Karvy Private Wealth

How long will markets continue to reflect the positive note?

2012-01-27T02:13:00.000-08:00

FIIs cut stake just in the last quarter, in many sectors; analysts say too early to say if upturn would sustain. Though 2012 has started on a positive note on foreign institutional investor (FII) flows, it is too early to say if the trend will sustain through the calendar year, analysts say.

2011 was the second worst year for Indian markets in two decades, with the Sensex slipping nearly 25 per cent on the back of the euro zone crisis, the Reserve Bank of India's monetary stance and the government's policy inaction.

In the fourth quarter alone, the Sensex slipped 5.4 per cent as FIIs reduced exposure to banking, realty, metal, infrastructure, capital goods and sugar sectors due to macro-economic headwinds. Their net outflow from the Indian market in the recently concluded quarter was Rs 2,074 crore ($343 million). Among prominent names, ICICI Bank, Larsen and Toubro, Tata Steel, IVRCL and Shree Renuka Sugars all saw FIIs reducing stake by a little over 100 basis points (one per cent = 100 basis points) in the December quarter (Q4).

"Metal is a high beta sector and when global slowdown takes place, the possibility of metal prices cooling is high. In India, the mining scam plus lack of reforms in the mining sector could also be reason for FIIs reducing stake in metals," said A K Prabhakar, senior vice-president (equity research), Anand Rathi.

"High interest cost, lack of funding, delay in government clearances, cost overruns, high raw material cost and corporate governance kept overseas investors at bay from the infrastructure and realty sector, while sugar is still under government control."

Risk aversion

In the BSE-500 pack, 361 companies have filed their shareholding pattern. It shows FIIs in Q4 reduced stake in 206. They raised holdings in 144 and 11 companies saw no change. Tata Motors, LIC Housing Finance, Aban Offshore, IRB Infrastructure and GE Shipping Company are among a few where they increased holding.

Analyst feels a worsening global outlook and the consequent risk aversion to investment in emerging markets has shrunk FII inflows into India. "With slowing GDP growth and the rupee weakness, some FIIs have downgraded India in their portfolios. They have been bearish on the high beta segments such as metals, capital goods and infrastructure. Further, sugar has been out of favour, as it is a highly cyclical and regulated industry. All in all, the December quarter has seen significant FII outflows," said Jagannadham Thunuguntla, head of research, SMC Global Securities.

Positive start

However, 2012 has started on a positive note. The benchmark Sensex has gained 1,297 points, or 8.4 per cent, the most since it rose 9.44 per cent in the first 13 trading sessions in 2000, according to data compiled by the Business Standard Research Bureau.

The rally has been led by strong capital inflows from FIIs and anticipation of the macro economic situation improving due to monetary easing. So far in calendar 2012, FIIs made a net investment of Rs 7,005 crore ($1,365 million) till January 20. "Though the New Year has started on a positive note, it still needs to be seen if the FIIs will take interest in these battered scrips," adds Thunuguntla.

"We have been positive on realty stocks and we continue to maintain this stance. Stocks like HDIL, Indiabulls Real Estate, Sobha Developers, Prestige, Mahindra Lifespace and Oberoi Realty look good in this space. Any dip should be seen as an opportunity to buy," states Prabhakar.

Source: http://www.rediff.com/business/slide-show/slide-show-1-will-the-markets-continue-to-reflect-the-positive-note/20120127.htm
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Tax Saving Tips

2012-01-26T23:59:00.000-08:00

1.Know Your 80C

The most common investments people think of, when they think of 80C are PPF and ELSS.
The split in most people’s minds is Rs. 70,000 into PPF and Rs. 30,000 into an ELSS fund.
But hang on.

a. You’ve been contributing to your own Employee Provident Fund (EPF) all year.
Find out what this figure is from your HR department, and make a note of it.

b. Also, do you have a home loan? If yes, the principal repayment this year counts under 80C as well. Call your bank / housing finance company and ask them for a copy of your amortization table to see how much principal you have repaid this year.

c.Have you paid any stamp duty and the registration fees in respect of purchase of a house? If yes, the amount paid is covered under 80C as well.

d. Have you paid a premium for ULIP recently? If yes, your premium, or atleast part of your premium, is deductible under 80C too.

e.Invested into any 5 year FDs in the last Financial Year? These funds count as well.

Also:

f.Pension funds,
g.National Savings Certificate,
h.Senior Citizen Savings Scheme investments
i.Investments into the National Pension Scheme
j.Any life insurance premium you might be paying…

All of these investments are deductible under 80C.

Total up everything that applies to you, and now you’ll know what you have left to invest under 80C to meet your Rs. 1 lakh deductible limit.

2. 80CCF

You can invest into Long Term Infrastructure Bonds, and avail an extra Rs. 20,000 of tax deduction under Section 80CCF. If you’re in the 30% tax bracket, you will save roughly Rs. 6,000 on tax by investing into these bonds.

3.Salary Restructuring:

a.Opt for food coupons instead of lunch allowances, as they are exempt from tax up to Rs 30,000 p.a.

b.Include medical allowance, transport allowance, education allowance, uniform expenses (if any), and telephone expenses as part of salary. Produce bills of actual expenses incurred for these allowances to reduce tax.

c.Opt for the company car instead of using your own car, to reduce high prerequisite taxation.

4.Got Health Insurance?

Section 80 D
A straightforward mediclaim policy can save you tax on the premium paid.
If you are paying premium for yourself, spouse and kids, you can avail up to Rs. 15,000 deduction per annum (Rs. 20,000 if you’re a senior citizen) and you can also avail deduction for premiums you are paying for your parents (Rs. 20,000 if they are senior citizens, Rs. 15,000 if they are not).

5.Taken an education loan?

Section 80E.
If you have taken an education loan for yourself, your spouse, your kids, or even of a child of whom you are a legal guardian, then every year you can avail a full deduction of the interest you are paying on the loan (capped at 8 years).

6.Living on rent?

Show your rent receipts to claim deduction using your HRA (House Rent Allowance) benefit available to you in your salary structure.

7.Took a holiday anytime in this past year?

Kept your travel expense records? You can claim your Leave Travel Allowance as an exemption as well, for travel within India, for yourself and your dependents who have travelled with you. Speak to your HR department, produce your tickets, and you can claim your LTA.

8.Declare interest paid on home loan to your employer.

You will get a deduction of maximum of Rs. 150,000/- from your salary income in case of self occupied property.

9.Take unlimited deduction for your second home loan interest payment.

10.Declare Capital gain losses in your tax returns to save taxes in future.

Keep in mind the below points, to avoid the hassles of last minute tax planning.
•Give your employer details loans and tax saving investments before hand, to prevent any excess deduction.
•Check the Form 16 received at the end of each year from your employer thoroughly.
•It is important to start your tax planning well before 31st March, and to file your returns before the 31st of July each year.

Rupesh Choudhary
Head – Tax Advisory Services

Why the IMF cut India's economic growth projections

2012-01-25T00:29:00.000-08:00

Even as the Reserve Bank cut banks' cash reserve ratio by half a per cent but kept policy rates unchanged, the International Monetary Fund (IMF) on Tuesday suggested India be cautious on monetary and fiscal easing because of high levels of inflation and public debt.

The IMF also cut its economic growth projection for this country to 7.4 per cent in calendar year 2011 from the earlier 7.8 per cent and by 0.5 per cent to seven per cent for calendar 2012. In its latest World Economic Outlook, it said it expected weaker global economic growth in both calendar 2011 and 2012 due to expectations of the euro area economy going into mild recession this year.

Recession is generally taken as two consecutive quarters of negative GDP growth. The IMF expects euro area GDP to contract 0.5 per cent in 2012. "Those (economies) that suffer from both relatively high inflation and public debt (including India and various economies in the Middle East) may need to take a more cautious stance (than other emerging market economies ) on any policy easing," the IMF said.

On any fiscal easing in India, the IMF said in a separate report that the cyclically adjusted deficit was projected to fall by about 0.5 per cent of GDP this year. "However, the space for loosening fiscal policy in response to a growth slowdown is limited by still high deficits and debt," it warned. It suggested that in case of a substantial fall in output, any prospective expansion should be small and focused on high-multiplier items such as indirect taxes and backlogged capital projects, rather than additional subsidies.

Wholesale price-based inflation in India came below nine per cent for the first time in a year to 7.47 per cent in December, on the back of falling food prices. While food articles saw deflation for three weeks in a row till the first week of January, manufactured inflation was still elevated at 7.41 per cent in December, despite moderation from 7.7 per cent in November.

The latest data shows government liabilities in India, both Centre and states, rose a little over 12 per cent to Rs 56.09 lakh crore in 2010-11 from Rs 50.05 lakh crore a year before. The liabilities, both external and internal, were 71.2 per cent of India's GDP in 2010-11.

IMF's caution on monetary and fiscal easing isn't for all emerging market economies. For China, where inflation is under control and public debt is not high, it suggested additional social spending to support poorer households in the face of weakening external demand.

Economies with diminishing inflation pressure and fiscal fundamentals, including many in Latin America, could afford to stop tightening or to ease monetary policy, IMF suggested. With a rider that these nations ensure that overheating sectors such as real estate are managed through macro prudential measures. Even as RBI expected economic growth to be faster in 2012-13 than in 2011-12, pegged by it at seven per cent, the IMF projected economic growth in India to be lower in the next two calendar years.

While 2012 is projected to witness seven per cent growth, economic expansion is estimated to be 7.3 per cent in 2013. In September, IMF had projected India's economic growth rate to be 7.5 per cent in 2012. It should be noted that IMF estimates economic growth in terms of market prices, which include indirect taxes, and on a purchasing power parity basis, against the official methodology in India of calculating GDP numbers at factor cost, exclusive of indirect taxes.

On the global front, IMF said economic recovery was threatened by intensifying strains in the euro area and fragilities elsewhere. "Financial conditions have deteriorated, growth prospects have dimmed and downside risks have escalated," it said, while scaling down world economic growth by 0.2 percentage points to 3.8 per cent in 2011, from the earlier four per cent projections.

Similarly, global GDP growth was cut by 0.7 percentage points to 3.3 per cent for this calendar year from the four per cent projected earlier. In 2013, world economic growth is projected to rise to 3.9 per cent. The IMF projections came on the heels of the World Bank saying it expected the Indian economy to grow by just 6.8 per cent in 2011-12, significantly lower than the 7.25-7.75 per cent pegged by the finance ministry, as the economy faces high interest rates and there was "heightened uncertainty of policy reforms".

The Bank also cut its forecast for global economic growth rate to 2.5 per cent for calendar year 2012 from its earlier estimates of 3.7 per cent. It also cautioned against the persisting threat of a global financial shock, "similar in magnitude to the Lehman crisis". On the issue of whether a European crisis would spell doom for payment obligations of Indian companies, the IMF in its separate 'Global Financial Stability Report' said euro area banks provide roughly 30 per cent of trade and project finance in the Asian region, though their balance sheets account for only about five per cent of bank assets.

"The impact depends on the extent to which local banks can step in and fill the financing gap. Though some banks may have the balance sheet capacity to do so, there are significant operational challenges in some areas of trade finance," the report said.

Source: http://www.rediff.com/business/slide-show/slide-show-1-why-the-imf-cut-indias-economic-growth-projections/20120125.htm
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RBI Third Quarter Monetary Policy Review January 2012

2012-01-24T02:54:00.000-08:00

Rbi third quarter monetary policy review january 2012

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Uncertain markets: What should investors do?

2012-01-23T23:25:00.000-08:00

The ruling sentiment everywhere right now is that of gloom. The stock markets have been skidding for over a year now (lost 25 per cent) and the negative returns are hurting investors big time.
People are now wondering if the markets are likely to go back to its peak of 21,000 levels any time soon. While some are regretting investing in equities, others are wondering if they should continue with their investments.

Therefore, most investors argue that it makes better sense to invest in simple bank fixed deposits, which guarantees positive returns. However, there are flaws in this argument though.Firstly, volatility does not mean poor returns. As long as the amount stays invested, the profit or loss is only notional. It is only when we cash out of the investment avenue that the profit or loss becomes real.

When the markets are in a tailspin and you have invested in the right stocks, it makes more sense to stay put. There is no point in complaining about the poor returns. As it is a well-known fact that the stock markets go through these volatile phases but do deliver returns, over time. So, the volatility that you are seeing now is not new and not for very long.

Volatility is in the very nature of equity markets. And when an investor invests in the markets, he/she is well aware about it. One thing that should be a source of comfort for investors is the fact that equity markets have given the best returns among any asset classes in the long term.

Since 1980 (Sensex's inception), Sensex has returned about 17 per cent compounded annual growth rate (CAGR). And that is not bad. Hence, investors should understand that equity works in the long term. You do not have to keep tracking stock quotes every day. Sensex has risen from 100, in 1980, to about 16,000 now.

At the same time, equity markets rise and fall rapidly. And that, to come back to the point, unnerves people. But, that does not mean that you move from equity to debt. It would be like shooting yourself in the leg by booking losses in equities, and investing in another instrument which is barely inflation proof.

Unfortunately, most investors do that. If one has the patience, the investment in equities will eventually turn around. But given the current mood in the markets, people are wondering if it will ever reach its highs again.

What one should keep in mind is that equities are business ownership units. Businesses will be there and will make money - their revenues are always inflation adjusted, that is, they can increase prices. It is a pessimist who would say everything will shut down and the markets will not perform.

By that measure, gold and property market can also meet the same fate. Other asset classes also have their cycles. For instance the current favourite gold has given single digit returns in the same period. But, investors seem to be comfortable with that. Gold reached an all-time high of about $850 an ounce in 1980 and had been sliding for most part of the period after that. It reached about $271 in 2001.

After that, it has been on a rise, till a few months back when the growth reversed. There was a fall of over 20 per cent in gold prices (in dollar terms) in the recent months, though the fall in rupee terms has been less drastic, due to domestic issues and a depreciating rupee.

Lots of people are betting on gold just looking at the past 10 years performance alone. Property, too, has its own cycles. The bust which started in 1995 was in place till 2003. After that there had been a meteoric rise. You may ask if the capital markets will go down again this year. But, there is no conclusive answer. It can if the global situation worsens. It can fall by about 20 per cent or even a third, perhaps. That now is in the realm of conjecture.

But in case you ask if the markets will come up and give good returns in the future? The answer is a resounding yes. Hence, it makes sense to just stay put and not jump in and out of equities. If the markets go down more from here on, you will not suffer losses as long as you stay invested. There will be those who will exit at the bottom. Let it not be you. And there will be those who will buy back when a bull rally reaches its peak.

These are the ones that loose out on both sides of the market movement. Still we have a hard time telling investors to just stay put. Some of them want to rejig the portfolios all the time, in the hope that it will miraculously recover. It just worsens the situation. Do not ever touch your portfolio in uncertain environment. Some others think of shedding loss making investments while retaining the better ones. Buy at dips instead of shedding or making any kind of changes to your portfolio. This will be a big favour for your investments and financial planning. You will realise that some years done the line.

Source: http://www.rediff.com/business/slide-show/slide-show-1-perfin-uncertain-markets-best-to-stay-put/20120124.htm
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The world this week 06 Jan - 12 Jan 2012

2012-01-23T22:45:00.000-08:00

The world this_week_-_january_16_-_january_20_2012

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Equities Regain Some Lost Ground On reform Hopes

2012-01-23T04:31:00.000-08:00

Five year plan targets to be bigger than economics

2012-01-23T00:29:00.000-08:00

The XII Five-Year Plan (2012-17) document is likely to also be a vision statement, encompassing broader issues that impact the India [ Images ] growth story and not just economic ones.

The rise of Islam as a reaction to totalitarian regimes, growing aspirations of marginalised communities within India, youth violence and restiveness in society because of economic disparity are among the factors that will find a mention.

The Planning Commission, having a re-look at its approach to the Plan, has also identified increasing violence in society, the rise of regional identities, dishonesty and failure of privately-run and government institutions, inadequate resources of water and energy, and a changing world order as key factors impacting economic growth.

The fresh parameters will be part of the first volume of the final document, which contains strategies and goals. These ideas were discussed at a Commission meeting earlier this month. Fine-tuning was done at a meeting. The parameters, if accepted, will give a new dimension to the Plan process and could be a vision document of the country's economic and non-economic scenarios over 10-15 years.

Narratives on how the demographic dividend that India is set to get over that time and how that will pan out across the country; the economic impact of changing world forces such as growth of China and its ambitions; challenges in democratic politics; ubiquity of information and proliferation of channels of communication could also form part of the document.

"The five narratives are independent of each other and are also linked," a senior Commission official said. It has pegged average annual growth rates at both nine and 9.5 per cent during the Plan period. The panel will not revisit the targets in the approach paper, which was cleared by the National Development Council in October.

The Commission estimated the country achieved average annual growth of 8.2 per cent in the XI Plan that ends this March. On the broader economic front, the document is expected to talk about adopting models of growth that will create more opportunities to earn income and hasten the pace of inclusion. "This approach is ore sustainable that the other approach that is based on handouts," the official said.

The document is also likely to talk about innovations in the democratic process with effective participation of citizens, helping channelise growing restiveness among youth.

Source: http://www.rediff.com/business/report/five-year-plans-sweep-to-be-wider-than-economics/20120123.htm
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Europe: No disasters in-waiting but…

2012-01-21T02:57:00.000-08:00

Clearly, there are two parts to the Europe question.

1. Will the euro survive?
2. If it does, what happens to Europe in the medium term?

The caveat in the second question is because it is difficult to predict what will happen to Europe if the euro does not survive. Predictions range up to as much as 25% loss of output across Europe.

To me, the first question seems moot, especially in light of the rather widely known fallout of euro’s failure and the fact that the near-term survival of the euro is actually pretty much on tap for policymakers in Berlin, Paris and Frankfurt (where ECB is based out of). I believe that contrary to popular belief and most scenarios of doomsday, euro as a currency is far from failure. Sure, it is under threat and is besieged from many sides. However, for the euro to fail, Germany and France will have to lose market access, or the cost of saving the euro in terms of bailouts has to go way beyond their current and future bond market-funded balance sheets. Either of these is a remote scenario.

What is Germany up to really? Angela Merkel has been painted black and grey and white in the last few weeks by analysts around the world. However, what the Germans are really trying to get out of the rest of the Euro-zone is actually a commitment to lead fiscal lives similar to its own. This, in turn, is based on a more productive workforce, longer hours, higher retirement age, less state dole outs, and so on. In the bargain the peripheral countries get to enjoy being part of the Euro-zone –certainly a privilege in times of crisis. Italy would have lost market access long back had it not been for its currency, i.e., the euro. Of course, one can argue that were it not for the euro, the country would not have been lent as much as it had been.

This is precisely the sort of thing the Germans would want to avoid in the future. They appear to have correctly concluded that bond market investors are not as well informed and choosy as they are made out to be. They will lend to seemingly sound but actually bad credit in much the same way that American banks lent to sub-prime individual borrowers. Greece was a major case in point for this. Post-facto, it seems ridiculous that anyone lent to Greece—euro-dominated bonds or otherwise! Presumably, everyone was counting on the rescue or explicit underwriting by Germany and France. However, that was neither really there nor did it occur when the time came.
Having seen the inability of bond investors to rein in fiscally imprudent countries, Germany has correctly understood that the future of the euro depends on a “no-bailout covenant”. Hence, if there is supply of money during lax times (from over-enthusiastic investors), Germany wants the demand curbed at the source through fiscal deficit limits and gross public debt limits. Prudent, if you ask me!

Why do I believe that the euro does not have much of a survival threat? For one, rescue is one round of QE away, much as the Americans have been shouting from the rooftops at the Euro-zone leaders for a while now. Eurobonds have been talked about enough by now for even an implicit acceptance of the same by Germany to send bond market investors into risk-on mode! Lastly, the leaders of the rest of the peripheral countries appear to be complying with the demands of fiscal prudence, which most realize are in their own interest even if the euro does not survive. Germany and Euro-saving are good external factors to blame to overcome any internal resistance in most of these countries. Push is unlikely to come to shove and, even if it does, a combination of ECB, IMF, EFSF and maybe even the Fed will figure out a good way forward.

It is in Germany’s interest to keep things muddling through rather than conclude these quite positively in a sudden stroke of brilliance. The most that sort of heroism will achieve is massive risk-on trades around the world, positive sentiment all around, and in effect loss of another chance for well-managed economies of the Euro-zone to establish some discipline among the rest. Since it appears more or less a case of coordinated brinkmanship, the only danger is that of an unforeseen financial accident. In the absence of that, Euro-zone worries will eventually go but probably drag on for another couple of quarters as the economies sort out the fine print of greater fiscal union and iron out inevitable differences.

Disaster, hence, is unlikely. That does not mean that the proverbial “aaaal” is well though! The Euro-zone crisis can be attributed to fiscal profligacy of the peripheral economies and the loss of confidence among bond investors for the debt issued by these countries. The confidence may gradually return, encouraging investors to take some cautious bets. However, the fundamental productivity challenges of the Euro-area economies will not go away. If anything, battling the crisis has only diverted the attention of policymakers from it.

That said, the unfavorable and worsening-by-the-year demographics of most European nations are not helping to boost productivity at all. The Spanish unemployment may come down and the Irish banking sector may after all be restored to some degree of health and the clouds over most of Europe’s banks may go away. However, the painful process of adjusting to a new economic environment, where money is neither cheap nor abundant, governments are not the welfare states they used to be, and where everyone is required to work longer and more productively will take its toll on growth. Europe may lose its own decade a la Japan. That is a fat bigger disaster—however slowly it bites!

Swapnil Pawar
CIO-Karvy Private Wealth

No CRR cuts likely in RBI policy review: Survey

2012-01-20T23:57:00.000-08:00

The Reserve Bank is unlikely to heed calls for cutting the cash reserve ratio in the forthcoming monetary policy review, says a survey of market participants by HSBC and Royal Bank of Scotland.

"We do not expect a cut in CRR this time to ease liquidity constraints, which would be addressed through open market operations," HSBC Global Research said in a note on Tuesday.Similarly, 51 per cent of 105 market participants polled by RBS said they do not expect a CRR cut in the quarterly policy announcement next Tuesday.

Banks have been borrowing over Rs 1.50 lakh crore (Rs 1.5 trillion) daily from the overnight window for the past few days, which shows strain on liquidity. At the customary pre-policy meeting with RBI officials, banks had asked for a cut in CRR -- the amount of deposits they have to keep with the Reserve Bank of India.

The Reserve Bank has been repurchasing the government securities from the market, in what it calls OMOs, to ease the liquidity situation. It has bought securities worth over Rs 40,000 crore (Rs 400 billion) in tranches over the past few weeks.

The CRR rate is at 6 per cent and has been unchanged for over a year, with RBI focussed on taming inflation, increasing the repo or its lending rate. Although inflation has moderated, it continues to be at the elevated levels. There is no 'compelling reason' for RBI to ease the policy rate or repo rate, the HSBC statement said.

Similarly, about 90 per cent of corporates and financial institutions polled by RBS also said they do not expect a repo rate cut. The headline inflation number for December declined to 7.5 per cent, but is still higher than Reserve Bank's comfort zone of around 5 per cent, and March-end expectation of 7 per cent.

In the RBS survey, 31.4 per cent of respondents said they expect a 0.25 per cent cut in CRR while 17.5 per cent expected a 0.50 per cent reduction. A half of those polled said the rate tightening cycle has ended and said they expect a 0.50 per cent cut across rates during the year. On the currency front, RBS said the median response stands at the rupee trading at 50 against the dollar by March and gaining further to Rs 49 by end of the year.

Source: http://www.rediff.com/business/report/no-crr-cuts-likely-in-rbi-policy-review-survey/20120120.htm
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Gold : Onward march to continue

2012-01-20T04:56:00.000-08:00

The yellow metal is a symbol of wealth and good fortune in India, and the country has a long history of gold buying. To understand India’s affinity towards gold, one must understand the nation itself, where the purchase of gold has been entwined with India’s religious and cultural beliefs. Unlike other nations, the love of gold has transcended generations of Indians across the social strata. For instance, gold jewellery is not only considered an ornament but also an inevstment and store of value. In fact, Indians have always identified the yellow metal as a form of “money” and a means for wealth accumulation.

India holds more than 18,000 tonnes of gold. At today’s price level, that is nearly worth Rs. 50 lakh crore. The nation continues to be the world’s largest gold market, and has expanded significantly since liberalisation. It constituted 32% of global godl jewellery and bar and coin demand in 2010. Of this, godl jewellery contributes around 75% of India’s total gold demand, and the rest is accounted for by investment (~23%) and decorative, technology and industrial (~2%).

Gold demand is well distributed across India, with the four southern states (Tamil Nadu, Kerala, Andhra Pradesh and Karnataka) accounting for more than 40% of the nation’s overall demand. The remaining is divided among the western (25-30%), northern (20-25%) and eastern (10-15%) regions of the country. Despite being the largest sourceof gold demand, India’s jewellery consumption intensity is still relatively low, at 0.40 gram (as on 2009). We foresee larger per-capita gold consumption over the next decade as the nation’s favourable demographics and age profile are likely to ensure buoyant consumption growth.

Gold plays a fudnamental role in India for marriage ceremonies, and is considered a necessity rather than a luxury. The gold (along with other gifts) that a bride receives is called “streedhan” (stree is woman and dhan is wealth), and is a means of passing some of the family inheritance to daughters, as Hindu tradition dictates that family assets can only be passed down to sons. Thus, wedding-related demand makes up a substantial proportion of overall jewellery demand, particularly in south India. Given the nation’s young population, approximately 15 million weddings are expected every year over the next decade. And, with gold being an integral part of these weddings, we are looking at incremental demand of about 500 tonnes every year, alogn with another 500 tonnes of existing gold being gifted by oen family to another.

India’s gold investment revolution is gathering pace given its strong affinity towards this tangible source of wealth. Given the yellow metal’s importance as a safe haven in troubled times, characterstics of diversification and hedge against inflation, it is inreasingly making its way into investment portfolios today. In recent years, many gold-based financial instruments have been launched, including GETFs, gold-linked structured products, and bullion PMS schemes, apart from schemes like the India Post gold retail programme and gold-linked microfinance schemes.

Over the last ten years, India’s gold demand has risen at an average rate of 13% every year, outpacing the country’s real GDP growth by almost 6 percentage points. While estimates may vary, the broad consensus is that godl demand in India is likely to increase nearly 30% to touch 1,200 tonnes by FY21. And India will continue to be the largest buyer and holder of gold in the world.

Kanna SI
Head- Structured Products
Karvy Capital

About a serial entrepreneur

2012-01-20T00:28:00.000-08:00

Swaminathan K, an alumnus of IIM-B, can be described as a serial entrepreneur who started young; in fact, from his school days.

Identifying problems and solving them through his innovative ideas has been his strength from the beginning. His latest venture is myBskool.com, which he has co-founded with KB Chandrasekhar, another "serial entrepreneur and risk-taker who empowers others to accomplish their dreams". He says myBskool.com can fill in the gap in the supply and demand of quality managers in India.

In this interview, Swaminathan goes through his entrepreneurial journey from his school days onwards.

I didn't know I was being an entrepreneur but I and my sister had to start working by taking tuitions to earn that extra money to pay school fees, and buy books and uniform. My father worked as a salesperson for MNCs but was too straightforward. So, he used to work for nine months, resign and be without work for another nine months.

So, there was a need for myself and my sister to earn. From our father, we also learnt to be straightforward in whatever we did. We were not born with silver spoons in our mouth but were brought up with strong values.

My first venture was a lending library which I started when I was in the seventh standard. Some of my friends used to buy comics like Amar Chitra Katha, Tinkle, etc, while there were others who could not afford them. So I decided to bridge the gap by starting a library.

When I was in the ninth standard, I started the sale of fireworks. Some of my seniors were studying at IIT Madras and they had difficulty in going out and buying crackers during Diwali. One of them asked whether I could help them buy crackers. I found out that at the Parry's Corner wholesale market, you could buy crackers at a cheaper rate. I told them I would buy for them at 10 per cent commission. They agreed. When I found that there was a huge difference between the price of the crackers bought from the wholesale market at Parry's Corner and other residential areas, I included that also as my market.

The business mantra I used as a student and later on as a businessman was, look out for demand and then fill it! I followed the demand and supply norm when I was in college too. It was the 90s and there was Hyundai, Ford and many such MNCs setting base here. It was followed by an influx of expatriates and they were badly in need of good houses.

They had no time to go and look at all the houses, and they were not comfortable with the typical broker who was not fluent in English.

What I had was a cycle, a phone connection at home and a camera. I went around looking for houses for MNCs and told the owners that I would not take any commission from them if they gave me three weeks' time.

That was because I could work only in the weekends. I also wanted to take photos of the interiors of the houses to show them to the clients.

With the photos of the exterior and interior of at least five houses in a folder, I met the clients. They would choose to visit 1 or 2 from the list. Because I was a neatly dressed young collegian, they were comfortable sending their family with me to see the houses, as the final decision was always taken by the ladies of the house.

After the deal was struck, I charged one and a half months' rent as brokerage while others charged only one month. But they were always willing to give me that extra money. My entry into the field of education started after I joined NIS-Sparta to teach sales and marketing strategy. Having been a successful sales person from my school days, in no time, I was heading the southern division.

I am one person who needs to be challenged all the time. So, when I found that the job was no more challenging, I started looking elsewhere.

In 1999-2000, some of my friends had started egurukool.com and they wanted me to be the Business Head. Till I joined the egurukool core team, I had no desire to be an entrepreneur.

I treated it like my own and worked like mad to build it. Every day was uncertain and every day started with dozens of problems. And I enjoyed solving them. That is when I understood my strength was in criss management, trouble shooting and problem solving. Problems never rattled me. Later it was acquired by NIIT.

Those were the dot com days and I founded pookaikani.com to sell fruits and vegetables online with a capital of a lack and a half.

We had 3,000 paying customers in Chennai but every day was filled with some crisis or the other. I had to even do the job of the driver when he took leave without telling us and literally tomatoes were thrown on my face. I was the Founder, remember! In nine months, we lost Rs 12 lakhs. Then I realised the vegetable business was not for me, and I would be better off in education.

Prof Abdul Kalam had come to Chennai after a stint as the scientific advisor to the Prime Minister and was talking about India 2020. He said Indians should aspire to build the country to the next level. I caught the word aspire and started Aspire Learning with two other friends (Madhumati and John) with a capital of Rs 25-30 lakhs with five people.

In the first Tamil Nadu entrance examination, in the top 10, three students were from Aspire. In 2004, out of the top 100, 93 were from our institute. We had similar success stories in AIEEE and IIT-JEE also. If we made an operating margin of eight per cent in the first year, we grew almost 300 per cent the second year. After that, our growth was exponential; about 16 times.

As everybody was in the BPO business, we also started one BPO and lost Rs 6 crores (Rs 60 million). I realised then that one should not do business that one doesn't know. Education was what I knew.

From 2001 to 2009, there was no looking back for us. When I came out in 2009, it was a Rs 40 crore (Rs 400 million) company. We had 62 centres with 30,000 students.
I knew that a management qualification from a premium B-School would be an added advantage. With a view to take Aspire to the next level, I decided to join the first batch of Executive MBA at IIM Bangalore in 2004.

With another 100 or more students from diverse backgrounds, with equal or more experience than me, every session witnessed mind boggling discussions and analysis of various contemporary models and case studies.

All these helped me in structuring business models and fine tuning the strategy for my organization. In 2008, I had another idea. That is to get the country's top professors on a single platform and video capture their lessons on each topic for the IIT-JEE entrance examination and put them online. So, our student sitting at Kumbakonam could listen to the professor from Kota which otherwise he would not have had the opportunity.

2008 was the year the crash took place. So, the Aspire Board did not agree with my plan. But I decided to move out of Aspire. Having sold my shares, I got some money. I started Smart learn Web TV with Rs 1 crore (Rs 10 million) from my side and got the first round of investment from Kalpathi Suresh, Kumar of the Sanmar group and KB Chandrasekhar. We pumped in around half a million dollars and built the company.

Within nine months, we had 10,000 paid customer base, and that year, out of the top 100 IIT JEE students, 23 were from us. In March 2010, EdServ acquired us and I made some good money. Now, they are all over the country with 100,000 students using the material. I happen to see a report that India needs 20 million managers at the entry and middle level in the next 10 years. The demand for an MBA is going up year after year not only in the classroom space but in the distance learning space too.

I found that in the distance learning market, half a million students register every year for Management Studies and it is growing at 8-10 per cent compounded annually. Entrepreneurship is all about finding a problem, solving it and getting people to pay for it. I thought like we did for IIT JEE coaching, I could bring the best professors in India to deliver lectures on every chapter and put them on a platform.

I discussed the idea with KB Chandrasekhar and he was game for it. We co-founded myBskool.com and he invested $1.5 million. I went all around India and got the best professors deliver lectures on each subject with many case studies as examples. After that, I signed a pact with IMT, Ghaziabad, which has been rated in the top 10 Biz Schools in India for the last 20 years, for a one-year Executive MBA.

It is approved by AICTE, UGC and IGNOU. When the average Biz School charges anywhere between Rs 7-10 lakhs, our fee is Rs 50,000 for an Executive MBA from IMT. On the seventh of December, 2011, we announced and we already have 800 registrations. Our streaming classroom lectures that include 6,000 plus podcasts, 3,000 plus video lectures, can be viewed on PC, smart phones, tablets and mobiles.

The second plan that we have is, give our online content to other institutes and IIM Ranchi is the first institute to use our platform for their students. We are also reaching out to 3,000 corporates so that their employees can register themselves for an MBA. This industry is estimated to be about Rs 5,000 crores (Rs 50 billion) and we are looking at 25,000 students in the next three years and a revenue of Rs 100 crore (Rs 1 billion) in four years.

We will soon be raising the next round of funding of Rs 2.5 million. Be focused. Don't be emotional about your ventures. Don't be too attached to your idea. Take one idea at a time. Have a proper mentor to guide you.

Source: http://www.rediff.com/business/slide-show/slide-show-1-the-success-story-of-a-serial-entrepreneur/20120120.htm
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What HNIs Look For In A Financial Advisor

2012-01-19T03:23:00.000-08:00

2012: The year of new normals

2012-01-18T23:44:00.000-08:00

The year 2011 was the second-worst for the BSE Sensex since 1980. India also turned out to be the second-worst performing market among the Asia pacific emerging markets in 2011. This was a year when the resilience of the Indian economy got challenged by both internal and external factors.

That said, the bulk of the pain was self-inflicted. The correction in the markets in the last quarter was more due to India-specific issues, such as lack of policy measures, corruption, and monetary tightening. Moreover, GDP growth continues to slow down. Meanwhile, foreign investors are increasingly concerned about the mid-term direction this country is taking with increasing susbidies and populist measures.

We believe that going forward, markets will reconcile to a lower trend growth rate- and settle at 6.5-7%. This could be the new nromal for growth and, by global standards, is not a bad number at all. We expect inflation to come down this year- it could average around 7%, leading to a nominal growth of 13-14%. That would lead to corporate earnings growth of 15%. Meanwhile, the rupee has weakened significantly this year, and we expect 50 levels to be the new normal. Exporters will benefit big time from this rupee weakness.

We expect growth to bottom out in Q1CY12, at 6%. Corporate earnings should also bottom out around this time. We expect the RBI to start easing the monetary policy, with a potential repo rate action on January 24 itself. Going by history, equity markets typically bottom out around the time when interest rates peak out. We expect markets to bottom out in Q1CY12 itself.

Globally, things are not as bad as perceived in August. In the US, there is no double-dip. In Europe, the endgame will require the European Central Bank (ECB) coming into play, which, we believe, will happen sooner than later. We expect equity market returns of 20-25% , backed by 10-15% earnigs growth and a P/E re-rating from 12x to 14-15x once growth bounces back to 7%.

Varun Goel
Head-PMS
Karvy Private Wealth

The car to look out for : Ferrari Daytona

2012-01-18T02:31:00.000-08:00

The Ferrari 365 GTB/4 Daytona is frequently considered one of the last truly great front-engined GT cars made by the legendary Italian company. Let's take a look at this beautiful car, courtesy Business Insider.

From the front, the Daytona is low and wide. Though they were heavy, the pop-up headlamps give it a sleek, aerodynamic look.This side view shows the classic profile. A long hood and short rear overhang has been imitated in GT cars ever since.This side view shows the classic profile. A long hood and short rear overhang has been imitated in GT cars ever since.

But with the top up, it is apparent that the Daytona was not originally designed with a convertible in mind. It's missing the classic fastback body style that made the coupe famous. This is one convertible that definitely looks better with the top down.

The 365 gets its name from the displacement of the cylinders in the engi#8800 each displaces 365 cubic centimetres. The 365 was fast for its time as well. These cars had around 350 horsepower and could scoot to 60 mph in under six seconds. The interior looks inviting, but there are a few issues. The seats were affixed to the floor and the backs couldn't be adjusted.

The wheel didn't tilt and the steering and gear shift required could replace going to the gym; they were heavy and a workout.

On the plus side, it did have air conditioning and power windows. The classic gated shift was in a reverse pattern. This made second gear and third, as well as fourth and fifth, line-up easily to facilitate quicker shifts on the race track or around town.

Source:http://www.rediff.com/business/slide-show/slide-show-1-auto-ferrari-daytona-a-truly-great-car/20120118.htm
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The world this week 06 Jan - 13 Jan 2012

2012-01-17T22:15:00.000-08:00

The world this_week_-_january_02_-_january_06_2012_(2)

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Tax-free bonds are bonds of power

2012-01-16T06:06:00.001-08:00

Make your money stay

2012-01-16T00:13:00.000-08:00

There are two friends X and Y. X has a monthly income of Rs 60,000, while Y has a salary of Rs 40,000 per month. However, X's job is more stressful and demanding; while Y has a comfortable job with low stress levels and better work life balance.

X lives a lavish life. He spends most of his salary saves inconsistently. On the other hand, Y saves and invests quite regularly. From his monthly income, he saves Rs 15,000 a month in the following instruments:

-l Pension -- Rs 3,000

-l Child plans -- Rs 2,000

-l Mutual Funds -- Rs 4,000

-l Emergency fund -- Rs 1,000

-l Vacation fund -- Rs 1,000

-l PPF -- Rs 2,000

-l Medi claim -- Rs 2,000

Y would have sufficient funds to pay off his medical emergency.

One can never predict life. Hence it is a must to save for a rainy day. One should make a habit to save, be it a small amount. Here are some steps that you can follow to inculcate financial discipline:

Check on expenses. This is the foremost step. You should keep a check on monthly expenses. Unnecessary expenses should be avoided. One way to know how much one spends in a month is by making a monthly budget. This exercise will help you identify areas where money is being spent and also regulate the cash flows. You will also be able to see if there is any room to cut expenditure and save. The will free up cash that can be used to pay debt, if any, or help save for a rainy day. Cutting expenditure as opposed to earning more money, is the real key to gaining control of finances. Also you must ensure that some money is set aside to cover monthly expenses for at least three months. These funds should be set aside in such a way that they can readily used in case of any emergencies or contingencies.

Pay-off credit card or other debt. Paying off your debt early is one of the best investments you can make, specially by paying off debts that incur high rate of interest. This includes credit card payments that usually charge more than 32 per cent per annum.

Be financially disciplined. Financial discipline is extremely important. You have to maintain some discipline in the way you spend and controlling expenditure. This is the key to reduce liabilities and debt and save more. According to a famous trading and investing legend -- one must not spend time looking for the Holy Grail of investments or trading systems. It doesn't exist. The Holy Grail is within you. It's not the investment that's going to determine success or failure. It's the discipline of an investor.

A steady plan of saving and investing helps attain one's goal. With discipline and time one can achieve all financial goals.

Importance of saving: Here is a simple example. There are two friends, A and B. B saves Rs 500 per month. A saves nothing. Over the years, here's what happens.

The discipline of saving regularly has helped B be richer by Rs 19, 931. Also what you earn is not as important as what you save. If you spend everything you earn in futile pursuits and wasteful expenditure, then there is no point to the amount earned.

Invest: Start the wealth-building exercise by investing in low risk investments. Once the base is strong, then increase the risk exposure by investing in higher return investments. Also do not put all the eggs in one basket. Your risk tolerance level goes a long way in defining your investment approach. But do remember your investment objectives before you subscribe to an investment plan.

Follow systematic investment plan. Invest regularly. By doing an SIP, you can SIP (sleep in peace). This will help you reduce the cost and earn higher returns in the long term. As seen in the case of Y, by saving regularly he was able to meet medical emergency with ease. By following these simples steps, one can make your money last longer.

Source:http://news.in.msn.com/moneyspecial/personalfinancefeatures/article.aspx?cp-documentid=4034377
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The 11th Auto Expo witnessed some amazing car launches

2012-01-13T05:51:00.000-08:00

The 11th Auto expo held earlier this year was the reason of excitement and anticipation for all auto enthusiasts. Not only did they get to see the new 50 launches of the year, but they also witnessed a flurry of other excitement that set the heart racing.

The auto exhibition was open to the public from January 7 to 11 and was spread across 1.15 lakh square metres of space, compared to the 1.25 lakh square metres in 2010.

With a mind blowing response, the auto expo claimed to be the world’s second largest show after the Shanghai Auto expo.

So, some of the amazing cars that were showcased at the 11th Auto Expo that are worth waiting for are Volkswagen, Tata Pixel, Nissan Leaf EV, BMW, Fiat Linea, Fiat Punto, Maruti SUV, Premier Rio, Mitsubishi, Audi, Chevrolet, Hyundai Sonata Fluidic, Skoda, Renault, Tata Manza Hybrid and Peugeot.

Source: http://www.rediff.com/business/slide-show/slide-show-1-auto-special-cars-that-you-will-make-you-drool/20120105.htm
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Hotel suite in India makes it to world's most expensive list of hotels

2012-01-12T23:24:00.000-08:00

There are hotel suites in the world that offer all sorts of facilities, but are also extremely expensive.

Here we take a look at 10 most expensive hotel suites, including one from India, in the world, according to the International Business Times.

1. The Presidential Suite

Hotel: Raj Palace

Room Tariff: $45,000 (one night)

City: Jaipur

Country: India

2. Royal Penthouse Suite

Hotel: President Wilson

Room Tariff: $65,000 (one night)

City: Geneva

Country: Switzerland

3. Ty Warner Penthouse Suite

Hotel: Four Seasons Hotel

Room Tariff: $41,836 (one night)

City: New York City

Country: The United States

4. Penthouse Suite

Hotel: Hotel Martinez

Room Tariff: $37,500 (one night)

City: Cannes

Country: France

5. Hugh Hefner Sky Villa

Hotel: The Palms

Room Tariff: $35,487 (one night)

City: Las Vegas

Country: The United States

6. The Royal Villa

Hotel: Grand Resort Lagonissi

Room Tariff: $35,487 (one night)

City: Athens

Country: Greece

7.Presidential Suite

Hotel: Hotel Cala di Volpe

Room Tariff: $32,736 (one night)

City: Sardinia

Country: Italy

8. Villa La Cupola Suite

Hotel: Westin Excelsior

Room Tariff: $30,000 (one night)

City: Rome

Country: Italy

9. Ritz-Carlton Suite

Hotel: Ritz-Carlton

Room Tariff: $25,050 (one night)

City: Tokyo

Country: Japan

10. Royal Towers Bridge Suite

Hotel: Atlantis

Room Tariff: $25,000 (one night)

Island: Paradise Island

Country: Bahamas

Source: http://www.rediff.com/business/slide-show/slide-show-1-worlds-most-expensive-hotel-suites/20120113.htm
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Look out for Lifetime Renewal Policy

2012-01-12T06:33:00.000-08:00

‘Age free’ policy is what the insurance industry is aiming at in the present scenario. IRDA or The Insurance Regulatory and Development Authority is aiming at removing the age barrier for getting insurance policies. This will imply that once a policy is bought, it can be renewed throughout the lifetime of the policy holder. The present entry age limit is 65 years.

Many insurance companies have started applying for this life long renewal clause and are waiting for approval. Many others are expected to start applying soon. Removing the entry age gap is under serious consideration but the plan is not concrete yet. Health insurance constitutes more than one-fourth of the overall insurance industry. The application of Lifetime renewal policy will help in making health insurance a more significant part of this industry.

Source: http://www.business-standard.com/india/news/age-barrier-for-health-policies-may-go/461515/
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An interview with Mr. Hrishikesh Parandekar

2012-01-10T03:15:00.000-08:00

An interview with Mr. Hrishikesh Parandekar

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The World This Week - Jan 02 - Jan 06 2012

2012-01-09T23:36:00.000-08:00

The world this week january 02 - january 06 2012

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5 photos that will lighten your mood!

2012-01-07T06:26:00.000-08:00

A surfer sails his board off a wave as large swells hit the California coastline at dusk in Cardiff, California.

Giant panda Qingfeng reacts as a photographer takes a photograph through a window at a zoo in Yantai, Shandong province, China.

A couple embrace as high winds wip up waves on Brighton beach in southern England.

A general view of the Baluarte Bridge, the highest suspension bridge in the world, that connects the north-western state of Sinaloa with Durango and Mazatlan, January 5, 2012. At 1,124 metres long (3,687 feet) and hanging at over 400 metres high (1312 feet), the Baluarte Bridge is part of the country's elaborate bicentennial celebrations to mark its independence from Spain in 1810

A couple stands on a sand bank as the sun sets in Venice, Los Angeles, California.

Source:www.rediff.com
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New normal for Rupee will be between 53-54 vs USD

2012-01-06T03:26:00.000-08:00

India's 16th Watch and Clock Fair

2012-01-05T05:04:00.000-08:00

The sixteenth India International Watch and Clock Fair “Samaya Bharati 2012” will be held in Mumbai between February 2 and 5. The expo will exhibit latest watches, clocks, components, watch movements, watch straps /bracelets, packaging, accessories and lifestyle products, according to the Watch Trade Federation, one of the main sponsors of the event.

Twenty new international brands that plan to tap the Indian markets will display their offerings for the first time at the expo. It will also showcase latest products and innovations of about 150 leading brands from India, Switzerland, France, Belgium, the US, Japan, Korea, Middle East, Denmark, China, Hong Kong, Italy and Spain. Entry to the fair will be restricted to business visitors from 10 am to 3 pm and for others it will be open till 7 pm, free-of-cost.

Source: www.thehindubusinessline.com
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Hallmarking of Gold made compulsory

2012-01-04T06:46:00.000-08:00

To protect consumers from unscrupulous jewellers, the government on Wednesday approved a proposal making hallmarking of gold mandatory.The hallmarking of gold, which is voluntary in nature at present, is a purity certification of the precious metal.

The Bureau of Indian Standards, under the Consumer Affairs Ministry, is the administrative authority of hallmarking.

The Cabinet, headed by Prime Minister Manmohan Singh, cleared the proposal by approving amendments to the Bureau of Indian Standards Act, 1986, that aims to expand the ambit of mandatory hallmarking to include more products, including gold, sources said.

Source: www.rediff.com
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ADVICE for the WISE

2012-01-04T02:42:00.000-08:00

Advice for the wise january 2012 (2)

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World This Week 26th Dec - 30th Dec, 2011

2012-01-02T21:43:00.000-08:00

The world this week December 26 - December 30 2011

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Cafe Mutual

2012-01-02T02:23:00.000-08:00

Cafe mutual

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High net Indians invest in alternate assets

2012-01-01T21:54:00.000-08:00

High net indians invest inalternate assets the sunday guardian, delhli, december 2011 -

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7 simple ways to avoid credit card money theft

2011-12-29T07:23:00.000-08:00

1. Keep your credit cards safe.
Keep your credit cards in a purse or wallet close to your body where it can't easily be snatched away. Carry only the one or two credit and debit cards you'll be using that day. Leave all your other credit cards at home. Thieves can take pictures of your credit card with a camera or cell phone, so don't leave your credit card exposed any longer than necessary.

2. Shred anything with your credit card number on it.
Rather than toss your credit card billing statements directly into the trash, shred them to keep dumpster divers from getting their hands on your credit card number. The same thing applies to old credit cards that have expired or been cancelled. You might even put the shredded pieces in different trash bags to thwart clever thieves who can put shredded pages back together.

3. Don't sign blank credit card receipts.
To avoid credit card fraud, always verify the amount on your credit card receipt before signing it. If you get a credit card receipt that has blank spaces in it, write $0 in those spaces or draw through them before putting your signature on the card.

4. Avoid giving out your credit card information.
Only give out your credit card number or other sensitive information on calls you initiate to customer service using the number on the back of your credit card. Credit card thieves have been known to pose as credit card issuers and other businesses to trick you into giving out your credit card number.

5. Be safe with your credit card online.
Don't click on email links from anyone pretending to be your bank, credit card company, or other business who uses your personal information, even if the email looks legitimate. To be sure a website is secure, look for a lock in the lower right corner of your internet browser.

6. Report lost or stolen credit cards immediately.
The sooner you report a missing credit card the less likely it is that you'll have to pay for any fraudulent charges made on your credit card. Write down your credit card companies' customer service number now so you'll have it if your credit card is ever missing.

7. Review your billing statements each month.
Unauthorized charges on your credit card are the first indicator of credit card fraud. If you notice a charge you didn't make, no matter how small, report the charge to your credit card issuer immediately.

Source: www.credit.about.com
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Gold and silver touched all-time highs in 2011

2011-12-28T06:29:00.000-08:00

Continuing their record-breaking spree, gold and silver galloped to all-time highs in 2011 on strong demand for precious metals considered as a 'safe-haven investment' in times of economic turmoil and rising inflation.

Gold (99.5 per cent purity) crossed the Rs 29,000 per 10 grams-level to a historic high of Rs 29,155 per 10 grams on December 8, 2011, on good local demand in view of the marriage season coupled with investment buying due to weak equity markets. Pure gold (99.9 per cent purity) also logged a fresh peak of Rs 29,280 per 10 grams during the year.

Silver (.999 fineness) prices hit an all-time high of Rs 75,020 per kilogram on April 25, 2011, on heavy speculative and investment-driven buying in line with global markets, where the metal rose to a fresh 31-year high. The metal witnessed a global rally amid speculation of a supply shortage. Furthermore, successful launching of E-silver by the National Spot Exchange Ltd sharply boosted the speculative nature of the metal.

The domestic market witnessed relentless buying in precious metals due to global volatility in view of escalating geo-political tensions across West Asia, the subsequent impact on crude prices, sustained weakness in world equities, higher inflation and concerns over global economic growth. In May, global markets witnessed a free-fall in prices of the precious metals as speculators dumped their long positions after metal exchanges hiked the margin requirement several times.

Silver ready (.999 fineness) was trading at Rs 52,285 per kg on December 27, nearly 11 per cent higher vis-a-vis last year's close of Rs 47,030.00 per kg. Standard gold (99.5 per cent purity) also flared up by about 34 per cent to Rs 27,500 per 10 grams on December 27, 2011, from Rs 20,585 per 10 grams on December 31, 2010. Pure gold (99.9 fineness) was quoted at Rs 27,630 per 10 grams on December 27, 2011, as against Rs 20,680.00 per 10 grams at the end of last year.

Source: www.rediff.com
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World This Week 19th Dec- 23rd Dec, 2011

2011-12-27T12:52:00.000-08:00

The World This Week December 19 - December 23 2011

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Curtain raiser: 3 stunning cars at the 11th Auto Expo

2011-12-26T20:07:00.000-08:00

Not even a month is left for the Indian Auto Expo -- one of the most awaited car events. In 2012, the Auto Expo will witness more than 55 new cars that would take your breath away.

About 42 automobile manufacturers took part in the auto expo last year, but this year around, about 50 car makers will participate. Sparkling cars will come from manufacturers like Maruti, Hyundai, Ford, Renault and Tata Motors. While some of these cars will be actually launched in India, some more will just be showcased, and others will be concepts.

Renault Pulse

Renault India has been quite active lately in the Indian car market. Earlier it launched its premium sedan, Renault Fluence in the country, which was pretty successful in wooing consumers. Now Renault is ready to tap the most thriving car segment, i.e. the hatchback segment with its new car, Renault Pulse.
Renault Pulse will be officially launched at the 2012 Auto Expo, New Delhi. This hatchback car has a striking resemblance to Nissan Micra in terms of its space and appearance. It is expected that the company will launch Renault Pulse in both diesel and petrol variants and keep the price between Rs 600,000 to 800,000. As soon as it is launched in the Indian car market, it will certainly be facing a cut throat competition from hatchbacks like Maruti Swift, Hyundai i10 and i20, Volkswagen Polo, Ford Figo and Toyota Etios Liva.

Audi A4

2012 Auto Expo will not only witness car launches from Indian car makers, but also from German luxury car maker, Audi. Audi India is all set to launch the Audi A4 facelift sedan in the country next year. Once launched, Audi A4 facelift will face aggressive competition from BMW 3 Series and Mercedes-Benz C Class.
This new sedan by Audi will come powered with 2.0 litre of petrol engine which will churn out 333 BHP of power and is likely to be more fuel efficient as compared to its previous version. Also the interiors are improved considerably in terms of steering wheel, superior MMI (multi media interface) and high quality upholstery. The exact price of Audi A4 facelift is still unknown, but it could be expected between Rs 34 to 40 lakh (Rs 3.4 - 4 million).

BMW Mini Cooper

Another German car maker that will launch its new car at the Auto Expo 2012 is BMW. BMW India is all set to bring its cute hatchback BMW Mini Cooper. Mini brand basically specialises in manufacturing small cars owned by BMW. BMW Mini Cooper was first introduced at the Frankfurt Motor Show 2011. There, the president of the firm, Andreas Schaaf mentioned that it might bring BMW Mini Cooper to India by 2012. Reports suggest that this car will be available for Rs 23 lakh (Rs 2.3 million).

Source: www.rediff.com
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INDIA’S HNW WEALTH GROWS FASTER THAN GLOBAL WEALTH

2011-12-24T18:32:00.000-08:00

The amount of wealth held by high net worth individuals in India has increased faster than that held by rich people globally.

That is according to the India Wealth Report, released by Indian wealth management firm Karvy Private Wealth. It found that while the fortunes of HNW individuals internationally grew by around 9% during the year, money held by Indian rich increased by more than 11%.

This made India one of the fastest-growing HNW populations in the world, accounting for 1.2% of global wealth, said the report.

It is also likely to increase further, with the research suggesting that collective wealth held by Indian HNW individuals will triple to Rs 249 lakh crore (€3.51 trillion) by 2016, up from the current Rs 86.5 lakh crore.

Much of the wealth was thanks to the increase in investment in fixed deposits and bonds, said the report. Fixed deposits, held in banks that offer high interest rates, accounted for more than 30% of individual wealth.

Second in demand was investing in high-risk, high-return assets, including direct equity. Around 29% of money, or €422 billion, was held by the rich in direct equity, said the report.

Karvy Private Wealth also touched upon the rising demand for gold, estimating that Indians hold more than 18,000 tonnes of the metal, which at today’s price levels, is worth nearly €710 billion.

While demand for gold has risen by 13% on average over the past 10 years, said the research, it will likely increase by 30% next year.

Source: http://www.campdenfo.com (RASHMI KUMAR)
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10 competitive cities in India

2011-12-20T04:26:00.000-08:00

Which are India's most competitive cities? The City Competitiveness Report 2011 -- unveiled by an international think tank, Institute For Competitiveness (IFC) -- aims to answer this question.

The latest report is an indicative of how the corporate world selects the cities for investing and also how governance is important in assessing the level of competitiveness diversity spread across these cities. These variations will indicate to the governing bodies the issues that need to be addressed to improve the competitiveness of Indian cities.

The India City Competitiveness Report 2011 is based on the 'Microeconomic Diamond Model' laid down by management guru Michael E Porter and focusses on 'Strategy and Competitiveness'.

The model is widely accepted across the world and assesses the competitiveness of a region or domain based on specific benchmarks.

The core of the model -- competitiveness -- is founded across the four pillars: Factor conditions, demand conditions, context for strategy and rivalry, and supporting and related industries. These four pillars are interlinked and instrumental in determining overall competitiveness.

To gauge the productivity and thus the prosperity of a city or a region it is essential to identify and measure dimensions on and around these four pillars, which are further categorised into sub-indices that assess the various details of a city through a set of well-defined indicators.

A city would need to improve along all these factors to increase its competitiveness. Each of these factors is further divided into sub-indices, which in turn are measured through indicators.

1. New Delhi

Overall competitive score: 78.02

New Delhi, the capital of India, has once again emerged as the top metropolis in the country and retained the title of the most competitive city in India.

2. Mumbai

Overall competitive score: 72.93

Mumbai is the second most competitive city in India, according to the report by Institute for Competitiveness. It is the second most populous city in India, and the fifth most populous in the world. The financial hub of India, Mumbai attracts people from all over India.

3. Bengaluru

Overall competitive score: 65.28

If the trend is analysed in the Competitiveness Index 2011 then it is exhibited that Bengaluru has jumped one spot up to the 3rd rank. Bengaluru is well known as a hub for India's information technology sector.

4. Pune

Overall competitive score: 64.27

Last year, Pune was the 8th most competitive Indian city, but has leapt to the 4th spot this year. The eighth largest metropolis in India, Pune is also the second largest city in Maharashtra.

5. Chennai

Overall competitive score: 62.75

Chennai saw a drop of three positions in competitiveness this year and is ranked at the fifth place.
Chennai is the sixth most populous city in India.

6. Gurgaon

Overall competitive score: 62.30

The report said it was surprising to note that Gurgaon figured in the list of the top 10 competitive Indian cities, at the sixth position, despite holding low scores in the administrative and human capacity.

7. Kolkata

Overall competitive score: 61.99

Kolkata is India's 7th most competitive city. Capital of West Bengal, it has a population of over 15 million. Like its many other metropolitan cousins, Kolkata suffered from economic stagnation in post-independence India.

8. Hyderabad

Overall competitive score: 61.76

Hyderabad, one of the largest metropolitan cities in the country, is the 8th most competitive Indian city.

9. Ahmedabad

Overall competitive score: 60.86

Ahmedabad, the financial capital of Gujarat, is India's 9th most competitive city. It is the seventh largest metropolitan area in India. In 2010, Forbes magazine rated Ahmedabad as the fastest-growing city in India.

10. Jaipur

Overall competitive score: 59.72

Jaipur maintains its position by stabilising its overall growth and is placed at the 10th spot. The capital of Rajasthan, Jaipur is one of the finest planned cities of India.

Source: Rediff.com

The World this Week December 12' - December 16' 2011

2011-12-20T00:52:00.001-08:00

The World this Week December 12' - December 16' 2011

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The World This Week - December 05 - December 09' 2011

2011-12-13T00:04:00.001-08:00

The World This Week - December 05 - December 09' 2011

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The Debate over FDI in Retail

2011-12-10T19:55:00.000-08:00

Owing to the unrelenting stand of its allies and the impasse it had reached with its political opponents, the government has been compelled to put on hold FDI in retail. If the objective of this policy initiative was to restore people's confidence in the government's commitment to economic reforms and earn back its political authority, the end result is far removed from the desired goal.

FDI investments in retail were subject to stringent stipulations including permission only to enter cities that have a population of above one million, a minimum investment of $100 million, of which 50% is to be used on back-end infrastructure and the requirement that 30% of the goods must be sourced from small-scale industry.

Voices of dissent, both within the UPA and from the Opposition, were heard right after the announcement. Confusion also arose on what constituted back-end infrastructure and whether sourcing from small-scale industry needed to be done domestically or could be from anywhere. And, over the next few days, there was turmoil in Parliament.

Compelled to take corrective action, the government tried to run a campaign on the benefits of FDI in retail: new manufacturing activities; new jobs, lower prices of products; benefits for the farmers et al. But none of this cut any ice with the mass opposition to FDI in retail. By this time, it was reported that perhaps even the government and the Congress party were not on the same page.

Eventually, the government was forced to announce that the decision has been put on hold till a consensus on the matter is reached. A threadbare analysis of the sequence of events is important to examine whether coalition politics can alone be blamed for the government's recent predicament.

Source: Economic times
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India’s economic growth expected to grow in FY12.

2011-12-08T19:05:00.000-08:00

The global economy is expected to continue to grow at sub-par levels over the next few years due to the uncertainty over the US recovery, sovereign debt crisis in Europe and fragile recovery in Japan. These three economies comprise nearly 50% of the global GDP.

In the backdrop of the global economic situation, it is believed that India’s economic growth will still be a respectable 7.50% for FY12.

In fact, the GDP growth differential between the developed economies and India will widen mainly because of the ring-fencing of the Indian economy from global economic turmoil to a large extent as domestic consumption constitutes more than 60% of our GDP while exports contribute only around 20% of GDP.

It is believed that in the backdrop of a weak global economic outlook, commodity prices should also soften, which could have a favorable impact on the Indian economy.

Source: Multiple
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The Indian Mutual funds in the coming years.

2011-12-07T15:40:00.000-08:00

The Indian mutual fund industry has grown at a breathtaking pace in the last five years. Not only have its assets under management (AUM) grown from Rs 3 lakh crore in September 2006 to Rs 7 lakh crore in September 2011, more than 1,150 schemes are on offer today compared to 600 in 2006. Assets have increased by nearly 60 per cent over the past one year. Further, investors have got access to new products such as exchange-traded funds (ETFs), fund of funds and international funds.

India’s buoyant asset management industry, set to continue expanding at a breathtaking pace, is attracting several new players, both international and domestic. Over a score of funds are awaiting approval, and about a dozen are expected to start operations over the next one year. So far, the Indian mutual fund industry has been product-led and offers many products that are not relevant to investors' needs. Investors will start demanding more solution-based products. Products that cater to specific life-stage needs such as education, marriage and housing may become popular. Child plans, for instance, can invest more in equity as investors can afford to take more risk given the long time frame to achieve the goal. Over the next five years, we could also see mutual funds take over the management of pension funds. We are also likely to see the launch of many new AMCs.

Mutual funds play a significant role in addressing these requirements. Mutual fund, in its essential detail, is a pass-through vehicle through which a person can invest in professionally managed portfolios of disparate asset classes like domestic equities, gilt, corporate bonds, money market instruments, gold, overseas equities, etc. The potential for growth for the Indian mutual fund industry is indeed enormous. There’s a huge generational shift in investment habits and patterns, especially among the young. Not content with plain old vanilla bank deposits, a growing number of Indians are seeking out more exciting and lucrative products. And fund houses are whetting their appetite through attractive schemes.

Source: Multiple
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10 Smartphones to Gift this Season.

2011-12-06T19:26:00.000-08:00

With Christmas and New Year approaching, it is once again time to make endless trips to shopping malls to select the best gifts for the holiday season. To make the painful experience, well, less painful, here are the 10 best smartphones to give this year.

1. iPhone 4S
The iPhone 4S is a touchscreen slate smartphone developed by Apple Inc.
It is the fifth generation of the iPhone, a device that combines a widescreen iPod with a touchscreen, mobile phone, and internet communicator.
It retains the exterior design of its predecessor, iPhone 4, but is host to a range of improved hardware specifications and software updates compared to the previous model.
Integrated software and hardware changes support the introduction of new user interface and functions by Apple.
Highlights include a voice recognizing and talking assistant called Siri, personal computer independence, cloud-sourced data (iCloud) and an improved camera system.
A selection of the device's functions can be controlled by voice.

2. Samsung Galaxy Nexus
The Galaxy Nexus is a touchscreen slate Android smartphone developed by a partnership between Samsung and Google.
The phone and operating system were developed collaboratively by engineers from both companies.
It is the third-generation successor to Google's previous flagship phones, the Nexus One and Nexus S.
It has a curved HD (1280 720 pixels) Super AMOLED display, an improved camera system, and Google's new version of its Android operating system, version 4.0, codenamed Ice Cream Sandwich.

3. Samsung Galaxy S II
The Samsung Galaxy S II is a smartphone running under the Android operating system that was announced by Samsung on February 13, 2011, at the Mobile World Congress.
It is the successor to the Samsung Galaxy S, with a different appearance and significantly improved hardware.
The Galaxy S II was one of the slimmest smartphones of the time, mostly 8.49 mm thick, except for two small bulges which take the total thickness of the phone to 9.91 mm.

4. HTC Rezound
The HTC Rezound is the company's first smartphone showing off its partnership with Beats Audio.
The phone has improved sound quality thanks to the Beats tech and even ships with a pair of Beats Audio ear buds.
The Rezound also has a 4.3-inch 720p display, which will be great for watching videos.

5. Motorola Droid Razr
The Motorola Droid Razr is an Android-based, 4G LTE-capable smartphone designed by Motorola.
The Droid Razr is the thinnest smartphone in the world at only 7.1 mm thick at its thinnest point (it does, however, have a 'bump' on top that's 11.1 mm thick) and includes a 4.3 inch Super AMOLED Advanced display, covered in a Gorilla glass screen and a Kevlar back plate.
It is powered by an OMAP 4430 SoC with dual 1.2 GHz ARM Cortex-A9 processor cores.
Its 8 megapixel rear facing camera can record 1080p HD videos. It comes with 1 GB of RAM and runs version 2.3.5 of the Android OS.

6. Motorola Droid Bionic
If the Razr doesn't do it for you, you may want to check out the Motorola Droid bionic instead.
The Bionic began as one of the most talked about smartphones when it debuted at CES in January 2011.
But months of delays caused Motorola to go back to the drawing board and redesign the phone from the ground up.
The result was pretty good. The Bionic has a 4.3-inch qHD display, Verizon LTE, and a solid 8 MP camera that shoots 1080p HD video.

7. Samsung Focus S
The Samsung Focus S is a slate smartphone which runs Microsoft's Windows Phone 7.5 Mango operating system.
Focus S is very similar to the new Galaxy S II Android phones, but runs the latest version of Windows Phone, version 7.5 Mango.
The Super AMOLED display pops, just like it does on the Galaxy phones and the OS is snappy and responsive. If you're looking for a strong alternative to Android or iOS, this is your phone.

8. HTC Sensation
The HTC Sensation is a smartphone designed and manufactured by HTC Corporation that runs the Android 2.3 Gingerbread software stack.
Officially announced by HTC on April 12, 2011, the HTC Sensation was launched by Vodafone in key European markets including the United Kingdom on May 19, 2011 and by T-Mobile in the United States on June 12, 2011 (marketed as the HTC Sensation 4G).
It was the first official HTC phone to sport the HTC Sense 3.0 user interface.

9. Motorola Atrix 2
The phone features many of the same specs as the first Atrix, but this time Motorola is marketing it towards the average user, not just those looking for a superphone.
It's number one pick if you're looking for an Android phone on a budget.

10. Motorola Photon.
The Photon runs a customized interface similar to the standard Android interface with several additions.
Motorola provides custom widgets to toggle settings for airplane mode, bluetooth, wireless 4G access (WiMAX 2.5 GHz), and WiFi access as well as resizable widgets for functions such as the calendar, social networking, a world clock and more.
The Photon's customized interface has seven home screens and four main onscreen buttons at the bottom of the screen.
Of the bottom buttons the left three buttons may be customized to run a programme of the user's choosing, while the right-most button opens the app drawer.

Source: www.rediff.com
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Karvy Private Wealth Case Study- Corporate Professional

2011-12-05T19:07:00.000-08:00

Case study established professional

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ADVICE for the WISE- December, 2011

2011-12-04T11:35:00.000-08:00

Advice for the wise december 2011

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The 5 travel destinations to visit in 2012

2011-12-03T17:00:00.000-08:00

The good folks at Lonely Planet -- that definitive travel book and magazine -- have drawn up a list of cities to go to in 2012. While some cities are in the news for sporting events, others have made it to the list for a variety of other reasons. Check out which is that one city you should be seen in next year.

1 Locating along the northern coast of Australia, Darwin is a charming town with a population of around 110,000 people from across 50 nations who have made the city their home.
Multi-cultural influences are reflected in the day-to-day life of the people here and the Asian influence is seen not just in the food but also the local music.
Australian National Trust has named Darwin the 'multicultural icon of national significance'.
If it's relaxed lifestyle and great tropical weather you're looking for, Darwin is the place to go to.

2. This one's for the Americophile!
Everyone who's anyone in the sporting world -- at least the one in the US -- will be heading to Orlando, which is all set to host the 61st NBA All-Star Weekend on February 25 and 26, 2012.
Visit the Walt Disney World at Lake Buena Vista or the other theme parks and museums including Universal Orlando Resort, Sea World Adventure Park or the International Trolley and Train Museum among others.

3. Hong Kong isn't called Asia's World City for no reason. The Special Administrative Region (or SAR) of the People's Republic of China has a lot to offer beyond its tall concrete buildings and traffic-clogged streets.
Hong Kong has a lot of breathtaking trekking trails, a climate that is just right and country and marine parks that will simply blow your mind.
Hike, camp, fish or bike or go shopping or restaurant and art gallery hopping and soak in the multi-cultural melting pot called Hong Kong as it takes cautious steps towards full democracy this year.

4. Santiago de Chile offers you a wide, range of restaurants and bars as well as a lively nightlife.
With the opening of the Gran Torre Santiago or the Great Santiago Tower -- the tallest building in South America, Santiago has made its presence felt in the continent.
Apart from being a base for to visit surrounding areas, entertainment options in and around Santiago include trekking to the nearby Andes in summer or skiing down its slopes in the winters.

5. Said to be the city where 'Portugal was born', Guimaraes was named by the New York Times as one of the places to visit in 2011.
The next year though is special for this historical city as it has been named as the European Capital of Culture 2012.
Guimaraes is also said to be the first city of Portugal and boasts og a lovely castle and a place that date back to the birth of the country itself.
Understandably Guimaraes has a great cultural life with numerous museums, monuments and art galleries to visit. Visit Guimaraes -- sounds like great fun!

Source: www.rediff.com
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Top 5 luxury cars

2011-12-02T17:31:00.000-08:00

With time, the definition of luxury car has changed in India. In the 60's and 80's a car meant either a Premier Padmini or Ambassador.
Then in the mid-90s came the Maruti and the auto scene in India changed forever.
Though hatchbacks are still the most popular, sales of luxury cars are also slowly picking up.

The luxury car segment in India starts at Rs 20 lakh (Rs 2 million).
From SUVs and sedans to coupe, hatchback, station wagon, convertible, minivans and crossovers, Indian roads boast of a fleet of luxury cars.

There is no dearth of luxury cars in India.
Ranging from the most expensive Rs 20 crore (Rs 200 million) Aston Martin to BMW or Toyota, Rolls Royce, Porsche or Lamborghini, India has it all.
Aston Martin has five offerings in this range viz. Aston Martin DB9, Aston Martin DBS, Aston Martin V8 Vantage, Aston Martin Rapide, Aston Martin One 77.
The price ranges between Rs 1 crore (Rs 10 million) and Rs 20 crore.

German car maker BMW has around eleven cars in this segment starting from Rs 22.5 lakh (Rs 2.25 million) BMW X1 to BMW 7 Series which costs around Rs 1.32 crore (Rs 13.2 million).

Among the Toyota luxury cars in India are Camry priced around Rs 21.58 lakh (Rs 2.15 million) and Prius at Rs 27.08 lakh (Rs 2.7 million).

British brand Rolls Royce luxury car range in India starts with Rolls-Royce Ghost priced at Rs 2.50 crore (Rs 25 million) followed by Rolls-Royce Phantom which is priced at Rs 3.50 crore (Rs 35 million) and Rolls-Royce Drophead which has a price tag of Rs 4.20 crore (Rs 42 million).

Another German car maker Porsche has 5 cars in India ranging from Rs 59 lakh (Rs 5.9 million) Porsche Cayenne to Rs 1.42 crore (Rs 14.2 million) Porsche Panamera.

Source: www.rediff.com
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Slowdown: RBI may halt rate hike

2011-12-01T20:11:00.000-08:00

Moderating economic growth and easing inflation may prompt the Reserve Bank to halt interest rate hike in the upcoming mid-quarterly credit policy review later this month, according to analysts.

With actual growth coming in well below the potential, there are 'dis-inflationary' pressures in the economy, Goldman Sachs economist Tushar Poddar said.
"We therefore expect inflation to fall to 6 per cent by March 2012. We expect the Reserve Bank of India to continue to ease liquidity, first through open market operations, and then by cutting the reserve requirements of banks," he said.
India's GDP registered just 6.9 per cent in the second quarter this fiscal against 8.4 per cent expansion in the same period last year due to poor performance of the manufacturing, agriculture and mining sectors.

It is expected that RBI would cut interest rates by 100 basis points (1 per cent) in 2012, starting in April, Poddar said, adding that the slowdown in growth and the trajectory of inflation suggests that an earlier easing of policy rates may be appropriate, especially given the severe external headwinds.
Bank of America Merrill Lynch India Economist Indranil Sen Gupta said, "Given this backdrop of growth slowing and inflation peaking off, we are relieved that the RBI has finally begun Open Market Operations (Rs 1,00,000 crore by January) to cut the money market liquidity deficit and reduce undue pressure on interest rates."
With inflation likely to come off to 7.2 per cent by March, it expects RBI to cut rates by 100 basis points from April onwards.

RBI has hiked interest rates 13 times since March, 2010, to tame demand and curb inflation, which has been above the 9 per cent-mark since December last year.
The government and the RBI have accepted that high interest rates may hurt the country's growth prospects, but the apex bank has underlined that bringing inflation under control is its major agenda.
In the mid-year credit policy review, RBI had said inflation, ruling near the double-digit mark, will start cooling by December this year and is likely to come down to 7 per cent by March, 2012.
As far as food inflation is concerned, the rate of price rise moderated considerably to 8 per cent during the third week of November, from over 9 per cent in the previous weeks.

Nomura said in a report that as WPI inflation is likely to moderate slightly in November, in line with RBI's expectations, raising hopes that the central bank would keep policy rates unchanged at its meeting on December 16.

Source: www.rediff.com
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World's top 5 retail giants

2011-11-30T19:46:00.000-08:00

As heated discussions take place in India over the issue of allowing 51 per cent foreign direct investment in the multi-brand retail sector and 100 per cent FDI in single-brand retail, here's a look at the top 10 retail giants, listed in the Deloitte Global Powers of Retailing 2011 report.

1. Wal-Mart (United States )
The world's largest retail company, Wal-Mart was founded by Sam Walton in 1962. Incorporated on October 31, 1969, Walmart has 8,500 stores in 15 countries.
Sales in 2010: $405.04 bn
CAGR 2005-10: 7.3%

2. Carrefour (France )
Carrefour S.A. headquartered in Levallois-Perret, France opened on January 1, 1958, in suburban Annecy.
The group was built by Marcel Fournier, Denis Defforey and Jacques Defforey. In 1995 it merged with Promodes, known as Continent, one of its major competitors in the French market.
Sales in 2010: $119.88 bn
CAGR 2005-10: 3.4%

3. Metro (Germany)
Founded in 1964, Metro AG is a diversified retail and wholesale/cash and carry group based in Dusseldorf, Germany. It has the largest market share in its home market.
Sales in 2010: $90.85 bn
CAGR 2005-10: 3%

4. Tesco (United Kingdom)
Tesco plc is a global grocery and general merchandise retailer headquartered in Cheshunt, United Kingdom.
Founded in 1919, it has stores in 14 countries across Asia, Europe and North America.
Sales in 2010: $90.43 bn
CAGR 2005-10: 10.9%

5. Lidl Stiftung & Co (Germany)
Founded in the 1930s by a member of the Schwarz family, Lidl stores are present across 20 countries in Europe.
Sales in 2010: $77.22 bn
CAGR 2005-10: 9.8%

Loan growth may fall to 7- year low in FY13

2011-11-30T03:26:00.000-08:00

Slow economic activity, delays in project execution and rising interest rates may result in banks' credit growing at the slowest pace in eight years in the next financial year.

While most bankers see advances growing 16-18 per cent this financial year, they expect credit expansion to slow to less than 16 per cent in 2012-13.

Banks' credit growth has remained over 16 per cent since 2005-06. In the previous financial year, loan growth was 21.38 per cent.

According to bankers, credit growth this financial year is driven by disbursement of loans sanctioned earlier.

With new project launches being delayed, the pipeline for new sanctions is drying up quickly.

On the retail side, high rates and rising inflation are keeping borrowers in a wait-and-watch mode and delaying their purchase decisions.

The festive season did little to boost sentiments and improve retail loan demand.

"A lot depends on the investment climate. Going by the current trend, we expect credit growth at around 16-18 per cent this year. Next year, it would certainly be lower than this," said M V Nair, chairman and managing director, Union Bank of India .

A chief executive of a Mumbai-based private bank said if loan sanctioning did not improve immediately, banks would stare at credit growth of 14 per cent in the next financial year.

The Reserve Bank of India has cut its credit growth projection for this financial year. It now expects bank loans to grow 18 per cent in 2011-12, compared to the earlier forecast of 19 per cent.

Annual credit growth fell to 17.9 per cent in October from 22.2 per cent a year ago, with industrial output growth slowing to a two-year low in September.

"The current growth is coming from past projects. What is clearly happening is the new approval rate is going down because there are no projects, or very few projects, that are coming for financial closure," Chanda Kochhar managing director and chief executive of ICICI Bank, said in a recent interview with Business Standard.

In July-September, a number of government-owned banks saw their loan books shrink from the levels in March.

For instance, Union Bank of India's advances stood at Rs 1.47 lakh crore as of September 30, compared with Rs 1.53 lakh crore in March.

"Credit growth has seen moderation this financial year, and one cannot be very optimistic about growth in the next financial year. While sanctions are in place, there is no disbursement schedule yet for some projects," said Bhaskar Sen, chairman and managing director, United Bank of India.

Bankers said micro and small enterprises and the farm sector were likely to drive loan demand in the next financial year.

Richest Techies of the world

2011-11-29T20:40:00.000-08:00

Nothing changed the world so much as information technology. Gradual progress of IT gave birth to a new generation of tech billionaires. Recently, Forbes published names of 15 richest tech people. It should be mentioned here that Microsoft and Google executives play a big role in this year's list.

1. Bill Gates
Total worth: $59billion
Gates is the former chief executive officer and current chairman of Microsoft.
He founded Microsoft with Paul Allen.
Gates is consistently ranked among the world's wealthiest people and was the wealthiest overall from 1995 to 2009, excluding 2008, when he was ranked third.

2. Larry Ellison
Total worth: $33billion
Lawrence Joseph aka Larry Ellison is the co-founder and chief executive officer of Oracle Corporation, one of the world's leading enterprise software companies.

3. Jeff Bezos
Total worth: $19.1billion
Jeffrey Preston 'Jeff' Bezos is the founder, president, chief executive officer, and chairman of the board of Amazon.com.
He was named Time magazine's Person of the Year in 1999.
In 2008, he was selected by US News & World Report as one of America's best leaders.
Bezos was awarded an honorary doctorate in Science and Technology from Carnegie Mellon University in 2008.

4. Mark Zuckerberg
Total worth: $17.5billion
Zuckerberg co-created the social networking site Facebook, of which he is chief executive and president.
It was co-founded as a private company in 2004 by Zuckerberg and classmates Dustin Moskovitz, Eduardo Saverin, and Chris Hughes while they were students at Harvard University.
In 2010, Zuckerberg was named Time magazine's Person of the Year.

5. Sergey Brin And Larry Page
Total worth: $16.7 billion
Sergey Mikhaylovich Brin is a Russian-born American computer scientist and internet entrepreneur who, with Larry Page, co-founded Google.
The Economist magazine referred to Brin as an 'enlightenment man', and someone who believes that 'knowledge is always good, and certainly always better than ignorance'.
Larry Page returned as CEO of Google in January, 13 years after he co-founded the Internet company with Brin. Page, who laid the foundation for Google in postgraduate research on how Internet websites link to each other, is regarded as the heavyweight thinker.

Source: www.rediff.com
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The world this week november 21 - november 25 2011

2011-11-29T12:21:00.000-08:00

The world this week november 21 - november 25 2011

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Exiting fixed income funds? Read on

2011-11-28T20:55:00.000-08:00

Those getting into debt instruments like short-term funds, ultra short-term funds and income funds may need to extend their investment horizons or pay higher exit loads. The past couple of months have seen 16 such funds either raising their exit loads or increasing the scheme's lock-in period.

Some, like SBI Dynamic Bond Fund, Axis Short-Term Fund and Principal Income Long-Term Fund , have raised both the exit load and minimum period of investment.

ICICI Prudential Regular Savings Fund and Kotak Bond Short-Term Fund have increased their period of investment; IDFC All Seasons Bond Fund has raised the percentage of load.

Lock-in periods differ, depending on the fund. Typically, ultra short-term funds have a 15-day lock-in. Short term and income funds have a minimum six months of lock-in.

Exit load is levied on the net asset value as on the day of redemption. Assume you need to redeem your investment of Rs 50,000 purchased at an NAV of Rs 10. If the NAV is now Rs 11, you would have earned Rs 55,000 on your investment. With a one per cent exit load on the NAV, Rs 550 is deducted and you will get Rs 54,450.

"Currently, managers are taking longer-term duration calls and prefer having investors whose investment horizon matches their own portfolios to ensure the fund's stability," says Nandkumar Surti, CIO, J P Morgan Mutual Fund. The higher exit loads will act as a deterrent to investors, as the increase in exit load will lower the yield in the hand of investors.

In a rising interest rate scenario, fund managers take advantage of upward moving rates by investing in shorter term corporate bonds and government securities.

But with the interest rate cycle peaking, interest rates are expected to be stable over the next few months before they move downwards.

In such a scenario, medium to long investment options like short term and income funds are preferred, because they not only lock investments at a higher rate, but also for a longer duration.

"However, many investors may wait just long enough to take advantage of the accruals gained and the capital appreciation, as a result of the falling interest rates, and move out immediately. This impacts the fund's overall performance, with the remaining customers taking a hit," says Amar Ranu, senior manager, research & advisory, Motilal Oswal Securities.

One-year absolute returns from income funds have been 7.13 per cent, while that from the short-term funds category has been 8.57 per cent. In the same period, both diversified equity mutual funds and the Bombay Stock Exchange's Sensex gave negative returns of 21.39 per cent and 20.27 per cent, respectively. In such a scenario, fixed income products have been the investor's best bet.

The new exit load rates will apply only to new investors wanting to get into these funds. Financial planners say investors would do well to consider the costs of exit, especially if the investor is likely to need the funds ahead of the lock-in period.

These funds would be best suited for those with an investment horizon of a year or two. Else, even investors with surplus cash could look at these funds.

Income accruals within a year for those choosing the growth option will be considered short-term capital gains and one will have to pay according to one's tax slab.

Gains earned after a year will be considered as long-term capital gains (LTCGs) and one can claim 10 per cent without indexation or 20 per cent with indexation benefits on these. If one chooses funds with a dividend option, the fund has to pay a dividend distribution tax of 14.163 per cent.

Source: www.rediff.com

5 most innovative gadgets

2011-11-28T15:38:00.000-08:00

With technology moving at ever faster speed, the world is witnessing introduction of the most innovative of gadgets. It is interesting to see the evolution of this ever changing technological world. Here we present the 5 most innovative gadgets to hit the world.

Solid state drives

A solid-state drive is a data storage device that uses solid-state memory to store persistent data with the intention of providing access in the same manner of a traditional block i/o hard disk drive.

SSDs are distinguished from traditional magnetic disks such as hard disk drives or floppy disk, which are electromechanical devices containing spinning disks and movable read/write heads.

In contrast, SSDs use microchips which retain data in non-volatile memory chips and contain no moving parts.

Compared to electromechanical HDDs, SSDs are typically less susceptible to physical shock, are silent, have lower access time and latency, but are more expensive per gigabyte.

SSDs use the same interface as hard disk drives, thus easily replacing them in most applications.

Glasses-free 3D

Autostereoscopy is any method of displaying stereoscopic images (adding binocular perception of 3D depth) without the use of special headgear or glasses on the part of the viewer. Because headgear is not required, it is also called 'glasses-free 3D' or 'glasses-less 3D'.

The technology also includes two broad approaches used in some of them to accommodate motion parallax and wider viewing angles: those that use eye-tracking, and those that display multiple views so that the display does not need to sense where the viewers' eyes are located.

Smart TV

Smart TV, which is also sometimes referred to as 'Connected TV' or 'Hybrid TV', (not to be confused with Internet TV or Web TV), is the phrase used to describe the current trend of integration of the Internet and Web 2.0 features into modern television sets and set-top boxes, as well as the technological convergence between computers and these television sets/set-top boxes.

These new devices most often also have a much higher focus on online interactive media, Internet TV, over-the-top content, as well as on-demand streaming media, and less focus on traditional broadcast media like previous generations of television sets and set-top boxes always have had.

Kogeto Dot

The Kogeto Dot is a neat clip-on lens for your iPhone 4 or 4S that turns your device into a panoramic video recorder.

After filming, you upload the clip to the company's Flash-based player that lets you pull and drag the video so you can view it from all angles. You get a new experience every time you watch the video.

Long Term Evolution

Long Term Evolution, usually referred to as LTE, is a 4G standard for wireless communication of high-speed data for mobile phones and data terminals.

It is based on the GSM/EDGE and UMTS/HSPA network technologies, increasing the capacity and speed using new modulation techniques. The standard is developed by the 3GPP (3rd Generation Partnership Project).

The world's first publicly available LTE service was launched by TeliaSonera in the Scandinavian capitals Stockholm and Oslo on December 14, 2009. LTE is the natural upgrade path for carriers with GSM/UMTS networks, but even CDMA holdouts such as Verizon in North America and au by KDDI in Japan have announced that they will migrate to LTE in the future.

LTE is therefore anticipated to become the first truly global mobile phone standard.

These new age technologies are a boon to the techie fans though some of them might not be useful on daily basis but are certainly going to catch the eye of the innovators and early adopters.

Source: www.rediff.com

These 8 cars will sport a new look in 2012

2011-11-25T19:05:00.000-08:00

Gear up and get ready to welcome enhanced and improved versions of your favorite cars in 2012.

Some of facelifts in India will include cars from highly prominent car makers such as General Motors, Hyundai, Audi, Tata Motors, Honda and Toyota.

Chevrolet Cruze

GM launched its stylish sedan, Chevrolet Cruze in India in October 2009.

The Chevrolet Cruze facelift version is expected to be launched in 2012. When Chevrolet Cruze arrived in India, the sedan managed to grab a lot of attention and finally was victorious among other strong competitors, such as Volkswagen Jetta, Toyota Corolla and Skoda Laura.

The major changes that are anticipated in the facelifted version of this sedan include, freshly designed fog lamps, high-up placed Chevrolet badge, sophisticated interiors with 2-tone colour scheme along with ample of storage space. However, the engine size is likely to be same.

Estimated price of the new Chevrolet Cruze is Rs 14 lakh.

Chevrolet Captiva

General Motors is certainly busy, along with Chevrolet Cruze facelift, GM is also expected to launch Chevrolet Captiva's facelifted version by next year.

This new car by GM will feature latest car technology. The major key features of the face-lift of Chevrolet Captiva would comprise newly designed bonnet, rectangular headlamps along with divided rectangular grille.

The facelifted Chevrolet Captiva will also come with LED turn signals placed on the rear view mirrors on either sides, ice blue back light, three row seating arrangements, touch screen navigation system, ABS, BAS, ESC, TCS, electric hand brake, hill start assist, USB ports and parking cameras.

As far as the engine of this new SUV is concerned, it is likely to be powered with 2.2 litre of VCDI engine that will produce 163 BHP of maximum power.

The price of the facelifted Chevrolet Captiva is expected to be approximately Rs 20 lakh.

Tata Nano

Following the facelift trend is Tata Motors. It is expected to launch the facelift version of the world's cheapest car, Tata Nano.

The new Tata Nano will come powered with a diesel engine that will provide a whopping mileage of 30 km per litre, which is absolutely striking. But this excitement has to be reserved as the diesel version will come next year. However, this year too, Tata Motors launched Nano with few cosmetic upgrades. Furthermore, reports suggest that the firm is also working on the hybrid version of the world's cheapest car.

This might come with Bosch power steering unit, top-hinged rear windshield along with twin cylinder diesel motor that will deliver 40 km per litre of mileage, which surely could be the next big thing.

The price of the hybrid version is not yet revealed, but the diesel version will be priced around Rs 225,000 only.

Audi A4

German luxury car maker Audi is also ready with a facelift version of Audi A4. The face-lifted version of Audi A4 sedan is expected to hit the Indian shores by mid-2012. This new sedan by Audi will give a direct competition to BMW 3-Series and also to Mercedes-Benz C class.

The key highlights of the new Audi A4 might comprise 4 engine trims, including 2.0 TFSI, 1.8 TSFI, 2.0 TDi and 3.2 FSI Quattro.

Furthermore, the redesigned comfortable interiors and stylish steering wheel will add more charm to the sedan, the price of the new Audi A4 has been still kept under the hood, but speculations suggest that this new sedan will cost you around Rs 34 lakh to Rs 40 lakh.

Toyota Fortuner

Next on the list is Toyota Motors, which is expected to launch a face-lifted version of Fortuner next year. This newly designed SUV will sport certain cosmetic upgrades including rear license plate, chrome radiator grille, black wood grain paneling inside the cabin and cylindrical shaped projector lamp.

All these are mere cosmetic changes but will surely give a new look to the very manly Fortuner. The engine specifications are likely to be same as the current version available in the Indian car market.

The cost of the facelifted Toyota Fortuner will probably be Rs 22 lakh.

Toyota Innova

Along with Toyota Forturner, a facelift variant of Toyota Innova is also likely to hit the Indian roads in 2012. There will be some high points in the new Toyota Innova, which might comprise 2.5 litre of diesel engine mated with 5-speed manual gearbox, redesigned tail lamps, windshield and bumper.

The chrome trimming done of the above number plate will add more charm to this MPV. Other changes will include squared grille, new bumper and sharp headlights.

Price of the facelifted Toyota Innova is likely to range between Rs 10 lakh and Rs 14 lakh.

Honda Civic

Honda Motors too is planning to launch the facelifted version of its much acclaimed sedan Honda Civic in 2012. The new Honda Civic is expected to come with some minor cosmetic changes on the outside along with stylish and chic interiors.

The engine will become more powerful and is expected to deliver better mileage. Also the gear transmission is expected to be enhanced as compared to the current variant of the sedan.

The price factor is still a mystery, but reports suggest that one will have to shed around Rs 14 lakh.

Hyundai i20

One more wagon on our list comes from Hyundai Motors, who are planning to launch the facelift version of its hatchback car, Hyundai i20. The new Hyundai i20 might come with hexagonal grille, revamped fog lamps along with sharper headlights.

New wheels will be installed on the facelift version of this hatchback. As far as the engine of the new Hyundai i20 is concerned, it is likely to get powered by 1.2 litre of Kappa engine accompanied with valve timing.

The new Hyundai i20 would give a tough competition to cars like Nissan Micra, Volkswagen Polo, new Maruti Swift and Toyota Etios Liva.

Source: www.rediff.com

Govt allows 51% FDI in retail

2011-11-25T13:14:00.000-08:00

In a historic decision the Union Cabinet on Thursday allowed 51 per cent FDI in retail trading. According to a top secret note of 120 pages that was circulated to 19 Union ministries, several conditions were attached to liberalization of the foreign investment policy regime.

The Manmohan Singh-led UPA government plans to gradually expose trade and industry to foreign investment so that the Indian industry is ready to face this challenge over a period of time.

Proposals to permit FDI in multi-brand retail trading in all products, in a calibrated manner, subject to the following conditions:

1. FDI in multi-brand retail may be permitted to the extent of 51 per cent with government approval.

2. Minimum amount to be brought in as FDI by a foreign investor would be around $100 million.

3. At least 30 per cent of the procurement of manufactured processed products shall be sourced from small industries, in the country, that have total investment in plant and machinery not exceeding $100 million.

4. The government will have the first right to procurement of agriculture products.

5. Fresh agricultural products, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meal products may be unbranded.

6. At least 50 per cent of the total FDI brought in shall be invested in back-end infrastructure. Back-end infrastructure will entail capital expenditure on all activities, excluding that on front-end units.

For instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, warehouse, agriculture market produce, infrastructure, etc.

7. This valuation refers to the value at the time of installation without providing for depreciation.

8. Further, if at any point in time, this valuation is exceeded the industry shall not qualify as a small industry for this purpose

9. Expenditure on land cost and rental, if any, will not be counted for purposes of back-end infrastructure.

10. Self-certification will be done by the company to ensure compliance of all the conditions.

11. Retail sales locations may be set up only in cities with a population of more than 10 lakh (1 million) as per 2011 Census and may also cover an area of 10 km around municipal urban agglomeration limits of such cities.

12. Retail locations will be restricted to areas as per the master zonal plans of the cities concerned and provisions will be made for requisite facilities such as transport connectivity and parking.

Single-brand retail

On single-brand retail, the note says, 'It is also proposed to permit 100 per cent FDI in single-brand retail trading, subject to the following conditions:

1. FDI in single-brand retail trading may be permitted with government approval.

2. Products to be sold should be of single-brand only.

3. Products should be sold under the same brand in one or more countries, other than India.

Source: www.rediff.com

Top 5 most expensive homes

2011-11-24T17:33:00.000-08:00

These are the five most expensive, private properties in the world. Lavish and extravagant, their sheer scale is breathtaking.

At no.5 is the Hearst Mansion (above) in Beverly Hills. Valued at $165 million, it features 29 bedrooms and astonishingly – three swimming pools.
Made famous in the Godfather movie, when a severed horse's head is delivered to the owner's bed, it is the former home of the publishing giant William Randolph Hearst, who was also the inspiration for the main character in “Citizen Kane”. The estate also gained an added helping of allure thanks to John F Kennedy, who stayed in the mansion during his honeymoon.

One step higher on the list is the $170 million Fairfield Pond in The Hamptons. The largest private, residential compound in the United States, this 63-acre home (above) is the property of publicity shy billionaire Ira Rennert, has 29 bedrooms, 5 sports courts, a bowling alley and a $150,000 hot tub.

In third place you might be surprised to find not a house, but a penthouse. The apartment at One Hyde Park (above) is truly exceptional. Complete with bulletproof windows, iris-scanners, a panic room, a secret tunnel to the nearby Mandarin Hotel and its own SAS trained bodyguards – it's a property for the security conscious.
The $200 million penthouse is served by 24-hour room service, and has access to the building's other facilities including the spa, squash courts and wine tasting rooms.

In second spot, is perhaps the most well known property on the list – Villa Leopolda (above). An 80,00 square foot chateaux in the French seaside town of Villefranche-sur-Mer, it was built for King Leopold of Belgium in 1902.
It boasts 19 bedrooms, sports courts, a bowling alley, multiple kitchens, dining rooms and a movie theatre. It also recently hit the headlines when Mikhail Prokhorov, the Russian metals magnate, lost his $55 million deposit on the $750 million property.

Finally, at the peak of the property pile is “Antilla” in Mumbai (above). Currently under construction and estimated to be worth a monumental $1billion, the 27-storey development is the dream home of Mukesh Ambani; the head of Indian petro-chemical giant Reliance Industries, and the fourth richest man in the world.
With double height ceilings, ballrooms, crystal chandelier ceilings, retractable stages, six floors of car-parking and staff quarters for 600 servants, there is no other home on earth that can compare to the 570 feet of Antilla.

Source: http://www.luxury-insider.com
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RBI’s limited ability over the forex market

2011-11-24T14:21:00.000-08:00

The Indian finance ministry stated its concern over the limited ability of Reserve Bank of India to mediate with the forex market to cease the fall in rupee, considering the decline of the Indian rupee to a 32-month low of Rs. 51.50 per US dollar in the initial trade. Department of Economic Affairs Secretary R Gopalan supported this view, "RBI's ability to intervene in forex market is limited".

In the early trade, rupee fell 16 paise to Rs. 51.50 against the dollar on the Interbank Foreign Exchange because of sustained demand for the American currency from banks and importers. The domestic currency had tumbled 44 paise to Rs. 51.34/35 per dollar in the previous session on heavy demand and firmness of the American currency overseas.

Meanwhile, dealers believed that the demand dollar had from some banks and importers, especially oil refiners, reflected on the value of rupee. They further added that the concerns over foreign fund outflows from the domestic equity market and the increase in demand of dollar from state-run oil refiners has bought a decline to the magnetism of the rupee.

Source: http://ndtv.profit.com
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L & T arm will float Rs 1,100 cr in intra bonds

2011-11-24T10:14:00.000-08:00

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Top 5 Expensive Perfumes!

2011-11-23T03:27:00.000-08:00

The most expensive perfume in the world costs “only” $215,000 for a bottle! Clive Christian’s Imperial Majesty Perfume has a unique scent which is a mixture of jasmine, cardamom, carnation, lemon, bergamot and benzoin but this incredibly high price comes from its diamond crusted bottle

Hermes launched this perfume in 1995 and named it after the Parisian address of their flag store since this was also going to become one of the “flag” perfumes in the world. The perfume was designed by Maurice Roucel and Bernand Bourjois to resemble the images of luxury and feminine quality and to compliment the soft and aesthetic and it comes in little bottles of just once ounce priced at $1,500 each.

The famous perfume maker Annick Goutal designed this richly aromatic perfume made from citrus fruits like grapes and Sicilian lemons.. The price is $1,500 for a 3,4 ounces bottle but it’s probably worth every single penny.

Henri Alméras designed Joy back in 1929 for the Parisian perfumer Jean Patou and since then it’s still considered one of the greatest fragrances ever created. The perfume was designed during the Wall Street Crash to bring joy in the lives of the clients and even though its price was really high it became an instant hit and remained popular since then.

The renowned jewelry designer Joel A. Rosenthal created Jar Perfumes and The Bolt of Lightning, a strong and fresh perfume that has an apparently similar smell to the smell of the air just after a bolt of lighting strike.

Source: http://luxatic.com/the
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The World This Week - November 14 - November 18 '2011

2011-11-22T03:08:00.001-08:00

The World This Week - November 14 - November 18 '2011

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Downturn To Hit Dividend Payout?

2011-11-20T23:21:00.000-08:00

Less firms declared divided this year, and with a lower payout ratio, even as earnings come under strain.

The aggregate dividend payout by corporate India may be lower in the current financial year (2011-12), compared to 2010-11.
Only 75 companies had declared an interim dividend in the first half of the current financial year, as compared to 107 in 2010-11.

Moreover, the payout by these companies declined to 32 per cent of net profit, as compared to 40 per cent at the same time last year.

And, a 27 % decline in the second quarter of 2011-12 indicates earnings for the third and fourth quarter may be worse.

The study by the Business Standard Research Bureau estimates the total dividend payout at Rs 7,285 crore (Rs 72.85 billion) by 75 companies in the first six months, compared to Rs 7,290 crore (Rs 72.90 billion) by 107 companies in the corresponding period of last year.

Though the aggregate payout remains almost unchanged, the payout ratio has dropped to 32 per cent from 40 per cent in the previous year.

The payout ratio dropped, as noted earlier, despite a 22.3 per cent rise in net profit of the 75 dividend-paying companies in the first half, compared to a 12.3 per cent rise in net profit of the 107 companies doing so in the same period last year.

It is usually when companies earn handsome profits that they reward shareholders with dividends. If one goes by the huge losses of Rs 37,151 crore (Rs 371.51 billion) by 562 companies in the first two quarters, the corporate payout will be significantly lower this year.

Already, domestic and foreign brokerages have downgraded Sensex earnings by a little over 10 per cent for both 2011-12 and 2012-13 due to growth concerns, a depreciating currency and interest rates.

Reflecting the downturn in investment climate and lower confidence, foreign institutional investor investment has come down to a trickle.

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Source: www.rediff.com/slideshare

The World This Week - Nov 7 - Nov11'2011

2011-11-14T23:45:00.001-08:00

The World This Week - Nov 7 - Nov11'2011

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Investment to build a better Mumbai!

2011-11-11T02:56:00.000-08:00

The Maharashtra government has decided to invest $60 billion (Rs 3 lakh crore) over the next 20 years to build infrastructure and modernise India's overcrowded financial capital.

The investment will be part-funded through public-private partnerships and 60% of the amount of the investment of $60 billion will be raised through government agencies.

This investment will boost the city's housing, transport, power and tourism industries.

The investment will also intend for holistic development of the entire Mumbai region.

The latest census data released by the government of India this year, the population of Mumbai is more than 12 million.

India is one of the world's most densely populated cities.

Mumbai routinely suffers from congestion on roads and airports, power cuts and water shortages.

The Maharashtra state has already lined up funds worth Rs 43,000 crore for the first phase of the project till 2016, and part of it will be used to improve the city's rail transport system.

The Maharashtra government has attracted investment from 40 global corporates out of which eight agreements have already been signed and thirty two more are in the pipeline.

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The World This Week - October 31 - November 4' 2011

2011-11-09T02:36:00.000-08:00

The World This Week - October 31 - November 4' 2011

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New Petrol Price – Much of a Pain?

2011-11-08T03:02:00.000-08:00

About 38 % or Rs 26.22 -- in the petrol price of Rs 68.64 a litre in Delhi (in many other Indian cities the price of petrol is much higher) is because of central and state government taxes.

State-owned oil firms had last week hiked petrol price by Rs 1.80 a litre, the fifth increase this year, as oil imports became costlier due to fall in rupee value.

The new rate is based on a basic price of petrol, without including any taxes, refining cost or margin, of Rs 41.38 per litre, oil company officials said.

The retail selling price is calculated by adding customs duty, central excise rates and VAT to the basic price which is nothing by the average of international oil rate.

On Rs 41.38 a litre base price, a customs duty of 2.5 per cent or Rs 1.04 per litre is levied.
Beyond this, the central government levies Rs 6.35 per litre basic Cenvat duty, Rs 6 per litre special additional excise duty and Rs 2 per litre additional excise duty towards highway cess.

The excise duty, after including education cess at the rate of 3% totals up to Rs 14.78 per litre.
However, VAT, which in Delhi is at 20 per cent, rises with every increase. Earlier, VAT on petrol was Rs 10.62 per litre, but after the hike, it totals to Rs 11.44 a litre.

In the case of diesel, the total taxes account for only Rs 7.66 of the retail price of Rs 41.29 in Delhi. The taxes include Rs 0.76 in customs duty, Rs 2.06 in excise duty and Rs 4.84 state VAT.
There is no central excise duty on diesel apart from the Rs 2 per litre cess for highway construction. Custom duty is 2.5 per cent.

State-run Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum are losing Rs 333 crore (Rs 3.33 billion) per day on selling diesel, LPG and kerosene below cost, officials said.

Petrol prices have risen by 33 per cent since they were freed from government control in June last year. The price of petrol in Delhi was Rs 51.43 a litre when the government decontrolled the fuel on June 26, 2010. Today, it costs Rs 63.70 a litre.

Source – http://www.rediff.com/business/slide-show
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Advice For The Wise - November'2011

2011-11-07T23:59:00.000-08:00

Advice For The Wise - November'2011

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Winners for "Share The Spirit of Diwali" Contest!

2011-11-06T21:11:00.000-08:00

Hi All,

We are happy to announce the mentioned below are the winners for the "Share The Spirit of Diwali" Contest!

1. Kamatchi Seshannarao
2. Champ Arpit
3. Karthik Ramanan

Kindly share your contact details,address with us on - karvywealth@gmail.com

India among the Top 5 Billionaires

2011-11-02T23:55:00.000-07:00

Nothing hits the headlines more than news about billionaires and their wealth as people never miss to garner information on the rich

As per the 2011 Wealth Report here is a list of 5 countries with most billionaires.

1. USA
Number of billionaires: 396
Total Population: 307,006,550

The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $48,000.

The United States is the largest importer of goods and third largest exporter, though exports per capita are relatively low.

The global economic downturn, the sub-prime mortgage crisis, investment bank failures, falling home prices, and tight credit pushed the United States into a recession by mid-2008.

2. China
Number of billionaires: 72
Total Population: 1,331,460,000

Since the introduction of market-based economic reforms in 1978, China has become the world's fastest-growing major economy and the world's largest exporter and second-largest importer of goods.

It is the world's second-largest economy, after the United States, by both nominal GDP and purchasing power parity.

Much newsprint has been dispensed recently discussing China racing past Japan to become the world's second-largest economy.

The second quarter of 2010 saw China's gross domestic product standing at $1.34 trillion and Japan's at $1.29 trillion.

3. Russia
Number of billionaires: 58
Total Population: 141,850,000

Russia has a market economy with enormous natural resources, particularly oil and natural gas.

It is the 10th largest economy in the world by nominal gross domestic product and the 6th largest by purchasing power parity.

Another problem is modernisation of infrastructure, ageing and inadequate after years of being neglected in the 1990s; the government has said $1 trillion will be invested in development of infrastructure by 2020.

4. India
Number of billionaires: 47
Total Population: 1,155,347,678

The Indian economy is the world's ninth-largest economy by nominal GDP and fourth largest economy by purchasing power parity.

India has become one of the fastest growing economies, and is considered a 'Newly Industrialised Country'.

However, poverty, illiteracy, corruption and inadequate public health still remain the country's major challenges.

5. Germany
Number of billionaires: 43
Total Population: 81,879,976

Germany has the world's fourth largest economy by nominal GDP and the fifth largest by purchasing power parity.

It is the second largest exporter and third largest importer of goods.

Germany has been the home of many influential scientists and inventors, and is known for its cultural and political history.

Source - Rediff.com
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Petrol prices likely to increase by Rs.1.82 !!

2011-11-02T03:57:00.000-07:00

India again encounters a hike in petrol prices by Rs. 1.82 a litre after a recent hike in petrol by Rs. 3.14 a litre on 16^{th Sep}2011.

Though the pricing of petrol was freed from government controls in June last year, state-owned oil firms 'informally' take directions from the oil ministry. It remains to be seen if the government will concede to the demand of oil companies just before the winter session of Parliament.

State-owned oil companies Indian Oil, Hindustan Petroleum and Bharat Petroleum last hiked petrol prices by Rs 3.14 a litre on September 16 when the rupee was ruling at about 48 to one US dollar. The local currency has depreciated further and is now trading at over 49 against the American unit.

Crude oil is hovering at around $108 per barrel in international markets. At current exchange rate, petrol price of Rs 66.84 per litre in Delhi corresponds to about $102 per barrel equivalent of crude oil price. The loss on petrol at present is Rs 1.50 per litre and after including local levies; the desired increase in retail prices is Rs 1.82 per litre.

An official from the Oil ministry said, “It may happen. We will see."

India’s grand entry into Formula1

2011-11-01T00:17:00.000-07:00

On 30th October 2011, India makes a grand entry into Formula1, the costliest and the fastest sport in the World. Sahara Force India is the team owned by Dr. Vijay Mallya, which has taken part in the Formula1 Grand Prix to score points for India. Formula1 is a proud moment for India. 12 Teams from all over the World are participating in this Formula1 Grand Prix 2011 held at the Buddh International Circuit, Noida, India.

Champions like Michael Schumacher, Jenson Button, Mark Webber, Fernando Alonso, and the 2010 Grand Prix World Champion Sebastian Vettel has taken part in this 2011 Grand Prix at the Buddh International Circuit. The Formula1 driver from India who will take controls of the Formula1 car which touches the speed of 350miles/hour is Narain Karthikeyan who will be a part of the HRT-Cosworth team.

From the little master Sachin Tandulkar, to the tennis icon Sania Mirza to the Bollywood superhero Shah Rukh Khan – they all were present to experience the view and sound of the fastest cars in the world at the Buddh International Circuit. Ferrari now plans to conduct owner training programmes and a challenger series in the India at the Buddh International Circuit.

The first ever edition of the Formula One Indian Gran Prix ended in style with a performance by the pop-sensation Lady Gaga. Now India will look forward to the Buddh International Circuit becoming one of the Top rated places for the elite.

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The World This Week - October 23 - October 28' 2011

2011-10-31T21:59:00.001-07:00

The World This Week - October 23 - October 28' 2011

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The World This Week - October17 - October21'2011

2011-10-25T03:23:00.000-07:00

The World This Week - October17 - October21'2011

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India Ranks No:2 in Production Of Rice

2011-10-23T23:56:00.000-07:00

One of the reasons why food prices are increasing all across the world is the shortfall in agricultural output.

With wild fires destroying much of Russia's production, floods wreaking havoc in Australia and the United States unable to keep output up, prices are at an all-time high.

So, let us see which countries are producing how much when it comes to rice and paddy, based on Food and Agriculture Organisation data.

China
Production (metric tonne): 1.966 billion
World ranking: 1
Rice production in China is an important part of the national economy.
China is the world's largest producer of rice, and the crop makes up a little less than half of the country's total grain output.
China accounts for 26 per cent of all world rice production.

India
Production (metric tonne): 1.337 billion
World ranking: 2
From a nation dependent on food imports to feed its population, India today is self-sufficient in grain production and also has a substantial reserve.
The progress made by agriculture in the last four decades has been one of the biggest success stories of free India.
Agriculture and allied activities constitute the single largest contributor to the Gross Domestic Product, almost 33 per cent of it.
Agriculture is the means of livelihood of about two-thirds of the work force in the country.

Indonesia
Production (metric tonne): 643.989 million
World ranking: 3
In the 1970s, Indonesia was a major rice importer, but by 1985 self-sufficiency had been achieved after six years of annual growth rates in excess of seven per cent per year.
From 1968 to 1989, annual rice production had increased from 12 million to 29 million tonnes, and yields had increased from 2.14 tonnes of padi (wet rice growing) per hectare to 4.23 tonnes per hectare.
Indonesia produces 643.989 million metric tonnes of rice.

Bangladesh
Production (metric tonne): 477.240 million
World ranking: 4
The dominant food crop of Bangladesh is rice, accounting for about 75 per cent of agricultural land use (and 28 per cent of GDP).
Rice production increased every year in the 1980s (through 1987) except 1981, but the annual increases have generally been modest, barely keeping pace with the population.

Vietnam
Production (metric tonne): 388.955 million
World ranking: 5
Rice production in Vietnam in the Mekong and Red River deltas is important to the food supply in the country and national economy.
The Mekong Delta is the heart of the rice producing region of the country where water, boats, houses and markets coexist to produce a generous harvest of rice.
Vietnam produces 388 million metric tonnes of rice.

Myanmar
Production (metric tonne): 326.820 million
World ranking: 6
Rice is the most important agricultural commodity of Myanmar.
The crop is cultivated along the river valleys, coastal areas and in the Irrawaddy River delta.

Thailand
Production (metric tonne): 314.629 million
World ranking: 7
Thailand has a strong tradition of rice production. It has the fifth-largest amount of land under rice cultivation in the world.
The most produced strain of rice in Thailand is jasmine rice, which is a higher quality type of rice.
Thailand produces 314 million metric tonnes of rice.

The Philippines
Production (metric tonne): 162.664 million
World ranking: 8
Rice is the most important food crop, a staple food in most of the country.
It is produced extensively in Luzon, the Western Visayas, Southern Mindanao and Central Mindanao.

Brazil
Production (metric tonne): 126.518 million
World ranking: 9
There are two main - and very different - areas of rice production in Brazil: the older, well-established irrigated areas of the south and the newer non-irrigated (ie "upland") areas of the center-west and northeast.
The main producing states that comprise Brazil's southern rice area are Rio Grande do Sul and Santa Catarina, which produce about 47 and eight per cent of the country's total rice production, respectively.

Japan
Production (metric tonne): 105.925 million
World ranking: 10
The most striking feature of Japanese agriculture is the shortage of farmland. The 4.63 million hectares under cultivation in 2008 has shrunk, with most farmers over 65.
However, the land is intensively cultivated. Paddy fields occupy much of the countryside, whether on the alluvial plains, the terraced slopes, or the swampland and coastal bays.
Japan produces 105 million metric tonnes of rice.

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Source - http://www.rediff.com/business/slide-show

Indian Wealth Triples?

2011-10-20T04:54:00.000-07:00

India may be home to a large number of poor, but the average wealth of an Indian has nearly tripled in the last 10 years to $5,500 (nearly Rs 2.70 lakh), making the country the sixth largest contributor to overall global wealth, as said by a study.

Still, the average wealth for Indians was way below the global average of $51,000 and just about one per cent of the world's highest per-adult wealth of $5,40,010 recorded in Switzerland, according to a report.

The wealth per adult in India has increased from $2,000 in the year 2000 to $5,500 currently, but the wealth distribution remains very disproportionate and poverty was still rampant in the country, as said in a report.

"While wealth has been rising strongly in India, and the ranks of the middle class and wealthy have been swelling, not everyone has shared in this growth and there is still a great deal of poverty," the report said.

43% of adults' wealth in India is below $1,000, as against the world average of 27%
Also, a very small proportion of the Indian population (just 0.4 %) has net worth of over $100,000.

The report said that the global wealth has grown by 14 %since January 2010 to $231 trillion as on June 2011, driven by strong contribution from emerging economies including India.

India was the sixth largest contributor to the global wealth accumulation, while the US was the largest wealth generator in the world over the 18 month-period, adding $4.6 trillion to global wealth.

Asia Pacific was the main contributor to the rise in global wealth during the period, with China, Japan, Australia and India among the top six contributors to global wealth accumulation.

According to what the estimate reports, there are 84,700 ultra high net worth individuals (UHNWIs) with net assets exceeding $50 million each globally.

The USA is at the top of the ladder with 35,400 UHNWIs, followed by China with 5,400 UHNWIs, Germany (4,135), Switzerland (3,820) and Japan (3,400), Russia (1,970), India (1,840), and Brazil (1,520).

In the year 2011 alone, India has acquired 34,000 new millionaires, however, a larger share of these wealthy individuals "may be more properly regarded as residents of other countries" the report said.

Source - http://www.rediff.com/business/slide-show
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The Joy Of The Four Letter Word "SHOP" & "SALE"

2011-10-19T03:35:00.000-07:00

Dress to kill:
Most of the impulsive buying happens on the ground floor and therefore all the big brands vie to occupy that space.

Also, if you take a tour of the ground floor you will realise that it typically houses brands that stock goods for both men and women. This is to entice the man too who is most of the times forcibly dragged into the store.

Even in stores that stack unisex apparel, the men's section is generally on the ground floor. Ask yourself why? Well, that is because unlike men, women are generally ready to climb several flights of stairs to find the matching top for the skirt they bought last summer!

So, if shopping is not your agenda, then take the escalator straight away.

Teeming it up
But if you stayed on the ground floor and have raided the apparel section then let's turn attention to the cosmetic and accessory counter.

Enter a store and you will have expensive watches, belts, matching lipsticks and dangling earrings staring at you. They are at the start of the store. So even if you skirt your way through when you enter, they are there to tempt you again at the time of exit.

This is because accessories are believed to have the highest profit margins and therefore store owners strategically place the counters at the start.

Also, accessories such as watches are considered to top the list of gift items which are mostly impulsive bought. Another reason why owners want to be doubly sure you don't miss it!

The power of smell:
The stimulating smell in a mall aims to usher you into a relaxed state and helps in creating an enticing and interesting retail environment.

The power of smell uplifts the whole retail therapy experience coaxing you into buying more, even without you being aware of it.

As Lindstrom says, 'All of our other senses, you think before you respond, but with scent, your brain responds before you think.'

Stocking up the kitchen
So as you enter the supermarket, you invariably drag a shopping cart even if you intend to buy only two items.

The shopping cart which is there at the entrance acts as a bottomless pit encouraging you to toss more things into it. So in a way even before you have started shopping your list has increased.

Now as you cruise around, you will notice how the expensive variants of chocolates, wafers and biscuits are placed right at your eye level. Meanwhile, their less expensive cousins are stashed away on the lower shelf. This is so that you notice the costly items first and throw them straight into the trolley.

As you will walk a little further to the grocery section, you are likely to notice the in-house brands of retailers prominently displayed.

Joy of the four-letter word:
The four-letter word 'SALE' gives one an adrenaline rush. The fact that you managed to buy something at half its original price seems like an achievement.

This is the reason why words like 'sale' and 'limited offer' are believed to have almost an unmatched magnetic attraction.

There are times when you are fully aware that the sale is likely to last a month more, but still the fear of losing on it makes you loosen your purse strings then and there without any debate.

On the other hand, there are instances when you have a faint idea that the price of the article on 'discount' has actually been hiked to give the customer an illusion of a bigger saving. But the love for sale defeats logic!

Don't blame the architect:
Is it that on your last visit to the mall, you were quick to blame the architect for the distance between two escalators? Well, it is not faulty design but a smart trick to lure you into buying more.

The distance between two escalators ensures that you walk the extra few steps. This exercise doubles up the chances of you stopping by a store and may be even coming out with a packet and a bill!

The same logic holds true for food courts. Most people come to the mall to grab a quick bite. But since the food courts are sprawled strictly across the top floor, one ends up taking a tour of the entire mall.

This doubles up the chances of impulsive buying and tries to ensure that you reach the food court with at least a packet or two.

Even in the super markets the entry and exit are at other ends. The reason is the same: a full tour of the store is on offer.

So the next time you go shopping, remember these points and they can help you change your shopping experience and leave you with guilt-free trips to the mall.

Source: http://www.rediff.com/business/slide-show
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Interesting Things Now You Can Do With Your ATM,NOW!

2011-10-18T06:00:00.000-07:00

Payment of credit cards
You can pay your credit card bill through the ATM, using your debit card.
This facility is useful only if both your credit and debit cards are of the same bank.
On typing the amount you wish to pay, the fund will be immediately transferred to your credit card account and you will also get a receipt.
An over-the-counter transaction of the same comes for a fee. For example, HDFC bank charges 50 and ICICI Bank 100 if you opt to pay over the counter.

Payment of utility bills
Electricity bills, telephone bills, insurance premiums etc can be paid through your ATM.
Some banks have tie ups with BSNL/MTNL, gas agencies and other such agencies to offer you discounts from 0.5% to 1% of bill payments made through ATM bill payments.
This is valid only in selected cities at present, but soon expected all over India. This will not only save your time but money also.

Tax payment
You can register your debit card with your bank's website for ATM payment of tax.
This will also validate your Permanent Account Number (PAN) and your Tax Deduction Account Number (TAN), provided to tax payers with National Securities Depositories (NSDL).
Once the registration is made, you can go to the ATM. You will be asked for the amount to be paid along with item-wise details if there is any other amount you may want to include.
The amount you have chosen will be debited from your account and the ATM will generate a receipt with a special number (SIN).
You can submit the SIN number on the bank's website after 24 hours and download the challan. The SIN has to be

Payment of tuition fees / application forms
Many educational institutions allow you to pay their application or tuition fee through selected bank ATMs.
You will have to register with the ATM first, which is a one-time procedure.
Ensure that you have collected the transaction slip after transferring the money. At present only the leading educational institutions are offering such a facility.

Railway tickets / air tickets
This can be done only if your bank's ATM has this option or has a tie up with a particular airline company or the Railways.
If it has, you just can walk into the ATM and purchase your tickets. At present, SBI, PNB and Bank of Baroda and Karur Vysya Bank offer this facility.

Mobile recharging
No need of searching a retailer for buying a recharge card. Walk into your ATM, type in your mobile number and recharge your mobile with the amount you wish.
You will receive an SMS confirming the activation.

Fund transfers
Banks allows you to transfer money between your accounts, which are linked to your ATM/Debit card. More than 10 accounts can be linked to a card. ICICI bank allows up to Rs 100,000 as the maximum amount of money transfer in a day.
The limits vary from bank to bank.

Open an FD
You can open an FD without visiting a branch or writing a cheque. ICICI Bank allows you to open an FD for a maximum of 990 days, through their ATM. You will get an FD receipt within 7 working days.

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Source: http://www.rediff.com/business/slide-show

The World This Week - October10 - October15'2011

2011-10-18T00:41:00.001-07:00

The World This Week - October10 - October15'2011

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Will blackberry users switch over to the iphone 4s?

2011-10-14T03:53:00.000-07:00

From corporate user of blackberry to the youth of India, Europe, West Asia and Africa had to go through and deal with disrupted services of blackberry provided by BlackBerry-maker Research In Motion.

RIM being the one to provide blackberry services to more than 70million subscribers all around the World struggled to resolve the issue and took about more than 2days to get the solution to the problem.

Capturing a market of more than a million users in India, of them being more than 60% enterprise users, RIM was unable to provide blackberry services.

According to the Cyber Media Research, RIM grabbed 13% share of India’s smart phones market in 2010, from 8% in 2009.

Companies went through productive losses for continuously three days because the employees were unable to use their blackberry and login to check their e-mails and had to go through a tiresome job of carrying their laptops for meetings.

Blackberry has made life so easy for the companies, as a company official said since their colleagues located in different time zones; they have synchronized their work of sending e-mails and hourly reports on their blackberry.

Even for the youth, which is logged on to Facebook, Twitter and other social networking sites had to face a communication gap in their personal relationships.

Blackberry users even started complaining on social networking sites as to they would switch over to iphone if the blackberry services would not start immediately.

Unfortunately blackberry services had to go through a downfall when Apple was preparing to put on sale its iphone 4s in the US markets.

The RIM officials claimed that there was a failure in blackberry services due to some technical core switch failure within RIM's infrastructure.

Advice For The Wise - October'2011

2011-10-12T22:51:00.000-07:00

Advice For The Wise - October'2011

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Need of New Luxuries?

2011-10-12T00:30:00.000-07:00

Image 1 - An emerald and diamond tiara is displayed at Sotheby's auction house in London May 4, 2011. The tiara, which value is estimated between $5-10 million, was auctioned off in Geneva on May 17, 2011.

Image 2 - A silver openface keyless lever chronograph watch (L) and an oversized silver hour angle aviator's wristwatch with indirect sweep centre seconds are pictured during an auction preview at Christie's in Geneva April 1, 2011. The items signed Longines, formerly the property of Air Marshal Italo Balbo and received probably from Col. Charles Lindberg for the wristwatch, carry a price estimate between US$ 30,000 and 50,000.

Image 3 - Ultra rare magnums of Le Pin 1982 wine are displayed at Sotheby's ahead of their auction next week, in London June 10, 2011. Valued approx in the range of 50-60,000 pounds ($81-98,000), a case of six magnums were auctioned off in June.

Image 4 - Christie's Islamic art specialist Sara Plumbly holds a Fatimid bronze gazelle dating from the late 10th to early 11th century Egypt valued at £800-£1 million (US$1.6-1.3 million) at Christie's in London April 4, 2011. The piece was auctioned off in London on April 7, 2011 along with other art of the Islamic and Indian world.

Image 5 - A model displays the Sun-Drop diamond during a media preview in Hong Kong October 6, 2011. The 110.03 carats diamond has been graded Fancy Vivid Yellow, the highest color grading for a yellow diamond. The diamond will be sold in auction at Sotheby's Geneva on November 15 and expected to fetch US$11-15 million.

Source: http://news.in.msn.com/gallery
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The World This Week: Oct 3 - Oct 7'2011

2011-10-11T00:26:00.000-07:00

The World This Week: Oct 3 - Oct 7'2011

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Is It Time To Worry - Bankers Are Stressed?

2011-10-10T02:44:00.000-07:00

The financial sector is beginning to bear the brunt of deteriorating quality of corporate debt. The corporate debt restructuring (CDR) mechanism set up to help companies unable to repay liabilities has gone up over six times in the first six months of FY 12.

Bankers expect things to worsen in the next two quarters. A State Bank of India executive said, "The slowdown in growth and pressure from rising interest costs may substantially increase the number of cases referred to the CDR forum in the third and fourth quarters of FY12."

In fact, concerns over asset quality topped the agenda for pre-policy review discussions bankers had with the Reserve Bank of India last week. Bankers requested they be allowed to recast CDR accounts for a second time for companies or units whose debt was reworked after the financial crisis in 2008.

According to the CDR Forum, a platform set up by banks and financial institutions, cases worth Rs 34,562 crore went for debt restructuring in the first half of the financial year compared to just Rs 5,179 crore in the year-ago period. The number of companies referred has risen from 21 to 35.

In December 2008, the RBI had allowed banks to again restructure debt of viable units with lowering status of account, as a one-time measure.

Bankers said there were a number of reasons for more companies being referred to CDR. For one, many have been unable to bear the burden of rising interest costs. These units are already under pressure of high input costs and lack of overseas demand.

Referring a company to CDR eases the restructuring process. A senior executive with the Bank of Baroda said, "The bank or financial institution is able to control slippages by taking early action. But, this restructuring comes at the cost of higher provisioning."

According to RBI norms, banks have to make a provision at two per cent for the restructured account, which is treated as standard asset. For a normal standard loan, provisioning is made at 0.4 per cent, which puts pressure on the bottom line.

The references in April-September 2010 had declined due to a better business environment. Some companies, which would have landed at CDR, were able to repay on time.

Rating agency in its September report said banks' gross non-performing assets (NPAs) ratio was expected to increase to nearly three per cent by March 31, 2012 from 2.3 per cent a year ago.

The significant increase in interest rates over the past 18 months will adversely impact the asset quality and profitability of India's banks.

Source: Business Standard