The FIIs on Wednesday stood as net seller in equity and net buyer in debt. The gross equity purchased was Rs2,636.50 Crore and the gross debt purchased was Rs354.50 Crore while the gross equity sold stood at Rs3,020.80 Crore and gross debt sold stood at Rs0.00 Crore. Therefore, the net investment of equity reported was (Rs384.30) Crore and net debt was Rs354.50 Crore.
Showing posts with label investment. Show all posts
Showing posts with label investment. Show all posts
Thursday, August 14, 2008
Friday, July 25, 2008
Intel To Double Its Investment In India - July 25 , 2008
In December 2005, Intel''s boss Craig Barrett received a red carpet welcome in India. Then, the IT minister Dayanidhi Maran, was wooing the tech major to set up a fab facility but that did not happen.
But Barrett, instead, launched the Intel capital fund to invest in tech start-ups. But the fund was never really aggressively active. However under the new team, Intel is refocusing on the fund. This is advantage for technology companies as Intel is not just looking at making twice the number of investments that it made last year, it is also increasing the size of the investment. Intel believes that it will double the number of investments in India.
Last year Intel Cap invested in 5 companies and so far in 2008, it has already the invested in 6 companies. Intel wants to close the year with at least 10 investments.Intel is clear the investments will only be made in companies that have synergy with the tech major. A string of new companies have been the big beneficiaries, buzzintown.com, yatra.com and Emnet Emergency electronic security.Unlike globally, in India, the best synergies for Intel are coming at the mid and late stage of companies and clearly that''s where the focus will be.
But Barrett, instead, launched the Intel capital fund to invest in tech start-ups. But the fund was never really aggressively active. However under the new team, Intel is refocusing on the fund. This is advantage for technology companies as Intel is not just looking at making twice the number of investments that it made last year, it is also increasing the size of the investment. Intel believes that it will double the number of investments in India.
Last year Intel Cap invested in 5 companies and so far in 2008, it has already the invested in 6 companies. Intel wants to close the year with at least 10 investments.Intel is clear the investments will only be made in companies that have synergy with the tech major. A string of new companies have been the big beneficiaries, buzzintown.com, yatra.com and Emnet Emergency electronic security.Unlike globally, in India, the best synergies for Intel are coming at the mid and late stage of companies and clearly that''s where the focus will be.
Tuesday, June 17, 2008
Bank Deposits Rule The Investment Roost - June 17, 2008
igh inflation and bearish markets have led to low returns and disappointed investors over the past six months, with the equity and commodity markets being particularly affected. Banks have always performed well for those looking for steady incomes and secure investments. In the last six months, the bank deposits have increased.
"Deposit rates have risen since last year. Perceiving bank deposits as one of the safest investment tools in these conditions, many people have invested their money in banks for stable returns", says H C Pattnaik, CGM of the State Bank of India (SBI).
He says, "Last year, in the first quarter we had deposits worth Rs 430 crore while this year, in just two months, deposits have touched almost Rs 600 crore".
"Rising crude prices have global economies unstable and as a result investment sectors are all passing through a bad phase. Investors are opting for safe investment and no sector will provide more safety than banks", says G G Joshi, GM, Bank of Baroda (BoB).
He says the money flow has increased as the BoB increased 0.50% deposit rate two week ago.
"Though many investment avenues like equity market, mutual funds, and gold offer higher returns than bank rate, people prefer to invest their money in banks", said the ICICI Bank spokesperson.
He said safety is a prime concern for investors in India and hence banks lead as the most preferred option of investment.
"Bank deposits increased in the first quarter and we hope that more customers will take advantage of higher deposit rates", said T K Sharma, GM, Union Bank.
"Deposit rates have risen since last year. Perceiving bank deposits as one of the safest investment tools in these conditions, many people have invested their money in banks for stable returns", says H C Pattnaik, CGM of the State Bank of India (SBI).
He says, "Last year, in the first quarter we had deposits worth Rs 430 crore while this year, in just two months, deposits have touched almost Rs 600 crore".
"Rising crude prices have global economies unstable and as a result investment sectors are all passing through a bad phase. Investors are opting for safe investment and no sector will provide more safety than banks", says G G Joshi, GM, Bank of Baroda (BoB).
He says the money flow has increased as the BoB increased 0.50% deposit rate two week ago.
"Though many investment avenues like equity market, mutual funds, and gold offer higher returns than bank rate, people prefer to invest their money in banks", said the ICICI Bank spokesperson.
He said safety is a prime concern for investors in India and hence banks lead as the most preferred option of investment.
"Bank deposits increased in the first quarter and we hope that more customers will take advantage of higher deposit rates", said T K Sharma, GM, Union Bank.
Monday, June 9, 2008
Wrong Policies Can Wreck $100 B Investment In Steel: Jindal - June 9, 2008
New Delhi: India runs the risk of losing 100 billion dollar investment in steel if the government persists with restrictions like export duty, JSW Steel Vice Chairman and Managing Director Sajjan Jindal said after taking over as Assocham President.
"We are talking about 100 billion dollars over the next five to six years to be invested in the steel industry. Now if the Government of India levies duties on exports, all these investments will not come," Jindal said.
He said imposition of up to 15 per cent export duty on steel may bring apprehensions in the mind of global investors who have announced their mega plans for India.
"One has to talk to Posco and ArcelorMittal and (ask) if there is an export duty and restrictions, will they still be investing," he said.
As of now, both domestic and foreign steel players have signed 193 memoranda of understanding with states for setting up new units with a total planned capacity of around 243 million tons and a total proposed investment of over Rs 5.14 lakh crore.
While the Assocham would try and convince the investors about the temporary nature of the measures arising out of 45-month high inflation, "investors fear that even if the government withdraws the duty today, what is the guarantee that tomorrow it will not put it at 50 per cent."
The government has not only withdrawn tax refunds on steel export, but also slapped export duty up to 15 per cent. However, it is learnt that the Committee of Secretaries has agreed to roll back the export duty on many of the steel products.
Steel prices have been spiralling for the last few months. Between January and April 2008, price of pig iron went up by more than 70 per cent, construction steel like TMT and wire rods by more than 36 per cent and HR coils by more than 40 per cent.
Jindal said rise in raw material prices, strong demand in international and domestic markets are some of reasons for the sharp increase in rates.
If the fears expressed by Assocham come true, the ambitious targets of 290 million tonne capacity by 2020 will be difficult to achieve.
At present, India has a total capacity of about 53 million tons and there is a demand-supply mismatch adding to the inflation.
"We are talking about 100 billion dollars over the next five to six years to be invested in the steel industry. Now if the Government of India levies duties on exports, all these investments will not come," Jindal said.
He said imposition of up to 15 per cent export duty on steel may bring apprehensions in the mind of global investors who have announced their mega plans for India.
"One has to talk to Posco and ArcelorMittal and (ask) if there is an export duty and restrictions, will they still be investing," he said.
As of now, both domestic and foreign steel players have signed 193 memoranda of understanding with states for setting up new units with a total planned capacity of around 243 million tons and a total proposed investment of over Rs 5.14 lakh crore.
While the Assocham would try and convince the investors about the temporary nature of the measures arising out of 45-month high inflation, "investors fear that even if the government withdraws the duty today, what is the guarantee that tomorrow it will not put it at 50 per cent."
The government has not only withdrawn tax refunds on steel export, but also slapped export duty up to 15 per cent. However, it is learnt that the Committee of Secretaries has agreed to roll back the export duty on many of the steel products.
Steel prices have been spiralling for the last few months. Between January and April 2008, price of pig iron went up by more than 70 per cent, construction steel like TMT and wire rods by more than 36 per cent and HR coils by more than 40 per cent.
Jindal said rise in raw material prices, strong demand in international and domestic markets are some of reasons for the sharp increase in rates.
If the fears expressed by Assocham come true, the ambitious targets of 290 million tonne capacity by 2020 will be difficult to achieve.
At present, India has a total capacity of about 53 million tons and there is a demand-supply mismatch adding to the inflation.
Friday, June 6, 2008
Investment In Rural Infrastructure Crucial - June 6, 2008
A writer in the International Herald Tribune recently exclaimed: “Now may be the time to shift from gold. Platinum and agriculture are seen as next areas of demand.” The steeply rising prices of agricultural commodities have engaged the attention of the world; agriculture is perceived to be a new pot of gold. World Bank’s World Development Report, 2008 (WDR) stresses this agricultural perspective worldwide, including the challenges India encounters.
India’s farm sector is projected to record a mere 2.6 per cent growth in 2007-08 against the overall GDP growth rate of 8.7 per cent. As the Economic Survey 2007-08 laments, the growth rate of food-grain production decelerated to 1.2 per cent during 1990-2007, lower than annual population growth rate averaging 1.9 per cent.
The share of agriculture in the GDP has steadily declined from 36.4 per cent in 1982-83 to 18.5 per cent in 2006-07, although this sector still supports more than half a billion people, providing employment to 52 per cent of the workforce. The stagnating agriculture, languishing food output account for millions of poor farmers struggling with high debts and crop failures, hundreds of them compelled to give up their lives.
Lack of drive
Recognising a loss of dynamism in this vital sector, the Economic Survey acknowledges that there has been a “gradual degradation of natural resources through overuse and inappropriate use of chemical fertilisers,” affecting the soil quality (consumption of fertilisers increased from 69.8 kg per ha in 1991-92 to 113.3 kg in 2006-07).
In this context, the Eleventh Five-year Plan (2007-2012) calls for a concerted strategy “to double the growth rate achieved in the 10th Plan and put agriculture on a growth path of 4 per cent.” It is realised that the Millennium Development goal of halving extreme poverty and hunger by 2015 will not be reached “unless neglect and under-investment in the agricultural and rural sectors over the past 20 years is reversed.”
The WDR emphasises that the GDP growth arising from agriculture is almost four times as effective in reducing poverty as GDP originating outside the sector. “Three of every four poor people in developing countries live in rural areas – 2.1 billion living on less than $2 a day and 880 million on less than $1 a day – and most depend on agriculture for their livelihoods.”
China’s feat acclaimed
WDR acclaims China’s unprecedented poverty reduction in the past 25 years from 53 per cent in 1981 to 8 per cent in 2001, pulling about 500 million people out of poverty; rural poverty dropped from 76 per cent in 1980 to 12 per cent in 2001. Growth in Indian agriculture likewise did more to reduce poverty than did industry or services. During the 1960s and 1970s, the introduction of semi-dwarf varieties of wheat and rice led to dramatic leaps in agricultural production and raised farmers’ incomes. Rural poverty came down from 64 per cent in 1967 to 50 per cent in 1977, and to 34 per cent in 1986.
To revive Indian agriculture, WDR recommends measures such as stepping up of investments in the sector, crop insurance for farmers, realistic charges for water and power, reduction in environmental footprints of intense agriculture, and creating greater opportunities in the non-farm sector to absorb displaced agricultural labour.
It calls for a clear “policy diamond” in a continued effort to improve access to markets and develop modern market chains, achieve a large scale and sustainable smallholder-based productivity revolution, achieve food security, improve livelihoods for those who remain as subsistence farmers, and capitalise on agricultural growth to develop the rural non-farm sector.
There must be a clear strategy for investments to increase farm yields and profitability as well as rural roads, irrigation, power and markets.
The need is critical to invest in rural infrastructure. The lack of access to food is a greater problem than the availability of food. Nobel Laureate Amartya Sen strikingly said, “starvation is a matter of some people not having enough food to eat, and not a matter of there being not enough food to eat.”
Long-term investment
Long-term investments in soil and water management are needed to enhance the resilience of farming systems, especially for people in subsistence farming in remote and risky environments.
Agriculture uses 85 per cent of fresh water withdrawals in developing countries. More than one-fifth of groundwater aquifers in India are over-exploited in three of the four leading Green Revolution states – Punjab, Haryana and Tamil Nadu. In Punjab, about 60 per cent of the groundwater resources are already over-exploited, extraction rates exceeding recharge rates.
‘Fiscal drain’
WDR terms public investment in agriculture as “much misspending” because it has been heavily skewed towards providing subsidies — to the extent of 75 per cent. Electricity subsidies to agriculture are described as “fiscally draining and environmentally damaging.” In Punjab, electricity subsidies to agriculture in 2002-03 were 7 per cent of state expenditures. Again, labour productivity has remained stagnant in India since the mid-1990s.
The key to the alleviation of rampant poverty among farmers is the increase in productivity of staple crops. Irrigated land productivity is more than double that of rain-fed land. Productivity of crops in India is not only low relative to other countries; there are considerable inter-State variations. As the Economic Survey testifies, productivity of wheat in 2005-06 varied from a low of 1,393 kg per ha in Maharashtra to a high of 4,179 kg in Punjab.
A paramount paradigm conducive to agricultural resuscitation signals towards “the visible hand of the state” that must provide core public goods, improve the investment environment, regulate natural resource management, and secure desirable social outcomes.
The WDR lays emphasis on safety nets and access to credit in order to minimise distress land sales when farmers are exposed to calamities and shocks. Incentives are necessary for farmers to diversify into high-value horticulture, poultry, fish, and dairy products “through an appropriate pricing mechanism”.
Bio-tech advantage
Two-thirds of the world’s agricultural value added is created in developing countries. It generates an average 29 per cent of GDP and employs 65 per cent of the labour force. Revolutionary advances in biotechnology offer potentially large benefits.
Agricultural intensification has created environmental problems from reduced bio-diversity, mismanaged irrigation water, agrochemical pollution, and pesticide poisoning. Many less favoured areas suffer from deforestation, soil erosion, desertification, and degradation of pastures and watersheds. Global warming is one of the areas of greatest uncertainty for agriculture.
While India keenly looks for a second green revolution, particularly in the rain-fed areas, there are schemes such as credit support, revamp of co-operative credit structure, redesign of the insurance scheme, rehabilitation package for distressed farmers, and easy availability of inputs, which, if properly implemented, will lend an impetus to the languishing sector. The Centre’s National Food Security Mission and the Rashtriya Krishi Vikas Yojana aim at rejuvenating agriculture and improving farm incomes.
The former aims at increasing the production of rice, wheat and pulses by 10,8 and 2 million tonnes respectively over the benchmark levels of production by the end of the Eleventh Plan. The latter, with an allocation of Rs 25,000 crore, aims at achieving 4 per cent annual growth in the agriculture sector during the Plan period.
India’s farm sector is projected to record a mere 2.6 per cent growth in 2007-08 against the overall GDP growth rate of 8.7 per cent. As the Economic Survey 2007-08 laments, the growth rate of food-grain production decelerated to 1.2 per cent during 1990-2007, lower than annual population growth rate averaging 1.9 per cent.
The share of agriculture in the GDP has steadily declined from 36.4 per cent in 1982-83 to 18.5 per cent in 2006-07, although this sector still supports more than half a billion people, providing employment to 52 per cent of the workforce. The stagnating agriculture, languishing food output account for millions of poor farmers struggling with high debts and crop failures, hundreds of them compelled to give up their lives.
Lack of drive
Recognising a loss of dynamism in this vital sector, the Economic Survey acknowledges that there has been a “gradual degradation of natural resources through overuse and inappropriate use of chemical fertilisers,” affecting the soil quality (consumption of fertilisers increased from 69.8 kg per ha in 1991-92 to 113.3 kg in 2006-07).
In this context, the Eleventh Five-year Plan (2007-2012) calls for a concerted strategy “to double the growth rate achieved in the 10th Plan and put agriculture on a growth path of 4 per cent.” It is realised that the Millennium Development goal of halving extreme poverty and hunger by 2015 will not be reached “unless neglect and under-investment in the agricultural and rural sectors over the past 20 years is reversed.”
The WDR emphasises that the GDP growth arising from agriculture is almost four times as effective in reducing poverty as GDP originating outside the sector. “Three of every four poor people in developing countries live in rural areas – 2.1 billion living on less than $2 a day and 880 million on less than $1 a day – and most depend on agriculture for their livelihoods.”
China’s feat acclaimed
WDR acclaims China’s unprecedented poverty reduction in the past 25 years from 53 per cent in 1981 to 8 per cent in 2001, pulling about 500 million people out of poverty; rural poverty dropped from 76 per cent in 1980 to 12 per cent in 2001. Growth in Indian agriculture likewise did more to reduce poverty than did industry or services. During the 1960s and 1970s, the introduction of semi-dwarf varieties of wheat and rice led to dramatic leaps in agricultural production and raised farmers’ incomes. Rural poverty came down from 64 per cent in 1967 to 50 per cent in 1977, and to 34 per cent in 1986.
To revive Indian agriculture, WDR recommends measures such as stepping up of investments in the sector, crop insurance for farmers, realistic charges for water and power, reduction in environmental footprints of intense agriculture, and creating greater opportunities in the non-farm sector to absorb displaced agricultural labour.
It calls for a clear “policy diamond” in a continued effort to improve access to markets and develop modern market chains, achieve a large scale and sustainable smallholder-based productivity revolution, achieve food security, improve livelihoods for those who remain as subsistence farmers, and capitalise on agricultural growth to develop the rural non-farm sector.
There must be a clear strategy for investments to increase farm yields and profitability as well as rural roads, irrigation, power and markets.
The need is critical to invest in rural infrastructure. The lack of access to food is a greater problem than the availability of food. Nobel Laureate Amartya Sen strikingly said, “starvation is a matter of some people not having enough food to eat, and not a matter of there being not enough food to eat.”
Long-term investment
Long-term investments in soil and water management are needed to enhance the resilience of farming systems, especially for people in subsistence farming in remote and risky environments.
Agriculture uses 85 per cent of fresh water withdrawals in developing countries. More than one-fifth of groundwater aquifers in India are over-exploited in three of the four leading Green Revolution states – Punjab, Haryana and Tamil Nadu. In Punjab, about 60 per cent of the groundwater resources are already over-exploited, extraction rates exceeding recharge rates.
‘Fiscal drain’
WDR terms public investment in agriculture as “much misspending” because it has been heavily skewed towards providing subsidies — to the extent of 75 per cent. Electricity subsidies to agriculture are described as “fiscally draining and environmentally damaging.” In Punjab, electricity subsidies to agriculture in 2002-03 were 7 per cent of state expenditures. Again, labour productivity has remained stagnant in India since the mid-1990s.
The key to the alleviation of rampant poverty among farmers is the increase in productivity of staple crops. Irrigated land productivity is more than double that of rain-fed land. Productivity of crops in India is not only low relative to other countries; there are considerable inter-State variations. As the Economic Survey testifies, productivity of wheat in 2005-06 varied from a low of 1,393 kg per ha in Maharashtra to a high of 4,179 kg in Punjab.
A paramount paradigm conducive to agricultural resuscitation signals towards “the visible hand of the state” that must provide core public goods, improve the investment environment, regulate natural resource management, and secure desirable social outcomes.
The WDR lays emphasis on safety nets and access to credit in order to minimise distress land sales when farmers are exposed to calamities and shocks. Incentives are necessary for farmers to diversify into high-value horticulture, poultry, fish, and dairy products “through an appropriate pricing mechanism”.
Bio-tech advantage
Two-thirds of the world’s agricultural value added is created in developing countries. It generates an average 29 per cent of GDP and employs 65 per cent of the labour force. Revolutionary advances in biotechnology offer potentially large benefits.
Agricultural intensification has created environmental problems from reduced bio-diversity, mismanaged irrigation water, agrochemical pollution, and pesticide poisoning. Many less favoured areas suffer from deforestation, soil erosion, desertification, and degradation of pastures and watersheds. Global warming is one of the areas of greatest uncertainty for agriculture.
While India keenly looks for a second green revolution, particularly in the rain-fed areas, there are schemes such as credit support, revamp of co-operative credit structure, redesign of the insurance scheme, rehabilitation package for distressed farmers, and easy availability of inputs, which, if properly implemented, will lend an impetus to the languishing sector. The Centre’s National Food Security Mission and the Rashtriya Krishi Vikas Yojana aim at rejuvenating agriculture and improving farm incomes.
The former aims at increasing the production of rice, wheat and pulses by 10,8 and 2 million tonnes respectively over the benchmark levels of production by the end of the Eleventh Plan. The latter, with an allocation of Rs 25,000 crore, aims at achieving 4 per cent annual growth in the agriculture sector during the Plan period.
Monday, May 19, 2008
ICICI Bank Planning To Raise Three Billion Dollars From Its Two Funds
ICICI Venture, the private equity fund subsidiary of the ICICI Bank, is planning to raise about three billion dollars from its two funds, including a real estate fund. The equity fund of 1.5 billion dollars, will make investment in the knowledge sector and domestic consumption led sectors like retail, services among others. The real estate fund of similar size will infuse in both residential and commercial properties in the country.
Wednesday, May 14, 2008
Private Equity Investments To Hit 16-Billion Dollar Mark This Year
New Delhi: Strong growth fundamentals of the country will help private equity investments to hit 16-billion dollar mark this year and India is likely to remain a popular destination for the next few years, a latest report says.
"PE investments might be in the $14-16 billion range for the calendar year 2008 and will remain a popular destination for the next two-three years along with China Brazil and Vietnam, Four-S Services, a provider of research, financial consulting and business content services said in its latest report.
In the first two months of this year, as many as 84 private equity or venture capital deals worth nearly $4.1 billion have already been announced, the report added.
Though investments in the private equity arena are flowing in, the year 2008, it would be little 'cautious,' because of the downturn in the US economy, appreciating rupee, high oil prices among others, Four-S Services said.
However, the global credit crunch would not impact India much, as the major portion of the over-eight per cent growth of the country would be driven by domestic demand.
The PE investments would get a further fillip from the reasonable valuations that are prevailing after the 20-25 per cent market correction so far this year.
The Indian markets are expected to witness a further correction before investments picks up. "The investment momentum is expected to rise in the second half of 2008, that is post July," the report added.
The report however pointed out that some of the factors that could pose challenges to the PE investment sector include lower growth rates for export-based industries due to strong rupee, high oil prices which is one of the reason behind high inflation, potential capital gains tax on external funds routed through Mauritius.
"PE investments might be in the $14-16 billion range for the calendar year 2008 and will remain a popular destination for the next two-three years along with China Brazil and Vietnam, Four-S Services, a provider of research, financial consulting and business content services said in its latest report.
In the first two months of this year, as many as 84 private equity or venture capital deals worth nearly $4.1 billion have already been announced, the report added.
Though investments in the private equity arena are flowing in, the year 2008, it would be little 'cautious,' because of the downturn in the US economy, appreciating rupee, high oil prices among others, Four-S Services said.
However, the global credit crunch would not impact India much, as the major portion of the over-eight per cent growth of the country would be driven by domestic demand.
The PE investments would get a further fillip from the reasonable valuations that are prevailing after the 20-25 per cent market correction so far this year.
The Indian markets are expected to witness a further correction before investments picks up. "The investment momentum is expected to rise in the second half of 2008, that is post July," the report added.
The report however pointed out that some of the factors that could pose challenges to the PE investment sector include lower growth rates for export-based industries due to strong rupee, high oil prices which is one of the reason behind high inflation, potential capital gains tax on external funds routed through Mauritius.
Friday, May 9, 2008
FII Activity on 08-05-2008
The FIIs on 7 May 2008 stood as net seller in equity. The gross equity purchased was Rs3,099.00 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs3,827.80 Crore and gross debt sold stood at Rs0.00 Crore. Therefore, the net investment of equity reported was (Rs728.80 Crore) and net debt was Rs0.00 Crore.
Wednesday, April 30, 2008
Don’t Mix Insurance And Investment
The following is an actual interaction with one of my clients. I am sure several readers will identify with his situation and benefit from the solution offered.
This was the email that he wrote to me:
“Succumbing to the aggressive sales pitch of the agent and the fact that there were precisely three days to go for the end of the fiscal year, I hastily bought an endowment policy four years ago. This 15-year policy offering a sum assured of Rs 8 lakh requires me to pay an annual premium of Rs 52,190.
However, now I find that I am stuck between a rock and a hard place. The return is too low and the commitment too high. The problem is that four years have already passed. I want to come out of this commitment but my agent says that if I stop, I will lose most of my money already invested. I have already paid the premiums for four years, amounting to Rs 2,08,760 (Rs 52,190 x 4). Discontinuing the policy now would mean a loss of the premiums paid. At the same time, continuing it would mean throwing good money into a bad deal. So what is to be done? Is there a way out?”
Here’s the solution I offered him:
“Sometimes, you make the right decision and sometimes you have to make the decision right. This is one situation where you have to have the conviction of making the decision right.
The first step is to realise your mistake. The second is to not repeat it. From now on, please avoid combining insurance and investments. At best, if you need insurance, buy a term plan.
Now, as for your current problem, there is no way of coming out without pain. However, you have the choice of limiting the amount of pain or letting it continue. It’s not as if you will lose all your money. Though you may not recover all of it, every policy has a surrender value and you should surrender the policy with immediate effect. Yes, you will lose money.
However, if you continue, you will lose much more. I can go to the extent of saying that even if the surrender value is zero (that is, if you don’t get anything back) — even then, surrendering and getting out of future commitment may actually be profitable. If you henceforth invest your money wisely, you will find that you can more than make up for your loss.
Now let’s examine the case in terms of the figures involved. First of all, though the sum assured of the policy is Rs 8 lakh, taking into account the expected bonus (which is paid on a non-compounded basis), you would in all probability receive Rs 12.50 lakh after 15 years. Even with the bonus included, the return works out to 5.65% p.a., a rate that may not even cover inflation over the term. So, fundamentally, it would be a good idea to discontinue this investment.
Secondly, as an investor in this policy, you need to know its surrender value. Most insurance policies come with specific surrender values (the value that the investor will get if he were to discontinue the policy for any reason). More often than not, agents forget to apprise investors of the same — what the investor doesn’t know will not hurt him and secondly if the premiums stop, so does the commission.
After studying your policy papers, we found that you will have to forego the first year’s premium and will get 50% of the balance premiums paid as the surrender value of the policy. In other words, in place of Rs 2,08,760 that has already been paid, the surrender value that you will receive will be only Rs 77,673.
Now, prima facie, most investors will reject this idea completely. Losing Rs 1,31,087 (Rs 2,08,760 less Rs 77,673) works out to a loss almost 63%. It would seem like it is better to continue the policy for whatever it is worth, rather than discontinuing it and losing 63% of your investment.
However, the numbers suggested otherwise. You have purchased the policy on March 28, 2004. As on March 28, 2007 (you would have paid the premiums for 2004, 2005, 2006 and 2007), you would receive Rs. 77,673. Now let’s say you keep investing Rs 52,190 each year for the remaining 11 years on your own, instead of paying the premium on the policy. The goal is that you should reach a value of Rs 12.50 lakh, which is what you would have otherwise got, had you continued the policy.
Actually, we also need to make another adjustment — the policy would have given you an insurance cover of Rs 8 lakh. To keep the same constant, buy a term policy. At your age (33 years), the annual premium would work out to Rs 2,677. So now, you will invest the balance Rs 49,513 (Rs 52,190 less Rs 2,677) over a period of the remaining 11 years.
To rephrase the object of the exercise, we are interested in knowing what rate of interest should you earn such that you are indifferent to continuing the policy or surrendering it and reinvesting the proceeds on your own. If you earn anything more, you would be better off and with anything less, you should continue with the original policy.
The rate worked out to 9.96% per annum. In other words, even after surrendering and foregoing almost 63% of the premium paid, a rate of 9.96% p.a. brings you on par with the return on the policy. As mentioned before, if you earn more, you would be better off.
For example, were you to earn say 12% p.a. (which is anyway a conservative estimate) instead of 9.96%, the investment would grow to Rs 13 lakh, and you would actually benefit. By the way, if we impute the rate of return of say Reliance Growth Fund, your investment would have grown to around Rs 52 lakh.”
To conclude
The point of this exercise is not to showcase how much my client would have benefited by assuming various rates of return. Instead, it is to point out that when it comes to investments, it is always better to take remedial actions now than later. Of course, it goes without saying that prevention is better than cure. Or like Donald Trump says, “Some of your best investments could well be the ones that you don’t make.”
This was the email that he wrote to me:
“Succumbing to the aggressive sales pitch of the agent and the fact that there were precisely three days to go for the end of the fiscal year, I hastily bought an endowment policy four years ago. This 15-year policy offering a sum assured of Rs 8 lakh requires me to pay an annual premium of Rs 52,190.
However, now I find that I am stuck between a rock and a hard place. The return is too low and the commitment too high. The problem is that four years have already passed. I want to come out of this commitment but my agent says that if I stop, I will lose most of my money already invested. I have already paid the premiums for four years, amounting to Rs 2,08,760 (Rs 52,190 x 4). Discontinuing the policy now would mean a loss of the premiums paid. At the same time, continuing it would mean throwing good money into a bad deal. So what is to be done? Is there a way out?”
Here’s the solution I offered him:
“Sometimes, you make the right decision and sometimes you have to make the decision right. This is one situation where you have to have the conviction of making the decision right.
The first step is to realise your mistake. The second is to not repeat it. From now on, please avoid combining insurance and investments. At best, if you need insurance, buy a term plan.
Now, as for your current problem, there is no way of coming out without pain. However, you have the choice of limiting the amount of pain or letting it continue. It’s not as if you will lose all your money. Though you may not recover all of it, every policy has a surrender value and you should surrender the policy with immediate effect. Yes, you will lose money.
However, if you continue, you will lose much more. I can go to the extent of saying that even if the surrender value is zero (that is, if you don’t get anything back) — even then, surrendering and getting out of future commitment may actually be profitable. If you henceforth invest your money wisely, you will find that you can more than make up for your loss.
Now let’s examine the case in terms of the figures involved. First of all, though the sum assured of the policy is Rs 8 lakh, taking into account the expected bonus (which is paid on a non-compounded basis), you would in all probability receive Rs 12.50 lakh after 15 years. Even with the bonus included, the return works out to 5.65% p.a., a rate that may not even cover inflation over the term. So, fundamentally, it would be a good idea to discontinue this investment.
Secondly, as an investor in this policy, you need to know its surrender value. Most insurance policies come with specific surrender values (the value that the investor will get if he were to discontinue the policy for any reason). More often than not, agents forget to apprise investors of the same — what the investor doesn’t know will not hurt him and secondly if the premiums stop, so does the commission.
After studying your policy papers, we found that you will have to forego the first year’s premium and will get 50% of the balance premiums paid as the surrender value of the policy. In other words, in place of Rs 2,08,760 that has already been paid, the surrender value that you will receive will be only Rs 77,673.
Now, prima facie, most investors will reject this idea completely. Losing Rs 1,31,087 (Rs 2,08,760 less Rs 77,673) works out to a loss almost 63%. It would seem like it is better to continue the policy for whatever it is worth, rather than discontinuing it and losing 63% of your investment.
However, the numbers suggested otherwise. You have purchased the policy on March 28, 2004. As on March 28, 2007 (you would have paid the premiums for 2004, 2005, 2006 and 2007), you would receive Rs. 77,673. Now let’s say you keep investing Rs 52,190 each year for the remaining 11 years on your own, instead of paying the premium on the policy. The goal is that you should reach a value of Rs 12.50 lakh, which is what you would have otherwise got, had you continued the policy.
Actually, we also need to make another adjustment — the policy would have given you an insurance cover of Rs 8 lakh. To keep the same constant, buy a term policy. At your age (33 years), the annual premium would work out to Rs 2,677. So now, you will invest the balance Rs 49,513 (Rs 52,190 less Rs 2,677) over a period of the remaining 11 years.
To rephrase the object of the exercise, we are interested in knowing what rate of interest should you earn such that you are indifferent to continuing the policy or surrendering it and reinvesting the proceeds on your own. If you earn anything more, you would be better off and with anything less, you should continue with the original policy.
The rate worked out to 9.96% per annum. In other words, even after surrendering and foregoing almost 63% of the premium paid, a rate of 9.96% p.a. brings you on par with the return on the policy. As mentioned before, if you earn more, you would be better off.
For example, were you to earn say 12% p.a. (which is anyway a conservative estimate) instead of 9.96%, the investment would grow to Rs 13 lakh, and you would actually benefit. By the way, if we impute the rate of return of say Reliance Growth Fund, your investment would have grown to around Rs 52 lakh.”
To conclude
The point of this exercise is not to showcase how much my client would have benefited by assuming various rates of return. Instead, it is to point out that when it comes to investments, it is always better to take remedial actions now than later. Of course, it goes without saying that prevention is better than cure. Or like Donald Trump says, “Some of your best investments could well be the ones that you don’t make.”
Tuesday, April 29, 2008
FII Activity On 28-04-2008
The FIIs on Monday stood as net buyer in equity while net seller in debt. The gross equity purchased was Rs3,414.90 Crore and the gross debt purchased was (Rs186.90 Crore) while the gross equity sold stood at Rs3,066.10 Crore and gross debt sold stood at Rs236.30 Crore. Therefore, the net investment of equity reported was Rs348.80 Crore and net debt was (Rs423.20 Crore).
Monday, April 28, 2008
Satra Properties India To Invest In Real Eestate Partnership Firm
The board of Satra Properties India has approved investment in a real estate partnership firm up to Rs 5 crore.
This was approved at the board meeting held on 26 April 2008.
This was approved at the board meeting held on 26 April 2008.
Uniphos Enterprises To Make Investments Up To Rs 500 Crore
The members of Uniphos Enterprises have accorded their unanimous consent to the board to make investments up to an amount of Rs 500 crore in the equity shares capital of United Phosphorus, notwithstanding that such investments in addition to existing investments made, loans / guarantees and securities already given / provided by the company may exceed the limits prescribed.
This was accorded at the extraordinary general meeting held on 28 April 2008
This was accorded at the extraordinary general meeting held on 28 April 2008
Friday, April 25, 2008
FII Activity on 24-April-2008
The FIIs on Thursday stood as net seller both in equity as well as debt. The gross equity purchased was Rs2,927.80 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs3,190.90 Crore and gross debt sold stood at Rs83.60 Crore. Therefore, the net investment of equity reported was (Rs263.10 Crore) and net debt was (Rs83.60 Crore).
Wednesday, April 23, 2008
Top 8 Cities To Get $15 B Investment In Retail
Despite the international slowdown in consumer confidence levels, the retail business in Indian cities is set to continue on its growth trajectory, according to an industry survey.
A recent survey conducted by retail consultant Technopak suggests that the country's top eight cities, including Ahmedabad, will attract an investment of $15 billion over the next five years.
This figure is set to grow further, if investments in malls and other ancillary industries are taken into account.
"The retail sector in India is pegged to attract at least $30 billion over the next five years. Half of this will be diverted to the top eight cities," associate vice-president of Tecknopak Research, Purnendu Kumar, said. "This will include both foreign direct investments (FDI) and investments from domestic majors such as Reliance, Aditya Birla Group and the Future Group," he added.
The survey slots Mumbai, Chennai, Delhi, Hyderabad, Bangalore, Pune, Ahmedabad and Kolkata among the select eight. "Of these, Mumbai, Chennai and Delhi will receive the lion's share, accounting for about 30%, or $9 billion, of the total investments," Kumar said.
According to Technopak, these eight cities currently account for more than 90% of the organised retail market in India. The country's total organised retail market India is estimated at around $15 billion, and is expected to grow at the compounded rate of 30% annually, assuming that the total retail growth remains less than 10%.
The consultancy firm says growth in the sector can further be accelerated if the government opens its doors to the multi-brands market. "In India, foreign players can only enter the cash and carry market, which is not enough to attract foreign investments into the country," Kumar said.
While the top cities will continue to lead the market over the next few years, tier II cities and other growth centres are expected to join the fray, accounting for about 40% of investments. Rural areas are seen receiving nearly $3billion in investments by 2012.
According to international consultant Jones Lang LaSalle Meghraj (JLLM), the country's retail sector is expected to grow by 35% by 2010, driven by a strong economy, favourable demographics, rising wealth levels, changing lifestyles and rising consumer aspirations. The growth is also expected to spill over to smaller cities.
"There is still a dearth of retailers in tier II and tier III cities. It costs less to establish an enterprise in these cities, and retail players can cash in on the high aspiration for brands from the metros, as well," Shubhranshu Pani, JLLM's managing director for retail, said.
A recent survey conducted by retail consultant Technopak suggests that the country's top eight cities, including Ahmedabad, will attract an investment of $15 billion over the next five years.
This figure is set to grow further, if investments in malls and other ancillary industries are taken into account.
"The retail sector in India is pegged to attract at least $30 billion over the next five years. Half of this will be diverted to the top eight cities," associate vice-president of Tecknopak Research, Purnendu Kumar, said. "This will include both foreign direct investments (FDI) and investments from domestic majors such as Reliance, Aditya Birla Group and the Future Group," he added.
The survey slots Mumbai, Chennai, Delhi, Hyderabad, Bangalore, Pune, Ahmedabad and Kolkata among the select eight. "Of these, Mumbai, Chennai and Delhi will receive the lion's share, accounting for about 30%, or $9 billion, of the total investments," Kumar said.
According to Technopak, these eight cities currently account for more than 90% of the organised retail market in India. The country's total organised retail market India is estimated at around $15 billion, and is expected to grow at the compounded rate of 30% annually, assuming that the total retail growth remains less than 10%.
The consultancy firm says growth in the sector can further be accelerated if the government opens its doors to the multi-brands market. "In India, foreign players can only enter the cash and carry market, which is not enough to attract foreign investments into the country," Kumar said.
While the top cities will continue to lead the market over the next few years, tier II cities and other growth centres are expected to join the fray, accounting for about 40% of investments. Rural areas are seen receiving nearly $3billion in investments by 2012.
According to international consultant Jones Lang LaSalle Meghraj (JLLM), the country's retail sector is expected to grow by 35% by 2010, driven by a strong economy, favourable demographics, rising wealth levels, changing lifestyles and rising consumer aspirations. The growth is also expected to spill over to smaller cities.
"There is still a dearth of retailers in tier II and tier III cities. It costs less to establish an enterprise in these cities, and retail players can cash in on the high aspiration for brands from the metros, as well," Shubhranshu Pani, JLLM's managing director for retail, said.
Monday, April 21, 2008
Venture Lighting To Invest $27 M For India Expansion
Chennai: Venture Lighting India Ltd, a wholly owned subsidiary of $270-million Venture Lighting International Inc of the US, plans to invest another $27 million in India for expansion and new facilities.
The company manufactures 5.5 million units of metal halide lamps, which it claims is more energy-efficient and eco-friendly than CFLs. It exports some 5 million units to over 70 countries. Its Indian customers include the Indian Railways, CPWD and some PSUs. Currently, India operations contribute $110 million to the company’s global turnover.
The plan now is to expand the present capacity to 8.5 million with an investment outlay of $15 million. The facility may come up at TIDCO’s new SEZ in Chennai or another SEZ being developed by a private company near the Tamil Nadu-Andhra Pradesh border.
Plans
That apart, it also plans to move its other business in the US, manufacturing of lighting peripherals including nano coating of light reflectors (used in projectors). “We are planning to set up green-field facilities at an investment of $12 million at the Madras Export Processing Zone where we have our current facility,” said Sabu Krishnan, President, Venture Lighting International.
According to Krishnan, moving the manufacturing business to India would enable the company to be 30 per cent cost effective.
The company manufactures 5.5 million units of metal halide lamps, which it claims is more energy-efficient and eco-friendly than CFLs. It exports some 5 million units to over 70 countries. Its Indian customers include the Indian Railways, CPWD and some PSUs. Currently, India operations contribute $110 million to the company’s global turnover.
The plan now is to expand the present capacity to 8.5 million with an investment outlay of $15 million. The facility may come up at TIDCO’s new SEZ in Chennai or another SEZ being developed by a private company near the Tamil Nadu-Andhra Pradesh border.
Plans
That apart, it also plans to move its other business in the US, manufacturing of lighting peripherals including nano coating of light reflectors (used in projectors). “We are planning to set up green-field facilities at an investment of $12 million at the Madras Export Processing Zone where we have our current facility,” said Sabu Krishnan, President, Venture Lighting International.
According to Krishnan, moving the manufacturing business to India would enable the company to be 30 per cent cost effective.
Wednesday, April 16, 2008
Deccan Aviation’s Angel Investors Hit Pay Dirt
Bangalore: Deccan Aviation may be a poor man’s airline but it has not been so for some of its investors who have made millions out of their initial investment into the venture.
The man who helped Capt G.R. Gopinath to launch India’s first low cost airline, S.N. Ladhani whose Brindavan Beverages invested about Rs 1.5 crore into Deccan Aviation has been able to mop up Rs 150 crore through a combination of sale of its shares in the open market and through the open offer of the UB Group.
Brindavan Beverages and Ladhani had totally about 18 per cent stake pre IPO which reduced to about 9 per cent after the open offer and now stands at a minuscule 3 per cent which indicates Ladhani’s dwindling interest in the airline.
ICICI Ventures and Capital One which invested about $40 million and had about 16 per cent stake each in the airline are learnt to have mopped up a total of around $90 million, sources close to the airline said. A clutch of NRIs, whose company Golden Ventures is based out of Mauritius, also made around $40 million from an initial investment of around $5 million.
“When the stock hit a peak of around Rs 300, Deccan Aviation was a billion-dollar company. Lot of investors and the public benefited from the surge,” Deccan Aviation’s Vice-Chairman, Capt G.R. Gopinath told Business Line.
AC Nielsen appointed
The UB Group is learnt to have appointed market research firm, AC Nielsen to carry out a survey to determine the branding of the merged entity. The survey is expected to throw up results on whether the merged entity should retain the brand identity of Kingfisher Airlines as well as Simplify Deccan separately.
“Right now we are going through an internal debate on whether we should retain separate identities or not,” Capt Gopinath said. Sources in the airline said that while definite benefits from synergies at the back end was what brought the two airlines together, it remains to be seen whether both the airlines will now fly under a common name.
An airline analyst said that by retaining separate identities, both the airlines will not only expand the customer base but it will also help their bottomlines. The analyst pointed out that a low cost airline helps generate more customers or convert more travellers to switch over to flying.
In turn, it helps value or full service carriers to find more customers from a bigger pool to fly their airlines. “Low cost airlines and full service carriers complement each other and a corporate entity which owns both these airlines benefits the most,” the analyst said.
The man who helped Capt G.R. Gopinath to launch India’s first low cost airline, S.N. Ladhani whose Brindavan Beverages invested about Rs 1.5 crore into Deccan Aviation has been able to mop up Rs 150 crore through a combination of sale of its shares in the open market and through the open offer of the UB Group.
Brindavan Beverages and Ladhani had totally about 18 per cent stake pre IPO which reduced to about 9 per cent after the open offer and now stands at a minuscule 3 per cent which indicates Ladhani’s dwindling interest in the airline.
ICICI Ventures and Capital One which invested about $40 million and had about 16 per cent stake each in the airline are learnt to have mopped up a total of around $90 million, sources close to the airline said. A clutch of NRIs, whose company Golden Ventures is based out of Mauritius, also made around $40 million from an initial investment of around $5 million.
“When the stock hit a peak of around Rs 300, Deccan Aviation was a billion-dollar company. Lot of investors and the public benefited from the surge,” Deccan Aviation’s Vice-Chairman, Capt G.R. Gopinath told Business Line.
AC Nielsen appointed
The UB Group is learnt to have appointed market research firm, AC Nielsen to carry out a survey to determine the branding of the merged entity. The survey is expected to throw up results on whether the merged entity should retain the brand identity of Kingfisher Airlines as well as Simplify Deccan separately.
“Right now we are going through an internal debate on whether we should retain separate identities or not,” Capt Gopinath said. Sources in the airline said that while definite benefits from synergies at the back end was what brought the two airlines together, it remains to be seen whether both the airlines will now fly under a common name.
An airline analyst said that by retaining separate identities, both the airlines will not only expand the customer base but it will also help their bottomlines. The analyst pointed out that a low cost airline helps generate more customers or convert more travellers to switch over to flying.
In turn, it helps value or full service carriers to find more customers from a bigger pool to fly their airlines. “Low cost airlines and full service carriers complement each other and a corporate entity which owns both these airlines benefits the most,” the analyst said.
Tuesday, April 8, 2008
Ulip Investment Caps May Be Eased
The Insurance Regulatory and Development Authority (Irda) likely to permit up to 25 per cent investment to a single group of companies as part of the group exposure norms for unit-linked insurance plans (Ulips). Exposure to a single company or a fund is expected to be capped at 10 per cent of the policyholders fund or the total investment in a particular fund, whichever is less. At present, there are neither single nor group company exposure guidelines for Ulips. The insurance regulator is in the course of working out the exposure norms for Ulip to avoid focus of risk. Ulip is a life insurance product that gives the benefits of protection as well as flexibility in investment, offering higher returns than usual covers. The investment is denoted as units and is represented by the value that it has achieved, called the net asset value (NAV). The idea is to prevent any downside to the policyholders'' investment in such policies that likely to arise from excess investment in one company or a group of companies.
Tuesday, April 1, 2008
FII Activity On 31-03-2008
The FIIs on Monday stood as net seller both in equity as well as in debt. The gross equity purchased was Rs3,235.90 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs3,350.10 Crore and gross debt sold stood at Rs30.70 Crore. Therefore, the net investment of equity reported was (Rs114.30 Crore) and net debt was (Rs30.70 Crore).
Tuesday, March 25, 2008
Henderson Equity Invests In Sharda Worldwide
New Delhi: Henderson Equity Partners announced investment of $21.5 million (about Rs 84 crore) in Mumbai-based agrochemical company, Sharda Worldwide Exports.
The company aims to have a leading presence in the majority of geographies and the funds raised are envisaged to increase our presence in the US and Europe, said R V Bubna, Director, Sharda Worldwide Exports Pvt Ltd.
"Our team has consistently demonstrated its ability to garner a sizeable market share in key geographies and we believe that Sharda is now on a critical growth path which will position it as one of the leaders in this industry,” he said.
The company advised by Ernst & Young, however, refused to disclose the equity stake being picked up by the UK-based private equity firm.
The company markets off-patent agrochemicals across 50 countries and across the herbicide, fungicide and insecticide sectors, he said, adding it follows an asset-light strategy sourcing through a global network of cost-competitive suppliers ensuring quality control from production to dispatch.
Commenting on the investment Vishal Marwaha, Partner of Henderson Equity Partners said, "We believe that the sector and the company will be strong beneficiaries of increasing regulation of agrochemicals and increasing crop acreage."
The company is very well positioned to make acquisitions of niche product registrations in the regulated markets, he said.
The company aims to have a leading presence in the majority of geographies and the funds raised are envisaged to increase our presence in the US and Europe, said R V Bubna, Director, Sharda Worldwide Exports Pvt Ltd.
"Our team has consistently demonstrated its ability to garner a sizeable market share in key geographies and we believe that Sharda is now on a critical growth path which will position it as one of the leaders in this industry,” he said.
The company advised by Ernst & Young, however, refused to disclose the equity stake being picked up by the UK-based private equity firm.
The company markets off-patent agrochemicals across 50 countries and across the herbicide, fungicide and insecticide sectors, he said, adding it follows an asset-light strategy sourcing through a global network of cost-competitive suppliers ensuring quality control from production to dispatch.
Commenting on the investment Vishal Marwaha, Partner of Henderson Equity Partners said, "We believe that the sector and the company will be strong beneficiaries of increasing regulation of agrochemicals and increasing crop acreage."
The company is very well positioned to make acquisitions of niche product registrations in the regulated markets, he said.
Monday, March 24, 2008
Maruti Suzuki To Infuse Rs 9,000cr More
Mumbai: Maruti Suzuki India Limited (MSIL), the leading car maker in the country, will pump in Rs 9,000 crore more in India, most of it in research and development (R&D), warehousing, marketing, logistics and design. The company has already set aside a corpus of Rs 9,000 crore, which will be used primarily to enlarge production. MSIL will infuse Rs 9,000 crore in India which will be over and above the earlier investment programme announced by the chairman (Osamu Suzuki) last year. The investment will cover its other round of expenses for opening a world class R&D and design facility, improving warehousing facilities and marketing channels, upgrading our logistics support and similar ventures, which will improve the company''s overall business presence in India. The company is planning to open giant regional warehouses, which will cater to sectoral markets in each of the distribution zones.
Subscribe to:
Posts (Atom)
