Moneylife 28 May 2015

SUCHETA DALAL ON:
SHORT-SIGHTED CORPORATES
UNDERMINING ASCI
Personal Finance Magazine
FAREWELL DAGAJI:
TOP GOLD EXPERT
INDIAN AVIATION:
MAULED BY DISCRETION
28 May 2015
Pages 68
Rs 45
(SUBSCRIBER COPY NOT FOR RESALE)
www.moneylife.in
IN
N A FA L L I N G M A R K E T
Stocks with a better model, rising
earnings and export growth, from a
database of 1,400 stocks
New
STOCK WATCH
H
Telecom Sector
Ringing Clearly
UPL
Agrochemicals Boom
Geometric
No Growth
Bata
Slipping Badly
Wockhardt
Wild Ride
FII vs Fundametals
Strange Love
Market Signal
200-dma
Kotak Bank
Strong Results
Cover Page_241.indd 2
08-05-2015 23:11:23
Advertisements.indd 5
07-05-2015 21:32:21
04-05-2015 14:09:38
ISSUE CONTENTS
28 May 2015
Winning Stocks
icking good stocks in a bull market is

difficult, as most stocks, deserving or not,
have been pushed up to their multi-year highs.
And, when the market corrects, all stocks suffer
a sharp decline. In our Cover Story, we sifted
through our database of 1,400-odd stocks to
pick nine stocks that reported a substantial,
and continuous, growth in earnings over the
past four quarters, thanks to some advantage
of strategy, business model, or marketsthat
they enjoy. These companies operate in a niche
market and have a well-diversified geographical
presence. All of them have strong export
performance which helps to improve even their
domestic operations. Turn to page 30 for these
nine stocks that appeared on our radar.
Controversies surrounding the Indian civil
aviation industry continue. Dr Subramanian
Swamy, in a letter to the prime minister (PM),
alleges that Kalanithi Maran, the former owner
of SpiceJet, entered into an unholy agreement
to transfer his holding to Ajay Singh at an
undisclosed price. Surprisingly, the market
regulator did not insist on an open offer. Will
the PM order an inquiry into the SpiceJet deal,
or will it end up in the court like the Jet-Etihad
deal? Sucheta raises these and other questions
in her Different Strokes section.
In her Crosshairs column, Sucheta writes
on how the advertising industry, beneficiary of
a strong, self-regulatory body, is working at
damaging the Advertising Standards Council of
Indias (ASCIs) credibility. This may attract the
governments attention and given the lack of
accountability of every statutory regulator, this
may adversely affect us. Sucheta also reminisces
about Madhusudan Daga, Indias finest gold
expert, who led an eventful life and has just
passed away.
As you would have noticed, we have an
extensive new section, Stock Watch. As always,
do write in to us with your feedback on what
you think of it. Moneylife Foundation will be
conducting an exclusive seminar titled Stocks
for Building Long Term Wealth on 23 May
2015 in Pune. Dont miss it, if you are there.
Debashis Basu
30 Cover Story
9 Safe Stocks In a Falling Market
Moneylife Research Team chooses stocks with a better
model, rising earnings and export growth, from a database
of 1,400 stocks
14
Regulating Advertising
Madhusudan Daga: Unsung Here, Admired Abroad
16 Different Strokes
Arbitrary and discretion-based policies bedevil the

aviation sector
18
Moneylife
Quiz no
MONEYLIFE
QUIZ
206
21 Your Money
Beware of Fraudsters Posing as SEBI Officers!

National Insurance Company Fined Rs5 Lakh
Builder Must Give Written Possession Notice to Buyer
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 | 28 May 2015 | 4
Content.indd 2
08-05-2015 23:03:06
07-05-2015 21:32:45
CONTENTS
INTERVIEW
24 Ifwe ahavecompany
selected is
oingg badlyy
doing
oday,y do we
today,
worry?
y The
nswer is No
answer
hankar
Shankar
Naren
FUND FACTS
& Worst Mutual

28 Best
Fund Schemes
FIXED INCOME
and IRFC Tax-free

29 NHAI
54 EMI
Issues
Bonds Coming Soon?
Yields Up Last Fortnight
G-Sec Yields Up
27 Smart Money
46 Insurance
Trends
Health Insurance
Reliance Lifes Health Total Is a
Mix of Several Covers
56 Bail,
not Jail
The Supreme Court had reiterated that
bail is a matter of right
ML FOUNDATION EVENTS
Care of
50 Taking
Your Radiator
How Good Are Fund Managers?
36 Street Beat
TECHNOLOGY: MOBILE
38 Stock Watch
YOU BE THE JUDGE
Fine Print
Removing a radiator to clean it can

become a major exercise
TV Today Network:
Market Reach
EMIs are a great boon, provided you

borrow responsibly or dont turn
unlucky
INSURANCE
AUTO
STOCKS
LEGALLY SPEAKING
Mobile
51 Safe
Banking
Mobile banking is becoming more
popular with users across all age
groups. Here are some tips to avoid
the pitfalls that loom large, points out
Yogesh Sapkale
Money Bill:
58 Black
What Good Is It?
The new Black Money Bill
will neither stop black money
generation, not bring black
money back
EARNING CURVE
on
60 Women
Boards
Companies with a higher percentage
of women at the top performed better
Telecom Sector: Ringing Clearly

UPL: Agrochemicals Boom
Geometric: No Growth
Bata: Slipping Badly
Wockhardt: Wild Ride
BEYOND MONEY
HEALTH
52
Stop those
Statins!
FII vs Fundametals: Strange Love

Market Signal: 200-dma
Kotak Bank: Strong Results
Network on
66 Knowledge
Autism
N Madhavan writes about how
a network of parents of children
diagnosed with autism and
professionals dealing with the
challenged is growing everyday, to
help one another
Market Trend: Going Nowhere
45 Long Term
Model Long-Term Portfolio
Content.indd 4
Almost everyone who took statins

suffered not one but multiple sideeffects
Pulse Beat: Medical developments
from around the world
DEPARTMENTS
Readers Response ........... 8
Book Review ....................62
Money Facts ....................64
08-05-2015 23:03:27
5 Problems with
Mediclaim &
7 Tips To
Handle Them
Buying health insurance is one of the most worrisome tasks for us. The products
are complex, making it tough for us to compare them. Policies differ in exclusions,
conditions and f ne print. If you slip on even one of the conditions, your claim may be
rejected or cut down. No wonder, a large number of cases generate disputes and
some end up as complaints with the Insurance Ombudsman or consumer courts.
There are several issues with a mediclaim contract.
1. The terms and conditions keep changing each year and premium
can get hiked suddenly.
2. No two health insurance policies are alike. Comparing the benefits is
tough.
3. Insurers are not bound to increase your sum assured at the time of
renewal.
4. At the time of buying, its difficult to know if the insurer will find
excuses to deny your claims.
5. Insurers entice you with a lower premium when you are young and
increase it once you get older.
Since savers are often not aware of these factors, they may fall for the
marketing blitz of insurers and the persuasion of agents. How to handle
all these issues?
What you need is an independent entity to help you with two things.
One, a short list of products right for you, based on unbiased and deep
research. Two, support you, if your claim is rejected.
This is precisely what we at Moneylife Smart Savers Network (MSSN) do.
We cut through the hype, hyperbole, duplication and complex f ne
print to help you select the most suitable products. We know that as an
individual you will f nd it hard to do all the research yourself.
Also, you need a voice when you have to fight for your valid claim.
Being part of the MSSN community can be an advantage in this. If your
claim is wrongly denied, we would fight for you.
An important part of the membership is continuous handholding. As a
member, if you have any questions before or after you buy mediclaim,
you can ask our experts for unbiased and practical solutions.
savers.moneylife.in
Benefit More from Less
MSSN-Promotional Ads.indd 1
Tips to Remember
1. Lifelong renewal is an
important product feature
you must consider.
2. In- house claims processing
is better than third party
administrators (TPAs).
3. Some insurers offer
discounts for not having a
TPA, but you may have to
give up other features.
4. Check the premium for
older age band, which
would give you a fair
idea of the difference
between younger and older
customers.
5. Some insurers offer
discounts for buying online.
If you dont need an agents
help, buy online to save on
premium.
6. Disclose truthfully. Insurers
look out for even the slightest
error to deny claims.
7. Mediclaim also covers
pre- and post- hospitalisation
expenses such as doctors
visit, diagnostic tests, etc.
08-05-2015 22:48:03
Volume 10, Issue 7

15 May 28 May 2015
Debashis Basu
Editor & Publisher

editor@moneylife.in
Sucheta Dalal
Managing Editor
sucheta@moneylife.in
Editorial Consultant
Dr Nita Mukherjee
nitamuk@gmail.com
Editorial, Advertisement,
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Moneylife is printed and published by

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Editor: Debashis Basu
Total no of pages - 68, Including Covers
RNI No: MAHENG/2006/16653
SIDE-EFFECTS OF STATINS
I am a regular reader of Prof Hegdes articles
in Moneylife ever since I became a subscriber
of the magazine, about four years back. I am a
retired engineer aged 63 years. I was working as
general manager in a well-known public sector
Mutual Fund investments
company at Mumbai.
are subject to market risks,
read all scheme related
Please convey my sincere congratulations to
documents carefully.
Prof Hegde and appreciation for the very
enlightening articles that he has authored in the
magazine. I really appreciate the bold approach.
Write to
the Editor!
In the current context, I also believe that drug
companies and some of the medical professionals
have adopted a very commercial approach.
a prize
Healthcare, in true sense, has become secondary.
I really admire his knowledge, thinking and
writings. I feel treatment should be done by
minimum medication and non-drug methods/
approach should be maximised. I feel that
drugs should be prescribed only where they
are absolutely necessary. Side-effects of many
drugs may be detrimental, although I am not
competent to comment on such matters.
Prof Hegdes article (Moneylife, 16 April
2015) was very enlightening and it has raised
alarm in my mind since I have been taking
statins (Rosuvastatin 5mg) for the past two-three years.
Considering
ears. C
onsi
on
side
deri
ring
ng
the possible side-effects of such drugs, I would like to reassure myself
whether it is really required in my case.
In fact, I discussed this aspect with my doctor sometime back, after
I read about the possible side-effects of statins in another article;
but he was reluctant to change his view. As per the doctor, it has got
more advantages than disadvantages. I would humbly request you
for re-evaluation, if possible, or maybe you can suggest someone
who has got the same/similar kind of thinking/mindset. I am located
at Mumbai. In case Prof Hegde is not located in Mumbai (or nearby
area), I can mail my history and scanned copies of reports for his
``
WIN
Letters.indd 2
08-05-2015 22:28:06
Wealth Manager:
Are you paying for Vanity?
Indians have grown rich over the past decade.
Along with wealth, they have acquired a new
appendage: wealth manager. There is no free
lunch in life so it is natural that for getting such
a dedicated sherpa for your wealth, you would
the yields fell 50bps (basis points), the return was

calculated to be around 13.5% post the payment
of the loan.
A few months later, the benchmark yield shot
up to a high of 9.24%. Mr Shahs investment had
declined by over 10%. He was facing a capital
loss of over Rs80 lakh, not to forget the interest
payable. His wealth manager assured him that
interest rates would fall in the coming months and
his investment would deliver positive returns.
Interest rates didnt fall. In fact, the opposite
happened. At the end of the one-year, when
the debt schemes were to be sold and the loan
repaid with interest, the schemes had gained
about 2%, while the interest payable was 9.50%.
Mr Shah was facing a loss of around Rs50 lakh.
The investment bank stood to gain on this
transaction, on boththe interest on the loan as
well the commissions earned from the mutual
fund schemes. So much for your knowledgeable
wealth manager and the get-rich schemes.
be charged. Except that, it is worth wondering

whether you are actually paying for nothing other
than vanity. Read this story.
Rakesh Shah, a top manager with a multinational
company had crores lying with a bank. His wealth
manager oered him the best investment of
his life. He would take a loan with his existing
investments as a security and invest the loan
amount in the some debt schemes. At the end
of the year, he would sell his debt scheme and
pay the interest on the loan at a rate of 9.50%. If
Investing success comes out of simplicity,

method and patience. It is unglamorous. Wealth
managers peddle exactly the opposite
complexity and exotica. It leads to losses.
So, what should you be doing?
May we suggest Moneylife Smart Savers
Network, a no-bias, no-conflict platform that
will not allow financial companies and their
intermediaries to take you for a ride? By reducing
your choices to the right ones you need, we
dramatically increase the quality of selection. And
we support you with unbiased information and
continuous handholding. We can guarantee you
will not be a victim like Mr Shah.
savers.moneylife.in
Take No Chances. Fix Your Finances
MSSN-Promotional Ads.indd 4
08-05-2015 22:48:41
LETTERS
the
Best
letter
Situation Remains
Unchanged
his refers to Vinayak

Shrivastavas letter How to
Collect Refund (Moneylife,
5 February 2015).
I would like to add the results
that my consumer complaints cell achieved while
dealing with a complaint about online/telly-seller
Naaptol.com, way back in 2011. Attracted by a print
advertisement from Naaptol, offering a mobile with
80% discount to the price, a senior citizen placed the
order on telephone. In the ad, a figure of Rs6,000/was mentioned as the price, followed by Cut it
out and the offer price was written as Rs1,200/-.
The packet was delivered to him. The phone worked
fine; but the sealed box; which contained the Chinese
phone; did not specify the MRP, which is mandatory
for on all packaged commodities in India, with
manufacturers name address and customer care
EID/phone number, etc. All these were missing. The
purchaser approached me about how this could have
happened and how could he verify that, indeed, it is
heavily discounted. For sure, the piece was obtained
from the grey market. Luckily, the consigners (it
was received through courier) address of Malad
(Mumbai) was found in the despatch paper.
I, therefore, lodged one complaint against Naaptol
with the ASCI (Advertising Standards Council of
India) for a misleading print advertisement and
another complaint with the Controller of Legal
Metrology against the telly-seller Naaptol and the
dealer at Malad. The dealers premises at Malad
were raided by the Legal Metrology inspectors and
they seized mobile handsets worth Rs1,47,000/- from
the dealers godown, which were found to be without
MRP or manufacturer details. After following due
procedure, ASCI too upheld the complaint and
` enlightened evaluation. Alternately, he can refer
me to a medical professional of Mumbai who has

similar clarity/mindset. I shall be grateful for your
understanding and support.
Arun Kumar, by email
We have forwarded the mail to Prof Hegde and you
will hear from him directly. Editor
Mutual Fund investments
directed Naaptol
are subject to market risks,
to stop issuing such
misleading ads. No
other action was taken
against Naaptol. The
Mohan Siroya
department of Legal
Metrology, on enquiry,
YOU WIN A
said that when their
PERSONALISED
inspectors visited
CLOCK
their premises at Navi
Mumbai no goods
were found stocked
there. Naaptols
defence was that they
were merely working
as a BPO for the
Mohan Siroya
dealers of various
products and,
thus, they were
not responsible
for the absence of
printed MRP on the packages
by
dealers.
agess sold
so
old
db
y de
d
eal
aler
ler
ers.
s.
s.
Strangely, this plea was accepted
by the
Legall
db
h L
Metrology department. Even the evidence, that
credit card payment was made in the name of
Naaptol, did not impress the authority to hold them
responsible for any legal violation. This appears to
be a big lacuna in the system which may allow all
online sellers, like Snapdeal, Ebay, or others of their
ilk, to get away from the clutches of law under the
plea that they are merely acting as BPOs, on behalf
of sellers. We even represented the matter to the
consumer affairs/protection department of the Union
government but, till today, the situation remains
unchanged.
Mohan Siroya, by email
Congratulations
ROUGH GUIDE NEEDED

This is with regard to Buying Stocks Vs Equity
Funds by R Balakrishnan. In the first paragraph,
there is a mention of timing needed for lump-sum
mutual fund investment. Can a rough guide or process
be indicated on what factors to look for, to make this
happen?
Naresh Narasimhan, online comment
``
Letters.indd 4
08-05-2015 22:28:25
LETTERS
` LICENCE NOT VALID?
This is with regard to When the Going Gets Tough...

by Veeresh Malik. How does one identify whether
it is an illegal toll booth or a valid one? The receipts
can be faked and many toll booths do not provide
computerised receipts.
I had faced a similar situation wherein I got a pollution
control certificate from a petrol pump. It looked like
a valid certificate with all the details. A couple of days
later, I saw in the newspapers that the checking centre
was shut down and the owner was arrested, as his

licence was not valid for the past three years.
So, how does a common man know which are the
valid placesbe it a toll booth or a pollution-checking
centre?
My suggestion is that there should be a website
which gives the list of toll booths by NHAI or state
government and a similar listing of such pollutionchecking centres.
Sudheer M, online comment
OUR READERS WHO CLICK WITH US

Heres a sample of the kind of feedback that we receive from our readers on
our vibrant website, www.moneylife.in
SHAME ON SUCH A GOVERNMENT!

This is with regard to SEBIs Lip Service on
Governance by Sucheta Dalal. There are over
75,000 depositors; most of them senior citizens who
have no source of income other than interest on
investments in companies like Neesa, Phadnis and
Helios & Matheson. These companies claim to have
huge reserves/assets; yet, they refuse to pay investors
their rightful interest or return the capital. What
kind of governance do we have that such companies
are allowed to get away with blatant dishonesty and
swindling? What is Narendra Modis government
doing about bringing such culprits to book? What
faith can we place in the countrys justice system
when their dishonesty is clear as daylight; yet, no
step is taken towards retribution? Shame on such a
government!
Anita Pai Raiturker
LIVING CONDITIONS OF MASSES

This is with regard to Who Does the Modi Sarkar
Really Represent? by Sucheta Dalal. Looks like
the time is ripe for a SWOT of sorts of the India
Growth Story! Just speeches can no longer sustain

peoples enthusiasm. Nor can expectations about the
inflow of foreign capital or slogans like Make in
India. Something real has to happen at the ground
level. The negative indications are coming from the
approach of political leadership which has not risen
beyond caring about winning elections. The country
should take advantage of the support received
from Narendra Modi, Vinod Rai, Arvind Kejriwal,
Sitaram Yechury and Raghuram Rajan, who have
opened debates during this decade, which can
change the living conditions of the masses in India.
MG Warrier
TRANSPARENT DISCLOSURE?
This is with regard to Relief for Property-buyers?
by SD Israni. It is really quite simple. Propertybuyers must get transparent disclosure of carpet area
in addition to built-up area. This way, the consumer
can compare and decide whether he wants to buy
more common built-up space or more personal
space.
Ralph Rau
HOW TO REACH US
Letters:
Letters to the Editor can be
emailed to editor@moneylife.
in or can be posted to: The Editor,
Moneylife Magazine, Unit No. 316,
3rd Floor, Hind Service Industries,
Off Veer Savarkar Marg, Dadar
(W), Mumbai 400 028 or faxed

to 022-49205022. Letters must
include the writers full name,
address and telephone number
and may be edited.
Subscription Service:
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028 or call 022-49205000 or fax

to 022-49205022.
Advertising: For information and
rates, email us at
sales@moneylife.in or call
91-022-49205000.
11 | 28 May 2015 | MONEYLIFE
Letters.indd 5
08-05-2015 22:28:42
www.moneylife.in
Exclusive news & views with a big dierence
EXCLUSIVE NEWS
News you had be er not miss
Making a mockery of
the Nifty?
India Index Services & Products Ltd (IISL),
a group company of the Na onal Stock
Exchange (NSE) that manages CNX Ni y
and other indices, decided to include
Bosch Ltd in the elite 50-stock benchmark
removing IDFC Ltd, from 29th May.
While the index maintenance subcommi ee at IISL takes such decisions
Is your property insured for a Nepal-like earthquake?

Check your exis ng insurance to find out whether you are really covered
for earthquake damage. Property-buyers should ask for earthquake cover
and pay addi onal premium
on periodic reviews, the ques on is: How

did Bosch, one of the most expensive
scrips, with a price-to-earnings (P/E) ra o
of 67.9, get included in the benchmark
index?
Was it done to boost volume and price
of Bosch or is there any other reason?
Some smell manipula on, given the funny
names that are included in various NSE
indices.
The charge is serious because of the
implica on of this move.
ML FOUNDATION
Safe and Smart
Vikram Bha files police complaint against former

partners Ajay Bishnoi and Amul Gabrani of Tecpro
A police complaint filed by well-known film director Vikram Bha against
the promoters of ASA Produc on seems set to expose a can of worms
KPIT Technologies stock tanked before the results

The share price of KPIT Technologies fell sharply before announcement of
the weak March quarter results
Nepal Earthquake: Watch out for fraudulent chari es

Everybodyfrom radio cabs to kids with bannershas jumped onto the
Help Nepal fund-collec on drive. Consumer Aairs has issued a warning
about fake chari es and phishing messages collec ng relief for Nepal
EXCLUSIVE VIEWS
On issues that ma er to you
>> Moneylife Founda on conducted a

seminar for students on Saturday,
9 May 2015 on How to be Safe and
Smart with your Money by Sucheta Dalal
and Debashis Basu. You too can benefit
from these programmes by registering at
www.mlfounda on.in Membership is free
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08-05-2015 22:43:17
Credit Helpline Ad.indd 1
04-05-2015 14:12:38
Regulating Advertising
Large advertisers are undermining the
self-regulatory body, ASCI. Do they want a
government regulator?
ften, industry fails to realise that it has a good

thing going with self-regulation. By its own
actions, it can create a draconian alternative
that neither helps the industry, its intermediaries or
consumers. After all, retiring bureaucrats are ever eager
to propose the setting up of independent regulatory
bodies which offer them an extension of service at
better pay and perks than the best government jobs.
It has happened with the capital market where
faction-ridden brokers ran stock exchanges like private
clubs. We have five financial regulators, but almost no
redress for retail consumers grievances. A regulator for
the real-estate industry is a crying need due to rampant
flouting of rules, harassment of consumers and refusal
to self-regulate.
However, the advertising industry has to be the
strangest of them all. It is almost as though the
industry, which is the big beneficiary of a strong,
self-regulatory body, wants to work at damaging the
Advertising Standards Council of Indias (ASCIs)
credibility.
For at least 15 years now, I have been part of
civil society or NGO groups discussing the need
for government regulation of false and misleading
advertising. The allegation was that ASCI was an
ineffective self-regulator. In 2011, the then minister
for consumer affairs, KV Thomas also made similar
remarks, even as the government was notoriously lax
in enforcing a clutch of statues specifically to protect
consumers.
Since then, ASCI has sharpened its act considerably.
It has expanded its reach by a more systematic process
of monitoring advertisements, permitting the filing of
online complaints and using social media to increase

outreach and awareness. It has also launched an
e-learning portal with an online training programme
for advertisers and communication professionals.
The next step would probably be for ASCI to make
it mandatory for marketing executives of member
companies and creative and client-service executives of
advertising agencies to take this course and understand
what is unacceptable advertising and why it is so.
This would probably put a stop to ASCI members,
mainly multinational companies (MNCs), behaving like
petulant children and dragging ASCI to court when
complaints against their advertisements are upheld.
Sistema Shyam Teleservices filed cases against two
ASCI orders. The first was one where a large number
of consumers had found its portrayal of a womans
birthing process gross and indecent and offensive to
women. Yet, it obtained a stay order from the Delhi
High Court. The second time, however, its legal action
over the speed claims of its Internet service did not
work to its advantage.
Amazon, Hero MotoCorp and a water purifier

company were others who challenged ASCIs orders
in court. But Reckitt & Coleman (R&C), which
makes Harpic and Dettol, has outstripped allwith
four cases. Interestingly, R&C, which thinks ASCIs
``
MONEYLIFE | 28
27 May
November
2015 2014
| 14 | 14
Crosshair.indd 2
08-05-2015 21:13:01
` processes are biased, has no problem using its fast-
track mechanism to complain about its competitors.

Another set of entities, which has challenged ASCI
in court, are teleshopping channels who mint money
by allowing a slew of unknown companies to market
magic potions and miraculous remedies through actors
and television stars.
Strangely, this flurry of cases by MNCs with
mega advertising budgets comes at a time when
ASCIs credibility is actually at an all-time high. The
information & broadcasting ministry has made the
ASCI Code a part of the Cable Television Networks
Act, thereby making it mandatory for television
channels to comply with the Code.
In 2014, the ethics committee of Medical Council
of India also strongly backed ASCIs effort against fake
advertisements. On 18 March 2015, the department
of consumer affairs launched a web portal called
Grievances against Misleading Advertisements with
a focus on agriculture and food, health, education,
housing, financial services and e-commerce.
Someone has to tell these bulge-budget advertisers
that if they prefer a government regulator to sit in
judgement on their advertisements, it would ratchet
up their costs, compliances and disclosures, not to
mention delays and endless red-tape which will impact
creative freedom. Given the utter lack of accountability
of almost every statutory regulator set up by the
government, we know for sure that it would not help
either consumers or advertisers. Maybe it is time for
the industry to get together for some blunt-speak.
Madhusudan Daga: Unsung

Here, Admired Abroad
Indias foremost gold expert, who led an
extraordinary life, quietly passes away
n 3rd April 2015, Indias best-known and

internationally famous expert on gold, gems
and jewellery died at the age of 88. Only a few in
the jewellery industry knew of it and none of the
mainstream media or the business press bothered to
report the passing on of this amazing man who lived
an unorthodox life and had the most extraordinary
spectrum of friends and acquaintances.
Fittingly, the most moving and detailed obituary for
Dagaji, as he was known, came from Stewart Murray
in The Alchemist, a publication of The London Bullion
Market Association. Mr Murray writes, Many are
aware that he was honoured by the Indian government
as a freedom fighter after independence in 1947. His
contribution to the struggle (including the blowing up
of railway lines) led to him being jailed by the British
authorities and there was a delicious irony that the
new Indian government

subsequently awarded
him a lifetime
freedom pass on
the Indian railway
system.
Madhusudan
Daga criss-crossed
India and the globe
on the gold trail;
visited mines and
bullion markets; knew
about the use of gold
and silver in zari and gutka;
followed the gem smuggling trails from Myanmar and
Nepal; and had first-hand knowledge of the gold and
contraband smuggling network that was then led by
the underworld don Haji Mastan. Importantly, his
knowledge was not limited to India; he had visited
all the places that mattered, including international
capitals, such as London, Dubai and African cities,
which exported the shiny yellow metal to India.
He began to cover the bullion industry in the 1950s
and was at his peak right until the turn of the century.
Mr Daga wrote for publications in India and abroad.
When it came to information, he was the go-to man
for everybody connected with the gold and jewellery
industry, including central bankers, customs officials,
ministers, bureaucrats and all the smugglers.
On long walks on Worli Seaface almost a decade
ago, Mr Daga used to regale us with the most
extraordinary stories of his life. When he came to
Mumbai, one of his first jobs was as a spot boy to a
famous actress. Here, too, he rose rapidly and even
went on to produce a Hindi film with a famous star of
that time.
Around then, he became fascinated with horseracing; not one to be content with betting, he even
owned a race horse for a while. Mr Murray writes that
Dagajis whiskey drinking, playboy phase ended when
he came in contact with his guru.
Those of us who knew him only after that phase
saw an earnest and busy man with thick spectacles, a
safari suit and a hard briefcase. It was probably hard
to believe that this was a man who never buckled
under pressure and was unafraid of speaking his mind,
especially against the Gold Control Act. The All India
Gem and Jewellery Trade Association, which gave him
a lifetime achievement award, noted how he could
predict market trends with unbelievable precision.
He has been a contributor to the annual Gold
Survey, published by Consolidated Gold Fields since
1986 brought out by the famous Timothy Green.
Mr Dagas contributions to the Survey, and to the
knowledge bank of Mr Green and Mr Murray about
the Indian market, were immense.
Crosshair.indd 3
08-05-2015 21:13:26
DIFFERENT STROKES SUCHETA DALAL
Flights of Fancy
Arbitrary and discretion-based policies bedevil the aviation sector
he Indian civil aviation industry continues to lurch

Dr Swamy says, SpiceJet possesses fixed assets of
from one controversy to another, without much Rs20,000 crore and a little more than 40% shares are held
respite. The main reason is that India believes in by the public and public sector financial institutions. Yet,
governance by discretion. Every rule, and policy, remains it was exempted from making an open offer. He makes
on paper and is conveniently waived to suit specific political several other allegations including the source of funds of
interests.
Mr Singh and links to the 2G scam-accused Shahid Balwa.
Bharatiya Janata Party (BJP) leader Dr Subramanian
But what is new about SEBIs attitude? The United
Swamy has exposed this, once again, in the case of the Progressive Alliance (UPA) government had converted SEBI
SpiceJet deal in his explosive letter to prime minister (PM) into a powerful tool for dispensing discretionary favours or
Narendra Modi, on 6th May. He wants the PMs office to set crippling punishment. Today, the market watchdog can shut
up a special investigation team
down capital market-related
and direct the Central Bureau of
businesses or choke their fund
Investigation (CBI) and Serious
flow with little accountability
Frauds Investigation Office
for its actions. It can bury
(SFIO) to probe the various
investigations for years, or let
illegalities that he alleges. Owned
off the guilty by filing consent
by the powerful Maran brothers,
terms and a payment. The
amount paid under consent
SpiceJet was bailed out by its
former promoter Ajay Singh
orders varies widely for similar
who is known to be close to
offences. Checks and balances,
the BJP government. Dr Swamy
which are part of plea bargains,
alleges that Kalanithi Maran, the
settlements, arrests and consent
Kalanithi Maran
Ajay Singh
former owner of SpiceJet (and
orders abroad (especially in
an accused in the Aircel-Maxis
the US from where we borrow
SpiceJet is a listed entity; yet,
2G scam being investigated
most of our new regulation), are
by the CBI), entered into an
ignored in India. There are no
the Securities and Exchange
unholy agreement to transfer his Board of India (SEBI) did not insist speaking orders in consent cases,
shares at a secret price.
so there is no way of knowing
on an open offer to the public
Mr Maran transferred 58%
whether the money paid is
and supported what Dr Swamy
of his holding to Ajay Singh at
commensurate with the extent
alleges is a secret and illegal
an undisclosed price which,
transfer of shares from the Maran of wrongdoing. Even the first
Dr Swamy alleges, is illegal,
arrest ever made, under SEBIs
brothers to Ajay Singh
since SpiceJet is a listed
newly-acquired powers, did not
company. Further, the valuation
bother to follow the due process
of SpiceJets shares as dud by the global investment bank, and was thrown out. Unlike with regulators around the
Goldman Sachs, is arbitrary and not in line with accounting world, the judiciary does not oversee SEBIs actions.
practices, he says.
It remains to be seen if Dr Swamys challenge to SEBIs
Interestingly, although SpiceJet is a listed entity, the discretionary waiver of the SpiceJet open offer will finally
Securities and Exchange Board of India (SEBI) did not shed some light on its working. And whether the PM will
insist on an open offer to the public and supported what order an inquiry into the SpiceJet deal, or it will end up
Dr Swamy alleges is a secret and illegal transfer of shares in the court like the Jet-Etihad deal.
from the Maran brothers to Ajay Singh. The aviation
Now lets look at what is happening with other airlines.
minister also allowed the transfer at a reportedly dud The recovery of Kingfisher Airlines Rs7,000-crore debt
price of a listed entity by underwriting the source of the to Indian banks is making slow progress. There is no light
Rs1,300 crore infusion of funds by Mr Singh.
at the end of the tunnel on recovery of loans and taxes or ``
DIFFERENT STROKES.indd 2
08-05-2015 22:20:10
DIFFERENT STROKES SUCHETA DALAL
` paying the salaries owed to its staff. And, although we
going to make much of a dent; even the reported three-year

see less of Vijay Mallya strutting on the society pages, he plan to monetise Rs5,000 crore seems rather tiny. Why
remains a free man. Tax authorities impose harsh punitive not a White Paper which has a fund-raising plan based
action on lesser mortals with no political influence but on professional valuation and optimisation of land and
property owned by the airline across India?
Mr Mallya continues to receive benevolent treatment.
Reports that Air India will review the purchase order
In the Jet-Etihad deal, Dr Swamy has alleged that
bribes were paid to politicians who are connected
con
to the of Dreamliners, or that it will purchase 50 new aircraft to
2G licence scam. According to him,, Etisalat, a company upg
upgrade its fleet over the next five years, are in the public
of the Emir of UAE (United Arab Emirates),
mirates), had partnered domain as media leaks attributed to unknown sources.
information leaked to the
with Shahid Balwa of Swan Telecom,
m, a key accused
Why should we see driblets of info
press without accountability instead of a solid re
revival
in the 2G scam. In order to compensate
sate
the Emir for the $1 billion loss hee
plan, especially when Air Indias performance
suffered when 2G licences were
re
is reportedly monitored on a weekly
cancelled, he was allowed to buy
ya
basis in line with the PMs
24% strategic stake in Jet Airways
ays for
orders?
Rs2,058 crore as compensation.. This came
with a bunch of generous bilateral
ral agreements
such as quadrupling its flyingg rights out of
India at the cost of Indian carriers
arriers and development of
domestic hubs. The comptroller
ler
and auditor general (CAG) of
India had also alleged reckless
Air India continues to make
allocation of air space to foreign
losses and is surviving on a
On 28th April, a
airlines.
performance-related
d Rs30,000news agency reported that the
The Supreme Court (SC) has
crore bailout by the exchequer
not only admitted Dr Swamys
d et had provided
approved by the UPA government Union Budget
petition but, in August 2014,
only Rs2,500 crore for Air India
di
in 2012. It has a total debt of
asked the Central government
out of its request for Rs4,277
Rs40,000 crore. Two months ago, crore. Where will the rest come
to produce the Cabinet note
the PM sought a roadmap for its from? Earlier, while the stock
on the Jet-Etihad Airways
revival. What we have, instead,
deal along with a transcript
market was booming and oil
are media leaks about how Air
of the Niira Radia taped
prices declining, government
India will sell tiny parcels of land officials were quite blas about
conversations on civil aviation
and communications with
fund-raising. But markets
to raise Rs1,200 crore
the ambassador of UAE. In
have decisively shown their
November 2014, Dr Swamy
disenchantment with confused
requested the PM to stop the Jet-Etihad deal. Nothing policies, slow pace of reform, frequent U-turns and the
has happened. On the 6 May 2015, when the case came return of taxtortion.
up for hearing before the SC, the government reportedly
Civil aviation minister, Ashok Gajapathi Raju, recently
asked for an adjournment. Why is the BJP-led government said that a new civil aviation policy is on the anvil. This is
not supporting a quick trial? After all, BJP was voted to certainly important; because faulty policies, excessive taxes
power because people were fed up of the mega scams and arbitrary decisions have played a role in the travails
under the UPA. But those connected with the decline and of the aviation industry. However, what is clear from the
mess in the aviation industry are treated with kid gloves. continuing scams and shady ownership issues (remember
Meanwhile, abused by successive civil aviation the chicken farmer and shady East-West Airlines that
ministries, Air India continues to make losses and is obtained the first aviation licences) is that discretion-based
surviving on a performance-related Rs30,000-crore bailout governance is really at the root of our problems. Will that
by the exchequer approved by the UPA government in be fixed by PM Narendra Modi first?
2012. It has a total debt of Rs40,000 crore. Two months
ago, the PM sought a roadmap for its revival. What we Sucheta Dalal is the managing editor of Moneylife. She was
have, instead, are media leaks about how Air India will awarded the Padma Shri in 2006 for her outstanding contribution
sell tiny parcels of land to raise Rs1,200 crore. This is not to journalism. She can be reached at sucheta@moneylife.in
DIFFERENT STROKES.indd 3
08-05-2015 21:17:17
BOTTOMLINE BY MORPARIA
CURRENT ACCOUNT
MONEYLIFE
QUIZ
Moneylife
Quiz no
206
Another quiz to tease your brain. The answers are in

this very issue. The winner will be chosen by a lucky
draw from correct entries and answers published in
the issue dated 25 June 2015. Send in your answers to
quiz@moneylife.in with the Quiz no., name, address &
telephone number before 4th June.
Mutual Fund
investments are
subject to market risks,
Answer
Correctly! Win
a personalised
sed
clock with an
investment
nt
quote!
B Viswanath
1. What is the approximate number of stocks listed on the

BSE?
a. 1,000
b. 2,000
c. 3,000
d. 4,000
5. What were the average quarterly rolling returns for equity

mutual fund schemes in the large-cap category?
a. 4.17%
b. 5.08%
c. 6.24%
d. 5.95%
2. How much is the market-cap to operating profit valuation

of Granules India, according to recent data?
a. 8.42
b. 9.42
c. 10.42
d. 11.42
6. What was quarterly average return of liquid funds as a

category among debt mutual fund schemes?
a. 2.09%
b. 2.34%
c. 2.23%
d. 2.22%
3. Which organ in the human body produces cholesterol?

a. Thigh bone
b. Pancreas
c. Lungs
d. Liver
7. How is the net profit margin of a company calculated?

a. Operating profit/ net profit b. Net profit/ revenue
c. Operating profit/revenue
d. Revenue/net profit
4. What was the quarterly growth in the Sensex as a

benchmark for quarterly rolling returns performance of
equity mutual fund schemes in the large-cap category?
a. 4.17%
b. 6.24%
c. 5.08%
d. 3.54%
8. Since the market bottom in August 2013, how many

companies have managed to attract FII investment in each
of the past seven consecutive quarters ending March 2015?
a. 20
b. 21
c. 30
d. 40
In all, 20 readers got all the answers right last time.

The winner of Quiz-204 is B Viswanath from Chennai.
Congrats! You win a personalised clock with an
investment quote!
The answers to Moneylife Quiz-204 are:

1-b. 5 November 2010 2-a. 42% 3-d. distribution expenses
4-c. Charles Duhigg 5-a. 55% 6-b. Cancer 7-d. 54%
8-b. 1986
Current Account.indd 2
08-05-2015 22:44:13
In an era of paid news & half-baked

analysis who tells you the truth about
financial products?
oneylife has always put the reader first.

Launched in 2006 by Debashis Basu and
Sucheta Dalal, Moneylife delivers brutally
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on all aspects
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gold, insurance,
saving for your
children, Wills
& nomination,
mis-selling
and money
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and even medical malpractices,, have stood the test
of time.
Unlike other media, we refused to accept paid
news. Regular readers know that we argued that
unit-linked insurance plans were harmful for your
wealth, when others were handing out Best ULIPs
awards with big sponsorship funds. Naturally, there
was a cost attached to our pro-customer stand. But

policy changes implemented by various regulators
(usually after the horses had bolted) have proved us
right many times overon ULIPs, on misuse of the
Pow of Attorney, on implications of SEBI rules on
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Your Money
REGULATION
CONSUMER ISSUES
Beware of Fraudsters Posing as

SEBI Ofcers!
Builder Must Give

Written Possession
Notice to Buyer
o take investors for a ride,

some scamsters have begun
posingg as ocers
from the capital
pital market
watchdog, Securi
ecuri es
and Exchange
ge Board
of India (SEBI),
BI), to
sell fraudulent
ent
investment
schemes and
d are
even promising
sing
gi s and bonus
nus
payouts.
These
fraudulent
schemes have,
ve,
however, already
ready
come to the
no ce of SEBI
BI
and the regulator
has
ulator
cau oned investors
and the
nvestors
general public
lic against such scams and
frauds. SEBI said that it is a regulatory
body established to protect the
interest of the small investors and
to regulate and promote the capital
REGULATION
National Insurance
Company Fined
Rs5 Lakh
he Insurance Regulatory
and Development Authority
of India (IRDAI), the insurance
sector regulator, has imposed
a penalty of Rs5 lakh on
National Insurance
Company
Limited for
markets. It does not involve directly

or indirectly in dealing with any
a kind
insurance
of financial product or insura
policy.
SEBI, which has
intensified iits
clampdown on
clampdow
kinds of
various ki
schemes aimed at
defrauding gullible
defraudin
investors, has
investor
also urged
the ggeneral
public to
pub
immediately
imm
report the ma er
to the police
pol so
miscreants
that misc
can be
taken to ttask. The
has come
regulator
said, It h
to the no ce of SEBI that certain
cert
uniden fied persons posing as
a SEBI
ocials are advising public to invest in
ocials
insurance policy/financial products to
avail bonus, gi s, promo onal oers
or other such oers.
violating certain norms.

IRDAI said that the wordings for
BOI National (Insurance Company)
Swasthya Bima Policys provision
for claim falling in two policy years
were not specified in the policy. The
insurer had not specified these
in the revised policy wordings
also. The order said that the
insurer accepted that the
product was not compliant
with the concerned
provisions of IRDAI
(Health Insurance)
Regulations, 2013.
here are certain statutory as well as

contractual obligations on a builder.
If a builder does not give the notice, as
required by law or under a contract, he
cannot raise a defence about limitation.
Collin and Cheryl Paes had booked a
villa at Navelim (Goa) in a complex known
as DSilva Residency to be developed by
Homemakers.
According to the sale deed (dated
13 October 2008), a total amount of Rs40
lakh had to be paid for the construction
and sale of the villa ad measuring 210sq
metres, along with proportionate undivided
right on the land.
The agreement stipulated that the
purchaser would have to take possession
within 30 days of the builder giving a
written intimation that the villa was ready
for occupation.
The builder kept extending the date
of possession and also increased the
price. Finally, when he failed to hand over
possession of the villa by 31 January 2014,
the Paes couple had a legal notice issued
to the builder. As this too failed to evoke
any response, the couple filed a complaint
before the Goa State Consumer Disputes
Redressal Commission.
The Commission noted that there was
a dispute in respect of the agreed cost
of the villa. When the written agreement
mentioned the price of Rs40 lakh, no
oral evidence could lead the builder to
claim that the agreed price was higher,
as it would be against the provisions
of the Evidence Act. The Commission,
accordingly, held the builder liable to pay
interest on Rs63,11,870 at 14.5% from
the date of the complaint up to date of
payment, along with compensation of
Rs25,000 for mental trauma and litigation
costs of Rs5,000.
Your Money.indd 2
08-05-2015 22:42:43
Answ
You Want Answers to you

But They Throw P
Your Questions:
How much of my income I must save?
How should I divide my savings across different investment products?
Are bond fund schemes good for long-term investment?
Why are online term plans cheaper?
Why is my surrender value lower than the premium I paid for six years?
Should I buy annuities at retirement?
Are pension plans of insurance companies good for me?
Which investment products beat inflation?
Can private insurance companies be relied upon to pay claims?
With is the best tax-savings option for me?
Should I take a top-up health insurance plan?
So, How Would

Opt for Moneylife Smart Savers
- A chosen few products among hundreds thrown at you
- Continuous handholding all your questions answered
savers.mon
Join Moneylife Smart Savers Network
MSSN double spread (Answer).indd 2
04-05-2015 14:13:36
wers
your Financial Questions.

w Products at You
Their Answers:
254 Traditional Insurance Plans
103 Unit-linked Insurance Products
40 Term plans
22 Large-cap Schemes
86 Multi-cap Schemes
42 Small- and Mid-cap Schemes
86 Bond Schemes
57 Liquid Schemes
3000 Actively-traded stocks
250+Portfolio Management Schemes
344 Health Insurance Products Endowment Plans
ld You Choose?
MSSN is based on three simple principles
1. Less Is More: Shortlist the very few safe and smart choices
2. Tell the Truth: Research that is unbiased, true and only in your best interest
3. Handholding: Support you with answers to any question about your money
moneylife.in
Take No Chances. Fix Your Finances
MSSN double spread (Answer).indd 3
04-05-2015 14:14:01
INTERVIEW EXCHANGES
If a company we have selected

is doing badly today, do we worry?
The answer is No
hankar Naren is the chief investment officer at ICICI Prudential AMC.

He joined the fund management team in 2004 and now oversees the
entire investment function across the mutual fund and International
Advisory Business. A value oriented fund manager, Mr Naren
manages more than Rs50,000 crore of investors money. Excerpts from an

interview with Pratibha Kamath and Jason Monteiro of Moneylife
Moneylife (ML): How do you define whether a stock

should be in the portfolio of a scheme
me or not?
Shankar Naren (SN): We look at ratios
ios like return on
equity (RoE), price-to-earnings, EV/EBIDTA
BIDTA (enterprise
value/earnings before interest, depreciation,
ciation, tax and
amortisation), and how much moat is there
here in a particular
stock. We get money into funds everyday
day and we have
to deploy that money. We constantly look at what to
switch. For example, IT (information technology)
echnology) stocks
have fallen substantially. We would try to see whether we
should sell something and buy something
ng else.
ML: Does market-cap size matter?
SN: It does; because we are managing large
ge sums of money.
We cant become a small-cap fund house.
e. Given our scale,
we have to be invested in super large-caps,
ps, large-caps and
then we will get into mid-caps and small-caps.
all-caps. Mid-caps
and small-caps are like desserts; they cant be the main
course. We have been looking at stockss with market-cap
of more than Rs500 crore.
ML: What kind of weightage do you give to different
parameters like RoE or earnings growth?
owth?
SN: We first look at the cycle. There are periods when
people have a very negative view on a certain cycle. So,
we believe that cycles tend to mean revert. I am very
comfortable with a stock that has done
ne very badly, but
where we have a strong conviction. If a stock does badly
there is normally a reason. We try to see
ee if that reason
is mean-reverting. For example, we never
ver have had a
tobacco stock for nearly two years in our portfolio. But

when tobacco stocks underperformed we did look at them
in March 2015, because we thought there
was an opportunity. In a cyclical stock,
typically, the RoE at the bottom
would be much lower than the
RoE at the top; so, very often, we
buy stocks with a low RoE and
wait for the RoE to increase. In
our opinion, in the past seven
to eight years, quality has been
given a very high emphasis. So,
today, we are being cautious
on quality.
ML: When the market
becomes overvalued, what
action do you take?
SN: We switch. No one would
have imagined in 2013 that
the Sensex would go to
30,000. Similarly, no
one believed
that the ``
Interview - S Naren.indd 2
08-05-2015 22:34:30
` rupee would go to Rs68 (per dollar) in 2013. So it is
better to think in terms of switches than to think what

happens in terms of a specific level. And, actually, as our
size becomes larger and larger, we also do profit-booking
in stages. So, if we have to cut our weightage, we dont
do it at one price point.
with improving prospects may underperform for some

period but it will make money, eventually. But, even in the
1996-2002 phase, an IT company did not underperform.
So I would say that, in the long run, if a company is doing
very well, you get rewarded.
ML: What would be a reason for investors to avoid

ML: While selecting a particular sector, what is your such stocks?
SN: In that phase between 1996 and 2002, I recall, the
thought process?
SN: We would like to look at whether the sector has growth prevailing view was that anything other than IT and TMT
potential; whether its growth will lead to its bottom-line (telecommunications, media and technology) was not
improvement; whether the company which we are looking going to make money, in the long term. Other than that,
at will deliver returns; how is the corporate governance; most people would never remember a situation where a
how is the taxation structure and the industry; what are company is delivering great returns for five-six years but
the coming macro events which benefit the sector, etc. We stock prices dont reflect it.
look at all these. We look to buy stocks in sectors that
are doing badly. The sector analyst tries to see whether ML: You mentioned that IT stocks are currently fairly
there is an opportunity to be more positive on a sector valued. What about energy stocks?
which is doing badly. We believe,
SN: Energy stocks are also
by and large, in reversion to mean.
attractively valued. But, I would
We believe, over a period of time,
say that they were more attractively
We believe, by and
a sector doing very badly will do
valued one month back. In the past
large, in reversion to
better and a sector doing very well
one month, technology stocks have
will do very badly.
done badly whereas energy stocks
mean. We believe,
been broadly okay. Compared
over a period of time, a have
ML: There could be stocks
to one month back, we are more
sector doing very badly positive on technology stocks today
which have value but are not
looked at by the market. How
and, compared to one month back,
will do better and a
do you identify such stocks?
we are relatively not as positive as
sector doing very well we were on energy stocks.
SN: We have a team of sector
analysts who look at different
will do very badly
sectors. Their job would be to keep
ML: If in a well-performing
looking at those sectors and come
sector a stock is not doing well,
to a conclusion whether it makes sense to aactually look at how do you deal with it?
that sector. There was person by name of Theodore
T
Levitt SN: In all cases, we try to assess the long-term potential. We
who wrote about marketing myopia. So whether
w
we will are rarely worried about how a stock/company is doing at
No. Whether we this point of time. It is more a function of whether it will
go back to horse-carriage the answer is No
would go back to landline of 15 years back,
bac the answer improve over a period of time. So, if a company we have
desktop today, selected is doing badly today, do we worry? The answer
is No. Will everything happen today on d
have changed. So is No; especially if we dont own very large chunks. If
the answer is No. Some of these trends hav
to look at we own very big chunks and it starts doing badly, then
when we are looking at value, we also have
h
or would that is a worry. If we see a company and it is doing very
whether the value is such that it would remain
rem
it be more.
badly and we dont own it, we always look at that as
an opportunity. If we lose confidence in a stock, or lose
ML: A stock may seem fundamenta
fundamentally attractive confidence in a management, then we find an alternative
and may have good management
managem
but the which is better than that stock.
market may be avoiding it. Have you
We look at things in relative terms. Historically, people
come across such stoc
stocks?
have got money at the top and lost money at the bottom;
SN: In my investing career,
care I have seen so thats why we started strategies like dynamic plan or
that happen between 1996
1
and 2002. balanced advantage fund which sell equities at the top and
I have not seen it ha
happen between try to buy, as the markets fall. The reason for doing that
2002 and 2015. Tha
That means, stocks was based on the experience we had in 2007 when as the ``
08-05-2015 22:34:46
INTERVIEW EXCHANGES
` market topped, people gave us more and more money. The
valuations would have been the biggest gainer.
money started coming in the aggressive funds and not in

the defensive funds. Yes, it is true we wanted money in
the defensive funds; but it came in the aggressive funds.
ML: Has your fund management style changed after

the global financial crisis?
SN: Certainly. Prior to the crisis, we didnt know of the
ML: ICICI Prudential Dynamic Plan maintains a impact of macro or top-down movements on stock prices.
constant allocation and hardly moves much in and So we moved to a model which looked at both top-down
out of equities. In a dynamic plan, wont one move and bottom-up. We dont try to forecast; but we try to
in and out of equities?
determine the direction. There was a period when we
SN: In our model, we also consider what happens to thought that the rupee would appreciate, in 2012-13. Then,
long-term interest rates. In the past one year, as the in the past one year, we had a belief that the interest rates
market went up, long-term interest rates fell. We dont would come down. So, to an extent, the reason for some
believe that equity valuation can be determined on the of our portfolio choices would be the top-down approach
basis of one number. It is much
or macro element. We believe that we
more complex. The reason equity
have to work on both the top-down
weightage did not shift significantly
element and the bottom-up element.
Prior to the 2008
was because long-term interest rates
crisis, we didnt know ML: How would ICICI Prudential
kept coming down. Otherwise, we
of the impact of
do buy when the market falls; like
Value Discovery be different from
in March, when the market fell, we
the other close-ended schemes
macro or top-down
bought equity. Then, after that, the
such as the ICICI Prudential Value
movements on stock Fund series?
market rallied and we sold equities.
Now, again, over the past three-toprices. So we moved SN: ICICI Prudential Value Discovery
four days, as the market has fallen,
is currently a Rs9,000-crore fund;
to a model which
we bought. So, equity levels are not
so it will have a very diversified
static. It might appear that our equity
portfolio and it will also have to have
looked at both toplevels are static to a person who sees
of large-caps in the portfolio.
down and bottom-up aButlotyou
our month-end portfolios; but it is
cannot construct a Rs9,000certainly not static.
crore portfolio just on the basis of
mid-caps easily. So we have large-caps and mid-caps in
ML: Do you have a stop-loss strategy?
the portfolio. The close-ended schemes have a finite life;
SN: We are not into technical trading. We may book for that reason, we do not have a growth option. There
losses, if we lose confidence in a companys fundamentals. is only a dividend option. As the market moves up, we
It could be based on events and not based on the price. So might declare more dividends and distribute it.
it is not that, if a share price comes down to a particular
level, we will immediately look to sell.
ML: You also manage the ICICI Prudential
P
Indo
Asia Equity Fund, do you find Indian equities more
Asian stocks?
ML: How is your fund management style
attractive compared to other Asia
different from the others?
SN: A year back, we used to have a ve
very low weightage
SN: My style is more contrarian. It is more
in Asia; then, in between, we increa
increased our weightage
value-oriented in the conventional sense.
in Asia. Now, Asia has outperform
outperformed Indian equity
I believe in taking risk where I have the
very drastically. As part of our process,
pr
we will try
confidence in stocks. Over the long term,
to see whether there is a case to bo
book profits in Asia
I believe it will work; over the short
or invest in India.
run, there will be different
periods where different
ML: Which books on markets have
kinds of styles will
influenced you the mos
most?
work. If you take
SN: I regard three authors
autho as having the
2014, someone
greatest influence on me: Howard Marks,
who focused on
James Montier and Mich
Michael Mauboussin.
buying quality
I use their thoughts to ge
get a handle on the
stocks at high
vagaries of the market.
08-05-2015 22:34:59
SMART MONEY R BALAKRISHNAN
How Good Are Fund Managers?

The mutual fund manager finds his task becoming harder. Large stocks tend to
get over-researched and a herd mentality emerges
any Indian mutual fund schemes routinely

outperform their benchmark indices, in contrast
to the US market where few are able to do so. In
fact, the longer the period, the fewer are the index beaters
in the US. So, is the quality of fund managers in India so
good that we can buck the US and global trends? I belong
ong
to a camp that believes that, over time, most mutual fund
und
schemes underperform broad indices. This is because of
a selection bias as well as size. To get a better grip on the
subject, let us have a look at the playing field.
The BSE has close to 3,000 listed stocks with a total
otal
market-capitalisation of Rs9,899,817 crore as on 28 April
pril
2015. In US dollar terms, it would be approximately $1.56
.56
trillion. The top 100, of the 3,000-odd companies, account
unt
for nearly three-fourths of the total market-capitalisation,
on,
or nearly $1.16 trillion.
Currently, about Rs400,000 crore is invested in equity
uity
schemes. There are many schemes and many fund houses.
ses.
Outperformance becomes more and more difficult as the
corpus of the scheme grows in size. To be effective, a fund
und
manager should be able to handle around 30 to 50 stocks,
ks,
at best, in a single scheme. In the early days of the mutual
ual
fund industry, when size was small, fund managers easily
sily
beat their benchmark indices by picking mid-cap and
nd
small-cap stocks outside of the index. That would havee a
big impact, if the fund size is small.
For instance, a Rs10-crore bet on a stock that goes to
Rs40 crore in a year can have a big impact on a Rs1,00000crore scheme, but not on a Rs5,000-crore scheme. As the
schemes get larger and larger, single investment sizes have
to become correspondingly bigger. In a large scheme of,
say, Rs8,000 crore or so, single investment sizes have to
be of at least a Rs100 crore or so.
As a scheme keeps growing in size, it has to consider
top 100 stocks. And then the fund manager, to beat the
index, starts to play with weights relative to the index.
He hopes to drop the losers and load up on the winners.
Often, there is a tendency at the end of reporting quarters
to try and show more winners in the portfolio and, hence,
there are switches from underperformers to outperformers.
All of this impacts performance.
As our markets lack depth and breadth, the mutual
fund manager finds his task becoming harder. The large
stocks tend to get over-researched and a herd mentality
emerges. So most large funds start looking like each other.
And, as size increases, the funds start to underperform

the indices. In India, past records are not representative,
since most funds were small in size in the early days of
out-performance.
With a bit of effort, a systematic investment plan
(SIP) in 6-10 chosen stocks ought to do better, over a
10-year period. This also gives you the freedom to take
some high-risk, highreward positions. I am
not advocating this for
everyone, but only for
those who are willing to
spend time on analyses
and have
the discipline
to stick with their
convictions. A direct equities portfolio also means not

having to add new stocks to the portfolio. If we choose
a handful of high-quality stocks, we ought to do better
than the broad indices. India is in a phase where per capita
consumption is on the rise; so, concentrate on companies
that are the beneficiaries of higher disposable income, such
as consumer goods, staples, automobiles, pharmaceuticals,
banking and financial services.
You are better off with mutual funds, if you cannot
spend some time and effort in picking your own stocks.
A do-it-yourself approach demands time, patience and
attention.
The author can be reached at balakrishnanr@gmail.com
column_Balakrishnan.indd 2
08-05-2015 23:20:27
MUTUAL FUNDS FUND FACTS
Best & Worst Mutual Fund Schemes

The best# three and the worst three schemes over the past three years ranked by their
quarterly rolling returns. Premium members get access to a more refined list of top
schemes by logging in to Moneylife Smart Savers - savers.moneylife.in
Equity Schemes (Quarterly Rolling Returns)
Large Cap (Category Avg: 5.08%,
Sensex: 4.17%)
Launch
Date
Corpus
(Rs Crore)*
Avg. Quarterly
Rolling Returns
SBI Bluechip
1-Year 3-Years**
Exp
Ratio
14-Feb-06
1,680
6.24%
44.54%
27.39% 2.13%
Birla Sun Life Frontline Equity
30-Aug-02
8,843
5.95%
37.44%
26.02% 1.86%
Birla Sun Life Top 100
24-Oct-05
1,419
5.91%
37.94%
25.84% 2.34%
HDFC Large Cap
18-Feb-94
1,265
4.17%
21.35%
17.76% 2.21%
DSP BlackRock Top 100 Equity
10-Mar-03
3,532
4.05%
31.39%
17.20% 2.27%
Sundaram Growth
24-Apr-97
315
3.54%
21.34%
14.93% 2.39%
SBI Magnum Global 94
30-Sep-94
1,946
7.39%
60.58%
33.02% 2.10%
L&T India Value
08-Jan-10
189
7.30%
65.57%
32.55% 3.02%
Birla Sun Life Advantage
24-Feb-95
447
6.46%
50.70%
28.47% 2.33%
Sundaram Select Focus
30-Jul-02
398
4.04%
27.10%
17.18% 2.16%
Principal Dividend Yield
15-Oct-04
117
4.01%
29.39%
17.04% 2.66%
IDFC Imperial Equity
16-Mar-06
135
3.95%
28.12%
16.78% 2.31%
Multi-cap (Category Avg: 5.31%, BSE 200: 4.43%)
Mid-and Small-cap (Category Avg: 7.40%, CNX Midcap: 4.99%)

Franklin India Smaller Companies
13-Jan-06
2,070
9.12%
68.49%
41.79% 2.40%
SBI Small & Midcap
09-Sep-09
300
9.08%
86.44%
41.55% 2.53%
SBI Magnum Midcap
29-Mar-05
982
8.61%
64.29%
39.14% 2.27%
HDFC Small and Mid Cap
03-Apr-08
878
5.73%
39.98%
24.97% 2.60%
SBI Emerging Business
17-Sep-04
1,634
5.71%
48.08%
24.89% 2.13%
Tata Equity Opportunities
25-Feb-93
1,053
5.59%
42.14%
24.30% 2.34%
Debt Schemes
Income (Category Avg: 2.29%, Crisil Composite Bond: 2.20%)
ICICI Prudential Long Term Plan
28-Mar-02
516
2.96%
17.47%
12.39% 0.76%
Tata Dynamic Bond
03-Sep-03
819
2.62%
13.38%
10.91% 1.25%
UTI Dynamic Bond
23-Jun-10
670
2.57%
12.99%
10.67% 1.14%
JPMorgan India Active Bond
30-Jun-08
1,724
2.17%
11.82%
8.98% 2.01%
DWS Premier Bond
21-Jan-03
833
1.96%
9.28%
8.06% 1.40%
Sundaram Flexible - Flexible Income
30-Dec-04
342
1.95%
14.58%
8.04% 1.50%
177
2.34%
9.38%
9.70% 0.50%
Liquid (Category Avg: 2.09%, Crisil Liquid Index: 2.14%)

Escorts Liquid Plan
03-Oct-05
Kotak Floater - Short Term
14-Jul-03
2,415
2.23%
8.96%
9.22% 0.42%
JM High Liquidity
31-Dec-97
1,721
2.22%
8.97%
9.20% 0.50%
Religare Invesco Liquid
17-Nov-06
3,557
1.90%
7.56%
7.81% 0.21%
DWS Insta Cash Plus
21-Jan-03
3,172
1.82%
6.51%
7.48% 0.54%
Peerless Liquid
19-Feb-10
189
1.57%
5.37%
6.44% 2.00%
# Please note the table represents a comparative performance of mutual fund schemes over a three-year period and it is not a recommendation; * Latest quarter average assets
under management; We have only considered schemes having a corpus above Rs100 crore. **Annually compounded
Fund Facts.indd 2
05-05-2015 19:05:59
FIXED INCOME
NHAI and IRFC Tax-free Bonds Coming Soon?
he National Highway
Authority of India (NHAI)
and Indian Railways Finance
Corporation (IRFC) may come out
with tax-free bond issues to raise
Rs24,000 crore and Rs6,000 crore,
respectively. There were no tax-free
bond issues in 2014-15 as there was
no provision for these bonds in the
Finance Act 2014-15. Tax-free bond
issues were a hit with investors in
2013-14 due to the coupon rate of
9%pa and above in some issues;
these bonds were oversubscribed on
the first day itself. The G-Sec yields
have been on a decline in the past
year; hence, it is unlikely that the
tax-free bond issues in 2015-16 will
see coupon rates close to 9%.
Tax-free bonds have been
beneficial to those in 20%, or
higher, tax bracket, even when the
coupon rate offered was 8%pa. It
is important to have your funds
ready, in case you plan to invest in
tax-free bonds. Often, funds are

not available if you have invested
in other products; this may lead
to losing the opportunity to
subscribe for tax-free bonds. Most
of the issues are for AAA rated
tax-free bonds which should be
your preferred issues. Investing in
tax-free bonds with rating lower
than AAA may give higher coupon,
but should be given lesser priority,
especially bonds with rating lower
than AA+.
With the coupon tied to the
existing G-Sec yields, it is possible
that the tax-free bond issues in

2015-16 may fetch coupon of
7.5% or lower. If so, there may not
be a rush to buy the bonds, even
though these may be a good option
taking into account the decline in
interest rates on bank fixed deposits
(FDs); currently, banks are offering
8.5%-9% for long-term deposits.
Investors who subscribed to tax-free
bond issues in 2013-14 are reaping
the benefits of high coupon (of
9%) as well as capital gains if they
want to sell the bonds in secondary
market.
Yields Up Last Fortnight
G-Sec Yields Up
ond yields have increased by 5bps to 10bps in a fortnight. You can still find some
bonds with rating lower than AAA that offer yields of over 9.25%. You can expect
to get 8.5% for AAA rated bonds maturing in the short and long term and over 9% for
bonds with rating below AAA.
Issuer
Maturity
Date
Next
Last Yield
Coupon
(%)
ISIN
Rating
IDFC 9.17%
14 Oct-24
14 Oct-15
8.64
INE043D07GX2
IRCA AAA
HDFC 9.25%
26 Feb-18
26 Feb-16
8.50
INE001A07KI9
CRISIL AAA
POWER FIN LTD 9.32%
17 Sep-19
17 Sep-15
8.50
INE134E08GJ4
CRISIL AAA
NSE data as of last trade date of 5 May 2015
IL&FS Transportation
11.50%
21 Jun-24
21 Jun-15
10.84
INE975G08058
CRISIL A
Chola Inv & Fin 9.89%
30 Oct-20
30 Oct-15
10.32
INE121A08NA4
CARE AA-
North Eastern Electric

Power Corp Ltd 9.60%
01 Oct-24
01 Oct-15
9.57
INE636F07183
CRISIL AA
BSE data as of last trade date of 5 May 2015
he 10-year benchmark
government security (G-Sec)
yield, which sets the tone of the
fixed-income market, has increased
by seven basis
points (bps) in
the past fortnight
to end at 7.85%
on 5th May. The
jump has been
due to absence
of any short-term relief from Reserve
Bank of India (RBI) which could have
eased policy rates or reserve ratios.
Easing food prices has lowered retail
inflation in March to a three-month
low of 5.17%, despite unseasonal
rains. The rupee dropped by 29
paise, or 0.46%, in the three trading
sessions in the first week of May.
Fixed Income.indd 1
08-05-2015 23:21:09
COVER STORY
IN A FA L L I N G M A R K E T
Moneylife Research Team chooses
stocks with a better model, rising
earnings and export growth, from a
database of 1,400 stocks
he biggest hurdle
to finding a winning
stock-picking strategy is
that no strategy works under all
circumstances. Indeed, after the bull run in
the Indian stock market over the past year, finding hidden
gems is an even more difficult task. Companies with strong
and unimpeded growth are too expensive. Companies that
are not exactly of the highest quality are expensive too,
thanks to the bull market that has pushed up all kinds of
stocks to multi-year highs.
In such a situation, the better bets are companies
that, at least, have rising earnings, that is, companies
that consistently make more money than they did the
year before, thanks to a good business model. There
is no easy formula for picking such companies. Every
method of picking stocks requires some interpretation
and judgement. We need to look for companies that have
a diversified portfolio of products or niche products and
a well diversified geographical presence. This ensures
that demand is not affected

by a slowdown or restriction by
government regulations in a specific
country.
We have looked for stocks that meet these criteria
and have found them across sectors like consumer
products, building materials, pharmaceuticals, industrial
intermediaries and auto-component manufacturers. The
companies we have picked delivered a substantial and
continuous growth over the past four quarters, thanks to
some edge they enjoy. Most of them have a strong export
presence which helps to improve even domestic operations.
Take a look at the nine stocks discussed below.
Bajaj Corporation
This is a consumer company with well-known brands
such as Bajaj Almond Drops Hair Oil, Bajaj Nomarks,
etc. Bajaj also exports to countries across Asia and Africa
and the US. Bajaj Almond Drop Hair Oil is the second
largest brand in the overall hair oil category. Around 38% ``
Cover Story.indd 2
08-05-2015 21:39:27
COVER STORY
Bajaj Corp
Profit (Rs Crore)
Sales (Rs Crore)

245
70
225
60
205
50
185
40
165
30
145
20
Sep 13
Mar 14
Sales
OP
Sep 14
Mar 15
NP (Rs crore)
` of the sales of Bajaj Almond Drops Hair Oil come from
the rural areas. According to Nielson, the Almond Drop

Hair Oil market has grown 21% annually from FY06-07
to FY14-15. The brand had a market share of 58.9% in
2014-15. Raw material consumption is about 38% of
sales for the brand.
As per Nielsens November 2014 figures, Bajaj Nomarks
cream has become the largest selling anti-blemish cream
in the country, once again, after more than two years. On
the other hand, Bajaj Nomarks face-wash is now the third
largest anti-blemish face-wash in the country. Over the
past four quarters ended March 2015, Bajaj Corporation
averaged a revenue growth of 22% and an operating profit
growth of 25%. Operating profit margin remained above
20% in each of the four quarters. The stock is expensive
at a market-cap/ operating profit of 34 but its one of the
few companies with a return on capital employed (RoCE)
above 30%.
Century Plyboards
Century Plyboards is the largest producer of laminates
in India and accounts for 7.5% share of the national
plywood market. Year-on-year volume growth in plywood
production was nearly 10%; it was about 19% in laminates,
for the quarter ended December 2014. Almost 23% of the
companys revenue is from exports. Century Plyboards is
looking to diversify into modular furniture and kitchen
furnishings. It has six strategic manufacturing facilities
across India to meet the steady growth in real estate and
construction which will drive its growth for years to come.
All ply-board manufacturers face issues with raw
materials from time to time, thanks to stricter conservation
policies. Myanmar banned export of timber in August 2014

to save its disappearing forests. But Century Plyboards
was not affected by the ban because it had set up a semiprocessed peeling facility in Myanmar in 2013. So, while
rivals, such as Greenply Industries, were hit by skyrocketing
timber prices, Century Plyboards could easily export timber
from its Myanmar facility. Revenues have grown at a steady
rate of around 20%-25% each quarter and it was able to
maintain an operating profit margin of 10%-15% over
the past seven quarters. Centurys RoCE is 26% and the
stock is quoted at 18 times its operating profit.
Century Plyboards
Profit (Rs Crore)
Sales (Rs Crore)

420
80
70
390
60
50
360
40
30
330
20
10
300
0
270
-10
Jun 13
Dec 13
Sales
OP
Jun 14
Dec 14
NP (Rs crore)
Granules India
Granules India is one of the few companies to offer its clients
all three components of the pharmaceutical manufacturing
value chain starting with active pharmaceutical ingredients
(APIs), pharmaceutical formulation intermediates (PFIs)
and finished dosages (FDs). Regulated markets, such as
North America and Europe, account for approximately
65% of its revenues, while the rest comes from quality- ``
31| 28 May 2015 | MONEYLIFE
Cover Story.indd 3
08-05-2015 21:39:46
COVER STORY
Granules India
Profit (Rs Crore)
Sales (Rs Crore)

330
60
310
50
290
40
270
30
250
20
230
10
Sep 13
Mar 14
Sales
OP
Sep 14
Mar 15
NP (Rs crore)
over the same period, thanks to its wide presence in the

international market. Its manufacturing facilities have
approvals from authorities US, UK, Australia, South Africa,
Ukraine, etc. JB Chemicals aims to create an additional
capacity for tablets, liquids, ointments, vials, eye-drops,
lozenges and diclofenac API plant by investing Rs140
crore on expansion. Clearly, there is no slowdown in its
` conscious customers in Latin America and the rest of the
world. It is among the global leaders in manufacturing

paracetamol, ibuprofen, metformin, guaifenesin and
methocarbamol.
According to the figures for December 2014 quarter,
42% of the companys standalone sales came from FDs
while 25% was contributed by PFI and 33% by APIs. It
has a 30% market share among regulated market suppliers
of paracetamol. Granules Biocause, a subsidiary, has a
16% market share of ibuprofen suppliers. Granules India
delivered a robust revenue growth of 26% compounded
annually and profit after tax of 63% compounded annually
over the five-year period ended FY13-14. Over the past
four quarters, it has averaged a revenue growth of 16%
and operating profit growth of 38%, maintaining an
operating profit margin between 18%-20%. Its RoCE, at
25%, is not among the top league of companies in terms
of returns; so its valuation (market cap/operating profits)
is lower at 8.42.
JB Chemicals & Pharmaceuticals
JB Chemicals & Pharmaceuticals manufactures and
markets pharmaceuticals formulations, herbal remedies,
and APIs in India. Its three brands, viz., Rantac (anti-peptic
ulcerant), Nicardia (calcium channel blocker) and Metrogyl
(amoebicides), feature the top 300 brands in terms of value
and unit sales, as per data from IMS MAT March 2014.
It is ranked 36th in the industry, with these three brands.
Its total exports income amounted to Rs574 crore which
represents 58% of total operating revenue for FY13-14.
The API business continued its upward momentum and,
with sales of Rs99.33 crore, registered a growth of 59%
JB Chemicals & Pharmaceuticals

Profit (Rs Crore)
Sales (Rs Crore)

285
50
270
35
255
20
240
225
-10
210
-25
Jun 13
Dec 13
Sales
OP
Jun 14
Dec 14
NP (Rs crore)
business. Over the past three quarters ended December

2014, the company has averaged a revenue growth of
11% and an operating profit margin of about 18%. This
is one of the few companies on our list which makes a low
RoCE of 11%. The stock is appropriately valuedlower
than others. Its market-cap/operating profit is around 12.
Kitex Garments
Kitex Garments is the second largest producer of childrens
apparel in the world. It has been exporting from India and
is now setting up operations in the US. Its dominance in
the highly specialised infant-wear market comes with an ``
Cover Story.indd 4
08-05-2015 21:40:08
COVER STORY
Quality Stocks
Company Name
Average Sales
Growth*
Average Operating
Profit Growth*
Market-cap to
Operating Profit
RoCE**
25%
23%
15%
11%
21%
24%
34%
38%
18%
37%
197%
28%
27%
92%
48%
44%
48%
73%
33.91
18.02
8.42
11.58
23.28
7.84
22.01
9.97
7.95
35.98%
26.24%
25.39%
11.01%
47.74%
20.04%
41.34%
33.37%
29.63%
Bajaj Corp
Century Plyboards (India)
Granules India
JB Chemicals & Pharma
Kitex Garments
MM Forgings
Marksans Pharma
Ratnamani Metals & Tubes
T VS Srichakra
*Latest three quarters, year-on-year growth; **Return on capital employed - (Four quarter profit before interest and tax)/(Capital Employed)
` edgeit is a segment where competitors have found the
going tough due to stringent safety norms. Kitex derives

around 80% of its garment revenues from exports, of
which 90% are to the US and 10% to Europe. It has five
large clientsGerber, Toys R Us, Jockey, Mothercare and
Cartersand has added two more large clients recently,
viz., Childrens Place and Kohls.
The largest manufacturer of infant-wear globally is
Chinas Wingloo which has a capacity of 750,000 pieces
per day against Kitexs capacity of 550,000 pieces per day,
according to Motilal Oswal Research. Kitex plans to be the
No.1 player in infant-wear market in the next few years.
According to analysts, to improve productivity, Kitex
plans to replace sewing machines older than five years
with newer ones which would increase the speed from
7,000 stitches/hour to 9,000/hour and consume one-third
Kitex Garments
Profit (Rs Crore)
Sales (Rs Crore)

165
75
150
60
135
45
120
30
105
15
90
0
Sep 13
Mar 14
Sales
OP
Sep 14
Mar 15
NP (Rs crore)
the power of old machines. It has now introduced an

Italian robotic technology which drastically reduces labour.
Similarly, it has installed a bow-making automated machine
requiring just one person compared with 50 people earlier.
All these measures make Kitex even more efficient. The
stock has had an extraordinary run ever since it started
acquiring scale and larger contracts. Over the past four
quarters ended March 2015, Kitex Garments averaged
a growth of 16% year-on-year. Operating profit grew at
an average rate of about 80% over this period. Its RoCE
is around 48% and, given that factor, valuation is less
expensive than many large Indian consumer products
companies. Its market-cap/ operating margin is 23 times.
MM Forgings
MM Forgings manufactures steel forgings in raw, semimachined and fully-machined stages in various grades of
carbon, alloy, micro-alloy and stainless steels in the weight
range of 0.20kg to 60kg. Companies that are connected to
the heart of the manufacturing processfrom ball bearings
to machine tools to forgingsare not exactly having a great
time because manufacturing growth is showing no signs of
revival. How is MM Forgings doing well? It caters mainly
to the global market with a focus on commercial vehicles ``
33| 28 May 2015 | MONEYLIFE
Cover Story.indd 5
08-05-2015 22:15:18
COVER STORY
MM Forgings
Profit (Rs Crore)
Sales (Rs Crore)

135
30
125
25
115
20
105
15
95
10
85
5
Jun 13
Dec 13
Sales
OP
Jun 14
Dec 14
NP (Rs crore)
` industry of the US and UK. It earns approximately 75%
of its revenues from exports to these countries.

In 2007, it generated nearly 62% of its revenues from
exports; in 2013-14, exports reached nearly 74%, helping
it negate the effect of a slow domestic commercial vehicles
market. Exports sales of MM Forgings gained nearly
2.25 times in five years, to Rs253 crore in FY12-13, from
Rs112 crore in FY07-08. Over the past three quarters
ended December 2014, it averaged a revenue growth of
around 24% year-on-year. Operating profits grew at an
average 48% over this period while the auto-components
manufacturer maintained a steady operating profit margin
of 21% over this period. Its RoCE is 20% and, given that,
its market valuation is slightly expensivemarket-cap to
operating profit is at 7.84.
Marksans Pharma
Marksans Pharma, which was a wholly-owned subsidiary
of Glenmark Pharmaceuticals, manufacturers generic
pharmaceutical products, such as soft gelatine capsules
& tablets across regulated markets, in niche segments.
It supplies its products to 25+ countries globally; UK,
followed by US, are its largest markets. Its export business
contributes to more than 99% of revenues with a focus
on regulated markets.
Marksanss manufacturing facilities are based in Goa
and Southport (UK). These are audited by some of the
most demanding global regulatory agencies in the US,
UK and Australia. The business is driven through three
subsidiariesNova Pharmaceuticals (Australia), Bells &
Sons (UK) and Relonchem Ltd (UK).
Abbreviated new drug application (ANDA) approvals,
led to a ramp-up in the US business in the past two years.

Softgel product ibuprofen (OTC) is now selling at leading
stores like Walmart, Walgreens and CVS. Other non-softgel
ANDAs have also been approved and are being marketed
via partners in the US. The softgel capsules market offers an
edge to Marksans due to the complexity of developing the
softgel formulation and high operational costs in running
a manufacturing facility.
Marksans Pharma
Profit (Rs Crore)
Sales (Rs Crore)

110
50
100
40
90
30
80
20
70
10
60
0
Jun 13
Dec 13
Sales
OP
Jun 14
Dec 14
NP (Rs crore)
It has generated a strong revenue growth in the past

three quarters ended December 2014, averaging 34%.
Operating profits grew 44% over this period, with an
operating profit margin of around 30%. It enjoys a RoCE
of 41% while market valuation is an expensive 22 times
operating profits.
Ratnamani Metals & Tubes is a niche player in the domestic
industrial steel pipes. It has a range of products in stainless ``
Cover Story.indd 6
08-05-2015 21:40:42
COVER STORY
` steel and carbon steel pipes & tubes used in sectors such as
oil refinery, thermal & nuclear power, fertilisers, chemicals,

pipeline projects, etc. It has a 35%-40% domestic market
share in high-end stainless steel pipes. Overseas markets
constitute 29% of Ratnamanis business. It has a presence
in over 20 countries, including Japan, South Korea, Middle
East, Europe, North America and South America.

Profit (Rs Crore)
Sales (Rs Crore)

500
100
20%. It enjoys a RoCE of 33% while market valuation is

a reasonable 10 times operating profits.
TVS Srichakra
TVS Srichakra is a well-known maker of tyres for twowheelers, three-wheelers and off-road vehicles. It plans
to launch radial tyres for two-wheelers in a couple of
months. Its domestic clients include Atul Auto, Bajaj
Auto, Hero MotoCorp, Honda Motors Cycles, Scooters
India and TVS Motor Company. It exports its products to
the Australia, Europe, Africa, South America and United
States. It recently entered into 15 new export markets and
now exports to over 80 countries. Exports constitute about
13% of its turnover.
455
85
410
70
TVS Srichakra
365
55
Sales (Rs Crore)

500
320
40
275
25
Jun 13
Dec 13
Sales
OP
Jun 14
Dec 14
NP (Rs crore)
The companys sales have grown at 30% annually and

profit after tax at 51% annually in the past 10 years, with
15%-20% margins. According to Edelweiss Research,
its customers include major players like RIL, BHEL and
L&T besides public sector oil refineries like BPCL, IOCL
and HPCL. It has received approvals from players like
Mitsubishi, Toshiba, IHI, Saudi Aramco, etc.
Ratnamanis revenues grew at an average rate of 38%
year-on-year over the three quarters ended December 2014.
Operating profits averaged a growth of 48% over the same
period while maintaining an operating profit margin around
Profit (Rs Crore)

55
475
45
450
35
425
25
400
15
375
5
Jun 13
Dec 13
Sales
OP
Jun 14
Dec 14
NP (Rs crore)
TVS Srichakra enjoys the highest market share amongst

two-wheeler manufacturers in India. It is projecting a
15% expansion this fiscal and similar growth next year,
as it expects two-wheeler sales to rise. Over the past three
quarters ended December 2014, it averaged a 17% growth
in revenues. Operating profit growth averaged around
70% over this period. TVS Srichakra has maintained an
operating profit margin of 9%-10%. The more positive
part of the stock is its valuation. While it enjoys a RoCE
of 30%, its market-cap to operating profit is around 8.
The stocks discussed in this Cover Story will be less
vulnerable to a market decline because these companies
are on a track of higher growth. The growth comes from
a business model that combines domestic and export
revenues, or substantial export revenues. Unless there is
a synchronised global downturn, as happened in 2008,
these companies are expected to do well.
Cover Story.indd 7
08-05-2015 21:40:55
STOCKS STREET BEAT
Unbiased & Methodical Stock Picking that Works!
T V T o day N e t work
Market Reach
One of the few TV channels making money
V Today is a media company well known

in India and abroad for its TV channels Aaj
Tak, Headlines Today, Tez and Dilli Aaj Tak.
The business model depends mainly on advertising
revenues. While a lot of channels are struggling, Aaj
Tak, has been raking it in which helps it support less
successful channels of the group, such as Headlines
Today.
For the quarter ended December 2014, revenues
of TV Today were Rs131.73 crore (Rs111.42
crore), up 18.23% and the net profit was Rs26.35
crore (Rs20.65 crore), up 27.60%. For the year
ended March 2014, revenues were Rs389.44 crore
(Rs312.67 crore), a rise of 24.55% and the net profit
was Rs61.32 crore (Rs12.21 crore), a jump of 402%.
The March quarter results are yet to be declared.
While its Hindi channel enjoys the position of a
market leader, the business environment is fraught
with risks. The market is extremely fragmented with
at least three major channels, such as India TV, ABP
News and Zee News, vying for ad revenues; there is
competition with regional channels as well. Besides,
access to viewers is controlled by last mile connectors
such as multi-system operators (MSOs) and local
cable operators who extract carriage fees from
the channels to reach viewers. Following extensive
digitisation, carriage fees were supposed to drop; this
has not happened because there are too many news
channels vying for distribution and are too eager to
pay money to the carriers to be on the distribution
platform. Secondly, smaller markets (population
of less than a million) are sought be digitised now
and channels would want a presence there. So, once ``
Key Financials
Stand-alone (Rs Cr)
Jun-14
Sep-14
Dec-14
Revenue
137.01
111.69
131.72
OP
55.30
23.54
43.70
OPM
40%
21%
33%
Y-o-Y Revenue Growth
54%
22%
18%
Y-o-Y OP Growth
131%
-4%
24%
March Ending
FY12
FY13
FY14
3%
4%
16%
RoNW
OP: Operating Profit,Y-o-Y:Year-on-Year, OPM: Operating Profit Margin, RoNW: Return on Net Worth
A Clear Trend
255
615,000
Share Traded
240
Adjusted
Closing Price
492,000
225
369,000
210
246,000
195
123,000
180
Oct-14
Jan-15
0
May-15
Recommended Price Rs67
MONEYLIFE STOCK IDEAS
THAT WORK
Moneylife Issue 31 May 2012
158%*
(RS SOFTWARE)
Exit Price Rs174

On 18 January 2013
* Non- annualised returns
Stock-Streetbeat.indd 2
08-05-2015 22:35:46
STOCKS STREET BEAT
Unbiased & Methodical Stock Picking that Works!
(Rs)
n
Stories of Price Manipulatio
35
30
25
Galada Power
wer &
Telecommunication
icati (Rs22)
20
10
alada Power &

Telecommunication (GPT)
manufactures electrical conductors
and related products. In 2001,
Galadas bankers initiated legal
proceedings for recovery of debts.
GPT had defaulted in the payment of
dues to its lenders and was declared
a sick company by the Board for
Industrial & Financial Reconstruction
580%
15
5
0
May-14
Oct-14
May-15
(BIFR) in September 2007. The

order for winding up the company
was stayed by the Andhra Pradesh
High Court. Over the past year, a
` again, carriage fees will go up.
It is commendable that TV Today and Aaj Tak have

managed to do well in this environment. What comes
in handy is chairman Aroon Puries deep knowledge
and long years of media experience, starting with India
Today. However,
the biggest risk
Valuation
is how people
Market-cap
Rs1,283.34 cr
would consume
Debt
Rs18.65 cr
news in future,
Cash and Cash Equivalents
Rs56.90 cr
impact of mobile
Enterprise Value (EV)
Rs1,245.09 cr
on TV channels
EBIT (trailing 4-qtr)
Rs119.92 cr
and the ad-based
EV/EBIT *
10.38
revenue model.
Price/ BV
3.43
Over the past
Price/Earning *
14.55
five
quarters, the
* - based on trailing four quarters
average growth
in sales was
27% and the average growth in operating profit was
62%. The average operating margin is a high 30%.
Market-capitalisation is 2.69 times sales and 8.67 times
operating profit. The return on net worth (RoNW)
was 16% for the year ended March 2014. RoNW over
About Our Stock Selection Process: The Street Beat stocks are selected from over 1,371
stocks in the Moneylife database. We normally look for companies that are small, recording a high
return on capital and are reasonably valued. After having selected stocks based on these criteria,
we try to eliminate the ones that could throw up governance issues.
How To Use this Section: Cumulative return is given at the end of the section under the head
Exits & Return. Look at it for exits from street beat stocks.
Disclaimer: This report is for informational purpose only. None of the stock information, data &
company information presented constitutes a recommendation or a solicitation of any offer to buy
couple of lenders agreed to a onetime settlement of dues. GPT has

generated revenue of just about
Rs2 crore-Rs3 crore in each of the
past five quarters with a net loss in
a couple of quarters. Yet, the stock
price shot up by 813%, to a high of
Rs30.85 as on 27 February 2015 from
Rs3.38 as on 26 March 2014, i.e., an
investment of Rs1 lakh would have
grown to Rs9 lakh in less than a year.
From the peak, the price has fallen by
nearly 25% to Rs23 on 5 May 2015.
Despite the steep fall, it is still nearly
580% up compared to a year ago. The
regulators, as usual, do not find this
suspicious.
quarterly trailing net profit is 23%. It has virtually no

debt. Return on capital employed (RoCE) is 21%.
The shareholding pattern of TV Today includes
57.42% with promoters, 3.56% with domestic
institutional investors and 39.02% with retail investors.
The dividend distributed by TV Today for FY13-14
was 20% and 15% in FY12-13 as well as FY11-12.
The share price rose (face value Rs5) from its 52-week
low of Rs116 on 19 May 2014 to its 52-week high of
Rs261.85 on 20 February 2015. The book value of
TV Todays share is Rs62.96. It was trading at around
Rs241 on 8 May 2015 and is an attractive buy at the
current market price.
Exits & Returns
Street Beat stocks are chosen from a list of undervalued
stocks that are earning a high return on capital. We
recommend an exit when they are no longer undervalued
or not performing as per expectaons.
50% Return: Our recommendaon has so far fetched 50%
average annualised return since January 2012, based on
booked profit and open posions of more than one year.
Exits: Acrysil: Profit of 180% since 6 February 2014
or sell any securities. Information presented is general information that does not take into account
your individual circumstances, financial situation or needs; nor does it present a personalised
recommendation to you. Individual stocks presented may not be suitable for you. Although
information has been obtained from and is based on sources we believe to be reliable, we do not
guarantee its accuracy and the information may be incomplete or condensed. All opinions and
estimates constitute our judgement as on the date of the report and are subject to change without
notice. Past performance is no indication of future results. Investors must do their own research
before acting on them. Data Source: Centre for Monitoring Indian Economys Prowess database.
Stock-Streetbeat.indd 3
08-05-2015 22:36:02
StockWatch
A section that throws light on stocks that catch our eye
Ringing
Ri
ging Clearly
C
received bids which were higher than

n anticipated.
The government earned nearly Rs1,10,000
10,000 crore,
well above the previous record of Rs1,06,000
crore
0
registered in 2010 for the 3G and broadband auctions.
A section of investors is worried about how the
spectrum fees will be recovered, whether tariffs can
be raised, and who will survive the competition. As of
now, though, the market seems to believe that charges
can be passed on to consumers.
Telecom stocks rose when others fell
he only sector, which gained in spite of the

downtrend which began on 3 March 2015, was
telecom. The sector ggained limelight on the back of
spectrum auction
telecom sp
wherein the government
Cement
Real Estate
Software & IT Services
Sugar
Con_EPC_Infra
Shipping
Financial Services
Non-ferrous Metals
Banks
Media
Auto Components
Oil & Gas
Chemicals
Energy
Steel
Consumer Products
Lifestyle & Leisure
Farm & Farm Inputs
Auto
Industrial Intermediates
Refineries
Hotels
5%
Consumer Durables
Pharma
10%
Textiles
15%
Foods & Beverages
Clear Signal
-5%
-10%
-15%
Telecom Services
0%
Agrochemicals Boom
The changing nature of farm production is
turning out to be a boon for producers of
agrochemicals like UPL
ccording to a report on Agrochemicals for food

and nutritional security for the nation prepared
by FICCI and TATA Strategic Management Group,
the Indian crop protection industry was estimated to
be worth US $4.25 billion in FY13-14 and is expected
to grow at a CAGR of 12% to reach US $7.5 billion
by FY18-19. The report also mentions that the per
hectare yield in India is among the lowest in the world.
Compared to global average of 4 tonnes/ha, the yield in
India stands at 3 tonnes/ha. There is a strong scope to

increase yield. Saurabh Mukherjea, CEO, institutional
equities, Ambit Capital, said that with the current
government throttling back on minimum support prices
(MSPs), one is likely to see farmers shifting from wheat
and rice towards fruits, vegetables, poultry and dairy
products. That in turn will create greater demand for
agrochemicals. In such scenario, agrochemicals will
play an important role in ensuring higher yield.
This is one reason why the share price of UPL
Ltd, a manufacturer of several agrochemicals,
mancozeb, aluminium phosphide and cypermethrin,
monocrotophos and devrinol, among others, is
shooting up. Within a span of 14 months, the stock has
surged from Rs179 on 24 February 2014 to Rs492 on ``
StockWatch.indd 2
08-05-2015 22:12:29
STOCK WATCH
` 30 April 2015 (175% up). It is quite expensive now.
As at the end of March 2015, the stock was trading at

MC/sales of 3.55 times (based on four trailing quarters
ended March 2015) and MC/OP of 34.40 times. Its
long-term prospects are attractive, as companies like
UPL enjoy not only domestic demand but export
demand also.
Indias agrochemicals exports have increased from
US$1.05 billion (bn) in FY09-10 to US$2bn in FY1314. For the past five quarters ending March 2015,
agro activities constitute, on an average, 92% of its
revenue. The companys exports for FY13-14 were
Rs2,783 crore constituting 56% of the total revenue of
Rs4,968.27 crore.
Fertile
Rs/share
495
UPL
415
335
255
175
Feb 14
Sep 14
Apr 15
Disappointment Continues
No growth in Geometric. Only a takeover
can create wealth for shareholders
hile discussing Geometric in our Street Beat

section (issue dated 8 January 2015), we had
pointed out that, although the business is profitable,
there is no earnings momentum and, hence, not much

attraction for institutional investors. For the real value
of the company to be unlocked, either there should be
a change in management that can add more profitable
business lines, or a takeover by a much larger company.
After our recommendation, at Rs126, the stock
moved up to the level of Rs195 on 15 April 2015.
However, since then, it collapsed and fell on 9 trading ``
Hopes Belied
Poor Operating Profit Growth
Rs/share
Rs crore
200
25
180
20
160
15
10
140
5
120
Mar 15
Dec 14
Sep 14
Jun 14
Mar 14
Dec 13
Sep 13
May 15
Jun 13
Feb 15
Mar 13
0
100
Dec 14
StockWatch.indd 3
08-05-2015 22:12:56
STOCK WATCH
` days (out of 12) ending 4 May 2015. The current price
15% to 14% for this period. Revenue for March 2015

is the lowest since the quarter ended December 2012,
while operating profit is the lowest since June 2012. Its
return on net worth (RoNW) for FY14-15 (based net
profit for four quarters ended March 2015) is 20%.
However, if we remove other income from the net
profit, its RoNW falls to just 10%.
is Rs138. Geometric has reported a fall in revenues and

operating profit for the past two quarters ending March
2015. Its average growth in revenues, which was just
7% for the five quarters ended September 2014, has
now fallen to 4% for five quarters ended March 2015.
Its average operating profit margin has also fallen from
Slipping Badly
Sharp decline in growth of revenue and
operating profit in Bata
ata has suffered a steady decline in its market price.

After closing at its life-time high in January 2015
at Rs1,476, the stock has given up 30%. On 4 May
2015, it was trading at Rs1,036. What gives? We are
not clear why it went up to nearly Rs1,500, in the
September 2005, while operating profit growth crashed

to its lowest level since December 2005. This weak
performance has been attributed to the problems
relating to introduction of new supply-chain systems.
However, the company said that issues have been
addressed and supplies have resumed.The company is
also aiming at rebuilding its image as one providing
a contemporary range of products. For the December
2014 quarter, it opened more than 50 stores and it has
an aggressive plan of expanding its retail presence in
Steadily Falling Growth

50
65%
Y-o-Y Sales Growth
Y-o-Y OP Growth
PE
40
25%
30
Dec -14
45%
-35%
first place. Since June 2011, Bata has witnessed

an uneven growth pattern in its revenue
and operating profit. For the
December 2014 quarter, its
sales growth fell for the
first time since the
quarter
ended
Sep -14
Jun -14
Mar -14
Dec -13
Sep -13
Jun -13
Mar -13
Dec -12
Sep -12
Jun -12
Mar -12
Dec -11
Sep -11
-15%
Jun -11
5%
20
10
2015. As at the end of December 2014, the stock

was trading at a PE (based on net profit
for four quarters ended December
2014) of 48.62, which is its highest
PE since December 2006. Based on
net profit for four quarters ended
December 2014, on 4 May 2015,
the stock is trading at PE
of 38.54. Still too high,
unless growth
``
resumes.
StockWatch.indd 4
08-05-2015 22:13:18
STOCK WATCH
Strange Love
FIIs seem to be increasing their holdings in
many companies whose profits have not
been growing
oes investment by foreign institutional investors

(FIIs) in a company have anything to do with its
fundamentals? The answer is mixed. Since the previous
major market bottom in August 2013, 20 companies
managed to attract FII investment in each of the past
seven consecutive quarters ending March 2015. This
was also accompanied with price appreciation.
12
11.31
Wockhardt MC/Sales
10
8.89
7.38
5.67
5.99
5.16
6.12
4
2
Mar 15
Jul 13
Nov 11
Mar 10
Jul 08
Nov 06
0
Mar 05
fter reaching a life-time high of Rs2,115 on the

BSE on 12 March 2013, Wockhardt crashed by
nearly 84% by 16 December 2013 when it reached
Rs340. From there, it again managed to reach close
to its all-time high at Rs1,979 on 7 April 2015. It has
already given up much of those gains and was trading
at Rs1,243 on 28 April 2015. How is the stock valued?
It had reached its life-time high level of 11.31 marketcap/sales (MC/sales) as at the end of March 2015
based on sales for four quarters ended December 2014.
Currently, it is trading at MC/sales of 7.54 which is
still in the highly overvalued zone.
MC/sales ratio measures the number of times
market-cap is to sales the of the company. The lower
the ratio, the more attractive is the stock. Each stock
or sector has a certain band within which valuation
movesuntil extraordinary events make them break
the previously known band. What has been the
historical trend of MC/sales of Wockhardt? From
the quarter ended March
arch 2000 up to June 2012, any
time the stock went above MC/sales level of 5, it hit
overvaluation zone. For the quarter
ended
December 2005, it was
as trading
at Rs445 when its MC/sales
C/sales
was at 5.16. After that,
at, it got
corrected 81% by March
arch
2009, when it was trading
ading
at MC/sales of 0.64. It
then broke above the MC/
sales level of 5 because
se of a
turnaround in its operations
rations
Bungee-jumping
Jul 03
The Wockhardt scrip has been making

highly speculative lunges
Nov 01
Breaking the Band
Mar 00
and expectation of major profits. At the end of March

2013, it was trading at MC/sales of 8.89 at a market
price of around Rs2006. From this level, it corrected
77% by the end of December 2013, when MC/sales
came sharply down to 2.29 on the news of a ban on its
medicines in Europe and statement of non-compliance
from the regulator. There was also a warning letter
by the UK regulator turned
from USFDA. Clearance b
recently, once again, it was
the stock around. But rece
in the (bad) news as 13 of its drugs were recalled in
the US, on the basis of the observations made before
import alerts were issued on
the US FDA and im
its Waluj and Chikalthana plants in
Maharashtra. This led to a
M
quick 37% decline. But even
at an MC/sales of 7.54, the
stock is not cheap, apart
from not being for the fainthearted.
Somany Ceramics enjoyed the highest price

appreciation (457%) for the relevant period when
FIIs holding in the company increased from 0.2%
as at the end of June 2013 to 5.79% as at the end of
March 2015. In the same period, FIIs increased their
stake in VST Industries from 8.51% to 14.88% but the
price went up by just 1%. This was the lowest price
appreciation of any stock where FIIs have increased
their stake. What about the fundamentals of these
20 stocks? Although their market-cap has increased
over the period, the operating profit of many of these
companies has not increased. Of the 20 stocks, five,
``
namely,
StockWatch.indd 5
08-05-2015 22:13:30
STOCK WATCH
Continuously Rising FII Holding

Sales Growth
Qtr
Jun-13
Non-promoter
FIIs (%)
OP Growth
Qtr
ended
Latest
result
Avg Sales
Growth
Qtr
Jun-13
Qtr
ended
Latest
result
Avg OP
Growth
Jun-13
Mar-15
DB Realty #
NA
Dec-14
NA
-15%
-84%
Dec-14
NA
-84%
5.25
9.6
KSB Pumps
4%
Mar-15
9%
7%
9%
Mar-15
-52%
-5%
0.67
2.72
Swaraj Engines
Mangalam Cement
Tamil Nadu Newsprint
Suprajit Engineering
Hero MotoCorp
IFCI
Kaveri Seed Co
25%
Mar-15
-35%
8%
23%
Mar-15
-44%
5%
1.45
6.84
-11%
Mar-15
9%
17%
-37%
Mar-15
-31%
36%
0.09
6.68
48%
Dec-14
-20%
9%
26%
Dec-14
-11%
11%
6.74
10.52
0%
Dec-14
-1%
13%
-7%
Dec-14
-10%
10%
0.91
4.73
-1%
Dec-14
-1%
9%
-2%
Dec-14
-8%
6%
29.85
40.77
-17%
Dec-14
5%
11%
-45%
Dec-14
-8%
24%
4.26
10.47
53%
Dec-14
-37%
23%
58%
Dec-14
-6%
61%
7.51
22.26
-10%
Dec-14
24%
7%
-25%
Dec-14
-5%
27%
1.07
2.97
Gujarat State Petronet
10%
Dec-14
-1%
-4%
8%
Dec-14
-2%
-6%
3.71
10.39
Just Dial
28%
Dec-14
29%
28%
45%
Dec-14
50%
34%
18.77
28.85
Somany Ceramics
36%
Dec-14
32%
24%
3%
Dec-14
43%
8%
0.2
5.79
Vakrangee
18%
Dec-14
43%
40%
30%
Dec-14
37%
43%
0.46
3.33
Bajaj Finance
32%
Dec-14
38%
32%
29%
Dec-14
35%
24%
8.75
13.55
La Opala RG
19%
Dec-14
11%
21%
50%
Dec-14
24%
29%
0.05
9.42
Pfizer
10%
Dec-14
74%
23%
47%
Dec-14
22%
17%
2.59
4.87
Firstsource Solutions
Sundram Fasteners
12%
Dec-14
-4%
4%
108%
Dec-14
16%
42%
0.94
9.13
Hindustan Zinc
9%
Mar-15
13%
8%
6%
Mar-15
13%
8%
1.53
2.51
VST Industries
14%
Mar-15
16%
12%
-9%
Mar-15
1%
19%
8.51
14.88
# NA - Inconsistent results which includes negative revenues for certain quarters; OP - Operating Profit; Non-promoter FII (%) - shareholding of FIIs who are
not part of the promoter group
Somany Ceramics, which the highest price increase

DB Realty, Gujarat State Petronet (GSPL), KSB
of 457%, has made only 8% average operating profit
Pumps, Mangalam Cement and Swaraj Engines, have
growth over seven quarters ended December 2014. KSB
recorded lower operating profit. GSPL, which reported
Pumps has had average revenue
an operating profit of Rs1,092.83
crore (for the four quarters ended
GSPL, which reported a growth of 7% over eight quarter
ended March 2015. Its operating
June 2013), made an operating
lower operating profit
profit of Rs928.46 crore (for the
and lowe revenues, over profit has declined consistently
over the past four quarters ended
four quarters ended December
four quarters, attracted March 2015. However, there are
2014). Its revenues for the relevant
a jump in FII investment. stocks like Vakrangee which have
periods too were lower by 12%.
FII holding shot up from posted good revenue growth and
DB Realty was the worst
operating profit growth in all the
performer in this lot of 20
3.71% to 10.39%
seven quarters ended December
companies. It reported operating
losses in most quarters since June 2013 up to December 2014. At the beginning of the fortnight (27 April
2015), 1,043 companies (out of the 1,370 in our
2014. For December 2014, it reported an operating
database) had published their shareholding pattern as
loss of Rs20.41 crore compared to a loss of Rs3.52
``
on 31 March 2015.
crore a year ago.
StockWatch.indd 6
08-05-2015 22:42:24
STOCK WATCH
nalysing a companys performance

requires measuring its efficiency
at different levels of profits, such as
operating profit or net profit. Most people
concentrate only on net profit because it
determines the popular price to earnings
(PE) ratio; but net profit is distorted by various
heads of income and charges. It is the operating ratio
that reflects the strength of a companys operations.
Operating Profit Margin: Operating profit (OP) is the
balance money remaining after paying off the variable
expenses. Variable expenses are those which relate to
operating activities of the business. A higher ratio means
the company is able to control its operating expenses
for generating revenue. Over a period, a trend analysis
Lakshman Rekha for Bulls?

Does a close below 200-dma mean
anything for the index? Not really
200 dma: Random Signal 1

Close
200 dma
5,600
5,400
Nifty
5,200
5,000
4,800
Apr 12
Jul 12
200 dma: Random Signal 1I

6,200
ven those who do not believe in technical analysis,

apparently observe whether a stock, or the market
index, is trading above or below what is known as
200-day moving average (dma). Apparently, 200-dma
is the lakshman rekha for investors. A close above
indicates a continuing bull market; a close below is a
warning of impending bear market. Is it? At the time
of writing, the Sensex and the Nifty had closed below
200-dma. Is the market about to change direction?
Here are two pictures of the Nifty closing below 200-
5,800
of this ratio helps determine whether the

efficiency of a company is increasing or
decreasing. It can be also used to analyse
two companies in same industry.
Operating profit margin: OP / Revenue
Net Profit Margin: Net profit is
the money left after deducting all the
expenses, including taxes and dividends to preference
shareholders. A higher net profit means higher amount
of dividends for equity shareholders and/or higher
amount that can be transferred to reserves. Higher
retained earning means that the company will have
lower dependence on external funds; so it can control
interest cost.
Net profit margin: Net profit / Revenue
Oct 12
6,000
Nifty
5,800
5,600
5,400
Close
200 dma
5,200
Mar 13
Jun 13
Oct 13
dma and what happened subsequently. As you would

notice, the market may, or may not, turn bearish if it
closes below 200-dma. The next move is random.
After trading above 200-dma for 65 trading days
ending 3 May 2012, the Nifty moved below the dma.
Would you have turned bearish at 5,087? Well, you
would have had to turn bullish immediately at 5,068
on 8 June 2012 when the index came above the dma.
This was followed by days when the index oscillated
randomly. On 19 June 2012, the index again came
above the 200-dma and stayed there for 27 days. On
26 July 2012, the index went below 200-dma, when
it closed at 5,043. Then, it stayed below the 200dma
for two days and resumed trading above it for 169
days. After the end of the 169 days, on 4 April 2013,
``
StockWatch.indd 7
08-05-2015 22:14:00
STOCK WATCH
` the Nifty closed at 5,575. Then it traded below the
200-dma for eight days. After that, it resumed trading

above 200-dma for 38 days. This was followed by the
index moving randomly above and below the average
for 78 days. Lesson: index closing below or above 200dma is a random event and has no predictive value.
Strong Results
It could be one of few stocks to beat a
sluggish market trend
otak Mahindra Bank (KMB) declined sharply in

early May 2015 as banking stocks got hammered
in the market slide. However, it remains one of the few
companies that has reported excellent results. KMB
reported a standalone net profit of Rs527 crore, in
the March 2015 quarter, up 29% from a net profit of
Rs407 crore in the March 2014 quarter. Its interest
income increased by 16%, to Rs1,123 crore, for the
March 2015 quarter compared to Rs966 crore a year
ago. Net interest income is the difference between
interest earned and interest paid. This was supported
by loan growth, up 25% year-on-year, from corporate
banking and personal loans and credit card business.
Non-interest income registered a healthy 35%
growth. It was up 95% year-on-year due to a low
base. This was supported by income from distributing
financial products, forex-related income, debt
syndication fee, trade and remittance charges. The
merger between KMB and ING Vysya became effective

1 April 2015 and consolidated earnings will be
reported in the June 2015 quarter. Full integration is
likely to be completed over the next one year.
Apart from the core banking business, Kotak
Mahindra Prime, the auto-financing business, reported
an earnings growth at Rs140 crore, up 13.5% year-onyear. Kotak Securities reported profits of Rs96 crore,
up 110% year-on-year. Kotak Mahindra Capital, the
investment banking division, reported a profit of Rs30
crore while the asset management business reported a
net loss of Rs18 crore. Unless there is a financial crisis,
we expect the stock to resume its upward journey soon.
The stock is expensive at P/E of 15.92 based on its
standalone net profit for the March 2015 quarter.
MARKET TREND
Going Nowhere
sluggish; businessmen are reluctant

to invest much; and rupee is weaker
again, despite the fact that oil is, on an
Weak and high valuation continue to
average, 50% below its highs of the same
pressure stocks
time last year.
ast fortnight, the market indices fell by about
fortn
Last fortnight,
I had also suggested that the index
5%. I had suggested that bulls were on the
is unlikely tto go much lower because institutional
ults,
back foot, struggling to battle poor results,
investors are still very bullish. For the
high valuation or both. In the event,
extreme short term, I expected the Nifty
this is what happened. Stocks fell
would find support at 8,300 and below
th at 8,100. The Nifty took support at
across the board. Also a set of
that
8,0 and rebounded. However, the index
foreign institutional investors (FIIs)
8,000
seem be getting impatient with the
will not go very much higher either. The
promises of the Modi government and
overall trend is still weak. Within that,
Medium-term:
various gaffes that various ministries

stocks with substantial export revenues
Long-term:
Up
seem to be making every day. Growth is
will do well. Debashis Basu
StockWatch.indd 8
08-05-2015 22:14:15
13.62%
NIFTY
Model Long Term Portfolio
17.04%
LONG TERM PORTFOLIO
STOCKGRADER LONG TERM
ANNUALISED RETURN
SINCE 31 JANUARY 2013
Return Ratios@
Valuation#
No. Company
RoE RoCE MC/OP
MC/Sales
Entry Price
ML Sector
1
Hero MotoCorp
Auto
44%
49%
14.30
1.72
1,823.40
2
Shree Cement
Cement
13%
10%
26.20
5.60
4,470.55
3
TCS
44%
44%
35.64
6.63
1,344.15
4
Sun TV Network
Media
23%
32%
8.16
6.32
472.10
5
Lupin
Pharma
37%
46%
26.57
8.41
629.05
6
Mindtree
33%
36%
16.06
2.89
457.27
7
HDFC
Financial services
22%
18.68
6.29
845.00
8
HDFC Bank
Banks
23%
12.64
3.83
683.00
9
Kotak Mahindra Bank
Banks
15%
34.64
9.18
774.70
10 Bajaj Auto
Auto
31%
37%
12.19
2.64
1,820.35
11 Asian Paints
Paints
35%
46%
33.98
6.07
457.37
12 Sun Pharma ^
Pharma
37%
36%
28.95
13.00
484.68
13 IndusInd Bank
Banks
21%
12.38
3.25
427.45
14 Titan Company
Lifestyle & Leisure
32%
32%
29.78
2.81
241.85
15 NMDC
Steel
23%
28%
6.49
4.29
140.05
16 Tech Mahindra
27%
31%
16.03
2.93
448.66
17 Britannia Industries
Foods & Beverages
67%
68%
36.96
3.63
876.45
18 Mahindra & Mahindra
Auto
22%
15%
18.28
1.90
938.90
19 Divis Laboratories
Pharma
27%
32%
19.94
7.24
1,178.40
20 Eicher Motors
Auto
45%
55%
51.34
12.12
4,910.15
21 Hexaware Technologies
33%
37%
20.15
6.15
165.90
22 Hindustan Unilever
Consumer Products
127%
143%
35.47
6.03
554.95
23 Hindustan Zinc
Non-Ferrous metals
22%
18%
9.36
4.49
116.05
Foods & Beverages
50%
47%
29.67
6.45
5,000.00
24 Nestl India
25 Zydus Wellness
Foods & Beverages
34%
29%
22.86
12.07
483.40
26 HCL Technologies
44%
45%
18.50
7.38
700.33
27 Bank of Baroda
Banks
11%
3.64
0.72
162.04
28 Dr Reddys Lab
Pharma
17%
15%
91.00
6.50
2,439.40
29 Eclerx Services
42%
48%
17.41
5.65
1,294.55
30 Colgate-Palmolive
Consumer Products
88%
117%
35.03
6.84
1,640.55
31 Axis Bank
Banks
19%
7.80
2.53
379.25
32 ICICI Bank
Banks
15%
8.08
2.72
292.00
33 Ultratech Cement
Cement
12%
14%
13.73
2.89
2,482.35
34 Zee Entertainment
Media
41%
25%
29.16
8.22
354.90
35 GSK Consumer Healthcare Foods & Beverages
31%
35%
63.46
6.64
5,414.75
36 Aurobindo Pharma
Pharma
40%
30%
16.34
4.30
1,001.90
37 Torrent Pharma
Pharma
34%
26%
33.32
6.33
922.25
38 Havells India
Engineering
23%
26%
24.65
3.52
289.60
39 Crisil
Financial Services
29%
51.70
15.78
1,818.30
40 Suven Life Sciences
Pharma
47%
49%
19.01
6.78
248.70
41 Indraprastha Gas
Oil & Gas
25%
30%
7.24
1.47
423.65
42 Amara Raja Batteries
Auto Components
29%
39%
19.54
3.30
CMP
43 Bharti Airtel
Telecom Services
20%
15%
7.52
2.75
CMP
44 Cipla
Pharma
12%
14%
26.19
5.11
CMP
45 ITC
Diversified
36%
48%
18.67
7.23
CMP
46 Bajaj Finance
Financial Services
21%
13.31
3.55
CMP
47 Maruti Suzuki India
Auto
18%
18%
12.36
1.96
CMP
48 Yes Bank
Banks
28%
8.90
2.27
CMP
We are exiting from Canara Bank (loss 18%), M&M Financial Services (loss 12%), State Bank of India (loss 15%) and BHEL (profit 20%)
CMP*
2,354.55
10,128.15
2,545.25
354.45
1,741.00
1,247.45
1,154.60
951.70
1,308.20
2,067.85
765.75
927.90
795.20
370.05
127.65
614.25
2,245.30
1,170.75
1,725.20
14,806.95
243.95
866.25
175.35
6,767.55
941.00
920.75
153.85
3,282.90
1,577.90
2,004.95
527.60
304.60
2,621.45
310.00
6,391.75
1,236.65
1,205.20
281.25
1,966.55
274.60
397.00
824.00
393.65
628.40
322.70
4,184.80
3,543.60
798.75
Change
29%
127%
89%
-25%
177%
173%
37%
39%
69%
14%
67%
91%
86%
53%
-9%
37%
156%
25%
46%
202%
47%
56%
51%
35%
95%
31%
-5%
35%
22%
22%
39%
4%
6%
-13%
18%
23%
31%
-3%
8%
10%
-6%
Exposure is assumed to be 2% for each stock. This means that the portfolio is 4% in cash now. For calculating portfolio return, the cash balance is expected
to earn 8% (pre-tax).*Latest price is the closing price of Thursday in Rs; MC: Market-cap; OP: Operating Profit; # Valuation based on the latest quarter result,
annualised; @ Return ratios based on the latest four quarters of profit; ^Consolidated; CMP: current market price
Moneylife Long Term Portfolio (MLTP) will have 50 stocks, weighted equally & will be benchmarked against Nifty and large-cap equity funds. But MLTP returns are not adjusted to the
cost & constraints of equity schemes: 1) Yearly equity fund charges of around 2% 2) Buying & selling, based on purchase or redemption pressures 3) Impact cost in buying/selling
Long Term.indd 2
08-05-2015 22:36:32
Insurance Trends
New products, regulations, features and
options, interpreted from your perspective
H e a lt h I ns uranc e
Reliance Lifes Health Total

Is a Mix of Several Covers
Does a mixed bag of benefits really make a
cost-effective option for you?
eliance Life Insurance has launched an innovative

health insurance plan Health Total that can
be renewed till the age of 99 years. This is a nonlinked, non-participating and non-variable health
insurance plan which includes a fixed benefit cover for
hospitalisation, critical illnesses and surgeries, along
with reimbursement for other health-related expenses.
The product is difficult to understand; hence, reading
the fine print is all the more important.
Health Total offers two options. You can choose
a higher medical reimbursement benefit (MRB) under
this policy (option-I) or a higher sum insured (SI)
(option-II). The product is a regular-pay, five-year-plan
Fine Print:
Car Insurance Claims May Be Seled Faster?
ar-owners might see faster claims settlement as

Insurance Regulatory and Development Authority
of India (IRDAI) is proposing an increase in the claims
limit for hiring external insurance surveyors. Currently,
an external surveyors report is necessary for claims of
Rs20,000 or more. IRDAI has proposed that the limit
be increased to Rs50,000 for motor claims and Rs1
lakh for other claims. It means claims lower than the
limit can be processed by an in-house surveyor leading
to faster claims settlement. External surveyors are
fewer in number and, hence, they have a high volume
with premium of Rs150 per Rs1,000 of SI for option-I

and Rs75 per Rs1,000 of SI for option-II. The SI for
option-I is 6.66 times of annual premium while the SI
for option-II is 13.33 times of annual premium. For
example, the premium for Rs2 lakh SI will be Rs30,000
for option-I; it will be Rs15,000 for option-II.
``
While the mixed bag of benefits may sound great,
Major Surgeries Covered:

Hip or knee-joint replacement surgery
necessitated only due to an accident
Heart valve replacement surgery
Excision of tissue of brain with craniotomy
Transplantation of heart
Coronary artery bypass surgery
Bone marrow transplant
Liver transplantation (recipient)
Renal transplantation (recipient)
Total excision of oesophagus and stomach
Transplantation of lung
Critical Illnesses Covered:
Cancer
Heart attack
Stroke
Major burns
Loss of speech
Loss of hearing
Alzheimers disease
Parkinsons disease
Coma
Terminal illness
of work. Insurers will have to hire competent in-house

surveyors so that they are able to negotiate the repair
costs with the garage. But will the in-house surveyor
be biased in favour of the insurer? If so, it will be
disadvantage for the insured.
United India Insurance Penalised Rs60 Lakh
RDAI imposed a penalty of Rs60 lakh on United

India Insurance for violation of various regulatory
provisions, against 58 charges of violation. For one of
the violations, the regulator found that three claims
cases were not registered and no provision was made
for them. For another charge, relating to delay in
premium collection even after enforcement of the
policies, the regulator imposed a penalty of Rs5 lakh.
``
Insurance.indd 2
08-05-2015 22:30:01
INSURANCE TRENDS
` you need to check which surgeries are covered, which
critical illnesses are included and whether MRB is

really comprehensive. The product covers only 10
major surgeries for 100% SI which is a disadvantage.
Any other medically necessary surgery, which needs
hospitalisation for more than 24 hours, will pay lumpsum benefit of only 5% of SI. Out-patient department
The product gives better

reimbursement benefit only in the
fifth year of the five-year policy. Will
your illness happen in the fifth year
or can it happen anytime?
(OPD) procedures and day-care procedures are not
covered. The critical illness coverage is only once per
policy during the policys lifetime.
The structuring of MRB leaves you totally confused.
For a mediclaim product, you pay a premium and get
covered for up to the SI each policy year. Reliances
Health Total offers MRB which is for a specific
percentage of the annual premium and has a variable
percentage for the fifth year.
During Policy Year
MRB (as a % of annual

premium)
25%
50%
60%
Variable*
* Depends on gender, age at entry and sum insured option selected
The variable amount is higher for younger age.

Option-I offers higher MRB and, hence, higher variable
` The insurer had issued Indian Bank Arogya Raksha
group policy to account-holders of Indian Bank. The

Bank was debiting the premium amount to its accountholders who had purchased the health policy and
remitted it to insurer. It was observed that there was
huge delay in transfer of this premium from the bank
to the insurer.
IRDAI Wants Insurers To Comply with Grievance

Redressal Norms
RDAI has directed insurers to strictly adhere to the

guidelines on grievance redressal, amid concerns
of complaints and grievances from policyholders not
being properly handled by insurers. According to the
guidelines, insurers are required to follow a minimum
Policy
Year
MRB (as a
% of annual
premium)
MRB
Benefit
Total
25%
50%
60%
205%
340%
Rs3,750 Rs7,500 Rs9,000 Rs30,750 Rs51,000
MRB benefit for 35-year-old male for option II Rs2 lakh sum insured
paying annual premium of Rs15,000
Sum
Total
Insured Premium
For 5
Years
Tax
Net
Total
Benefit Premium MRB
Under In 5 Years Payout
Sec 80D
Rs2 lakh Rs75,000
Rs23,175 Rs51,825
Net
Effective
Cost Per
Annum
Rs51,000 Rs165
Assuming 35-year-old male in highest tax bracket
percentage compared to option-II. For example, age at

entry for the five-year policy has variable percentage
of 240% (age 18); it drops to 25% (age 65) for male
(option-I). Variable percentage is 225% (age 18) and
it drops to 20% (age 55) for male (option-II); it is not
applicable from age 56 to 65 years.
Another claim of Reliance, based on a weird
calculation, is that the net effective cost per annum
for the product is only Rs165 for a male of 35 years.
In reality, this is possible only if there are claims every
year which total Rs51,000 such that the eligible claim
for payout for year two to five is Rs3,750, Rs7,500,
Rs9,000 and Rs30,750. The product gives better
reimbursement benefit only in the fifth year of the fiveyear policy. Will your illness happen in the fifth year or
can it happen anytime?
turnaround time to resolve customer complaints.

Improper handling of complaints was giving rise to
customer dissatisfaction and escalation of complaints to
higher authorities.
All insurers have been advised to ensure that
the timelines stipulated in the regulations and the
guidelines are strictly adhered to while handling the
complaints received from policyholders/ ministries/
regulators and other statutory agencies. IRDAI has also
emphasised the need to review the systems, to sensitise
not only front-office staff but customer service staff/
officials at all levels of the organisation on handling
policyholders grievances with seriousness, promptness
and empathy, to enhance the trust and confidence in
the insurance sector.
Insurance.indd 3
08-05-2015 22:30:16
Warning:
Most Insurance
Products Destroy
Your Wealth
Over the past few years, thousands of savers have bought

what are called traditional insurance plans. These were sold
under the garb of protecting your capital and saving taxes.
But traditional plans are non-transparent, that is, you dont
know where your money is invested. These are inflexible and
illiquid too. You cannot change what you have bought. Worst
of all, you make pathetic returns on such insurance products.
You will end up getting 4%-6% return which is lower than
what you get from bank fixed deposits.
Read more on
https://www.moneylife.in/promotion/warning_insurance/index.html
GET ONE-ON-ONE HELP:

If you follow our choice of safe & smart products
you can avoid harmful financial products. That
apart, as a Premium Member, you can ask for
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04-05-2015 14:11:23
11 GREAT BENEFITS
A service for everyone that meets
90% of personal finance needs
INSURANCE
1 Accident cover of Rs2.5 lakhs
2 Which life insurance?
3 Which health insurance?
Which critical illness plans?
Which personal accident?
Which top-up/super-top up and why?
Which mediclaim with maternity benefits?
Which mediclaim (individual & floater)?
INVESTMENTS
4 Which equity funds?
Which large-cap funds?
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Which ELSS?
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Which bonds, NCDs?
Which long term debt funds?
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Warning- Insurance.indd 3
04-05-2015 14:11:48
PERSONAL BUSINESS AUTO
Taking Care of
Your Radiator
since it is very likely that the sludge and scaling has moved
on to other parts of the cooling system.
However, where there is a will, there is a way; and
every town has its radiator specialists who will find some
home-grown method to bring the cooling functions back
to original tick. Its that, or alternately, spend a huge sum
of money getting it done by the authorised lot.
Lobby against Public

Transport
Removing a radiator to clean it can become a

major exercise
very summer, water-cooled-engine-powered motorvehicle-owners in India would get their radiators

flushed. This meant every car, truck and bus, with
the possible exception of the VW Beetle and some other
air-cooled engines. The drill was simpleopen the drain
cock at the bottom of the radiator; let the rust-coloured
(or worse, mud-coloured) water and slurry out. Then put
a hose-pipe with running water on top; let the engine tick
over gently and keep pouring water till what comes out
looks like what went in.
In a day and age prior to green and other coloured
chemical coolants, this worked very well; it got rid of all
the scaling, rust as well as muck which impacted cooling
efficiency. To a keen eye, it also gave an indication of
engine health; but more on that some other day.
For the purists, a reverse flush was also essential and
consisted of unbolting the radiator from the body; holding
it upside down; and pouring water bottom to top while
thumping it gently to dislodge anything that got stuck
inside. It never failed to surprise me how much more
garbage would pour out even after the straight flush had
visibly cleaned things up.
Unfortunately, in modern cars, radiators often cannot
be flushed; certainly it is almost impossible to reverse flush
them. Removing a radiator to clean it up if it gets choked
after a few years can become a major exercise as authorised
dealers will try to charge you also for full engine removal
t is not just the expected bad results from the agricultural

sector that may drive down new motor-vehicles sales this
year but also the huge number of over-aged second-hand
motor-vehicles of all sorts heading for non-urban India.
In addition to the large number of people now opting for
new forms of public transport in many cities, Delhi, the
largest market, is one example.
This is why the lobbies, fighting for better public
transport, appear to be back in full form. The long delay
in the opening of the vital Mandi House to ITO stretch
of the Delhi Metro, for example, is one outcome. This
important arterial connection will reduce road traffic
load of vehicles as well as pedestrians on one of the most
congested street junctions in Delhi. It has been ready for
almost six months now; but its operation is being held back
on a technicality between two ministriesthat single-line
operation is unsafe. This is not true, because single-line

operation under controlled conditions has been allowed
in the past too.
It is said that the automobile lobby, already reeling
under reduced sales of new motor-vehicles, has been behind
this also. Not difficult to believe.
Veeresh Malik started and sold a couple
of companies, is now back to his first
lovewriting. He is also involved in
helping small and midsize family-run
businesses re-invent themselves.
Auto.indd 2
08-05-2015 22:26:27
TECHNOLOGY MOBILE
Safe Mobile Banking

Mobile banking is becoming more popular with users
across all age groups. Here are some tips to avoid the
pitfalls that loom large, points out Yogesh Sapkale
ith newer handsets with bigger and better

screens and updated operating systems (OS)
entering the market, almost every bank is
coming up with mobile banking solutions, especially
via an app. Although there is a difference between
mobile banking and mobile payments, both are
becoming popular across bank customers. As the name
suggests, mobile banking helps you to carry out regular
banking transactions, like checking account balance,
remitting money, paying utility bills and recharging
mobile, data-card and direct-to-home (DTH) services.
On the other hand, mobile payment means use of the
handset to make payment for goods or services either
at a shop physically, or remotely.
The main reason for the increasing popularity
of mobile banking is ease and accessibility. You can
use the mobile banking app for transactions from
anywhere (with suitable Internet connectivity) for
which, otherwise, you may have to spend considerable
time visiting the branch. However, one needs to be
careful while doing banking transactions and making
payments using a mobile phone; else, you may suffer a
financial loss.
Mobile banking has evolved from earlier SMS-based
banking to app-based banking. Most banks have come
out with their own mobile app for all platforms like
Apple iPhones, Android-based devices, Windows phone
and BlackBerry.
Here are some safety tips to remember for mobile
banking.
Always Use Secure Connection: As mentioned
above, mobile banking requires you to be connected
through the Internet. Since Wi-Fi connections,
especially some free ones, are becoming more visible,
we tend to use them. However, for mobile banking,
avoid unsecured, public or open Wi-Fi connections.
Unsecured wireless connections are susceptible to
security breaches. So, use the 3G or 4G connection
provided by your mobile operator. Also, make sure the
signals are strong so that your transaction can be fast.
Use Authentic Apps Only: Always use only those

mobile banking app that your bank offers. Remember
to download it either from the banks secure website
(make sure to check if there is an https before the
banks name in the browsers address bar) or an
authorised app store. In addition, apply regular updates
your mobile device and the mobile banking app. (One
way is to visit the apps store on a regular basis and
check if any update is available for the apps installed
on your device.) Also, do not download and use apps
from any third-party vendor. Stick to the official apps
store and/or the banks website.
Malware/Virus: Over the past few years, several
mobile devices, especially Android-based onesdue to
the open ecosystemare being subjected to malware
attacks. Jailbreaked Apple phones are also susceptible
to malwares. To avoid this, install an anti-virus or antimalware app on your device. Plenty of such apps are
available free of cost. However, make sure to check the
credibility of the creator of the app and read reviews.
For Android-based devices, Avast Anti-virus is one such
free app.
Phone Security: Never store your mobile banking
credentials, like mobile personal identification number
(mPIN) or login ID, on the handset. Keep your mobile
phone locked either with a password or screen-lock
pattern that is hard (for others, not you!) to detect and
misuse. If possible, use a good, i.e., rated, software to
lock your mobile banking app so that nobody other
than you can use it. For locking your mobile and apps,
use a password that is not common and is random.
Use the maximum number of characters allowed by the
devices OS.
Password Secrecy: Lastly, but most importantly, do
not share your mPIN or username with anybody as it
may be misused like a credit or debit card.
Happy mobile banking!
Technology.indd 1
08-05-2015 22:33:07
HEALTH BM HEGDE
Stop those Statins!
Liver produces cholesterol to keep us alive and healthy,

as cholesterol forms the cell membrane of every human
cell of 120 trillion in all that we have. Billions of them
die a natural death (apoptosis) daily to be replaced by
new cells. The raw material for the new cell membrane
(wall) has to come from the liver, our bodys cholesterol
manufacturing centre.
The JUPITER (Justification for the Use of Statins in
Primary Prevention: An Intervention Trial Evaluating
Rosuvastatin trial) study, one of the largest studies in the
conventional sense, revealed that statins had not passed
the litmus test. Interestingly, brakes were applied on the
study by a major drug manufacturer mid-way.
Most Sold Drug
Almost everyone who took statins suffered not

one but multiple side-effects
Its discouraging to think how many people are shocked
by honesty and how few by deceit. Nol Coward,
Blithe Spirit
tatins are the most sold, most talked about, yet, the
most dangerous chemicals, used in Western medical
therapeutics only to get a better lipid profile report
of hapless, unsuspecting humansdubbed as patients,
because they have lots of patience to bear with all the
physical insults that we inflict on them.
Medical students are now taught that statins are the
best bet to get a patients lipid profile back to normal.
They have to regurgitate this theory in the exams to get
their coveted degrees. Some teachers at Harvard University
were shown to be on the payroll of statin manufacturers.
Drug barons took bets on their sales and spent a billion
dollars in one year on advertisements and doctor hospitality
to net just about $13 billion in one year itself!
The CEO of a company was the happiest at his success.
Almost every patient who took statins suffered not one
but many side-effects, symptomatic (like muscle pain and
muscle loss) or asymptomatic (like liver damage, muscle
damage, kidney damage, brain damage and what have you).
An Australian study revealed that every patient on
statins suffered muscle damage right from the beginning!
The scariest part of the whole saga is that these companies
knew that statins destroy the livers normal function.
One of the largest studies of statins in the worlda metaanalysis of 113,394 patientsshowed that between 7%27% of patients on statins will become diabetics in one year.
In a randomised control trial (RCT), done long before the
drug was certified for human use by the US Food and Drug
Administration, Rosuvastatin (a commonly prescribed
statin these days) was blamed for rhabdomyolysis (the
rapid destruction of skeletal muscle tissue) in patients. How
could that drug be licensed? Yet, it got the green signal
from the FDA and went on to become the most sold drug!
Be that as it may, the very connection between fat
profile and heart disease is so shaky that if we went into
it from one end to the other, many skeletons will stumble
out of the regulatory bodys cupboards. The whole edifice
of fat-diseases connection started with Ancel Keys study.
That study was badly sexed up and doctored to get positive
connection where none existed. The rest of the story was
built on that dry-sand foundation.
Truth, unfortunately, is very lazy. By the time truth
could pull up its pants to start the race, falsehood and
mystery will have gone round the globe twice over! We
might break our heads; but the powerful pharma lobby
will prevail, truth notwithstanding. God save mankind
from this unholy nexus between the drug manufacturers,
the medical profession and the regulatory agencies. Thank
God, the industry has not succeeded in getting statins put
into drinking water supplies! However, they have put it
into the controversial poly-pillan alleged Rambaana
(panacea) for all ills. Lets hope for that utopia where
truth prevails.
Professor Dr BM Hegde, a Padma
Bhushan awardee in 2010, is an MD,
PhD, FRCP (London, Edinburgh,
Glasgow & Dublin), FACC and FAMS.
He can be reached at hegdebm@gmail.com
BM Hegde.indd 2
08-05-2015 22:25:43
HEALTH BM HEGDE
PET OWNERS BEWARE
psychiatristsfound that
persons could transfer
e are very fond of
their happy state of
our pets, especially
MEDICAL DEVELOPMENTS FROM
mind via their sweat to
dogs and cats. Some
AROUND THE WORLD
those who smell them or
people have reptiles and
come close to them. The
exotic birds at home.
Washing hands after contact with
researchers said: We observed
Having a pet is assumed to be very
animals and their excreta should be
that exposure to body odour
good for ones health and also to
routine.
collected from senders of chemo
If one keeps birds, a big risk
signals in a happy state induced a
is psittacosis or parrot fever,
facial expression and perceptuala bacterial disease caused by
processing style indicative of
chlamydia psittacia type of
happiness in the receivers of those
bacteriathat humans can
signals. Our findings suggest that
contract through inhalation of bird
not only negative (effect) but also
secretions, including urine and
a positive state (happiness) can be
faeces.
transferred by means of odours.
Women showed more signs of
happiness in this study, according to
BREAST SCREENING MAY
Gn Semin, one of the researchers.
REVEAL HEART DISEASE
f
scanning
of
breasts
show
Most pet keepers
calcified breast arteries, the
OBESITY AND CAUSE(S)
do not clean up
likelihood of coronary arteries
lthough exercise has many
after their pets.
being calcified is also quite high.
health benefits, not exercising
Strict cleaning is
If a woman past middle age has
is not a significant cause of obesity,
calcified breast arteries, she is
as are sugars and other refined
a must. Washing
advised
to
have
a
full
cardiac
carbohydrates in food. Even if one
hands after contact
evaluation
for
preventive
steps.
were to exercise for an hour a day,
with animals and
the amount of calories spent cannot
their excreta should
be compensated as much as they are
SMELL SWEAT, BE HAPPY!
be routine
by strict dieting.
heromones (described as
behaviour-altering
agents by some) are
DEPRESSION AND
avoid depression. Yet, if a very high
known to transfer
MEDITATION
degree of hygiene standards are not
emotions to others.
recent study showed that
kept, the risk to human health from
In a recent study
meditation is as effective as
pets could, at times, be even lifeat the Utrecht
any anti-depressant drug in the
threatening.
University (The
treatment of depression. This is
Toxoplasmosis (infection
Netherlands),
good news, for two reasons.
from parasitic bacteria), intestinal
the
Most, if not all, antiworms like hookworm, salmonella,
depressants encourage suicidal
researchers
campylo-bacterial diarrhoea,
tendencies. They also have
both
common cold from dogs, cat scratch
many other unpleasant sidedisease and the deadly rabies from
effects. Another significant
warm-blooded animals are the risks
reason is that latest
one takes while keeping pets. We,
quantum physics puts
in India, do not have strict rules
the mind outside the
governing pets. The main danger
brain. So treating
to human health comes from dog
brain tissues with
and cat excreta on roads. Most
drugs might not
pet keepers do not clean up after
have any relation
their pets. Strict cleaning is a must.
to human mind.
BM Hegde.indd 3
08-05-2015 22:25:55
LEGALLY SPEAKING SD ISRANI
EMI Issues
EMIs are a great boon, provided you borrow
responsibly or dont turn unlucky
he past decade has witnessed a phenomenal growth

in the retail trade for various products and services.
One of the reasons for this exponential growth has
been the easy availability of finance. Be it a home, vehicle
or white goods, like air-conditioners and refrigerators,
virtually every product is available against loans. To further
simplify the process and extend the purchasing power of
consumers, banks and consumer finance companies have
popularised the mode of dividing the loan into equal
monthly instalments or equated monthly instalments,
generally known as EMIs, for repayments. This has been
a boon for consumers with limited means.
But, because of such convenience, many consumers
tend to go overboard while making purchases that result
in stretching their finances and lead to failure in meeting
their repayment commitments. Such defaults of consumers
invite serious action from the concerned bank.
This point was tellingly brought home to me by the
ongoing travails faced by 37-year-old Deepa Manwani
(name changed) who, along with her husband, started a
small business in Pune. She obtained a loan of Rs40 lakh
from a nationalised bank and, as a security, mortgaged the
flat in which they are currently living. The entire loan is
payable in monthly instalments, i.e., EMIs.
All was well in the first year as Deepa was able to pay
the EMIs in time; but problems arose due to downturn in
herr business, resu
h
he
resulting
ulting in delayed paym
payments
and backlog of unpaid EMIs. The bank
b
was prompt in issuing notices to her
asking her to immediately pay the
explained
overdue instalments. She explai
her problems and sought some ti
time;
they assured
asssur
u ed
e her of full support and
asked
papers in
aske
as
ked
d her
he to
o sign
siggn certain paper
connection
conn
co
nnec
ection with her
h r loan.
he
l an
lo
The next
Th
ne thing she
he knew
k
was thee bank
wa
b nk asking
ba
ask
kin
ingg her
t h
to
hand
and over cha
charge
of her
h er apartment.
apartm
She
She was shocked.
sh
hock
The bank served
Th
serr
the
th
he notice and
symbolic
took sym
ymb
b
possession
of
o her
h er flat.
f
Now, the bank has threatened to auction her flat forcing

her to rush to a debt recovery tribunal for relief. In the
meantime, she has been receiving verbal threats from
the bank to vacate the apartment. Deepas case is not an
exception but the rule, if a customer defaults in payment
of EMIs.
Something similar happened in the case of Shriram
Transport Finance Co Ltd, versus Chaman Lal. In this case,
the finance company had provided loan for the purchase
of a tractor with repayment in fixed monthly instalments.
However, the customer failed to pay the EMIs; the finance
company seized the tractor. It went a step further and
sold off the tractor. When the matter came up before
the National Consumer Disputes Redressal Commission
(National Commission), after hearing both the parties,
National Commission made a reference to the judgement
of the Supreme Court delivered in 2012 in the case of
Suryapal Singh Vs Siddha Vinayak Motors & Anr, wherein
it was held that:
Under the Hire Purchase Agreement, it is the financier
who is the owner of the vehicle and the person who takes
the loan retains the vehicle only as a bailee/trustee, therefore,
taking possession of the vehicle on the ground of nonpayment of instalment has always been upheld to be a
legal right of the financier.
In Chaman Lals case (supra), the National Commission
upheld taking possession of the tractor and its sale by the
finance company and directed the finance company to
adjust the proceeds against Chaman Lals EMIs.
These two casesof Deepa and Chaman Lalhold
vital lessons for consumers availing loans from banks
and finance companies and promising to repay by way of
EMIs. First of all, it is imperative to pay the EMIs on the
due date, else consequences will follow.
Secondly, let there be no illusion that, in case of difficulty,
the bank/finance company will help you. Remember, they
are only interested in their dues being collected; they will
use all legal and, at times, illegal means to recover the dues,
failing which they would like to take control of the property.
Thirdly, when caught in such a sticky situation, you
should immediately contact Moneylife Foundations Credit
Helpline where voluntary experts can guide you correctly.
Finally, dont sign any papers without understanding
the underlying implications and, if necessary, do seek
professional assistance.
SD Israni is a corporate lawyer & Fellow

of ICSI. Email: sdisrani@gmail.com
``
Legally Speaking.indd 2
08-05-2015 22:33:50
LRC.indd 3
08-05-2015 22:46:33
Bail, not Jail
We now come to a catch-22 situation. The man is

arrested because he had no money to buy a ticket and
now he has to shell out money to get bail.
You be the judge. What would you do?
The Supreme Court has, again, come to the rescue of the
common man. Poverty cant be a ground for keeping
in custody an accused who is unable to furnish the bail
bond, the social justice bench, comprising Justices
Madan B Lokur and UU Lalit, said. We feel that this is
as path-breaking an order as any.
Moreover, the court has asked the legal aid people
to make sure that this ruling is implemented all over the
country. The sad fact is that, as of last year, 278,000
persons were languishing in jails across the country.
Of these, 67% are under-trials; more than 186,000 are
awaiting trial. Considering that the conviction rate in
India is abysmally low, why are jails so overcrowded?
Under-trials are kept in a lock-upa euphemism for
a jailfor indefinite periods. The main business of the
police is to quickly make out a case, a charge-sheet, and
The Supreme Court had reiterated that bail is a present it to the court. The court then decides on the
matter of right
bail, or whether to release the person. In myriad cases,
though, the person rots in jail for a period longer than
what he would have served, if he had been tried and
n legal matters, courts have a right to detain a
convicted. For this, the cops are solely to blame.
person. This can be due to non-compliance of court
Of course, if you are the high and mighty, you do
orders, possibility of escape and disappearance, or
not spend more than a night in jail. The privileged class
the chance that a person will tamper with evidence or
threaten witnesses. There are, indeed, some very serious suddenly becomes prone to heart attacks. The poor
guys are rushed to hospital where
crimes where bail can be justly
they stay in comfort, till the day of
refused by the courts.
Poverty cant be a
The Supreme Court had
ground for keeping in reckoning; which never arrives till
death or contacts solve the matter.
reiterated that bail is a matter of
custody an accused
Usually, by the latter.
right. That means that the balance of
Can anything be done about
convenience must be in the favour of who is unable to furnish
the bail bond
it? One cause of concern is public
the person charged. In other words,
perception and pre-trial conviction
it is better to grant bail rather than
by the sensationalising media. Once one reads in the
refuse it. Of course, as in all things legal, this comes
newspapers of an arrest, along with juicy details, it is
with a rider. Bail usually entails a money deposit with
assumed that the person is as guilty as hell. This, often,
the court and a surety, a person who is responsible for
translates into a fear in the minds of the authorities
the accused turning up when asked to.
This leads us to some intriguing thoughts. Suppose a against early bail. More often than not, the bail plea is
man travels by train. He is too poor to buy a ticket; but rejected. Better to err on the side of caution.
So, in spite of the hue-and-cry against the judges,
the urgency of travel is very high. A child may be sick. A
there are some who uphold human dignity and act with
relative may have died. He received the message on his
sanity and fearlessness. We need our courts.
friends cell phone.
He gets caught for ticket-less-travel. He has no
money to pay the fine. He is arrested and put in a
lock-up by the railway police. He is produced, on
Bapoo Malcolm is a practising lawyer in
the next working day, which may be three days later,
Mumbai. Please email your comments to
before a magistrate. It is a small offence. The magistrate
mail@moneylife.in
understands that, when caught entrain, the man can
produce no surety. So, a monetary bail bond is imposed.
You Be the Judge.indd 2
08-05-2015 22:27:11
TION
MONEYLIFE FOUNDA
*
DONATE
to
make our
voices heard
Since February 2010, Moneylife Foundation,

the Voice of Savers has enrolled 30,100 members,
conducted 238 workshops, handled scores of grievances & made
four representations to policymakers.

We need to do much more
As the Voice of Savers, Moneylife Foundation is proud to have

been one of the fastest growing NGOs, reaching out to savers
across India (Gurgaon, Kolkata, Bengaluru, Chennai, Nashik, Pune,
Hyderabad and Goa), covering a wide variety of subjects. On
advocacy, we continued to pursue the government for appropriate
legislation to prevent people from being looted by thousands of
money-chain schemes. We took up the issue of harassment of
senior citizens because of problems with TDS. In August 2011,
Moneylife Foundation was accepted as an affiliate member of
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Donate Ad.indd 1
08-05-2015 22:49:08
MLF SEMINAR ON BLACK MONEY BILL
Black Money Bill: What Good Is It?

The new Black Money Bill will neither stop black money generation, not bring black money back
n a candid assessment of The Undisclosed Foreign through which the government could bring back black
Income and Assets (Imposition of Tax) Bill (Black money, pegging the amount at about Rs1.2 lakh crore.
He said the Indian government does not have names
Money Bill in common parlance), Dr Subramanian
Swamy, leader of Bharatiya Janata Party (BJP), said of Indians holding accounts abroad illegally except in
that the, recently introduced Bill in the
the case of two banks. Give me
Give me appropriate
Lok Sabha is unlikely yield the desired
appropriate power, control over the
results. The Black Money Bill tabled power, control over the ED (enforcement directorate) and other
in the Parliament is not sufficient to enforcement directorate agencies, and I will get all the black
eliminate the problem. In addition, and other agencies, and money stashed abroad in two months,
there is nothing in the Bill on bringing
the BJP leader said, adding that many
I will get all the black
black money back in India, he said.
money stashed abroad in the higher echelons of power from
Instead, he explained the various
across the parties may not like it if this
in two months
strategies employed by other countries
really happens.
to bring back illicit wealth siphoned away from their
Apart from bringing black money
countries. For instance, Dr Swamy said that many countries back, we need to prevent its creation.
had declared wealth stashed abroad, or in tax havens, Abolishing participatory notes
by overthrown dictators, as national wealth. Under the (P-Notes), personal income-tax
United Nations Convention on Corruption, each of the (I-T) and registration charges
countries (that holds such illicit wealth) can be directed for real estate are ways
to transfer the money back. He suggested that India to curb creation of black
should promulgate an ordinance on this issue and, with money. The total value of
UN support to have it enforced, we can bring black money P-Note investments in Indian
back in two or three years.
markets (equity, debt
and derivatives)
The BJP leader said the best way forward was to
take recourse to the United Nations Convention on
rose to ``
Corruption to instruct the tax havens to cooperate.
He recalled that in October 2014 he had written
to prime minister Narendra Modi listing six steps
Event.indd 2
08-05-2015 22:23:58
` Rs2,72,078 crore at the end of March
Indian economy. Britain had done so to

2015, according to SEBI data.
encourage its Industrial Revolution during
With regard to some of the more
the period 1816-1842, Dr Swamy said.
On black money in the realty sector,
draconian provisions of the Black Money
Bill (such as a maximum of 10 years
Dr Swamy said, In the real estate sector,
rigorous imprisonment for offenders
there are problems of stamp duty, and
who evade taxes in relation to foreign
registration fees, which are paid by the
public at a lower value. Undervaluation
assets and a penalty of 300%), Dr Swamy
said, I agree that the Bill contains some
of property for this is a problem. All
harshness and its assumptive powers may Anil Harish, partner at DM Harish
these government fees/duties should
be abolished. The market should be
be misused by revenue officials. The Bill & Co Advocates, puts forward a
is more like an I-T Bill and a de facto question to Dr Swamy
operating freely for buying and selling.
amnesty scheme. The amnesty would also
If there is a major overhaul, black money
be dropped and, in the end, it will be only
will not be generated in the real estate
empowerment of I-T officials.
sector.
On preventing the generation of black
Aadhaar Is a Disaster
money, Dr Swamy said, Start catching
big people, whose information is available
Responding to another question, the
with the ED and who are involved in this
BJP leader called Aadhaar, a numbering
black money business. This will have a
scheme promoted by the Unique
deterrent effect for other people and the
Identification Authority of India
population would become honest sooner
(UIDAI), a disaster. He said, Aadhaar
Ameet Patel, partner at Manohar
is a disaster. It is based on existing data
rather than later.
Chowdhry & Associates Chartered
Dr Swamy, arguably Indias most Accountants, puts forth his query to systems. Software is prepared by foreign
fearless politician and a renowned the speaker
companies. Aadhaar should be scrapped.
economist, was at his best while replying
Sooner or later, it is bound to happen.
He narrated how he had spoken against
to a volley of questions on black money,
taxation, hawala and politics. Eminent
Aadhaar while campaigning for BJP
lawyer and taxation expert, Anil Harish,
minister Ananth Kumar in the Bengaluru
asked about practical ways to bring back
south constituency during Lok Sabha
and prevent the creation of black money.
elections in 2014. Ananth Kumar was
Dr Swamy said, the practical way
contesting against Nandan Nilekani, who
should not be to penalise the honest
pioneered Aadhaar and had just stepped
down as chairman of UIDAI. But then
taxpayer. Even today, tax rates, in my
I found when the new government came
opinion, are unacceptably high. If you
Nagesh Alai, group chairman, FCB
abolish income tax, then you begin the Ulka Group India, asks a question
in, they decided to renovate or bring
process anew; fresh black money is going
it (Aadhaar) in new form. So I asked,
to be discouraged as a consequence.
Ananth Kumar, who had become a
Xerxes Dastur, a chartered accountant,
minister, that you made me come and
asked about the cost of tax collection
argue (against Aadhaar). Now, with what
and remedy from severe procedures for
face I will go and tell people that I do not
filing tax. There should be a national
know what is going on? The minister
demand from the publica national
said, I also dont know what is going
movementto abolish income tax. It
on. So if a minister doesnt know whats
taxes predominantly the urban middle
going on, then dont blame me if I dont
class and the young professional class.
know what is going on, said Dr Swamy
In rural areas, agricultural income is not Amit Paranjape, from Pune, sought
with a laugh. But I certainly think that
Aadhaar is a disaster, he added.
taxed. Rich people anyway have chartered a reply from the speaker for his
question
accountants to help them. The ordinary
A packed audience, comprising
taxpayer is the one who goes through hell
eminent lawyers, chartered accountants,
in adhering to the law. Abolition of income tax will have a senior consultants and citizens, responded to Dr Swamys
salutary effect on the rate of savings and investment in the forthright views with a standing ovation.
Event.indd 3
08-05-2015 22:24:50
Learn the
basics of
saving and
investing
Earning
Curve
Women on Boards
Companies with a higher percentage of women at the top
performed better
he Securities and
Exchange Board of India
(SEBI) last year imposed
a condition that every
listed company must have at least
one woman director on its board.
The deadline expired at the end
of March 2015, but almost onethird of companies listed on the
National Stock Exchange still have
no woman director on their board.
More than creating gender equality,
it is a case of creating gender
diversity, as women deal with risk
and decision-making in different
ways. In the US, women make up
more than half of the professional
and technical workforce and there,
too, the gender gap in business and
investment management persists.
Yet, studies show that companies
have performed better with a higher
percentage of women at the top.
A 2011 report from Catalyst,
a non-profit organisation for
promoting women in business,
found that, over the course of five
years, companies with women on
their boards had average return
on equity (RoE) of 15.3%. This
was 50% higher than the 10.3%
RoE of companies without any
woman board member. A report,
published in December 2012, by

Rothstein Kass research, indicated
that, between January 2012 and
September 2012, an index of 67
hedge funds owned or managed by
women had a return of 8.95%
significantly more than the 2.69%
return generated by the HFRX
Global Hedge Fund index.
As part of the Future of Finance
initiative, CFA Institute recently

held discussions on recognising
the value that women can add in
the finance industry, investing in
womens careers, and generating
practical approaches on how to
increase the number of women
in senior positions across the
finance industry. The Institute
highlighted reports that supported
the case of gender diversity. A
report published by Credit Suisse
in September 2014, titled The
CS Gender 3000: Women in
Senior Management, found that
greater diversity in boards and
management is associated with
higher returns on equity, higher
price/book valuations and superior
stock price performance. It is not
a case of a greater ability of one
gender versus the other but that a
more diverse group makes for better
decision making and corporate
performance, the report mentions.
The study was based on data
from Credit Suisses global company
research coverage, of more than
3,000 companies across 40 countries ``
Over five years, companies with women on

their boards had average return on equity
of 15.3%, 50% higher than the 10.3% RoE of
companies without any woman on board
Earning Curve.indd 2
08-05-2015 22:22:03
EARNING CURVE
` and all major sectors. For CY2013,
globally, 12.7% women were on the

boards of the companies sampled.
Women representation has increased
from 9.6% in 2010. Among the
40 countries, Norway ranked the
highest, with 39.7% women on
boards. In the US, 13.7% women
were on boards, while in the UK,
women representation was higher,
at 17.9%. Among countries with
the lowest percentage of women on
boards were: Pakistan, Japan and
South Korea with 1.5%, 1.6% and
2.4%, respectively. India ranked
32nd (with 6.7% of women on
company boards).
Norway ranks high as the
Norwegian mandatory quota is
widely quoted as a minimum 40%
requirement and as the model to
ensure diversity. We were surprised
therefore to find that the average
level of women on Norwegian
boards was just below 40%, the
report mentions.
Studies have shown how women
are different from men in leadership,
dealing with risk, decision-making,
etc. A comprehensive analysis of
95 studies on gender differences
showed that, when it comes to
leadership skills, although men are
more confident, women are more
competent.
Therese Huston, a cognitive
psychologist at Seattle University,
mentions in a report that
neuroscientists have provided
evidence suggesting that women
bring unique strengths to decisionmaking, especially when under
stress. The researchers found
that, under normal circumstances,
when everything is low-key and
manageable, men and women make
decisions about risk in similar ways.
They gather the best information
they can; weigh potential costs
against potential gains; and then
choose how to act. But, add stress to
the situation and men and women
begin to part ways.

Across a variety of gambles,
the findings were the same: men
took more risks when they were
stressed. They became more focused
on big wins, even when they were
costly and less likely. In one such
experiment, researchers asked
participants to draw cards from
multiple decks, some of which were
safe and provided frequent small
rewards; and others were risky and
had infrequent but bigger rewards.
They found that most stressed men
drew 21% more cards from the
risky decks rather than from the safe
ones, compared to most stressed
women, losing more rewards.
Neuroscientists explain that
levels of cortisol, a stress hormone,
play a major role. They found that
the tendency to take more risks
when under pressure is stronger
in men who experience a larger
spike in cortisol. But, in women,
they found that a slight increase in
cortisol seemed actually to improve
decision-making performance.
Stressed women made more
advantageous decisions, looking
for smaller, surer successes.
Unfortunately for the stressed men,
as soon as time started running out,
their decision-making became more
questionable, risking a lot for the
slim chance of a major achievement.
Men were also less aware that they
had used a risky strategy in the last
few minutes of the game. Another
study found that, under stressful
conditions, women become more
attuned to others.
Closing the gender gap will take
time. The speed of this process
will vary from country to country
and will depend on several factors,
the Credit Suisse report mentions.
There is no silver bullet; but the
combination of the appropriate
policies and initiatives altogether
can be extremely impactful, the
report concludes.
Biggest Risk in
Retirement?
A retirees grey matter
hat is the biggest risk in

retirement? Many would say
its longevity, inflation risk, market
risk, etc. According to Michael
Finke, director of retirement
planning at Texas Tech University,
the biggest risk may be a retirees
brain. The biggest risk to a
retirees portfolio is a large decline
in cognitive ability without a plan
and without an awareness that
its occurring, he says in a report
published by CFA Institute.
A health and retirement study
conducted by the University of
Michigan found that 60% of those
who were experiencing clinical
dementia said they were still
managing their own money. Around
10% said they were still doing so,
but having a little trouble doing it,
while the remaining 30% said they
were delegating the responsibility
to someone else. Is the person
making the financial decisions on
the retirees behalf keeping their
best interest at heart? In the US,
we have a buyer-beware market for
products that are very often sold to
older consumers. This is insane!
the authors of the report said. Its
insane that we allow people to sell
products that are not necessarily in
the best interest to people who are
in their 80s and 90s without any
fear. That needs to change. This
needs to change in India too. But
who cares?
Earning Curve.indd 3
08-05-2015 21:20:30
BOOKS
WHERE ANGELS PREY
The Untold Story of

Micro-finance
An insight into the real political economy of
micro-finance, told in the form of a novel
icro-finance institutions (MFIs) were supposed

to deliver a win-win solution: making money, by
doing a public good. But these two objectives
turned out to be irreconcilable. A reconciliation was
possible only by applying force, which MFIs actually
applied, resorting to age-old, time-tested third-degree
methods. Soon, it acquired a proportion of a socio-political
crisis in the main theatre of Indian micro-finance industry,
i.e., Andhra Pradesh (AP).
If one Googles micro
credit crisis, the search
engine throws up more
than 1.5 million pages
within 0.42 seconds. But
can one imagine writing
a novel based on it? That
is exactly what Ramesh S
Arunachalam, a known
name among development
practitioners, an occasional
writer for www.moneylife.
in, has done.
Set against the
backdrop of Andhra
Pradesh (AP) crisis, that
WHERE ANGELS PREY
erupted in 2010, the novel
RAMESH ARUNACHALAM
chronicles the events of a
AuthorsUpFront
13-month period, from
Pages 189; Rs295
August 2010 to August
2011. Though the story
unfolds in villages, jungles, dusty roads and tea-stalls in
two districts (Warangal and Ranga Reddy), the reader is
also taken to a stock exchange in Mumbai, chief minister's
office, secretariat, hotel rooms in Hyderabad, district
magistrates offices, police stations in district headquarters
and newspaper and investment bank offices in New York.
The author has consciously avoided using sector-specific
jargon and terms; but he has hardly left any important
aspect of this sector untouched. Though financial sector
is at the centre of the novel, it does not confine itself to
the sector to explore the reasons for the crisis; instead, it
points to diverse reasons that flow from global capital into
MFIs, Centre-state coalition politics, money laundering,

political system and musclemen of the local political leaders
and many others.
Though the novel wears the usual disclaimer that it
is a fiction and does not depict any particular individual/
MFI / Institution in India, existing or past, characters
and events flash continuously in the minds of the readers
who have kept track of newspaper reports of events which
led to the crisis in AP. The book helps those readers in
filling the gaps, joining the dots and unveils the material
relationships among the all the actors. It informs them
why those actors must have behaved in the way they did
and no other way.
However, the book also assures us that it is not pitch
dark, yet. Bob and Chander in investigative journalism,
Veena Mehra and Subba Rao in administration, and even
Renuka and Vijaya, the ordinary villagers, all exhibited
strength of conviction and stood by those poor borrowers
who have become a prey of the Angels who had promised
to take them out from the hell of poverty.
Arunachalam does deliver an ending to satisfy the
reader. You cannot forget the burning issues with an
ending where the guilty is punished. The reader gets a
slap on his face in the last couple of chapters, particularly
the Epilogue, which declares that The moneylenders are
back. It informs that the investigative journalists and the
well-intentioned administrators, going out of their way, to
book not only the front men butchering the poor people,
but even the most resourceful and influential individuals
who were actually running the show, fail. The Angels are
rewarded by the State for serving the poor in the form of
granting a banking licence. The novel provides the deep
insight into the real political economy that influences the
functioning of MFIs.
Talk of regulating MFIs started after the AP crisis; but
our lawmakers are busy with many businesses. The Micro
Finance Bill, hanging fire for past many years, is likely to
hang where it is in the foreseeable future. Even if passed,
it is unlikely that the regulator will have the institutional
wherewithal to reach out to remote places in Warangal
and Ranga Reddy. The concerns of society will not be
limited to wrongdoings in micro-credit activities alone.
Because there are quite a few new micro products, viz.,
micro-insurance, micro-pensions, micro-housing loans,
etc, waiting to target the poorer sections. The clientele of
these micro-products is identical; the agencies that are
going to serve these products are being driven by identical
business considerations. They have a grip of identical
levers of State machinery, policy-makers and local political
networks. Sanjeev Chandorkar
(The author had a long career with a public sector bank
and has since retired)
Book Review.indd 2
08-05-2015 21:18:49
6
3
2
375
Moneylife Foundation AD.indd 1
08-05-2015 22:50:31
MONEY FACTS STOCKS
INDIAN MARKET TRENDS
FUND FLOWS
The Sensex and the Nifty, as well as the ML Mid-cap Index,

declined 3% each during the fortnight ended 6th May.
ML Mega-cap Index and ML Large-cap Index dipped 1%
each, while ML Small-cap Index fell 2%.
Foreigners: Foreign institutional investors were net

sellers of stocks (Rs9,553.68 crore). They sold shares
worth Rs46,190.09 crore.
Share Prices, November 2014=100
75
-575
130
-1,225
-1,875
115
FII Net Investments

(Rs Crore)
-2,525
100
-3,175
27 Apr-15
06 May-15
Indians: Domestic institutional investors were net

buyers of stocks (Rs9,158.84 crore). They bought
shares worth Rs19,784.93 crore.
85
70
Nov-14
Feb-15
ML Large-cap
ML Mid-cap
ML Small-cap
ML Mega-cap
May-15
DII Net Investments

(Rs Crore)
2,000
ML Micro-cap
Nifty
Sensex
2,465
1,535
24-Apr
06-May
+/-
1,070
MLMega-capIndex
116.80
116.15
- 1%
605
MLLarge-capIndex
112.81
111.56
- 1%
MLS mall-capIndex
101.43
99.76
- 2%
Index
Nifty
Sensex
140
27 Apr-15
8,305.25
8,097.00
- 3%
27,437.94
26,717.37
- 3%
107.21
104.24
- 3%
57,125
88.13
84.36
- 4%
55,080
53,035
MLMi d-capIndex
MLMi cro-capIndex
Mega-cap Gainers/Losers
24-Apr
06-May
Change
AdityaB irlaN uvo
1,561.00
1,775.50
14%
Shriram Transport Finance Co
1,039.95
814.45
- 22%
24-Apr
06-May
Change
57.50
82.95
44%
145.40
109.45
- 25%
24-Apr
06-May
Change
SrikalahasthiP ipes
141.20
171.40
21%
InfiniteC omputerS olutions(Indi a)
265.95
220.80
- 17%
24-Apr
06-May
Change
350.30
489.20
40%
Large-cap Gainers/Losers
WelspunC orp
KPIT Technologies
Mid-cap Gainers/Losers
Small-cap Gainers/Losers
VadilalIndustri es
DrD atsonsLabs
Micro-cap Gainers/Losers
16.72
12.16
- 27%
06 May-15
GLOBAL MARKET TRENDS

Bovespa
50,990
48,945
46,900
Nov-14
Feb-15
May-15
S&P 500, the FTSE and Nikkei fell 2% each, while

Taiwan Weighted and Hang Seng dipped 1% each.
Bovespa rose 1%.
Index
Bovespa
Taiwan Weighted
Hang Seng
24-Apr
06-May
+/-
56,594
57,103
1%
9,913
9,818
- 1%
28,061
27,641
- 1%
S & P 500
2,118
2,080
- 2%
FTSE
7,071
6,934
- 2%
Nikkei
20,020
19,532
- 2%
24-Apr
06-May
Change
SuryachakraP owerC orp
2.20
3.03
38%
Korean Composite
2,160
2,105
- 3%
SamtelC olor
0.55
0.42
- 24%
Nasdaq Composite
5,092
4,920
- 3%
Shanghai Composite
4,394
4,229
- 4%
(AllP ricesi nR s)
Money Fact.indd 2
08-05-2015 23:03:52
MONEY FACTS STOCKS
Whats H
ML SECTORAL TRENDS
Non-ferrous metals companies were a mixed bag during the fortnight.

Man Industries (India), Hindustan Zinc, Hindalco Industries and National
Aluminium Co advanced 8%, 5%, 5% and 4%, respectively.
24-Apr
06-May
+/-
ManIndustri es
57.80
62.50
8%
HindustanZi nc
167.65
176.05
5%
HindalcoIndustri es
131.25
137.75
5%
Shares of garments companies

and non-ferrous metals companies
advanced 5% each. Stocks of
healthcare companies and energy
companies declined 5% each. Stocks
of office equipment companies
and education companies fell 4%
each. However, stocks of trading
companies and retail companies rose
2% each.
National Aluminium
46.35
48.20
4%
ML Sectoral Trends
350.45
346.40
- 1%
Companies
ML Non-ferrous Metal Index

105
100
95
Arcotech
90
HindustanC opper
85
NissanC opper
Nov-14
Feb-15
64.10
63.30
-1%
1.95
1.87
-4%
May-15
Garments
5% Diversified
- 6%
Non-ferrousMetal s
5% Healthcare
- 5%
Transport& Logistics
4% Energy
- 5%
Trading
2% Office Equipment
- 4%
Retail
2% Education
- 4%
Whats
AllP ricesi nR s
N T
FOOD INFLATION
Energy companies were punished. Gujarat Mineral Dev Corp and Honda
Siel Power Products declined 9% and 8%, respectively. PTC India, Gujarat
NRE Coke, Jaiprakash Power Ventures and JSW Energy fell 7% each.
Companies
GujaratMi neralD ev
HondaS ielP ower
PTCIndi a
+/-
24-Apr
06-May
107.30
97.15
-9%
ML Energy Index
1,144.50
1,051.50
-8%
110
74.25
68.95
-7%
5.11
4.75
-7%
-7%
GujaratN REC oke

JaiprakashP ower
9.35
8.72
JSWE nergy
114.80
107.20
-7%
CoalIndi a
376.25
353.10
-6%
SuzlonE nergy
24.55
23.05
-6%
TataP owerC o
78.10
73.45
-6%
HBLP owerS ystems
52.85
50.50
-4%
105
Combined food inflation

was 6.20% for March 2015,
compared to 6.76% recorded
for February 2015. For rural and
urban areas, food inflation was
5.85% and 6.72%, respectively,
in March. Inflation in vegetable
prices was at 11.26% in March,
compared to 13% in February.
Inflation in fruit prices was
Steadying
100
11%
95
Annual Change
7%
90
Nov-14
Feb-15
May-15
AllP ricesi nR s
3%
BULK DEALS
Mar-14
Date
Company
Buyer
Seller
Rs Cr
28 Apr-15
SanghiIndustri es
SamruddhiInvestorsS ervP vt
Safal Investors Serv Pvt
29 Apr-15
Fulford
VOFMas ter
Acira Consultancy Pvt
7.25
30 Apr-15
VisaS teel
LTSInvestmentFund
Visa Infrastructure
4.57
05May-15
InternationalC onveyors
SunitaD eviModi
RCA
2.30
27 Apr-15
Avishek Agarwal
RajendraK umarD abriwala
2.12
27 Apr-15
AdarshJV anzara
IGE ( India ) Pvt
1.92
30 Apr-15
DipakK umarModi
Rajendra Kumar Dabriwala
1.92
24.05
Sep-14
Mar-15
7.41% in March, while pulses

were dearer by 11.48% year-onyear. Inflation for cereals stood
at 2.32% and inflation for milk
products was 8.35%. Price rise
on non-vegetarian items, such
as meat and fish, was 5.11% in
March compared to 4.95% in
February 2015.
Money Fact.indd 3
08-05-2015 23:04:27
BEYOND MONEY
Knowledge
Network on
Autism
decided to put this knowledge to use to help other parents

get information about the disorder without having to
grope in the dark.
Today, the group has grown from a bunch of affected
parents to a well-functioning organisation with hundreds
of parents and professionals as members. FFAs Facebook
page has over 2,000 members and offers a platform for
active interaction between parents and professionals.
FFAs wide knowledge network of parents and
professionals is readily available to anyone interested
in the field of autism, whether they are parents or caregivers of freshly diagnosed children, families that have
recently moved to Mumbai, parents in search of doctors,
therapists, schools or other facilities for children with
autism. After functioning informally for several years,
the group decided to formalise its activities. It registered
itself only recently as a trust and society under the name
of Forum for Autism. The parent trustees of FFA include:
Parul Kumtha (president), Babita Raja (secretary) and
Chitra Iyer (treasurer).
FFA continues to hold workshops to help parents and
professionals learn the latest teaching methods. Experts
are invited to conduct these workshops. FFA conducts
N Madhavan writes about how a network of awareness drives to help the public understand the problem
autism. Members of FFA regularly address gatherings
parents of children diagnosed with autism and of
of college students to spread information about autism.
professionals dealing with the challenged is
FFA participates in the Mumbai Marathon every year
growing everyday, to help one another
where the contingent is led enthusiastically by celebrity
endorsers like Chef Sanjeev Kapoor and Harsha Bhogale.
ccording to an old-timer, the Forum for Autism
Funds raised through the Marathon are used to pay the
(FFA) began in the pre-Internet age, when parents fees for school and therapy sessions of several children.
got little information from sources other than the Constant and consistent therapy (especially in the initial
medical fraternity. Most often, doctors had little time years after diagnosis) is essential. Early intervention is
to explain autism and its implications to the family. So, known to result in significant improvement in the childs
parents ended up discovering their childs problem while life. Finances can be a major impediment for most
visiting speech-therapists since most of
families for the most-needed therapy
these children spoke little or nothing Most often, doctors had and intervention and FFA tries to help
as many families as it can. Residential
at all.
little time to explain
In the waiting rooms of therapists,
homes for adults with special needs
autism to the family.
they started noticing other children
leave much to be desired. It is FFAs
So, parents ended up
whose behaviour was similar to that discovering their childs dream to start a residential project in
of their children and realised that the
problem while visiting the near future where children will have
fellow parents were equally clueless
a safe and enriching environment to live
speech-therapists
about their childs autism. These
in, when their parents are no longer
since most of these
mothers (it is mothers who invariably
children spoke little or around. FFA conducts all workshops at
take their children for therapy) decided
nominal rates to make them affordable.
nothing at all
to help themselves and started pooling
Hence, FFA is dependent on donations.
resources. They started sharing books
If resources are made available, FFA
that they had read; swapped stories
would like to sponsor many more
and anecdotes; and realised that there
children who are in need of therapy
FORUM FOR AUTISM
was a reasonable pool of knowledge
but are unable to afford it. Donations
Flat No. 1, Ground floor, Sorabh House,
from readers are welcome.
that they possessed collectively. They
Garden Lane, Off Colaba Causeway,
Beyond_money.indd 1
Mumbai 400 039 Tel: 022-32949595

Email: forumforautism@gmail.com
Web: http://forumforautism.org/
08-05-2015 22:22:37
04-05-2015 14:10:10
REGISTERED WITH THE RNI UNDER NO. MAHENG/2006/16653. Postal

Registration No: MCW/184/2015-2017. POSTED AT PATRIKA CHANNEL
SORTING OFFICE, MUMBAI 400001. Date of Publishing Alternate Friday.
Date of Posting Alternate Tuesday & Wednesday.
04-05-2015 17:51:07

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