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Personal Finance Magazine 24 November-7 December 2017 Rs 45


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24 Nov-7 Dec 2017

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A year after demonetisation, Sucheta’s
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and coercive decisions are inflicting pain on Investors have put in more than Rs52,000 crore in these mutual
people and businesses. When government fund schemes. Are they good for you too? Debashis Basu and
Clinton Fernandes explain
officials do not accept mistakes, the chances of
repetition are high. In Crosshairs, she writes
about how Indian black money hoarders
seem to slip through Panama, Paradise and
demonetisation even when the government
12 Public Interest
– How To Eliminate Tedious TDS Errors
– Air Travel Travails
seems earnest in its crackdown. Is it time to try
– Madras High Court Order Protects the Dignity of
out-of-the-box ways to bring this money back? Retirees
Bala’s column, this time, is very interesting
as always; he has an interesting rule-of-thumb
for understanding overvaluation. He says use
the valuation based either on profit or balance
14 Your Money
– Government Says Home-buyers Can Seek Damages in
sheet, as the case may be, to measure your risk. Ongoing Projects
For example, for companies that are valued – Aadhaar Linking Compulsory for Life, Non-life
highly because of growth, compare the price-to- Insurance Policies: IRDAI
earnings ratio (P/E) and return on equity (RoE). – New Minimum Balance for HDFC Premium Customers
The bigger the gap between the P/E and the – Kasa Isles Welfare Association Bids for Completion of a
Part of Jaypee Infratech Project
RoE, the higher is the risk. On the other hand, – HDFC Bank Makes Online Transactions Free for RTGS
for most commodity companies, the farther and NEFT
away from book value + debt per share, the – Indians Working Abroad Will Also Be Covered under
higher is your risk. EPFO
From this issue, we welcome back Mehrab – Delay in 62% of Housing Projects in 50 Indian Cities
– Supreme Court Asks Banks, Telecom Companies Not To
Irani to our regular list of contributors, which Create Panic among Customers
will strengthen our personal finance coverage.
Also, don’t miss Prasanna’s fascinating coverage
of the shocking developments in the Supreme
Court about corruption charges, which the
mainstream media has kept rather quiet on.

Debashis Basu  Disclaimer: Moneylife has a policy of not allowing its editorial staff to
buy and sell stocks that are written about in the magazine. All personal
transactions in individual stocks are subjected to internal disclosure rules.
MONEYLIFE | 24 Nov-7 Dec 2017 | 4

Content.indd 2 17-11-2017 18:54:09

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Volume 12, Issue 21
24 November–7 December 2017

Debashis Basu
Editor & Publisher

Sucheta Dalal
Managing Editor

Editorial Consultant
Dr Nita Mukherjee

Editorial, Advertisement,
Circulation & Subscription Office
315, 3rd Floor, Hind Service Industries
Premises, Off Veer Savarkar Marg, Shivaji
Park, Dadar (W), Mumbai - 400 028 SHED WHITE ELEPHANTS?
Tel: 022 49205000 This is with regard to “Abolish income-tax,
Fax: 022 49205022
E-mail: levy 8% GST after bringing black money from
abroad, says Dr Swamy”. As an ex-government
employee, I have seen such wastefulness and
E-mail: extravagance in government expenditure that Mutual Fund investments
Subscription e-mail words like criminal negligence would not do are subject to market risks,
read all scheme related justice to them. Forget running after impossible documents carefully.
dreams like black money recovery or income-
tax abolition. Just create laws about fiduciary
New Delhi
DDA Flats, J-3/66, Kalkaji, responsibility of government-funded projects, using
New Delhi - 110 019 means like RTI (Right to Information), and we Write to
will see government expenses shrink by 40%-60%. the Editor!

Instead of fuelling the inflation and corruption
cycle, government will chase innovation to take
a prize
1st Floor, 13/1, 7th Main Road,
1st Cross, Saibabanagar, Srirampuram, up only productive projects and will, of its own,
Bengaluru - 560 021
shed the white elephants. That will improve the
taxman’s credibility and, hence, compliance.
Kolkata I know what I am suggesting is avant-garde; but
395, Lake Gardens, Kolkata - 700 045 someone like prime minister Narendra Modi can,
Tel: 033 2422 1173/4064 4318
at least, do this. It is totally within his control.
But no; he, too, just like the Congress, is going
Moneylife is printed and published by on announcing thousands of crores of projects
Debashis Basu on behalf of to each state, and letting money be siphoned
Moneywise Media Pvt Ltd and
published at 315, 3rd Floor, off from these projects because they are not
Hind Service Industries Premises, going to be beneficial to the economy in any
Off Veer Savarkar Marg, Shivaji Park,
Dadar (W), Mumbai - 400 028 way.
Editor: Debashis Basu
Manoj Khare, by email


This is with regard to “Why a New Consumer Protection Law Alone
Total no of pages - 68, Including Covers Is Not Enough” by Sucheta Dalal. While it’s well known that India
has the most voluminous Constitution of all nations in the world, I
doubt if any other nation has as many laws as India. Besides, despite 
RNI No: MAHENG/2006/16653

MONEYLIFE | 24 Nov–7 Dec 2017 | 8

Letters.indd 2 14-11-2017 19:09:26


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


Appalling Reality
T his is with regard to
“Auditor, Regulator, Rater:
and Exchange
Board of India),
Can They Get Away with a PFRDA (Pension
Mutual Fund investments
Consent Plea?” by Sucheta Dalal. Fund Regulatory are subject to market risks,
read all scheme related
In the last paragraph, she has and Development documents carefully.
said, “...would make us seem like Authority), IRDAI
a banana republic.” As a senior
journalist, I suppose, she has used
(Insurance Regulatory
and Development Congratulations
all her wisdom and experience in the statement. If so, Authority of India), Sharad Shah
it is an appalling reality of India! TRAI (Telecom
All regulators, auditors, bankers, raters, SROs (self- Regulatory Authority
regulatory organisations), etc, make tall claims of of India), CBFC CLOCK
‘protecting small/ retail investor’ or in the name of (Central Board of
common man. But, in reality, all of them are for Film Certification),
‘chairs’, and the power/pelf that can be drawn from etc. They are all an
the chair, during their tenure and post-retirement. additional burden on
No one really cares for the common citizen and for the common citizens,
values/ethics! while they take them
Look around, and you will see that banks are the for a ride, generation Sharad Shah

biggest mis-sellers of all products of insurance, after generation.

mutual funds, etc, and what is the result of such acts Banana republic
by banks? Those who fight may get their dues and all or not, I am
others are likely to be cheated and would go down as convinced by my
losers. experiences that
Check out, how all regulators have failed in the India is not a vibrant, robustt ddemocracy
racycy tthat holds
hat ho
ha h
simple basic duties that they are supposed to uphold: its citizens first, in any sphere of life!
RBI (Reserve Bank of India), SEBI (Securities Sharad Shah, by email

 ‘fighting’ for ‘independence’ for over 100 years, India BAD DEBTS GROW!
continues to have most laws that were enacted during This is with regard to “Why It’s TimeTo Revisit Income
the very same British rule that they opposed. Our Tax on Individuals” by R Balakrishnan. A businessman
politicians have done the greatest disservice to the never invests anything from his pocket. Most of the
nation by not reviewing and overhauling these archaic businesses run on the money of the banks. Businessmen
laws of the British era and replacing them with laws get richer day-by-day and the banks get poorer as
more in tune with our times. bad debts grow. The common man, the bakra, the
India has the worst legal system (I refuse to call it a scapegoat, has to pay the taxes to run this drama. This
criminal justice system, as it doesn’t dispense justice) is our type of luxurious most liberal, socialist, secular,
among large countries in the world. Unless law democratic peoples’ republic.
enforcement is robust and the legal system delivers TC Shivswamy, online comment
prompt verdicts, instead of after decades, having more
laws has no meaning. Also, every single law is made ANXIOUSLY AWAITING THE VERDICT ON
with enough loopholes for protecting rogue politicians, AADHAAR
if and when they get caught. India’s legal system is The judgement on validity of Aadhaar is heading
sold-out to the rich and powerful, while millions of towards the slog overs and, definitely, towards a
poor and helpless people languish in jails well beyond nail-biting finish. In the meanwhile, a whole lot of
the period they would have served even on conviction. us, including Moneylife readers like me, are resisting
I don’t see any light at the end of the tunnel! attempts from numerous agencies to force us to link
Ramesh I, online comment up with Aadhaar. At the workplace, it was resisting 

MONEYLIFE | 24 Nov-7 Dec 2017 | 10

Letters.indd 4 14-11-2017 19:10:15


 seeding of the PF (provident fund) account with vehicles dirty and filthy. They take a bath and ease
Aadhaar; with the bankers, it is a daily barrage of themselves in the open.
SMSs and emails pushing a link with Aadhaar; I-T The whole idea of swachch Bharat comes to naught
(income-tax) returns, a hurried filing before linking with commercial vehicles’ illegal parking. Not even a
Aadhaar and the PAN (permanent account number) single case of such violation—towing away or other
became mandatory; and, now, to handle the mobile legal measures—is ever seen on the records of the
operator’s pressure to link the number with Aadhaar. authorities concerned for violations of law. It is the
Not to forget, the mutual fund and insurance linking as duty of the government to provide enough parking
well. I can try and resist and ask my spaces. Parking, in fact, should be free for
wife to put up with this for a few all vehicles, as one-time parking charges
weeks; but it is a struggle to explain are collected at the time of buying a car!
the logic to my aged pension-earning Further, it is a fallacy that higher parking
parents who get stressed at the mere charges will help in solving parking
mention of a deadline. problems. A lot of black money is created
It is like they say in a Kenyan by the parking mafia at present—where
proverb, ‘when elephants fight, it is there are no authorised car parking
the grass that gets hurt’. The ordinary charges, this mafia collects it illegally. To
citizen is not at all given a thought control the parking mafia, authorities
by the heartless system. Anxiously must take suitable action and advertise in
awaiting a decision that impacts the media—newspapers, TV and FM radio,
lives of sava sau karod deshwasi. etc—giving a complete list of authorised
Rajaram, online comment parking sites and rates, until the whole
country is made free parking for all
This is with reference to Your Money snippet,
“Roadside Parking in Specific Residential Areas in HOST FAMILY WAS GOOD
Delhi Will Be Paid Parking” (Moneylife, 13-26 October This is with reference to “Airbnb: Home Stays
2017). The idea of charging a fee for parking of cars Anywhere in the World” by Yazdi Tantra. My cousin,
in Delhi colonies is an abandoned thought; in March who travelled France for about 10 days, had booked
2017, it was, rightly, dropped. It is most absurd and accommodation through Airbnb. As I also travel
is not a viable solution. If parking attendants are regularly within and outside India, he suggested to
expected to manage the arrangement, it would only me that I try Airbnb. I booked Coorg/Karnataka;
add to the problems of residents’ security concerns. everything was as good as claimed/shown on the site.
In fact, commercial vehicles parked around colonies Again, I booked for Pune home-stay with the charge
and on roadsides must be charged; such vehicles just 25% of what I used to pay to any reasonably
should be towed away, rather than private vehicles. good three-star hotel. At both places, Coorg and Pune,
Commercial vehicles—like tempos, trucks—light the host family was cordial and saw to it that I was
vehicles’ drivers and attendants, often, collude and this comfortable.
results in petty crimes and makes whole area near such Bharat Gandhi, online comment

Letters: Mumbai 400 028 or faxed to 022- complaints about current 400 028 or call 022-49205000 or
Letters to the Editor can be 49205022. Letters must include subscription and books, write to fax to 022-49205022.
emailed to editor@moneylife. the writer’s full name, address us at
in or can be posted to: The Editor, and telephone number and may or to Subscription Manager, Unit Advertising: For information and
Moneylife Magazine, Unit No. 316, be edited. No. 316, 3rd Floor, Hind Service rates, email us at
3rd Floor, Hind Service Industries, Subscription Service: Industries, Off Veer Savarkar or call
Off Veer Savarkar Marg, Dadar(W), For new subscription requests, Marg, Dadar (W), Mumbai 91-022-49205000.

11 | 24 Nov-7 Dec 2017 | MONEYLIFE

Letters.indd 5 14-11-2017 19:10:41

Public Interest
How To Eliminate Tedious TDS Errors
hy are depositors plagued been computerised, customers find An internal newsletter of
by mistakes banks commit that TDS is wrongly computed, the Corporation Bank Officer’s
in deducting tax on fixed or wrongly deducted, despite Organisation (CBOO) reveals that
deposits (FDs)? Banks are mandated submitting the relevant forms, or TDS compilation is done by each
to deduct tax at source (TDS) on wrong deductions happen, especially branch with very little time given to
annual interest income of Rs10,000 when FDs are being renewed. This the officers to verify and remit the
and above, when a depositor has is a serious harassment, because tax collected. This leads to errors,
which not only anger customers
but have stressed out bank officials
as well, because, if collections
from customers fall short, or TDS
remittance is delayed, it attracts
a penalty. The draconian tax
rules are leading to mistakes and
haunting bank officials when wrong
deductions are made. A further
twist arises from the fact that bank
branches are burdened with the job
of compiling TDS and transferring
no permanent account number banks cannot refund the wrong it to a temporary current account
(PAN) or has not submitted deduction; the tax refund can only which has its own issues in
Form 15G or 15H (applications be claimed by individuals filing a remittance through netbanking.
to ensure no deduction of tax if needless tax return to claim it, even The CBOO general secretary,
income is not taxable). In practice, when the income is below the tax Satish Shetty, has now demanded
although banking operations have threshold. that TDS must be compiled and 

empowered to cause permanent

Air Travel Travails damage by threatening to classify
him/her as unruly and be put on a

T he viral video of Indigo Airlines

staff manhandling a passenger
and pinning him to the ground
the passenger could well be at the
mercy of the airline which has been
‘no-fly list’.
A sharp social media message
that has found plenty for
has triggered a giant stream of ‘forwards’ lists how the silence
jokes and memes about how of customers has given airlines
the Indigo treats its staff. The the upper hand allowing
incident also brought home the them to charge for every
fact that disaggregated airline service (premium-priced food,
customers are increasingly at convenience fee for booking
the mercy of airlines due to online when it ought to be
their inability to get together discounted, seat selection fee,
to demand their rights. In the surge pricing, which makes
Indigo case, the ill-treatment of travel on holidays unaffordable,
the passenger caused outrage and reduction in free hand
and inquiry, only because it was baggage and check-in baggage
recorded and released on social allowance). Since there are
media. When no such visual only a few airlines which can
documentation is available, gang up, competition no 

MONEYLIFE | 24 Nov-7 Dec 2017 | 12

Public Interest.indd 2 16-11-2017 20:54:44

 remitted from the head office, which
has all the data in the core banking Madras High Court Order
software. He also wants a resolution
to the issue of TDS being deducted Protects the Dignity of Retirees
with relevant forms submitted,
without holding officers responsible
for the error which are not really
O n 5th November, the Madras High Court took suo moto cognisance of a
letter written by a senior citizen and, treating it as a PIL (public interest
litigation), ordered the Tamil Nadu government to, periodically, inspect all
their fault. Why this has not been old-age homes in the state and ensure compliance of rules in accordance
done, despite TDS issues being faced with the law. A status report is to be submitted in two weeks. The Court
by customers of all banks is the order asked the government to ensure that senior citizens residing in such
big question. The problem is not homes are not denied basic amenities of a life of dignity.
limited to Corporation Bank. For The order is a big step forward in the fight for their rights by elders
instance, State Bank of India’s (SBI’s) residing in the retirement townships of Coimbatore. Moneylife readers may
customers, especially those whose recall our detailed coverage (Cover Story, 9-22 June 2017) of the victorious
bank was merged with the giant legal battle S Krishnamurthy, an 80-year old, in the Madras High Court (Writ
SBI, find that bank officials are not Petition Number 22967 of 2015) in 2015. He had asked the Court to direct
familiar with the software and are the Tamil Nadu government to set up a specific regulatory authority for
making mistakes in TDS compilation senior citizens’ homes in the state. Although S Krishnamurthy won the court
and deduction. A few banks battle, the war to have the order implemented carries on.
harass senior citizens by making it This time, the bench comprising Chief Justice Indira Banerjee and Justice
mandatory to submit Form 15H M Sundar
online when they are unfamiliar with took suo moto
computers. Between draconian and action on a
impractical tax rules and bankers letter written by
working on faulty systems, it is the Sangameswaran
ordinary customer, especially the Krishnan,
senior citizen, who is the scapegoat. resident of
But who is listening?  Dhyanaprashta
 longer works. According to social retirement
media posts, airlines are coming home in
up with new gimmicks that seem Coimbatore
aimed at fattening their bottom- that had failed
line. For instance, one post says that to deliver on the promises made to his family, including nutritious food
airlines callously offer no support to and medical care. He has paid an interest-free security deposit of Rs13
passengers stuck in long check-in lakh for a 20-year lease deal. While the action by the Madras High Court is
queues causing them to miss flights; an important step forward, one needs a mechanism to ensure that elders
they are then offered the next flight do not have to approach the courts every time for redress. Moreover,
ticket at a steep price difference. retirement homes have sprung up across the country on the promise of
We don’t know if this is a deliberate allowing affluent or middle-class elders a serene, hassle-free retirement.
strategy; but the fact is that there is The relatively nascent business (barring some shining exceptions) is high
little recourse if you are the victim on promises but not bound by any regulation to deliver on them, over the
of such a strategy. The government long term. The need of the hour is a set of regulations issued by the Central
rarely reacts until public outrage government. Moneylife Foundation, which had conducted the first ever
snowballs into a huge controversy. In study of retirement homes in India, took up the issue with Hardeep Singh
the Indigo case, the issue has already Puri, minister of state for housing and urban development. Mr Puri has
died down which means that we agreed to have the issue examined and was very positive about the need
should not expect any change until for appropriate regulations to protect middle-class Indians who pay for such
a bigger incident causes even more homes in the expectation of hassle-free silver years. 
outrage! 

13 | 24 Nov-7 Dec 2017 | MONEYLIFE

Public Interest.indd 3 16-11-2017 20:55:25

Your Money

Government Says Home-buyers Can Aadhaar Linking Compulsory

for Life, Non-life Insurance
Seek Damages in Ongoing Projects Policies: IRDAI

B uyers in ongoing projects can

seek compensation from a builder
under the Real Estate Regulatory Act
builder for acts committed prior to
registration, in an ongoing project.
How many penalties will he have to
T he Insurance Regulatory and Development
Authority of India (IRDAI),India’s insurance
regulator, has mandated all insurers—life
(RERA) even if the developer had pay?” They asked, “If a builder whose and non-life—to link the Aadhaar number
committed a breach and failed to registration is revoked—as allowed of policyholders to their policies. A circular
give possession before the Act came under RERA for defaults or ‘unfair informed life, non-life and stand-alone health
into force, practice or insurers that linking of Aadhaar number to
the Central irregularities’— insurance
government will he only policies is
informed the have to pay mandatory
Bombay High compensation under the
Court. or an interest Prevention
The per month to of Money-
government, an allottee or laundering
through buyer? Why (Maintenance
additional should he be of Records)
advocate general Anil Singh, is made to pay, especially, if it is not Second Amendment Rules 2017.
presenting its arguments to defend, known how long it takes for the The amended rules make Aadhaar linking
justify and explain why RERA, building to be completed then?” What mandatory for availing financial services
enacted last year, is reasonable, valid happens when a registration is revoked including insurance and also linking existing
and a vital statute to rein in rogue ,was another query. insurance policies. However, IRDAI has not
builders. The High Court is hearing a “It is the original builder who specified any deadline for linking of Aadhaar
clutch of constitutional challenges to will have to pay the compensation or number with the existing policies. It will be
the law. A bench of Justices Naresh interest and not the new builders who a major task for the non-life insurers to link
Patil and RG Ketkar, assigned the task, will only serve as contractors with no Aadhaar with motor insurance policies, given
had a series of questions to ask. rights in the project. Can a bona fide the huge number of vehicles that are insured.
Keen on understanding the buyer who has not received his flat be
intention of the lawmakers, the judges punished and the defaulting builder
observed, “You are penalising a protected?” asked Mr Singh.

New Minimum Balance for

Kasa Isles Welfare Association Bids for HDFC Premium Customers
Completion of a Part of Jaypee Infratech Project H DFC Bank has changed the requirement
for its premium customers by mandating
that they now keep Rs1-lakh balance a month
A group of flat-buyers from Kasa Isles, a Jaypee Infratech project, are pitching to
take over some of the apartment blocks and construct it themselves. Over 600
buyers from the 16 towers of the project in Noida’s Sector 129 have come together
from the earlier requirement of Rs1-lakh
balance a quarter. Changing the eligibility for
under the umbrella of Kasa Isles Welfare Association and submitted their proposal to its ‘Classic’ banking programme, HDFC Bank
the resolution professional appointed by the National Company Law Tribunal. now requires that customers would have to
They have approached the insolvency resolution professional with a formal offer. maintain the new minimum balance from
Aman Behal, a core committee member, said that the Association will need around 9th December, according to mailers sent to
Rs200 crore to complete the project and is hoping to scale up the membership to customers. Customers of Classic banking
over 1,200 members. The Association’s proposal has met with scepticism as far as account get waivers on some services—
the court-appointed interim resolution professional and the lenders to Jaypee are cheque deposit, stop payment of cheque and
concerned who want to avoid splitting the assets as part of the resolution plan. standing instructions.

MONEYLIFE | 24 Nov-7 Dec 2017 | 14

Your Money.indd 2 17-11-2017 17:46:04

On chequebook issuance, HDFC

HDFC Bank Makes Online Bank said a customer can avail one
chequebook of 25 leaves free only
Transactions Free for RTGS and NEFT once in a year in contrast to two
such chequebooks earlier. However,

H DFC Bank has made online

transactions through Real Time
Gross Settlement (RTGS) and National
online transactions through RTGS
and the NEFT from 1 November
2017. However, any NEFT or RTGS
the cost of requesting an additional
chequebook (25 leaves) has been kept
unchanged at Rs75 each. Also, if a
Electronics Funds Transfer cheque is returned due
(NEFT) free of cost. On to insufficient funds,
the other hand, various such cheques will now
charges for cheque-related attract a penalty of
transactions as well as Rs500 each.
request for additional leaves “The revision
will become costly from in chequebook and
December 2017 for non- cheque return charges
managed savings and salary is applicable only to
accounts. non-managed resident
According to the revised savings and salary
fees and charges for savings customers effective
and salary accounts, customers transaction carried out at the Bank December 1, 2017,” read the Bank’s
will not have to pay any charge for branch will be payable. notice.


Delay in 62% of
Indians Working Abroad Will Also Be Housing Projects in
Covered under EPFO 50 Indian Cities

I ndians working abroad can

exempt themselves from their
host country’s social security
(CoC). They can apply for the CoC
online and can get it too,” he said.
Mr Joy said there is a simple one-
A ccording to the findings of a survey by
Liases Foras, an independent non-
brokerage real estate company in India, 62% of
scheme and get covered by EPFO page application form available under-construction housing projects across 50
(Employees on EPFO’s Indian cities are delayed. The percentage for
Provident Fund website for the delayed flats/apartments stands slightly higher
Organisation), purpose. at 64%. Nearly 30% of under-construction
Central Explaining apartments are delayed by two or more years.
provident fund the benefits The government had recently informed the
commissioner of the scheme Bombay High Court that, in Maharashtra alone,
(CPFC), VP Joy, he said, “The 530,000 apartments in under-construction
said. An online scheme is of projects were delayed, and that more than
facility to avail great help for one-fifth of these were delayed by more than
the benefit has Indian workers three years. The Court had asked the housing
been made going overseas and urban development ministry to provide
functional. for a limited period of time. The details and the number of delayed projects. The
“We have made the whole biggest benefit they get from Bombay HC is holding daily hearing of cases
process employee-friendly. opting for the CoC is that their filed by real estate developers challenging
Employees going abroad to work money is not blocked for a long RERA and seeking to keep incomplete projects
can get a certificate of coverage time in the host country.” out of the Central law.

15 | 24 Nov-7 Dec 2017 | MONEYLIFE

Your Money.indd 3 17-11-2017 17:46:27

Your Money
BANKING companies for creating panic by
sending customers messages
Supreme Court Asks Banks, Telecom Companies saying their accounts will be
deactivated if they don’t link them to
Not To Create Panic among Customers Aadhaar.
“I don’t want to say (so) but I

T he Supreme Court sought the

government’s response on four
petitions challenging the constitutional
also get messages,” said Justice Sikri,
referring to the sometimes umpteen-
a-day text messages threatening
validity of the Aadhaar Act and deactivation for not linking one’s
linking of bank accounts and mobile Aadhaar to one’s bank account and
numbers with the 12-digit biometric mobile phone number. The top court
identification number. asked these institutions to avoid
A bench comprising Justices scaring people in this manner, while it
AK Sikri and Ashok Bhushan, however, was hearing a plea from social activists
said that banks and mobile service- to restrain the Centre from linking
providers must mention the deadlines their accounts to the Aadhaar Aadhaar to bank accounts and mobile
– December 31 and February 6 – in numbers. The apex court, however, phone numbers until a Constitution
SMSs sent to customers on linking pulled up banks and mobile telephone bench decides its validity.


Quiz no

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

draw from correct entries and answers published in the Mutual Fund
investments are quote!
issue dated 4 January 2018. Send in your answers to subject to market risks,
read all scheme related with the Quiz no., name, address & documents carefully.
telephone number before 13 December 2017.
1. In the Moneylife analysis of liquid mutual fund (MF) 5. How much are the assets under management (AUMs) of
schemes, what is the lowest TER (total expense ratio) for ICICI Prudential Liquid Scheme, according to the latest data
regular plan schemes? available?
a. 0.56% b. 0.78% a. Rs27,409 crore b. Rs27,964 crore
c. 0.19% d. 1.05% c. Rs27,998 crore d. Rs26,556 crore

2. Among liquid MF schemes in the Moneylife analysis, what is 6. Who is the author of the book, Mad Money Journey?
the highest TER (total expense ratio) for direct plan schemes? a. Amish Tripathi b. Rashmi Bansal
a. 0.19% b. 0.11% c. Mehrab Irani d. MG Parameswaran
c. 0.09% d. 0.78%
7. What is the meaning of voilà?
3. When was Republic TV launched? a. There it is b. It has vanished
a. 1 May 2017 b. 5 May 2017 c. Abracadabra d. End of magic show
c. 5 May 2016 d. 1 May 2015
8. Under which Section of the Income-tax Act can a revised
4. In which town of Gujarat was Mohitraj Prabhatsinh Rathod return be filed after an error is noticed?
a driver? a. Section 80-G b. Section 143(1)
a. Surat b. Valsad c. Section 80-D d. Section 6
c. Rajkot d. Junagadh

In all, 12 readers got all the answers right last time. The answers to Moneylife Quiz-270 are: • 1-d. Debt mutual fund
The winner of Quiz-270 is Rajendra Phophalia from schemes are free of risk • 2-b. Rs4,28,000 crore • 3-d. 63%
Jodhpur. Congrats! You win a personalised clock with • 4-b. London • 5-d. Section 80-G of the Income Tax Act • 6-a. Vishal
an investment quote! Sikka • 7-c. 1950 • 8-a. Dartmouth University

MONEYLIFE | 24 Nov-7 Dec 2017 | 16

Your Money.indd 4 17-11-2017 17:47:15
News & views with a big difference
them are considered non-maintainable,
Shocking! Banking
probably because of the cumbersome
Ombudsman awards 24 process to be followed before filing a
orders out of 119,758 complaint. The numbers are shocking.
complaints During FY16-17, BO offices across
the country received over 119,758
Although the Reserve Bank of India complaints; but there were awards in only
(RBI) has recently amended the Banking 24 cases—a shocking 0.02% of cases filed.
Ombudsman (BO) scheme, fresh data on bank customer at all. The numbers show This data was obtained by Hardik Vasani
complaints filed with it reveal a system that the BO continues to close and reject based in Ghatlodia through a query filed
that does not work for the depositor or thousands of complaints—over half of under Right to Information (RTI) Act

DS Kulkarni Default: Liabilities could be as high as Rs5,400 crore

Pune-based DS Kulkarni (DSK) group, which had defaulted on repayments to numerous depositors, owes thousands of
crores of rupees to banks and financial institutions. These will get top priority, in case Deepak Sakharam Kulkarni, the
group promoter, wants to repay. Depositors will be at the end of debtors’ line and would get their money, only if DSK
group has assets more than its liabilities which seems unlikely

SAT quickly sets aside SEBI order on Gujarat CM Rupani for market manipulation; Rupani
had failed to reply to SEBI Notices
The Securities Appellate Tribunal (SAT) has set aside an order passed by the adjudicating officer of Securities and
Exchange Board of India (SEBI) against 22 entities for alleged manipulation in trading in Sarang Chemicals Ltd.

Pincon Spirits admits arrest of its chairman Monoranjan Roy, but mum on why it failed
to update the exchanges
Kolkata-based Pincon Spirits Ltd has admitted that its chairman Monoranjan Roy was arrested by the police on
2nd November from Bengaluru airport and is in the custody of Jaipur Police till 9 November 2017. The company gave this
clarification as sought by BSE, based on a news item published by Moneylife

RTI Empowerment: Patients are scarce at Pt Bhimsen Joshi Hospital in Mira Bhaindar,
finds activist Krishna Gupta
Probably for the first time, a Right to Information (RTI) activist has used the Section 2(j) of the RTI Act to conduct
a physical inspection of a public premise. The premises in question were that of the 100-bed Pandit Bhimsen Joshi
(Temba) Hospital, a new facility run by the Mira Bhaindar Municipal Corp (MBMC)

RTI exposes flaws un-calibrated speed guns used by Delhi traffic police
The next time you are accused of speeding, when you believe you are within the rules, you could well be right—no
matter what the reading on the speed guns used by the traffic police to catch you and impose a fine. When Delhi-based
Savyasachi Marwaha was intercepted and fined for speeding, even when he was driving his car at low speed, he decided
to get to the bottom of how the system worked.

EXCLUSIVE VIEWS On issues that matter to you

Banks Recapitalisation: Why can’t EPFO link Employee

The need is Rs5 lakh different PF accounts appreciation and
crore to meet Basel III through one UAN? recognition: How
capital norms Veeresh Malik to go about it
Dr B Yerram Raju Jayant Kadambi

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Web Content.indd 1 17-11-2017 17:45:17

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

From Panama to Paradise – No Sign of

the Bulk of Indian Black Money
et another big global leak of confidential papers Paradise papers, is a British citizen. Ms Radia made
exposing rampant tax evasion and hardly any headlines for the leaks of her taped conversation
really big names from India—isn’t it strange? lobbying for ministerial portfolios, pushing policy
And, yet, India ranks a high 19, out of 180 countries, changes and influencing media on behalf of her
in terms of the number of people named in the clients—Mukesh Ambani and Ratan Tata.
documents. The Paradise papers, a leak of 13.4 million The Indian names, published so far, include those
confidential documents pertaining to clients of two of the Sun group founded by NL Khemka (according
law firms—Appleby, based in Bermuda and Asiaciti to The Indian Express, it has 118 offshore entities
of Singapore—were released by the International and is the second largest client of Appleby), which is
Consortium of Investigative Journalists (ICIJ) earlier likely to face detailed scrutiny. There is the flamboyant
this month. The leaked documents, allegedly, reveal Vijay Mallya, whose troubles continue to mount. The
tax evasion by rich and powerful individuals and Indian Express alleges that Vijay Mallya diverted
companies across the world through artificial entities over $1.5 billion through four offshore subsidiaries
registered in 19 tax havens. of United Spirits Limited (USL), India as loans. When
The Indian government was extremely swift in Diageo acquired control of USL for Rs1,225 crore,
announcing a multi-disciplinary committee last year to these funds, shown as debts were waived. In effect,
investigate the Panama papers (a similar leak in 2016 the Appleby documents indicate that Diageo paid
of 11.5 million files from the Panama-based law firm over Rs10,000 crore to Mr Mallya which has been
of Mossack Fonseca & Co which included the names hidden from the Indian shareholders, regulators and
of several leading politicians around the world but tax authorities. This is bound to come up, with Mr
nothing of great significance from India). It has, once Mallya’s extradition hearings in the United Kingdom
again, been quick in announcing the reconstitution of begin shortly.
this committee, in response to Paradise papers. The Superstar Amitabh Bachchan figures again in the
committee comprises officials of the Reserve Bank of Paradise papers (he and daughter-in-law Aishwarya
India (RBI), central board of direct taxes, enforcement Rai figured in the Panama papers too); but, since
directorate and the financial intelligence unit of the he has chosen to remain silent, it is not clear if any
finance ministry. But, having offshore accounts is not, wrongdoing would eventually be established. Similarly,
in itself, a crime; the government permits setting up what is reported so far, about several political figures,
of overseas bodies for bonafide business activities and including Jayant Sinha, Manyata Sanjay Dutt (wife
Indians are also allowed to invest as much as $250,000 of actor Sanjay Dutt), or BJP member of Parliament
overseas. Ravindra Kishore Singh, appears so tiny that the
Moreover, although the Paradise papers threw investments could easily be done under the limits
up 714 Indian names (only a few have been released permitted by the government for individuals. The
so far), all Indian-sounding names needn’t be Indian Indian Express reports that Dr Ashok Seth, chairman
citizens. For instance, corporate lobbyist Niira Radia, of Fortis-Escorts and Padma Bhushan awardee, had
whose companies figure in what are now called the shares in a Singapore-based company whose stents he 

Dec 2017
2014 | 20

Crosshair.indd 2 17-11-2017 18:53:20

 prescribes to patients. He has, since, sold the shares. An the Panama papers, had found that only 147 are
investigation by the committee would reveal whether actually actionable and its investigation has led to the
there is any financial impropriety, although it raises disclosure of Rs792 crore so far. The I-T department
issues about moral propriety. Entities being investigated has already launched criminal prosecution in five cases
in what is known as the Rajasthan ambulance scam, and conducted searches, or issued notices, in several
including politically exposed persons (PEPs) figure in others. Amang these is Vijay Choudhary, promoter of
the Appleby papers. The documents ought to provide Zoom Developers, one of the biggest bank defaulters
additional ballast to the probe. (which owes nearly Rs3,000 crore), was arrested by
Unfortunately, none of this adds up to huge the enforcement directorate in May this year under the
revelations about laundered money. We have all Prevention of Money Laundering Act (PMLA).
seen the stupendous increase in wealth flaunted by And, yet, none of this adds up to the big war on
politicians across the spectrum without any visible black money that one expects. The numbers cited,
means of income to justify their lifestyle and spending. over the years, are mind-boggling. A Hindustan Times
Even Subrata Roy, Amitabh Bachchan’s s former buddy, report in November 2016 said, “Goods and services
still has plenty of money to splash on advertisements, worth at least Rs17 trillion were exported by Indians
hoardings and hiring stadiums for public meetings in over the past four decades but did not remit an
18 cities, despite spending two years in jail for failing equivalent amount in foreign exchange.” This money
to make bail payments in accordance with a Supreme was probably siphoned abroad through phoney export
Court order. deals or under- and over-invoicing of goods. Other,
Remember, India is apparently hard at work trying more modest estimates of black money have ranged
to track down black money since 2008, when we from $181 billion to $1.8 trillion, according to Prof R
(albeit reluctantly) obtained information from Germany Vaidyanathan’s book Black Money and Tax Havens. A
on those who had accounts with LGT, a Liechtenstein 2014 study by the Associated Chambers of Commerce
bank. There were three other lists of money stashed and Industry had estimated black money stashed
overseas even before the Panama and Paradise leaks. abroad at $2 trillion.
There was a list of 700-odd names from data stolen The Panama or Paradise papers are a step forward,
from HSBC’s Geneva branch that was handed over by but still not the bombshell one has been led to
the French government; two other lists of stolen data expect. So what is the way forward? Dr Subramanian
were available from Denmark and Finland. Swamy, member of parliament, has outlined four
Although these were non-serious efforts under the ways, in an article in The Hindu. First, use the Swiss
previous government, the NDA (National Democratic government’s cooperation to confiscate money held in
Alliance) has shown greater determination. A new Swiss bank accounts by using Switzerland’s Law on
Black Money Act was passed in 2015; a voluntary International Judicial Assistance in Criminal Matters.
disclosure with very steep penalties coincided with Secondly, follow the French or German method of
the harsh demonetisation of currency that threw the using ‘inducements’ to secure leaks of information
country in turmoil;; none of these has led to from specific banks and act on it. Unfortunately, India
any significant revelations.
elations. The multi- has not done much even when these governments
disciplinary group (MDG) probing information. Third, use the US
offered specific inf
black money stashed ed overseas has arresting and accusing Swiss bankers
method of arresti
already submitted five reports to the of espionage and forcing the government to hand
Supreme Court appointed
pointed special over information about Americans holding illegal
investigation team (SIT) headed by Swiss bank accounts.
accou The fourth suggestion,
two former judges of the apex court. says Dr Swamy, w was made by the jurist Fali S
The SIT, in turn, hasas submitted Nariman; it was tto invoke a resolution of the
a sealed cover report
ort to the UN Convention against Corruption and to
Supreme Court. pass a law to nationalise all bank accounts
Further, the of Indian citizens
c in the 90-odd nations
income-tax (I-T) where black
bla money is stashed. Next,
department, on get possession
poss of the money through
inquiring into bilateral
bilatera negotiations with each of
426 names these countries.
revealed by The
T Modi government is high on
rheto about black money, but will
Subramanian Swamy it dare
d to experiment with these
has the answers for
how to unearth black bolder
bo suggestions to get real
re 

21 | 24 Nov-7 Dec 2017 | MONEYLIFE

Crosshair.indd 3 17-11-2017 18:53:40


A Coercive State, in Full Flow

t was, finally, the anniversary of the currency objections raised by industry associations to the oppressive
demonetisation that brought out some truths about the and punitive provisions in the statute were ignored as
source of the many goof-ups that put people through the Bill was rushed through parliament. Moneylife had
untold harassment. Ironically, the truth was told in a huge, published a Cover Story ( Moneylife 4-19 September 2013)
self-laudatory article that had the temerity to dismiss the on the implications of these brutal provisions. There is a
mistakes, as almost inconsequential. Before we go into it, lot worse in the Companies Act, 2013, which gives the
let’s look at a couple of issues, to put into perspective how government power to cripple company directors through
hasty decisions have thrown people and companies into fines and imprisonment.
turmoil. This is not limited to demonetisation (where new Let us return to the drastic decision to demonetise
rules and circulars were issued almost 84% of currency that first exposed
every day), or to the ill-prepared launch this regime’s penchant for rash
of the Goods and Services Tax (GST) and harsh decisions. The best that
where, again, the government is back- supporters of demonetisation can
peddling furiously, correcting mistakes claim is that the benefits will come
and trying to smoothen things after it later. The government argues that
is clear that business and industry was laundered money is now sitting in
hurting badly and struggling to cope. bank accounts and this leaves a trail
The haste to trap black money which it is unearthing. The decision
credited to bank accounts has led to a to de-register 200,000 shell companies
decision to disqualify 300,000 directors (a good and bold decision), and the
of companies merely for delayed filing foolish one to disqualify directors,
of annual accounts. This is a separate is a part of the attempt to bolt the
exercise from the decision to strike stable doors.
off 200,000 shell companies that the Whether it succeeds will depend
prime minister (PM) has mentioned A good chunk of the on whether the tax machinery is
in many of his speeches. Since this money credited to bank able to prevent this money from
has not made media headlines, the being withdrawn without paying tax
accounts will be quietly
government is in no hurry to find a or even paying just 33% like other
solution. Innumerable large, medium,
converted in connivance law-abiding taxpayers. Ultimately,
small and tiny companies are in deep with tax officials while a everything is in the hands of individual
turmoil along with a few lakh other few raids will keep up the tax assessing officers and, at this level,
companies where the disqualified façade of recovery anecdotal reports indicate that there
persons are directors. Company is no visible reduction in corruption
officials crowding registrar of companies’ (RoC) offices or the tendency to harass taxpayers.
are told that the government recognises the problem and We recently had the opportunity to listen to two bulge-
some palliative will be offered, but nobody knows when. bracket taxpayers, who are routinely harassed, despite
Meanwhile, companies are scrambling to find new paying tens of crores of rupees in tax. The first one said
directors to replace those who have been disqualified there is an improvement under this government—not
without so much of a warning or a show-cause notice. because there was no attempt to harass him, but because,
And, if any of our readers believes this is a criticism of when he yelled back and asked a senior tax official whether
this government’s functioning, it is. But let me also point he ‘seriously wanted to harass a law-abiding taxpayer?’,
out that these draconian provisions were pushed through the officer backed off. There is fear of action, he concludes.
in the Companies Act, 2013, piloted by Sachin Pilot, a The second one said he has no time or inclination to face
Wharton School (US) alumnus, when he was minister harassment and humiliation, despite paying full tax (I must
of corporate affairs under the terrible second term of mention here that there is no scope anymore to fudge tax
the United Progressive Alliance (UPA). Thousands of liability on income from investments). So his accountant 

MONEYLIFE | 24 Nov-7 Dec 2017 | 22

DIFFERENT STROKES.indd 2 17-11-2017 17:50:05


 is allowed to make reasonable payments (bribes or speed drama about Rs500 and Rs1,000 being declared tools
money) that are routinely demanded. Clearly, a good of hoarding black money?
chunk of the money credited to bank accounts will be 2. Secondly, he claims, “lower denomination notes were
quietly converted in connivance with tax officials while a issued in plenty.” If that were true, why were 12 billion
few raids will keep up the façade of recovery. Senior tax pieces of lower denomination pieces pushed into the
officials tell us that this is happening already. market in a hurry only after public anger began to
This brings us back to whether blundering officials at mount?
the Reserve Bank of India (RBI) increased our hardship by 3. Had Mr Gandhi’s grand plan anticipated the large
botching up the implementation of demonetisation. In a gap between Rs100 and Rs2,000, creating a void in
jaw-dropping claim, R Gandhi, former deputy governor of denominations for daily transactions? If so, shouldn’t
the RBI who was in charge of the demonetisation exercise, the Rs200 note have been put into circulation before the
claims in an article in The Economic Times that large-scale demonetisation exercise, since it was unlikely to arouse
preparation preceded demonetisation and its “execution suspicion. Instead, Rs200 has been introduced last,
was to the script; and unanticipated almost as an afterthought and is still
mid-course corrections were minimal.” not available in sufficient numbers.
He also says that the many policy 4. Outrageously, Mr Gandhi writes:
reversals, course-corrections, etc, “Yet another blow to our plans was
were also part of the plan and even the public behaviour (or should I say
the misuse of Jan-Dhan accounts non-behaviour) relating to digital
(people being used as ‘money mules’ payments.” He had ‘factored’ that
to launder money) and corruption of with people’s cash vanishing overnight
bank officials was anticipated and and stringent limits on withdrawal,
factored in! In other words, if asked to people would switch to ‘RTGS/NEFT,
do it all over again, the same hardship, Internet and mobile banking. Since
or worse, will be inflicted on people, RBI does not speak to people, he is
because RBI thinks everything went In a jaw-dropping clueless about the fact that most of
as per plan. If some lives were lost, claim, R Gandhi, who these transactions need some learning
that was mere collateral damage. In was in charge of the and confidence level; while people
another media interview, he said, the demonetisation in RBI, did open PayTM and other e-wallets,
only thing he would do differently is claims that large-scale RBI itself did not put in place digital
to print more Rs500 notes (this was preparation preceded safety regulations until Moneylife
done by asking the RBI security press it and its “execution Foundation campaigned vociferously
at Mysuru to take up printing of Rs500 for it, long after the demonetisation
was to the script, and
after public anger began to explode). exercise was over. Does this indicate
The preposterousness of these claims
unanticipated mid-course meticulous planning?
requires some response. So here are a
corrections were minimal” 5. Mr Gandhi’s article omits
few quick points. uncomfortable issues that are still
1. Mr Gandhi explains that stocking 200,000 ATM unsettled. For instance, many non-resident Indians
machines with 2000-rupee notes was expected to (NRIs) and those who were not in the country in
increase the number of ‘touch points’ to withdraw November 2016 and deposited demonetised currency
money. But that didn’t happen when it was needed, in designated RBI branches are still waiting for their
did it? The biggest goof-up of failing to stock ATM money to be credited into their accounts. Why didn’t
machines, anticipating the need to calibrate each the plan consider this? Or is it okay for the State to
one physically for smaller size notes is probably the make ones hard-earned money worthless for things
biggest blunder in handling demonetisation. Mr Gandhi beyond their control?
dismisses this as a minor issue saying, “with the benefit Clearly, when a coercive State is in action, planning is
of hindsight, I wish we had handled it differently.” He not necessary; people are expected to put up with hardship
has also claimed elsewhere, that introduction of 2000- in the nation’s moral and ethical interest. 
rupee note was irrespective of demonetisation and
RBI had even recommended introduction of notes of Sucheta Dalal is the managing editor of Moneylife. She was
Rs5,000 and Rs10,000 denominations. If so, doesn’t awarded the Padma Shri in 2006 for her outstanding contribution
it make you wonder about the timing, sequence and to journalism. She can be reached at

23 | 24 Nov-7 Dec 2017 | MONEYLIFE

DIFFERENT STROKES.indd 3 17-11-2017 19:30:58


Why Do These Liquid Funds Have

1% Expense Ratios?
hen the equity markets are expensive, some a minimum.
investors re-balance their portfolios and shift Though this practice is spread across all liquid schemes,
to liquid schemes or bank fixed deposits. This this has effectively reduced the difference in the returns
is done with the anticipation of re-entering equities when between the regular and direct plans. Yet, there are a couple
the market becomes reasonably priced. But if the liquid of schemes that have a big difference in the expense ratios
scheme delivers 6%, an investor in the highest tax bracket which has created a gap in performance. Here are the three
will make a meagre 4.2% by way of annual post-tax returns. liquid schemes whose regular plans’ expense ratios are

High Expense Schemes

Scheme Name Regular Plan TER 1-year Returns Direct Plan TER 1-year Returns
Reliance Liquid- Cash Plan 1.05% 5.80% 0.11% 6.80%
Principal Money Manager 1.14% 6.50% 0.31% 7.20%
L&T Cash 0.78% 5.40% 0.09% 6.25%
TER: total expense ratio as on 31 October 2017

We already have liquid schemes which have dropped from higher than those of their direct plans.
6% and are now delivering 5.5%. But there is another angle When it comes to liquid schemes, even a 0.25%
to liquid schemes. Imagine if one were to be careless about difference in returns can mean a lot. Individual investors
how one is investing and continues to invest via regular may initially find investing in direct plans tricky compared
plans. What would be the returns and can investing via to the normal distributor route. There are a few platforms
direct plans improve it? which charge an annual fee to purchase direct plans; but
Well, think of this. Does it make sense to pay a there is a free service-provider also, viz., MF Utilities. We
distributor 1% out of the 5%-6% you make on a category have shortlisted a few liquid schemes with low gap in
of investment which is low-effort and offers similar returns expense ratios of their regular and direct plans, coupled
across its category? Asset management companies have with good returns. You can park your surplus in any of
observed this and kept the difference in the expense these schemes’ regular plans through your mutual fund
ratios of regular and direct plans of liquid schemes at distributor. — Clinton Fernandes 

Liquid Schemes
Scheme Name AUM (Rs Cr) Regular Plan TER (%) Returns (%)
1-year 3-year 5-year
Axis Liquid 20,503 0.12 6.60 7.49 8.03
Kotak Liquid 12,564 0.03 6.54 7.46 8.02
ICICI Prudential Liquid 31,633 0.24 6.54 7.47 8.04
DHFL Pramerica Insta Cash Plus 6,938 0.09 6.58 7.51 8.02
Kotak Floater 11,223 0.07 6.59 7.53 8.08
L&T Liquid 14,513 0.14 6.58 7.48 8.02
Tata Money Market 12,105 0.14 6.57 7.48 8.06
HSBC Cash 4,780 0.15 6.55 7.44 8.02
Invesco India Liquid 10,268 0.12 6.58 7.50 8.05
Reliance Liquid 27,343 0.19 6.57 7.48 8.04
AUM: assets under management as on 31 October 2017

MONEYLIFE | 24 Nov-7 Dec 2017 | 24

Fund Pointer.indd 2 17-11-2017 18:56:31


Hot and Cold Stocks of Mutual Funds in October 2017

In October 2017, Axis Bank and SBI Life Insurance Company were the most preferred stocks of Indian
mutual funds. The net purchases of Axis Bank were Rs814.51 crore, of which HDFC Mutual Fund made net
purchases worth Rs539 crore and Franklin Templeton Mutual Fund bought shares worth Rs236 crore. Yes
Bank and HCL Technologies were the most sold companies. The net sales of Yes Bank shares were Rs327
crore, of which HDFC Mutual Fund sold shares worth Rs41 crore.

Top Buys (Rs Crore) Top Sales (Rs Crore)

Axis Bank 814.51 Yes Bank (326.98)

SBI Life Insurance Company 462.34 HCL Technologies (298.56)
Apollo Tyres 434.36 UPL (262.11)
GAIL (India) 422.94 ICICI Bank (258.96)
Cyient 384.62 Adani Ports and Special Economic Zone (218.47)
Reliance Industries 337.02 IndusInd Bank (205.33)
PI Industries 295.57 Zee Entertainment Enterprises (198.35)
Bharti Airtel 289.21 Coal India (195.01)
Larsen & Toubro 287.03 Hindalco Industries (185.68)
ICICI Lombard General Insurance Company 237.15 Tata Steel (174.92)

HDFC Mutual Fund

Axis Bank 539.38 Adani Ports and Special Economic Zone (186.97)
Edelweiss Financial Services 143.69 Maruti Suzuki India (151.93)
RBL Bank 140.04 UPL (142.79)
Tata Chemicals 121.84 Aurobindo Pharma (43.55)
Larsen & Toubro 121.76 Yes Bank (41.27)

ICICI Prudential Mutual Fund

HCL Technologies 137.14 Kotak Mahindra Bank (147.18)
Infosys 136.39 Bajaj Finserv (131.28)
Exide Industries 132.36 Coal India (102.11)
Housing Development Finance Corporation 88.61 Rain Industries (89.36)
HDFC Bank 80.14 Tata Motors (85.77)

Reliance Mutual Fund

Cyient 264.65 HCL Technologies (388.31)
NLC India 137.22 UPL (159.31)
Bharti Airtel 132.47 HDFC Bank (157.63)
Tata Motors 121.12 Tata Steel (122.75)
Larsen & Toubro 112.31 Infosys (109.29)

Franklin Templeton Mutual Fund

Axis Bank 236.21 State Bank of India (250.00)
Oberoi Realty 102.75 IndusInd Bank (218.13)
Dr Lal PathLabs 92.68 Gujarat Pipavav Port (105.39)
BASF India 64.81 Exide Industries (88.12)
Housing Development Finance Corporation 61.65 Coal India (86.38)

25 | 24 Nov-7 Dec 2017 | MONEYLIFE

Fund Facts.indd 2 17-11-2017 18:57:57


Preserving Capital… and

Sanity in a Bull Market

ull markets show us as being very smart. All our In a bull market, what I will talk about is the rate
chosen stocks work out very well or at least the of earnings growth, the attractiveness of the sector and
majority of them. The change from one week to the justify a buy decision. The stock has moved up nearly
next is on the quantum of gain we see in our portfolio. five times in a year.
Good times call for temporary suspension of logic and work However, I take a deeper look and I see that the business
on improving our ‘hearing’ skills. We have to hear the name is contracting; debtors and sales are sometimes estimated
of the stock before the others. But, while we celebrate the numbers. The company has increased its total indebtedness
joys of a bull market, let me try and engage your attention more than proportionate with its sales growth. And,
with some mundane things going by my experience,
about investment analysis. it unlikely to be able to
At a recent get-together on keep the show going, at
balance sheet analyses, we this rate. What it means
were discussing the section is that the company will
on analysis of cash flow. constantly need cash more
I had cited examples than its sales growth, since
of companies that are it generates its revenue
apparently profitable, only by deploying more
but it takes some detailed fixed assets. So it has to
analysis to predict where reach a scale and size that
the company is headed. The is such that it can reduce
profit & loss and balance its incremental growth
sheet analysis has to take us to a size that is smaller
beyond the obvious. What than its realised profits.
happens is that in a bull Cash flows tell the story
run, even a bhangar, or kachra company looks like a great of ‘probable’ success or failure. When companies keep
company. There are similarities on the surface. But, deep accessing the markets frequently for raising money, the
inside, there are killer differences. Let me reproduce the probability of longevity is low. Unless the total leverage
‘What you see’ in a company that is in a ‘hot’ sector and keeps reducing, the risks continue to be very high. Of
is on the hi-speed price elevator in this market: course, one can always argue about a bright future, so
investing or not investing in the stock is a function of an
investor’s gullibility.
A Hot Stock FY15-16 FY16-17
Similarly, in this market, we see people looking at
EPS (Rs ) 20 26
the book value of the share and commenting on the
Share Price (Rs) 1,000 — replacement price. They conveniently forget the total
P/E 50 38 debt. Maybe, the assumption is that banks are not to be
Dividend Per Share (Rs) — 1.00 taken seriously. Recently, there was a discussion on old
9 Research Reports with Buy ‘brands’. In the marketplace, ‘brands’ and ‘virtual space’
seem to give the best valuations. So everyone is busy
trying to locate once-popular brands like BPL, Garden,
Maharajah, Kelvinator, etc, and place their bets on them.
FY17-18 FY18-19
Of course, it is imprudent to speak about the financials. It
EPS Forecast 31 40
is very unlikely that we will see old brands coming back.
One Year Ago Price (Rs) 226 At best, someone business rival may emerge as a ‘buyer’
Steady Upward Moving Curve No Jerks and simply kill the brand. These companies would have
a lot of debt, lost key people and need a lot of resources 

MONEYLIFE | 24 Nov-7 Dec 2017 | 26

column_Balakrishnan.indd 2 17-11-2017 17:03:09


 to fight for space. You have to hope that there are others who have similar
As the bull market keeps rolling on, there is a constant thoughts and chase the stocks that you buy. We all probably
search for themes. Commodity plays become value and know how to board a running train. The more difficult
‘growth’ plays. And the action is far higher on the mid- part is knowing when to get off. There is no one who can
cap and small-cap space because this is where sketchy predict when the bull gets tired and the bear takes over.
information works best and it is easy to plant stories. No one can forecast which will be the proverbial ‘straw on
Mostly, these shares are illiquid and, very often, it is easy the camel’s back’. A bull market that ignores all warnings
to move prices. Thanks to social media, today, a large body may cool off for no reason and it does not take long for
of the unsuspecting public investors also are roped into panic among the weak and late buyers to set in. Further,
the ‘pump & dump’ game. The fixers never had it so easy. in a market where many buyers are leveraged, the leverage
Most of us lose our bearings in a acts as a panic accelerator when the
bull market. We forget that two and tide turns. And, when the selling
two is always four. The arithmetic of A simple rule for this starts, you will only see constant
investment returns does not change. lower circuits on the stocks that
Measuring returns is still a function
market: use either the seemed to defy gravity.
of what profits come in on invested valuation based on A simple rule for this market: use
money. It is not about some vague profit or the balance either the valuation based on profit
matrices like eyeballs, footfalls and or the balance sheet, as the case may
brand value. All of these have to,
sheet, to measure your be, to measure your risk. For most
finally, result in a single number that risk. The bigger the gap commodity companies, the farther
can be measured. It is not very wise between the P/E and away from book value + debt per
to compare equity with the way, share, the higher is your risk. For
say, a painting is valued. Going to
the RoE, the higher is companies that you buy because of
a cocktail party, you have the first the risk brands, use the price-to-earnings
two drinks, probably. After that, ratio (P/E). Measure the return on
it is the drinks that have you. Bull equity (RoE). The bigger the gap
markets are like that. Very often, you will find that you between the P/E and the RoE, the higher is the risk. And, as
have no idea of what stock you are going to buy, even a the P/E keeps crossing the RoE, the risk jumps higher. This
day in advance. There are hundreds of ideas that come is a simple back-of-the-envelope number and I use it when
and go and what you may, finally, act upon is a matter of I am tempted to trade in a market such as this. Preserving
circumstances or impulse. capital in this market should be the big motive, not search
When investment decisions violate processes, and for quick money, thanks to our newfound smartness. 
are driven by thinking that ignores investment logic,
the outcome is dependent on luck and crowd behaviour. The author can be reached at

What’s Your Bahana for Not Subscribing?

I am not interested in honest & insightful advice on money matters

I never have any problems with banks, credit-cards or insurance companies

I always invest on the basis of tips from friends and brokers

For subscription offers
Finance bores me to tears that are a steal, look for
a form elsewhere in this
I would rather spend two year’s of knowledge on one evening of eating out
issue or our website at
I always buy from the newsstands

27 | 24 Nov-7 Dec 2017 | MONEYLIFE

column_Balakrishnan.indd 3 17-11-2017 17:03:43

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MSSN GB (Insurance 1-3 ).indd 2 16-12-2016 17:29:15

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MAS is a SEBI-registered investment adviser and part of Moneylife, India’s most unbiased and
pro-investor research and information group. We run India’s best personal finance magazine,
Moneylife. We are not afraid to call a spade a spade. We are India’s only media company to have
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MSSN GB (Insurance 1-3 ).indd 3 16-12-2016 17:29:45

expensive; hence, avoid it.
The entry age for a customer
is a minimum of 18 years and
a maximum of 65 years. The
maximum maturity age is 80 years.

INSURANCE TRENDS The maximum policy term is 40

years (30 years, if RoP chosen).
A lower premium rate is offered
New products, regulations, features and options, for women and non-smokers.
interpreted from your perspective Total sum assured: minimum of
Rs25 lakh and no maximum limit,
subject to underwriting.
L i f e I n s u r anc e It is better to avoid RoP option; Being an offline term plan, the
buying pure term plan is your best premium is higher than online term
PNB MetLife bet for life insurance. Avoid Fixed plans. For example, a 30-year-old

‘Mera Jeevan
Income and Increasing Income non-smoker male buying Mera
option as these are, usually, not as Jeevan Suraksha Plan for Rs25
Suraksha Plan’ cost-effective as lump sum payout. lakh Lump Sum payout will pay
Lump Sum is the best option, if the premium of Rs5,600 for a 30-year

P NB MetLife’s ‘Mera Jeevan

Suraksha Plan’ is an offline term
plan with various benefit options—
family can manage the one-time
payout without hardship. Making
family members financially literate
policy term. The same person
buying online term plan Aegon
Life iTerm for the same cover for
Lump Sum, Life Partner (lump sum is an important task irrespective a policy term of 45 years will pay
payout for self and for spouse), of whether you buy a term plan or premium of Rs3,492. It means
Fixed Income and Increasing not. that the person pays 60% higher
Income. The Plan offers the option If the Life Partner benefit option premium for Mera Jeevan Suraksha
to increase your life cover at key is chosen, both, the life assured and Plan for a 30-year term compared
life milestones by paying additional spouse, are protected within the to iTerm for a 45-year term.
premium. In addition to death, same plan. If something were to
diagnosis of terminal illness is also happen to the life assured, spouse Regulation
covered in Mera Jeevan Suraksha would receive a lump sum death
Plan. benefit and all future premiums Aadhaar Link with
There is an additional option as
well—Return of Premium (RoP).
within the policy would be waived
off. In case of subsequent death of Insurance Can Be
If the life assured survives to the the spouse, the family will receive a Challenge
end of term, all premiums will be an additional lump sum. Joint
paid back if RoP option is chosen. life insurance works out to be
T he Insurance Regulatory
Development Authority
of India (IRDAI) has made it
PNB MetLife ‘Mera Jeevan Suraksha Plan’ Premium
mandatory for companies to link
Male Age in Years Policy Term Years Premium Rs RoP
Aadhaar with insurance policies
28 30 6,200 No from general, life and stand-alone
28 30 11,900 Yes insurers without awaiting further
38 30 11,500 No instructions. The move can create
38 30 22,300 Yes logistical challenge for insurance
companies for life, health, vehicles
48 30 25,350 No
and all other types of covers. There
48 30 47,500 Yes
is a possibility of insurers even
58 20 48,900 No stopping claims payments until
58 20 1,00,750 Yes policyholders submit their Aadhaar
Premium for Rs50 lakh sum assured lump sum payout details. Will the policyholders get
a raw deal and insurers another 

MONEYLIFE | 24 Nov-7 Dec 2017 | 30

Insurance.indd 2 17-11-2017 19:02:30


 reason to keep the claim payment Form 60 for availing financial case of two-wheelers and Rs2 lakh
float under the garb of Aadhaar services, including insurance. in case of four-wheelers. The cover
compliance? If the policyholder Due to lack of any more details, for unnamed vehicle passengers is
does not have Aadhaar and files IRDAI circular can cause more mere Rs50,000 per person. The
a claim with policy in-force, will confusion among insurers and the increase in PA cover is a welcome
the claim not be paid? If the insured. Time will tell if pending step, even if it means additional
policyholder dies without having claims get delayed and the existing premium to be paid by the vehicle-
Aadhaar linked to the policy, will policyholders are made to rush for owner. It will help the owner in
the nominee/legal heir face difficulty compliance. case of an accident.
with claim payment? The policy to compensate
There is no timeframe given M otor Insurance vehicle-owners by PA cover was
for existing policies to be linked to introduced 15 years ago. Today,
Aadhaar; but will the policyholders HC Directs IRDAI the PA cover of Rs1 lakh to Rs2
still be inconvenienced? In a terse
To Enhance lakh is inadequate to meet medical
expenses of bodily injury or death.
Accident PA Cover The judges directed IRDAI to
to Rs15 Lakh enhance the compulsory PA cover
from the existing amount to not
less than Rs15 lakh. The judges

T he Madras High Court (MHC)

has directed IRDAI to enhance
compulsory personal accident
also directed IRDAI to undertake
and complete such an exercise
within six months from the date of
(PA) cover from Rs1 lakh to not receipt of a copy of the judgement.
less than Rs15 lakh. It will help The bench directed IRDAI to have
circular, IRDAI says that linkage vehicle-owners paying premium consultations with all stakeholders
of Aadhaar number to insurance for vehicle cover to get adequate before enhancing the premium
policies is mandatory under the compensation in the event of death for getting compensation under
Prevention of Money-laundering or bodily injury. Indian motor tariff the compulsory personal accident
(Maintenance of Records) Second compensation payable to the legal cover. It will have to be seen when,
Amendment Rules, 2017. It said heirs in case of death or bodily and how much, increase in PA
the amended rules have made it injury suffered by the owner of the cover IRDAI enforces for vehicle
mandatory to link Aadhaar, PAN/ vehicle is restricted to Rs1 lakh in insurance. 

Fine Print over vehicles in use without the

mandatory TP cover. As per
It will help bring down the time
taken for policy renewal. The
Insurance Information Bureau data, application is currently available
Government To Track there are only 65 million vehicles for Android users and the iOS
Uninsured Vehicles with TP cover against nearly 210 version will be launched soon.

G overnment has asked

insurance companies to
share details of insured vehicles.
million registered vehicles.


The app lists steps to be taken
by the customer with video
capturing for a 45-second video.
The data on uninsured cars and Self-inspection Application The customer will also take the
two-wheelers will be kept on
an online website which can be
accessed by every state transport
H DFC ERGO has launched an
application for self-inspection
of motor vehicles. It will allow
image capturing screen of the
Registration Certificate (RC),
all four sides of the vehicle and
department and traffic police to customers to get instant policy close-up pictures of the existing
take action against the vehicles renewal of their motor insurance damages seen on the car. The
plying on the road without policy without having to wait for video and photos are uploaded
third-party (TP) insurance cover. a physical inspection of the vehicle and submitted for inspection to
There is a growing concern by an authorised motor surveyor. the central team for approval. 

31 | 24 Nov-7 Dec 2017 | MONEYLIFE

Insurance.indd 3 17-11-2017 19:01:43

Investors have put in more than Rs52,000 crore in these mutual fund schemes. Are
they good for you too? Debashis Basu and Clinton Fernandes explain

he thumb rule for investors, when it comes along with high level of liquidity and safety. As the name
to parking surplus funds for safety of capital, implies, they are highly liquid and can be redeemed
is to go for fixed deposits (FDs) or savings instantly. Liquid schemes offer more attractive returns
accounts of banks. For more flexibility and than savings account. Additionally, you can withdraw
liquidity, one may also use liquid schemes the money anytime you like without any penalty charges
which are a category of mutual fund (MF) schemes or exit-load. All these features are so well known to
that invest primarily in very short-term instruments investors that they blindly put their funds into these
like certifi cates of deposits, treasury bills, commercial schemes, without checking the tax implications on the
paper, term deposits and money-market instruments. gains.
The primary objective is to provide returns that are Liquid schemes are, of course, not invested in with
higher than interest on savings bank account balances a focus on the long term but more for their convenience 

MONEYLIFE | 24 Nov-7 Dec 2017 | 32

Cover Story.indd 2 17-11-2017 19:03:25


Assets under Management over 3 Years

Corpus (Rs Cr)






Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec-16 May-17 Oct-17

Kotak Equity
K IICICI Prudential E
Edelweiss HDFC
H Reliance Arbitrage
A Equity - Arbitrage Arbitrage Arbitrage Advantage

 and safety. But that does not mean liquid schemes are the price difference. So, if Reliance Industries Limited
the go-to category to park your surplus money, always. (RIL) is trading at Rs874.90 on the BSE (Bombay Stock
There’s another type of scheme, offering the same, or Exchange) and Rs876.10 on the NSE (National Stock
better, returns and safety similar to that of liquid schemes, Exchange), one just needs to buy on the BSE and sell on
with one exception, that is, you don’t pay tax on what the NSE and, thereby, make a risk-less profit of Rs1.20
you earn, if you hold the investment for a year. It does on this transaction. But, for this, you need to already
sound too good to be true which is why we will explain have the stock of RIL on your hands. In the US, you
the details of this amazing scheme category and why could have borrowed the stock but the Indian market
you should add it to your list. We are talking of ‘equity does not have a proper lending and borrowing facility.
arbitrage’ schemes. It does sound fancy and one might The second form of arbitrage, which is more relevant
turn a blind eye to it, but this category will help investors, in our context, is the cash-futures market arbitrage. Fund
especially those in the higher tax bracket, to earn the best managers look for differences in the price of a stock in
returns on their parked money while saving on tax. A the cash market and the futures market. For example, if a
lot of smart people have already figured this out. Take share of Ambuja Cement is currently trading at Rs1,761
a look at the chart above and see how the assets under in the cash market and Rs1,849 is the futures price (0.5%
management (AUMs) of some of the arbitrage schemes higher), they can buy shares of Ambuja at Rs1,761 and
have more than tripled in the past three years. sell a futures contract at Rs1,849, locking in a profit of
Let us get to know what these schemes do; how much Rs88 on this trade. At the end of the month, they sell off
returns one can make on average; and the possibility the Ambuja stock holding in the cash market and square-
of losing money. Arbitrage schemes practise arbitrage, off the futures contract, thereby, netting a profit. They do
or simply, “the simultaneous buying and selling of 12 such trades in a year; so the returns from the capital
securities, currency, or commodities in different markets allocated to these trades would be around 6%. But there
or in derivative forms in order to take advantage of are additional costs, such as brokerage and securities
differing prices for the same asset.” It is a way of trying transaction tax. Rajat Jain, chief investment officer
to make riskless guaranteed profits if one finds such of Principal Mutual Fund, explained why the ‘cash
opportunities. & futures’ combo is widely used for finding arbitrage
Arbitrage works in different ways but the basic opportunities. “Fund managers use stock futures as it is
principle remains the same, which is, finding price a deep and liquid market with low impact costs for most
differences in different markets for the same stock or futures.”
goods. For arbitrage to go as planned, the trader/manager
needs to be really quick in executing the transactions. The ‘Equity Savings Vs Arbitrage’ Debate
For the fi rst method, which is known as inter-market There are two categories of equity-oriented arbitrage
arbitrage, the price difference of a single stock on two schemes: pure arbitrage schemes and equity savings or
different stock exchanges is compared to cash in on income schemes. The objectives of both of these are 

33 | 24 Nov-7 Dec 2017 | MONEYLIFE

Cover Story.indd 3 17-11-2017 19:04:17


Finally, Fix Your

Finances, Forever
Actionable advice on investment that works.
Plus continuous one-on-one online support

No Bias, No Conflict of Interest
MAS is a SEBI-registered investment adviser and part of Moneylife,
India’s most unbiased and pro-investor research and information group.

Subscription to Moneylife magazine is included in MAS Premium Membership

MSSN GB Ad_invest.indd 2 15-12-2016 18:28:46

MAS Benefit #4 - 7

Equity Fund Choices

• Which Large-cap Funds?
• Which Mid-cap Funds?
• Which ELSS?

Fixed Income Choices

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

Investools with
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MSSN GB Ad_invest.indd 3 15-12-2016 18:35:28


 somewhat similar, that is, both practise arbitrage, invest Arbitrage Schemes Vs Liquid Schemes
some portion in debt and money-markets and are equity- Now, we will compare the performance of arbitrage
oriented. But they are not in the same category. Mr Jain schemes with liquid schemes and figure out which one
explains the difference between the two: “Equity savings has performed better.
scheme has an asset allocation in which the pure or
unhedged equity component can go up to 30% of the
portfolio. However, the scheme also adds arbitraged
equity positions so that the gross equity exposure is Liquid Schemes 5-year Returns (%) Arbitrage Schemes
above 65%. As against this, in the pure arbitrage scheme, Escorts Liquid 8.4 7.6 ICICI Prudential
there is no unhedged equity and all equity exposure is Equity - Arbitrage
hedged.” Principal Money 8.3 7.5 Kotak Equity
Manager Arbitrage
Equity savings schemes, are therefore, a mix of pure
equity schemes and arbitrage schemes. Which of the two Essel Liquid Fund 8.2 7.4 Reliance Arbitrage
is better? Are there any advantages to investing in equity
savings schemes over arbitrage schemes? Aditya Birla Sun 8.1 7.3 IDFC Arbitrage
Life Floating Rate
JM High Liquidity 8.1 7.2 JM Arbitrage
10-year Returns Advantage
Indiabulls Liquid 8.1 7.2 SBI Arbitrage
20% Opportunities
15% Aditya Birla Sun 8.1 7.0 IDFC Arbitrage Plus
Life Cash Plus
Kotak Floater - ST 8.1 7.0 Invesco India
5% Arbitrage
Baroda Pioneer 8.1 6.9 HDFC Arbitrage
Liquid - A
31 Oct-08 30 Apr-13 31 Oct-17
Observations: Both the categories are offering good
EEquity Savings EEquity Arbitrage
returns ranging between 7% and 8% approximately.
Compared to savings account interest rate of 4%, both
are definitely better. However, they are just about as
The chart above, of 10-year returns, shows that good as the average bank FD rates over the past five
returns on equity savings scheme are volatile compared years. In some cases, they are worse. But they have better
to those on pure arbitrage schemes. The returns of equity features like liquidity, ease of purchase and redemption,
savings schemes can be compared to hybrid schemes as lower risk and flexibility. If you notice, liquid schemes
both have an equal exposure to the riskier equities and have generated higher returns than arbitrage schemes
safer debt or arbitrage opportunities. Now that this mentioned here. The average returns by arbitrage
difference is out of the way, we can compare the returns schemes were 7.2%. Compare this with the 41 liquid
of pure arbitrage schemes with those of liquid schemes. schemes available in the market, which delivered an
average 7.9% in the past five years. Looking at the
numbers, liquid schemes appear to be a clear winner,
Methodology but not for everyone. Returns have to be measured post-

W e took the average quarterly return for five

years ending 30 October 2017. We then
multiplied it by four to arrive at the yearly returns
tax and, the moment we bring the tax angle, the picture

fi gure. Rolling returns offer better understanding The Tax Advantage

of the schemes’ returns compared to point-to-point Liquid schemes are categorised under ‘debt schemes’
ones. For liquid and arbitrage schemes, there were and gains are taxable as per the individual’s tax slab
some schemes with higher than average returns; but if the holding is less than three years or at 20% with
we preferred schemes which have existed for more indexation benefit, if the investment is held for more
than five years. than three years. Arbitrage schemes are categorised as
equity schemes and profits are taxable at 15%, if held for 

MONEYLIFE | 24 Nov-7 Dec 2017 | 36

Cover Story.indd 4 17-11-2017 19:04:46


 less than one year, and tax exempt if held for more than money to liquid schemes for safety, flexibility and
a year. So how much returns do arbitrage schemes earn liquidity. Past returns data tell us that if your holding
over liquid schemes, if held for a year, after considering period is more than a year but less than three years, you
tax? The figures will surprise you. should ideally park your money in arbitrage schemes.
In the chart ‘Performance over 10 Years’, we have
Arbitrage Vs Liquid Schemes: Post-tax Returns compared the average yearly returns of arbitrage
As the chart below clearly shows, those in the 20% and schemes with liquid schemes to see how both moved over
30% tax bracket would have made 1%-2% more returns, the 10-year period ending 31 October 2017. One can
if they had invested in arbitrage schemes. Earning 7.9% see that there is a correlation in the direction of returns.
and paying a 30% tax, lowers the actual yield from liquid The returns have been trending lower as interest rates
decline. There are two factors that boost the returns
from arbitrage schemes: market volatility and rising
Post-tax Returns interest rates. Liquid schemes are influenced only by the
trend in interest rate.
Due to growing awareness of financial products
among a section of investors, huge inflows have come
into arbitrage schemes in the past five years. This has
made fund managers worry over the lack of arbitrage
opportunities available in the market. Mr Jain states,
“Clearly, if there is too much money behind arbitrage
schemes, it would impact returns. While returns will
moderate if there are many people doing arbitrage, they
will not go below a particular threshold.”
2014-15 2015-16 2016-17

5% Tax Bracket Concerns

Arbitrage Schemes Liquid 20% Tax Bracket 1. Handling Market Crashes: Usually, futures trade
30% Tax Bracket at a higher price than the cash market, which is the
opportunity for arbitrage schemes. But what if the stock
schemes to a paltry 5.5%; while returns from arbitrage is at a higher price than its futures price, as happens
schemes, being tax-free after one year, flow fully to the during a severe market decline? Can one sell a stock
investors. This post-tax advantage is, often, neglected by and buy futures to take advantage of such a situation?
investors, mostly those in the higher tax brackets, who Unfortunately, as mentioned before, one cannot short
miss out on the extra returns they could have earned stocks in India easily. Hence, ‘reverse’ arbitrage cannot
with similar risk as those on liquid schemes. be done to monetise even the downside. This brings up
One must have surely come across financial advice the question: How do these equity-oriented schemes
that, when you approach retirement or are a couple of handle market crashes? Would investing in these schemes
years away from achieving your goals, transfer your be a mistake, considering these circumstances? We will
find out.
Looking at the chart on the next page, we can see
Performance over 10 Years how arbitrage schemes performed on a monthly basis
from January-2008 market peak till the March-2009
10% lows. This period marked the biggest drop for the broad
market indices: Nifty 50 and the Sensex, both were down
by 50% by the end of March 2009.
None of the arbitrage schemes, which existed during
the market crash, performed negatively in any of the
6% months. This clears a probable misconception investors
might have regarding the risk of arbitrage schemes, since
4% it is classified as an equity scheme.
31 Oct-08 31 Oct-11 31 Oct-14 31 Oct-17 2. Huge Inflows, Fewer Opportunities: Another
Arbitrage concern is, whether the huge inflows will lead to a drop
in performance. This is due to the lack of arbitrage 

37 | 24 Nov-7 Dec 2017 | MONEYLIFE

Cover Story.indd 5 17-11-2017 19:05:06


Monthly Performance





31 Jan-08 31 Mar-08 31 May-08 31 Jul-08 30 Sep-08 30 Nov-08 31 Jan-09 31 Mar-09

K Equity Arbitrage JJM Arbitrage Advantage SSBI Arbitrage Opportunities IIDFC Arbitrage
IICICI Prudential Equity Arbitrage IInvesco India Arbitrage HDFC Arbitrage

 opportunities in the market because of many more definitely expensive to maintain. There is a solution to
arbitrageurs. Returns generated by schemes are based this problem—direct plans of arbitrage schemes—and
on the efficiency of fund manager’s opportunity-spotting you can earn higher returns. The yearly expense ratio of
skills and the trade execution skill of his team. Of course, direct plans is 0.3%, on average. This minor difference
they have software that flags such mispricing the moment can add 0.25% to 0.7% to your yearly returns from
it occurs. But others have such these schemes.
software too and investors do have
to take into account the uncertainty There are additional Anomalies
of the arbitrage opportunity as a There are additional factors
hurdle in earning returns. For this
factors that you need to be that you need to be aware of,
reason, such schemes cannot assure aware of, while investing in while investing in arbitrage
returns; the returns totally, and arbitrage schemes. While schemes. While pure arbitrage
completely, depend on available schemes are available, do not
opportunity. pure arbitrage schemes get carried away by the word
3. Cost-of-carry: This is the are available, do not arbitrage. It may be misleading,
operational cost of entering and get carried away by the at times. Let us check the
maintaining a stock position. When investment objective of BNP
comparing it with liquid schemes, word arbitrage. It may be Paribas Enhanced Arbitrage
where transactions costs, if any, misleading, at times Fund. It says “The primary
occur only during the purchase of investment objective of the
the debt securities, with arbitrage scheme is to generate income
schemes, the cost-of-carry can include costs such as and capital appreciation by investing in a combination
brokerage, securities transaction tax (STT), interest of diversified portfolio of equity and equity related
cost on margin requirements for futures and short-term instruments, including use of equity derivatives strategies
capital gains tax on selling of the stock held in cash. These and arbitrage opportunities with exposure in debt and
costs reduce the actual returns on arbitrage schemes. fixed income instruments.”
4. High Expense Ratios: Arbitrage schemes suffer from Well, it is true that the scheme intends to exploit
very high expense ratios relative to liquid schemes. The arbitrage opportunities; but the main purpose of this
expense ratio for regular plans is, on average, 0.9% scheme is to generate capital appreciation by investing
a year. When you compare this with the expense ratio in equity securities. The whole purpose of getting risk-
of liquid schemes, which is usually in the range of free returns from arbitrage schemes is compromised with
0.1% to 0.3% for regular plans, arbitrage schemes are such schemes and, then, returns witness high volatility. 

MONEYLIFE | 24 Nov-7 Dec 2017 | 38

Cover Story.indd 6 17-11-2017 19:05:40


 So how do you know if the arbitrage scheme you

want to invest in, will be as safe as it should be? Firstly, 3-year Rolling Returns
look for schemes which have the term ‘arbitrage’ in their
scheme name. Secondly, look for the scheme’s objectives,
which should be similar to what we mentioned in the 10%
previous paragraph. What does one do when one reads
words like: “…Scheme also intends to generate long-term
capital appreciation by investing a portion of the schemes 6%
assets in equity and equity related instruments…” or
something like, “…enhance returns with a moderate
exposure in equity & equity related instruments…” or 2%
“…income distribution to the investors by using equity
and equity related instruments…”? We hope you have 31 Oct-14 31 Oct-15 31 Oct-16 31 Oct-17
noticed the similarities in these examples. So, if the
Arbitrage Schemes Short-term Debt Schemes
objectives mention anything about investing in pure
equity investments, or moderate exposure to equity
instruments, it will be evident that the scheme isn’t truly of short-term debt schemes. Future returns from debt
an arbitrage one. schemes will be lower as yields have already fallen to
The key take away from this section is that it is >8%, on average. If interest rates continue to remain
benefi ical for one to visit the scheme information low, and favourable arbitrage opportunities open up in
document before making investments. It will help the stock market, we may, again, see arbitrage schemes
get more data, facts and help you understand your giving returns that are close to those of short-term debt
investment product better. This is related to the point schemes. But this is unlikely. If you intend to park your
we specifi ed earlier—it is important to understand the investment for more than three years, short-term debt
dynamics of the category and the scheme you going to schemes are better than arbitrage schemes.
invest in. We have addressed most, if not all, of the advantages
and disadvantages of arbitrage schemes and also
Comparison with Short-term Debt Schemes compared their performance with equity savings, liquid
We did a bit of additional research on how arbitrage schemes and short-term debt schemes. The conclusion is:
schemes have done vis-à-vis returns from short-term if you are in the higher tax bracket and have a surplus
debt schemes over three years. Holding a debt scheme amount to park somewhere, then, in addition to other
for over three years reduces the tax on the income or avenues, you can invest in arbitrage schemes, provided
gains earned because of lower tax (20%) and the facility you are doing it for less than three years. While doing
of ‘indexation’ on the purchase price. Indexation means so, as mentioned earlier, check for the term ‘arbitrage’ in
infl ating the purchase cost of a product on par with its the scheme’s title and then proceed to check the scheme’s
current value so that gains, accounted for the purpose of objectives to make sure it isn’t indulging in unhedged
tax, reduce. Financial planners, therefore, recommend to equity investments.
investors that short- or medium-term debt schemes should In summary, equity arbitrage schemes are a safe, low-
be held for a minimum of three years to take benefit of risk alternative to liquid schemes. These schemes look for
this tax advantage. We used three-year rolling returns for price difference of a stock in two different markets, using
each year, for example, three-year returns of 2011-14, sophisticated software that buys the stock in cash market
2012-15, 2013-16 and 2014-17. The average post- and sells the futures contract at a higher price. Arbitrage
tax returns for both types of schemes were calculated, scheme’s post-tax returns for investors in the 20% and
considering the consumer inflation index (CII) used for 30% tax bracket are higher than post-tax returns from
the respective years, for indexation, and this is what we liquid schemes. This tax advantage makes arbitrage
found. schemes an attractive option to park your money. The
While arbitrage schemes were competitive for the downside is that there is an exit-load for redemptions
initial three-year periods, the small difference started done within 30 days of investment. The stipulated time
widening as short-term debt schemes gave a higher post- may vary from scheme to scheme; therefore, investors
tax return in the next few years. This could be due to must check the exit-loads of the arbitrage schemes before
higher returns generated from corporate bonds and investing. Also, withdrawal or redemption request might
debentures which constitute a major part of the portfolio take longer compared to that for liquid schemes. 

39 | 24 Nov-7 Dec 2017 | MONEYLIFE

Cover Story.indd 7 17-11-2017 19:06:03


8 Secrets for Women To Achieve

Financial Nirvana
hy do so many women delegate their financial you keep buying the things which you don’t require,
security to a spouse or significant other and very soon, you will have to sell the things which you
allow divorce or death to plunge them into require.
financial difficulty? Why do so many women spend more 3. Learn to budget and save for yourself. Develop a
than they earn and become mired in debt? Why should boys separate kitty for your own self.
always manage all the money? Nobody wants to live a life 4. Don’t use money to make yourself feel good. That type
where they have to spend their time, which is limited, in of a high is fleeting. Instead, do things that promote
exchange for somebody else’s money which is available in self-respect and creativity so you don’t have to seek
abundance. People spend their time earning money which those feelings through just mindless spending.
they don’t value, take loans which they can’t repay, to buy 5. Get some financial education. Learn about protecting,
goods which they don’t require, to impress people who budgeting, leveraging and investing. Believe me, in
don’t matter. It’s the birthright of each individual to achieve most cases, it is simpler than learning to cook and
financial freedom. And it’s more exciting than going
more so for a woman who, on senseless shopping.
even today in a liberalised 6. Get involved in the long-
Indian society, might be term financial decisions of
educated and working your family. Be a part of
but is primarily expected it and give your valuable
to take care of the family contribution—it will
and home. When we ask a improve your family’s
housewife ‘what you are finances as well as boost
doing with your money’, your personal morale.
the typical answer is: ‘I 7. Always ensure that the
don’t know; my husband earning member has a
or father is doing that’. A proper insurance policy as
woman, whether working well as a succession plan.
or not, is always made to depend on the male for her After loving him for his entire life, you would not want
financial needs. A woman takes care of her work as well to curse your husband after his death because of money.
her home; a woman attends to her husband, children as 8. Don’t marry a man because of money; nor divorce
well as the adults; a woman keeps the house as well as a man because of lack of money. Never force your
the image clean; a woman perfectly blends and unites the husband into a job or profession because you think
family with her love, dedication and sacrifice. But can’t that he will earn more money in that job and give you
the same woman manage money? Here are 8 secrets for a safe secured life.
women to achieve financial nirvana: Learn before you earn; protect before it’s taken away;
1. You, surely, take care of your home and family but, budget before you spend; save before you invest; create
along with it, also try to earn some money. It need cash flows as you invest; leverage before it grows; insure
not necessarily be a full-time job or employment; it before you risk; live before you die. Your financial security
can be something which you can do from home or is dependent on your attitudes and beliefs about money
with minimum time. Develop your hobbies and turn and your willingness to take your financial future into
them into profitable ventures. Start small, make a your own hands. Being financially secure and independent
beginning—earning some money will not give you will help you love yourself and your loved ones more. 
financial independence but will give a great boost to
your self-esteem.
Mehrab Irani is the author of acclaimed
2. Control your indulgent mind when you see the next 10 Commandments for Financial
‘sale’ or ‘discount offer’ on your favourite clothes, Freedom and best-seller Mad Money
garments, jewellery, etc. Remember that a 40% sale still Journey, India’s first finance thriller
means that you have to pay the remaining 60% and, if

MONEYLIFE | 24 Nov-7 Dec 2017 | 40

New column.indd 1 15-11-2017 21:12:51


Will NRIs Dump Their PPF and NSC?

game-changing rule from the putting their hard-earned money and get back the money easily?
government has debarred for retirement funds. It should not There are practical difficulties.
non-resident Indians (NRIs) be assumed that PPF being tax- First, NRIs being abroad, may have
from investing in Public Provident free in India means that the NRIs difficulty in communicating with
Fund (PPF) and National Savings don’t pay tax abroad on their PPF the banks in India to convey their
Certificate (NSC) with effect from interest. Depending on their country decision whether to close the PPF
3 October 2017. Under the rule, of residence, they may have to or continue it with 4%pa interest.
PPF and NSC will yield only savings pay taxes on global income which Second, banks may take their own
account interest from time to close the PPF
the day the person account and may
becomes an NRI. even insist on NRIs
NSC investment by having to return to
NRIs will have to be India to close the
encashed, or deemed account, as this is not
to be encashed on the like a withdrawal on
day the status of the maturity.
resident changes to Third, unlike
non-resident. The PPF online FDs, there is
notification says that no online process
the account will be to close the PPF
‘deemed closed’ for account. It only
NRIs which experts means that instead
claim to mean that of the government
NRIs can freely withdraw the PPF includes PPF interest. seeing a mass outflow of PPF
corpus. If so, NRIs will have to Hopefully, NRIs will not be money, it has ensured for itself a
get out of PPF and NSC instead of subjected to PPF lock-in period huge profit by paying a measly
getting 4%pa (per annum) interest. of seven years which can then be 4%pa interest on the NRI
The government has announced followed by partial withdrawal. retirement money soaked up in PPF
the change without any notice Assuming NRIs are free to and NSC. Time will tell how far the
period to existing NRI investors withdraw the PPF corpus, will government’s tightening measures
in PPF and NSC who have been they be allowed to close the PPF adversely impact savers.

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

Date Coupon (%)
0-year benchmark G-Sec yield,
which sets the tone of the fixed- Sundaram Fin Ltd 7.47% 01 Sep-20 03 Sep-18 7.60 INE660A07PE0 CARE AA+

income market, has jumped by 13 REC Ltd 7.95% 12 Mar-27 30 Mar-18 7.58 INE020B08AH8
basis points (bps) in the last fortnight (unsecured)
to end at 7.02% on 15th November. HDFC Ltd 7.20% 01 Sep-20 01 Aug-18 7.50 INE001A07QY3 CRISIL AAA

NSE data as of last trade date of 14 November 2017

G-Sec Maturity Yield to
Date Maturity Dewan Hsg Fin Ltd 9.95% 16 Aug-26 16 Aug-18 8.43 INE202B07HU2 CARE AAA

U.P Power Corporation 15 Feb-21 15 Feb-18 8.14 INE540P07046 BWR AA

19 December 2034 7.45
Ltd 8.97% (structured
28 November 2051 7.43 obligation)

10 November 2033 7.43 Aditya Birla Fin Ltd 8.85% 22 Feb-19 22 Feb-18 7.65 INE860H07CJ8 CARE AA+

G-Sec yields on 15 November 2017 BSE data as of last trade date of 14 November 2017

41 | 24 Nov-7 Dec 2017 | MONEYLIFE

Fixed Income.indd 1 17-11-2017 17:00:51

3 Long-term Stockletters
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The best results from good stocks come when they are held for five years price in the short term.
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StockWatch Stocks and sectors that catch our eye

IFB Agro of growth. In the spirits segment, IFB Agro produces

110,000 litres of extra neutral alcohol (ENA),
Super Growth from by fermenting non-edible grain in its grain-based
distilleries in West Bengal for production of IMIL
Seafood Exports (Indian made Indian liquor) varnishes, perfumes,
essences and flavourings, medicines, drugs and

FB Agro, which manufactures and distributes grain disinfectants, chemical intermediates and personal-care
alcohol, distillers dried drain solubles (DDGS), products. The DDGS that it produces is sold as a value-
carbon dioxide (CO2), organic manure, alcoholic added organic ingredient for poultry, aqua, cattle and
beverages, aqua-feed and processed frozen shrimps for swine feed. In this segment, the company has clients
domestic and export markets, has performed well in like Godrej Agrovet and Suguna Foods. The carbon
the September 2017 quarter. Sales shot up 63%year-on- dioxide division produces food & industrial grade
year (y-o-y) from Rs273.44 crore to Rs446.22 crore. CO2 in bulk as well as in cylinders and is the approved
Operating profit jumped 49% y-o-y from Rs13.36 supplier for Coca Cola and Pepsi. It claims that it is the
crore to Rs19.88 crore, while net profit rose 29% y-o-y sole manufacturer and leading distributor of dry ice in
from Rs8.9 crore to eastern India.
Rs11.48 crore. This In FY16-17,
is in continuation of it operated the
last year’s excellent new plant for
performance when spirits, based on
revenues jumped ‘Eco Smart’ multi-
33% y-o-y, from pressure distillation
Rs621.3 crore to technology, for
Rs829 crore, though the first time with
net profit was up expanded capacity.
only 9% y-o-y from The DDGS capacity
Rs29 crore to Rs32 was also expanded
crore. The stock is trading close to its 52-week high of during FY16-17. IFB Agro claims that its distilleries
Rs757, at Rs679.8, at a price-to-earnings ratio (P/E) operated at an optimum capacity during the year.
of 20.70 and the company has a market-capitalisation However, this business faces competition due to the
of Rs623 crore. Thanks to the increased cash flow, commissioning of a new distillery of Globus Spirits
borrowings reduced from Rs49.63 crore in FY15-16 to during FY16-17. The spirit production in capacity
Rs42.95 crore in FY16-17. What is the source of the surplus states like Uttar Pradesh and Punjab also put
recent surge in profits and is it likely to continue? pressure on margins of the distillery business especially
West Bengal-based IFB Agro has two main business since they are brought into West Bengal, duty-free. IFB
segments: spirits, liquor and ‘spirituous beverages’ Agro, in its annual report, claimed that its earnings
is one and marine products is another. It is this, the before interest, tax and depreciation (EBITDA) margin
second business, which has now become the engine at the distilleries suffered due to significant increase in 

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 Economy’s Prowess database.

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

MONEYLIFE | 24 Nov-7 Dec 2017 | 44

StockWatch.indd 2 17-11-2017 16:52:32


 input costs and the cost increases could not be passed up in the financial results of the September 2017
on fully to the buyers due to competition. Even though quarter. Marine exports in FY16-17 jumped 64% due
IFB Agro is the largest manufacturer of IMIL in West to full functioning of its plant in Andhra Pradesh (It
Bengal with its four bottling plants, in FY16-17, this now has two plants—one in Kolkata and another in
segment managed a revenue growth of only 6%. IFB Andhra Pradesh, for processing its marine products.).
Agro claims that demonetisation impacted the sales of IFB Agro exports value-added premium black tiger
IMIL products in FY16-17. Revenue of IMIL business shrimps to countries such as France, Germany, Russia,
will also be impacted by the decision of the Supreme Italy, Thailand, Japan, Vietnam, USA, Canada and
Court to ban of sale of liquor within 500-metre radius Australia. IFB Agro's fresh catch range includes both,
of highways. ready-to-cook (RTC) and ready-to-fry (RTF), products
The real growth engine is seafood exports. The that are retailed in major towns across the country
global seafood market has grown steadily at a and also used by hotels, restaurants and caterers. The
compounded average growth rate (CAGR) of 4.1% net profit from the marine segment leapt 59% y-o-y
during the period 2014-16. The trade volumes are from Rs6.32 crore in the September 2016 quarter to
reported at $216 billion in the calendar year 2016. As Rs10.03 crore in September 2017 quarter. This more
per Food and Agriculture Association (FAO), estimates than compensated for the spirit and liquor segment’s
that seafood consumption in China, the Middle East, net profit growth of only 4% y-o-y from Rs9.19
East and South East Asia is increasing at a steady crore in the September 2016 quarter to Rs9.56 crore
pace because of income in September 2017
growth and expansion quarter. Revenue from
of the middle class.
Improving Results of Marine Segment the marine aqua-feed
Rs Cr
India is well positioned 12 business shot up 46%
to take advantage of in FY16-17; operating
increase in global seafood 10 margins remained flat,
consumption because 8 despite higher input costs
of our long coast line, and investments made
availability of raw 6 in Aquashops (retail
materials and idle land 4
venture of feed division
available for taking up to boost prawn farming
aquaculture in large 2 with scientific solutions).
scale. Total exports 0
The company expects a
of seafood from India Dec-16 Mar-17 Jun-17 Sep-17 revenue growth of 4% in
was 1.14 million metric FY17-18 in the domestic
tonnes (MT) in 2016-17 marine food business.
compared to 946,000MT in 2015-16 reporting, a jump Entry of new players in the aqua-feed business in
of 20% in volume terms. In value terms, exports were West Bengal may affect growth and margins, the
Rs37,871 crore in 2016-17 as against Rs30,420 crore company feels. It has also incorporated a wholly-
in 2015-16 -- an increase of 24%. owned subsidiary - IFB Agro Marine (FZE), in the
Shrimp continues to be the backbone of Indian Sharjah Airport International Free Zone, to establish
seafood exports and accounted for 38% in volume a marketing and trading outfit to explore untapped
terms of total seafood exports from the country in markets in countries of the Middle East and Eastern
FY16-17against 40% in the previous year. Total Europe.
shrimp exports were around 434,000MT in 2016- IFB Agro’s annual report said that it expects FY17-
17 compared to 373,868MT in 2015-16 in volume 18 will be challenging for all the verticals. It is taking
terms, while, in value terms, they were Rs24,415 crore into consideration a potential threat due to liquor
against Rs20,045 crore in 2015-16. The major export ban in selected states. IFB Agro also claims that a
market has been USA followed by Europe, Japan and recent notification by the government of West Bengal
South East Asia during 2016-17. Over 2011-15, the to convert the distribution of IMIL products under
shrimp culture industry registered CAGR of 25% and ‘Corporation Model’ wherein West Bengal government
has grown threefold from 151,465MT in 2010-11 will undertake wholesale distribution of Indian-
to 434,000MT in 2016-17. IFB Agro is taking full made foreign liquor (IMFL) may impact margins and
advantage of this growth opportunity. This shows volumes during 2017-18. For some strange reason, 

45 | 24 Nov-7 Dec 2017 | MONEYLIFE

StockWatch.indd 3 17-11-2017 16:53:12


 the management has been overly pessimistic in its Chemical India Private Limited, its Indian subsidiary,
forecast of marine exports in the annual report which which together now own 64.97% of the capital. The
has just been released. Strangely, even as the company reason for the Shroff family selling their entire stake
was getting ready to report 59% growth in marine is not clear; but, surely, the future seems bright, with
segment in the September quarter, after a 20% growth strong manufacturing capabilities and the brand image
in the June quarter, and a 64% growth last year, the of Excel, while there will be synergy with the research
management feels that marine exports will continue and development capabilities of Sumitomo Chemical.
to be under margin pressure due to competitions from
South East Asian and Latin American countries. Also, Risk/Concern
that the high level of raw material prices and exchange Growth was muted over the past two financial years
fluctuations will continue to weigh on marine exports. but it has started picking up again. The agrochemicals
Does the management think that the growth of the past industry is highly correlated with the monsoon
few quarters is unsustainable?  which was not good in the past two years; there
were drought-like situations in many parts of the
country. This led to sluggish growth in sales. Revenues
E x c e l C r o p C are grew at just 4.5% for FY14-15, fell by 13.2% in
FY15-16 and grew by 9.8% in FY16-17. Despite a
Better Growth strong brand image and vast distribution network
in the country, poor monsoon, lack of widespread
Prospects irrigation infrastructure in India and also inadequate
rainfall in countries like Brazil (to which it exports

E xcel Crop Care is a Mumbai-based agrochemicals

manufacturer, previously run by Ashwin Shroff
and Dipesh Shroff. The company is an established
agrochemicals), affected sales. Another concern was
China’s exports, which don’t seem to a big threat
anymore. Chinese regulators are becoming more
manufacturer of insecticides, weedicides, fungicides, stringent on environmental effects of the chemicals
fumigants and rodenticides. industry; hence, exports at
It also manufactures soil and lower price have become
plant nutrition products, bio- less viable for the Chinese
pesticides and plant growth manufacturers. Excel Crop
promoters and regulators. Care says that genetically
In June 2016, the company modified (GM) seed is also a
went through a change in threat to their business; but,
management and promoters. in our opinion, the costs of
The Shroff family sold its using such seeds outweigh the
entire stake to Sumitomo benefits which farmers realise
Chemical Company Limited after a few years of using GM
(Japan) and Sumitomo seeds. 

Product-wise Segmental Revenue Growth Rate


8% Metal Phos 50%

Herbicides 30%
Insecticides 10%
Soil & Nutrition, -10%
Bio-pesticides, Plant
31% Growth Promoters -30%
Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17
SSales Growth y-o-y N
Net Profit Growth y-o-y
Operating Profit Growth y-o-y

MONEYLIFE | 24 Nov-7 Dec 2017 | 46

StockWatch.indd 4 17-11-2017 16:53:33


 Excel Crop Care is continuously adding new and reduced threat of cheap imports from China,
products to its portfolio and expanding manufacturing Excel Crop Care reported a jump in numbers for the
capacity at all its three plants in Bhavnagar and Gajod September 2017 quarter. High asset utilisation has
(Gujarat) and Silvasa (Dadra and Nagar Haveli). In increased operating margin from 15% in September
FY16-17 alone, the company introduced three new 2016 to 18.8% in September 2017. Sales grew by
products under herbicide and fungicides segment. 44.1% year-on-year (y-o-y); while operating profit
Moreover, all expansions are funded with internal grew at 80.2% y-o-y and net profit grew at 67.72%
accruals. As of FY16-17, there was no outstanding y-o-y. This can be seen in the graph below.
debt, either short-term or long-term. Excel is The return on assets is 14% and net profit to
also trying to increase the share of exports which capital employed ratio is a high 18%. The stock is
currently contributes 29% to its revenues. The size currently trading at a price-to-earnings (P/E) multiple
of opportunity is huge for Excel Crop Care, if the of 29.6x and market-capitalisation to sales ratio of 2.
management is successful in leveraging the brand of With ample rainfall this monsoon, there should not
its products, the company will capture an even larger be a shortage of water for winter crops as well. If the
market share. north-west monsoon also continues to be good, the
demand for company’s products will be steady. Hence,
Tailwinds one can expect to see similar results of good growth
With industry-wide tailwinds of good monsoon over the coming quarters. 

S a i nt- G o b ain S ekurit India looks expensive.

SGSI is a subsidiary of global glass manufacturing
Growth in Sept Quarter company Saint-Gobain SA (France). The French parent,
along with another Indian subsidiary, holds 75% in
but It Could Be Fragile SGSI, listed on the Bombay Stock Exchange (BSE).
SGSI manufactures laminated and tempered glass as

A fter five quarters of sluggish performance, Saint-

Gobain Sekurit India Limited (SGSI) is showing
signs of improvement in the September 2017 quarter
an original equipment manufacturer (OEM) for the
automobile industry. SGSI has two manufacturing
facilities located close to Pune (Maharashtra) in
results. Sales grew at 9% year-on-year (y-o-y), Bhosari and Chakan. These factories are located
operating profit at 66% y-o-y and net profit at 54% in close proximity to company’s customers. In the
y-o-y. Will this growth sustain? OEM space, SGSI does not face severe competition,
The performance of this company is in line with the as there are only two major OEM manufacturers for
three-wheeler and commercial vehicles segment of the glass unlike in the replacement market. The other
automobile industry, as can be seen in the graphs on manufacturer is Asahi India Glass Limited. Even
the next page. these two do not compete directly with each other.
The growth has not been great except for one year Asahi has a major customer base of passenger vehicles
and the uncertainty about the future remains. The manufacturers, like Maruti Suzuki, Honda Cars India
margin at present rising standing at and Hyundai India. SGSI has a customer base of
17% at operating level 8% net commercial vehicles manufacturers. OEMs are
profit margin for September also subject to stringent contractual obligations;
2017 quarter. If automobile hence, companies like Asahi and SGSI don’t face
sales revive, SGSI may any severe competition.
also do well. Return SGSI
on equity is at a mere manufactured
7.45%. However, the glasses are
stock has run up a either laminated
lot and, currently, or tempered
the price-to-earnings and are used
ratio (P/E) is 90x and in windshields
market-capitalisation to (laminated glass),
sales is at 5x. It surely back-lites and side- 

47| 24 Nov-7 Dec 2017 | MONEYLIFE

StockWatch.indd 5 17-11-2017 16:53:55


Commercial Vehicles Production Trend Three-wheeler Production Trend

1,000,000 14% 1,000,000
950,000 950,000
9% 8%
900,000 900,000
4% 4%
850,000 850,000
800,000 -1% 800,000
750,000 750,000 -4%
700,000 700,000 -8%
-11% -12%
650,000 650,000
600,000 -16% 600,000 -16%
FY11-12 FY12-13 FY13-14 FY14-15 FY15-16 FY16-17 FY11-12 FY12-13 FY13-14 FY14-15 FY15-16 FY16-17
Commercial Vehicles Growth Rate Three Wheeler Growth Rate
Source: Society of Indian Automobile Manufacturers (SIAM) Source: Society of Indian Automobile Manufacturers (SIAM)

 lites (tempered glass); back-lites and side-lites are the commercial vehicles. In the following year, FY15-
glasses used in windows of the automobile. SGSI is 16, sales grew at a mere 6%; they fell by 12.3% in
heavily dependent on the automobile sector; hence, FY16-17. The major decline in the past financial year,
its growth is also in line with the automobile sector according to SGSI, is due to sharp fall in sales of three-
in India. SGSI has witnessed poor growth—of just wheelers, uncertainty pertaining to policy changes like
3.5%—over the past five years, except in FY14- norms of BS-IV emission standards. Another important
15, when the sales growth was 28% mainly due to factor was demonetisation which led to poor growth of
high sales growth of three-wheelers and light/heavy commercial vehicles in FY16-17. 

A ma r a R a j a Bat t e ries Indian Ocean rim. The company gets one-third of its
revenue from the industrial segment and two-thirds
Will It Get Energised? from the automotive segment.
Revenues of Amara Raja increased only 6% year-

A mara Raja Batteries Limited manufactures lead

acid batteries for both, industrial and automotive,
applications in the Indian storage battery industry. It is
on-year (y-o-y) from Rs1,345.54 crore in the September
2016 quarter to Rs1,427.50 crore in September 2017.
The net profit fell 7% y-o-y from Rs136.32 crore in
the preferred supplier for major telecom the September
p 2017 quarter to Rs127.22
service-providers, Telecom equipment crore.
crore The management, during the
manufacturers, uninterrupted analysts’ conference call for the
power service (UPS) sector and September 2017 quarter results, said
Indian Railways and for power, that the company had taken a few
oil & gas companies, among measures like changing the product
other industry segments. It also mix and improving efficiency
supplies automotive batteries under during the quarter. The earnings
original equipment manufacturer before interest, tax and depreciation
(OEM) relationships to Ashok (EBITDA) margin for the September
Leyland, Ford India, Honda, 2017 quarter was 16.68% and the
Hyundai, Mahindra & Mahindra, management announced that it aims
Maruti Suzuki, and Tata Motors. to maintain the margin at 16%. The
While the average ratio of OEM board approved an interim dividend
to replacement battery share in of Rs2 per equity share of face value
revenue for the market is 1:3, Amara off R
1 each (200%).
Raja has the ratio at 1:2.5.The industrial During the analysts’ conference call, the
and automotive batteries are exported to countries in management announced that the automotive battery 

MONEYLIFE | 24 Nov-7 Dec 2017 | 48

StockWatch.indd 6 17-11-2017 18:31:16


 business showed impressive growth across segments. increases, thanks to demand growth. It achieved almost
Demand for the AmaronTM and PowerZoneTM full capacity utilisation in all it segments in the past
batteries was robust during the September 2017 quarter quarter. The four-wheeler segment ran on 90% capacity
in both, four-wheeler and two-wheeler segments, utilisation; additional capacity for 2.25 million units
helping further consolidation of market share. The was commissioned in Q2FY17-18 and another 2.25
volume and revenue growth in these two segments was million units capacity addition is planned for the next
in double digits. Tubular battery sales to the home quarter. The inverter segment, which has a capacity
UPS segment sustained growth momentum, driving of 8.9 million units per year, ran at 100% capacity
significant increase in utilisation. In the two-
volume. This increase wheeler segment, which
helped the company has a current capacity
to record very healthy of 11 million units per
capacity utilisation year, the company plans
during the quarter in capacity addition of
all product categories 4 million units in the
across automotive coming two quarters.
battery business. The During the analysts’
replacement battery conference call, the
segment also performed management announced
well in the September its focus and more
2017 quarter. Inverter aggressive approach
battery sales were good in the industrial
due to the summer. battery segment on
The industrial battery better product-mix
business recorded and exports. In the
significant growth in telecom segment, where
volumes over the previous year in all segments except performance was poor, it plans to increase value
telecom which continued to suffer disruptive changes, proposition for clients. The management also hopes
thanks to Relianc Jio. The good performance of the for some consolidation in the telecom segment by
automotive segment helped the company tide over the the end of this year. Lithium-ion batteries, which are
fall in margins and volumes of the telecom segment. used internationally by telecom companies (used only
Amara Raja’s performance has to be seen in the by Jio in India), is a great opportunity and will be a
light of continued surge in lead prices which have focus area for Amara Raja. While lithium batteries are
risen as much as 25% over the past 12 months. The more expensive than normal batteries, they are also
company has been able to offset the price pressure more durable. Another area in which the company sees
by a mix of cost management strategies and price scope is batteries for electric rickshaws (e-rickshaw)
and solar power. While the company has ventured into
these segments, it cannot gauge its market share as the
segment is mainly in the unorganised sector. While it
Quarterly Sales
Rs Cr
estimates 1 million e-rickshaws on the road at present,
1,500 the numbers are continuously increasing. At present,
the margins of Amara Raja in the e-rickshaw segment
are close to its margins in the four- and two-wheeler
segment. The management believes that consolidation
of the supply chain will provide great opportunity to
1,400 it in the e-rickshaw segment. The stock of Amara Raja
is trading at a price-to-earnings ratio (P/E) of 26.04 at
1,350 a market price of Rs734 per share. The share touched
its 52-week low of Rs 665.45 recently, on 7 November,
2017. In the short term, the stock will sparkle, if lead
Dec-16 Mar-17 Jun-17 Sep-17 prices come down; these are already showing signs of
weakness. 

49| 24 Nov-7 Dec 2017 | MONEYLIFE

StockWatch.indd 7 17-11-2017 16:55:14


D- L I N K net profit fell 28% y-o-y from Rs24 crore to Rs18

crore. For the March and the June quarters, it blames
No Growth Drivers demonetisation and disruptive changes in Internet
access technologies that came along with the rollout of

D -Link, which sells networking products, such as

switching, security, wireless, Internet protocol (IP)
surveillance, storage and structured cabling, in India
services by telcos. However, the rupee was stable for
the greatest part of the year and that lent a fair degree
of stability to the business.
and neighbouring countries, has reported excellent D-Link aims to become the forerunner in providing
performance for the September quarter. Its operating wireless infrastructure, city
profit jumped 59% year-on-year (y-o-y) from Rs10.52 surveillance and fibre connectivity
crore to Rs16.74 crore in the September quarter even to enhance city management and
though sales continued to decline—they fell 9% y-o-y, public safety. In its annual report,
from Rs200 crore in the September 2016 quarter to the managing director, Gary
Rs181.48 crore in the September 2017 quarter. Riding Yang, said that the company is
on higher margins, net profit shot aiming to capitalise on the lifestyle
up 40% y-o-y from Rs7.6 crore networking device segment
in the September 2016 quarter which has seen a huge surge
to Rs10.75 crore. After two in demand. Internet of Things
quarters of a negative operating (IoT) is expected to be the
margin, in September 2017 next big thing and D-Link
quarter, the operating margin claims that it is positioning
was 9.22%. Is this sustainable? itself to be an important
Most likely, the company player in this segment. It
was catching up in the aims to offer a range of
September quarter with Net Profit: No Consistency mydlink cloud-enabled
Rs Cr
the massive decline in 15
products that deliver
sales in the June quarter. cloud-based device
D-Link is hoping 10 management platform for
that the huge planned wireless access points for
investments in small- and medium-sized
infrastructure and 0 businesses. Apparently,
manufacturing under this cloud-based platform
the ‘Digital India’ has now made it possible
and ‘Make in India’ -10 to manage chain stores
initiatives and ‘Smart or satellite offices
City’ projects, along with Dec-16 Mar-17 Jun-17 Sep-17 across large geographic
cashless transactions and regions. D-Link’s
e-commerce boom, would subsidiary, TeamF1,
mean immense opportunities for its networking and and India’s Reliance Jio, will explore solutions for
surveillance solutions. In line with the government’s home surveillance through IP cameras and video
vision of Digital India, the company announced a analytics and for smart homes through IoT sensors
detailed plan as a guideline for developing Smart Cities and actuators, data analytics and machine-learning
by smart networks that ensure economic, social and technologies. It remains to be seen if any of this
environmental sustainability. It sees opportunities in delivers double-digit growth. D-Link has also launched
unified network solutions that integrate capabilities in the latest range of 4G unlocked devices that work with
switching, wireless, broadband, storage, IP surveillance, all service-providers giving users the freedom of choice.
cloud-based network management and structured All these businesses are extremely competitive and it is
cabling. unlikely that D-Link brings something so unique that it
D-Link’s performance has been unexciting, over the is able to command pricing power. The stock is trading
years. While sales fell 1% y-o-y, from Rs721 crore in at a high price-to-earnings ratio (P/E) of 53.12 on the
FY15-16 to Rs715 crore in FY16-17, operating profit hopes that the government’s digitisation moves will
fell 30% y-o-y, from Rs38 crore to Rs26 crore, and deliver huge opportunities. It may be misplaced hope. 

MONEYLIFE | 24 Nov-7 Dec 2017 | 50

StockWatch.indd 8 17-11-2017 16:55:59



Best Steel Logistics (Rs99) reserve & surplus of Rs0.54 crore. BSLL
(Rs) is growing by borrowing funds; as of

B est Steel Logistics Limited (BSLL) 125

5 FY16-17 borrowing stands at Rs33
claims to provide warehousing crore. The cash flow from operations is
solutions for steel industry and is also negative; this is due to high receivables
engaged in trading of steel and related 75
5 and low payables, i.e., sales are not
products. It controls four warehouses being converted to cash. This trend can
with a total area of 373,000 square 50
0 be seen in its cash flow statement for
feet, located in Bengaluru, Hyderabad, 25
1033% the past three years. For FY16-17, the
Faridabad and Ghaziabad. While the increase in debtors was Rs9 crore while
company says it is also looking to set 0 decrease in payables was Rs1.8 crore in
up additional facilities in Rajasthan, 3 Nov-15 3 Nov-16 3 Nov-17 the cash flow statement. The promoter
Gujarat and Uttar Pradesh, revenue shareholding has reduced from 39.04%
has been erratic in the past five years, crore in September 2016. While the in June 2017 quarter to 38.75% in the
from no revenue in FY12-13 to Rs61 reported profit after tax was Rs2.91 September 2017 quarter. Meanwhile,
crore for FY16-17; trailing 12-month crore for September 2017 compared to the stock has rocketed—from around
(TTM) revenue is at Rs210 crore. BSLL Rs0.34 crore in September 2016. Until Rs9 in November 2015 to over Rs102
reported net sales of Rs99.6 crore in FY15-16, the net worth of company now, a rise of 1033%. The regulators?
September 2017 compared to Rs1.34 was also negative with a negative As usual. 


A Third Big Cheer for Bulls What led Moody’s to upgrade India
now? Well, the agency talks approvingly

n 24th October, after the market closed, the of the government’s reforms like
government announced that it would find a way to Goods and Services Tax (GST), bank
pump in Rs2.11 lakh crore into moribund public sector recapitalisation, demonetisation and the
banks. This was a big booster for the market. Then, on use of Aadhaar for direct benefit transfer in formalising
31st October, the World Bank announced that India the economy. While a better rating is always welcome,
has jumped 50 places in the ranking of Ease of Doing many observers are surprised that this has come at a time
Business. The market shot up again.. And then, just when when growth has sloweds down, farm loan waivers are
an overvalued market started drifting
ng lower, came another rampant and the government
g may not be able to meet
boost. On 16th November, in a surprise
rise move, its fiscal
fisc deficit target. In response to these
Moody’s Ratings upgraded India’s sovereign
overeign negatives, government bond yield had
bond rating from Baa3 to Baa2. Thee pushed past 7%, up 50 basis points
last time Moody’s upgraded India since
s August.
was in 2004 to Baa3, moving The equity market, of course, has
India to an ‘investment grade found
foun one more reason to be bullish,
destination’. Ratings below Baa3 aree junk status. The ignoring
igno some recent short-term data like
last rating upgrade for India by any major rating agency index
inde of industrial production at a low
was on 30 January 2007, when Standard
ndard & Poor’s 3.8% for September and manufacturing
upgraded India to BBB (-). Fitch, the other rating firm, Purchasing Managers’ Index down to 50.3 in October. In
had upgraded India to BBB(-) in August 2006 and has not terms of money flow, inflows into mutual funds remain
changed its rating since. The Indian government has been robust but fund houses have slowed down their net
asking for a rating upgrade for many years now. investment in stocks. — Debashis Basu 

51 | 24 Noc-7 Dec 2017 | MONEYLIFE

StockWatch.indd 9 17-11-2017 18:29:43


Judiciary in Turmoil
n Friday, 10th November, in what is a shockingly by the current CJI and a retired judge of the Orissa High
unconstitutional order, a five-judge bench of the Court.
Supreme Court (SC), hurriedly constituted and In September, the Central Bureau of Investigation (CBI)
headed by the Chief Justice of India (CJI) Dipak Misra, had arrested, and later released on bail, the retired High
annulled an order passed by another SC bench of Justice Court judge on charges of corruption and conspiring to
Jasti Chelameswar and Justice Abdul Nazeer. A brief settle a Supreme Court case. The writ petition contended
timeline of the story, as it unfolded, is as follows. that, because the CJI is a potential investigation target in
On the morning of 8th November, a writ petition by the matter, CBI, which reports to the executive, cannot
the committee for judicial accountability and be expected to handle the case as that would
reforms (CJAR) was mentioned before a mean the independence of judiciary would
bench headed by Justice Chelameswar, be greatly compromised.
the senior-most judge after the CJI, In the afternoon, it appears that
for urgent listing. the counsel for the petitioners
Usually, out-of-turn listings were told that by the registry
are obtained by mentioning of the Supreme Court that the
matters before the CJI, as CJI had directed the listing of
he/she (India has never had the petition before a bench
a ‘she’ as a CJI, yet…) is in headed by Justice AK Sikri
charge of the roster, i.e., on 10th November.
determines the composition This was somewhat
of various benches, the surprising for the
matters to be listed before petitioners, given that the
the various benches and the CJI was expected to recuse
dates on which such matters himself from the case and not
should be listed. even pass administrative orders
However, when the CJI heads such as listing before a particular
a Constitution bench, i.e., a bench of bench, etc.
five judges or more, urgent mentioning On the morning of 9th November,
is usually done before the senior advocate Dushyant
bench headed by the next Dave mentioned another
senior-most judge. writ petition with the
On this day, the CJI same cause of action, filed
was heading a five-judge by Kamini Jaiswal (she is
bench that was hearing an advocate-on-record in
the matter relating to the Supreme Court and a
the powers of the Delhi’s patron of CJAR!), before
lieutenant governor the bench comprising
under the Constitution Justice Chelameswar and
and, therefore, the Justice Nazeer.
mentioning before I n e x p l i c a b l y,
Justice Chelameswar was Justice Dipak Misra Prashant Bhusan it appears that the
normal, as he is the next senior-most judge. The bench advocates for the petitioners, Dushyant Dave and Prashant
headed by Justice Chelameswar ordered the matter to Bhushan, did not bring it to the notice of the bench that
come up before an appropriate bench on 10th November. the previous CJAR matter had been listed before another
This writ petition by CJAR had sought a court- bench on 10th November. This time round, the bench
monitored probe by a special investigation team (SIT) appears to have taken this as an urgent matter to be listed
headed by any former CJI into allegations pertaining to before itself on the same day at 12.45pm.
bribery and corruption in a medical college recognition The news reached the CJI and, astonishingly, the
matter which, at one point, was heard by a bench headed Constitution bench that he was heading rose abruptly at 

MONEYLIFE | 24 Nov-7 Dec 2017 | 52

Prasanna - column.indd 2 17-11-2017 17:01:59


 12 noon, ostensibly for CJI to consider further steps in bench to, then, directly refer to a Constitution bench of its
the light of the developments before Justice Chelameswar’s choosing without making it as a recommendation to the
bench. At 12.45pm, Justice Chelameswar’s bench ordered CJI which would have clearly had its force. It was also,
that the petition be listed before a Constitution bench clearly, improper for the second petitioner not to have
consisting of the five senior-most judges of the Supreme the matter listed along with the CJAR petition before the
Court on Monday, 13th November. Justice Sikri’s bench on 10th November.
During the hearing, an officer of the registry also The order of Justice Sikri’s bench was also irregular in
handed over a letter, purportedly from the CJI, ordering allowing an oral impleadment of SCBA when its president
that all same-day urgent listings can only be mentioned mentioned it (without due authorisation from SCBA’s
before the CJI. Justice Chelameswar’s order also took note executive council being placed on the file), without hearing
of the letter and annexed that letter along with the order CJAR on that point. However, what was most shocking
to list on Monday. was the order passed by the bench led by the CJI on
On 10 th November, the CJAR matter came up 10th November.
before a bench comprising Justice AK Sikri and Justice The CJI is the first among equals. While he is the master
Ashok Bhushan which, without of the roster, one must not lose
tagging the matter with Ms sight of the fact that he cannot
Jaiswal’s petition, referred it be an appellate authority or a
to a Constitution bench. The Judicial propriety revisional authority over orders
bench headed by Justice Sikri demands that whenever passed by other puisne judges who
also allowed an oral request by are his equals. All Supreme Court
the president of the Supreme
another bench’s orders judges, including puisne judges,
Court Bar Association (SCBA), are sought to be recalled even have suo motu powers to
RS Suri to implead SCBA as a or reviewed on any take up matters for hearing, even
party respondent in the matter. when there is no formal petition.
Later in the day, at 3pm,
ground, it must include Further, judicial propriety
the CJAR petition was initially the judges that passed the demands that whenever another
listed before a seven-judge bench original order—unless it is bench’s orders are sought to
headed by the CJI and comprising be recalled or reviewed on any
also Justice AK Sikri, Justice
impossible to do ground, it must include the judges
AM Khanwilkar, Justice Arun that passed the original order—
Mishra, Justice Amitava Roy and unless it is impossible to do so
Justice Ashok Bhushan. At the last minute, Justice AK because of any of them having retired, etc. What happened
Sikri and Justice Ashok Bhushan were no longer on the in this case is, ostensibly, an unconstitutional assertion of
bench and, instead, a five-judge bench headed by the CJI the administrative precedence of CJI to annul a judicial
took up the case. order passed by a brother judge.
What followed was total chaos with the CJI seeking The Supreme Court is not only merely one branch of
opinions from advocates who were not representing any the State with the legislature and the executive being the
party in the case, and the advocate for the petitioner, others. It also is guardian of the Constitution itself, which is
Prashant Bhusan barely being heard. Additional solicitor- supreme; on its supremacy rests the legitimacy of all actions
general, PS Narasimha, representing the Union of India, of the State. Competing orders of Court No.1 and Court
RS Suri, president of SCBA, and several other advocates No.2 (of the Supreme Court), resembling an open power
were in favour of issuing contempt notices against Prashant tussle, have created a crisis of legitimacy and, therefore,
Bhushan and Ms Jaiswal and CJAR. However, the bench the authority of the Supreme Court. The Supreme Court
led by CJI was more intent on undoing the order of the will take time to heal. 
bench led by Justice Chelameswar passed on 9th November.
Accordingly, the five-judge bench, shockingly, proceeded
to annul a judicial order passed by a different bench.
Conclusion: This is the story of a tragedy of errors by
everyone involved. It was clearly out of the norm for Justice A Delhi-based lawyer & a constitutional
Chelameswar’s bench to entertain the petition and not tag it law enthusiast and commentator.
along with the previous petition, when it was listed before @prasanna_s
another bench. It was also clearly out of the norm for that

53 | 24 Nov-7 Dec 2017 | MONEYLIFE

Prasanna - column.indd 3 17-11-2017 17:02:29

Supported By

to clear the transmission process.

Till such time as any investment

At Moneylife Foundation’s
is transferred to the legal heir, the
income from that investment will
be considered as the income of the
estate of the deceased and a separate
tax return will need to be filed by
the estate.
Tax Helpline You cannot pay rent to yourself.
Therefore, I would not advise you
Ask tax-related questions at It’s free to continue to pay rent on your
father’s house occupied by you.
investments in his name. Some have As regards the gift cheque
Revised Returns after crossed the three-year window. remaining to be deposited into
Refund Is it necessary to redeem them? If the bank account, there is no law

I filed my return of AY2016-

2017 and received a refund of
Rs20,880. Now, I want to revise my
yes, then into whose bank account
does the redemption amount get
that prevents you from depositing
it now. However, you have to
understand that such a transaction
return due to some issues and, after 3. He was receiving rental income will always be suspected. Nobody,
the changes, it shows refund of only from multiple houses. Can that generally, keeps a gift cheque lying
Rs12,740 instead of what I received. continue to be credited in his bank un-encashed with him or her.
What should I do now? Will I have a/c until the property is transferred However, since this cheque is issued
to pay the difference in refund in the heir’s name? There is no Will by the deceased’s own sister, in the
amount or will it get adjusted? and the transfer is likely to take normal course, there should not be
considerable time. any cause for an inquiry as long as
Nikhil Vadia’s Reply: 4. He was also receiving house you have sufficient proof to show
This will depend on the nature of rent from me as I was staying on that the cheque is, indeed, from his
error that you have discovered. his property. After his death, I am sister and that it was issued by her
If it is covered the legal heir to the property. Do I prior to his death.
under Section 154, continue my rent payments to his
you can apply for bank account? Taxability of Pensioner
a rectification of 5. He received a gift cheque from
mistake apparent
from the records. If due to
rectification of mistake, the tax
his sister before his death, but it
could not be deposited in the bank
due to practical reasons. The cheque
M y income comprises interest
from bank fixed deposits
(FDs), dividends, capital gains from
liability of the taxpayer is enhanced is still valid as per date. Can it be equity and mutual fund schemes,
or refund is reduced, the taxpayer deposited in his account now? interest from corporate bonds,
is given an opportunity of being and pension from Life Insurance
heard. Whether the revised return Ameet Patel’s Reply: Corporation of India (LIC). My
can be filed after intimation under Practically, it is unwise to close the total income does not exceed Rs10
Section 143(1) is an open question savings bank account lakh. Am I required to prepare
and I would not suggest that route till such time as all balance sheet and profit & loss
unless the amount is substantial. the assets belonging account for filing my tax returns?
to the deceased are
Taxation after Father’s transmitted to the Subodh V Shah’s Reply:
Demise legal heirs. You do not need to sell An individual, who has income up
any investments that belonged to to Rs50 lakh and has income from

M y father passed away some

time back. Some queries:
1. Is it necessary to close his savings
your father. Every investment can
be transferred to the name of the
second holder (wherever the asset is
salary (pension), one house property
and other sources, can file the
return in ITR-1 Sahaj. You are not
bank account immediately? held in joint name). Since there is no required to prepare a balance sheet
2. There were mutual fund Will, this would be the easiest way and profit & loss account. 

MONEYLIFE | 24 Nov-7 Dec 2017 | 54

Tax Queries.indd 2 14-11-2017 20:24:00

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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.

1 Every new query posted will be sent to our panel of tax experts
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Tax Helpline.indd 2 24-02-2017 16:12:20


Mobile Ticketing App for you are or, in some cases, even in an emergency.
Google Maps now has an option to share your
Booking Unreserved Tickets current location with anyone
immediately. Just open the

I f you travel by train, you know how difficult it is to stand

in a queue and buy unreserved tickets for suburban trains.
UTS, by Indian Railways, solves this painful problem.
Google Maps app and go to
the hamburger menu on the
left top. You will find the
UTS is the official mobile ticketing app for booking Share Location option. Tap
unreserved tickets. Paperless ticketing has been enabled on that and then you will be
for the entire Chennai suburban section, shown all options to share
entire Mumbai suburban section and New your current location. You may
Delhi-Palwal section. In addition, season share by SMS, Gmail, WhatsApp or any other
and platform tickets are also available. option that you have on your device.
All you have to do is to download the When sharing, you can set the time for sharing too—
app, assign a user id and password and one hour, two hours or even permanently, till such time
you are ready to go. Just add an amount you shut it off—the last option would be very useful for
to the UTS digital wallet through your kids to show their parents where they are, or for people
credit card or Internet banking. The next time you travel, visiting unknown places and want their friends or kin to
you can book your tickets on the way to the station. Be know where exactly they are. Very useful to convey your
sure to choose the paperless ticket option, so that you get location in good times and bad!
your tickets on your mobile. When asked, you can show
the ticket from your mobile directly! How convenient!
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You just have to visit and paste your

R ingdroid lets you create personal ringtones, alarms

and notification sounds from existing music/audio
files and record new ones using your
favourite site’s url in the space provided and, voila! It will
list the sites which
are similar to the
Android device. Download and install one selected—it is
Ringdroid on your phone. Once you that simple.
launch the app, you will see a list of The website also gives you the option to add an
songs on your device. To view all the extension to Chrome which allows you to do the same
sounds on your device, tap the Action seamlessly. When you are on a site you like, just click
icon on the top right corner and choose Show All Audio. on the Similar Sites extension on the top right and the
Then, select the song that you want as your ringtone. same functionality will be available to you right from
Once selected, decide the start point and the end point your favourite browser. A very simple and elegant way
for your ringtone by moving the sliders above and below. of browsing similar sites, when you are doing research or
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can save it as a ringtone (default) or use a contact-specific
ringtone, or use it for your alarm, or even use it for various
notifications—a different one for each! So, which song will
use as your ringtone now? Android: Yazdi Tantra is a chartered accountant
by training, computer consultant by
profession, entrepreneur-developer by
Share Your Current Location hobby and trainer in his leisure time.
He is currently the vice-chairman of
via Google Maps Zoroastrian Co-operative Bank Ltd
and has been running a medium-sized computer

V ery often, we need to share our current location with

a friend or relative. Either it is to direct them to where
company ON-LYNE for the past 24 years.

MONEYLIFE | 24 Nov-7 Dec 2017 | 56

Tantra - column.indd 1 14-11-2017 20:23:20

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

DEADLY SUGAR are strongly

I s there any nutritional

benefit from having sugar?
Most studies have conclusively
associated with
negative health
effects.” It would
established that there is no
AROUND THE WORLD not be a surprise
benefit. And, yet, wherever you to know that many
look, there is sugar. There is sugar Yudkin paid a high price for such research studies are funded
not only sweets but also in most it. Prominent nutritionists who by the sugar lobby. By the way, an
bakery products, breakfast cereals, believed in the prevailing orthodoxy average American consumes 22
salad dressings and, of course, in of fat being the villain, collaborated teaspoons of added sugar per day.
almost all the bottled beverages. with the food industry to destroy
Sugar consumption contributes his reputation. Yudkin died in 1995, ARE STATINS OVERRATED?
to weight gain, increased risk of
type-II diabetes, heart disease and
even prevents healing of chronic
a forgotten man.
Over the past 20 years,
though, dietary sugar has come
S tatins are a group of drugs that
lowers the level of low-density
lipoprotein (LDL) cholesterol in the
conditions. Of course, the sugar under increasing scrutiny and has blood. LDL cholesterol is, often,
lobby is so strong that it would slowly been identified for what referred to as ‘bad cholesterol’.
want you to ignore all these risks. it is; experts are increasingly It appears that
For many years, it got away with recommending less sugar. For statins can
murder. The blame for rising instance, the 2015-20 dietary cause
lifestyle diseases and chronic guidelines for Americans included
diseases fell on fats and then a limit on added sugar to less than
carbohydrates. 10% of total daily calories. The
Way back in 1972, John Yudkin, same limit was also previously
a British professor of nutrition, recommended by the World
had written a book called Pure, Health Organization in 2015. The
White, and Deadly in which he American Heart Association has muscle
said: “If only a small fraction of recommended that children and damage
what we know about the effects teens consume less than 25 grams, and do not
of sugar were to be revealed in or six teaspoons, of added sugar perr extend the
relation to any other material used day. Some countries have imposed lives of low-
as a food additive, that material taxes on sugary drinks.
drinks risk patients,
would promptly be banned.” But apologists for ssugar are not according to a
But sugar remained pure, white giving up. In February this year, in new study, originally published
and deadly, while a review published by tthe Annals of in the Journal of the American
Internal Medicine (AIM(AIM), Jennifer Medical Association. Dr John
Erickson, Behnam SSadeghirad, Abramson, a specialist in healthcare
Lyubov Lytvyn, Joanne policy at Harvard Medical School,
Slavin and Bradley
Br C has reviewed the study and found
Johnston saysa that the that 217 patients would need to
advice against
ag sugar take the drug to prevent just one
is “based on low- non-fatal heart attack, while 313
quality evidence.”
e people would need treatment with
The authors
aut also statins to prevent just one non-fatal
conclude “There stroke. Meanwhile, at least one
seems to be no reliable in 21 statin users suffers muscle
evidence indicating damage and one in 204 develops
that any
an of the diabetes. The study reviewed the
recom results of 22 leading trials of statins,
daily caloric all but one of which were sponsored
thr for by drug companies. 
su intake

MONEYLIFE | 24 Nov-7 Dec 2017 | 58

Health.indd 3 16-11-2017 17:47:45


Consumer Raises Storm in a Tea Cup

nce in a while, we come across a case that would writing in the complaint about why Rs25 for one cup of
bring a smile on the face of a common consumer. tea was not justified. It claimed that it had tried to maintain
Most consumers would have tales about their superior quality of tea and it also gives more quantity than
bad experience with some hotel or restaurant; but, most the restaurants in the city area. The hotel claimed that,
of the time, we tend to grumble and forget the matter. in other areas, no bill was being issued for a cup of tea;
However, the exception to such a situation was Mohitraj so, by issuing bills, the hotel was being customer-friendly.
Prabhatsinh Rathod of Rajkot (Gujarat). He was a driver It also explained how the price of Rs25 was arrived at:
for a government car, appointed through an outsourcing Rs21.18 + 9% (Rs1.9062) CGST + 9% SGST (Rs1.9062)
firm. As a part of his routine, he had to go from Rajkot to = Rs24.9924. This amount was rounded off to the figure
Junagadh and return. On 4 July 2017, while on the National of Rs25. Accordingly, for two cups of tea, it came to Rs50.
Highway-27, near village Pithadiya, he stopped over The hotel also claimed that its computer was still being
for tea. The hotel charged configured for GST; hence,
him Rs50 for two cups of no break-up was given
tea, which included Rs7.63 and only the consolidated
as service-tax when GST amount was mentioned in
(goods and services tax) the bill given to the customer.
had already come into effect. The hotel claimed that the
He paid Rs50 by cash and complainant was not entitled
a relationship between the to get any amount by way
complainant and opponent of compensation for mental
as customer and service- agony and harassment and
provider was established. cost. It also claimed that
Mohitraj wondered why the bill produced by the
each cup of tea should cost complainant did not bear
Rs25 and how Rs7.63 was any seal of the hotel or
charged as tax. He talked signature of the proprietor
to the owner of the hotel The hotel also claimed that its of the hotel and, as such,
on mobile and requested computer was still being configured the said bill was not legal
him to waive the service- for GST; hence, no break-up was and valid; so the complaint
tax. The owner replied that given and only the consolidated should be dismissed.
hoteliers were free to charge The District Forum noted
the prices as per their own
amount was mentioned in the bill that the hotel had not shown
wish on a highway. He also given to the customer the rate of taxes and which
told Mohitraj that customers type of tax has been charged.
come to his hotel on their own and, even if some of them It held that the complainant was entitled to get Rs7.63
stop coming, it would make no difference to him. Mohitraj with interest @ 6%pa from the date of filing the complaint
filed a consumer complaint under various provisions of till the realisation of the amount. The complainant was
the Consumer Protection Act, 1986 (COPRA), before the also awarded Rs1,000 for mental agony and harassment
Consumer Disputes Redressal Forum, Rajkot (District and Rs500 as cost. This case proves that no complaint is
Forum) for deficiency of service. Interestingly, the District too small and a consumer can fight to protect his rights.
Forum exhibited exemplary efficiency by registering the Mohitraj Prabhatsinh Rathod of Rajkot has proved to be
complaint on the 18 July 2017. The Forum showed equal an alert consumer living up to the slogan, ‘Jago Grahak
speed while deciding the complaint and gave its verdict in Jago’. 
two months and 17 days.
Mohitraj asked for a refund of Rs7.63 with interest
@ 18%pa (per annum) from the date of filing the complaint SD Israni is a corporate lawyer & Fellow
till the realisation of amount and money for mental agony of ICSI. Email:
and harassment and cost of the litigation. The hotel
contended that the complainant had not mentioned in

59 | 24 Nov-7 Dec 2017 | MONEYLIFE

Legally Speaking.indd 2 17-11-2017 18:59:15



Subramanian Swamy: The First Two

Decades of His Political Life

ost people do not know how to categorise fame on fractile graphical analysis. That paper earned him
Subramanain Swamy, teacher, economist, admission to Harvard and, in two years, Swamy had earned
mathematician, an expert on China and an his PhD. In an early class of Samuelson, Swamy interrupted
upright politician, in the habit of making ‘wild allegations’. Samuelson’s lecture to say, “You have one equation wrong,
Unlike most Indian leaders, he is highly educated. If he had so you will not be able to prove the theorem.” When Swamy
continued in academics, he would have perhaps been a corrected the mistake, Samuelson said: “See me after the
candidate for the Nobel Prize. Swamy was among the four class.” When Swamy saw him, he told him: “I think you and
favourite students of Paul Samuelson; three of them have I should write a joint paper some day.” Some 10 years later,
got the Nobel. But Swamy left academics after 10 years Swamy co-authored a famous paper with Samuelson on the
and has been a full-time politician for the past 35 years. He "Theory of Index Numbers".
is also one of the rare leaders As his fame spread in the academic world, Amartya
whose name has never been Sen invited him to join the faculty of the Delhi School of
dragged into any scam or Economics. But, by then, Swamy was developing strong
even minor transgression. ideological positions. He believed that India needed a
Finally, he has shown how free market for economic growth, a nuclear bomb to
effectively one can use the strengthen and establish its position in the world and open
justice system in the public up relations with Israel.
interest. As Roxna Swamy, his wife and steadfast supporter all
A combination of these years through the ordeal under Emergency, many
such rare brilliance and court cases and nasty physical attacks by Jayalalitha’s
honesty ought to have goons, writes in her memoir: “Swamy started out in India
made him India’s most in 1968-1969 with the best of intentions. He really simply
effective politician, with an wanted to write his research papers and enlighten his
opportunity to change the extremely bright and focused students.” In 1968 summer,
lives of millions. And, yet, he in one of his lectures, Swamy advanced a startling new
EVOLVING WITH has been a minister only once thesis: with the infrastructure already developed, India
SUBRAMANIAN SWAMY (in the ramshackle Chandra could produce an atom bomb and delivery system for just
ROXNA SWAMY Shekhar government of a few lakh rupees.
Roxna Swamy 1990) and remained out of This caught the attention of the Hindu right wing
Pages264; Rs699 power ever since. Even after party, the Jan Sangh, which invited Swamy to address
the Bhartiya Janata Party their parliamentary party. Swamy talked about the need
(BJP) came to power, Swamy has only been made a Rajya for a Hindu renaissance and the correct dating of historical
Sabha member and that, too, after more than two years events and records, the need for a market economy,
of waiting. normalising relations with Israel and so on. “Perhaps his
All this is a very long way from the day when, armed speeches were too successful for his own good,” writes
with a Master’s in mathematical statistics from the Indian Roxna in Evolving with Subramanian Swamy. “They
Statistical Institute (ISI), Kolkata, he first met Samuelson in convinced an appalled Delhi University Establishment that
his office in September 1962, wanting to join his advanced Swamy could lead a thought revolution… hurriedly, the
mathematical economics course at the Massachusetts Chair in Chinese Economics created at Delhi University
Institute of Technology. Samuelson used to select only 20 for Swamy, which Amartya Sen had promised Swamy ‘is
students from among about 200 applicants. being dusted and got ready for you’, was withdrawn.”
Swamy was already a bit of a sensation in the academic Swamy, with his impeccable academic credentials,
world because, as a student at ISI, he had published a became Professor of Economics at the IIT, Delhi. Soon,
research paper in the world’s then most prestigious journal the students, the Employees Union and the lower faculty
Econometrica, demolishing PC Mahalanobis’ claim to staff were at Swamy’s doorstep, pouring their grievances 

MONEYLIFE | 24 Nov-7 Dec 2017 | 60

Book Review.indd 2 17-11-2017 18:47:04


 into Swamy’s ears. This did a policeman from the local

not make him popular with police station, Swamy set
the IIT powers that be, since off to his lawyers’ place
these included things like to collect the Tis Hazari
the corruption involved in Court’s Stay Order; “while
developing the Delhi IIT the children, the cook and I
campus. settled down to wait for it,”
The director was “a writes Roxna.
construction engineer with “Unfortunately Swamy
no teaching or research can never resist a political
qualifications that we Subramanian Swamy (left) and Narendra Modi in disguise discussion; so on the way to
during the Emergency
could discover, but with the lawyers’, he stopped off
an entrée to Indira Gandhi EXCERPT to have some discussion or
through his wife who was other with his mentor Nanaji
teaching lkebana flower Whenever Swamy met us during the Deshmukh... Meanwhile all
arrangements to the PM and Emergency, he would wax lyrical on those hell broke loose. Heaven
her daughter-in-law Sonia,” Ahmedabad fruit icecreams; but I don’t knows how many trucks and
writes the author. remember his ever having mentioned beldars rolled up; someone
Soon, faced with an the facilitator of those humble treats, got out and politely asked
agitating Employees Union Shri Narendrabhai Modi. Of course, me to leave forthwith with
and students, the director perhaps that may have been to protect my belongings as they had
was determined to see that Narendrabhai’s Emergency incognito an eviction order. I tried to
Swamy’s appointment was explain that we had a Stay
not made permanent. His Order but beldar types and
temporary appointment as professor was extended again the IIT official superintending the melee, do not know or
and again and a selection committee was set up. To make respect such niceties; I slammed the door in their faces,
sure there was no unanimity, the director set it up with called in the cook as reinforcement, and we dragged all
nine members and, since there was a requirement that the drawing room and dining room furniture and piled it
there must be a foreign expert on it, he asked around up against the door which the beldars were hammering
to find a suitably leftist foreign expert. It was Leon at. An hour later, the police arrived and must have made
Hurwitz. the IIT minions see some reason, because they left… that
The chairman of the selection committee was someone was our first brush with the LAW. And it was a victory!
from the reputedly left wing Delhi School of Economics, After that, there was no looking back.”
one Professor Manmohan Singh, later prime minister of Some 20 years later, Swamy won his case against the
India. When Professor Hurwitz realised that the applicant IIT: his termination was quashed and he got a declaration
was a co-author of a paper with Samuelson, he could only that he continued all along in the service of the IIT with
gasp, “That is something I would give my left arm for. Of all salary and perquisites. But, by that time, Swamy was a
course, he must be selected!” Singh concurred. Swamy was Union Cabinet minister and in no position to teach, so he
unanimously appointed to hold the professorship; but he sent a letter resigning from the IIT and claiming his back
did not last long. wages. The IIT accepted his resignation; but continued
Meanwhile, Swamy grew closer to the Jan Sangh, with its legal case.
working out, “The Swadeshi Plan - An Alternative “By then, Swamy was hooked to the legal route as a
Approach to Socialism”. lndira Gandhi laughed at it, in a weapon in his fight against corruption… he is by now a
speech in parliament in 1970, calling Swamy a Santa Claus recognised authority on all sorts of law, without a law
with unrealistic ideas. Swamy was emerging as quite an degree,” writes Roxna. Indeed, Moneylife benefited
intellectual force because, after two years, he was suddenly immensely from his counsel while defending its defamation
dismissed from IIT with one month’s salary in lieu of notice. case against National Stock Exchange.
In his first attempt at using the justice system to right a Swamy planned to return to Harvard. But, in 1974,
wrong, Swamy filed a suit in the Tis Hazari District Court elections to the UP legislative assembly came up and Jana
and got a Court stay order permitting him to continue Sangh leader Nanaji Deshmukh asked Swamy whether
to occupy the IIT flat. But IIT proposed to evict Swamy, he would like to manage the four Lucknow seats. Next,
his wife and two young daughters by force. Warned by Nanaji and Lal Krishna Advani wanted to field Swamy 

61 | 24 Nov-7 Dec 2017 | MONEYLIFE

Book Review.indd 3 17-11-2017 19:35:47


 for the Rajya Sabha seat. Royal Nepal Airline plane

Swamy had turned into a to Bangkok, and from there
politician. took a Thai Airline flight
Things moved quite to London via Rome. The
dramatically after that. Thai plane developed engine
Swamy discovered that trouble in Rome but almost,
Sonia Gandhi was doing miraculously, an Italian
brisk business as a life lady came up to him and
insurance agent even though asked if he had an Indian
she was not an Indian citizen passport and whether he
and forced Indira to declare had no luggage. When he
in the Parliament that Sonia confirmed both facts, she
had given up her agency. quietly led him to a London
In 1974, Indira faced a bound plane which was
20-day railway strike by 1.7 EXCERPT ready to leave, and settled
million employees and, on him in the sole unfilled first
25 June 1975, she declared Swamy’s expulsion, also showed me class seat, (Swamy only had
Emergency, arresting how small, mean, envious and malicious an economy ticket). To this
hundreds of Opposition a man was Atal Behari Vajpayee, the day, Swamy does not know
leaders. Parliamentary Leader of the Jan Sangh who she was.
Swamy, disguised as Roxna writes “Swamy’s
a Sardarji and Nanaji expulsion, also showed me
Deshmukh, as a businessman, moved around the country how small, mean, envious and malicious a man was Atal
organising an underground resistance. Among the Bihari Vajpayee, the Parliamentary Leader of the Jan
safest places was Gujarat, which had an anti-Congress Sangh. Vajpayee instructed the party’s legal cell not to
government and Swamy was taken care of in Ahmedabad help Swamy fight the Rajya Sabha expulsion order.”
by one Narendra Modi. Soon, thereafter, Nanaji was When Roxna confronted him, Vajpayee charged that
arrested and Swamy went to Colombo from Tamil Nadu Swamy’s ‘wrongdoings’ were damaging the credibility of
and from there to London and the US. the Sangh. Apparently, “Swamy had signed and collected
The Emergency made a hero out of Swamy as he evaded some Rs400 or Rs500 daily allowance by ‘claiming’ to have
arrest for the entire 19-month period. Within that, not to attended Parliament on the days immediately before and
get suspended from parliament, Swamy came into India, after Parliament met in June 1975. Vajpayee kept insisting
broke through security cordons of parliament, attended piously that this amount was the ‘fruit of corruption’.
a Rajya Sabha session on 10 August 1976 and slipped Writes Roxna: “But it soon became clear to me that
out. Eventually, a parliamentary committee pronounced Vajpayee was seething because anyone could see the
Swamy guilty of a “conduct unbecoming a Member of contrast between Swamy’s heroic and selfless struggle
Parliament” and recommended his expulsion. for which he had sacrificed his family’s wellbeing and
By then, the Rashtriya Swayamsevak Sangh (RSS), too, comfort and Vajpayee’s self-indulgence in the arms of the
was keen to get Swamy out of India. It is in describing family of his foster daughter. I left in disgust… When you
this period that Roxna reveals the reason for Swamy’s consider the literally hundreds of crores that Vajpayee, his
lifelong animosity against Atal Bihari Vajpayee, was one foster daughter’s family and his friends and creatures are
of the reasons for Swamy being in the wilderness for two reputed to have made while in power, I find it laughable
decades from the mid-1990s till mid-2010. that he could have castigated Swamy for his ‘corruption’
Apparently, a group consisting of Vajpayee and two of a few hundred rupees.”
others “were proposing to sign some sort of a surrender This is a fast-paced and well-written book that offers
accepting the need for Indira Gandhi’s 20-Point Programme a rare peek into the first two decades of Swamy’s political
and legitimacy of the Emergency; but that was being held career and is a must-read for anyone curious about Swamy
up because ‘Swamy was not cooperating’,” writes Roxna. and the events of 1970s and 1980s. It does not discuss
Swamy agreed to leave India. He walked across the Indo- much of what happened after Narasimha Rao government
Nepal border and got into a rickshaw that was waiting came to power nor any of Swamy’s anti-corruption cases
for him in Nepal, where King Birendra had arranged which have yielded dramatic results. We will await the
for a plane which flew him to Kathmandu. He caught a second volume. — Debashis Basu 

MONEYLIFE | 24 Nov-7 Dec 2017 | 62

Book Review.indd 4 17-11-2017 19:36:17


Mobile Data Cheats

Mobile subscribers never get the promised 4G speed even as their data-pack gets consumed
within a few hours. Yogesh Sapkale guides you on how to deal with this

any mobile subscribers are now on to the on all handsets. Open phone dial, press *#*#4636#*#*.
fastest fourth-generation (4G) networks; and, This will open a menu for phone information. Here you
yet, everyone still dreams of superfast speeds can set your preferred network type to ‘LTE only’ for
as promised by the operators. Another complaint of 4G. When ‘LTE’ or ‘4G’ is displayed next to network
most 4G users is about how fast their data-pack gets signal, run the ping test. If both IPV4 and IPV6 tests are
consumed even when they have hardly used Internet passed, then you are on 4G network. But do remember,
on their mobile handsets. A 4G system must provide keeping the mobile on LTE only mode may make it
capabilities like mobile web access, IP telephony, gaming inaccessible where there is no 4G network from your
services, high-definition mobile TV, video conferencing, operator. You can also try setting your network on
and 3D television, as defined by the International ‘LTE’ mode under mobile network in general settings.
Telecommunications Union (ITU). But most mobile handsets provide
According to the standard defined only ‘preferred’ or ‘auto’ mode for
by ITU, a 4G network should be 4G/3G and 2G and, in that case,
capable of a download speed of you will have no choice.
100 megabits per second (Mbps) You may also want to check
for long term evolution (LTE) and the access point network (APN)
150Mbps, for LTE-Advanced and setting under mobile networks. If
upload speed of up to 50Mbps. you are not sure about any settings,
But, again, these are just simply tap the menu icon and set
standards and, if you ask your APN to default. Another issue faced
mobile service-provider, he can give by mobile subscribers is about the
you many excuses. These include, speed with which their data-pack
network coverage (I still am unable to understand what gets consumed. In some cases, background apps (not
exactly this means), higher number of users, number of visible but still running) continue to consume data.
apps, especially heavy data consuming apps like music You may think that by touching back button or screen,
or video streaming used simultaneously by multiple you have closed the app. But it may still be working in
users, and the distance between the user and base trans- the background and sending and receiving messages.
receiver station or node (tower). Interestingly, many of those who complained about fast
The coexistence of competing mobile data consumption were found to have enabled ‘auto
telecommunications standards can also contribute to download’ for images, audio files and videos in their
technological complexity and consumer confusion. As WhatsApp. So check,
mentioned above, at present, service-providers are only if the same is your
selling 4G SIM cards. However, the service-providers case and disable
guarantee no speed whatsoever. When confronted, auto download.
they provide several explanations. And, as expected, Do check mobile
not all consumers can even understand these technical data usage of each
terms, except that there is a huge load of users on app installed on
the network. But this is all bluff. The main reason is your mobile handset.
telecom operators still use the old network and keep This setting is under
automatically switching users. For example, if you networks or mobile
are paying for 4G, then everywhere on the operator’s networks. Disable background data for apps that you
network, you must get 4G coverage. But, in practice, think are consuming more data than required. Social
you are often switched to 2G (denoted by ‘E’) or 3G media apps, like Facebook and Twitter, would remain
(H+). This explains why users can never use the 4G data active in the background even if you are not using them.
network to its full potential. So disable these apps as well restrict use of YouTube or
Here is a simple trick; but this code may not work any other video and audio streaming apps. 

63 | 24 Nov-7 Dec 2017 | MONEYLIFE

Technology.indd 1 17-11-2017 18:59:59



The Sensex and the Nifty fell 3% each during the fortnight Foreigners: Foreign institutional investors were
ended 15th November. ML Small-cap Index, ML Large-cap net sellers of equities (Rs2,081.50 crore). They sold
Index and ML Mid-cap Index went down by 2% each, while shares worth Rs53,538.87 crore. 
ML Mega-cap Index ended flat. 

Share Prices Index, May 2017=100 1,310 FII Net Investments

(Rs Crore)



6 Nov-17 15 Nov-17

90 Indians: Domestic institutional investors were net

buyers of equities (Rs3,479.39 crore). They bought
shares worth Rs34,750.73 crore. 
80 3,100
May-17 Aug-17 Nov-17 DII Net Investments
(Rs Crore)
ML Large-cap ML Small-cap Nifty ML Micro-cap 2,060
ML Mid-cap ML Mega-cap Sensex

Index 3 Nov 15 Nov +/-
ML Mega-cap Index 111.53 111.05 0% -1,060
ML Small-cap Index 103.26 101.61 -2%
ML Large-cap Index 113.48 111.56 -2% 6 Nov-17 15 Nov-17
ML Mid-cap Index 117.65 114.90 -2%
Sensex 33,685.56 32,760.44 -3% GLOBAL MARKET TRENDS
ML Micro-cap Index 93.69 90.79 -3%
Nifty 10,452.50 10,118.05 -3% 7,480

Mega-cap Gainers/Losers 3 Nov 15 Nov Change 7,360

Balkrishna Industries 1,753.45 2,157.70 23%


Reliance Capital 588.05 422.80 -28%


Large-cap Gainers/Losers 3 Nov 15 Nov Change

IFB Industries 898.40 1,180.60 31% May-17 Aug-17 Nov-17

Reliance Communications 16.90 10.15 -40% Bovespa declined 4%, while Nikkei and the FTSE fell
2% each. Shanghai Composite and Hang Seng rose
Mid-cap Gainers/Losers 3 Nov 15 Nov Change
1% each, while NASDAQ Composite fell 1%. 
Soril Infra Resources 167.35 284.50 70%
Index 3 Nov 15 Nov + / (-)
Tata Teleservices (Maharashtra) 9.98 7.35 -26% Shanghai Composite 3,372 3,403 1%

Small-cap Gainers/Losers 3 Nov 15 Nov Change Hang Seng 28,604 28,852 1%

NASDAQ Composite 6,764 6,706 -1%
Patspin India 28.55 39.40 38%
S&P 500 2,588 2,565 -1%
Pincon Spirit 70.55 42.10 -40%
Korean Composite 2,558 2,518 -2%
Micro-cap Gainers/Losers 3 Nov 15 Nov Change Taiwan Weighted 10,801 10,631 -2%
Nikkei 22,539 22,028 -2%
Ruchi Infrastructure 3.45 4.80 39%
FTSE 7,560 7,373 -2%
T V Vision 37.20 24.85 -33%
Bovespa 73,915 70,827* -4%
(All Prices in Rs) * 14 November 2017

MONEYLIFE | 24 Nov-7 Dec 2017 | 64

Money Fact.indd 2 17-11-2017 19:06:42



Stocks of software & IT (information technology) services companies were
in demand during the fortnight. Vakrangee, L&T Infotech, Polaris Consulting
Shares of office equipment
companies and garment companies
advanced 6% and 4%, respectively.
amd Zen Technologies advanced 22%, 18%, 14% and 13%, respectively.  Shares of software & IT services
companies and trading companies
Companies 3 Nov 15 Nov +/- rose 3% each. Stocks of telecom
services companies declined 10%,
ML Software & IT Serv Index Vakrangee 527.45 645.45 22%
while stocks of steel companies
Nucleus Software 350.15 414.75 18%
fell 8%. 
L&T Infotech 816.60 961.15 18%

105 Polaris Consulting 285.20 324.00 14%

ML Sectoral Trends
Zen Technologies 84.95 96.20 13% Odds 8% Telecom Services -10%
100 Zensar Technologies 786.55 872.20 11% Office Equipment 6% Shipping -9%
Zylog Systems 3.75 4.15 11% Garments 4% Steel -8%
Datamatics Global 102.30 113.20 11% Software & IT services 3% Non-ferrous Metals -8%

L&T Technology 851.80 939.95 10% Trading 3% Petrochemicals -7%

Hinduja Global 588.15 636.35 8%
May-17 Aug-17 Nov-17
All Prices in Rs

Combined inflation for urban
What’s and rural areas in October 2017
rose to 3.58% from 3.28% in
Stocks of telecom services companies were punished. Reliance September 2017. Inflation in rural
Communications, Tata Teleservices (Maharashtra), GTL , Idea Cellular and areas rose to 3.36% in October
Suyog Telematics declined 40%, 26%, 14%, 12% and 10%, respectively.  2017 from 3.15% in September
2017. Food & beverages inflation
Companies 3 Nov 15 Nov +/- rose to 2.18% in October 2017
Reliance Comm 16.90 10.15 -40%
ML Telecom Services Index from 1.75% in September 2017 in
rural areas. Milk & milk products
Tata Teleservices 9.98 7.35 -26% inflation increased to 4.04% in
GTL 16.10 13.85 -14%

Idea Cellular 106.05 93.60 -12%

120 Inching Up?
Suyog Telematics 424.70 382.00 -10%
Bharti Airtel 541.35 487.35 -10%
Bharti Infratel 413.80 377.90 -9% 100

MTNL 23.20 21.20 -9%

90 3.00%
Tata Comm 689.50 681.50 -1%
May-17 Aug-17 Nov-17
All Prices in Rs

BULK DEALS Oct-16 Apr-17 Oct-17

Date Company Buyer Seller Rs Cr October 2017 from 3.47% in

September 2017. Inflation for
7 Nov-17 Emami Paper Mills Ganpati Industrial Pvt Pankaj Jalan 5.15
clothing decreased marginally
9 Nov-17 Appu Marketing Manufacturing Leela Merchants Pvt Bhavishya Ecommerce Pvt 0.58 to 5.44% in October 2017 from
5.49% in September 2017. For
9 Nov-17 Franklin Industries Rathod Manoj Chhaganlal Pratyakshya Sharebrokers 0.33
fruits, inflation fell to 5.85% in
14 Nov-17 Escorp Asset Management Namrata Sajankumar Bajaj SRK Tradelinks Pvt 0.20 October 2017 from 6.18% in
10 Nov-17 Naysaa Securities Ramnath Sharma Lalit Punamiya 0.19
September 2017. For sugar &
confectionery, it increased to
8 Nov-17 A M Febcon Pinalben R Shah Sandip Jayshukhlal Shah 0.13 7.05% in October 2017 from
6 Nov-17 Nalin Lease Finance Dilipkumar Nalinkant Gandhi Ronakpuri Pankajpuri 0.13 6.98% in September 2017. 

65 | 24 Nov-7 Dec 2017 | MONEYLIFE

Money Fact.indd 3 17-11-2017 19:06:59

Tweeting to Lobby with organising the PM’s meet with
the Pakistani PM, Nawaz Sharif, in

O n 8th November, industrialist

Sajjan Jindal tweeted: “Dubious
promoters should not be allowed
‘dubious promoters’ (DPs) are openly
saying that they will retain control.
Also, we have no faith in public sector
December 2015.
Is it because this government
responds faster to social media? Or
to submit the rehabilitation plan bankers or government officials who is this about Indian industrialists
to prevent misuse of the IBC.” We are colluding with DPs even today. learning to speak openly rather than
absolutely agree; but, ironically, a lobby covertly—at least, about rivals
decade ago, he was in the same boat if not about government policies? Mr
as other steel barons who were happy Jindal also had some policy advice on
recipients of bailout or corporate how the bidding and transition process
debt restructuring. But, unlike the ought to be handled. He wanted
Ruias of Essar, Vinod and Pramod that trading in the shares should be
Mittal of Ispat, or the Singhals of suspended during the bidding process
Bhushan Steel, he transformed his (we agree) and the new investor “must
business. Sajjan Jindal, who is a key have flexibility for automatic de-listing
bidder for distressed steel assets, was of the company as the equity value
provoked to tweet after the Insolvency is not there in most of NCLT cases”
and Bankruptcy Board of India (we disagree). There is no mention of
(IBBI) amended the Insolvency and But why did Sajjan Jindal tweet, what happens to minority shareholders
Bankruptcy Code (IBC) regulations rather than pick up the phone? He who may be holding on to currently
allowing ‘credit-worthy’ promoters to tagged the finance minister, law worthless stock that could soar on the
bid for their own assets. minister and the prime minister’s acquisition. The upshot of this twitter
Gaming the IBC is a real concern. office (PMO) in his tweets. But Mr exchange is that the government is,
The first case under the new rules Jindal’s proximity to this government apparently, open to tweaking the rules
had a shocking outcome and some is well known; he is even credited again! — Sucheta Dalal 

English TV: Few Viewers, Big Advertisers

E very week, BARC India puts out
television viewership data which
shows that the stardom enjoyed by English
viewers (average/week). The subsequent
10 weeks showed increased average
viewership for both, Republic and Times
weeks. Although Republic retains
leadership, the Times group could,
eventually, occupy major viewership
news anchors is completely unjustified Now (R:1027,000; T: 960,000). In the past and corner the bulk of advertising in the
by the pathetic viewership of the genre. 10 weeks, though, both channels show English news genre with its two channels.
The advertising that it corners is also much lower views while retaining their The others may struggle. Viewership for
far in excess of the eyeballs it attracts, positions (R: 760,000; T: 681,000). English news are an embarrassing fraction
probably because marketing honchos
who carve up advertising budgets have
English channels on their favourite list
even if they don’t watch them. Before
Republic TV was launched on 5 May
2017, Times Now, with Arnab Goswami
at the helm, was the undisputed leader,
averaging weekly 842,000 views. When
Republic hit top position immediately, it All other English channels have been of all language news channels, where
was expected to eat into Times Now’s big losers too. Their viewership has viewership is at least 10 times higher
viewers. Extraordinarily, Republic remained in the 300,000 region or fell. than Republic’s. Clearly, English channels
averaged 1,193,000 viewers over the Only Mirror Now, from the Times stable, neither know, nor care, about what the
next 10 weeks (week 19 to 28) but Times has doubled viewership from 88,000 (in viewers want. And why should they? If the
Now was only marginally down at 774,000 week 8 to 18) to 189,000 in the past 10 advertiser doesn’t bother? — SD 

MONEYLIFE | 24 Nov-7 Dec 2017 | 66

PS.indd 1 16-11-2017 11:02:33

Advertisements.indd 4 14-11-2017 19:07:53
REGISTERED WITH THE RNI UNDER NO. MAHENG/2006/16653. Postal Registration No:
Date of Publishing 17 November 2017. Date of Posting Alternate Tuesday & Wednesday.

Advertisements.indd 3 16-11-2017 20:48:41