THE ECONOMIC TIMES

wealth
www.wealth.economictimes.com | Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi, Pune | November 19-25, 2012 | 32 pages | ` 7

13
STOCKS
15
FINANCIAL PLANNING
29
TECHNOLOGY
IS IT A GOOD
TIME TO BUY
PROPERTY?

ALSO INSIDE
Financial planning PAGE 14
Be a Financial Wizard
PAGE 9

Is this a good time to Improving distributor- Click better images with

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Over-diversification can HOW MANY

STOCKS
pare your portfolio’s SHOULD YOU
returns. Here’s how to OWN?
optimise performance PAGE 3

by picking the right

number of funds. HOW TO
PAGE 2 BUILD
A FUND
PORTFOLIO
PAGE 6

HOW
INVESTORS
LOSE OUT TO
EMOTION
PAGE 16

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02 The Economic Times Wealth, November 19-25, 2012 Cover Story

Do you
have
too
many
funds? Diversification reduces the risk, but owning too many mutual
funds or stocks will only make it difficult to track your
investments and bring down your overall returns. Find out the
optimum number of funds and stocks one should invest in.

SANKET DHANORKAR their eggs in one basket. Hence, hotchpotch portfolio with all kinds of
investors seek safety in numbers to schemes, some of which may not be best

F
or many people, investing is reduce the element of risk. But are you suited to his needs.
all about numbers. While the going too far in trying to spread the risk In most cases, fund portfolios do not
obsession with returns is in your portfolio? start out complicated; they grow thus
natural, investors also tend Mutual fund investors often get over a period of time. Investors buy
to fuss about the number of trapped in the quest for diversification. funds in an ad hoc fashion without any
holdings in their portfolio. Be it stocks Take 65-year-old Jaipal Singh from investment goal in sight. Very soon, the
or mutual funds, they are not sure about Delhi. He has as many as 20 schemes in portfolio becomes a heady cocktail of
the optimum size and mix of invest- his mutual fund portfolio. “I have been sorts—too complex to understand and
ments. Given most experts’ opinion on investing in funds for the past 10-12 unwieldy to monitor. Many investors
the benefits of diversification, people years and mostly do my own research,” don’t even realise how complicated
are aware of the dangers of putting all he says proudly. The result is a their portfolios have become till they get
Cover Story The Economic Times Wealth, November 19-25, 2012 03

down to figure out their returns. Sumeet only up to a reasonable extent. If you overdo
Vaid, founder, Ffreedom Financial Planners, it, diversification actually works against you.
How
attributes this practice to the lack of a proper
financial plan or strategy. “Investors end up
Here’s how:
No further mitigation of risk: You may many
stocks
with a messy portfolio as they don’t have a think that you are playing safe by adding
proactive approach to allocating their more schemes to your portfolio, but this is
savings. In the absence of a proper blueprint, not always true. After a point, having more

should you
savings are invested in a haphazard funds may not offer any value to your
manner,” he says. portfolio. A Morningstar study found

own?
To be sure, one cannot blame that an investor can only reduce
the small investor for getting How investors risk to a certain extent. Beyond a
carried away. There are lose out because point, there is no benefit from
hundreds of schemes of myriad of emotions diversification. Morningstar creat-
flavours on offer and small Page 16 ed hypothetical portfolios,
The consensus is that a well-balanced stock portfolio with not more than 20
investors want a bite of each. ranging from 1-30 funds, using stocks offers the best possible diversification. "Empirically, it has been
New fund offers (NFOs) of mutual every possible permutation. It then observed that 15-20 stocks lend optimum diversification to a portfolio.
funds ride on this mentality of the calculated the five-year standard devia- Beyond this, a portfolio becomes too
average investor. It is not uncommon to find tion of each of these portfolios. The single- stretched,” says Sandeep Sabharwal,
in an investor’s portfolio schemes that may fund portfolios had the highest standard CEO of PMS, Prabhudass Lilladher.
STOCK- Within academic circles too, this number
not be suitable for his needs. However, this deviation—they delivered either the biggest

Standard deviation (risk)

SPECIFIC
habit of lapping up anything in the name of gains or suffered the heaviest losses. This RISK seems to be the optimum choice. The
diversification does more harm than good. showed that owning just one fund can be modern portfolio theory suggests that
you will come very close to achieving
Read on to find out how diversifying beyond risky and pointed to the need for
optimal diversity after adding about the
a point may actually hurt your returns and diversification. Adding another fund to the 20th stock to your portfolio. Stock
the way you can create a truly diversified portfolio brought down the standard researchers Edwin J Elton and Martin J
MARKET
portfolio. deviation significantly, thus reducing the RISK Gruber found that the average standard
risk. This drop in risk was experienced with deviation (which is indicative of risk) of a
WHY OVER-DIVERSIFICATION IS each additional fund. After seven funds, 1 20 200 portfolio of one stock was 49.2%.
NOT HEALTHY however, Morningstar discovered that a Number of stocks Increasing the number of stocks in the
Diversification is a prudent strategy that portfolio’s standard deviation remained average well-balanced portfolio could
reduces the investment risk by spreading it pretty much the same regardless of the reduce the portfolio’s standard deviation
to at most 19.2% (this number represents market risk). However,
across a basket of securities. Investing in a number of funds added. In other words,
they also found that with a portfolio of 20 stocks, the risk was
mix of assets that has little correlation to each there is no need for more funds once you
reduced to about 20%. Therefore, any incremental additions after
other is advisable as this ensures that even if reach a critical number. 20 only reduced the portfolio’s risk by about 0.8%, while the first
one or two assets face rough times, others Problem of plenty: When you hold a large 20 stocks reduced the portfolio’s risk by 29.2%. So, the
may perform well enough to protect your number of funds, it is that much more incremental benefit is negligible.
portfolio. However, diversification is healthy difficult to keep track of your investments.
04 The Economic Times Wealth, November 19-25, 2012
Cover Story

Mutual fund investors should ideally monitor through other funds, the diversification
their portfolios every 3-4 months to ensure principle is defeated. “Owning too many
Are An online survey the performance is up to the mark, and to mutual funds does not necessarily give you

you conducted by check if there are no undesirable surprises,

such as a change in manager or investment
the underlying diversification if all the
schemes own the same kind of stocks,” says

a smart
Economictimes.com,
mandate, or a hike in expense ratio. This will Ajit Dayal, director, Quantum Advisors. We
last week, shows
be tedious if you have a fat bunch of fund examined the portfolios of the 25 largest
that though small

fund
statements to sift through. Neeraj Chauhan, equity diversified funds and found that of the
investors under- CEO, Financial Mall, says, “A bloated 351 stocks in their portfolios, only 126 stocks
stand the need for portfolio becomes unmanageable, making it were unique. The remaining 225 stocks

investor?
diversification, they difficult to keep track.” If you don’t know overlapped in the portfolios of these funds
don’t know how to how your investments are doing, you won’t (see graphic on page 6).
achieve it. be able to remove the underperformers.
Dilutes impact of performers: Having too FINDING THE RIGHT MIX
many funds also takes the bite out of your For investors, the big question is: how much
portfolio. Even if there are good schemes in diversification will deliver the optimum
How do you invest How many stocks your basket, it may not reflect in the portfolio results? If you are looking to build a well-
in equity? do you own? returns because their contribution will be diversified portfolio, remember that
43% diluted by the slackers. This is similar to an investing works best when kept simple.
15-30

Buy stocks.
5-15

>30

over-diversified equity fund; owning Investing in mutual funds is supposed to sim-

<5

hundreds of stocks waters down the plify life, not complicate it. The best way to
32% 38% 17% 13% potential of big gainers and affects the total make your portfolio work for you is to have a
returns. Suppose there are 50 stocks in your compact collection of quality funds. Broadly
portfolio, each with equal weightage. If one speaking, one should look at the following
10-15
5-10

>15

stock shoots up by 40%, the overall portfolio factors while building his portfolio:
<5

10% will go up by less than 1%. If you diversify too Asset mix: The key factor that determines
50% 34% much, you might not lose much, but you the success of any portfolio is the asset alloca-
57% 6%
Through mutual funds. won’t gain much either. tion and its rebalancing. “Investors tend to go
High possibility of overlap: The average wrong mostly in finding the right asset alloca-
How many mutual diversified mutual fund invests in 40-50 tion and maintaining the same throughout
funds do you own? stocks. Two funds from the same category the investment period,” says Chauhan.
are likely to invest in the same companies Pankaaj Maalde, head of financial planning at
How often do you track your investments? and sectors. As you add more funds to your Apnapaisa.com, says investors tend to be
portfolio, there is high chance of duplication under-diversified across asset classes. “There
2% and overlapping. If you buy the same stocks is a lot of imbalance in the allocation. They
My broker does
it for me.

83% “I have realised the value of following a

Regularly as 9%
it’s online. At least
6%
I rarely track
goal-based approach to investing, instead of
once a year.
my investments.
making ad hoc investments.”

How did you decide What is the Rajesh K Prasad, 35, Bangalore
to buy these stocks most important
or funds? factor while buying
17%
a mutual fund?
As and when 10%
I had extra 52%
Past returns.
money. On my
broker’s
31% advice

When I came across

a good opportunity. 59% 31%
The fund category How it fits in
and past returns. the portfolio.

What is true diversification?

17% 20%
Investing in as many
VARADHARAJAN SANTHANAM

Investing in
different mutual assets that
funds or stocks move in
as possible. tandem with
each other.

63%
Investing in assets
that have little correlation
with each other.

The survey was

What is the true benefit Started investing in

of diversification?
conducted by
Economic-
times.com on
stocks and mutual
funds on his own
PLANNER’S ADVICE
14-15 Nov. The about five years ago, Pankaaj Maalde, Apnapaisa
31% 60% total number of
Safety of relying on advice
Stability in respondents Mutual fund portfolio needs to be reviewed because
capital was 964. from magazines and
performance. there are too many schemes. It is advisable to invest in
invested. newspapers. Now, he
9% 4-5 good performing funds. The portfolio includes
owns a portfolio of 12
Higher return global and sectoral funds, which are not suitable for
funds, worth approxi-
on investment. him given his financial situation.
mately `4 lakh.
Cover Story The Economic Times Wealth, November 19-25, 2012 05

BHARAT PATHAK

are either heavily into property or deep

into fixed income,” he says.
Category mix: While investing in a “I only invest in
fund, avoid schemes with similar
attributes. Buying two large-cap funds funds that have
doesn’t help because they will invest in
the same stocks. Investors should own a
been given a
mix of funds that have exposure to
different segments of the equity market.
high rating by
Similarly, one can have exposure to both fund research
long and short tenure bond funds. “One
should spread one’s investments within agencies.”
each asset class to achieve the right diver-
sification,” says Vaid.
Manager mix: Even when you invest
in a diverse mix of funds, don’t rely on a Amit Ranjan,
single fund manager or team to handle 30, Vadodara
your money. Though you might have
preferences for a certain brand name, it
is wise to diversify across fund houses.
By doing so, your portfolio health will
not be affected even if one of the fund
houses witnesses a downturn in
performance across its schemes.
So, how many funds should one have
said, keep in mind that no matter how
diversified your portfolio, the risk of
He invests in
mutual funds
based on his own
PLANNER’S ADVICE
in a portfolio? There is no one-size-fits-all investing in stocks can never be research. He Pankaaj Maalde,
answer, but experts say 4-5 diversified completely eliminated. currently has SIPs Apnapaisa
equity funds, 1-2 bond funds and a gold in nine funds and Consolidate mutual fund portfolio in five funds. For
fund should be enough to create a well DECLUTTER THE PORTFOLIO six other funds. His funding higher education of daughter, continue invest-
diversified portfolio. “Most investors If you have a messy portfolio of funds total mutual fund
ment of `7,000 per month in HDFC Equity Fund, ICICI
would do well to have 8-10 mutual funds and stocks, it may be time to get it back portfolio is around
Prudential Focused Bluechip and Birla Sun Life Dividend
covering equity, debt and gold into shape. But don’t start cutting your `2.35 lakh.
Yield, while the remaining `3,000 per month can be
investments,” says Chauhan. If you investments blindly. Prune your invested in the PPF. Marriage funding can be continued
broadly follow this structure, it should portfolio in a way that it achieves the through equity investment of `4,200 per month in IDFC
give you reasonable diversification. That desired asset allocation keeping your Premier Equity and Reliance Regular Savings Fund and
`1,800 in SBI Gold Fund.
06 The Economic Times Wealth, November 19-25, 2012
Cover Story

Howto TENURE ASSET ALLOCATION

How long do I want to stay invested?

build
How do I want to split my investment?
Short term: Debt Heavy in equity: Diversified, ELSS, mid-cap, sectoral
Medium term: Balanced, FMPs Heavy in debt: Debt, FMPs
Long term: Equity Mix of both: Balanced, MIPs

a fund
Each financial goal has a different tenure, so invest in Choose the fund that invests in avenues that suit your desired asset allocation.
funds that give the best results in the time horizon for

portfolio
each goal.
RISK PROFILE
How much risk can I take?
Low risk: Debt, MIPs, arbitrage
Moderate risk: Balanced, index, diversified
High risk: Mid-cap, small-cap, sectoral
Take this short quiz to find out which
option is best for you, depending on The funds in your portfolio must match your risk appetite.
Also, factor in goal-related risks while picking funds.
the risk level of the fund and the
returns it can generate.
TAXABILITY
Which tax breaks do I want?
QUESTIONS TO ASK YOURSELF
LIQUIDITY Low tax: Debt for over one year
Would I need money at short notice?
Remember that you will need to No tax: Equity, equity-oriented
If required at short notice: Liquid funds
rebalance your mutual fund portfolio balanced funds for over one year
If not required immediately: Equity funds
as you age and achieve your financial Tax exemption on both
goals. This will be decided by your risk Your monthly surplus has two parts: ready-to-use cash investment and income: ELSS
and investible money. Choose funds that meet your cash-
appetite, tax considerations and cash- flow needs. The tax on income from funds depends on the kind of fund and
flow requirements. investment tenure. Choose ones that are the most tax-efficient.

“I am now looking to exit some of the non- Duplication across funds

performing funds at reasonable valuations.” The 25 largest equity funds have invested in similar stocks.
ASHWANI NAGPAL

Jaipal Singh, 65, Delhi NUMBER OF FUNDS THAT HAVE INVESTED IN THESE STOCKS

21
20
18 18
17
16 15
15
14 14 14 14
k

nk

nk

n.

el

ia

s
sy

rie

rie
an

di

br

pl

nd
rp

rt
Ba

Ba
In

Ci
u
fo

Ai
IB

st

st
Co

lI
To
of

In

du

FC

is

du
a
IC

ti
as

Co
Ax

ar
&
nk

In

In
IC

HD

lG

Bh
en
Ba

im
nc

ra
rs

as
e

lia

tu
La
at

Gr

Data as on 30 Sept 2012

Na
Re
St

Source: Value Research

l&
Oi

broader investment goals in mind. portfolio will not be able to outperform.”

Consider these steps when you start Instead, identify investments that are
consolidating: consistently underperforming and weed
Get rid of duplicate holdings: Identify them out.
He started investing
in mutual funds PLANNER’S ADVICE investments that are similar to each other.
If you hold 3-4 large-cap equity funds, get
Be wary of costs: Consolidating a
portfolio will entail some costs. Every
several years ago Neeraj Chauhan, rid of 2-3. “Investors should remove funds time you sell shares in a company or units
when the stock CEO, Financial Mall and stocks that are similar because they in a mutual fund, there could be a tax
markets were doing do not lend any diversification benefit,” incidence or an exit load. Make sure that
well. He chose funds The existing portfolio has multiple schemes in the same says Hemant Rustagi, CEO, Wiseinvest you are not incurring an unduly high
purely on the basis of asset class and categories. The portfolio is too big to Advisors. Keep the fund that has done expense when you sell. Even though
manage and doesn’t serve the purpose of appropriate
past performance and better than the others. some costs are unavoidable, it should not
diversification. The investor is aged 65 and retired.
currently has about Don’t cut the winners: While trimming deter you from the exercise. The benefits
Though he has adequate fixed deposits and pension for
`7 lakh invested in 20 safe and regular income, his allocation to equity is not the portfolio, investors often end up of having a leaner portfolio far outweigh
different schemes. appropriate. His risk profile is moderately aggressive selling their winners while keeping the the cost of achieving it. “If your returns
and has no goal left apart from a comfortable retired underperformers intact. This strategy of are optimised, the cost won’t matter
life. It is suggested that he put 32% in debt, 54% in booking profits on winners is not the right much,” says Rustagi.
equity and 14% in gold. Equity is better diversified approach. Sandip Sabharwal, CEO,
among large-cap, mid-cap & small-cap funds with portfolio management services,
lesser schemes and different fund managers. Prabhudas Lilladher, says, “Stay with Please send your feedback to
winners for some time, otherwise your [email protected]
Review Preview The Economic Times Wealth, November 19-25, 2012 07

1-week
Weekly wealth monitor change (%)
1-year
change (%) The top three
12.64 13.49
10.25 10.43 STOCKS Price (`) Weekly
% change
DEBT FUNDS NAV (`) Weekly
% change
9.38
8.20 8.31 L&T Finance Holdings 86.20 57.30 Canara Yield Advantage 11.38 0.35
United Spirits 1,850.65 51.74 UTI Bond 33.38 0.33
2.02 SREI Infrastructure Finance 34.15 31.85 IDFC Asset Allocation Agg 12.87 0.31
0.14
Weekly
-0.41 -0.80 WORLD INDICES % change EQUITY FUNDS NAV ( `) Weekly
-1.99 % change
10-yr GoI Balanced Equity Gold Income Sensex WIG20(Poland) 2,371.77 1.44 Sundaram Entert. Opp 13.50 5.39
bond yield funds funds funds
JCI (Malaysia) 4,351.28 0.54 SBI Magmum Emer. Bus. 56.78 3.05
Wealth doesn’t get built or destroyed in a week. But you do need to broadly know how your investments Hermes (Egypt) 568.18 0.53 Reliance Media & Entert. 36.01 2.62
in different asset classes are doing. This monitor tells you exactly that.
10-yr GOI yield is the average yield in the respective periods. Stocks are from the BSE-500. Debt funds are income funds. Source: ETIG Database

Market pulse
Top news ■ Hurt by the contraction in industrial production in ■ On the global front, the threat of the fiscal cliff in
September and the disappointing 2G spectrum the US has already pulled the US markets down by
auction, the Nifty slipped below the 200 point more than 5% since the re-election of Barack
range between 5,580 and 5,780 and ended at 5,574 Obama. This has begun denting the sentiments in
METALS for the week. The Sensex too slipped below its other markets as well. With the Eurozone economy
range of 18,400-18,900 and closed at 18,303. contracting by 0.1% during the July to September
Import tariff hiked for gold and silver Volatility is likely to increase this week because the period, after it contracted by 0.2% during the previ-
winter session of the Parliament begins on 22 ous quarter, the Eurozone has officially slipped into
In the wake of rising global prices of precious metals, the government
November. Though the session is expected to be a recession now after a gap of four years. The deci-
has increased the import tariff of gold and silver. The tariff value, which
stormy, market participants will be closely watch- sion regarding the Greece bailout could not materi-
is released every fortnight, is the base price on which the customs duty
ing the fate of bills pertaining to the recent eco- alise last week and some decision on this front is
is determined to prevent under-invoicing. The tariff for gold has been
nomic reforms like insurance bill, pension bill, etc. expected during this week.
hiked from $556 (`30,580) per 10 gm to $561 (`30,855), while for silver it
has been raised from $1,039 (`57,145) a kg to $1,058 (`58,190).

ECONOMY Product launches

KYC deadline pushed for LPG clients INSURANCE NPS
The Petroleum Ministry has extended the deadline by another 15 days, Bajaj Allianz General Insurance has launched an Muthoot Finance, a Kerala-based gold loan
to 30 November, for submission of ‘know your customer’ details by cus- ‘extended warranty plan’ for consumer durables, company, has tied up with the Pension Fund
tomers holding multiple domestic LPG connections. Only customers under which a customer will be able to extend the Regulatory and Development Authority, an
whose names appear in the respective OMC Transparency Portal, as warranty period for 12 months after expiry of the man- autonomous body under the Ministry of Finance,
identified using/holding multiple LPG connections, need to submit KYC ufacturer’s product warranty. The premium for this to act as a service provider for the National
policy will start from `350. The cover shall be equal to Pension Scheme.
details along with proofs of identity and address before the deadline.
the invoice price of the product.
MUTUAL FUNDS SAVINGS ACCOUNT
Axis Bank has launched two savings bank products,
Fund houses allowed to deal in CDS one aimed at the younger section of the population weekly calendar
and the other is for homemakers. The first one, called
The Securities and Exchange Board of India has announced that mutual
‘YOUth account’, allows a zero balance and also lets
funds can sell a credit default swap (CDS) only when they want to exit Wednesday Friday
accountholders pull funds from their parents’ account,
an existing ‘bought position’. However, this can be done only if the fund
house’s total exposure through CDS in corporate bonds, along with
equity, debt and derivative positions, exceeds 100% of the scheme’s net
which could be linked to the YOUth account. The sec-
ond product is a debit card, Ladies First Card, which is
targeted at stay-at-home women. It offers reward
NOV
21 NOV
23
assets. A credit default swap is an insurance against potential non- points on shopping for groceries and apparel. These
payment by a counterparty. points can be redeemed against gifts and vouchers. India to sell `50 Siemens to
billion 182-day release its
PERSONAL LOAN bills & `50 billion quarterly results.
REGULATION
Popley Group has tied up with Reliance Commercial 91-day bills.
Finance to offer a jewellery purchase loan for gold and
Sebi slaps fine on Earnest Healthcare diamond jewellery. Clients can buy the jewellery from
Sebi has slapped a fine of `10 lakh on Earnest Healthcare for failing to Popley by paying 40% of the price as downpayment
redress investors’ grievances and submit a status report as specified by and the rest through EMIs.
the market regulator. In April 2011, the regulator had directed the firm to
resolve 51 investor grievances within 15 days from the date of receipt of
the letter and submit a status report, but the company failed to do so
within the stipulated time.
wealthwise
INSURANCE

LIC plea against cost on officials rejected

The National Consumer Disputes Redressal Commission has dismissed a
plea by LIC against a Haryana Consumer Commission’s order imposing
cost upon its officials for rejecting a woman’s claim for cover after the
death of her husband, who was a policyholder. Dismissing LIC’s revision
petition which had said that the insurance company was ready to pay
the costs and its officials not be burdened with the same, the apex con-
sumer commission observed that there was ‘dereliction of duty’ by the
LIC officers and instead of tackling the problem, it had challenged the
state commission’s order. The insured had bought an LIC policy for a
cover of `1 lakh in May 2004, the wife had said in her complaint.
08 The Economic Times Wealth, November 19-25, 2012
Pick of the Week

BCM: Poised for further growth

A strong inventory, along with higher sugar production in UP will help the company boost its sales.
alrampur Chini Mills surprised street expectations Balrampur Chini Mills to hike their sugar production. The

B with a 77% jump in its top line in the second quar-

ter of 2012-13, helped by a rise in sugar volumes
and high sugar prices. Distillery volumes and realisations
government may allow increased non-levy sugar sales to con-
trol domestic prices and this will benefit companies with
increased production like Balrampur Chini Mills. The
Fundamentals

2010-11
Actual

2011-12
Consensus

2012-13
estimate
2013-14

have also been strong due to high prices for rectified spirit deregulation of sugar prices, proposed by the former Revenues (in ` cr) 2,977 2,310 2,951 3,128
and alcohol. On the back of a seven-fold increase in its governor of the Reserve Bank of India, C Rangarajan, if EBITDA (in ` cr) 546 264 459 414
Net Profit (in ` cr) 163 0 154 135
EBITDA, the company, which is one of the largest integrat- implemented, can act as another trigger for sugar stocks.
EPS (in `) 4.15 0.02 6.03 5.64
ed sugar manufacturing firms in the country, reported a With a very strong balance sheet (debt equity ratio of only
net profit of `49 crore. This is a healthy 0.5 times as on 30 September),
growth compared with a loss of `18 Balrampur Chini Mills is the best play in
Relative valuation Dividend
PE PB yield (%)
crore in the preceding quarter and a loss the unfolding sugar sector story. Balrampur Chini Mills 1.27 15.90 0.00
of `39 crore in the corresponding period Analysts’ views However, the UP government is expected EID Parry 1.67 12.80 1.72

last year. 2 17 to come out with the state advised price Shree Renuka Sugars 0.95 -13.21 0.00
Buy (SAP) for sugarcane and any jump in SAP Bajaj Hindusthan 0.59 -7.37 1.50
Sell Bannari Amman Sugars 1.36 8.78 1.03
Strong numbers may continue: will be negative news for the company.
Balrampur Chini Mills is expected to Since the long-term outlook for sugar is
report strong numbers in the coming still positive, investors should use any Latest brokerage calls
quarters as well. This is because the situa- 2 correction triggered by this event to buy Recomm Research Advice Target price
date house (`)
tion is tight on the domestic front. The Hold shares of the company.
12 Nov Prime Broking Company Strong buy 98
2012-13 sugar season (that is, the October
9 Nov Enam Securities Buy 83
2012-September 2013 period) started Selection methodology: We pick up the 9 Nov ICICI Direct Buy 82
with a low inventory of 45 lakh tonnes. stock that has shown maximum increase 9 Nov Centrum Broking Buy 80
The domestic production is expected to in ‘consensus analyst rating’ during the 8 Nov Jefferies Buy 87
Analysts are bullish on the
be lower at around 2.4 crore tonnes past one month. Consensus rating is 8 Nov HDFC Securities Buy 86
compared with about 2.6 crore tonnes of counter since the company arrived at by averaging all analyst
production during the sugar season of is likely to increase its sugar recommendations after attributing
2011-12. With an inventory of 2.3 lakh production. weights to each of them (5 for strong buy, Relative performance 132.81
tonnes, the company will be able to bene- 4 for buy, 3 for hold, 2 for sell and 1 for
fit from the firm domestic sugar prices. strong sell). Any improvement in consensus analyst rating
However, the domestic prices may not go up much higher indicates that the analysts are getting more bullish on the
than the current levels because sugar is facing a case of stock. To make sure that we pick only companies with 111.84
100
oversupply on the global level, thereby bringing the decent analyst coverage, this search will be restricted to
international prices to much lower levels. While monsoon stocks with at least 10 analysts covering it. You can see similar
failure reduced sugarcane production in Maharashtra and consensus analyst rating changes during the last one week in Market price: `62.95
Karnataka, good rains in UP helped to increase sugarcane ETW 100 table (page 23). 18 Nov 2011 Sensex Balrampur Chini Mills 16 Nov 2012
production there. This is likely to help companies like —Narendra Nathan Performance of Balrampur Chini Mill’s shares compared with the
Sensex. The figures are normalised to the base of 100.

Source: ETIG Database and Bloomberg

What experts advise

BUY
Stock Research house Advice Market Target
price (`
`) price (`
`) Comment

Jyoti Structures Angel Broking Buy 45 53 The company’s robust order book and scaling up of overseas opera-
tion will benefit it in the medium to long term.

Voltas’ order flow is expected to improve due to its increasing reach

Voltas Prabhudas Lilladher Accumulate 107 131 in international markets and business segment in domestic market.

Gateway Distriparks Karvy Buy 139 188 The company is on course to double its cold chain capacity by next
financial year despite increased competition.

PI Industries Nirmal Bang Buy 521 605 A sustained order book and low per-capita pesticides consumption
make PI Industries a good long-term bet.

JBF Industries Sushil Finance Buy 130 180 The company’s persistent capacity addition, backward integration
and waning risk of derivative loss makes it a good buy.

SELL
Stock Research house Advice Market Target
price (`
`) price (`
`) Comment

Espirito Santo Securities Sell 217 185 Second quarter result was lower than expected. Also, price cuts and
Marico increase in promotional spending will cut consensus earnings.

Bhushan Steel Edelweiss Finance Reduce 490 417 Despite factoring in benefits of project completion in 2013-14 and
improvement in margins, the current valuations appear expensive.

GVK Power & Infra MSFL Research Sell 12.40 11.40 Allowance of airport development fee for funding airport capex will
help the stock, but there is no concrete outcome on this as yet.

DLF IIFL Sell 204 180 Maintains ‘sell’ as DLF's reported revenue, EBITDA and PAT were
significantly below estimates on low value tier-II city sales.
Real Estate The Economic Times Wealth, November 19-25, 2012 09

Is this a good time

to buy property?
Buying a house has high aspirational value in India. Howev-
er, in the recent past, property prices have not shown any
signs of correction, forcing many to live on rent. A study by
ArthaYantra compares property prices and rentals in
seven top cities. Know the cities in which you can buy a
house and where it’s more cost-effective to rent.

I
t is often said that anytime is a good time to A key outcome of the study is the ArthaYantra
buy property if it is for your own use. Only Buy versus Rent Score (ABRS) assigned to each
if the property is bought for investment city (see page 11). The ABRS is an objective
should the buyer worry about the price, indicator of whether it makes financial sense to
cost of capital and other factors. However, buy a house or live on rent in a particular city.
property prices are continuing to rule at high Since affordability is a function of income levels,
levels and there are no signs of a significant the ABRS is calculated for six income levels,
correction. In Mumbai, for instance, the average beginning from `8 lakh a year up to `25 lakh a
price of a 1,000 sq ft house is `1.09 crore. In the year. With a score of 55 across all income levels,
Delhi/National Capital Region (NCR), it is a tad Delhi/NCR is a clear candidate for living on rent.
cheaper at `1.08 crore (see graphic), but still out However, there are pockets of affordability in
of reach of the average buyer. Even if someone several other cities. In Kolkata, Pune and Hyder-
earns `8 lakh a year and saves 25% of his abad, it makes more sense to buy a house if your
income, he will have to wait for eight years to ac- income is above `15 lakh a year. This is because
cumulate the 20% down payment in Delhi or property prices are within reach, while the rents
Mumbai. are comparatively high. This is reflected in the
According to a detailed study by Hyderabad- short break-even horizon in Kolkata. This is the
based financial advisory firm ArthaYantra, it is time during which the decision to buy becomes
more cost-effective to live on rent than to buy a financially viable. According to the ArthaYantra
house in a city. ArthaYantra compared the prop- study, a buyer in Kolkata will break even within
erty prices with rentals in seven top cities across 12 years of purchasing a property. In Delhi, it will
India, taking into account the income and saving take him 16 years.
potential of the buyer, the cost of capital, as well If you plan to buy a home, go through the
as the increase in property prices and rentals. excerpts of the report for more such nuggets of
“Our research says that in the current situation, information. It might help you in taking an
it is preferable to rent a home than buy one,” informed decision on buying a house or
says Nitin Vyakaranam, CEO of ArthaYantra. renting one.

Should you buy or live on rent?

Though rents are steep, the high prices of property in cities like Mumbai and Delhi/NCR
make renting more cost-effective. But in Kolkata, high rents make buying more feasible.

`1.2 crore `18,137 `28,830 `35,000

Price and rent of 1,000 sq ft apartment
`1 crore `30,000
`25,000
`80 lakh `17,833 `14,955
`20,000
`60 lakh `12,125
`10,438 `12,000 `15,000
`40 lakh `10,000
`20 lakh `5,000

`37.64 lakh `42.76 lakh `51.23 lakh `54.38 lakh `71.62 lakh `1.09 crore `1.09 crore
ne
d

CR

i
na
ba

ba
or
at
Pu

en
ra

lk

i/N
al

um
Ko

ng
de

Ch

lh

M
Hy

Ba

De

Average property prices Average rent per month

10 The Economic Times Wealth, November 19-25, 2012
Real Estate

Saving for down payment How much can you buy with `1 lakh?
A critical decision in purchasing a home is the down payment. This is
usually about 20% of the property value. Based on average property In Mumbai and Delhi, you will get enough space for a small table. In Hyderabad, you may fit in a single
prices, the time required to accumulate the down payment for a house bed. Here’s how much residential space can be bought with `1 lakh in these cities.
ranges from four to eight years.
Based on average property prices

8 years Gross income Saving rate

`8 lakh 25% pa
This assumes
that the balance
80% will be
accounted for Mumbai
by a home loan.
9.15 sq ft
6 years
5 years Delhi/NCR Bangalore
9.19 sq ft 18.39 sq ft
4 years
Chennai Kolkata
13.96 sq ft 19.52 sq ft Pune Hyderabad
23.39 sq ft 26.57 sq ft

As buyers grapple with high property prices and rising EMIs, builders are trying to make their offerings more affordable
by reducing the average size of house. The average dwelling size was around 1,100 sq ft about 10 years ago. Now, it is
about 920 sq ft. If you take out the super area, the living space available to the family shrinks to around 700 sq ft.
Mumbai Delhi/NCR Chennai Bangalore Kolkata Pune Hyderabad

Cost of ownership vs cost of renting When buyers break even

The rent to buy ratio explains the additional monthly payments to be paid in case of ownership A crucial factor that resolves the rent versus buy dilemma is the time it would take to
compared to renting. The ratio also shows whether the property prices are impacting the rental make the decision to purchase financially viable. If the property price is low and the
value or not. The ratio is calculated based on the average monthly cost of renting (rental + main- rent is high, the break-even horizon is short. In Kolkata, it is 12 years. If the price is
tenance) and average monthly cost of ownership (EMI + maintenance). high, it can take a longer time as in Delhi/NCR, Chennai, Bangalore and Mumbai.

Cities Average out-of- Average out-of- Rent or buy ratio Urgency to buy 16 years
pocket cost for pocket cost of (renting the rank
Delhi/NCR Based on out-of-
renting the owning the house)/ (owning
pocket expenses
house (`) house (`) the house) 12 years for owning a home
versus renting
Kolkata one.
DELHI/NCR 19,137 97,236 20% 7
15 years Current average
stay is seven years.
KOLKATA 18,833 46,304 41% 1 Mumbai

MUMBAI 29,830 97,673 31% 4 14 years

Pune
PUNE 13,000 38,814 33% 2
14 years
The current aver-
HYDERABAD 11,438 34,288 33% 3 Hyderabad age stay in a house
is seven years,
16 years which means that
BANGALORE 13,125 48,085 27% 5 most buyers will
Bangalore not achieve the
break-even before
they shift to a new
CHENNAI 15,955 64,331 25% 6 16 years location.
Chennai
In Kolkata, buying is a compelling option because the cost of renting is 41% the cost of ownership. The
situation is different in Delhi/NCR, where the cost of ownership is five times higher than the cost of renting.

Methodology SOURCES: Property prices and rentals of residential properties were

collected from multiple sources, including the National Housing Board,
 Average savings rate is assumed to be 25%.
 The minimum gross income required to buy a house is calculated
ArthaYantra analysed the costs real estate aggregations and more than 100 estate agents in the cities by considering 50% of monthly take-home salary as monthly EMI.
associated with owning a house or included in the study.
 Gross income of the individual is assumed to rise by 10% annually.
renting one across seven major cities,
Assumptions  1.5% of the property value is considered as property tax to be paid.
including Delhi/NCR, Pune, Mumbai,
Hyderabad, Bangalore, Kolkata and  Sale price and rentals are for a 1,000 sq ft property.  The rent is assumed to increase by 10% annually.
Chennai. Here are the assumptions  20% of the cost of the house is considered as down payment.  Real estate as an asset class is considered as having the same
used in the study. properties as other asset classes.
 The loan tenure is assumed to be 15 years with an interest rate of
10.50% per annum.  The ownership/buy case considered is for self-occupancy.
Real Estate The Economic Times Wealth, November 19-25, 2012 11

Where to rent or buy a house

The ABRS scores for the following cities and different income levels are objective
Why it is smart to rent
indicators of the financial viability of buying or renting a house. ools build houses and wise men live room. In their desire to minimise the EMI,

Gross
annual Delhi/
F in them, goes an old saying. Given the
high property prices in most metros,
living on rent is perhaps the smartest
people often liquidate all other investments
and savings. This can be disastrous for your
finances and can put you in a spot in case
Kolkata Mumbai Pune Hyderabad Bangalore Chennai financial move you can make today. As the there is a financial emergency.
income/ NCR ArthaYantra study has shown, in most cities Savings: The rent you pay is likely to be
Cities
and income ranges, living on rent is a better only a fraction of what the EMI would have
option than buying property at the current, been. Use this to your advantage by saving
`8 LAKH 55 75 65 65 65 55 55 overheated levels. Here are a few the difference in a safe, yet liquid, option.
advantages of living on rent: Disciplined saving can help you accumulate
`10 LAKH 55 75 65 65 77.5 55 55 Flexibility: If you don’t own the house you a considerable amount, which can serve as
live in, you can move to another location the down payment for your house when
without any inhibitions. This also means you decide to buy one. Debt mutual funds
`12 LAKH 55 75 65 77.5 90 55 55 not having to forego career opportunities are a good avenue to save for such a
that come your way in a distant suburb or in financial goal.
another city. Home owners will necessarily No stress: Despite the rosy picture painted
`15 LAKH 55 87.5 65 90 90 67.5 55 look for jobs at places close to their homes, by analysts and government agencies, the
but tenants have more options. economy is not in a very good shape. If
`20 LAKH 55 100 65 90 90 80 67.5 Liquidity: Buying a house is one of the things worsen, we might see a replay of
biggest financial decisions in one’s life. It 2008. A tenant will find it easier to tide
sucks up the liquidity of the household and through the hard times than a home owner
`25 LAKH 55 100 65 90 90 80 80 leaves the buyer with very little elbow with a huge EMI to service.


What the scores mean

Score Recommended action

100 Buy (rents are very high).

90 Buy (rents are high).
87.5 Buy/Neutral (Buying is recommended as rents are very high).
77.5 Buy/Neutral (can afford both ownership and rent).
80 Can afford both ownership and renting, but because of low rent compared
with ownership, rent is recommended.
75 It is advisable to buy, but EMI can’t be afforded. Have to rent.
67.5 Rent/Neutral (can afford both ownership and rent, but rent/EMI ratio is low).
55 Can afford to rent, but can’t afford to buy.
50 Can’t afford both ownership and renting.

What you should do

How buyers should use ABRS scores to make informed decisions.

DELHI/NCR: The low rental values compared with high property prices make it
a place affordable for renting since the home loan EMIs are high. It is advisable
to live on rent if the salary range is `8-25 lakh.
KOLKATA: The ABRS score of 75 for a salary range of `8-12 lakh indicates that
the rental value is critically high, but an individual can't afford to buy a house.
For someone earning `13-25 lakh is better off owning a home than renting it.
MUMBAI: The score of 65 signifies that though the rents are high, it is advisable
to rent because the property prices are also high. The EMI payments to be made
in case of ownership may not be affordable.
PUNE: For a professional with a salary range of `8-11 lakh, it is advisable to
rent. A professional with a salary of `12-15 lakh falls in the neutral zone. He can
afford to buy, but will have to make a few adjustments in his lifestyle in order to
afford the EMI payments. Those earning over `15 lakh should buy.
HYDERABAD: If someone is earning `8-9 lakh a year in Hyderabad, he should
live on rent. If the income is `10-11 lakh, it is advisable to buy, but he will have to
make a few adjustments. Those earning more than `12 lakh are advised to buy.
BANGALORE: The score of 55 for a professional with a salary range of `8-14
lakh signifies that the monthly cost of renting is cheaper than buying. The low
rental prices also mean that though someone with an income of more than `15
lakh can afford to buy a house, renting is a better option.
CHENNAI: The score of 55 for a professional with a salary range of `8-19 lakh
signifies that the monthly cost of renting is cheaper than that of buying by more
than 70%. The low rental prices also mean that though a professional with a
salary of more than `20 lakh can afford to buy a house, renting is better.
12 The Economic Times Wealth, November 19-25, 2012
Banking

Buying a house? Bank

loan is your best bet
The lender not only conducts due diligence for the property, but you can also avail of tax deductions.

AMIT SHANBAUG interest paid for that assessment year is

less than `1.5 lakh, the couple can share
the benefit according to the amount

H
ariprasad Nair, a sales
representative with a reputed contributed by each for the mortgage
multinational company, has payment.
saved enough money to buy a
small house in a suburb of Disadvantages
Mumbai. However, he has decided to take a Though taking a home loan from a
bank loan to fund a part of his purchase. bank seems to be a beneficial move,
“The 1-BHK house I want to buy costs there are some pitfalls that
around `15 lakh. Though I can arrange for borrowers should be aware of.
the money through my savings and by
borrowing from friends, I prefer to take a  Better discounts on lump-sum
loan worth `5-6 lakh,” says the 36-year-old. deals
Nair’s reasoning is that since he doesn’t When it comes to negotiating the price
have the time to check on the property title of a property, buyers with ready cash
and documentation, and doesn’t want to always have an edge over those who fund
trust the broker implicitly, it will be better their purchase through a home loan. This
for him to pass on this job to a bank. “I don’t is because the former can expect an addi-
have the information or the time to exercise tional discount of 5-10%.
due diligence as far as the property is
concerned. As the bank needs to safeguard  Five-year sale restriction
its money, it will carry out a more detailed If you sell the property within five years of
scrutiny, and furnish me the loan only after the end of the financial year in which you
it is fully assured,” he adds. purchase it, all the deductions claimed

Safety checks
Before under Section 80C with respect to the
property will be added to your taxable
A loan is often the only financially you take a income in the year that you sell it. This
viable method for a person to fund a
massive purchase like a house. How
home loan to `1.5 lakh a year
for the interest
means that the deduction in terms of the in-
terest and principal will be added to your
However, as Nair has discovered, to gift or  While selecting a home paid. taxable income. Suppose you sell the
there are other advantages of transfer shares loan lender, check for the If the buyer property after four years of buying it and
Page 14 various terms and
taking a loan. Real estate experts will push up books a house that is still avail of the maximum deduction in terms of
conditions, and charges
believe that buying property the property under construction and the principal amount and interest repaid,
regarding the loan.
through a home loan ensures some prices much gets partial disbursement then `10 lakh (`2.5 lakh deduction each for
level of safety to the property buyer. higher in the  Don’t choose a lender till of loan according to the four years) will be added to your taxable
Says Sandeep Sadh, chief executive officer future, taking a loan you have identified a stages of completion, he income. If you are in the highest tax bracket,
of mumbaipropertyexchange.com: “The now seems to be a property. can still claim tax you will end up paying an additional tax of
potential buyer is saved the time and hassle win–win situation for benefits. Though he is not `3 lakh.
required to check the authenticity of the buyer,” he says.
 You should be able to
eligible for tax deductions
fund 25-35% of the cost
the title and the various documents of Apart from the fact of the house yourself. till he actually gets the What if the bank rejects the
the property.” that a bank’s due possession (even if he has house?
Anuj Puri, chairman & country head, diligence amounts to a  Approach at least three begun repaying the loan), “One reason that the bank may not approve
lenders, get their figures
Jones Lang LaSalle India, cautions that legal check for the prop- for all fees and charges, the interest paid can be of the house is that it is not satisfied with the
though banks exercise due diligence for any erty, there are and then bargain. claimed as deduction revelation from its due diligence of the
property that a prospective home loan significant tax benefits after receiving the property, or that the price stated is
borrower intends to purchase, it’s depth available on a home  Apart from the interest
rates, check up on the
possession. Under excessive. If this is the case, the aspiring
often varies among banks. “Taking a home loan. The mortgage pay- various charges, such as
Section 24, the interest buyer should take heed of the impli-
loan does provide a reasonable safety net ments by the borrower processing fees and paid during the cons- cations and perhaps not invest in the
for the buyer most of the times. However, it help him get tax valuation fees. truction phase can be house,” says Puri.
is prudent for the buyer to examine the deductions from his claimed as deduction in Another reason could be that the buyer’s
property’s antecedents himself if he has any total taxable income. five equal instalments, credit worthiness has come into question.
doubt,” adds Puri. The equated monthly in- subject to the upper limit “In such a case, the borrower should check
stalment (EMI) comprises two of `1.5 lakh. his credit score and try to repair it (in terms
Financial/tax benefits components—principal and interest—both In case two people are buying a house of the outstanding credit card bills, existing
Ganesh Vasudevan, chief executive officer of which qualify for tax deductions. jointly, they can opt for a home loan loans, etc) before approaching the same
of Chennai-based Indiaproperty.com, Under Section 80C of the Income Tax Act, together. The benefit is that both of them bank again or taking a loan from another
explains that purchasing a property a borrower can get a deduction for a will be able to avail of the tax benefits on the lender,” adds Puri.
through a bank loan also provides financial maximum of `1 lakh for the principal joint loan. Since the maximum tax
efficiency to the buyer. “Today, home loans amount paid each year, irrespective of his deduction available to a single borrower is
are available at 10.5-11% interest rate. If you tax bracket. Under Section 24(b), `1.5 lakh and this applies to each borrower, Please send your feedback to
[email protected]
factor in the inflation of 7-8% a year, which the borrower can claim tax deduction of up the total deduction will be `3 lakh. If the
Stocks The Economic Times Wealth, November 19-25, 2012 13

Time to raise stock holding

The market will continue to move up for some time, so investors should use any correction to buy shares.

India Vix PE of the Sensex

The volatility index is at its lowest level,
15-yr average
indicating complacency regarding risk. Price/earnings

18.16
18.16
29.61
12 Nov 2009
} 13.98
16.91

{ 14.86
12 Nov 2012
7 Nov 1997

PB ratio for the Sensex

9 Nov 2012

Source: NSE 15-yr average

Price to book value

reforms. However, the next budget is the

last one before the general elections, so 3.43
3.43
any populist move may derail the correc-
tive efforts. 2.67 2.87
The impact of the low base effect will
7 Nov 1997 9 Nov 2012
be visible in the corporate performance
As most market as well, so India Inc may report better
players seem to numbers in the coming quarters. The
Dividend yield of the Sensex
be oblivious to
the risks at the
increased focus by companies to reduce 15-yr average
Dividend yield
moment, the cost and increase profitability is another
stock market good factor. This means that profitability 1.56 1.62
may be heading
towards
is expected to rise in the coming 1.55 1.55
increased quarters, even if it happens at the cost of
volatility. lower sales growth. Currently, the
market has managed to hold on 7 Nov 1997 9 Nov 2012
despite the below-average second Source: BSE
Since the market
quarter numbers because it is con- is priced below
centrating on the expected future the historical companies. As a thumb rule, if the
growth. “The stock market has valuations now, PE falls below its historical average,
long-term
already started discounting the investors can use
it indicates that the broader market
2013-14 numbers,” says Shankar any correction to is trading at cheaper valuations. It’s
What could drive up the Sharma, chief global trading increase their the same case with the price to book
equity exposure.
markets... strategist, First Global. value (PB) ratio. However, when it
While the current low growth is comes to dividend yield, a higher-
NARENDRA NATHAN  Interest rate cuts by the RBI. bad, it may force the RBI to reduce than-average yield indicates cheap
 The reform bill being passed in the the interest rates faster. Any global shock valuations. As evident from the above
Parliament. triggered by the US fiscal cliff (automatic charts, the market is trading at cheap

A
fter almost a year, investors
finally have reason to cheer.  More quantitative easing money spending cuts and tax increases of $600 valuations on all three parameters at the
The Sensex, which had hit a flowing to emerging markets like India. billion from 1 January 2013) will pull the moment. So, investors can use any
bottom of 15,135 in December  A stabilised Indian GDP growth. commodity prices down, thereby, making it correction to increase their equity holdings.
2011, has gone up by 23%.  Bottoming out of the performance easy for the RBI to cut rates. This will help However, the current valuations are not at a
However, this upbeat mood has been tinged of India Inc. stimulate consumption/investment deep discount to the historical averages, so
with anxiety. Should investors pour in more demand and take the broader market investments should be staggered.
money into the stock market or use the What could pull down to much higher levels, in addition to There is no guarantee that this up-
current rally to earn profit? helping stocks from rate-sensitive ward move will be a one-way ride.
Market experts believe that the current
the markets... sectors like banking and auto. How to There are several factors that can
upswing will continue for some time, so  A fiscal cliff in the US, which may If the deadline for the US fiscal build a puncture the rally in the short
fund portfolio
investors can use any correction to increase trigger a recession there. is not postponed, it may force its term (see What can pull the
Page 6
their stock holding. What are the reasons for  Aggravation of the sovereign debt economy back into a recession. markets down?). The fact that
this optimism, especially since several crisis in the European Union. This may lead to a knee-jerk market participants have become
factors—global and domestic—could impact  India's fiscal/budgetary deficit going selling, but investors should use it slightly complacent and are not too
the current rally? The most important is the well above the target. as an opportunity to enter the equity bothered about volatility is a major
expected revival in the economic growth.  A cut in the credit rating of India. market. This is because while the fiscal cliff worry. This is evident from India Vix (which
The industrial production had contracted  A populist budget aimed at the 2014 is bad for the global economy, the US measures the implied volatility), which is
by 0.4% in September, and the RBI has general election. Federal Reserve may increase the size of its currently quoting at its lowest level of 15.
already cut the expected growth rate  Loose monetary policies, which could third quantitative easing programme. The Since the volatility is expected to
for 2012-13 from 6.5% to 5.8%. So, the low push up the price of crude oil. US Fed also intends to keep the interest increase, it is safer to invest in defensive sec-
base effect will make next year’s growth rates close to zero till mid-2015. Since tors, such as Pharma, FMCG and IT, in the
appear better. growth in the developed markets is still low, short term. However, investors need to
Moreover, the government’s recent there is a high chance of this additional avoid stocks that are already quoting at
announcement of economic reforms, such implement the announced reforms, the stimulus money being routed into emerging much higher valuations. They should also
as FDI in retail and insurance, as well as market will be at a much higher level within markets like India. streamline their exposure to weak sectors
power sector reforms, will aid the revival. a year,” says Mehraboon Irani, principal & Another factor favouring continued like infrastructure.
The biggest glitch is whether the govern- head (PCG), Nirmal Bang Securities. investment is the relatively low valuations of
ment will be able to get the reform bills The threat by global rating agencies to cut the Sensex. The PE of the index is calculated
passed in the upcoming Parliament session. India’s sovereign rating to below BBB+ may by dividing its market cap with the sum of Please send your feedback to
[email protected]
“If there are concrete measures to force the government to push for economic the net profit generated by the 30
14 The Economic Times Wealth, November 19-25, 2012
Financial Planning

THE MONEY QUESTION Paper

Work
How to optimise the return from investments by avoiding costs.

Sabeer Awasthy considers himself a

smart investor. He has invested How to gift or
according to a plan and makes his transfer shares
decisions with care. Lately, he has If a person decides to gift his shares to
started noticing the costs associated another, it is legally considered a trans-
fer. Hence, the same procedure applies.
with investments and knows that The person giving the gift is termed the
these eat into the latter. He wants to donor, and the person receiving the
shares is termed the donee. The shares
know the things he should be aware can be transferred by initiating an off-
of on this count and the ways he can market transaction. An off-market
transaction is initiated by the donor with
make sure that he is not losing his depository participant (DP) by
money unnecessarily. submitting a delivery instruction slip
(DIS) to transfer securities from his
depository account to that of the donee.

abeer Awasthy can make a significant impact on

S his investment returns by considering the costs

as an integral part of decision-making. This is
because these reduce the amount that he earns from Details
compounding. He must remember that apart from The DIS should have the name of the
costs like brokerage, which is incurred when he makes donee’s DP, of the security being trans-
a direct payment, there are also the ones that are ferred, ISIN number of the company
inbuilt in investments, such as mutual fund expenses, and quantity of shares being trans-
and are deducted from his investment value. The other ferred. The donee must give a receipt
cost that is likely to be overlooked is the penalty on instruction to his DP to accept the
investments, such as delayed payments or early shares, if he has not already given a
standing receipt instruction.
withdrawals, which may cut into his returns.
He must not let only the performance of his
investments dictate his attitude to costs. What may
seem a small charge when the investment returns are
good will be a big drain on returns when performance
Deed execution
dips. A high cost can be justified only if the investment Though it is not compulsory, it is best
is consistently generating much higher returns to execute the gift deed on a non-judi-
cial stamp paper of appropriate
compared with the low-cost options. Meanwhile,
amount for legal record and to avoid
Awasthy can avoid penalties to a large extent by
any tax queries in the future.
automating the operational aspect of investing and
making sure that his portfolio has adequate provision
for his liquidity needs. He can also eliminate
unwarranted costs by questioning every time he is
advised to sell his current investment and put the
money in a new one, since the churning will also Share certificates
translate into higher costs. If the shares are in certificate form,
Awasthy must use investment-related service a share transfer deed in Form 7B, filled
providers, who link the fees to transactions and don’t and signed by the donor, needs to be
charge a flat or annual rate. Flat charges can be executed and registered. The stamp
beneficial only in situations where the number of trans- duty is payable at the rate of 25 paise
actions are high enough to apportion the costs. Being for every `100 of the face value, or the
aware of the impact of costs on his investments and market value of shares prevailing on
assessing those related to each investment before the date of the document, whichever
committing will go a long way to make sure that his is higher.
money works in his interest.

SMART THINGS TO KNOW: Real estate terms Points to note

1
Down payment is
2
The sale deed is the
3
Stamp duty is the tax
4
It is only after the payment
5
The registration fee is paid
 The details mentioned in the delivery
instruction slip and receipt instruction for
off-market transfer must match, other-
wise the transfer will not take place.
made to the builder to agreement between the levied by the state of stamp duty that the sale for getting the sale deed
confirm the purchase seller and the buyer government on the deed is considered legally registered and is associat-  A gift from a relative (as defined under
decision. It typically and is proof of transfer agreement value or valid and can be admitted ed with getting the proper- the Income Tax Act) or of a value less than
represents a percent- of property to the buyer. the market value, as evidence of transfer of ty transferred in the name
age of the full purchase It is signed by both the whichever is higher. It property in courts. The sale of the buyer. The original `50,000 are not liable to be taxed in the
price. It could be non- parties and also by a is payable by the pur- deed has to be registered document, along with two hands of the donee.
refundable if the deal minimum of two wit- chaser and may vary with the sub-registrar of the photocopies, has to be sub-
falls through. nesses along with all mitted and registration
 Paper shares can be converted to the
across states. jurisdiction where the
their details. property is located. requires two witnesses. demat form by the donor before gifting.
This will save stamp duty on the transfer.
The content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Sunita Abraham, Girija Gadre and Arti Bhargava.
Financial Planning The Economic Times Wealth, November 19-25, 2012 15

Distributors vs investors
Distributors must improve their credibility for investors to be more willing to pay, says Uma Shashikant.

Second, acquiring saving and investing

T
he upfront commission for selling
mutual funds is all set to go. habits requires effort in education. Without
Enhancing revenue simply meant creating a pull for investment products, it
that distributors set themselves may be tough to create widespread
sales targets to push investor money in awareness and demand for useful products
unsuitable products or churn it from one like mutual funds. The industry needs to
product to another. According to the pool its resources to create serious
regulatory direction that is now in place, educational initiatives that provide good
distributors and advisers should earn their quality inputs, which are unbiased, factual
commissions from investors, not and persuasive.
producers. The concern among distributors Third, distributors are very divergent in
is that investors remain unwilling to pay. their quality and abilities. To get them to
What lies ahead for distributors? What can clear an exam and declare them as eligible
be done to move to a regime where to sell mutual funds is a necessary step, not
investors start paying? a sufficient one. AMCs segment their distrib-
First, investing is not a felt need that spurs utors by asset size; investors have no basis
a buyer into immediate action. It lies in the for choosing from competing advisers and
same league of desirable, but poorly distributors. In a divergent market like
implemented, lifestyle changes. Like India, it is not feasible to require
healthy diet, regular exercise and distributors to align themselves to one
preventive care, everyone knows that it is grouping or other. There is a dire need for
important to save and invest for the future, categorisation of services, clear labelling,
but only a few devote time and resources for written down code of conduct, ethics and
long-term benefit. Investment advice needs professional behaviour, and periodic
persuasion, motivation and coaching. The disclosures on parameters of professional
eager transition of the distribution excellence. This task is best done inde-
community into advisers, financial planners pendent of the industry, preferably by the
and wealth managers comes from this regulator, in the interest of investors. It
understanding. Those who have built their should be possible for investors to assess
practice into full-fledged advisory models and select their distributor based on clearly
that works with investors over longer time verified and disclosed proficiencies,
periods, have managed to charge for their performance and commitment to service
services. Investors may be willing to pay for standards.
transformational services, not mere The reluctance of investors to pay is a
transactional services. symptom of a bigger problem. Most
Second, the pure distribution model of investors need help with their investments,
achieving a sales target has spurred a set of but they do not know where to begin and
sharp practices. It is not uncommon for dis- whom to trust. Asking them to pay for
tributors to share their commissions with in- vaguely defined services and performance
vestors. The ‘payback’, as it is known, is an might be too much to ask.
incentive passed on by the distributor to the
investor, where both parties agree that they
are in a simple buying transaction. There is
no pretence of advice and relationship here. GETTYIMAGES

There are also distribution licences in the The author is Managing Director,
Centre for Investment Education and
names of senior citizens, housewives, and pressurise producers to ‘find a way’ to pay reasonable fee. Mutual funds are, by far, the
Learning, and can be reached at
other ‘passive’ family members, created to them. As the January deadline draws near, only segment in financial services that is uma.shashikant@ ciel.co.in
enhance commission income for the family. mutual funds are huddled with their key dominated by the private sector. Despite the
Investors are unwilling to pay for ‘profe- distributors, trying to find out how to tremendous operational efficiency, good
ssional fees’ to a distributor who had been protect the latter’s incomes, without quality disclosures, and decent fund
doing what it takes to get mere sales harming their own balance sheets and performance, mutual funds are viewed
numbers. without running afoul of the regulator. with suspicion associated with
Third, the low entry barriers to becoming The past 10 years of mutual fund private and foreign players. An
a distributor of financial products have distribution have been a story of endorsement of the industry’s
Is this a good
created a large mass that is poorly differenti- distributors prospering at the capability to manage a large
time to raise
ated in quality. The identity of a distributor cost of AMCs, and the former are stock holding? corpus will come if all large
is usually linked to the ubiquitous insurance not yet willing to let go. AMCs Page 13 portfolios are handed over to
agent, who taps anyone with some income continue to depend on mutual funds to manage. This
tax to pay. The simple pitch of saving taxes, distributors, who continue to includes pension, insurance,
compulsory saving, and a large, assured prefer the easier route of getting trusts, societies, endowments,
benefit is enough for most investors to sign their income from the AMC than from treasuries and all other large pools of
on without making a payment for the investors. This umbilical cord has not money that need professional attention.
service. A genuine multi-product been cut yet. This will achieve two objectives: one,
distributor finds it tough to differentiate If we truly care for a clean system that enhance the professional stature of the
himself, his products, or his services. It ensures the distributors serve their product as more information is available
takes time to establish a clientele, to protect primary constituency, namely the investor, on how it works and delivers, and two,
them from predatory competition, and to and that the investor acknowledges the reduce the painful dependence on retail
establish oneself as working in the client’s value of the services and pays for it, what funds for survival. Without a large pool
interest. Most distributors are not confident needs to be done? that provides the basic profit, mutual
enough to bring up the payment of a fee in First, the mutual fund industry needs funds can never become the small
this predatory environment. acknowledgement and recognition as a investor’s product. Policy needs to see this
Fourth, distributors continue to professional manager of portfolios, at a economics with an open mind.
16 The Economic Times Wealth, November 19-25, 2012
Learn & Keep

HOW INVESTORS LOSE OUT TO

The equity
Th it market
k t offers
ff the
th best
b tbbett to
t bbeatt inflation,
i fl ti butb t stock
t k picking
i ki can be
b ttricky.
i k H However, if you know
k the
th rules
l off the
th game
EMOTION and don’t let your emotions rule your decisions, you can build a profitable stock portfolio. Here’s how.

I got my
stocks!
I missed the
consolidation, I’ll increase my
so I have to get position at this
in now. bargain price.

I’ll buy at the

EUPHORIA Let’s average
next market SM CO down further.
SIA NF
consolidation. I N V
E S T O
R
ID
THU EN
F S
EN O E
CE
N
E T
L MARKET PEAK I
C
M
Highest price, so it’s
M

IS
the best time to sell.
E
DE

I M
N

It’s still too early. I am a

T
T
IAL

i will watch the OP long-term

market. The
investor.
The
herd The herd
starts starts
investor turning
turning
bullish sentiment bearish
wheel
FEAR

Most investors move

in a direction opposite to that
UNCERTAINTY

of the market cycle.

ST
RE E
PA

MARKET TROUGH
I

NT
NI

N
C

SI

V Lowest price, so it’s a C

DI

E good time to buy. Y

S C
T
M E T
K
N E N
CA
T M A R As soon as the
O P
SI IT
ES UL prices increase, I
PR will sell.
AT
DE ION
Equity investors AGONY
still haven’t learnt
their lesson.

The market has

Investors mostly have short Which stock has hit its absolute
memories, display herd
everyone else bottom.
behaviour and don’t like to
adjust their own decisions bought?
made in the past.
I will never
buy stocks
again.
Adapted from
TRUSTABLEGOLD.COM

Graphics: ANOOP VERMA

STICK TO THE BASICS

DON’T FALL FOR Follow this time-tested strategy while
WHAT GOES DOWN IN THE MARKET building your stock portfolio.,
COMMON MYTHS MUST COME UP.
Beware of these misconceptions that If a company is performing consistently well,
can interfere with your decisions. its stock price may rise steadily. However, Avoid investing large amounts in
START WITH the beginning. Buy small
even a growing company may see its stock
price fall if the market turns bearish. On the
A SMALL quantities at regular intervals and
other hand, a company whose shares have
AMOUNT try to get a feel of the market.

A `25 SHARE IS CHEAPER THAN been beaten down may never rise again,
THE ONE TRADING AT `2,500. especially if it is poorly managed.
HAVE Stocks can create wealth, but
Some investors believe that a low- don’t expect to get rich overnight.
priced stock is cheaper than the one INDEX-BASED STOCKS ARE SAFE
REALISTIC You might earn muted returns till
trading at a higher price. The former INVESTMENTS. EXPECTATIONS you get a hang of the markets.
may be costlier in terms of valuation if
These stocks are in the indices merely
its profits are falling and there is poor
because they are the largest in terms of As a novice, you are bound to make
revenue visibility. LEARN
market capitalisation and are widely some mistakes. Don’t get
traded. Every stock is exposed to the same
FROM discouraged. Instead, analyse what
forces and sentiment that govern the FAILURES went wrong and learn from them.
A STOCK WITH LOWER broader markets.
PE IS BETTER THAN THE ONE
INVEST IN Buy stocks in businesses that you
WITH A HIGHER PE. A STOCK TRADING AT A 52-WEEK understand. You should be
While the price to earnings (PE) ratio is LOW IS CHEAP. WHAT YOU familiar with the company and
used to evaluate stocks, it should not If the stock is trading at a considerable KNOW the sector dynamics.
be considered in isolation. A company discount to its 52-week high, the price
with a higher earnings growth and differential alone does not mean the Don’t let greed, fear, excitement
better operating performance would be stock is a bargain buy. There might be and frustration guide your
justified in having a higher valuation.
DON’T GET
something wrong with the company, decisions. Maintain a disciplined
which is why its shares are being
EMOTIONAL approach to investing.
battered. Invest only if the company’s
fundamentals are intact.
18 The Economic Times Wealth, November 19-25, 2012
Family Finances

“Till now, I have been

consulting friends
while planning invest-
ments. Now I feel the
need for professional
advice for my goals.”
DEO MISHRA

NET WORTH OF THE

MISHRAs
Asset Current
value (`)
Real estate 27 lakh
Equity MFs 3.04 lakh
Debt funds 1.8 lakh
FD 1.8 lakh
EPF 1.5 lakh
Cash 20,000
Total 35.34 lakh

Liabilities Current
value (`)
Home loan 23,781

Approximate net worth S VARADHARAJAN

35.1lakh
Deo Mishra, with his wife Mamta and daughters Soumya and Shruti, in Chennai.

Mishras’ cash flow Funds needed to achieve goals

Goal Years to Future Resources Further
Inflow achieve cost (`) used investment
(`/month)
Total monthly Deo
income `40,000 Contingency fund 10 mths 1 lakh Savings 8,000

`40,000 Soumya’s education 4 4 lakh Equity MFs, stocks -

Shruti’s education 7 6 lakh Insurance -

Outflow Household
Soumya’s marriage 8 8.5 lakh - 5,300

Total monthly EMIs Shruti’s marriage 10 9.5 lakh - 5,034

expenses
expenses `8,000 Retirement 12 3.2 crore EPF, real estate 5,930**
`15,200
`27,500 Investible Investible surplus needed 18,334
surplus Cost of additional insurance (average) 1,356

Insurance `12,500* Total 19,690

premium A comprehensive Surplus 810
plan has been
`4,300 mailed to the * Surplus will rise to `20,500 after home laon ends in December 2012.
Mishras. **Investment for this goal will start after 10 months. Equity and debt are expected to give
14% and 7% annual returns, respectively. Inflation assumed to be 6%.
Family Finances The Economic Times Wealth, November 19-25, 2012 19

Late start set to impact

corpus for goals
The Mishras need to realign their portfolio, with focus on equity, to make up for the lost time.

EXPERT ADVICE SAKINA BABWANI MISHRAS’ GOOD MOVES ...

three years. Another `71,000, which Mishra
will receive in six years from the third
EXISTING ASSET ALLOCATION insurance plan, can be added to the corpus.

O
ne of the cornerstones of Investing in real estate at an
financial planning is to start early stage. This will help achieve the set target.
1% 23%
early so that each goal gets
Having a high rate of savings.
Once Mishra has planned for his children’s
Cash adequate time for funding. If education, he can proceed towards building
Equity a corpus to fund their marriages. He has
not, it becomes difficult to cor-
rect the anomalies and build a sufficient planned Soumya’s wedding in about eight
corpus. The Mishras exemplify the perils of a … AND THE BAD ONES years and this will require `8.5 lakh. For this
late start. They have five key goals, but little Buying inadequate life goal, he needs to start a monthly SIP of
time on hand. Hence, Sumeet Vaid, CEO, `5,300 in equity mutual funds. Assuming a
insurance.
Ffreedom Financial Planners, suggests they growth rate of 14%, the investment will grow
scale down the target amount for each goal Not maintaining a to the desired corpus in the given time
to make them achievable. The good news is contingency fund. frame. Mutual fund investments worth
that their asset allocation is satisfactory and `60,000 can also be allocated towards this
62% will need minor modification, which should goal. Shruti’s marriage will require a corpus
Real
estate 14% not be too difficult for the Mishras. “Till now,
I have consulted friends while planning my
insufficient. Hence, he is advised to
purchase a term plan of `50 lakh right
of `9.5 lakh in 10 years, for which Mishra
needs to start a monthly SIP of `5,034 in
Debt
investments. Now, however, I feel the need away, which will cost `1,356 every month. equity mutual funds. This investment is
for professional advice so that I can achieve Mishra must also build an emergency expected to grow to the desired corpus in
the goals without stress,” says Mishra. Vaid corpus of `1 lakh, for which he should the given time horizon.
PROPOSED ASSET ALLOCATION
has prepared a detailed plan for the family to allocate his current savings account Mishra also needs to build a retirement
2% help them fund their main goals of their balance of `20,000. To meet the shortfall kitty of `3.2 crore in 12 years, for which he
Gold 15 % daughters’ education and marriages, as well of `80,000, Mishra must start a monthly SIP can allocate his EPF and two properties at
Equity as planning for retirement. of `8,000 in ultra-short term debt funds for Ambernath and Delhi. After 12 years, his EPF
Deo Mishra, 46, lives with his 42-year-old 10 months. Assuming a growth rate of 7%, is estimated to fetch him `33 lakh, while his
1% wife, Mamta, and two daughters, Soumya, the investment is likely to grow to `1 lakh in properties are expected to be worth `53
Cash 15, and Shruti, 12, in Chennai. Employed as a this period. Since he is employed by the lakh, assuming they grow at 10% annually.
government servant in the Defence Depart- central government, he and his family will To make up for the shortfall, Mishra must
ment, Mishra takes home a monthly salary be medically protected for life and, so, he start a monthly SIP of `5,930 in equity mutu-
of `40,000, while Mamta is a homemaker. does not need a health cover. al funds. Assuming a growth rate of 14%, the
The total monthly outflow is `27,500, of Mishra can now focus on building a investment will generate the desired corpus.
which `8,000 is incurred as EMI for a home corpus for his daughters’ education. However, at this juncture, Mishra doesn’t
54% loan that Mishra took in 2007. He had bought For Soumya, Mishra needs a fund of `4 lakh have sufficient surplus to invest for this goal.
Real a house at Ambernath, Mumbai, for `3.8 in four years. The original target was `12 lakh Hence, he is advised to push this objective by
estate 28 %
lakh with this loan. They also have a in two years, but since this cannot be 10 months since his surplus will increase
Debt
property in Delhi worth `4 lakh. The loan achieved, Mishra has altered this goal and after this period. This will be due to a rise in
Proposed asset allocation to be achieved over time. will be settled in December this year and the can allocate his fixed deposit of `1.8 lakh his salary as well as the availability of
freed sum of `8,000 can be directed towards towards it. Mishra’s investment of `2.42 lakh `8,000, which is now being used to create
RECOMMENDATIONS investment of goals. So the current monthly in mutual funds can also be allocated the emergency fund.
surplus of `12,500 will rise to `20,500 from towards this goal.
EQUITY FUNDS
next month. As far as Shruti’s education is concerned,
Advice: HDFC Top 200, IDFC Premier Equity, However, before Mishra plans for the Mishra needs to amass about `7 lakh in
DSP equities, BSL Dividend Yield Plus. goals, he must ensure that his family is seven years. His insurance plans will come
Financial plan by Sumeet
Rationale: The Mishras do not have much adequately protected. For this, he must buy in handy since his two endowment plans will
Vaid, CEO, Ffreedom
time on their hands, so they must invest in life insurance and set up an emergency fetch him `1.79 lakh and `2.62 lakh, when Financial Planners
well-performing equity funds. However, they fund. Currently, Mishra has a combined life these mature in six and seven years,
must avoid sectoral funds at all cost. insurance of only `4.5 lakh from his three respectively. On the other hand, his Ulip will Need help with your family finances?
Write to us at [email protected]
traditional plans and one Ulip, which is fetch `2 lakh when it matures in the next
20 The Economic Times Wealth, November 19-25, 2012
Your Queries

QUESTION OF
THE WEEK
I have a Ulip with a cover of `4 lakh, for
which I pay a premium of `20,000 per
annum. I paid three premiums, but was
unable to pay the last one as I was not
1 2 3 4 5 6
well. I received a letter from the com-
pany stating that the policy had lapsed.
What should I do to revive it? If I surren-
der the policy, what will be my loss?

Q&A
PANEL MEMBERS
- Sunil Kumar
1. Taxation 2. Mutual 3. Insurance 4. Banking 5. Real Estate 6. Real Estate
Vaibhav Funds Pankaj VN Kulkarni, (Legal) Gulam Zia, Executive
The premium payment for life insur-
Sankla, Dhirendra Mathpal, Chief Dhiraj D Jain, Director, Retail &Hospi-
Director, Kumar, CFP, Managing Counsellor, Abhay Partner tality, Research & Advi- ance policies should not be stopped,
H&R Block CEO, Value Director, Optima Credit Coun- (Real Estate), sory Services, Knight more so if you are ill. If you were not
Research Money Managers selling Centre SNG & Partners Frank India able to pay the premium, you should
have opted for a premium holiday and
cover continuance option. Under this,
you would have been covered even if
ET Wealth brings the collective wisdom of six investing experts to help answer you had not paid the premiums. Now,
you can revive your policy by paying
readers’ queries on issues related to personal finance. the due premium, besides fulfilling the
revival formalities of your insurance
company. However, if you decide to
surrender the policy, you will get the
TAXATION whereas Ulips and tax-planning funds offer from? Should I also check the claims current fund value after the deduction
I live with my parents in their house. I have market-linked returns. ratio of insurers before selecting the of surrender charges under the policy.
an HRA component in my salary and this None of these instruments guarantees a policy?
comprises taxable income. Can I claim tax 15-20% return that you are expecting. If you - F D’Souza
deduction for this amount? are looking for guaranteed returns with the to my account on 13 September. I deposited
- M Macha shortest lock-in period, a five-year bank It will be better to buy an online term another cheque on 30 September and it was
fixed deposit is the ideal investment option policy as it will be cheaper than purchasing credited on 13 October. What can I do about
The income tax law does not prohibit you for you to save tax. If you can stomach a it through an agent. Remember that insur- these delays?
from paying rent to your parents. If you are little risk, the three-year lock-in period in ance is a contract based on the principle of - Pallavi Nair
actually doing this, you are eligible to claim case of tax-planning funds can suit your utmost good faith. So if you provide correct
HRA exemption. It is also advisable to enter requirements. Depending on your comfort information in the proposal form and dis- When you deposit a cheque, typically you
into a formal agreement with your parents level, you can select any of these products close all material facts concerning your get an acknowledgement. This serves as
and pay the rent through cheques. to invest and save taxes. health, occupation and family history, you proof of having deposited the cheque on a
will not have to worry about claim settle- particular day. Banks are supposed to clear
Can the employer invest up to 10% of the ment since all insurance companies settle these from ATMs and send them to the
basic salary in the New Pension Scheme INSURANCE genuine claims. You should also not be clearing house through their designated
(NPS) on behalf of the employee even if the I bought three Ulips in 2009 for an concerned about the credibility of Aviva, branches. You can bring this to the notice
latter does not invest in it? Can the employ- annual premium of `1 lakh as an invest- and if you have found its premium to be of the bank’s nodal officer and claim inter-
ee claim deduction under Section 80 CCD(2) ment for the higher education of my grand- the lowest, go ahead and buy the policy. est for the delayed period.
only for the employer’s contribution? children. However, they did not show any
- B Thomas capital appreciation at the end of three We had taken a `15 lakh mortgage loan
years. So I decided not to contribute to REAL ESTATE from Citi Finance against our property
Yes, the employer can invest up to 10% of these and switched over to flexi/multi-cap I have paid 40% of the total cost of a resale worth around `70 lakh. Our EMI is `25,000.
the basic salary of an employee in his NPS options. Despite the switchover, the value flat to its owner after an agreement on a We have a delayed track record of payment.
account without the employee having to of each is about `3.5 lakh after a period of non-judicial paper. The flat owner has given Our source of income is rent and business
make a contribution. Also, the employee five-and-a-half years. Should I continue me a photocopy of the agreement between and we have not filed our income tax
can claim deduction under Section with these funds or quit investing in them? the promoter and her at the time of occupy- returns for the past three years. Now, we
80CCD(2) for the employer’s contribution Please advise. ing the flat, but not the registered sale are considering a top-up loan of `10 lakh.
to his NPS account. The deduction is - P Vishwanathan deed. She will give me the same after We need the funds immediately to scale
restricted to 10% of the basic salary (plus completing the registration. She has also up our business and diversify. Is there a
dearness allowance, wherever applicable). When you invest in unit-linked insurance given me a photocopy of the plan of the possibility of getting a loan with a Cibil
This is in addition to the deduction of up to plans, or Ulips, a part of the premium is building. This flat is in a village panchayat rating of 836?
`1 lakh, which can be claimed under deducted to meet the various charges in area. Could you inform me about the other - N Kumar
Sections 80C, 80CCC and 80CCD(1). the policy and the balance premium is documents that I should check before the
invested in the funds opted by you under sale deed registration? The company that has financed you
If I want to save tax, should I invest in ELSS, the plan. The returns depend on the - D Chaudhari has adequate security. Any lender first
Ulips, fixed deposits or some other prod- performance of the underlying asset in the considers the repayment capacity of the
uct? I am looking at a 15-20% return, and fund portfolio. An investment period of You must check the registered copy of the borrower and track record so that the
security with a minimum lock-in period. three years is too short to evaluate the sale deed in favour of the seller and the account does not have to be classified as a
- PK Antony performance of Ulips. Considering that you previous chain of registered sale deeds/ non-performing asset. If you have paid the
have bought these policies for the higher agreements from the first owner to the sell- instalments on time, there should not be
Investing to save tax is a good start, but you education of your grandchildren, I recom- er. Also make sure to check the share cer- any problem in getting the top-up loan
should align the tax-saving benefits with mend that you park all the units in the tificate duly endorsed in favour of the seller considering your credit score. If you are
your financial goals. There are several appropriate fund available under the plan in case there is a society, besides a copy of liable to pay tax, you must file the returns.
products in which investments of up to `1 based on your risk appetite and remain occupation certificate/building completion This will help you get a loan at a future date
lakh in a financial year qualify for tax invested for the long term. certificate and latest property tax receipts. as it is one of the requirements of the
deduction under Section 80C. For this, you It is advisable to inspect the above men- lenders.
can consider tax-planning funds, insurance I am 23 years old and want to buy a tioned original title deeds before the pur-
premium, Ulips, PPF, NSC, bank fixed term insurance of about `50 lakh. Could chase of the property.
deposits and pension plans. The lock-in you suggest the factors I should consider
period and assured or market-linked before selecting the policy? I checked Ask Experts
returns vary for each of these products. For online for the best quotes and got the BANKING & FINANCE
instance the PPF, NSC and bank fixed cheapest ones from Aviva. Is it a good I deposited a cheque on 31 August 2012 Have a question for our experts? Post it at
deposits provide guaranteed returns, company to buy life insurance policy - [email protected]
through my bank’s ATM, but it was credited
Commodities The Economic Times Wealth, November 19-25, 2012 21

Upbeat on mustard seed

in the short term
Though short-term fundamentals remain supportive for the
upside, higher sowing expectations may cap sharp gains.

NAVEEN MATHUR the Canadian mustard oil produc- also affected the mustard seed
tion is exported globally, making it yield. The drop in area under
the world’s largest exporter. In mustard seed cultivation by 7% to

M
ustard seed is the
second largest India and China, rapeseed oil is 6.69 mn hectares and yield by 10%
produced oilseed usually produced to meet the has resulted in a drop in output by
in the world and domestic demand. 17% to 6.7 mn tonne in 2011-12.
is the third In India, mustard seed is the Accordingly, the upside rally in
leading source of edible oil after third largest produced oilseed mustard seed prices that started in
palm and soy oils. Mustard seed after soybean and groundnut. It November 2011 continued till
yields around 38% oil, while the
remaining 62% is converted into
has a negligible trade in mustard
seed and oil, and so the prices are
February 2012, when the prices
witnessed a correction due to the
Commodity update
cake, which is used as cattle feed. influenced mainly by domestic start of harvesting. The correction Change (%)
Being an important source of fundamentals rather than global was shortlived and the prices Commodities Unit Price (`) 1-week 1-year
edible oil and protein meal, the factors. However, India has a high touched a new high of `4,489 per
METALS
world production of mustard seed trade in mustard meal exports quintal in August 2012. The revival
has grown at a significant pace. and is the second largest oil meal of monsoon in August and better Aluminium `/kg 143 0.0 9.6
The global mustard seed prod- exported after soy meal. prospects for 2012-13 sowing have Copper `/kg 438 -0.7 9.5
uction has grown at 4.08% CAGR In India, mustard seed is grown led to a significant decline in prices
Gold `/10 g 31,900 2.2 11.3
in the past two decades and is cur- as a rabi crop, which is sowed since September.
rently 60.55 million tonne (2011- during October-December and The sowing for the new season Nickel `/kg 1,027 0.5 -4.5
12). However, it has undergone a the harvesting begins from Febru- has begun and is expected to be Silver `/kg 62,365 3.4 12.0
momentous shift with respect to ary onwards. The largest mustard higher as lucrative returns and
countrywise contribution. During seed producing states in India are hike in MSP will make farmers opt Zinc `/kg 147 0.7 15.3
the 1990s, China and India Rajasthan (45%), Haryana (13%), for the crop. The government has FOOD PRODUCTS
accounted for over 28% and 21% Madhya Pradesh (13%) and Uttar declared a `500 per quintal hike Chilli `/100 kg 7,500 1.4 -8.5
share, respectively, followed by Pradesh (11%). The domestic in MSP to `3,000 for the coming
Turmeric `/100 kg 9,500 3.3 1.1
Canada’s 13%. With spectacular mustard seed production has season and has targeted a record
growth in Canadian production at witnessed a huge fluctuation and 8.9 mn tonne output for 2012-13. Cardamom `/kg 715 0.0 -14.9
7.01% CAGR in the past two marginal growth in the past two The prices are expected to remain Rajma `/100 kg 9,200 -5.2 49.6
decades, it is now the world’s decades. In fact, there was a fall in in the positive territory as supply
largest producer with a share of production from 5.8 mn tonne to tightness will continue to push up Potato `/50 kg 500 0.0 42.9
24%. Meanwhile, China and India 3.9 mn tonne during 1991-2002, prices till fresh arrivals begin in Maize `/100 kg 1,900 0.0 5.6
have witnessed marginal growth but shot up drastically to a record February. Also, the winter season
Sugar `/100 kg 3,800 -1.3 11.0
and now have around 21% and 11% 8.8 mn tonne in 2010-11. demand will keep the sentiment
share in the world production. In the past two years, the gover- upbeat for mustard seed in the do- Refined soy oil `/100 kg 6,950 -0.7 6.1
The global consumption of nment has hiked the MSP of oil- mestic market. However, if the Wheat `/100 kg 1,635 -0.9 32.9
mustard seed has grown at 4.13% seeds, along with that of mustard sowing increases significantly, the
ENERGY
CAGR in the past two decades and seed, to boost production and crop’s prospects for next season
is currently 63.37 mn tonne (2011- reduce the dependency on imp- will improve and may cap a sharp Crude oil `/BBL 4,677 2.1 -6.7
12). China is the largest consumer, ort. From `1,800 per quintal in upside in prices. Natural gas `/mmBtu* 190 -1.9 10.1
accounting for a 26% share in 2010-11, the government raised
OTHERS
global consumption, followed by the support price to `2,500 per
Lead `/kg 138 0.0 3.8
Canada and India, with 11% each. quintal in 2011-12. However,
With respect to the consumption unfavourable weather conditions The writer is Associate Rubber `/kg 170 -1.2 -8.1
of mustard oil, Canada accounts during November-December 2011 Director, Commodities &
Currencies, Angel Broking Castor oil `/100 kg 7,800 1.3 -19.6
for only 3% share. In fact, 85% of not only hampered planting but
Prices are rounded off. Data as on 15 November;
*mmBtu = 1 million British thermal unit. Source: ETIG Database

Production, yield of Mustard seed futures:

mustard in India monthly average prices
10 1,300
1,250
4,500 4,392
4,153
TIPS FOR FIRST-TIME
INVESTORS

}
8.9

{
8.8
9
4,000 3,918 Mustard seed prices are mainly influenced by the domestic demand-sup-
8.1 1,200
8 3,458 ply fundamentals. So keep track of sowing progress and weather condi-
7.6 1,150
7.4 7.2 tions as these have a major impact on fundamentals and, hence, on
7.0 1,100 3,500
7 6.6 prices. Also takes cues from prices of other oilseeds like soybean.
6.3 1,050
5.8 3,112
6 3,000
1,000
5.1
5 950

TRADING STRATEGIES
4.2
3.9 900 2,500
4
850
3 800 2,000
NCDEX Mustard seed December contract is trading at around
2000-1 2012-13* Jan 2011 Nov 2012 `4,292 per quintal and is expected to trade in the range of
Production (mn tn) Yield (kg/ha) *Output target for 2012-13
Source: Ministry of Agriculture Prices are till 10 Nov 2012; Source: Reuters `4,170-4,420 per quintal in the short term.
22 The Economic Times Wealth, November 19-25, 2012 Investing

HOW REFORMS AFFECT

YOUR INVESTMENTS
As the winter session of Parliament starts this week, reforms will be back on the agenda. Their pace not only affects the
economy but also your investments. Keep track of the past reforms and the ones to look out for.

Import quotas FRBM passed.

Currency on
Govt monopoly cut managed float. New telecom removed for Electricity Act.
from 18 to 3 Direct taxes policy. consumer goods. VAT law.
Equity FIIs & pri-
sectors. vate MFs allowed. slashed. NELP launched. Deepening of debt Airport
MRTP abolished. Ad hoc T-bills Irda set up. markets. modernisation. VAT effective.
Import licences for Unique ID
Licensing require- capital goods gone. abolished. FIPB decisions Capital a/c opened. Debt swap for state NHDP III launched. Excise cut 1pp. Authority set up.
ments eased. New law for banks VDIS introduced. made time-bound. 7 PSUs privatised. governments. JNNURM Securitisation Competition Com-
Import duties to recover loans. Import duties cut FDI limits relaxed. Govt staff reduc- PFRDA set up. NPS launched. allowed. mission set up.
slashed. Import, excise 5pp. Customs, excise tion started. launched. Import duties cut 79 items dere- Money laundering
Excise duty cut. duties cut. Excise cut 50bps. rates cut. 14 SSI dereserved. Import duties cut. 7pp. served for SSI. bill passed.
1991 1993 1997 1999 2001 2003 2005 2007 2009

How reforms have kept pace with time and their impact on the market
The US housing European
While the GDP growth accelerated from
market meltdown debt crisis and
an average of 5.6% in the 1980s to 6% in
The 9/11 led to a global slump in concerns over the
the 1990s and then 8% in the 2000s, the
market too responded positively to terrorist attack in consumer spending and US economic
reform measures. the US and slow- industrial production. growth impacted
down in Japan & Foreign firms withdrew markets across US,
western Europe investments from Middle East, Europe
affected the Asia to repay debts and Asia.
market. back home.

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*

1992 1994 1996 1998 2000 2002 2004 2006 2010

Positive list for CCI abolished. IDFC established. Bank reforms. Currency flow Tariff rationalis- NTPC privatised. Bids invited for Divestment
import licences. Dual currency rate Insurance Currency: FEMA eased. tion by railways. Service tax net five UMPPs. restarted.
SLR cut from abolished. regulator (interim) replaced FERA. NHDP capex Further decontrol widened. FII debt limits Habitations >2K to
38.5% to 30%. Service tax set up. Stock futures `540 bn. of agriculture. Import duties cut raised. get banks.
Import duties cut. introduced. FDI limits relaxed. approved. Rural roads/- APM dismantled. 3 pp. Excise cut 1 pp. Civil nuclear liabil-
Excise cut 1pp. SLR target of 25% Direct tax cut. SERC/CERC for electrification SARFAESI Act Excise cut 1 pp. 392 items dere- ity bill passed.
by 1996-97. power tariffs. launched. passed. served for SSI.
Sebi got statutory 193 items
powers. Corp tax cut. Tax net widened, Dept. of disinvest- SEBs recapi- dereserved for
filing simplified. ment set up. talised; APDRP SSI.
NSE set up.
Cess on fuel to SEZ policy launched.
Direct taxes announced.
simplified. fund NHAI.

LEGISLATIVE REFORMS WHAT ADMINISTRATIVE REFORMS

{ }
Here are the amendments likely in the following four bills and Find out how these changes will be positive for the capital
what they will entail, if approved. TO WATCH markets, retail investors, and power producers.

Recovery of Debts (Amendment) Bill

OUT FOR Disinvestment
1. Amends existing Acts (SARFAESI 2002, recovery of debts The reforms can be 1. Budget target of 300 billion targeted through MMTC, NMDC,
1993) to help recover bad loans. Allows conversion of any part broadly divided into Nalco, NLC, Hind Copper, NALCO, SAIL, RINL, BHEL, OIL.
of debt into borrower’s shares, accepts immovable property if legislative, which need Primary issuances positive for capital markets.
there’s no buyer for assets. Harder for borrower to get a stay. Parliament’s approval, ETFs for state-run firms
Forward Contracts (Amendment) Bill and administrative, which 2. Creating an alternate route for disinvestment. To help the
2. Confers statutory powers on the Forward Markets Commis- don’t. Here are the ones to government sell stake in illiquid companies. It can result in
sion. Allows use of options, institutional participation in com- keep track of this diversification benefit for retail investors and low-cost access.
modity markets. To help deepen market, reduce hedging cost. season. SEB restructuring
Banking Laws (Amendment) Bill 3. State governments take over 50% of SEB ST loans and lenders
3. Strengthens regulatory powers of the RBI. New banking
What
restructure the rest if SEBs take adequate tariff hikes and
licences held up till the bill is approved. Eases capital raising reduce T&C losses. Will be positive for power producers and
for banks. could pull down result in lower stress for banks.
the markets
Insurance Laws (Amendment) Bill Page 13 Banking licences
4. Seeks to amend three laws. Changes capital raising norms, 4. Issuance of new banking licences after a decade. New private
allows 49% FDI from 26%. A few billion dollars of FDI for 2-3 banks have better NPAs and RoA; economy under-banked. It
years; jobs if the insurance industry does start growing again. will have huge latent potential.
Source: Credit Suisse
 In

smart stats
ETW Funds 100 25
This Insurance ranking 27
Section Loans and deposits 28

ET WEALTH TOP 100 STOCKS

Every week we put about 3,000 stocks through four key filters and rate them on a mix of factors. The end result of this exercise
Fast Growing Stocks
Top 5 stocks with the highest expected revenue
growth (in %).

Kansai Nerolac Paints 129

is the listing of the top 100 stocks based on the composite rating to help ease your fortune hunt. Jaiprakash Power 126
Cox & Kings 118
Prestige Estates 108
RANK PRICE ` GROWTH% VALUATION RATIOS RISK RATING
Oberoi Realty 105
Current Previous Stock Revenue Net Div Downside Bear No. of Consensus
Rank Rank Price Profit EPS PE PB Yield PEG Risk Beta Analysts Rating See revenue column in the adjacent table.

Gateway Distriparks 1 1 139.00 74.04 67.35 66.03 11.44 2.02 7.22 0.17 1.07 0.58 19 4.53
Orient Paper & Industrie 2 2 78.50 81.30 47.27 43.89 7.34 1.47 2.54 0.17 1.25 0.73 13 4.77 Least Expensive Stocks
Arshiya International 3 3 121.10 57.37 57.81 53.44 5.98 0.83 1.14 0.11 1.55 0.89 7 4.71 The 5 stocks with the lowest forward PE.
Dalmia Bharat Enterprise 4 5 160.70 21.10 87.44 97.41 9.05 0.45 0.94 0.09 1.66 0.41 6 5.00
JBF Industries 4.27
Gujarat Inds Power 5 4 68.00 19.92 40.44 46.44 8.66 0.71 3.68 0.19 1.11 0.74 10 4.50
Arvind 5.16
Indian Oil Corp 6 6 258.00 14.71 76.64 79.63 14.86 1.04 1.93 0.19 1.02 0.26 38 3.66
Deepak Fertilizers 5.44
Alok Industries 7 7 11.45 28.20 496.79 485.49 10.03 0.33 2.59 0.02 1.77 0.88 5 3.40
Vardhman Textiles 8 14 243.00 17.75 108.23 109.69 10.84 0.69 1.82 0.10 1.43 0.92 7 4.57 Ratnamani Metals & Tubes 5.54
Jubilant Life Sciences 9 8 211.40 30.74 3185.48 3147.59 233.60 1.46 1.39 0.07 1.36 0.52 17 4.24 Infinite Computer 5.86
HPCL 10 11 295.00 8.89 632.76 616.17 57.42 0.76 2.87 0.09 1.43 0.52 46 3.70 See PE column in the adjacent table.
Mangalam Cement 11 NR 185.05 29.19 60.08 61.11 9.11 1.18 3.22 0.15 1.48 1.16 8 4.13
Greenply Industries
United Phosphorus
12
13
10
17
293.00
112.95
33.61
21.32
103.99
37.55
103.94
41.28
12.45
9.41
1.95
1.25
0.69
2.29
0.12
0.23
1.37
1.57
0.45
0.56
6
25
5.00
4.60
Best PEGs
Top 5 stocks with the least price earning
Balkrishna Industries 14 12 258.85 42.43 41.00 41.04 9.32 2.26 0.57 0.23 1.34 0.14 19 4.79 to growth ratio.
Cairn India 15 15 331.30 60.01 27.69 27.35 8.00 1.32 1.48 0.29 1.42 1.10 56 4.09
Cox & Kings Jubilant Life
Oberoi Realty 16 9 283.70 105.05 75.03 76.22 20.78 2.58 0.68 0.27 1.36 0.55 31 4.42 Sciences
0.05
Persistent Systems 17 18 479.95 36.41 40.91 34.06 12.94 2.28 1.25 0.38 1.09 0.20 37 4.51 0.07
Cox & Kings 18 21 138.60 118.02 745.67 858.70 46.33 1.62 0.70 0.05 1.81 1.56 16 4.50
0.02 0.06 0.08
Motherson Sumi 19 20 163.45 85.98 164.63 170.70 37.11 5.07 0.93 0.22 1.31 0.72 22 4.68
HSIL 20 16 125.05 34.36 32.74 32.81 8.98 0.87 2.41 0.27 1.81 1.10 11 4.91
PVR 21 19 237.20 50.52 99.47 87.18 25.00 2.17 0.84 0.29 1.41 0.30 12 4.67 Alok HEG Chennai
Ballarpur Industries 22 22 22.10 9.66 71.04 56.89 11.89 0.37 2.70 0.21 1.39 0.97 5 4.80 Industries Petroleum
HEG 23 25 230.05 31.61 243.43 240.57 15.14 1.09 2.15 0.06 1.34 0.62 5 2.80 See PEG column in the adjacent table.
Elder Pharmaceuticals 24 NR 328.00 26.17 45.26 45.12 9.28 0.96 0.92 0.21 1.11 0.01 5 4.60
EID Parry India 25 23 232.80 11.33 65.18 64.78 12.93 1.67 1.73 0.20 1.12 0.49 8 4.75 Income Generators
CESC 26 24 279.75 22.43 72.13 62.15 14.39 0.73 1.80 0.23 1.91 1.19 33 4.09 Top 5 stocks with the highest dividend yield.
Infotech Enterprises 27 27 198.95 32.25 52.53 52.12 13.25 1.85 1.31 0.25 1.35 0.56 15 4.40
Gateway Distriparks | 7.22
Graphite India 28 33 87.50 26.95 19.39 19.29 8.09 1.04 4.12 0.42 0.81 0.24 8 4.63
JBF Industries | 5.97
Prestige Estates 29 26 155.45 107.79 412.35 415.60 59.71 2.45 0.75 0.14 1.95 1.16 24 4.54
Hexaware Technology | 5.36
Pratibha Industries 30 28 50.05 44.38 30.72 26.90 6.30 0.94 1.17 0.23 2.07 1.69 16 4.88
J Kumar Infraprojects 31 36 222.00 52.28 34.31 34.41 9.11 1.41 1.00 0.26 1.24 0.50 6 4.50 Deepak Fertilizers | 4.23

Power Grid Corp 32 29 119.10 37.48 32.47 32.31 16.74 2.34 1.76 0.52 0.96 0.74 47 4.40 Graphite India | 4.12
Hexaware Techno 33 34 105.05 51.21 38.42 36.38 11.72 3.09 5.36 0.32 1.64 1.14 28 4.04 Dividend stocks are considered
JBF Industries 34 13 130.05 10.77 44.87 35.96 4.27 0.59 5.97 0.12 1.19 0.46 7 3.14 safe stocks during a downturn.
Figures indicate what an investor
Apollo Tyres 35 32 80.20 19.14 64.37 62.78 10.02 1.45 0.61 0.16 1.70 1.29 38 4.18 can earn as dividend for every
BPCL 36 39 329.05 5.76 99.09 114.42 30.37 1.49 1.66 0.27 1.25 0.75 46 4.00 `100 invested.

CMC 37 35 1120.30 42.83 72.82 72.80 22.58 4.44 1.11 0.31 1.12 0.23 10 4.40 See dividend yield column
Ipca Laboratories 38 31 426.95 32.27 55.07 55.06 19.45 4.27 0.98 0.35 1.42 0.35 34 4.74 in the adjacent table.
NIIT Technologies 39 37 278.00 34.99 22.06 21.13 8.41 1.81 2.95 0.40 1.50 0.79 27 4.33
Sobha Developers 40 38 364.90 47.26 40.13 39.85 17.62 1.81 1.35 0.44 1.72 0.15 32 4.13
Chambal Fertilizers 41 NR 66.00 3.21 127.29 127.30 17.25 1.60 2.88 0.14 1.55 1.33 14 3.93
Chennai Petroleum 42 42 130.00 10.33 328.98 394.38 31.25 0.51 1.56 0.08 0.99 0.52 7 3.14
KSK Energy Ventures 43 57 58.65 58.51 126.31 146.07 18.24 0.75 0.00 0.12 2.07 1.73 7 4.14
Jindal Saw 44 30 118.60 26.55 148.06 145.20 17.82 0.91 0.82 0.12 1.34 0.82 12 2.92
Essar Ports 45 47 94.05 49.09 377.89 203.06 63.38 1.84 0.52 0.31 1.82 1.39 12 4.83
G E Shipping Co 46 46 256.90 10.08 56.07 56.38 12.36 0.65 2.55 0.22 1.37 0.96 7 3.86
JK Cement 47 44 308.05 5.15 49.73 56.55 12.94 1.48 1.56 0.23 1.87 0.60 8 5.00
KPIT Cummins Info 48 43 122.90 60.21 56.87 53.77 15.05 3.08 0.56 0.28 1.80 1.24 26 4.35
MindTree 49 45 670.75 30.36 48.49 42.33 12.72 2.87 0.66 0.30 1.22 0.72 41 3.90
Kansai Nerolac Paints 50 41 1003.50 129.23 156.96 157.03 52.44 8.13 1.08 0.33 0.80 0.18 11 3.64
Mangalore Refinery 51 58 62.70 13.82 55.27 85.14 12.41 1.56 1.58 0.15 1.56 1.12 11 4.09
Shree Cement 52 62 4197.30 32.39 249.84 250.98 54.76 7.36 0.49 0.22 1.15 0.47 41 3.95
Geometric 53 40 106.75 37.97 63.24 62.52 11.79 3.74 1.58 0.19 2.06 1.37 5 4.40
Ajanta Pharma 54 52 365.65 38.92 50.46 50.82 11.00 2.85 1.04 0.22 1.69 0.48 7 4.00
Dishman Pharma 55 51 112.75 25.01 95.40 92.70 16.46 1.00 1.02 0.18 1.97 1.74 19 3.63
GMDC 56 50 210.05 31.71 42.51 43.00 13.86 3.30 1.42 0.32 1.24 0.92 10 4.80
HeidelbergCement 57 49 51.00 73.98 230.73 230.17 40.59 1.45 0.00 0.18 1.77 0.69 5 4.20
Sterlite Industries 58 NR 97.25 12.14 27.26 27.37 6.84 0.72 2.13 0.25 1.82 1.34 43 3.91
Lupin 59 54 575.00 41.30 52.53 52.96 29.69 6.42 0.55 0.56 1.12 0.13 60 4.18
JSW Steel 60 60 731.10 18.78 262.33 276.96 30.81 1.01 1.02 0.11 1.98 1.91 51 3.06
Simplex Infrastructures 61 53 191.75 22.40 47.30 47.08 11.47 0.80 1.02 0.24 1.75 0.78 21 3.67
24 The Economic Times Wealth, November 19-25, 2012
Smart Stats

RANK PRICE ` GROWTH% VALUATION RATIOS RISK RATING

Current
Rank
Previous
Rank
Stock
Price
Revenue Net
Profit EPS PE PB
Div
Yield PEG
Downside
Risk
Bear
Beta
No. of Consensus
Analysts Rating
Least Risky
Top 5 stocks with the lowest downside risk.
Jaiprakash Power 62 55 36.90 126.45 79.18 87.80 24.73 1.82 0.00 0.28 1.68 1.00 15 4.07 GlaxoSmithKline
PI Industries 63 63 521.00 46.17 30.18 29.90 12.17 3.89 1.19 0.41 1.72 0.27 11 4.91 Pharma
Ashoka Buildcon 64 59 203.30 49.69 28.42 27.09 8.66 1.05 0.00 0.32 1.43 0.90 10 4.60 0.71
IL&FS Transportation 65 56 186.40 25.88 14.40 14.72 7.40 1.33 2.13 0.50 1.39 0.93 26 4.50
GlaxoSmithKline Kansai
Infinite Computer 66 61 162.20 37.32 21.88 20.73 5.86 1.38 2.77 0.28 1.85 1.06 7 4.00 Consumer Nerolac
India Cements 67 69 86.15 14.80 25.36 25.50 9.92 0.68 2.32 0.39 1.90 1.45 41 4.05 0.87 Paints
Solar Industries 68 NR 955.00 37.64 44.30 39.86 16.56 4.14 1.03 0.42 0.93 0.45 5 4.60 0.80
JSW Energy 69 65 60.95 40.68 423.47 423.43 59.75 1.78 0.81 0.14 2.08 1.75 28 2.50
Solar Graphite India
Jaiprakash Associates 70 68 90.95 32.97 101.97 99.84 31.25 1.72 0.55 0.31 2.27 2.04 33 4.12
Industries 0.81
Mahindra & Mahindra 71 73 894.45 29.70 33.98 31.86 16.83 3.14 1.39 0.53 1.21 1.06 60 4.15 0.93
Kalpataru Power 72 72 83.25 31.67 2.62 10.94 6.95 0.71 1.77 0.64 1.56 0.93 19 4.58
See downside risk and bear beta
Kajaria Ceramics 73 66 237.00 37.49 60.98 61.64 21.38 6.13 1.09 0.35 1.33 0.95 10 4.50 columns in the adjacent table.
Oil India 74 75 465.55 17.19 5.79 7.18 8.14 1.59 4.08 1.13 0.95 0.45 46 4.26
Deepak Fertilizers 75 84 128.65 14.77 5.62 8.69 5.44 0.95 4.23 0.63 1.16 0.81 11 4.64
Amara Raja Batteries 76 85 252.40 34.58 49.57 48.70 20.17 5.27 0.74 0.41 1.35 0.83 17 4.59
What is Hot
Stocks whose analyst rating improved in one week.
TVS Motor Co 77 71 38.10 12.24 34.11 60.11 13.77 2.51 3.38 0.23 1.62 1.61 40 3.30
NCC India 78 48 43.30 12.32 68.86 68.79 20.47 0.41 0.68 0.30 2.69 1.55 33 3.97
0.33 Natco Pharma
McLeod Russel 79 77 314.65 23.46 25.49 27.11 12.17 2.01 1.89 0.45 1.54 0.54 13 4.54
Eros International Media 80 76 165.20 39.52 28.65 32.31 10.19 1.81 0.00 0.32 1.45 1.12 8 4.88 0.25 Graphite India
GlaxoSmithKline Consumer 81 88 3026.20 33.62 42.89 43.15 35.87 11.14 1.17 0.83 0.87 0.27 31 4.55
Ratnamani Metals & Tubes 82 80 132.00 14.76 8.22 15.70 5.54 1.16 2.26 0.35 1.36 0.55 6 4.83 0.08 Dishman Pharma
Hindustan Zinc 83 89 135.00 15.07 18.08 18.30 10.28 2.11 1.88 0.56 1.35 0.57 49 4.31
0.07 Vardhman Textiles
Grasim Industries 84 97 3179.65 19.73 19.35 18.36 11.15 1.73 0.70 0.61 1.01 0.56 37 4.65
HCL Technologies 85 81 607.75 22.67 32.82 31.15 17.55 4.34 1.61 0.56 1.10 1.02 67 4.15 0.06 CESC
GlaxoSmithKline Pharma 86 82 1995.05 24.12 78.50 78.20 39.54 8.75 2.28 0.51 0.71 0.33 29 2.83
Figures show improvement in rating on a scale of 0-5.
Century Textiles 87 86 394.00 27.46 688.93 687.97 167.76 1.96 1.42 0.24 1.83 1.79 7 4.00
Maruti Suzuki 88 90 1438.10 35.52 48.34 46.41 25.01 2.68 0.51 0.54 1.42 0.69 63 3.60
PTC India 89 99 70.55 44.33 14.21 13.04 10.46 0.85 2.10 0.80 1.86 1.86 21 4.24 What is Not
Glenmark Pharmaceuticals 90 91 433.10 30.89 47.81 47.62 25.96 4.98 0.45 0.55 1.33 0.56 39 4.44 Stocks that have gone down in analyst
rating in one week.
Aditya Birla Nuvo 91 70 967.10 19.00 45.86 36.86 12.39 1.47 0.62 0.34 1.32 0.87 8 4.50
Exide Industries 92 96 138.95 32.84 49.86 53.92 26.25 4.36 1.17 0.49 1.38 0.30 39 3.00
Infinite Computer -0.57
Cipla/India 93 98 379.55 29.47 40.60 40.64 26.95 4.04 0.51 0.66 1.01 0.35 52 4.13
IRB Infrastructure 94 92 123.25 32.58 6.74 7.00 8.56 1.49 2.98 1.22 2.66 1.69 42 4.64 Mangalam Cement -0.50
Cadila Healthcare 95 93 819.20 37.51 35.90 35.85 25.92 6.57 0.91 0.72 1.20 0.19 52 4.04
Ambuja Cements 96 NR 202.80 30.15 45.00 43.41 25.62 3.91 1.54 0.59 1.29 0.75 59 3.14 Aditya Birla Nuvo -0.25
Natco Pharma 97 NR 405.20 35.26 59.87 59.86 20.08 2.72 0.74 0.34 1.46 1.07 6 4.33
J Kumar Infraprojects -0.17
Arvind 98 94 85.50 17.47 26.86 26.82 5.16 1.09 1.15 0.19 2.12 1.61 7 4.57
Adani Ports and SEZ 99 NR 127.35 57.63 41.00 40.43 23.80 5.43 0.76 0.59 1.84 1.13 33 4.58
Jindal Saw -0.17
Godrej Properties 100 100 632.65 84.32 120.91 85.25 46.05 3.49 0.47 0.54 1.02 0.56 22 2.32
Figures show dip in rating on a scale of 0-5.
NR: Not in the ranking. Data as on 16 November 2012. Source: Bloomberg

METHODOLOGY expected to show growth in revenue, net Total weight: 30%, which is further split into weight to the total number of analysts
The four filters used to arrive at the Top profit and EPS (earnings per share) in the in 10% weight to revenue growth, 10% weight to covering the stock (the higher, the better)
100 stocks the next four quarters. The final two filters net profit growth and 10% to growth in EPS and 10% to consensus rating (a composite
were that the companies should have made (the higher, the better, for each parameter). rating based on the recommendations by all
Only traded stocks: Of the about 7,000
profits in the past four quarters and have a Growth is calculated by comparing the analysts who track a stock. Again, the higher,
listed stocks, only actively traded stocks
positive net worth. ’consensus estimate’ for the next 12 months the better).
were considered.
Rating rationale with the historical 12-month values. 4. ... and so do the risks.
Only big stocks: Companies with a market
Having arrived at the final stocks universe, 2. ... but only at reasonable valuation. Total weight: 10%. Two kinds of risks were
capitalisation below `500 crore were dropped.
However, if a company had a market cap we ranked them using the following four Total weight: 40%, which comprises 10% considered. A 5% weight was assigned to
higher than this, but its annual revenue was principles. weight to PE ratio, 10% to PB ratio, 10% to downside risk and bear beta each (the lower,
lower than `500, it was not considered. A percentile rating, that is, on a 1-100 scale is PEG ratio (the lower, the better, for all three the better, in both cases).
given to each parameter and the composite parameters) and 10% to dividend yield (the
Only well tracked: We picked stocks that
ranking is arrived at using the weighted higher, the better). The ranking methodology has been developed
are tracked by at least five analysts. by Narendra Nathan..
average of these parameters. 3. Analysts’ views matter ... A detailed explanation of the methodology
Only profitable and growing: We is available at
1. Growth is the key ... Total Weight: 20%—this consists of 10%
considered only those stocks that are www.wealth.economictimes.com

Top 5 Large-cap Stocks Top 5 Mid-cap Stocks Top 5 Small-cap Stocks

Top 5 weekly gainers (price) Top 5 weekly gainers (price) Top 5 weekly gainers (price)

L&T Fin.Holdings Tata Coffee MPS

1 Price: 83.55 | % chg: 50.13 1 Price: 1427.50 | % chg: 31.47 1 Price: 101.80 | % chg: 60.82
United Spirits ITDC J.K. Agri Gene.
2 Price: 1791.50 | % chg: 44.03 2 Price: 632.80 | % chg: 21.53 2 Price: 536.10 | % chg: 57.68
Idea Cellular DB Realty Money Matter Fin.
3 Price: 95.15 | % chg: 11.88 3 Price: 123.90 | % chg: 15.96 3 Price: 137.45 | % chg: 41.70
M & M Financial Muthoot Fin. Accelya Kale Solutions
4 Price: 998.90 | % chg: 11.58 4 Price: 212.95 | % chg: 13.69 4 Price: 327.45 | % chg: 40.60

Rollatainers
5 Wockhardt
Price: 1738.95 | % chg: 11.49 5 Ashok Leyland
Price: 27.40 | % chg: 12.76 5 Price: 229.05 | % chg: 40.56
Stock prices in `, as on 16 November. Source: ETIG Database
Smart Stats The Economic Times Wealth, November 19-25, 2012 25

ETW FUNDS 100

B E S T F U N D S T O B U I L D Y O U R P O R T F O L I O
LEADERS & LAGGARDS
Taking a long-term view of fund returns, here is a list of 10 funds
in each category—five leaders (worth investing) and five laggards
(that may be a drag on your portfolio).

LAGGARDS LEADERS

ET Wealth collaborates with Value Research to identify the top-performing 100 Equity: Large-cap 5-year returns
funds across 10 categories. Equity funds and equity-oriented hybrid funds are -7.95 3.93
ranked on 3-year returns while debt-oriented hybrid and income funds are JM Equity Franklin India Bluechip

-6.34 3.49
ranked on 1-year returns. LIC Nomura MF Opportunities ICICI Prudential Top 100 Inst I

-4.08 3.16
LIC Nomura MF Equity DSPBR Top 100 Equity Reg

-3.13 2.31
VALUE NET
RESEARCH R E T U R N S ( % ) Sundaram Select Focus Reg HDFC Index Sensex Plus
ASSETS EXPENSE
FUND RATING RATIO
(` cr) 3-MONTH 6-MONTH 1-YEAR 3-YEAR 5-YEAR -2.96 2.14
Equity: Large Cap
ICICI Prudential Focused Bluechip Equity
Franklin India Bluechip


4025.37
4852.84
5.98
4.00
14.49
12.22
12.08
10.05
10.11
7.92
—
3.93
1.83
1.82
10.11%
The 3-year
UTI Leadership Equity ICICI Prudential Indo Asia Equity Inst

SBI Magnum Equity

ICICI Prudential Top 100


806.70
373.88
5.73
4.99
13.39
11.46
14.78
16.27
7.51
7.15
1.65
1.91
2.26
2.27
return of ICICI Pru
Focused Bluechip
Equity: Large- & Mid-cap 5-year returns
Reliance Top 200 Retail  818.80 7.97 16.07 21.69 6.96 1.62 2.11 is the highest in
-10.32 8.88
DSPBR Top 100 Equity Reg  3384.70 6.22 12.26 13.49 6.41 3.16 1.86 its category.
LIC Nomura MF India Vision Quantum Long Term Equity
HDFC Index Sensex Plus  88.63 4.47 13.81 12.24 6.05 2.31 1.00
Reliance Quant Plus Retail  144.03 4.76 12.85 11.91 6.01 — 2.41 -6.76 6.33
ICICI Prudential Target Returns  118.99 3.81 11.94 13.19 5.77 — 2.42 ING OptiMix Multi Manager Equity Option A ICICI Prudential Dynamic Inst I

UTI Top 100  621.01 5.96 17.49 12.60 5.63 — 1.21 -5.43 6.08
Religare Business Leaders  28.82 5.57 15.74 10.33 4.98 — 2.50 Principal Growth UTI Opportunities
Kotak Sensex ETF  20.59 4.31 14.46 10.69 4.10 — 0.50
-5.31 5.91
Equity: Large & Mid Cap Taurus Bonanza UTI Dividend Yield
Quantum Long Term Equity
Canara Robeco Equity Diversified


119.12
680.91
5.88
6.45
15.95
15.26
18.97
15.84
11.16
10.60
8.88
4.79
1.25
2.25 11.16% -4.17
SBI Magnum MultiCap
5.78
UTI Equity
UTI Opportunities  3035.75 6.46 14.57 14.91 10.22 6.08 1.86 The 3-year
Mirae Asset India Opportunities Regular  257.43 7.92 16.33 17.41 10.08 — 2.37 return of Quan-
Franklin India Prima Plus  1834.08 7.42 15.54 13.99 8.97 3.75 1.90 tum Long Term
ICICI Prudential Dynamic  4056.37 5.14 10.43 14.32 8.97 5.38 1.82 is the highest in Equity: Multi-cap 3-year returns
its category.
UTI Dividend Yield  3630.64 4.20 13.65 8.60 8.56 5.91 1.83 -7.97
11.71
UTI Equity  2113.60 5.72 14.98 16.19 8.48 5.78 1.45
JM Core 11 ING Dividend Yield
Fidelity International Opportunities  304.49 4.40 15.06 14.46 8.35 4.34 2.33
HDFC Growth  1226.22 5.40 13.51 12.40 8.05 3.67 1.99 1.43 10.58
Fidelity Equity  2792.69 5.01 13.96 10.21 7.99 3.76 1.84 Birla Sun Life Special Situations BNP Paribas Dividend Yield
Fidelity India Growth  272.21 4.38 13.19 8.48 7.54 4.11 2.33 1.84 9.71
Edelweiss Diversified Growth Equity Top 100  14.63 6.09 14.15 16.14 7.02 — 2.28 L&T Opportunities Fidelity India Special Situations
HDFC Equity  9887.21 7.17 14.05 14.33 6.98 5.47 1.78
2.5 9.49
Kotak Select Focus  361.14 5.89 16.66 15.52 6.39 — 2.33
L&T Contra
HDFC Top 200  11591.05 6.62 14.85 13.79 6.34 5.67 1.77 Tata Ethical

Morgan Stanley A.C.E.  243.01 8.48 17.10 13.50 6.34 — 2.26 3.09 9.39
Birla Sun Life Equity
Equity: Multi Cap Templeton India Equity Income

ING Dividend Yield  85.56 7.30 14.78 11.78 11.71 8.83 2.49

BNP Paribas Dividend Yield
Fidelity India Special Situations 
14.53
644.75
8.77
7.24
15.66
17.39
15.20
20.85
10.58
9.71
6.53
3.50
2.50
2.18
Equity: Mid- & Small-cap 3-year returns
Templeton India Equity Income  963.31 5.41 17.83 20.54 9.39 4.44 2.00
-2.93 23.67
Principal Dividend Yield  102.95 9.96 16.91 22.23 9.25 2.98 2.49
HSBC Progressive Themes SBI Magnum Emerging Businesses
Reliance Regular Savings Equity  2828.63 13.72 24.03 25.16 7.33 6.65 1.85
DSPBR Equity  2536.78 7.40 13.31 13.67 7.25 4.27 1.88 -1.01 17.58
Tata Contra  88.21 6.22 9.25 10.34 6.98 3.81 2.50 HSBC Midcap Equity Religare Mid N Small Cap
Religare Contra  60.75 9.16 16.20 13.11 5.99 5.06 2.50 1.66 17.28
Templeton India Growth  679.14 4.69 14.01 15.99 5.37 3.13 2.13 HSBC Small Cap DSPBR Micro Cap Reg
Equity: Mid & Small Cap 2.04 16.59
SBI Magnum Emerging Businesses  733.80 14.66 25.59 30.77 23.67 4.89 2.26 Sundaram S.M.I.L.E. Reg Reliance Equity Opportunities Inst
DSPBR Micro Cap Reg  450.79 11.47 16.85 20.05 17.28 6.09 2.29
3.11 16.37
Reliance Equity Opportunities  3830.09 9.46 18.89 26.97 16.37 7.64 1.84
Sundaram Equity Multiplier Reliance Equity Opportunities
Canara Robeco Emerging Equities  37.91 9.34 16.76 26.30 15.99 2.44 2.50
HDFC Mid-Cap Opportunities  2267.14 5.62 13.50 18.48 15.14 8.17 1.91
IDFC Premier Equity
Religare Mid Cap
ICICI Prudential Discovery



3070.90
52.53
1985.21
11.76
12.15
5.49
17.09
19.75
13.43
19.11
21.51
25.37
14.77
14.61
13.71
9.58
4.75
11.57
1.88
2.50
1.92
11.57% Hybrid: Equity-oriented 5-year returns
The 5-year
-5.68 9.67
DSPBR Small and Mid Cap Reg  1169.21 11.57 18.65 19.35 12.47 6.21 2.01 return of ICICI
JM Balanced HDFC Balanced
Tata Dividend Yield  325.61 4.82 8.18 11.10 11.20 5.88 2.35 Pru Discovery is

the highest in its 9.35
Birla Sun Life Dividend Yield Plus 1279.73 6.88 11.64 12.01 10.24 9.89 2.02 -3.61
category.
Sundaram Select Midcap Reg  2039.91 8.99 20.29 20.32 10.08 5.12 1.89 Escorts Balanced HDFC Children's Gift-Inv
UTI Master Value  636.89 8.95 13.12 9.38 9.89 5.08 2.18 8.7
-3.45
Equity: Tax Planning Baroda Pioneer Balance Reliance Regular Savings Balanced
Reliance Tax Saver  1993.76 8.77 16.09 26.99 11.79 4.64 1.91
-3.4 8.39
Canara Robeco Equity Tax Saver  456.12 5.99 14.05 15.22 11.02 6.58 2.32
LIC Nomura MF ULIS HDFC Prudence
ICICI Prudential Tax Plan  1362.85 7.57 16.46 17.72 10.28 5.99 1.99
-1.71 7.63
Franklin India Taxshield  853.26 5.28 13.09 12.21 9.94 4.15 2.10
Religare Tax Plan  120.36 7.03 15.40 13.93 9.67 5.09 2.48 LIC Nomura MF Balanced UTI CCP Advantage
Fidelity Tax Advantage  1166.15 5.81 14.12 10.86 8.77 4.55 2.01 Returns as on 15 November
26 The Economic Times Wealth, November 19-25, 2012
Smart Stats

ETW FUNDS 100

VALUE NET
R E T U R N S ( % )
RESEARCH
FUND RATING
ASSETS
(` cr ) 3-MONTH 6-MONTH 1-YEAR 3-YEAR 5-YEAR
EXPENSE
RATIO Top 5 SIPs
IDFC Tax Advantage (ELSS)  144.27 8.73 21.61 16.32 8.20 — 2.44 Top 5 equity schemes based on 10-yr SIP returns.
Taurus Tax Shield  85.75 6.84 16.00 13.53 6.52 4.17 2.50 Sundaram Select Midcap Reg
Equity: Banking 24.03
SBI Magnum Global
Reliance Banking Retail  1728.60 13.61 27.15 29.19 12.89 12.07 1.93
22.91
ICICI Prudential Banking and Financial Services  155.57 14.19 31.66 38.71 12.74 — 2.44
Reliance Growth
Religare Banking  44.94 11.89 28.10 29.30 12.10 — 2.50 22.81
Equity: Infrastructure DSPBR Equity
Franklin Build India  60.89 7.82 17.18 18.76 5.81 — 2.38 21.65
Canara Robeco Infrastructure  112.14 3.67 13.29 6.74 4.84 -2.70 2.33 HDFC Top 200
21.12
PineBridge Infrastructure and Economic Reform Standard  86.80 6.06 16.24 3.84 2.06 — 2.49
Religare Infrastructure  37.63 5.87 13.69 2.92 -0.36 — 2.50 SIP: Systematic investment plan % annualised returns

HDFC Infrastructure  660.01 6.23 11.59 10.84 -2.09 — 2.15 as on 15 November

Hybrid: Equity-oriented
HDFC Balanced  784.32 4.13 8.97 13.05 12.98 9.67 1.98
12.98%
The 3-year return of
HDFC Prudence  6032.60 6.46 10.51 14.56 10.62 8.39 1.79 HDFC Balanced is
Canara Robeco Balance  192.00 5.18 12.00 15.24 10.58 5.42 1.66 the highest in its Equity: SWPs
Reliance Regular Savings Balanced  556.61 7.36 15.96 21.08 10.31 8.70 2.19
category. Top 5 MIP schemes based on 3-year SWP returns.
Tata Balanced  373.86 6.03 14.74 18.90 9.35 5.26 2.33
Canara Robeco MIP
Birla Sun Life 95  537.20 5.36 13.55 12.25 8.24 7.31 2.24
8.24
UTI CCP Advantage  75.29 5.87 14.68 10.15 5.54 7.63 1.39 SBI Magnum MIP Floater
Hybrid: Debt-oriented Conservative 8.23
Reliance MIP  3423.37 3.71 6.85 14.59 8.14 11.33 1.56 Reliance MIP
7.88
DSPBR MIP  290.89 3.33 5.79 13.81 7.60 7.32 2.13
Birla Sun Life MIP II Savings 5
Birla Sun Life MIP II Savings 5  309.81 2.65 5.56 10.51 7.72 10.41 1.32
7.69
Canara Robeco MIP  286.46 3.08 6.17 10.31 8.34 7.67 2.08
ICICI Prudential MIP 25 Reg
UTI Monthly Income Scheme  346.65 2.95 6.14 10.31 7.14 7.56 1.79
7.64
HDFC Multiple Yield Plan 2005  567.85 2.63 5.23 9.72 9.24 9.19 1.75
SWP: Systematic withdrawal plan % annualised returns
HDFC Multiple Yield  96.20 2.49 4.58 9.50 9.08 9.24 1.75
Birla Sun Life Monthly Income  403.96 2.84 5.60 9.44 7.17 7.80 2.00 as on 15 November

L&T MIP

Debt: Income
Templeton India Income Builder 
76.84

148.94
2.33

2.90
5.62

6.00
9.21

12.70
6.01

8.47
8.94

7.87
2.23

1.53
12.7%
The 1-year return of
SBI Dynamic Bond  2466.66 2.73 5.23 12.64 9.69 5.26 1.67 Templeton Income Debt: Liquid
Birla Sun Life Medium Term  215.73 2.29 5.14 11.18 8.68 — 0.10 Builder is the high-
est in its category.
Lowest Expense Ratio
IDFC SSI Medium-term Plan F  1210.68 2.59 5.40 11.08 — — 1.00
Birla Sun Life Dynamic Bond Ret  12125.20 2.59 5.23 11.03 8.18 9.66 1.19 0.11 0.11
Birla Sun Life Short Term  1966.92 2.65 5.58 10.85 7.88 8.23 0.25 0.10 0.10
IDFC SSI Medium-term Plan A  1210.68 2.49 5.20 10.72 8.63 9.30 1.24
ICICI Prudential Long-term  537.63 2.43 5.25 10.23 — — 0.76
Religare Active Income Fund Plan A  739.70 2.49 5.22 10.21 8.05 5.82 1.79
Templeton India Income Opportunities  2714.66 2.63 5.37 10.12 — — 1.45
L&T Select Income-Flexi Debt Ret  126.56 2.00 4.30 9.18 7.70 — 0.57 0.05
ICICI Prudential Banking & PSU Debt  65.17 1.92 3.95 9.01 — — 0.21
BNP Paribas Bond Reg  431.92 2.28 4.80 9.00 8.57 — 2.00

Debt: Gilt Short Term

SBI Magnum Gilt Short-term  27.31 2.14 4.52 10.23 7.21 7.15 0.86
UTI G-Sec Short-term  19.67 1.76 3.91 9.48 6.27 5.95 0.74
Edelweiss Religare Principal Morgan Stan- Edelweiss
Canara Robeco Gilt Advantage  3.75 1.72 3.65 8.10 — — 1.11 Liquid Overnight Cash Mgmt ley Liquid Liquid Inst

All equity funds including balanced equity funds sorted on 3-year returns; all others ranked on 1-year returns.

Data as on 31 March
Did not find your fund here?
Log on to www.wealth.economictimes.com for an exhaustive list.

Methodology EQUITIES (figures over the past three years) Mid & Small Cap Exposure
The Top 100 includes only those funds that have a 5- or Large-cap: More than 80% assets in large-cap companies.
4-star rating from Value Research. The rating is determined Large- and mid-cap: 60-80% assets in large-cap
of Large & Mid Cap Funds
by subtracting a fund’s risk score from its return score. The companies.
result is assigned stars according to the following 52.69
distribution: Multi-cap: 40-60% assets in large-cap companies.
45.78
Mid- & small-cap: At least 60% assets in small- and 44.60
 Top 10% 42.20 41.60
mid-cap companies.
 Next 22.5%
(Not covered Tax planning: Offer tax rebate under Section 80C.
 Middle 35% in ETW Funds
International: More than 65% of assets invested abroad. Returns as on 15 November
 Next 22.5% 100 listing) Assets as on 30 September
Income: Average maturity varies according to objective.
 Bottom 10% Rating as on 31 October
Gilt: Medium- and long-term; invest in gilt securities. Expense ratio as on 31 March
Fixed-income funds less than 18 months old and equity funds
less than three years old have been excluded. This ensures Equity-oriented: Average equity exposure more than 60%.
that all the funds have existed long enough to be tracked for Debt-oriented aggressive: Average equity exposure
consistency of performance. Given the focus on long-term between 25-60%. Stock
investing, liquid funds, short-term funds and FMPs are not pick of
part of the list. For the same reason, we have considered only Debt-oriented conservative: Average equity exposure
the week Reliance SBI Mag- SBI Principal
the growth option of funds that reinvest returns instead of less than 25%. ING OptiMix
Page 8 Vision num Magnum Growth Multi Manager
offering dividends that increase the NAV of funds. Arbitrage: Seek arbitrage opportunities between equity Contra MultiCap Equity Option A
Despite these rigorous filters, the list includes 2/3 funds of and derivatives.
each category to maximise choice from the best funds. The Asset allocation: Invest fully in equity or debt as per Data as on 31 October
fund categories are: market conditions. Methdology of selected Top 100 funds on www.wealth.economictimes.com
Smart Stats The Economic Times Wealth, November 19-25, 2012 27

BEST HEALTH INSURANCE

Every week ET Wealth brings you the rankings of one financial product done by i-save*. In this issue we look at the best
Rating methodology
Coverage: Comprehensive. All health insurance products (indi-
vidual) whose prices and features data is available in the public
individual health insurance plans available in the market. domain have been covered. Some plans may have been exclud-
Product name Price rating Features rating Service rating Overall rating High scores ed on account of not being comparable with the peer group as
across parame- they may be targeted towards a specific customer segment.
Apollo Munich Easy Health Standard    
ters helps Apol- Ratings: : i-save Health Insurance Ratings use a relative rating
Apollo Munich Easy Health Exclusive    
lo Munich get methodology to rate health insurance products on a 1-5 star
Apollo Munich Easy Health Premium     superior ratings scale. The product ratings are a weighted aggregate of the
Apollo Munich Insure Health  No Star   in 3 products product price, product features and company service data, each
Apollo Munich Optima Restore    
rated on a relative 1-5 star scale. The star ratings assigned
Apollo Munich Maxima No Star   
correspond to the following:
Bajaj Allianz Individual Health Guard    
Bajaj Allianz Health Ensure    
High scores on  Superior product
pricing and  Excellent product
Bharti AXA Smart Health Insurance Basic     servicing gets  Good product
Bharti AXA Smart Health Insurance Premium     Bajaj a superior
 Average product
Bharti AXA Smart Health Insurance Optimum     rating on one of
its products  Below average product
Cholamandalam MS Individual Healthline Standard     No star Low rating
Cholamandalam MS Individual Healthline Superior    
Cholamandalam MS Individual Healthline Advanced         
Future Generali Health Suraksha Basic Plan    

No star

Below average

Excellent

Superior
Future Generali Health Suraksha Silver    
High scores on
Future Generali Health Suraksha Gold     pricing and serv-

Good
Future Generali Health Suraksha Platinum     icing gets ICICI

Average
HDFC Ergo Health Suraksha Individual     Lombard an
ICICI Lombard Health Advantage Plus No Star    excellent rating
ICICI Lombard Family Protect Premier - Single Adult    
Iffco Tokio Individual Medi Shield   No Star No Star
Max Bupa Heartbeat Silver     Max BUPA
Max Bupa Heartbeat Gold     products make
National Insurance Individual Mediclaim     up for high pric-
0 10 20 30 40 50 60 70 80 90
ing through
New India Assurance Individual Mediclaim Policy  No Star  
superior feature
Oriental Insurance Individual Mediclaim Policy  No Star   scores The relative position on the distribution curve highlights the
Reliance Healthwise Standard     overall ranking of the product relative to its peer group based
Reliance Healthwise Gold No Star    on a comprehensive product score of its price competitive-
Reliance Healthwise Silver No Star   No Star ness, features and flexibility, and servicing capabilities.
Royal Sundaram Family Good Health - Single Adult    
   
Star Health and Allied Medi Classic
Star Health Gain Insurance No Star   No Star
Parameters considered
Price: Lower premiums get higher scores. Premiums are
Star Unique Insurance No Star   No Star
compared across multiple age bands (young, middle and
Tata AIG General Tata AIG Wellsurance Classic   NA NA Tata AIG
mature) and multiple covers (`1-10 lakh).
Tata AIG Wellsurance Supreme   NA NA Mediprime
Tata AIG Wellsurance Elite   NA NA scores high on Product features: Features are assigned a numerical score
Tata AIG Mediprime   NA NA
both price and based on product benefits, customer availability and flexibility.
features
United India Health Insurance Gold     Servicing capabilities: Scores are awarded to customer
United India Health Insurance Platinum     servicing and claims settlement statistics. These are not
Universal Sompo Individual Health Insurance   No Star  product-specific and the data published by Irda for the past
two years is used to compare and allocate a relative numerical
 Where a company has recently commenced operations, service scores have not been considered for rating; where service scores could not be calculated due to lack of
score, adjusted for age.
publicly available information, service stars are marked 'NA'.  i-save ratings are at a product level and provide a relative ranking to products in their peer group. They do
not take into account personal or individual financial needs, circumstances or objectives. It is important to review and compare benefits, exclusions and limits on sub-bene- For detailed methodology, visit i-save.com.
fits for each product.  i-save ratings are not financial advice or guidance or a recommendation to purchase, hold or terminate any policy. Data as on 15 June 2012.

Buying Guide
PREMIUM RECKONER Premiums of individual health insurance plans of all companies  Health insurance protects you against
rising healthcare costs and financial
Premiums in ` for 25-year-old male Premiums in ` for 35-year-old male Premiums in ` for 45-year-old male uncertainty arising from hospitalisation
Insurance cover (`
`) 1 lakh 2 lakh 3 lakh 5 lakh 1 lakh 2 lakh 3 lakh 5 lakh 1 lakh 2 lakh 3 lakh 5 lakh
due to accidents or illnesses.
 It is always better to start your health
Apollo Easy Health Standard 1,784 2,843 3,878 6,017 1,784 2,843 3,878 6,017 2,933 3,101 4,130 6,842
insurance cover at an early age:
Apollo Easy Health Exclusive N/A N/A 4,601 6,902 N/A N/A 4,601 6,902 N/A N/A 4,955 8,094
Apollo Easy Health Premium N/A N/A N/A 8,628 N/A N/A N/A 8,628 N/A N/A N/A 10,079  With age the risk to our health increases,
Apollo Insure Health 1,193 1,791 N/A N/A 1,193 1,791 N/A N/A 1,850 2,387 N/A N/A
making insurance more expensive too.
Apollo Optima Restore N/A N/A 5,041 6,303 N/A N/A 5,041 6,303 N/A N/A 5,368 7,186  Some companies now provide
Apollo Maxima N/A N/A 15,500 N/A N/A N/A 15,500 N/A N/A N/A 15,500 N/A guaranteed renewals for life.
Bajaj Allianz Health Ensure 1,229 N/A N/A N/A 1,424 N/A N/A N/A 1,824 N/A N/A N/A  Most policies have an exclusion period
Bajaj Allianz Individual Health Guard 1,574 2,627 3,715 5,892 1,960 3,689 4,977 6,917 2,510 4,842 6,815 10,759 (usually 2-4 years) for certain illnesses.
Bharti Axa Basic Plan N/A 2,289 N/A N/A N/A 2,289 N/A N/A N/A 3,772 N/A N/A  Do not restrict your cover just to meet
Bharti Axa Optimum Plan N/A N/A N/A 5,749 N/A N/A N/A 5,749 N/A N/A N/A 10,223 your tax-exemption limit.
Bharti Axa Premium Plan N/A N/A 3,197 N/A N/A N/A 3,197 N/A N/A N/A 4,243 N/A  Compare products not just on price, but
Chola Standard Individual Healthline 3,611 4,212 4,719 7,059 4,320 5,050 5,661 8,544 5,761 6,765 7,606 11,610 also on features, benefits, age till when
Future Generali Health Suraksha Basic Plan 1,262 2,072 2,856 4,774 1,494 2,201 3,205 5,202 1,571 2,811 3,708 5,778 renewability is available, sub-limits, etc.
Future Generali Health Suraksha Silver Plan 1,420 2,333 3,214 5,369 1,683 2,475 3,605 5,853 1,766 3,162 4,171 6,500
* i-saveTM ratings have been
Future Generali Health Suraksha Gold Plan 1,578 2,592 3,570 5,966 1,869 2,751 4,005 6,503 1,963 3,512 4,635 7,221 sourced from i-save.com, a
HDFC Ergo Health Suraksha Individual N/A 3,217 3,721 7,254 N/A 3,217 3,721 7,254 N/A 4,037 4,479 8,137 unit of MAGI Research and
Consultants Private Limited
* Premiums as applicable for Delhi taken into account. For the complete list of family floater health insurance premiums visit www.wealth.economictimes.com which analyses and rates
 Premiums sourced from quotation engines on each individual company website. Premiums are inclusive of service tax except in cases where this information may not have been available at individual websites. financial products
 Given the nature of health insurance and varied benefits and exclusion related terms, it is important to review what each product does or does not offer.
28 The Economic Times Wealth, November 19-25, 2012
Smart Stats

LOANS & DEPOSITS

ET Wealth collaborates with ETIG to provide a comprehensive ready reckoner of loans and fixed-income
instruments. Don’t miss the information on investments for senior citizens and a simplified EMI calculator.

Top five FDs Cheapest Personal loans Cheapest Auto loans

Interest rate (%) What `10,000
compounded qtrly will grow to
Tenure: 1 year INTEREST RATE (%) INTEREST RATE (%)
Indian Bank 9.25 10,958
Bank of Maharashtra 11.50 - 13.50 Bank of Maharashtra 10.50- 10.55

LOAN AMOUNT: `2 LAKH

UCO Bank 9.10 10,942

LOAN AMOUNT: `5 LAKH

IDBI Bank 8.75 10,904 Dena Suvidha 13 - 14 SBI 10.50 - 17.25
Yes Bank 8.75 10,904
Bank of India 13- 15.5 Allahabad Bank
ING Vysya Bank 8.70 10,899 10.75 - 11
Central Bank of India 13.25 - 15 Union Bank 10-95 15.75
Tenure: 2 years
City Union Bank 9.25 12,007 ICICI Bank 14 - 18 Central Bank of India 11.-12
Indian Bank 9.25 12,007
11 12 13 14 15 16 17 18 19 20 21 22 9 10 11 12 13 14 15 16 17 18 19
Lakshmi Vilas Bank 9.25 12,007
Tamilnad Mercantile Bank 9.25 12,007 * These are floating interest rates while the others are fixed interest rate
Union Bank of India 9.25 12,007

Tenure: 3 years
City Union Bank 9.25 13,157
Cheapest Home loans Cheapest Education loans
Indian Bank 9.25 13,157 10 YEARS 20 YEARS
Karur Vysya Bank 9.25 13,157 Minimum loan: `50,000; Maximum loan: `2 lakh
Interest Interest Margin money: 15%
Tamilnad Mercantile Bank 9.25 13,157
rate (%) rate (%)
Union Bank of India 9.25 13,157 Up to `10 lakh
State Bank of India 10.00 State Bank of India 10.00
Tenure: 5 years 15
HDFC 10.25 HDFC 10.25
City Union Bank 9.25 15,797 LIC Housing Finance 10.25 LIC Housing Finance 10.25 14 11.50 -
10.95 - 11.75 -
Tamilnad Mercantile Bank 9.25 15,797 Dena Bank 10.45 Dena Bank 10.45 13.50%
13.20% 13.25%
Oriental Bank of Commerce 9.10 15,682 13
10.50 -
Syndicate Bank 10.50 Syndicate Bank 10.50 12.50%
Andhra Bank 9.00 15,605
Axis Bank 9.00 15,605 12.00%
Up to `30 lakh 12

State Bank of India 10.00 State Bank of India 10.00

Top five senior citizen deposits HDFC 10.25 HDFC 10.25
11

LIC Housing Finance 10.25 LIC Housing Finance 10.25 10

Interest rate (%) What `10,000
Corporation Bank 10.50 Corporation Bank 10.50 Central United State Bank Allahabad Dena
Tenure: 1 year compounded qtrly will grow to
Bank of Bank of of India Bank Vidyalaxmi
Bank of Maharashtra 10.50 Bank of Maharashtra 10.50 India India
Allahabad Bank 10.00 11,038
These are average rates for the entire tenure
Indian Bank 10.00 11,038
UCO Bank 9.60 10,995
Yes Bank 9.50 10,984
Indian Overseas Bank 9.25 10,958 Postal Deposits Interest (%)
Minimum
Invt. (`)
Maximum
Investment (`) Features
Tax
Benefits
Tenure: Above 2 years
Monthly Income Scheme 8.50 1,500 Single 4.5 lakh 5 year tenure; monthly returns Nil
Indian Bank 10.00 12,184
Joint 9 lakh 5 year tenure; monthly returns Nil
City Union Bank 9.75 12,125
Indian Overseas Bank 9.75 12,125 Recurring Deposits 8.40 10 No limit 5 year tenure Nil
United Bank of India 9.75 12,125 Savings Account 4.00 50 No limit `10,000 interest tax free Nil
Yes Bank 9.75 12,125
National Savings Certificate (5 yr) 8.60 100 No limit No TDS 80C
Tenure: 3 years National Savings Certificate (10 yr) 8.90 100 No limit TDS applicable 80C
Indian Bank 10.00 13,449
Axis Bank 9.75 13,351 Time Deposit 8.20 - 8.50 200 No limit Available in 1, 2, 3, 5 years 80C
City Union Bank 9.75 13,351 Senior Citizen Saving Scheme 9.30 payable quarterly 1,000 15 lakh 5 year tenure; minimum age 60 80C
Indian Overseas Bank 9.75 13,351
Public Provident Fund 8.80 500 1 lakh a year 15-year term; tax-free returns 80C
Yes Bank 9.75 13,351
Employees' Provident Fund 8.60 - - Till retirement 80C
Tenure: 5 years Sec 80 C benefit: Investments up to `1 lakh in specified securities qualify for deduction.
City Union Bank 9.75 16,187
Dena Bank 9.75 16,187
IDBI Bank
Indian Bank
9.75
9.75
16,187
16,187
Home loan Base rate (%) Base rates are reference rates for all floating-rate home loans.

Indian Overseas Bank 9.75 16,187 As on 15 November 2012

10.45% 10.45% 10.50% 10.50% 10.50% 10.50% 10.50% 10.50% 10.50% 10.50% 10.50% 10.50% 10.50%
10% 10.25%
9.75%
Top five tax-saving FDs
Interest What `10,000
rate (%) will grow to
Tenure: 5 years and above
City Union Bank 9.25 15,797 BANK State Bank Axis State Dena United IDBI Punjab Bank of Bank of Bank of Canara Central Corpo- Union Alla- Andhra
Tamilnad Mercantile Bank 9.25 15,797 of India Bank Bank of Bank Bank of Bank National Baroda India Maha- Bank Bank of ration Bank of habad Bank
Oriental Bank of Commerce 9.10 15,682 Mysore India Bank rashtra India Bank India Bank

Andhra Bank 9.00 15,605

Axis Bank 9.00 15,605 Cheapest Gold loans
INTEREST RATE (%)
Your EMI for a Loan of `1 lakh Allahabad Bank 10.50- 14.50

@ 8% 2,028 1213 956 836 772 Central Bank of India 11.50 - 12.50
@ 10% 2,125 1,322 1,075 965 909 Syndicate Bank 11.75
@ 12% 2,224 1,435 1,200 1,101 1,053 Dena Gold 12 - 13.75
@ 15%
2,379 1,613 1,400 1,317 1,281 Tamiland Mercantile Bank 12.25 - 15.25

9 10 11 12 13 14 15 16 17 18 19
Tenure 5 10 15 20 25
Choose this calculator to check your loan affordability. For example, a `5 lakh loan at 12% for 10 years will translate into an EMI of `1,435 x 5 = `7,175 All data sourced from Economic Times Intelligence Group ( [email protected])
Technology The Economic Times Wealth, November 19-25, 2012 29

Click better images with

your phone’s camera
Pick from the following photo apps and editors to help you enhance the quality of your pictures.

KARAN BAJAJ
Free photo editors

M
obile phones have evolved from the simple calling and texting devices of a
decade ago into multi-functional gadgets with endless features. Take the cam-
eras installed in these phones. With many sub-`10,000 phones sporting 8- 1 iPhone: Aviary
megapixel (MP) cameras, more people are using this pocketable device to
click photos on the move. However, you may not get very good results from Also available for Android, Aviary allows
all of these. Here’s where a plethora of photo apps and editors come handy. Though some of you to adjust the brightness, contrast,
saturation and sharpness of images. You
these are free, you will have to buy others, but they can all help you enhance the images.
can add free effects like sepia, soft focus
and aqua, or purchase additional ones.
You can also change the colour tone or
Best camera apps add fun stickers to photographs before
sharing them with friends.

1 iPhone 2 Android 2 Android: PicsArt

Camera+ Camera Zoom FX With this free app, you can add frames,
borders, stickers, Clipart graphics and
($0.99 or `55) ($2.99 or `165)
text effects. There are also lots of artis-
Justifying its name, This app offers advanced tic photo effects, in addition to the stan-
this app offers controls for ISO, focus, metering, dard crop, rotate and colour adjustment
advanced features to iPhone users. exposure and white balance. Other features options. You can also draw on the image
You can control exposure, adjust include a burst mode of 10 shots per second, with various artistic brushes, as well as
focus using touch, or choose from 16 make a collage with pictures.
customisation of hardware buttons to click or
scene modes to get the best picture. zoom and live preview of special effects.
It also has a built-in image editor to
3 Windows Phone: InstaCam
add various effects to your Pudding Camera (Free) The highlight of this photo editor is that
photographs. it lets you combine multiple filters and
Also available for the iPhone,
effects to create your own filters. It has
Pudding Camera offers unique
Camera Awesome (Free) effects (50 mm, fisheye,
26 photo effects, 12 frames and 9 pre-
design filters to enhance your photos
If you need help with composition, triplex, etc) for your and share them on various social
Camera Awesome can show you photographs. There is also a networks. Instacam also calls itself the
grids to get the best subject quick access dial for exposure ‘unofficial Instagram client’ for
placement. It also provides a timer, control on the interface. The Windows Phone OS. The limitation is
image stabiliser, burst shooting only issue is that it shoots at that it only lets you browse through
mode and has an integrated image Instagram photos and does not let you
a maximum size of 1,280
upload your own.
effects editor. x 1,280 pixels.
How many
stocks should 4 Symbian: Molome
you own?
3 Windows Phone Page 3 This free app is the Symbian alternative
to Instagram. It works in the same fash-
ion—click a photo or select an existing
Camera one from your phone and then apply any
Effects 4 Symbian 5 BlackBerry
of the effects available. The app keeps
($1.49 or `82) getting updated with new effects on a
regular basis. You can share the
With this app, you can preview CameraPro `15 Pencil camera image on various social networks,
the various effects and frames For a puny amount, this ($2.99 or `165) including Molome’s own network,
available in the app before taking app offers a multitude of In a simple two-step where you can earn badges on complet-
a photo. The app provides easy advanced features. It allows process, you just shoot an ing certain milestones to improve your
access controls for flash, burst you to adjust white balance, exposure image with the app and it gets displayed social reputation.
mode as well as effects and and ISO settings, as well as shoot high instantly as pencil art. Pencil Camera
frames in a single window. dynamic range (HDR) pictures. There is gives you the option to choose the 5 BlackBerry: Photo Editor Ultimate
an onscreen compass and a virtual image size as well as to directly store the Offering various colour filters and
Fhotoroom (Free) horizon to help with composition. images in the internal memory or the effects, Photo Editor Ultimate lets you
Fhotoroom offers a built-in image memory card. combine or overlay one photo over the
stabiliser in its camera interface. SCam (Free) other to create beautiful collages. Apart
It also has a self-timer, exposure This app offers advanced features, such Camera Timer (Free) from options to adjust brightness, hue,
saturation and colour, it also comes with
adjustment, built-in image level as a real-time histogram and a horizon As the name suggests, the app lets you
tools to set the image quality as well as
to frame the shot better, various line to help with composition. It offers set a timer for the camera. You can crop, rotate or resize an image. You can
preset shooting modes and over time lapse, HDR, exposure bracketing choose between 0-20 seconds for taking e-mail the photo or share it on various
90 post-processing effects to modes and a continuous autofocus pictures and even set time intervals social networks, besides doing so with
enhance the image. mode, over and above the basic settings between photos. You can shoot up to 10 your BBM contacts from within the app.
available on your smartphone. images within the interval time.
30 The Economic Times Wealth, November 19-25, 2012
My Enterprise

Building on green projects

T Chitty Babu’s decision to construct green buildings has paid off, making way for a `350 crore venture.
S VARADHARAJAN

T Chitty Babu
45 years
Company
Akshaya Homes Pvt Ltd
Headquarters
Chennai, Tamil Nadu
Seed capital
`10,000
Source of funds
Personal savings
Current turnover
`350 crore

It is a myth that my wife pitched in with book-keeping. My been limited to Tamil Nadu so far.

G
rowing up in the 1970s in a
starting a real estate quiet, little town tucked away first project was worth `2 crore and I made Recognising the importance of any busi-
in the southernmost tip of a handsome profit. By the end of March ness to keep innovating in order to grow
venture requires a lot of India, tall buildings were a 1996, I had already started working on four organically, I took a call to concentrate sole-
money. As long as you rarity for me. At Nagercoil, projects and the profits enabled me to move ly on green projects at the beginning of
have established the near Kanyakumari, the tallest building I the company headquarters from my house 2008. Not only did this move send out a
knew of was the clock tower. It fascinated to a rented office at Adyar. strong message that we care for our planet,
right network and can me and I knew I wanted to design and con- Another misconception is that the realty but also captured the imagination and con-
deliver on time, money struct big buildings for a career. However, sector is full of problems. I can vouch for sciousness of the new buyers. In a way,
is not an issue. since I came from a humble background, I the fact that as long as you take up we were among the first companies
had to take the longer route to achieve my projects you are sure of executing to join the green bandwagon, and
dream. It took eight years and a long run at in the given time and budget, it is How to this gives us an edge today,
the corporate carousel before I got around as easy or difficult as any other optimise returns when certifications and clean
to starting the first project under my ban- venture. Also, one needs to give by avoiding costs records are paramount. I am
ner, Akshaya Limited. every business some time to Page 14 proud of the fact that we have
Within a year, After completing my five-year civil
engineering degree programme from SIT
grow—it took a year for my compa-
ny’s revenues to hit the `1 crore
consistently bagged good ratings
from all the important certifying
our firm had hit the `1 Tumkur, I joined Dual Structurals Private mark. It was not until October 1998 agencies in the market. Three out of
crore mark. Even Limited as first engineer, in 1987. I worked that I attempted to go beyond playing the our nine projects till date are platinum
for the construction company for the next contractor by taking on my first independ- rated and the rest have been given gold
then, I continued as a six years, eventually being promoted to ent project, that of developing four apart- ratings by the Indian Green Building
contractor, gaining director in 1993. However, two years on, ments. I invested `55 lakh in this venture. Council, an independent rating agency. We
more experience boredom set in and I was itching to do It was small change compared with the also received the best legal systems award
something new. A comfortable job was no projects that I had handled in the past, but it from CNBC/Crisil for four years in a row
before starting my longer good enough as I was still working on was a start and there has been no looking (2007-10).
own projects. someone else’s ideas and there was no chal- back ever since. I am now looking forward to unveiling the
lenge in terms of creativity. So I quit my job Here’s another tip for realty entrepre- tallest residential tower in Tamil Nadu. Kick-
and, in October 1995, I started Akshaya with neurs: guard against the temptation to started last month, this two-acre project,
a seed capital of `10,000. spread out too soon. I am not against called Abov, will boast 6,700 sq ft homes
It is a myth that one needs to have deep ventures in different geographical locations, with one on a floor, and each priced at
In 2008, we pockets to enter the realty market. I had but one must first master the area one starts about `7 crore. In keeping with the growing
already established a network of contacts out from. Thankfully, for Akshaya, there has demand, we have set up offices in Chennai,
decided to turn during my previous job, so credibility and been a lot of scope for growth in Tamil Salem, Coimbatore, and most recently
green and, since workflow were never a problem. To keep Nadu. Over the past 14 years, we have (2010) in Dubai. Our aim now is to reach out
then, all our projects things simple at the outset, I took on the role ventured into various cities within the state, to a lot more customers while continuing to
of a contractor. Interested parties would from Coimbatore and Salem to Madurai and meet the industry standards.
have been given top entrust me with projects with a clearly spec- Trichy. It is a market that I understand and
ratings by independ- ified budget and timeline. It was my respon- we have been able to execute more than 150 (As told to Amit Kumar)
ent rating agencies. It sibility to get the architect, engineers, raw projects in the state so far. Between 1995
material, and the like, and the amount I and 1998, I took on contractor roles for
helped us gain a saved was my commission. I hired just one projects in Karnataka and Andhra Pradesh Please send your feedback to
[email protected]
stronger foothold. employee, a civil engineer, to help me while too, but the self-developed projects have
Your Feedback The Economic Times Wealth, November 19-25, 2012 31

Readers’ response, online and in print, to ET Wealth stories has been THE ECONOMIC TIMES
overwhelming and enlightening. We pick some that add information
and perspective to our articles from previous issues.
wealth
November 19-25, 2012
www.wealth.economictimes.com
FRO
THE WM
EB

Need for cheaper loans for home renovation

The cover story ‘Renovate or relocate’ was of immense help to me since I have been facing this dilemma. Of late, the steep BEST OF ARCHIVES
rise in property prices has made it impossible to purchase new property. I have been looking at renovating my current
home, instead of relocating, for a number of reasons. The most compelling one to overhaul an old property is its location. Should you choose growth or dividend?
My house is in south Delhi and is well connected to the rest of the city, even though it is a bit small. However, even if I sell it, Both fund options offer certain benefits to
I will be unable to afford a new property in the area. Relocating is an easier option for younger couples and smaller fami- investors in specific situations. Go through this
article to consider these before deciding.
lies compared with senior citizens. It would be of big help if banks offer cheaper loans for renovation since the market for
such loans will be immense. Right now, a number of people do not renovate due to the costs involved, which, unlike a Five tips to secure your retirement corpus:
home loan, has to be paid immediately. However, a low-cost loan will make it easier to do so. Pushpendra Varma, Delhi If you want to build a sizeable retirement corpus
and financially secure your sunset years, go
through this story to find out how.

Mid-cap funds must Govt must push Need to improve Lost important documents? Here’s what
you need to do: Read this story to know about
for a portfolio through reforms adviser-client ties the steps you should take to get duplicates in
order to avoid financial loss or misuse.
The story ‘Time to pick mid-cap The story ‘Stocks to pick after sec- Uma Shashikant’s column ‘Client
funds’ provided a welcome ond quarter results’ provided an should be the core’ was an impor-
Are you losing `48 lakh in wasting food?
change from the usual stories on interesting analysis of India Inc. tant take on the financial advisory
Find out how a family can save a fortune
mutual funds, which focus on Like most investors, I had little business. While we can talk about it through smart shopping, intelligent storage as
large-cap and blue-chip funds. hope from this quarter, but I was in endlessly, things are unlikely to well as careful food consumption.
While there is no doubt that mid- for a pleasant surprise. I think the change unless there are proper rules
cap funds are more risky, I think worst period for the industry is and regulation. The advisory busi-
the biggest challenge is picking over and at least some sectors, nesses that have been involved in
the right one. Unlike large-cap such as FMCG and infotech, will mis-selling must be dealt with All these stories are available at
funds, where most of the AMCs continue to rally strongly. While the severely. The idea of providing www.wealth.economictimes.com
have similar investing patterns, in result of Union Bank was encourag- financial advice is based on trust
mid-cap funds the difference can ing, unless the overall PSU banking and considering how often people
be massive. So, stick to just one space improves, the market rallies feel cheated by profit-driven compa-
will remain short and unpre-
LEARN & KEEP
good mid-cap fund instead of nies, one can see why customers
investing in different options. dictable. I hope the government impose little faith in planners. Also take a look at:
Also, as the story shows, investors pushes through reforms to address Besides, the advisories need to
 How much debt do
with a low-risk appetite should these issues. In this regard, the come out and engage with people in you carry?
avoid mid-cap funds at all cost as infrastructure sector also needs a better and simpler manner. If not,
the returns can be bad during some incentives, otherwise it will the adviser-client relationship will  Get your budget in
downturns. find it difficult to revive. never improve. shape.

Pawan Negi, Delhi Viren Sawhney, Kolkata Manoj Sharma, Pune  Ways of investing
in gold.
How companies dress up their  Basics of bond
accounts: Though companies have to investing.
prepare their accounts as per defined
 Can you be a day

Life insurance in 2020

standards, the pressure to report good
results makes them fudge figures. Here trader?
are some of the tricks they use.

A recent study by PwC looks at how the insurance sector will change over the next decade.
The Learn & Keep section is available at
www.wealth.economictimes.com
Insurance penetration Evolving model of advice,
The low penetration in India highlights the huge sales and service MOST READ OF THE WEEK
uninsured population. The new regulatory controls As customers research and buy products directly, insurers will offer
precipitated a sharp fall in overall life premiums in interaction via virtual networks, offer guidance and access, and Should you renovate or relocate? Read the
2011 and are likely to lead to a shift towards more develop an infrastructure of multi-channel advice, sales and assis- story to find out which of the two options
traditional products, such as whole life insurance. tance. Consumers will use multiple online channels for research. gives you a better return on the time and
money that you invest.

How to delegate authority legally: If you

Call want to allow another person to handle your
Aggregators/ centre financial matters, read this article to know
online Partner/white
about the documents you need to draw up.
1.6% intermedi- label website
BRAZIL aries
2.5% 3.5% Check the fine print in festive home loan
CHINA US rates: As banks woo borrowers with attractive
schemes, scan this article to find out if you
Broker CUSTOMER actually benefit from them.
Website

4% Time to pick mid-cap funds: Go through

WORLD
this story to know how small- and mid-cap
4.4% funds have outperformed their large-cap
INDIA peers, the reason to invest in them.
7.4% Customer Mobile
Apps
FRANCE

YOUR FEEDBACK
9.5% Social Mobile Please send your feedback to [email protected], or
media website you can write to us at Times House, 7, Bahadur Shah Zafar Marg,
UK
12% New Delhi-110002
SOUTH Note: The letters have been edited for grammatical errors
AFRICA and better reading.
Last Word The Economic Times Wealth, November 19-25, 2012 32

Financial wizards of the week

Bring out the planner in Solutions from the following were also useful
you and suggest a Last week’s winner Prasad Gaikwad, Mumbai RA Parekh, e-mail
strategy for a financial VINAY KUMAR, DELHI Solution: Considering you are 53, you Solution: The markets are expected to do
problem to one of our should move about 80% of your corpus well within a period of six months. The
Last week’s question to debt instruments. This will allow market may continue to gain momentum
readers. I am a 53-year-old engineer and will retire Winner you to earn nearly `65,000- and hit the peak in 1-2 years to deliver a
after seven years. I have built a corpus of
`3,000 75,000 per month once you Winners boost to your portfolio, which might
The winners will `50 lakh over the past 20 years by investing
mainly in equity and equity funds. I have
retire. After reviewing your `1,000 be in the region of about 10-25% from
portfolio, ensure that you retain the present levels. In view of the
receive gift vouchers been thinking of moving my corpus to debt the best performing funds to
each above, get rid of the non-performers
worth instruments now for capital protection, but since the make for high growth, especially in your portfolio and start investing in
markets are currently at low levels, I want to continue since the next bull run is expected soon. debt instruments, comprising long-term
investing for another two years till the next bull run. bank fixed deposits at a 9% return. You
`5,000 However, my son thinks it is a risky option. Please advise.
R Sharma, Thane
This will make sure that you continue to
earn handsome rewards from equity,
while taking care of your post-
can continue to keep 10-15% in well-
performing equity funds and opt for
retirement expenses. dividend option for regular income.
and will be crowned the
ET Wealth Financial Kumar’s solution
You have done well to invest regularly and create a large
This week’s situation
Wizards of the week.
corpus, but do not get carried away. There is no guarantee as I have been investing `5,000 in mutual funds for the past three years, but
to when the next bull run will hit the market. If there is a the returns have barely beaten the market. I need a corpus of `2.5 lakh for
The decision of ET Wealth further dip, you might lose out on your investment. Over the
my brother’s education in a year and was thinking of using my mutual
regarding the winners of next one year, you should sell your low performing funds and
‘Financial Wizard’ will be start a systematic withdrawal plan from equity funds to debt
fund corpus. However, since it is performing badly, I am considering redi-
final. The vouchers will be funds, and four years before retirement, move it to fixed recting my investments for the next year to a recurring deposit so that the
e-mailed to the winners. deposits. This will ensure a smooth transition and safety of returns are ensured. Since the markets are improving, my wife thinks I
Allow at least 30 days for the capital. After retirement, move 85% of the corpus to the should continue with the SIPs. Please advise. PN Hari, Mumbai
despatch of the voucher. Senior Citizens Savings Scheme for regular income.
Send your solutions to [email protected]

MONEY-MAKING VENTURE

Rewards of a sporting gesture

In inculcating the benefits of sports in schools, EduSports has grown to a `8.3 crore venture in three years.
S VARADHARAJAN
MILAN SHARMA contacted them to manage a comprehensive
sports curriculum. By the end of the first year
of operations, the company had managed to

W
hen a friend of Bangalore-
based Saumil Majumdar tap 10 more schools and posted a turnover of
complained that his kid `60 lakh. In keeping with the growth, the
preferred to watch tele- team size too grew to 20 employees. Then, in
vision rather than sweat it January 2010, they were fortunate to get a
out on the playground, Majumdar came up fund infusion worth $2 million (`1.09 crore)
with a simple, but effective, solution. Along from Seedfund.
with three others—friends Meer Waqiruddin Today, EduSports has impacted over 1.5
Khaleeq and Parminder Gill, and sister-in- lakh students in nearly 220 schools (nursery
law Jyoti Majumdar—he founded the sports to class XII) across 70 cities, mostly tier II and
management services company, EduSports, III. In addition, it trains physical education
in January 2009. instructors and has provided employment to
EduSports was a shoot-off of SportzVillage, more than 280 sport instructors to date. In
which Majumdar had set up in September September-October 2011, the company
2003. A serial entrepreneur, the IIT expanded its footprint to three schools in
(Mumbai) and IIM (Bangalore) graduate had Saudi Arabia, all managed by Indian trustees.
also founded Learn@home and QSupport at From left: Parminder Gill, Jyoti Majumdar, Meer Waqiruddin Khaleeq and Saumil Majumdar A team of three currently oversees the sports
the fag end of the 1990s. However, after curriculum of these schools.
suffering in the dotcom bust, he shut shop, old Majumdar. EduSports, dedicated to offering integrated Today, the company has 340 employees
grabbed a corporate job in the US, and So, by 2008, the team started thinking sports management services to schools. and it raked in `8.3 crore in 2011-12. Given
returned home to start SportzVillage. The about approaching different stakeholders (SportzVillage is no longer a functioning that EduSports makes about `150-250 from
premise was that sports ought to be an who could help them in nurturing a physical- company.) each student, the growing awareness for
integral part of every child’s education and ly active generation. Majumdar soon realised The quartet invested a total of `2.5 crore in fitness from a young age bodes very well for
upbringing. So the four created the infra- that schools would make ideal partners since this venture, partly drummed out of their its future. In the next fiscal year, it hopes to
structure where kids could be trained in vari- their facilities could be used to make sports savings, and the rest coming from the parent make `13 crore.
ous sports under one roof. “However, it an integral part of the school curriculum. company as well as angel funding. For the
didn’t work because it was more a play of real While he admits that it was “cumbersome” to next five months, they had to play the waiting
estate. To have access to a centrally located convince the school trustees, Majumdar game, and finally got lucky in June 2009, Please send your feedback to
[email protected]
property was a challenge,” admits 40-year- persevered and finally set up a subsidiary, when the TVS School from Madurai

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