Thursday, 31 January 2013

ubject to maximum investment limit of Rs 50,000 under the newly introduced Section 80-CCG of the Income Tax Act,1961

Quick Facts about RGESS
Who can Invest	New Retail Investor
Gross total income requirement of investors	To be less than or equal to Rs. 10 lakhs in the year of investment
Maximum Investment amount available for exemption	Rs.50,000
Eligible Securities	Eligible stocks/Exchange Traded Funds/Mutual fund schemes investing in those eligible stocks
Lock-in Period	3 years (Fixed Lock-in period of 1 year Flexible lock-in period of 2 years)

Under this scheme, a one-time deduction for income tax purposes will be available to a "New Retail Investor" as defined in the notification by the Ministry of Finance, Government of India. The New Retail Investor will be eligible for a deduction on the actual amount invested in 'Eligible Securities' in the first financial year, subject to maximum investment limit of Rs 50,000 under the newly introduced Section 80-CCG of the Income Tax Act,1961.

Quantum Index Fund (QIF, NSE Symbol - QNIFTY) is an Open Ended Fund, listed on the National Stock Exchange of India Limited in the form of an Exchange Traded Fund (ETF) tracking the S&P CNX Nifty Index.

Quantum Index Fund is one of the few funds in the country that invests in RGESS eligible securities, hence qualifying for RGESS today.

The scheme will be managed by replicating the Index in the same weightage as in the S&P CNX Nifty Index with the intention of minimizing the performance differences between the scheme and the S&P CNX Nifty Index in capital terms, subject to market liquidity, costs of trading, management expenses and other factors which may cause tracking error.

Since, Quantum Index Fund, an Open Ended Exchange Traded Fund makes investments in stocks of the S&P CNX Nifty Index which qualify for investments under RGESS, a New Retail Investor who complies with the conditions of the RGESS shall be entitled to the benefits of the RGESS for investments made in QIF.

ubject to maximum investment limit of Rs 50,000 under the newly introduced Section 80-CCG of the Income Tax Act,1961

Quick Facts about RGESS
Who can Invest	New Retail Investor
Gross total income requirement of investors	To be less than or equal to Rs. 10 lakhs in the year of investment
Maximum Investment amount available for exemption	Rs.50,000
Eligible Securities	Eligible stocks/Exchange Traded Funds/Mutual fund schemes investing in those eligible stocks
Lock-in Period	3 years (Fixed Lock-in period of 1 year Flexible lock-in period of 2 years)

Quantum Index Fund is one of the few funds in the country that invests in RGESS eligible securities, hence qualifying for RGESS today.

ubject to maximum investment limit of Rs 50,000 under the newly introduced Section 80-CCG of the Income Tax Act,1961

Quick Facts about RGESS
Who can Invest	New Retail Investor
Gross total income requirement of investors	To be less than or equal to Rs. 10 lakhs in the year of investment
Maximum Investment amount available for exemption	Rs.50,000
Eligible Securities	Eligible stocks/Exchange Traded Funds/Mutual fund schemes investing in those eligible stocks
Lock-in Period	3 years (Fixed Lock-in period of 1 year Flexible lock-in period of 2 years)

Quantum Index Fund is one of the few funds in the country that invests in RGESS eligible securities, hence qualifying for RGESS today.

ubject to maximum investment limit of Rs 50,000 under the newly introduced Section 80-CCG of the Income Tax Act,1961

Quick Facts about RGESS
Who can Invest	New Retail Investor
Gross total income requirement of investors	To be less than or equal to Rs. 10 lakhs in the year of investment
Maximum Investment amount available for exemption	Rs.50,000
Eligible Securities	Eligible stocks/Exchange Traded Funds/Mutual fund schemes investing in those eligible stocks
Lock-in Period	3 years (Fixed Lock-in period of 1 year Flexible lock-in period of 2 years)

Quantum Index Fund is one of the few funds in the country that invests in RGESS eligible securities, hence qualifying for RGESS today.

Wednesday, 30 January 2013

Use ETFs to manage time, effort and investments

B. VENKATESH

You should reduce your systematic investments in equity as you approach your investment horizon to moderate the risk on your investment capital.

Your investment process should be easy to implement and manage. That is, your life goals should not suffer due to your inability to find time each month to convert your savings into investments. How then should you plan your investments with minimal time and effort? In this article, we discuss how you can use equity exchange-traded funds (ETFs) to meet your life goals. This article can be read along with “Go for a small investment portfolio”— an article that appeared in this column dated November 11, 2012.

two portfolios

You should typically create two portfolios — core and satellite. The core portfolio is the primary component of your total investments. You should buy-and-hold your investments inside the core portfolio.

The core equity portfolio can be created by setting up a systematic monthly investment on a broader benchmark such as the S&P CNX 500 Index. As the market currently does not offer such products, your preferred choice should be the Nifty ETF. ETFs are open-ended funds, listed on the stock exchanges, which are created to mirror the index. Your monthly investment should be in a Nifty ETF of your choice, as all Nifty ETFs offer similar returns. Remember, investing in more than one Nifty ETF does not offer you diversification benefits.

If your monthly investment as part of your core portfolio is more than Rs 10,000 a month, you may want to consider investing on two different dates during the month — one day during the first week of the month and one day during the last week of the month. It is important to provide auto-debits from your bank account to invest in the ETF.

What happens if the market declines? You will be able to purchase more units with your monthly investment capital. But remember to reduce your systematic investments in equity as you approach your investment horizon to moderate the risk on your investment capital.

chart analysis

The attractiveness of ETFs is that you can use these funds as part of the satellite portfolio as well. How? Just as with your core portfolio, set up systematic investments every month on ETFs of your choice. The satellite investment is different in that you will continually take profits and reinvest the capital.

The preferred way is to trade on ETFs using chart analysis. Given your time constraint to follow market movements, you should frame easy-to-implement rules to manage your satellite portfolio. We suggest four simple rules to this effect.

One, set up your satellite portfolio with at least three ETFs — one gold ETF, one sector ETF and one thematic ETF. Stagger these investments through the month to get the satisfaction that you are continually investing in the market. Two, take profits when any of these investments has about 10 per cent returns or Rs 5,000 profits, whichever is lower. This is to ensure that you capture profits even if your initial investment capital is small. You can later change the rule to an absolute gain of Rs 10,000 or more. Three, preferably transfer the profits you generate from your satellite equity to your core bond investments. That way, you do not take additional risks on your equity investments. And four, keep at least 50 shares of any ETF on your portfolio even if your profit rule is triggered.

Least effort

You can effectively construct your equity portfolio using ETFs. Your choice of investments should span the suite of ETF products available in the market such as style ETFs (Nifty), sector ETFs (bank), commodity ETF (gold) and thematic ETFs (infrastructure). Your objective is to invest every month with the least effort. To this end, it is important that you keep the number of ETFs in your portfolio to 5 or less. And if possible, operate your core and satellite portfolios through separate demat accounts.

Jewellery continues to glitter for Titan

Jewellery business revenue and Ebit growth stand at 27% and 29%, respectively

Pallavi Pengonda

First Published: Wed, Jan 30 2013. 07 37 PM IST

Titan Industries has seen a consistent improvement in the jewellery business volumes for the last three quarters. Photo: Priyanka Parashar/Mint

Updated: Thu, Jan 31 2013. 01 19 AM IST

“The signs are right,” Titan Industries Ltd management had said during the September quarter conference call. Another quarter down the line, the company’s performance reflects that optimism. Sure, the Ebit margin has narrowed to 9.8% in the December quarter from 12.5% in the September quarter. Ebit is short for earnings before interest and tax. But then, the September quarter margin for the jewellery business was anyway the highest in atleast the past six quarters at that time.

Moreover, the nature of the business in which Titan operates does have an element of seasonality so a sequential comparison may not be appropriate. Sure, the December quarter performance got a lift because of the festival season. But on a year-on-year basis, the jewellery business Ebit margin has improved by 20 basis points. One basis point is one-hundredth of a percentage point.

However, that’s really not the highlight for last quarter. What stands out is that jewellery business volumes have increased by 12% this time around. Compare that to the 11% and 21% decline seen in the September quarter and June quarter, respectively.

The company has seen a consistent improvement in the jewellery business volumes for the last three quarters. The jewellery business revenue and Ebit growth, too, was strong at 27% and about 29%, respectively. Titan derives a massive chunk of its total revenue from its jewellery business (around four-fifths usually).

Titan’s second major business is the watch business, which has disappointed to some extent. Ebit margin narrowed in the watch business by 46 basis points compared with the same period last year to 12.01%. The company blames the excise duty hike and higher material costs for the margin decline. Still, the watch business revenue increased by 11%, thanks to the price increases the company has announced over the last one year.

On an overall basis, Titan’s total operating revenue and net profit increased by around 24%, looking far better than the 9% revenue growth and 21% net profit growth in the September quarter. Little wonder, the stock rose by 2% in reaction to the numbers. At Rs.275, the stock trades at 27 times its estimated earnings for the next fiscal year. While valuations appear to be on the higher side at these levels, if consumers persist with their love for the yellow metal, there could be some more room for the valuations to improve.

Five trends that will drive FMCG growth in 2013

India’s consumption story remains intact, though the pace of growth has slowed against previous years

Sapna Agarwal

Consumer spending reached an eight-year low in the September quarter of fiscal 2013. Photo: Pradeep Gaur/Mint

Updated: Thu, Jan 31 2013. 01 20 AM IST

Mumbai: India, Asia’s third largest economy, saw urban consumers spend less in calendar year 2012 due to high inflation, muted salary hikes, and slowing economic growth that affected both real wages and sentiment.

Yet, the fast moving consumer goods index (the BSE FMCG index) was the third biggest gainer among sectoral indices on BSE, surging 47%, while ITC Ltd figured among the top 10 best-performing stocks, rising 43.64% in the period.

Compared with other sectors, the consumption story remains intact, though the pace of growth has slowed compared with previous years.

Consumer spending reached an eight-year low in the September quarter of fiscal 2013 (FY13). Private final consumption expenditure (PFCE), an official estimate of consumer spending, slowed to 3.68%, according to India Ratings, a part of the Fitch Group. That’s not an isolated number—in the last six quarters, four recorded the lowest PFCE growth rate seen in the last 34 quarters, India Ratings said in its January report.

“This time, the slowdown in consumption spending is visible in some categories in the higher SECs (socio-economic classifications) of urban India,” analysts Anand Mour and Gagan Borana said in an ICICI Securities Ltd December report.

The trends seen in 2012 are likely to accelerate in 2013. Growth will come from rural dwellers who are expected to see a rise in disposable incomes due to the direct cash transfer scheme, while urban consumers will continue to be affected by the macroeconomic environment, analysts said.

“Our analysis of the impact of government spending on consumption suggests that consumption at the bottom of the income pyramid is likely to stay strong,” said analysts Neelkanth Mishra and Ravi Shankar in a 7 January report titled India Market Strategy by Credit Suisse Securities (India) Pvt. Ltd. “The squeeze of the urban middle-class, on the other hand, is likely to continue.”

Muted salary increases will also add to the pressure on urban consumption, it said.

Besides that, food inflation remains persistent, forcing consumers to spend more. “Food inflation, which had declined to 6.6% in October, has re-entered the double-digit zone after four months,” said a January report by Crisil Ltd.

Yet, there are bright spots, with analysts expecting consumer companies to continue seeing growth from shoppers buying branded goods for the first time, and by sales, discounts and promotions. Experts expect five trends to dominate in 2013: rural and new consumer segments, sales and discounts, new launches and expansion, emerging segments and trade channels, and premiumization.

Rural and new consumer segments

The consumer packaged goods market growth will be aided by a rise in government final consumption expenditure (GFCE), as was witnessed two years before the general election in 2009, and the likely roll-out of policies such as the food security Bill and the direct cash transfer of subsidies to about 40% households in India, said analysts.

In the two years preceding the 2009 general election, the consumer packaged goods market grew in excess of 1.4 times the nominal GDP (gross domestic product) growth, while GFCE grew at over 18%, exceeding the nominal GDP growth during the period. Spending by the rural development ministry doubled in FY09 to Rs.56,900 crore owing to government spending.

“Already in the first half of fiscal 2013, GFCE has grown by 19%, compared to about 14% growth in the past 18 months,” said the ICICI Securities December report cited earlier.

Growth will also be driven by new segments such as urban India’s poorest households earning less than Rs.6,000 per month and low-income value seekers visiting modern trade outlets for the first time. These two segments will add around $3 billion (around Rs.16,000 crore today) to the consumer packaged goods sector by 2015, said a November report by market research firm Nielsen Co.

Sales, promotions and discounts

If we look at the just concluded festive season for a glimpse of what to expect in 2013, there will be an increase in the frequency of promotions and discounts. Retailers from food and groceries, electronics, home furnishings, and apparel and lifestyle are likely to increase the number of promotions and sales that they run in a bid to lure consumers shying away from buying.

“Sales in 2013 would be driven by discounts, a trend that was largely prevalent in 2012,” said Govind Shrikhande, managing director of Shoppers Stop Ltd, which runs India’s oldest department store retail chain.

“About 40% of the overall sales come from discounts. On an average, this will further increase by 4-5% this year as discounts increase,” said Dipak Agarwal, chief executive officer of DLF Brands Ltd, which retails apparel and footwear brands such as Mango and Boggi.

The year will see the advent of “value trading” as one of the biggest drivers of growth, said Ritesh Chandra, executive director and head (consumer group) at Avendus Capital Pvt. Ltd, adding that retailers and manufacturers will work together and give conjoint offers rather than mere discounts.

“We have to keep grocery shopping exciting for the consumer,” said Damodar Mall, director (food strategy) at Future Group , parent of India’s biggest listed retail company Pantaloon Retail (India) Ltd.

Sunil Kataria, executive vice-president (marketing and sales) at Godrej Consumer Products Ltd, the maker of Cinthol soaps and Hit insecticides, agreed with the above view. He added that cooling of commodity prices would aid a larger incidence of consumer promotions across categories.

Expansion and new launches

The year will see consumer companies increase their reach into the interiors of India. Firms will also launch more products and widen their portfolio as they get into new segments and categories, according to Abheek Singhi, leader of the consumer practice and India partner at Boston Consulting Group (BCG).

For instance, Procter and Gamble has a presence in 14 categories in India that include detergents such as Tide, Ariel and shampoos such as Head & Shoulders. Its Cincinnati-based parent has products in 24 categories. In the coming years, the company plans to introduce its entire portfolio, with the exception of toilet paper, in India, Shantanu Khosla, managing director of P&G India, had said in a September interview.

Besides, consumer and retail companies are also expanding into new geographies and categories. Hindustan Unilever Ltd (HUL) recently launched Dove hair oil—a segment hitherto dominated by companies such as Marico Ltd, known for Parachute hair oil, and Dabur India Ltd that sells Vatika.

The India opportunity is also attracting global quick-service restaurant chains, besides apparel and footwear retailers. In December, the UK-based casual dining chain PizzaExpress launched its first store in India. Earlier this month, the US-based Krispy Kreme opened its first store in Bangalore. DLF recently signed a joint venture with the US-based fashion brand Forever21 and will launch its first store in April this year.

Even regional brands across categories such as Turtle in men’s wear, Khadim’s in footwear and others will continue to invest to take their brands pan-India after having established themselves in regional markets, said Santosh Verma, director (investment banking) at IDFC Capital Ltd.

Emerging segments and trade channels

Growth will come from the fringes—categories that are not among the mainstays—such as oats, conditioners, liquid fabric conditioners, and liquid soaps and face wash compared with staple soaps and deodorants.

Five categories that have witnessed the highest growth in their contribution between calendar year 1999 and calendar year 2010 are biscuits, refined edible oils, salted and savoury snacks, mosquito repellents and skin creams. “We note that these categories witnessed increase in penetration, consumer shift from loose to packaged products or unbranded to branded products,” said the ICICI Securities report cited earlier.

It identified the five categories that witnessed the maximum drop in their contribution as toilet soaps, packaged tea, detergent cakes and bars, toothpaste and confectionery (toffee and hard boiled candy).

Channels including modern trade (comprising hypermarkets and supermarkets) account for 5-7% of the overall retail market and are expected to double to 10-12% in the next three years, according to a Mint estimate based on forecasts from BCG, Ernst and Young Pvt. Ltd, Deloitte Haskins and Sells, KPMG Advisory Services Pvt. Ltd, Technopak Advisors Pvt. Ltd and Booz and Co.

Modern trade growth will come with new consumers accessing such stores for the first time, existing consumers buying more and retailers opening new outlets.

Shoppers Stop opened 13 new stores in FY12. The retailer targets to have 75 stores by the end of FY15. Pantaloon Retail added 41 stores and Trent Ltd, the retail arm of the Tata group that runs the Westside department store chain and Star Bazaar hypermarket chain, opened seven stores in the year.

“Retailers will continue to open new stores in tier II and tier III cities as metros get saturated,” said an India Ratings January report.

Likewise, e-commerce, which accounts for close to 1% of the overall retail market, will also drive growth. “E-commerce, which, till a few years back, was predominantly a medium for information, has graduated to being a medium for buying.

The e-commerce market in 2012 has grown 45-50%. This is an important trend and can have significant impact on the way consumers buy and organized retail evolves in the country,” said Mohit Bahl, partner at KPMG India.

The fundamentals of an online ecosystem are already in place, said Harminder Sahni, managing director at consultancy Wazir Advisors, adding that growth in 2013 will come from the availability of many more categories online. “Online will move upwards in terms of price range as well as customer segments in terms of higher age and higher income,” said Sahni.

With changing lifestyles, consumers’ focus on health and wellness will also see emerging categories such as nutraceuticals, health food and health services doing well. Sales of olive oil, for instance, exceed that of Saffola, a premium cooking oil from Marico, at grocery retail chain Big Bazaar.

Oats, which didn’t exist as a category until three years ago, are now a Rs.200 crore market. The high growth has persuaded companies such as HUL and Nestlé India Ltd to launch oats under their Knorr and Maggi brands, respectively, said a January 2013 report by Edelweiss Securities Ltd.

Premiumization

Despite the slowdown, consumers are willing to buy premium goods, unlike previous slowdowns that saw consumers down trade or buy cheaper products. “Researches indicate consumers are willing to adopt a new premium category, even at a higher price, in the space of convenience, health and wellness,” said the ICICI Securities report cited above.

The sale of products perceived as being healthier— wheat cornflakes and muesli, baked and non-fried potato chips and snacks, and diet beverages, 100% juices and organic or green tea—are rising, said Gaurav Gupta, senior director at Deloitte Touche Tohmatsu India Pvt. Ltd. He added that the sale of organic products was also rising.

To be sure, in the last two years, consumers are increasingly opting for more and more premium products. “This has led companies like HUL, P&G, Kraft/Cadbury to launch more and more premium products at higher price points as there is an increasing demand amongst consumers for such products,” said the Edelweiss report.

“The growth of the premium segment is being driven by income levels improving and more choices available today,” said Sunil Taldar, director (sales and international business) at Cadbury India Ltd, which has seen success with pricier products such as Silk and Bournville, and recently launched Toblerone from its parent’s portfolio.

Tuesday, 29 January 2013

In its quarterly monetary policy review today, the Reserve Bank of India (RBI) reduced repo rate and CRR by 25bps each. The easing was to support growth, and declining inflation (especially core) provided the central bank the room to do so. Importantly, RBI’s guidance was dovish, clearly stating that it will be growth supportive. We expect the central bank to reduce policy rates by ~100bps in FY14 on inflation easing further and CAD narrowing. In our annual strategy report, our bullish case for market was primarily based on monetary easing and continued government reforms improving domestic macros. Today’s move, in conjunction with recent government steps (actions to reduce oil subsidy etc.), provides clarity on our call of improving economy. Accordingly, we reiterate our stance to rotate from quality to growth. We are overweight on banks, metals, industrials, real estate and cement, and underweight on consumers, IT and pharma.-edelwiss

NRIs can’t buy but can inherit agricultural or farmland

Property can’t be agricultural land or farmland if acquisition is by an NRI through a sale-purchase.

Shabnum Kajiji

Madhu Kapparath/Mint

I have three children and want to divide my property equally among them. One of my children is now a citizen of the US. Will it be valid to transfer the property to his name?

—Shashi

While answering this query, we are assuming that your child (who is now a citizen of the US) is a non-resident Indian (NRI).

As per the current foreign exchange regulations prevalent in India, an NRI can acquire immovable property in India either by way of purchase, gift or inheritance, and the said immovable property can either be residential or commercial. However, the property cannot be agricultural land, plantation property or farmland if the acquisition is by an NRI through a sale-purchase or a gift. This restriction will not prevent an NRI from inheriting agricultural land, plantation property or farmland; however, there are certain restrictions imposed on an NRI with respect to dealing with such type of property once inherited.

Subject to the aforesaid, you may either divide the property, equally among your three children by selling the property to them, gifting it to them, or by making a will and bequeathing your property to them. The sale or gift would take place during your lifetime but if you have made a will, then such property will vest in your children after your death.

If you want to sell your property, you will have to execute a sale deed in favour of your children and there needs to be some consideration paid by them to you. The said sale deed needs to be appropriately stamped.

Section 17 of the Registration Act, 1908 lays down the documents which are to be compulsorily registered. Section 49 of the Registration Act, 1908, inter alia states that the transfer of immovable property vide an instrument required by section 17 or by any provision of the Transfer of Property Act, 1882, to be registered shall not take effect unless such document has been registered. A sale deed is a compulsorily registerable document as per the provisions of the Registration Act, 1908 and thus the same will be required to be registered with the sub registrar of assurances.

If you want to gift the property to your children, you will have to execute a gift deed in their favour, which will need to be executed by you and them. You may execute one consolidated gift deed or individual gift deeds in favour of each child. For a gift to be considered valid it is made voluntarily; it must be without consideration, there has been an offer by the donor (i.e. you); the offer has been accepted by the donee (i.e. your children), and the donee actually accepts the gift.

The gift deed must be adequately stamped. While there would be certain stamp duty benefits in gifting the property to your children, check with your chartered accountant/tax consultant its tax implications. A gift deed is also a compulsorily registerable document.

Queries and views at mintmoney@livemint.com

Monday, 28 January 2013

PPF -More questions replied

Can I maintain more than 1 Public Provident Fund (PPF) account under my name?

Only one PPF account can be maintained by an Individual, except an account that is opened on behalf of a minor.

What is the eligibility for investing under Public Provident Fund (PPF) Scheme, 1968?

A Public Provident Fund (PPF) account can be opened by resident Indian Individuals and individuals on behalf of minors.

Only one Public Provident Fund (PPF) account can be maintained by an Individual, except an account that is opened on behalf of a minor.

A Public Provident Fund (PPF) account can be opened either by the Mother or Father on behalf of their minor Son or Daughter; however the Mother and Father both cannot open Public Provident Fund (PPF) accounts on behalf of the same minor.

Grand-parents cannot open a Public Provident Fund (PPF) account on behalf of minor grand-child; however, in case of death of both the Father and Mother, Grand-parents can open a Public Provident Fund (PPF) account as guardians of the Grand-child.

What is the minimum and maximum amount that can be invested under the Public Provident Fund (PPF) Scheme, 1968, in a financial year?

The minimum deposit amount is Rs. 500 per annum and the upper ceiling limit is Rs. 1,00,000 per annum.

What happens if I fail to deposit any amount in one or more Financial Years?

A penalty of Rs. 50 will be levied per year of default, if the customer doesn’t deposit the minimum deposit amount of Rs. 500 on the completion of the financial year.

What is the Interest earned in Public Provident Fund (PPF) account?

The current rate of interest on Public Provident Fund (PPF) is 8.8%, which is compounded annually .

When does a Public Provident Fund (PPF) account mature?

A Public Provident Fund (PPF) account gets matured after the completion of 15 years from the end of the year in which the account was opened.

Can I extend the tenure of a Public Provident Fund (PPF) investment beyond the Maturity Period?

A customer can extend the tenure of a Public Provident Fund (PPF) investment for a block period of 5 years beyond the maturity period by submitting Form H within one year from the date of maturity.

Can I terminate or closed the Public Provident Fund (PPF) account before before maturity?

No premature withdrawal is allowed for Public Provident Fund (PPF) accounts. Only in the case of the death of a customer, their nominee /legal heir can close the account by submitting the required documents as guided by the Ministry of Finance.

Can I withdraw funds from my Public Provident Fund (PPF) Account?

Customer can make one withdrawal every year, from the 7th financial year, of an amount that does not exceed 50% of the balance of the customer credit at the end of the fourth year immediately preceding the year of withdrawal or the amount at the end of the preceding year, whichever is lower.

Can I avail of Loan facility on my Public Provident Fund (PPF) investment?

Customers can avail of the loan facility between third financial year to sixth financial year ie. from third financial year upto end of fifth financial year.

What is the process for transferring my existing Public Provident Fund (PPF) account maintained with another bank/post office to Bank of Your Choice?

As per the PPF scheme of the Government, subscribers can transfer their PPF account from one authorised bank or Post office to another. In such a case, the PPF account will be considered as a continuing account. To enable customers to transfer their existing PPF accounts to Bank of your choice, the following process must be followed.

The customer approaches the bank or the Post office where his current PPF account is held and makes an application for transfer of PPF account to another Bank’s branch.

Once the application is processed, the existing bank/Post office arrange to send the original documents such as a certified copy of the account, the account opening application, nomination form, specimen signature etc. to another Bank branch address provided by the customer, along with a cheque/DD for the outstanding balance in the PPF account.

Role of another Bank Branch:

Once transfer in documents are received at another Bank branch, customers are required to submit fresh PPF account opening form and Nomination form, along with their original passbook . Also customer is required to submit a fresh set of KYC documents.

Can I withdraw funds from my Public Provident Fund (PPF) Account?

Anytime after the expiry of 5 years from the end of the financial year in which initial subscription was made, a subscriber may withdraw 50% of the balance to his credit at the end of 4th year immediately preceding the year of withdrawal or amount at the preceding year which ever is lower. However, not more than one withdrawal is permitted in one financial year.Source Tax Guru

Sunday, 27 January 2013

High-powered jury salutes excellence

Seven of India Inc?s leading decision-makers select five winners of the coveted Business Standard awards for the year 2012

BS Reporter / Mumbai Jan 28, 2013, 01:45 IST

The 260-page information docket containing details of the candidates shortlisted for the Business Standard awards for corporate excellence, 2012, looked daunting when it was sent to the jury, comprising seven of India Inc’s leading decision-makers. The question the BS Research Bureau had was whether the jury members would have the time to go through the reams of data and detailed profiles.
As things turned out, the concern was irrelevant. The intense discussions during the over-one-and-a half-hour meeting here last Friday afternoon showed the distinguished jury had come well-prepared. While some of the members bookmarked quite a few of the pages they found interesting, others had done detailed colour-coding on the positives and negatives of each candidate. A couple of them came with their own spreadsheets on the numbers, while one said he also “googled” some names to figure out whether they found place in the shortlist. But then, such rigour is only to be expected of a power-packed jury, for which excellence is not a destination but a journey.
The initial shortlisting by the BS Research Bureau was done by choosing firms that had posted top line and bottom line growth of over 20 per cent compounded in each of the three years between 2009-10 and 2011-12. Other financial criteria, including returns on net worth and capital employed, were also applied.
The tone of the meeting to decide on a few outstanding individuals and institutions was set by ICICI Bank and Infosys Chairman K V Kamath, the chairman of the jury. “We want the Business Standard awards to be different. It’s not the usual market-cap ranking. We must honour those who have contributed to the creation of a New India,” Kamath said.
Everyone also agreed with AMM Foundation Managing Trustee M V Subbiah’s suggestion that one had to go beyond just the financials. “We need to look at how they have touched the lives of the real India and how they have contributed to leadership development and corporate social responsibility – in short, we have to give due weightage to the qualitative aspects,” he said.
CEO of the year
The discussion on the CEO of the year went on for over 45 minutes and the consensus choice finally was Titan Industries MD Bhaskar Bhat, who, L&T Finance Holdings CMD Y M Deosthalee said, had transformed the company “quietly”. Under Bhat, Titan has grown from a niche watchmaker (it already is the fifth-largest watch-maker in the world) to a leading speciality retailer that sells everything from gold jewellery (Tanishq is the country’s biggest jewellery retailer) to bags, belts and wallets. And, it’s now incubating new businesses in youth watches, prescription eyewear and branded leather accessories. “He has entered three new businesses where India Inc had no presence and made those successful. That’s outstanding work,” said Marico CMD Harsh Mariwala.
Bhaskar Bhat

Apart from the scale of operations (sales grew from Rs 4,770 crore to Rs 8,848 crore between 2009-10 and 2011-12), what impressed the jury was how Bhat had taken profitability to a new league. Titan’s net profit crossed Rs 600 crore in 2011-12 at a three-year compound annual growth rate (CAGR) of 54 per cent.
When contacted, Bhat, 56, was generous in attributing this “most satisfying and special success” to his employees, customers, business associates and leadership team. “It celebrates our endeavour to transform and reform industry sectors, our sincerity of purpose, simplicity of behaviour and the quality of our people… all qualities of the Tata group and modern India,” he said.
Company of the year
The jury felt due recognition must be given to Tata Consultancy Services (TCS), which had become something of a gold standard for the Indian information technology industry. McKinsey India MD Noshir Kaka said, “TCS MD & CEO N Chandrasekaran has done an incredible job consistently”, while AZB Managing Partner Zia Mody termed his performance “fabulous” and KKR India CEO Sanjay Nayar described him as a “hard runner”.

The jury gave enough reasons for the grand adjectives. TCS has sailed through the IT industry’s crisis period with barely a flutter. In fact, in the two-and-a-half years as the CEO, Chandra, as the CEO is better known as, took the revenue to $10 billion by the end of FY12. The market value of the firm more than doubled in the period. The acquisitions and growth of non-linear businesses were also transformational in nature, the jury felt.
Most innovative company of the year
The jury then veered round to the view that innovation was the key to survival at a time when Indian companies were going through a tough phase. And the unanimous choice (in fact, this award took the least time to decide) was Mahindra & Mahindra, a company that had become synonymous with innovation — so much so that it became a case study for the Harvard Business Review.

The jury felt CMD Anand Mahindra had made M&M an innovation factory that did not look at just the lowest cost per unit of output, but searched for the lowest cost per unit of innovation. “Apart from the range of products such as Bolero, Xylo and others, look at what Anand is doing with SsangYong. That’s incredible innovation,” Kamath said. The jury felt it was not for nothing that Ratan Tata had praised M&M for the wonderful work it had done to beat Tata Motors.
Star MNC of the year
The star multinational company of the year award went to engineering firm, Bosch India, though it was not in the original shortlist, as the firm fell just short of the 20 per cent growth cut-off in one of the past three years. But the jury felt Bosch’s sauce for success was its strategy of converting the downside in the Indian automotive industry into an opportunity through its deep commitment to the Indian market, constant innovation, speed to market and its response to skill development.
Star SME of the year
Moving on to the small and medium enterprise (SME) space, the jury discussed several names, but Page Industries, founded by Sunder Genomal in 1994, was the chosen one. The firm, a franchisee for Jockey International and an exclusive licensee of Speedo International, has managed to capture a fifth of the men’s innerwear market and 12 per cent of women’s. The jury took note of the opinion of leading analysts that Page was in a sweet spot as its pricing was at a 50 per cent premium to large local brands and at a significant discount to luxury innerwear brands. Page went public in 2007 and issued around 2.8 million shares of Rs 10 each at a premium of Rs 350. The stock is currently trading at Rs 3,400 a share.
There were three contenders to the Star public sector enterprise of the year, but the jury felt none made the cut and recommended the award be withheld this year.

Sunday, 20 January 2013

Nimesh Mehta, Senior Vice-President of Motilal Oswal, said creating wealth through long-term investment was different from making money. “Creating wealth means foregoing purchasing power today to increase purchasing power tomorrow,”

Saturday, 19 January 2013

ITC-Equity Master say to sell

While regulatory headwinds have led to a moderation in ITC's cigarette business, the impact has been partially offset by the brisk growth in its FMCG business. Despite a structural rise in taxation, ITC has been able to expand margins in its core cigarette business, thanks to the huge pricing power enjoyed by it. Even cigarettes launched in the new filter segment (cigarette length not exceeding 65 mm) have met with reasonable success and the company is rolling out the products across the country. The company has been consistently reducing losses in the FMCG segment. All these factors have enabled ITC to grow its topline as well as earnings at a robust pace.

At the current price of Rs 287, the stock trades at a P/E multiple of 23 times its estimated FY15 earnings. At current valuations, the stock still appears overpriced and we maintain a SELL view on the stock.

Cigarettes pull ITC off growth plateau

Published: Saturday, Jan 19, 2013, 10:00 IST
By Nupur Anand | Place: Mumbai | Agency: DNA

After four quarters of stagnant growth, conglomerate ITC, the country’s largest cigarette-maker which also runs hotels and is an FMCG and paperboard major, beat street estimates as its October-December profit jumped 21% up on-year to Rs2,050 crore on sales of Rs7,630 crore (up 23% on-year).

Four key factors explain the better-than-expected performance: pan-India launch of smaller (64mm) and cheaper cigarettes during the quarter; welcome growth in cigarette sales volume after a sluggish July-September quarter; a 7% price hike on its mass-selling Gold Flake brand which accounts for about 35% of ITC’s cigarette sales; and pruning of administrative and other costs.

ITC, which is 30.8% owned by British American Tobacco, makes four out of every five cigarettes sold in India, but does not reveal cigarette volumes. Well-informed analysts, however, estimated a 1.5-3% rise. Cigarette margins being as high as 35-50%, additional volumes must have boosted profit significantly, they said.

That performance came against a backdrop of higher taxes and tighter anti-smoking regulations in several Indian states which impacted ITC’s sales from a long-term perspective.
“The cigarette industry in India continues to be impacted by a discriminatory taxation and regulatory policy framework,” said ITC.

Net sales from ITC’s non-cigarette consumer business grew 30% on-year to `1,780 crore. The FMCG segment’s loss narrowed by 49% on-quarter to `24 crore (from `47 crore), suggesting that in spite of the economic slowdown, sales of wheat flour, biscuits and snacks recorded a robust 34-36% growth, said an analyst with a foreign brokerage said.

Naveen Kulkarni, analyst at Phillip Capital, said “If the ITC tries hard, the FMCG loss can be stemmed in a couple of quarters.”

Analysts have been estimating that ITC’s FMCG business will break even by the end of next fiscal.
ITC’s agri business grew 43% on-year, but hotels continue to be a drag with no signs of a turnaround. V Srinivasan, analyst at Angel Broking, said ITC’s paperboard business has been under pressure as well due to rising costs of raw material, particularly wood.

Impressive successive quarterly shows have earned the ITC stock a ‘buy’ rating from most analysts. Shares gained about 0.67% to close at `287 in Mumbai on Friday.

ITC’s December quarter profit rises 21%

Net revenue grows 23% to Rs.7,627 crore on robust sales of cigarettes, farm commodities, consumer goods

Manish Basu

First Published: Fri, Jan 18 2013. 01 36 PM IST

Revenue from consumer goods such as food, apparel and personal care products rose 30% to `1,782.70 crore. Loss from the segment during the quarter was cut to `23.98 crore from `46.63 crore last year, and from `30.31 crore in the September quarter. Photo: Indranil Bhoumik/Mint

Updated: Sat, Jan 19 2013. 12 46 AM IST

Kolkata: ITC Ltd posted a 20.6% increase in net profit for the December quarter as it cut losses in the consumer goods business and sustained a high operating profit margin in the cigarette segment.

Net profit rose to Rs.2,051.85 crore, or Rs.2.57 per share, for the three months ended December from a year ago. Net revenue grew 23% to Rs.7,627 crore, thanks to robust sales of cigarettes, farm commodities and consumer goods such as food and personal care products, the firm said in a note on Friday.

Operating profit margin narrowed 75 basis points to 36.4% from the year earlier, Angel Broking said in its earnings analysis. One basis point is one-hundredth of a percentage point.

Investor reaction indicated earnings were largely in line with expectations. The stock rose 0.67% to Rs.287.05 on BSE. The benchmark Sensex rose 0.38% to 20,039.04 points.

Net revenue from cigarettes rose 13% to Rs.3,657.36 crore, while pre-tax profit from the segment jumped 21% to Rs.2,233.54 crore. Sequentially, cigarette sales by value grew 8%.

Operating margin from cigarettes (calculated on net revenue) was at 61.06%, marginally lower than 61.4% in the quarter till September.

Though a well-diversified conglomerate with interests in hotels, farm products and paper, 75% of ITC’s pre-tax profit of Rs.2,957.19 crore in the quarter ended 31 December came from cigarettes. This is a shade lower than the previous quarter, in which cigarettes contributed 78% of pre-tax profit.

The company said its newly launched cigarettes—less than 65mm in length—were being rolled out nationally.

Revenue from consumer goods such as food, apparel and personal care products rose 30% to Rs.1,782.70 crore. Loss from the segment during the quarter was cut to Rs.23.98 crore from Rs.46.63 crore last year, and from Rs.30.31 crore in the September quarter.

The company could break even in the consumer goods segment in two-three quarters, said V. Srinivasan, an analyst at Angel Broking.

Though revenue from the hotel business grew 11% to Rs.309.46 crore from the year ago, pre-tax profit plunged 45.45% from last year to Rs.55.49 crore. The company said the segment was affected by poor tariff due to a spurt in the supply of hotel rooms and a decline in tourist traffic.

Revenue from farm commodities such as leaf tobacco, soya and wheat jumped 43.4% from last year to Rs.1,630.97 crore because of improved exports. Net profit from the segment rose 21.85% to Rs.172.63 crore from the year earlier, but dropped 33.5% sequentially.

Revenue from the paper and paperboards segment at Rs.1,061.55 crore was 8.5% higher than the same period a year ago, while pre-tax profit from it remained almost unchanged at Rs.228.58 crore, showing a decline in operating margin. Compared with the September quarter, net profit from the paper and paperboards segment was 19% lower.

Once again, the topic of discussion in offices, during tea breaks, or at social gatherings is centred about how much the stockmarket has gained and how everybody is investing in equity. It is the same pattern being repeated all over again.

Herd mentality can hurt you

Since your financial needs are different, it is important to have a strategy that is tailor-made to meet them

Steven Fernandes / Jan 20, 2013, 00:44 IST

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www.indiagetonline.in

Lata Desai, a school teacher in Pune, has recently started a monthly recurring deposit scheme with her jeweller. Her inspiration: A neighbour, who told her that a lot of people were doing this, because gold prices have gone through the roof. Desai hopes to buy jewellery by saving small amounts of money this way. The thought that this jewellery, accumulated over the years can become a good investment was also an attractive proposition for Desai.

Similarly, Rajeev Gupta, a vice – president with an FMCG firm recently sold all the equity investments he had been holding for the last two years, as they had not performed as per his expectations. He invested the money in a real estate project along with his friends who convinced him that real estate was the best investment currently. They based their decision by the returns generated by real estate in the last couple of years.