SUCHETA DALAL ON:

MALLYA EXTRADITION: SEBI SCUTTLES NEED TO

GET ALL THE FACTS REPORT LOAN DEFAULTS
Personal Finance Magazine 13 October-26 October 2017 Rs 45

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

Ensure Your Assets

Dont Fall Under

The Benami Act

Will your gift to parents or siblings be considered a benami transaction?
Can you invest in the name of your spouse or children? What about
transfer of money by NRIs to parents/relatives? Mare sure you don't
create benami assets unknowingly

STOCKS

Shemaroo Entertainment KNR Constructions Market Manipulation: Antarctica

Cover Page_304.indd 1 11-10-2017 10:37:29

Advertisements.indd 5 05-10-2017 21:01:17
Advertisements.indd 3 02-10-2017 12:48:45
 ISSUE CONTENTS
13-26 Oct 2017

Beware of the Benami Act

I nvestment of unaccounted money into

benami property is well-known. But benami
no longer applies only to property. Even
financial accounts can be deemed benami. In
simple terms, a financial asset may be benami
if the person who makes the investment does
not have his/her own name on the asset, at
least as a joint-holder, for varying reasons
including hiding of unaccounted money,
evading taxes in India or a foreign country
and so on. Raj Pradhan looked at the Benami
Transactions (Prohibition) Amended Act,
2016, and explains how you can avoid

creating benami assets unknowingly. The Act
has hefty penalties and rigorous imprisonment.
The government has already cracked the
whip and attached assets worth crores of
rupees. There is a thin dividing line between a
transaction being deemed a benami or genuine.
Vijay Mallya got arrested in UK and was
released on bail. Sucheta points out, in her
Crosshairs column, that Indian investigation
agencies will succeed in getting Mr Mallya
extradited only if they present an ironclad
case. Industrialists in the dock have routinely
influenced investigation agencies to present
weak cases. Shockingly, in Mr Mallyas case,
Indian regulators have sat on evidence shared
by UK regulators a few years back. On
4th August, Securities and Exchange Board
of India (SEBI) issued a circular making it
mandatory for companies to report any lapse
on payment of interest or principal to their
lenders from 1st October onwards. Suddenly,
on 29th September, SEBI suspended this move.
Sucheta points out, in her Different Strokes
column, that this shockingly anti-investor
decision comes after a series of missteps by the
present government that has put businesses
and consumers alike under severe pressure.
There is a disconnect between the current
tepid economic growth and strong bull market.
What should investors do in such a situation?
Bala explains what he himself would do. A lot
of investors, I think, would find that his is the
right path. As always, do write in with your
views including what you would like us to
32 Cover Story
Ensure Your Assets Dont Fall under the
Benami Act
The Benami Transactions Amended Act can be a pain even for
those who may not have any unaccounted wealth. Raj Pradhan
describes ways in which you may inadvertently create a benami
asset. How can you ensure that you do not cross the fine line
which can jeopardise your asset? Will your gift to parents or
siblings be considered a benami transaction?
12 Public Interest
Regulation of Retirement Homes under Consideration
Jan-Dhan Accounts: Who Do They Serve?
16 Your Money
NCDRC Asks Unitech To Refund Rs41 Lakh to
Home-buyer
TATA AIG General Insurance Directed To Pay Car
Theft Insurance Claim of Rs5.22 Lakh
DSP BlackRock Launches Equal-Weight Nifty50 Scheme
Roadside Parking in Specific Residential Areas in Delhi
Will Be Paid Parking
Real Estate Developer AN Buildwells Director Arrested
Piramal Finance Enters into Housing Finance Segment
SBI Waives Account Closing Fees
Government Has Decided To Audit Aadhaar Enrolment
Centres
17 MONEYLIFE

QUIZ
cover.
Disclaimer: Moneylife has a policy of not allowing its editorial staff to
Debashis Basu buy and sell stocks that are written about in the magazine. All personal
transactions in individual stocks are subjected to internal disclosure rules.
MONEYLIFE | 13-26 Oct 2017 | 4

Content.indd 2 06-10-2017 17:46:49

 MONEYLIFE
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 CONTENTS
20 FUND FACTS TAX HELPLINE

25 Best 52 Queries
Will Venal Indian Regulators
Save Vijay Mallya from & Worst Mutual at Moneylife
Extradition? Fund Schemes Foundations Tax Helpline
PULSE BEAT

22 Different Strokes
Going Easy on Loan
INSURANCE

56 Weight Loss
Defaulters: What Is behind
the SEBI Move? 30 Insurance
Trends
from Black
Tea?
Accident Insurance Get Lean, Cure Diabetes
Motor Accident Death Worth Less
FUND POINTERS than Rs10 Lakh?
Health Insurance LEGALLY SPEAKING
Mediclaim Renewal Notice Not

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Heart-related Claims Data from
ICICI Lombard and SBI General 58 Reputation
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Guarantee
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TAX / FIXED INCOME TECHNOLOGY

26 Smart Money
Investing during
Economic
48 Perils of Claiming
Wrongful I-T Deduction 60 IsLeaks
Protection from Data
Possible?
Sluggishness G-Sec Yields Up

40 Stock Watch
Shemaroo Entertainment: Is Old, CYBER SECURITY
Really Gold in the Digital Age?

50 Rise
India
of Revenge Porn in
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66 End This Obsequious
Protocol Now!
KNR Constructions: Will
Growth Accelerate?
54 Mumbai T2 App:
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Travellers from
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HERE WeGo:
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DEPARTMENTS
Market Trend: Managing the Share Your Location Readers Response ........... 8
Mood through WhatsApp Book Review ....................62
Money Facts ....................64

Content.indd 4 06-10-2017 17:54:40

 Black Money
& Tax Havens
Dr Subramaniam Swamy
to release the book by
Prof R Vaidyanathan

Date: Friday, 27 October 2017 | Time: 6pm to 8pm

Just how much black money is there in India? Estimates

vary from 10% to 20% of our GDP. Conservatively,
Rs15 lakh crore (10% of Rs150 lakh crore, our GDP in
2016-17).

And what would be the amount of Indian money in

tax havens around the world?
Around Rs65 lakh crore. Truly astounding figures!

Come and hear Dr Swamy and Prof Vaidyanathan, two of

the distinguished authorities on analysis of black money.

Register online at moneylife.in/event/179.html

Venue: BSE International Convention Hall,

1st Floor, PJ Towers, Dalal Street, Fort, Mumbai 400001
RSVP : Shilpa at 022-49205000 or email foundation@moneylife.in or Call/SMS/ WhatsApp on
+91-7045156415 (Please give your name, email ID & contact number)

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 Volume 12, Issue 18
13 October26 October 2017
Debashis Basu
Editor & Publisher
editor@moneylife.in
Sucheta Dalal
Managing Editor
sucheta@moneylife.in
Editorial Consultant
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Total no of pages - 68, Including Covers
RNI No: MAHENG/2006/16653
MONEYLIFE | 1326 Oct 2017 | 8
Letters.indd 2
MIDDLE-CLASS VOTES DO NOT
COUNT
This is with regard to What Is the Opposite
of Achche Din? Will the BJP Course-correct?
(Moneylife, 29 September-12 October 2017) by
Sucheta Dalal. Politicians can go to any extent
Mutual Fund investments
to retain power. Everything is fair in love, war are subject to market risks,
read all scheme related
and politics. To serve the country is no longer documents carefully.
the motive of politicians. In politics, showing big
dreams to the voters is called vote-bank politics.
Nothing is done for the common man, especially
the middle-class. Knowing pretty well that middle- Write to
class votes do not count for winning elections, all the Editor!
politicians play a game against the middle-class
without any fear.
WIN
a prize
Mahesh Kumar, by email
ABANDON USE OF AADHAAR CARD?
This is with regard to the Your Money news item
Driving licence, vehicle registration to require
Aadhaar (Moneylife, 29 September-12 October
2017). There is no second opinion that the
UIDAI (Unique Identification Authority of
India) evades various privacy policies that all
citizens are entitled to, though the Supreme
Court has decided that reasonable restrictions
in public interest can be allowed on privacy matters.
Such reasonability is always questionable. This kind of prproof
ooff is vvalid
proo a id
al
only for criminal activities of serious nature like murder, etc. But, in
no way, can it be for the filing of income-tax returns. Some good, sane
thinking must prevail with persons who are behind Aadhaar, making it
almost compulsory in every step of life. The most important fact is that
Aadhaar details can be hacked very easily. With changed technology,
Aadhaar card will never be a fool-proof enough to prevent its misuse.
02-10-2017 16:57:47
 +

Moneylife Foundation AD.indd 1 26-07-2017 11:09:05

 LETTERS

Ourselves To Blame?
the
Best
letter
T his is with regard to 4 Schemes, Same Fund House,
Same Returns! (Moneylife, 28 September-12 October
2017). The article only reminds us of the principle of KISS:
Mutual Fund investments
Keep it simple, stupid. are subject to market risks,
read all scheme related
The KISS principle states that most systems work best documents carefully.
if they are kept simple rather than made complicated;
therefore, simplicity should be a key goal in all our daily
activities (living, habits, investments, etc) and all unnecessary Congratulations
complexity should be avoided. KISS is also an acronym for: Sunil Rebello
Keep it simple, silly, keep it short and simple, keep it simple and
straightforward and keep it small and simple. We have to avoid all extra clutter
YOU WIN A
PERSONALISED
(also extra noise) in our daily lives. CLOCK
Investments are mainly on the principle of RISK & REWARD. But if we are
more greedy than fearful, we have only ourselves to blame.
Sunil Rebello, online comment

In the larger interest of the country, it is better that the Of course, this is not
use of Aadhaar card be abandoned. to say that everything Sunil Rebello

M Kumar, by email has been executed

EXCESSIVE MEDIA PESSIMISM?
This is with regard to the article What Is the Opposite
of Achche Din? Will the BJP Course-correct?
(Moneylife, 29 September-12 October 2017) by Sucheta
Dalal. The recent bout of negativity has emerged after
the announcement of the GDP growth numbers and the
realisation that the next quarters may be even worse
on account of transition to GST (Goods and Service
Tax). I would focus my reply only on the GST.
International experience with GST is that prices go
up initially for a couple of years and come down
eventually as the economy begins to adjust. Some
slowdown in the economy was expected, given that
GST would hit the unorganised sector adversely. This
was known beforehand. Since all political parties
supported GST, it can be said that we, as a nation, have
taken a call to go through the pain, for the purported
long-term benefits that the new tax structure offers. It
was also the collective wisdom of all that an imperfect
GST is better than no GST.
Disgruntlement of those who were able to evade
taxes earlier but are finding it difficult to do so now
is expected. Economists and politicians have talked
for decades about widening the tax base but the talk
went nowhere beyond taxing the middle-class and
the corporate sector. One should now appreciate that
prime minister Narendra Modi has taken an unpopular
step in the larger national interest.
to perfection. The
timing was, probably,
driven by political
expediencythe
earlier the better, giving more time for things to settle
down. Complaints such as software glitches could have
been avoided. But these are minor issues in the larger
scheme of things and will get resolved eventually. If the
government was not fully prepared, it is equally true
that many businesses too did not prepare adequately
and kept the matter pending till the last moment. Those
who prepared in time have faced no major issues.
While one can say with hindsight that there was
a better way to execute, I think, excessive media
pessimism is unwarranted. In any case, GDP growth
rate is a very short-term focused, imperfect and
overrated statistic whose limitations also should be
kept in mind.
Chandragupta Acharya, by email
TAKEN FOR GRANTED?
This is with regard to Data Theft in Organisations
and Legal Issues (Moneylife, 15-28 September 2017)
by Prashant Mali. All apps now ask for complete access
to your contacts. Is this a data protection violation? We
are sharing a contact without approval from the owner
of contact. Data protection and privacy are big themes
which are taken for granted now.
Vasudevan, online comment

MONEYLIFE | 1326 Oct 2017 | 10

Letters.indd 4 02-10-2017 16:58:29

 LETTERS

ASSIGN CLEAR RESPONSIBILITIES!
This is with regard to Who To Blame in a Lift
Accident? (Moneylife, 4-17 August 2017) by
SD Israni. How did the lift door open when the lift was
not at the third floor landing? Does this reflect poor
maintenance or poor installation quality? Given that
most building projects come in the form of towers, can
the bye-laws include clear guidelines for preventing lift
mishaps and assign clear responsibilities and culpability
in this regard on the managing committee of the
cooperative housing society?
Kumar R, online comment
ROOT OF THE PROBLEM
This is with regard to Fortnightly
Market View: Creeping Frustration
(Moneylife, 15-28 September 2017).
The root of the problem is the
finance ministry which has turned a
prosperous economy into a stagnating
one with constant problems for Indian
businessmen. Unless this is fixed, nothing
much will happen (fixed means change
of finance minister).
Suketu Shah, online comment
TERRIFIC READ!
This is with regard to The Fraud at RicohExclusive:
PwC Forensic Report (Moneylife, 29 September-
12 October 2017) by Debashis Basu and Shashank
Manilawala. Terrific read! This feels like a crash-course
in auditing.
Aditya G, online comment
CRYING FOUL WHEN THE TIDE TURNS?
This is yet another interesting expos by Sucheta Dalal
HFCL Scrip Drama: Raises Intriguing Questions
(Moneylife, 29 September-12 October 2017). You
would be surprised to know how many corporate deals
are done over messaging apps and blogs/forums which
seem to be far from reality. Yet, the ever hungry for
multi-bagger retail investor buys the stories and cries
foul when the tide turns.
Kunal Singh, online comment
BEST OPTION FOR A DEFENSIVE
INVESTOR?
This is with regard to Picking Winning Equity
Schemes (Moneylife, 18-31 August 2017) by Debashis
Basu, Pratibha Kamat and Clinton Fernandes. With all
due respect, I disagree with the authors that a superior
equity mutual fund scheme can be selected. As John
Bogle has repeatedly said, Always remember the
relentless rules of humble arithmetic. Its all
about the cost.
In constructing the model used in the article,
only the total returns of the mutual fund
schemes were considered, and not the NET
RETURNS, which equals total returns
minus expense ratio. So, a more complete
picture of the mutual funds returns should
take into account the expense ratio as well.
I also believe that Matthew (19:30) was
right when he said: But many who are
first will be last, and many who are last
will be first. These words may equally
apply to mutual fund returns.
All said and done, a periodic investment in a low-cost
index fund is, and always will continue to remain,
the best option for a non enterprising/defensive (in
Grahams definition) investor, for creating wealth.
While I do understand that a large majority of people
believe that they are superior to others and, therefore,
can spot an investment strategy better than others, I
would like to quote Kato on the matter: There must
certainly be a vast fund of stupidity in human nature,
else men would not be caught as they are, a thousand
times over, by the same snare; and while they yet
remember their past misfortunes, go on to court and
encourage the causes to which they were owing, and
which will again produce them.
Eashan, online comment

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11 | 1326 Oct 2017 | MONEYLIFE

Letters.indd 5 02-10-2017 16:59:02

 Public Interest
Regulation of Retirement
Homes under Consideration
H
ardeep Singh Puri, minister of
state for housing and urban
development, has agreed to
examine Moneylife Foundations
study on retirement homes with a
view to formulating appropriate
regulations and guidelines to protect
middle-class and affluent elders
who move to such homes in the
expectation of hassle-free silver
years. I met Mr Puri and presented a
copy of the study to him on
29th September at New Delhi and
briefed him on the key findings
as well as the need for formal
regulations and disclosure norms
to protect those who chose to move
Jan Dhan Accounts: Who Do They Serve?
I f one goes by the numbers
displayed on the Pradhan Mantri
Jan-Dhan Yojana (PMJY) website,
the financial inclusion scheme
remains a huge success. At the end
of September 2017, it reported
302.6 million beneficiaries with bank
balance of Rs66,606 crore. These
were being serviced by a vast army
of 126,000 bank mitras, delivering
branch-less banking. However, a
closer look raises many questions
about this three-year-old initiative
launched with great fanfare. Of
these, we know from reports that
nearly 10 million accounts have no
transactions.
For starters, we do know that
Jan-Dhan accounts were targeted
to launder black money by using
account-holders as money mules to
deposit large chunks of tax-evaded
cash. A response to a question in
Parliament indicates that deposits in
MONEYLIFE | 13-26 Oct 2017 | 12
Public Interest.indd 2
into retirement homes/townships
which are a booming new sector
that meets the changing
requirementsts of society.
The regulations
ulations
should include
ude prescribing
minimum standards
tandards of
infrastructure,
ure, service,
contracts and
nd protection
(in the form
m of
supervision,,
swift grievance
nce
redress and
empowerment ent
of residents))
in line with Hardeep Singh Puri,
minister of state for
what has housing and urban
development
Jan-Dhan accounts, which stood at
Rs45,636 crore on 9 November 2016,
had jumped to Rs71,036 crore on
28 December 2016. We have also
seen innumerable media reports since
then that the income-tax department
has frozen all suspicious accounts
with large deposits in these accounts.
And, yet, a massive Rs4,430 crore
has been withdrawn from these
accounts. The steady increase in
balances in these accounts (in the
past) suggests that these are not
normal withdrawals. Did they then
escape the taxmans eagle eye?
There are issues with opening
of the new Jan-Dhan accounts too.
No bank is willing to open these
accounts anymore, not even private
banks which have been extremely
eager to please the government.
We already know that nationalised
banks have incurred a high cost for
maintaining Jan-Dhan accounts. To
been done by developed nations
such as Canada, Singapore, New
Zealand, Australia and others. The
minister also discussed how financial
products such as reverse mortgage
could be encouraged among this set
of residents to give them access to
cash if they begin to run out of
savings.
Mr Puri readily
re agreed
to have his offi
of cials consider
how best to ensure
en the
orderly development
develop of such
townships forfo the benefit
of all stakeholders
stak and
enhance confidence
in this sector.
Simultaneously,
Simul
at the
th initiative
of Praveen
Pr Singh
Pardeshi,
Par
additional
ad chief
a question in the Parliament, State
Bank of India (SBI) had claimed that
its cost for maintaining such accounts
is Rs774.86 crore.
However, The Times of India (TOI)
has exposed another dimension to
these accounts. In a report, it says
that banks are taking advantage of
the vague wording of Reserve Bank
of India (RBI) guidelines for basic
savings bank deposit accounts, to
impose restrictions on transactions
or find ways to demand a minimum
balance or levy charges if the four
free transactions norm is exceeded.
Free transactions include ATM
deposits and withdrawals, online and
point of sale transactions as well as
standing instructions. The TOI report
names top private banks for finding
ways to charge Jan-Dhan customers
for more than four transactions. SBI
freezes the account after the monthly
four-transaction limit is reached.
05-10-2017 15:41:03
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 Public Interest
secretary to the chief minister (CM)
of Maharashtra, a working group
is being set up to examine what
needs to be done to encourage the
growth of retirement homes, which
cater to a growing market segment,
and to put in place regulations
that will protect their residents.
The working group, which will
include all stakeholders, is being
led by Dinesh Waghmare, secretary,
department of social justice &
special assistance and includes
BN Makhija (ex-secretary, GoI),
Priya Khan (OSD, CMs office) and
representatives from ministry of
urban development and department
of social justice & special assistance.
Moneylife Foundation is also a part
of the group. Maharashtra wants to
prescribe standards, ensure grievance
redress, while avoiding needless
The Bank recently agreed to allow
economically weak customers as well
as students and pensioners to convert
their regular accounts into basic
accounts with stringent restrictions,
after a furore over its decision to
impose huge costs for failing to meet
minimum balance requirements.
Charging Jan-Dhan account-
holders for more than four
transactions is a relatively
new development. It has
happened mainly due to
RBIs studious silence with
regard to exploitation
of bank customers and
generated anger and
confusion about bank
charges.
Interestingly, while banks insist
on capping transactions on the claim
of high costs, our sources tell us that
banking correspondents (BCs), who
earn a commission per transaction,
have been encouraging needless
deposits and withdrawals of the
same sum of money to bump up their
MONEYLIFE | 13-26 Oct 2017 | 14
Public Interest.indd 3
red-tape and inspector raj, as also
to ensure an independent rating of
retirement homes to guide investors.
The key findings of Moneylife
Foundations study were as follows.
Retirement homes are a new market
segment with huge potential because
a growing number of affluent
middle-class Indians are looking to
spend their retirement in a secure
environment, with like-minded
people of similar interests and
without the burden of running a
home. However, the sector needs
effective regulation to ensure
security and grievance redress. The
need for regulation was underlined
by a court case in the Tamil Nadu
High Court that highlighted the
travails of the senior citizens living
in a retirement home in Coimbatore.
The study recommends that
commissions. This information comes
from a source who has worked with
the biometric identification and
enrolment agencies. Despite efforts,
we were unable to verify whether
this is happening routinely, or even
in pockets, or get information
about the action taken by banks in
such cases, or the turnover of BCs
employed by banks. The Indian
Banks Association has prescribed a
minimum compensation of Rs5,000
per month, but the guidelines for
engaging BCs say that BCs may be
incentivized on business volume/
transaction/milestone basis, with
retirement homes must come under
Central regulation, although housing
is a state subject. The government
must put in place regulations
to ensure that every retirement
home, and its management agency,
is required to file details of its
agreements, amenities, terms and
conditions of service, licences,
sanctions, and permissions; these
should also be uploaded on a
statutory searchable website. The
promoter/developer of a retirement
home must sign an agreement
with the residents to ensure that
services, like nutritious meals, 24x7
security, well-equipped medical
centre, comprehensive insurance,
record maintenance, employee
screening and policy for transfer of
the asset, are provided by them.
Sucheta Dalal
stipulation of a minimum threshold
limit, to encourage them for business
development.
More importantly, banks have
been allowed to pay commissions
to BCs in order sell new products
launched by them. Although BCs
are not allowed to collect the
commission directly from
customers, the guidelines are
clear that since the delivery
of services and products are at
the convenience of customers,
we may recover the incentives
and commission from the
customers such commissions/
incentives. BCs are also paid
commissions for new products
launched by banks for these
rural folks who are the target of
financial inclusion. In an environment
where educated urban consumers
have been subject to the most brazen
mis-selling of financial products
and services, it is anybodys guess
what is being sold to this vulnerable
segment. SD
05-10-2017 15:41:35
 Your Money
CONSUMER INTEREST saying the allottee cannot be expected
to wait for possession of the apartment

NCDRC Asks Unitech To Refund for an indefinite period. It noted that

the firm was not in a position to hand
Rs41 Lakh to Home-buyer over the possession of the apartment.
NCDRC awarded Rs10,000 as

A ccording to a complaint to
NCDRC (National Consumer
Disputes Redressal Commission), in
2006, DK Mathur had paid over Rs41
lakh and booked an apartment in
Unitech Horizon, a residential project
in Alistonia Estate at Greater Noida
(Uttar Pradesh).
litigation cost to Mr Mathur and said
that the firm had failed to hand over
the possession even after eight years of
Mr Mathur was promised delivery date. The opposite
promised delivery of party (firm) is not in a position to
of the apartment by offer possession of the apartment.
the end of 2008, but The company shall refund the amount
he failed to get it. with simple interest at 10% per
The company said it annum without any further liability.
was not in a position In the absence of any explanation for
to hand over the failure to comply with the stipulation
property as the delay of delivery of possession, we have no
in completing the hesitation in concluding that Unitech
construction was beyond its control. has committed deficiency in service
NCDRC has asked the company and has indulged in unfair trade
to refund Rs41,15,320, to Mr Mathur practice, the Commission said.

VEHICLE INSURANCE MUTUAL FUNDS

TATA AIG General Insurance Directed To Pay Car DSP BlackRock Launches
Theft Insurance Claim of Rs5.22 Lakh Equal-Weight Nifty50
Scheme
A complaint was submitted before the Central Mumbai District Consumer Disputes
Redressal Forum in 2015 by the owner of a car, M/s Banswara Syntex Limited,
against TATA AIG General Insurance Co Ltd. The complaint said that, on 7 May 2012, D SP BlackRock Investment
Managers Pvt Ltd, one of
the car was parked in the parking slot of the companys director. The driver of the Indias premier asset management
car slept in the vehicle for the night. The following morning, after the driver returned companies, launched its first passive
from the washroom, he found that the car was not in the parking spot. A complaint fund, DSP BlackRock Equal Nifty 50
was lodged with the police and on 9 May Fund. This index fund is different from
2012, the RTO (Road Transport Oce) was other index funds as it assigns equal
informed. weight to each stock and invests
The insurance company was intimated equally in them. In this scheme, each
and the claim submitted. However, the company will be apportioned 2%
insurance company repudiated the claim of the portfolio, given that there are
through a letter dated 25 March 2013 on 50 companies in the Nifty 50 index.
the grounds that proper care was not taken, The scheme also gets rebalanced on
and the vehicle was left unattended without a quarterly basis and has a built-in
locking it. It said that this was a breach of the policy conditions. profit-booking mechanism, in effect
The complainant said that the claim was repudiated on the basis of the insurance buying the underperformers at low
company investigators report. The advocate pointed out that the report said, It was and selling the outperformers at high.
found that the location is well secured and guarded by a fleet of security persons. The minimum investment for this
The Forum ruled against the insurance company and ordered the insurance company scheme is Rs1,000 and in multiples of
to pay Rs5.22 lakh, along with a compensation of Rs40,000, to the owner of the Rs500 thereafter. There is no entry- or
Skoda car stolen from a heavily secured and guarded Mumbai building in 2012. exit-load in the scheme.

15 | 13-26 Oct 2017 | MONEYLIFE

Your Money.indd 2 05-10-2017 17:40:24

 Your Money
REAL ESTATE
Roadside Parking in Specic Residential
Areas in Delhi Will Be Paid Parking
R oadside parking in residential
colonies in Delhi will be allowed in
demarcated areas and a fee charged,
according to new rules that are set to
be notified very soon. The lieutenant
governor of Delhi, Anil Baijal,
reviewed the Delhi
Maintenance and
Management of
Parking Rules,
2017, prepared
by the transport
department.
According
to the new rules,
which give teeth to
the draft parking
policy prepared by the department,
parking rates will be fixed by a base
parking fee committee headed by the
transport commissioner. The rules
propose that on-street parking for
the first hour be priced at least twice
as much as off-street parking. The
parking fee will increase exponentially
Real Estate Developer AN Buildwells Director Arrested
S urendra Kumar Hooda, the 75-year-
old promoter and director of
AN Buildwell, was arrested by the
economic oence wing (EoW) of Delhi
Police on charges of cheating and
criminal breach of trust after home-
buyers who booked flats in the realtors
Spire Woods project in Haryana filed
a complaint against him. The project
stalled after the developer abandoned
it three years ago, and the realty firm
is under liquidation. Mr Hooda was
arrested on 20th September and has
been hospitalised since. The Saket court
rejected Mr Hoodas bail application
and sent him to judicial custody. More
MONEYLIFE | 13-26 Oct 2017 | 16
Your Money.indd 3
every hour to discourage long duration
of on-street parking and will be thrice
that of off-street parking. No surface
parking will ordinarily be allowed
within 500 metres of a multi-level
stack parking. The civic agencies
will identify
roads and spaces
for granting
permission for
overnight parking
of transport
vehicles. The
parking of
commercial
vehicles would be
permitted only on
notified roads only during night hours,
on payment. In case of illegal parking
on roads wider than 60 feet, the traffic
police shall be the primary agency
for towing away the vehicle. In case
of other roads and spaces, the civic
agencies shall be responsible to tow
away the vehicle and impose penalties.
than 1,700 buyers have invested in two
projects of AN BuildwellSpire Edge in
Manesar, a commercial project, and Spire
Woods in Sector 103, a housing project.
Mired in controversy since the launch
of the two projects, all directors of
AN Buildwell resigned and construction
work at their sites has been at a standstill
for three years. The company went into
liquidation in 2016. Rejecting the bail
application of the realtor, the court
observed that since the accused collected
funds from the public in violation of the
conditions of the licence granted to his
company, the court is of opinion that he
is not entitled to be accorded the benefit
LOANS
Piramal Finance Enters
into Housing Finance
Segment
P iramal Finance announced entry
into retail housing finance business
through its wholly-owned subsidiary,
Piramal Housing Finance. The housing
finance company will offer home loans
as well as loans against property
and construction finance for small
developers. Given the size, scale and
market relevance of the wholesale
lending business, it was a natural
progression to assess opportunities
within the retail lending space, Piramal
Finance and Piramal Housing Finance
managing director, Khushru Jijina, said.
The company will initially focus on a
product roll-out across all major metro
cities and, thereafter, seek to establish a
pan-India presence, including tier-2 and
tier-3 towns and cities.
BANKING
SBI Waives Account
Closing Fees
S tate Bank of India (SBI) has waived
account closing charges for all savings
bank customers, provided the account has
been in existence for over a year. The move is
the second in the round of relaxations by the
Bank following protests against the penalty
for not maintaining a minimum balance. Until
now, the Bank was deducting Rs500 with
service-tax as account closing charges on
all accounts except those closed during the
14-day free-look period. The waiver will come
into effect from October 2017. Customers are
allowed to switch from regular savings bank
accounts to a basic savings bank account
(BSBA). The BSBA is similar to a regular
account but it does not have a chequebook
facility. A BSBA also cannot have total credits
of more than Rs1 lakh or minimum balance of
over Rs50,000.
05-10-2017 15:39:32
 BANKING
overcharged for Aadhaar services.
Government Has Decided To Audit Photographs of all sta at the
enrolment centre and equipment
Aadhaar Enrolment Centres will be taken and a 5-10 minute
video would be shot of the ongoing

F acing questions over the privacy

and security of the Aadhaar systems
in the Supreme Court (SC), the
government has decided to conduct
an independent audit of all 50,000-
odd Aadhaar enrolment centres and
inspect them.
Three independent auditors
will assess if enrolment centres
are adhering to UIDAIs processes
and guidelines, if the hardware
and software deployed at the
enrolment centres are as per UIDAIs
specifications and check whether the
enrolment centre is involved in any
corrupt practice and people are being
enrolment and update process at the
centre. The three auditors would be
allotted 10,000 centres in the first
year for the job. The auditors will
assess if supervisors and verifiers are
present at each enrolment centre
to help and guide residents, if the
original documents of the resident are
scanned and reviewed as per UIDAIs
guidelines without retaining their hard
copies, whether the behaviour with
the resident is courteous and whether
the centre is covered by CCTVs.

Moneylife

MONEYLIFE
Quiz no

269
QUIZ Answer
Correctly! Win
Another quiz to tease your brain. The answers are in a personalised
sed
this very issue. The winner will be chosen by a lucky clock with an Rajendra Kumar Phophalia

investmentnt
draw from correct entries and answers published in the Mutual Fund
investments are quote!
issue dated 23 November 2017. Send in your answers to subject to market risks,
read all scheme related
quiz@moneylife.in with the Quiz no., name, address & documents carefully.
telephone number before 1 November 2017.
1. During the global stock market crash of 2011, which of the 5. What is the name of the director of AN Buildwell who was
following countries did not have a rising debt problem? arrested by the economic offences wing of the Delhi
a. Germany b. Spain Police?
c. Italy d. Greece a. Mohinder Singh b. Surendra Kumar Hooda
c. Mohinder Hooda d. Kumarrao Mohite
2. When, in the past 10 years, were stock market highs similar
those in September 2017? 6. Who is the current chairman of the Indian Railway Board?
a. September 2008 b. December 2008 a. Piyush Goyal b. Suresh Prabhu
c. October 2010 d. December 2011 c. Laloo Prasad Yadav d. Ashwini Lohani

3. Among equity diversified mutual fund schemes, what was 7. How much is the minimum monthly compensation
the largest decline in one-year returns for 30 September recommended for banking correspondents by the Indian
2011? Banks Association?
a. 18% b. 25% a. Rs5,000 b. Rs10,000
c. 39.3% d. 40.2% c. Rs15,000 d. Rs20,000

4. What was the business activity of Shemaroo Entertainment 8. When did the Benami Transactions (Prohibition) Amended
in 1962? Act come into force?
a. Cinema hall b. Circulating library for books a. June 1975 b. January 1988
c. Photography laboratory d. Film production c. December 2008 d. November 2016

In all, 18 readers got all the answers right last time.

The answers to Moneylife Quiz-267 are: 1-a. 37% 2-a. Capital
The winner of Quiz-267 is Rajendra Kumar Phophalia
Growth 3-a. Dr YV Reddy 4-b. Shadow Brokers 5-c. 31.26%
from Jodhpur. Congrats! You win a personalised clock
6-b. 60 7-b. 1898 8-d. 220 countries
with an investment quote!

17 | 13-26 Oct 2017 | MONEYLIFE

Your Money.indd 4 06-10-2017 12:48:06

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

Will Venal Indian Regulators Save

Vijay Mallya From Extradition?
T
he flamboyant Vijay Mallya is in the news defaulting on a Rs900-crore loan from IDBI Bank.
again, after the third arrest in his lifetime and Since he has been declared a proclaimed offender,
a quick bail. The only time he spent a night in investigation agencies have reportedly confiscated his
custody, way back in 1985, was in connection with unpledged shares worth around Rs4,000 crore and had
the acquisition of a stake in Shaw Wallace through them transferred to the Central government.
some dubious deals overseas. That was at the height Are the latest charges enough to get an extradition?
of the draconian Foreign Exchange Regulation Act Mr Mallya is a skilled litigator and the record of
(FERA), so badly misused by government ministers Indian enforcement agencies is fairly pathetic; their
and bureaucrats to victimise, torture and extort from charge-sheets are notorious for exaggeration and
business and industry, that it had to be defanged as falsehoods that fall apart in court. Even today, with the
part of Indias economic liberalisation. countrys prestige at stake, there is no attempt to gather
That Indians are notorious for the vast wealth all possible evidence against Mr Mallya. Here is a case
transferred to Swiss Banks is testimony to our study on the selective approach of the Securities and
extraordinary corruption levels. In 2005, Mr Mallya Exchange Board of India (SEBI)) and its complete lack
became the official owner of Shaw Wallace and merged off accountability to people or Parliament.
it with United Spirits. On 2 February 2017, Arvind
Let us look at how Indian investigation agencies Sawant,
awant, member of Parliament (MP)
are likely to fare in the UK court when Vijay Mallyas from
om Mumbai (south), belonging
extradition trial begins next month. Their success to
o the Shiv Sena, wrote a letter
depends on presenting an ironclad case with all the to
o the prime minister captioned
evidence they can gather. Will that happen? For many Deliberate
eliberate and mischievous
decades now, industrialists in the dock have routinely delays
elays
y byy SEBI ((Mr UK Sinha))
influenced investigation agencies to present weak cases in pprobingg Vijay
j y Mallya
y for
that cannot back up their charges. This time around, round
ound tripping
pp g despite
p specific
p
there is enormous pressure on the government to walk information/
formation/ inputs
p received
the talk on recovering black money and loans from from
om Financial Conduct
defaulting industrialists. Mr Mallyas case covers both Authority
uthorityy of the UK (emphasis
categories. He was re-arrested on 3rd October, after the his).The
s).The letter exposes how
enforcement directorate (ED) followed up the Central two
wo former SEBI chairmen
Bureau of Investigations (CBI) attempt to seek his have
ave failed to act on explosive
extradition. information
formation received from the
It has filed a 5,000-page charge-sheet alleging that Financial
nancial Conduct Authority
Mr Mallya had diverted over Rs3,000 crore lent by (FCA,
FCA, UK) in 2008-09.
a consortium of 17 banks through 13 multi-layered And,
nd, they seemed
shell companies by creating fictitious invoices and disinclined
sinclined to
inflated bills. These funds were allegedly transferred investigate
vestigate even
to several countries. Mr Mallya has called the charges when
hen there is
wild and baseless. Meanwhile, it is important to nationwide
ationwide
remember that he has been formally charged only for utrage
outrage

MONEYLIFE | 13-26
27 November
Oct 2017
2014
| 20| 14

Crosshair.indd 2 06-10-2017 16:31:45

 over Mr Mallyas defaults and escape to London. If these employees were laundering funds for Indian
Mr Sawant writes that Mr Mallya diverted funds industrialists, why has the information not been handed
borrowed from banks to illegal foreign bank accounts over the SIT on black money?
and particularly to the London wealth management Let us look at the basis of Mr Sawants allegations
desk of Union Bank of Switzerland (UBS). He says that against SEBI and its then chairman UK Sinha. In
SEBI has received specific inputs about this from the August 2013, The Economic Times published an article
FCA in 2009 in the form of an email dump of internal which said that the FCA had provided inputs to SEBI
correspondence of UBS. This included information on a number of promoters in the liquor, mining, real
about Mr Mallyas stock market transactions and a estate, media and entertainment and infrastructure.
list of six bank accounts of Mr Mallya in UBS. These Soon after this, in October 2013, one Ramsagar Yadav
are: 364567 Highland Trading, 369939FG-Personal filed an application under the Right to Information
Account, Birchwood Hills (389458) Plc.; Suncoast (RTI) Act seeking information on how corporate
Valley (389459) plc; Bayside Inn (389460) plc; Venture houses other than the Anil Ambani group about which
New Holding (138154). the FCA had provided inputs and the action taken with
The letter goes on to say that Vijay Mallya made regard to them.
a profit of $5.4 million from the purchase of 633,330 On 25 November 2013, SEBI responded saying,
and sale of 408,333 shares on 24 May 2007. The Information received from FCA is in confidence
FCA email had apparently provided the high, low from foreign government/regulatory agency. Further,
and closing price of certain shares on a specific day the information is held by SEBI in its fiduciary
which, on cross-checking, turned out to be those of relationship. Dr Anil Kumar Sharma, who signed the
United Spirits, a UB group company. This information SEBI letter, claimed that such information was exempt
pertained to 2006-08 and was from disclosure under the RTI
received by SEBI in 2009 when Act. But this response clearly
CB Bhave was the chairman. indicates that SEBI had, indeed,
One may recall that Mr Bhave
Arvind Sawant, MP alleges received information from the
had followed up the FCA inputs that SEBI received specific FCA. When nothing further
with regard to UBS and the Anil inputs about Mallya happened, Indian Council of
Ambani group. The matter was Investors filed a public interest
mysteriously settled through a
from the FCA in 2009, litigation (PIL No 16 of 2014)
sketchy consent order after the when CB Bhave was the in the Bombay High Court to
group paid up Rs50 crore and chairman, in the form of direct the regulator to investigate
senior officials, including Anil the FCA inputs on UBS.
Ambani, were barred from the
an email dump of internal SEBIs official response, in
market for a year as part of the correspondence of UBS an affidavit to the court, was
deal. pertaining to 2006-08 surprising. It flatly denied having
We learn that while the FCA received information other than
provided extensive information that on the Anil Ambani group
about the Anil Ambani group, the there were details with from the FCA. It also said that newspaper articles
regard to six other industrialists, which have not cannot be the basis for levelling allegations against
been investigated. Mr Sawant alle alleges that SEBI even SEBI. However, the PIL was withdrawn on 5 February
misled the Bombay High Court aand the SIT (special 2015 after SEBI flipped its position and submitted that
investigation team) investigating b black money and investigation into the issue had commenced. Did it
asks for stringent action against tthose responsible for really happen? Nobody knows, since SEBI is back to
burying the issue. stonewalling queries. Who was SEBI protecting, under
Remember, in August 2009, F FCA had imposed a two different chairmen, and why? We have specific
8-million penalty on UBS
UB and also penalised information about internal notes of those who have
four of its officials of whom three were studied the FCA information.
Indians. The ffour were: Andrew SEBI is an independent regulator with enormous
Johnson Cu Cumming, Jaspreet powers; can it get away by not sharing information
Ahuja, SaSachin Karpe and received by it from international regulators under
Karan. The last three
Laila Ka global treaties? What needs to be done to ensure
orders were passed in 2012 that SEBI joins the PMs effort to bring back black
based on disclosures of money? If the government cannot ensure action and
an eelaborate scheme investigation by its regulators, then its talk about loan
run by the employees recovery and the war on black money will continue to
to launder money. be mere rhetoric to fool the people.

21 | 13-26 Oct 2017 | MONEYLIFE

Crosshair.indd 3 06-10-2017 16:32:23

 DIFFERENT STROKES SUCHETA DALAL

Going Easy on Loan Defaulters:

What Is behind the SEBI Move?

B
arely a month ago, Deepak Parekh, chairman of Remember, while SEBI was all set to force corporates
Housing Development Finance Corporation (HDFC) to disclose information about defaults, RBI has refused to
was all praise for the speed with which Ajay Tyagi, name defaulters, despite a Supreme Court order. Consider
chairman of the Securities and Exchange Board of India how the SEBI circular would have affected banks. Bankers
(SEBI), had accepted his suggestion to get listed companies do not report defaults for at least three months and they
to mandatorily report to stock exchanges every default are used to ever-greening accounts and delayingas
in payment to banks or financial institutions. Mr Parekh long as possiblethe classification of loan defaults as
had told us that this move would give investors timely non-performing assets (NPAs). By forcing companies to
information, since there is a huge lag today before they get report payment defaults immediately, banks would no
to know about financial difficulties of listed companies. longer have the power to make a variety of adjustments,
On 4th August, SEBI issued a including offering fresh loans (or
circular making it mandatory for other forms of finance, including
companies to report any lapse on loans to group entities) to hide the
payment of interest or principal to NPAs in their own books.
their lenders. This was to become Public sector banks (PSBs)
applicable from 1st October. The were already reeling under the
reporting requirement would cover pressure of bad loans when the
default in payment of interest on national democratic alliance
loans from banks and financial (NDA) came to power. The
institutions, interest/instalment Congressled United Progressive
obligations on debt securities Alliance (UPA) had ignored the
(including commercial paper), bad loans issue and routinely
external commercial borrowings
(ECBs), medium term notes
That SEBI was forced to defer papered over a possible panic by
doling out thousands of crores
(MTNs) and foreign currency an investor-friendly action to of rupees to recapitalise PSBs.
convertible bonds (FCCBs). SEBI allow banks and companies NDA was expected to force
said the move would fill a critical to hide corporate defaults them to clean up their books
gap in the information available reflects adversely on this and stop their corrupt lending
to investors. government, which was voted practices. But prime minister
Then, on Friday, 29th September, in with such hope (PM) Narendra Modi began his
a press release sent after 11pm from innings by launching the Pradhan
an iPhone scuttled the move with Mantri Jan-Dhan Yojana in
one line: It has been decided to defer implementation of August 2014. His stiff targets forced banks to divert
SEBI circular no. CIR/CFD/CMD/93/2017 dated August 4, almost all their energy into opening these accounts. Since
2017 until further notice. The SEBI chairman was in New many nationalised banks were also kept headless for a long
Delhi for the weekend and, perhaps, the action was dictated time, there was nobody to ensure that core functions did
by instructions received there. It is not clear whether the not take a hit. Barely had the pressure about Jan-Dhan
objections of the Reserve Bank of India (RBI) have forced ended, when the PM announced demonetisation of Rs500
SEBI to withdraw its circular; but the market regulators and Rs1,000 notes on 8 November 2016, once again
silence reflects a panic about the state of bank finances plunging banks and the entire country into chaos for the
and the governments struggle to deal with bad loans. The next few months.
SEBI circular was aimed at protecting retail investors and Bad loans have now reached a crisis point, with stressed
mutual funds (which pool retail investment) by providing assets of the entire banking industry estimated at nearly
immediate information about payment difficulties of 10% of all outstanding loans. The government passed
listed companies. the Insolvency and Bankruptcy Code (IBC) to help banks

MONEYLIFE | 13-26 Oct 2017 | 22

DIFFERENT STROKES.indd 2 06-10-2017 15:16:05

 DIFFERENT STROKES SUCHETA DALAL

with faster loan recovery from wilful defaulters. But, as Goods and Services Tax (GST) with multiple tax slabs,
with all grandiose schemes disconnected with ground onerous reporting requirements, frequent changes in rates
reality, there were two major problems. The first case of and an online filing system that was not robust enough.
successful resolution under IBC, involving Synergies Dooray While a simple GST would be beneficial in the long run,
Automotive Ltd, has led to a complaint by Edelweiss especially if we are able to move towards a single rate, at
Asset Reconstruction before the National Company Law the moment, GST has caused a huge disruption, especially
Appellate Tribunal (NCLAT) calling it a fraud and a among exporters and traders.
sham. Lenders took a 95% haircut in this case and there In this scenario, the instant reporting of defaults would
are grounds to suspect that an associate company of the force banks and rating agencies to take immediate action
promoter group has contrived to wangle control. such as classifying loans as a default (with commensurate
The decision has had a huge hidden impact. Only in provisioning for bad loans) and downgrading of credit
July this year, industrialists believed that the PMs office rating. All this would have had a big impact on loss-making
was directly monitoring the 12 cases marked for insolvency nationalised banks, which are seeking a fat government
action, where the outstanding debt is over Rs5,000 crore bailout (or recapitalisation) at public expense. With the bull
and 60% of it is classified as non-performing. A steel run of the Indian capital market having paused, in response
industry magnate told me that bankers were asked to to bleak economic numbers, a spate of rating downgrades
ensure that at least six of these companies had a change would have only precipitated a further decline in share
in management. After Essar prices. A desperate government
Steels audacious, but failed, legal appears to have pressured SEBI
challenge to the recovery process, to drop the investor-friendly
the Synergy Dooray case and lower move and allow the obfuscation
GDP numbers, the mood has by lenders and borrowers to
changed completely. Three months continue.
later, the same source says that While institutional investors
every defaulter company will sail with large research teams have
through the National Company ways to ferret out information
Law Tribunal proceedings with about corporate health, this move
lenders taking a haircut and leaves retail investors at the mercy
promoters retaining control either of sketchy disclosures made to
directly or indirectly. Prashant stock exchanges. That SEBI
Ruia of Essar Steel has already
After the Synergy Dooray case was forced to defer an investor-
gone public about his confidence and lower GDP numbers, the friendly action to allow banks
that the family will remain firmly mood has changed. Prashant and companies to hide corporate
in the saddle. Ruia of Essar Steel has defaults reflects adversely on this
This has cast a shadow already gone public about his government which was voted in
over the entire IBC process and confidence that the family will with such hope and expectation.
raises concern about yet another remain firmly in the saddle What is worse, every problem
mechanism to recover bad loans faced by the economy today is
that may be doomed to fail. Was self-inflicted. With low oil prices
the IBC legislation pushed through in a hurry without and a good monsoon after two years of drought, and
taking the time to eliminate possible loopholes? There enormous goodwill and support from the public, the
seems some merit to this disconcerting view, but it fits government ought to have pushed for high economic
in perfectly with this governments quick-fix approach. growth, job creation and kick-starting investment supported
A bankruptcy legislation has a significant weightage in by a clean and efficient administration. Instead, with less
the World Banks Ease of Doing Business, which is due than two years for the next general elections and negative
for a revision in October. Government mandarins rushed outbursts from its own party stalwarts, the government is
through the IBC legislation hoping for a 20-point jump in defensive mode and angrily attacking those who raise
in Indias rank, from 130 last year. valid questions.
Indias GDP growth, which was 9.2% in the third
quarter of 2016, has steadily dropped to 5.7% in the April- Sucheta Dalal is the managing editor of Moneylife. She was
June quarter of 2017. While companies were struggling awarded the Padma Shri in 2006 for her outstanding contribution
to cope, the government went ahead with a complicated to journalism. She can be reached at sucheta@moneylife.in

23 | 13-26 Oct 2017 | MONEYLIFE

DIFFERENT STROKES.indd 3 06-10-2017 15:16:42

 MUTUAL FUNDS POINTERS

Mutual Funds May Cushion a Falling Market

T
he current market highs are similar to those witnessed levels, given that growth has been so slow.
in October 2010. Here are the similarities in the Mutual fund investors should avoid committing any
markets then and now. large lump-sum investments in equity schemes at the
moment and probably look at liquid funds or arbitrage
Nifty50 schemes for the short term until the markets become
Ratios October 2010 September 2017 reasonably priced.
P/E 25.72 25.9
P/B 3.89 3.47 Equity Diversified Mutual Fund Schemes
Scheme Name 1-Year returns %
Dividend Yield 1.03% 0.94%
JM Basic -39.3
Rise in Previous 9 Months 33.7% 24%
HSBC Midcap Equity -37.2
The only difference between then and now is the extra- HSBC Infrastructure Equity -35.0
aggressive rally of the index in the past which jumped 33% JM Multi Strategy -31.7
in a brief nine-month window before falling 20% in the Baroda Pioneer Large Cap -29.1
subsequent year. The table alongside shows point-to-point Escorts Growth -27.8
one-year returns of equity diversified mutual fund (MF)
Principal Emerging Bluechip -27.2
schemes for the period ending 30 September 2011. The
Escorts Leading Sectors -26.9
schemes declined 18% on average, with some falling as
much as 39%. DSP BlackRock India Tiger -26.6
The global stock market crash of 2011 was mainly due Taurus Discovery -25.9
to rising debt problems in Europe especially Greece, Italy
and Spain. Additionally, Americas credit rating downgrade Investors who have SIPs in equity schemes will hope
was also another reason. From a fundamental viewpoint, that the fund managers have a large amount of investments
revenues were on uptrend and the market fall was mainly in cash and cash equivalents, to cushion any drastic fall.
a cause of bearish market sentiment. Since there is always This wasnt the case during the four-months prior to the
a reason to trigger a fall, especially when the market is 2011 crash where the amount of cash available with equity
expensive, do we have any such reason at the moment that mutual funds was much lower than it is today.
could trigger another fall like the one in 2011? Could the The increasing allocation to cash and cash equivalents
US-North Korea face-off be the trigger for the correction signifies that managers of equity schemes are better prepared
in the markets? Or the realisation, that the economy is for any upcoming corrections, than in the past. Monthly
stalled, thanks to the twin impact of demonetisation and inflows into equity schemes through SIPs will add further
shoddy implementation of the Goods & Services Tax. Even liquidity to the schemes and probably open up valuable
otherwise, the markets are definitely expensive at these buying opportunities if the markets fall further.

Cash & Cash Equivalents in Equity Diversified Mutual Fund Schemes

Rs Crore 2010 Rs Crore 2017
7,400 23,000

7,000 21,000

6,600 19,000

6,200 17,000
Jul-10 Aug-10 Sep-10 Oct-10 May-17 Jun-17 Jul-17 Aug-17

MONEYLIFE | 13-26 Oct 2017 | 24

Fund Pointer.indd 2 05-10-2017 15:49:02

 MUTUAL FUNDS FUND FACTS

Best & Worst Mutual Fund Schemes

The best# three and the worst three schemes over the past three years ranked by their
quarterly rolling returns. Premium members get access to a more refined list of top
schemes by logging in to Moneylife Advisory - advisor.moneylife.in
Equity Schemes (Quarterly Rolling Returns)
Large Cap (Category Avg: 3.36%, Sensex: 1.82%) Launch Corpus Avg. Quarterly 1-Year 3-Years** Exp
Date (Rs Crore)* Rolling Returns Ratio
L&T India Value 08-Jan-10 5256.30 5.15% 24.70% 20.62% 2.02%
Tata Equity P/E 29-Jun-04 1628.55 4.90% 29.55% 19.61% 2.29%
Aditya Birla Sun Life Pure Value 27-Mar-08 1617.51 4.76% 26.56% 19.06% 2.44%
ICICI Prudential Select Large Cap 28-May-09 698.51 2.47% 7.83% 9.86% 2.67%
UTI Dividend Yield 03-May-05 2720.09 2.46% 15.78% 9.84% 2.11%
HDFC Large Cap 18-Feb-94 1273.92 1.96% 13.17% 7.86% 2.20%
Multi-cap (Category Avg: 3.47%, BSE 200: 2.71%)
Motilal Oswal MOSt Focused Multicap 35 28-Apr-14 8677.83 6.41% 26.33% 25.63% 2.09%
Aditya Birla Sun Life Advantage 24-Feb-95 4258.08 4.95% 20.64% 19.78% 2.30%
SBI Magnum Multi Cap 29-Sep-05 2954.72 4.72% 20.35% 18.87% 2.06%
Union Equity 10-Jun-11 199.17 1.83% 11.42% 7.30% 3.10%
UTI Wealth Builder 17-Dec-08 952.55 1.61% 8.83% 6.42% 2.57%
LIC MF Equity 15-Apr-93 338.02 1.43% 5.90% 5.71% 2.82%
Mid-and Small-cap (Category Avg: 5.16%, Nifty Midcap 100: 7.23%)
SBI Small & Midcap 09-Sep-09 727.34 7.70% 36.61% 30.79% 2.37%
DSP BlackRock Micro Cap 14-Jun-07 5791.12 6.59% 17.91% 26.35% 2.41%
Mirae Asset Emerging Bluechip 09-Jul-10 4304.67 6.53% 27.05% 26.12% 2.41%
Axis Midcap 18-Feb-11 1231.42 3.54% 15.47% 14.17% 2.20%
DHFL Pramerica Midcap Opportunities 02-Dec-13 140.97 3.48% 10.91% 13.92% 2.63%
Union Small and Midcap 10-Jun-14 239.74 3.17% 15.53% 12.68% 3.08%

Debt Schemes
Income (Category Avg: 2.32%, Crisil Composite Bond: 2.55%)
ICICI Prudential Long Term Plan 20-Jan-10 3134.43 2.88% 9.65% 11.53% 1.26%
DHFL Pramerica Dynamic Bond 12-Jan-12 185.69 2.66% 10.35% 10.64% 1.70%
ICICI Prudential Income 09-Jul-98 2389.75 2.66% 8.38% 10.63% 1.71%
L&T Triple Ace Bond 31-Mar-97 601.89 1.96% 3.98% 7.83% 1.09%
DHFL Pramerica Premier Bond 21-Jan-03 1718.39 1.91% 6.50% 7.65% 1.55%
Invesco India Bank Debt 29-Dec-12 116.92 1.71% 6.19% 6.84% 0.65%
Liquid (Category Avg: 1.88%, Crisil Liquid Index: 1.89%)
Escorts Liquid Plan 03-Oct-05 172.89 1.99% 6.91% 7.97% 0.90%
Indiabulls Liquid 25-Oct-11 6881.50 1.93% 6.87% 7.74% 0.15%
JM High Liquidity 31-Dec-97 5125.67 1.93% 6.85% 7.70% 0.50%
Quantum Liquid 10-Apr-06 121.179 1.77% 6.12% 7.07% 0.26%
Reliance Liquid Fund - Cash Plan 07-Dec-01 6142.63 1.72% 5.82% 6.87% 1.06%
L&T Cash 27-Nov-06 475.03 1.64% 5.44% 6.58% 0.78%
# Please note the table represents a comparative performance of mutual fund schemes over a three-year period and it is not a recommendation; * Latest quarter average
assets under management; We have only considered schemes having a corpus above Rs100 crore. **Annually compounded

25 | 13-26 Oct 2017 | MONEYLIFE

Fund Facts.indd 2 05-10-2017 16:29:41

 SMART MONEY R BALAKRISHNAN
Investing during Economic
Sluggishness
I
do not know if our markets will correct deep enough
to catch up with earnings. Hope and money inflows
seem to be the two props holding up our markets.
Flows from foreign institutional investors (FIIs) used to be
the sole driver of our markets. However, of late, domestic
retail has made the systematic investment plans (SIPs)
into a monthly inflow of Rs5,000 crore. And domestic
insurance companies and other pension funds seem to be
big buyers. They seem to have provided some hope to a
falling market as FII flow slows down.
One continuing problem is the lack of sufficiently
reliable data on where the economy is going. Sometimes,
it may be a question of how much. This time, I feel it is a
question of direction rather than the quantum. The absence
of new jobs, the panic in the software sector
and the paralysis in government banks are all
pointers. The economy is slowing down. There
is a virtual 180 degree change in
the business environment. Sales
tax, excise and service tax
rolled into a single goods
and services tax (GST), a
new law for real estate,
demonetisation,
digitisation and fewer
cash deals and rising
compliance costsall this
is happening together.
Meanwhile, there have
been few structural reforms.
There have been no reforms
of labour laws, leading to some
reluctance to invest in new capacities. Start-ups are
able to create many jobs because they are more in
e-commerce and alternative energy. Traditional
businesses seem to have enough capacities and are
reaping the profits from better capacity utilisation
plus some retaliatory tariff protection measures. As
global growth slips, every country is resorting to overt
forms of protection by politicians who have to repay
their support lobbies. An indirect form of subsidy from
consumers to industries happens and the world goes on.
China, the eternal mystery in world economic stage,
MONEYLIFE | 13-26 Oct 2017 | 26
column_Balakrishnan.indd 2
seems to be on its own clean-up mode. As some of its
commodity supplies slow down, Indian producers rejoice
without realising that profit gains are due to protection
rather than increasing efficiencies. These are not permanent
gains at all. The government is now pushing out
infrastructure project launches in a hurry. Will it provide
jobs and turn consumption demand? Demonetisation and
forced digitisation have affected confidence. The costs
of compliance and a less than perfect implementation
infrastructure are more a bottleneck than an enabler.
Yes, we are probably changing for the better; but, to use
a clichd saying: Things will get worse before they get
better.
A major bottleneck is banking, specifically public
sector banks (PSBs). Lending by PSBs has effectively
dried up as they face higher disclosure of non-performing
assets (NPAs) and this translates into a fear of lending.
Merely lowering the interest rate is not going to make a
difference. For loans to be picked up, we also need a viable
business. Today, the environment of rocky implementation
of GST and closed door at banks do not encourage risk
taking. In all this slowdown, we are very lucky that global
oil prices are low. Probably, it will continue so long as the
growth rates remain muted. Geopolitical tensions are also
not the best of factors, to boost investment sentiments.
Looking at our markets, one does not get the impression
that they reflect a slowing economy. It has been held up
on a lot of hope over the past three years. In the three
years, we have seen cyclicals steal the show. And super
profits accrued as stock multiples expanded for the
below par earnings. However, what matters most
is what lies ahead. First is to figure
out if industrial growth will get
worse. My instinct is, NO. In
fact, it may pick up a bit.
Infrastructure activity
will boost industry. And
it will be a sustained
one. One thing that
infrastructure companies
need is money. Equity
will be not easy to come
by. However, debt will be
available. And if projects
are tied to foreign aid
06-10-2017 11:25:14
 SMART MONEY R BALAKRISHNAN

(like the good deal done for the Bullet train), we can see the latter and take a call on the others, one by one;
things easing. The government will be forced to encourage iv) Sell off mid-cap stocks that have rallied sharply in
public sector companies to lend as the slowdown hits our the past six months;
economy. v) Keep a list of good shares (where 10-year average
Turning to investments, the valuation matrices are RoE is more than 20% and buy them gradually as
deceptive. If I take an optimistic perspective, saying that the market falls;
earnings will double from this level in three years, it vi) Wait for a clear sign that the economy is recovering
means that the markets may be valued at 10-12 times, before I get back actively in to markets;
assuming stock prices do not move from here. On the vii) I may still keep some trading going on, knowing
ground, I see a lot of emphasis being given by promoters full well that there could be losses, because I am a
to margin improvements, which compulsive stock market-player.
is a good thing. Return on equity But I have to set aside a certain sum
(RoE) is set to rise from here. Banks for it and decide how much of loss
can only give out more loans from
I want to keep can I bear before I down shutters
here on. Private sector banks and more cash handy. I for a break;
finance companies are growing their think, better buying viii) Keep some of my money in
books rapidly. Real estate, in a lot liquid mutual funds, for the time
of ways, is the lead indicator of
opportunities will come. being.
good times. We are yet to see this However, if they do What I am saying may sound
sector doing better. Unsold inventory, not come, I have lost pessimistic to you. On the contrary.
abandoned projects and lower new I want to keep more cash handy. I
starts are visible. The government is
nothing. I do not think think, better buying opportunities
hoping to fill this gap by speeding that the markets will run will come. However, if they do not
up the launch of new infrastructure away from here come, I have lost nothing. I do not
projects. Coming to the markets, I think that the markets will run
will be wrong, whatever forecast I away from here. Yes, I know that
make. Rather, I will limit myself to what I should be doing. probably the government will do its best through fiscal
i) Continue my SIPs, if it is less than two years old; incentives to keep the engines firing. However, I am of
ii) Probably, take most of my money off the table on the view that we need a long-term fix and not band-aid.
SIPs that are more than two years old (not a dividing One final call. It is time to get rid of low-quality (low
line, but older SIPs that have given more than 20% RoE, poor management) stocks and stay with high-quality
growth should probably be liquidated); stocks.
iii) Take a quick review of stocks I hold. Divide them
into opportunistic buys and long-term holdings. Keep The author can be reached at balakrishnanr@gmail.com

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27 | 13-26 Oct 2017 | MONEYLIFE

column_Balakrishnan.indd 3 06-10-2017 11:25:32

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MSSN GB (Insurance 1-3 ).indd 3 16-12-2016 17:29:45


INSURANCE TRENDS
New products, regulations, features and options,
interpreted from your perspective
A c c i de n t I n s uranc e
Motor Accident
Death Worth Less
than Rs10 Lakh?
T he Aurangabad Motor Accident
Claims Tribunal (MACT) has
directed a driver and the insurance
company to pay compensation with
interest to the widow, her daughter
and parents of the deceased who
lost his life when a speeding
truck ran over him. The claimant
had asked for compensation of
Rs20 lakh for the death of her
husband. MACT awarded a joint
compensation of Rs9.13 lakh in
favour of the mother-daughter duo
and others with 8% interest per
annum from the date of petition till
realisation of the cheque.
Does it mean that the value of
life in motor accident is worth less
MONEYLIFE | 13-26 Oct 2017 | 30
Insurance.indd 2
than Rs10 lakh? Road accident
victims may lose their lives or
end up disabled. While physical
abilities are irreplaceable, financial
compensation can alleviate the
victim's problems. Today, sky is
the limit for the award that MACT
can bestow. If there is proper
justification, unlimited delay in
claims filing is also allowed. Road
accident victims, thus, have a
chance of reducing the extent of
their misfortune.
But a number of pedestrians
from the low-income group suffer
in accidents. Based on their income
group and age, many MACT
judgements have awarded an
amount much below Rs10 lakh as
compensation for death. A proposal
to amend the Motor Vehicles Act
(MVA) aims to cap the third-
party (TP) liability at Rs10 lakh in
accident cases. At present, there is
no cap for the insurers liability. It
will be unfortunate if such a cap
is legalised. It will certainly be a
welcome step for general insurance
companies but at the cost of fair
compensation for accident victims.
The proposed limit for TP
liability is bad news for pedestrians.
However, it can be seen as a
positive too, especially if Rs10 lakh
is provided as fixed compensation
in all the cases. Providing a fixed
benefit of Rs10 lakh will ensure
that the poor are assured of this
amount. Those who are well-off
and/or have other insurance policies
are well protected. The quantum of
claim awarded by MACT in most
death cases and grievous injuries
are within the Rs10 lakh proposed
cap; the average payout per TP
claim is less than Rs5.5 lakh.
Health Insurance
Mediclaim
Renewal Notice
Not Mandated Is
an Issue
T he Pune District Consumer
Disputes Redressal Forum gave
justice to a lapsed bank mediclaim
policyholder. Bank of India did not
automatically renew the mediclaim
policy it had sold. Non-payment
of premium led to policy lapse
due to which the policyholder
had to spend nearly Rs40,000 for
treatment of his spouse.
According to the Bank, the
insurance company did not send a
renewal notice and the policyholder
did not give any instructions that
he intended to continue the policy.
But it was found that the Bank had
been debiting the account of the
policyholder for seven years for
policy renewal. The complainant
had not informed the Bank about
any change in the status. It means
there was gross negligence on the
part of the Bank.
While the decision of the
consumer court helped the insured
to get back the treatment cost of
Rs40,000 along with 9% interest
and Rs3,000 in cost, what about
the policy renewal? Will the
insurance company be forced to
continue the policy without any
break? There are several such
instances of lapsed health insurance
policy due to negligence of the bank
or other intermediary. Insurance
companies can also be blamed in
05-10-2017 15:33:54
 INSURANCE TRENDS
many cases, as they do not always
send the renewal notice.
Surprisingly, this is not even
mandated by the Insurance
Regulatory and Development
Authority of India (IRDAI).
Insurance companies can misuse
this by not sending renewal notice
to senior citizens or to the insured
having ailments which can have
claims in future. The insured will
have to be proactive in renewing
mediclaim policies on time without
depending on the insurer to send a
renewal notice. You may also have
to push your intermediary (bank,
agent, broker, etc) to complete the
renewal process on time. It will be
difficult to fight, once the policy
has lapsed.
Speaking at a closed-door
discussion organised by Moneylife
Foundation in 2012, the then
IRDAI chairman, J Hari Narayan,
had clarified that IRDAI does not
want to mandate renewal notices.
We dont want to mandate
renewal notice as it can get gamed.
If the regulator mandates it and
if the insured say that they have
not received it, will the cover be
considered as continued? The
policyholder will go to court over
the dispute. There are certain
things that are not mandated. The
customer knows the annual cover
due date and hence can do the
necessary renewal.
Fine Print
How Much Commission Do
Life Insurance Agents Get?
I RDAI has found that Indian
life insurers do not pay
adequate commissions to their
agents. According to IRDAI
member (life), many agents end
up getting only 10% of total
Insurance.indd 3
He alth Insurance
Heart-related
Claims Data from
ICICI Lombard
and SBI General
I CICI Lombard has extracted
claims data for the past three
years pertaining to heart-related
diseases. The data have been
collated on the basis of gender, age
and demographics. The claims data
show interesting trends. In males,
claims pertaining to heart ailments
are rising. The number of claims
pertaining to parents and in-laws
is also significant. Claims in the
age band of 36-55 years are rising
significantly. Claims in the tertiary
hospitals are on the rise in the past
three years. In secondary hospitals,
claims were higher in
2015-16 vis--vis the past two
years. Top-3 locations for heart-
related claims for 2017-18 are:
Mumbai (24.84%), NCR (19.92%)
and Chennai (7.04%).
SBI General Insurances claims
data show a 40% rise from
individuals below 35 years, and
a 32% increase amongst 35- to
45-year-olds in FY16-17 compared
to those in FY15-16. Interestingly,
according to the data, claims in
the age group of 55-60 years and
premium as first-year commission
instead of 35%. Is the statement
made only to justify his assertion
that agents do not churn policies
due to unattractive incentives?
Churning of life insurance policies
to earn high first-year commission
is common. IRDAI seems to be
turning a blind eye to existing
policy lapsation to mis-sell new
policies with the justification of
65 years and above have declined
by 13% and 25%, respectively, in
FY16-17 compared to FY15-16.
Various studies have shown that,
while males are more prone to
heart diseases, females are likely
to develop heart diseases at a later
age as female hormones provide
protection until menopause.
Increased stress, sedentary lifestyle
and long working hours act as
catalysts, thus increasing risk of
cardio-vascular diseases.
Claims by males from SBI
General went up by 12% in FY16-
17 compared to those in
FY15-16, while claims by females
witnessed a slight reductionof
5%during the same period.
Overall, cardio-vascular diseases
ranked second after those of
the digestive system in terms of
percentage of total amount paid
for non-communicable diseases for
both, FY15-16 and FY16-17.
agents being paid mere 10%
commission which is hard to
believe.
If IRDAI could effect a
change in September 2010 in the
case of front-loaded commission
on unit-linked insurance policies
and rule that it should be treated
as being distributed over the
years, why cant it do the same
for traditional products?
31 | 13-26 Oct 2017 | MONEYLIFE
05-10-2017 15:35:26
 Ensure Your Assets

Dont Fall Under

The Benami Act

The Benami Transactions Amended Act can be a pain even for those who may not have any
unaccounted wealth. Raj Pradhan describes ways in which you may inadvertently create a
benami asset. How can you ensure that you do not cross the fine line which can jeopardise
your asset? Will your gift to parents or siblings be considered a benami transaction?

T
he Benami Transactions (Prohibition)
Act, 1988, was comprehensively amended
through Benami Transactions (Prohibition)
Amended Act, 2016, which came into force
in November 2016. Indians with benami
assets will have a lot to worry about, with the amended
Act having got its teeth which were lacking in the original
legislation. Those having benami property to hide their
unaccounted money will be in trouble as will those who
happened to inadvertently create benami property, even
with legitimate money.
After the demonetisation drive, prime minister
Narendra Modi warned of action against benami
property-holders, to eradicate black money and
corruption. The Benami Act and Black Money Act
are not just about property but also about all financial
assets. A saver and investor should be careful about not
violating these stringent legislations. The Acts also have
the potential to punish genuine investors who may be
ignorant of the regulatory changes.
An honest taxpayer will not have anything to fear
from both the Acts; but it will be worth checking if you
have violated some provisions inadvertently. It is possible
that you may have created an asset for a family member
without your name anywhere in the asset. Questions
can be raised to explain the reasoning behind it. For
example, to avoid taxation in the country of residence,
an NRI (non-resident Indian) may transfer money in

MONEYLIFE | 13-26 Oct 2017 | 32

Cover Story.indd 2 06-10-2017 16:50:43

 COVER STORY

parents/relatives name for investment without his/her common practice is to put a family members or friends
own name being mentioned in the account. Through name as the owner. There are cases of even putting the
such action, the NRI is creating a benami asset, even asset in the name of cooks, maids, peons or drivers
though the source of money is legitimate. The same can without their knowledge or by paying them peanuts to
happen with a resident Indian investing in the name use their permanent account number (PAN) and other
of parents or siblings without own name in the asset. details.
A second example: a resident Indian with a legitimate A transaction is termed benami if an asset is held
foreign account may not declare it in tax returns to avoid by one person but has been provided, or paid for,
paying tax on income generated from it or to avoid any by another person. Such an asset can be movable,
tax scrutiny. It may tantamount to actually converting immovable, tangible, intangible, any right or interest,
white money into black money. legal documents, gold, financial securities and any
One makes several decisions when opening financial other financial assets. So, benami definition is not just
accounts or buying property. Will it be a single or joint for physical property, but it is also applicable for any
account and in whose name? financial asset.
Who is paying for it? Is the For example, you may pay
person putting the money for a property in name of your
going to be an account-holder sister or put your money in a
or not? Are you putting your bank account of your brother.
money in your family members In both cases, your name is
name? Can you give a gift to not there as the owner of the
a family member? Can the property/financial account or
Benami Act be applied even if as a joint account-holder. It is
the gift is genuine? There is a a benami transaction because
thin line of difference between your money is used to create
whether or not a transaction an asset without your name.
will be deemed to be a benami There could be various reasons
transaction. why you may have done such
These blurred lines mean arrangement. It could be to
that mistakes can happen Movable, immovable, tangible evade taxes by utilising the
unintentionally. The semantics or intangible, any right or low tax bracket of your family
of the definitions could interest, legal documents, gold, member. Or it could be that
impact genuine asset-owners. you have taken a loan and
Moreover, if you think you
financial securities and any want to keep your assets away
can pull a fast one and no other financial assets can be a from creditors who can attach
one will notice, you will be declared a benami asset the asset, if you default on the
caught sooner or later. For loan repayment.
existing property or financial In an attempt to evade taxes
accounts as well as the future assets you create, you need or finding ways to safeguard your asset, you are creating
to be aware of the rules so that you do not violate any trouble for yourself by turning your legitimate finances
provisions. Remember, you do not want your legitimate into a benami asset. Why would you take risk for your
and accounted finances to be falling in the category of white money? So, while the colour of a benami asset is
benami or black money. Today, it is not just the fraudsters not always black, it can still land you in trouble. This is
who have to worry; even genuine persons who need to the reason for you to know the provisions of the Benami
safeguard their assets by not making any suspicious Act so that you do not make the blunder of creating a
move. benami asset intentionally or inadvertently.
Benami assets are liable for confiscation by the
What Is a Benami Property? government. The guilty are punishable with rigorous
Corruption is one of the sources of benami assets. Bribes imprisonment of not less than one year which may be
are not just paid in cash, but also with gold, diamonds, extended to seven years depending on the severity of the
land, house, car, stake in a company and so on. The offence. The guilty can also be charged with a fine which
person taking such a bribe avoids putting such an asset may extend to 25% of the fair market value of the benami
in his or her name, but will have control over it. The asset. A person could also face rigorous imprisonment

33 | 13-26 Oct 2017 | MONEYLIFE

Cover Story.indd 3 06-10-2017 18:14:32

 MONEYLIFE
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 COVER STORY

for six months up to five years for knowingly giving false

information and will have to pay a fine of up to 10% of Impact of The Benami Act
the market value of the asset.
The Benami Transactions (Prohibition) Amended and Other Initiatives
Act, 2016, defines a benami property/asset as:
Person holding the property or the person on whose
name the property has been transferred has not paid
A s per media reports, the enforcement
directorate, which implements the Prevention of
Money Laundering Act (PMLA), has provisionally
the money or the price of the property in question is attached properties worth Rs12,000 crore in the
paid by someone else; past 15 months, believed to be the proceeds of
A transaction carried out under a fictitious name; laundered money. Government is using all available
Where the person in whose name the property is data sourcesphone records, credit cards, PAN,
registered denies any knowledge of ownership; or tax returns and even social media platformsto
Where the person paying for a transaction or property- track down benami assets. The income-tax (I-T)
related arrangement is either not traceable or found to department has established charges against five
be fictitious. persons with unaccounted foreign assets of Rs5,000
crore (Rs50 billion) in the British Virgin Islands, a
Are You Creating a Benami Asset? Caribbean tax haven. The government has unveiled
With the amended Benami Act expanding the applicability a draft law which seeks to confiscate properties of
from property to all financial transactions, you need to fugitive economic offenders and plug loopholes
be careful in investing your hard-earned money in the to deter offenders from evading the process of
name of your spouse, child, parents, siblings and other Indian law by remaining outside the jurisdiction of
family members. If its your money, the most logical thing domestic courts. It is seen as a measure to deal with
is that you should be the single owner or a joint owner cases similar to Vijay Mallyas who escaped to the
of the asset created with the money. If you are neither, United Kingdom.
determination of the actual status of the financial asset
lies with the competent authorities. They will apply the
following considerations: property in joint name with a family member can help
Sources of the funds used for making the payment for to avoid possible family disputes in the future. Buying
the property are disclosed by the buyer or not. property with spouse as a joint owner can help with
Intention behind buying home loan tax deduction for
property in the name of you as well as spouse up to
another person, i.e., spouse, the allowed limit. It can also
children, parents, siblings, save on property registration
etc. and stamp duty. Such property
Actual possession of the cannot be treated as benami
property and custodian property.
of the documents of the
property. Property/Asset in the Name of
Disclosure of the income Spouse or Child
from the property, if any, The Benami Transactions
while filing I-T returns. (Prohibition)Amended
If gift was made by you, Act, 2016 states: Benami
the genuineness of the gift transaction exception will be
along with any supporting when the property is held by
documentation. With the Benami Act expanding any individual in the name of
If the answers reflect that the scope from property to his spouse or in the name of
legal ways have been used to all financial transactions, you any child of such individual
reduce taxation for money from need to be careful in investing and the consideration for such
known sources or to benefit your hard-earned money in the property has been provided
from any specific scheme, the or paid out of the known
asset will not be treated as
name of your family members sources of the individual.
benami. For example, buying So, buying a financial asset or

MONEYLIFE | 13-26 Oct 2017 | 36

Cover Story.indd 4 06-10-2017 16:36:35

 COVER STORY

property in name of spouse or child is allowed if it is

from your known sources of income. But you will have Own Property, but Dont
to worry about clubbing provisions. For example, if you
put your money in the name of your spouse for a bank File Tax Returns?
fixed deposit (FD), then it is not a benami asset. But the
interest from the investment will be clubbed with your
income and taxable for you. You cannot use the low tax
T he income-tax (I-T) department has put 14,000
properties valued over Rs1 crore each under its
scrutiny as their owners have not filed I-T returns. The
bracket of your spouse to lower your tax burden. The tightening measures will also check if the properties
clubbing provisions prevent tax avoidance. Moneylife purchased exceed the income declared in the I-T
keeps getting asked: How do I efficiently transfer returns; if no returns are filed, you have to specify
wealth to my wife so that we can make use of her no-/ the reasons for it. If there is concrete evidence of tax
low-tax bracket? Investing in the name of your spouse avoidance, enforcement action can be taken. With
or children entails that you are actually gifting them your rumours of government possibly making Aadhaar
money and you may not remain in control of the amount authentication mandatory for real estate deals, there
you have given away. Investment in the name of your can be more trouble for benami property-holders.
spouse and children is common but make sure you dont Property transaction worth more than Rs30 lakh is
fall foul of the taxman: read the dos and donts of such a trigger for the I-T department to check the source
investment. Our Cover Story on investment in the name of funds of the buyer. Today, with benami property
of spouse and children give details:- http://tinyurl.com/ regulations revised to turn the heat on those having
y8nljylz benami properties, property sellers, too, are under
the I-T departments lens. There are news reports of
Buying Property/Asset for Parents? I-T department trying to find the property sellers
It is advisable to buy property or have financial accounts source of income to buy the property they are now
in joint names from your known sources of income. trying to sell. So, if you are a property seller, you
There is a thin line that separates a genuine transaction may be asked to justify the source of funds used to
from a benami transaction. If you invest in the name buy the property which could have been purchased
of your parents without your name being mentioned decades ago.
in the property/asset, you are creating a benami asset.
Such transactions can also put NRIs in trouble if they
want to evade tax in their country of residence by name of a spouse or a minor child, there is no clubbing of
transferring money to India income in the case of parents.
for investment in the name of There are instances when you
parents. But if you are a joint invest in a financial asset (bank
account-holder of the property FD, etc) in the name of parents
or fi nancial asset, it would to get higher interest of 0.5%
not be considered a benami offered. Keeping you name
transaction under the Act. as joint account-holder will
You may want to buy a ensure the account cannot be
retirement home for your called as benami. But is it wise
parents. Your intention may to get 0.5% higher interest by
be to safeguard your parents putting your parents as first
future by giving them financial account-holder?
stability. You may do so by There are media articles
making yourself as single that say, It is simpler if you
owner or a joint owner to invest in your parents name.
avoid violation of Benami Act. If you invest in the name of your If any or both of your parents
You should not buy property parents or siblings without your do not have a high income,
or make investments in the while you are in the highest
name being mentioned in the
name of parents (bank FDs, 30% tax slab, you can gift
shares, mutual fund units, property/asset, you are creating them money to invest in fixed
bonds) without your name. a benami asset deposits. But is it a genuine
Unlike investments made in the gift to your parents or are you

37 | 13-26 Oct 2017 | MONEYLIFE

Cover Story.indd 5 06-10-2017 16:37:19

 COVER STORY

taking an FD in their name person purchasing a joint asset

as fi rst account-holder just to with his/her brother or sister
get a higher interest rate? If will have to prove his source of
you get back the money from income and the remaining 50%
your parents after the bank contributed by the sibling will
FD matures, is it not a sham also have to be demonstrated
transaction? If so, it is not a under the law. But a recent
genuine gift. You are doing a income-tax appellate tribunal
transaction for tax avoidance (ITAT) ruling gives a different
which will be difficult to opinion.
explain if there is tax scrutiny. ITAT recently ruled that
Avoid it. You dont want your an individual should get the
parents to be questioned on the full benefit of tax-exemption
source of investment. for property purchase made
after selling own property.
Buying Property/Investing in the
The right to give gift to ones Tax-exemption will be allowed
Name of Siblings parents is blurred as the Benami if he/she has purchased the
The Benami Transactions Act forces you to put your name property, along with stamp
(Prohibition)Amended as a joint account-holder to duty and registration charges,
Act, 2016, states, Benami avoid being called benami asset. from the sale proceeds of own
transaction exception will be Proper documentation is a must property. The name on the new
when the property is held by property, if it is jointly held,
any individual in the name of should not result in lower tax
his brother or sister or lineal ascendant or descendant, exemption for the individual who paid for the property.
where the names of brother or sister or lineal ascendant The property may be in a joint name due to various
or descendant and the individual appear as joint- reasons, including providing security to a family member,
owners in any document, and the consideration for such and to avoid possible disputes. The I-T department
property has been provided or paid out of the known wanted to restrict the tax-exemption to 50% because of
sources of the individual. So, you should not make a joint ownership. But ITAT noted that the taxpayer himself
financial investment in the name of your siblings, unless has paid for the new property fully and that the brother
you are joint account-holder. Lawyers suggest that a was made joint owner for the sake of convenience.

The Powerful Black Money Act

T he Black Money (Undisclosed Foreign Income and

Assets,) and Imposition of Tax Act, 2015, which
came into effect from 1 July 2015, aims to curb black
money, or undisclosed foreign assets and income and
imposes tax and penalty on such income. For financial
year 2014-15, the Central Board of Direct Taxes
(CBDT) directed all resident Indians to disclose their
foreign accounts in the I-T returns. The idea is to find
unaccounted wealth of resident Indians stashed in a
foreign country. The amount in an undeclared foreign
account can be considered to be black money even if it
is a legitimate account. Today, it is no longer just about
taxation but also compliance. This can be a cause of
worry as the Black Money Act has hefty penalties for
violations. But non-resident Indians (NRIs) were not
covered by the directive to disclose foreign accounts.
The Black Money Act is the Indian way of ensuring
declaration of foreign accounts. It is possible that
people putting money in Panama and tax havens may
get away, but those genuinely paying taxes can be
harassed if they do not declare their legitimate foreign
account which may have been opened several years
ago when they were NRIs. Similar to the Black Money
Act, US is using Foreign Account Tax Compliance Act
(FATCA) as a tool to find undeclared foreign accounts
held by US taxpayers. FATCA is a masterstroke by
the IRS (Internal Revenue Service) of the US. There
are a large number of US residents and non-residents
(staying in India) who have been evading taxes. FATCA
forces declaration of accounts held outside US. It can
also affect those who are paying taxes, but are still not
in compliance for accounts declaration under FATCA.

MONEYLIFE | 13-26 Oct 2017 | 38

Cover Story.indd 6 06-10-2017 16:37:53

 COVER STORY
Benami Act: Impact on Real Estate Prices
M edia articles quote experts who say that the
Benami Act may force benami property-owners
to sell their properties at rock bottom prices and these
distress sales may help bring
down property prices. But this
has not happened so far. It is
possible that those with benami
property transactions may have
found their way out just like
those with hoarded cash did
not get stuck with banned notes
after demonetisation. Under the
amended Act, a property cannot
be transferred back to the original owner. Once an asset
has been marked benami, it cannot be sold further or
Benami versus Gifting
A property/financial asset bought with a gifted amount
cannot be treated as a benami property, provided the gift
is irrevocable and the property/financial asset is not held
for the immediate or future benefit, direct or indirect, of
the person who has provided the consideration. The gift
has to be genuine to ensure that Benami Act does not
get applicable. Avoid misuse of gifting to help get higher
interest rate or to shirk the responsibility of paying taxes.
What is important is that the gift must be genuine.
It is not mandatory to document a gift. However, it is
advisable to do so where transfer of substantial amounts
and property is involved. The clubbing provisions are
not dependent on the documentation. Gifting a financial
asset to your spouse or minor child will be clubbed
with your income. A gift deed allows you to transfer
ownership without any exchange of money. To gift
Get reward for being
benami property informer
M edia reports suggest a government initiative
that may be started soon. Government may
give a reward of between Rs15 lakh to Rs1 crore
to informers who provide tip-offs to investigative
agencies in connection with benami properties. The
tip has to be specific to qualify for the reward. The
identity of the informer will be kept secret. Time will
tell how the reward scheme helps to unearth benami
properties.
Cover Story.indd 7
resold to the actual owner. If a benami property is
sold to a third party and the transaction concluded by
way of registry of the sale, the department can attach
only the proceeds from the
sale but not the property. If a
benami transaction is found
by authorities, but it has been
transferred to a third party,
the officials can send notices
to the current owners to get
clarifications about the status
of the property. The current
owners will have to prove that
they are not the original beneficiaries of the benami
transaction or proxies.
immovable property, you have to draft the document
on a stamp paper, have it attested by two witnesses and
register it. To gift immovable property, registering a gift
deed with the sub-registrar of assurances is mandatory
as per Section 17 of the Registration Act, 1908, failing
which the transfer will be invalid. Besides, such a transfer
is irrevocable. Once the property is gifted, it belongs to
the beneficiary and you cannot reverse the transfer or
even ask for monetary compensation.
However, if you want to gift movable property, like
jewellery, registration is not compulsory. At the same
time, a mere entry in an account book is not sufficient to
establish a transfer. Apart from physically handing over
the property, you need to back it with a gift deed. Once
again, get a gift deed drawn and executed to complete the
transfer, but the document need not be registered. Make
the gift deed on the stamp paper even if registration is
not required.
The right to give a gift to ones parents is blurred as
the Benami Act forces you to put your name as a joint
account-holder to avoid being called benami asset.
Proper documentation can prove that the gift is not a
sham. Taxpayers should be worried about the Benami
Act as it targets not just those who indulge in corruption.
A financial asset is a responsibility; if you are careless
in handling finances, you may be careless in handling
account ownership (single, joint) and nomination. Being
careful with finances and holdings will ensure your
money is safe from the government so that you and your
family have uninhibited access to it. Dont let the Benami
Act raise suspicion and questions which you are unable
to answer.
39 | 13-26 Oct 2017 | MONEYLIFE
06-10-2017 16:39:50
 StockWatch Stocks and sectors that catch our eye

S H E MA R O O E NT E RT AINM E NT Syndicating movie rights to TV channels is one of its

major revenue contributors. Thee quality of movies
Is Old, Really Gold in is very important as it aids rating channels
g for TV chan
(movies-only channels) and also general
ner entertainment
the Digital Age? channels. With the proliferation of new TV channels,
demand for content is going up and channels approach

S
hemaroo Entertainment buys copyrights of Shemaroo. Shemaroo then sells limited copyright to the
media content (movies, TV programmes) and channels.
distributes them through various platforms such India is witnessing a massive shift towards digital
as TV channels, Internet video and also sells the same media. Video streaming accounts for 49% of mobile
content on video compact discs (VCDs) & digital video data consumption in India in 2016. The move has
discs (DVDs). Shemaroo was established in 1962 as been accelerated by Reliance Jio which is giving mobile
a circulating library broadband data at a
for books. It became very low price. Access
a video cassette to Internet is also
circulating library faster than ever before
in 1979. Today, it with the advent of
has copyright for 4G. Increasingly there
over 3,500 titles is a shift towards
and continues to digital media, or
acquire new titles. new media which
Shemaroo has a long- includes Internet
standing relationships services (YouTube,
with various Hotstar, Hooq, Apple
movie production iTunes, Google Play,
companies such as etc) and mobile
RK films, Red Chillies Entertainment, Tips Industries, value-added services. Hence, Shemaroo expects a
Viacom18, Nadiadwala Grandson Entertainment, etc, rise in content acquisition budget for its customers
to source entertainment content. Shemaroo has adapted as well as advertisement budget on digital media,
itself to changing media consumption patterns across especially YouTube. Since customers have moved to the
various media platforms. segment, Shemaroo has set up various revenue models
These platforms can be divided into two major across different platforms like pay per transaction,
categories, viz., traditional media and new media. subscription and advertisement supported (free for
Traditional media includes (which accounts for customers). With the large library the company has,
approximately 75% of revenues) selling content to Shemaroo can also slice and dice content and package
TV broadcast channels, home entertainment (VCDs it in a different ways, for example, small YouTube clips
& DVDs) and other niche segments such as in-flight of different movie scenes, music videos, etc. Shemaroo
entertainment, international film festivals, etc. has a strong presence and relationship in digital space

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

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

MONEYLIFE | 13-26 Oct 2017 | 40

StockWatch.indd 2 06-10-2017 16:21:37

 STOCK WATCH
where a lot of content is already deployed. It has also
entered into licensing tie-up with VuClip, a platform
owned by PCCW, a content syndicator based in Hong
Kong. The YouTube views of Shemaroo content grew
rapidly from 50 million per month in June 2014 to
over 300 million a month in June 2017.
Lower-Risk ModelFor Now
After the release of a movie, about 80% to 90% of
revenue is generated from what is known as the first
cycle of a movie when it is released in theatres and then
its copyrights acquired by various TV channels or other
content aggregators at a very high price. At this stage,
it is not very clear which movies will be successful;
hence, there remains a risk. Shemaroo is not present at
this stage; it acquires movie copyrights in the second
cycle which generally starts after five years. By this
time, it is known what has worked and what hasnt
and, therefore, it is easier for Shemaroo to select the
content carefully, thus reducing the risk of not being
able to monetise that content. This makes Shemaroo
a preferred option for any new player in digital or
traditional media which wants to source good content
for its new platform.
Entertainment is a hot sector; new media are
mushrooming; and Shemaroo is one of the largest
content syndicators. So it should be minting money,
right? However, Shemaroos cash flows, so far, have
been negative. This is so because, since 2012, it has
focused on building up its content library not just
monetising it. So, each year, the outflow on acquiring
content has been more than inflows from new media.
There is another reason for the negative cash flows:
accounting treatment of rights. Rights are treated as
raw material (inventories in trade parlance) and have
to be written off in the year of acquisition; but it
can be monetised over many years. According to the
management, Shemaroo is almost near the end of the
content acquisition phase. This will reduce the outflows
and improve cash flows, especially since it will continue
to monetise this content now. The key performance
indicator to look for here is sales to inventory
Key Performance Indicator (in Rs crore)
Financial Year Gross Sales Inventory Sales/ Inventory
Ratio
2014 264.61 200.51
2015 323.45 288.68
2016 375.05 387.64
2017 425.53 500.43
StockWatch.indd 3
(rights acquisition) ratio. The sales/inventory ratio is
constantly reducing (less sales, more acquisition); but
with the acquisition phase being over, the management
now intends to monetise this content; so, gradually, the
ratio will start moving up.
Is the Business Model Sustainable?
Investors in this stock expect that revenues from the
new media segment, which is witnessing a phenomenal
growth, will be the engine for the future. The new
media industry is growing at a rate of 30%-35%;
Revenue Break-up
Rs Cr
350
300
250
200
150
100
50
0
2012 2013 2014 2015 2016 2017
Traditional Media New Media
Shemaroo expects to grow faster or at least at the
industry average. Moreover, the new media segment
also has a better operating leverage; hence, operating
costs do not rise much with high revenue growth;
thus operating margins increase. However, Shemaroos
investment attractiveness remains unclear due to three
factors: competition, no growth of old media and
extreme difficulty in getting revenues from new media
commensurate with the growth. Therefore, it is not
clear what kind of management plus technology and
financing structure is required to make things work in
the digital age. Lets start with competition because this
will make or break Shemaroo.
Competition: Indeed, we are not even sure if Shemaroo
understands this competitive strength of two of the
worlds biggest digital media aggregatorsNetflix
and Amazon Prime Videowho are in India now.
Shemaroo doesnt see them as competition but allies
because, to have a good Bollywood collection, they
need content syndicators like Shemaroo. We dont
1.32
agree; Netflix and Amazon are not neutral platforms
1.26
but content aggregators like Shemaroo and also
0.96 produce original content. Secondly, Shemaroo argued,
0.85 in a conference call, that Netflix and Amazon Prime
are going after first cycle Bollywood films. This has
41 | 13-26 Oct 2017 | MONEYLIFE
06-10-2017 16:22:35
 3 Long-term Stockletters
for Excellent Returns
Panther Antelope Lion
59.80%* 39.79%* 35.71%*
(includes dividend) (includes dividend) (includes dividend)

*Annualised. Since 25 April 2014
For small-cap/ low-price stocks with
big growth potential
A shortlist of stocks to invest in
Fundamental data we rely on
Brief description of the companies
Weekly updates on all stocks
*Annualised. Since January 2012
Long-term value stocks. More of mid-
cap stocks to be held for 1 year or more
Weekly market view
A shortlist of stocks to invest in
Fundamental data we rely on
Weekly updates on all stocks
* Annualised. Since January 2012
Long-term value stocks. Usually large
companies are selected
Weekly market view
A shortlist of stocks to invest in
Fundamental data we rely on
Weekly updates on all stocks

Facts about the Stockletters

What is the difference among these stockletters?
The stockletters are for stocks for long term but with specific emphases.
We hope to have a maximum of 25 stocks at any time.
What is the investment horizon for these stockletters?
The best results from good stocks come when they are held for five years
or more.
What is the investment strategy?
Our investment strategy for the long-term stockletters is to select quality
stocks at a reasonable price. We identify companies that are reporting
high return on capital but are available cheaper than similar high-quality
stocks. We then apply our knowledge of managements, including
corporate governance.
How much should one invest in each stock?
You should invest equal amount in every single stock suggested.
What if I cannot invest in all the stocks?
If you cannot invest in all the stocks, invest equal amounts in as many
stocks as possible, starting from the lowest in rupee terms to the most
expensive in ascending order. It is also very important that you invest in
stocks ONLY the money you will NOT NEED to touch for the next 5 years.
Good quality stocks are likely to grow at 20%-22% annum but not in a
smooth fashion.
If some stocks have already run up sharply, will it be wise to invest in
them still?
These are all excellent stocks we have selected in long -term stockletters.
We separately identify stocks that are still worth buying at current prices
even if they have run up sharply. You must remember though that stocks
may go down after your purchase. That is the nature of stocks. So it is
important to follow these two principles about stock investing 1. Investing
only that money you will not need for 5 years 2. Not looking at the share
price in the short term.
How do we know when to exit from the stocks selected?
Exit suggestions are spelt out clearly every week.
How many stocks are changed every week?
Our list of long term stocks do not change much. Deletions are usually
made after one year, if the performance is not too good. This also helps
one avoid short-term capital gains. We may add a new company after
several weeks. If the market crashes we may suddenly add many more
names.
How much do the stockletters cost?
Antelope, Lion, Panther each costs Rs 3,540 per year. If you buy two
together, you pay Rs 5,664. If you buy all three, you pay Rs 8,496.
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 STOCK WATCH
turned out to be incorrect. More than half the content
of Netflix and Amazon comprises old films. Amazon
and Netflix are like Shemaroo only apparently. Their
much deeper pockets, management bandwidth and,
importantly, strong technological strengths make them
very tough competitors.
Challenges of New Media: Digital media has three
critical features. One, while growth is fast, it does not
bring in large revenues. This is because lots of stuff is
free and cannot be monetised. People are used to free
chat on WhatsApp, free Facebook, free search, free
newspapers, free emails, etc; they are reluctant to pay
much for other digital services. This is a huge negative
for Shemaroo. Two, this means that players in the
new media must somehow have access to unlimited
low-cost capital to keep growing. Shemaroo does not
have access to capital like Amazon and Netflix do.
Three, true digitisation of businesses means that, for
the first time in history, business owners can leverage
customers explicit behaviour and latent desires to
give them what they want, on a mass scale. This
is achieved by capturing each customer interaction
on digital platforms, allowing business owners to
extract more lifetime value from its customers. This
interactivity is much deeper than passively making
available lots of choices, as happens in a department
store. As Bernadette Jiwa, a marketing expert, puts it
We are the first business owners in history who know
what our customers are thinking, feeling and doing
even when they are not in our presence. Amazon and
Netflix would be focused on this knowledge. We are
not sure Shemaroo will invest in this capability. Its a
different skill-set. Shemaroo will have to be as much a
technology company as it is now a content-aggregating
company.
Stagnant Old Media: In an interview with CNBC
K N R C o n s t ruc t ions
Will Growth
Accelerate?
K NR Constructions (KNR) is an infrastructure
development company with high-value projects
across segments such as expressways, national
highways, state highways and rural roads, flyovers,
bridges and viaducts, irrigation projects, urban
development, civic amenities and commercial and
residential projects. It aims to add more business
verticals such as elevated metro rail and railway
MONEYLIFE | 13-26 Oct 2017 | 44
StockWatch.indd 4
TV18, Hiren Gada, whole-time director & CFO,
said that Shemaroo is focusing on the new media as
traditional media revenues are consolidating, a polite
way of saying that it is not growing. The official line is
that India is a consumption-driven economy, so there
will be increased spending on advertisement, over time.
We disagree with this optimism. The broadcast media
is struggling. Except Zee, Star, and a few regional
channels, all others are losing money. And so are
distributors (cable and satellite companies). A supplier
to a struggling sector usually has no competitive edge.
As the digital media reduce everyones profits and take
eyeballs away from TV channels, there will further
compression of margins of everyone associated with
the broadcast business. Shemaroo showed a slow
growth year-on-year (y-o-y) in sales and profitability
in quarters ending December 2016 and March 2017,
whereas the revenue growth in March 2017 was
negative. This can be seen in the table below.
Erratic Growth
Quarter Sales Operating Net Profit
Growth Profit Growth Growth
March-16 18.5% 34.9% 42.3%
June-16 22.5% 36.8% 39%
September-16 20.4% 41.2% 45.1%
December-16 11.6% 16.1% 14.7%
March-17 -8.6% -16.1% -30.3%
June-17 7.6% 2.3% 1%
We are not sure whether the slowdown was due to
demonetisation; if so, there could be a pick up in the
coming quarters. But we dont see much of a long-term
strength in the traditional media business.
projects, which have a great scope in the future.
KNR claims to have executed more than 6,000 lane-
kilometre (km) road projects across 12 states. It has
four build, operate and transfer (BOT) projects of
778 lane-km in Telangana, Karnataka, Kerala and
Bihar and has signed a share purchase agreement
along with Patel Engineering Limited (PEL) to sell
its entire equity stake in two road BOT assetsPatel
KNR Infrastructure Limited and Patel KNR Heavy
Infrastructure Limitedto an Essel group company.
The enterprise value of both assets put together for this
transaction is Rs850 crore.
It has a strong engineering, procurement and
construction (EPC) order-book of Rs3,338.8 crore as
06-10-2017 16:22:59
 STOCK WATCH

on 30 June 2017 comprising Rs2,844.8 crore in roads increased 124% y-o-y from Rs30 crore in the June
sector, Rs490.7 crore in irrigation and Rs3.3 crore 2016 quarter to Rs68 crore in the June 2017 quarter.
in others. Some 37% of the order-book is for state Other income in the June 2017 quarter was 15% of the
governments and 55% for the Central government. operating profit. This was due to an income-tax refund
About 6% are international orders (from Bangladesh). of Rs37 crore on which it also got Rs7 crore interest.
The management said, in a conference call, that tenders Depreciation was up 85% y-o-y, from Rs13.17 crore in
have decreased in the the June 2016 quarter
first quarter of FY17- to Rs24.38 crore in
18 due to Goods the June 2017 quarter
and Service Tax and due to revision in the
higher costs for land estimated life of the
acquisition. KNR assets for the irrigation
has bid for Rs1,400 project in Telangana.
crore in the irrigation While the company
segment and a few performed well in the
bids in hybrid annuity June 2017 quarter, the
model (HAM) projects. management expects
The results for these the performance of the
bids are awaited. The company to decline in
outstanding tenders, the second and third
results for which the company is awaiting, are worth quarters of FY17-18 due to the rains. At a recent
Rs3,000 crore-Rs4,000 crore. KNR plans to obtain analysts conference, it gave a revenue guidance of
orders worth Rs2,000 crore-Rs2500 crore in FY17-18. Rs1,700 crore for FY17-18 and Rs2,000 crore in
The management said that it wishes to focus on HAM FY18-19. Assuming a profit margin as the average of
projects especially in south India since the number the margin of the past six quarters (10%), we arrive at
of bidders on HAM projects are fewer and many a profit of Rs170 crore for FY17-18 and Rs200 crore
HAM projects (about 80) will come up for bidding in for FY18-19. Taking the most recent available market-
the next 4-5 months. This segment is becoming less capitalisation of Rs2,904 crore, the price-to-earnings
competitive, bids are more reasonable and margins are ratio (P/E) of FY17-18 is 16.5 and FY18-19 is 14.5.
higher. The management hopes to bag orders worth The current P/E is 14.92.
Rs2,500 crore and grow by 10% in FY18-19.
One of the unique selling points of the company is
early completion of its projects. KNR has a long list Consolidated Profits (Rs Crore)
of clients including National Highways Authority of Stand-alone 157.25
India (NHAI), Andhra Pradesh Road Development KNR Constructions 150.49
Corporation (APRDC), Ministry of Road Transport
Subsidiaries -39.67
& Highways (MoRTH) Hyderabad Growth
Non-controlling interest in all subsidiaries -16.15
Corridor Limited (HGCL), Karnataka State Highway
Improvement Project (KSHIP), Karnataka Road Associates 4.12
Development Corporation (KRDCL), Madhya Pradesh Joint Operations -3.13
Road Development Corporation Limited (MPRDCL) Others -37.17
and Bruhat Bangalore Mahanagara Palike (BBMP). The Consolidated 98.76
Walayar Tollway, which was completed a month before
its deadline, caters to commercial traffic towards Kochi
Port and Kochi International Container Transhipment While the stand-alone revenue of the company was
Terminal. Rs1,541 crore for FY16-17 the consolidated revenue
KNR has been performing well in the past quarters. was Rs1,679 crore. The standalone net profit was
The sales jumped 59% year-on-year (y-o-y), from Rs157.2 crore while the consolidated net profit was
Rs303 crore in the June 2016 quarter to Rs480 crore Rs98.76 crore. The consolidated net profit was low due
in the June 2017 quarter. The operating profit shot up to the losses of the subsidiaries and joint ventures. On
93% y-o-y, from Rs44 crore in the June 2016 quarter a consolidated basis, there was hardly any profit
to Rs85 crore in the June 2017 quarter. Net profit growth.

45 | 13-26 Oct 2017 | MONEYLIFE

StockWatch.indd 5 06-10-2017 16:24:39

 STOCK WATCH

UN UOTED
STORIES OF PRICE MANIPULATION

Antarctica (Rs1) Kazakhstan and Nepal. The fact is that

(Rs) it has hardly any business. Sales for the

A ntarctica Ltd claims, on its
website, that it started off
with providing pre-press services;
diversified into printing on a job-
work basis with multicolour offset
printing machines and, now, is in the
packaging and printing business. The
company was earlier called Antarctica
Graphics Limited and, according to
www.watchoutinvestor.com, it was
suspended from trading by the Bombay
Stock Exchange on 30 November 2007
for not complying with the listing
agreement. The company now claims
to be into carton box manufacturing,
book printing and finishing,
manufacturing labels, contract
2 June 2017 quarter were Rs44.78 lakh
while sales for the March 2017 quarter
were Rs40.96 lakh. It reported a loss of
Rs17.2 lakh in the March 2017 quarter
1 and a meagre profit of Rs4.3 lakh in
the June 2017 quarter. It neither pays
tax nor declares dividend. Despite
850% such poor performance, the stock rose
0 850% from Re0.1 on 24 March 2015 to
24 Mar-15 24 Mar-16 24 Mar-17 Re0.95 on 29 September 2017, after
rising to as high as Rs1.85 in February
packaging and manufacturing tea bags. 2016, at which point it was up by
Antarcticas packaging/printing unit 94.75%. The promoter shareholding
is located at Falta Export Processing in the company is only 31.63%. This
Zone (Free Trade Zone) about 50km looks like a clear case of manipulation,
from Kolkata and claims to export to but do you expect market regulators to
Sri Lanka, the Middle East, Russia, bother?

MARKET TREND

Managing the Mood channels for the first time in three years
to argue for the government, it seems

Athe index suffered further sell-off and fell all the

fortnight ago, the Sensex was at 31,922. Thereafter,
way to 31,081. On 6th October, it is at 31,814. There is
a nagging and rising suspicion among investors that the
economy is in a mess after two seriously botched up
movesdemonetisation and Goods and Services Tax.
Foreign institutional investors (FIIs) are continuous sellers.
After having sold over Rs12,000 crore re worth of equities
in August and over Rs10,000 crore in n September,
they were net sellers also in the first
st two
trading days of October. However,
domestic investors continue to
pour money into mutual funds
and, hence, net mutual fund
purchases are more than enough to the
o staunch th
he net
FII selling. Even in August and September,
ember, compared to
around Rs23,000 crore of FII selling,, buying by Indian MFs
was over Rs33,000 crore. Is this a cushion for the market?
But even Modi fans admit that the economic mood
has turned negative. While the government is publicly
brazening it out by having ministers appear on news
to be paying attention to the discontent
on the ground. This regime came to
power by combining voters anger with
the previous regime and catchy slogans, promising a
glorious future. These easy-to-swallow bites were pushed
through social media channels where they got shared
among millions of voters.
v These same channels are now
being used by the C Congress Party and Modi detractors
to highlight
high the gap between the promises
and performance of the government
as less than two years remain for the
next
n elections. Perhaps the endless
negative
neg chatter on social media has
reached
reac the governments ears. Amit Shah
had to abandon his high-voltage rallies
in Kerala
K and rush back to have a high-
level
leve discussion with prime minister Modi
and finance minister. If the government pays attention
and corrects course, the indices will be headed higher,
especially since the market has now distinctly shifted into
the hands of domestic investors. Debashis Basu

MONEYLIFE | 13-26 Oct 2017 | 46

StockWatch.indd 6 06-10-2017 17:53:05

 lrc.moneylife.in

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foundation.moneylife.in Credit : Tax : Legal

LRC.indd 2 24-08-2017 16:44:54

 TAX/ FIXED INCOME

Perils of Claiming Wrongful I-T Deduction

T
here are various Sections
under which tax deduction
can be claimed, to reduce
your taxable income while filing
income-tax (I-T) returns. For
example, Sections 80C, 80D, 80G,
80GG, 80TTA and so on are some
of the commonly used Sections for
claiming tax deductions. At the
time of filing I-T returns proofs
do not need to be submitted
to claim these deductions.
But fraudulently claiming of
deduction is tax evasion and
can land you in trouble. Proofs
can be verified, if there is
scrutiny.
There are media reports
that the Hyderabad central
crime station sleuths revealed
in the city criminal court
that at least 200 information
technology (IT) employees
faked disability and chronic illness
of family members to fraudulently
claim I-T refunds. Two I-T
practitioners processed the dubious
refund claims by stating that their
family members suffer from chronic
illness. Each one of them got a
rebate ranging from Rs50,000 to
Rs1 lakh. The I-T practitioners took
around 10% commission from the
IT employees. The total loss to the
I-T department in these cases is
Rs1.36 crore.
Under Section 80U, a deduction
Rs75,000 is allowed for those
who are suffering from 40%
disability while a deduction of up
to Rs1,25,000 is allowed for those
with 80% of disability. Under
Section 80DD, deduction is allowed
to taxpayers who have dependents
with disability. For a dependent
with 40% disability, a deduction of
Rs75,000 is allowed for the medical
treatment (including nursing),
training and rehabilitation. The
limit is Rs1,25,000 for those with
80% disability. Those claiming the
deduction will have to produce
a medical certificate granted by
prescribed medical authority,
defined as a civil surgeon or
chief medical officer (CMO) of a
government hospital, a neurologist
with an MD in neurology
and, in case of children, a
paediatric neurologist having
an equivalent degree. However,
80DD and 80U cannot be
claimed for the same disabled
person. Tax benefit is also
available under 80DDB for
an individual for expenses
incurred by him/her for the
treatment of specific diseases
such as neurological diseases,
malignant cancers, full blown
AIDS, chronic renal failure, and
hematological disorders. The
amount is Rs40,000 or the amount
actually paid, whichever is lower.
For senior citizens, the upper limit
is Rs60,000 and, for very senior
citizens it is Rs80,000.

G-Sec Yields Up
Issuer Maturity Next Last Yield ISIN Rating

T en-year benchmark G-Sec yield, Date Coupon (%)

which sets the tone of the fixed- Axis Bank 8.75% 14-Dec-21 14-Dec-17 8.75 INE238A08427 CRISIL AA
income market, has increased by four (unsecured)

basis points (bps) in the last fortnight ICICI Bank 8.55% Perp 20-Sep-22 20-Sep-18 8.57 INE090A08TZ5 CARE AA+
to end at 6.63% on 4th October. Dewan Hsg Fin 9.25% 09-Sep-23 09-Sep-18 8.47 INE202B07IO3 CARE AAA

NSE data as of last trade date of 3 October 2017

G-Sec Maturity Yield to CRISIL AA+

Bank of Baroda 8.65% Perp 11-Aug-22 11-Aug-17 8.88 INE028A08117
(unsecured)
Date Maturity
IndiaBulls Hsg Fin 9.10% 16-Aug-26 16-Aug-18 8.55 INE202B07HU2 BWR AAA
01 December 2044 7.31
BWR AA
22 June 2045 7.29
U.P Power Corp Ltd 8.48% 15-Mar-27 15-Mar-18 8.4 INE540P07178 (structured
19 December 2034 7.20 obligation)

G-Sec yields on 4 October 2017 BSE data as of last trade date of 3 October 2017

MONEYLIFE | 13-26 Oct 2017 | 48

Fixed Income.indd 1 06-10-2017 16:43:10

 MONEYLIFE
ADVISORY
FIX YOUR FINANCES, FOREVER

Ask Vijay Kedia about Stocks

A free resource from Moneylife Advisory, in investor interest

This is a basic resource for stock-related queries for retail investors under the initiative of
ace investor Vijay Kedia. Our aim is to foster cautious and long-term investment in stocks
for wealth creation. We will not offer buy/sell advice or stock recommendations and tips.
Mr Kedias sole aim is to prevent retail investors from making careless mistakes and stay on
the path of patient long-term investing in stocks.

http://www.moneylife.in/askvijaykedia

Sample Questions
How do you collect the data for understanding
the industry or interpreting on which stage of the
business cycle it is currently moving around? Also,
industries such as publishing and media are dicult
to interpret, how does one link the industry prospects
with revenue and growth? It would be an honour, if
you could provide answers to these questions.
Read annual reports, attend annual general
meetings, read investor presentations, brokerage
reports, listen to conference calls and watch interviews.
If you find a particular industry dicult to interpret,
then move on to another industry, as there are a lot of
opportunities available.
If a stock is not doing well, should one book loss
or hold?
Find out the reason why the stock is not doing
well. If a stock is not doing well in spite of good
performance, it should be watched closely. If the
problem is temporary, one may hold. If there is a
structural problem in the company, one may sell.
If a small-cap company has metamorphosed
into either a mid-cap or a large-cap over time,
will it be prudent as a long-term investor, to sell
during market highs and buy again during the market
lows, to get better returns?
Only two people can know the lows and highs of
the market. One is god and the second is a liar.
We can see lots of news about buy this and that
stock but not much news about sell stock and
why. What should be the parameter to sell a stock?
One should exit the stock when the focus of the
management changes (unrelated diversification),
product is becoming obsolete and the valuation is too
high compared to the leader in the industry, its peers
and the sector.

Ask vijay kedia Ad.indd 2 28-07-2017 17:00:56

 CYBER SECURITY PRASHANT MALI

Rise of Revenge Porn in India

A
bout a month ago, I received a call from Nashikat As it happens, I am handling at least two cases every
the other end of the line was a lady who sought an month where an educated boy from a respected family
appointment with me in a very subdued voice. I either posts his nude pictures or videos of his ex-girlfriend
allocated a date and time and, to my surprise, found two on various websites, or pastes the girls face on some nude
very young girls, one of them accompanied by both her body and makes it go viral to demolish her reputation and
parents. Their story is tragic and has left a deep scar on make her existence hell.
me, both as a lawyer and a human being. Another case that I want to narrate is that of another
One of the girls had filed a complaint against her respectable family from Pune. Such is the irony of our
boyfriend (she was still in a profession that, in this case, I am
relationship with him) and he on the side of the boy, as a defence
was arrested. The boyfriend owns lawyer and bail specialist. This boy
a bungalow and has a job with was going steady with a girl who
WNS, a IT company. He had shot allegedly married another man,
nude pictures and videos of the girl even when she was in the thick of
and posted them on as many as an affair with him. This accused, an
125 websites and forums, causing engineering graduate, in a fit of rage
them to go viral. The posts had made a Facebook page of the hospital
lurid descriptions about her body where the girl is working. He used it

Picture For Illustration Only

referred to her in abusive terms like to upload a series of videos of their
Ran**. The story of the second girl private moments. These sexually
was even worse. In this case, the boy explicit videos came to the attention
was her school friend. He had lured of hospital management and they
her into a sexual relationship with filed a case against unknown persons
the promise of marriage. He took with the cyber-crime police. During
her to his bungalow, shot explicit the investigation, the police allegedly
videos of private sexual acts and The story of the second traced the IP address of my client
uploaded them on a website with and he was arrested.
captions that depicted the girl as a
girl was even worse. In Under Section 67A of the IT
prostitute soliciting a client. this case, the boy was Act, 2000, anyone who transmits
What is scary is that even as I her school friend. He had sexually explicit pictures or videos
write this article, the nude pictures lured her into a sexual can be punished with imprisonment
and videos are available on the relationship with the up to seven years and a fine that can
websites and can be accessed by promise of marriage. He go up to Rs10 lakh. It is a cognisable
anyone typing her name and adding and non-bailable offence. Worse, the
postfix of nude photos in a Google
took her to his bungalow, media coverage alone can destroy the
search. Despite a court order, the shot explicit videos life of the accused and the victim,
police are unable to remove these but affects the woman a lot more.
photos and videos and the girls are Through the two cases mentioned
left to fend for themselves. I have taken up this case above, which I represented from opposite ends, I want the
pro-bono and opposed granting bail to the accused as readers to realise that, as a society and family, we need to
intervener lawyer in all courts including the High Court. counsel the young to deal with heartbreaks. We also need
The only relief is that the accused boy is still in jail as he to watch for signs of the psychologically unwell and deal
is a threat to society. with it before it goes out of hand.
This an exampleof revenge pornthe publication/
sharing of explicit material portraying someone who has Advocate Prashant Mali is the President,
not consented to the image or video being shared. Indian Cyber Law Consulting, author &
law makes it illegal to transmit a private sexually explicit speaker. Email: prashant.mali@
photograph or film with or without the consent of the cyberlawconsulting.com
person depicted in the content.

MONEYLIFE | 13-26 Oct 2017 | 50

Cyber Security.indd 1 05-10-2017 21:19:26

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Rs25 lakh. The loan was
sanctioned in 2013. But the builder
handed over possession of the flat
in 2016. The house registration
was done in July 2016. It is my first
property. To claim tax rebate of
Rs50,000 under Section 80EE, the
loan should be taken in FY16-17. Is
there any way I can claim the rebate
under Section 80EE?
Ameya Kuntes Reply:
Section 80EE provides for
additional deduction for home loan
interest to the first-time
home-buyers. One of
the key conditions
for claiming the
deduction u/s 80EE,
as amended by the
Budget 2006 (i.e., Finance Act,
2016) is that the loan must be
sanctioned during FY16-17. Since
your home loan was sanctioned in
2013, you would not be eligible for
the additional deduction for home
loan interest under Section 80EE
as applicable for FY16-17. Section
80EE was originally introduced
in the 2013 Budget (i.e., Finance
Act, 2013). The original Section
provided for additional deduction
up to Rs1 lakh for home loan
availed in FY13-14. Applying the
old Section to your facts, in my
view, you were eligible for the
additional interest deduction in
MONEYLIFE | 13-26 Oct 2017 | 52
Tax Queries.indd 2
Tax Helpline
FY13-14 or FY14-15 (in specified
situations). However, the time limits
for revising FY13-14 and FY14-15
returns have expired. Unfortunately,
you will not be eligible to the
deduction under Section 80EE. You
would, however, be entitled to the
regular deduction under Section 24
for the home-loan interest on the
self-occupied house up to Rs2 lakh
for FY16-17.
Tax on ESOPs
A bout 10 years ago, as an
employee, I was allotted
employees share options (ESOPs) in
an unlisted public limited company
in India. The company in which
I hold ESOPs is acquired by a
European company. If I receive a
consideration against my ESOPs,
how should I calculate the amount
of income-tax that I need to pay?
Subodh V Shahs Reply:
ESOPs are taxed in two stages:
1. At the time of exercise of the
option. The taxable amount will
be the difference between the fair
market value (FMV)
and the exercise
price and will be
taxed under the
head Income from
Salaries.
2. At the time of sale of the shares.
Consideration received less cost of
acquisition (being FMV considered
for taxation of perquisites). This
Supported By
income will be taxable as capital
gains. It seems that we are talking of
stage 2 of the taxation. The shares
were allotted 10 years ago; hence,
the shares will be treated as long-
term capital asset and the resulting
gain will be taxed as long-term
capital gain (LTCG).
Tax Liability of an NRI
M y cousin has acquired British
citizenship. He has properties
in India. Does he have to pay tax
on those properties now that he
is a British citizen? He has a PAN
(permanent account number) but
does not have, and is not eligible for
an Aadhaar, linking of which has
been made mandatory recently.
Ameet Patels Reply:
Any income that arises/accrues
in India or is received in India
is taxable in India for all. For
non-residents (whether citizen or
otherwise), the same rule applies.
If someone has more than one
residential property (and if none of
them is rented out),
any one property
will be considered as
self-occupied (and,
therefore, having NIL
income). The other
property(ies) will be considered to
be deemed to be let out and the
owner will need to compute the
deemed income for such houses
and include that income in his/her
computation. After that, if the total
income exceeds the threshold limit
for that year, tax will have to be
paid and return of income will also
have to be filed. If any property is
actually rented out, obviously, the
rental income has to be included
in the computation. Aadhaar is
not mandatory for non-residents.
Therefore, for your British cousin,
there is no requirement of linking
PAN and Aadhaar.
03-10-2017 20:24:42
 Supported By

INE
LPL
HE
TAX OUR EXPERTS

AMEET PATEL

SUBODH SHAH

This helpline is for tax-related queries for individuals and small NIKHIL VADIA
businesses who file their own tax returns or want to double-check the
advice they have received from others. It will not attempt to substitute a
tax advisor or tax expert whose help is required for complex issues. Nor
is it a grievance redress forum.

HOW IT WORKS
1 Every new query posted will be sent to our panel of tax experts
2 When we get the opinion/advice from our expert, we will post the reply
3 You can access similar issues faced by other taxpayers

www.moneylife.in/taxhelp
elp
To use our tax helpline, please confirm that you have read our terms and conditions.
Also, this is only for individual taxpayers and small businesses.

Tax Helpline.indd 2 24-02-2017 16:12:20

 USEFUL APPS YAZDI TANTRA
Mumbai T2 App: A Must for
All Air Travellers from Mumbai
T he Mumbai T2 app is a great app for Air Travellers
to and from Mumbai. The app works not only for
Terminal 2, but is also great for domestic flights!
The app offers you flight
information, such as international
and domestic flight status, and flight
schedule for arrivals and departures.
It also gives information on the
various airport facilities, such as the
check-in counters, gates, customs,
baggage wrapping points, washrooms and dd
drinking
k water,
restaurants and shops. Whats more, you can also discover
all these through the augmented reality experience it offers.
Augmented reality is a revolutionary technology that allows
you to see the options using your camera. A must-try!
Besides, if you save your flight on the go, it gives you the
gate No., any changes to them, and also when its time to
reach your gate. Find the availability of an airport taxi
and even a restaurant within CSIA (Chatrapati Shivaji
International Airport) Terminal 2 to catch up on a cup
of coffee. You can even keep our SOS number handy for
any emergencies.
A must for all air-travellers to and from Mumbai!
Android: https://goo.gl/WibB9p iOS: https://goo.gl/saekdW
HERE WeGo: Offline Maps &
GPS
H ERE WeGo is a free app that makes city (in any city)
navigation effortless. With detailed routes, turn-by-
turn guidance and information about
every way of getting around, its the
only app you need, to get through
the city. It tells you everything about
your route before you leave. Turn-by-
turn guidance keeps you stress-free
behind the wheel. The maps can be
used offline, saving you data charges. You can download
the maps before you leave, so that you can keep using
the maps even when there is no signal. Offline maps are
available for most cities across the world.
HERE WeGo has public transit information for 1,300
cities including New York City (NYC Subway, NYC Bus),
San Francisco (BART), Chicago (CTA), Boston (MBTA),
London (TfL), Berlin (BVG), Munich, Paris, Barcelona,
Madrid, Rome, Milan, Vancouver, Toronto, Sydney,
Melbourne and many more. Go where and when you
MONEYLIFE | 13-26 Oct 2017 | 54
Tantra - column.indd 1
want on the underground, bus, bike, train, tram or ferry.
Android: https://goo.gl/6OPWSD
iOS: https://goo.gl/TupiFv
Android Auto: A Great Tool
When You Are On the Road
W hen we enter our car with our phone, we want
everything to turn hands-free.
Android Auto does just that. You can
connect your phone to a compatible
car display, or put your phone in a
dock and use Android Auto directly
from your phone screen. It works
with any car which has compatible
Bluetooth connection and on Android versions 5 and above.
Navigate with Google maps, listen to playlists or
podcasts from your favourite apps, send messages via
voice, and more. Once connected to your car Bluetooth,
you are truly hands-free. With a simplified interface, large
buttons and powerful voice commands, Android Auto is
a must when you are on the road. Be safe, be careful and
be hands-free! Android: https://goo.gl/BS2ONa
Share Your Location through
WhatsApp
O ften, we need to send our current location to our
friends/relatives. Doing so from other apps is not
so convenient. WhatsApp allows us to send our current
location
loc directly to the receiver in three
easy steps. 1. Select the person or group
to whom you wish to send your current
location. 2. Select attachment (the
paper-clip shaped icon) on the top
rright of your screen 3. From the list of
options
t shown, select location and send
thats it. Your location will be immediately visible to the
receiver(s) on their phones on Google maps. This simple
trick will save you lots of time and help you communicate
your location speedily and efficiently!
Yazdi Tantra is a chartered accountant
by training, computer consultant by
profession, entrepreneur-developer by
hobby and trainer in his leisure time.
He is currently the vice-chairman of
Zoroastrian Co-operative Bank Ltd
and has been running a medium-sized computer
company ON-LYNE for the past 24 years.
03-10-2017 18:12:20
 HANDHOLDING:
MAS Benefit #11
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generators; so, you get ethically correct advice

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Option1: Do nothing.

Option2: Rely on friends, relatives, neighbours, oce accountant, derived wisdom from social media
or the press/TV. (But do they know more than you? And how do you know that?)

Option3: Rely on relationship managers, insurance agents, distributors, wealth managers. (But you
are only a sales target for them)

Option4: Research insurance, mutual funds, markets, stocks, financial theories Become a financial
expert yourself. (Is this practical?)

Option 5: Choose Moneylife Advisory

A no-bias, no-conflict platform. Ask any confidential question about investments, insurance and taxes
and you get the right answer.

Subscription to Moneylife magazine is included in MAS Premium Membership

About MAS
MAS is a SEBI-registered investment adviser and part of Moneylife, Indias most unbiased and
pro-investor research and information group. We run Indias best personal finance magazine,
Moneylife. We are not afraid to call a spade a spade. We are Indias only media company to have
set up a non-profit trust, Moneylife Foundation, which is now the largest savers and investors
association with more than 35,000 members. MAS was set up to help investors and savers make
the right financial decisions and handhold them through the entire process.

MONEYLIFE
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advisor.moneylife.in

MSSN Handholding.indd 1 15-12-2016 18:07:06

 WEIGHT LOSS FROM
BLACK TEA?
C ould it be that black
tea may promote
weight loss by changing
MEDICAL DEVELOPMENTS FROM
bacteria in the gut?
In a study of mice, scientists at
University of California Los Angeles the weight of mice that were given
(UCLA) have found that black tea
alters energy metabolism in the liver down to the same levels as those
by changing gut metabolites. The
study, published in the European
Journal of Nutrition, found that
both, black and green tea, changed
the ratio of intestinal bacteria
in animals. Apparently, this led
to a fall in the ratio of bacteria
associated with obesity and, at the
same time, bacteria associated with
lean body
mass
increased. that the findings suggest that the
In the study, four groups of mice
were given four different sets of
diets. One was given low-fat, high-
sugar and the other high-fat, high-
sugar. A third set of mice got the
same as the first with added extract
of green tea. And a fourth set of
mice got the same diet as the second
with added extract of black tea.
Eating a health food?
But what about financial health?
The best wealth food.
Once every fortnight
MONEYLIFE | 13-26 Oct 2017 | 56
Health.indd 3
AROUND THE WORLD
When measured after four weeks,
green or black tea extracts was
that were given the low-fat diet.
The results suggest that both
green and black teas are prebiotics,
substances that induce the growth
of good micro-organisms that
contribute to a persons well-
being, said Susanne Henning,
the studys lead author and an
adjunct professor at the UCLA
Center for Human Nutrition. Our
new findings suggest that black
tea, through a specific mechanism
through the gut microbiome, may
also contribute to good health and
weight loss in humans.
Dr Zhaoping Li, director of the
UCLA Center for Human Nutrition, that Not only is type-2 diabetes
chief of the UCLA Division of
Clinical Nutrition and the studys
senior author, was quoted as saying
health benefits of both, green tea
and black tea, go beyond their
antioxidant benefits, and that both
teas have a strong impact on the gut recorded officially. Type-2 diabetes
microbiome.
GET LEAN, CURE DIABETES
A report published by the British
Medical Journal (BMJ) says
that type-2 diabetes can be
controlled if patients lose
12kg-15kg or so. Type-
2 diabetes is considered
incurable; but evidence is
growing that it is curable
if certain steps are taken, according
to a study headed by Professor
Mike Lean of Glasgow Universitys
Human Nutrition Section. Prof
Lean points out that, currently, 488
drugs are licensed worldwide to
treat type-2 diabetes by lowering
blood glucose levels. They are
not treating the disease process,
he said. He was quoted as saying
preventable by not getting fat, but
as long as you get in early after the
disease is establishedin the first
five years or soyou have a better
than even chance of becoming
non-diabetic. This information is
hardly known, because it is rarely
now affects 5%-10% of the UK
population and about 10% of total
National Health Service expenditure
in that country goes into treating
the condition.
For subscription offers that
are a steal, look for a form
elsewhere in this issue or our
website at www.moneylife.in
06-10-2017 16:45:19
 TION
MONEYLIFE FOUNDA

DONATE*
to
make our
voices heard
Since February 2010, Moneylife Foundation,
the Voice of Savers has enrolled 67,200+ members,
conducted 345+ workshops, handled scores of grievances &
made four representations to policymakers.
We need to do much more

As the Voice of Savers, Moneylife Foundation is proud to have
been one of the fastest growing NGOs, reaching out to savers
across India (Gurgaon, Kolkata, Bengaluru, Chennai, Nashik, Pune,
Hyderabad and Goa), covering a wide variety of subjects. On
advocacy, we continued to pursue the government for appropriate
legislation to prevent people from being looted by thousands of
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Donate Ad.indd 1 26-07-2017 11:06:40

 LEGALLY SPEAKING SD ISRANI
Reputation No Guarantee
A
s consumers, we have always been made to believe
that well-known brands are generally reliable, that
dealing with reputed companies ensures proper
performance of the product and, in case of any problem,
the company will come to the rescue of customers. How
often have we heard that it is safer to use good products
from established companies and, to an extent, this is right.
In other words, a consumer feels assured while dealing
with a familiar name that has been around for a long time;
the name becomes a guarantee of service. Unfortunately, it
can happen that not every reputed company cares for an
individual consumer and this could be true of some of the
biggest names in the market. Ask Dwarikanath Baranwal
of Varanasi (UP). He did not expect that purchase of an
ordinary pressure cooker will generate so much pressure
for himself even though he was dealing with a well-
known reputed company.
Around 2012-13,
Mr Baranwal purchased
a pressure cooker worth
Rs980 of the well-known
brand Hawkins. The
cooker turned out to be
defective
d f and
d so he
h approached
hd
Hawkins for replacement. As the company was not responsive,
Mr Baranwal approached the district consumer forum.
The forum directed Hawkins to pay Rs980, besides a
compensation of Rs3,000. Mr Baranwal was also awarded
litigation cost of Rs2,000. He was relieved that his stand
had been vindicated as his claim was upheld by the district
forum. However, his happiness was shortlived as he soon
realised that Hawkins was in no mood to redress his
grievance. Instead of complying with the order passed
by the district forum, Hawkins chose to file an appeal
against the order. Much to cheer of Mr Baranwal, the
state commission concurred with the finding of the district
forum and dismissed the appeal of Hawkins.
Hawkins should have gracefully accepted the fact
that two statutory bodies had upheld the contention of
the complainant in a matter involving a paltry amount.
Instead, it opted to file an appeal; but the when it did file
the appeal, it was beyond the time limit. Hawkins had
to satisfy the National Consumer Disputes Redressal
MONEYLIFE | 13-26 Oct 2017 | 58
Legally Speaking.indd 2
Commission (NCDRC) about the reasons for the delay
in filing the petition and seek condonation for the delay
in filing. The counsel for Hawkins contended that the
47 days delay in filing of the petition was unintentional.
In fact, the company claimed that the delay took
place because of bureaucratic procedure involving taking of
legal opinion and getting permission from the headquarters
of petitioner-company to file the revision petition. By
taking such a stand, Hawkins had shown itself in poor
light.
NCDRC made references to several cases, including
some well-known judgements of the Supreme Court on
the subject of condonation. After considering the detailed
arguments placed before it, NCDRC said that Hawkins
appears to be taking advantage of its financial clout in trying
to defeat the benefit of concurrent finding of the fora below.
Therefore, we do not find any reason to condone the delay.
Application is accordingly dismissed. As a consequence,
the revision petition
is also dismissed as
Hawkins kept on barred by limitation.
(Hawkins Cookers
losing in different Ltd vs Dwarikanath
consumer courts but Baranwal, judgement
continued to fight, was pronounced on
22 September 2017).
trying to deny a few It is noteworthy
thousand rupees of that NCDRC
claim to its customer has specifically
remarked that the
company seemed to
be taking advantage of its financial clout and thwarting the
efforts of the complainant to get justice. This is also
evident from the fact that the company would have spent
a large sum on fighting before various authorities while
refusing to pay the meagre a amount of Rs5,980/- to its
customer.
Therefore, every consumer should always be alert
and not get carried away by big and well-known names;
the true character of a company is known by the
treatment it gives to its customers who approach it with
a complaint.
SD Israni is a corporate lawyer & Fellow
of ICSI. Email: sdisrani@gmail.com
06-10-2017 11:27:17
Pathbreakers.indd 2 06-09-2017 16:24:34
 TECHNOLOGY
Is Protection from Data Leaks Possible?
No government can be trusted to put data security ahead of its surveillance needs. The best
you can do is minimise data leakage from your side, advises Yogesh Sapkale
I
n September 2017, Equifax, the credit bureau,
reported a serious data breach that affected
143 million US customers or about 44% of the
countrys population. This breach into one of the most
sophisticated data centres gave hackers easy access to
every piece of information of customers, like full name,
social security number, date of birth, addresses, and
driving licence number. Hackers can use this information
to impersonate and dupe the person, while putting entire
blame on the very person whose ID they have used. This
is the stark reality of the digital age where more than
99% people blindly believe that all their online data is
safe and secure.
In the Indian
context, the same
blind faith can be
seen in the statements
of Union ministers
about data storage of
Aadhaar or the unique
ID (!) number. Those
who understand
technology do
not believe such
statements or trust
the government to put
security ahead of its
ever-growing need for
surveillance. Especially, when the same set of politicians
who opposed Aadhaar before coming to power are
zealously enforcing the UID number for everything.
Coming back to data breaches and data leakages,
your data is protected as long as it is in your possession.
When the data is not in your possession, all you can do
is to just pray! This is because, for all those who have
access to your data, you are just a product which needs
to be sold in the market. In such a situation, you are not
important and your consent, willingness or even your
right to privacy does not matter.
You may have heard someone saying data is the
new oil. Yes, that is true. Your personal information
is very valuable and that is why you are lured and even
threatened (by government!) to part with your private
information and data. All this collected data is then
analysed and sold as classified information to buyers at a
premium. As per reports, there could be over 3,000 data-
MONEYLIFE | 13-26 Oct 2017 | 60
Technology.indd 1
brokers across the world, who are collecting, storing,
analysing and then selling your personal information for
a hefty fee.
Citizens believe that government regulation and
legislation can protect them. But there is not much hope
on this front and you will have to make sure you do
not share your personal data with anyone, including the
government. Share data only on a need to know basis.
If the government agency threatens you into sharing
your permanent account number (PAN), share only
that number and not any other information. The same
applies to other private parties.
Even when you
install an app on
your mobile device,
make sure you read
all the information
about the app. It is
important to know
what information
the app can access
from your device.
Also, if possible (it
can be done through
a privacy guard
available on some
operating systems),
make sure that the
app is given bare minimum access for working. For
example, an app for torch does not need access to your
contacts or gallery. So disable this access. If the app does
not work without gaining such access, simply uninstall
it from your mobile. You do not require a snooping app
on your mobile device in any case.
Remember, you or any organisation or institution,
cannot protect your data forever from breaches.
However, what you can do is to minimise leakage of
data from your side. Start with social media. Remove all
the information that is not required for you to use the
social media account. For example, remove your mobile
number or other contact details from Facebook. You can
still access it through your email ID. If possible, create a
separate email ID for your social media presence or for
everything that does not affect you financially. Be safe
until the next data breach happens and pray it does not
affect you!
05-10-2017 15:42:42
 24 YEARS OF THE SCAM:
THE PERENNIAL BESTSELLER, READS LIKE A THRILLER!
THE ONLY BOOK ON THE TWO BIGGEST STOCK MARKET SCAMS OF INDIA,
NOW IN ITS EIGHTTH PRINTING
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Written in a racy style, the book weaves together
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During discussions that night, Subba Rao called
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That afternoon a new chapter began in the life of
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 BOOKS

THE FIX banks estimates of how much they thought they would
have to pay for funding. As the authors write, the big

Libor: The Big Fat Lie flaw in Libor was that it relied on banks to tell the truth
but encouraged them to lie. When the 150 variants
of the benchmark were released each day, the banks

W
estern financial markets are often characterised individual submissions were also published, giving the
by a colossal failure of supervision, every few
years. Whether it is the Savings & Loans scam
in the 1980s, the insider trading scandal of the late-1980s,
the accounting scandal post dot-com bust in early-2000
or the bursting of the housing bubble in the mid-2000,
companies, traders and bankers have repeatedly gamed
the system and made millions. The supervisory failure is so
routine and regular that it does not shock people anymore.
But fixing the London Interbank Offered Rate? Even for
the world-weary, it was a shock.
It all started on 16 April
2008 when The Wall Street
Journal printed a story on its
front page with the headline
From the first weeks of his probation in
Bankers Cast Doubt on Key the summer of 2006 until he walked out
Rate Amid Crisis. Written the door in September 2009, Hayes and
by Carrick Mollenkamp his colleagues had made more than 2,000
from Fleet Street, London,
it began: One of the most
documented requests on at least 570 days.
important barometers of The trader had sought to manipulate
the worlds financial health Libor about three-quarters of the times
could be sending false he was in the office and made almost no
signals. In a development
that has implications for
attempt to hide it
borrowers everywhere,
from Russian oil producers world a snapshot of their relative creditworthiness. Those
THE FIX to homeowners in Detroit making their firms Libor submissions were prevented
LIAM VAUGHAN, to, bankers and traders are from deviating too far from the truth because their fellow
GAVIN FINCH expressing concerns that the market participants knew what rates they were really
Wiley London Interbank Offered being charged.
Pages216; Rs1,772 Rate, known as Libor, is The central character in all this was Tim Hayes.
becoming unreliable. Sometime in 2006, Hayes, a trader with UBS Securities
That was a serious understatement. Libor was actually based in Tokyo had figured out how to rig Libor. When
being rigged with impunity. Libor is a benchmark of interest he was a junior trader in London, Hayes had got to
rates that the worlds leading banks charge each other for know several of the 16 individuals responsible for making
short-term loans. It was supposed to be the worlds most their banks daily submission for the Japanese yen. He
important number, to which more than $300 trillion of realised that these guys relied on inter-dealer brokers, the
mortgages, loans and derivatives were pegged. And, yet, middlemen involved in all trades, on what rate to submit
a close network of traders and brokers was manipulating each day. In the opaque, over-the-counter derivatives
this number on which a substantial part of the Western market, where there is no centralised exchange, brokers are
economy depended, before getting caught in 2012. Liam at the epicentre of information flow. That puts them in a
Vaughan and Gavin Finchs The Fix tells us the story of powerful position. Only they can get a picture of what all
this monumental scandal. the banks are doing. While brokers had no official role in
The most obvious question is: How was Libor getting setting Libor, the rate-setters at the banks relied on them
manipulated? The starting point was the primitive way for information on where cash was trading.
Libor was calculated. The rate was an average of different Hayes cultivated them, bribed them to submit rates

MONEYLIFE | 13-26 Oct 2017 | 62

Book Review.indd 2 06-10-2017 14:48:12

 BOOKS
according to his
market positions,
which came especially
handy for him in
the crisis of 2008,
when, incredibly,
instead of the rate
shooting up (due to
the liquidity crisis),
Libor indicated that
It is the rate at which it would fall. This
banks do not lend to each helped Hayes survive
other... it is not a rate at the 2008 crisis as
which anyone is actually he offloaded his
borrowing. Mervyn King, positions based on
Governor of the Bank of rigged rates. In 2009,
England, in late-2008 on Hayes left UBS and
Libor joined Citibank, lured
away for a $3 million
bonus by Chris Cecere.
Among those who read the WSJ article on Libor was
Vince McGonagle, working at the enforcement division
of the Commodity Futures Trading Commission (CFTC)
in Washington for 11 years. He asked his staff to put
together a dossier and decided to launch an investigation.
Earlier, in March, economists at the Bank for International
Settlements, a group created by central banks around
the world, had published a paper that identified unusual
patterns in Libor during the crisis. However, the study
concluded that these were not caused by shortcomings
in the design of the fixing mechanism.
Sometime in the afternoon of 8 December 2009, Cecere
felt that the six-month yen Libor was too high. When
he checked the submissions from the previous day, he
was surprised to see that Citigroup had put in one of the
highest figures. Cecere contacted the head of the risk
treasury team in Tokyo, Stantley Tan, and asked him to
find out who the yen-setter was and request that he lower
his input by several basis points. It turned out the risk
treasury desk in Canary Wharf was responsible for the
banks Libor submissions, write the authors. Tan spoke
to the London office to consider moving the quotes lower.
However, the risk management group in London didnt
budge. Cecere asked Tan to ask London again and was
rebuffed by Andrew Thursfield, Citigroups risk head.
Hayes tried to work his contacts in London but failed. Not
only would Thursfield not oblige but, in March 2009, he
gave a presentation via video link to investigators on the
rate-setting process. Hayes tried to push harder and got
reported by Citibank officials in London. After this, the
scandal unravelled quickly, as CFTC closed its net and
even the brokers stopped cooperating with Hayes.
Book Review.indd 3
Finally, Deutsche Bank, UBS, Barclays and other banks
paid up a fine of a few billion dollars and just one person
went to jail: Tom Hayes, arrested in 2012 and convicted
in 2015 for 14 years, which was reduced to 11. This is
a compelling story of the Libor scandal told through
Hayes, the obsessive high-risk trader, later diagnosed with
Aspergers disease, who bent the rules, bullied the brokers
and bribed them to fix Libor to his advantage. The authors
narrate the crime and one punishment in a factual manner,
without getting into value judgement on whether others
in the game deserved to be convicted as well.
Separately, it transpired that even foreign exchange
rates were manipulated, between December 2007 and
January 2013, in which traders in UBS, Bank of America,
Citigroup, JP Morgan, Barclays and the Royal Bank of
Scotland were involved. Later, six banks were fined $5.6
billion over this separate scam.
The book reads like a novel where characters, events
and locations come alive with vivid descriptions. It opens
with a secret meeting in a bar with a source, who identifies
Hayes as the villain of
Libor manipulation
setting the tone of
for a gripping thriller.
But the real villains
of the saga are British
Bankers Association
(BBA), Financial
Services Authority
(FSA), UK, and Bank
of England (BoE).
BBA continued to
The Libor scandal dwarfs claim, long time
by orders of magnitude after the WSJ article,
any financial scam in the
that the Libor was
history of markets,
Andrew Lo, professor of reliable even in times
finance, MIT of financial crisis.
In October 2008,
the International
Monetary Fund found that although the integrity of the
U.S. dollar Libor-fixing process has been questioned by
some market participants and the financial press, it appears
that U.S. dollar Libor remains an accurate measure of a
typical creditworthy bank's marginal cost of unsecured
U.S. dollar term funding. The minutes of the Bank of
England show that deputy governor Paul Tucker was
aware as early as in November 2007 of concerns that
the Libor was being manipulated. In early 2008, the then
New York Fed President Tim Geithner wrote to BoE chief
Mervyn King to fix Libor. But BoE didnt act on it. FSA
couldnt care less about Libor. This is a short, fascinating
book and a must-read. Debashis Basu
63 | 13-26 Oct 2017 | MONEYLIFE
06-10-2017 14:48:47
 MONEY FACTS STOCKS

INDIAN MARKET TRENDS FUND FLOWS

The Sensex dipped 1% and the Nifty ended flat during the Foreigners: Foreign institutional investors were net
fortnight ended 4 October 2017. ML Large-cap Index, ML sellers of equities (Rs12,221.76 crore). They sold
Mega-cap Index and ML Small-cap Index ended flat, while shares worth Rs48,475.40 crore.
ML Mid-cap Index rose 1%. ML Micro-cap Index fell 3%.
0

Share Prices Index, April 2017=100 -1,075

120
-2,150

FII Net Investments

110
-3,225 (Rs Crore)

-4,300

100
-5,375
25 Sep-17 4 Oct-17

90 Indians: Domestic institutional investors were net

buyers of equities (Rs13,803.89 crore). They bought
shares worth Rs34,266.39 crore.
80 5,200
Apr-17 Jul-17 Oct-17

ML Large-cap ML Small-cap Nifty ML Micro-cap 4,160 DII Net Investments

ML Mid-cap ML Mega-cap Sensex (Rs Crore)
3,120

2,080
Index 22 Sep 04 Oct +/-
ML Mid-cap Index 107.65 108.43 1% 1,040
ML Large-cap Index 106.50 106.53 0%
0
ML Mega-cap Index 110.66 110.61 0% 25 Sep-17 4 Oct-17
ML Small-cap Index 102.70 102.36 0%
Nifty 9,964.40 9,914.90 0% GLOBAL MARKET TRENDS
7,600
Sensex 31,922.44 31,671.71 -1%
FTSE
ML Micro-cap Index 94.09 91.31 -3% 7,480

Mega-cap Gainers/Losers 22 Sep 04 Oct Change 7,360

Avanti Feeds 1999.75 2402.3 20%

7,240

Reliance Capital 661.55 573.9 -13%

7,120

Large-cap Gainers/Losers 22 Sep 04 Oct Change

7,000
Graphite India 352.85 449.7 27% Apr-17 Jul-17 Oct-17

Kwality 113.55 97.65 -14% The FTSE, Hang Seng, NASDAQ Composite and
Nikkei rose 2% each, while Taiwan Weighted and
Mid-cap Gainers/Losers 22 Sep 04 Oct Change
Shanghai Composite ended flat.
Ador Welding 403.75 603.8 50%
Index 22 Sep 04 Oct + / (-)
Tourism Finance Corpn. of India 157.6 138.75 -12% FTSE 7,311 7,468 2%

Small-cap Gainers/Losers 22 Sep 04 Oct Change Hang Seng 27,881 28,379 2%

NASDAQ Composite 6,427 6,535 2%
Orient Press 96.15 135.9 41%
Nikkei 20,296 20,627 2%
Gammon India 8.23 5.97 -27% Bovespa 75,390 76,591 2%
Micro-cap Gainers/Losers 22 Sep 04 Oct Change S&P 500 2,502 2,538 1%
Korean Composite 2,389 2,394# 0%
Raj Rayon Inds 0.22 0.3 36%
Taiwan Weighted 10,450 10,469* 0%
Bharati Defence & Infrastructure 16.44 11.5 -30%
Shanghai Composite 3,353 3,349# 0%
(All Prices in Rs)
*3 Oct 2017, #29 Sep 2017

MONEYLIFE | 13-26 Oct 2017 | 64

Money Fact.indd 2 06-10-2017 15:13:11

 MONEY FACTS STOCKS

Whats H T ML SECTORAL TRENDS

Oil and gas companies were a mixed bag during the fortnight. GAIL (India)
Ltd, Hindustan Oil Exploration Company, Oil India and Oil & Natural Gas
Shares of oil & gas companies
and petrochemicals companies
advanced 6% each, while shares
Corporation advanced 9%, 8%, 7% and 5%, respectively.
of non-ferrous metals companies
and hotel companies advanced
Companies 22 Sep 04 Oct +/-
5% each. Stocks of education
ML Oil & Gas Index GAIL (India) 398.55 436.35 9%
companies, paints companies and
110 sugar companies fell 3% each.
Hindustan Oil 85.55 92.30 8% Stocks of engineering, procurement,
construction and infrastructure
100
Oil India 328.85 351.30 7% companies also fell 3%.
ONGC 164.45 172.10 5% ML Sectoral Trends

Oil & Gas 6% Trading -5%

90 Indraprastha Gas 1,436.95 1,451.10 1%
Petrochemicals 6% Education -3%
Selan Exploration 186.80 179.55 -4% Non-ferrous Metals 5% Paints -3%

80 Hotels 5% Con_EPC_Infra -3%

Tide Water Oil Co 6,587.5 6,311.30 -4%
Apr-17 Jul-17 Oct-17 Industrial Intermediates 3% Sugar -3%
All Prices in Rs

RURAL INFLATION
Whats N T Combined inflation for urban
and rural areas in August 2017
Engineering, procurement, construction and infrastructure companies rose to 3.36% from 2.36% in
were punished. Gammon India, Pratibha Industries, Unity Infraprojects July 2017. Inflation in rural areas
and C&C Constructions declined 27%, 16%, 10% and 9%, respectively. rose to 3.30% in August 2017
from 2.41% in July 2017. Food &
Companies 22 Sep 04 Oct +/-
beverages inflation rose to 1.88%
Gammon India 8.23 5.97 -27% ML Con_EPC_Infra Index in August 2017 from 0.65% in
Pratibha Industries 9.15 7.73 -16% 110 July 2017 in rural areas. Milk &
milk products inflation decreased
Unity Infraprojects 5.70 5.15 -10%

C&C Constructions 47.55 43.25 -9%

105 Inching Up?
Prakash Constrowell 4.63 4.23 -9%
6.00%
Ion Exchange (India) 525.00 479.95 -9%

Tantia Constructions 16.50 15.25 -8% 100

4.50%
JMC Projects (India) 417.35 385.80 -8%

Hindustan Const Co 35.00 32.50 -7%

95 3.00%
GTL Infrastructure 6.33 5.96 -6%
Apr-17 Jul-17 Oct-17
All Prices in Rs
1.50%
BULK DEALS Aug-16 Feb-17 Aug-17

Date Company Buyer Seller Rs Cr to 3.03% in August 2017 from

29 Sep-17 GOCL Corporation
26 Sep-17 Monnet Ispat Energy
04 Oct-17 Saurashtra Cement
27 Sep-17 LKP Finance
25 Sep-17 Aditya Vision
04 Oct-17 Pankaj Polymers
27 Sep-17 Tirupati Industries (India) Rahul Lakhotia
Hinduja Power Dilipkumar Vishindas Lakhi
Sri Silverdale Opportunities APMS Investment Fund
The Arj Investment Villa Trading Company Pvt
India Max Investment Fund Prime India Investment Fund
NNM Securities Pvt JS Enclaves Pvt
Kedia Prabha B Garnet International
Vijay Lakhotia
23.29
3.34% in July 2017. Inflation for
clothing increased marginally
4.03 to 5.44% in August 2017 from
3.90 5.17% in July 2017. For fruits,
inflation increased sharply to
1.25
5.35% in August 2017 from
0.39 3.83% in July 2017. For sugar
& confectionery, it decreased
0.24
to 7.76% in August 2017 from
0.17 8.79% in July 2017.

65 | 13-26 Oct 2017 | MONEYLIFE

Money Fact.indd 3 06-10-2017 15:13:26

 PS
End This Obsequious Protocol Now!
A few years ago, the head of a leading
public sector bank startled us with
this admission: We may not have a
good salary and perks but the one thing
you have in plenty in a public sector
undertaking (PSU) is staffthere are
always dozens of people around you.
One of the things these hangers-on
do is to suck up to the bosses. It is a
standard protocol for a group of seniors
niors
to drop all work and land up at airports
orts
to receive and send-off their bosses.. This
obsequiousness is unavoidable for
those who want promotions; heads of
State-owned institutions, who have e babu culture,
gone up the ladder doing exactly this,his,
are unwilling to put an end to this
colossal wastage of valuable time.
And so it was that a bunch of
top railway officials landed up at the e
Mumbai airport to receive Ashwini
Lohani, chairman of the Railway
Board, after 23 people had been
Is Blue Whale for
Real?
T he Blue Whale online game, driving
youngsters to suicide, has been
widely discussed by the media in the past
few months. The government
has also directed major social
media giants to disable any
links providing access to the
suicidal trap game. The deadly
game reportedly assigns nearly
50 tasks to those who play it,
which include physically harming
themselves (providing evidence
of it) before moving on to the
next level. The final task involves
suicide. Advocate Mahendra
Limaye, who has been crusading
relentlessly against cyber-fraud and
lack of cyber-literacy, has an interesting
MONEYLIFE | 13-26 Oct 2017 | 66
PS.indd 1
crushed to death at Elphinstone Road
Station in Mumbai because of their
criminal negligence in providing basic
infrastructure.
Fortunately, this story has a positive
twist. Mr Lohani had made it clear that
he should not be received at the airport.
p Mr Lohani needs a bigg ovation for
Clearly, the senior official and heads of
departments, who turned up, believed
it was a display of fake
modesty. But Mr
Lohani blasted the
officials for their
red-tape and
need to urge the prime minister
reports media.
He asked
his
Ashwini Lohani,
chairman, Railway Board
question. He asks why the media has
failed to provide a fact-based follow-up of
the cases of Blue Whale-driven suicides
reported by them. Advocate Limaye is,
probably, the first to question why the
entire digital footprint of this game has
even been reported by the police and
suspects that the hue and cry about the
game itself may be false or exaggerated.
He further says, The game is not
staff to give him an entire list of officers
who had received him and promised
action against them. Mr Lohani told the
media that he had finished the protocol
culture at Air India and will ensure that
it is ended in the railways too.
this move. Even if he achieves n nothing
else at the railways, ending this dubious
protocol alone with mean saving
savin
thousands of man-hours of sen senior
management time which should shou have
been employed in ensuring that tha critical
safety-related work is done. We now
ministe to
this culture
take note of this and end thi
across PSUs as well asa the
mindless protocol
protoco attached
parliamentary
to 20-odd parlia
committees that are
waited upon by senior
management o of
PSUs.
available on any website nor are its links
available on any popular social media sites
like Facebook, WhatsApp or Twitter. Nor
do any search engines like Google and
Yahoo have any traces of links leading to
Blue Whale game. Even the Russian social
networking site VK, which was blamed for
facilitating access to the
Blue Whale game, does not
have any notable presence
in India, he says. In fact,
he wonders if the game
even exists, since it has
never been reported to the
cyber-crime helpline that
he runs. Is this another big
hoax that has been played
on the media? What does
it say about those reporting
this Blue Whale game? Will anyone
provide evidence to contradict advocate
Limayes charge?
05-10-2017 15:36:09
Advertisements.indd 2 02-10-2017 12:44:46
 REGISTERED WITH THE RNI UNDER NO. MAHENG/2006/16653. Postal Registration No: MCW/184/2015-2017. POSTED AT PATRIKA
CHANNEL SORTING OFFICE, MUMBAI 400001. Date of Publishing 6 October 2017. Date of Posting Alternate Tuesday & Wednesday.

Advertisements.indd 4 03-10-2017 16:27:49