Lunar Eclipse on 31st December 2009

There is a Lunar Eclipse on the night of 31st December 2009! What a way to celebrate the New Year.

As per the Hindu practices, people used to stop eating atleast 3 hours before the start of the eclipse. Why? Is it a matter of superstition? or just a practice or has some science behind it? Why people are asked to stop eating atleast 3 hours before the start of the eclipse? Is it to fast and pray to God?

I believe that it is not because of some superstition or so. It is proved scientifically that the digestive power will be reduced during the eclipse and not to give much work load to the organs. If all the food are digested during the eclipse, there is not much work load on digestive side. Digestion is related to the gravitational force.

Just to make sure that people stop eating, elders use the technique of fasting and praying to God, so that out of fear the youngster will adopt this.

All said and done, the lunar eclipse will have an impact on this New Year eve. Those follow the above will not party, as the eclipse ends by 1.00am on 1st Jan 2010.

Hang on....I was writing about the relationship found recently between the Moon phase and the return on Investment? Check it out with the Sensex & Nifty.

Who knows...later on there will be study which will show the relationship between Eclipse and return on investments by some universities, which we will accept. 
Superstition becomes Science, when proved!!!

Cheers & Happy New Year

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Recent notification on taxing the perquisites - More on the topic

In my last post on the taxing the employees on the perquisite (which was earlier taxed as FBT). Some of my friends wanted more clarity on this. I am giving my interpretation and anyone has to plan their salary package, better check with their tax consultants or their auditors before doing so.

Let me discuss some of them.

(a) Provision of meals to employees during the office hours

Under the FBT rules, it was exempted. But now they have brought in the perquisite valuation back. Upto Rs.50 per meal, it is exempted. This was the old valuation before FBT. Now that the prices have gone up tremendously, they should have thought about increasing the limit alteast, if not exempting the perquisite.

(b) Provision of Credit Cards

Any annual fee paid by the Company for the employee is now taxable as perquisite. Nowadays, all the cards are coming as "Free for life time". So, this may not hit the employee much. If you have any cards which you have acquired based on reimbursement by company, the annual fee or joining fee, consider surrendering or continuing based on the benefits. The fee paid by your employer is now taxable

(c) Provision of Club Memberships

Now the reimbursement or provision of club membership by the employers is taxable in the hands of the employees as perquisite.

(d) Provision of transportation

If it is used solely for official purposes, it is not taxable. But the onus is on the employee & employer to prove it.

If it is used for both official and personal purposes, then it will be treated as used for personal purposes. Ridiculous isn't it?

The valuation is as below:
  • For cars with a capacity of less than 1.6 litre,  Rs 1,800 for the vehicle and Rs 500 for chauffeur. 
  • For cars above that category, valuation will be Rs 2,400 for car and Rs 900 for chauffeur.
The transportation allowances of Rs.800 remains unchanged.

(e) Provision of residential accommodation

Any residential accommodation provided by employer with or without the following facilities:
  • supply of gas, electric energy and water
  • watchman, sweeper, and any personal staff
is taxable in the hands of the employee, as it is now.

(f) Concessional education facilities to employee or any member of the household

It is taxable as perquisite.

(g) Carriage of household goods

It is taxable as perquisite. Need further clarification. In today's world, people migrate to places. Will the re-location allowance paid is taxable as perquisite?

(h) Interest-free or concessional loans 

Any loan given to an employee at a concessional rate or as interest free is taxable as perquisite. The only exception is medical treatment expenses reimbursed under any insurance scheme.

(i) Concessional or Free travel / tour

Any concessional tour or travel to employee is taxable. It includes the value of travel/tour, accommodation or any other expenses which were directly paid by or reimbursed by the employer.

(j) Subscription to periodicals

Any reimbursement for subscription of periodicals are taxed as perquisite.

(k) Gift or Gift Voucher or Token

Any gift or gift voucher or token with value of Rs.5000 and above are taxable.

(l) Stock Options

I am not discussing on this topic, as it has various permutation combinations depending on the scenario / type of options.

To conclude, any expenses which were reimbursed or directly paid by the employer on your behalf is taxable, unless specifically exempted.

As mentioned earlier, please check with your tax consultant before taking any decision.

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Season's Greetings


It was a wonderful year (2009) for me and hope for many too. The economy started reviving and the Stock Market bounced back from the steep slide.

I wish you all a Merry Christmas and a Happy New Year.

I wish the New Year will bring in eternal Happiness, Prosperity, Joy, Peace, Success in our life.

Like 20-20, 2010 will a successful one.

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GST Task Force recommendation - Implementation may be delayed!

The Thirteenth Finance Commission’s taskforce on the proposed goods and services tax (GST) has recommended a 5 per cent central GST and 7 per cent state GST on all goods and services, except five specific categories. It has proposed a zero rate for exports though it is not in favour of any special dispensation for the special economic zones (SEZs).

For inter-state transactions, the taskforce, in its report, recommended zero-rated structure through adoption of the modified bank model. Pending constitutional amendment, the report suggested that the collection from 7 per cent state GST should accrue to the state government and devolution to the third-tier (local) government should be made based on recommendations of state finance commissions.

The exemption list includes public services of Union, state and local governments, service transaction between an employer and employee, unprocessed food articles sold under the public distribution system, educational and health services provided by non-government schools, college and agencies.

It has favoured doing away with area-based exemption and replacing it with direct investment-linked cash subsidy in case the government wants to support industry for balanced regional development.

The taskforce has also recommended that “sin” goods comprising emission fuels, tobacco products and alcohol should be subject to a dual levy of GST and excise with no input credit for excise. “However, industrial fuels should be subjected only to GST with the benefit of input credit like any other intermediate good,” the report said.

Central taxes proposed to be subsumed in GST are central excise duty, including additional excise duty, service tax, additional customs duty, all surcharges and cesses. Among state taxes that should be subsumed are value added tax, including purchase tax and central sales tax, and entertainment tax, among others.

In recommending what it terms as a “flawless” GST, the taskforce, headed by Arbind Modi, joint secretary, Department of Revenue, has made wide variations from what was proposed by the empowered committee of state finance ministers in their first discussion paper released last month.

The discussion paper had recommended a two-rate structure for both state GST and central SGT while keeping the purchase tax levied by states like Punjab, Haryana and Uttar Pradesh out of the purview of GST.

The discussion paper had recommended a dual rate structure for CGST and SGST with a single rate for services. The finance commission taskforce, however, said “there should be no classification between goods and services in law so as to ensure that there is no classification dispute”.

The state governments will meet soon to discuss the fine contours of GST as the scheduled date (April 1, 2010) for its introduction draws closer.

Even in the case of exempted items, the discussion paper did not list the items but favoured retaining the exempted list of value added tax and Central VAT which is currently around 100.

  • A zero rate for exports though it is not in favour of any special dispensation for the special economic zones.
  • It has favoured doing away with area-based exemption and replacing with direct investment-linked cash subsidy.
  • The taskforce has also recommended that ’sin’ goods comprising emission fuels, tobacco products and alcohol should be subject to a dual levy of GST.

  • The taskforce in its report has suggested that small dealers, service providers and manufactures with an annual turnover of less than Rs 10 lakh should be exempted from both CGST and SGST though they could voluntarily register themselves for GST in order to get the benefit of input credit. The discussion paper had suggested Rs 10 lakh as threshold for SGST and Rs 1.5 crore as threshold for CGST

In order to reduce administrative and compliance burden, the taskforce report proposed compounded levy of one per cent each for CGST and SGST for those with turnover of Rs 10 lakh to Rs 40 lakh with “no input credit allowed against compounded levy or purchases made from exempt dealers”.

The 13th Finance Commission task force on the proposed Goods and Services Tax has recommended a single, 12 per cent rate on all items and suggested deferring implementation of the new tax regime by six months from April to October next year.

Out of the GST of 12 per cent, states should receive seven per cent while the rest five per cent should go to the Centre’s kitty, said thetask force.

The recommendations, however, are at variance with the Discussion Paper prepared by the Empowered Committee of State Finance Ministers which had suggested four rates, including a separate category for exempt items.

The task force has said the GST be introduced from October 1, 2010.

The Empowered Committee, which is yet to take a final call on GST tax rates, is meeting here under the chairmanship of Asim Dasgupta.

“It (GST) will have four slabs. I hope the rates will be released in the next 15 days,” Dasgupta had said.

I feel that the implementation will be delayed further not only because of the rates and structure but also due to getting the constitutional amendment done. With the strong government in place it is not that difficult. But issues like Telangana, Terrorism will digress important issues.

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GST - PM's Economic Advisory Committee favors single slab for Goods & Services

In my earlier posting, I have mentioned the salient points of the recommedations by the Empowered Committee of the State Finance Ministers (EC). 

Last week the Prime Minister's Economic Advisory Committee (PMEAC) headed by C.Rangarajan favoured a single slab each for goods and services or one common rate for both under the proposed goods and services tax (GST), unlike the proposal mooted by the states.

Rangarajan said,"The Centre could follow the pattern in which there is only one rate for goods and one rate for services, or one rate which is common to both goods and services". He added that there is an advantage in having single uniform rate. He added that having a separate slab for precious metals is neither advisable nor advantageous.

As I mentioned in my post that the empowered committee suggested two main rates for goods, besides a special rate for precious metals. However, for services the committee proposed just one rate. It also suggested that some goods be exempted from the proposed GST.

Last week, chairman of empowered committee of state finance ministers Asim Dasgupta had said GST would have four slabs. Among the GST tax slabs, it would be zero for exempted items, one standard rate for majority of goods and services and another having a moderate rate, he said.

The EC expected the Centre will follow same structure for GST as mooted by it. However, a task force set up by the 13th Finance Commission has suggested a single GST for the Centre and the states, though rates proposed are different.
Wait for more updates. I will post a separate note on the hurdles on implementaion.
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Do return on Investments have link to the Moon phase?

Read an article on the link between moon phase and the return on investment. Sounds silly. Here you go....

Macquaire Securites team of 14 senior market analysts scrutinised the data of 32 leading indices around the world. The data pertains to few decades (since 1988).

The finding : A strong surge in returns was seen leading into the turn of the month.

It means, the 2 days on either side of the new month represent most of the Positive returns on equity markes for next four weeks. Of the 32 markets studied, ALL showed higher than average returns around the turn of the month and for many of the markets, the average return for the rest of the month was BELOW or close to ZERO.

Not only this, the stock market has got into the beliefs of astronomy and vaastu saastra. There are so many astrological predictions done for the day's trading. Bejan Daruwalla's Ganesha Speaks in MoneyControl is a classic example of linking the market hour-wise and predicting with the move in the planetary positions.

I can relate to what my father used to say, whenever I invest in anything. Do it after during the New Moon day and not after the Full Moon day. The reason is..when the moon start growing, it will give better result and your investment will grow. It was sounding bit odd and silly for me, when he used to say this. But, with the recent study, I cannot question his belief.

Sounds interesting! Let us watch this phenomena.

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Hurray.....Schumi is back !! Sadly.....Tiger is away !!!

Can't hold myself ! The World Champion turned Consultant is now back to the grid. It is not just a sport. You need to manage the vehicle, plan your moves, take quick decision (in milli seconds), plan your pit stops etc., to make sure you are finishing and that too first!

His management skills on the wheels is known to all. Unfortunately, he is not representing Ferrari. He has signed up with Mercedes. Whatever team he may represent, he is a master in that sport, undoubtedly.

With Tiger Woods endorsements at stake, Schumi may get more endorsements. So many endorsements by Tiger Woods are at stake, if he is not going to play Golf. So, here comes another great sporstman. He has signed for 3 years with Mercedes. Marketing managers and Brand managers would have started working on the endorsements. Let us wait and see.

Welcome back Schumi.
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Monetary Policy - What the RBI will do?

We have the Reserve Bank of India (RBI)  to come out with the next review of the Monetary policy by the end of January 2010. With the expansionary policy last year, the RBI was able to do some justice. The indicators currently points towards reversing or taking back the expansionary policy in the coming review. This may put a  cap on the rising prices. 

The current liquidity position is good, so we can expect an increase in the interest rates. Whoever looking out to invest in Housing because of lower housing interest rate, be quick! The interest rates may go up in Jan 2010.

The RBI may hike the Cash Reserve Ratio (CRR), this will reduce the liquidity in the market. I hope all will know what CRR is. Refer my posting on 28th Jan 09. To put it simple, it is the deposit that a bank has to keep with RBI. With the money moved out of the banks to lend, the liquidity will be tightened.

It looks like the RBI may come out soon with their recommendations. Let us wait and watch what the next steps of RBI.

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Now the perquisites are to be taxed that too effective from April '09

As you are aware that the Fringe Benefit Tax (FBT) was abolished in the recent Finance Bill, which paved way for more tax in the hands of the employees. The taxability has been shifted from the Employer to the employee. This will have an impact on the tax to be deducted from the employees in the coming months till Mar 2010.

According to the new rule, which was notified on Friday (18t-Dec-09) by the Central Board of Direct Taxes (CBDT), the perks like ESOP, residential accommodation, free conveyance, free food, provision of company vehicles for personal & official use, concessional education, concessional journeys, credit card, interest-free loans, gift vouchers, hotel stay exceeding 15 days, medical facilities etc., are to be taxed in the hands of the employee with retrospective effect from 1-Apr-09.

For the valuation part of vehicles, small cars below 1.6 litres will now have a value of Rs 1,800 per month while cars with engine capacity above 1.6 litre cubic capacity will have a value of Rs 2,400 per month, if expenses on maintenance and running are reimbursed by the employer.

Per this new rule, the value of the perk will be added to the employees taxable income and taxed accordingly. Some employees at the lower tax bracket may move to the next bracket. 

It is important to take note of the following in the current situation:

  • The additional tax due the added taxable salary component, need to be collected in the remaining 3 months (Jan, Feb & Mar), if not started in Dec09.
  • If the employee got his final settlement before Dec09, who has to take the hit is a question mark. 
    • If the employer includes the taxable portion in his Form16, then he has to pay and collect from the employee.
    • Can the employer hold the issue of Form16 till the employee pay the employer? I don't think so.
    • Tax planning need to be redone by the employee.
  • Is the Payroll department robust enough to calculate the additional perks that need to be added to the employee's income and deduct the tax accordingly.
Let us see if the CBDT gives any further clarification in this regard.

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Is it worth investing in Gold now?

Gold had a fantastic bull run during the current year (2009) and people started investing in this category apart from the normal Equity markets. I read an article in the Equitymasters, that the Gold's Bull run may continue in the future also. I earlier suggested that one should have Gold as part of their investment portfolio, as it will not let you down. The article is written by Porter Stansberry, chief of the leading US-based private publishing company, Stansberry & Associates Investment Research. That article gave various reasons, which is acceptable, for a bull run in Gold.

The key reason is that "it has future". With the Central banks busy printing currencies (lead by the US Fed), many experts now predict a return of Gold Standard. Porter himself has been a Gold Bull for a number of years. His current view is that "GOLD IS NOWHERE NEAR THE TOP". He believes this because the central bankers have began to buy gold during the last six months. Hence, he feels that the bull market for Gold has lot further to run.

My personal view on Gold is that it is a safe investment and gives a steady return, considering the fact that it has a ever-growing demand (both fashion, sentiments, government requirements etc.,). Have atleast 10%-15% of your investment in Gold. It can be either in the form of solid Gold or you can trade in the Gold Benchmark funds, which are traded in the stock exchanges.

All the best and happy savings for 2010 and beyond.

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GST - Get...Set....Take-off

Here I am with an update on what is happening on GST (Goods & Services Tax). 

What is GST?

GST stands for Goods & Services Tax. It will replace Excise Duty, Customs Duty, Sales Tax, VAT, Services Tax, Luxury Tax, Entertainment tax, Cesses charged by States, etc.,). Stamp Duty, Toll Fee, Passenger Tax, Road Tax are not part of the GST. It will be a simplified tax, which can be easy to administer across the states in India.

As you know that the Government is keen in rolling out the GST with effect from 1-Apr-2010, all the teams are working towards the same.Here are the some high level points on the recommendations by the Empowered Committee of the State Finance Ministers (EC):
  • Dual GST - Central GST (CGST) & State GST (SGST) - an agreement reached.
  • Dual GST Rates agreed :
    • Standard rate would be in the range of 8% to 9%
    • Essential Commodities - 4% to 5%
    • Precious metals (Special rate) - 1%
    • Few products - exempted from GST
      • Special treatments:
        • Tobacco products subject to GST and Centre to levey excise duty over & above the GST
        • Alcoholic beverages & Petroleum products kept out of the GST purview
    • Inter-State GST
      • It is known as IGST (Integrated GST) - taxable for all inter-state sales including branch transfers & consignment goods
      • Centre will be taxing these transactions
      • Input credits of IGST, CGST & SGST will be available for offset.
      • Central agency to act as a clearing house for IGST funds among States.
  • Central Govt agreed to compensate the State for any revenue loss
  • GST paid on imports are available as input tax credits
  • Place of supply determines the State in which the SGST on Import payable.
  • Services to be charged in the state of consumption
  • Supply rule determines the place of consumption for cross-border services
  • State GST - Charged based on the location of the recipient of services
  • Thresholds for the GST applicability:
    • For SGST - Gross Annual Turnover of Rs.10,00,000 (both for Goods & Services)
    • For CGST - Gross Annual Turnover of Rs.150,00,000 (for goods) and for services it may be slightly higher. This is in line with the basic exemption duty from Central Excise.
  • For a better monitoring purposes, a PAN-linked Tax Payer Id with 13/15 digits will be allotted.
A Joint Working Group (JWG) to prepare paper on:
    • Rules and Procedures
    • Legal & Constitutional changes required
It is expected that the required Constitutional amendments (required for Centre & State sharing the revenue etc.,) would be made in the winter session of the Parliament (Let us hope it get through)
The Information Technology (IT) infrastructure is expected to operational by end-Jan 2010.

Let us hope for the best!!! The above is the gist of EC recommendations.

We will see in the next post on the latest developments.

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Back after a Gap

Apologies for not posting during the last few weeks. Occupied with some official work. Here I am with the postings, with lot of interesting things happening. I may be covering the following during the next 2 weeks:
  • GST - Recommendation by the empowered committee
  • GST - What the PM team wants
  • Is it good to invest in Gold
  • Where the Stock Market is heading?
  • Taxing the perquisites - Only 3 months remaining
  • Monetary Policy - current situation and expectation
Any other thing that crops up during the next few days.

Am really thrilled and excited on hearing from many on why I am not posting. Thanks for following me.

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Telangana like incident - Impact on our economy

When the world is looking at consolidation, only Indian politicians can think of disintegration. All done for political mileage or camouflaging the situation. Thanks to the media, the citizens are now aware of what is happening in the country. When the government announced that they will consider splitting Andhra into 2, I was shocked. What an Idea sirji !

What will happen when you have two states in the place of one. Two elections ! If in case the government is minority, it may have many elections! Whose money is spent on these? Our own money.
When we are working on increasing the GDP growth, fighting against economy slowdown, why our hard earned money spent on these petty things. Already the political and government spending are alarming. With such a step, we can expect more taxes than sops!

Few items, which crossed my mind, when I saw that Govt is considering a separate state of Telangana:

  • Already VAT implementation is fought with the existing states and having difficulties. This will add more headaches. Trouble for interstate traders.

  • More IAS required

  • More government spending on running an extra state

  • More opportunities for Employee, Establishment, VAT & Sales Tax consultants to comply with the respective state's requirement.

  • Changing the maps frequently - Students need to know the changes frequently

  • With water & electricity sharing, the states are fighting with each other. So, this will create more problem than a solution.

If it is only a political stunt, it is good that only we lost few crores as of now (protecting TRS chieft during the hunger strike, burning buses, damaging public properties etc.,). Hope no more damage will happen!

Let Manmohan Singh concentrate on the Economy than on the internal politics!

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Corporate Governance

Currently the corporate governance stressed more for the listed companies. Lot of compliances, disclosure requirements are there for listed companies, by way of the listing agreements. These are not applicable to the unlisted public companies.
The Ministry of Corporate Affairs (MCA) is trying to introduce Governance Code for the unlisted companies too. The proposed Companies Bill 2009 may ask the unlisted companies to follow specific norms of governance in line with the SEBI's code on Corporate Governance.

Let us see the advantages & challenges of this.

  • Currently the unlisted Public companies do not list their shares due to the fact that the compliances and governance requirements are more. When this governance is made equal for all companies, the unlisted companies may try to approach the public for their funding
  • Growth plans can be made by the promoters, as funding will not be an issue
  • Transperancy : Lot of visibility to the outsiders in terms of the internal working
  • The market price of the share would get visibiity for the company
  • ESOPs can be issued, as they will have market value and the employee know the financial by way of disclosure
  • Lot of Chartered Accountants, Company Secretaries, Cost Accountants will get job.

  • Cost of Compliances. Some companies may not afford to meet the cost of complying and having a dedicated resouces.
  • Potential companies would get attracted by strategic investors. It may be an advantage also.
  • With the limited audit force, getting the accounts & financial audited and Financial disclosures drawn up, the audit may get delayed.
It looks like the advantages outweigh the challenges and it may pave way for getting public funds at an attractive cost.

Let us wait and watch what the MCA, SEBI and other regulatory bodies decide. In all, there is going to be enough job created in the market for the finance folks.

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ICAI elections !

The ICAI council elections are around the corner. Please cast your valuable vote. I am not canvassing for any candidates. I want each and every one of us to exercise our rights.

It is disheartening to see people blaming the Council members. It hurts more, when you know that the member blaming has not exercised his vote.

Remember, it is we who elect the council members. So, go through the profiles of the candidates before voting. Make up your mind and consciously vote for that member.

It is time that ICAI need all our support – when GST roll out is on the card, IFRS convergence is around, etc.,

Let us elect and support the council.

Good Luck.
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IFRS - Phased implementation in India

I attended a two day IFRS workshop last week. It was really good. With the deadline for IFRS implementation nearing and in another 4 months the comparative period will start, we need to gear up for the IFRS adoption / convergence / migration (you can choose whatever you feel).

What India Inc is going to do? It was decided to go in phases and key representative from various industries are picked up for the I phase. Nifty companies, banking, insurance companies are pulled into the I phase.

The first list comprises 439 companies. It includes
  • BSE-Sensex companies
  • NSE-Nifty companies, 
  • companies that have raised debt of over $50 million abroad, 
  • financial sector companies, 
  • publicly accountable companies (with total borrowings of over Rs 1,000 crore), 
  • Indian subsidiaries of foreign companies that have implemented IFRS at the parent company and 
  • companies outside these categories with capital of over $50 million abroad.
ICAI is also mulling including venture capital funds also in the IFRS convergence process.

The first list includes
  • BSE and NSE companies                                                         - 52
  • insurance companies                                                             - 44
  • mutual fund companies                                                          - 46
  • Indian banks with presence only in India                                 - 37
  • foreign banks with a presence in India                                   - 30
  • Indian banks with overseas branches                                      -  8
  • Indian bank with subsidiaries/JV abroad (Central bank of India)- 1
  • Indian banks with representative offices abroad                       - 4         . 
This cleary shows the commitment of India to the IFRS implementation.

Let us gear up for the same. You can now expect more postings on IFRS.


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Cox & Kings - IPO is it a good bet?

With the recent IPOs not cheering up the investors, COX & KINGS are confident in getting into the market with their IPO. With the market being in an uptrend, would it give a thumbs up for the IPO? Let us see how the issue is, through an SWOT analysis.

  • 200+ years in the industry
  • Presence in many countries around the world
  • Well known in the industry
  • Not having a good financial track record
  • The recent performance is not good
  • The collection period is very high
  • IPO proceeds deployed for Working Capital, which may not give much return
  • The PE and the price is too high, considering the performance
  • With the market getting matured, there are good opportunities
  • More people are willing to travel abroad and take a holiday package
  • The market competition (KUONI, SOTC etc.,)
  • The Airlines themselves giving schemes
Some facts on the issue:

Issue opens on : 18th Nov 2009 (today)
Issue closed on : 10th Nov 2009
Price range       : Rs.316 - Rs.330
IPO grading      : 4 (by CARE)

Given the performance, the poor working capital management, the IPO proceeds being used for Working Capital, mounting competition, I would suggest my friends to stay away from the issue. I don't see any capital appreciation in this stock.

Those who have risk appetite can invest in the stock!

Views solicited.

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Weekly Digest 16 Nov 09

  • Public sector banks roll out the red carpet for MBAs
  • Understanding how hedging works!
  • Bill Gates, Warren Buffett on surviving the fin crisis
  • India to be $2-trillion economy by 2014-15
  • SFIO to begin Satyam prosecution soon: Khurshid
  • Domestic BPO mkt to touch $6.82 bn by 2013: IDC

Public sector banks roll out the red carpet for MBAs
When he took over as the chairman of Union Bank, M V Nair was one of the youngest entrants to the corner office of a public sector bank. So it’s natural that Nair didn’t think twice before rewriting the rules of the recruitment game for his bank.
In his hunt for talent from the Indian Institutes of Management (IIMs), Nair offered a 12-year fast-forward for young graduates -- direct appointment as a Scale III officer (at Rs 5 lakh plus other substantial benefits). That's a game-changer for public sector banks which tend to set great store by seniority to move up the corporate ladder. CLICK HERE TO READ FURTHER

Understanding how hedging works!
Risk and Returns go hand-in-hand. When we look at high returns, the danger of risk is quietly lurking underneath, ready to pounce at a slightest miscalculation. Hedging refers to a method of reducing the risk of loss caused by price fluctuation. An example of a hedge would be if you owned a stock, then sold a futures contract stating that you will sell your stock at a set price, therefore avoiding market fluctuations.

With an increasing number of people becoming interested in finance, it has become important for people to understand financial terms, jargon etc. Let’s take a look at one such term which is encountered by individuals who frequently dabble in the stock markets - Hedging. CLICK HERE TO READ MORE

Bill Gates, Warren Buffett on surviving the fin crisis
Despite the financial crisis, former Bill Gates, Chairman, Microsoft, and Warren Bufffett, Chairman, Berkshire Hathaway, say America's economic future remains robust.

The two richest men in the world, who are also good friends and business partners, came together at the Columbia Business School to talk about the future of the American economy. Here's Warren Buffett and Bill Gates on surviving the global financial crisis and the lessons from it. CLICK HERE TO READ FURTHER 

India to be $2-trillion economy by 2014-15

India will be a $2-trillion economy in the next five years as its GDP growth is likely to average at 12 per cent in nominal terms powered by a huge consumption demand, Enam Securities has said.
"India's GDP is likely to grow at (an) average 12 per cent in nominal terms. Hence, India will be a $2-trillion economy by 2014-15," Enam Securities head-research, Nandan Chakraborty, and economist Sachchidanand Shukla said in a report titled 'India Strategy' released on Monday. CLICK HERE TO READ FURTHER.

SIFO to begin Satyam prosecution soon : Khurshid
The government said on Monday its serious fraud probe arm SFIO will start prosecution proceedings against Satyam founder B Ramalinga Raju and others this month, as there was sufficient evidence of their involvement in the over Rs 10,000-crore (Rs 100-billion) scam in the IT firm.
"During this month, the SFIO will begin prosecution on those or those areas of company laws that the SFIO is expected to and have been authorised to proceed with," corporate affairs minister Salman Khurshid told reporters in New Delhi.  CLICK HERE FOR FURTHER READING

Domestic BPO mkt to touch $6.82 bn by 2013: IDC
BPO industry would evolve from just running isolated processes for customers to engaging more deeply in identifying and transforming core business processes

After establishing itself as a major player in the international business process outsourcing (BPO) market, India is now set to shift focus on the domestic market, which is projected to grow at over 30 per cent annually. CLICK HERE TO READ FURTHER

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Weekly Digest 08 Nov 09


Legal & Tax
  • EPFO proposes salary cap rise to Rs 10,000
  • PM pushes for reforms, says will exit stimulus
  • India would've grown at 7% had monsoon not played truant

EPFO proposes salary cap rise to Rs 10,000

The Employee Provident Fund Organisation (EPFO) has sent a proposal to the labour ministry to increase the salary limit for paying employee provident fund (EPF) to Rs 10,000 from the current Rs 6,500.

It has also proposed covering companies with a minimum of 10 employees under the Employee Provident Fund and Miscellaneous Provisions Act (EPF & MP Act), 1952, against the present norm of a minimum of 20 employees. CLICK HERE TO READ FURTHER

PM pushes for reforms, says will exit stimulus

Prime Minister Manmohan Singh, who as finance minister in the 90s initiated liberalisation, today said his government would steadily pursue reforms to feed economic growth, while withdrawing the fiscal stimulus by next year.

Growth is expected to be around 6.5 per cent (this fiscal). There are clearly signs of an upturn in the economy. With a normal monsoon next year, we hope to achieve a growth rate of over 7 per cent," he said addressing the inaugural of the India Economic Summit organised by WEF and CII here. CLICK FOR FURTHER READING.

India would've grown at 7% had monsoon not played truant

We have had a bunch of economic data, strong august Index of Industrial Production (IIP) numbers, moderate September infrastructure numbers and tepid corporate earnings. The Planning Commission is the body that processes this information for further policy action. In an interview with CNBC-TV18, Dr Saumitara Chaudhuri, Economist and Member of Planning Commission, sifts through India's macro-economic data and presents his outlook for growth. CLICK HERE for a verbatim transcript of Saumitra Chuadhuri’s exclusive interview on CNBC-TV18. Also watch the accompanying video.

This week, I could spend time in my reading news articles. So, less contents

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What the CEO Wants You to Know - by Ram Charan

This is a wonderful book, which talks of the fundementals of a business, either small, medium or large.

For those who are running a business, they may be knowing the fundementals of the business - how to run, advertise and face the everchanging situations.

This book is for the new generation entrepreneurs, middle level managers who are aspiring to go up in the corporate ladder.

Ram wants the corporate executives to break the sylo mentality and look at the bigger picture on how the business works. He talks about the business acumen one need to have. The concepts of velocity (asset & inventory), Cash generation, margin, growth, how to understand the customers, social operating mechanism etc. was explained very well.

He has shared the experience of Ford, Walmart, GE, GM etc., which are really an experience a manager looks for.

The book was written in a very simple manner comparing the big businesses of the world and the normal street hawker. Both does the same universal law of business, but the magnitude differs.

Suggest this for any entrepreneurs and business managers.

Author     - Ram Charan
Publisher  - Crown Business, New York

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Good news for those who want to invest in ULIP !

It is learnt that the Load Charges on Unit Linked Insurance Plans (popularly known as ULIP) is set to go after April 2010.

Currently an investor is charged upto 40% of the invested amount in the first year of inverstment and only the balance 60% is invested in his name. This load is being used to pay the commission to the broker/agents.

In a move to increase the returns to the investors, increase the insurance cover base and to prevent the mis-selling the financial products, the High-Level Committee on Financial Matters (HLCFM), has recommened to remove the load charges.

This is a good move and if it happens, a spate of investors will be moving towards the ULIP for investment and wealth creation.

So, wait for the good news !!!

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No LTA for employee using car or taxi, say Central Govt.

Saw this notification relating to LTA, announced by the Central Government on 3-Nov-09. Looks like:
  • They want to make Govt carriers (Indian Airlines & AirIndia) usable
  • This notification is applicable only to Central Gove Employees
  • State Govts may follow soon.
  • Private sector employees are escaped from travelling in IA & AI :-)
Here is the notification:

The government will not sanction any Leave Travel Allowance (LTA) for an employee who uses personal car or taxi as mode of transport.

However, the rule shall not be applicable to employees with a handicap or disability of self or dependent family member.

According to a government notification, the employees can avail the LTA only if they travel by Indian Railways or Air India and state transport corporation buses.

The order issued by Department of Personnel said the LTA facility would be admissible only in respect of journeys made in vehicles “operated by the government or any corporation in the public sector run by the Central government, state government or a local body”.
However, the government has relaxed the order for the physically handicap or disability of self or dependent family members who are unable to travel by authorised modes of transport and are compelled to undertake the journey by own car or private taxis.

Such employees will have to take a medical certificate from the competent authority, besides give an undertaking that the journey in authorised mode is not feasible and the same can be only covered in own car or taxi.

Besides, such claim should not be more than the journey performed by the entitled class by rail or air.

Source: Business Standard


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Weekly Digest 01 Nov 09


  • He became an entrepreneur while at high school
  • Wim Elfrink: Global Culture Is Respect For Time Zones
  • India is more prosperous than China - Legatum Prosperity Index
  • Second Quarter review of Monetary Policy for the year 2009-10
Money & Market
  • Inoperative Current / Savings Bank A/c - RBI Clarification 
  • Cash flow statement: What it tells you? 

He became an entrepreneur while at high school

Click HERE to read the story of a successful businessman who did not want to do anything in life but be an entrepreneur. 

Wim Elfrink : Global Culture is respect for Time Zones

A five hour flight from India covers 70 percent of world population, says Wim Elfrink, Cisco’s chief globalisation officer. Now, he wants to replicate the company’s India model of decentralisation in other emerging economies. CLICK TO READ FURTHER.

India is more prosperous than China - Legatum Prosperity Index

Is India more prosperous than China? Yes, says the Legatum Prosperity Index. India ranks 45th in the index well ahead of China. CLICK FOR FURTHER READING.

Second Quarter review of Monetary Policy for the year 2009-10

CLICK HERE to read the Second Quarter review of the Monetary Policy for the year 2009-10 - by Dr. D. Subbarao, Governor on 27th Oct 2009.

Inoperative Current / Savings Bank A/c. - RBI clarification

Please refer to Paragraph 24.2 (iv) of our Master circular DBOD. No.Leg. BC. 9 / 09.07.006 / 2009-10  dated July 1,  2009 on 'Customer Service' in terms of which a savings as well as current account should be treated as inoperative / dormant if there are no transactions in the account for a period over two years. Further, in terms of Paragraph 24.2 (vi), for the purpose of classifying an account as inoperative, both the types of transactions i.e., debit as well as credit transactions induced at the instance of customers as well as third party should be considered. CLICK HERE FOR FURTHER READING.

Cash flow statement: What it tells you?

How do you value a company? Any investor wanting to invest his money into a company should find out the real value of a company. But how do you do it? The company's cash flow statement can give you a fair idea of the status of the company and if it is worth your investment or not.CLICK HERE FOR FURTHER READING.


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Listing of IndiaBulls Power shares in NSE

Here goes the listing of IndiaBulls Power share in NSE today (30-Oct-09)

Open price  Rs. 45.05
High           Rs. 45.05
Low           Rs. 35.35
Vol            143,094,006 shares (till 2.30pm)

The shares got listed at Rs.45.05 (the issue price and that was the highest price reached so far today @ 2.30pm). It immediately fell to Rs.35 levels and regained to settle at Rs.40 levels.

Our poll results were bang on...great guess by the participants.

Hope the share price will go down further and anyone interested for long term investment can consider the same once it reaches Rs.30 levels.

Happy investing...

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I just realised that I have made so far 49 postings in this blog and want to dedicate this 50th post to YOU ALL. I feel really happy and thankful to you all for the support and guidance all throughout this 9 months. Of late, I have made it a point to make regular postings to the blog.

The statistics is as follows: 
  • First Blog Posting : 25th Jan 2009 on IFRS
  • Visitors so far : 5800+
  • Indiblogger ranking - 73 (higher the better). Was 49th earlier.
I get lot of mails on Stock Market. So, you can see more posting on that. With the IFRS getting the attention, you can expect more on IFRS in this space.

I could see from the clustrmaps (visitors locations) that I have friends in more countries. The following are the list of locations of the visitors (from 30th Sep 2009, when I added this gadget), in the order of highest number of visits to lower number of visits:
  1. India (IN)
  2. United States (US)
  3. United Kingdom (GB)
  4. United Arab Emirates (AE)
  5. France (FR)
  6. Singapore (SG)
  7. Vietnam (VN)
  8. Slovakia (SK)
  9. Belgium (BE)
  10. Canada (CA)
  11. Germany (DE)
  12. Norway (NO)
  13. ussian Federation (RU)
  14. Ireland (IE)
  15. Korea, Republic of (KR)
  16. Kuwait (KW)
  17. Oman (OM)
  18. Philippines (PH)
  19. Malaysia (MY)
  20. South Africa (ZA)
  21. Saudi Arabia (SA)
  22. Taiwan (TW)
  23. Asia/Pacific Region (AP)
  24. Israel (IL)
  25. Australia (AU)
  26. Japan (JP)
I thank you once again for your support, without which I would not have got into blogging and becoming an addict. Special thanks to Anand & Bala for forcing me to blog my thoughts (which is the caption for this blog), Raghavan for chasing me to post, Sendil & Yashoda for keeping a tab on my posting and encouraging AND YOU for giving valuable comments and feedbacks.

With more and more requests coming in, it makes me to read a lot before posting.

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Getting connected - Power of Internet !!!

Orkut, Facebook, Linkedin, can add sites to the list ! These sites help people to get connected, socially. During my school, college & start of my career, there were no internet facility or emails. We were working on DOS - not Denial of Service, Disk Operating System. No windows even. Because of that, I could not be in touch with most of my friends (School, College, past employements)

Why we need to get connected? You will realise the power of networking and joy of getting connected to your friends, only when you experience it !

With so many friends and lived in pre-Internet, pre-Mobile era and where telephone at home was a luxury, I am trying all my best to get connected to them. Thanks to the internet and social networks.

Had these sites been there.....we would not have a BILLU (the Barber) or Kuselan movie. The way the friends unite after a long time was really touchy.

Till date, I have created so many Yahoo and Google groups to stay connected to my classmates, colleagues of past employment and feel very happy for that. Though networking is my passion, connecting to people whom you know is a pleasure.

In a recent incident, yesterday, my ex-colleague (Siva) sent me a request to connect with me in Linkedin. It was a pleasant surprise, as I was looking to catch hold of my ex-colleagues and could not get much success. From yesterday evening to today, we got connected to about a dozen of our colleagues in that organisation!. I have created a Yahoo group for us, so that we don't get disconnected.

I was searching for a close of mine (who was my CS batchmate) for a long time and found him after a gap of 8 years through Linkedin and we are now united through a group along with out batchmates.

I have created a group in Linkedin for my schoolmates and have many joined (though only 2 from my class). But am happy that we have a professional school alumni in Linkedin.

Friends, be in touch and don't forget to send atleast a mail in a month (it can be a email forward or a special note) to your friends (including me !), so that we can feel the warmth of friendship.

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Do you know about ASBA?

You might of seen IPO advertisements saying that ASBA facility available for the IPO. What is this ASBA? ASBA stands for - Applications Supported by Blocked Amount.

It is a process by which your money is in your account only and being blocked  (by your authorisation) to the extent you applied for the IPO. You cannot use the blocked amount, till the allotment is over. Once the allotment is over, the bank will release the amount pertaining to your investment and release the hold on the balance blocked amount.

  • The ASBA process shall be available in all public issues made through the book building route.
  • Only certified banks can offer this ASBA facility. To get certified the banks has to submit a certificate in the prescribed format to SEBI. Then the certified bank is called a Self Certified Syndicate Bank (SCSB)
  • An ASBA shall be deemed to have entered into an agreement with the issuer and shall be required to offer the ASBA facility to all its account holders for all issues to which ASBA process is applicable.
Now, the question arises as to who are all eligible for this ASBA facility?

An Investor shall be eligible to apply through ASBA process, if he/ she :
  1. is a “Resident Retail Individual Investor”;
  2. is bidding at cut-off, with single option as to the number of shares bid for;
  3. is applying through blocking of funds in a bank account with the SCSB;
  4. has agreed not to revise his/her bid;
  5. is not bidding under any of the reserved categories
ASBA helps in many ways:
  • Your money is in your account
  • It earns interest
  • No need to run around for refunds
  • Easy to monitor

For more details on the ASBA process, please refer to the SEBI circular SEBI/CFD/DIL/DIP/31/2008/30/7 July 30, 2008.

The list of SCSBs are as below. For details of designated branches click on respective banks below:
Happy investing.

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