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High Dividend

Yield
Stocks 11 with
Pers onal Finance Magazine Rs 30 20 March 2014
WILL SAHARA EVER
BECOME ACCOUNTABLE?
AAP GUNS FOR AMBANI;
WHAT ABOUT OTHERS?
UBI EXPOSES CORPORATE
GOVERNANCE HYPOCRISY
Pages 68
SUCHETA DALAL ON:
www.moneylife.in
INSURANCE 42 YOU BE THE JUDGE 49 FIXED INCOME 40 HEALTH 50
These stocks are recording
strong cash ows and are
reasonably valued. So, a price
rise would be a bonus, over and
above current high dividends
MONEYLIFE
FOUNDATIONS
LEGAL
RESOURCE
CENTRE
NEW LAUNCH
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I S S U E C O N T E N T S
20 March 2014

LETTER
FROM THE
EDITOR
Yield Matters
Disclaimer: Moneylife has a policy of not allowing its editorial staff to
buy and sell stocks that are written about in the magazine. All personal
transactions in individual stocks are subjected to internal disclosure rules.
MONEYLIFE | 20 March 2014 | 4
Current
Account
18
?
MONEYLIFE
QUIZ
T
here are many ways to screen, and pick,
stocks. One such way is through analysing
their dividend yield. However, merely picking
stocks based on high dividend yield could be
risky. This strategy would work only when
companies are filtered using other valuation
parameters and their management history. This is
where Moneylifes analysis comes in. We have not
only considered a companys dividend yield, but
since dividends are paid out of earnings, we have
considered sales growth, earnings growth, the
size of operations and so on. After factoring in all
these, we provide you with a list of 11 stocks that
may not only offer good income in the form of
dividends but capital appreciation as well.
Mutual funds come in many forms. Many
of them are designed only to garner funds from
investors. Dynamic equity funds belong to
this category. These are pitched at investors as
products that can time the markets. However,
evidence from the US (from where these strategies
are borrowed) shows that such schemes have
grossly underperformed. Are their Indian
counterparts headed in the same direction? If so,
is there a better way? Turn to our Fund Pointer
section to find out.
In her Crosshairs section Sucheta writes on
Subrata Roy of Sahara who has run his peculiar
empire for years without any regulator asking
any questionuntil his defiance of Supreme
Court became bizarre. She also writes on Arvind
Kejriwals strange tactic of targeting only some
businessmen, leaving out people like Vijay Mallya.
In her Different Strokes section, she questions
SEBIs corporate governance norms which will
not apply to the entire swathe of listed public
sector undertakings that have inflicted big losses
on investors. The fact that neither SEBI nor the
stock exchanges, who administer the corporate
governance code, have uttered a word about
the goings on at United Bank of India that have
mauled its share prices, shows that the norms
would be nothing but a sham.
Moneylife Foundation launched yet another
helpline for its members; this time for those
seeking legal advice. To know more about, or to
avail the facilities of, the Legal Resource Centre,
please visitlrc.moneylife.in. We have lined up
another helpline; expect to hear about it soon.
Debashis Basu
Cover Story
28
11 Stocks with High Dividend Yield
These stocks are recording strong cash flows and are reasonably
valued. So, a price rise would be a bonus, over and above
current high dividends. Jason Monteiro explains
Different Strokes
16
UBI Saga Exposes Many Warts: Why SEBIs corporate
governance norms are a sham
Ambani ki dukaan Includes Congress-BJP-Media
Kejriwal: What is Mr Kejriwals idea behind these barbs?
Defiant Sahara: Will Subrata Roy Finally Be Brought To
Book?
AAPs Glare: Whys Mr Kejriwal silent about the
massive loot of banks?
14
Chidambaram Brings Cheer to Education Loan
Borrowers
SEBI Wants Pension Money in Mutual Funds
SEBI Collates KYC Details of Nearly 20m Investors
FIIs Scale Back Emerging Markets Exposure
Your Money
21
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CONTENTS
Letters ............................ 8
Book Review ....................60
Money Facts ....................63
DEPARTMENTS
STOCKS
Positive Trend: We are adding
six new stocks to the portfolio
37 Long Term
38 Value Picks
List To Stagnate
Valuation Matters: Is the market
trying to anticipate Narendra
Modi as the PM?
36 Which Way
34 Street Beat
Narmada Gelatines: Steady
Growth
66
Help Animals,
Help Humanity
BEYOND MONEY
Appalled by the way people tend
to treat stray animals, Preeti Bhatt
decided to set up an organisation
especially for their protection at Pune.
Konica Bhatt tells us how it works
Mutual Funds
vs SEBI
22
SMART MONEY
Another new twist to mutual fund
regulationsas regressive as the
previous ones
UBI CD
Downgrade
40
FIXED INCOME
Top-rated Corporate Bond Yields
Sudden Jump in 10-Year G-Sec Yield
Options for Tax-free Bonds
Bank FD Rates
Shut Up, Or
Put Up
49
YOU BE THE JUDGE
What are some valid grounds of
complaint against your neighbour?
Using Behavioural
Analysis To Improve
Regulations
58
UKs Financial Conduct Authority
is using insights from behavioural
economics for consumer-focused
regulation
EARNING CURVE
Health Insurance
Steep Rise in Mediclaim Premiums
L&T General Medisure Super Top Up
Life Insurance
Tata AIA Mahalife Gold
Fine Print
INSURANCE
42
Insurance
Trends
48
Making Railways
Accountable
LEGALLY SPEAKING
National Consumer Commission
delivers a big blow for consumers
46
Auto
Mode
AUTO
Automatic manual transmission is the
new buzz in car market
FUND POINTERS
Dynamic Equity Funds,
Anyone?
24
Do they work? Can we do any better
than them with some other strategy?
ML FOUNDATION EVENTS
56
Moneylife
Foundation
launches its third
free helpline,
after Insurance
and Railways,
covering 10 areas
of interest to
individuals
Legal Resource Centre
Launched
Mo
Fou
lau
free
afte
and
cov
of i
ind
Launched
REAL ESTATE
Impact of Maharashtra
Housing Act
47
Restrictions on Buying Plantation
Land in Karnataka
UP To Regulate Real Estate Agents
Livinla Vida
Loca
52
If theres one city on earth that
knows how to live the crazy life,
its Madrid. Naveena Israni explores
the passion and vibes of this
effervescent city
TRAVEL
Science That Seeks
the Truth
50
Healthcare industry uses science like
a dogma. We need to open our minds
Pulse Beat: Medical developments
from around the world
HEALTH
Content.indd 4 3/1/2014 5:32:07 PM
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FACULTY EVALUATION BY
STUDENT RATING?
It is often said that what goes
around comes around. Success
is often ephemeral and one can
never take it for granted. If
success goes to your head
and encourages you to treat
people (read employees)
badly, then retribution will
not lag. A private university
in Bengaluru, having a
sprawling campus, started
attracting students with
a high-flying marketing campaign
and aggressive promotion. For some
time, their ploy worked. Students
from the north and east flocked to
this university and paid through
their nose to enrol in the various
programmes. The proof of the
pudding lies in the eating.
When these students graduated,
there were not many jobs for them
as per their expectations. Investment
in education cant be compared to
investment in a business that returns
on investment will start flowing
soon after. It was a different matter
that the quality of the students
enrolled by this university was
nothing great as the only eligibility
criteria for getting admission was a
bagful of cash. Once students pay
astronomical sums as fees, they
start behaving like customers. Any
faculty, who was strict with them,
was given a poor performance rating
and, within no time, the university
started sacking faculty members.
As they were good paymasters,
the faculty got attracted to the
university just like bees get attracted
to flowers. But soon the cat was
out of the bag. Students
were ruling the roost and
dictating terms.
A former colleague of
mine who had shifted
base to Bengaluru got an
opportunity to teach in
this university as a visiting
faculty. His son had got
a job in Mindtree Ltd and the
family shifted based from Mumbai
to Bengaluru. But his experience
was anything but satisfactory. He
said, Mind-blowing infrastructure
and pathetic quality of students
students who are not interested in
learning anything, yet they have
so much dominant power. Soon
enough, his contract was terminated.
This incident happened two years
ago when the university was
glowing and beaming with heavy
rush from students for all their
programmes. Two years down the
line, the university is struggling to
attract students
and is doing
aggressive
marketing to
attract students.
In the past
two years, the
university blindly
chucked out
many faculty
members simply
on the basis of
performance
RNI No: MAHENG/2006/16653
Debashis Basu
Editor & Publisher
editor@moneylife.in
Sucheta Dalal
Managing Editor
sucheta@moneylife.in
Editorial Consultant
Dr Nita Mukherjee
nitamuk@gmail.com
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Editor: Debashis Basu
MONEYLIFE | 20 March 2014 | 8
Letters
Editor
to the
Volume 9, Issue 2
7 March 20 March 2014

Total no of pages - 68, Including Covers


Write to the Editor!
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MONEYLIFE | 20 March 2014 | 10
LETTERS

rating of students. But now, with a slump in the job


market, many of their students are unable to get jobs.
This has reflected poorly on the universitys credentials!
Chandraprabha Venkatagiri, Mumbai, by email
ARE CONGLOMERATES LONG-TERM
WEALTH CREATORS?
Smart Money column by R Balakrishnan is always
interesting and educative. The current column
(Moneylife, 20 February 2014) on 'Intelligent Capital
Allocation' was no exception and it aptly gives
examples of L&T and ITC, where the managements
are wasting capital in some segments of the business.
The most important management act is the efficient
allocation of capital. This probably is the reason why
conglomerates hardly find place in the list of long-term
wealth creators. Warren Buffett has also emphasised
this aspect of the managements and has even
recommended a book The Outsiders, which I find has
not been reviewed by you in your Book Review section
so far. Of late, I find you have shifted your focus
from reviewing books mainly relating to stocks and
investments to those on other subjects. Please re-work
your focus as I feel that there are many books on these
subjects which need to be reviewed for the benefit of
your subscribers.
Krishan K Aggarwal, by email
4
TH
ANNIVERSARY CELEBRATIONS
Heartiest Greetings to Moneylife Foundation on its
entering the fourth year of activities related to financial
literacy. May Moneylife Foundation grow not just
bigger, or older, but better and better and be a source
of valuable information. It should transform the lives of
not just your readers, but also all those who follow the
newsletters, publications, and functions. It should help
them to assimilate the great ideas on matters concerning
our economy, finances, and it should be instrumental
in shaping their thinking, which would assist in overall
better appreciation of the finer nuances of clean
governance.
I have become a new member and the Moneylife issue
dated 20 February 2014 was very impressive. Having
spent a great deal of my career in the capital markets
OUR READERS WHO CLICK WITH US
Heres a sample of the kind of feedback that we receive from our readers on our vibrant website, www.moneylife.in
BLOOD DONATIONS SHOULDN'T GO IN VAIN!
T
his is with regard to Is the blood you donate, going
down the drain? by Vinita Deshmukh. Thanks
Vinita, for highlighting the sad state of our blood banks
that are simply wasting an extremely perishable life
saving commodity. There is nothing to prevent the
authorities from setting up a simple saving mechanism
of proper refrigeration and storage and putting out in
the public domain (possibly, similar to the Red Cross
Blood Bank web site). The information should include
the type and quantity of blood available at least on a
weekly basis. The wastage can possibly be minimised by
issuing out blood on first-in-first basis to other hospitals
and banks. The donations shouldn't go in vain.
Nagesh Kini
GO SLOW ON VIOLATIONS?
T
his is with regard to Regulators should intervene
only in case of grave violation says Chidambaram.
The position taken by the finance minister in his
observation: "I reiterate, we must bring self-regulation,
we must enforce compliance, need to heed to board
of directors and shareholders and only in exceptional
cases should (the) regulator intervene to punish gross
grave cases of proven criminality," is quite intriguing.
This amounts to asking regulators to 'go slow' or
ignore violations. As I said in my earlier comment, self-
regulation is conspicuous by its absence in India.
MG Warrier
BETTER FOREWARNED
T
his is with regard to Should India keep off shale oil
& gas? by AK Ramdas. Very true! It is better to be
forewarned than to repent later.
Nalin Patel
MONETARY EXPERIMENTS: AT WHAT COST?
T
his is with regard to Japan: Is the correction
temporary or something more serious? by William
Gamble. This is a very informative article, especially,
given the sea of confusing information on the Internet
about Japan! It appears that Japan finally got out of
deflation, but the bigger issue is: At what cost? There
must be lessons here for other nations contemplating
monetary experiments.
Abhijit Gosavi
Letters.indd 4 2/27/2014 5:56:33 PM
space, I must say that
the coverage of various
topics, was indeed, ideal.
It is doing justice to the
issues headline Are You
a Smart Investor. I am
already eagerly looking
forward to the next
Moneylife issue.
SK Nataraj, by email
FIRST STEP
TOWARDS FINANCIAL LITERACY
Well said, Moneylife. I couldnt agree more to what has
been commented by the Moneylife reader about the
article Are you a smart investor? For the uninitiated,
I would recommend reading the excellent book, Rich
Dad Poor Dad by Robert Kiyosaki.
And hats off, to all my friends at Moneylife! Now
that we are premium
members at Moneylife, let us
congratulate ourselves for
taking the first step towards
financial literacy and
responsibility.
Yes, we have a long way
to go. The article from
Moneylife couldnt have
been better. I have a
suggestion to Moneylife
to share insights on how
investors from various
international markets
behave, when it comes to
applying conventional wisdom in investing. Also, what
is it that sets successful investors apart from the smart
investors!
Rajesh Premani, by email
CONTENTIOUS CELEBRITY
ENDORSEMENTS?
Celebrity endorsements have always been a contentious
issue in marketing consumer goods as well as services.
Major celebrity endorsements have always centred on
selling FMCG (fast moving consumer goods) products.
One finds it so difficult to recollect famous faces
endorsing a service. Amitabh Bachchan has endorsed
the services of ICICI Bank, Hema Malini has endorsed
Bank of Rajasthan and Juhi Chawla has endorsed
Dena Bank. But we have never seen any famous face
endorsing Pizza Hut or Dominos pizza or McDonalds
or Caf Coffee day.
Be that as it may, Mr Bachchan recently proclaiming
that he decided to stop
endorsing Pepsi, after
a girl told him to do
so, is in poor taste.
After earning millions
of rupees from the
endorsement, is it fair
that he now de-endorses
it? At best, he should
have remained silent.
If his logic is that he
wants to be socially
responsible, then he should also stop endorsing
products like Maggi Noodles. Noodles have vanaspati
(hydrogenated fat) that is not good for health. Does
Mr Bachchan know about it?
Organisations also pour lot of money in the drain
when they hire a celebrity for endorsing a product
which is not doing well in the market. No celebrity can
guarantee increased sale of a sub-standard product. At
the end, what matters is that the quality of the product/
service must be good and the product/service must be
reasonably priced. Consumers are far more intelligent.
They know that when Sachin Tendulkar endorses
a brand of pen or MS Dhoni endorses a brand of
chappals or Virat Kohli endorses ear-buds, it goes from
the consumers pocket.
TTK Prestige, the south-based maker of home
appliances, has used Abhishek Bachchan and Aishwarya
Rai for selling their products. Barely a few days later,
Aishwarya confessed that she has never entered a
kitchen and doesnt know cooking at all. The company
was taken aback as the entire advertisement falls on
the face. Going by what Mr Bachchan says, unless you
have a personal experience with a brand, how can you
endorse it? When will these organisations learn?
G Venkatesh, by email
HOW TO REACH US
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rd
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11 | 20 March 2014 | MONEYLIFE
LETTERS
tha
me
co
ta
fin
re
Y
t
M
b
Letters.indd 5 2/27/2014 5:56:48 PM
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HAVE YOUR SAY
Vote in the Moneylife poll on
the top issues of the week
Has Arvind Kejriwal done the right thing by
quit ng as CM of Delhi?
4%
53.4%
42.6%
No
No comment
Yes
Are developed
countries policies
responsible for
emerging markets
turmoil?
William Gamble
>> ML Foundatons Legal Resource Centre
was launched by former Miss World
Yukta Mookhey in the presence of several
prominent experts and actvists. You
too can benet from these programmes
by registering at www.mlfoundaton.in
Membership is free.
LRC Launch
ML FOUNDATION
Why are healthcare
costs shootng up?
Prof Dr BM Hegde
How Indian Overseas Bank is
trying to mislead with an ad
Indian Overseas Bank published an ad with
a header Performing Consistently, Growing
Exponentally while releasing its December
quarter results. The only growth the Bank
has shown in past ve quarters is in bad
loans
Defaming loan defaulters: An
uncivil pracce by banks, RBI
and courts?
The courts need to distnguish between
oences. For a civil oence, the rigour of
embarrassment cannot be so high as to be
equated with a criminal oence
RBIs revised 20:80 gold import
scheme and added to the
confusion
RBI came out with the 20:80 gold import
scheme notcaton to curb the volume of
gold import and create a more regulated
domain for gold trading in India, but ended
up creatng greater confusion
Is SEBI aware of huge mutual
fund upfront commissions?
Mutual funds contnue to pay huge
commissions to large distributors to
promote their schemes
United Banks bulging NPAs:
What went wrong?
United Banks CMD opted for VRS as it
reported 194% jump in its NPAs for the
December quarter, bringing into focus the
opaque procedures regarding appointments
of statutory auditors and independent
directors followed by India Inc
Crazy about corporate
governance norms, SEBI is blind
about Geodesic
Geodesic has defaulted in repaying its FCCB
holders and loans to banks. Its accountng is
in a mess while independent directors have
ed. SEBI, however, sees no evil
How banks create their NPAs
Handholding of a new borrower increases
possibilites for future business. Banks can
be strict as a lender at the right tme but
should be ready to act as a friend and guide
of the borrower, when required
Gurpur
Can we have peaceful
and undisruptve
banking services in
India?
Web Content.indd 1 2/28/2014 9:07:45 PM
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Exclusive news, the stories behind the headlines
and the truth between the lines by Sucheta Dalal
MONEYLIFE | 20 March 2014 | 14

A
am Aadmi Party (AAP) leader
Arvind Kejriwals virulent
attack on media houses, and their
alleged connections with Mukesh
Ambani of Reliance Industries,
got the Editors Guild of India
agitated enough to note: with
concern the growing attacks
and unsubstantiated charges
levelled against the media by
political leaders and public figures
dissatisfied with the coverage of
their activities or with criticism
from the media. Specifically,
the editors were distressed at
General VK Singhs use of the term
presstitutes to describe journalists
and found it disquieting that
Arvind Kejriwal attributed corrupt
motives to the media that criticised
him. While the Guild is correctly
agitated about abuse and vague,
unsubstantiated accusations of
corrupt motives attributed to the
media, it does not spare a thought
for others who are in the crosshairs
of these leaders and public figures.
Journalism, as it was taught to
us, required charges to be backed
by facts, preferably with documents.
Not any more. While media houses
make vague references to shoot &
scoot politics, journalism today is
about reporting and relaying every
allegation without any attempt to
check facts even afterwards.
What is Mr Kejriwals
calculation behind these allegations?
As someone doing investigative
work for nearly three decades, I
know that crony capital, with its
lobby groups, wields plenty of
clout and has a nice way cutting off
access, funding and opportunities
for those who dare to be impartial.
On the other hand, as one senior
editor told me, if one decides on a
few high-profile targets and leaves
others alone, there is a good chance
of building a powerful support base
among those who privately dislike
the extraordinary influence of one
business house across the corporate
and political spectrum.
Mukesh Ambanis enormous
clout comes from having several
close aides in both houses
of parliament, in addition to
funding political parties and a
section of the media. Reliances
Foundations and CSR (corporate
social responsibility) vehicles also
offer a ready berth to powerful
politicians and their aides who
are out of power. This makes the
group appear omnipotent. A top
bureaucrat once told me that,
in the 1980s, when Dhirubhai
Ambani headed Reliance, people
used to ask, who is an Ambani
person; these days, under Mukesh
Ambani, the question is who isnt
an Ambani person because that list
may be significantly shorter.
The positive impact of Mr
Kejriwals attack on Mukesh
Ambani is that it has shaken the
group and its acolytes from their
complacency. But will it force the
glitterati and chatterati to choose
sides, or will they profess support
to AAP, while continuing to enjoy
Mr Ambanis largesse?
AAP probably calculates that
Mr Kejriwals courage in taking
on the Ambanis will ensure him
support from all sections including
the salaried middle-class working
in clean information technology
companies and other professionals
who desire to end crony capitalism
without a clear plan or strategy
about how to do it.
Ambani ki dukaan Includes Congress-
BJP-Media Kejriwal
What is Mr Kejriwals idea behind these charges?
Crosshair.indd 2 2/28/2014 8:33:26 PM

A
rvind Kejriwal is, without doubt,
one of the sharpest minds on
the political scene today. His guerrilla
tactics of destabilising established
power centres has won him an
impressive victory in Delhi and his
anarchist ways and disregard for
rules has only increased his following
among disenchanted Indians who want
change at any cost. His followers are
uninterested in facts and details. So, if
one asks Mr Kejriwal why target Mukesh
Ambani alone and remain silent about
others, he could well argue that he will
do what he can and it is for others to
take up the rest.
He has probably calculated that
training his guns on public-private
partnerships in bijlee and paani will
yield better political dividends than
issues that do not affect the aam
aadmi directly, or are less catchy. But
even taking all these calculations into
account, one cannot help wondering
why Mr Kejriwal is silent about the
biggest source of the loot of public
money and the watering hole of all
dubious capitaliststhe frightening
amount of bad loans run up by public
sector banks.
In this context, one also wonders
about the silence on the Rs7,000-crore
largesse, in the guise of corporate debt
restructuring, handed to pepper spray
Rajagopal, the founder of the flying
Lanco group, who has run up huge
losses and gets bank funding with ease.
There is similar silence about Vijay
Mallya of Kingfisher Airways, who also
owed Rs7,000 crore to Indian banks.
One could list many more who are not
in AAPs crosshairs. But one cant help
wondering why they are not.
15 | 20 March 2014 | MONEYLIFE
AAPs Glare
Whys Mr Kejriwal silent
about the massive loot of
banks?
W
ill Subrata Roy, chief
worker of the Sahara group
have to be arrested to ensure his
appearance in Supreme Court (SC)
on 4
th
March? Will he, finally,
understand the gravity of an
unprecedented non-bailable warrant
(NBW) issued by the SC and make
an appearance without coercion?
No. He has once again, employed
the best legal brains in India to
come up with more delaying tactics.
Most ordinary persons would
not have dared to defy the SC
once it had angrily rejected his
plea for exemption from personal
appearance, especially when
he already faces restrictions on
travelling abroad. However, the
extraordinary Sahara saga that is
being played out in multiple courts,
for over three years, defies every
rule in the book about fear and
respect for judicial proceedings.
Even the NBW does not seem
to have woken up this strange
man with powerful friends among
all of Indias movers and shakers.
Immediately after the SC issued a
NBW, the Sahara group released
a letter from Sahara Hospital
claiming that Mr Roy could not
leave the bedside of his ailing
mother. In effect, the man who
usually flies private charters or
helicopters could not leave the
Hospital even for a couple of hours
to remain present in court! The
SC also has been extraordinarily
patient with Subrata Roy. Its
path-breaking order asking him to
refund Rs20,000 crore to investors
was back in August 2012.
That trial itself was marked
by Saharas audacious strategy
of making defamatory and
contemptuous statements against
the Securities & Exchange Board
of India (SEBI) through full-page
advertisements. This stopped only
after SEBI, finally, hit back when
Sahara went too far and called
it a sarkari gunda. Meanwhile,
Saharas battery of lawyers kept
trying to delay compliance though
endless appeals.
Until the SC put Saharas claims
about the funds collected, repaid
and the identity of its investors
under the lens, none of Indias
investigative agencies, nor the
Reserve Bank of India (RBI), had
dared to examine the endless source
of a large gush of money.
There is also no clarity on what
the group has paid in terms of
service tax, income tax or to the
provident fund, although it claims
to employ hundreds of thousands of
people. Even today, the SC is only
looking at two specific companies
that raised over Rs20,000 crore
through a synthetic instrument
called optionally fully convertible
debentures (OFCDs) that were
made to appear like financial paper
that was under regulatory scrutiny
and oversight.
As Moneylife has written earlier,
nearly Rs20,000 crore raised by the
two Sahara realty entities was to be
managed by a tiny partnership firm
of the promoters called M/S Sahara
India. The documents submitted
to the Supreme Court show this
clearly; but it would not be a
surprise if all the money, claimed
to be raised by the Sahara pariwar
from tiny investors, is similarly
controlled.
How has Sahara avoided
investigation and scrutiny by
our revenue, intelligence and
investigation agencies over the
decades? That is a mystery that
even a SC order may not solve.
Maybe Arvind Kejriwal can.
Defiant Sahara
Will Subrata Roy Finally Be
Brought To Book?
Crosshair.indd 3 2/28/2014 8:33:52 PM
O
n 13
th
February, the Securities & Exchange
Board of India (SEBI) revised its corporate
governance code, for the third time, making it
stricter. The new code, effective October 2014, expects to
empower the board to ensure legal and ethical conduct of
management. It also wants the board to evaluate, reward
and, if necessary, remove senior management and ensure
succession planning. The code, says an academics review,
will create an empowered board
that is always vigilant, as opposed
to a passive board that usually
gets active only during a crisis.
This strict code, with many
laudatory provisions, will apply
to all companies listed on our
stock exchanges. Or will it? Look
closely, and you can see that none
of the new provisions will apply
to the entire swathe of listed
public sector undertakings (PSUs)
that have inflicted big losses on
investors. This is evident from
the fact that neither SEBI nor the
stock exchanges, who administer
the corporate governance code
through their listing agreement
with companies, have uttered
a word about the goings on at
United Bank of India (UBI) that
have mauled its share prices.
On 22
nd
February, its chairman
& managing director (CMD),
Archana Bhargava, suddenly
opted for voluntary retirement
citing health reasons. The finance ministry instantly
accepted her application and allowed her to vanish
from public view; she has not responded to our queries.
Ms Bhargava was allowed to opt for voluntary retirement
after Reserve Bank of India (RBI) governor, Dr Raghuram
Rajan, formally asked the government to remove her and
supersede the entire board of the Bank.
Four days after Ms Bhargavas exit, UBIs board
remains paralysed and unclear about its own future; the
Bank is being jointly run by two executive directors.
Anonymous sources, quoted in media reports, say that the
board is unlikely to be superseded, despite the banking
regulators recommendation, because it is a politically
sensitive time. So, how will SEBIs new corporate
governance code help UBI investors who, at the very
least, are entitled to a proper disclosure of facts from the
board of directors? Do PSU boards have truly independent
directors or empowered audit
committees? Will they be exempt
from the tough new norms and
punishments prescribed by the
SEBI code and the new Companies
Act? The answer is: Yes.
Someone like Rajiv Takru,
secretary (financial services),
ministry of finance, will always
call the shots at listed PSU banks.
Management succession and
remuneration will never be within
the purview of these boards;
but government appointees will
continue to wield enormous
influence on behalf of their
political masters, crony capitalists
and influence-peddlers. Investors,
like those of UBI, who have lost
over 70% of the value of their
holdingthe share price declined
from Rs85 in January to around
Rs25 (at the time of writing)
wont even know who to demand
answers from. Their source of
information will continue to be
media reports quoting anonymous sources.
Consider another angle. Reliable sources in the
banking industry and the Bank say that Ms Bhargava
may have exaggerated the bad loans below Rs10 lakh.
For this, she blamed the core banking software (supplied
by Infosys Ltd) which was unable to detect these. She is
also accused of reckless lending by her own senior officers.
These sources say that she was bent on declaring the
entire portfolio, running into over Rs2,000 crore, as non
MONEYLIFE | 20 March 2014 | 16

DIFFERENT STROKES SUCHETA DALAL


UBI Saga Exposes Many Warts
Why SEBIs corporate governance norms are a sham
Neither SEBI nor the stock
exchanges, who administer
the corporate governance
code through their listing
agreement with companies,
have uttered a word about
the goings on at United Bank
of India that have mauled
its share prices
DIFFERENT STROKES.indd 2 2/28/2014 8:36:17 PM
performing assets (NPAs), which is a huge exaggeration.
Many of these loans, they say, are likely to be written back
in the coming months. If this happens, the share price may
rise and investors who sold in a panic have reasons for
serious complaint. Who will SEBI hold accountable? The
passive board which does not even know its own fate? The
government, as owner of UBI, for failing to make full and
proper disclosures to shareholders? The RBI, as banking
regulator, which remains secretive and does not disclose
the true state of UBIs finances or respond to rumours
about merging the Bank with a stronger one? Clearly, the
accountability of PSU bank boards or management is a
hoax on investors.
If corporate governance
norms do not apply to giant
PSUs, or make a difference to
politically connected companies
like Kingfisher Airways, LANCO
(of pepper spray in parliament
fame) or NDTV, what is the
purpose of tinkering with the
rules? Our regulators, like our
investigation agencies, will
nitpick on compliance and harass
companies who follow the rules
or are not powerful enough block
action. The same regulators will
maintain a studied silence over
the massive rise in bad loans of
public sector banks that have even
caused their unions to panic. SEBI
is also silent about the misuse of
funds by large corporate houses
that use their political clout to get
bad loans restructured repeatedly.
Here is yet another aspect to
the governance conundrum in
PSUs. In just over a year at UBI,
Ms Bhargava precipitated a crisis by antagonising her
entire board of directors over declaration of higher NPAs.
She wrote to RBI asking for a forensic audit of UBIs loans,
since neither the RBI inspection nor the Banks external
auditors had recognised the true extent of the rot in the
Bank. Bad loans at the Bank trebledfrom Rs2,964 crore
in March 2013 to Rs8,546 crore in December 2013. The
Bank, which was profitable until the first quarter of
2013-14, reported a Rs489-crore loss in the second quarter
which spiralled to Rs1,238 crore in the December quarter.
Was this an accurate representation of the Banks finances?
Nobody knows. The RBI governors letter, recommending
Ms Bhargavas removal, suggests that it does not see her
as a crusading clean-up agent. However, our sources say
that there is, indeed, a big increase in bad loans at UBI;
but this is in line with those of all public sector banks.
They also agree that much of her provisioning was high
and, probably, exaggerated.
In fact, SEBI has allowed it to become a tradition
for incoming chairmen at PSU banks (including State
Bank of India) to declare higher NPAs so that their own
performance shines in comparison to their predecessors.
In a listed company, this would amount to a deliberate
attempt to depress the stock price and ought to be
investigated under price manipulation and insider trading
rules. Will SEBI dare to launch such an investigation and
initiate action? Or will Archana
Bhargava and the UBI board of
directors be allowed to fade away
without accountability for her
actions or consequences?
Let us now look at another
aspect of how UBI and other
listed PSUs make a mockery of
SEBIs corporate governance
code. The universal view at RBI
and UBI is that Ms Bhargava had
extremely poor people skills and
rode roughshod over her board of
directors and senior management.
However, neither shareholders
nor employees have a say in the
selection process.
Everybody knows that most
appointments (barring rare
exceptions) as bank chairmen
are the result of hectic lobbying
and dubious deal-making with
corporate houses, brokered by
notorious chartered accountants
who turn up as finance ministry
appointees at many banks. So
Ms Bhargava, despite her patchy track-record at Canara
Bank and Punjab National Bank about the quality of loans
and other transgressions, apparently managed to bag a
coveted assignment.
When hundreds of listed government companies
(representing the largest block of assets) have no control
over the appointment of their board of directors or their
chairman and managing director, how fair is it for SEBI to
keep making corporate governance rules more onerous?
17 | 20 March 2014 | MONEYLIFE
DIFFERENT STROKES SUCHETA DALAL

Sucheta Dalal is the managing editor of Moneylife. She was


awarded the Padma Shri in 2006 for her outstanding contribution
to journalism. She can be reached at sucheta@moneylife.in
When hundreds of listed
government companies
have no control over the
appointment of their board
of directors or their
chairman and managing
director, how fair is it
for SEBI to keep making
corporate governance rules
more onerous?
DIFFERENT STROKES.indd 3 2/28/2014 8:36:48 PM
Surprise Gift for Quiz
winners from:
Another quiz to tease your brain. The answers are in
this very issue. The winner will be chosen by a lucky
draw from correct entries and answers published in
the issue dated 17 April 2014. Send in your answers to
quiz@moneylife.in with the Quiz no., name, address &
telephone number before 27
th
March.
Moneylife Quiz - 175
In all, 28 readers got all the answers right last time. The winner of Quiz-173 is Hemlata Gupta from Jharkhand.
Congrats! You will get a surprise gift from Surat Diamond Jewellery.
1. Who is said to have given 1.2b Indians an identity?
a. Subroto Bagchi b. Ramesh Ramanathan
c. Harish Hande d. Nandan Nilekani
2. Name the scientist behind the Uncertainty Principle?
a. Werner Heisenberg b. Sir Isaac Newton
c. Fritz-Albert Popp d. Glen Rein
3. Which is the nodal public sector bank managing the interest
subsidy scheme on educational loans?
a. State Bank of India b. State Bank of
Bikaner and Jaipur
c. Canara Bank d. Indian Bank
4. To which country does the regulatory body Financial Conduct
Authority (FCA) belong?
a. United States of America b. India
c. Australia d. United Kingdom
5. Who said, I hold that the more helpless a creature, the
more entitled it is to protection by man from the cruelty of
man?
a. Mitali Courtinho b. Preeti Bhatt
c. Mahatma Gandhi d. Henry Bergh
6. What is the meaning of jardn colgante?
a. Hanging Garden b. Royal Bakery
c. Outdoor Tables d. Royal Pharmacy
7. What is the promoters shareholding in Narmada Gelatines
Limited?
a. 51% b. 75%
c. 80% d. 100%
8. Who is the managing editor of The Manual of Ideas?
a. John Mihaljevic b. Benjamin Graham
c. Joel Greenblatt d. Susanta Kumar Saha
CURRENT ACCOUNT
BOTTOMLINE BY MORPARIA
MONEYLIFE | 20 March 2014 | 18
The answers to Moneylife Quiz-173 are:
1-a. William Congreve 2-b. Chicago 3-a. Deutsche Asset
Management (India) Pvt Ltd 4-b. Rs1,107 crore 6-d. Brahm
Vasudev 7-c. Application Supported by Blocked Amount 8c. 32
Current Account.indd 2 2/27/2014 5:52:14 PM
M
oneylife has always put the reader first.
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21 | 20 March 2014 | MONEYLIFE
S
ecurities and Exchange Board
of India (SEBI) has pitched for a
part of the money lying in employee
pension funds to be
invested in mutual
fund schemes
for investors
below 40-45
years of age and
earning over
Rs6,500 per
month. While
looking to boost to the mutual fund
industry with contribution from the
Rs5.5-trillion corpus being managed
by the Employees Provident Fund
Organisation, SEBI feels that the age
restrictions would safeguard investors
from unnecessary risks during
the years closer to their retirement.
Simultaneously, income-related
restrictions will protect low-income
employees from the risks
associated with capital
marketsa major
roadblock in
pension money
being invested in
high-risk assets.
MUTUAL FUNDS
SEBI Wants Pension
Money in Mutual
Funds
Your Money
A
s the government prepares to set
up a central know your client
(KYC) system for entire nancial
sector, details of close to 20 million
investors have been collated in a
centralised database covering various
segments of the capital market. In his
Interim Budget speech, the nance
minister said that the government
plans to create one record for all
nancial assets of every individual
to help them as well banks, insurers,
mutual funds and brokers. A
centralised KYC database has already
been set up under SEBI and 18.7
million investors have provided
KYC details to ve KYC registration
agencies registered with the market
regulator at the end of December 2013.
W
ith an eye on elections,
nance minister (FM), P
Chidambaram, is trying to endear
himself to families that have availed
educational loans from banks. He
announced a moratorium for all
education loans taken up to
31 March 2009 and outstanding
as of 31 March 2013. The
government will take over the
liability for outstanding interest as of
31 December 2013, but the borrower
would have to pay interest for the
period after 1 April 2014. Nearly
900,000 student-borrowers would
benet by around Rs2,600 crore
which will be transferred to Canara
Bank, the nodal bank managing
the interest subsidy scheme on
educational loans.
The education loan portfolio
of nationalised banks, as on
31 December 2013, aggregated
Rs57,700 crore in 2,570,254
accounts.
BANKING
Chidambaram Brings Cheer to
Education Loan Borrowers
REGULATION
E
merging market economies are most
unloved ever and are now seen as
the biggest risk to financial market stability,
according to the latest Bank of America Merrill
Lynch Fund Managers survey. The survey
said that, currently, investors are the most
underweight on BRIC countriesBrazil,
Russia, India and China.
About 43% of respondents are of the
opinion that global emerging market (GEM)
equities are undervalued. This, in turn,
could lead to a contrarian rally, according
to the global financial services major. Almost
24% of global investors would like to remain
underweight on GEM in the next 12 months,
down from 28% in January 2013. Overall, 222
panellists with $591 billion of assets under
management participated in the survey.
FIIs Scale Back
Emerging Markets
Exposure
STOCKS
57,000
Mar
2012
Dec
2012
Mar
2013
Dec
2013
45,600
34,200
22,800
11,400
0
Educational Loan Outstanding
Rs57,700 crore in 2,570,254
accounts.
nds to be
mutual
mes
rs
5
e and
er
ile
employees from
associated
marke
road
pen
bei
hig
Rs crore
Your Money.indd 2 2/28/2014 8:53:35 PM
T
he mutual fund industry is once again at the
receiving end of regulatory manipulation. Every
few months, the Securities and Exchange Board
of India (SEBI) develops an urge to mess with the fund
companies. This time, it has issued two new fatwas. One,
SEBI wants the asset management companies (AMCs) to
have a minimum net worth of Rs50 crore, as opposed to
the present minimum of Rs10 crore. Two, it also wants
the AMCs to invest at least 1% of the corpus of each
scheme (up to a maximum of Rs50 lakh) to demonstrate
their skin in the game. Does this, in any way, make things
better for the mutual fund investor?
SEBI, to my mind, seems to be aligned with the interests
of the big fund houses. There are at least 10 AMCs who
will be short of the Rs50
crore equity base. If they
cannot raise the fund, it is
logical to presume that they
would have to sell out or
shut shop.
Nowhere in the world
does such a comical
regulation exist. It is not for
SEBI to promote or decide
on the business strategy for
a fund house. Some fund houses may
not want to go retail or serve every
nook and cranny and so may need
less of capital. Can SEBI decide what
is right?
SEBI, anyway, micro-regulates
fund houses on where they can invest.
And an investor is only entitled to
the NAV of his investment and
nothing more. An increased
capital does not mean he would
get a better return. I recall that, in the early days, when
the net worth was raised from Rs5 crore to Rs10 crore,
one of the fund houses simply bought the premises of
the promoter company for Rs9 crore or so. All that the
promoter did was to shift the ownership of a property
from one to another. And did SEBI do anything? No. The
net worth criterion was met. This time, it is unlikely that
professionally-run fund houses, like Quantum, can find
this Rs50 crore very easily. And pray, what is the need
for this? The SEBI press release justifies the hike with
the following words of wisdom: objective is to ensure
that Mutual Funds achieve a reasonable size and play
an important role in achieving the objective of financial
inclusion while further enhancing the transparency, so
that investors can take informed decision.
A mutual fund will expand its business, if it sees a
benefit in doing so. SEBI, or the government, cannot force
it. And the second part of the sentence is incredible: while
further enhancing the transparency A higher capital base
will enhance transparency?
What SEBI does not seem not to realise or understand
is that the mutual fund industrys expansion is a function
of the per capita disposable incomes. If SEBI can regulate
well, as they are supposed to, investors would be delighted.
Finally, what does this
mean for the investor?
I think this should not
impact investors in any
way. Either the fund house
with a lower capital base
will find the money or sell
out the schemes or fold up
the schemes. In any case,
the NAV is not at any kind
of risk. So, if you are happy
with the performance of the scheme,
do not rush to exit.
The seed capital of the
AMC investing 1% (subject
to a maximum of Rs50 lakh)
also means nothing to you. It
does not give any increased
confidence to anyone.
Funds are managed by
professionals who are
not going to do any
better or worse, simply because there is some money of
the AMC invested in it. What impact will Rs50 lakh have
on a Rs10,000 crore plus scheme like HDFC Top 200?
So, ignore this SEBI missive and carry on what you were
doing. SEBI, run by an ex-IAS officer, possibly believes
in financial inclusion, social justice, etc. But its actions
are creating nightmares for fund houses especially the
smaller ones.

SMART MONEY R BALAKRISHNAN


Mutual Funds vs SEBI
MONEYLIFE | 20 March 2014 | 22
The author can be reached at balakrishnanr@gmail.com
Nowhere in the world does such a
comical regulation exist. It is not
for SEBI to promote or decide on the
business strategy for a fund house.
Some fund houses may not want to go
retail or serve every nook and cranny
and so may need less of capital. Can
SEBI decide what is right?
Another new twist to mutual fund regulationsas regressive
as the previous ones
ses may
e every
y need
e what
ulates
nvest.
ed to
nd
d
with the
do no
T
AM
to a
also
do
SEBI decide whattttttttttttttttttt iis right?
column_Balakrishnan.indd 2 2/27/2014 5:51:27 PM
Mutual Fund helpline Ad.indd 1 2/25/2014 7:22:49 PM

B
alanced funds or dynamic
funds, also loosely known
as tactical asset allocation
funds, have a strong logic, at least
theoretically. It goes something
like this: It is not advisable to try
to time the markets. Balanced
schemes provide long-term capital
appreciation with the cushioning of
debt. If not this, then dynamic funds
would be a good option as they are
designed to switch easily between
equity and debt, depending on the
market conditions. Both categories
of schemes create the notion of
reduced volatility, with a dash of
prudence (balanced fund) or timing
skills of the fund manager (dynamic
funds), something that any average
saver would easily fall for.
But do these schemes truly
provide savers with what they are
looking for? Balanced mutual fund
schemes invest around 65%-85%
in shares of listed companies and
the balance 15%-35% in debt
instruments. Dynamic plans free
fund managers from the constraints
of having to stay fully invested at all
times. They can invest the assets of
the portfolio fully in equity or fully
in debt, according to their market
sense. Balanced schemes have limited
flexibility and are suggested for a
period of five to 10 years.
Moneylife has analysed these
schemes in detail in the past (Fund
Pointer, Moneylife 30 May 2012).
We have found that most balanced
schemes are no different from equity
diversified schemes that invest 80%
or more of their assets in equity.
Well, they have to invest at least
65% in equities, to be eligible for
tax-free long-term capital gains. The
few schemes that have done well in
this category have probably done
so because of better performing
stocks in the portfolio than due to
their asset allocation which has been
similar to that of other schemes in
the same category.
What about dynamic funds
based on the (false) hypothesis that
fund managers can move in and out
of stock even as fund companies
preach that timing the market is
impossible?
While some of the schemes
have done well, it was difficult
to say whether these schemes
would continue to perform well,
based on their brief track record
of performance (Fund Pointer,
Moneylife, 20 March 2013).
However, by investing in a dynamic
scheme, you not only expect fund
managers to move in and out of
stocks and bonds as an asset class
but you also expect them to pick the
right stocks and bonds.
Lets look at what this means.
Lets assume, for a moment, that
fund managers skills are hard to pin
down and much of the performance
is attributable to luck. If so, by
investing in dynamic funds,
you are combining two
different bets.
One, the fund manager
would be skilful or lucky to
move in and out of stocks and
bonds; and, two, he would be skilful
or lucky to pick the right bonds
and stocks. If you assume that the
probability of your fund manager
getting it right is 50%
in both cases, the
joint probability of
him getting both
right, falls to as low
as 25%.
Anecdotally, we know that doing
both, together, is a difficult task,
especially since
market-timing
calls for an
enormous
amount of
research
that fund
companies
dont
MONEYLIFE | 20 March 2014 | 24

POINTERS MUTUAL FUNDS


Dynamic Equity
Funds, Anyone?
Do they work? Can we do any better than them with
some other strategy?
SIP in Index Fund Vs Lump-sum in Dynamic & Bond Funds
12%
8%
4%
0%
-4%
We have ranked the returns of 20 balanced funds, six dynamic funds and one index fund.
While the investment in the index fund was through a monthly STP from a liquid fund, a
lump-sum investment was made in the remaining schemes. As the chart depicts, a SIP in an
index fund would have performed better than a majority of these schemes.
Lump-sum in Balanced Fund SIP in Index Fund Lum-psum in Dynamic Equity Fund
Three-year annualised returns
Fund pointer.indd 2 2/28/2014 8:54:29 PM
25 | 20 March 2014 | MONEYLIFE
POINTERS MUTUAL FUNDS
do. Fund houses are coming out
with newer approaches to asset
allocation making guinea pigs
out of us. While some work with
crude tools, like the historical
price-to-earnings ratio, others use
a more complex approach to asset
allocation. We recently covered DSP
Blackrock Dynamic Fund which
uses the ratio of debt market yield
to equity market yield to decide the
asset allocation.
Indian fund houses seem to be
copying strategies from the West
to make schemes look attractive
and, in turn, garner more assets
to lift their declining business.
Tactical asset allocation strategies
have been around for years in
the US. They offer an algorithm
that can analyse macroeconomic
forecasts and valuation formulas
to identify the ideal time to get in
and out of stocks and bonds. In a
recent paper published in January
2014 by Vanguard titled Broader
Opportunities, Same Limited
Results: An Analysis of
Go-Anywhere Funds,
mentions that the
number of such funds
grew from 61 in
January 1998 to 110
as of June 2013. The
total assets for this group of funds
increased sixfold, from about $60
billion to $356 billion over
the same period. No
wonder, Indian fund
houses are following
the global trend and
have begun to launch
similar schemes.
But have these
funds, which
claim superior
asset allocation
strategies,
rewarded
investors with
superior
performance? Over the period
January 1998June 2013, regardless
of the test used, Vanguard found no
excess returns, or alpha, on average,
the paper mentioned. The paper
concludes that The majority of
these funds underperformed from
January 1, 1998, through June 30,
2013, relative not only to a 60%
equity/40% bond passive allocation
but to their stated benchmark and
a traditional active balanced fund.
The paper further mentions that
Over the past 15 years, these funds
have generated considerable interest
and assets as investors have sought
better performance. Unfortunately,
however, the majority of investors
in these funds appear to have been
unsuccessful in their quest.
In another study conducted
by Morningstar, a research firm,
over the 18 months ending 28 June
2013, only 28 of the 142 funds they
tracked produced a higher return
than the Vanguard Balanced Index
Fund which has a 60% allocation to
equity and the rest in debt.
In the Indian context, the number
of schemes is smaller and these do
not have a significant track record
to judge their performance. Yet, our
analysis has shown that the returns
have been inconsistent.
Is there another way? Investing
the equity portion through a
systematic investment plan (SIP)
and keep the rest in fixed income
is one way to overcome volatility.
How would a SIP, in an index fund,
compare to the 26 balanced and
dynamic schemes?
Over the one-year period ended
31 January 2014, a SIP would have
provided an absolute return of
4.54% which would be better than
the return of a lump-sum investment
in 60% of the schemes. Taking a
three-year period, a SIP investment
would have yielded a return better
than 75% of the schemes. We have
taken for this analysis an index fund,
because it is hard to know about
top-performing funds in advance;
but, if you can, the returns would be
even better.
Even if you had done a SIP in
balanced and dynamic schemes,
your returns from the index fund SIP
would have been better than nearly
60% of the schemes in both the one-
year and three-year periods ending
31 January 2014.
Of course, this is merely
illustrative. We may be biased in
selecting a period where the closing
NAV is high, since the markets have
been on a rising trend, a situation
when SIPs would naturally do better.
Dynamic mutual fund schemes have
the flexibility to time the market
and, therefore, should have done
better than a plain vanilla SIP. They
dont, which is quite revealing.

SIP in All Schemes


Even if you had done a simple monthly SIP in all the schemes, a SIP in an index fund would
have yielded better than majority of the schemes. The returns have been calculated over a
three-year period ending 31 January 2014. *Internal Rate of Return
12%
8%
4%
0%
Lump-sum in Balanced Fund SIP in Index Fund Lump-sum in Dynamic Equity Fund
Three-year yield*
Fund pointer.indd 3 2/28/2014 8:54:57 PM
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COVER STORY
H
igh dividend yield stocks certainly have
a place in portfolio construction; but
the underlying price performance and
relative strength are factors as vital as
dividend. It is important to own a stock for its total
return performance, not just for the dividend.
When we buy a stock, we focus
on possible price appreciation,
that is, capital gain. However, the
most rational measure of returns must
include dividends. Indeed, dividends can make
a signicant difference to your returns over the
long term. In our Cover Story (Wealth Creators, 9
January 2014), which analysed the total shareholder
return of the top 500 companies, dividends, on an
average, contributed 14% to the total returns. For
Hawkins Cookers, which ranked fth on the top 500
list, dividend yield contributed 10% to the total
returns. Therefore, apart from the huge price
appreciation, dividends provided a decent
income as well. In companies, like EID Parry,
dividend contributed 25% and, for Karnataka
Bank, dividend contributed 50% to the total
returns. We tend to forget the important role of
dividend in total returns over the long term.
Dividend is the income one gets, usually regularly,
for owning a stock. Companies with strong cash ow
and commitment to investors generally pay decent
dividends and steadily increase them over years. You
can judge the quality of management by consistent
and high dividends. In fact, the prospects of a stock
are judged by estimates of high or rising dividends.
Increasing, or even continued high dividends, show
that the management genuinely believes that the
MONEYLIFE | 20 March 2014 | 28
These stocks are recording
strong cash ows and are
reasonably valued. So, a
price rise would be a bonus,
over and above current high
dividends. Jason Monteiro
explains
High Dividend
Yield
Stocks 11 with
Cover Story.indd 2 3/1/2014 5:04:40 PM
29 | 20 March 2014 | MONEYLIFE

COVER STORY
company is on strong growth path. Why would it otherwise
give away its earnings to shareholders? Moreover, dividends
are paid by such companies, regardless of market gyrations,
as long as the fundamentals are strong. In other words, if
you invest in a company that has a good track record of
management, healthy cash ows and good dividend history,
and hold it over the long term, the chances are that your
returns will be magnied due to the dividend component.
Therefore, it makes sense to pay attention to dividends.
Usually, dividends form a small part of the price we pay.
For instance, if you buy a share of Nestl today, it would
cost you Rs5,000. It paid a dividend of Rs48.5 per share in
2012-13, i.e., just 0.97% of the price. In nancial jargon,
this is called the dividend yield. What if the dividend yield
is high? It means that the dividend is larger for the price
you pay. Unlike Nestl, take a company like Corporation
Bank. It paid a dividend of Rs23.5 when the market price
was Rs400. The dividend yield is 6%. So you are getting
much more dividend from Corporation Bank for the price
you pay, compared to the Nestl stock. Conversely, the
price is low for the dividend the company is paying out.
Many investors use dividend yield to shortlist low-priced
stocks for investing.
Does this method make sense? Dividend yield can lead
you into a trap, if youre not careful. Dividend paid is
historical data, while price reects the future. There may
be a reason for the price to be low that may come to light
later, leading to still lower prices. If the price drops, and
the dividend paid out remains the same, the dividend yield
will be even higher. But what you gain in dividend, you
lose in price. Worse, a company that has run into problems
may lower the dividend, destroying the reliability of the
data that attracted you in the rst place.
As this example shows, the dividend yield strategy to
picks stocksas, indeed, other stock-picking methods
will not work when applied mechanically. Dividend
yield strategy works well when companies are ltered
appropriately. This is where Moneylifes analysis of
dividend yield comes in.
Companies with a high dividend yield may be good
investments if their fundamentals do not deteriorate.
Dividends are paid out from the cash which comes from
earnings. Therefore, one should look at factors like sales
growth, earnings growth, the size of operations and so on,
to ensure that the high dividend yield you are seeing today
is not a chimera. One should be careful when one indicator
looks good and the rest are dubious. Thats a sure sign
that not all is right with the company. After all, you dont
want to be stuck with a stock that offers good dividend but
no capital appreciation. The company must be running a
business that is growing as well. We have factored in all
these and created a method that gave us a shortlist of stocks
with high dividend yields worth investing in. Of these, we
have selected 11 stocks including four
public sector companies.
1. Accelya Kale Solutions (DY:
11%): Accelya Kale Solutions
offers software solutions for
airlines and travel industry.
The company caters to over 200
airlines customers to streamline
their nancial processes; they also
Yield Matters
Company Name Dividend Yield 5-qtr Sales Growth 5-qtr OP Growth OPM RoNW * RoCE **
Accelya Kale Solutions 11% 29% 94% 40% 105% 123%
Akzo Nobel India 10% 8% 5% 8% 14% 12%
Andhra Bank 9% 13% -4% 18% 8% NA
Syndicate Bank 8% 8% 2% 18% 18% NA
Infinite Computer Solutions (India) 7% -1% 6% 30% 17% 17%
Lumax Auto Technologies 6% 3% -9% 7% 16% 19%
Ador Fontech 6% -9% -30% 12% 22% 18%
Tourism Finance Corporation of India 5% 14% 19% 44% 16% NA
Cheviot Company 5% -2% -22% 12% 9% 9%
GIC Housing Finance 5% 17% 20% 21% 16% NA
Swaraj Engines 5% 15% 9% 14% 33% 37%
* - based on trailing past four quarter net profit
** - based on trailing past four quarter EBIT
OP - Operating Profit, OPM - Operating Profit Margin, RoNW- Return on Net Worth, RoCE- Return on Capital Employed
Cover Story.indd 3 3/1/2014 5:05:11 PM
provide them with insights on business performance, using
decision support tools and data analytics. The company
is a strategic partner to IATA and provides expertise in
revenue accounting, audit & revenue recovery, credit card
management, miscellaneous billing and decision support
& analytics.
The airlines business is complex; competition from
other service-providers is intense and, therefore, the focus
is on innovation, increased productivity and improved
quality. The company has over 1,500 employees, spread
across various nationalities and geographies. In terms of
revenues, 30% of its sales comes from Middle East and
Africa; America contributes 29% to revenues and 25%
comes from Asia-Pacic and India. The remaining 16%
of the revenues comes from the European region.
Net prot of Accelya Kale Solutions rose a huge
64.63%, to Rs31.33 crore, in the quarter ended December
2013 as against Rs19.03 crore during the quarter ended
December 2012. Sales rose 4.10%, to Rs65.32 crore, over
the same period. The companys sales growth, over the past
ve quarters, averaged 29%, while operating prot growth
averaged 94%. The company has an average operating
prot margin of 40% over the ve quarters, one of the
highest in the industry. The stock is reasonably priced,
even after the recent run-up. Its market-cap is 3.74 times
sales and 9.99 times operating prot. The company has
a fantastic RoNW (return on net worth), of 105%, and
a RoCE (return on capital employed) of 123%.
2. AkzoNobel India (DY: 10%): AkzoNobel India
manufactures and markets a wide range of coatings and
specialty chemicals. Its decorative paints business-line
comprises the Dulux brand of paints for interior and
exterior decoration and protection. AkzoNobel NV is
headquartered in Amsterdam (the Netherlands) and is a
Fortune Global 500 company. Earlier a part of Imperial
Chemical Industries (ICI), the company
has been present in India for over
100 years and is a signicant
player in the paints industry.
The specialty chemicals
business in India deals in more
than 30 products grouped
under organic peroxides, metal
alkyls and polymer additives to
pharmaceutical companies, polymer
producers, composite and rubber industry. Sales rose
8.40%, to Rs643.93 crore, in the quarter ended December
2013 as against Rs594.05 crore during the quarter ended
December 2012. However, net prot declined 46.65%,
to Rs27.01 crore, over the same period due to increase in
other expenses for certain services received and higher raw
material costs. The companys sales growth over the past
ve quarters averaged 8% while operating prot growth
averaged 5%. Growth is slow and valuation is expensive.
The market-cap is 21 times operating prot. The company
has an RoNW of 14% and an RoCE of 12%.
3. Andhra Bank (DY: 9%) Andhra Bank is a mid-sized
public sector bank. The Bank has a network of over 1,880
branches, two-thirds of which are in Andhra. Total business
increased to Rs2.23 lakh crore in FY12-13, from Rs1.90
lakh crore in FY11-12, registering a growth of 17.5%. Total
deposits increased by 17.0%, to Rs1.23 lakh crore from
Rs1.05 lakh crore, over the same period. Gross bank credit
increased by 18.2% to Rs1 lakh crore as on 31 March
2013, from Rs84,684 crore as on 31
March 2012. The Bank has done
considerably well in key nancial
ratios, given the performance
of the industry as a whole.
Net interest margin stood at
3.21% in FY12-13 compared
to 3.67% in the previous year.
Cost to income ratio stood at
42.40%. Earnings per share (EPS)
stood at Rs.23.04 and book value per share increased
from Rs.126.36 in FY11-12 to Rs.144.67 in FY12-13.
However, the gross NPAs rose to 5.56% in Q3FY13-
14 from 3.66% in Q3FY12-13 while net NPAs climbed
to 3.65% from 2.29% in the same period, signalling
deteriorating asset quality amid higher interest rates. The
Banks sales growth over the past ve quarters averaged
13%, while operating prot growth averaged -4%. Quite
possibly, the worst is over for the government banking
sector which is suffering from bad decisions and adverse
external environment. One of the crucial measures of
banks is price to book value. The rule of thumb is that a
price to book value of less than 1 signies undervaluation.
Andhra Banks price to book value is 0.36 times.
4. Syndicate Bank (DY: 8%): Syndicate Bank is a south-
based, mid-sized public sector bank with 3,143 branches,
mostly in the south. The Banks net prot declined 25.20%,
to Rs380 crore in Q3FY13-14 as
against Rs508 crore in Q3FY12-
13, while advances increased
from Rs1.37 lakh crore as at
Q3FY12-13 to Rs1.57 crore
as at Q3FY13-14, up 15.17%.
Gross NPA ratio stood at
2.80% in Q3FY13-14 as against
2.31% in Q3FY12-13 due to high
slippage in the past nine months. Net
interest margin was at 2.76% in Q3FY13-14 as against
3.29% in Q3FY12-13. The Bank has an RoNW of 18%
and a price to book value of 0.46 times.
COVER STORY

MONEYLIFE | 20 March 2014 | 30

Cover Story.indd 4 3/1/2014 5:05:31 PM


Advertisements.indd 5 2/19/2014 3:30:19 PM
5. Innite Computer Solutions (DY: 7%): Innite Computer
Solutions, which has 5,000 employees, is a software and IT
services company offering technology solutions to telecom,
healthcare, banking and nance industries in application
management, infrastructure management and product
engineering services including mobility and messaging
products. It also provides niche expertise in enterprise
analytics, enterprise mobility solutions and broadband
networking. It caters to local as well as global clients. The
telecom vertical contributes around 35% of the companys
revenues; the healthcare vertical contributes 17% while
the mobility business contributes 27%.
During the December 2014
quarter, Innite reported a 46%
decline in its net profit, to
Rs15.39 crore from Rs28.74
crore, due to lower sales and
higher forex losses. Its total
revenues decreased 18%, to
Rs89.11 crore from Rs108.19
crore, over the same period. Its
forex losses increased 44%, to Rs9.98
crore, in Q3FY13-14 from Rs6.93 crore in the same period
a year ago. Its sales growth over the past ve quarters
averaged -1% while operating prot growth averaged
6% due to poor performance in the past three quarters.
It has maintained an average operating prot margin of
30%. Its market-cap is 1.45 times sales and 7.24 times
operating prot. The stock is reasonably priced and, if
growth rebounds, shareholders will be in for a pleasant
surprise. Its RoNW is 17% and RoCE is 17% which is
excellent.
6. Lumax Auto Technologies (DY: 6%): Lumax Auto
Technologies is a part of the DK Jain group of companies
that has carved its place in automotive components like
sheet metal parts, fabricated assemblies and tubular parts,
for the two-wheeler and three-wheeler industries. It has
six manufacturing plants; of these, three are in Pune,
two in Aurangabad (Maharashtra) and one in Kala Amb
(Himachal Pradesh) which manufactures two-wheeler
chassis, exhaust systems & mufers, fork & handle bar
assemblies, petrol tanks, adjustor motors, auto lightings,
etc, among other products. Its clients include Bajaj Auto,
Piaggio, Honda, Ashok Leyland, etc.
The Indian automobile
industry is going through a
rough patch. Slow economic
growth and high ination has
dented consumer sentiment and
sales have declined. Net prot
of Lumax Auto Technologies
declined 6.45% y-o-y, to Rs3.48
crore in the quarter ended December 2013 as against
Rs3.72 crore during the quarter ended December 2012
even though revenues rose 22.13%, to Rs127.26 crore over
the same period. Sales growth over the past ve quarters
averaged 3%, while operating prot growth averaged
-9%. Lumax seems reasonably valued with its market-cap
to sales at 0.25 times and market-cap to operating prot
at just 4.03 times. Its RoNW is 16% and RoCE is 19%.
The price is possibly at its lowest and, if the dividend is
maintained, while growth returns in the next two quarters,
the stock would rally and offer decent returns.
7. Ador Fontech (DY: 6%): This is another high-quality
stock whose price is depressed due to macroeconomic
factors. Ador Fontech makes low-heat input alloys, solid
and ux-cored wires, welding and cutting equipment, fume
extraction products, ceramic-lined
components, in-situ machining
systems and thermal spray
products which cater to cement
plants, railways, mining
industries, power plants, sugar
mills, etc.
Ador is organised into two
major operating segments
products and services. Over 75% of
its revenues come from product manufacturing. Globally,
and in India, a slowdown in industrial markets has meant
that growth has been slow. Yet, net prot rose 13.06%,
to Rs2.77 crore in the quarter ended December 2013 as
against Rs2.45 crore during the quarter ended December
2012. Sales rose 7.91% y-o-y, to Rs32.88 crore over the
same period. Sales growth over the past ve quarters
averaged -9% while operating prot growth averaged
-30%, mainly due to the slowdown in the market. Its
average operating prot margin is around 12%. Business
may have hit a trough and, if so, the stock is reasonably
valued. Its market-cap is 0.80 times sales and 6.15 times
operating prot. It has an excellent RoNW of 22% and
RoCE of 24%.
8. Tourism Finance Corporation of India (DY: 5%):
Tourism Finance Corporation of India (TFCI) is a public
limited company set up to provide nancial assistance to
tourism-related activities and projects (hotels, holiday
resorts, tour agencies, convention
halls, etc) of Rs3 crore and above.
Not only does this non-banking
finance company (NBFC)
provide rupee loans, it also
provides nancial assistance in
the form of equipment leasing,
takeover financing, working
capital nancing and underwriting
COVER STORY

MONEYLIFE | 20 March 2014 | 32


Cover Story.indd 6 3/1/2014 5:05:59 PM
COVER STORY

33 | 20 March 2014 | MONEYLIFE


of public issues of shares. The bulk of nancial assistance
is provided to ve-star and three-star hotels. Its capital
adequacy stood at 37.21% as on 31 March 2013 as against
the prescribed norm of 15%. It reported an income of
Rs42.89 crore and a net prot of Rs14.77 crore for the
quarter ended December 2013. Income growth over the
past ve quarters averaged 14% while operating prot
growth averaged 20%. The NBFCs RoNW is 16% and
sports a low price to book value of 0.39 times.
9. Cheviot Company (DY: 5%): Cheviot is one of the
leading manufacturers and exporters of ne jute yarn.
Apart from manufacturing jute ne yarn, normal hessian &
sacking products, it is into the production of high-quality
jute fabric for industrial and decorative applications,
manufactured at two production units near Kolkata.
The Budge-Budge Jute Mill, located at Kolkata, produces
traditional jute products, like sacking and hessian. It set up
an export-oriented unitFalta in 2003 to manufacture
high-quality technical fabrics and jute shopping bags. Jute
sacking products constitute a major share of the companys
turnover. For forward integration, it started producing
jute shopping bags from jute cloth manufactured in-
house, which puts Cheviot in an advantageous position to
guarantee quality and timely shipment
of bags at very competitive prices.
Nearly 50% of its revenues come
from the overseas market.
For the quarter ended
December 2013, sales turnover
was Rs70.37 crore down 3%
y-o-y against sales of Rs73 crore
reported in the quarter ended
December 2012. During the third
quarter, net prot rose 1.22%, to Rs5.98 crore from
RsRs5.92 crore in the same quarter last year. Sales growth
over the past ve quarters averaged -2%, while operating
prot growth averaged -22%. It has an average operating
prot margin of 12%. The stock seems reasonably valued
with a market-cap of 0.46 times sales and 3.62 times
operating prot. Its RoNW and RoCE were 9% each.
10. GIC Housing Finance (DY: 5%): GIC Housing
Finance offers retail housing loans; its business is mainly
concentrated in western and southern India. The NBFC is
present in over 40 locations and focuses more on middle-
and lower-middle-income borrowers where the average
size of loan ranges from Rs12 lakh-Rs13 lakh. Nearly
95% of its borrowers have salary incomes and most of
them are rst-time borrowers. Most of its funding comes
from banks. While the average tenure of its loan book is
12 years, the tenure of its borrowing is around nine years.
Its retail housing loan portfolio in FY12-13 was Rs4, 524
crore as against Rs3, 864 crore in FY11-12, a rise of 17%.
Gross NPAs on retail loans as on 31 March 2013 were
1.86% as against 2.08% for the previous year. Income
rose 13.63%, to Rs158.49 crore, in the December 2013
quarter over those in December 2012. Its income growth
over the past ve quarters averaged 17%, while operating
prot growth averaged 20%. The NBFCs RoNW is 16%
and price to book value of 0.82 times.
11. Swaraj Engines (DY:5%): Swaraj Engines manufactures
tractor engines and engine components for companies like
Mahindra and Mahindra (M&M) and Swaraj Mazda.
The principal business is to supply engines for tractors
manufactured by M&M-Swaraj
Division. M&M, which designs,
develops, manufactures and
markets tractors for Indian and
overseas market, is the largest
manufacturer of tractors in
India and has maintained its
market leadership for the past
30 years. Despite an overall
slowdown in the auto industry,
engine sales during AprilMay 2013 were 11,945 units
as against 9,218 units sold during the corresponding period
of the previous yeara growth of 30%. Net prot of
Swaraj Engines rose 13.01% y-o-y, to Rs15.55 crore, in
the quarter ended December 2013 from the quarter ended
December 2012, while sales rose 20.80%, to Rs149.17
crore over the same period. Sales growth over the past
ve quarters averaged 15% while operating prot growth
averaged 9%. Swaraj Engines has maintained an average
operating prot margin of 14%. Its valuation is reasonable
at a market-cap that is 1.35 times sales and 10.27 times
operating prot. It has an outstanding RoNW and RoCE
of 37% each.
A company paying a high dividend
may not continue to do so forever.
Analysis of dividend yield is one
method in selection of stocks.
However, as mentioned earlier,
dividend yield is not the only
metric one to take into account;
one needs to keep track of a
companys nancials as well as
valuation. Dividend yielding stocks
should form one part of your portfolio and you should
look to diversify your portfolio. For greater insights, you
may want to go through our Street Beat, Long Term and
Value Picks sections. If you are looking for stocks that are
analysed in detail, you may subscribe to our Stockletters.
As with all equity investments, returns are not always
predictable; therefore, you should look for a holding
period of at least ve years.

Cover Story.indd 7 3/1/2014 5:06:38 PM


Stand-alone (Rs Cr) Jun-13 Sep-13 Dec-13
Revenue 31.09 30.36 36.32
OP 6.24 5.56 7.17
OPM 20% 18% 20%
Y-o-Y Revenue Growth 11% 0% 9%
Y-o-Y OP Growth 53% 9% 7%
March Ending FY11 FY12 FY13
RoNW 17% 17% 20%
OP: Operating Profit, Y-o-Y: Year-on-Year, OPM: Operating Profit Margin, RoNW: Return on Net Worth
Volume
Reflecting Growth
Price (Rs/share)
Feb-13 Aug-13 Feb-14
Feb-13 Aug-13 Feb-14
0
20,250
13,500
6,750
27,000
155
95
125
110
140
N
armada Gelatines makes gelatine, ossein and
di-calcium phosphate. It is based in Jabalpur
(Madhya Pradesh) and has convenient access
to its main, and essential, inputs of crushed bones,
acid, lime and good quality water.
Gelatine is an indispensable material in medical
and pharmaceutical fields; it is used in hard capsules,
soft capsules, micro capsules, tablets and other
coating applications. A unique process has also been
developed to provide gelatine suitable for use in
the manufacture of intravenous plasma extenders.
The gelatine used is made such that it decomposes
completely after administration without leaving any
residue. Gelatine also has industrial and photographic
applications.
There is considerable gelatine shortage in the
market because a large chunk of the gelatine produced
in the country is exported to countries looking for
cheap deals provided by the declining rupee. Top
manufacturers of the product in the Indian market
export about half of their produce.
For the quarter ended December 2013, the
companys quarterly sales were Rs36.32 crore
(Rs33.38 crore) and its quarterly net profits were
Rs4.71 crore (Rs4.46 crore). For the year ended
March 2013, the companys annual sales were
Rs121.80 crore (Rs106.71 crore) and its annual net
profits were Rs15.40 crore (Rs11.06 crore). As can be
observed, the growth in revenues has been steady.
Although 2013 was a year of high inflation and
high interest rates, the companys management feels
STOCKS STREET BEAT
MONEYLIFE | 20 March 2014 | 34
Steady Growth
Narmada Ge l at i ne s
Niche area and exports are working well for
the gelatine-maker

Key Financials
Unbiased & Methodical Stock Picking that Works!
110%*
MONEYLIFE STOCK IDEAS
THAT WORK
(MPS)
Exit Price Rs240
On 16 January 2014
Recommended Price Rs114
Moneylife Issue 19 September 2013
* Non- annualised returns
Stock-Streetbeat.indd 2 3/1/2014 5:56:38 PM
R
isa International Limited was
known as Govindji Trikamdas
Exports. In 2011, a new management
took over and began to diversify into
trading. Over the past three quarters,
the company has shown a substantial
growth in revenues. Revenues for
the December 2013 quarter have
grown to Rs45 crore from nil in the
corresponding period last year. Over
96% of the revenues have come from
trading in fabrics.
Over the past 10 months, the stock
price shot up by more than five times,
to Rs988 as on 19 February 2014
from Rs184 as on 15 April 2013. But
is it because the company is showing
better financial performance? In FY12-
13, it reported sales only in the last
quarter of the financial year, of Rs3.08
crore and a net profit of Rs35 lakh; in
FY11-12, the company had reported nil
sales. The stock is quoting at a price/
earnings ratio of nearly 900 times.
In the past, the company has
been suspended for not complying
with the listing agreement. It has also
been pulled up for not submitting its
shareholding pattern and corporate
governance report.

that the pressure on input costs is lower compared to


it was in the previous year. But the upward trend in
energy costs is severe because of the depreciating rupee.
The shareholding pattern of the company includes
75% with promoters and 0.01% with domestic
institutional investors. The remaining 24.99% shares
are with retail
investors
leaving
sufficient
liquidity for
those who
wish to exit
at the time
of booking
profits.
Over
the past five
quarters, the companys average growth in sales was
8% and its average growth in operating profit was an
excellent 34%. The average operating margin is 20%.
The market-capitalisation of the company is just 0.40
times annual sales and 2.01 times annual operating
profit. The return on net worth is 20% and the
return on capital employed is 26%. The company has
negligible debt. Its cash earnings per share are around
Rs43.
Narmada Gelatines distributed dividend of 50%
for FY12-13 and 45% and 40%, respectively, in the
two previous years. The companys share has been
doing well on the Bombay Stock Exchange for more
than a year. Its face value is Rs10 and its book value is
Rs192.86. It has been range bound with a 52-week low
of Rs104 on 14 August 2013 and a 52-week high of
Rs152.85 on 5 February 2014. The share price has the
potential to rise further and the companys share is an
attractive buy at the current market price of Rs141.70
(on 28 February 2014).

STOCKS STREET BEAT

35 | 20 March 2014 | MONEYLIFE


About Our Stock Selection Process: The Street Beat stocks are selected from over 1188
stocks in the Moneylife database. We normally look for companies that are small, growing,
reasonably valued and are in an uptrend. After having selected stocks based on these criteria, we
try to eliminate the ones that could throw up governance issues.
How To Use this Section: Our buy suggestions are given at the end of each analysis. Please
exit if a stock closes 25% below the purchase price. This is called stop-loss. However, if the market
price is above 50% of the purchase price, exit if the stock falls by 25%, below any days closing
price. This is called stop-profit. In other cases, follow this section for our sell suggestions.
Disclaimer: This report is for informational purpose only. None of the stock information, data &
company information presented constitutes a recommendation or a solicitation of any offer to buy
or sell any securities. Information presented is general information that does not take into account
your individual circumstances, financial situation or needs; nor does it present a personalised
recommendation to you. Individual stocks presented may not be suitable for you. Although
information has been obtained from and is based on sources we believe to be reliable, we do not
guarantee its accuracy and the information may be incomplete or condensed. All opinions and
estimates constitute our judgement as on the date of the report and are subject to change without
notice. Past performance is no indication of future results. Investors must do their own research
before acting on them. Data Source: Centre for Monitoring Indian Economys Prowess database.
Risa International (Rs1,102)
na
ational (Rs
Stories of Price Manipulation
Unbiased & Methodical Stock Picking that Works!
Exits & Returns
Street Beat stocks are chosen from a list of undervalued
stocks that are earning a high return on capital. We
recommend an exit when they are no longer undervalued
or not performing as per expectatons.
19% Return: Our recommendaton has so far fetched 19%
since January 2012, based on booked prot and open
positons of more than one year. Returns exclude open calls
of less than a year.
Valuation
Market-cap Rs57.73 cr
Debt Rs0.21 cr
Cash and Cash Equivalents Rs6.35 cr
Enterprise Value (EV) Rs51.59 cr
EBIT (annualised) Rs26.72 cr
EV/EBIT 1.93
Price/ BV 0.74
Price/Earning (annualised) 3.06
Sep-13 Apr-13 Feb-14
435%
(Rs)
1,000
325
100
550
775
Stock-Streetbeat.indd 3 3/1/2014 5:57:21 PM
L
ast fortnight, I had suggested that the weakness
of market indices would continue as foreigners
wake up to the Indian reality of politics and
economics. Well, it turned out to be incorrect. We got
two weeks of rally instead, and the Nifty went up from
6,048 to 6,277. The short downturn I was anticipating
has not happened, yet. My longer-
term arguments of that piece
remain though; we are taken in by
the pronouncements of politicians
and officials without doing our own
thinking and that leads us to wrong
prognosis and expectations.
Over the past fortnight, the
market has been in the comfortable
zone of no news is good news.
All global markets were strong; the US market was
the strongest. The S&P500 made a new all-time high.
Indian market is still below the all-time high made on
9
th
December when the results of assembly elections
of five states showed a pro-BJP wave in three
states and strong support in the
fourth (Delhi). But, following
the sudden decline of the Nifty
from 6,355 on 23
rd
January, the
index has been slow to regain lost
ground.
While the decline was 400 points
over just eight days, the subsequent
rally has been 300 points over 18
daysshorter and slower. The slow
laborious rise creates the probability of a
decline, though the trend now is firmly up.
One of the reasons for the rising trend,
apart from the strong global markets, is the possibility
of an election victory for the BJP. Given that Narendra
Modi has the image of a doer, a pro-business stance
and a no-nonsense approach to governance and
development, the market has become expectant about
a significant change in the economy, post-2014 general
elections.
Indeed, if the BJP and its current allies manage to
get close to 225 seats, as is being projected, it could
well be that Narendra Modi will become the prime
minister (PM). At that stage, the index will shoot up.
Now, the way markets work is, of course, quite different.
It will not wait for this eventuality.
If the market senses that Mr Modi
is bound for the PMs chair, stocks
will rally in advance, in anticipation.
The current firmness in the market
reflects this possibility. This is why
we are turning neutral in the run-up
to the elections for the medium term,
with an eye to turning positive on any
substantial decline.
That leads us to the issue of Sensex valuation which
we have not addressed for a while. The Sensex may
end 2014 with an EPS of Rs1,225exactly what we
were expecting. At 21,000, that means a PE of 16.8.
That is not cheap.
Next year, the EPS could be up 11% or
so. If the fair valuation is 17 times, the
Sensex would be over 23,000.
At a valuation level of 14
times, that is around 19,000,
the Sensex would start to look
cheap. Below 18,000, it would be
a solid bargain. What can completely upset
these sober calculations is a sweeping BJP victory. In
that case, euphoric investors may push
the Sensex to 19 times EPS at least, that is,
around 26,000. Sounds incredible? But that
is how markets work.

investment that is
not subject to market risks
Attractive gifts, invitation for
events and free online help.
For a subscription offer that is
unique, look for a form else-
where in this issue or on our
website at www.moneylife.in
STREET BEAT WHICH WAY
At a val uat i on
l evel of 14 t i mes
(19,000), t he Sensex
woul d st ar t t o
l ook cheap. Bel ow
18,000, i t woul d be
a sol i d bar gai n
Medium-term:
Long-term:
Valuation Matters
Is the market trying to anticipate Narendra
Modi as the PM?
MONEYLIFE | 20 March 2014 | 36
Which way.indd 1 2/28/2014 9:27:43 PM
37 | 20 March 2014 | MONEYLIFE
STOCKGRADER LONG TERM
O
ur long-term portfolio has moved up with the
market; 19 out of 26 stocks have closed positive.
The earnings season is almost over. Our portfolio was
48% in cash until now. Following the December quarter
results, we are adding six stocks to the portfolio, bringing
down the cash level to 36%. Zydus Wellness, Hindustan
Unilever, Nestl, Ranbaxy, Hexaware Technologies and
Hindustan Zinc are the new additions. Shree Cement (up
10%) was the top gainer followed by Sun TV Network
(up 9%). Among the seven stocks at the losing end,
NMDC (13%) declined the most and was followed by
Mindtree (3%).

We are adding six new stocks to the portfolio


Positive Trend
Moneylife Long Term Portfolio (MLTP) will have a maximum of 50 stocks,
weighted equally. MLTP will be benchmarked against the Nifty and large-
cap equity funds. But MLTP returns are not adjusted to the following cost
and constraints of equity schemes:
1) Yearly equity fund charges of around 2%
2) Buying & selling, based on purchase or redemption pressures
3) Impact cost in buying/selling
Return Ratios
@
Valuation#
No. Company ML Sector RoE RoCE MC/OP MC/Sales Entry Price CMP* Change
1 Hero MotoCorp Auto 43% 40% 10.98 1.43 1,823.40 1,975.20 8%
2 Shree Cement Cement 22% 17% 15.30 3.10 4,470.55 4,695.85 5%
3 VST Industries Lifestyle & Leisure 44% 59% 9.66 2.89 1,786.15 1,588.00 -11%
4 Jammu & Kashmir Bank Banks 24% 3.67 0.90 1,370.10 1,349.70 -1%
5 TCS Software & IT Services 51% 63% 18.49 6.40 1,344.15 2,182.40 62%
6 ONGC Oil & Gas 17% 20% 5.90 4.02 339.70 283.95 -16%
7 Sun TV Network Media 24% 35% 9.49 6.95 472.10 358.45 -24%
8 Lupin Pharma 39% 41% 13.44 4.44 629.05 960.45 53%
9 Mindtree Software & IT Services 33% 37% 13.40 2.16 914.55 1,637.75 79%
10 IDFC Financial services 15% 5.57 1.80 154.20 94.45 -39%
11 ITC Diversified 38% 54% 19.88 7.48 334.90 328.75 -2%
12 HDFC Financial services 21% 18.56 5.34 845.00 819.10 -3%
13 HDFC Bank Banks 22% 10.44 3.19 683.00 677.40 -1%
14 Kotak Mahindra Bank Banks 16% 22.56 5.29 774.70 685.40 -12%
15 Bajaj Auto Auto 41% 53% 12.26 2.71 1,820.35 1,923.30 6%
16 Asian Paints Paints 38% 53% 23.95 4.02 457.37 477.15 4%
17 Sun Pharma ^ Pharma 22% 8% 16.25 7.54 484.68 628.10 30%
18 IndusInd Bank Banks 18% 8.03 1.98 427.45 395.95 -7%
19 Castrol India Auto Components 78% 105% 20.75 4.41 310.60 289.00 -7%
20 Titan Company Lifestyle & Leisure 37% 56% 22.23 2.04 241.85 245.60 2%
21 NMDC Steel 22% 27% 6.61 4.46 140.05 126.90 -9%
22 Tech Mahindra Software & IT Services 55% 47% 12.89 2.52 1,794.65 1,821.65 2%
23 Britannia Industries Foods & Beverages 57% 54% 17.94 1.64 876.45 889.35 1%
24 Mahindra & Mahindra Auto 26% 26% 10.75 1.41 938.90 964.70 3%
25 Divi's Laboratories Pharma 31% 37% 16.38 6.84 1,178.40 1,420.35 21%
26 Eicher Motors Auto 45% 48% 32.14 6.42 4,910.15 5,012.60 2%
27 Hexaware Technologies Software & IT Services 34% 40% 11.50 4.54 current price 165.90
28 Hindustan Unilever Consumer Products 141% 133% 24.56 4.15 current price 554.95
29 Hindustan Zinc Non-Ferrous metals 22% 22% 6.72 3.55 current price 116.05
30 Nestl India Foods & Beverages 62% 64% 26.19 5.33 current price 5,000.00
31 Ranbaxy Lab Pharma 2.85 current price 367.75
32 Zydus Wellness Foods & Beverages 44% 43% 19.11 8.68 current price 483.40
Exposure is assumed to be 2% for each stock. This means that the portfolio is 36% in cash now. For calculating portfolio return, the cash balance is expected
to earn 8% (pre-tax).*Latest price is the closing price of every alternate Thursday in Rs; MC: Market-cap; OP: Operating Profit; # Valuation based on the latest
quarter result, annualised; @ Return ratios based on the latest four quarters of profit; ^Consolidated; CMP: current market price
Long Term.indd 2 3/1/2014 5:26:49 PM
A
ll the stocks on our list have declared their results
for the December 2013 quarter. From the list of 75
companies present in the past fortnight, 70 companies
continue to feature in the list. Of these, five companies
which declared their December quarter results recently,
MPS, Igarashi Motors India, Mayur Uniquoters, Rural
Electrification Corp and Ahmednagar Forgings, continue
to be on the list because of their strong December quarter
results. Out of the five which have gone out of the list,
three moved out on weaker results: Deepak Spinners,
Ujaas Energy and Clariant Chemicals.
Of the five new companies that have made it to the
list, three are trending higher while two are showing
weak price strength. La Opala RG and Excel Crop
Care, among the new entrants, have made it to the
list on better results. In the current list, 60 stocks are
trending higher, while 10 remain flat. A major shuffle
in the current list may happen by the end of the current
quarter.

List To Stagnate
STOCKS VALUE PICKS
MONEYLIFE | 20 March 2014 | 38

How To Use the Data: This list is mainly designed to reduce your effort while making a shortlist of
value picks. Stocks have been sorted and displayed according to a composite rank of high return on
net worth and low valuation. You cannot buy these stocks mechanically. To actually select a stock
to buy, you may want to glance at other parameters and apply your own understanding of a sector
or a company. Remember, for value investors, there is something called a value trap. This refers
to a situation when an attractive company is reasonably valued but its internals are deteriorating
which is probably why the stock was cheap to start with. One way to avoid this is to consider sales
growth; so look at the ones with strong sales growth. Also, keep an eye on the tax payout, which is
a measure of corporate governance. The best combination is great financials, low valuation and a
rising stock price. One should buy in an uptrend, though a flat trend of a value stock is perfectly fine
too. A value stock in a strong downtrend is best avoided. Remember, price could go down due to
an adverse event relating to the company or a severe market decline; in either case you dont want
to catch a falling knife.
Company Results
Declared
ML Sector Latest Qtr
Revenue
Growth
Average
3-Qtr Revenue
Growth
Valuation
(MC/OP)
**
Return on
Net Worth
(%) *
Tax
Rate
Price
Trend
Indo Count Inds Dec-13 Textiles 38% 32% 0.70 141% 13% Up
Maral Overseas Dec-13 Textiles 20% 19% 1.05 149% 0% Flat
Adi Finechem Dec-13 Chemicals 41% 17% 1.86 48% 34% Up
Morarjee Textiles Dec-13 Textiles -2% 12% 1.39 43% 0% Up
Indian Terrain Fashions Dec-13 Retail 111% 69% 2.84 48% 14% Up
Sutlej Textiles & Inds Dec-13 Textiles 13% 12% 1.05 36% 17% Up
Suven Life Sciences Dec-13 Pharma 91% 116% 3.83 78% 6% Up
TVS Srichakra Dec-13 Auto Components 15% 11% 1.79 35% 25% Up
Centum Electronics Dec-13 Engineering 60% 68% 3.30 45% -27% Up
Ceat Dec-13 Auto Components 15% 11% 1.87 35% 31% Up
AVT Natural Products # Dec-13 Industrial Intermediates 20% 4% 3.13 38% 33% Up
Chaman Lal Setia Exports Dec-13 Foods & Beverages 21% 52% 0.91 30% 31% Up
MPS Dec-13 Education 24% 14% 4.17 47% 21% Up
RS Software (India) # Dec-13 Software & IT Services 24% 19% 3.17 38% 24% Up
Igarashi Motors India Dec-13 Auto Components 34% 26% 2.36 34% 27% Up
Jayant Agro-Organics Dec-13 Farm & Farm Inputs -40% -52% 1.52 28% 29% Up
Alkyl Amines Chemicals # Dec-13 Chemicals 9% 20% 3.11 33% 33% Up
Fluidomat # Dec-13 Engineering 0% 0% 4.23 37% 33% Up
Heritage Foods # Dec-13 Foods & Beverages 8% 6% 4.40 38% 22% Flat
Vardhman Textiles Dec-13 Textiles 31% 28% 1.73 27% 29% Flat
Munjal Auto Inds # Dec-13 Auto Components 25% 13% 2.89 30% 5% Up
KRBL Dec-13 Foods & Beverages 30% 26% 2.19 27% 27% Up
Atul Auto # Dec-13 Auto 19% 19% 5.35 39% 31% Up
Indag Rubber # Dec-13 Auto Components 0% -1% 4.47 34% 24% Flat
Shivam Autotech Dec-13 Auto Components 18% 9% 1.55 25% 11% Up
Vikram Thermo (India) # Dec-13 Pharma 23% 24% 4.26 32% 33% Down
Balkrishna Industries Dec-13 Auto Components 25% 7% 3.59 30% 34% Up
Gujarat Gas Co # Dec-13 Oil & Gas 2% 0% 6.47 39% 30% Down
IL & FS Investment Managers Dec-13 Financial Services 0% 9% 8.21 51% 31% Flat
Granules India Dec-13 Pharma 51% 41% 2.20 25% 32% Up
Stocks Value Pick.indd 2 3/1/2014 5:25:28 PM
STOCKS VALUE PICKS
39 | 20 March 2014 | MONEYLIFE
Ajanta Pharma # Dec-13 Pharma 31% 36% 8.56 50% 38% Up
Atul Dec-13 Chemicals 31% 14% 3.97 28% 30% Up
VST Tillers Tractors # Dec-13 Farm & Farm Inputs 31% 39% 4.51 30% 30% Up
Aurobindo Pharma Dec-13 Pharma 33% 30% 4.93 31% 11% Up
Munjal Showa # Dec-13 Auto Components 6% 0% 2.30 24% 14% Up
Mayur Uniquoters Dec-13 Auto Components 30% 23% 8.54 43% 32% Up
Rural Electrification Corp # Dec-13 Financial Services 24% 27% 3.31 26% 26% Flat
Alembic Pharmaceuticals # Dec-13 Pharma 29% 25% 9.64 48% 21% Up
Eclerx Services Dec-13 Software & It Services 28% 24% 10.59 55% 18% Up
Benares Hotels Dec-13 Hotels 16% 13% 3.03 24% 31% Flat
Accelya Kale Solutions # Dec-13 Software & It Services 4% 16% 11.62 105% 32% Up
Vinati Organics # Dec-13 Chemicals 21% 31% 7.13 33% 33% Up
Narmada Gelatines # Dec-13 Chemicals 9% 7% 1.88 22% 29% Up
Ambika Cotton Mills # Dec-13 Textiles 36% 25% 1.34 21% 24% Up
Symphony Dec-13 Consumer Durables 29% 79% 10.58 44% 29% Up
VST Industries # Dec-13 Lifestyle & Leisure 20% 18% 10.58 44% 31% Flat
Zensar Technologies Dec-13 Software & IT Services 3% 8% 7.51 33% 29% Up
Jammu & Kashmir Bank # Dec-13 Banks 11% 10% 3.91 24% 31% Up
La Opala RG # Dec-13 Glass 14% 13% 9.59 37% 29% Up
Vakrangee Dec-13 Software & IT Services 26% 21% 7.48 31% 27% Up
Suprajit Engineering # Dec-13 Auto Components 25% 14% 5.88 28% 28% Up
Power Finance Corp Dec-13 Financial Services 24% 26% 2.69 22% 27% Up
Ahmednagar Forgings Dec-13 Auto Components 74% 55% 0.83 20% 29% Up
Supreme Industries # Dec-13 Plastics 20% 16% 9.27 35% 33% Up
Yes Bank Dec-13 Banks 19% 26% 5.43 27% 32% Down
Syndicate Bank Dec-13 Banks 12% 7% 1.77 20% -28% Flat
Hexaware Technologies # Dec-13 Software & IT Services 25% 13% 9.12 34% 16% Up
Tata Elxsi Dec-13 Software & IT Services 31% 25% 7.68 31% 36% Up
Wim Plast # Dec-13 Plastics 15% 19% 4.57 24% 27% Up
DCM Dec-13 Textiles 15% 19% 2.53 21% 28% Up
Hero MotoCorp # Dec-13 Auto 11% 7% 11.54 43% 16% Flat
Finolex Industries Dec-13 Petrochemicals 6% 5% 6.10 27% 30% Up
CCL Products (India) Dec-13 Foods & Beverages 0% 5% 4.09 23% 32% Up
Acrysil # Dec-13 Consumer Durables 31% 35% 5.67 26% 23% Up
Triveni Turbine Dec-13 Engineering -20% -17% 13.70 56% 32% Up
Tech Mahindra # Dec-13 Software & IT Services 181% 165% 13.00 55% 23% Up
Muthoot Finance Dec-13 Financial Services -12% -4% 3.28 22% 33% Up
Ratnamani Metals & Tubes Dec-13 Steel Products 28% 9% 2.34 20% 33% Up
LG Balakrishnan & Bros Dec-13 Engineering 5% 5% 1.68 19% 20% Up
Amara Raja Batteries # Dec-13 Auto Components 13% 18% 9.55 33% 32% Up
Torrent Pharmaceuticals # Dec-13 Pharma 11% 19% 11.66 40% 18% Up
Excel Crop Care Dec-13 Farm & Farm Inputs 34% 29% 5.37 25% 29% Up
Indraprastha Gas Dec-13 Oil & Gas 20% 19% 4.82 24% 33% Down
Uco Bank Dec-13 Banks 13% 8% 1.25 18% 4% Down
Swaraj Engines # Dec-13 Auto Components 21% 23% 10.14 33% 30% Up
MC: Market-cap (as of 31 December 2013); OP: Operating Profit; * Return on net worth is based on trailing four quarters of net profit; ** Valuation is based on
the recent quarter operating profit annualised; # These stocks have been covered in Stockgrader, Street Beat, Cover Stories or Kensource stockletter
Company Results
Declared
ML Sector Latest Qtr
Revenue
Growth
Average
3-Qtr Revenue
Growth
Valuation
(MC/OP)
**
Return on
Net Worth
(%) *
Tax
Rate
Price
Trend
Stocks Value Pick.indd 3 3/1/2014 5:25:38 PM
Issuer Maturity
Date
Next
Coupon
Last
Yield (%)
ISIN Rating
PFC 8.60% 07 Aug-14 07 Aug-14 10.32 INE134E08BN7 CRISIL AAA
TATACAP FINSER 0% 27 Jan-15 10.23 INE976I07BZ8 CRISIL AA
NHB BONDS 10.24% 11 Sep-16 12 Sep-14 10.20 INE557F08ES9 CARE AAA
NSE data as of last trade date of 25 February 2014
Rajasthan State Road
Transport 10.25%
20 Feb-24 10 Aug-14 10.33 INE700N08015 BWR A
(SO)
TATA MOTORS FIN 9.45% 29 Mar-18 29 Mar-14 10.30 INE155A08126 CARE AA
L&T INFRA FIN 10.35%
(unsecured)
29 Jan-24 29 Jan-15 10.00 INE691I08255 CARE AA
BSE data as of last trade date of 25 February 2014
Maturity Date Last Trade Yield(%)
15 Feb-27 9.34
21 Sep-27 9.33
20 May-23 9.31
G-Sec data as of last trade date of
26
th
February
T
he 10-year benchmark government security (G-Sec) yield, which sets the tone of
the xed-income market, was at 8.74% on 11
th
February and suddenly moved
to 8.92% on 26
th
February. The yields touched two-month high due to expectations
of a liquidity crunch arising from corporate tax payments in March. There are also
redemption pressures from some mutual fund schemes. The three-month inter-bank
borrowing rate jumped 27bps, to 9.67%. RBI has made it clear that containing
ination continues to be its priority.
S
tate Bank of India has reduced
xed deposits (FD) rates by 0.25%
for maturities of three to ve years
and 0.50% for FDs for over ve years.
Canara Bank and Kotak Mahindra
Bank have increased interest rates
for deposits of over Rs1 crore. UBI
has increased lending rates, but cut
interest on deposits.
Sudden Jump in 10-Year G-Sec Yield
Bank FD Rates
T
he rating of United Bank of Indias (UBIs) certicates of deposit (CD)
was lowered by ICRA and CRISIL. CDs are often purchased by mutual
fund (MF) companies and other institutions. Due to the downgrade, there
can be mark-to-market losses for some MF schemes, depending on the
duration of the UBI CD and the amount invested by the
schemes. However, due to their diversied investments,
the impact may be minimal. But it shows that mutual
fund investment even in CDs of public sector banks
(PSBs) can have its risks. Bank NPAs have been a matter
of concern for the past few quarters. Portfolio details of
mutual fund schemes do matter and should be analysed
before making your investment decision. The nature and quality of a
schemes investmentsCD, CP (commercial paper), bonds/NCD (non-
convertible debentures), along with their ratingsshould be of concern to
investors. CDs from PSBs are considered safer than other options, but the
UBI CD downgrade has highlighted the aw in this assumption.
Y
ou can expect to get yield of over 10% for AAA and AA rated bonds maturing in
the next couple of years. The bond yields have improved over the past couple of
weeks due to increase in 10-year G-Sec benchmark yields by 18bps (basis points).
I
nvestors will have ample options for
tax-free bond investments in March.
IREDA and Ennore Port issues were
launched on 17
th
and 18
th
February,
respectively. IRFC (AAA rated) and
HUDCO (AA+rated) bonds were
offered from 28
th
February. The coupon
for IRFC was 8.44% and 8.88% for
10 and 15 years, respectively. HUDCO
offered 8.54%, 8.98% and 8.96% for
10, 15 and 20 years, respectively. NHB
and REC issues were expected to open
on 3
rd
March.
NTPC was also expected to launch
tax-free bonds in mid-March. Investors
lapped up NHBs and NTPCs tax-
free bonds during the last issue and,
hence, a fresh issue from both will be
an option for those who missed it or
got partial allotment. Tax-free bonds
are an excellent option for those in
20%, or higher, tax bracket. Due to
uncertainty (about whether these be
offered in the next nancial year) and
the high rates offered currently, the
option is worth considering.
Options for Tax-free
Bonds
UBI CD Downgrade
Top-rated Corporate Bond Yields
FIXED INCOME
MONEYLIFE | 20 March 2014 | 40
Fixed Income.indd 1 2/28/2014 9:15:07 PM
Moneylife Foundation AD.indd 1 2/28/2014 6:18:17 PM
MONEYLIFE | 20 March 2014 | 42

P
remiums of mediclaim products
have gone up since the new
health insurance regulations came
into effect in October 2013. You
can expect 15% to 35% increase
in your health insurance outgo.
Features like lifelong renewal,
no-claims-based loading come at a
price to be paid by policyholders
across various age groups.
Government insurers have
increased premiums by 20%-25%.
New India Assurance is allowing
policyholders to stay with the old
product Mediclaim 2007, but they
have to pay premium as per the
new product Mediclaim 2012.
In short, there is no escape from
increased premiums. Oriental
Insurance has
changed the way
premium is calculated
for its Happy Family
Floater product which
the insurer terms as
closing a loophole that
was being exploited
by customers. The
premium for this
product, with the new
computation, can be
higher by almost 100%,
in some cases.
ICICI Lombard has
discontinued its old mediclaim
product as it was not compliant
with the new regulations.
Policyholders are forced to move to
the new product, called Complete,
which has a higher premium. The
increase in premium can go up
to 35%. Are the new regulations
being used as an excuse to jack up
the premiums and to make existing
mediclaim obsolete?
Policyholders, whose renewal
is due in 2014, should seek
information from the insurance
company to find out if their
premiums are being increasedng
and, if so, by what extent.
Mediclaim premiums are a major
expense for customers; insurance
companies should be proactive
and give upfront information
about premium increase so that
policyholders can plan for it. Will
some insurers give a nasty surprise
at renewal to avoid giving time to
the insured to plan for
portability?
Some insurers, like
Max Bupa, who already
had a mediclaim
product offering
lifelong renewal
and no-claims-
based loading have
not increased the
premium, although
it was on the
higher side, to
begin with. Bajaj
Allianz had to upgrade its existing
mediclaim product Health Guard
with features compliant with new
regulations, but has refrained from
hiking the premiums.
L
&T General has received
approval for a super top-
up health insurance plan of up
to Rs25 lakh. L&T my:health
Medisure Super Top Up can be
purchased even if you dont have
a mediclaim policy and are willing
to pay hospitalisation expenses up
to specific limit from your own
pocket. If you are already covered
by individual or group mediclaim,
you can still avail the super top-
up to cover yourself beyond the
maximum limit of the existing
mediclaim. United Indias Super
Top-Up was the only standalone
policy available in the market until
now. Max Bupa Heartbeat High
Deductible plan is also super top-
up policy, but it is available only
for those who have a mediclaim
product from the same insurer.
The premium for super top-
up is lower than that for regular
mediclaim. The difference between
super top-up and top-up is that,
in the case of a top-up policy, the
expenses for a single treatment
should be over the threshold,
whereas in a super top-up the total
expenses in a year must be above
the threshold level for the policy
to be useful. Thus, between a top-
up and super top-up, the latter
is more beneficial for customers.
There are several top-up policies in
New products, regulations, features and options,
interpreted from your perspective
Insurance Trends
Steep Rise in
Mediclaim
Premiums
He alt h I nsurance
New regulations an excuse?
L&T General
Medisure Super
Top Up
He alt h I nsurance
Product worth considering
for saving costs
| 42
,
portabil
Som
Max B
had a m
produc
lifelon
and n
based
not i
prem
it w
high
beg
Insurance.indd 2 2/28/2014 8:56:04 PM
168
cases
handled
123
cases
guided
correctly
Moneylife Insurance
Helpline Success
I am indebted to
Moneylife for jumping in and taking
the reins in their hands. I had lost
all hopes of getting my money
back till the day PNB Metlife called
me and confirmed that they would
put Rs25,000 in my account.
- Shunila
I am honoured to
have a great companion
like Moneylife in my life.
It is a matter of pride and
privilege to be a part of it.
- Uttam Kumar Dubey
Special thanks to
Moneylife for the
comprehensive articles
which are full of necessary
information. I searched the
internet and none is as good.
- Girish Kodashettar
The initiative
from your group is
commendable as it will be
helpful to spread awareness
about the dos and donts by
customers before finalising
an insurance product to
prevent from being cheated.
- Amit Mishra
I am extremely
happy about the manner
and speed with which my
issue was handled. This
speaks volumes about
Moneylife Foundation.
- N Kanitkar
y
Within 3 days of
writing to the Helpline, Reliance
credited the money. This was an
amazing turnaround! My sincere
heartfelt thanks to the entire
team at Moneylife Foundation
for acting so swiftly.
- Dinesh Shanbhag
We thank you
for the support you
gave to our cause
which also helped
LIC accept their
mistake.
- N K Bhatt
Aviva tried to
pressurise me to purchase a
policy. Thanks to Moneylife
Foundation, I have taken an
informed decision rather than
hurry and fall into a pit.
- Tushar
I want to thank
Moneylife Foundation for
preventing us ordinary
people from falling into
financial traps.
- Brijesh
45 members got back over
` 29 lakh
Have any insurance-related problem? Contact us at
hp://moneylife.in/promoon/insurancehelp/unregistered.html
Insurance Helpline Success.indd 2 2/28/2014 5:57:55 PM
the market; but they are not worth
falling for. There is mis-selling, as
customers are not aware of the
difference between super top-up
and top-up and usually fall for the
top-up trap. L&Ts Super Top-Up
will have a premium of Rs2,472
for a Rs25-lakh policy (Rs20
lakh cover, Rs5 lakh threshold
deductible) for a customer under
35 years of age. The premium will
be Rs2,719 for individuals in the
36-45 years age group and Rs4,079
for individuals in the 45-60 years
age group. The policy cover in the
above example will kick-in after
your yearly hospitalisation expenses
exceed Rs5 lakh.
T
ata AIA Life has launched
MahaLife Gold, a whole life
cover up to age 85 years that
provides insurance cover and
assured benefits of 5.5% of the
sum assured payable from the 10
th

policy year till maturity. The non-
guaranteed cash dividends will be
paid from 6th policy anniversary
till maturity. Even though there are
assured benefits, the returns from
product is uncertain due to non-
guaranteed payout component. The
product offers limited premium
paying term of 15 years and can
be purchased from age zero (birth).
Tata AIA had a product with the
same name MahaLife Gold before
the new life insurance regulations
came into effect on 1 January 2014.
The old plan offered 5% of the
sum assured from the 10th policy
year till maturity which was at 100
years instead of 85 years offered
by the new plan. MahaLife Gold
was a popular plan for Tata AIA
and competed with Life Insurance
Corporations (LIC) Jeevan Tarang
before the new regulations.

INSURANCE TRENDS

MONEYLIFE | 20 March 2014 | 44


Will IRDA Hike TP Motor
Premiums Steeply?
I
RDAs exposure draft has
proposed a steep increaseof
25%-137%in premiums for
third-party (TP) motor insurance
for 2014-15. The proposed hike is
1%-45% for two-wheelers.
TP vehicle insurance is mandatory
in India and under tariff, but
general insurers are running
at losses due to no-limit for
compensation in case of accidental
death or disability. TP insurance
covers liability arising from third-
party claims due to accidents. Last
year, IRDA had proposed a hike
of nearly 40% for private cars and
100%-300% for goods vehicles.
But, in the final order, IRDA hiked
the premium by only 20% due to
pressure from various stakeholders,
especially transporters. If the
hike is lower than insurers
expectations, will companies
compensate by increasing your
Own Damage premium which is
not under tariff?
IRDA Wants Reducton in
Unclaimed Money with Insurers
I
RDAs has asked insurers to take
steps to ensure timely payout of
dues to policyholders, following
sharply rising trend of unclaimed
amount lying with companies (see
chart). IRDA has asked insurers
to display on their websites
information about any unclaimed
amount of policyholders. For
example, death claim, maturity
claim, survival benefits, premium
due for refund, premium deposit
not adjusted against premium
and indemnity claims remaining
unclaimed beyond six months from
the due date for settlement of the
claim amount. Insurers have been
asked to remit the proceeds of
claims, maturity payments or any
other sum due to the policyholders,
or nominees or assignees, only
through the electronic mode. The
circular is effective 1 April 2014.
Delhi HC Seeks Response from
IRDA, PNB Metlife
T
he Delhi High Court has
sought a response from
IRDA and PNB MetLife on a
plea that seeks to quash a rule
imposing penalty on surrender of
a life insurance policy. Some of the
ULIPs sold before September 2010
had rapacious surrender charges
making people wonder how IRDA
approved such products. Moneylife
has written about the hardship
faced by policyholders who want
to surrender old ULIPs. They are
trapped in a flawed product with
the fine print of hefty surrender
charges, suffering huge losses due
to horrendous surrender charges
of the policy. It is time IRDA
considered a way to make insurers
waive the surrender charges that
tantamount to unjustified penalising
of consumers.

Fine Print
Tata AIA Mahalife
Gold
L i f e I nsurance
Whole life plan till 85
Unclaimed Amount
5,000
2,000
4,000
3,000
0
1,000
2009-10 2012-13
Rs Crore
Insurance.indd 4 2/28/2014 8:56:24 PM
In order to offer you diverse choices, insurers end up creating complexity.
They seem to have an insurance product, no matter what your need! Childrens
education? There is an insurance product for that.
Your Insurance against Insurance
Need post-retirement income? There is an insurance product for that too. Advertisements to
sell these products assure a secure future.
But most of these products deliver poor returns, do not provide adequate coverage of risk and
are designed to benefit the insurer.
Moneylife
Insurance coverage:
bold, unbiased & practical
What You need is insurance against insurance
products that you are lured into buying. You will get
this from our insurance coverage
Insurance ad.indd 1 2/27/2014 6:23:13 PM
S
uddenly, the otherwise sleepy new car market in
India is abuzz with discussions on the range of
small cars which are already out with automatic
transmission or promise to provide automatic
transmission. Primarily, as on date, that means the
Maruti Celerio, which sports a Magnetti Marelli AMT
(automatic manual transmission), and a wide choice of
cars from other stables that have promised the customer
that they are almost ready too.
AMT has automated the functions of a gear-shift
and clutch and ensures that you use the hand-brake
when you have to park. Gear selection is taken out of
your left hand and left foot and transferred to your
fingers, with some very minimal control still left for
those high-revving moments that you may need every
now and then.
All in all, it makes for a relaxed style of driving; but
there is still no clarity on the issue of maintenance as
well as how it will actually perform. To be fair, friends
in the industry tell me that this has been tried and tested
all over the country under real driving conditions. Have
they included the typical overloaded conditions which
require more clutch and gear play than city driving?
If your driving style is simple and non-aggressive,
then this is certainly the best option with non-manual
transmissions going on our roads in any segment. The
old-style automatic transmission causes heavy torque
loss and higher fuel consumption. The continuous
variable transmission is complicated and makes a mess
of the restricted engine area; and the double-clutch
system is better suited for bigger cars because it also
costs a lot.
Expect to see automobile garages attempting
to re-set the AMT soon, to try and achieve better
performance or more economy, as per the customer's
desire. The other benefit I expect from this is that it will
not be so easy any more for valets and others to damage
the car by revving it up excessivelyI hope. There is
always the option of paddle-shifters or moving the drive
position shifter around in such a way that the engine
can be made to over-rev and then be slammed into a low
gear.
W
hats the reality on the latest NCAP (new car
assessment programme) results for Indian cars
which have caused so much stress and confusion with
their convoluted results on entry-level models of many
cars sold in India? Well, without going into the specifics
of their methodology, the makes and models tested, and
the results, here is my view.
Indian road and driving conditions are certainly
different. At this juncture, the idea is to improve the
mobility of people at as low a cost as possible, with
reasonable safety and efficiency. Loading a car with
electronic gadgets on par with the rest of the world will,
at this juncture, not really fit into that set of parameters.
Though, personally, I do wish people would spend more
on safety equipment than on stereos.
More important, this test also brings out the simple
truth and reality that almost NONE of the cars tested,
brand for brand, would match the same car as sold in
European marketswhich is where the real problem
lies. We ASSUME that foreign brand cars sold to us in
India are the same as those that sell abroad.
Remember, thats why the Morris Oxford was
renamed the Hindustan Ambassador and the Fiat 1100
was renamed the Premier President. And similar names
for other vehiclesTata Mercedes-Benz, Ashok Leyland,
Standard Herald, to name just a few. Time we did the
same, again, instead of fooling ourselves.

MONEYLIFE | 20 March 2014 | 46


Crash Test: Get Real
PERSONAL BUSINESS AUTO
Veeresh Malik started and sold a couple of
companies, is now back to his first love
writing. He is also involved in helping small
and midsize family-run businesses re-invent
themselves.
Automatic manual transmission is the new
buzz in car market
Auto
Mode
Auto.indd 2 2/27/2014 5:59:03 PM
47 | 20 March 2014 | MONEYLIFE
Real Estate
K
arnataka minister for revenue,
V Srinivas Prasad, informed the
legislative council that steps would
be taken to prevent non-agriculturists
from buying plantation lands violating
the provisions of the Karnataka Land
Reforms Act. He was responding to
charges of Janata Dal (Secular) floor
leader MC Nanaiah who said revenue
department officials, particularly in
Kodagu district, have been allowing non-
agriculturists to buy plantation land on
the ground that it is not agricultural land.
The Act prohibits purchase of
agriculture land by non-agriculturists
with an annual income of more than
Rs2 lakh. However, officials have been
allowing transactions of hundreds of
acres of land in the district, resulting
in a complete change of
the district topography.
Buyers have been
converting such land into
resorts or farmhouses. If
the trend continues,
it would be
disastrous and
could affect
the flow of
the Cauvery
River.
Restrictions on Buying
Plantation Land in
Karnataka
M
aharashtra has enacted
the Maharashtra
Housing (Regulation and
Promotion of Construction, Sale,
Management and Transfer) Act
which will create a housing regulator
and will, supposedly, offer buyers an
arbitrating body to attend to their
grievances. It will have the powers
of a civil court, can sentence errant
developers to a prison term of up to
three years and impose nes of up to
Rs1 crore.
The housing regulator can
standardise practices, streamlining
procedures and attend to consumer
grievances in a decisive and timely
manner. The regulatory body can
pass orders to transfer 10% of the
total project to buyers who can then
sell it in the market to cross-subsidise
the construction cost and nish the
project on time. Builders will not be
allowed to sell at least 10% of their
total apartments, known as retained
ats, until they nish construction
and procure the occupation
certicate (OC) for the project.
The Act received presidential
assent this week, making
Maharashtra the countrys rst
state to have a regulator to rein
in the realty sector. The Housing
Regulatory Authority will be headed
by a person of the rank of a principal
secretary. Those dissatised by its
ruling can approach the Housing
Appellate Tribunal chaired by a
serving or retired judge of a high
court.
Impact of
Maharashtra
Housing Act
T
he Uttar Pradesh (UP) government
has decided to enact new
legislation aimed at regulating real
estate agents and ensuring better
services to home-buyers. Officials
said that, under the new law, brokers
will have to register themselves with
a local body and obtain a licence
number before commencing business.
As per the draft legislation,
the district magistrate or any other
top official in each district will be
appointed as the nodal officer who
will issue licences and address
home-buyers grievances against
erring agents, who go scot-free in
case of cheating or poor services. The
draft bill may fix certain educational
qualifications for real estate agents to
be registered with the government.
Gautam Budh Nagar district,
comprising Noida, Greater Noida
and Yamuna Expressway areas, has
50,000 unregulated and unregistered
property agents. UP approximately
has 500,000 unregistered agents,
said officials of the UP government.
UP To Regulate Real
Estate Agents
d the
ould
lturists
iolating
a Land
ng to
) floor
evenue
rly in
owing non-
land on
ltural land.
in a complete change of
the district topography.
Buyers have been
converting such land into
resorts or farmhouses. If
the trend continues,
it would be
disastrous and
could affect
the flow of
the Cauvery
River.
The draft bill may x
certain educational
qualications for real
estate agents to be
registered with the
government
Real Estate.indd 2 2/28/2014 8:52:21 PM
R
ailways are the lifeline of the economy and the
most viable mode of long distance travel for a
large section of the population; in a city like
Mumbai, millions are dependent for their daily travel
to the workplace on the proper functioning of the local
trains. In such a situation, the minimum a citizen would
expect is to have a safe and timely
journey. Unfortunately, over the years,
the Railways appear to have become
totally indifferent to the problems
faced by the rail commuters.
When the Railways change either
the train timings or the route of any
train, particularly a long distance train,
they rarely bother to communicate the
information about the change to the
passengers who hold valid reservation
on that train. At such times, Railways
act even worse than a private transport
operator leaving the poor passengers
to fend for themselves.
However, Susanta Kumar Saha
of West Bengal was not willing to
suffer the indignity in silence. He
had purchased his ticket to go on
11.10.2011 from Kharagpur to Puri.
On the date of the journey, he got
confirmation that the train would run
from Kharagpur. So, he went to Kharagpur Station to
board the train, only to learn from the station master that
the train (Utkal Kalinga Express) would not be touching
Kharagpur Station.
A shocked Mr Saha filed a complaint, through a letter
addressed to the divisional railway manager (DRM),
Eastern Railway, Sealdah Division. There was no response
from the DRM. But he was not the one to give up easily.
He filed a complaint before the North 24 Parganas District
Consumer Disputes Redressal Forum, alleging deficiency
in service by the Railways, but it was dismissed. He filed
an appeal before the West Bengal State Consumer Disputes
Redressal Commission (State Commission) which allowed
the appeal and awarded Rs1,00,000 compensation and
Rs1,000 as cost of litigation.
Railways dragged him to the National Consumer
Disputes Redressal Commission (NCDRC). The counsel
contended that the complainant should have approached
the Railway tribunal for seeking redressal of his grievance
against the Railways. NCDRC noted that the claims
tribunal was empowered only to deal with some specific
matters relating to compensation for loss, destruction,
damage, deterioration or non-delivery of animals or goods
or claims for refund of fares, etc, while the complainant
had not claimed for any refund.
NCDRC noted that the complainants case was that,
despite purchasing a valid reserved ticket, he suffered
mental agony, stress, tension and physical stress which
were caused because of the incorrect and misguiding
information given by Railways enquiry service, as well
as at the enquiry counter at Howrah
Station. As a result, the complainant
was compelled to avail alternative
arrangement that prolonged his
journey by several hours. He claimed
that it was deficiency in service and
negligence on the part of the Railways.
Railways put up the defence of force
majeurethat the route had to be
changed because of Naxalite attack.
NCDRC observed that the
complainant might not be aware of
the diversion of the route of the desired
train for his journey from Howrah
Station to Puri, nor there was a
compulsion to read newspapers. In
fact, the NCDRC was surprised to note
that even though the reservation form
had full information of the passengers,
including their mobile number, the
Railways did not bother to send a
communication to passengers.
By its order dated 21 January 2014, NCDRC upheld
the quantum of compensation awarded by the State
Commission. It is the duty of rail commuters not to accept
the indignities heaped upon them by the Railways by
fighting back to protect their interest and rights available to
them under the law. The Railways, being a monopoly, are
going scot-free at the expense of commuters and it is only
when there is a concerted effort in making the Railways
more accountable will there be some responsibility taken
by the Railways in improving its services.

MONEYLIFE | 20 March 2014 | 48


SD Israni is a corporate lawyer and Fellow
of ICSI. Email: sdisrani@gmail.com
LEGALLY SPEAKING SD ISRANI
Making Railways
Accountable
National Consumer Commission delivers a big
blow for consumers
It is the duty of rail
commuters not to accept
the indignities heaped
upon them by the
Railways by fighting back
to protect their interest
and rights available to
them under the law
Legally Speaking.indd 2 2/27/2014 6:05:16 PM
49 | 20 March 2014 | MONEYLIFE
R
emember Playboy? The one with the hedonism
mantra and the centre-spreads? Well, it carried
articles on some other topics too. Heres one:
A very devoted missionary goes into deepest Africa to
spread the word of the Gospel. Read, to convert the
natives to Christianity. As the ery speech picks up,
the villagers, in a state of agitation, shout, Huzzanga.
Encouraged by this show of emotion, the re-brand revs
up his delivery, only to be greeted by more and more
Huzzangas. Finally, satised that he has done Gods
work that day, he ends and asks the chief to explain a
strange-looking animal in the krrall. Of course, says
the chief, as they edge closer to the ferocious animal.
But just be careful not to step in the Huzzanga. So,
where does this t in with law?
The Environmental Protection Agency (EPA) in
America comprises an over-active bunch of agents, much
like some of our own ministers. Sometimes, they act like
the gun-slinging sheriffs or federal marshals of yore. The
shoot-rst-and-ask-questions-later brand. They once
targeted a chicken farm.
It was a large chicken farm on the banks of a river.
An old farm that was probably as old as the river itself.
It had loads of chicken which were raised for sale.
Business depended on the number of chickens soldthe
more, the better. Problem was, the more the birds, the
more the bird excreta. While most of the stuff is often
recycled as manure, in the instant case, it got washed
down into the river by rain. This waste disposal system
had existed from as long as the farm had.
The DEA (Drug Enforcement Administration) did
not like it. They demanded that the farm stop polluting
the river or shut down. An unstoppable force against an
immovable object. Sparks ew. You be the judge. After
a lot of legal haggling, the court held for the chickens.
Age-old process without any evidence of actual harm
held the day. The DEA had to back off. KFC and others
had their supply and the eggists had their breakfast as
usual. The extension of the episode is this. Can you run
off your muck from your property any way you wish?
The answer is yes-and-no.
In one of his books, Lord Denning tells a delightful
story of a case he had personally decided. The
judgement starts something like this. is a village. It
has a cricket ground. Surrounding the cricket common
are some houses
One of the houses had a new owner. For those who
have played cricket in the by-lanes, the sound of a ball
crashing through a window must still be heard. The new
occupant, however, hated the sound and the ensuing
cost. He sued. Denning disagreed. The ground was
there, he said. It was a cricket ground. You should have
known of the consequences before you bought the place,
he ruled. But, then, cricket, to an Englishman, was a
religion much before it converted the Indians.
In another case, a few days ago, a bullet whizzed
past a mans property. No one was injured. But the
question arose: Did the bullet violate the mans right to
safety on his own property? You be the judge.
The law here says that the right to bear arms
involves a great responsibility. The very fact that a bullet
entered anothers property, even ying through his air,
constitutes a danger. The shooter is at fault and may
lose his licence. In fact, he should.
In law, these cases are referred to as the Wild Beast
Theory cases. What you do on your property is your
business. But the moment you endanger another or
create a nuisance, you are liable. This includes smoke,
stink, dust, sound, heat, cold; just about anything that
makes your neighbours life less happy. But if damage
cannot be proved or the possibility of damage is too
remote, the courts will look askance.
Going back to gully cricket, a compromise was
evolved. One that worked wonderfully well. Each player
would deposit four annas (25 paise), when the cost of
replacement was Re1 and four annas, cricket won the
day; until the time cars invaded the lanes, wanting to
park.

Bapoo Malcolm is a practising lawyer in


Mumbai. Please email your comments to
mail@moneylife.in
Shut Up, Or Put Up
What are some valid grounds of complaint
against your neighbour?
You be the Judge.indd 2 2/27/2014 6:01:06 PM
S
cience is mans wonderment about the universe.
The majority of us are conformists; we do not think
out-of-the-box and are not capable of understanding
progress in science. Occasionally, someone comes along
with a new idea that coruscates like the midday sun.
Our cave-dwelling ancestors were as curious as we are
about this world. Initially, they were content observing
the suns rays coming into the caves where they could
see the shadows on their cave walls. Later, a few daring
thinkers among them ventured out of the cave and were
amazed with the outside world. They came back to tell
the majority who were still inside the
dark caves. Curiously, that situation
obtains even now. Nearly 90 years
ago, Newtonian physics gave way
to Werner Heisenbergs Uncertainty
Principle. Heisenberg went out of
the cave of ignorance created by
Newton and dared to challenge the
accepted norm. We still hang on to
Newtonian physics which is good
enough to make money.
Everything in the physical
universe is made up of sub-atomic
particles such as leptons. These particles exist, when not
observed, as just pure potential. The quantum universe is
waiting for a conscious observer to come along and infuse
energy by using the mind and consciousness (which are
themselves energy). We, the observers, cause a particle,
or groups of particles, to manifest. We communicate with
the quantum field, primarily, through our thoughts and
feelings.
In this universe, there is nothing as enigmatic as the
human body and its working. We still use the outdated
Newtonian physics to understand the human body.
The result has been disastrous. Every single audit, since
Hippocrates, shows how the medical world has been
harming human beings! Science has gone too far with that
mechanistic view of the human being to the quantum view
that shows the human body to be a colony of 100 trillion
human cells which are capable of independent life on
their own. Each cell, in turn, has 100 trillion atoms at the
lowest level and then, of course, the sub-atomic particles.
Each atom in the human body emits a photon light which
can now be studied using the bio-photon camera invented
by Fritz-Albert Popp. When the cells are happy and are
in-sync, one is healthy and vice versa.
The human body is eminently capable of self-healing
without outside help as long as human thoughts and
emotions are positivefilled with universal compassion.
When the mind and consciousness are negative and
hateful, human healing suffers and diseases come up.
The explanation above shows how thoughts and emotions
convert energy probabilities into physical matter. Even
genes can be changed by this healing process, proving
Darwins views to be inadequate. One such experiment
is quoted below.
Cellular biologist Glen Rein (PhD) conceived of a series
of experiments to test healers ability to affect biological
systems. He first studied a group of 10 who were well-
practised healers. They applied the techniques to produce
strong, elevated feelings, such as love and appreciation;
then, for two minutes, they held vials containing DNA
samples suspended in de-ionised
water. When those samples were
analysed, no statistically significant
changes had occurred. A second
group of trained participants did
the same thing; but, instead of just
creating positive emotions (a feeling)
of love and appreciation, they
simultaneously held an intention
(a thought) to either wind or unwind
the strands of DNA. This group
produced statistically significant
changes in the conformation (shape)
of the DNA samples. In some cases, the DNA was wound,
or unwound, by as much as 25%.
Indian wisdom of Ayurveda, and many other so-called
complementary systems, has been trying this Whole Person
Healing (WPH) for centuries with good results. Some
charlatans give those systems a bad name. Allopathic
system is only a few hundred years old and occupies
respectability because it can misuse the word science to
support its tall claims. The tag of science is to frighten
people and get them into their fold. Since this world is
only energy which, when observed, becomes matter, we
need energy sources to heal better.

Professor Dr BM Hegde, a Padma Bhushan


awardee in 2010, is an MD, PhD, FRCP
(London, Edinburgh, Glasgow & Dublin),
FACC and FAMS. He can be reached at
hegdebm@gmail.com
MONEYLIFE | 20 March 2014 | 50
Science That
Seeks the Truth
HEALTH BM HEGDE
Healthcare industry uses science like a dogma.
We need to open our minds
BM Hegde.indd 2 2/27/2014 6:03:26 PM
51 | 20 March 2014 | MONEYLIFE
HEALTH BM HEGDE
PENTAVALENT
VACCINE-RELATED
DEATHS
Government of India is
trying to undermine the
seriousness of deaths
following this new vaccine which it
wants to spread all over India. One
wonders why the government is so
keen to push this down the throat of
hapless children, when doubts about
the vaccine are being voiced all over
the world.
One has only to find out who owns
the vaccine companies?!!
SCREENING FOR NECK
ARTERIES!
Adults should not be screened for
narrowing of the neck arteries,
according to a draft recommendation
from the influential US Preventive
Services Task Force. Narrowing of the
neck arteries, formally called carotid
artery stenosis, reduces blood flow
to the brain and is a risk factor for
stroke. The carotid artery is the blood
vessel that brings blood to the brain,
explained Dr Peter Faries, chief of
vascular surgery at the Mount Sinai
Hospital in New York. Coronary artery
starts in the chest and travels through
the neck until it enters the skull. The
market-driven medical-scare system
now recommends this screening
routinely; but there seems to be no
evidence to support this claim!
PULSED
ELECTROMAGNETIC FIELD
THERAPY (PEMF)
PEMF is like a whole body battery
charger. It helps to recharge the 1,000
trillion body cells by improving ATP
(adenosine triphosphate) production,
increasing tissue oxygenation,
enhancing circulation, promoting
cellular hydration, facilitating
detoxification, and improving overall
absorption of nutrients. In this
era of multiple unhealthy
electromagnetic energy
waves coming from radios, cell
phones, cordless phones, computers,
microwave cookers, Wi-Fi , Internet,
and what have you, PEMF
is like a small jumper cable
on body cells to jump-start them
back to health. Our bodies are but
energy; mind is also the same. The
third dimension of energy comes from
the earths geomagnetic field and the
Schumann ring around the globe of
Suns EMF.
More than 10,000 scientific papers
and more than 2,000 double-blind
studies have been carried out all
over the world on the uselfulness of
PEMF. It started in Russia
and Europe. Our group
introduced this in India
and already more than 500
patients have undergone
this therapy. We have
shown this to be very useful in acute
tissue damage, inflammation and
many other painful conditions. For
restoring health, this is a boon.

DENGUE FEVER
Dengue fever is caused by a family of
viruses transmitted by mosquitoes.
It is an acute illness of sudden onset
that usually follows a benign course
with symptoms such as headache,
fever, exhaustion, severe muscle
and joint pain, swollen lymph nodes
(lymphadenopathy) and rash.
Presence of fever, rash, and headache
(the dengue triad) is the particular
characteristic of dengue. Other signs
include bleeding gums,
severe pain
behind
the
eyes and red
palms and soles.
Dengue can affect anyone;
but it tends to be more severe in
people with compromised immune
systems. Because it is caused by
one of five serotypes of virus, it is
possible to get dengue fever multiple
times. However, an attack of dengue
produces immunity for a lifetime to
that particular viral serotype to which
the patient was exposed.
Haemorrhagic dengue is a more
serious condition and requires careful
management; but, by and large,
dengue does not warrant any scare-
mongering. Improve your immune
system and dengue will not bother
you.

MEDICAL DEVELOPMENTS FROM


AROUND THE WORLD
State Deaths Babies
Vaccinated
per Death
IMR (infant
mortality
rate)
Goa 2 3,829 10
Kashmir 12 7,284 49
Kerala 16 12,252 12
Haryana 5 38,372 54
Tamil Nadu 8 51,823 31
Karnataka 6 75,150 10
Gujarat 2 2,292,46 50
Puducherry 0 Data not available
Delhi 3 Data not available
54
Source: Response of Union health ministry to an RTI
query. This is a gross under-reporting of deaths.
BM Hegde.indd 3 2/27/2014 6:04:15 PM
MONEYLIFE | 20 March 2014 | 52

F
or years considered the
ugly stepsister of beautiful
Barcelona, Madrid has nally
come into its own. It has
emerged as the beating heart of Spain,
a beguiling city that really knows how
to live. The seat of the government
and monarchy, Madrid has an old-world elegance thats
reected everywherefrom the gardens, monuments
and museums to medieval mansions and royal palaces.
Despite being tied to tradition, the city is brimming
with cutting-edge design, ne arts and sheer energy. Its
gregarious nightlife is also legendary; the innumerable
bars and nightclubs enhance the appeal of after-dark
Madrid. No wonder, tourists cant afford to give this
city a miss.
Getting around Madrid is convenient and
reasonably priced. The city sports one of the best
public transportation networks in the world and the
second-largest metro system in Europe. Buses and
subways form an integrated network.
A single ride costs 1.50 / 2, while a
10-ride ticket costs 12.20 / 18.30
(depending on the zone). To save cost,
buy a 10-ride Metro-bus ticket that is
valid on both metro and bus. You can
also buy an unlimited travel pass for
one, two, three, ve or seven days.
The best sightseeing option is Madrid Hop-On
Hop-Off-City-Tour bus. It operates on two separate
routes, but a single ticket is valid on both routes. The
tour costs 21 for one day and 25 for two days. If
youre planning to spend more than a day touring the
city, buy the money-saving Madrid card that provides
free entry to over 50 museums and a variety of
attractions.
If you dont want to travel by public transport, ag
down taxis that are plentiful and not too expensive.
Most taxi-drivers dont speak English, so make sure
to carry your destination address written in Spanish
SPENDING TRAVEL
Livinla Vida Loca
P
h
o
t
o

C
r
e
d
i
t
:

S
a
t
y
a
n

I
s
r
a
n
i
If theres one city on earth
that knows how to live
the crazy life, its Madrid.
Naveena Israni explores the
passion and vibes of this
effervescent city
MADRID
Travel.indd 2 2/27/2014 6:08:29 PM

SPENDING TRAVEL
or your hotels business card. It would help to know
a few Spanish words to indicate directions and street
numbers. Renting a car isnt recommended, since
parking is a nightmare. This makes sense only if youre
planning day-trips to nearby towns.
Though Madrid is considered the most expensive
city in Spain, its cheaper for travellers than major
world capitals like Paris, London or New York.
You can change cash or travellers cheques at any
bank or exchange bureau. Get your cheques in large
denominations to save on per-cheque commission
charges. Exchange bureaux
have longer
hours than
those of banks,
but worse rates
and steeper
commissions.
Most major
credit cards
are accepted
throughout Spain.
Tourists should
watch out for value-
added tax, known
as impuesto sobre el
valor aadido (IVA).
Hotels and restaurants charge
IVA at 7%; on retail goods, its
16%. Visitors are entitled to
a refund of the 16% IVA on
purchases above 90.16 from
any shop. Just ask the shop
for a cash-back refund form and
present it at the customs booth for reimbursement when
you depart from Spain.
Once youve gured out your mode of transport
and payment, begin exploring the citys raw, infectious
energy. Few cities have an artistic pedigree as rich as
Madrids. Masterpieces by Spanish talents such as
Goya, Velzquez, El Greco,Picasso, Dal and Mir,
apart from a plethora of Flemish/Dutch (Rubens, Van
Dyck, Rembrandt, Van Gogh, Bosch), Italian (Botticelli,
Raphael, Caravaggio), French (Monet, Renoir, Degas)
and German (Drer, Cranach, Grien) artists adorn the
citys world-class galleries.
First-time tourists must visit the golden triangle of
museumsMuseo Nacional del Prado, one of the nest
art museums in the world having the best collection of
classical art in Madrid; Museo Thyssen-Bornemisza,
housing one of the most extraordinary private
collections of European art in the world from the 13
th

century to the present day; and Museo Nacional Centro
de Arte Reina Sofa, which has a stunning collection
of Spanish modern art starting from the 20
th
century.
However, these museums are vast, so dont visit them
on the same day. Also, they offer free entry
during certain times of the day, so take
advantage of them on a lesser budget.
The Prado is a seemingly endless
parade of over 7,000 priceless works
that will seduce any art connoisseur.
Though its impossible to see the
entire collection, there are certain
masterpieces you shouldnt miss.
Velzquez is the undisputed
headliner of the Prados
collection. His
Las Meninas is to
the Prado what
Mona Lisa is to
The Louvre in
Paris. Also ranked
among Madrids
most emblematic
paintings are
Goyas The Second
of May, 1808 and
The Third of May,
1808, portraying the
anti-French revolt
and execution of
insurgents in Madrid. The museum timings are 10am-
8pm (Monday to Saturday) and 10am-7pm (Sundays
and public holidays). Theres free entry from 6pm-8pm
(Monday to Saturday) and 5pm-7 pm (Sundays and
public holidays). The entrance ticket costs 14 (general)
and 23 (with visitors guide book). The Prados website
offers timed-entry tickets that are cheaper than those
bought over the counter.
At the Thyssen-Bornemisza (entry ticket 8), begin
your visit on the second oor, home to medieval art,
and make your way down to modern works on the
ground level. Meanwhile, the Reina Sofas (entry ticket
8) biggest draw is Picassos masterpiece Guernicahis
53 | 20 March 2014 | MONEYLIFE
MUSEO NACIONAL DEL
ONE OF THE FINEST ART MUSEUMS IN THE
WORLD HAVING THE BEST COLLECTION OF
CLASSICAL ART IN MADRID
HOP-ON HOP-OFF CITY TOUR BUS
THE TOUR COSTS 21 FOR ONE DAY AND 25
FOR TWO DAYS
Travel.indd 3 2/27/2014 6:13:01 PM
protest against the German bombing of the Basque
town of Guernica in 1937. Another eye-catching
architectural innovation in Madrid is the Caixa Forum,
a private museum of contemporary art and culture
that seems to hover above the ground. You cant miss
the jardn colgante (hanging garden), a vertical wall of
greenery almost four-storey high.
Once youve had your ll of art and architecture,
unwind at the glorious gardens of Parque del Buen
Retiro. Interspersed with marble monuments,
landscaped lawns and abundant greenery, its the
perfect place for a stroll, boat ride or to nurse a cool
drink. The focal point is the articial lake, watched
over by the massive Monument to King Alfonso XII.
Retiro Park comes alive on weekends with street/theatre
performers, live musicians, clowns, magic/puppet/dog
shows, tarot card readers and hawkers.
Another place to chill out is Plaza Mayor, an elegant
and bustling square. Considered Madrids architectural
jewel, it transports you back to the
17
th
century. Its
surrounded on three
sides by ochre-hued
apartments. The only
break in symmetry
is the Real Casa de
la Panadera (Royal
Bakery), decorated with
colourful frescoes. Ringed
with souvenir shops,
cafs and restaurants,
the square is packed with people, day and night. Pull
up a chair (at the outdoor tables) or laze upon the
cobblestones to gaze at the Spanish street life buzzing
through the plaza. Then wander around Los Austrias
neighbourhood teeming with tapas bars and nightclubs.
A noisier gathering place is Puerta del Sol, a plaza with
neo-classical buildings which is considered the heart of
Madrid and one of the busiest places in the city. Indulge
in the various shopping and eating joints, but watch out
for pickpockets. Another tourist attraction is Plaza de
Cibeles that evokes the splendour of imperial Madrid.
It houses the Fountain of Cibeles, which portrays the
Roman goddess of fertility sitting upon a chariot pulled
by two lions. Whenever Real Madrid football club wins
a match, its fans come here to celebrate.
Another must-visit tourist spot is Palacio Real,
one of the most emblematic and beautiful buildings in
Madrid. This 18
th
-century royal palace is the ofcial
residence of the King of Spain, though the royal family
doesnt reside here. However, the palace is sometimes
used for ofcial ceremonies. Be prepared for a visual
onslaught; the opulent interiors, architecture and
artistic treasures will bombard your senses. Tour the
elegant Royal Chambers, resplendent Banquet Hall,
lavish Throne Room and extravagant Porcelain Room
and see their exquisite tapestries, frescoes, artwork,
carvings, china, silverware, etc. Also visit the Farmacia
Real (Royal Pharmacy) that contains a formidable
collection of medicine jars for mixing royal concoctions.
Continue on to the Armera Real (Royal Armoury)
which houses a hoard of medieval weapons and suits
of armour. The palace timings during April-September
are 9am-6pm (Monday to Saturday) and 9am-3pm
(Sundays and public holidays); it closes one hour earlier
from October-March. The entry ticket costs 10.
For football fanatics, a tour of Santiago Bernabeu
(entry ticket 19), the home
of Real Madrid, is not to be
missed. Circumnavigate the
towering stadium and eld,
sit in the players dug-out,
visit the dressing rooms,
Press Room and Real
Madrid Museum, take a
peek at the clubs trophies /
jerseys/shoes or buy Real
Madrid memorabilia from
the club shop. You can
even get morphed photos
clicked with your favourite
player and purchase them
as souvenirs, though they are costly (large photo
17, small photo 12).
If you visit Madrid during the bull-ghting season
(mid-May to October), head to Plaza de Toros Las
Ventas to gain an insight into this Spanish tradition
lled with blood, courage, nobility and, sadly, cruelty.
Las Ventas is one of the largest and most revered
bullghting rings in the world. Each bullght stars three
matadores and six bulls. Each matador leads a team
of toreros, picadores and banderilleros. They aim to
impress the crowd with daring moves which, ultimately,
result in the bull being killed. Buy tickets in advance to
bag good seats. Ticket prices range from 5 to 150.
Madrid also offers excellent shopping and
entertainment opportunities. The smartest shopping
district for tourists is Sol-Salamanca, home to El Corte
Ingls (Spains largest department store); high-street
names like Zara, H&M, Mango; and top designers

SPENDING TRAVEL
MONEYLIFE | 20 March 2014 | 54

BULL-FIGHTING SEASON
FILLED WITH BLOOD, COURAGE,
NOBILITY AND, SADLY, CRUELTY
Travel.indd 4 2/27/2014 6:10:19 PM
55 | 20 March 2014 | MONEYLIFE

When To Go
Spring and autumn are the best seasons to visit Madrid,
especially April, May, June, September and October.
Cultural and street festivals are held for most of May. Its
uncomfortably warm during July-August and bitterly cold
in January-February. If youre here for the art galleries
and museums, avoid Mondayswhen many are closed;
the Reina Sofa is an exception, closing on Tuesdays.
Getting There
Air: Madrid Barajas International Airport is located 13km
from the city centre. Its one of the largest airports in
Europe and serviced by many airlines from Europe and
beyond. The biggest airlines flying to Madrid are:
Emirates, British Airways and Lufthansa. There
are no direct flights between India and Madrid.
Train: Renfe trains connect Madrid with destinations
throughout Spain. Also, the Eurail connects Madrid
with other European cities like Lisbon, Milan, Paris, etc.
Madrid has two train stationsChamartn and Atocha.
Most northbound and international trains arrive and
depart from Chamartn, while trains to Barcelona,
Valencia and southern Spain depart from Atocha.
Where To Stay
Madrid has a large number of hotels. Staying in a luxury
hotel can cost more than 200 a day; mid-range and
semi-luxurious boutique hotels charge 100- 200, while
budget hotels rarely cost over 60. Advance reservation
is recommended. Retiro and Los Austrias are upmarket
areas housing luxury hotels, while Sol and Gran Va
are best for mid-range accommodation. Malasaa
and Chueca offer good budget pensiones (guest
houses), while Huertas and Santa Anaareas have
cheap pensiones and boutique hotels.

ESSENTIAL FACTS
pe and
e:
are best
and
ho
c
like Chanel, Versace, Louis Vuitton, Armani, Adolfo
Domnguez, Cartier, Prada, etc. The most avant-
garde part of Madrid is Fuencarral Street, lined with
restaurants, shops and night clubs. The main market
here is Mercado de Fuencarral. Besides selling clothes,
shoes, accessories and decorative items, it hosts cultural
activities like disc jockey sessions, cinema and theatre
performances. Gran Via is another busy avenue
thats good for shopping, Broadway-type musicals
and amenco
performances. If
youre looking for
bargain deals, shop
at Alcal Street. Or
head to El Rastro,
Madrids largest
Sunday ea market
selling clothes,
leather goods,
jewellery and
handicrafts. But
watch your wallet!
Once
youre done
with sightseeing and shopping,
its time to test Madrids reputation for culinary
excellence. The city has embraced the innovation of
Spains gastronomic revolution, while staying true to
traditional Spanish cooking. Its residents love going out
to eat and drink. Most bars and nightclubs stay open
till 3am or 4am. The practice of stopping for tapas
(small snack) and cana (draft beer) before dinner is an
institution. The secret to enjoying a variety of tapas is
to seek out the specialty of each bar, wash it down with
a drink and move on to the next bar.
Madrid is also teeming with delis, cafs and gastro-
bars with great food and a lively atmosphere. They
range from simple and reasonable to elegant and
pricey. Two people can dine well for 50 or 150or
a lot less if they opt for tapas. A 10% tip for a meal is
considered generous, 5% is more the norm. Finally, no
trip to Madrid is complete without
sampling these must-have food
itemsTortilla Espaola (Spanish
omelette made of eggs, potatoes
and onions), Paella (Spains
national dish made of rice, seafood,
meat and vegetables) and Churros
(Spanish doughnuts).
After spending a few days here,
youll realise that no city captures the
Spanish soul as well as Madrid. Its
architectural and artistic history
provides a glorious backdrop to city life, while the
exotic nature of bull-ghts and amenco lures tourists,
time and again. So what are you waiting for? Pack
your bags and head to Madrid to soak in some Spanish
passion!
PALACIO REAL
ONE OF THE MOST EMBLEMATIC AND BEAUTIFUL
BUILDINGS IN MADRID
Travel.indd 5 2/27/2014 6:10:41 PM
ML FOUNDATION EVENTS
I
ndias legal system and an activist judiciary is probably
the key to its vibrant democracy. However, laws are
always complex and technical. New laws have come in
following two decades of liberalisation. Besides, our legal
system is slow, expensive and complicated. People are
always looking for legal helprelating to financial and
consumer products and servicesas also guidance on how
to use Right to Information (RTI) or file public interest
litigation (PIL), etc.
To help them, Moneylife Foundation launched its
Legal Resource Centre (LRC) on 21
st
February. The LRC
was inaugurated by former Miss World Yukta Mookhey
in the presence of a packed audience where distinguished
lawyers, accountants and activists were present.
In her brief but pointed remarks,
Ms Mookhey said: We often feel
wronged or cheated and believe that
a legal course of action would get us
redress. But you often end up meeting a lawyer or a
doctor or somebody whos going to wrong you further.
We should rather ask ourselves: Do I really want to get
into litigation? Do I really want to fight against something
or do I really want to put my energy, all my emotional
charge into something else that I believe in, said Ms
Mookhey, who has been involved in a tough divorce
battle. Those who want to fight legal battles should
also know that letting go is also a great act. So, I would
really want to suggest that emotional counselling should
be among the various things being offered at Moneylife
Foundations LRC! There are some great lawyers doing
fantastic work and there are really some genuine human
beings who are trying to improve the world. I really hope
and do pray that Legal Resource Centre and Moneylife
Foundation will bring about that change.
The LRC will help the ordinary individual to
navigate the redress systems put in place by a plethora
of independent regulators (SEBI, IRDA, banking
ombudsman, insurance ombudsman, electricity regulators,
etc) and self-regulatory organisations (stock exchanges),
which often have their own quasi-judicial complaints
handling and arbitration systems. It will also help
consumers to draft effective complaints and guide them on
how to argue their case in consumer courts.
The LRC will be specifically useful in dealing with
the Companies Act 2013 which has, for the first time,
created a provision for filing class action suits. Since this
is a new area, people need help to come together to build
an effective case. Even NGOs need help on these matters.
For instance, a large global NGO sought Moneylifes help
in filing complaints about false disclosures by a listed
company regarding its coal reserves.
The LRC will help people with RTI, public interest
litigation (PIL), the draconian Information Technology
Act, etc. Please see the ad on the next page to know the
areas LRC will cover. Please do use the LRC, spread the
word and write to us about how we can improve.
Legal Resource
Centre Launched
Moneylife Foundation launches its third free
helpline, after Insurance and Railways, covering
10 areas of interest to individuals
We should rather ask ourselves:
Do I really want to get into
litigation? Do I really want to
fight against something or do
I really want to put my energy,
all my emotional charge into
something else that I believe in
MONEYLIFE | 20 March 2014 | 56
SHAILESH HARIBHAKTI (L), WELL-KNOWN FINANCIAL EXPERT MAKES
A POINT ABOUT THE LRC AS DOES ACE LAWYER SACHIN GUPTA
was inaugurated by
in the presence of a p
lawyers, acco
In her b
Ms
wro
a le
We s We
Do I D
litiga
fight
I rea
all m
some
Event.indd 2 2/28/2014 9:29:06 PM
LRC.indd 3 2/28/2014 9:23:39 PM
Earning
Curve
Learn the
basics of
saving and
investing
T
he Financial Conduct
Authority (FCA), a
regulatory body in the United
Kingdom, in its first occasional
paper, Applying Behavioural
Economics at the Financial Conduct
Authority, has described the ways
in which behavioural economics will
lead to a more consumer-focused
regulatory approach. In its task
of regulating financial markets,
FCA focuses on the behaviour
of consumers to understand how
decisions are made and how the
external environment can influence
behavioural changes.
Behavioural economics uses
insights from psychology to explain
why people behave the way they
dooften quite irrationally. The
regulator recognises the fact that
individuals operate at two levels of
cognition, namely, intuition, which
is fast and effortless, and reasoning,
which is slow and deliberative.
Most individuals rely on the former.
People do not always make choices
in a rational and calculated way.
In fact, humans are intuitive and
reactive rather than deliberative and
reflective.
The paper mentions that people
often make errors when choosing
and using financial products and
can suffer considerable losses, as a
result. Using behavioural economics,
they can understand how these
errors occur, why they persist and
what they can do to deal with them.
The first part of the paper focuses
on the lessons from behavioural
economics and the reason why
consumer choice in financial
products is prone to errors.
People are mostly blind to their
biases and mistakenly trust their
intuition. Even people familiar
with different types of biases find
it difficult to spot how their biases
affect a particular decision. The
paper explains why biases affect
the choice of retail consumers in
financial markets. Some of their
findings are summarised below.
1. Financial Products Are Difficult
To Grasp: Financial products are
complex and can be difficult to
comprehend. Most people have
little interest in finance and,
therefore, find making financial
decisions hard, unpleasant and
time-consuming. This makes
it difficult for them to evaluate
financial products. And, though
some financial products may come
with elaborate disclosures, these
make them even more difficult to
comprehend, rather than helping
the consumer to make a choice.
Some decisions may depend on
macroeconomic circumstances that
consumers may have little chance of
knowing about or grasping.
2. Many Financial Decisions Require
Assessing Risk and Uncertainty:
People are generally bad at this.
Individuals rely on intuition and
are prone to making errors. Saving
and borrowing decisions, for
instance, often give rise to self-
control problems and may result in
procrastination, e.g., consumers may
over-borrow on a credit card and
then not repay it on time.
3. Many Financial Decisions Are
Emotional: Emotions, such as stress,
fear of losses and regret, can drive
decisions rather than the costs and
benefits of the choices, e.g., fear
might drive the purchase of an
expensive insurance for a phone that
may not really be required.
Using Behavioural Analysis To
Improve Regulations
MONEYLIFE | 20 March 2014 | 58
UKs Financial Conduct Authority is using insights from
behavioural economics for consumer-focused regulation

People do not always


make choices in a
rational and calculated
way. In fact, humans are
intuitive and reactive
rather than deliberative
and reflective
Earning Curve.indd 2 2/28/2014 8:57:39 PM
Financial firms play a crucial
role in shaping consumer choices
through product design, marketing
and the sales process. A greater
issue, as the FCA noticed, is that
problems, often, arise because a
firms product design and sales
processes may accentuate, rather
than ameliorate, the effects of
consumer biases. The paper explores
ways in which firms may profit
from consumer mistakes, with
examples from financial services.
For example, firms can
manipulate consumers emotions,
such as regret in insurance decisions,
to create a demand for a product.
Consumers, often, make predictable
mistakes when encountering
complex pricing schemes. These
mistakes make them vulnerable
to firms deliberately complicating
their pricing schemes, for example,
through drip pricing or teaser rates.
In credit cards, the artificially low
introductory rates are attractive to
consumers and they may not pay
attention to the higher rates they
will end up paying over the long
term.
While FCA considers the
effects of consumers behavioural
errors as business as usual
(since it is difficult to influence
behavioural aspects), the admission
of behavioural issues in decision-
making means that practical
financial regulation can be made
more effective.
FCAs regulatory experience
shows that consumer biases are
usually just one part of the story.
When other structural or systemic
problems are present in markets,
it will probably not be enough
to target only the behavioural
problems; instead, a package of
market-wide measures is likely to be
required. How can FCA intervene to
protect consumers?
Nudge Them: Firstly, it requires
firms to provide specific information
and bans marketing material or
practices which unfairly target
behavioural weaknesses, biases
or mistakes. Another option the
regulator looks to explore is
nudges. The idea of nudges is
that small, well-designed prompts,
rather than constraints, can trigger
behaviour that is well-aligned
with policy goals. Providing
information and changing the choice
environment can be nudges. For
instance, consumers often fail to
act in their own interest by taking
up free or subsidised insulation
of their homes. But giving people
anonymous data about the fuel bills
of other homes in the street where
they live, materially increases the
take-up rate. Nudges were also at
play during the London Olympic
Games when they were used to
coax rather than coerce people to
use public transport, for example,
by sending travel passes and public
transport directions along with
tickets.
Set the Right Default Option:
Secondly, it was found that
consumers often went for the default
option in choosing a product which
would often include an add-on
product. Thus, FCA requires setting
of the default options for products
that require consumers to make an
active decision, instead of being
automatically opted in to purchase
a product. Regulators recently
found, for example, of similar motor
insurance add-on products sold by
similar firms having very different
penetration rates because one had a
default form which consumers had
actively to opt-out, while the other
did not. In fact, 80% of consumers
bought the add-on when they had
already been automatically opted-
in by default, compared to 40%
when they had to actively choose to
purchase it themselves.
Segregate Channels: Thirdly,
instead of allowing products to be
distributed by various channels, the
regulator tries to allow complex
products to be promoted only with
advice. In addition to bans, product
controls could mandate products to
contain specific features or options.
In credit cards, for example, rules
could require that consumers be able
to choose their own spending limit
(within their credit limit), perhaps
for different categories of products
or services, e.g., casinos or gambling
shops.
Ban Exploitative Products: Finally,
the regulator bans specific product
features or products that appear
designed or otherwise likely to
exploit consumer mistakes, or
require products to contain specific
features to address the risk arising
from such mistakes. For example,
auto-renewal feature which comes
as a contract can be detrimental to
consumers who may mistakenly not
have cancelled.
FCA mentions that it will
need to learn how to design and
implement behaviourally informed
remedies, possibly when there
is uncertainty about underlying
consumer biases and their
relationship with other market
features. This implies that they will
need to test the remedies before
implementation more frequently
than has been done previously and
conduct research to gain deeper
insights into specific markets. This,
undoubtedly, is a move in the right
direction.

EARNING CURVE
59 | 20 March 2014 | MONEYLIFE
80% of consumers bought the add-on when they
had already been automatically opted-in by
default, compared to 40% when they had to actively
choose to purchase it themselves
Earning Curve.indd 3 2/28/2014 8:58:32 PM
BOOKS
MONEYLIFE | 20 March 2014 | 60
J
ohn Mihaljevic is the managing editor of The
Manual of Ideas, a monthly journal for value-
oriented investors. The popular investing newsletter
is aimed at generating investment ideas and publishes
interviews with numerous fund managers whose styles
cover a range across areas of investing.
Mihaljevic, in his book
titled The Manual of
Ideas, aggregates the key
takeaways from numerous
interviews with fund
managers and has created
a guide to value investing.
The book covers a range of
value investing styles and
opportunities: deep value,
sum-of-the-parts value,
jockey stocks, following
super investors, small- and
micro-cap stocks, special
situations, equity stubs,
and international equities.
If you are an avid reader
on value investing and have
already read other books
on the subject, theres only
a marginal value addition
to your knowledge.
However, if you are new
to stock investing, this would be a great book to gain
insights into different proven investment approaches.
Each investing category discussed has several dedicated
works. Therefore, those who find a particular approach
interesting, can do their research further.
Unfortunately, this book does not evaluate which
method works best or to identify which strategy one
should use, under what circumstances, and what would
be the outcome. It offers basic knowledge, but you will
have to dig deeper for a better understanding of which
style to actually use and when. This book is more of
a general overview of several approaches to investing
rather than a detailed research on any one of them.
The book offers methods for deciding whether
a company passed the right screen for the wrong
reason, whether the financial statements are fudged, and
discusses several other factors that may miss an investors
eye. In the chapter on deep value, the author describes
Benjamin Grahams approach to cigar butt investing.
Like cigar butts, which may have a few puffs left in
them, there may be stocks that have been discarded but
still have some value left. This is what Graham called
net net stocksstocks which were trading at a discount
to their net current assets.
In the chapter on good and cheap stocks, Mihaljevic
describes the concepts used by Joel Greenblatt to identify
a companys quality. Under this approach, the company
should not only be cheap but should be backed by a
high-quality business. (This is the approach adopted
by Moneylife while picking stocks.) In another chapter,
the author also talks about jockey stocks; in other
words, investing in companies with great management
by reviewing their capital expansion plans and trends as
well as their management compensation and incentives.
The book discusses how to follow investors who have
done well over time and achieve success by investing in
the same companies as they do.
While large companies are well covered by analysts
and institutional investors, Mihaljevic has dedicated an
entire chapter on finding hidden gems among smaller-
sized companies. However, most experienced investors
would be aware of the risks in these stocks; finding
a good bargain requires deeper digging. The book
also covers investing in stocks by looking for value
during special situations such as spin-offs, mergers or
acquisition. On this topic, among the most interesting
books is the one by Joel Greenblatt titled You Too Can
Be a Stock Market Genius.
Finally, choosing an investment style is a matter of
ones own special needs and interests. This book will act
as a good introduction. Jason Monteiro

T he Manual of I de as
A Guide to Value
Investing
A range of value investing styles and
opportunities
While all investors strive toward
essentially the same goalto make
money in the markettheir paths
may differ considerably. The historic
success of an approach means little
if an investor cannot understand the
underlying drivers of success
THE MANUAL OF IDEAS
JOHN MIHALJEVIC
WILEY
Pages 320; $40
Book Review.indd 2 2/28/2014 8:43:41 PM
BOOKS
T
his book is a compilation of Subroto Bagchis
long-running column about sixty men and
women I came in contact (who) left behind a sense
of wisdom. Bagchi shares these with us through this
tome. He classifies his subjects under various categories;
the category is mentioned in italics above the name.
Some of the choices, and their categorisation, would
seem strange. DeterminationRamesh Ramanathan
ex-Citibanker and co-founder of Bengaluru-based NGO
Janaagrha that works
to change the quality of
life in urban India, and
Janalakshmi, an urban
microfinance entity.
He also includes
Nandan Nilekani in this
category, because he gave
1.2b Indians an identity.
Under Vision is Harish
Hande, the winner of the
Social Entrepreneurship
Award of 2007 who
believes that subsidies are
for the rich, sustainability
is for the poor, and
Jimmy Wales, founder of
Wikipedia whose passion
for information arose out
of an operation that saved
his daughters life.
Under Courage is
GR Gopinath of Air
Deccan who went bankrupt twice, and NS Narendra,
owner of a fire-fighting company. There are others who
are low-profile but well-known in their own domain like
VG Siddhartha, son-in-law of former Karnataka chief
minister SM Krishna, promoter of successful ventures
such as Caf Coffee Day.
Bagchi features Kiran-Mazumdar Shaw under
Innovation; Dr Devi Shetty (Narayana Hrudayala),
Dr Sharan Patil (Sparsh Hospital) and Dr Gulapalli
N Rao (LV Prasad Eye Hospital) are placed under
Corporate Leadership. He writes about Dalai Lama and
Jaggi Vasudev, the BMW motorcycle-riding and golf
playing guru, under Altruism.
A few stories are about sheer courage and fortitude.
Like Anu Agas who anchored the family business
(Thermax) after the sudden passing way of her husband
Rohinton. A year later, her mother-in-law, a family pet
and son Kurush (who died in a fatal road accident) all
passed away within a fortnight of each other, giving
her a lesson in life: Pain is inevitable, suffering is
optional.
The story of Shashikant Shetty, the indomitable
owner of a dive bar at a Mumbai suburb, is gripping.
He survived a brutal attack in 2004 at the hands of two
off-duty policemen who drank at his bar, necessitating
180 stitches and blood transfusions. While knocking
on various doors for justice with bandages still on, he
realised how the off-duty rampage by a criminalised
force in uniform held the city to ransom.
In the introduction to the chapter on Vision, Bagchi
quotes from an video-recorded talk of Peter Drucker, the
father of modern management, with Peter Senge, where
he pointed out that the for-profit sector has much to
learn from the not-for-profit sector than the other way
round. It is easier for a for-profit business to sustain
itself because greed is a strong motivator.
Altruism is good but not always as potent as
greed, to build a shared vision of the future of society
in transitiona society that equates success with
consumption and celebrates moving along at all costs.
To create and sustain great businesses also requires the
powers of vision, altruism and volunteerism; the ability
to use technology as an ally, and the capacity to see
problems as opportunities. Many of the cases Bagchi
describes illustrate this.
These stories are interesting but, since Bagchi mostly
says nice things about everybody, ignoring the warts,
his book runs the risk of being seen as a collection
of puff pieces. After all, the unique identity project
of Nandan Nilekani runs the risk of going down in
history as the costliest and most irresponsible of public
projects, especially now that Nilekani has decided to
quit as head of the project and contest as a Congress
candidate. Did his determination to press ahead with
the project ignoring criticisms and challenges, only
amount to pouring billions of dollars down the drain.
Captain Gopinath is a model of courage but only
with other peoples moneymainly of public sector
banks, capitalised periodically with taxpayers money.
The microfinance company of Ramesh Ramanathan is
successful because of the governments failure to create
a fair and competitive lending system. Zen Garden is
a good read. Bagchi describes a wide cross-section of
achievers with great interest and passion. But it is rose-
tinted. Nagesh Kini

Z e n Garde n
Rose-tinted Profiles
Some good profiles, many puff pieces
J
J
JJ
ZEN GARDEN
SUBROTO BAGCHI
Portfolio Penguin
Pages 328; Rs499
61 | 20 March 2014 | MONEYLIFE
Book Review.indd 3 2/28/2014 8:44:04 PM
LIST PRICE: `400
MONEYLIFE PRICE: `350
LIST PRICE: `125
MONEYLIFE PRICE: `100
The most thrilling business book ever written in India.
A fast, colourful narrative knitting together the life
and times of all stock market players involved in two
of Indias biggest stock market scams.
These commonsense guides tell you in an inimitable
easy-to-understand, peppered with lots of real-life
examples, what you must know to make successful
investments in stocks and funds.
Two priceless books of autobiographical
narrative that candidly reveal the
unique thought processes, untiring
efforts and colourful anecdotes of top
achievers such as Ratan Tata, Amitabh
Bachchan, Mukesh Ambani, Aditya
Puri, Rajiv Bajaj, RA Mashelkar, Keki
Dadiseth, Geet Sethi and others.
Contact details: Mail in your remittances to Moneywise Media Pvt Ltd, 315, 3
rd
Floor, Hind Service Industries Premises, Off Veer
Savarkar Marg, Shivaji Park, Dadar (W), Mumbai 400028. Credit card orders can be faxed to Mumbai 022-49205022.
In case payment is made by credit card, date of birth should be mentioned. Rates and offers are valid in India only. This offer is valid for a
limited period. Please allow 4-6 weeks for the delivery of your personal copy. All disputes shall be subject to Mumbai jurisdiction only.
GET YOUR COPY NOW
AVAILABLE AT CROSSWORD BOOKSTORES
UNIQUE BOOKS FROM MONEYLIFE/KENSOURCE
LIST PRICE: `1,200
MONEYLIFE PRICE: `1,000
LIST PRICE: `1,300
MONEYLIFE PRICE: `1,100
COMBO
PRICE
`2,000
Book Ad.indd 1 2/28/2014 9:49:02 PM
63 | 20 March 2014 | MONEYLIFE
INDIAN MARKET TRENDS
The Sensex and the Nifty advanced 3% each during the
fortnight ended 26
th
February. ML Mega-cap Index and ML
Mid-cap Index advanced 3% each. ML Large-cap Index, ML
Micro-cap Index and ML Small-cap Index rose 2% each.
MONEY FACTS STOCKS
Mega-c ap Gai ner s/Loser s 14 Feb 26 Feb Change
ABB India 578.45 707.90 22%
NMDC 145.45 126.90 -13%
Lar ge-c ap Gai ner s/Loser s 14 Feb 26 -Feb Change
Amtek Auto 81.10 99.45 23%
Unitech 12.66 11.75 -7%
Mi d-c ap Gai ner s/Loser s 14 Feb 26 Feb Change
Uttam Value Steels 5.62 7.40 32%
Wheels India 667.75 581.15 -13%
Smal l -c ap Gai ner s/Loser s 14 Feb 26 Feb Change
Adi Finechem 79.80 115.35 45%
Warren Tea 273.60 191.80 -30%
Mi c r o-c ap Gai ner s/Loser s 14 Feb 26 Feb Change
Birla Cotsyn (India) 0.10 0.15 50%
Prime Securities 4.05 2.95 -27%
(All Prices in Rs)
I ndex 14 Feb 26 Feb +/-
ML Mega-cap Index 113.49 117.46 3%
ML Mid-cap Index 121.58 125.67 3%
Nifty 6,048.35 6,238.80 3%
Sensex 20,366.82 20,986.99 3%
ML Large-cap Index 124.12 126.95 2%
ML Micro-cap Index 108.89 111.32 2%
ML Small-cap Index 117.22 119.27 2%
I ndex 14 Feb 27 Feb +/-
Nikkei 14,313 14,923 4%
Hang Seng 22,298 22,828 2%
FTSE 6,664 6,810 2%
Korean Composite 1,940 1,978 2%
Nasdaq Composite 4,244 4,319 2%
Taiwan Weighted 8,514 8,640 1%
S & P 500 1,839 1,854 1%
Bovespa 48,201 47,607 -1%
Shanghai Composite 2,116 2,047 -3%
FUND FLOWS
ML Micro-cap ML Small-cap Nifty
Sensex ML Mid-cap ML Mega-cap
ML Large-cap
Share Prices, August 2013=100
Feb-14 Nov-13 Aug-13
130
100
110
120
Indians: Domestic institutional investors were net
sellers of stocks (Rs2,510.52 crore). They sold shares
worth Rs7,773.51 crore.

The Hang Seng, FTSE, Korean Composite and


NASDAQ Composite rose 2% each; S&P500 went up
by 1%, while the Shanghai Composite declined 3%.
GLOBAL MARKET TRENDS
2,250
2,200
2,150
2,100
2,050
2,000
Shanghai Composite
Aug-13 Nov-13 Feb-14
Foreigners: Foreign institutional investors were net
buyers of stocks (Rs3,294.82 crore). They bought
shares worth Rs20,430.67 crore.

17 Feb-14 26 Feb-14
17 Feb-14 26 Feb-14
FII Net Investments
(Rs Crore)
615
530
275
190
445
360
-140
-615
-520
-235
-330
-425
DII Net Investments
(Rs Crore)
Money Fact.indd 2 3/1/2014 5:20:23 PM
FOOD INFLATION
Combined food inflation
stood at 9.90% for January
2014, down from 11.97% for
December 2013. For rural and
urban areas, food inflation
stood at 10.67% and 8.20%,
respectively, in January 2014.
Inflation in vegetable prices
came down to 21.91% in
January compared to 38.76%
in December. Fruit prices rose
15.66% year-on-year in January,
while pulses were dearer by
2.59% y-o-y. Inflation for
cereals stood at 11.42% and
inflation for milk products was
9.82%. The price rise of non-
vegetarian items, such as eggs,
meat and fish, was 11.69% in
January compared to 12.64% in
December 2013.

MONEY FACTS STOCKS


ML SECTORAL TRENDS
Shares of trading companies and
packaging companies surged 12%
and 10%, respectively, while shares
of cement and sugar companies
advanced 9% and 8%, respectively.
Stocks of steel companies declined
7%, while stocks of airlines
companies and energy companies
fell 3% each.

ML Sec t or al Tr ends
Trading 12% Steel -7%
Packaging 10% Telecom Services -6%
Cement 9% Non-Ferrous metals -4%
Con_EPC_Infra 8% Airlines -3%
Sugar 8% Energy -3%
MONEYLIFE | 20 March 2014 | 64
BULK DEALS
Dat e Company Buyer Sel l er Rs Cr
21 Feb-14 Shoppers Stop Miraj Marketing Company LLP Metropolitan Trading Co 16.92
19 Feb-14 Dhanuka Agri Zoom Leasing & Finance Co Ram Gopal Agarwal 14.03
19 Feb-14 Star Ferro Prem Kumar Bhajanka Vishnu Khemani 11.63
19 Feb-14 Century Ply Vishnu Khemani Prem Kumar Bhajanka 11.60
26 Feb-14 Exdon Trading Rajyavardhan Sonthalia Sinjan Overseas Pvt 0.72
21 Feb-14 ICVL Chem Veena Gupta Pyare Lal Gupta 0.26
18 Feb-14 Gangotri Iron Hallmark Commerce Pvt Sekhwell Trading & Finance Pvt 0.06
WhatsH T

Cement companies were in demand during the fortnight. JK Lakshmi


Cement and India Cements soared 14% each; and Prism Cement, Shree
Cement and Ambuja Cements advanced 10% each.

Whats N T

Steel companies were punished. NMDC, Ramsarup Industries and Steel


Authority of India declined 13%, 11% and 9%, respectively. Tata Steel fell
6%, while Jindal Steel & Power rose 2%, Kalyani Steels advanced 4%.

Compani es 14 Feb 26 Feb +/-


NMDC 145.45 126.90 -13%
Ramsarup Industries 2.79 2.49 -11%
SAIL 61.45 56.05 -9%
Sesa Sterlite 189.70 175.00 -8%
Tata Steel 371.05 349.30 -6%
Sunag Iron & Steel 19.70 19.85 1%
J indal Steel & Power 235.40 239.15 2%
J SW Steel 834.45 858.15 3%
Prakash Industries 37.05 38.15 3%
Kalyani Steels 52.70 54.70 4%
All Prices in Rs
Compani es 14 Feb 26 Feb +/-
J K Lakshmi Cement 68.90 78.85 14%
India Cements 49.10 56.05 14%
Ultratech Cement 1,666.35 1,844.10 11%
Prism Cement 22.90 25.25 10%
Shree Cement 4,262.40 4,695.85 10%
Ambuja Cements 151.40 165.95 10%
ACC 1,010.45 1,090.75 8%
Mangalam Cement 96.35 103.90 8%
Kakatiya Cement 67.15 71.50 6%
Heidelberg Cement 33.50 35.55 6%
All Prices in Rs
ML Steel Index
Aug-13 Nov-13 Feb-14
ML Cement Index
Aug-13 Nov-13 Feb-14
435
335
415
355
375
395
330
255
315
270
300
285
Bottomed Out?
Jan-13 Jul-13 Jan-14
Annual Change
11%
9%
15%
13%
Money Fact.indd 3 3/1/2014 5:20:37 PM
COMMODITY TRENDS
65 | 20 March 2014 | MONEYLIFE
MCX PRICE TRENDS
Particulars Active
Contract
11 Feb-
2014
25 Feb-
2014
Change
%
High Low
Gl obal Commodi t i es
Gold Rs/10gm Apr-14 29,104 30,240 3.9% 34,100 26,445
Silver Rs/kg Mar-14 44,700 47,817 7.0% 62,068 41,600
Copper Rs/kg Feb-14 441.90 444.55 0.6% 537.00 417.50
Lead Rs/kg Feb-14 130.90 130.20 -0.5% 145.85 129.15
Nickel Rs/kg Feb-14 879.40 882.80 0.4% 920.70 838.70
Zinc Rs/kg Feb-14 124.65 127.70 2.4% 136.25 115.85
Crude Oil Rs/barrel Mar-14 6,214 6,304 1.4% 6,570 5,730
Natural Gas Rs/mmBtu Feb-14 295.90 300.80 1.7% 402.70 242.40
Ot her s
Cardamom Rs/kg Mar-14 825.50 802.00 -2.8% 859.00 729.10
Cotton Rs/bale Feb-14 20,620 20,530 -0.4% 21,170 18,840
CPO Rs/10kg Feb-14 548.20 585.20 6.7% 589.00 529.00
Mentha Oil Rs/kg Feb-14 788.90 771.30 -2.2% 943.60 760.10
Potato Rs/100kg Mar-14 1,117.40 1,179.30 5.5% 1,207.40 802.20
MONEY FACTS COMMODITIES
INDEX TRENDS
The US energy department has predicted that natural gas production will
continue to grow. Natural gas futures fell for five consecutive days on the
New York Exchange and was headed for the biggest weekly drop in 17
years after a government report showed a US stockpile decline that was
lower than forecasts. NYMEX natural gas prices crashed by a huge 31.60%,
to $4.441/mmBtu on 27
th
February, from a high of $6.493 on 24
th
February.
On the MCX, February futures crashed by 31.14%, from a high of Rs402.7/
Mmbtu to a low of Rs277.3/mmBtu, over the same period.
COMMODITY FOCUS
MCX Commodi t y I ndi c es
Particulars 14 Feb 26 Feb Change 52-Week High 52-Week Low
Agri 2,492.18 2,646.86 6% 2,669.43 2,169.40
Comdex 4,047.76 4,142.41 2% 4,798.68 3,352.03
Energy 4,391.15 4,479.01 2% 5,301.62 3,335.05
Metal 4,886.94 4,967.81 2% 5,887.99 4,249.45
Soybean
S
oybean prices have rallied this year,
amid signs of strong demand from
China. Demand in the spot market
improved over the week due to a rise
in overseas soybean prices on concerns
over emergence of
El-Nino for the 2014
monsoon season. The
Soybean Producers
Association said that
soybean production
is to be lowered to
12.23mt (million tonnes) from 12.98mt
earlier. The March soybean contract
on the NCDEX closed 0.86% up, at
Rs4,050.5/100kg on 27
th
February.

Copper
C
opper prices have been under
pressure on concerns about Chinas
economy and as Chinas property prices
cooled down. This has dampened
demand for copper
not only in the
construction sector
but in the home
appliances sector as
well. This affected
prices internationally
as China is the second in global copper
demand, behind US. On 27
th
February,
March futures prices on the MCX fell by
2.21%, to Rs442.55/kg from Rs453/kg
on 19
th
February.

Gold
G
old prices continue to trade
with a positive bias, as safe
haven buying, due to Ukraine-Russia
tensions, coupled with a weaker
dollar, helped
demand. However,
expectations of the
US Fed continuing to
reduce its stimulus
programme could
dent golds appeal.
Gold, in dollar terms, has gained
nearly 7% in February 2014, to $1,330/
ounce. Back home, movement of the
rupee would play a major role.

MCX Natural Gas (Rs/mmBtu)


Nov-13 Jan-14 Feb-14
390
360
300
270
240
330
Money Fact.indd 4 3/1/2014 5:25:15 PM
I
hold that the more helpless a creature, the more
entitled it is to protection by man from the cruelty
of man, said Mahatma Gandhi. As much as this
quote is true, it is also a bitter truth that in a nation where
human beings are treated disrespectfully, expecting love
and compassion for animals is a tall order. This is where
Friends of Stray Animals (FSA) comes
in. FSA, located in Pune, was founded in
2008 by Dr Preeti Bhatt, who has been
a trustee of the Society for Prevention of
Cruelty to Animals (SPCA) Pune. While
with SPCA, Dr Bhatt was appalled at
how people treat stray animals; some
horrifying cases were reported to the
NGO, but lack of manpower, adequate
facilities and internal conflicts prevented
them from doing much about it. That
was when she decided to start her own organisation that
would provide the best treatment possible to these animals.
FSA started by providing a home to seven rescued cats;
it now has three working branches looking after nearly 250
cats and 50 dogs. Its latest animal shelter was opened
at Bhor, on the outskirts of Pune. Mitali Courtinho is
another member of the organisation, who operates a
separate animal shelter. One of
the greatest challenges
for Dr Bhatt was to
convince people
about her motives
and to generate support for the organisation. Although
financially independent, she required the support of the
veterinary doctors, animal activists, government officials
as well as people in her area to set up the organisation.
She says, My family has been my greatest strength. My
husband and kids never questioned my beliefs. There were
times when everyone was against us, but they always stood
by me with as much compassion as I have for my pets.
Born and raised in Mumbai, Dr Bhatt completed
Bachelor of Ayurvedic Medicine and Surgery (BAMS)
from R.A Podar Medical College in Mumbai. She
practiced medicine for several years before shifting to
Pune, completed her PG in Ayurveda from Pune University.
Although a medical doctor by profession, she was always
empathic towards animals. She actively participated in
animal welfare, and often took them to treatment to
the SPCA hospital. Well known for her dedication and
goodwill, Dr. Bhatt became the trustee of SPCA Pune
from 2005 to 2007.
She has witnessed a number of cases of cruelty to
animals in the past 11 years; this has made her resolve
to protect them even stronger. Initially, she faced much
harassment from her neighbours who lodged several
complaints against her. One of them even threw boiling
water on one of the cats that was sleeping in his parking
lot. People will always harm the weak because they
cannot fight back. It is a harsh reality that some people
that can go to any limit to harm animals. We want to try
and eradicate such behaviour, she says. She has now given
up her medical practice and manages the
NGO full time.
The animals are looked after well
and given timely medical help. FSA
holds regular animal adoption as well
as vaccination camps. FSA takes the
initiative to sterilise stray animals in other
localities. Apart from FSAs employees,
there are volunteers who work from their
own localities. The local veterinarians also
show their support to the organisation by
charging less than the regular price for vaccinations and
treatment. The support is growing now, with more people
willing to come forward and show kindness to animals.
Regarding donations for the trust, Dr Bhatt says, We
need volunteers who are willing to adopt pets or help in
their own way. Also, since there are a large number of
animals, we constantly require newspapers and old clothes,
so anyone willing to donate that is
always welcome. Donation cheques
can be sent to the address alongside.
Donations are exempt under Section
80G of Income Tax Act.

MONEYLIFE | 20 March 2014 | 66


People will always
harm the weak because
they cannot ght back.
It is a harsh reality that
some people that can
go to any limit to harm
animals. We want to
try and eradicate such
behaviour

FRIENDS OF STRAY ANIMALS


2, Indumati Apartments, Lane-7,
Plot-17, Dahanukar Colony,
Kothrud, Pune 411029
www.friendsofstray.in
Email: preetiab@yahoo.com
BEYOND MONEY
Appalled by the way people tend to treat stray
animals, Preeti Bhatt decided to set up an
organisation especially for their protection at
Pune. Konica Bhatt tells us how it works
Help Animals,
Help Humanity
Beyond_money.indd 1 2/28/2014 8:32:06 PM
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POSTED AT PATRIKA CHANNEL SORTING OFFICE, MUMBAI 400001. Date of Publishing Alternate Friday. Date of Posting Alternate Tuesday & Wednesday.
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