Do not forget to mention your PAN in your financial transactions

Starting this new financial year (from 1-Apr-2010) ,please quote your Permanent Account Number (PAN) in all financial transactions, where tax need to be deducted at source (for example, Interest, rent, contract work, consultancy etc.,).

What if I do not mention my PAN? - The payer will deduct tax at a higher rate at 20% !

This will be a pain for the Senior Citizens, who do not pay tax (Meaning, they are well within the taxable limit). For most of them, bank interest is the source of income. They have to provide Form 15H to the bankers / companies. If they do not provide the PAN detail, they will receive the amount after deduction of tax @20%. Of course, they can claim refund, but cash flow is affected.

For those, who earn interest apart from other sources like Business Income or Salary income, they will not be much affected, as their advance tax payment will be reduced to that extent. But now that Form 26AS is the source for the IT dept, it is necessary that we get the credit to our PAN for the deductions made.

So, please do not be casual about this!

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Savings Account balance to get more interest - on a daily balance basis.

Good news for those who depend on the savings bank account. Currently, your savings bank account balance earns interest @ 3.5% on the lowest balance maintained between the 10th and the last date of the month. It means that if you have Rs.1.01 Crore on the 2nd day and and on the last day, you withdraw Rs.1.00 crore (leaving Rs.1 lakh in the account), you will get interest on Rs.1 lakh for that month. Now, wef 1-Apr-2010, your savings bank account will earn interest on the daily basis (based on your daily balances). So, the short term FD rates will also increase now. Only thing to be noted is that though the interest is calculated on the daily basis, it will be credited to your account on a quarterly basis.

This new mandate from RBI will earn upto 18% more for the savings bank investor. Following is the article from Times of India:

From Thursday, every rupee that you keep in your savings bank account will earn more money. According to a Reserve Bank of India (RBI) mandate, from April 1, banks will calculate interest paid on money kept in the savings bank account on a daily basis. This is a departure from the earlier practice of calculating interest on the lowest balance after the 10th of every month.

This change in calculation of interest paid on money kept in one's savings bank account, made possible by the use of technology in banking, will translate to about 16-18% higher earnings for the depositor, top bankers said. This means that if a person now earns around Rs 100 annually as interest income from his savings bank account, from the next financial year, the amount will jump to Rs 116-Rs 118.

There is a caveat though: although the interest will be calculated on a daily basis, it will be credited to the account only at the end of each quarter or the half year. Top bankers also pointed out that this new structure for interest calculation will force interest paid on ultra short-term fixed deposits, say for 15 days to 45 days, to go up substantially.

At present, the rate of interest in your savings bank account is 3.5% per annum as mandated by the government. But going by the current structure of calculating interest rate, the effective rate applicable to customers is about 2.90-2.95%, said Bipin Kabra, CFO, Dhanlaxmi Bank. In the new structure, this will be exactly 3.5%.

Since the RBI had announced to move to this structure one year ago--in its April 2009 policy meeting--all the banks got sufficient time to get their IT infrastructure ready. "All the test runs...dummy runs have been done. The technology has been tested to move to a system of daily calculation of interest (in savings bank)," said Seshan Ramakrishnan, head, retail liabilities product group, HDFC Bank. "Technology plays a huge role in this," he added.

The move to daily calculation of interest also has the potential to push up interest rate paid on very short-term FDs. This is because a number of banks pay just about 2.5-2.75% per annum on these FDs. But now that depositors can earn at least 3.5% in savings banks, and that too without any lock-in like in FDs, customers will have the freedom to arbitrage between the two types of deposits. "Savings bank accounts give liquidity, but here the interest income is credited at the end of the quarter or half year. On the other hand, in FDs, one could get the interest income at the end of term (that could be on the 46th day)," pointed out Ramakrishnan. "So it needs to be seen how customers behave under the new structure."

While account holders will earn some extra money, banks will be hit. Banks with a higher percentage of funds in their total liabilities coming from savings bank accounts would be affected more. According to balance sheet of banks for the year ended March 2009, SBI had 27% of its liabilities in savings bank accounts and HDFC Bank had 24%. Similarly, Axis Bank had 22%, Federal Bank had 20% and Dhanlaxmi Bank 15% in savings banks.
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Another day in ICWA Institute - This time on IFRS

Last Monday I gave a presentation to the members of ICWAI - Bangalore Chapter, on how to go about the IFRS implementation. This was arranged as a Professional Development meeting.

I was really thrilled by the following:
  • The Institute president Shri.G.N.Venkatraman presided over the session
  • There turnout was really good. Nice to see many members interested in the topic.
We were informed that Shri.GNV was on board of NACAS and the Institute is actively working on the IFRS.

Shri.GNV gave an update on the latest happenings in the Institute. He invited the members to be more participative in the IFRS journey and the professional development. Shri.GNV already set the context of IFRS implementation in India, which made my job easier, as I could directly jump to my slides, without spending too much time on what the IFRS is all about.
I decided, in the interest of time, to present the slides and then take the Q&A at the end. I have seen in many meetings, small questions drag the time and finally important discussion points will be missed out or just being rushed (or just read by the presenter).

I covered the presentation covering the following areas:
  • What is IFRS
  • What is the current scenario in the countries already implemented
  • What is the scene in india
  • How to plan the transition
  • Challenges
  • The opportunities for the preofession
The presentation was well received and appreciated. There were lot of good questions, which I answered to my best and to the satisfaction of the person asking the question.

It was a good session and I really enjoyed. My friends, Satish and Raghavan was with me during the session.

Not only I got 1 CEP credit hour, but got a lot of satisfaction that I ignited the minds to get into IFRS soon.

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CFO Forum on IFRS....organised by CII & EY

Today I attended the CFO Forum on IFRS, with a focus on Technology, Real Estate & Manufacturing.

Jayaram, Convenor - CII, Karnataka, gave the welcome address.

The speakers were the experts in the area. Yes, we had
  • Ruth (Global IFRS Leader of EY and a member of the IFRIC).
  • Dolphy (IFRS Leader, India EY)
  • Harriet (IFRS expert)
  • Kaustav & Navin (EY Partners & IFRS experts)
We had the opportnity of listening to Ruth, who is an IFRIC member representing EY on the global experience.

Dolphy took us through the transition plan in India

Kaustav & Navin took us through the sector specific issues and covered, Technology, Real Estate & Manufacturing.

After this we had a panel discussion, where the CFO of well known companies from the Real Estate (Shobha), Infrastructure (GMR), Engineering (ABB), Techonology (HP) were present.

It was a good knowlege sharing session, which ended with a conculding remarks from Sunil of EY.

Since we were nearing the deadline of implementation of IFRS, we had some good insight to the subject and learning.

Some key learning:
  • IFRS implementation is sure. No postponement
  • Relevant changes to Companies Act, will be made to take care of the financial reporting
  • Tax implications, still a grey area
  • US is committed to move to IFRS.
  • India will be adopting the IFRS, as it is and no changes / tinkering.
  • CA Institute and MCA is working towards the smooth implementation.
I would request all accountants to get prepared for the IFRS, learn it (First unlearn the existing standards) and make use of the situation (the demand for the IFRS experts).

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Change your vision - A nice story

There was a millionaire who was bothered by severe eye pain. He consulted so many physicians and was getting his treatment done. He did not stop consulting galaxy of medical experts; he consumed heavy loads of drugs and underwent hundreds of injections.

But the ache persisted with great vigour than before. At last a monk who has supposed to be an expert in treating such patients was called for by the millionaire. The monk understood his problem and said that for sometime he should concentrate only on green colours and not to fall his eyes on any other colours.

The millionaire got together a group of painters and purchased barrels of green color and directed that every object his eye was likely to fall to be painted in green colour just as the monk had directed.

When the monk came to visit him after few days, the millionaire's servants ran with buckets of green paints and poured on him since he was in red dress, lest their master not see any other colour and his eye ache would come back.

Hearing this monk laughed said "If only you had purchased a pair of green spectacles, worth just a few rupees, you could have saved these walls and trees and pots and all other articles and also could have saved a large share of his fortune. You cannot paint the world green." 

Let us change our vision and the world will appear accordingly. It is foolish to shape the world, let us shape ourselves first.
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Union Budget 2010 - A discussion session @ XIME

This year also, I was fortunate to be the chairman of the panel for discussing the Union Budget. It was a tough job this time, as there were not much change in the Union Budget and not many new schemes introduced by the Finance Minister.

Myself and Sendil (my friend) reached the venue much earlier (thanks to the new Flyover)!

We met Prof.Philip, the President of the Institute and he hosted us. Prof. J. Philip,  recently received the Life-time Achievement Award for Excellence in the Profession and Societal Contribution, instituted by the Alumni Association of XLRI, Jamshedpur. Prof. J. Philip was a student of XLRI during 1958-60. Shri B. Muthuraman, Chairman XLRI and Vice Chairman Tata Steel presented the award in a ceremony to mark the Diamond Jubilee Celebrations of XLRI on 21st November, 2009 at Jamshedpur.

Prof.Srinivasan joined us, took us to Mr.Tyagaraj (Officiating Director of XIME) and introduced him.

The other panelist, Mr.Shiva Kumar, CFO, DBOI Global Services P Ltd, who is my friend, joined us and we chatted for sometime, before being put before the gathered knowledge crowd.

It was nice to note that the programme started exactly at the stated time.

After a brief introduction of the panelist, the Management students presented nicely the synopsis of the Union Budget from the angle of Business, Taxpayer, Investor etc., It is really good to see students getting too much into the Budgets and analyzing them too. They put the points very neatly & crisply.

Then Shiva Kumar presented his views on the Union Budget from an Industry perspective. He touched upon the various provisions relating to the Direct & Indirect taxes. His covered the following among other things:
  • TDS provisions - payment before filing the return.
  • Taxability of the LLP Conversion
  • Weighted deduction for inhouse R&D
  • Service Tax
  • GST & DTC roll outs
After Shiva's speech, Prof Srinivasan took the stage and had the entire auditorium under his control with his witty and thought provoking speech. His vast knowledge came in very handy for him. This is the same person, who told the "horse can fly" story while discussing the last union budget. He summarized the speech and concluded "It is not the OUTLAY that matters, but the OUTCOME"!

It was my turn to summarize the session and give my view on the Union Budget. It was a difficult job for me. Yes...the Union Budget has not made any great changes to discuss and whatever little changes that were made, were already covered by the previous speakers.

As usual, I started with a cartoon (pictures can convey better than words) and covered the following:
  • Budget outlay and the highlights of the budget
  • Some of the key projects (for Justice, Development of skilled labours and E-Governance)
  • Direct & Indirect tax changes (mostly covered in my previous post)
  • Challenges before the Government
After my speech, the Q&A session was opened. There were very good questions (of course, questions are always good - only the answers matter). The questions were on:
  • LLP
  • NREGA & how the outlays are utilised
  • MAT implication once the DTC is introduced
We tried to answer the questions. Remember, answering a student is not an easy task!

After the vote of thanks, we left thanking Prof.Srinivasan & Mr.Tyagaraj.

I am really happy that students / B-School are taking initiatives in getting the industry perspective and get the people from Industry to air their views.

Thanks to Sendil for taking the snaps and accompanying me.

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Gratuity ceiling increased

This was one of the things, we were expecting in the Budget. But now the cabinet has given their approval for amending the ceiling on Gratuity from Rs.3.5 Lac to Rs.10 Lac on Thursday (4th Mar 2010). However, we need to wait and see whether the tax exemption limit will also get increased.

Below is the extract from the Financial Expresss

The Cabinet on Thursday approved an amendment to the Gratuity Act to raise the ceiling from Rs 3.5 lakh to Rs 10 lakh. The Bill to amend the Act will now go to Parliament, a government official told FE.

Every salaried person, who has completed five years of government or private sector service, is eligible for half a month’s salary as gratuity for every completed year of service. 

But the gratuity pay of those with higher salaries is now limited at Rs 3.5 lakh. The proposed amendment raises this to Rs 10 lakh

Every employer with more than ten salaried workers is mandated to provide gratuity to the eligible employees. Many companies, however, do not keep the gratuity liability adequately funded. That is, they make provisions for future payment, but do not set aside funds towards the future payment. Listed companies are expected to disclose their gratuity liability. 

Source : The Financial Express.

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Brouhaha over hike in Fuel price

Find below, one of my friends letter to the editors. Soon, you may see in the newspapers.
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Budget 2010 - Hightlights

Pranab has delivered the budget in the expected lines. What the poor finance minister can do in this situation. The prime concern is the fiscal deficit and inflation. He did a good job in the budget by not making too many changes.
Individuals are happy, as they have some excess funds at their disposal.

Let us look at the highlights of the Union Budget 2010:

Plan outlay

Total Receipts          -   7,27,341`
Total Expenditure     - 11,08,749
Fiscal Deficit            -   3,81,408

The Fiscal Deficit is 5.5% of the GDP (Last year it was 6.8%). It is a good sign. We need to wait and see the FY10 result and see whether the 5.5% is achievable.

The targets for the Fiscal Deficit (as a % of GDP) is pegged at 4.8% and 4.1% respectively for 2011-12 & 2012-13.


The most awaited agend in all the ITES sector was extending the STPI tax exemption. Pranab has kept his words on rolling back the stimuli. He didn't extend the tax benefit. In a way it is good. But some of the small organisations thrive on this tax benefit and soon they will look for buyers. Time for the ITES market to consolidate.

He has given the assurance & commitment to the introduction of Direct Tax Code and GST from 1-Apr-2010. Let us see.

Business impact

Direct Tax
  • STPI & EOUs taking tax benefit u/s 10A and 10B not extended and get over by 31-Mar-2011.
  • MAT rate has been increased to 18% from 15%. More credit available for the STPI units in the years to come.
  • Encouragement to inhouse R&D by way of higher weighted  deduction.
  • No change to the Corporate tax. But the surcharge for the domestic companies reduced to 7.5% from 10%.
  • Tax benefit for SEZ had some ambiguity with the formula for computing the deduction u/s 10AA. This is clarified and the revised formula is now applicable with retrospective effect from 1-Apr-2006.
  • Tax audit limit increase to Rs.60 lacs (from Rs.40 lacs) for business and Rs.15 lacs for professionals.
  • The turnover for presumptive taxation of small business increased to Rs.60 lacs
Indirect Tax
  • The peak excise duty increased to 10% from 8%. This is in line with the roll back of the stimulus package.
  • The CST rate is unchanged at 2%
  • Service Tax rate remains at 10% (in line with the GST roll out)
  • Service Tax refund provisions simplified for exporters.
  • Not much change and only favourable budget.
  • Petrol & Diesel to be costlier by Re.1 per litre due to the increase in the excise duty
  • The tax brackets widened to benefit the individual
    • Upto Rs.160,000               - No Tax
    • Rs.160,000 to Rs.500,000  - 10%
    • Rs.500,000 to Rs.800,000  - 20% 
    • Rs.800,000 & above          - 30%
  • Increased deduction u/s 80CCF. Additional deduction of Rs.20,000 for investment in Infrastructure bonds. So, we get a total deduction on Rs.120,000.
  • "Swavalamban" - a initiative for National Pension Scheme. Under this, Rs.1000 p.a. will be contributed by the Govt. to each NPS account opened in the year 2010-11.
  • SARAL - II : Simplified form for individual salaried class.
There are other schemes that are announced by the PM, which are of national interest. Of which the following are of interest to a common man:
  • Setting up of National Mission for Delivery of Justice & Legal Reforms. This aims to reduce the legal backlog in courts from 15 yrs to 3 yrs by the year 2012.
  • National Skill Development Corporation approved 3 projects for Rs.45 crore to create 10 lac skilled manpower at the rate of 1 lac per year.
  • Technology Advisory Group for Unique Projects to be set up to look into the technological & systemic issues for effective tax administration and financial governance.
Going back to the earlier budget, he proposed the following 2 things in the Tax proposals.
  1. Direct Tax Code - Draft of DTC within 45 days, which he achieved.
  2. Safe Harbour Rules (for transfer pricing declaration) for transactions between associated parties. No threshold nor rules were laid down so far.
  • Bringing back the economy and reduce the fiscal deficit
  • Control inflation
  • Roll back the stimulus package
  • Huge MAT credit to be set off against future tax
  • Overall, it is a balanced budget (given the circumstances). 
  • There were not much changes, which shows stability. Most of the tax proposals are of clarification in nature or of change in rates of tax.
  • The focus is mainly on growth along with fiscal consolidation
  • Stock Market gave a thumbs up and zoomed
All said, it is a budget. We have to see the actual performance. Hope Pranab walk the talk.

We, the citizens are like Gajni. Yes, the budget is in our memory for just 15 days. After that we will forget this budget and wait for the next budget.

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Stock Market reaction to Budget

With an 2 hours to go for the budget, the stock market is raring to go. Many pundits say the market will crash. But i feel, the market to be range-bound around 4850 levels.

Whether the market goes up or goes down, play safely.

If the market goes down steeply, go ahead and buy good stocks, as every steep fall is a good buying opportunity.

If the market goes up, it is a good sign. If you have any open position, book profit. It may go up to 4920 levels.

April is crucial, as many publish their 4th quarter results.

All the best with your investments.

Any one wants to watch the budget live in office or where you dont have a TV, you can watch it in the net (

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Little master's great knock!

Today, it is one of the finest day in Indian cricket history, rather the ODI history. Yes, the little master ripped the SA attack with an unbeaten 200 in 147 balls to steer India a comfortable 153 run victory.

With 93 International centuries, 147 half  international centuries, about 200 international wickets, highest run getter in both forms of cricket, he is undoubtedly a MASTER !!

Wishing him more success in the cricket and god bless him with more energy and good health.


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Countdown to the Union Budget - our wishlist

We are just a day from the Union Budget. More focus on Pranab's strategy to
  • counter the fiscal deficit, 
  • push the GDP growth, 
  • control the inflation,
  • roll out plan for GST
  • Plan for the Direct Tax Code roll out
For individuals,
  • Increase in basic tax exemption
  • increase in medical reimbursement limit (from 15000 to atleast Rs.50,000), considering the cost of medication.
  • Increase in the deduction limit u/s 80D for mediclaim insurance to Rs.50,000.
  • With the skyrocketing education cost, there should be a separate deduction for this. This category should be removed from 80C.
  • Increase in the exemption limit for transportation (from the current Rs.800 pm) in line with the pay commission recommendation.
  • Increase in the gratuity exemption limite (from Rs.3,50,000 to Rs.10,00,000).
  • Increase in the 80C deduction limit from Rs.1,00,000 to Rs.2,00,000
  • Reducing the short term capital gains.
  • Senior citizens - Increase in the basic exemption limit.
For Business:
  • Phased removal of stimuli - rather than sudden removal
  • GST roll out plan
  • Extension of STPI tax benefit
 Let us see, how much Pranab can make the wish come true.

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Railway budget highlights

Mamta presented the rail budget today. It is a plain vanila budget with some benefits to the freight, passengers, employment opportunities, more trains etc.,

Some of the benefits to passengers:
  • No change to the passenger fare
  • Cancer patients can travel free, for treatment, in third AC and sleeper classes.
  • Service charges on e-tickets reduced to Rs 10 for sleeper class and Rs 20 for AC classes. The present charges are Rs 15 and Rs 40, respectively.
  • The benefit of 50% concession to the spouse of accredited journalists has been extended to the companions of those who do not have a spouse. Their dependent children of up to 18 years of age would also get 50% concession once a year.

Highlights of the Rail Budget, presented today

No hike in passenger fares
Cancer patients travel free in AC3
Concession to film industry and press.
Children upto 18 yrs travel free
To launch 10 more duronto trains
  1. Yeswantpur (Bangalore) -Delhi (AC) (Weekly)
  2. Mumbai-Secunderabad AC (Bi-weekly)
  3. Pune –Howrah AC (Bi- weekly)
  4. Mumbai-Ernakulam AC (Bi-weekly)
  5. Indore- Mumbai AC (Bi-weekly)
  6. Jaipur-Mumbai AC (Bi-weekly)
  7. Chandigarh-Amritsar
  8. Chennai–Coimbatore
  9. Puri-Howrah
  10. Howrah-Digha
Aims at electrification of 1,000 km route in FY11 Special train named ' Bharat Tirth' to connect Himachal to Kanya Kumari. (all over the country).
Janmabhoomi train: connected areas in western sectors, linking Jodhpur, Lalgarh, etc. To run every week
Karmabhoomi: sleeper trains introduced for the unorganised sector
Introduction of ladies special trains in the name of Matribhumi
Work under Mumbai suburban area under MUTP phase 1 to be completed this year, and under phase 2 to be completed by March 2014
Kolkata Metro to be extended inside the city, 5 stations to be renamed.
Funding for METRO RAIL projects up 5%
FY11 operating ratio pegged at 93.2%
Impact of 6th Pay Commission to railways at Rs 55,000 cr
Will link western corridor development - deal with Japanese firm in March
Cost sharing projects bagged from Andhra Pradesh Government
Propose to run a special train from West Bengal to Bangladesh

FY11 Gross Traffic Receipts seen at Rs 94,700 crore
To acquire 80,000 new wagons
FY11 working spend seen at Rs 87,100 crore
To beat FY10 freight target by 8 million tonnes
To start door-to-door service for freight movement
To launch tourist trains on 16 routes
To introduce 54 new trains  in FY11
Will launch double-decker trains on pilot basis
Allocation for implementing 1,000 km news lines in a year almost doubles to Rs 4,411 crore.
Passenger amenities Rs 1,200 cr
Appropriation for pension fund at Rs 14,500 cr

Expenditure of 783 cr after meeing the dividend liability
Budget estimates: Target for freight set at 944 million tonnes (up 54 million metric tonnes)
Non core business earning seen at Rs 1,000 cr
Cuts freight on foodgrains, kerosene by Rs 100 / wagon
22.6 million free CFL lights already distributed
Premium tatkal service for parcel and freight movement
Autmobile and ancillary hubs in 10 different locatins on PPP mode
5 wagon industry in JV-PPP mode, in Secundrabad,AP,Guwahati,Orissa and Haldia
Wagon repair shop in Mumbai
Agrees to set up railway coach factory in Singur if land is available;
Intergral coach factory in Chennai to be modernised
Rae Bareli coach factory, the work will begin within a year.
Railway will establish strong research partnership with institutes like IIT, CSIR etc
Corporate Social Responsibilty thorugh expansion of Rashtriya Swastha Yojana
Railways has 80,000 women employees. creches and hostels to be set up for children of women employees
MoU with health and HRD Ministry; 101 secondary hospitals, and multi functional hospitals with AIIMS and Vellore to be set up
Staff Welfare: 'House for all' scheme for railways employees - Boost for construction materials
Railways to be the lead partner in Common Wealth Games 2010. Also to introduce special train for the games.
To provide increased employment opportunity in railways through sports quota
To promote sports, wil build  five sports complexes in Delhi, Secundabad, Chennai Kolkata and Mumbai.
To strengthen the RPF security force; Mahila bahini -  for security of women to be introduced
Will construct underpasses at railway stations to counter problem of lack of usage of foot overbridges.
3,000 level crossings to be mended this year, rest to be done in within next 5 years.
Introducing modern trolleys at all imp stations to assist senior citizens, physically handicapped and children
Six bottling plants on PPP basis to provide clean water at cheaper rates to passengers
Upgradation of 94 stations. Propose to take up another 93 multi functional stations.
Examination fee to be exempted for minority & women,with income less than Rs.50,000 in a year
117 trains will be flagged off
Target: To implement 1,000 route km in one year, 25,000 km in Vision 2020
No privatisaton of railways, says is proud of 14 LAKH employees. To set up a special task force to clear proposals for investments within 100 days
Only 10,419 km of railways added between 1958 and now.
Vision 2020 goals broken up in to short, medium and long term projects. The latter two will require funds and can be done in 5 years.

Source: Business Standard & Live budget presentation

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Will Mamatha outsmart Lalu in the Railway budget

Stock markets are ignoring the railway related stocks (Kalindee, Texmaco, Titagargh...etc.,). Market sentiments are that Mamatha is not doing any great in terms of growth plans. These stocks were the creams when the railway budgets were presented. She has to do wonders to get the support of the market.

Tomorrow (24th Feb) is the Railway budget and India expects something from the Mamatha's team:
  • More faster trains
  • No increase in fares
  • More thrust to PPP (Private Public Partnership) - ACC, L&T & Adani may benefit.
  • Increase revenue through freight (transportation)
  • More connecting rails
Let us see how the market reacts after the Railway budget. Keep an eye on the stocks.

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ULIP - Who needs to control - SEBI or IRDA ?

IRDA questions market regulator’s show cause to insurers on conceptual, legal, structural grounds. SEBI's contention is that the insurance companies are offering products mixing Insurance and Financial Products (in the nature of Mutual fund).

What if SEBI treats it as Mutual fund and starts governing these ULIP, apart from IRDA?
  • The accounting will be different.
  • The initial load will go off (GOOD NEWS), as commissions are not allowed.
  • Exit load (surrender value) will also come down.
  • More investor protection measures & transparency will come into play.
  • Tax benefits will vary (Any way we are not sure what the tax benefits after the new tax code, be it either Insurance related or Mutual fund)

Following is the full article for your reading. Source: Business Standard.
The Insurance Regulatory and Development Authority (Irda) has said the Securities and Exchange Board of India’s (SEBI) notice to insurance companies on unit-linked insurance plans (Ulips) sold by them was “misconceived on conceptual, legal and structural grounds”.

Irda’s letter to the market regulator comes after the latter’s showcause notice to insurance companies last month, asking why they had not taken Sebi’s approval to sell Ulips.

In a letter to Sebi Chairman C B Bhave last week, Irda’s Deputy Director (Life) Sudipta Bhattachaya pointed out that the regulatory set up in India, which had legal backing, was clearly demarcated.

In its letter, the insurance regulator said the road map for regulation of Ulips by Irda was “well laid down, and settled,” and there was “no merit” in the contention that insurers must obtain a certificate of registration from the Sebi for selling these products.

Following the Sebi showcause notice on January 15, life insurers had approached Irda. “While there is an element of market exposure, the insurance component is much higher. The rules are fairly clear and investor interest is clearly protected,” said the CEO of one of the largest life insurance companies. For some private players, Ulips account for close to 90 per cent of new business.

Application of mutual fund rules to Ulips would mean that companies will not be able to pass on the commission to customers, since entry loads have been banned for mutual funds. In addition, the investment and accounting rules are different for Ulips and mutual funds.

Sources close to the development said Irda’s letter has pointed out the legal provisions that limited Sebi’s jurisdiction to securities and securities related transaction.“What constitutes a security has been defined in the Securities Contract (Regulations) Act, 1956 and insurance contracts are not regulated under these securities laws,” it said.

Further, Irda said that structurally, Ulips are distinct from mutual funds and pointed out that the minimum capital requirement for an insurance company was Rs 100 crore and also maintain around 3 per cent as solvency capital. In contrast, an asset management company “is required to manage thousands of crores of assets with just Rs 10 crore”.

“Certain similarities in the features of various products issued in the financial world would not necessarily imply regulatory overlap,” Irda added.

Asked to comment, a senior Sebi official said: “Ulips are hybrid investment products with insurance cover and since it involves management of funds, Sebi has a role in protecting the interests of investors... Ulips are fit for regulation under Sebi’s mutual fund regulations.”

He, however, added that the Sebi was waiting for replies from insurance companies before deciding on how to regulate them.

In its letter to Sebi, sources said Irda also attached a copy of its mandate, which states that the regulator has to “protect the interest of the holders of insurance policies”.

Sandeep Parekh, a faculty member at the Indian Institute of Management, Ahmadabad and a former Sebi legal advisor said buyers of insurance policies were not sophisticated enough to understand the fine print or the risks associated with such plans.

“Ulips, which are mutual fund products with a fig leaf of insurance, ought to be regulated by Sebi. This is notwithstanding the fact that the insurance regulator already regulates it. There is nothing unusual with more than one regulator regulating a product,” he added and pointed to the joint regulation of currency futures by the Reserve Bank of India and Sebi.
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Some clarifications on the subjects to be covered in the blog!

Thank you so much for the immediate response to my move to post articles on Health, Sports and Job Market. I have received calls showing concerns that I may move out from the finance side.

Just to clarify, I just thought of posting Health and Job related articles in this blog, as it is more relevant to today's executives.  With lot of stress, lack of time to exercise, irregular food habits, today's executive finds it very difficult to cope the work pressure. So, that is the reason I have started to post articles on these lines.

Again, this blog will not deviate from the purpose for which it is created. To put in finance related language, the Main objects remain the same and only the incidental objects are invoked. :-).

Thanks once again for your concern for my blog.

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SBI providing seed capital to SMEs for budding entrepreneurs.

Good news for Small and Medium Enterprises (SMEs). State Bank of India is providing seed capital upto Rs.10 lakhs to budding entrepreneurs. What is so special? Here is the speciality:
  • The seed capital is interest free
  • You can repay the seed capital in 5 year
This is a good opportunity for the aspiring entrepreneurs to start their ventures. So, walk up to your nearby SBI and get more information on the requirements to avail this seed capital.

I know many bright entrepreneurs looking out for funds and finding it difficult in this economic downturn, to get loans or finance. Either they are asked to pledge their properties or the rate of interest is too high to make it viable to borrow.

So avail this opportunity. Who knows - in the next election, the parties will announce writing off this seed capital also!!

Below is the news article, which appeared in the Economic Times today.


NEW DELHI: State Bank of India (SBI) will provide interest-free seed capital of up to Rs 10 lakh to aspiring entreprenuers under a new scheme, SBI SMILE, which is specially targeted to encourage small and medium enterprises in the country.

The scheme will be in place initially for one year, after which the bank could extend it, if the situation warrants.

“Given the economic downturn, some entrepreneurs have not been unable to raise any capital. The scheme will provide them a platform to kick-start their businesses,” said BS Bhasin, chief general manager, SME, at the country’s largest lender.

Currently, banks give loans to the entrepreneurs, only if they have a substantial capital to invest. The loan amount is around 70-80% of the total project cost. Under the new scheme, SBI will provide the seed capital and entrepreneur will also be able to seek a loan. Loan terms and interest rates will be determined as per the existing guidelines. “There will be no interest on the seed capital. You can pay that amount after you’ve serviced your loan,” Mr Bhasin said.

The bank will offer a five-year moratorium on paying the seed capital amount.

The bank, however, has not set any target for the amount it will disburse under the scheme. Already, SBI has SME loans of Rs 1,00,000 crore outstanding on its account books.

As per the central bank guidelines, a bank can give up to Rs 10 crore as loan to a medium enterprises for investment in plant and machinery.

Other banks are not impressed with the scheme. “This is another gimmick. The bank is flush with liquidity and hence this scheme. Otherwise how would you explain that SBI has lowered the target from 29% to 25% for the current fiscal,” said a senior official with a Mumbai-based private sector bank.

Earlier, the banking regulator RBI had expressed concerns over a slowdown in lending to SME sector. It had extended a special refinance scheme of $1.4 billion to Small Industries Development Bank of India (SIDBI) to enable it to lend to banks and financial institutions towards incremental SME loans.
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Go Green.....Gardening & Oraganic vegetables at home

Today, I was chatting with my colleagues in the cafetaria. To my surprise, I found that most of them are interested in organic foods, growing vegetables in their places. One has already attended a course on organic forming, conducted by a foreign NGO.
The topic started over a cup of tea. They asked me why I take green tea and which is the good brand. My interest level in the dicussion went up, inspite of the people cheering Shewag for his half century. I started expalaining what a Green Tea and how it differs from the normal tea.

Slowly, the topic changed and one of my colleagues mentioned that he attended a day long training program on organic farming, preparation of organic manure at home. What was interesting is that there were many participants in their early 30s, who attended and shared their experiences in growing vegetables in their terraces. The more interesting part is that they are all techies, working in MNCs. They are getting good vegetables at their home and when in excess, share the same with their neighbours. The vegetable inflation has not bothered them and they are smiling at the inflation.

When I started saying that I am growing Tomato, Mint, Palak, Ladiesfinger, Onion, Lemongrass, Wheatgrass apart from the flowing plants in my balcony, they disengaged themselves from the cricket match and started listening to me.

Lot of ideas came out during the discussion, on balcony and terrace gardening and preparation of manure for the plants at home, without any chemicals.

Will share the growing of some good plants inthe balcony in the coming posts.

Let us go Green, plant our own vegetables, save the economy and improve our health.

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Wheat Grass - Natural healthy food

I was discussing this with my colleague, who is also getting into the wheat grass world, on growing the grass at home.

Not many know that we can grow and have juice of wheat grass. Why suddenly wheat grass?

Yes, of late if you visit any restauarants of thematic nature, they serve you Wheat Grass juice? What is so special about it?

It has:
  • Chlorophyll,
  • beta carotene,
  • more than 80 minerals,
  • 18 amino acids
  • Vitamins - C, E, B12
  • Iron
  • Calcium

Research has shown that 1 kg of wheatgrass matches the nutritional value of 22 kg of ordinary garden vegetables.

Wheatgrass is generally consumed as juice which is a complete food with regenerative and protective qualities. Its regular use
  • improves perception and increases mental and emotional calmness.
  • aids in digestion,
  • prevents graying of hair,
  • prevents skin diseases,
  • prevents asthma, arthritis and diabetes
  • helps in detoxification of heavy metal from the body.
In fact, because of its blood purifying qualities, wheatgrass is used in the treatment of leukemia and some other forms of cancer.

The normal dosage of wheatgrass juice is 25 to 50 gm twice a day on an empty stomach. The average dosage taken by consumers of wheatgrass is 3.5 grams (powder or tablets).

Some also have a fresh-squeezed 30 ml shot once daily or for more therapeutic benefits a higher dose up to 2–4 oz (60 - 120 ml) taken 1-3 times per day on an empty stomach and before meals. For detoxification, some users may increase their intake to 3–4 times per day.

It can be extracted from wheatgrass in a juicer. One problem with the grass is that it cannot be stored and has to be consumed immediately.

You can chew the wheatgrass and discard the pulp.

Sounds interesting....yes...more interesting is that you need not have space to grow this grass. Let me tell you how to grow this grass in the next post. I have grown this in my apartment and it is very easy to maintain.

The above details are sourced from various websites relating to wheatgrass.

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Constructive feedbacks !!


It is really nice to get feedbacks and if you are open-minded, you will get more suggestions. I had many suggestions during the course of this one year of my blogging:

  1. Write the blogs in a masked name

  2. Write on something which is of recent happening

  3. Write on the recent economic situations

  4. Write on Stock market basics

  5. Write on certain financial jargons (to make life easy)
I tried my best to take note of these suggestions and impelemented the same.

Recently, one of my well wishers (my name sake), suggested to write on simple topics which is of importance to everyone! Sounded resonable to me. I took the advise of my friend to write in a masked name (refer 1 above) and am writing there, venting out my feelings and thoughts on the day to day matters. Now, for some of the general matters, I can write in this blog itself. I have created a separate tag called "Random" meaning random thoughts - Ranging from Health, Sports, Job Market etc.,!

Thanks to all for giving me the feedback and suggestions - Keep suggesting me.

Am feeling happy that I am being a consultant on blog designing to a 5th person ! (The funniest part is I am not a tech person :-D )

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Budget - 2010, expectations


It is budget time again. What to expect from the Finance Minister?

Tax proposals:
  • Stimulus to continue
  • More tax benefits
    • Deductions
    • Increase Basic exemption limit
    • Increase the gratuity limit
    • Increase the medical reimbursement limit (from Rs.15,000)
  • Reduction in tax rates
    • Short term capital gains
    • Personal tax slabs to be widened
  • Controlling the inflation by tax sops to industries
The above are just to kindle the interest and may I request you to get the list ready, so that we can see where we are against the budget!

Plan outlay

How he is going to fix the situation? I mean, the fiscal deficit. It is widening.

Also, we need to see how the previous budget vs. the actual situation is.

Look forward to your views.

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The NTPC Follow on Public Offere was fully subscribed (overall -1.2 times and the retail sector 0.25 times) - Thanks to LIC and SBI for pitching in to save the dignity of this issue. While the below average issues are over-subscribed, the fundamentally strong issue like NTPC is not even subscribed by the public. Why? Let me share my thoughts on the same and would like others also to share their views.

(1) French auction method
Under this method the highest bidders get a priority on allotment. This is useful when the current market price is much more than the offer price. Here the offer price was Rs.201 and the market price was Rs.205. Who will buy in the issue, block the funds. If the market falls, they may get even below Rs.200! Government failed to understand this.

(2) The Government holding was offered and they could have given at a lower price to the retail investors. This also, contributed for the failure. Probably, they thought that people will be mad to get these shares.

(3) If the market price and the offer price are very close, investors will get attracted, if the stocks are not that liquid (not widely traded in volumes) in the market. Here, NTPC was traded widely.

(4) If they are not really looking at the retail sector, then they could have directly placed the shares with LIC & SBI. This would have saved the issue cost and saved the government from this embarassment.
So, what is the fun in this FPO - NOTHING. With the other FPOs - REC & NMDC in the offing in Feb 2010, they would have learnt the lesson with the NTPC issue.

I solicit your views on this.

Cheers and Happy Weekend,
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Adjustment of Fringe Benefit Tax paid against Advance Income Tax for FY 2009-10

Good news to those who paid the Advance Fringe Benefit Tax (FBT) for the I Quarter of FY2009-10 and wondering how to get that back. The FBT was later on abolished in the Finance Act (2), 2009. 

In a circular, the IT dept has clarified that the Advance tax in respect of FB paid by the assessee can be adjusted against the Advance Tax for the FY 2009-10. If you do not have any tax liability, then you can claim refund of the FBT in their returns.

Below is the circular for your reference.


2/2010, Dated: January 29, 2010
F. N0.385/05/2010-IT (B)
Sub: Adjustment of “Advance Tax in respect of Fringe Benefits” for Assessment Year 2010-11 against “Advance Tax” – matter regarding. 

The Finance Act, 2005 introduced a levy namely Fringe Benefit Tax (FBT) on the value of certain fringe benefits as contained in Chapter XII H (Sections 115 W to 115 WL) of Income Tax Act, 1961. By the Finance (No. 2) Act, 2009 a new Section 115 WM was inserted to abolish the FBT with effect from Assessment Year (A.Y.) 2010-11. Consequently, benefits given to employees are taxed as perquisites in the hands of employees in terms of amendments to Clause 2 of Section 17 of Income Tax Act, 1961. However, during the current Financial Year 2009-10 some assessees have paid “advance tax in respect of fringe benefits” for Assessment Year 2010-11. In such cases the Board has decided that any installment of “advance tax paid in respect of fringe benefits” for A.Y. 2010-11 shall be treated as Advance Tax paid by assessee concerned for A.Y. 2010-11. The assessee can adjust such sum against its advance tax obligation in respect of income for A.Y. 2010-11 or in case of loss etc claim such payment as refund as advance tax paid in A.Y. 2010-11.

2. This circular may be brought to the notice of all officers in the field for compliance.

Hindi version to follow

(Ansuman Pattnaik)
Director (Budget)
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RBI hikes CRR by 75 bps to 5.75% in two stages

The Reserve Bank of India (RBI) has hiked its cash reserve ratio by 75 bps to 5.75% as against 5% at its credit policy meet today.
The move will be implemented in two stages. The first 50 bps hike will come into effect on February 13 while the next 25 bps hike will be effective February 27. A CNBC-TV18 poll had forecasted a 50 bps CRR hike. The move will result in a mop-up of Rs 36,000 crore by February end.

The central bank has left unchanged the reverse repo and repo rate at 3.25% and 4.75% respectively. It says the FY11 growth pace of 7.5% will continue amd has upped its March-end inflation forecast to 8.5%. The apex bank has also lowered its bank loan and deposit growth expectation to 15% and 16% respectively.

Bankers say that even if the CRR is raised, they have no leeway to raise rates because nobody is demanding money much these days.

Expected Outcomes
  • Reduction in excess liquidity will help anchor inflationary expectations.
  • The recovery process will be supported without compromising price stability.
  • The calibrated exit will align policy instruments with the current and evolving state of the economy.

Source : MoneyControl Flash News

This is in line with my expectations shared with you all on 24th Jan 2010. Expect the market to react today by going up ! Let me see.

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CA Exam results for Nov-09 exams postponed to 1-Feb-2010.

Results of the Chartered Accountants PE–II, PCE and IPCE held in November, 2009 scheduled to be announced on 29th January, 2010 will now be announced on 1st February, 2010. – (28-01-2010).

The results of the Chartered Accountants Professional Education (Examination-II), Professional Competence Examination and Integrated Professional Competence Examination held in November, 2009 scheduled to be announced on 29th January, 2010 will now be announced on 1st February, 2010.

Inconvenience caused is regretted.


Here is wishing all those who have taken this exam. You have a breathing time. I know the state of the those waiting for exams. You have a weekend to celebrate.

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Story with a message : Don't judge people by the look & act - understand them

As she stood in front of her class on the very first day of school, she told the children an untruth. Like most teachers, she looked at her students and said that she loved them all the same. However, that was impossible, because there in the front row, slumped in his seat, was a little boy named Teddy Stoddard. 

Mrs.Thompson had watched Teddy the year before and noticed that he did not play well with the other children, that his clothes were messy and that he constantly needed a bath. In addition, Teddy co uld be unpleasant. It got to the point where Mrs. Thompson would actually take delight in marking his papers with a broad red pen, making bold X's and then putting a big 'F ' at the top of his papers.

At the school where Mrs. Thompson taught, she was required to review each child's past records and she put Teddy's off until last. However, when she reviewed his file, she was in for a surprise.

Teddy's first grade teacher wrote, 'Teddy is a bright child with a ready laugh. He does his work neatly and has good manners... He is a joy to be around.."

His second grade teacher wrote, 'Teddy is an excellent student, well liked by his classmates, but he is troubled because his mother has a terminal illness and life at home must be a struggle.'

His third grade teacher wrote, 'His mother's death has been hard on him. He tries to do his best, but his father doesn't show much interest, and his home life will soon affect him if some steps aren't taken.'

Teddy's fourth grade teacher wrote, 'Teddy is withdrawn and doesn't show much interest in school. He doesn't have many friends and he sometimes sleeps in class.'

By now, Mrs. Thompson realized the problem and she was ashamed of herself. She felt even worse when her students brought her Christmas presents, wrapped in beautiful ribbons and bright paper, except for Teddy's. His present was clumsily wrapped in the heavy, brown paper that he got from a grocery bag. Mrs. Thompson took pains to open it in the middle of the other presents. Some of the children started to laugh when she found a rhinestone bracelet with some of the stones missing, and a bottle that was one-quarter full of perfume. But she stifled the children's laughter when she exclaimed how pretty the bracelet was, putting it on, and dabbing some of the perfume on her wrist. Teddy Stoddard stayed after school that day just long enough to say, 'Mrs. Thompson, today you smelled just like my Mom used to.'

After the children left, she cried for at least an hour. On that very day, she quit teaching reading, writing and arithmetic. Instead, she began to teach children. Mrs. Thompson paid particular attention to Teddy. As she worked with him, his mind seemed to come alive. The more she encouraged him, the faster he responded. By the end of the year, Teddy had become one of the smartest children in the class and, despite her lie that she would love all the children the same, Teddy became one of her 'teacher's pets..'

A year later, she found a note under her door, from Teddy, telling her that she was the best teacher he ever had in his whole life.

Six years went by before she got another note from Teddy. He then wrote that he had finished high school, third in his class, and she was still the best teacher he ever had in life.

Four years after that, she got another letter, saying that while things had been tough at times, he'd stayed in school, had stuck with it, and would soon graduate from college with the highest of honors. He assured Mrs. Thompson that she was still the best and favorite teacher he had ever had in his whole life.

Then four more years passed and yet another letter came. This time he explained that after he got his bachelor's degree, he decided to go a little further. The letter explained that she was still the best and favorite teacher he ever had. But now his name was a little longer.... The letter was signed, Theodore F. Stoddard, MD.

The story does not end there. You see, there was yet another letter that spring. Teddy said he had met this girl and was going to be married. He explained that his father had died a couple of years ago and he was wondering if Mrs. Thompson might agree to sit at the wedding in the place that was usually reserved for the mother of the groom. Of course, Mrs. Thompson did. And guess what? She wore that bracelet, the one with several rhinestones missing. Moreover, she made sure she was wearing the perfume that Teddy remembered his mother wearing on their last Christmas together.

They hugged each other, and Dr. Stoddard whispered in Mrs. Thompson's ear, 'Thank you Mrs. Thompson for believing in me. Thank you so much for making me feel important and showing me that I could make a difference.'

Mrs. Thompson, with tears in her eyes, whispered back. She said, 'Teddy, you have it all wrong. You were the one who taught me that I could make a difference. I didn't know how to teach until I met you.'


I checked the website of and found that there is nothing mentioned about Teddy or Theodore ! It may be a fiction. But, it has a point!

You can relate this to any situation. The teacher can be a Manager and Teddy be his sub-ordinate. I really like the way the story is made. Hats off to the person thought about this.
Thanks to Ramesh, my friend, who forwarded this story.

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100th Post & Completion of 1 year of blogging.


Thanks to Sendil (can say my statistician), who reminded me that I am due for my 100th posting and that can coincide with the completing of 1 year of my blog.

Yes, my first posting was on 25th Jan 2009. Time flies and today the blog is 1 year old and here is my 100th posting. I thought I won't achieve this milestone of 100 in 1 year. But thanks to the holidays, am able to spend time for blog.

Anand & Bala will shout at me for mentioning their names again. But, at the cost of their shouting, I would like to thank them for kindling my interest in writing a blog. Thanks buddies. I cant refrain from mentioning this.

Ashok and Raghavan are also a source of inspiration and keeps a tab on my posting and give regular feedbacks.

What is so special on this occasion? Nothing special, but I wanted to print all my postings and give a copy to my parents. They have not seen my blog. They will be really happy to see this. I want to enjoy seeing them happy.

I am indebted to all my friends, wife and parents, who have stood by me and forced me to achieve this.

I take this opportunity to wish all my friends a Happy Republic Day. Blog itself is a way of freedom to express one's thoughts. So, let us celebrate our status of a Republic country.

Jai Hind,


I am asking Sendil to click this post for publishing. When I write this, he is not aware of this. :-)

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2 sets of Standards under Companies Act for achieving IFRS convergence

The much awaited plans for the realistic IFRS roadmap is here. It has been decided to go in phases to facilitate smooth convergence.

Following is the press release issued by the Ministry of Corporate Affairs laying down the IFRS convergence road map, on Friday, January 22, 2010.

It is a good opportunity for the members to get into the IFRS, as we have time and also can learn from the experience of the first set of people adopting the IFRS.


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Results of the Chartered Accountants Exams - Nov 2009

Here comes the notification on the Announcement of results for the CA Exams conducted during Nov-09.

Good Luck to all those who are awaiting the results. I wish you all a Successful career as a Chartered Accountant.


January 21, 2010
The results of the Chartered Accountants Professional Education – II, Professional Competence Examinations and Integrated Professional Competence Examination held in November, 2009 are likely to be declared on Friday, the 29th January, 2010 around 2 P.M. and the same as well as the merit list (candidates securing a minimum of 55% and above marks and upto the maximum of 50th Rank) on all India basis will be available on the following website:


Arrangements have also been made for the students desirous of having results on their e-mail addresses to pre-register their requests at the above website, i.e., http://www.caresult from 22nd January, 2010. All those registering their requests will be provided their results through e-mail on the e-mail addresses registered as above immediately after the declaration of the result.

Further facilities have been made for students of Professional Education – II, Professional Competence Examinations and Integrated Professional Competence Examination held in November, 2009 desirous of knowing their results with marks on SMS. The service will be available through MTNL, India Times and Reliance.

For getting results through message students should type:

i) for Professional Education - II Examination result the following

CAPE2(Space) XXXXX (Where XXXXX is the five digit PE II examination roll number of the candidate)

e.g. CAPE2 00171

ii) for Professional Competence Examination result the following

CAPCE(Space) XXXXX (where XXXXX is the five digit PCE examination roll number of the candidate)

e.g. CAPCE 00197

iii) for Integrated Professional Competence Examination result the following

CAIPCE(Space) XXXXX (where XXXXX is the five digit IPCE examination roll number of the candidate)

e.g. CAIPCE 00297

and send the message to:

52001 - for DOLPHIN AND TRUMP users only

58888 - for all mobile services - India Times

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

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IPO - Thangamayil Jewellery Ltd - All that glitters is not gold!!!

All that glitters is not gold - Yes, here comes another Public Issue - by a Gold Jewellery  business. It is not a high end business, but a well known business in the city of Madurai (in Tamil Nadu - southern part of India).

There are very many players in this industry and not many get into the Stock Market to raise funds for the business. The reasons being:

1. They all operate in an unorganised sector

2. Most of the purchase and sales are in Cash

3. Lot of competitions and individual's taste differ, when it comes to jewellery.

4. If you are not updating your patterns and designs, you are out of the race.

There are very many players in the southern part of India, who has an established customer base and created a brand for themselves (GRT, Vummudiars, NAC etc.,). There are many business with big showroom and facilities - like Joy Alukas, GRT, Kazhana etc.,

All the above are fine. But, if you read the Red Herring Prospectus, you see that the company is planning to raise about Rs.29 crores by this IPO.

The price band is fixed at Rs.70 - Rs.75.

The issue is open between 27th Jan 2010 and 29th Jan 2010.

If you look at the objectives of the issue, they are planning to fund new retail outlets and more for the working capital. 

They plan from this IPO               - 29 crores,

Pre-IPO placement                       -  6 crores

Internal accruals                          - 13 crores

Total                                          - 48 crores

Land & Building                          -   8 crores

Interiors                                     -   9 crores

Working Capital                         - 23 crores

Other assets & Issue expenses  - 8 crores (inclg contingencies)

Total                                        - 48 crores

The company is also having a Debt (secured & unsecured) to the tune of Rs.53 crores!

It has a negative cash flows in 2005, 2007, 2008, 2009 & 6 months ended Sep-09!!!

With all the above and no big business in other parts of the State (forget about National presence), it is not worth investing in this IPO.

The only positive in this IPO is that the family running the business is well experienced in this trade and has a name in the city of Madurai.

The liquidity of the share and trading volumes would be a question mark.

I would prefer to invest in other stocks than this IPO, on fundamental basis, considering the high price band and the cyclical nature of the business. 

Only those who have a good risk appetite can subscribe to this issue.



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