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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.

Advantages
  • 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.
Challenges

  • 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.

Cheers,
Gopal
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ICAI elections !

Friends,
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.
Cheers,
Gopal
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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.

Cheers,
Gopal

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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.

Strength:
  • 200+ years in the industry
  • Presence in many countries around the world
  • Well known in the industry
Weakness:
  • 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
Opportunities:
  • With the market getting matured, there are good opportunities
  • More people are willing to travel abroad and take a holiday package
Threats:
  • 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.

Cheers,
Gopal
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Weekly Digest 16 Nov 09

Contents:
  • 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

Cheers,
Gopal
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Weekly Digest 08 Nov 09

Contents:

Legal & Tax
  • EPFO proposes salary cap rise to Rs 10,000
Economy
  • 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


Cheers,
Gopal
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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

Cheers,
Gopal
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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 !!!

Cheers,
Gopal
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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

Cheers,
Gopal

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Weekly Digest 01 Nov 09

Contents:

Business
  • He became an entrepreneur while at high school
  • Wim Elfrink: Global Culture Is Respect For Time Zones
Economy
  • 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.


Cheers,
Gopal

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