitting on the sidelines watching the
game of thrones instead of seeking truth, not for
any reason other than, for the sake of it! But, alas!
Now, as a citizen of this country, personally, I feel,
Mr Tata has a lot more to answer for than
Mr Mistry.
But, unfortunately, after all wars, history is written
by winner!
India is not a great country and is becoming
a zombie state, on the way down every day,
year after year, decade after decade, sadly after
independence!
Sharad Shah, online comment

MONEYLIFE | 9-22 Dec 2016 | 10

Letters.indd 4 29-11-2016 15:57:25

 LETTERS

any services and Cyrus Mistry got him dismissed. It
seems that these and similar decisions taken by Cyrus
Mistry to reorganise the group companies were not
liked by Ratan Tata and, hence, the removal.
As regards the working of Cyrus Mistry as the
chairman of various group companies, the law requires
the board, and/or the independent directors group
and/or the nomination and remuneration committee
of every public company, to make an assessment of
the performance of the companys chairman annually.
I am sure that all the public companies must have
clearly recorded such assessments for the period since
Cyrus Mistry was appointed chairman and it should be
interesting to examine the records, to
ascertain the reality.
It is shocking that with a view to serve
their own purpose, Ratan Tata and his
team have thought it fit to raise doubts
about the independence of eminent
independent directors like Deepak Parekh,
Keki Dadiseth, Nadir Godrej and even
gone to the extent of maligning a well-
known industrialist like Nusli Wadia who
has been associated with the group even
before Ratan Tata came on the scene.
The suddenness and the manner in which
Cyrus Mistry has been removed do not leave
much to be said. This is a distinct case where
SEBI (Securities and Exchange Board of India) can
play a role and the importance of Tata group in the
corporate sector of the country calls for intervention
and action by SEBI.
Apart from holding of Tata Sons in various group
companies, the remaining shareholders are financial
institutions, FIIs (foreign institutional investors),
mutual funds and small public shareholders. It will be
unfair to treat Tata Sons, which is fully controlled by
the Trusts chaired by Ratan Tata, as a non-interested
shareholder of the group companies.
In fairness, the decisionwhether Cyrus Mistry
should continue as the chairman of various group
companiesshould be left to the other shareholders
(excluding Tata Sons). If SEBI is permitted to act
without being influenced by Ratan Tata, and without
any political interference, the voting of Tata Sons at the
EGMs (extraordinary general meetings) proposed for
removal of Cyrus Mistry should be barred. Let us see
who wins, David or Goliath.
ML Bhakta, senior partner, Kanga & Co, by email
GOOD SENSE SHOULD PREVAIL
I have read the Moneylife articles on the feud between
the two giant industrialists in Tata Sons and it is,
indeed, unfortunate that it has happened
between the two Parsi families which
have great reputation globally. If one
were to go through the history of Parsis
in India, one will come across a very
well-known event when they landed
the shores of Sanjan (Gujarat). They
promised the then rulers of Sajan that
they would spread sweet fragrance
throughout the country. Just as sugar
mixes with milk, they would maintain
harmony and peace and spread sweet
fragrance. The Parsi community
is known for its patriotism,
philanthropy and business skills.
Jamsetji Tata, the pioneer who build the Tata
empire, believed in three cardinal principles: good
thoughts, good words and good deeds. However, any
immediate truce seems remote. But a serious attempt
has to be made to resolve the present crisis which will
impact all the stakeholders globally and, particularly,
small retail investors who have immense faith and
confidence in good governance. The situation is quite
similar to what prevailed in the case of the Ambani
brothers who, ultimately, chose the path of a good
arbitrator and resolved the crisis amicably. Hope good
sense prevails, for the betterment of the countrys
economy.
Ramesh Kapadia, by email

Letters:
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11 | 9-22 Dec 2016 | MONEYLIFE

Letters.indd 5 29-11-2016 15:58:01

 Your Money
MEDICLAIM TAX

Benami Property Owners

Rs1 Crore Health Insurance Policy Soon under Watch by I-T
Department
N ew India Assurance Company
Ltd said it has formulated a
health insurance scheme for high
up to Rs1 crore and will include
many advanced features, besides
having complete protection to T he income-tax (I-T) department has
instructed its officials to clamp down
net-worth individuals with a sum policyholders and family, in any on people having benami properties
insured of up to Rs1 crore. It was eventuality. and question those found depositing
awaiting The banned currency notes in banks in large
approval of insurer has amounts without known sources of
the Insurance also made income.
Regulatory changes to its The newly enforced Benami
and Mediclaim Property Transactions Act carries a
Development 2012 product penalty and imprisonment of up to seven
Authority of by removing years. The I-T department is responsible
India (IRDAI) some of the for enforcing the Act and attachment of
for the deficiencies. properties under it. Under the Benami
launch. This is Property Transactions Act, a taxman
New India expected to can confiscate and prosecute both the
Assurance be rolled out depositor and the person whose illegal
chairman- in three to money he/ she adjusted. The person
cum- four months who deposits old currency in the bank
managing director G Srinivasan and the improved product is also account shall be treated as beneficial
told reporters, The sum insured awaiting IRDAIs approval, said owner and the person in whose bank
on this new product could go Srinivasan. account it has been deposited shall
be categorised under this law as a
benamidar, an I-T department official
REAL ESTATE said.

Jitendra Jain of Kamlashri Builders Held BANKING

RBI Counters Will Allow

T he economic oences wing (EOW) of Mumbai police arrested 37-year-old
Jitendra Jain of Kamlashri Builders. The Bombay High Court (BHC) had directed
the EOW to investigate the fabricated commencement certificate (CC) till 17th
floor for the building called
Shimmer. The complaint accused
Mr Jain of criminal conspiracy,
forgery and cheating alleging
that he also failed to give flats to
buyers, despite collecting over
Rs60 crore from them since 2009.
After buyers moved the BHC, the
civic body informed the Court
that the CC was till the fifth floor
while its former architect said it
was only till the stilt level. Mr Jain
cheated buyers by falsely representing that he had permission to build beyond the
fifth floor. He sold two flats to more than one buyer each, according to the EOW.
Exchange of the Demonetised
Currency Notes
R eserve Bank of India (RBI) said
that it will exchange old currency
notes of Rs500 and Rs1,000 at their
counters even after it disallowed banks
from exchanging old notes at their
counters. RBI has not specified until
what date the exchange facility would be
available at their counters. RBI has 19
exchange counters across India where
it is exchanging old invalid notes since
10th November. RBIs notification said
that exchange facility will be available at
their counter up to the current limits per
person.

MONEYLIFE | 9-22 Dec 2016 | 12

Your Money.indd 2 02-12-2016 18:02:08

 MONEYLIFE
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 Your Money
REAL ESTATE RETIREMENT

Realty Law Finalised in Delhi EPFO Pensioners Are

T he urban development ministry has
finalised the rules to make the Real
Estate (Regulation and Development) Act
operational in the city of Delhi.
Parliament had cleared the
realty law in March and states
and Union Territories were
given six months to notify
the rules. The vice-chairman
of the Delhi Development
Authority has been designated
as the real estate regulator. While
registering with the regulator, developers
of ongoing projects will have to make
public the original sanctioned plans with
specifications as well as changes made
later, the total amount collected from
allottees and the money that has been used
already. Within three months
of applying for registration of a
project, the developer will have
to deposit 70% of the unused
portion of the amount collected
in a separate bank account for
ensuring completion of ongoing
projects. The registration fee
for realty projects has been reduced to Rs5
per sq mtr for up to 1,000 sq mtr area and
Rs10 per sq mtr beyond this limit, subject
to a maximum of Rs50 lakh per project.
Required To Submit Life
Certificate by 15th January
T he Employees Provident Fund
Organisation (EPFO) has informed its
120+ field offices that the last date for
submission of life certificate by pensioners
is extended up to 15 January 2017, a
senior official told news agencies. In case
pensioners dont submit their life certificate,
their pension is stopped. EPFO accepts life
certificate through Jeevan Pramaan software
application through mobile phones. Besides,
the pensioners can use over 200,000
common service centres.

Moneylife

MONEYLIFE
Quiz no

247
QUIZ Answer
Correctly! Win
Another quiz to tease your brain. The answers are in a personalised
sed
this very issue. The winner will be chosen by a lucky clock with an Francis F Fernandes

draw from correct entries and answers published in the Mutual Fund investmentnt
investments are quote!
issue dated 19 January 2017. Send in your answers to subject to market risks,
read all scheme related
quiz@moneylife.in with the Quiz no., name, address & documents carefully.
telephone number before 28 December 2016.
1. According to the Moneylife analysis of, how sector mutual 5. How many times have the average returns for pharmaceutical
fund (MF) schemes, many times in 12 five-year periods sector MF schemes been less than 15% in a five-year period?
have the pharmaceutical sector MF schemes outperformed a. never b. once
the information technology sector MF schemes? c. five times d. seven times
a. eight times b. four times
c. twice d. once 6. What was the lowest return by an information technology
sector MF scheme in a particular five-year period?
2. What is meant by inter alia? a. -2.32% b. 1.55%
a. Internal alliance b. International alliance c. 2.32% d. 5.41%
c. Alien from Internet d. Among other things

3. When was SEWA-Rural formed? 7. What was the yield of 10-year G-Sec on 25 November 2016?
a. 26 October 1980 b. 26 November 1985 a. 6.05% b. 6.23%
c. 2 October 1988 d. 1 January 2000 c. 6.77% d. 7.08%

4. What is the estimated number of downloads of the popular 8. Which bank installed its first cash machine on 27 June 1967
app Skyscanner? in north London?
a. 10 million b. 15 million a. Barclays Bank b. Standard Chartered Bank
c. 30 million d. 50 million c. Citibank N.A. d. Bank of England?

In all, 13 readers got all the answers right last time. The answers to Moneylife Quiz-245 are: 1- a. William Bernstein
The winner of Quiz-245 is Sudesh Kumar Roy from 2- c. 7-10 years 3- d. Ahmednagar 4- d. German stock market
Hyderabad. Congrats! You win a personalised clock 5- d. Rs845 crore 6- c. 1982 7- a. 1,200 metric tonnes per annum
with an investment quote! 8- c. Singapore

MONEYLIFE | 9-22 Dec 2016 | 14

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 www.moneylife.in
News & views with a big dierence

Demonetisation Impact: absolutely no intermediate denomination

Decoding the note
shortage
Starting 5th December 2016, the
Reserve Bank of India (RBI)s presses will
start printing the new Rs500 denomination
currency, after stopping the print run of
Rs2,000 denomination at around 1,900
million (190 crore) pieces.
The decision is a recognition of the huge mess up in
anticipating currency requirements and the blunder in failing to
recognise that people cannot possibly be asked to manage with
between Rs100 and Rs2,000 notes. The
blame for this has to lie squarely at the
doors of RBI which is responsible for
currency management and for advising the
government on preparedness. They are
also responsible for what turned out to be
a deadly blunder in printing and reducing
the size of the currency, thus rendering over
220,000 ATMs useless at a crucial time.
These ATMs have not been fully recalibrated as yet, despite a
massive team being pressed into action. The function is headed by
one deputy governor of RBI, who also heads RBIs wholly-owned
subsidiary the Bharatiya Reserve Bank Note Mudran Pvt Ltd

Demonetisation: Implementation is Demonetisation: Govt needs to give

highly anti-poor, says
Dr KC Chakrabarty
In an interview with Moneylife, Dr KC Chakrabarty,
former deputy governor of the Reserve Bank of
India, gave us his no-nonsense views on how to
tackle the issues raised by demonetisation of
currency
incentives for digital transactions
Following the demonetisation drive, the number
of digital transactions is going up. However, in
value terms per transaction, it is still very low
and the Indian government should come up with
a detailed list of incentives to popularise digital
transactions, says a research report

Dont pre-pone Taxes; scrap the ICDS
standards, appeal CAs
The Bombay Chartered Accountants Society
(BCAS) has requested the finance minister, Arun
Jaitley, to scrap the Income Computation and
Disclosure Standards (ICDS) Section 145(2) of
the Income-tax Act, 1961. BCAS has launched a
petition under change.org to urge that the ICDS
should be withdrawn completely
Strange request from slayed
unmarried RTI activist Satish
Shettys wife to remove report on
his murder
In what turns out to be a sinister attempt to scrub
all news about the murder of Right to Information
(RTI) activist, Satish Shetty, Moneylife received
an email, purportedly from his wife, asking for
reports about his murder to be deleted from our
website, because it causes pain to the family

EXCLUSIVE VIEWS On issues that matter to you ML FOUNDATION

Scope for Tax Terrorism

As per the amendments, the Central

Board of Direct Taxes (CBDT) has
authorised income-tax ocers
(ITOs) powers to be an I-T authority
which may be misused by ITOs to
India needs a Rs200 RTI success stories Loan write-os, send notices or scrutiny notices
note, not a Rs2,000 ocially compiled demonetisation to genuine taxpayers, said Nikhil
note and the for the first time and black money Vadia, a chartered accountant. He was speaking at a seminar-
science behind it Vinita Deshmukh PV Vijay Kumar cum-guidance session organised by Moneylife Foundation on
Ravi Abhyankar demonetisation of high currency notes and its implications

For the latest news, exclusives and reports on our activities TO GET THIS AND MUCH MORE INSTANTLY,
twitter.com/MoneylifeIndia http://www.facebook.com/moneylife.in SUBSCRIBE TO OUR DAILY & WEEKLY
NEWSLETTER FREE

Web Content.indd 1 02-12-2016 18:05:19

 CROSSHAIRs
Exclusive news, the stories behind the
headlines and the truth between the
lines by Sucheta Dalal

On the Digital Highway without a Seat Belt

B
P
rime minister (PM) Narendra Modi
Modiss mega 1. Beneficiaries Must Pay: The first step is to encencourage
campaign to go cashless may, in the long run, convenience
and incentivise e-payments by scrapping conven
lead to transformation like his much-needed charges and transaction charges. So far, it has be been a
Swachh Bharat initiative. We are a cash-based (makemytrip,
sellers market. So ticket booking agents (makem
economy; over 68% of transactions happen in cash principals
cleartrip, etc, or Bookmyshow) and even principa
and the push to get, at least, urban, educated Indians (Jet Airways) conveniently turned the logic on its head
to switch to cashless payments is necessary and long and decided that we, the consumers, must pay for the
overdue. Starting with his radio talk convenience of getting tickets online. Airlines useused to
(Maan ki Baat), the offer hefty commissions to travel agents who did
PMs slogan of the hard work of selecting the
My Mobile, best route and the
My Wallet, lowest fare opoption;
My Bank the customer did
has been not pay.
pay
amplified Today,
Today
by leading bankers, there are
e-payment no travel
trav
companies, agents; the
Union consumer
consume
ministers, NITI Aayog does all the hard work of
officials and high-profile bureaucrats. But people wont searching and selecting; and also pays for the
th
change just by being shoved in a particular direction. alleged convenience. We need to ensure that beneficiary
beneficia
Moreover, in the short run, the pain in accessing companies, at least, share the convenience. But what
ones own money is very real. The government needs about movie theatres and airlines which are able to
to work harder to make the switchover easier, by save on ticketing and box-office costs? This is the best
providing adequate infrastructure (telecom coverage, time to do it because they need our business at a time
Internet connectivity), safety and ease of transactions when discretionary spending has dried up ssubstantially.
b
and proper grievance redress. Unfortunately, the effort Regulatio off E-wallet Companies: Information
2. Regulation
to push e-payments seems driven by the th need to hastily technology experts will tell you that most apps and
correct the
co h massive failure of currency management e-wallets collect a lot of sensitive customer data by
after demonetisation, rather than a genuine desire seeking omnibus permissions from not-so-savvy users.
to bring about a paradigm shift. Lets look at a few According to a report by medianama.com, leading
decisions that are urgently needed to ensure that payment apps get access to your Internet history,
the switch to cashless transactions is both, safe and bookmarks, and even really sensitive data such as IMEI
permanent. number, saved Wi-Fi network info and the MacID.

MONEYLIFE | 9-22
27 November
Dec 2016
2014
| 18| 14

Crosshair.indd 2 02-12-2016 18:06:55

 They record audio info, modify contacts and even use in online transactions has led to a manifold surge in
call logs to make calls. Many e-wallets will save credit/ customer complaints. Addressing a public meeting on
debit card details used to transfer money to the wallet 23rd May, he had said that these complaints relate to
without your permission. electronic transactions, unauthorised fund transfers,
This increases the security risks for users, without fraudulent ATM withdrawals using duplicate cards,
their knowledge. If the data is hacked, we, as phishing, vishing, etc. And yet, on 31st August, RBI
individuals, are in no position to track the source of the only issued a draft regulation proposing to limit
leak and we have no access to easy grievance redress customer liability instead of notifying formal rules.
either. We need to have clear rules on what information These regulations propose to shift the onus of proving
can be collated by apps and their liability spelt out, wrongdoing or carelessness on the part of the customer
in case there is a large-scale data breach or even if to the bank. They will also ensure that the money lost
an individual consumer has a complaint. Will every is immediately credited back to customer accounts
minister of the NDA government, who is dutifully pending investigation. Isnt it strange that RBI has not
promoting e-wallets, take up the issue of regulation as been asked to notify these regulations even while a
well? nationwide campaign to go cashless has been launched
3. Grievance Redress: This is an issue that we have from the highest office in the land? RBI must also
been agitating for several years through Moneylife be asked to notify its much-touted consumer charter
Foundation, our not-for-profit entity involved in and take responsibility for its implementation. The
advocacy and financial literacy. At a social gathering, charter must prescribe clear penalties for banks lapses
recently, a leading industrialist and amend the banking
and a retired police chief were ombudsman regulations to
narrating interesting stories In one case, a domestic helpers empower it to initiate stringent
about how their domestic account, which had her precious action. Instead, an unworkable
helpers and cooks had adapted savings of over Rs70,000, was hacked. consumer charter has been
to technology, using it to The hacker, pretending to be a put out in the public domain
transfer money to their village banker, claimed that the account was and RBI seems to have no
in Bihar and Odisha through being tested to ensure that a link intention of holding banks
ATMs. to her mobile phone was working strictly accountable for treating
While this is, indeed, very effectively and she should read out customers fairly.
heartening, it is also a fact that 4. Financial Literacy: The buck
the number received in an ATM
ATM PINs are easily shared for spreading financial literacy
with the family because of also stops at RBIs doors. The
ignorance. In one case, a domestic helpers account, central bank, as is its style, works at an excruciatingly
which had her precious savings of over Rs70,000, was slow pace on most issues; it is probably the slowest on
hacked. The hacker, pretending to be a banker, claimed consumer protection. Two years ago, RBI took charge
that the account was being tested to ensure that a of over Rs3,500 crore of unclaimed cash deposits
link to her mobile phone was working effectively and that were lying with banks and set up the Depositor
she should read out the number received in an ATM. Education and Awareness Fund (DEAF). This money
The unsuspecting woman ended up giving her OTP could have been put to excellent use today to spread
(one-time password) six times, until the bank itself financial literacy using modern tools to spread the
noticed something amiss and blocked her account. A message.
well-known consumer activist, who is helping the lady Two years later, DEAF has little to show. It took a
recover her money, related this story to me; how many year to grant accreditation to a few NGOs and another
are so lucky? year to sanction small sums to be spent on workshops
As Dr KC Chakrabarty, former deputy governor of to a few of them. Worse, DEAF will simply not engage
the Reserve Bank of India (RBI), told me in a recent with people in the field. Another effort to reach out
interview, You may push a person to do digital to rural consumers under the aegis of RBI and with
transaction; but once a person has lost money at an support from banks is similarly chugging at a snails
ATM or in a digital transaction, he will stay away speed. This is not the pace at which the PM operates;
for 10 years. All over the world, unless the bank can but then, why doesnt someone push RBI to act, or
prove that the customer is at fault, his money should take away these responsibilities and allow it to remain
first be credited to his account. That is a global rule. Indias monetary authority? At a time when people are
This is not yet implemented in India. The reason for going through enormous hardship to access their own
not notifying consumer protection regulations is rather hard-earned money, being pushed into driving along
perplexing, especially when RBI deputy governor, the digital highway without a safety belt will be even
SS Mundra has publicly acknowledged that the increase more insensitive.

19 | 9-22 Dec 2016 | MONEYLIFE

Crosshair.indd 3 02-12-2016 18:07:28

 DIFFERENT STROKES SUCHETA DALAL

Why the Strike against Black

Money Faltered so Quickly

M
unicipal council elections in Gujarat and and turmoil faced by ordinary people has not even shaken
Maharashtra seem to suggest that prime minister the confidence of the corrupt who continue to manipulate
(PM) Narendra Modi and the Bharatiya Janata the banking system to corner new currency.
Party (BJP) have scored big with the strike on black money The government and its diehard supporters will argue
through demonetisation of Rs500 and Rs,1000 notes. At that it is too early to pass any judgement. After all, the
least, that is what the Party believes, as is apparent from frequent policy changes are being announced, precisely to
their social media messages. plug every new leak that is detected. Unfortunately, the
However, a series of rapid-fire actions by the government atmosphere of uncertainly and confusion is causing a new set
indicate a dawning realisation that the rollout of the of problems. For starters, it is fuelling rumours and fanning
demonetisation plan is riddled with errors, misjudgement fears of an authoritarian State that encroaches on our
and big blunders such as printing new Rs500 and Rs2,000 rights in the name of fighting corruption. On 1st December,
notes in different sizez (which the finance ministry had
rendered 220,000 ATMs to clarify that it was not
until they are painstakingly planning to change the law to
recalibrated), complete clamp down on the amount
lack of preparedness and of gold that Indians can hold,
leadership at the Central or which the government can
government presses at Nashik seize during tax raids. It is not
and Dewas, shortage of Rs500 clear if the clarification has,
notes and failing to anticipate indeed, allayed fears. The
the problem of having no Reserve Bank of India (RBI)
currency between Rs100 and also issued a press release
Rs2,000 after demonetisation asking people not to believe
and lack of understanding anything that is not officially
about the extent of Indias announced on its website.
cash economy. The PM has not admitted to any problem. But, remember, the rumours
But the PM has not Instead, as is his style, he is leading a had found wide acceptance
admitted to any problem
massive campaign to persuade people to because of a pattern of
with the rollout. Instead, as policy announcements and
is his style, he is leading a
switch to electronic transactions, using his legislative changes. Fears of
massive campaign to persuade personal charisma and goodwill intrusive government and tax
people to switch to electronic terrorism are not without a
transactions, using his personal charisma and good will basis. It is important to understand the sequence.
to great effect. Unfortunately, all the positive actions are Nikhil Vadia, a well-regarded chartered accountant,
being undermined by two factors. told Moneylife Foundation members, at a recent workshop,
One, the constant change in regulations, policies and about how Rule 12E was introduced on 16 November
decisions of the government seem to suggest that the 2016, under what is known as the scrutiny Section,
government is shooting in the dark on the black money allowing an income-tax officer (ITO), the first level in the
issue and is clueless about the contours of the problem hierarchy, to order a tax scrutiny. This has the potential to
and the solutions. Two, daily reports of large cash seizures unleash tax terrorism all over again and reverses the earlier
in new notes. As much as Rs4.7 crore in new notes were efforts by this very government to end the harassment of
seized from government officials in Bengaluru; a BJP district genuine taxpayers.
secretary was caught with over Rs20 lakh in cash in Tamil On a recent trip to Delhi, we were told by a very senior
Nadu; and Rs95 lakh has been seized in Hyderabad. This official in one of the government agencies about plans to
leads to the chilling conclusion that the enormous pain recruit thousands of retired tax officers to scrutinise all the

MONEYLIFE | 9-22 Dec 2016 | 20

DIFFERENT STROKES.indd 2 02-12-2016 18:07:52

 DIFFERENT STROKES SUCHETA DALAL

deposits made between 8th November and 31 December to reason that Rs2 lakh crore or more would come into
2016. While people were still trying to understand these the system till 30 December, thus throwing to the winds
changes, the government hurriedly passed the Taxation all calculation of the government to tackle black money,it
Laws (Second Amendment) Bill, 2016, announcing another says. In fact, there are jokes and memes circulating on
opportunity to come clean on undisclosed income or face social media about the attempt to trap unaccounted
steep penalties. wealth through demonetisation. One, attributed to a
This change, which is seen as another income declaration tax official, says, With amount of money already back
scheme, also seems to suggest a drastic course-correction in bank, I fear it may be like Black Label whiskey, more
in the governments plan to deal with black money. There money may come back than has been printed by the RBI.
are reports that over Rs11 lakh crore of demonetised Whether this could actually happen was also posed as a
currency has already been deposited into banks, signalling serious question at a discussion organised by the Bombay
that black money hoarders were merrily depositing their Chartered Accountants Society a couple of weeks ago.
stash of undeclared wealth without fear of punishment It will be another 30 days before a clear picture emerges,
or coercive action. but the government is clearly worried. The spate of tax
This is most plausible, because tax experts and notices and raids on hoarders is a sign; but it still does
retired income-tax commissioners have been confidently not include measures to root out the generation of black
encouraging people to deposit their unaccounted money money and its illegitimate use in funding political parties
as this years income under Sections 68 and 69 of the and elections (unrealistic spending cap per candidate),
Income-tax Act and get away or the sale of government
by paying 30% tax. While appointments and postings
there is a good chance that with its consequence of
this may lead to litigation, rampant corruption in
case law from the two delivering public services.
previous instances of currency At the same time, it has
demonetisation in India put every single person in
(1946 and 1978) may support the entire country through
this stand. Nikhil Vadia cited enormous hardship, and at
several examples where even a great cost to the economy
the most egregious cases of itself. After two consecutive
conversion were decided by years of drought, the
the apex court in favour of economy was just beginning
the taxpayer, after protracted to pick up. Banks, which
litigation. People with large There are reports that over Rs11 lakh crore were struggling with losses,
amounts of unaccounted of demonetised currency has already been bad loans and shrinkage of
money would clearly prefer
deposited into banks, signalling that black lending opportunities, are
to take their chances with now fully occupied only
our slow legal system
money hoarders were merrily depositing with exchanging currency;
than allow the currency to their stash of undeclared wealth all other work has come to
turn worthless. Will such a standstill. Depositors are
declarants be willing to make this money legitimate under not only unable to withdraw their funds, but deposit
the new amendment? It remains to be seen and depends rates are shrinking. Foreign investors are systematically
on what else the government does to end corruption and pulling money out of our stock markets. If all this werent
expropriate black money. enough, oil prices, which have a significant impact on our
The governments action also indicates that its surgical economy, are gradually beginning to rise.
strike on black money has missed its target. An article on PM Modi took a huge gamble with demonetisation
IANS offers a simple arithmetic: currency deposited in and he will certainly work very hard to make it pay off;
banks in the first 20 days after demonetisation (Rs8.45 lakh but at this point of time, it is anybodys guess which way
crore) plus the cash reserve ratio (CRR) as on 8th November it will go.
(over Rs4 lakh), plus another Rs50,000 crore as cash-in-
hand adds up to Rs13 lakh crore, which is just short of the Sucheta Dalal is the managing editor of Moneylife. She was
Rs14.5 lakh crore worth of higher denomination notes that awarded the Padma Shri in 2006 for her outstanding contribution
were demonetised. With another 30 days to go, it stands to journalism. She can be reached at sucheta@moneylife.in

21 | 9-22 Dec 2016 | MONEYLIFE

DIFFERENT STROKES.indd 3 02-12-2016 18:08:22

 MUTUAL FUNDS POINTERS

Time for Pharma & Tech Funds?

A
popular topic in the investment community now
is performance of the pharma and information Tech Schemes
technology (IT) sectors. Both have delivered great Minimum Maximum Average
returns over the years and seem to be in a consolidation
Birla Sun Life New -2.32% 45.37% 15.99%
phase for some time now. The BSE Healthcare Index Millennium
touched a high of 18,843 on 20 August 2015 and is at DSP BlackRock -0.24 % 48.22 % 19.55%
15,624 as of 2 December 2016 down 17.09% from its high. Technology.com Fund
It touched a low of 13,955 on 9 November 2016. The BSE Franklin Infotech Fund 3.59% 41.44% 16.51%
IT Index touched a high of 12,196 on 4 March 2015 and
ICICI Prudential 5.27 % 40.27 % 19.63%
is trading at 9,704 as of 2 December 2016 down 20.43% Technology Fund
from its high. It touched a low of 9,123 on 15 November
2016. Is it worth buying units of mutual fund schemes
focused on these sectors? Let us see how these sectors defensive sectors and only a strong contrarian would say
have performed over the years and what one can expect. that the sector has run out of steam.
Given that sector turnarounds do not happen overnight, The IT sector is in the limelight currently, thanks to
one needs to have a time horizon of at least five years for the depreciating rupee. The schemes have yielded extreme
gains from sector-oriented mutual funds. We took five-year returns ranging -2.32% to 48.22% in a five-year period.
rolling returns of the handful of schemes available in each The average has been 16%-19%. Is one willing to take on
sector, from October 2000 till September 2016. The results enormous additional risk inherent in sector schemes for
of all 12 five-year periods are given in the tables below. returns that are akin to diversified schemes?
Pharma schemes have always been a favourite and Taking a close look at historical perfoemance helps.
rightly so because of the high returns the sector has yielded. The graph shows returns of all individual five-year periods.
The average returns have been impressive, with the least Pharma schemes have outperformed the IT schemes in eight
being 18.71% by UTI Pharma and Healthcare over all the out of times and usually by a higher margin. Only in one
12 five-year periods; the highest was 24.61% by Reliance out of 12 five-year periods have the average returns of
Pharma over the same period. Pharma is one of the safest the pharma sector schemes been less than 15%, whereas
the average returns of IT sector schemes have been very
volatile. The returns range from 2.33% for five years ending
Pharma Schemes 28 September 2012 to 42.98% for five years ending 29
Minimum Maximum Average September 2006.
Reliance Pharma Fund 21.00 % 27.99 % 24.61% While sector schemes can yield big returns, the timing
SBI Pharma Fund 4.29 % 39.29 % 22.45% of entry is crucial and understanding the prospects is
UTI Pharma and Health- 11.83 % 25.27 % 18.71% necessary. Invest in sector schemes only if you have the
care Fund ability and capability of making high-risk investments.
Mitul Patel

Category Average Returns

% Returns
50
Pharma IT 42.98
40 39.29

31.43 32.07
30 26.90 26.29
24.67
22.79 22.38
19.06 20.57
20 17.03 16.98 16.49 17.25
15.43 16.15 15.49 14.87
13.50 13.17
10 8.47
5.34
2.33
0
Sep-16 Sep-15 Sep-14 Sep-13 Sep-12 Sep-11 Sep-10 Sep-09 Sep-08 Sep-07 Sep-06 Sep-05

MONEYLIFE | 9-22 Dec 2016 | 22

Fund Pointer.indd 2 02-12-2016 18:13:29

 MUTUAL FUNDS FUND FACTS

Best & Worst Mutual Fund Schemes

The best# three and the worst three schemes over the past three years ranked by their
quarterly rolling returns. Premium members get access to a more refined list of top
schemes by logging in to Moneylife Advisory - advisor.moneylife.in

Equity Schemes (Quarterly Rolling Returns)

Large Cap (Category Avg: 5.02%, Launch Corpus Avg. Quarterly 1-Year 3-Years** Exp
Sensex: 3.38%) Date (Rs Crore)* Rolling Returns Ratio
Mirae Asset India Opportunities 04-Apr-08 2,441 6.50% 8.86% 26.00% 2.37%
Reliance Vision 08-Oct-95 3,076 6.44% 2.40% 25.77% 2.04%
HDFC Equity 01-Jan-95 16,238 6.43% 5.61% 25.72% 2.03%
IDFC Imperial Equity 16-Mar-06 109 3.69% 3.11% 14.76% 2.68%
HDFC Large Cap 18-Feb-94 1,183 3.55% 0.85% 14.20% 2.20%
UTI Wealth B uilder 17-Dec-08 746 2.66% 7.10% 10.64% 2.61%
Multi-cap (Category Avg: 6.04%, BSE 200: 4.49%)
L&T India Value 08-Jan-10 2,063 8.48% 11.45% 33.90% 2.15%
Tata Equity P/E 29-Jun-04 684 8.20% 16.90% 32.81% 2.75%
ICICI Prudential Value Discovery 16-Aug-04 14,979 7.93% 4.18% 31.72% 2.26%
UTI Bluechip Flexicap 20-Feb-06 1,868 4.40% 3.44% 17.61% 2.18%
Axis Equity 05-Jan-10 2,106 4.23% -1.78% 16.92% 2.09%
Union Equity 10-Jun-11 173 4.10% 0.86% 16.39% 3.08%
Mid-and Small-cap (Category Avg: 8.72%, Nifty Midcap 100: 7.09%)
DSP BlackRock Micro Cap 14-Jun-07 4,264 11.45% 17.25% 45.80% 2.52%
Reliance Small Cap 16-Sep-10 2,730 10.87% 7.63% 43.46% 2.06%
Sundaram SMILE 15-Feb-05 1,185 10.22% 0.20% 40.88% 2.51%
HDFC Small Cap 03-Apr-08 969 6.46% 8.75% 25.84% 2.45%
IDFC Sterling Equity 07-Mar-08 1,327 6.41% 5.38% 25.64% 2.18%
SBI Emerging Bussiness 17-Sep-04 1,861 6.23% 8.16% 24.94% 2.11%

Debt Schemes
Income (Category Avg: 2.75%, Crisil Composite Bond: 3.09%)
ICICI Prudential Long Term Plan 20-Jan-10 1,509 3.45% 18.08% 13.82% 1.21%
ICICI Prudential Income 09-Jul-98 2,753 3.19% 17.34% 12.76% 1.81%
HDFC Income 11-Sep-00 2,610 3.17% 17.72% 12.66% 1.84%
Invesco India Medium Term Bond 30-Dec-10 1,325 2.31% 9.50% 9.24% 0.75%
Axis Banking Debt 8-Jun-12 556 2.27% 8.68% 9.06% 0.35%
Invesco India Bank Debt 29-Dec-12 430 2.02% 7.85% 8.08% 0.65%
Liquid (Category Avg: 2.07%, Crisil Liquid Index: 2.11%)
Escorts Liquid 03-Oct-05 244 2.19% 8.14% 8.76% 0.50%
Peerless Liquid 19-Feb-10 583 2.11% 7.84% 8.45% 0.21%
Indiabulls Liquid 25-Oct-11 6,423 2.11% 7.93% 8.45% 0.21%
Reliance Liquid - Cash Plan 07-Dec-01 4,185 1.92% 6.96% 7.68% 1.04%
L&T Cash 27-Nov-06 640 1.85% 6.62% 7.41% 0.79%
HDFC Cash Management - Call Plan 06-Feb-02 150 1.83% 6.46% 7.31% 0.20%
# Please note the table represents a comparative performance of mutual fund schemes over a three-year period and it is not a recommendation; * Latest quarter average assets
under management; We have only considered schemes having a corpus above Rs100 crore. **Annually compounded

23 | 9-22 Dec 2016 | MONEYLIFE

Fund Facts.indd 2 02-12-2016 18:48:13

 SMART MONEY R BALAKRISHNAN
Demonetisation & Stocks
T
he demonetisation of 500 and 1,000 rupee notes,
announced on 8th November, has virtually touched
every life in the country. Whether you had a
currency note of that denomination or not, you have not
escaped its impact. My focus, in this column, is simply on
what happens to the fundamentals of stocks, following this
monumental decision. Does demonetisation mean a lower,
or higher, profit for them or does it mean that life goes on
as usual? I am not trying to either explain or anticipate
which way the markets are headed. My focus is more to
see if the stocks themselves become more attractive or less
attractive because of demonetisation.
Where Cash Is King
Demonetisation, among other things, has primarily put
brakes on discretionary consumer spending.
There are two sets of people who are
now going to take time, to come back
to buying. First are those who are in
cash-based system. For instance, the
wholesale markets have a range of
people from owners, employees,
loaders and freight-operators for
deliveries. The owner buys from the
organised sector as well as from the
unorganised sector. The unorganised
sector is a large cottage industry
which does not pay any taxesdirect
or indirect. The inefficiencies of scale are
more than offset by avoidance of taxes.
The entire chain operates on cash payments. Salaries,
raw materials, packaging, despatch, transport, etc, are
all paid in cash. If you go to the shop to buy, most will
get a cash memo with the word estimate printed on it.
You will pay cash. If you flash a card or want to make
a cheque payment, you will be told that there would be
16% tax, extra. Since these are not big tickets (typical bills
could be from Rs5,000 toRs50,000), most transactions
happen in cash.
This group of people is suddenly impacted. Cash is in
short supply and there is a newly instilled fear of dealing
in cash. It will take a long time for this ecosystem to adjust
to be a part of the tax-paying universe of commerce. It will
change the dynamics and there could be casualties along
the way. In this business chain, there will be financiers
MONEYLIFE | 9-22 Dec 2016 | 24
column_Balakrishnan.indd 2
who lend in cash, take interest in cash and provide the
working capital to this sector.
This example can be extended to things like plastics,
household items, electricals, etc. The participants of this
sector, in turn, contribute to demand for a range of products
like consumer durables, automobiles, etc. In addition,
we have the millions of business-to-consumer (B-to-C)
businesses that include everythingfrom a food vendor
with a basket on his head, to the corner store selling day-to-
day products. In a country where connectivity is poor and
digital outreach is not great, electronic payment systems
have not caught on. And, in addition, the reluctance to
pay taxes, etc, means that our economy is predominantly
a cash economy.
The second set is the business-to-business (B-to-B)
segment. Logic says that they may not be affected
Think again. The B, in the B-to-C segment,
buys something critical that is the output
of the B-to-B segment. A hardware
fellow will need aluminium. A utensil
manufacturer will need steel, copper,
etc. The B-to-B distributor is the
facilitator. He has no hesitation in
selling and collecting cash, whether
he reports it or not. The B-to-B sector
will suffer a deep knock-on effect, if
the B-to-C sector slows down. There is
also a loss of wealth for some who would
have provided capital to the B-to-B sector.
Even if they have not lost all, their coming
back to business is going to take a long time before
new dynamics are established.
The B-to-B also outsources a lot from the medium and
small enterprises (MSMEs) which, in turn, rely a lot on the
cash-driven economy. The cash-driven economy has a lower
cost structure which more than offsets the dis-economies
of scale. All of these will have to find a new equilibrium.
Many will go out of business and there will be a disruption.
At the point of writing, the cash withdrawal limit for a
business is just 50,000 rupees a day. Most businesses need
several times this on a daily basis. So everyone will try and
find ways to live within that which means that, somewhere,
there is a huge contraction in spending taking place. If you
consider the truck operators, each one needs upwards of
Rs20,000 per day to meet fuel, bribes and toll costs. Not
01-12-2016 21:01:34
 SMART MONEY R BALAKRISHNAN
everyone has a fuel card. Bribes (police harassment, for
overloading or for some violation or the other) are paid
in cash. For the truck operators, it has become a regular
expenditure, like the toll.
Thus, a general slowdown is on the cards due to
demonetisation. How long could it extend? My view is
that it could be anything from 6-18 months. Our economy
is too deeply entrenched in cash transactions and the
new order will take time. The government has pushed
the Budget forward by around four weeks. This means
that the government has armed itself with a way to apply
some quick-fix relief measures, as the extent of the fallout
would be clearly visible by December-end.
I expect interest rates to come down, as banks will
have more money. Whether business has the confidence to
spend is something difficult to say. The move against illicit
wealth will get intensified and this will surely mean that
there would be less money getting invested, in the short
term. The government will, probably, have to give a big
infrastructure spending push in the Budget to revive the
sagging spirits. Private investment could be encouraged,
to some extent, as interest rates start declining. All of this
will take time. So far as 2016-17 is concerned, the last
four to five months of the current fiscal (April to March)
will see some contraction in the economy.
This means that the corporate results for the last quarter
will bear the the full impact of demonetisation and also
whatever measures come, between now and the Budget,
in the governments attempts to attack black money. It is
logical to expect a sharp fall in that quarter. Among the
different sectors, banks are happy (lower cost of money,
thanks to a spike in deposits for some time and book
gains on falling interest rates). The non-banking financial
companies are unhappy, as they are impacted on loans to
individuals, and the MSME segment, which is impacted
Whats Your Bahana for Not Subscribing?
I am not interested in honest & insightful advice on money matters
I never have any problems with banks, credit-cards or insurance companies
I always invest on the basis of tips from friends and brokers
Finance bores me to tears
I would rather spend two years of knowledge on one evening of eating out
I always buy from the newsstands
column_Balakrishnan.indd 3
by the currency shortage. High-end durables and luxury
goods segments would hurt.
The real estate sector is yet to face some music from the
government. Home finance should see a slowdown even if
house prices fall, as the investment demand slows down.
Maybe, if home loan rates drop to 8% after the Budget,
there could be a small revival. Automobiles should suffer a
slowdown, too. Infrastructure would be in the spotlight as
expectations are high about government being compelled
to spend on infrastructure, to revive sentiments. Some big
tax changes could come, as GST (goods & services tax)
will also be making its debut in the coming year.
Stock markets should go down more. Dont forget, we
are witnessing a chain of happenings as the US sets to chart
a new path that has resulted in the dollar strengthening
and interest rates firming up. In other words, global money
flows into US have got a leg up. The flows into emerging
markets have, consequently, thinned. And we all know
that our markets are driven by foreign portfolio investors,
though domestic mutual funds are acquiring some heft.
This may be an opportunity to get hold of high-quality
stocks at attractive valuations. The key is not to invest
at the first fall. I think, the next 12 months are an open
season for buying. So plan your buying gradually. Or
start doing SIP in high-quality stocks. And be alert for
sharp corrections, when there is disappointment on a
quarters result. Sectors like pharma and software should
do reasonably well. And the other thing to remember is
that we are not falling from a reasonably valued market.
We are falling from an over-valued market. In the history
of economic India, we have entered uncharted waters. No
one knows the true and final outcome of demonetisation.
We all hope that we will emerge stronger.
The author can be reached at balakrishnanr@gmail.com
For subscription offers
that are a steal, look for
a form elsewhere in this
issue or our website at
www.moneylife.in
25 | 9-22 Dec 2016 | MONEYLIFE
01-12-2016 21:02:15
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MSSN GB (Insurance 1-3 ).indd 3 29-07-2016 16:42:29


INSURANCE TRENDS
New products, regulations, features and options,
interpreted from your perspective
H e a lt h i n s uranc e
Religare Healths
New Version of
Care
R eligare Health Insurance
launched a new version of its
flagship productCare. Here are
some of the upgraded features,
along with Moneylifes comments.
The product now offers sum
insured (SI) of Rs75 lakh; the
maximum limit, until now, was
Rs60 lakh. Few people can
afford to pay the premium for
such high cover.
The product offers Care
Anywhere benefit which
allows convenience of global
coverage for SI of Rs50 lakh,
Rs60 lakh and Rs75 lakh. The
feature can now be availed
for 12 critical illnesses (CI)
instead of the earlier five CIs.
The Care Anywhere feature
is applicable only for high
SI which customers may not
be able to afford. The global
coverage is applicable for
specific CIs and not all health
conditions.
The plan of SI Rs50 lakh,
Rs60 lakh and Rs75 lakh
comes with an in-built
maternity cover of up to Rs1
lakh. While maternity cover
benefit is good for the high
cover amount, there is no
MONEYLIFE | 9-22 Dec 2016 | 28
Insurance.indd 2
maternity benefit for less than
Rs50 lakh cover.
The list of named day-care
medical procedures has been
increased from 175 to 541.
The policy includes a
preventive annual health
check-up at no extra cost to
all insured members, including
children.
The policy offers coverage
of AYUSH treatments, i.e.,
ayurveda, unani, sidha and
homeopathy (for SI of Rs3 lakh
and above). There are sub-
limits for alternative treatments
which start with Rs15,000 and
go up to Rs40,000 for high
cover of Rs50 lakh, Rs60 lakh
and Rs75 lakh. A claim will be
admissible under this benefit
only if it is admissible under
in-patient care of benefit
(hospitalisation expenses).
Such hospitals should be
run directly by a local/state/
Central government body.
In addition to these features,
some new optional covers are
being introduced at additional
premium payment.
Unlimited Automatic Recharge of
SI: Recharge of SI is only for future
claims which are not in relation to
any illness or injury for which a
claim has already been admitted for
that insured person during a policy
year. So, the feature may not always
be helpful, even if it offers optional
cover for unlimited recharge.
Personal Accident (PA) Cover:
The optional cover includes two
benefits, namely, accidental death
and permanent total disablement.
It is not comprehensive as it
does not cover permanent partial
disablement and temporary total
disability which is covered by PA
stand-alone product.
Health Insurance
Exide Life Cover
for Heart and
Cancer conditions
E xide Life Insurance has
launched Sanjeevani. It is
a fixed benefit health insurance
offering coverage against heart and
cancer-related conditions.
The plan differs from standard
critical illness policies as it
provides a fixed lump-sum benefit
on diagnosis of early and major
stages of heart and cancer-related
conditions. The product will
pay you the benefit on diagnosis
of covered heart and cancer
conditions, even if you have filed
a claim under any existing health
insurance policy (e.g., mediclaim)
that you may have.
Option-A: Cover for heart-
related conditions where a lump-
sum amount is paid to you on
diagnosis of a covered heart related
condition.
Option-B: Cover for heart and
cancer-related conditions where you
can cover yourself against cancer-
related conditions, in addition
to heart, by paying a nominal
additional premium. A lump-sum
amount is paid to you on diagnosis
of the covered heart or cancer-
related condition.
The insurer has classified all
covered heart and cancer-related
conditions under three categories
mild, moderate and severe. These
02-12-2016 17:55:35
 INSURANCE TRENDS
categories are based on the severity
of the diagnosed illness and define
the extent of payout as a percentage
of your chosen sum assured (SA).
Mild: 25% of the chosen SA is
paid to you on diagnosis of a mild
condition. You can claim a mild
condition only once, under plan
Option-A, and twice under plan
Option-B (one each from heart and
cancer related conditions).
Moderate: 50% of SA is paid to
you on diagnosis of a moderate
condition. Exide Life Insurance
will pay the premium for the next
five years on your behalf. Multiple
claims are allowed under this
category; your policy will terminate
on payment of 100% of SA.
Severe: 100% of SA is paid to you
on diagnosis of a severe condition.
The amount paid to you prior to
diagnosis of a severe condition
will be deducted. The policy will
terminate on payout.
The minimum and maximum
entry age is 18 and 65 years,
respectively. The maturity age is
Fine Print
Insurer Delay Can Mean
Deemed Approval
T he guidelines of Insurance
Regulatory and Development
Authority of India (IRDAI)
require the insurer to inform
the policyholder about the
acceptance or rejection of his/
her request for revival of lapsed
policy within a period of 15
days. The Maharashtra State
Consumer Disputes Redressal
Commission observed that the
failure to communicate the
rejection of the revival application
within 15 days, as provided
under the IRDAI regulations,
would constitute a deemed
Insurance.indd 3
Exide Life Sanjeevani Premium
Sum Option A:
Assured Cardiovascular
Male Life
Rs5 lakh Rs3,020
Rs10 lakh Rs4,730
Rs15 lakh Rs6,510
Rs20 lakh Rs8,400
Rs25 lakh Rs10,500
Premium (excluding taxes) for 35-year-old person buying 35 years policy term. The premium rates
are guaranteed for five years and can be revised post-IRDAI approval
70 years; there is no lifelong
renewal option. The policy term
is five to 35 years, subject to
maturity age of 70 years. The
longer the policy term you choose,
the higher will be the premium.
The premium rates are guaranteed
for five years and can be reviewed
post-IRDAI approval. Under this
policy, you will be required to
wait for a period of 180 days
from policy commencement date
or reinstatement date, whichever
approval. Life insurance policies
allow for a specific number
of years for policy revival,
subject to a medical check-up.
The Commission differentiated
between a fresh proposal, where
there was no confirmed contract
till its acceptance, versus an
already underwritten policy which
was pending for revival. For a
policy which was pending revival,
absence of any communication
from the insurer confirming
the acceptance of the proposal
within 15 days can be considered
as deemed approval as per the
Commission.
Max Life Insurance InstaClaim
M ax Life Insurance has
launched InstaClaim
Option B: Option A: Option B:
Cardiovascular Cardiovascular Cardiovascular
and Cancer Female Life and Cancer
Male Life Female Life
Rs4,005 Rs2,535 Rs3,480
Rs6,700 Rs3,020 Rs5,650
Rs9,465 Rs3,945 Rs7,890
Rs12,340 Rs4,980 Rs10,240
Rs15,425 Rs6,225 Rs12,800
is later, before you apply for a
claim. Survival period is the time
for which the life assured has to
survive, once the covered condition
is detected, to be eligible for the
claim payout. The survival period
in case of heart-related conditions is
28 days from the date of diagnosis.
In case of cancer-related
conditions, no survival period is
applicable. Exide Life Sanjeevani
does not offer any life insurance
cover or maturity benefit.
to enhance overall customer
experience.
InstaClaim will provide claim
approval to Max Life customers
in case of eligible policies within
one day from the receipt of
the claim with the necessary
documents.
It will be available to the
registered beneficiary in all
eligible policies which have
completed three or more
continuous years, in which the
claim amount is less than Rs25
lakh and the claim does not
warrant any field verification.
Necessary documents should
be submitted before 3pm on
any working day from Monday
to Friday at any of Max Lifes
offices.
29 | 9-22 Dec 2016 | MONEYLIFE
02-12-2016 12:23:18
 BUYING
LIFE INSURANCE
RIGHT
Life insurance has a definite place in
our life. It is the best step you can take
for your family to ensure they survive
financially even when you are not
there. Raj Pradhan offers key lessons
for buying life insurance properly for
safeguarding your assets

T
he death of a bread-winner is an emotional
shock for a family. If the persons life is not
covered, it can be a financial disaster as
well. If the person had adequate insurance
on his/her life, the family can at least use the
death benefit to carry on with life. Insurance is a transfer
of your risk to the insurance company, for a cost. The
golden rule is that you should insure what you cannot
afford to lose. If the impact of the rare event can lead the
family to poverty, or huge loss of assets, you need to be
insured against the possibility of such an event.
Life insurance is a necessity for most people; it is best
gift for your family. If you outlive the policy term, your
family is lucky, even when it means that the premium
is you paid is wasted. If you are not lucky enough to
survive, the family gets a gift of the security of a lifetime
due to your wise decision of buying life insurance.
There are people who may over-insure, to be on
safer side; there may be those, at the other extreme, who
will under-insure or buy no insurance. Based on your
age, family, location, assets, income, liabilities, you can
decide which insurance cover or covers you need and for
what amount. You may need to prioritise the insurance
requirements, in case you cannot afford to buy all the
required covers.
Life insurance should be high on your priority list,

MONEYLIFE | 9-22 Dec 2016 | 30

Cover Story.indd 2 02-12-2016 18:14:59

 COVER STORY
especially if you have dependents. But avoid insurance-
cum-investment products like ULIPs (unit linked
insurance plans), endowment, money-back and whole-
life policies. Keep your insurance and investment needs
separate. Buying a term insurance return of premium
(TROP) product is also an unwise choice, even though
it is a term plan. The return of premium feature makes
it an insurance-cum-investment product that is best
avoided.
Buy an insurance product that is simple to understand.
Offline term plans are expensive; hence, skip them. Even
LIC has its online term plan (e-Term) which is much
cheaper than its own offline term plan. So, you have a
choice of online term plans from LIC as well as private
insurers. An online term plan is the best option. But is it
really easy to buy, with multiple options that go with the
base product? Keep your focus on the base cover which
is simple to understand, instead of going for features
which you dont need or are unable to understand.
The flexibility and features offered by term plans
usually benefit the insurance company. They sell higher
margin features which may not be cost-effective. It is
difficult for customers to decipher. Buying a plain-vanilla
online term plan, with no bells and whistles, will be a
wise decision. Stay away from life insurance agents,
bank personnel or any other intermediary, including
online sellers or web aggregators. Buying an online term
plan from insurance company website is the best way to
purchase.
1. Getting the Basics Right
If you dont have any dependents, you do not need a
life insurance policy. It does not mean your life has no
worth; it only means that life insurance is not your
requirement. You may need other insurance policies, like
health, personal accident and so on. Dont let anyone sell
you life insurance policy when you do not have someone
who is financially dependent on you.
If you have dependents, you need to evaluate your
life insurance needs. You need to have a cover which is
at least 10-12 times your annual salary plus any liability
(loan, etc) minus assets (excluding the home where
you reside). You need to do this exercise every year, to
eliminate the problems of having to calculate the future
value of assets. You will need a term plan to cover you up
to your retirement. If you need beyond it it means your
retirement planning was insufficient or your liabilities
(loan, childrens education, marriage) are still pending.
A term plan is a plain-vanilla product which pays
nothing if you survive the term. On death of the insured,
the sum assured is paid. While some insurers may restrict
the cover to 10 times the annual salary, others may offer
Cover Story.indd 3
up to 25 times the annual salary. The general rule is that
insurers do not want someone to be over-insured as it
can mean fraud. Its not always true, but buying high
cover than what you are eligible for is a red flag that you
may be hiding some illness while making the purchase.
While filling the proposal form, declare your existing
life insurance policies (if any). It is important to make
all declarations in the proposal form in utmost good
faith. Ask for a copy of the submitted proposal, along
with the policy document. The proposal is a crucial
document, as medical tests may not detect all the health
conditions. Insist on a medical test before you buy life
insurance. Talk with the insurer about medical tests
before the purchase. An insurer may not do the medical
tests in all cases. Insurance companies keep changing the
criteria for medical tests to not require it for higher age
or higher sum assured. It is not good news for customers
as medical tests help in robust underwriting.
2. Go for Single Premium?
Single-premium products offer a discount in premium
compared with regular annual premium policies. The
discount can be tempting, but resist the temptation. You
should never buy a single-premium term plan. It can tie
you up with the insurance company till end of the policy
term. With online term plans offering lower premium
for newer products, why would one want to give up the
flexibility of being able to change policies?
When a newer and better online term plan is available,
you can simply switch to a new policy. Even the same
insurer may offer a lower-premium term plan which is
possible to opt for, if you have a regular premium policy.
So, do not get stuck with any insurer by paying single
premium.
Moreover, if the policyholder dies soon after buying a
single-premium policy, it is big loss; there is no pro-rated
refund or any adjustment of the single premium. Regular
31 | 9-22 Dec 2016 | MONEYLIFE
02-12-2016 18:15:22
 COVER STORY

Increasing Income Plan

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Increasing Income Benefit 20 22 24 26 28 30 32 34 36 38
NPV @8% Discount 20 20.37 20.57 20.63 20.58 20.41 20.16 19.83 19.44 19
Increasing income benefit amount in Rs lakh. It starts with Rs20 lakh paid in first year and increases by 10% of the base amount every year. It is paid for 10
years. Discount rate is taken as 8%, to calculate the NPV

premium is better because you pay as you go. While one-
time payment is convenient, one must not ignore the time
value of money. The money you save by not going with
single premium can be invested. It may do better than
any discount offered for single-premium mode. Dont
fall for the single-premium mode.
3. Why Go for Lump-sum Payout?
Many term plans offer the options of death benefit as a
lump-sum or monthly income (fixed or increasing). The
argument in favour of periodic payment (income benefit
payout) is that the lump-sum amount may be misused by
the dependents intentionally or otherwise. There can be
selfish relatives or advisers who can misguide the family
to invest in toxic products that can put the lump-sum
received at risk. Buyers of life insurance should take into
account the financial literacy of dependents as much as
the amount of insurance for proper coverage. But if the
family can efficiently manage the lump-sum payout, it is
better than income benefit.
A Moneylife reader, Dhananjay Vaidyanathan,
has made an excellent comparison of lump-sum death
benefit payout versus income benefit payout that shows
the lump-sum death benefit to be a better option. Check
the three cases below to know how make a financially
prudent decision.
The family can decide to invest it as per their or your
wishes. It is best to state your wishes in writing for the
family so that they know where they can invest it safely
and avoid risky investments. It is especially important
if the family is not savvy about investment. The selling
pitch for income benefit payout is that it saves the
nominee the burden of managing a large pool of money.
But is it really cost-effective? It is not easy for a layperson
to work out the math and make a financially correct
decision. Insurers can take advantage of it and sell you
the less cost-effective option. You need to safeguard your
interest.
Mr Vaidyanathan evaluated the three payout options
offered by ICICI Pru iProtect Smart and concluded the
following: At 8% discount rate, the NPV (net present
value) works out to roughly the same for lump-sum
versus increasing income benefit, but the premium is
26% higher for increasing income benefit. So, lump-sum
works out to be better option financially. Why would
you want to pay 26% higher premium just to get payout
as increasing income benefit?
Moreover, the comparison of lump-sum with same
amount paid as income benefit reveals that the NPV
works out to be 28% lower than the lump-sum payout,
but the premium is only 15% lower than lump-sum
option. Is that a marketing gimmick? It again reinforces
the argument that lump-sum payout can work out to
be financially better option. The income benefit option
seems to be a feature designed to help the insurance
company earn higher margin.
CASE 1: Lump-sum Payout
ICICI Pru iProtect Smart premium for a 31-year-old
male buying cover of Rs2 crore is Rs15,216. The NPV is
Rs2 crorethe same as the cash flow from death benefit
lump-sum payout.
CASE 2: Increasing Income Plan for 10 Years
The NPV is Rs2.01 croreclose to NPV of the lump-
sum option. The premium isRs19,172 which is 26%
more expensive compared to the lumpsum payout. Why
would you opt for increasing income benefit, especially if

Fixed Income Plan

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Same Income Benefit 20 20 20 20 20 20 20 20 20 20
NPV @ 8% Discount 20 18.51 17.14 15.87 14.70 13.61 12.60 11.66 10.80 10
Same income benefit amount in Rs lakh. Rs20 lakh is paid for 10 years. Discount rate is taken at 8%, to calculate the NPV

MONEYLIFE | 9-22 Dec 2016 | 32

Cover Story.indd 4 02-12-2016 18:15:46

 COVER STORY

Do Insurers Reject High Value Claims?

W ith term plans, there are higher chances of fraud. Is that the reason why some newer insurers have a high
It is, after all, a low premium product giving high number of high-value claims rejections?
cover. So, fraudulent policies, such as buying cover for In 2013-14, HDFC Life and ICICI Pru Life were
someone already dead, buying cover without declaring in the second and third positions for claims rejection
about smoking or existing PED are a reality. Insurance (number of policies) of 4.70% and 4.98%, respectively;
companies reject the claims
claims when rejection (benefit
they arise. If a Claims Rejection amount) was 9%
genuine claim is SBI Life and 12.73%,
rejected, one has Canara HSBC OBC
respectively. For
to go through 2014-15, ICICI
HDFC Life
the redressal Pru Life has
Sahara India Life
process. It will be fallen to sixth
Kotak Life
interesting to see position (5.42%),
SUD Life Claims Rejection (Benefit Amount)
how the recent while HDFC
PNB Metlife Claims Rejection (No. of Policies)
Section 45 Life (7.24%)
amendment ICICI Pru Life ranks at 11th
will help the Bajaj Allianz place. Both fare
policyholders as Tata AIA even worse with
insurers cannot Max Life claims rejection
reject claims Birla SunLife (benefit amount)
after three LIC at 17.25%
years of policy 0% 5% 10% 15% 20% 25% and 21.13%,
purchase citing Top-13 insurers ranked according to claims rejection for 2014-15
respectively. This
discrepancies in is a high number
declaration. compared with
But is it possible that insurance companies are other insurers in the same range for the number of
strict with high-value claims? They may pay low-value policies rejection ratio. It certainly helps LIC keep its
claims to improve their claim settlement ratio, but the top position secure.
key is to keep track of the benefit amount rejection. It An insurance companys inefficiencies, or poor
will tell if high-value claims are rejected by insurance underwriting practices, can be a reason for high
company. After all, how many death claims of high repudiation ratios. It can also be due to incorrect or
value (Rs50 lakh or more) paid by insurers is an hidden details in policy forms filled by a policyholder
important criterion. Online term plans, being a recent with or without abetment of an agent. It is imperative
phenomenon, may have many early claims (death that the policyholder fills up the proposal form in
within three years of purchase). Early death claims are good faith without the agent filling any policyholders
subjected to higher scrutiny for veracity from insurer. personal data.

your family is financially literate? get the family educated on handling finances.

CASE 3: Fixed Income Plan for 10 Years
The NPV is close to Rs1.45 crore28% lower than the
NPV of the lump-sum payout. The premium is Rs12,934,
only 15% lower than the premium for lump-sum. So,
with same income benefit, you get a lower NPV, but
the premium is not as much lower. It proves that lump-
sum option remains your best bet for ICICI Pru iProtect
Smart. For term plans, go with the lump-sum option and
4. Buy Increasing Cover To Beat Inflation?
The need for life cover does increase after having
children. But, at one point, the need will start decreasing,
when children have completed their education, have a
job and are married. So, life insurance need grows with
age and drops later. It should come down to zero, when
you retire. It is not a good idea to have increasing sum
assured cover even if you want to consider the impact of

33 | 9-22 Dec 2016 | MONEYLIFE

Cover Story.indd 5 02-12-2016 18:16:14

 MONEYLIFE
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MSSN GB Ad_invest.indd 2 29-07-2016 16:12:48

 MAS Benefit #4 - 7

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Which Mid-cap Funds?
Which ELSS?
ELSS SIP Tool

Fixed Income Choices

Which Bonds, NCDs?
Which Long term Debt Funds?
Which Short term Debt Funds?
Which Liquid Funds?

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MSSN GB Ad_invest.indd 3 29-07-2016 16:14:07

 COVER STORY
infl ation to get increased cover. The reason is that such
products (increasing sum assured) are not cost-effective.
It is better to buy a simple online term plan. If there
is a better product you come across in future, you can
easily discontinue the existing term plan and buy the new
product. It starts with a cover of Rs25 lakh or more.
When the need increases due to inflation or increased
family responsibilities, you can buy another online term
plan. It can be discontinued when your need goes down.
So, you may have two or three policies over a period and
discontinue one or more when the need for life insurance
decreases. As long as you are healthy and under 50 years
age, buying online term plan should not be difficult.
5. Buying High Cover To Lock Rates?
The policy term for a term plan can be long with duration
of 40 years or more. A term plan can lock the premium
for the full policy term which is a good thing. So, should
you over-insure yourself today just to lock-in with the
premium? Premium increases with age. So, the premium
is more for higher age. It means that buying a term plan
at a younger age helps to lock-in at a lower premium for
the full policy term.
But it is better to buy the cover amount which is
needed today rather than buying a high cover for future
needs. The money saved (and grown by investing) by
not buying more than required cover will help in future
even if the premium were to increase. Moreover, buying
in future will mean that you will buy for a lower policy
term which can offset the premium rise with age. The
total premium paid by a 28-year-old for a period of 35
years is Rs1,93,200; the total premium paid by a 38-year
old for a period of 25 years is Rs2,14,175. The difference
is only Rs20,975 over the period of the policy term. The
difference for a smoker is a marginally higher amount of
Rs46,850.
You do not need to over-insure today, especially if
you are in good health. If health is an issue, or there is a
family history of adverse health conditions, better to buy
a little higher cover today. Moreover, insurers will not
allow over-insurance as it can signal fraud. Depending on
Impact of Age on Premium
Type 28-year-old male buying Total premium paid by
policy of term of 35 years 28-year-old over the period
of 35 years
Non-smoker Rs5,520 Rs1,93,200
Smoker Rs7,245 Rs2,53,575
Tata AIA Sampoorna Raksha premium for Rs50 lakh lump-sum death benefit. The policy will be over at age 63 years. Standard life assumed (no premium
loading)
MONEYLIFE | 9-22 Dec 2016 | 36
Cover Story.indd 6
Are You NRI/OCI/PIO?
A pure term plan is the best way to cover life. NRIs
(non-resident Indians) can buy life insurance.
What are the options for OCI (overseas citizen of
India)/PIO (person of Indian origin)? Please read
our Cover Story - http://tinyurl.com/jl2kbcz. It gives
details which no other media has given. It will help
you understand how to handle buying a term plan if
you are an NRI/OCI/PIO.
your income level, the insurer will offer an appropriate
cover amount.
Premiums for online term plans have been decreasing;
hence, the increase of premium with age should not be
a worry. Insurers are coming out with new online term
plans with lower premium than what they were offering
earlier. It helps customers to increase their cover at a
lower rate. They can even discontinue an existing cover
and buy a new product with lower rates. If the premium
for online term plans starts increasing (reversal of current
trend) in future, it will be better to lock-in with a higher
cover. Till then, just buy what you need today. Avoid
over-insurance.
6. New Trend: Higher Maximum Age and Term
In the past, life insurance used to be available up to 55
years. The maximum age increased to 60, then to 65,
70, and 75; now, there are products for up to the age
of 80 years as well. It offers flexibility, since people
may consider late retirement and/or have outstanding
liabilities like loans, childrens education and marriage.
But the longer the policy term you try to buy, the higher
will be the premium. So, buy based on your need.
Having life insurance till age 80 years should not be a
requirement, normally.
Life insurance needs should be till retirement. By
the time you retire, you should have enough retirement
corpus to live on and, hopefully, the responsibilities of
childrens education and marriage may be over. If you are
38-year-old male buying Total premium paid by
policy of term of 25 years 38-year-old over the period
of 25 years
Rs8,567 Rs2,14,175
Rs12,017 Rs3,00,425
02-12-2016 18:16:44
 COVER STORY

Want To Change the Country or Occupation?

W hen buying life insurance, the country of present

residence and current occupation matter. After
you buy life insurance, change of countryountry
or location does not have impact on the
existing policy. So, buy life insurancee
before you move to a country which
may be considered unsafe by insurers
or changing your occupation to what
may be considered as higher risk by
insurers. Your current profile matters
when you buy life insurance. Where you
move in future or what work you do in
future has no bearing.
The proposal can be rejected if you live in a country
which is excluded by the insurer. If the profession is
not safe, life insurance can be denied. Make
all proposal
pro declarations in good faith else
there
ther may be issues with the claim. After
a life
l insurance policy is underwritten,
based on existing profile from the
b
proposal form, it will cover death
p
anywhere. So, if you are travelling
an
abroad, death will be covered. If you
ab
u change
cha residence country, the address
n needs
n eed to be updated. But coverage would
continue.
cco
onti

maturity age has been raised to

Impact of Policy Term on Premium 80 years, raising the maximum
Type Policy Term of 25 Years Policy Term of 40 Years Premium Difference policy term to 62 years.
Entry age for a customer
Non-smoker Rs8,567 Rs9,257 Rs690pa
is a minimum of 18 years and
Smoker Rs12,017 Rs13,167 Rs1,150pa
a maximum of 65 years, with
Tata AIA Sampoorna Raksha premium for a 38-year-old male with Rs50 lakh lump-sum death benefit. a minimum policy term of five
Standard life assumed (no premium loading)
years and a maximum of 62
years.
dependent on life insurance policy even after retirement, Tata AIA has just launched Sampoorna Raksha. It is
it means your retirement corpus is not enough or you a term plan with a wide range of policy terms starting
did not plan properly for retirement. But there could from 10 years and going to as high as 40 years, coupled
be some genuine reasons due to which your financial with the maximum maturity age of 80 years. The longer
responsibilities may continue beyond your retirement the policy term, the higher will be the premium. In the
age. If you foresee such a situation, you can buy a longer example given in table, the non-smoker person will
term plan to lock the rates. pay Rs690 per annum (pa) higher premium to avail 40
The maximum policy term of 40 years or more is years term instead of 25 years; smoker person will pay
a helpful innovation. If a married individual of age 27 Rs1,150pa higher amount.
years is buying an online term plan, the policy term of 40
years will ensure that it gets over when the customer is 7. Buying Life Cover in Old Age?
67 years. But, if the maximum policy term were only 30 Today, term plans can be purchased up to the age of 65
years, the policy would have got over at the of 57 years; to 70 years. For example, Tata AIA Sampoorna Raksha
which would have been a wrong age. You dont want the allows entry up to 70 years. Buying a term plan in your
policy to get over when you are in your 50s. It will be 50s or 60s will be at a higher premium; there are also
difficult to buy another term plan at that age. higher chances of proposal rejection. You may land in
Max Life Online Term Plan Plus is a new product the same problem if your existing term plan gets over
launched with maximum maturity age of 75 years and in your 50s. Buying with a term which ensures cover
maximum policy term of 40 years. It has extended the till retirement is important. It is possible that you may
maximum policy term and maturity age. So, at age 33 discontinue the existing term plan and buy a new one
years, you can get a policy up to age 73 years. If you buy for various reasons like lower premium, better settlement
after two years, you can get cover up to age 75 years. ratio of the insurer, insurer brand, etc. But always buy a
Another product which was re-launched with a higher term plan with adequate policy term.
policy term and age is Aegon Life iTerm. The maximum Today, senior citizens are trying to buy term plans

37 | 9-22 Dec 2016 | MONEYLIFE

Cover Story.indd 7 02-12-2016 18:17:00

 COVER STORY
Should You Ride with Riders?
A term plan will pay in the event of death, irrespective
of whether it is accidental or otherwise. If you have
accidental death rider with life insurance or personal
accident (PA) policy, it will pay additional sum assured
if death was due to an accident. So, accidental death
will give additional benefit to family. It will pay term
plan sum assured plus accidental death rider/PA policy
cover. If there is non-accidental death, the family gets
paid from only term plan cover.
We do not suggest buying riders of accidental death
and disability along with term plans. They do not offer
comprehensive cover. You can buy a stand-alone PA
product from
general insurers.
So, buy an online
term plan without
consideration of
accidental death
and disability
riders. Buy a
comprehensive
PA policy instead.
The premium
for a PA policy
does not change
with age up to
70 years. It also offers lifelong renewal. But the life
insurance rider works only up to policy maturity.
Accidental death and disability rider premium can
be higher, based on age at purchase, which makes it
unattractive if you buy it along with life insurance at
older age.
A good stand-alone PA policy will cover accidental
death, permanent total disability (PTD), permanent
partial disability (PPD) and temporary total disability
(TTD). PTD and PPD are defined in the policy
document. For example, loss of both hands will be
PTD and loss of one hand will be PPD. The main
reason for, and benefit of, a PA policy is TTD. Most
of the PA claims are for TTD. If any accidental injury
prevents you from going to work, TTD is the cover
due to various reasons like loan, etc. If you are healthy,
there are good chances of getting a term plan, albeit at
higher premium due to age. Any adverse declaration in
the proposal may mean denial of life insurance proposal.
There can be loading instead of rejection for certain cases.
Read our Cover Stories - http://tinyurl.com/zuyquka and
MONEYLIFE | 9-22 Dec 2016 | 38
Cover Story.indd 8
which will pay. The possibility of accidental death,
PTD and PPD is remote. TTD pays a fixed amount if
you miss work due to temporary disability for a period
of up to two years.
Even a critical illness (CI) rider with life insurance
is not needed as you can buy a comprehensive CI
product from general insurers. CI will supplement
mediclaim for your health insurance needs. A CI
product pays lumpsum, irrespective of the expenses
for the medical treatment. When there is a critical
illness, hospitalisation may be one expense. In some
illness, hospitalisation may not be required and, hence,
mediclaim will not pay; exceptions being some day-
care procedures like chemotherapy and dialysis which
are covered by
mediclaim.
There are other
expenses like loss
or leave from
job, other family
member busy
with helping, non-
hospitalisation
expenses. A CI
cover helps to
defray these costs.
There is
an incorrect
perception that the premium will remain constant
for a CI rider or a cancer product from life insurer.
The premium rate for CI rider and cancer product is
guaranteed for an initial period of three to five years
from the date of issuance of the policy and thereafter
for every block of three to five years. There are a couple
of new CI products from life insurers which offer fixed
premium for policy term of up to 30 years. It is surely
an innovation. We are suggesting one such product
for Moneylife Advisory Services (MAS) subscribers.
But there is no lifelong renewal for CI product from
life insurers. A stand-alone CI product from general
insurers offers lifelong renewal. But the premium
may change at renewal and it gets expensive as age
increases; choose the cover amount wisely.
http://tinyurl.com/glmc5kj
For Sampoorna Raksha, the total premium paid by a
60-year-old for a period of 20 years is Rs8,09,600; the
total premium paid by 70-year-old for a period of 10
years is Rs7,55,550. It means that a 70-year old will pay
a lower total premium than a 60-year-old. It contradicts
02-12-2016 18:17:30
 COVER STORY

Senior Citizens Buying Term Plan

Type 60-year-old male Total premium paid by 70-year-old male buying Total premium paid by 70
buying policy of term 60-year-old over the period policy of term of 10 years year-old over the period of
of 20 years of 20 years 10 years
Non-smoker Rs40,480 Rs8,09,600 Rs75,555 Rs7,55,550
Smoker Rs63,940 Rs12,78,800 Rs1,20,635 Rs12,06,350
Tata AIA Sampoorna Raksha premium for Rs50 lakh lump-sum death benefit. The policy will be over at age 80 years. Standard life assumed (no premium loading)

the assumption that, with advancing age, you pay higher
premium!
8. Should You Split into Multiple Policies?
Based on your high income and, possibly, need for a high
cover, you can think about splitting into two or more
policies. It will also help, in case you plan to discontinue
one or more policies in future.
If you do not foresee the need to give up one policy
before the other, you can go with one online term plan,
especially if there is discount for high sum assured (SA).
For example, you can check the premium of two Rs1-
crore policies versus one Rs2 crore policy. If the product
offers lower premium for a Rs2-crore policy compared
to two Rs1-crore policies, you can consider going with
Rs2-crore policy. If you wish to split the policies, declare
your existing policy when you buy new one. Insurers do
not want you to be over-insured.
It is usually better to go with one policy, but cover
Buying One Rs2-crore Policy versus Two Rs1-crore Policies
Type Premium for one Total premium for two Savings due to high
Rs2-crore policy Rs1-crore policies
Non-smoker Rs25,760 Rs27,370
Smoker Rs36,110 Rs38,410
Tata AIA Sampoorna Raksha premium for 38-year-old male for 25 years term. Standard life
assumed (no premium loading)
of Rs3 crore or more is better to split. Even though
high sum assured may fetch you a discount, split policy
can help to get rid of one policy when responsibilities
(child education, marriage) are over by retirement. It
also helps to not put all the dependency on one insurer
to have to pay a large sum assured amount. If there are
issues with the declaration, even split policies will not
help, as there can be rejection from each insurer. They
all do due diligence when they have to pay claims. The
recent Section 45 amendment will help policyholders as
insurers cannot reject claims after three years of policy
purchase citing discrepancies in declaration.
Keep in Mind
Term plan covers include death due to terrorist attacks
or natural calamities. Declaration of the correct age
and/or gender of the life insured are important for
calculation of premiums payable under the policy.
Fraud, misrepresentation and forfeiture would be dealt
with in accordance with provisions of
Section 45 of the Insurance Act, 1938,
as amended periodically. If the life
insured commits suicide, whether sane
sum assured discount or insane, within 12 months from the
Rs1,610pa date of commencement or from the
Rs2,300pa date of revival of the policy, all risks
and benefits under the policy shall
cease and the insurer may only refund
the premiums received.

Eating a health food?

But what about financial health?
For subscription offers that
The best wealth food. are a steal, look for a form
elsewhere in this issue or our
Once every fortnight website at www.moneylife.in

39 | 9-22 Dec 2016 | MONEYLIFE

Cover Story.indd 9 02-12-2016 18:17:54

 TAX/ FIXED INCOME

trend reverses. Liquid and UST MF

Shift from Bank FDs to Liquid/ schemes will not be impacted much
Ultra-short-term Funds? due to the short maturity dates of
the investment which means less

T
he governments move to
demonetise Rs1,000 and
Rs500 currency notes,
to curb black money, has led to
lowering of interest rates on bank
fixed deposits (FDs). Low bank FD
rates, coupled with taxation as per
individual tax bracket, can
be disastrous for savers.
Should you invest in liquid
or ultra-short-term (UST)
mutual fund (MF) schemes
instead of bank FDs?
Mutual fund companies are
trying to woo customers,
knowing that bank savings
accounts are flush with
cash. Returns on liquid
and UST MF schemes can also be
affected in the current scenario, but
they may deliver better returns than
bank savings account and bank
FDs. It is possible due to the tax
benefits (indexation) that come with
investment in these and other debt
mutual fund schemes for more than
three years.
Liquid and UST MF schemes
invest in commercial paper
(CP), certificates of deposit
(CDs), treasury bills, short-term
debentures, FDs and other similar
instruments. Most liquid schemes
invest in instruments with a
maximum residual maturity of
61 days; UST instruments have
maturity of one month to one year.
But investors can remain invested
in liquid and UST MF schemes
for any duration, even though
experts say that one should invest
in liquid or UST MF schemes
for short-term purposes. Avoid
long-term debt schemes which
will work well as long as interest
rates are on a decline. They will
not work well, once the current
volatility.
There is no exit-load (in most
liquid/UST MF schemes) and, hence,
there is no minimum waiting period
to remain invested. Moreover, you
can get access to your cash fairly
quickly. Withdrawals from liquid
schemes are processed
within 24 hours on business
days. If you place a
redemption request by the
cut-off time on a business
day, the redeemed amount
will be credited to your
bank savings account on the
next business day.
Investing in a liquid and
debt mutual fund scheme
with a growth option can help you
defer your tax liability, if you dont
redeem any units. Until redemption,
you have no tax liability which is
in contrast to a bank FD where
the tax liability arises even for
accrued interest on cumulative FDs.
You may not get income until the
cumulative FD matures, but you
have to pay tax on the accrued
interest every year.

G-Sec Yields Decline to a record low level of Rs68.86/US$
Steeply and some experts feel that it could slip
to Rs70-Rs72/US$ in the near term,
due to the belief that Reserve Bank of
India (RBI) may want to conserve its
foreign exchange reserves.

T he 10-year benchmark G-Sec

yield, which sets the tone of the
fixed-income market, has nosedived
Issuer Maturity Next Last Yield ISIN Rating
Date Coupon (%)
by whopping 49 basis points (bps) in
Dewan Housing 9.25% 09 Sep-23 09 Sep-17 9.30 INE202B07IO3 CARE AAA
the last fortnight, to end at 6.23% on
25th November. The rupee has fallen Tata Capital Hsg Finance 9% 01 Jun-18 01 Jun-17 7.75 INE033L07CO4 CRISIL AA+
LIC Hsg Fin 8.72% 28 Nov-19 28 Nov-16 7.69 INE115A07GH7 CRISIL AAA
G-Sec Maturity Yield to NSE data as of last trade date of 25 November 2016
Date Maturity
Reliance Capital Ltd 8.90% 09 Sep-21 09 Sep-17 8.42 INE013A071E0 CARE AAA
02 July 2040 6.87%
Bajaj Finance Ltd 7.9% 16 Sep-19 16 Sep-17 7.45 INE296A07MK7 CRISIL AA+
30 September 2030 6.76%
26 October 2055 6.71% HDB Financial Serv 9.32% 17 Nov-17 17 Nov-17 7.56 INE756I07480 CARE AAA

G-Sec yields on 28 November 2016 BSE data as of last trade date of 25 November 2016

MONEYLIFE | 9-22 Dec 2016 | 40

Fixed Income.indd 1 01-12-2016 21:12:19

 VALUE STOCKS DEBASHIS BASU

Strong Stocks in A Weak Market

R
egular readers would know that we have been
researching momentum strategies for some time.
While there are multiple approaches to capture
momentum, the core idea in all the approaches is the same:
buy stocks that are stronger, relative to the overall market/
index. (I am ignoring the academic studies that show the
results of buying strong stocks and selling weak stocks
which can be done only by way of stock borrowing. We
cannot borrow stocks in India). The issue is whether to
buy stocks that are stronger irrespective of the market
condition, or whether to buy stronger stocks only in a
market trending higher. If you buy stocks that are exhibiting
relative strength in a very weak market, you will do better
than weaker stocks but that is no consolation; you may
only end up losing less money.
This is why any strategy to buy stocks must be preceded
by some sense of the market climate. My view is that
there are only three kinds of market situations: strong
bull market (rare), non-trending market, whether mildly
bearish or mildly bullish (frequent) and strong bear market
(rarest). Momentum strategies work well in the first two
market situations. We are in the second kind of market
climate nowmildly bearish. Under this market condition,
momentum may work. If so, how does one compile a basic
list of momentum stocks?
Here is what I did. I pulled out all stocks that make
a minimum return on assets (RoA) of 7%. If a company
cannot even make 7%, it would be better off to take no
riskwhich running a business entailsand keep the
money in bank. A 7% filter of RoA yielded a list of 620
companies. You may wish to eliminate micro-cap (less
than Rs100 crore by market value as per our definition)
and small-cap companies (Rs100 crore-Rs500 crore) from
the list because they could be illiquid. That leaves us with
mid-cap (Rs500 crore-Rs2,000 crore), large-cap (Rs2,000
crore-Rs10,000 crore) and mega-cap (Rs10,000 crore+).
This gave us a list of 464 companies. Lets now do a simple
relative strength analysis of these stocks between the close
of 8th November and 29th November. During this period,
the Sensex was down by 4%. But 206 companies reflected
a higher relative strength than the Sensex.
Of these, as many as 96 companies actually went
up. Which were these stocks? Here is a list of top-
performing stocks when the market fell under the impact
demonetisation. We now have a short list of 45 stocks
which are fundamentally sound and have bucked the
downtrend. Their shareholders are not panicking. In fact,
these companies are attracting new shareholders. Maybe
they are doing something right. The most fertile areas
for such enquiry are large-caps and mid-caps. This is
how we can start the process of identifying momentum
stocks.

Momentum in Action: Between 8th-29th November the Sensex was down 4% but these stocks were up
Mid-cap Large-cap Mega-cap
PNB Gilts 44% Balmer Lawrie & Co 25% Power Finance Corp 15%
Ujaas Energy 37% Quess Corp 19% Sun Pharma 11%
Kovai Medical Centre 28% Advanced Enzyme Technologies 14% Mangalore Refinery 11%
Merck 23% Engineers India 12% Hindustan Zinc 9%
IFGL Refractories 22% Shilpa Medicare 12% Rural Electrification. 8%
Arrow Greentech 15% KRBL 10% Alkem Laboratories 7%
Garware-Wall Ropes 12% Mahanagar Gas 9% Torrent Pharma 7%
Dwarikesh Sugar Ind 12% Cyient 7% Bharat Electronics 7%
Voltamp Transformers 11% Mindtree 7% Tech Mahindra 7%
Nucleus Software 10% VA Tech Wabag 7% Cipla 6%
RPG Life Sciences 9% Navneet Education 7% Cadila Healthcare 6%
Shemaroo 8% Zensar Technologies 6% Bharat Forge 6%
Dalmia Bharat Sugar 7% Sharda Cropchem 6% SJVN 6%
Kellton Tech Solutions 5% Balrampur Chini Mills 6% Natco Pharma 6%
R Systems 5% Thyrocare Technologies 6% Hindustan Petroleum 5%

41 | 9-22 Dec 2016 | MONEYLIFE

Value Stocks.indd 2 02-12-2016 18:31:25

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 StockWatch Stocks and sectors that catch our eye

T r a n s f o r me rs & Rec t if iers book of Rs948 crore of around 29,622MVA (mega-

volt ampere). It also received a breakthrough order for
Getting Transformed? 13,765kV (kilo-volt) class reactors from Power Grid
Corporation of India Limited.

F
or the past several years, Transformers & TRIL is expected to get some further benefits from
Rectifiers India Ltd (TRIL) has not shown any the Make in India requirement that only
major increase in sales or profits. In fact, the companies that have a manufacturing
company had been showing losses or, in a quarter or set-up in India can participate
two, reported some negligible profits. The average in the bidding process of PSUs
growth in sales for the past five years stands (public sector units) /SEBs
at 3.51% and the net profit growth (state electricity boards). This
stands at a negative 65.12%. requirement has eliminated the
However, the scenario competition from Chinese and
seems to have changed in South Korean vendors.
the past three quarters. For FY15-16, TRILs return on
For the quarter ended capital employed (RoCE) was 5% and
September 2016, sales the return on net worth (RoNW) was
growth was 88% -3%. These figures are expected to
y-o-y (year-on-year), improve as the management expects
reaching Rs263.24 crore to increase its top-line and bottom-line
(Rs139.79 crore), and the net figures. TRIL has also managed to bring
profit hit Rs9 crore from a loss of down debtor days to 140 from 156-160
Rs2.35 crore.
The electrical equipment sector has been stagnating
for the past five years. TRIL, currently, has an order Turning Around?
Rs Cr
65
Transformers & Rectifiers
Stand-alone (Rs Cr) Mar-16 Jun-16 Sep-16 35 Free Cash Flows
Revenue 248.05 159.17 263.24
OP 27.58 112.03 127.04 5
OPM 11.12% 70.38% 48.26%
Y-o-Y Revenue Growth 51.78% 156.27% 88.31% -25

Y-o-Y OP Growth 188.19% 22.96% 18.94%

-55
March Ending FY14 FY15 FY16
RoNW 1.40% -1.93% -2.61%
-85
OP: operating profit, OPM: operating profit margin, RoNW: return on net worth 11-12 12-13 13-14 14-15 15-16

Disclaimer: None of the stock information presented constitutes a recommendation or a solicitation of any offer to buy or sell any securities. Information presented is general in nature that does not take into
account your individual circumstances, financial situation or needs Although information has been obtained from and is based on sources we believe to be reliable, we do not guarantee its accuracy and the
information may be incomplete or condensed. All opinions and estimates constitute our judgement as on the date of the report and are subject to change without notice. Past performance is no indication of future
results. Investors must do their own research before acting on them. Data Source: Centre for Monitoring Indian Economys Prowess database.

Those who have subscribed to the stockletters should only follow the stocks recommended there.

MONEYLIFE | 9-22 Dec 2016 | 44

StockWatch.indd 2 02-12-2016 18:32:57

 STOCK WATCH

expectations of a turnaround. The stock was trading at

Attracting Interest Rs315.50 on 22 November 2016.
Adjusted closing Price in Rs TRIL is a manufacturer of wide range of
400 transformers, producing power, distribution and
specialty transformers. It has three manufacturing
plants in Odhav, Chandogar and Moraiya. The
340
Moraiya plant has the facilities to produce 765kV
transformers and capacity to produce 16,000MVA
280 per annum. The Chandogar plant produces 245kV
transformers and has a total capacity to produce
220 7,000MVA per annum. The Odhav plant has a
manufacturing capacity of manufacturing 1,200MVA/
160
per annum and a testing capacity up to 10,000kVA
(kilo-volt-ampere) - 66kV.
Nov-15 May-16 Nov-16
TRIL has entered in a 60% joint venture agreement
with a Chinese company, Jiangsu Jingke Smart Electric
levels and aims to bring them further down to 120 Company Limited (Jingke), for manufacturing and
days. marketing of transformers of 220kV and below and
The promoters hold 74.9% of the total shares and distribution of products of 40.5kV and below in
the rest is held by the public. The stock rose from its India. Currently, the company has no further capital
52-week low of Rs180.10 on 24 November 2015 to expenditure plans and is planning for backward
its 52-week high of Rs389 on 11 October 2016 on integration in the near future.

B o da l C h e mic al s
Bodal Chemicals
Strong Growth Stand-alone (Rs Cr) Mar-16 Jun-16 Sep-16
Revenue 205.57 270.54 330.95

B
odal Chemicals has reported excellent results OP 30.47 56.45 58.47
for the quarter ended September 2016. Sales OPM 14.82% 20.87% 17.67%
were Rs330.95 crore (Rs254.27 crore), up 30% Y-o-Y Revenue Growth -12.46% 9.92% 30.16%
(y-o-y) year-on-year, and the net profit was Rs34.05
Y-o-Y OP Growth 3.01% 40.96% 48.74%
March Ending FY14 FY15 FY16
RoNW 33.58% 50.57% 36.66%
OP: operating profit, OPM: operating profit margin, RoNW: return on net worth

favourable market conditions resulting from reduced

crore (Rs23.39 crore), a huge jump of 46% y-o-y.
For the past five years, the average sales growth has
been 14.32%. This increase in net profit is because
of increased economies of scale due to expansion and
better capacity utilisation, better product optimisation
between dye intermediates & dyestuff products, and
competitive pressures. Bodal has benefited from the
shutdown of a major chemicals company in China due
to environmental issues.
Bodal makes dye intermediates, dyestuff and
sulphuric acid. It has nine plants located in Gujarat.
The total production capacity is: sulphuric acid
190,000MTPA (metric tonnes per annum), dye
intermediates 30,000MTPA and dyestuff 17,000MTPA.
While the recent profit growth has been strong,
Bodal runs a commodity business with low returns.
The companys return on capital employed (RoCE)
in 2015-16 was 10% and the return on net worth

45 | 9-22 Dec 2016 | MONEYLIFE

StockWatch.indd 3 02-12-2016 18:33:33

 STOCK WATCH

Cash Machine Bull Charge

Rs Cr Adjusted closing Price in Rs
165
145 135
125 Free Cash Flows
115
105
85 95

65
75
45
25 55

5 35
-15
11-12 12-13 13-14 14-15 15-16 Nov-15 May-16 Nov-16

(RoNW) was 13%. Valuation is low, despite profit
growth. The market-cap to sales ratio is 1.15 and
market-cap to operating profit ratio is 6.26. The
debt:equity ratio has declined to 0.61 for FY15-16
from 1.33 in FY14-15, with increased cash flow being
used to pay back debt. The company exited from its
corporate debt restructuring programme in September
2015 and capital expenditure on a new plant is also
over. This should result in higher free cash flows.
During FY15-16, the company announced two
interim dividendsof 10% and 20%. The dividend
yield of the company, however, stands low, at 0.55%.
The promoter holding in the company has been
declining and was 65.55% for the September 2016
quarter (69.67% for September 2015 quarter). Of the
balance, 5.30% is held by foreign institutional investors
and 29.15% by the public.
The share price of Bodal rose from its 52-week low
of Rs38.05 on 26 November 2015 to its 52-week high
of Rs155 on 6 October 2016. The share was trading at
Rs111.95 on 24 November 2016.
Bodals new plant for linear alkyl benzene sulphonic
acid (LABSA) has commenced production from March
2016. LABSA is an anionic surfactant widely used in
all ranges of domestic detergent powders, cake & dish-
wash cleaners. The total annual capacity of this plant is
18,000MTPA.
Bodal has also invested Rs15 crore in Trion
Chemicals Private Limited (TCPL) which makes
a compound that is a disinfectant, algaecide and
bactericide (mainly for swimming pools). It is used as
a bleaching agent in textiles industry. TCPL is expected
to start production in H2FY16-17. Bodal will have
a 42% stake in TCPL. The management has planned
capacity expansion of dyestuff, by 24,000MTPA in
the next three to four years. Bodal exports its products
to over 35 countries and, for FY15-16, 32.25% of its
total sales was derived from exports.

IFB Agro
IFB Agro
Agressive Growth Stand-alone (Rs Cr)
Revenue
Mar-16
130.98
Jun-16
216.07
Sep-16
273.44

I
FB Agro has announced excellent results for the OP 8.79 15.71 13.36
quarter ended September 2016. Sales jumped OPM 6.71% 7.27% 4.89%
by 48% y-o-y (year-on-year) to Rs273.44 crore Y-o-Y Revenue Growth 23.60% 41.23% 47.61%
(Rs185.25 crore) and net profit was up 22% to Rs8.9 Y-o-Y OP Growth 33.99% 20.11% 1.75%
March Ending FY14 FY15 FY16
crore (Rs7.27 crore). The liquor and marine food
manufacturer has achieved an average sales growth of RoNW 20.23% 7.03% 11.69%
OP: operating profit, OPM: operating profit margin, RoNW: return on net worth
7.7% and net profit growth of 26.50% for the past five
years.
Exports, mainly of marine food products, account has been a 14% decline in revenue from exports of the
for around 17.24% of the total sales. However, there marine segment because of the fall in price of shrimp.

MONEYLIFE | 9-22 Dec 2016 | 46

StockWatch.indd 4 02-12-2016 18:34:12

 STOCK WATCH

Investment Drag
Rs Cr
10

-5
Free Cash Flows
-20

-35

-50
-65
-80
-95
11-12 12-13 13-14 14-15
IFB Agro has planned expansion of its distillery
facilities for which it acquired a loan worth US$7.5
million. This loan has made the debt:equity ratio reach
0.20 for FY15-16. The company had no, or very low,
borrowings for the past five years.
For FY15-16, the return on capital employed
(RoCE) was 12.06% and return on net worth
(RoNW) was 11.69%. Valuation is low. The market-
capitalisation to sales ratio is 0.45 and market-
capitalisation to operating profit ratio is 7.67. The
stock is trading at price to earnings (P/E) ratio of
10.69.
The
promoters of
the company hold
64.99% of the total
15-16
shares of the company; the balance 35.01% is held
by the public. Well-known investor, Dolly Khanna,
holds 1.46% of the capital. The share price fell from
its 52-week high of Rs518.90 on 6 January 206 to its
52-week low of Rs327.20 on 22 November 2016.
The stock was trading at Rs365 on 23 November
2016.
IFB Agro, incorporated in 1982, operates in two
segments. One is spirit, liquor and spirituous beverages
(grain alcohol and alcoholic beverages) and the second
is marine (aqua feed and processed frozen shrimps
for domestic and export markets). It also into organic
manure.

APCOTEX The reason for decrease in profits for this quarter

was that production of high styrene rubber had
Short-term Blip to be shut down because of repairs at the plant
and had to shift to another plant at Vaila from
Taloja(Maharashtra). This shift imposed a higher

F
or the quarter ended September 2016, Apcotex
reported sales of Rs92.46 crore (Rs67.84
crore), a growth of 36% year-on-year (y-o-y).
The increased sales were partially
contributed by its subsidiary,
Apcotex Solutions India
Private Limited which was
acquired in March 2016.
Apcotex, however, has
not been able to
convert its sales into
profits. For the same
quarter, the operating
profit decreased by 51%
y-o-y, to Rs4.62 crore (Rs9.52
crore) and the net profit was
33% to Rs3.56 crore (Rs5.33 crore).
It earned 12% of its total sales from exports.
conversion cost which affected profits. The paper and
paperboard segment also faced a slowdown because
of the shutdown of one of the largest customers of the
company. The margins fell further because the price of
butadiene, one of the major raw materials, shot up and
Apcotex was not able to pass it on to the customers.
Sales of Apcotex were up 9.04% and average net
profit growth was 33.04% over the past five years. It
has also managed to bring down the debt:equity ratio
to 0.14 for FY15-16 from 0.62 for FY12-13. The
return on net worth (RoNW) and return on capital
employed (RoCE) for FY15-16 was 21% and 17%,
respectively.
Last year, Apcotex allotted one bonus share of Rs5
each for every one share held. The management has
been paying out dividends regularly for the past five
years; it paid 90% dividend last year. The company
has fair amount of free cash flows even after giving out

47 | 9-22 Dec 2016 | MONEYLIFE

StockWatch.indd 5 02-12-2016 18:34:33

 STOCK WATCH

Apcotex Throwing Lots of Cash

Stand-alone (Rs Cr) Mar-16 Jun-16 Sep-16 Rs Cr
Revenue 96.06 106.44 92.46 24

OP 9.52 10.69 4.62

OPM 9.91% 10.04% 5.00% 19 Free Cash Flows

Y-o-Y Revenue Growth 24.54% 59.20% 36.29%

14
Y-o-Y OP Growth -0.82% 12.41% -51.47%
March Ending FY14 FY15 FY16
9
RoNW 15.41% 24.74% 20.56%
OP: operating profit, OPM: operating profit margin, RoNW: return on net worth
4

high dividends.
For a small company in the commodity business,
the stock is not cheap. The market-capitalisation to
sales ratio is 1.85 and the market-capitalisation to
operating profit ratio is 18.66. The stock is trading at a
price-to-earnings (P/E) ratio of 17.76.
The promoters hold 57.89% of the total shares; the
rest 42.11% is held by the public. The share price rose
to its 52-week high of Rs435 on 28 August 2016 from
its 52-week low of Rs181.50 on 12 February 2016.
The share was trading at Rs325 on 30 November
2016.
-1
11-12 12-13 13-14 14-15 15-16
Apcotex, which produces performance emulsion
polymer, was originally formed in 1980 as a division
under Asian Paints and was spun off as a separate
entity in 1991. It manufactures two major products,
namely, synthetic latex and synthetic rubber.
Synthetic latex is used in paper, carpets,
construction, tyres, paints, textiles and the automotive
components sector. Synthetic rubber is used in the
footwear industry.

MARKET TREND

Slow Realisation for the the negative impact was positive, it

is difficult for investors to shake off
Bulls the positivity and switch to a negative
mindset. In that situation, investors can

Lwith a major change in the form of demonetisation.

ast fortnight, I had mentioned that we are confronted get caught like a deer in the headlights. Are we in a
different complex situation now? It depends on what this
Initially, the market had reacted strongly.
ngly. The government re really wants to do next. The cash crunch
Sensex was at 26,150 two weeks ago. o. At the will ease out over a month. But, if
time of writing, it was above 26,500.. the black money continues to be
At a first glance, it seems that generated as before through the two
investors have taken the impact clearly
cl visible routes of extortion and
of demonetisation in their stride. unreported
unr income, the government will
Serpentine queues outside banks, face an enormous backlash over the pain
ubiquitous signs of No Cash at ATMs,
Ms, moving the current
c purge has inflicted. Hence, it is
television reports of workers not being
ng paid, etc, have quite likely that the government will continue
not dented investors enthusiasm. Even a steady d stream with
i h its
i tirade
i against black money. This means
of reports of corporate distressstocks not moving from making sure that most of the income is reported and
the dealers and drop in ordershas not impacted the tax paid on It. This, in turn, will mean higher prices and
market. a transfer of money from the pockets of the citizens to
Sometimes, market prices are the wrong gauge. The the government. I am not sure if investors have thought
more complex the issue, the more difficult it is for the through all the implications of what promises to be a
market to figure out the implications. If the mood before Long March to tackle black money. Debashis Basu

MONEYLIFE | 9-22 Dec 2016 | 48

StockWatch.indd 6 02-12-2016 18:35:02

 STOCKSCREEN

September Quarter Stars

The September 2016 quarterly reporting season approaching its end and in our database of 1,535 companies,
1,271 have come out with their quarterly results. Of these, 1,031 companies have posted profits. These companies
have recorded a 6% revenue growth but have posted net profit growth of 25%. Given below is the top five
companies (based on market cap size) by revenue growth and net profit growth.

Micro-cap
Sale Growth NP Growth
Vijay Shanthi Builders 616% Vijay Shanthi Builders 4783%
Bharatiya Global Infomedia 190% Malu Paper Mills 1314%
Prakash Constrowell 81% Ishan Dyes & Chemicals 1078%
Indo Thai Securities 71% VBC Ferro Alloys 1056%
Fluidomat 62% Vijay Textiles 635%

Small-cap
Sale Growth NP Growth
TVS Electronics 275% Gujarat Apollo Inds. 10762%
Intense Technologies 201% Ponni Sugars (Erode) 7331%
Sphere Global Services 194% Upper Ganges Sugar & Inds 5008%
Inventure Growth & Securities 134% HIL 4467%
Genesys International Corpn 108% Shreyans Industries 2236%

Mid-cap
Sale Growth NP Growth
Ujaas Energy 130% Dynamatic Technologies 2416%
Capital Trust 119% Zuari Agro Chemicals 2192%
Shree Renuka Sugars 110% Atlanta 1481%
Deep Industries 97% Dhanlaxmi Bank 1238%
Centum Electronics 93% Rane Holdings 1073%

Large-cap
Sale Growth NP Growth
Monsanto India 155% Bannari Amman Sugars 1088%
Sun Pharma Advanced Research Co 120% Healthcare Global Enterprises 1080%
8K Miles Software Services 100% Balrampur Chini Mills 880%
Indian Hume Pipe Co 96% Dr Lal Pathlabs 714%
Texmaco Rail & Engg 82% Heidelberg Cement India 667%

Mega-cap
Sale Growth NP Growth
Bajaj Holdings & Invst 140% Biocon 8663%
Ambuja Cements 114% JSW Steel 1844%
Reliance Capital 108% Siemens 1026%
Natco Pharma 93% Indian Oil Corpn 793%
Bharat Financial Inclusion 40% Tata Power Co 748%

* - consolidated revenue and net profit used wherever available

49 | 9-22 Dec 2016 | MONEYLIFE

Stockscreen.indd 1 02-12-2016 18:50:30


Queries
At Moneylife Foundations
Ask tax-related questions at moneylife.in/taxhelp. Its free
How To Show Cash
after Fathers Demise
W e sold our flat in the month
of March 2016 and, before
buying a new flat, we moved into
a rental apartment to search for
a good place which fits into our
budget. My father also sold a lot of
my mothers gold ornaments in the
month of March 2016, basically to
have enough money to buy a new
flat. While we were searching for
the new house, my father expired
on 1 April 2016. Now my mother
and I are left with cash worth
Rs10.17 lakh, in Rs500 & Rs1,000
notes. As my father sold the gold
ornaments, we do not have any
receipt for them. My question is:
Can we deposit Rs2 lakh in four
accounts of my mother and the
balance Rs2.17 lakh in my account
and pay tax accordingly?
Ameet Patels Reply:
It would be against my
ethics to give you
ways of converting
black money into
white. If your father
had actually sold gold
jewellery or raw gold, he ought to
have declared the capital gains from
that in his tax return for the year
ended 31 March 2016. Since he
expired on 1st April, the tax return
should have been filed by his legal
heirs. At that time, the calculation
MONEYLIFE | 9-22 Dec 2016 | 50
Tax Queries.indd 2
Tax Helpline
of the capital gains should have
been done on a reasonable and
honest basis. If the cost is not
known, some estimation could have
been done and the gains could have
been calculated. I would suggest
that you still have the time to do
this and, therefore, you should
do this immediately. Once you do
that, you can then deposit the cash
into your or your mothers bank
accounts. You will need to be ready
to explain this cash if and when the
tax department questions it.
Housewifes Cash
Deposits
I n the context of demonetisation,
please clarify my following
query. One homemaker has been
accumulating the cash being
received regularly from her parents
on various occasions since her
marriage. Her marriage is 13 years
old and she has accumulated around
Rs31 lakh of cash over that period.
She has not disclosed it even to her
in-laws and has kept it with her
parents only. What should she do
in the current situation, since she
can deposit only Rs2.5 lakh in the
bank?
Ameet Patels Reply:
The eradication of black money
is a massive effort on the part of
the government. Considering the
hardship that is obviously going to
Supported By
be faced by the common man, the
government has provided a leniency
to people who deposit up to Rs2.50
lakh in their bank account(s). The
leniency is that, in such cases, the
deposit of cash will not be reported
to the income-tax department. They
have nowhere said that in such
cases, the tax department does not
have the right to question the source
of the cash.
In the case mentioned by you, if
the amount is Rs31 lakh, obviously,
the housewife will have to work
hard to convince the tax department
that it is out of savings. That would
depend on how much money the
parents were giving to the housewife
every month or year. Prima facie,
the case looks very difficult to
defend. However, several facts need
to be looked into. It would be best if
this person consults a CA and takes
professional advice.
Most households in the country
would have a few of the high
denomination notes which are
now no longer legal tender. Do not
rush or take hasty decisions based
on some posts on social media,
WhatsApp or email messages.
Tax on Medical
Reimbursement
I have paid my mothers hospital
bill amounting
Rs98,000, in
cash and it was
reimbursed by the
insurance company
which is reflected in my 26AS. Now
the question is: How do I show this
amount while filing my returns?
Nikhil Vadias Reply:
Reimbursement of actual expenses
for medical treatment of your
mother incurred by you by the
insurance company, is not taxable;
hence, you do not need to show this
in your income-tax return.
02-12-2016 18:39:45
 Supported By

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elp
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Also, this is only for individual taxpayers and small businesses.

Tax Helpline.indd 1 29-07-2016 17:49:42

 USEFUL APPS YAZDI TANTRA
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Your Choice Organiser
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First Aid: Expert Advice for
Emergencies
M any a times, during emergencies, our mind stops
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book at home and many tips are available online, when
an emergency occurs, our mind just goes blank.
This is where First Aid, by St John Ambulance, comes
to the rescue. This simple app
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emergencies in your hand. With
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this app helps you prepare for emergencies and act, in
case you are in the midst of one. Some of the numbers are
foreign to us, but the basic procedures remain the same for
human bodies across the world! Go ahead, download it
and keep it handy on your phoneyou never know when
you will need it! https://goo.gl/eiUQjq
MONEYLIFE | 9-22 Dec 2016 | 52
Tantra - column.indd 1
C ozi is a simple family organiser. Theres nothing
stationary about your life; so why depend on a family
calendar that hangs on a fridge or wall? Cozi turns all
your devices into ultimate family organisers with a shared
calendar, shopping lists, to-do lists,
family journal, recipe box and more,
which everyone can access, on the
go. Cozi is an easy-to-use colour-
coded calendar, where you can
view an individuals schedule, or
the whole familys, at once. You
can set reminders so no one misses an important event.
Shopping lists are shared across the family - you can retrieve
lists when you're at the store and quickly cross off items
or add new ones while you shop.
To-do lists, family journal, etc, add to the fun of sharing
stuff for the entire family. So, install Cozi immediately,
enter errands and you can conveniently forget reminding
your better half about them! https://goo.gl/ogO31k
Swipes: A Better To-do App
T here are many to-do apps available on the Play Store.
If you are still looking for a minimalist and robust
app, look at Swipes. It has now come to Android Play
Store with the same ease of use as it was on the iPhone
app. You can quickly add an item to your to-do list. You
can then add tags to your reminders,
schedule them in a variety of ways
and filter them easily. It is all-in-
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a happy middle-ground between
complex lists and a very minimal
interface with a very light footprint.
The item remains on your to-do
list till the time you dispose it off. The best part is that it is
FREE! Happy Swiping! Try it and let me know if you like
it. (www.swipesapp.com) https://goo.gl/Psn2te
Yazdi Tantra is a chartered accountant
by training, computer consultant by
profession, entrepreneur-developer by
hobby and trainer in his leisure time.
He is currently the vice-chairman of
Zoroastrian Co-operative Bank Ltd
and has been running a medium-sized computer
company ON-LYNE for the past 24 years.
01-12-2016 21:22:16
 HANDHOLDING:
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About MAS
MAS is a SEBI-registered investment adviser and part of Moneylife, Indias most unbiased and
pro-investor research and information group. We run Indias best personal finance magazine,
Moneylife. We are not afraid to call a spade a spade. We are Indias only media company to have
set up a non-profit trust, Moneylife Foundation, which is now the largest savers and investors
association with more than 35,000 members. MAS was set up to help investors and savers make
the right financial decisions and handhold them through the entire process.

MONEYLIFE
ADVISORY
FIX YOUR FINANCES, FOREVER

www.savers.moneylife.in

MSSN Handholding.indd 1 29-07-2016 16:08:23

 LEGALLY SPEAKING SD ISRANI
Open Offer, Once Made, Cant Be
Withdrawn
T
here are certain situations under the takeover
code (Takeover Regulations) of SEBI (Securities
and Exchange Board of India) which mandate an
acquirer to make an open offer of shares to the existing
shareholders. Can such an open offer be withdrawn?
This question came up in the matter of Pramod Jain and
Others Vs SEBI [Civil Appeal No.9103 of 2014judgement
delivered on 7 November 2016]. Here are the facts of the
case. Golden Tobacco Limited (GTC Ltd), a Mumbai-based
company listed on the BSE and the NSE, was the target
of acquisition. The acquirers along with a person acting
in concert (PAC) made a public announcement (PA) on
12 November 2009, when they collectively held 6.47% of
the equity shares. The acquirers were to acquire up to 25%
of GTC from its equity shareholders
at a price of Rs101 (the offer price)
per share. At that time, the market
price of the target companys shares
was Rs109.
The offer was for a hostile
takeover of GTC. The draft letter
of offer also mentioned that the PAC
had given a loan against shares of
GTC and. when it could not repay,
the acquirers got shares representing 5.05% of the capital.
The acquirers and the PAC had also acquired 71,034
equity shares at highest and average price of Rs100.15
and Rs89.13, respectively.
The draft letter of offer (DLO) was filed with SEBI
on 26 November 2009. During examination of the DLO,
SEBI got some complaints against the acquirers and PAC.
The acquirers, too, had complaints against GTC and also
initiated other proceedings, including a petition under
Section 397/398 of the Companies Act before the Company
Law Board; a suit before the Civil Court inter alia questioned
the transaction for joint development of prime property
with two builders.
But, on 8 October 2011, the acquirers asked permission
from SEBI to withdraw the offer, arguing that SEBI had
not taken any decision on the DLO in two years during
which the GTC management had systematically siphoned
off its coffers, depleted its valuable fixed assets and eroded
its net worth substantially with the intention of making it
a shell company. So, the very object of the open offer was
defeated without any fault on their part. The acquirers also
contended that the management had availed huge high-cost
MONEYLIFE | 9-22 Dec 2016 | 54
Legally Speaking.indd 2
borrowings from banks and financial institutions against
its property, including 18.7% shares out of the promoters
shareholdings. Disputes were pending before the arbitrator
arising out of default in payments. The acquirers alleged that
the most valuable assets of the target company had been
encumbered in violation of SEBI regulations and against
the interest of minority shareholders and the acquirers.
On 13 April 2012, SEBI declined to permit withdrawal
of the offer but observed that the alleged violations by GTC
shall be investigated. SEBI held that, as per the applicable
regulation, the target company was entitled to dispose
of its assets with the approval of the shareholders even
after the PA. It said that public offer, once made, could
not be withdrawn except in the circumstances provided
in the Takeover Regulations which
had to be construed strictly. It would
also violate the Contract Act, 1872.
SEBI observed that the acquirers
and the PAC had already purchased
substantial shares of the target
company and, thus, could not make
a PA without exercising due diligence
regarding the financial condition and
quality of management.
SEBIs position was affirmed by SAT (Securities
Appellate Tribunal), but, at the same time, it observed
that SEBI was wholly unjustified in taking more than two
years for offering its comments on the DLO. But the delay
did not constitute a ground to permit withdrawal of the
PA. The acquirers challenged SATs decision in the Supreme
Court. The apex court held that SEBI was not justified in
delaying its response to the DLO, but the acquirers had
not made out a case to withdraw the DLO. The apex court
held that the acquirers could not wriggle out from their
offer by raising untenable grounds as it was their duty to
conduct due diligence before making the open offer. The
irony of the situation is that, after traversing all the way to
the Supreme Court, the ball is back in SEBIs court as the
DLO submitted to SEBI on 26 November 2009 continues
to remain in limbo and no one is any the wiser.
SD Israni is a corporate lawyer & Fellow
of ICSI. Email: sdisrani@gmail.com
02-12-2016 18:41:36
 UNBIASED INFORMATION:
MAS Benefit #8-10
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set up a non-profit trust, Moneylife Foundation, which is now the largest savers and investors
association with more than 35,000 members. MAS was set up to help investors and savers make
the right financial decisions and handhold them through the entire process.

MONEYLIFE
ADVISORY
FIX YOUR FINANCES, FOREVER

www.savers.moneylife.in

MSSN - Unbiased.indd 1 29-07-2016 16:09:26

 HEALTH BM HEGDE
Is it Your Genes
or Your Lifestyle?
The most important factors for a long life, I think, are
partly in the genes; number two is lifestyle, which includes
healthy diet and regular exercise. However, I think too
much exercise is also unhealthy because of over-stress;
sometimes people who exercise too many hours per day
die early. John Gokongwei
H
uman genome has millions of times more germ
genes compared to the small 23,000 human genes.
Unlike what illiterate doctors (illiterate, today, is
one who is incapable of unlearning the wrong things one
has learnt, to re-learn new facts) and greedy biotechnology
industry, which wants to amass wealth by selling genetic
counselling, cord blood freezing, stem-cell therapy and
what have you, tellgenes are the be-all and end-all of
our inheritance. Doctors keep
generating fear in the minds
of healthy young people that,
if their parents had suffered
fatal diseases, they are likely
to develop those diseases. Such
disease-mongering is good for
business but could ruin young
lives and the mortal fear can,
by itself, bring on such diseases.
It is now well known, for
more than 25 years, that human
evolution is not genetic but environmental; while a few of
the dominant human genes (among the 23,000) might help
transmit certain genetically inherited disorders, they are
incapable of contributing to chronic lifestyle diseases like
heart disease, diabetes and cancer. Evolutionary biologists
have been shouting from housetops about the ascendency
of environment, above genes, in evolution and disease
inheritance. Unfortunately, most of our cross-sectional
short-term small cohort studies generate false positive data
mostly to appease the grant givers needs and they give us
the false impression about disease inheritance.
The New England Journal of Medicine (12 November
2016) has published a milestone paper on this subject
which looked at a very large set of human beings (more
than 55,000 people) studied for genetic mapping and
lifestyle. It was also significant in that all the 50-odd
genes connected with heart attack have been studied
in detail as were lifestyle factors, ranging from really
horrible ones, to simple smoking, drinking and obesity.
The study clearly brought out the importance of healthy
MONEYLIFE | 9-22 Dec 2016 | 56
BM Hegde.indd 2
lifestyle in preventing a heart attack even in those with a
very bad genetic history and gene patterns. This was the
first study that looked at genes and lifestyle in the same
cohorta brainchild of the leader of the research team,
Dr Sekar Katiresan, the director of genetic research at
The Mass General Hospital in Boston. This young man
found that there were no studies in the past that looked
simultaneously, in the same cohort; they looked at them
individually. That did the trick for this study. Here are the
take-home messages for lay readers:
1. The boss in inheritance is environment and not genes.
2. One does not need to be worried, even if one is dealt
a bad hand in genetic play.
3. Even those with strong genetic background could avoid
heart attacks, if they switch to a healthy lifestyle.
4. One does not have to undergo hardships in trying to
change lifestyle. For those with extreme obesity, it is
not easy to lose weight. If they just add regular exercise,
hard work, avoided alcohol and tobacco, they could
alter their genetic risks.
5. Even minor changes in lifestyle
could bring significant benefits.
There was near unanimity
among all sections of researchers
in this area on the wonderful
results of this study which used
the best statistical methods. An
on-going study of one million
such people is in the pipeline.
The leading researcher of that
study feels that his outcomes
might just reinforce the results
of this study as he was very impressed by the rigours of
this study. The results, he said, should quell the cries of
those who emphasise that genes are above all as well as
those who emphasise that elements of lifestyle are above
all. Its not nature or nurture; its both, says the study.
We can now safely say that heredity is not to be feared
like in the past. Most diseases depend on the lifestyle
(environment); to be healthy, one can follow a healthy
lifestyle which is not difficult and is very inexpensive. An
appeal through this article to practising doctors is that they
should not scare patients about their bad heredity; it can
now be mended by changing ones lifestyle.
Professor Dr BM Hegde, a Padma
Bhushan awardee in 2010, is an MD,
PhD, FRCP (London, Edinburgh,
Glasgow & Dublin), FACC and FAMS.
He can be reached at hegdebm@gmail.com
01-12-2016 21:08:01
 HEALTH BM HEGDE
CHOLESTEROL
GUIDELINES
T he subtle efforts of
the sugar lobby in
the 1950s to show fat
MEDICAL DEVELOPMENTS FROM
in bad light, vis--vis
sugar, as the main factor behind the
killer disease of vessels blocks were
eventually found out and the world
was disabused of the false myth
about fat, by the American Diet
Guidelines. It is now known that fat Pant Hospital, department of
and cholesterol are not the demons
that they were made out to be; they
are vital parts of human nutrition,
as every cell in the human body
must have a strong cell embrace for
healthy living. The cell membrane
is cholesterol. Body cholesterol is
made by our own liver; a paltry
10% comes from food. The 1972
thinker-professor of nutrition at the
London University, John Yudkin,
wrote Pure, White, and Deadly
about the dangers of sugar. Yudkin,
discredited by the sugar lobby, left
teaching and retired. His book has
now been republished. Thank God
for that! Interestingly, the recent
statin recommendation committee
of the American cardiology group
still recommends statins for some
sub-groups. An investigation about
the team members revealed that
most of them were (are) on the
statin manufacturing companys
rolls! This is the truth about most
Western guidelines for medical
management.
BM Hegde.indd 3
AROUND THE WORLD
LAVISH MEDICAL
CONFERENCES
I was in Delhi to deliver a
keynote address at a critical-
care meet organised by the GB
critical-care medicine. It was at
the India Habitat Centre on a low
budget. Interestingly, I did not see
a single drug company banner. The
volunteers only came to fetch me
from the India International Centre. boosting with this new drug. There
The talks were good and, all in
all, it was a good effort to educate
the audience from many parts of
India, without a vulgar display
of hospitality. Interestingly, I saw
another intensive-care meeting at
the Leela Palace, a 7-star facility,
with the speakers staying there.
Posters and drugs were on display
all over. The budget must have run
into crores of rupees. Another lavish
programme was going on at the
Habitat Centre. If there could three
such conferences, in one city, on one
day, imagine the total money spent
on those all over India. Imagine,
for a minute, where all this money
comes from? Mark my words, when
I say that every sick person is paying
for those meetings. The drug and
device prices go up partially due to
such lavish hospitality.
CANCER IMMUNE THERAPY
T he Food and Drug
Administration, USA has
approved an immunotherapy drug,
called Keytruda, which stimulates
the bodys immune system, for
the first-line treatment of patients
with metastatic non-small-cell lung
cancer. In other words, the drug
could be the very first treatment
a patient receives for the disease,
instead of chemotherapy.
Keytruda is the only
immunotherapy drug
approved for first-line
treatment for these
patients.
For decades, I have been writing
that our own immune system can
cure cancer. This could be done
by the various immune boosters in
Ayurveda which were in existence
for eons! Who bothers? Now that
America says this, our great Indian
medical players will embrace this
idea. President Jimmy Carter (of
the USA) announced that he is
cancer-free now, thanks to immune
are Indian research groups that
have put together methods to even
treat heart attacks with immune
boosting. Logically, our immune
system is the in-built healer inside
the human body.
Humankind has existed
for 900,000 years, in 50,000
generations, without any chemical
drugs of the Western medical
system. Cancers are not new
either. So, logically, if surgery,
chemotherapy and radiation were
the only life-savers from cancer,
as the rich cancer industry claims,
humankind should have been
extinct long before the dinosaurs!
Now, the new quantum healing
could help your own consciousness
to heal your cancer. I have faith in
that. Let us try.
57 | 9-22 Dec 2016 | MONEYLIFE
01-12-2016 21:08:19
 TECHNOLOGY MOBILE

How ATMs Function

ATMs are now a part of our lives. Yogesh Sapkale explains how they work

T
he demonetisation announcement has caught out various functions. Most ATMs across the world
not only money hoarders, but also banks and use Microsoft Windows OS, with Linux and CEN XFS
financial institutional on the wrong foot. What making some inroads in this field as well (Banrisul of
followed was a massive rush either to exchange Rs500 Brazil uses Linux, while Triton, Diebold, NCR use XFS
and Rs1,000 notes or withdraw money from banks. The for their cash machines).
reason for the overload on banks, especially for allowing
customers to withdraw cash, was the non-functioning How Do ATMs Work?
automatic teller machines (ATMs). Many of them are still When a customer swipes her card at the ATM, and verifies
waiting to be recalibrated for the new currency which her identity through the PIN, she is allowed to perform
would take weeks, if not months, before normalcy can transactions like checking balances, transferring money,
be restored. changing PIN
So what (at own bank
exactly is The ATM receives the request and ATM) and so
dispenses the requested amount
an ATM? Customer swipes
on. This routine,
B a s i c a l l y, his/her ATM card The processor transmits approval code back to however, is not
an ATM is the ATM, telling it how much to dispense fixed and some
The ATM dials to the processor and
a machine transmits the customers request ATMs may ask
The network transmits approval
connected for the PIN only
code back to processor
with the after allowing
The processor (i.e. core data) receives the The bank approves the transaction
bank or a request and sends it on to the networks, & submits an approval code back you to enter
financial (i.e. Visa/MC) for approval to the network the transactions
institution details. Besides,
The network requests authorisation
that allows from the cardholders account
Visa and
customers MasterCard,
cardholders account
to perform India has its
various transactions. Never mind, most ATMs across own network, RuPay, developed and managed by
the world are used only to withdraw cash and, hence, National Payment Corporation of India. RuPays fees
sometimes are referred as cash machines. Development are lower than that of Visa and MasterCard.
of ATMs started at various places. However, it was
Barclays Bank which installed its first cash machine on Demonetisation Effects on ATMs
27 June 1967 in north London. It was developed by an As mentioned above, most ATMs are used as cash
engineering team led by John Shepherd-Barron from the dispensing machines. There are different currency
printing company De La Rue. The ATM was called as denominations and, depending on the size of the currency
De La Rue Automatic Cash System or DACS. A small note, the holding slot (cassette) needs to be recalibrated
start-up Spytec was the first company to use a card with or adjusted. During the latest demonetisation drive,
magnetic stripe at the back. In 1965, a British engineer, recalibration of cassettes seems to have escaped the
James Goodfellow, developed the idea of storing a decision-making process, resulting in several ATMs
personal identification number (PIN) on the card which, being unable to dispense new currency notes of Rs500
till date, is used by ATM-makers across the world. and Rs2,000. Considering that India has about 220,000
However, it was IBM that came out with the first true ATMs spread over the country, and the number of
ATM machine named 2984, in December 1972. personnel required to recalibrate each machine, it would
An ATM consists of a central processing unit (CPU), take a few more days before people can use these cash
magnetic or/and chip-card reader, PIN pad, a crypto- machines again. While the recalibration work is going
processor, display screen, function keys (placed near full swing, ATMs are facing the other issue of currency
the screen), printer, vault, housing and sensors and supply. So, unless this demand & supply gap is narrowed
indicators. Just like PCs (personal computers), ATMs or closed, ATMs would be able to dispense only limited
also have an operating system (OS) installed to carry cash to customers.

MONEYLIFE | 9-22 Dec 2016 | 58

Technology.indd 1 01-12-2016 21:14:58

 YOU BE THE JUDGE BAPOO MALCOLM

Smart Man, Smarter Wife

M
arriages are made in Heaven, money in the judge on that, piqued though he might be. But what
courts, currency notes in mints and acrimony was his advocate doing? Why did he not prevent his
in homes. Hell is made when all of them client from such a disaster?
meet. We often talk of equity. What if the husband had
Mr and Mrs Seal were involved in a divorce case, handed over the cash a day before? He could have. The
in a Kolkata family court. The man was asked to depositing of cash, immediately after the declaration,
pay an amount to his ex-wife. Americans proudly meant he had the resources, but was procrastinating.
announce their divorce settlements. Elsewhere, there is That, too, would get the judges goat. Counterfeiting
a prolonged tug-of-war. The poor? The husband was coupled with contempt? More than likely. One does not
dragged to court for non-compliance. He agreed to pay. throw dice in court.
That too, in cash. He would make the payment in court What if the woman had accepted the cash? If I
in front of the judge. He did. The wife refused to accept were her advocate, I would have advised it. Cash is at
the money. the top of all balance sheets and, as my late finance
Our dear man had laid the money on the table in director always said, nothing works
work better. Say Yes,
old notes, which Narendra
ndra Modi had just but with a rider. She would try to exchange it as swiftly
declared to be pieces off as possible; but, if unable, the husband would
paper. The amount wass still
sti have to make
Rs2.25 lakh, in Rs500 good
g the balance. Her
and Rs1,000 notes. counsellor
c failed on
Mr Seal had brought another
a count too. She
the money; Mrs could
c have deposited
Seal did not want all the amount into her
al
it. How was the account; then declared
ac
honourable judge to that she had got it
th
settle the issue? under a court order!
u
Miya razi, bibi Would she have
na razi, made an illegal
To kya karay move? No. Old
bechara kazi? notes
note are on a pendulum.
You be the judge. At one end, one can refuse; on
The judge sent the against accepting,
the other, there is no law agai
husband to jail for a month. legitimately, in open courtin
especially when it is done legitimat
The husband is appealing the pursuance of its order.
verdict. He may get out of jail shortly; but why was he Is demonetisation correct terminology? As catchy
convicted in the first place? Let us ask ourselves that as surgical strike, the currency in hand is actually
question. in limbo. It exists, but cannot be used. It can be
A few days ago, there was a report that a van filled exchanged, its value, post-exchange, being left intact,
with old notes had been seized. If one gets caught with thereby giving a lie to the word associated with it. If
billions of rupees, one is answerable to the income-tax four Rs500 notes fetch you one Rs2,000 note, it is the
authorities. One must explain the source of currency. reverse of demonetisation, where notes worth millions
After demonetisation, even a mountain of bank notes in in face value are exchanged with notes of far lower
ones possession cannot be a crime. It is not money that denomination, but with higher worth.
is in his possession, but tonnes of paperraddi. The
government has declared it to be so.
In the context of what is said above, Mr Seal was, in
effect, playing a fraud on the court. He wanted to pass Bapoo Malcolm is a practising lawyer in
off loads of junk paper as legitimate money. He was, Mumbai. Please email your comments to
mail@moneylife.in
therefore, guilty of passing off counterfeit cash, that too,
in court, one month being too short a time. We are with

59 | 9-22 Dec 2016 | MONEYLIFE

You Be the Judge.indd 2 01-12-2016 20:58:56

 ML FOUNDATION EVENTS
MONEYLIFE FOUNDATION SEMINAR ON DEMONETISATION & TAX IMPLICATIONS
Domonetisation: What You Need To Know
T
here is a lot of confusion in the minds of people
about the implications of demonetisation of
Rs500 and Rs1,000 notes announced by the
prime minister Narendra Modi on the night of
8th November. To explain what it means from the income-
tax (I-T) perspective, Moneylife Foundation invited Nikhil
Vadia, well-known practising tax consultant, to address
the Foundation members. Mr Vadia explained the history
of demonetisation and its tax implications as well as the
burning question: How much cash can one deposit safely?
However, the most important
aspect of Mr Vadias presentation was
the revelation that, on 16th November,
the government inserted Rule 12E in
the Income-Tax Act which states:
The prescribed authority under
Sub-Section (2) of Section 143 shall
be an income-tax authority not below
the rank of an Income-tax Officer...
Section 143 covers under-reporting of
income (or what is known as the scrutiny
Section). Earlier, cases under this Section were picked
by a computerised system or needed the okay of an I-T
commissioner. It now gives powers to the lowest rung of
the I-T administration, with enormous scope for misuse,
such as sending notices or scrutiny notices to several
genuine and tax-compliant taxpayers.
Mr Vadia touched upon the history of demonetisation
undertaken in India in 1946 and 1978 and explained
several fascinating courts cases they attracted. Another
issue that Mr Vadia highlighted was about the reporting
period for banks to disclose cash deposits in accounts.
By 31 January 2017, banks are required to report all
cash deposited above Rs2.50 lakh in savings account and
MONEYLIFE | 9-22 Dec 2016 | 60
Event.indd 2
Rs12.50 lakh in current account from 10 November 2016
to 30 December 2016. Therefore, those who deposited,
or are depositing, cash in banks, can expect notices after
February 2017, he said. The Government has said
up to Rs2.5 lakh deposited between 10 November and
30 December 2016 will not be questioned. Income-tax
returns are to be filed for entire year of 2016-17 and
cash deposits and withdrawals for entire year have to be
explained. Large cash deposits, with no history of previous
income, would be difficult to explain, he said. He then
briefed the audience about the various
provisions of I-T Act which the taxpayers
should be aware of.
Mr Vadia touched upon various
penalties and provisions for prosecution
applicable in case of wilful default by
assessees under different scenarios. He also
explained the impact of demonetisation
on value added tax (VAT), service-tax
and benami property transactions, and
cited the effective taxes payable in select
cases. The Act with respect to benami transactions was
amended on 1 November 2016 and ensures that those
trying to evade the law will be taken to task, he said.
Mr Vadia also explained a few cases that had arisen
after earlier demonetisations. He concluded the session
with an advice to the audience: Do not panic and act in
haste. He emphasised the need to think before depositing
any money and to consult an honest tax consultant before
taking any action. It is critical that people do not rely on
WhatsApp messages, not get caught up in media frenzy,
and believe and disseminate information only from official
sources. The event was recorded and has been uploaded
on YouTube.
02-12-2016 18:46:19
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During discussions that night, Subba Rao called
R Sinha, chief general manager (vigilance). They
discussed the course of action and then planned
to go to the Chairman, Maneck N Goiporias
house. But they were told that Goiporia was out
meeting
eeting somebody and would return only after
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m. It was then that Khemani and Subba Rao
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Theyy even sent somebody over to the branch
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roke open Sitaramans drawer. It was a
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sperate move. There was nothing there...
The skyscraper that houses BSE hadnt yet
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Harshad was just an onlooker. But he had a
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 BOOKS

SIMPLY BRILLIANT

People Ahead of Everything Else

W
hich was the best-performing stock in the US
in the 25 years, following the Black Monday
crash of October 1987? When Bloomberg-
Businessweek went searching for the answer, it did not end
up in Apple (Silicon Valley), or Microsoft (Redmond) or
Berkshire Hathaway (Nebraska). It ended up at Fastenal,
based in the quiet town near Winona (Minnesota) which
has a population 28,000. (Actress Winona Ryder, who
was born in nearby Olmsted County, was named after
the town.)
Fastenals shares rose 38,565% in the 25 years after
Black Monday. In contrast, Microsoft was up 10,000%
and Apple was up 5,542%. An investor who bought
and held $10,000 worth of
Fastenal stock in October
1987 would have had $3
million by October 2015. At
the time of its IPO in August
1987, Fastenal had 250
employees and $20 million
of revenue. By 2015, it had
more than 18,500 employees
and $3.7 billion of revenue.
To understand this incredible
story, Williams travelled to
Fastenals headquarters,
as he did for all the other
fascinating organisations in
SIMPLY BRILLIANT this book.
WILLIAM C TAYLOR Fastenal is into one of the
Penguin UK most mundane businesses; it
Pages 272; Rs1,250 sells industrial products such
as nuts and bolts, cutting
tools, safety equipment, lighting and all sorts of specialty
parts that are needed in factories, mills and construction
sites. It has 11 factories worldwide that can manufacture
anything, from fasteners to specialty parts for Arctic energy
exploration, mining, and manufacturing, for all kinds
of technically demanding endeavors, writes William C
Taylor, the author of Simply Brilliant. Fastenal likes to say
about itself: We make the unavailable part available.
Fastenal employs more than 18,500 people who work in
nearly 2,700 stores, with locations that stretch from the
countrys biggest cities and industrial centres to remote,
rural communities. Its online catalogue offers hundreds
of thousands of different items. It has installed more
than 60,000 fully customized and automated, vending
machines stores at factories, warehouses, construction
sites.
What makes Fastenal tick? The companys goal is to
make its staff, entrepreneurial, self-drivenwork like
you own the business it. When you trust people to solve
problems and make decisions, and then let them go, thats
when the magic happens, writes Williams. Each of its
2,700 stores operates as a stand-alone business, with a
clear leader, profit & loss account and grassroots zeal
for growth and service. Its human resources approach is
old-school: it recruits many employees while they're still
attending college, starts a majority of them in part-time
jobs, prizes lifetime careers, and drills everyone on the
timeless basics of sales and service.
Gary Polipnick, a senior executive, told Williams,
We call ourselves a blue-collar sales company. When our
folks in the stores are doing it right, customers say, This
guy knows my business better than I do. We don't care
where you went to school, we care about what they can't
teach in schoolwisdom, savvy, entrepreneurial spirit.
To codify and formalise its knowledge base, actually,
Fastenal has created a school of its own, to teach the
business skills, sales techniques and service mentality
around which its bottom-up culture is built. The Fastenal
School of Business, launched in 1999, has 39 instructors,
20 campus locations, and more than 300 different courses,
from 10-minute e-learning modules to one-week and two-
week programmes.
Fastenal designs and develops all the course material
itself. It even offers introductory courses in welding and
metalworking, to help salespeople relate to their customers.
Nearly 9,000 employees spent time in the classroom in
2014, and the workforce as a whole completed nearly
280,000 online courses. It also publishes a widely read
paperback, The Little Blue Book of Customer Service,
which has become a bible of sorts for parables on how to
treat customers, writes Williams.
From this small town in Minnesota, travel to another
less-known location in the USKingsport, Tennesseeto
Pals Sudden Service, which sells standard fast-food like
hamburgers, hot dogs, chicken sandwiches, fries and shakes
from 28 locations in northeast Tennessee and southwest
Virginia, all within an 80-mile radius of its home base.
What is so great about this company? Pals does not offer
sit-down service. Customers pull up to a window, place
their orders with an employee, pull around to the other
side of the facility, take their orders and drive off. Other

MONEYLIFE | 9-22 Dec 2016 | 62

Book Review.indd 2 01-12-2016 21:05:46

 BOOKS

fast-food companies offer years, a demographic slice

the same but here is what that is notoriously taxing
happens at Pals: to manage.
It takes an average of Pals screens its new
18 seconds at the drive- hires through a 60-point
up window to place psychometric survey drawn
an order. That's four from attributes of star
times faster than the performers. The selected
second-fastest quick- candidates are put through
serve restaurant in the massive amounts of training
country which requires and retraining, certification
more than a minute on and recertification. New
average to take an order. In a country with a financial system employees get 120 hours
It takes an average of 12
seconds to get the order.
infamous for limited hours and plentiful of training before they are
allowed to work on their
Hence, the firms name. bank holidays, Metro locations are own, and must be certified
When Fred Pal Barger open 362 days per year, twelve hours in each of the jobs they do:
founded the company, a day during the week, ten hours on grilling burgers, making
he asked: what is faster fries, mixing shakes, taking
than fast? Sudden
Saturday, six on Sunday. (The banks orders. (Most employees are
service. The companys locations are closed only on Christmas, certified in as many as eight
slogan: Great food in Easter, and New Years Day.) Moreover, different jobs, although
a flash. in an industry plagued by long lines and some specialise in just one
But what about errors, or two.)
when you try to serve
painfully slow response times, Metro Then, every day,
so fast? Pals makes a vows that new customers can walk into on every shift, in every
mistake only once in a branch, open an account, and leave restaurant, a computer
every 3,600 orders. with a working debit card and full access randomly generates the
Thats 10 times better names of 2-4 employees to
than the average fast-
to online bankingall within fifteen be recertified in one of their
food joint. Speed and minutes and without any paper forms. jobspop quizzes, if you
accuracy are interlinked. will. They take a quick test;
One reason customers pull away from the handout see whether they pass; and, if they fail, they get retrained
window in 12 seconds is that almost none of them for that job before they can do it again. (The average
bothers to check their orders before they drive off. employee gets two or three pop quizzes per month.) The
Pals customers visit its restaurants an average of goal is for everyone at the company to be so good at what
three times per week. McDonalds customers visit its he or she does, to stay at the top of their game throughout
restaurants an average of three times per month. their tenure at Pals, that the company operates at what
An individual Pals location requires only 1,100 square it calls the Triple 100 100% execution, 100% of the
feet of space and generates $2 million of annual time, even when restaurants are operating at 100% of
revenue, a sales-per-square-foot performance $1,800. capacity.
The typical McDonalds location generates less than These are just two stories, of the many that Williams
$650 of annual sales per square foot. narrates. They range from Metro Bank, which is challenging
Pals knows that its customers are in a hurry and how banking is done in UK (which was dominated by five
that its job is to help them get on with their lives. And banks, who often work against customers interests), to
its treats them like adults. It does not helpfully suggest an organisation that gave permanent homes to thousands,
Would you like a drink with that? It gives back their to a unique healthcare system for the local population in
time. Plus, the confidence that the bag has what they asked Alaska, to the John Lewis Partnership of UK and so on.
for. How does Pals manage to pull off such incredible This is a fascinating book that will open your eyes to how
efficiency? The key is hiring, training, sharing ideas with unique and successful some organisations have been by
its employees. But here is a breathtaking fact: 90% of Pals being dedicated to the interests of customers and employees
over 1,000 employees are part-time, 40% between 16-18 simultaneously. Debashis Basu

63 | 9-22 Dec 2016 | MONEYLIFE

Book Review.indd 3 01-12-2016 21:06:01

 MONEY FACTS STOCKS

INDIAN MARKET TRENDS FUND FLOWS

The Sensex and the Nifty rose 2% each during the fortnight
ended 30 November 2016. ML Mega-cap Index, ML Micro-
cap Index and ML Large-cap Index advanced 3% each.
ML Mid-cap Index surged 6%.
Foreigners: Foreign institutional investors were net
sellers of stocks during the fortnight (Rs7,995.94
crore). They sold shares worth Rs54,240.47 crore.
0

Share Prices Index, June 2016=100 -420

130

-955

120
-1,490 FII Net Investments
(Rs Crore)
110
-2,025
21 Nov-16 30 Nov-16

100 Indians: Domestic institutional investors were net

buyers of stocks (Rs8,631.61 crore). They bought
shares worth Rs22,234.47 crore.
90 1,680
Jun-16 Sep-16 Nov-16 DII Net Investments
(Rs Crore)
ML Large-cap ML Small-cap Nifty ML Micro-cap 1,260
ML Mid-cap ML Mega-cap Sensex

840

Index 18 Nov 30 Nov +/-

420
ML Mid-cap Index 111.29 118.38 6%
ML Small-cap Index 105.78 111.39 5%
0
ML Mega-cap Index 105.95 109.07 3% 21 Nov-16 30 Nov-16

ML Micro-cap Index 104.98 107.79 3%

ML Large-cap Index 107.59 110.42 3%
GLOBAL MARKET TRENDS
65,000
Sensex 26,150.24 26,652.81 2%
Nifty 8,074.10 8,224.50 2% Bovespa

Mega-cap Gainers/Losers 18 Nov 30 Nov Change 59,500

Berger Paints India 188.00 228.85 22%

54,000
Punjab National Bank 149.75 138.20 -8%

Large-cap Gainers/Losers 18 Nov 30 Nov Change

48,500
Jun-16 Sep-16 Dec-16
Shilpa Medicare 563.45 678.50 20%

Indoco Remedies 283.00 257.90 -9% Bovespa advanced 3%, while Hang Seng, Nikkei
Mid-cap Gainers/Losers 18 Nov 30 Nov Change
and Shanghai Composite rose 2% each. The FTSE
and NASDAQ Composite ended flat.
Ajmera Realty & Infra India 102.50 153.40 50%

Den Networks 76.50 62.75 -18% Index 18 Nov 30 Nov +/-

Bovespa 59,962 61,906 3%
Small-cap Gainers/Losers 18 Nov 30 Nov Change
Taiwan Weighted 9,009 9,241 3%
TVS Electronics 93.50 177.30 90% Hang Seng 22,344 22,790 2%
Control Print 256.55 230.40 -10% Nikkei 17,967 18,308 2%
Shanghai Composite 3,193 3,250 2%
Micro-cap Gainers/Losers 18 Nov 30 Nov Change
S&P 500 2,182 2,199 1%
MPS Infotecnics 0.12 0.25 108%
Korean Composite 1,975 1,983 0%
Prakash Constrowell 8.20 5.65 -31% FTSE 6,776 6,784 0%

(All Prices in Rs) NASDAQ Composite 5,322 5,324 0%

MONEYLIFE | 9-22 Dec 2016 | 64

* 20 O 16 ** 1 N 16
Money Fact.indd 2 02-12-2016 18:52:12
 MONEY FACTS STOCKS

Whats H T

Shares of non-ferrous metals companies were in demand during the
fortnight. Gravita India, Arcotech, National Aluminium, Hindustan Zinc and
ML SECTORAL TRENDS
Shares of non-ferrous metals
companies and paper & paper
Man Industries advanced 19%, 15%, 14%, 13% and 11%, respectively. products companies advanced 11%
each. Shares of paints companies
Companies 18 Nov 30 Nov +/- and petrochemicals companies
advanced 9% and 8%, respectively.
ML Non-ferrous Metal Index Gravita India 35.45 42.05 19%
Stocks of banks and retail companies
175 Arcotech 348.90 400.25 15% fell 2% and1%, respectively. Stocks
National Aluminium 50.20 57.10 14%
of refinery companies rose 1%.
160
Hindustan Zinc 249.80 282.60 13%
145 ML Sectoral Trends
Man Industries 43.90 48.75 11%
Non-ferrous Metals 11% Banks -2%
130 Hindustan Copper 55.35 58.90 6% Paper & Paper Prod 11% Retail -1%

Hindalco Industries 165.50 175.90 6% Office Equipment 10% Transport & Logistics 0%
115
Paints 9% Refineries 1%
Alicon Castalloy 377.20 398.00 6%
100 Petrochemicals 8% Odds 1%
Ram Ratna Wires 63.85 67.30 5%
Jun-16 Sep-16 Nov-16
All Prices in Rs

FOOD INFLATION

Whats N T Combined food inflation declined

steeply, to 3.71% in October
Shares of banks were punished. Karur Vysya Bank and Punjab National 2016, compared with 4.12%
Bank declined 8% each. State Bank of India, United Bank of India and recorded for September 2016.
Dena Bank declined 6% each. Vijaya Bank and UCO Bank fell 5% each. For rural and urban areas, food
inflation in October 2016 was
Companies 18 Nov 30 Nov +/- 4.25% and 2.79%, respectively.
Karur Vysya Bank 91.05 83.90 -8% ML Bank Index
PNB 149.75 138.20 -8% 125 Trending Lower
Bank of Baroda 176.95 164.25 -7%
120 8.00%
State Bank of India 275.80 258.40 -6%
Annual Change
United Bank of India 22.50 21.25 -6% 115
Dena Bank 37.05 35.00 -6%
110 5.25%
Vijaya Bank 47.15 44.75 -5%

SBBJ 746.70 710.45 -5% 105

Uco Bank 35.65 33.95 -5%
100 2.50%
St Bank of Mysore 585.20 560.25 -4%
Jun-16 Sep-16 Nov-16 Oct-15 Apr-16 Oct-16
All Prices in Rs

Vegetable prices fell by 5.85%

BULK DEALS in October 2016 compared with
those prevailing in September
Date Company Buyer Seller Rs Cr 2016. Inflation in fruit prices was
28 Nov-16 Mac Charles (India) Embassy Property Chatrabhuj Bassarmal Pardhanani 432.78
4.50% in October 2016, while
pulses were dearer by 4.24%
29 Nov-16 Mac Charles (India) Embassy Property Chatrabhuj Bassarmal Pardhanani 184.66 year-on-year. Inflation for cereals
23 Nov-16 Apcotex Industries Saldhar Investments Abhiraj Atul Choksey (HUF) 6.14 stood at 4.40% and inflation for
30 Nov-16 Raunaq Epc International Gulab Merchandise Pvt Surinder Pal Kanwar 5.11
milk products was 4.42%. Price
rise of non-vegetarian items, such
22 Nov-16 Zuari Global Globalware Trading Coltrane Corporation 4.32
as meat and fish, was 6.00% in
18 Nov-16 Lloyds Metals and Energy Lloyds Metals and Minerals Uttam Exports Private 3.15 October 2016 compared with
25 Nov-16 Future Enterprises Kumaraswamy Reddy Sumanthkumarreddy Bathina 0.42
4.25% in September 2016.

65 | 9-22 Dec 2016 | MONEYLIFE

Money Fact.indd 3 02-12-2016 18:52:26

 BEYOND MONEY

Tribals Benefit from Scientific

Approach and Spiritual Outlook
T
his story began in the early 1960s. A group of states. It is fully equipped with facilities like laboratory &
students from various colleges in Gujarat were blood storage, X-ray and sonography, operation theatres,
disturbed about poverty, inequality and the labour-room, intensive-care-unit (ICU) and neonatal ICU.
exploitation people in our society, but could do little about About 150 eye camps are organised in the field every year
it then. Many of them went to the USA for higher studies. and over 4,500 cataract surgeries performed. More than
By the late 1970s, many of them had completed their 100,000 patients are managed in the OPD, while 18,000
studies and worked for a few years in the US. But the dream patients are admitted every year. About 5,000 deliveries
of working for the poor in India hadnt been forgotten; and 7,000 operations are also conducted.
some of them chose to come back and follow the path SEWA-Rural runs a vocational training centre that
prescribed by Mahatma Gandhi and Swami Vivekananda. has a one-year residential programme to train around
The result was the formation of the Society for Education, 150 rural, poor and tribal youths in various technical
Welfare & Action-Rural (SEWA-Rural) on 26 October skills; it also focuses on character building and becoming
1980. The initial founders responsible citizens. A 100%
were Dr Anilbhai Desai (MS, job placement with nearby
General Surgery), Dr Lata industries is ensured and this
Desai (MD, Paediatrics), has benefited 2,000 students
Dr Pratimaben Desai (PhD) so far. All these have been
and Arvindbhai Desai (MSc). made possible by more than
A beginning was made 250 full-time staff including
with a small 30-bed hospital a 25-doctor team, 100
in Jhagadia (district Bharuch, para-medicals, and about
Gujarat). Over the years, other 500-village level frontline
like-minded professionals health volunteers.
joined the group and SEWA-Rural is able to
started imbibing the spirit mobilise funds to the tune of
of organisation. Hence, the scope and range of various Rs10 crore every year from multiple sources including
services, activities and programmes to serve and empower government grants, international funding and donations.
the last man standing started growing. A comprehensive mHealth innovation (ImTeCHO) for
SEWA-Rural is a voluntary organisation involved in empowering accredited social health activists (ASHAs) has
health and development activities in rural tribal areas been introduced by SEWA-Rural in partnership with the
of south Gujarat with its headquarters at Jhagadia. All health department of Government of Gujarat. More than
the activities and programmes incorporate, as well as 600 village-level ASHAs are now utilising smart phones
balance, the three basic principles: social service, scientific with a specially designed software to provide maternal and
approach and spiritual outlook. The idea is to encourage childcare at the doorstep with better quality and timely
young medical professionals to work for the poor and management in the districts of Bharuch, Narmada and
the disadvantaged sections of society. Over the years, Valsad (Gujarat).
SEWA-Rurals work has earned rich accolades from the The doctors in SEWA-Rural aspire to lower the maternal
government, donors and the public. It has also increased mortality ratio (MMR), infant mortality rate (IMR) and
in size and reach. neonatal mortality rate. They are also
The 200-bed Kasturba Hospital working towards reduction in poverty
runs a round the clock OPD (out- through employment opportunities for
patient department) as well as indoor SEWA-RURAL community and empowering women
and emergency services in the fields of Jhagadia, District Bharuch, through educational and employment
OBGYN (obstetrician and gynaecology), Gujarat, PIN: 393110. opportunities.
paediatrics, ophthalmology and general Phone number 091-2645- 220021, Donations to SEWA-Rural have 50%
medicine. It serves patients from 3,000- 091-2645-220868 income-tax exemption under Section
odd villages as well as neighbouring Fax number 091-2645-220313 80-G of the Income-tax Act.
Mobile +91 9978228689
Email sewarural@ymail.com
Website: http://sewarural.org/
MONEYLIFE | 9-22 Dec 2016 | 66

Beyond_money.indd 1 01-12-2016 21:16:36

Advertisements.indd 2 03-10-2015 14:03:26
 REGISTERED WITH THE RNI UNDER NO. MAHENG/2006/16653. Postal Registration No: MCW/184/2015-2017.
POSTED AT PATRIKA CHANNEL SORTING OFFICE, MUMBAI 400001. Date of Publishing 2 December 2016. Date
of Posting Alternate Tuesday & Wednesday.

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