tag:blogger.com,1999:blog-39290326033716824452024-03-05T19:50:54.851+05:30Finance and Capital MarketsAnandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.comBlogger328125tag:blogger.com,1999:blog-3929032603371682445.post-6321882009081949402017-12-24T21:08:00.000+05:302017-12-24T21:08:59.788+05:30Why are intelligent people discontent with their jobs-for example CAsBeing intellectual can often become a handicap. Many CAs perceive accounting/tax as beneath them, and yearn for banking jobs, just to realize they are a (overpaid) hamster on a giant wheel, at risk of getting obsolete(for example, investment banking back office)<br />
<br />
<ol>
<li>Often, you apply just a fraction of what you have learnt unless you are in a research world</li>
<li>You often face ostracizm from your peers who are afraid to be surrounded by those "smarter" than you. Hence, social stress may come.</li>
<li>In real life, the standard tested measures of intelligence may not make you successful in real life where you need to use street smarts to achieve a result(eg increase market share of XYZ item by 1% in 6 months)</li>
<li>For Big 4 also, Sr Manager and above is a sales role, and in assessment procedures, you may know the law but the other party may know the assessment officer</li>
<li>Rules of success change in the real world and you need to be prepared. </li>
</ol>
<div>
Credits: Large part of this post inspired by video of Anurag Singhal(<a href="https://www.youtube.com/watch?v=_1J-_binWYA">https://www.youtube.com/watch?v=_1J-_binWYA</a>)</div>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com2tag:blogger.com,1999:blog-3929032603371682445.post-27477868395887730342017-10-27T21:54:00.001+05:302017-10-27T21:54:49.039+05:30ICSI Vision 2022-my viewsThe usual practice of newly elected heads of professional bodies(ICAI, ICSI, ICWAI) is to host conventions in their home cities, go globe trotting, and try to leave their imprint on the institute in the short 1 yr tenure. However, the dynamic ICSI President Dr Shyam Lal Agarwal is an exception. He has updated the Vision 2020 document to Vision 2022. Here are my views on the salient points(do read it here <a href="https://www.icsi.edu/webmodules/Vision_New_ICSI_2022.pdf">https://www.icsi.edu/webmodules/Vision_New_ICSI_2022.pdf</a><br />
<br />
Overall a motivational read.<br />
<br />
<b>The Good</b><br />
<br />
<ul>
<li><b>Disruption Realization: </b>Art of reading, interpreting and understanding the law is more important than studying a large
number of laws;..It is expected that the routine and procedural matters will be automated with the support of
technology. Therefore, focus should be on value- added areas, like advisory, advocacy and strategic
management. </li>
<li><b>Asset Light: </b>More and more emphasis should be given to create IT and digital infrastructure instead of physical
infrastructure; </li>
<li><b>Governance starts with Self: </b>Performance evaluation of the Council and its Committees, President, Vice-President, Council
Members and Secretary may be introduced;</li>
<li><b>Speakers for national convention:</b>Speakers should be invited keeping in view their expertise and exposure to the subject(<i>and not on their PR value :D)</i></li>
<li><b>Research Repository: </b>Maintaining a data base of various research papers carried out including published and
unpublished papers, project reports submitted by members and students during the course of
their training. <i>Secrecy of info would be a challenge but manageable via black out of information</i></li>
<li>Specially designed Refresher Courses may be organized for members to be undertaken every five
years for updating their knowledge and skills.</li>
</ul>
<br />
<b><br /></b>
<b>Business as Usual/Expected</b><br />
<br />
<ul>
<li><b>India focus: </b>Research on origin of Corporate Governance from Indian ethos should be carried out, documented
and given wide publicity</li>
<li><b>SMAC:</b>There should be a standard format for obtaining feedback on every professional development
programme. The possibility of obtaining instant feedback through Mobile App may be explored;</li>
<li><b>SME: </b>The members should be encouraged to seek employment / practice opportunities
in the SMEs and small cities also</li>
</ul>
<br />
<b><br /></b>
<b>The Bad</b><br />
<br />
<ul>
<li>undertaking sponsored research: How does this ensure autonomy? </li>
<li>The concept of ‘Senior Company Secretary’ may be introduced, on the lines of ‘Senior Advocate’ in the
legal profession, to provide distinct status and recognition to the experienced members. <i>The Senior Advocate concept is not a desirable one for clients and is an indirect advertisement. Is this really necessary for a self regulatory body?</i></li>
</ul>
<br />
<b><br /></b>Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com5tag:blogger.com,1999:blog-3929032603371682445.post-88852536108570132832017-10-22T10:14:00.000+05:302017-10-22T10:14:43.377+05:30Interesting stock market tactics used by companies<br />
<div>
The stock markets are a place where Caveat Emptor(Buyer Beware) applies to its fullest. If you come across any of the below tactics, do </div>
<ol>
<li><b>Issue QIP/Decisions just before a major negative event</b></li>
<ol>
<li>Money Matters-QIP at peak price just before MD was arrested</li>
<li>Yes Bank-Issue QIP in Q4'17 before disclosing potential provisioning lapse</li>
<li>Axis Bank-MD/CEO reappointment and performance bonus, just before NPA issues</li>
</ol>
<li><b>Declare results at a very early date after quarterly closing, to attract attention</b></li>
<ol>
<li>Sanwariya Consumer-Declared Jul17-Sep17 results on Oct 3rd, 2017(Remember Oct 1/2 were holidays) albeit unaudited</li>
<li>Kitex-Releasing its audited results for Apr15-Mar16 on Apr 4, 2016!! Surpassed even Infosys. For FY167 however, they released with a month's lag</li>
</ol>
<li><b>Delay results/ declare results quite late with some bad news/Extend Reporting year</b></li>
<ol>
<li>Axis Bank-When it declared results for Q2'18 showing NPA slippage</li>
<li>Shree Renuka Sugars-Extended financial year to 15months without a clear rationale</li>
<li><b>Commission research report and upload on website</b></li>
</ol>
<ol>
<li>CRISIL research(most companies) albeit neutral</li>
</ol>
<li><b>AGMs</b></li>
<ol>
<li><b> at remote locations to minimize attendance-</b>Inox Wind?</li>
<li> a<b>t quarter end/latest possible dates to minimize attendance-</b>Many Cos</li>
</ol>
<li><b>Glossy annual reports</b></li>
<ol>
<li><b> by firms </b>like TRISYS to simplify business. metrics</li>
<li><b>Focus on extraneous stuff-</b>Temptation Food seductive photos of women.</li>
</ol>
<li><b>Suddenly start </b>holding conferences presentations, analyst calls etc, but stop it when bad times happen. For example</li>
<ol>
<li>Sanwariya Consumer sudden spurt of presentations, reports</li>
<li>Educomp ceasing to update its website after bankruptcy</li>
</ol>
<li><b>Announce plans with limited execution </b></li>
<ol>
<li>DCB Bank retail expansion-subsequently rolled back due to resistance and ESOPs repriced to adjust for this benefits</li>
<li>Crompton Greaves-Plans to turnaround/hiveoff units but not done</li>
</ol>
</ol>
<div>
<br /></div>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com1tag:blogger.com,1999:blog-3929032603371682445.post-2818246135730612102017-10-22T07:42:00.001+05:302017-10-22T07:42:25.862+05:30Coattails customer-examples of listed companies with dependence on one customerCustomer concentration is good and bad. Good because it indicates there are some loyal users of your product, bad because they have pricing power. Some examples below:<br />
<br />
<ol>
<li><b>Nile Limited </b>(manufacturer of lead acid batteries) supplies 80% of its output to Amara Raja(another unrelated listed player). This exposes it to risks of revenue loss</li>
<li><b>Vakrangee </b>(a last mile B2C/B2G/G2B kiosk) has run up due to its tieup with the global 800 pound ecommerce gorilla Amazon, where the tieup allows Amazon orders to be placed via(and delivered to) the Vakaranjee Kendra. Not yet key person risk, but still significant. </li>
<li><b>Future Consumer products(FMCG asset light play of Kishore Biyani) gets ~70% of its revenues </b>via the Future Retail and other related(not owned by it but by promoters) entities. This makes it akin to contract manufacturer</li>
<li><b>Solar Explosives </b>gets ~30% of its revenues from Coal India. Of course, to put this in perspective, 90% of the explosives use in India is industrial, and coal mining is a great chank. So this is understandable. </li>
<li><b>Manpasand Beverages(</b>listed beverages player) gets 25% of its revenue from Indian Railways via the mango/apple flavour drinks sold on the trains/railway stations</li>
<li>This list excludes franchises/exclusive players which have different risks such as </li>
<ol>
<li>Page India(For Jockey)</li>
<li>Jubilant Foods(for Dominas)</li>
<li>Westlife(for McD)</li>
<li>Varun Beverages(for Pepsi)</li>
</ol>
</ol>
<div>
In all these companies, there is always a disruption risk apparent and/or risk of dispute etc. Hence, one should take care while seeing the financials-whether this is a contract manufacturer or branded player in reality-one indicator is margin volatility etc. Also, IND-AS has some guidance on take or pay contracts, so thats useful too</div>
<div>
<br /></div>
<div>
<br /></div>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com0tag:blogger.com,1999:blog-3929032603371682445.post-68531272248086969322017-10-01T10:47:00.000+05:302017-10-01T10:47:20.734+05:30Why should you go for a tax opinion/ruling?Recently, I have had the experience of reviewing direct/indirect tax rulings for my employer. While the process is useful, I was left wondering that with so many caveats/disclaimers, why should we go to the whole pain of getting one? After all, for other subjects such as valuation, accounting etc, opinions are rarely sought. Why make an exception for tax and law? After some search, I found out the following reasons. The primary reason in the Indian context is statutory reasons(financial statement or tax penalty protection).<br />
<br />
<ol style="background-color: white; color: #333333; font-family: Verdana; font-size: 12px; margin: 0px; padding: 0px 0px 0px 35px;">
<li style="list-style: decimal outside; margin: 7px 0px 8px 10px; padding: 0px;"><b>Comfort opinion/Vet the transaction: </b>Provides the taxpayer with comfort that a transaction the taxpayer is considering entering into will have the expected tax consequences. This involves steps like making sure all issues are properly thought out and documented, confronting any shortcuts or sloppy thinking, and due diligence via fact collection. From an internal standpoint, it is also useful as to assure proper implementation and continued compliance, and memorializes analysis for future reference</li>
<li style="list-style: decimal outside; margin: 7px 0px 8px 10px; padding: 0px;"><b>Contractual condition opinion: </b>Other parties seek assurance/closing condition as receipt of the opinion that the transaction will have the tax consequences specified in the contract.</li>
<li style="list-style: decimal outside; margin: 7px 0px 8px 10px; padding: 0px;"><b>Disclosure opinion: </b>This opinion gives comfort regarding a person’s duty to disclose.</li>
<li style="list-style: decimal outside; margin: 7px 0px 8px 10px; padding: 0px;"><b>Penalty protection opinion: </b>This opinion is intended to permit clients to rely on to avoid possible civil penalties.Can deter IRS from challenging or asserting penalties.</li>
<li style="list-style: decimal outside; margin: 7px 0px 8px 10px; padding: 0px;"><b>Financial Statement Recognition: </b>This opinion provides advice regarding the tax treatment of items for purposes of financial statements. The “more likely than not” standard is required in order to recognize, for financial statement purposes, a tax benefit with respect to which there is some legal or factual uncertainty. This would be acceptable to the financial statement auditor. </li>
<li style="list-style: decimal outside; margin: 7px 0px 8px 10px; padding: 0px;"><b>Reporting opinion: </b>This opinion provides advice regarding the proper tax reporting of a completed transaction.</li>
</ol>
<br />
<b>References</b><br />
<a href="https://www.americanbar.org/content/dam/aba/publishing/aba_tax_times/16feb/att-16feb-15ptc-d1p5-tax-opinions-3-0-ethical-considerations.authcheckdam.pdf">https://www.americanbar.org/content/dam/aba/publishing/aba_tax_times/16feb/att-16feb-15ptc-d1p5-tax-opinions-3-0-ethical-considerations.authcheckdam.pdf</a><br />
<div class="MsoNormal">
<b><u><a href="https://taxassociate.wordpress.com/2014/06/12/tax-opinion-practice/">https://taxassociate.wordpress.com/2014/06/12/tax-opinion-practice/</a><o:p></o:p></u></b></div>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com2tag:blogger.com,1999:blog-3929032603371682445.post-10216529063249725542017-09-24T15:49:00.000+05:302017-09-24T15:49:51.290+05:30 Business Law-some finer points-Part 2<br />
<ol>
<li>Reasons to apply for patents outside India would be due to </li>
<ol>
<li>software patents issue in India, and friendly jurisdictions such as USA, Australia, Japan; and if technical problem related EU too</li>
<li>Pre grant opposition very easy in India(no need to be interested party also)</li>
<li>Ease of enforcement abroad easier, and thus valuation better</li>
</ol>
<li>Non economic considerations(beyond market potential) is to increase startup valuation via patent applications :D and quantify sweat equity brought in by promoters. Further, cross border patents allow for potential total addressable markets(TAM) in valuations.</li>
<li>Ways to speed up arbitration</li>
<ol>
<li>Allow arbitrator the power to impose fines for delaying tactics(such as non filing reply)</li>
<li>Time limit for counter claims/setoff, to include in statement of defence, ensures endless pleading won't happen. </li>
<li>CPC provision for max 3 adjournments and reasons recorded in writing/show cause</li>
</ol>
<li>Dispute resolution is a skill not just a subject. Further, clients classified as as follows</li>
<ol>
<li>Startups just <i>hate </i>lawyers who complicate thing</li>
<li>Seek same advice from multiple lawyers/<i>too many cooks</i></li>
<li>those who come <i>after </i>problem arises and facts usually compex/verbal/not in place.</li>
<li>Those who seek advice from the very inception. </li>
</ol>
<li>Exclusive jurisdiction clause helpful to allow anti-suit injunction later</li>
</ol>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com0tag:blogger.com,1999:blog-3929032603371682445.post-62271526851734602972017-09-24T12:32:00.002+05:302017-09-24T12:32:48.443+05:30Business Law-some finer points-Part 1<br />
<div>
<i>Below points basis general reading and the NUJS DEABL Course material/videos. Comments welcome</i></div>
<ol>
<li>Deadlock situations more common in JVs than in financial/strategic investments</li>
<li>Strategic investor values business on a more long term basis than financial investor, and often enters at different life-cycle(angle-VC-PE-Distressed/Strategic) and pays a premium as they enter into established business</li>
<li>For PIPE transaction, valuations usually predetermined due to pricing rules/formula, and better for foreign investors as helps them avoid issues in exchange purchase. Here however, no exit clause as listed shares already liquidity there. So enter in negotiated deals and exit on exchange, and less scope of reps/warranties as there is already greater scrutiny/compliance and lot more information enabling buyers to do their own diligence. Due diligence is an issue due to insider trading regulations and risk of triggering change of control norms(hence limited affirmative rights, and conservative view on negative rights). Also, mostly equity and no convertibles/warrants. </li>
<li>Picking up a block on the market is difficult since prices increase exponentially, hence it is better to purchase from the company. </li>
<li>However, new trend of complete buyouts of startups but this is not strategic investment per se.</li>
<li>Commercial/Business law is complex, needs quick turnarounds(eg change agreements across multiple documents) and levels of understanding not available on Google. Long term solution is to follow a checklist approach and be through, till you develop your own framework. </li>
<li>NDA(Non disclosure agreement) may have non compete and non solicit provisions. So READ the agreement w/o presuming it is only NDA. Also, disclosing party usually wants broad scope , while receiving party wants narrow scope, and differ on wish to 'Mark' Documents as confidential which is usually difficult. Also, right/requirement to return/retain copies depends on form(physical/electronic) and also on need for referrals/retention rules. If really needed, then virtual cloud/data room is must with locked/monitored spreadsheets.</li>
<li>Due diligence forms the bread and butter for transactional lawyers especially those representing the target. It is not a judgemental exercise it just brings the relevant('Material') facts to the table to draft representations and warranties, and proceed with txn in best tenable manner avoiding defects/deal killers and bad deals. Be prepared for the worst-due diligence helps you know the worst, and also confirm the business is what is appears to be.</li>
<li>Business due diligence involves business experts(like AT Kearney/BCG), inventory physical checks, people due diligence especially key folks and change of control provisions in their contracts like gratuity, and legal/tax document review to examine present/threatened/potential risks, IPR ownership reviews(does company OWN the IPR part of deal,corporate History/Capitalization review-check for ROFR/lockups/agreements binding the shareholding, financial indebtedness review for mortgage/prior consent</li>
<li>There are multiple procedural ways to frustrate the process(eg no consent for valuer, delay to submit bids) for mechanisms like Russian roulette, so in practice not done. However, this is having both parties submit sealed bids at which they will buy/sell stakes. Even if loan documentation/JV documentation for funding is clear, establishing default is very difficult in terms of choice of instrument, timing, valuation level etc. So to avoid bad blood, even if clause exists to buyout at discount due to failure to fund, done at negotiated deals typically. </li>
<li>Exit waterfall is usually IPO, strategic sale, put option to company/promoters. However, IPO cannot ever be forced upon on company and there are timing, economic and commercial factors to decide to do it, as also third party cooperation. Strategic sale needs promoter to dilute and share control, as also need for cooperation/continue at times. Drag Along rights are usually value destructive(PE/Fund need to exit at lifecycle end and may not care about IRR, also diversified, but promoter may believe value exists and would not want to take that decision) and hard to negotiate, contractually tough and unless escrow, impossible to enforce. Usually, company not doing well hence no IPO/drag along works, so unlikely it will be able to buyback the stake</li>
<li>The investor relies on the founder to manage the business and grow his money. Hence, clauses exist on founders such as full time, no competing business, tag along, anti dilution(unless ability to subscribe at same valuation)</li>
<li>Usually, reserved matters consent given by nominee of investor, and meeting to vote needs the mandatory quorum of that representative. </li>
<li>M&A transactions usually have term sheet, due diligence, definitive agreements, signing and closing interposed by standstills/actions(operational surveillance in the meanwhile). </li>
<li>Inhouse counsels usually have a kickoff internal meeting, understand business thresholds and imperatives, and then take a look at the contract wrt allocation of risks, liabilities and responsibilities if it meets. This would then result in discussion points(key issues) which when resolved conceptually in meeting/call(eg payment terms, title, O&M) could then go to the wording. To cut the information asymmetry, identifying the deal team including correct persons who can take a CALL on that subject will be must. Also, need to balance timeliness(deal was needed yesterday!), cost and quality. </li>
<li>Usually, large groups have standard, non negotiable contracts for ordinary course of business, to manage legal risk, with some provisions negotiable. This makes in-house job easier. These depend on your bargaining power, nature and scope of contract and the perspective/importance of items(eg 1 issue with tender)</li>
<li>Also, inhouse counsel not bound by billable hours need to rack up, and often wants to cut to the chase and focus on vital issues</li>
</ol>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com0tag:blogger.com,1999:blog-3929032603371682445.post-59939107033907093012017-09-24T09:59:00.001+05:302017-09-24T09:59:33.417+05:30NUJS-Diploma-Course-in-Entrepreneurship-Administration-An unbiased reviewAs a student of the Sep 2016 batch of this online diploma course( a JV between NUJS Kolkata and a legal startup iPleaders), I thought to give a review of this course, now that I am at the end of the course.<br />
<br />
<b>Positives</b><br />
-Plenty of videos tightly edited and focused on relevant topics from industry professionals<br />
-Business focused and practical points-for instance the structuring checklist is probably well worth the entire course fee<br />
-Phased course outline<br />
-Novel concept and inclusive education.<br />
-Recently introduced apps<br />
<br />
<b>Areas of improvement</b><br />
-Access to the course is NOT lifetime but just 1 year. This can be extended if you are part of their 'Club'/'Whatsapp' group but this appears more fit for college students. They should extend it to lifetime access for students who do well, or on payment of course fee<br />
-Plenty of college students who have a different focus and 'Sir/Maam' culture, this is one key reason why I left the official whatsapp group<br />
-Quizzes are open book and therefore extremely easy-you can answer 15qn in 15qn by a quick Google if you have a reasonable understanding<br />
-the monthly writing assignment<br />
-Obsessive focus on IPR to the extent of watermarking pages, and very little downloadable attachment. This is ok if access lifetime but otherwise quite constructive. Also, charges for printed material is way more than cost.<br />
-Monthly writing assignments focus on minimum word count rather than writing quality.<br />
<br />
In brief, I'd say the course is worth it IF you are able to spare 2 hrs/week-thats all it would take on an average. If you wish to take benefit of all webinars etc then double that time.Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com0tag:blogger.com,1999:blog-3929032603371682445.post-11656705513206613342017-09-19T21:03:00.001+05:302017-09-19T21:03:51.022+05:30How NPCI is silently transforming Indian payments ecosystem<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-layout-grid-align: none; text-autospace: none;">
<span style="font-size: 12pt;">Quick. Name a major Digital/Skill India/Make in India
success story of the public sector, other than IRCTC. Hint, this is related to
banking. Given up guessing? Its NPCI. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-size: 12pt; line-height: 107%;">Last
week, Google made the news again in India when it introduced a payment system.
However, unlike other players, it chose a different route. Tez is neither a mobile
wallet nor a modified version of Android Pay. It is built on UPI. </span><span style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: "Trebuchet MS";">Ever
since demonetization(aka withdrawal of specified bank notes), the acronyms UPI,
BHIM, Rupay, Aadhar Pay have all entered the general lexicon. What is common
between these? All these are brands/products
of the National Payments Corporation of India (NPCI), an umbrella organisation
for operating retail payments and settlement systems in India. It is the
payments utility of the Indian financial system, which aims to innovate retail
payments for achieving greater efficiency in operations and widening the reach
of payment systems.</span><span style="font-size: 12pt; line-height: 107%;"> L ike India leapfrogged the landline to mobiles, and cards to
wallets, payments systems are similarly seeing digital first viz online players
becoming mainstream and digital natives. For instance, across smartphones,
fully secure, encrypted, virtual payment addresses, etc. <o:p></o:p></span></div>
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<span style="font-size: 12.0pt; mso-bidi-font-family: "Trebuchet MS";"> It is a Section 25 company (Like GSTN) which
has broad-based shareholding across all sectors. The payments system globally
has been an oligopoly between Visa, Mastercard and Amex. The developing world
however has resisted this, with China locking out these majors and leapfrogging
to Alipay, while India has not explicitly resisted them, but imposed
limits/caps on their fees. So for these global players, India remains the last
virgin frontier. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-size: 12.0pt; mso-bidi-font-family: "Trebuchet MS";">However, this was not reflected in
the pricing which was high, viz anything between `5 to `8 per transaction as
switching fee, which allowed NPCI to disrupt the market by charging around 5%
of the other, and still earning a profit.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-size: 12.0pt; mso-bidi-font-family: "Trebuchet MS";">NPCI was created along with UIDAI,
and has leveraged the identity/digital revolution to establish itself across debit,
credit, contactless and prepaid, with flagship products of National Financial
Switch, Cheque Truncation Systemand Aadhaar Enabled Payment System. While these
target the bigger value transactions, smaller value transactions are enabled
via Bharat Bill Pay, National Common Mobility Card and National Electronic Toll
Collection. And of course, the USSD enabled BHIM. <o:p></o:p></span></div>
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<span style="font-size: 12.0pt; mso-bidi-font-family: "Trebuchet MS";">Lets understand these acronyms a
bit better<o:p></o:p></span></div>
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<b><span style="font-size: 12.0pt; mso-bidi-font-family: "Trebuchet MS";">-UPI:</span></b><span style="font-size: 12.0pt; mso-bidi-font-family: "Trebuchet MS";"> 24*7 instant
money transfer, with value added facilities of customer ID like email address, Scan
and Pay/Collect and Receive/QR Code/free of charge notifications and multi
lingual, the last part being vital for financial inclusion. The ‘instant’
credit allows it to substitute ATM, however customer security(via 2FA and PIN)/dispute
handling/fraud treatment will be critical to its replacing credit cards<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-layout-grid-align: none; text-autospace: none;">
<b><span style="font-size: 12.0pt; mso-bidi-font-family: "Trebuchet MS";">BHIM-
</span></b><span style="font-size: 12.0pt; mso-bidi-font-family: "Trebuchet MS";">Launched
in December 2016, the BHIM app is essentially a rebranded version of UPI and
Unstructured Supplementary Service Data (USSD). Available on the Android app
store, the app allows users to send money, receive from friends, family and
customers through a mobile number or payment address. For that, one has to
register his bank account with BHIM, and set a UPI PIN for the bank account.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-layout-grid-align: none; text-autospace: none;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-layout-grid-align: none; text-autospace: none;">
<span style="font-size: 12.0pt; mso-bidi-font-family: "Trebuchet MS";">-One may wonder why <b>UPI when IMPS</b> already offers instant
credit. However, the features of single APP(across all banks) and P2P give it
an edge. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-layout-grid-align: none; text-autospace: none;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-layout-grid-align: none; text-autospace: none;">
<b><span style="font-size: 12.0pt; mso-bidi-font-family: "Trebuchet MS";">-NPCI</span></b><span style="font-size: 12.0pt; mso-bidi-font-family: "Trebuchet MS";"> being a bank
owned utility reflects in their ability to retrieve account details in a masked
manner, which is passed to BHIM via encryption to the extent required. However,
it is not neutral in the sense that wallets are not linked to UPI so far-it is
unlikely they would want it, as it’s a competing tool anyways. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12pt; line-height: 107%;">-Rupay-</span></b><span style="font-size: 12pt; line-height: 107%;">This is India’s answer to
VISA/MasterCard/Amex. It has </span><span style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Calibri;">380+ MnRupay cards issued by 800+
participating banks, driven by Kisan Cards and PSU banks mainly. However,
private sector is also issuing these cards(eg PAYTM virtual Rupay card), due to
the advantages of no need for hedging Forex risks, low fees(switching fees
nearly 1/3 of global peers) etc. Also,
for the less tech savvy banking segment such as RRB/Cooperatives, Rupay has allowed them to enable their customers
with good technology. Interestingly, the global tie ups for cards are not with
the biggies, it is with </span><span style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: "Trebuchet MS";">Discover Financial Services and Japan
Credit Bureau.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">For more
information, the below links are useful:<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;"><a href="https://www.bhimupi.org.in/" target="_blank"><span style="color: #2862c1; text-decoration-line: none;">https://www.bhimupi.org.in/</span></a><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;"><a href="https://www.rupay.co.in/" target="_blank"><span style="color: #2862c1; text-decoration-line: none;">https://www.rupay.co.in/</span></a><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;"><a href="http://www.npci.org.in/" target="_blank"><span style="color: #2862c1; text-decoration-line: none;">http://www.npci.org.in/</span></a><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">Of
course, such initiatives are not without their detractors. The government
announced an outlay of nearly 495crores to encourage BHIM transactions. The
private wallet players felt this was not neutral. Ironically, it’s the private
sectors who have lagged behind neutrality, for instance, the ability to read
all 5 payment constitutes(Mastercard, Visa, American Express, RuPay ,UPI) in
one QR code was only within BHIM. Other UPI apps had not followed suit. So now
the government mandated it. <o:p></o:p></span></div>
<br />
<div class="MsoNormal">
<br /></div>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com3tag:blogger.com,1999:blog-3929032603371682445.post-40705749885518535332017-09-12T09:30:00.000+05:302017-09-12T09:30:19.085+05:30Annual Reports 2016-17-Part I<b>Ecoplast Limited</b>, Valsad(Gujarat) based manufacturer of plastic films mentions that it has increased capacity of <i>value added products from </i>1000MT to 2400MT. Presumably, this change effective Sep-16 will drive mix improvement and eventually sales/profit growth. For a company with total EV of ~45crs and capacity ~10,000MT, this 14% mix improvement should be substantial.<br />
<br />
<b>Kaveri Seeds </b>saw its EPS(Earnings per share) more than halve during the period, but most of this change was due to an exceptional item viz lumpsum recording of disputed seed royalties of earlier years. The company however explained it in a single line viz <i>An
overall deficit monsoon in the Kharif season 2016</i>. The exceptional item disclosed as <i>As per the agreement
with M/s. Mahyco Monsanto Biotech India Limited, during
the financial year the company has made a provision of
Rs.5923.80 Lakhs for payment of royalty against the short
provided royalty in the previous years. </i><br />
<br />
<b>Zicom </b>saw disruption of its import and distribute business model due to the Budget 2016 provisions, wherein CCTV/security components were allowed at NIL customs duty with corresponding excise benefits, which helped Make in India players. They had to take an inventory writeoff, and with the Middle East slowdown, also had to writeoff receivables from Qatar, UAE etc, with order slowdown. They therefore delayed bank repayments to the tune of 94Crores, which almost entirely got converted into equity via SDR at valuation of Rs 43/share. However, they still took <i>additional </i>funding via working capital borrowings(!!) mostly from PSUs who ideally should have stopped lending<br />
<br />
<b>UFO Moviez </b>is exploring interest adjacent business models such as <i>UFO Framez is a cloud-based
advertising technology platform..offers hyper local
advertising clients a seamless avenue to advertise on
UFO’s in cinema advertising platform, </i>co branding of local greenfield cinemas under the brand 'NOVA'(maybe learning from OYO), as also Cinema on Wheels/Club Cinema. These have implications for growth of <b>Just Dial, </b>multiplex stocks like <b>Inox/PVR </b>and media in general<br />
<br />Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com1tag:blogger.com,1999:blog-3929032603371682445.post-45877861192418848782017-09-10T09:03:00.000+05:302017-09-10T09:03:43.283+05:30Delta Corp-2016-17(2017) Annual Report overviewMotilal Oswal has been bullish on Delta Corp (read the below reports <a href="http://www.motilaloswalgroup.com/AnalystVideo/Pdf/227183999DELTA-20170321-MOSL-IC-PG042.pdf" target="_blank"> http://www.motilaloswalgroup.com/AnalystVideo/Pdf/227183999DELTA-20170321-MOSL-IC-PG042.pdf </a>and also the most recent one<a href="http://www.motilaloswalgroup.com/AnalystVideo/Pdf/227183999DELTA-20170321-MOSL-IC-PG042.pdf" target="_blank"> </a>(http://www.dsij.in/productattachment/BrokerRecommendation/DeltaCorp_BUY_Motilal_31.08.17.pdf)<br />
<br />
Having traded in and out of the stock between 145-180 levels, I thought to revisit the annual report to analyze how the business outlook has changed. The 256 page annual report (<a href="http://www.deltacorp.in/pdf/annual-report-2016-2017.pdf">http://www.deltacorp.in/pdf/annual-report-2016-2017.pdf</a>)<br />
<br />
Positives<br />
1)Currently, only 12 Indian states offer lottery, six states allow horse
racing, and two states (Sikkim and Goa) and one union territory (Daman) allow casino-based gaming. ..In India, while on-shore casinos are permitted in Goa, Daman and Sikkim, off-shore casinos
are permitted only in Goa, and online casinos in Sikkim and Nagaland...Regulatory moat since onshore casinos in Daman/Sikkim can only be set up in 5 star hotels-Delta owns the only 5* hotel in Daman and this business has a long gestation period. Also, Goa presumably would not issue any more licenses. These are however high regulatory risks<br />
2)Management guidance of no further growth capex-However Adda52 M&A deal does not sync<br />
3)Two other listed entities to piggyback-Arrow Textiles and Delta Magnets-latter is a self professed turnaround story<br />
4) Equitable managerial remuneration increase-<i>The average percentage increase made in the salaries of total employees other than the Key Managerial
Personnel for Financial Year 2017 is around 11% to 14%, while the average percentage increase in the
remuneration of the Key Managerial Personnel is NIL. </i><br />
<i>5)</i>Conservative revenue recognition: As per the company's policy, gaming revenue is recorded based on net gain/loss at the end of each day.
The revenue recognised includes gaming related taxes and duties which the Company pays as a
principal but excludes amount collected on behalf of third parties such as entry tax.<br />
6)Pedigree in promoters, auditors and board: Promoters are the Mody family(noted lawyer Zia Mody's husband). Audit committee has renowned audit partner Chetan Desai, and auditors are Grant Thornton.<br />
<br />
Points to see further<br />
1) <i>In case of one of the subsidiary company there is a default in payment of Interest to FCD-A, FCD-A1 holders
since April 2010.</i><br />
2) Nearly all the promoter shareholding(40%) held in the form of trusts potentially to ensure smooth inheritance for the owner's daughters. Is this good(ensure continuity) or bad?<br />
3) Normalize shareholders equity numbers-As per the IND-As reconciliation, 318.6 million Rs is the increase in retained earnings/equity as at 31-03-2016(Date of IND-AS). This is due to ~770 M INR goodwill offset mainly by investment markdown ~383 MINR.<br />
4) Sikkim not material from financial perspective-Key revenue driver seems gaming positions which is 1500 at present. Sikkim contributes to ~12% of this. While Daman approval awaited for ~1200 positions which will rampup capacity by 80%, this is therefore key number to watch.<br />
<br />
Risks disclosed in QIP Document<br />
1) Relocation of Goa casino ships out of river Mandovi: The company claims on-shore casinos are more profitable however this risk factor <i>Pursuant to the letters dated April 7, 2017 of the Government of Goa each issued to our Company,
HCEPL, and DPCCPL, we have been asked to submit a fresh undertaking in favour of the Government of
Goa to relocate the operations of our Offshore Casinos out of the river Mandovi by June 30, 2017</i><br />
2) Limited Pricing Power: While they can drive footfalls, they cannot really "hike prices" or show pricing power as the inherent nature of the business is house %. <i>While we may
modify our entry fees and introduce new games or modify existing ones, the ability of our Company to
charge our customers for its services offered is limited</i><br />
3) Natural Disasters-However company claims to have insurance against earthquakes, floods etcAnandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com0tag:blogger.com,1999:blog-3929032603371682445.post-92019976685513641132017-09-05T20:56:00.000+05:302017-09-05T20:56:23.353+05:30India Services Sector-some takeways from Deloitte's reportRecently, I stumbled across the below report India Services Sector | A Multi-trillion Dollar Opportunity for Global Symbiotic Growth. While the report proceeds along predictable lines of asking industry status, subsidies and more infrastructure with less taxes(:D), this was quite useful to provide base rate data and some context for India shining. Some views basis that report(<i>Italics is quotes from report, </i>with my comments in normal text with listed company names <b>in bold. </b>Please note, this DOES NOT CONSTITUTE INVESTMENT ADVICE<br />
<a href="http://www.gesdelhi.in/images/pdf/deloitte-cii-ges-2017-interactive.pdf">http://www.gesdelhi.in/images/pdf/deloitte-cii-ges-2017-interactive.pdf</a><br />
<br />
<i> Conversion of 75% of the
existing single screens into two screen
multiplexes can unlock revenues of INR
40-50 billion for the film industry through
higher average ticket price, occupancy
rate and advertising and food and
beverage revenues </i>This is nearly 30% of the present realization. Could be positive for <b>UFO Moviez. </b><br />
<br />
<i> In India, fantasy
sports is called ‘game of skill’ which is
outside the purview of gambling. With
rising number of sports enthusiasts,
internet penetration and usage of
smartphones, India would be an obvious
destination and business choice for
fantasy sports operators. Nagaland is
the only state in India that has issued
online gaming licenses for skill games
including fantasy sports </i>Will <b>Delta Corp </b>be able to capitalize on this or be disrupted? Already, virtual gaming is big abroad.<br />
<i><br /></i>
<i>The Ministry of Urban Development has
come out with a Smart National Common
Mobility Card (NCMC) model to enable
seamless travel by metros and other
transport systems across the country, as
well as retail purchases.</i> If this disrupts wallets, impact on <b>PAYTM</b><br />
<b><i><br /></i></b>
<i> The
government has accorded CGD network
the status of public utility. This will allow
the CGD system to increase its reach and
make it comparatively easier to secure
government licences and clearances </i>Increasing competitive threat to <b>Adani Gas Indraprastha Gas, Mahanagar Gas</b><br />
<b><br /></b>
<i>• The government has in-principle
approved the decks for use of LNG as
an auto fuel. The draft norms for LNG
application in road vehicles will be ready
in FY2018 </i><b>Demand to explode for listed gas players? </b><br />
<b><i><br /></i></b>
<i>Facility management has
become a tool that allows businesses
to integrate their noncore activities,
focusing attention on core activities...Government regulations including Private
Security Agencies (Regulation) Act 2005
and Foreign Direct Investment Policy
and Goods and Services Tax is building
the foundation for a key segment of this (Facility management) sector. </i><b>Positive for Teamlease</b><br />
<b><br /></b>
<i> As companies increase
their workplace wellness expenditures,
it generates many related business
opportunities, including a proliferating
number of third-party providers that
supply services, products, and platforms
(e.g., screening assessments, diagnostic
tests, incentive programs, wearable
devices, counselling services, etc.)</i> Positive for <b>listed diagnostics and health insurers</b><br />
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com0tag:blogger.com,1999:blog-3929032603371682445.post-91952091872696627612017-08-06T19:54:00.000+05:302017-08-06T19:54:35.431+05:30GST Implementation-Myth vs RealityAny major reform is painful, and this is true with GST also. While the Central Government(and to a lesser extent, the State Government) got plaudits for a landmark transition, the business sector was impacted and this continues. From a change management perspective, this Government probably deserves a 3 or lower, on a 1-5 scale. This is because of delayed finalization in rules, last minute rates announcement, and very limited test runs/public APIs. While this allowed consultants to get a windfall business, this decreased corporate ease of doing business.<br />
<br />
What needs improvement:<br />
<br />
<ol>
<li><b>Unregistered vendors reverse charge:</b> The government probably imposed this rule intentionally to force small vendors to register anyways to avoid pressure/blacklisting from their registered suppliers. However, awareness campaign has been deficit (for example, 20lakhs limit not applicable to interstate suppliers), thus leaving the education job to a short staffed companies</li>
<li><b>Lack of Official Tariff </b>:The government has given PDFs at 4 level code while leaving a 18% residuary clause, thus throwing open the GST rate classification of several items. </li>
<li><b>No harmonization in HSN/SAC: </b>Depending on turnover, vendors have option to cite 0/2/4/8 digits of HSN code on the invoice. This poses a challenge for ERP system validation rules, as also reporting of procurement. </li>
<li><b>Lax merger framework</b>: In an invoice level matching framework, there is no changeover period applicable for merger/amalgamation. This is posing challenges</li>
<li><b>Delay in Registration allotment: </b>The registration window closed on 31 Mar 2017 and reopened on 1 Jun 2017. For those who delayed new registration(NOT migration) pending the release of final rules, they had only a week to take fresh registration. </li>
<li><b>Automated matching of PAN not allowing for exceptions: </b>Imagine trying to update your GSTIN name(Core field) while PAN is still under old name. This would throw up an exception not allowing you to proceed, and resolve issues offline</li>
</ol>
<div>
<b><br /></b></div>
<div>
The good points:</div>
<div>
<ol>
<li><b>Twitter Page for queries: </b>One can directly tweet the government their queries on GST, and await responses</li>
<li><b>Extension of timelines: </b>The return timelines have been extended due to lack of readiness of Government IT infrastructure. </li>
<li><b>ICAI education: </b>The Institute of Chartered Accountants of India has released lots of high quality material on its website free of cost. This is really a great public service. </li>
</ol>
<div>
<br /></div>
</div>
<div>
From a systems perspective, several challenges emerge due to the large number of exceptions. For example, the following rules breakdown </div>
<div>
<ol>
<li><b>Place of Supply=Place of Customer: </b>It is possible that for certain vendors</li>
<li><b>Vendor Tax Status c</b>hange affecting the past invoices: If the vendor GST registration is pending allotment</li>
<li><b>One GST Rate for One HSN: </b>There are options in services for different tax rates basis non GST parameters(eg hotel room rental decides whether 12% or 18%, similarly existence of AC in the restaurant determined the 5%/12%18%, also whether vendor wishes to take ITC determines 5% or 12% for rentacab).</li>
<li><b>ITC eligibility linked to HSN Code: </b>It is not possible to define ITC eligibility at item level also by HSN code, so one needs to do tax configurations at a much more detailed level. For example, plastering services may be generally eligible for input credit, but not if used for immovable property construction. Therefore, one may either need to define a custom GST status, or else manually edit this. </li>
</ol>
<div>
<br /></div>
</div>
<div>
The first returns cycle due on 20th Aug 2017(simplified) and 25 Sep 2017(full) will prove the robustness of the IT infrastructure and whether it will crash like the income tax efiling site. </div>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com1tag:blogger.com,1999:blog-3929032603371682445.post-83503080931400734602017-07-16T10:35:00.000+05:302017-07-16T10:35:01.414+05:30How will GST disrupt the CA/accounting, tax and audit professionIn India, the Chartered Accountancy(CA) professional is synonymous with accounting, audit and tax-this does not detract from other professionals of course like CS, CMA, LLBs and tax practitioners. The advent of India's largest indirect tax reform viz GST has the scope to transform the financial professionals industry tremendously. In the short term, there is a LOT of work due to impact analysis, transition, old cases closure etc for which professionals are minting money. But in the medium/long term, the picture is much less clear. Picture the scenario in 2years, where B2B invoices are uploaded online and matched(with government receiving its tax on time) for seamless credit. The income tax audit of these entities can be substantially triangulated with GSTIN data to reconcile revenue and COGS. Would audit become redundant? There are arguments for and against this:<br />
First the positive arguments for simplification( and hence CA revenue declining)<br />
<br />
<ol>
<li>Excise, Service Tax, VAT audits all replaced by a single GST audit. </li>
<li>Invoice level matching</li>
<li>Government audit interest declining once it receives its tax payment on time</li>
<li>Statutory audit simplified from indirect tax/compliance</li>
<li>Lesser possibility of people evading direct tax while reporting higher GST revenues</li>
</ol>
<div>
Arguments for complexity (and hence bright future for CAs)</div>
<div>
<ol>
<li>Multiple GST rates-hence classification confusions</li>
<li>Residual 18% rate vs lowest 5% slab, chances for government to raise aggressive tax positions</li>
<li>~40% GDP still out of GST tax net-hence need to check omissions</li>
<li>Reverse Charge for purchases from unregistered vendors-substantial complexity</li>
<li>Non GST expenses like salaries, utilities, taxes-hence cannot prepare full P&L</li>
<li>Multiple GST registrations for Pan India entity, need for record keeping/reconciliations</li>
<li>B2C Invoices uploaded in summary NOT at invoice level-so need for audit here</li>
</ol>
<div>
There will of course be 'Non professional' work such as mismatch reconciliations, vendor review etc but this will be outsourced I suppose. </div>
</div>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com1tag:blogger.com,1999:blog-3929032603371682445.post-35637592716912610772017-07-06T09:18:00.001+05:302017-07-06T09:18:23.918+05:30How Mutual fund for a day is helping drive Mission 10cr folios<div class="MsoNormal">
<span lang="EN-GB" style="text-align: justify;">In the last 10
years, AUM of Indian MFs has grown 6x from Rs 2.6Tn to Rs 19.2Tn<a href="https://www.blogger.com/null" name="_ftnref1"></a><a href="https://www.blogmint.com/opportunity/reviewUnpublishedTextEntry?contract=ac554f2553d84eac9d1dc9e8ee92bb30&serial=0#_ftn1" title="">[1]</a>. However, the
number of folios has remained nearly flat in this period, from 48M to 56M,
covering hardly 4%-5% of Indians. Why don't more people invest in equities? <a href="https://www.blogger.com/null">The answer is
often time, expertise, discipline and budgeting.</a></span><span class="MsoCommentReference" style="text-align: justify;"><span lang="EN-GB" style="font-size: 8.0pt; line-height: 107%;"> </span></span><span lang="EN-GB" style="text-align: justify;"> Personal finance is an area where we tend to overrate our expertise
instead of leaving it to professionals. Mutual funds allow the common man to
invest on the same terms as HNIs or corporates, via pooled funds(or mutual
funds). What is a mutual fund? It is simply a pooled fund following a set
strategy, with entry/exit in discrete units. Unlike alternate asset classes,
MFs offer liquidity, transparent valuations and fees, and stringent regulation,
that too without high AUM limits. <a href="https://www.blogger.com/null">Despite these advantages why do people not
invest in mutual funds? </a></span><span lang="EN-GB" style="text-align: justify;">Many of them are presently investing in alternate asset classes
such as ‘life insurance’, property, gold and land. Despite tax advantage to
mutual fund investment under 80C, the tax benefit/tax evasion ease of other
asset classes has historically depressed folio growth. But with demonetization,
ULIP regulation and digitization making it easy to open eKYC accounts, mutual
funds can now compete on a level playing field. In the last 1 year,
CRISIL top ranked mutual funds<a href="https://www.blogger.com/null" name="_ftnref2"></a><a href="https://www.blogmint.com/opportunity/reviewUnpublishedTextEntry?contract=ac554f2553d84eac9d1dc9e8ee92bb30&serial=0#_ftn2" title="">[2]</a> had
yielded 19%-28% for large caps, 35%-43% for midcaps, and around 30%-40% for
diversified funds. These numbers are attractive enough to build the investment
case, even over long term fundshave given a sustained CAGR of 25% over 20years.
Imagine earning such returns while continuing to earn from your regular
profession. Often, the sustained income from mutual funds allows financial
independence at an early age (debt free home etc). </span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-GB">But you may
ask-how can one keep investing for decades despite personal financial
commitments? The answer is simple-pay yourself first. Set aside a fixed amount
each month, to invest in mutual funds. Even better, avoid market timing by
automating SIPs and reduce the chances of slippage. Maybe that day can be in
the first week-just after paying monthly commitments, but before impulse
purchases lure you with their siren calls. <a href="https://www.blogger.com/null">That is why for those of us not yet
invested in MFs, or those not using SIP mode, 7<sup>th</sup>of each month<b>(or
‘Mutual Fund Day’)(MFD)</b> is an opportunity </a></span><span lang="EN-GB">to begin for those who either haven’t started investing in mutual
funds or aren’t using the SIP mode. Take the chance to meet your financial
advisor or register online</span><span class="MsoCommentReference"><span lang="EN-GB" style="font-size: 8.0pt; line-height: 107%;"> </span></span><span lang="EN-GB"> to start a SIP. For those fortunate souls already doing this,
consider devoting some time each month or during the next time you discuss with
friends, to discuss wealth building measures with them. This 'help a friend'
eventually helps them long term and will truly be ‘Fund for a friend’(FFAF)
cause aka ‘Each one teach one’. <a href="https://www.blogger.com/null">The above 2 behaviour triggers has been piloted by Reliance
Mutual fund, which has a financial calculator in the prosperity hub URL, as
well as a series of posts on the concept of MFD.</a></span><span lang="EN-GB"> Those interested can have a look below.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-GB"><a href="http://www.moneycontrol.com/prosperity-hub/">http://www.moneycontrol.com/prosperity-hub/</a><o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<span lang="EN-GB"><a href="https://www.facebook.com/RelianceMutualFund/posts/10155457454169284">https://www.facebook.com/RelianceMutualFund/posts/10155457454169284</a><o:p></o:p></span></div>
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<span lang="EN-GB">The MFD concept
involves a year long sustained push through coverage on Network 18 channels,
popular radio outlets, and moneycontrol. <a href="https://www.blogger.com/null">This initiative has begun in Mar-17, and as yet
there is no publicly available data on how this specific initiative has worked
in terms of new folios, new SIPs or AUM increase</a></span><span class="MsoCommentReference"><span lang="EN-GB" style="font-size: 8.0pt; line-height: 107%;"><!--[if !supportAnnotations]--><a class="msocomanchor" href="file:///C:/Users/asundar/Downloads/Anandh.docx#_msocom_7" id="_anchor_7" language="JavaScript" name="_msoanchor_7">[</a></span></span><span lang="EN-GB">. However, habit <a href="https://www.blogger.com/null">formation takes time and probably 6-8 months down</a></span><span lang="EN-GB"> the line would be a good time to review. As those who are
long term investors in markets, entry of new money only improves the market
valuations, and also the overall ecosystem. So this is a positive sign which we
all should encourage<o:p></o:p></span></div>
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<a href="https://www.blogger.com/null" name="_ftn1"></a><a href="https://www.blogmint.com/opportunity/reviewUnpublishedTextEntry?contract=ac554f2553d84eac9d1dc9e8ee92bb30&serial=0#_ftnref1" title=""><span lang="EN-GB">[1]</span></a><span lang="EN-GB"> https://www.amfiindia.com/indian-mutual<o:p></o:p></span></div>
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<a href="https://www.blogger.com/null" name="_ftn2"></a><a href="https://www.blogmint.com/opportunity/reviewUnpublishedTextEntry?contract=ac554f2553d84eac9d1dc9e8ee92bb30&serial=0#_ftnref2" title=""><span lang="EN-GB">[2]</span></a><span lang="EN-GB"> http://www.moneycontrol.com/mutual-funds/top-rated-funds<o:p></o:p></span></div>
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Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com0tag:blogger.com,1999:blog-3929032603371682445.post-70537207474086619262017-05-22T21:29:00.000+05:302017-05-22T21:29:52.051+05:30Investment learnings in the week ended 21 May 2017Starting this week, I have decided to publicly document my investment learning from what I read. Wherever possible, I include links to it.<br />
<br />
<ol>
<li><b>Financials/Disclosures: </b>The debacle of a leading listed private commercial bank YES Bank revealing more NPAs than expected , reinforced the fact that bank financials are a leap of faith, and that management integrity/readiness to disclose often correctly accounts for valuation multiples (<a href="https://www.bloombergquint.com/business/2017/05/19/should-yes-bank-have-told-investors-about-the-npa-divergence-before-its-qip">https://www.bloombergquint.com/business/2017/05/19/should-yes-bank-have-told-investors-about-the-npa-divergence-before-its-qip</a>). Having entered into the bank at levels above its current one, the lesson would be to wait for all mandatory disclosures before entering, like how I do not time quarterly results, extend this to annual results for banks</li>
<li><b>Auto Industry Perception: </b>The autonomous car revolution would likely not affect the car seats market(people will still sit in cars), which is utility like in the safety and cost aspects(small % of car cost), and if it becomes a car differentiation tool, then as mentioned by Michael Blitzer of Kingston Capital management, companies like Adient (ADNT), the largest manufacturer recently spunoff from Johnson Controls, could benefit. Another example is car tires/tyres, companies like Michelin have technological/regulatory moat in developed markets, and since this is an aftermarket replacement driven, it is more a consumable than consumer durables stock.</li>
<li> <b>Matrimony.Com: </b>Litigation can be expensive. The company spent ~US$8M to fight a litigation over a term sheet to invest in it, and finally ended up agreeing to pay US$8M to the affected party! While the promoter agreed to refund US$2M of the litigation cost to the company, this is an example of wasteful litigation</li>
<li><b>QIPs at a discount: </b>Delta Corp and Premier Explosives closed their QIPs at a discount of 5% to benchmark price. Is the bull market finally cracking for these companies? Classic reason why mere QIP announcement is NOT assurance of short term gains. When Delta was at ~170, QIP base price was 163, and finally it was priced at 155. </li>
<li><b>Regulatory Moat might erode: </b>Gujarat Gas peak supply in Morbi industrial cluster was 4Mcsm but when the use of coal gasifiers was allowed(ban lifted), industries shifted to 3mth gas supply contract with GG but shift to dirty fuels basis economics. This is a classic case of ephemeral moat and may happen with solar(as in Germany)</li>
<li><b>Somany Ceramics has ~60% purchases through its associate companies(</b>majority owned by promoters) which may account for lower margins. This analysis by Motilal Oswal in its annual report analysis of FY16 underlines need to read annual reports.</li>
<li><b> </b></li>
</ol>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com0tag:blogger.com,1999:blog-3929032603371682445.post-60273953228133924632017-04-26T15:04:00.000+05:302017-04-26T15:04:25.746+05:30How to meet long term fixed income goals<div style="background: rgb(233, 234, 234); border: 0px; box-sizing: border-box; color: #555555; font-family: open_sans; font-size: 14px; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
For most people, investing is about identifying undervalued investments(stocks, real estate etc) and entering. The areas of position sizing, entry price, portfolio allocation and exit criteria is hardly considered. Additionally,dynamic portfolio allocation, wealth preservation and tax efficient withdrawal are essential parts of a wealth management strategy but due to behavioural finance quirks, are not optimized. Hence, one has the challenge of purchasing different products for different needs, and these products often have different providers, time horizons, design frameworks and regulators, thus leading to cognitive overload by the poor individual investor who has to juggle term plans, FDs, liquid funds, pension funds, equities and insurance. What if one could maximize post tax investment returns, without sacrificing portfolio rebalancing flexibility and liquidity needs?</div>
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Let’s consider the case of Mr Akash, aged 30 years,earning Rs 50,00,000 net salary per year, who is in the maximum tax bracket of 30%. He wishes to retire early at the age of 50, but would like to fund some commitments such as children's education, marriages etc. Considering his overall financial position and goals, his financial planner suggests an allocation of 2% of annual income, to fixed income. Now, fixed deposits would lock in the rate for maximum 5-7 years, but exposes him to reinvestment risks. Unlike institutional investors, he cannot purchase a 30 year GSec bond which would give him that locked in return. And even if he directly purchased it, his post tax returns would fall below 4%. His goal is to lock in long term interest rates, but also ensure the investment continues even in the event of death, or inability to pay the annual contributions due to accidental disability, critical illness etc.Also, having seen how some friend's dependents had not been able to effectively utilize the lump-sum maturity payouts, he wishes to stagger the maturity payouts so that in the unfortunate event of death, his family will get the money in instalments and hopefully spend the money prudently. And if he is still alive then as expected, his other investments permit him the luxury of staggering these proceeds. </div>
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Any bank product would not give him protection against inability to pay premiums, nor does it give him any 'upside' compared to merely purchasing a long term bond fund. Hence,desiring guaranteed returns over a long horizon with tax benefits, Mr Akash decides to check the <a href="https://www.edelweisstokio.in/product/planned-future/gcap" style="background: transparent; box-sizing: border-box; color: #0086e4; line-height: inherit; margin: 0px; padding: 0px; text-decoration-line: none; vertical-align: baseline;">Edelweiss Tokio Life GCAP plan</a> on the advise of his planner. </div>
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The following table shows the IRR obtained basis quote for 30 year male who pays Rs 1lakh/ year for a 10 year premium paying term, and who gets the maturity benefit at the end of year 20.The quotation is sourced from https://www.edelweisstokio.in/product/planned-future/gcap as of 28 Mar 2017, and might be subject to change. </div>
<table border="0" cellpadding="0" cellspacing="0" style="background: rgb(233, 234, 234); border-collapse: collapse; border-spacing: 0px; border: 0px; box-sizing: border-box; color: #555555; font-family: "Open Sans", open_sans; font-size: 14px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline; width: 612px;"><tbody style="background: transparent; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">
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<br /></div>
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Post Tax yield</div>
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5.68%</div>
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Year</div>
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Discount Factor</div>
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Cash Flows</div>
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PV</div>
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Remark</div>
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1</div>
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1.00</div>
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(100,000)</div>
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(100,000)</div>
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Premium at start of year</div>
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<br /></div>
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2</div>
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0.95</div>
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(100,000)</div>
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(94,624)</div>
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<br /></div>
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<br /></div>
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3</div>
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0.90</div>
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(100,000)</div>
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(89,538)</div>
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<br /></div>
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<br /></div>
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4</div>
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0.85</div>
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(100,000)</div>
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(84,725)</div>
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<br /></div>
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<br /></div>
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5</div>
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0.80</div>
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(100,000)</div>
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(80,170)</div>
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<br /></div>
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<br /></div>
</td></tr>
<tr style="background: transparent; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
6</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
0.76</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
(100,000)</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
(75,860)</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td></tr>
<tr style="background: transparent; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
7</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
0.72</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
(100,000)</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
(71,782)</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td></tr>
<tr style="background: transparent; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
8</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
0.68</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
(100,000)</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
(67,924)</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td></tr>
<tr style="background: transparent; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
9</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
0.64</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
(100,000)</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
(64,272)</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td></tr>
<tr style="background: transparent; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
10</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
0.61</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
(100,000)</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
(60,817)</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td></tr>
<tr style="background: transparent; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
20</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
0.33</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
2,384,564</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
789,716</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
Maturity benefit at end of year</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td></tr>
<tr style="background: transparent; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
Total NPV-></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
2</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td></tr>
<tr style="background: transparent; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><td colspan="2" style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
Comments:</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td></tr>
<tr style="background: transparent; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><td colspan="5" style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
This includes insurance benefit(Since product offered by an insurance company)</div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td></tr>
<tr style="background: transparent; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td><td style="background: transparent; border: 0px; box-sizing: border-box; height: 20px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;"><div style="background: transparent; border: 0px; box-sizing: border-box; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
<br /></div>
</td></tr>
</tbody></table>
<div style="background: rgb(233, 234, 234); border: 0px; box-sizing: border-box; color: #555555; font-family: open_sans; font-size: 14px; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
Looking at the calculation, Akash's first reaction is that it is too good to be true. When a pension plan itself offers only 4%-5%(he knows this having recently taken one for his parent's EPF proceeds), how can the yield be so high? And that too post tax and with insurance? Is there some catch here? The planner tells him that in insurance, due to the persistency issue( people do not pay their premiums despite signing up for it), insurance companies give loyalty additions for just sticking to your contractual terms. Also, the high number of people who do not continue their policies, and the asset liability management of insurance companies, helps them manage the liquidity and solvency risks associated with this plan, and enables them to offer such a high guaranteed return. Since the plan is eligible for 80C benefits on contribution, and 10(10D) benefits on maturity proceeds, Akash can be assured that his maturity proceeds are tax free(being a HNI he has long ago exhausted his 80C benefits with EPF etc), and that his wealth is enhanced equivalent to pre tax 5.68/70% or 8.061%per year, with the insurance sweetener. While he might pay some slight extra for the riders on premium waiver etc, he realizes that is well worth his piece of mind, and allowing him to solve his fixed income needs with one single product. </div>
<div style="background: rgb(233, 234, 234); border: 0px; box-sizing: border-box; color: #555555; font-family: open_sans; font-size: 14px; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline; word-wrap: break-word;">
. So with this, Akash decides to sign up for this. He also realizes that the financial product innovation is such that insurance companies can now often beat banks and mutual funds at their own game, and that one needs to be open to new ideas, instead of blindly abhorring all insurance companies due to their past sins.</div>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com0tag:blogger.com,1999:blog-3929032603371682445.post-67833298750484293682017-01-29T19:56:00.001+05:302017-01-29T20:03:14.965+05:30Is it fair for DCB to extend ESOP exercise period due to strategic change?A niche private sector bank DCB(Development Credit Bank) was named by Motilal Oswal in its annual wealth creation study as a potential 100x bagger, subject to management validation :D<br />
<div>
In Oct-15, they announced an ambitious plan(<a href="http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/22B0BC71_2E4B_42AF_8CE5_3CABA08280AE_171649.pdf">http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/22B0BC71_2E4B_42AF_8CE5_3CABA08280AE_171649.pdf</a>) to double their branch network in 12months. They had even stated upfront that this investment would pay back only in 3-4 years. Unsurprisingly, despite their detailed planning, the stock market punished them by hammering down the stock by ~50%. Then the management rolled back the plan and said they would consult the analysts going forward <a href="http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/6577829A_1250_4D5C_AE43_DF6253C10D48_080642.pdf">http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/6577829A_1250_4D5C_AE43_DF6253C10D48_080642.pdf</a><br />
<div>
<br /></div>
<div>
Things settled down and the stock has nearly returned to its earlier levels. However, while reading the annual report, I came across this nugget indicating <i>repricing of stock options </i></div>
<div>
<a href="http://www.bseindia.com/bseplus/AnnualReport/532772/5327720316.pdf">http://www.bseindia.com/bseplus/AnnualReport/532772/5327720316.pdf</a></div>
<div>
<i>During the year under review, the Bank has extended the exercise period from 5 years to 8 years from the date of vesting for all the unexercised
options in force, as on July 1, 2015</i></div>
<div>
<i><br /></i></div>
<div>
I could not locate any specific shareholder approval for this measure, and it appears this was done to protect employees from their underwater stock options(remember the shares as at Mar 31,2016 was trading at ~Rs 70/share vs earlier levels of 140). This is quite sad that the 3yr extension was given without revising the exercise price upwards. Where is the skin in the game for the management to feel the pain like equity shareholders? Ironically, this extension happened even when the stock price was way above the weighted average exercise price of Rs 47(as at 31 Mar 2015), and hence most options would not have lapsed. </div>
<div>
<br />
Dr Vijay Malik has explained the volte face of the management very beautifully in his blog post<br />
<a href="http://www.drvijaymalik.com/2016/05/steps-to-assess-management-quality-before-buying-stocks-moneylife-session-part-3.html">http://www.drvijaymalik.com/2016/05/steps-to-assess-management-quality-before-buying-stocks-moneylife-session-part-3.html</a></div>
<div>
<br /></div>
<div>
<i><br /></i></div>
<div>
<i><br /></i></div>
<div>
<i><br /></i></div>
</div>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com0tag:blogger.com,1999:blog-3929032603371682445.post-45393470543773229532017-01-10T18:23:00.000+05:302017-01-10T18:23:32.895+05:30Value Investing Courses for Indians-some guidesOk I admit it. The title is kinda clickbait to draw folks like you to this post. But having come here, why not spend 2min to decide whether it is worth while? While everyone feels their situation is different, that of the Indian markets is especially so. Like Ambit Capital opined in their Nov-16 report, <span style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 12px;"><i>while earnings yield of value stocks looks attractive, these stocks display limited potential to actually realise those earnings given their declining return ratios, excessive leverage and poor accounting practices. </i>While the rising tide of demographics, reforms, zero interest rates driven liquidity lifts all boats, value investing is good to know to avoid being caught naked while the tides go out. For those interested in a detailed overview, read responses to the question on Quora.</span><br />
https://www.quora.com/How-do-I-learn-stock-market-investing-in-India<br />
<br />
Below are some links. Do note I do not specifically recommend any of these, so please do your due diligence<br />
<br />
<b>Distance Learning-Paid</b><br />
<a href="http://www.safalniveshak.com/mastermind-login/">http://www.safalniveshak.com/mastermind-login/</a><br />
<br />
<b>Distance Learning-Free</b><br />
<a href="http://zerodha.com/varsity/module/fundamental-analysis/">http://zerodha.com/varsity/module/fundamental-analysis/</a><br />
<a href="https://www.sanjaybakshi.net/bfbv-v12/">https://www.sanjaybakshi.net/bfbv-v12/</a><br />
<a href="https://janav.files.wordpress.com/2015/12/agentleandpracticalintroductiontovalueinvesting2.pdf">https://janav.files.wordpress.com/2015/12/agentleandpracticalintroductiontovalueinvesting2.pdf</a><br />
<br />
<b>Classroom Training/Workshops</b><br />
<a href="http://www.flame.edu.in/academics/executive-education/fil-with-the-masters">http://www.flame.edu.in/academics/executive-education/fil-with-the-masters</a> This is invite only<br />
<a href="http://www.safalniveshak.com/value-investing-meetups-bangalore-mumbai/">http://www.safalniveshak.com/value-investing-meetups-bangalore-mumbai/</a><br />
<a href="http://www.drvijaymalik.com/2016/06/pre-register-express-interest-free-for-stock-investing-workshop.html">http://www.drvijaymalik.com/2016/06/pre-register-express-interest-free-for-stock-investing-workshop.html</a><br />
<a href="http://www.jsalphaa.com/register.php%20%C2%A0" target="_blank">http://www.jsalphaa.com/register.php </a><br />
<a href="http://www.bsebti.com/all_program_pages/fundamentals_analysis.html" target="_blank">http://www.bsebti.com/all_program_pages/fundamentals_analysis.html </a><br />
<a href="http://imarticus.org/certification-in-value-investing">http://imarticus.org/certification-in-value-investing</a><br />
Valuepickr forum members sometimes meet up in cities like Mumbai, Kolkata, Delhi, Pune. Try and attend these meets.<br />
<br />
<b>Internship</b><br />
<a href="https://www.linkedin.com/pulse/value-investing-internship-2016-ankur-jain">https://www.linkedin.com/pulse/value-investing-internship-2016-ankur-jain</a> Might be one-off but for those serious, worth a try<br />
<br />Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com2tag:blogger.com,1999:blog-3929032603371682445.post-74435640835119575832016-11-02T22:32:00.000+05:302016-11-03T14:01:25.862+05:30Dynamic Asset Allocation-a genuine way to get outperformance in sideways market<div style="-ms-word-wrap: break-word; background: rgb(233, 234, 234); border: 0px currentColor; box-sizing: border-box; color: #555555; font-family: "open_sans"; font-size: 14px; outline: 0px; padding: 0px 0px 15px; vertical-align: baseline;">
If I had a rupee for each time I got a SMS/email/report guaranteeing me a multi bagger, I’d be a millionaire by now. Naturally, I am skeptical when someone claims the magic sauce of superior returns. But when that person has achieved it over a 13 year period across multiple market cycles, one would tend to sit up and pay attention. The below post outlines the dynamic asset allocation approach.</div>
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Volatility is the friend of value investors since it is at periods of extreme volatility that Mr Market offers bargains to buy, or premium prices to sell. However, most often, volatility is not a part of time ‘Buy and hold’ is a cliché which fails in ‘sideways markets’. As Howard Marks puts it, markets are like pendulums which spend maximum time in the middle, and very little in extremes. So while equity returns do compound over time balancing out the periods of zero returns/negative returns, one wonders whether one can avoid even these periods of low returns. In theory, one can monitor market valuations levels and change the asset mix between debt, equity and cash. In practice however, this needs expertise and transaction costs, taxes and emotions reduce the odds of making alpha. Given the necessity of active management to spot and manage such potential periods of low returns, one could consider professional fund managers to do the same via specialized products/strategies which use dynamic asset allocation.</div>
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Being a member of the ICICI family be it savings account, home loan etc, I decided to see how ICICI performs in this. They have a fund called ICICI Prudential Balanced Advantage fund. <a href="http://www.icicipruamc.com/icici-prudential-balanced-advantage-fund" style="background: none; box-sizing: border-box; color: #0086e4; line-height: inherit; margin: 0px; padding: 0px; text-decoration: none; vertical-align: baseline;">http://www.icicipruamc.com/icici-prudential-balanced-advantage-fund</a></div>
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The fund benchmarks itself against the CRISIL Balanced Fund-Aggressive Index and has outperformed its benchmark over the last 3 yrs ending June 30, 2016. The equity benchmarks are Nifty 50 and debt benchmark is 1 yr Tbill. While one might question the relevance of the indices(since many investments are outside the benchmarks), the fact is that the fund’s returns exceeds the <em style="background: none; border: 0px currentColor; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">total </em>of its benchmark returns. For example, in the year ended June 30,2016, the fund returned 6.7% while Nifty 50 and 1yr Tbill returned (0.96%) and 7.67%. The benchmarks returned totaled 6.71%, and averaged 3.36%(which was coincidentally the CRISIL index return, implying a possible 50:50 split. With the benefit of hindsight, someone investing in Tbills over Nifty 50 would have earned 7.67%, but lost only 1% return by choosing ICICI Prudential balanced fund, thereby achieving investment goals with much less risk. The picture is even more stark for inception to date returns, where the scheme CAGR of 14.62% outperforms the Nifty CAGR of 11.62%. The balance 3% yield is due to asset allocation to debt in times of flat markets. They have on average 70% equity exposure.</div>
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Also, one can withdraw upto 20% of the units till 18 months from investment, without an exit load(otherwise 1%). Post 18 months, exit load is NIL.</div>
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In short, it is apt for all investors-experts or otherwise-and this appears a superior substitute to debt or NCDs, in the Indian context.</div>
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Do note as always that this blog is not a substitute for professional investment advice. Further, mutual funds are subject to market risks, and the scheme related SID/other documents should be read carefully</div>
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Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com1tag:blogger.com,1999:blog-3929032603371682445.post-25098505613250309242016-10-25T10:13:00.000+05:302016-10-25T10:13:17.641+05:30Draft GST Formats-Some ObservationsAs professionals, part of the public service obligation in my view, is to go through draft proposals and try to refine/improve it. In that light, I decided to read the 70pg GST forms/rules, and find out any issues. Below are my observations.<br />
<br />
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext .5pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
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<td style="border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 155.8pt;" valign="top" width="208">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
Form/Rule</div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 155.85pt;" valign="top" width="208">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
Observation</div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 155.85pt;" valign="top" width="208">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
Suggestion</div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 155.8pt;" valign="top" width="208">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
FORM REG GST-1- Application for Registration under Section 19(1) of
Goods and Services Tax Act, 20</div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 155.85pt;" valign="top" width="208">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
Trade name is asked also as an optional field. Address contains
latitude/longitude which might be used for apps/mapping. Reason for
registration is sought including merger etc</div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
Nature of premises ownership is asked including shared/Consent-this
might be a risk mapping factor</div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
DIN/Aadhar/PAN/Passport Number is asked for details of KMP, besides
citizenship-helps cross matching</div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 155.85pt;" valign="top" width="208">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
Name of Father/Mother instead of Name of Father</div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 155.8pt;" valign="top" width="208">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
FORM GST REG 26-Form for Field Visit Report</div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 155.85pt;" valign="top" width="208">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
Physical verification report has photograph of place with person
present at verification time as also details of open, covered and, floor on
which business done. </div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 155.85pt;" valign="top" width="208">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
It ensures the person has visited the place, and gives details of the
person interacted with. If only there is a similar facility for Swatch Bharat
Abhiyan, things would be much better</div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid windowtext 1.0pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 155.8pt;" valign="top" width="208">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
Rule 1[e]Tax Invoice</div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 155.85pt;" valign="top" width="208">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
name and address of the recipient and the address of delivery, along
with the name of State and its code, if such recipient is unregistered and
where the taxable value of supply is fifty thousand rupees or more-This
provision will help curb URD menace and the bill to/ship to scam</div>
</td>
<td style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 155.85pt;" valign="top" width="208">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
The invoice should also include the PAN number of the unregistered recipient,
so that it is easier for the government to track. Name/Address alone with end
up in a physical/manual reconciliation</div>
</td>
</tr>
</tbody></table>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com0tag:blogger.com,1999:blog-3929032603371682445.post-29356903592565227962016-10-25T10:10:00.001+05:302016-10-25T10:10:13.194+05:30Sharekhan Ignite Trading Guarantee-the caveats render it usless<div class="MsoNormal">
I got an email from Sharekhan offering a 1yr trading education program, with the claim that they are so confident in it, they will absorb the losses on your first 40 trades! However, while reading the full offer, I saw the below fineprint. Lesson learnt-ALWAYS read the fineprint</div>
<div class="MsoNormal">
<a href="http://www.sharekhan.com/IgniteDisclaimer.html">http://www.sharekhan.com/IgniteDisclaimer.html</a><o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="mso-cellspacing: 0in; mso-padding-alt: 7.5pt 7.5pt 7.5pt 7.5pt; mso-yfti-tbllook: 1184; width: 100%px;">
<tbody>
<tr>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">1<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Total
40 trades to be taken under “controlled trades” in Ignite TradeTiger.<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">2<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">All
trades will be intra-day (compulsory square off by 3.15pm).<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">3<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Trades
to be taken in cash segment only and in BigTrade scrips only. </span><span style="color: red; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">They are
not confident enough to extent the offer to F&O/Commodity segment, or
even to smaller scrips. Just shows their faith.<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">4<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Order
entry by bracket order only, i.e. entry, target and stop loss to be entered
initially.<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">5<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Maximum
loss per trade will be Rs125. Position size will be decided accordingly by
the system. For eg. if long entry is at Rs100 per share and stop loss is
Rs99, then risk per share is Rs1. Position size in this case would be
Rs125/Rs1 i e 125 shares.</span><span style="color: red; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"> That means even if ALL 40 trades end in loss,
their max risk is Rs 125*40 or Rs 5000. Do remember they would earn a minimum
of 25-50 Rs in brokerage itself, so their risk is much less<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">6<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">At
the end of all 40 trades, cumulative profit / loss will be calculated. If
there is a net loss at the end of 40 trades, Sharekhan.com India Pvt. Ltd.
will reimburse the loss to you.</span><span style="color: red; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"> SO there is a setoff but
no capping/retention of profit to you<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">7<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">For
the purpose of profit/loss calculation, only market price of entry and exit
shall be considered, i e other trading costs such as brokerage, STT etc will
not be included.</span><span style="color: red; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"> For small positions with max loss of Rs 125, these costs often
equal the profit<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">8<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">To
get the reimbursement, you will have to take all 40 trades in your account.
The time limit for taking these 40 controlled trades is the end of the
calendar month following your Certified Trading Professional course, i e if
you have enrolled for the Certified Trading Professional course in September
2013, then the time limit for doing the 40 controlled trades will be till
October 2013.<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">9<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid #CCCCCC 1.0pt; border: none; mso-border-bottom-alt: solid #CCCCCC .75pt; padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">All
the trades have to be as per Online Trading Academy’s core trading strategy
that will be taught in the Certified Trading Professional course.<o:p></o:p></span></div>
</td>
</tr>
<tr>
<td style="padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">10<o:p></o:p></span></div>
</td>
<td style="padding: 7.5pt 7.5pt 7.5pt 7.5pt;" valign="top">
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #494949; font-family: "Georgia",serif; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">At
least half of these trades must be as per trading calls given by the Ignite
research team. The remaining trades can be based on your own analysis (using
Online Trading Academy’s core trading strategy).<o:p></o:p></span></div>
</td>
</tr>
</tbody></table>
<br />
<div class="MsoNormal">
<br /></div>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com0tag:blogger.com,1999:blog-3929032603371682445.post-15801391362025287342016-09-12T15:46:00.002+05:302016-09-12T15:46:56.710+05:30How to gauge management quality and integrity in India<br />
<div>
<b>There is a lot of articles on this </b>but mostly in the western context. I thought to write a brief note on what I do to evaluate Indian companies</div>
<ol>
<li><b>What they say about themselves</b></li>
<ol>
<li><b>MD&A: </b>There will obviously be puffery and exaggeration but do they take a balanced view and try to highlight risks/issues? Or do they just take credit in the good years and blame external factors in the bad years<b> </b></li>
<li><b>AGM Q&A: </b>Do they address all questions including critical questions?</li>
<li><b>Conference Calls: </b>How is the behaviour and confidence on the con-calls?</li>
<li><b>Investor Presentations: </b>Is the presentation balanced?</li>
</ol>
<li><b>What others say about them</b></li>
<ol>
<li><b>Scuttlebutt </b>What do competitions,employees, channel partners, suppliers and regulators say about them? Are there serious quality or safety concerns? </li>
<li><b>Media(Incl interviews): </b>What does the media say? Does this seem paid media/hagiography or an objective look?</li>
</ol>
<li><b>Public records</b></li>
<ol>
<li><b>Are they listed as defaulters or have criminal cases been filed? </b>Have they/related entities defaulted on debt to banks, or has case been filed against them in personal capacity(eg murder-this is a real case against the MD of a listed infra co in maharashtra)</li>
</ol>
<li><b>How did they behave during adverse times</b></li>
<ol>
<li><b>Did they convert preferential issue warrants at above market prices? Or did they allow it to lapse: </b>Before SEBI made it mandatory for preferential allotment to require a minimum 25% upfront non refundable advance, promoters used the warrants as a free 18month call option! While 25% is low, it is still enough of a deterrent for opportunistic investors. When the regulations were lax, did the promoters allow the warrant to lapse</li>
<li><b>Did the company cease all non mandatory investor relations activity: </b>Some companies in 'bad times'(when they make losses/stock price collapses) stop updating IR presentations or maintaining the site. If possible, ask a veteran investor in the stock if the company did like this. </li>
</ol>
<li><b>Ownership/Shareholding pattern</b></li>
<ol>
<li><b>How much is purchased vs acquired via mergers into listed company, ESOPs etc: </b>Have the ownership stake increased via merger of unlisted entities into the listed companies at valuations blessed by a pet merchant banker, in the era before this required majority votes from <i>non interested shareholders</i></li>
<li><b>How much is insider trading-and is this buy/sell? </b>Do the promoters trade frequently in their sales? How much pledged and do they usually buy or sell> <b> </b></li>
</ol>
<li><b>How are their incentives aligned with yours</b></li>
<ol>
<li><b>Management compensation linkage with company profit: </b>Do the promoters primarily link remuneration to profit or clearly defined KPIs</li>
<li><b>Do the management take a pay cut/NIL pay when company starts defaulting/making losses?</b></li>
<li><b>Related party transactions- red flags: </b>Is a high extent of expense/sales from related parties? </li>
<li><b>Other related entities/business group: </b>If having outside business interests or part of vertically integrated group, how aligned are the interests of the listed and non listed entities</li>
<li><b>Minority shareholders Squeezeout: </b>Have they squeezed out minority shareholders ever earlier(supposedly this was done by Godrej also one).</li>
</ol>
<li><b>Professional Management</b></li>
<ol>
<li><b>How much are the KMPs paid? </b>Are the KMPs paid at the maximum possible limit? How reasonable is the compensation given industry salary levels?</li>
<li><b>How much is the compensation growth of promoters vs others? </b>Do promoters take a hike when everyone else is flat</li>
<li><b>Are the 2nd generation promoters catapulted into high levels at remunerations greater than market levels? </b>Is the 'usually foreign educated' son/daughter made a VP/AVP at levels greater than IIM/HBS alumni? This indicates undue favouritism. </li>
</ol>
</ol>
<br />
<br />Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com0tag:blogger.com,1999:blog-3929032603371682445.post-7468589889063393182016-09-12T15:28:00.000+05:302016-09-12T15:28:11.573+05:30A guide to industry analysis for fundamental investors in India<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 13.5pt; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: Symbol; font-size: 8.5pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> Some points which struck me recently while listening to a friend: </span></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 13.5pt; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"><br /></span></b></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 13.5pt; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Regulation<o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Industry
Specific: </span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Wherever there are specific statutes or regulators for an
industry, understanding this is essential as also the dynamics. Some regulators
are even handed(eg telecom, natural gas) while others leave much to be desired.
Is there any possibility that your industry will be on the wrong side of these
rulings<b> Foreign regulation </b>also
matters as in FDA inspection of factories<b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Competition
Law: </span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Some industries like cement, tyres, shipping etc are perceived to
be cartelistic, and therefore at risk of penalties from the Competition
Commission. <b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Export/Import
related-</span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">There have been export bans and/or pricing floors imposed on
various commodities such as basmati rice, onions, sugar, iron ore. Similarly, import tariffs have been raised on
commodities supposedly dumped from China such as tiles, steel. Having an idea
of the trade policy and the lobbying power of the industries(suppliers vs
importers)<b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: Symbol; font-size: 8.5pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Banking/Finance
regulations:<o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Foreign
investment: </span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Wherever there are foreign investments limits on shareholding
and sectors and these are eased, the demand pool goes up therefore helping the
stock price. Examples are industries where FDI limit raised from 49% to 75% or
even to 100%-the stock prices goes up anticipating higher demand from FIIs/FPIs<b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Prudential
Norm/Banking Regulation: </span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">When it becomes difficult for certain
industries to raise more funds(say real estate, gems) from banks, they need to
tap the bond market or expensive sources, and hence the stock price might fall.
Same holds for regulations affecting troubled loan resolution(eg CDR,
SARFAESI).<b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: Symbol; font-size: 8.5pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Taxation <o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Indirect-
</span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">some industries face ‘sin taxes’ such as tobacco, alcohol. This
is a real risk for those companies<b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Direct-</span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">some
benefit from tax holidays or weighted deductions on research, while some are
tax free(eg SEZs, agriculture). <b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: Symbol; font-size: 8.5pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Customers<o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Pull vs
Push: </span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Is there a lockin of revenues or orders as evident via customer
contracts and cash/carry, or is it a push driven credit dependent business<b> <o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">B2B or
B2C: </span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Is the company largely in B2B or B2C? If B2B, expect the margins
to be lower unless it is a hidden champion. Just ask insurers who suffer from
losses in group health insurance but who still continue it for revenues<b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">‘Sophistication’:
</span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Are the customers aware or do they think they are aware of the
business? People may not understand paints or hardware (one reason why hardware
shops mint money), but they ‘get’ FMCG and hence may not continue brands. <b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Value
Migration: </span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Is there a demographic migration from basic to luxury? Or do
people migrate from products(eg scooters to bikes)? Implications<b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: Symbol; font-size: 8.5pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Competition/Industry<o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Market
share of top few players: </span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">If the HHI index is below 50 or if the top few
players do not exceed 50%, there is a sign of unorganized sector<b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Profit
pool of industry and trends: </span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Is the industry overall
profitable or loss making(like airlines, ecommerce)? How has this trend changed
in the last few periods? <b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Ecommerce/Online
Impact: </span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Is ecommerce favourable(say +ve for logistics, packaging,
impulse purchases, advertising but –ve for brick and mortar)? Is there any
industry where competitive advantage is negated via ecommerce distribution network
access(eg ability to launch smartphones without dealer network, this has hit
Samsung/Nokia/Apple)<b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Growth
and import competition: </span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Is
there a China threat? Are they getting bulk of the incremental demand(eg
replacement tyres growth eaten up by China market)<b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Demand
supply gap-presently and 5yrs: </span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Do you have visibility on
new capacities? Can there be a scenario
where the industry becomes surplus in capacity domestically or globally due to
undergoing investments?<b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: Symbol; font-size: 8.5pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Suppliers:
<o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Where
the key suppliers are organized or have pricing power</span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">,
expect your profits to be squeezed. Ask any customer of petrochemical firms in
India<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-list: l0 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #434343; font-family: "Courier New"; font-size: 8.5pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Statutory
regulation on terms of trade-</span></b><span style="color: #434343; font-family: "Verdana",sans-serif; font-size: 8.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";">Whether it be quantity
allocation(like natural gas priority allocation to power and fertilizers),
price controls(coal, railway) or any statutory restriction on terms of trade,
this has an impact. <b><o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 13.5pt; margin-left: 1.0in; mso-add-space: auto; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<br /></div>
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<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 13.5pt; mso-add-space: auto; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<br /></div>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com0tag:blogger.com,1999:blog-3929032603371682445.post-78828343219635681322016-09-12T15:27:00.000+05:302016-09-12T15:27:15.445+05:30Why you should not be glued to the market/watch ticker all the timeDay trading is not for everyone. An article I read recently explains it in great depth below(reproducing the whole article as it is simply too good!). For those with the FOMO(Fear of missing out) yet considering trading as a 2nd day job, they can get heart from this article.<br />
<div class="MsoNormal" style="background: white; line-height: 12.0pt; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 2; vertical-align: baseline;">
<b><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><a href="http://www.daytradingbias.com/?p=118073">http://www.daytradingbias.com/?p=118073</a><o:p></o:p></span></b></div>
<div class="MsoNormal" style="background: white; line-height: 12.0pt; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 2; vertical-align: baseline;">
<span style="color: #333333; font-family: Arial, sans-serif; font-size: 9pt; line-height: 12pt;"><br /></span></div>
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</div>
<ul>
<li><span style="color: #333333; font-family: Arial, sans-serif; font-size: 9pt; line-height: 12pt;">Restraining oneself from watching the market until decision
making time can help reduce anxiety and indecision issues. Having the
discipline to stay relaxed until the necessary decision time (i.e. when the bar
on your chart is about to be completed and that a new bar is about to be
formed) is great but not everyone can do that.</span></li>
<li><span style="color: #333333; font-family: Arial, sans-serif; font-size: 9pt; line-height: 12pt;"> </span><span style="color: #333333; font-family: Arial, sans-serif; font-size: 9pt; line-height: 12pt;">Once you glue yourself to the screen monitoring every tick, you
mind cannot control itself in response to the changes in the chart. It is
especially true when you have a position on. Your mind is working hard to make
sense out of the information every second. You are practically setting yourself
up to burn your brain out.</span></li>
<li><span style="color: #333333; font-family: Arial, sans-serif; font-size: 9pt; line-height: 12pt;"> </span><i style="line-height: 12pt;"><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";">Not everyone can analyze a fluid situation
dynamically like the chess grandmasters do. Reduce the decision making process
to very specific conditions and shut out the rest. After all, you are not
playing chess. You are not required to compete in trading from start to finish.
</span></i><span style="color: #333333; font-family: Arial, sans-serif; font-size: 9pt; line-height: 12pt;">You can pick the
battle you know you have better chance to win. Do not even look at the markets
when the prescribed conditions are not showing. That will limit your mind from
random thoughts messing up your decision making process.</span></li>
<li><span style="color: #333333; font-family: Arial, sans-serif; font-size: 9pt; line-height: 12pt;"> </span><span style="background-color: white; color: #333333; font-family: Arial, sans-serif; font-size: 9pt; line-height: 12pt;">Some people are capable of highly concentrated real-time
processing. But such talent has its limitations. </span><i style="background-color: white; color: #333333; font-family: Arial, sans-serif; font-size: 9pt; line-height: 12pt;">Even if you are physically fit, using mental strength in highly
concentrated ways every day will burn the brain out very quickly. This is what
happen to many day traders working for trading firms as they are pushed to
perform. It is not a good idea if you are planning to make day trading your
career.</i></li>
</ul>
<div class="MsoNormal" style="background: white; line-height: 12.0pt; margin-bottom: .0001pt; margin-bottom: 0in; vertical-align: baseline;">
<i><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";">The solution is to utilize the talent by
trading within a very short time window every day (e.g. just the first 10
minutes from stock market open). This allows the trader to fully focus within
that short period of time making analysis and decisions on every tick. The rest
of the day the trader can do other productive things. Most important of all,
the trader is giving the brain time to recover so that long term performance is
not jeopardized.</span></i></div>
Anandh Sundarhttp://www.blogger.com/profile/14874226278638311812noreply@blogger.com0