Beruflich Dokumente
Kultur Dokumente
HEALTH INSURANCE:
How To Make
Your Claim
Trouble-free
VALUE STOCKS:
Winning Stocks via Shareholder
Yield Page40
STOCKS
FMCG: Poor Growth, Institutional Buys and IG Petrochemicals: Pidilite: Reliance Capital Demergers: Manipulation:
High Margins Sales in June Quarter Turning Around? Strong Going Commercial Opportunism? Agri-Tech (India)
Hassle-free Mediclaims
30 Cover Story
known investing strategy called Shareholders
Yield. This is a relatively new idea with a lot
of promise. By focusing on dividends, share
purchases and falling debt, it could be a tool for
identifying candidates for an early turnaround. Health Insurance: How To Make Your Claim
Its been over a year since we first published Trouble-free
a whistleblowers letter highlighting the issue of If you had multiple mediclaim policies, claim filing used to be
manipulation and collusion with select players difficult. The new regulations have made things easier. TPAs role
in algorithm trading and use of co-located has been curtailed. Insurers will have to make payment from their
own account. Raj Pradhan analyses
servers at the National Stock Exchange (NSE).
NSE dragged us to court and got rapped on the
knuckles by the order against its injunction. And
now, the Securities and Exchange Board of India
has demanded a forensic investigation and also
12 Your Money
Soon an Easier System for Senior Citizens To Prove
They Are Alive
asked that any revenue accruing from NSEs co- PFRDA Approves 75% in Equity for NPS for Private
location facilities must be paid into an escrow Sector Employees
account. Sucheta, in Crosshairs, points out that Mutual Funds To Disclose Distributor Commission
the regulator may need to dig deeper and be Deposit Rs12 Crore with Court, SC Directs Parsvnath
more transparent in its actions, in future. Developers
Insurance Policies To Be Issued Online
Moneylife has often highlighted the
aggressive sales tactics and mis-selling by
banks. Not surprisingly, banks are one of the
largest earners of mutual fund commissions
and, probably, insurance commissions as well.
Will the Reserve Bank of India wait till banks
13 MONEYLIFE
QUIZ
go the Wells Fargo route of gypping millions of
customers before it takes any action? Sucheta
asks these questions in Different Strokes.
The penultimate session of Moneylife
18 SEBI Finally Cracks down on NSEs Suspect Algo
Trading; Algo Revenue To Go into Escrow Account
Foundations The Police and You series will
be held on 1st October. The programme will
cover the functioning of the Anti Corruption
Bureau and the role of citizens in filing
complaints. Dont miss it. (moneylife.in/events/
20 Different Strokes
Wells Fargos of India neither Get Caught nor Pay a Price
mlfpolicereform/)
Disclaimer: Moneylife has a policy of not allowing its editorial staff to
buy and sell stocks that are written about in the magazine. All personal
Debashis Basu
transactions in individual stocks are subjected to internal disclosure rules.
MONEYLIFE | 30 Sep-13 Oct 2016 | 4
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Dr Vij
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Speaker Event Amount
Prof Sanjay Bakshi Investing Traps & How To Avoid Them Rs.800
Dr Vijay Malik How To Assess the Management Quality before Buying Stocks Rs.700
Vijay Kedia My Investment Journey so for & what I learnt from my Failures Rs.700
VALUE STOCKS
IG Petrochemicals: Turning
from Fiction
Salient Eye: Home Security System 66 Remembering Those
Who Cannot Remember
Around? Is Our Social Duty
HEALTH
Pidilite: Strong
Going
ng
56 Treating Heart: The Good,
Bad and Ugly in Modern
Medical Research
Reliance Capital Demergers: Pulse Beat: Medical developments
Commercial Opportunism? from around the world
Market Manipulation:
LEGALLY SPEAKING
Agri-Tech (India)
DEPARTMENTS
Market Trend: Risk Vs Reward
59 On Death of the First
Holder of Shares and
Readers Response ........... 8
Book Review ....................62
Debentures Money Facts ....................64
Debashis Basu
Editor & Publisher
editor@moneylife.in
Sucheta Dalal
Managing Editor
sucheta@moneylife.in
Editorial Consultant
Dr Nita Mukherjee
nitamuk@gmail.com
AN EYE-OPENER
Editorial, Advertisement, This is with regard to the article Beware
Circulation & Subscription Office Investors in Indian Mutual Funds from US and
315, 3rd Floor, Hind Service Industries
Premises, Off Veer Savarkar Marg, Shivaji
Canada by Raj Pradhan. It was an eye-opener.
Park, Dadar (W), Mumbai - 400 028 Can you please provide similar insights on life
Tel: 022 49205000 insurance; investors from US and Canada are
Fax: 022 49205022 Mutual Fund investments
E-mail: mail@moneylife.in interested in buying ULIPs (unit-linked insurance are subject to market risks,
read all scheme related
products). What are the FATCA (Foreign Account documents carefully.
Tax Compliance Act) implications on these
E-mail: products for them?
sales@moneylife.in
Subscription e-mail Puneet Aggarwal, online comment Write to
subscribe@moneylife.in the Editor!
Raj Pradhan replies:
As mentioned in our Cover Story, FATCA has
WIN
a prize
New Delhi
DDA Flats, J-3/66, Kalkaji, implications for the insurance industry too. We do
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Moneylife is printed and published by plans from some insurers. Please read our Cover Story
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Debashis Basu on behalf of www.moneylife.in/article/can-nris-pios-and-ocis-buy-indian-life-
y-indi
dian
an-lif
life-
e-
Moneywise Media Pvt Ltd and
published at 315, 3rd Floor, insurance/38662.html. It gives details which no other media has given.
Hind Service Industries Premises, It will help you understand how to handle buying a term plan if you
Off Veer Savarkar Marg, Shivaji Park,
Dadar (W), Mumbai - 400 028 are an NRI/PIO/OCI.
Editor: Debashis Basu
Documents Safety in
the Storage
Best
letter
T his is with regard to When
Citibank Lost the Original
Title Deeds on a Home Loan
loans will have to be
classified as unsecured
loans on par with
Mutual Fund investments
are subject to market risks,
read all scheme related
documents carefully.
by SD Israni. I understand that personal loans.
it is the standard practice of
most banks, who are into retail
It is important to
remember that home Congratulations
home loans, to outsource the custody of all such loans are long-term TS Easwaran
mortgage documents to a third party. As and when loans of 10 to 15
the documents need to be retrieved, they send a years tenor and it is
YOU WIN A
PERSONALISED
requisition to the service-provider, get the documents the responsibility of CLOCK
back and hand them over to the customer. The bankers to safeguard
internal auditors of banks do an existence check, or the property papers.
inventory check, to ensure that all such documents It may be a good idea
are stored properly by the service-provider, indexed for customers to get
and kept in strong / fireproof storages. a periodic certificate
They must be stored in such a way that they are from bankers that
protected from damage by floods, fire, etc. We do their property TS Easwaran
not know how many bank documents were damaged documents are safe,
(if at all) in last years floods in Tamil Nadu. in their custody,
Lastly, how do the external/ statutory auditors and this fact has
satisfy themselves that banks do have all the been verified by
mortgaged property documents based on which the bank before
they are classifying these mortgage loans as secured giving this certificate.
advances? In the absence of such documents, these TS Easwaran, online comment
large, in the form of lands with value inflated beyond ulterior motives, who have plans to play with the
imagination. Promoters come with the idea of loot, not financial system with. Moneylife is doing a wonderful
to run any business. Many defaulters of banks have the service to society by keeping a close watch on the
backing of chartered accountants, bankers, lawyers, wrongdoings of key institutions and the corporates
bureaucrats, tax officials and institutions like SEBI who want to enjoy everything at the cost of taxpayers
(Securities and Exchange Board of India). Most of the and other stakeholders in the economy.
corporates have umpteen subsidiaries which facilitate Gopalakrishnan TV, online comment
them to fudge the accounts in such a manner that even
the most intelligent auditor cannot find anything wrong KEEP THE LEGAL PROFESSION NOBLE
with the accounting. This is with regard to Judges Need Not Know All
Banks can have an immediate feel of the problems Laws by Bapoo Malcolm. I have one experience of
and, if they are shrewd to warn the borrowers and fighting a case personally when I dragged Tata Motors
their contacts at the right time, many frauds taking to the consumer court... It is true that a human being
place in the economy, involving banks and government is not expected to know everything under the Sun...
authorities, can be easily prevented. The approach of However, the only purpose why a matter goes to court,
the courts is in the right direction; they should give and we seek a judgement, is to get someone who can
sufficient warnings to borrowers, banks, chartered look at both the parties perspective. Then, the judge
accountants, bureaucrats and all other associates that would ideally come to a conclusion based on his
it is becoming difficult to loot the system and get away perspective, his knowledge, experience and wisdom.
permanently, like Vijay Mallya. Nothing is wrong in learning from the lawyers who are
This article also is an eye-opener for those, with fighting against each other.
I was once guided by a judge whose view was said than done. No one wants to be proved wrong. Its
contested by the opposite lawyer. But, I am sorry to human nature.
say, while there may be many good lawyers who have As for paying money and dancing to their tune,
understood their critical role in justice and fair play, you will not believe how many clients want just that.
there are a few who have downgraded the noble legal Including lying in court, on their behalf. No self-
profession to a pedestrian level... you pay money and respecting lawyer will submit to that. And, eventually,
they are willing to dance to your tune; truth, justice the truth does come out. That's what
and fair play are alien to them... They courts are forthe truth. The judgement
have no conscience. comes later. So, feed you lawyer the truth
Except a few, in most of the cases, it and await the outcome. Good Luck.
is clear right from the beginning what
the truth is. But the cases go to the MONITORING PMS MANAGERS
court because the party which is wrong This is with regard to SEBI Ensures
is stronger and has the money power No PMS Loophole for Insider Trading
to hire the best law firms with shrewd by Sucheta Dalal. SEBI should
lawyers to armtwist or deny the rightful carefully monitor portfolio holdings in
benefits to a weaker party. PMS (portfolio management schemes)
Except for some landmark judgements schemes, twitter messages from PMS
from the Supreme Court and the high managers and their generally bogus
courts, people dont have much hope at claim about annual returns of PMS,
the lower courts... thanks to our tareek in their presentations to potential
pe tareek adjournments. Sometimes, legal clients.
cases take decades. Kumar Swamy, online comment
Shyamsunder Nambiar, online comment
APPEAL OPTION TO HIGHER COURT
Bapoo Malcolm replies: This is with regard to How the Rich & Powerful
You say you dragged Tata Motors to court. That Abuse the Legal Process by SD Israni. I agree that the
one word put me off immensely. You file a suit, ask appeal options are a major reason for the mess in our
for reliefs; dragging gives an image of a caveman judiciary. I was reading about the Supreme Court order
dragging his mate by her hair! We need to remember on the height of dahi handi! If the topmost court is
that ours is an adversarial system; all court cases going to get into such matters, one can only wonder.
are. One wins, another loses. The latter grumbles. Anil Kumar, online comment
Unfortunately. Very often, people think they are in
the right; but the law is against them. Maybe on a
technicality that the person was unaware of. It happens Errata: In the Beyond Money article on Page 66 of Moneylife
with amazing regularity. A CA (chartered accountant), magazine (Issue 29 September 2016), there is a correction and
just because he was a CA, thought he knew all the text should read as, For instance, FOHF offered financial
assistance to the widow of martyr Havaldar Channalli (who died
laws and chewed our brains with wild theories on a in Kashmir). FOHF undertook restoration of his dilapidated
six-hour journey. He was fighting his cases himself memorial for Param Vir Chakra awardee, CQMH Abdul Hamid
and, obviously, annoying the judges. So, even litigants and also gave a grant to his widow, Rasulan Bibi, to renovate her
house. The error is regretted. Editor
need to study the law; dispassionately. But thats easier
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T
here is a new proposal to 5 million pensioners of the Central disclosures in the consolidated account
allow senior citizens to government and a similar number statement (CAS) sent to investors by
prove that they are alive of pensioners of state governments. mutual funds (MFs), from 1 October
by just sending an email, by post, Jeevan Pramaan, as it functions 2016. These include disclosure on the
their latest Aadhaar authentication now, has enabled pensioners to gross commission paid to distributors.
statement, to the government office. authenticate their proof of existence Gross commission comprises
Ajay Bhushan Pandey, CEO, Unique using Aadhaarinstead of reporting the amount of actual commission
Identification Authority of India physically at a government office. paid by AMCs (asset management
companies) to distributors during the
half-year period against the concerned
investors total investments in each
MF scheme. Commission refers to all
direct monetary payments and other
payments made in the form of gifts/
rewards, trips, event sponsorships,
etc. CAS will have to give the schemes
average total expense ratio for the
half-year period for each schemes
applicable plan where the concerned
(UIDAI) told media persons that In Jeevan Pramaan 2.0, they can investor has invested.
it will be called Jeevan Pramaan just sit at home and send across the
2.0 and will save the pensioners statement that will be enough to
from going to a nearby centre to process their pension, said REAL ESTATE
authenticate proof of existence Mr Pandey. The finer details of
through Aadhaar. According to the the proposal will be worked out Deposit Rs12 Crore with
official website of Jeevan Pramaan, by the nodal agency for disbursing Court, SC Directs Parsvnath
10 million families in India are
pensioners, which include
pensions. We are in talks with
them, he added.
Developers
S
tarting 1 October 2016, it has CAMS Repository Services, SHCIL
become compulsory for every Projects Limited, Central Insurance
insurance company to issue all Repository, Karvy Insurance Repository
insurance policies in online format. and NSDL Database Management. The
This includes life insurance, health policyholder needs to choose one of
insurance, motor insurance, pension these.
policies and all general insurance A special feature called Authorised
policies. The policyholder will need to Representative is introduced in this eIA
have an e-insurance account (eIA) and where an investor can assign someone
the policies will be issued in demat form trustworthy, or close to the authorised
only in that account. This will apply to most of the policies, like term plans and representative, who will be able to
renewal policies as well. health insurance, or if the sum assured is access the details of the account in case
The e-account is required only if the above Rs5 lakh-Rs10 lakh. of death of the policyholder. This person
annual premium crosses Rs10,000 for There are five registered insurance may be dierent from the nominee.
Moneylife
MONEYLIFE
Quiz no
242
QUIZ Answer
Correctly! Win
Another quiz to tease your brain. The answers are in a personalised
sed
this very issue. The winner will be chosen by a lucky clock with an RA Murali Mohan
draw from correct entries and answers published in the Mutual Fund investmentnt
investments are quote!
issue dated 10th November. Send in your answers to subject to market risks,
read all scheme related
quiz@moneylife.in with the Quiz no., name, address & documents carefully.
telephone number before 19 October 2016.
1. In August 2016, what was the value of investments by all 5. What is the factor added by the Fama-French-Carhart model
equity MFs, in the top bought company, HDFC Bank? to the Fama-French model in stock market investments by
a. Rs2,350 crore b. Rs896.12 crore fund managers?
c. Rs456.37 crore d. Rs218.73 crore a. Return on investment b. Return on capital employed
c. Momentum d. Shifts in currency market
2. How many PSU oil companies were there in the list of most
sold companies by all equity MFs in August 2016? 6. What is the lowest tariff in the prepaid subscription plans of
a. Four b. Three Reliance Jios service?
c. Two d. One a. Rs500 b. Rs250
c. Rs99 d. Rs19
3. What is alpha, in the capital asset pricing model?
a. Return on investment 7. What is the meaning of primum non nocere?
b. Measure of the return on investment as compared to a a. First heal the patient
suitable market index b. First start the prescribed treatment
c. Price-earnings ratio as a percentage of a market index c. First do no harm d. First study the symptoms
d. Weighted average of return on investment of index shares.
8. Which Section of HIR 216 says that the TPA has to
4. What is the function of the app Salient Eye? transfer the claims document to the insurer for a decision?
a. Phone camera b. Home security system a. Section 35(a) b. Section 40(a)
c. SMS storage system d. News compiler c. Section 26 d. Section 80-G
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Asset reconstruction companies Noise pollution and road or train If you see Pink, you will see Red Why business needs to focus on
in India at an inflection point rage in Mumbai Bapoo Malcolm disabled, pregnant women and
Rajendra M Ganatra Sumaira Abdulali senior citizens Dr Ketna L Mehta
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T
he story that began on 19 June 2015, when was dismissed by the order of Justice Gautam Patel of
Moneylife published a whistleblowers letter on the Bombay High Court which also imposed costs of
manipulation and collusion with select players Rs50 lakh on the Exchange. The NSE had appealed
in algorithm (algo) trading and use of co-located (Colo) the order and a division bench issued a stay on the
servers at the National Stock Exchange (NSE), seems payment of costs; the matter is in a limbo ever since.
headed to a conclusion. Almost immediately after the stay, the report of
On 9th September, the Securities and Exchange SEBIs technical advisory committee became available
Board of India (SEBI) wrote to NSEs new chairman, to the media and it confirmed all the whistleblowers
Ashok Chawla, asking the NSE to immediately allegations. But the NSE, which had always denied
initiate an independent examination (including forensic wrongdoing, continued to aggressively defend
investigation by an external agency) of all the concerns itself and, according to one media report, had even
highlighted by the SEBI expert committee in its report rubbished and challenged the findings of SEBIs expert
alleging lack of process that allowed this to happen committee.
and collusion if any and fix accountability for the Some former regulators wonder at the absence of a
aforesaid breachess covering NSE and stock brokers, formal show-cause
show cause notice to the NSE in such a serious
vendors and outsourced
ourced entities involved in the issue. matter. They are also intrigued by th the fact that the
Apart from a forensic investigation, the most NSE has been asked to inv investigate its own
significant punitive
ve aspect of SEBIs directive is actions and act on the possible collusion
that all revenue accruing
ccruing from its co-location of its officials with tthose who
facilities, includingg from fibre connectivity obtained unfair ac access to the system.
between brokers co-location facilities and their How feasible is th that, in a closed,
offices, must be paidaid into an escrow account. secretive, unlisted entity? However,
The NSE has been n asked to get all concerns directly connected to
my sources, direct
expressed by the committee addressed, and emphatic that SEBI
the action, are emp
take necessary action,
tion, within three months. concluded that there was
has already conclud
There are several
eral interesting queries that wrongdoing and the NSE has only to
arise out of the regulatory
egulatory action finally going identify the persons re responsible and act.
public. Remember, r, the NSE had filed action was possible
Even this actio
a Rs100-crore defamation
famation suit overcoming stiff and
after ove
against Moneylifee and this powerful resistance, we
power
writer for publishinging are told.
the whistleblowersrs While SEBI has
letter. Its attempt asked the NSE
Ashok Chawla, chairman NSE
to gag Moneylife to deposit the
O
ne of Warren Buffetts favourite investee charged for insufficient funds or overdraft fees, because
companies is caught cheating customers and the the money was not in their original accounts. Customers
senior management, who benefited the most from were also billed annual fees, interest and other charges for
it, reacts by sacking 5,300 employees. But is Wells Fargo unauthorised credit cards opened in their names. The bank
alone in squeezing profits by cross-selling and mis-selling is now in the process of reimbursing approximately $2.5
financial products? Dont we continue to have similar million to customers who were duped, without requiring
problems in India with no system in place to catch the any action from the customers themselves.
culprits or force them to cough up hefty penalties? Readers would recall that the most profitable and
Let us first look at what Wells Fargo did. In the five aggressive banks in India (mainly private and foreign ones)
years since 2011, employees of the bank opened over did a much of what Wells Fargo is accused of, right until the
1.5m (million) bogus deposit global financial crisis of 2008.
accounts, 565,000 credit-card Most of them were forced to
accounts and unwanted debit clean up their act by the then
cards, without the consent of Reserve Bank of India (RBI)
clients. governor Y Venugopal Reddy
They also created fake and they did it by taking a hit
e-mail addresses to enrol on their books and selling their
people for online banking and bad loan portfolio to recovery
generated PINs to activate agents and asset recovery
unauthorised debit cards. companies.
All this was done to meet Nearly 10 years later,
stringent cross-selling targets Moneylife Foundation
that were part of the banks continues to hear about
strategy. It has, since, fired customers who are harassed
5,300 employees who it held John Stumpf, CEO, Wells Fargo by recovery agents or struggle
accountable for opening these Media reports are now suggesting with poor credit records, mainly
dubious accounts. because of poor financial
that many employees, who
Media reports are
attempted to blow the whistle and awareness.
now suggesting that many Heres one latest example,
employees, who attempted to
refused to open such accounts or with names changed. Rajesh
blow the whistle and refused to pointed out to their illegality, were has an account with two leading
open such accounts or pointed also fired by the bank private banks. He is a careful
out to their illegality, were also customer who also insists on
fired by the bank. controlling risk on his debit
The Consumer Financial Protection Bureau (CFPB), a and credit cards, by insisting on a ceiling of Rs40,000
watchdog body set up in US after the global financial crisis on withdrawals as a precaution. A month ago, he sold
of 2008, brought the scandal to light. Wells Fargo has paid a property, leading to a huge cash injection of Rs1 crore
up a fine of $185 million. Of this, $100 million was levied into his savings account.
by CFPB which accused the bank of widespread abusive A couple of weeks later, on 9th September, two thick
and illegal sales practices dating back to the beginning envelopes came, via a courier who asked Rajesh for
of 2011. identification as they contained a credit card and debit
The CFPB investigation revealed that Wells Fargos card. Since Rajesh had not applied for either card, he
employees had transferred funds from customers existing refused to accept them.
accounts into new accounts created without their knowledge As a matter of abundant caution, he wrote to the banks
or consent. Worse, this led to some customers being senior management informing them about his refusal to
accept unsolicited cards. The main objective was to ensure will be reversed forthwith and a penalty equal to twice the
that the cards, printed with his name on them, are properly value of charges will be paid without demur.
destroyed and dont fall into wrong hands. He also pointed The victim can also approach the banking ombudsman
out that a higher card limit increases his own risk if it is to claim a compensation for loss of time, harassment,
misused. Moreover, he said, it was his understanding that mental anguish, etc. Is it any surprise that the bank is
RBI specifically banned unsolicited cards. Now, there is simply denying that it continues to send out unsolicited
a strange twist. credit and debit cards in complete violation of the RBI
The bank responds to say that it has checked with the circular? And, it has been getting away with it too, because
leading courier company handling its work and there was consumers do not know the rules or their rights.
no delivery for Rajesh on 9th September. It also claims that In fact, every time a bank upgrades your card and
it has not issued any cards to Rajesh. Is this believable? It enhances your credit or withdrawal limit (in case of a debit
is even more worrisome. Is the bank fudging facts because card), it also increases your risk, when things go wrong.
it knows it has no business sending out unsolicited cards? The misuse of debit cards is so widespread that RBI has
Most likely. Here is probably why the cards were issued. recently put out a draft notification seeking to limit the
Every Indian bank has automated systems to monitor liability of innocent victims and to transfer the burden of
clients savings accounts, to spot opportunities to sell a host proving customer liability on to banks.
of financial products (mutual funds, hybrid investments, Over the past few months, RBI deputy governor
insurance, wealth management SS Mundra has repeatedly
services and credit and debit pulled up banks for their
cards). shabby treatment of consumers,
A large sum in your savings rampant mis-selling of third-
accounts immediately alerts party products and flagrant
the entire system to target the violation of the customer code
individual. It happened to the of the Banking Codes and
singer Suchitra Krishnamoorthi Standards Board of India.
when she got a large divorce And, yet, when it comes to
settlement that was, later, action, India has nothing like
systematically ripped off the CFPB which nailed Wells
under a wealth management Fargo and forced it to pay a
programme; Rajeshs property hefty fine. Or a situation where
sale proceeds would have a bank CEO is hauled before
triggered a similar alert. a parliamentary committee
The first stage of softening RBI deputy governor SS Mundra on live television, like the US
the customer is to flatter him has repeatedly pulled up banks... congressional hearings in this
with high-value plastic (a And, yet, when it comes to action, case.
platinum, titanium or credit card Forget about live televised
India has nothing like the CFPB
of similar nomenclature). The grilling, RBI has yet to name or
which nailed Wells Fargo and
next is to send over a smooth, punish a single bank for failing
glib-talking, jargon-spewing,
forced it to pay a hefty fine to treat consumers fairly or
investment expert along with to single out egregious cases
the relationship manager to for exemplary action. On the
pitch investment ideas based on risk assessment. Rajesh contrary, RBI insists that it has no power to punish banks
had such a session too. and financial intermediaries. Earlier, we were told that RBI
Now, heres the worry. If the bank had merely said, did not have a structure and framework for initiating such
sorry to have bothered you; we will destroy the card, the action. But, even after it has put in place a framework in
matter would have ended right there. But the elaborate the form of a Consumer Charter, RBI has ensured that it
effort to claim that no card was sent at all suggests that the remains toothless by making no attempt to frame polices
bank knows it is flouting RBI rules and trying to cover up. for punishment and compensation.
So we checked out RBIs master circulars. The key directive,
under the right to privacy section says, unsolicited cards Sucheta Dalal is the managing editor of Moneylife. She was
should not be issued; if issued, activated (without the awarded the Padma Shri in 2006 for her outstanding contribution
written consent of the recipient) and billed, then charges to journalism. She can be reached at sucheta@moneylife.in
I
nvestment in Government met with similar results. demat form and transfer it to the
Securities (G-Secs) for retail To improve the bond market, account of the demat-holder.
investor has, traditionally, been RBI has allowed retail investors With the current G-Sec yields
through the mutual fund (MF) to invest directly into G-Secs. at their lowest in seven years,
route. With rate cuts by the Reserve All demat account-holders of will retail investors really be keen
Bank of India (RBI) for more than depositories NSDL and CDSL can now? What else will keep the retail
one year, MFs exposure to G-Secs transact in G-Secs through the investor away? First, the tax rates
has been on the rise. Investment on interest is the same that you
through the MF route (growth pay for bank FDs; this makes MF
option) is still a good option, due to schemes the preferred route. Second,
tax efficiency. The long-term capital there are products, such as PPF
gains on bond funds are taxed at (public provident fund) and NSC
20% with indexation benefit. (national savings certificates) which
G-Secs are the safest instrument are popular with retail investors.
available for an investor, with Third, those in the 20% or higher
maturities of one year to up to 30 tax bracket find tax-free bonds
years. Buying G-Secs directly is more attractive. Those in the zero
rarely explored as an investment trading platform of RBI. Retail to 10% tax bracket buy taxable
option by retail investors, due investors having demat accounts bonds which have higher yields.
to numerous reasons. It is not can ask their depository participants Fourth, there is no initial public
as easy to buy them as it is to (DPs), who are also primary offer (IPO) route for G-Secs like it
open a bank FD (fixed deposit) members of Negotiated Dealing is available for taxable and tax-
or invest in an MF scheme. IDBI SystemOrder Matching (NDS- free bonds. IPO offers are easy for
Bank has launched Indias first OM), to place orders on their behalf investor to understand and know
online G-Sec web portal Samriddhi on the NDS-OM trading platform. the rate of interest that will be paid
(samriddhigsec.idbibank.co.in), to The Clearing Corporation of India for the specified term. Secondary
promote retail investment in G-Secs. Ltd (CCIL) maintains the NDS-OM market pricing, volumes and yield
But this route has not attracted on which banks and primary dealers information are difficult for a
retail customers so far. Axis Banks transact in G-Secs. After order layman to understand. There is also
online facility to enable retail execution through the DP, CCIL broker commission to be paid for
investors to invest in G-Secs has also will convert the bond holding into buying and selling.
T
Date Coupon (%)
he 10-year benchmark G-Sec yield,
which sets the tone of the fixed- Apollo Hospitals 22 Aug-28 22 Aug-17 9.86 INE437A07104 CRISIL AA
income market, declined steeply, by 25 Dewan Housing Fin 9.74% 09 Jun-17 09 Apr-17 9.15 INE202B07EG8 CARE AAA
basis points (bps), in the last fortnight,
CRISIL AAA
to end at 6.86% on 16th September. ICICI Lombard GIC 8.25% 28 Jul-26 28 Jul-17 8.24 INE765G08012
(unsecured)
12 December 2041 7.31 Indiabulls Housing Fin 9% 30 Jun-26 30 Jun-17 9.12 INE148I07FG5 CARE AAA
Margin of Recklessness
E
very equity portfolio is constructed differently. Each in Delhi; there are new rules; the Goods & Services (GST)
investor thinks differently and, to that extent, the Bill has been passed and, so, stocks are great.
outcomes differ, performances differ. When the Fundamentals get ignored, in the process. This happens
market hits rock bottom, everyone first loads up with when the markets are down, up or flat. Crowd behaviour
heavyweights, the proven large-caps, seeking safety in that drives markets does not respect fundamentals.
established names. These stocks are the ones that rally Investors are either on speed or on depressants. Nothing
first and lead the surge in indices. While this is happening in between.
currently, the smaller companies stocks are languishing. Against this backdrop, building an investment portfolio
Smart money then starts moving to this area. that endures is helpful, if you think equities is serious
Once the main indices shoot up, big money starts business. And you also realise that preservation of capital
chasing small things. It is ironical that the structure of has some relevance. This would mean that we have to
industry is such that every large investor wants investible construct a portfolio of stocks that can withstand most
ideas defined by size and liquidity. They want minimum downturns. I am not saying that I can help construct
ticket-sizes and are compelled to first chase the large-cap a portfolio that is always rising. Every stock can fall.
stocks. Only then, attention shifts to smaller ones which However, the thoughts behind a portfolio construction are:
shoot up rapidly with small amounts of investments, given i) Capital preservation, to the extent possible; and
their inherent illiquidity. ii) Take some chances for super-normal returns.
The smaller companies hog the limelight for some Boring as it sounds, I assume that investment in equities
time. Everyone has his/her own stories that they discover. is with the money you can spare for 20-30 years. It can
Logic takes a back seat. Momentum m go up or down,
d but largely up, during these
matters. As more people join the years. The objective is to get a return
yea
bandwagon, everyone feels like that will beat inflation. To sell
a genius. The smaller stocks keep it, you need a separate plan. You
hitting the upper circuit repeatedly do not decide, on one fine day,
and the stock market seems like that you want to sell. Just like we
a one-way street. Everyone is cannot get the best results by
talking about India having the buying without a plan, we are
highest growth rates, while others unlikely to get the best results
are slowing down; global trade is on selling without a plan.
shrinking and commodity prices To do this, it is useful to
are not recovering. understand how the market
It is like saying that the one- behaves and use crowd behaviour
eyed is king when the world is blind. We seem to be great to ones advantage rather than being part of the crowd.
because China is slowing down. We seem to be great Do not worry about where the crowd will come from if
because Europe seems headed into a recession. Right everyone were to become smart. There is always a herd.
statements, perhaps. But are these valid reasons to take New crowds are mobilised every day. A bull market is a
exuberance to new levels in the Indian markets? One party to which latecomers never stop coming.
interesting thing is that everyone seems to be very wise As an investment strategy in such a market, I will
about the market risks and seems to know every market divide my investments into two buckets. Let us call one
move in advance. bucket Core and the other chance. How much does
Market movements, of the recent couple of years, have one allocate to each one? Well, that would depend on the
actually brought back greed into the market. Maybe we money you have, your need to save, your need to provide
are in a multi-year bull run. Ah, you say, let us ignore for someone and the circumstances you are in. And, of
fundamentals. Our markets have seen P/Es of 40+ and we course, your attitude and tolerance would be key factors.
are nowhere near that. And, of course, it is a new regime Someone, who is well off, well provided for and not
worried about tomorrow, could have as much as he wishes than, the nominal GDP growth.
in the chance bucket. The core bucket will be filled with By nature, these are growing companies, probably,
stocks of companies that are established names, high- they have a low level of fan following, poor liquidity and,
quality businesses, leadership positions and long history. while they may be easy to buy, the impact cost of buying
These stocks, if bought right, can give you market to or selling is very high. What it means is that you could
above-market returns. They will never rise too high nor fall easily have a difference of anything up to 5% of the quoted
too low (or, even if they fall too low in panic, remain so). price, should you decide to buy or sell modest quantities.
These are liquid stocks. They are preferred by Thus, your calculation of returns and realisable returns
institutional investors and very well researched. Most will have a gap. Hence, the returns have to be large enough
probably, these companies deal in goods or services that to absorb this factor of impact cost.
are easily understood and have brands that command This satellite portfolio is a high-reward high-risk
leadership positions. They rarely disappoint in terms of investment plan. Of course, if you are what is referred to
performance. It is very unlikely that they will give you in poker as a high roller, you make your own rules. For
shocks either. you, core and satellite are irrelevant. What you seek is
In a bull market, these companies will lead the rally excitement and so you have only these satellite stocks.
and, at some point, will just stagnate for a long time. When Make sure you always live to fight another day.
the bull run is over and the decline starts, these stocks will Thus, portfolio quality, diversification, etc, are personal
also fall, but its unlikely that they will crash to nothing. preferences. For those who live by an Excel sheet and like
Being large in size and being liquid, they will always find textbook-style investing, it is good to stick to high-quality
buyers at every level. They are generally shock-proof and stocks or mutual fund investments.
considered as core holdings. What is useful to understand is that, when there is
The core is, thus, a universe of high-quality, proven euphoria, the small horses run very fast. And they also
companies. The worry about company performance over slip back very rapidly, should the euphoria disappear. In
a long term is minimal or chance. an illiquid stock, when the selling comes, you do not have
The other one is the satellite group. Here, we put in sufficient buyers. So, such stocks will just disintegrate in
our wealth-creating ideas into action. We buy a group price. At the top of the bull market, it makes sense to
of small company stocks hoping that some of them will shift out of the satellite kinds and move into the core
emerge as multi baggers and give CAGR (compounded type of stocks.
annual growth rate) that could be upward of 25% per It all narrows down to being aware and keeping a close
annum. track. Cut out the noise. Look at valuations. Keep a goal
We know that the mortality rates in these stocks are (for buying the stock) in mind. Unless things have changed
going to be high. However, these are stories which, I think, with the company, do not worry much about macro issues.
will play out over the next 10 years or so and, hence, I Markets are not designed to behave according to logic or
am not going to disturb this portfolio. These companies design. Understand Mr Market and take advantage.
have the potential to become leaders in their industry.
They have growth rates which could be twice, or more The author can be reached at balakrishnanr@gmail.com
the risk of theft, breakage, water would also be portable), as per Group Insurance, from time to
damage, etc. The mobile phone of Schedule I, Section(1) & (18). time.
the complainant was snatched by Free-look in period is 15 days as Whether a group of seven
unknown persons; a complaint was per Section 14. members is too small for group
lodged with police. The consumer Cumulative bonus amount has insurance is debatable, considering
forum examined the customers to be clearly mentioned in the the amount of losses with group
copy of the insurance policy and policy, as per Section 16(i). cover. But even a big group
the police complaint along with All disclosures as per the new can inflict huge losses if it is
untraceable report, to come up regulations have to be included not underwritten with justified
with its decision. It found that the in the policy document, as per premium. It has been happening for
insurance claim was denied without Section 28. not just government schemes but
any reasonable excuse. For multiple policies, claims even for private ones.
under other policies can be made National Insurance had
Regulations after exhaustion of the sum extended health insurance cover
insured in the earlier policy, as for Jain International Organisation
Regulations per Section 24 (ii)2. The option
to choose will remain with the
(JIO) members since September
2014. Moneylife had written a
2016: Mediclaim insured. There is no contribution couple of articles one of which
Policyholders clause. was titled Health Insurance:
Rights
Group Insurance for Jains with
Re gulations Taxpayers Money? It was a
no-brainer, considering that
Which insurance product then is right for you? As a member of Moneylife Advisory, you
get advice on selected term insurance products, identified after deep, unbiased research.
Most importantly, you will get special support during your claims, as long as you make the
right declarations.
es dier
Health insurance products are complex. Policies
in exclusions, conditions and fine print. If
you slip up on even one of the conditions,
your claim may be rejected or cut down. A
large number of cases generate disputes
and some end up as complaints with the
Insurance Ombudsman or consumer courts.
This is all you need on the insurance front. Be an MAS member today and stay safe.
MAS is a no-bias, no-conflict platform. We are not in the business of selling any
financial product and so can advise you ethically.
About MAS
MAS is a SEBI-registered investment adviser and part of Moneylife, Indias most unbiased and
pro-investor research and information group. We run Indias best personal finance magazine,
Moneylife. We are not afraid to call a spade a spade. We are Indias only media company to have
set up a non-profit trust, Moneylife Foundation, which is now the largest savers and investors
association with more than 35,000 members. MAS was set up to help investors and savers make
the right financial decisions and handhold them through the entire process.
MONEYLIFE
ADVISORY
FIX YOUR FINANCES, FOREVER
www.savers.moneylife.in
HEALTH INSURANCE:
How To Make
Your Claim
Trouble-free
If you had multiple mediclaim policies, claim filing used to be difficult. The new
regulations have made things easier. TPAs role has been curtailed. Insurers will
have to make payment from their own account. Raj Pradhan analyses
B
uying health insurance can be difficult if you your family aware of the policy details and what is to be
are old or have health issues. Getting a claim done, in case of an emergency hospitalisation.
paid can be an uphill task too. Having more Today, consumers may have a corporate cover along
than one mediclaim policy used to add to the with a retail policy. There can be more than one retail
complexity. Not anymore. Health Insurance mediclaim policy or mediclaim along with top-up/super
Regulations (HIR) 2016 has scrapped the Contribution top-up policy. Under which policy should you make the
Clause completely under which two or more insurers claim, when the need arises? Should you go for cashless
would proportionately pay the claim amount (based on or reimbursement claim, especially if the hospital of
the sum insured of each policy) if the claim cannot be your choice is not on cashless network? Insurance
fully paid by one insurer policy. You can claim with any companies are competing to offer assurance of cashless
insurer of your choice. Under HIR 2016, if the claim approval within record time. Does it really work or is it
amount is more than the sum insured (SI) of one policy, a marketing gimmick to attract customers?
the balance can be claimed from the other insurance Buying mediclaim is not the end of your financial
company. There is no concept of the insurers prorating planning. It is just the beginning of a journey which
your claim when you claim from more than one insurer. should lead to getting a claim paid, if the need arises. Pay
It will also help to improve your claim payout. Make attention to policy clauses and claims documentation.
The process starts with the proposal form which displayed on the policy document, you need to get it
needs to have all the declarations made honestly. It is corrected.
a major reason for claim rejection even if the claim is The policy can have exclusions, cooling off period,
totally unrelated to the lapse in the declaration. All the sub-limits, room rent limit, co-pay, deductible, etc. Just
premiums, paid over the years, will go down the drain ensure that there are no permanent exclusions for PED;
if your claim is rejected. So, make your start honestly to it usually involves a waiting period of two to four years.
ensure that the claims are paid. Despite this, if a claim is There can be waiting period for specific procedures like
rejected, you will be on a strong wicket to fight a case. cataract, kidney stone removal, hernia, appendectomy,
As you probably know, there is a very short time limit knee cap surgery, etc. Corporate mediclaim may have no
for intimating the insurers about hospitalisation. Some waiting period for PED or for specific procedures.
insurers are taking advantage of this to mechanically Cooling period is an initial waiting period which,
reject claims. The Insurance Regulatory and Development typically, is for one to three months, when you buy
Authority of India (IRDAI) has clarified that insurers the policy for the first time. Hospitalisation due to an
cannot a reject claim only on the ground that the time ailment is, typically, not covered during this time; but
limit for intimation of hospitalisation has been violated. hospitalisation due to an accident is covered.
But the delay has to be justified. So, ensure that the family
does its best to inform the insurer of your hospitalisation
and also to file the claim in time. Dont give a chance to
the insurer to raise any issue.
There is no claims-based loading anymore under the
regulations, effective 2013. So, do not hesitate to lodge
a claim even if it is of a small amount. Your no-claim-
bonus (NCB) may go down a notch, but hospitalisation
in India is not cheap; you paid the premium to get claims
paid and not to see your NCB grow. While doctor visits,
diagnostic tests and medicines are not covered stand-
alone by mediclaim, they are covered when there is a
hospitalisation claim. A fixed number of days for pre-
and post-hospitalisation expenses is covered for these
expenses which should be claimed, even though they Sub-limits cap the liability of the insurer. These can
may be through a separate claim. apply to specific procedures or ailments. Room rent limit
Delays in getting a claim paid are not uncommon. is, often, tricky. Usually, room rent is not just limited the
Many are relieved to get the claim paid and do not insist room rent which is allowed, but it also pro rates the claim
that the insurer pays a penalty for late payment. Dont based on the room rent availed vis-a-vis how much the
let the insurer go scot-free. Consumers will get interest policy allows for room rent. Co-payment clause means
of 2% over the prevailing bank rates on claims payment you will bear a percentage of the claim amount. For
delayed beyond 30 days and it will have to be specified in example, a 10% co-payment clause means that you will
the policy document, as per Section 28(iv) of HIR 2016. pay 10% of the claim amount and the insurer will pay
the remaining claim up to the SI, subject to other limits.
Policy Wordings Are Sacrosanct There is a grace period of 30 days for renewing your
Understanding the policy details will help you know policy. The policy will be considered as continuous for all
what claim is valid and what the insurer should pay. If the waiting periods. If the renewal is done after 30 days,
you are aware of the policy, you know you are fighting the waiting periods (PED, specific procedure waiting
to get a valid claim paid. First, check your details on the period) will again be applicable. The insurer may or may
policy. The Customer Information Sheet must be part not even renew the policy if there is more than 30 days
of the policy document, as per Section 26 of HIR 2016. break; it is almost like buying a new policy, if there is
Ensure that all your information is accurate. If not, get more than 30-day break in renewal.
it corrected. The insurer is not mandated to send renewal notice.
Your proposal should be filled by you with full The policyholder will have to be proactive and ask for
disclosure and accuracy. Declare existing insurance renewal premium and pay it on time. Ensure that the
policies, health conditions, smoking and drinking habits, insurer clears your cheque on time. Avoid even a few
family history, etc. If PED (pre-existing disease) is not days delay after the renewal date, as any hospitalisation
during the unpaid period after renewal date will not be be expected to pay some advance to the hospital (less
covered. than 10% of the estimated cost) which will be adjusted
after cashless approval. If there is cashless denial, for
Moment of TruthCLAIM some reason, you will have to pay the hospital bill and
In a pre-planned hospitalisation, the policyholder try for the reimbursement route.
should intimate the insurers about the forthcoming Keep copies of old insurance policies to prove
hospitalisation, irrespective of whether it is cashless or continuous coverage with the insurer. If portability is
reimbursement claim. In emergency hospitalisation, the done, the old policy document will also help; waiting
intimation must be sent to the insurance company or the periods are not applicable again. If any ailment was
third-party administrator (TPA) within 24-48 hours of first detected after buying mediclaim, it is not a PED.
hospitalisation, depending on the policy. The insurer/ But you should be able to prove that its inception was
TPA should be given an opportunity to visit the hospital after the initial purchase of the policy. Any doctors
for verification, if they wish to do so. note, diagnosis report, hospital record, employer record,
You need to be aware of which neighbourhood clinical evidence which contradicts it will put your claim
hospital is in the network of your insurer. Give preference in jeopardy as it would mean that you did not declare
to get pre-planned or emergency hospitalisation done your PED when buying the policy. It is a grave blunder
that can lead to policy cancellation along with claim
rejection.
Cashless: For cashless claims, you need to fill up a pre-
authorisation form giving personal and policy details.
The doctor will fill details of the treatment/procedure
along with estimated costs given by the hospital
billing department. The form, along with supporting
documents, is sent to insurer/TPA. In-house claims
department has an edge over insurers operating with
TPA. But do not assume that in-house claims department
will always be able to make a quick turnaround as
marketed by the insurer. Advertisement stating cashless
approval in specified hours is subject to fine print of the
insurer receiving all the required documentation and
information to their satisfaction. In reality, the approval
can take even longer than a day or more.
at a network hospital so that cashless can be availed. Keep track of hospital bills so that you can check if
Network hospitals have a proper agreement with they will exceed the approved cashless amount. If the
insurer/TPA for negotiated payment for various medical amount is going to be more, you need to approach the
procedures which helps smooth claims processing. If it insurer/TPA again with details of the bills. The insurer/
is not possible, you have to go with the reimbursement TPA will try to find why the costs are higher than the
route for non-network hospital claims. estimate. Keep following up with them and provide any
Reimbursement claim carries more risk than cashless. required documentation from the doctor or hospital. Do
You have to pay from your pocket to the hospital and all the legwork to get the additional expenses approved
then claim from the insurer. It is possible that some of the by the insurer/TPA, for cashless.
charges levied by the non-network hospital are higher Reimbursement: With cashless approval, your worry
than reasonable and customary payment for such about a claim is over. Reimbursement puts you in
services. If so, the insurer may only partially settle the financial stress as you have to foot the hospital bill
claim which can defeat the purpose of buying a policy. upfront and claim it later from the insurer. It means
So, your priority should be cashless for all claims. getting all the discharge documentations to file with
For pre-planned claims, you have time to get the claim form. These include: hospital bills, hospital notes,
approval for a cashless claim before hospitalisation; doctors consultation details and bills, investigation/
hence, you will not have to pay from your pocket or diagnostic reports, discharge card, doctors prescriptions
face the issue of being denied a cashless claim during the and medicine bills, proof of payment to hospital, etc.
hospitalisation. For emergency situations, cashless may A bank mandate with the policyholders bank account
not be approved before hospitalisation; hence, you may details and IFSC or a cancelled cheque may be required
to be submitted, as the payment will be made with ECS an assessment of what can be claimed and the final
(electronic clearing system). payment would be close to the given estimation.
The insurer will insist on getting the original copies Check with your insurance company about it.
of all documents; in case of multiple insurers, get attested 5. If the day-care procedure you intend to undergo is
copies of hospital documentation and claims settlement not specified in the policy wordings, it is a grey area.
summary from the first insurer you approach for the But dont lose heart, as you may be able to persuade
claim. Ensure that all the documents are submitted and prevail. A lot will depend on the negotiation
in proper sequence so that it is easy for the insurance power, to prove to the insurer/TPA that the medical
companys decision-maker to comprehend your claim. It nuances of the procedure will actually help the
is your responsibility to present your case in a proper insurer due to lower cost than regular procedures
way, to ensure smooth claims processing. The claim is that need hospitalisation.
usually to be filed in seven to 15 days from the date of 6. If the insurer/TPA brushes you off, you can still seek
discharge from the hospital, depending on the policy justice with the insurance ombudsman or a consumer
terms. Irrespective of whether your hospitalisation court. If you purchased mediclaim in good faith and
claim is in cashless or reimbursement mode, pre- and are convinced that the insurance company should
post-hospitalisation expenses claim will always be in pay, go for the fight.
reimbursement mode. 7. Remember, there are always costs involved, even in
cashless (registration, deposits, incidentals, etc); it is
Steps To Take When Hospitalised better to try and get an estimate of these costs before
1. Mediclaim usually covers treatment that requires choosing where to get yourself treated.
24-hour hospitalisation, with a few exceptions. 8. Insurance advertisements make it appear that
Insurers cover day-care procedures like lithotripsy, insurance is easy to buy and easy to claim. In reality,
chemotherapy, dialysis, etc. More and more day- the claims process is tough to negotiate, especially
care procedures are covered in mediclaim, due for those who are less educated.
to technological advancements that do not need 9. Finally, be meticulous in your paper work and dont,
24 hours or more of hospitalisation. You need to be under any circumstance, delay the submission of
aware of them. hospitalisation intimation and claims request.
2. Claiming insurance money is a fairly tough process. 10. The difference in the cost of diagnostic tests is
If it is not an emergency, it is worth your while to enormous. So put your foot down, if needless and
spend time to learn; ask plenty of questions and repetitive tests are prescribed. Diagnostic tests,
make an appropriate choice. doctors charges and medicines are covered for pre-
3. Ideally, go for cashless. It eliminates nasty surprises and post-hospitalisation period.
on what the insurance company is willing to pay. 11. Medicine costs can also upset budgets. Some
It will also mean restricting yourself to network pharmacists offer discounts ranging from 5% to
hospitals. 10%; hence, always ask for a discount when buying
4. In case of reimbursement, some medicines.
insurers allow patients to
get an estimate of Dealing with Emergency Hospitalisation Cashless
costs before the In case of emergency hospitalisation, it is best if you
hospitalisation and your family are prepared to work in an organised
by submitting manner. Here are a few tips:
details to the Know your insurer/TPA, broker/agent. Have all the
insurer/TPA contact details. Confirm with the intermediaries the
prior to the role they will play, in case of your medical emergency.
procedure Understand what is covered and not covered. Ideally,
they will find out things when there is no emergency! Ensure
give you that there is no change in policy wording during
renewal.
Keep mediclaim policy documents, policy ID card,
updated cashless hospitals list, insurer/TPA phone
numbers, email and postal address in a place
accessible to your family at home and even during
savers.moneylife.in
MAS is a SEBI-registered investment adviser and part of Moneylife,
Indias most unbiased and pro-investor research and information group.
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travel. The postal address is needed for pre- and post- Limited TPA Role Will Help Policyholders
hospitalisation expenses (which is a reimbursement The new regulations specify that insurers and TPAs
claim). should put systems and procedures in place to identify,
Photo identity proof (passport, drivers licence, monitor and mitigate frauds. HIR 2013 had stated that
PAN card) of the insured are needed during cashless TPA may handle claims admission and recommend to
application and reimbursement claim submission. the insurer for the payment of the claim settlement.
Research the local hospitals and nursing homes. This has been dropped from the new regulations which
Narrow down to one or two hospitals which offer is good news.
cashless as well as facilitate most of the medical HIR 2016 states: Insurers shall ensure that the TPAs
procedures. Check the TPA desk at these hospitals are not carrying out the following activities as part of
and get their contact information. the agreement: i. Claim rejections/repudiations with
Keep all medical reports, pharmacy bills, lab/ respect to the health insurance policies; ii. Payments to
diagnostic bills, etc, to establish a trail for your the policyholders, claimants or the network providers;
medical need. It is required for cashless approval iii. Any services directly to the policyholder or insured or
and claims reimbursement. Keep photocopies of all to any other person, unless such service is in accordance
the documents before submitting originals to insurer/ with the terms and conditions of the Agreement entered
TPA. into with the insurer and complies with the IRDAI (TPA-
Be ready to pay for incidentals (that may or may Health Services) Regulations, 2016.
not be reimbursed). Keep emergency cash at home HIR 2013 had stated that TPA shall, in the
as it may be needed even for cashless treatment. correspondence to the policyholder with respect
Registration and non-medical expenses are not to settlement/denial of the claims, state clearly the
covered. Until cashless approval is obtained, you will following.... HIR 2016 puts the onus on insurers.
need to pay a deposit to the hospital. It states, Where a claim is denied or repudiated, the
communication about the denial or the repudiation shall Policyholder ID card to have logo of insurance
be made only by the insurer by specifically stating the company (not of TPA) and the card may be
reasons for the denial or repudiation, while necessarily permanent, as per Section 30(f).
referring to the corresponding policy conditions. Consumer will get interest of 2% over the prevailing
Other important clauses in HIR 2016 (listed on social savings account interest rates, on claims payment
activist Gaurang Damanis website) are as follows: delayed beyond 30 days and will have to be mentioned
The claims payment will be made from the insurers in the policy document, as per Section 28(iv).
bank account and not the TPAs, as per Section 32 Fees to the TPA will not be related to reduction of
of HIR 2016. Earlier, claim cheques were issued to claims costs, as per Section 20(6) of Health Services
the customer by the TPA; but, now, the insurance Regulations for TPA, 2016. Discounts offered by
company would have to write a claim cheque or ECS hospitals have to be passed on to policyholders, as
directly to the customers bank account. This would per Section 20(9) of these Regulations.
eliminate the float that some TPAs were enjoying.
Also, there was never any public audit of the claim Contribution Clause Loophole Closed
amount sanctioned by the insurance company versus Prior to HIR 2013, if you had more than one health
the actual amount disbursed by the TPA. policy, the claim was to be pro-rated, depending on the
TPA has to electronically transfer the claims document sum insured of each policy. For example, if there were
to the insurer for a decision, as per Section 35(a). two policies of Rs2 lakh and Rs4 lakh, respectively, and
The TPA will ask for claims-related papers from the there was a claim of 1.2 lakh, then Rs40,000 would
policyholder at one time only, and not in a piecemeal be paid by the Rs2 lakh policy while Rs80,000 would
manner, as per Section 27(ii). be paid by Rs4 lakh policy. This is called contribution
The claims settlement (rejection) letter should clause. It was a lot of hassle for the insured who could
mention the specific grounds for denial/ rejection of have easily got paid for the claim amount from just one
claim, as per Section 33(d)(iv). policy. It made having multiple policies a headache for
Change of TPA will be intimated to the consumer in claim reimbursement.
writing 30 days before hand, as per Section 34(a). This was done away with in HIR 2013; but there
was a loophole. HIR 2013 allowed the policyholder to it. If the claim amount is higher than the SI of one policy,
settle with the insurer of his/her choice. It stated: If you can claim from one policy and the balance from the
two or more policies are taken by an insured during a second policy without worrying about the contribution
period from one or more insurers to indemnify treatment clause to complicate the matter.
costs, the policyholder shall have the right to require You have to obtain a claims settlement summary
a settlement of his/her claim in terms of any of his/her from the first insurer you approach for claim settlement.
policies. It has to be sent to the second insurance company along
But what if the claim amount were higher than the with attested copies of all the hospital bills. So, ask the
sum insured of each of the policies? HIR 2013 said: If hospital to give original bills as well as attested copies
the amount to be claimed exceeds the sum insured under of it, when you have multiple insurance policies. You
a single policy after considering the deductibles or co-pay, cannot make a claim for the same hospitalisation bill
the policyholder shall have the right to choose insurers by to both insurers, as you cannot profit from mediclaim
whom the claim to be settled. In such cases, the insurer policy.
may settle the claim with contribution clause. So, in this Inform all the insurers when hospitalised; for pre-
case, the contribution clause could still be applicable; planned hospitalisation, intimate ahead of hospitalisation.
this meant hassles for the policyholder. Once all the insurers are intimated of the possibility of
HIR 2016 completely removes the contribution a claim, you can decide if you want to go for cashless or
clause. It says: If the amount to be claimed exceeds reimbursement. Priority should be for cashless, especially
the sum insured under a single policy after considering if you are hospitalised in a network hospital. You can get
the deductibles or co-pay, the policyholder shall have cashless approval from one insurer and obtain the claims
the right to choose insurers from whom he/she wants to settlement summary.
claim the balance amount. It will help to improve claim If the amount is going to cover all the hospital bills,
payout. your job is done. If not, approach the second insurer for
In the past, insurer liability of the claim amount was either cashless or reimbursement of the balance hospital
proportionate to the sum insured of each of the policy bills.
when claim was to be paid by multiple insurers. With If you are aware, from inception, that the hospital
no such restriction in place, you can expect better claim bill will be higher than the SI of one policy, you could fill
settlement. up two authorisation forms which the hospital can send
to both insurance companies. The insurers will settle the
How To Handle Multiple Policies? bills directly with the hospital.
Deletion of the contribution clause in HIR 2016 is a
good move by the regulator. If the claim amount is lower Which Policy To Claim from?
than the SI of one policy, you can get full payment from There will be times when you will have to claim from
both insurers. With the contribution clause gone, the under such policy, to keep the high NCB of 100% of
process should be smooth. So, from which policy should basic SI. First lodge the claim with other policy. If full
you claim first? claim is not settled, make the claim with the policy that
Corporate Cover/Group Policies: It may cover PED from has high NCB.
the first day. There may not be any other waiting period. Policy with Sub-limits: If you plan to claim under two
The claims process may also be easier but not as a norm. policies, make the claim first under the policy where
If you have a group policy, apart from the individual the sub-limits or room rent limits are applicable. Let
cover, it makes sense to make a claim under the group them apply the sub-limits, room-rent limit and pay
cover first. Moreover, avoiding the retail policy will help accordingly. The second insurer with less, or no, limits
preserve its no-claims-bonus (NCB). can then reimburse, to the balance extent. It works out
Cashless: Preference for cashless can dictate which policy to be a better deal for getting the payout rather than the
to claim from first. If the hospital is on a cashless basis other way around.
for one of the policies and not from the other, go for the Top-up/Super top-up: Having a super top-up is much
policy which offers cashless. better than just top-up. You will first claim with one
Older Policy: Newer policy will have waiting period for or more corporate or retail mediclaim policies. If full
specifi c procedures/treatment, PED waiting period and payment is not done and super top-up deductible is
cooling off period. If the claim is going to fall under met, claim from the super top-up policy. If you have no
any of these and, hence, rejected, why should you apply mediclaim policy, you should make the claim for super
under that policy? Go for the older policy for which the top-up when the deductible is met.
waiting periods are over. But, if the waiting periods are Getting claims paid can be hard work. But, if the
over for the newer policy, then go for, it instead of the process from buying until the claim is properly followed,
older policy which would have higher NCB amount that the chances of rejection of partial claims payment are
you may want to preserve. low. You need to be able to talk the insurers language
Policy with High NCB: Some products offer high NCB and deal with them in a professional way. If you are not
of 50%for first claims-free year which grows to 100% able to put your case properly, the insurer/TPA can pick
of basic SI after two years. holes in your claim. Buying a mediclaim policy is not
When there is a claim, the high NCB falls at the same end of covering yourself; understand the product and
rate. It may be worthwhile to avoid making the claim process, to protect yourself.
I
have just finished reading a book on investment purchase price. The remaining $80 million came from a
(published in 2007) Free Cash Flow and Shareholder $40 million loan from General Electric Credit Corporation
Yield by William Priest and Lindsay McClelland and a $13 million loan from Barclays American Business
where I found this nice little story. In the words of Priest Credit.
and McClelland, in 1984, a little-known private equity To finance the rest of the purchase price, Gibson sold,
company called W.E.S. Ray (founded By Bill Simon, a and then leased back, its three major manufacturing
former secretary of the US Treasury, and Ray Chambers, and distribution facilities. Then, 18 months after the
an accountant) bought a company called Gibson Greeting acquisition, W.E.S. Ray made a public issue of 10 million
Cards. shares of Gibson at $27.50 per share. With this, W.E.S. Ray
Gibson had already been the target of several acquirers realised a final payoff of $66 million on an investment of
before that. In 1964, it had been acquired by CIT Financial about two-thirds of a million dollars. W.E.S.Rays return
Corporation, which was acquired, in turn, by RCA, in 1980. was nearly 100 times its initial equity investment.
Soon after its acquisition of CIT, RCA shifted its strategic As for the $80 million debt, the newly-public Gibson
focus to its core business, (NBC, was now responsible for using its
Hertz and several high-profile own free cash flow to repay these
electronics and communication loans. This event, according to
companies). Priest and McClelland, would
So, RCA decided to sell Gibson transform the common perceptions
Greeting Cards, one of its non-core of what determines investment
subsidiaries, to W.E.S. Ray, for value and stock prices.
$81 million.
Gibson was a boring Profits Vs Cash Flows
investment for Wall Street, even All of us believe that the most
though it was the third largest significant driver of stock prices is
Benjamin Graham David Dodd
greeting cards company in the US. earnings or net profits. As they say,
This is because most investment The discussion of cash flow prices are a slave of earnings. This
analysts still looked for earnings was confined to eight pages of is largely true. There is nothing
growth. a 723-page Graham and Dodd that can get investors excited as
To them, Gibson was hardly classic Security Analysis much as higher earnings can. This
investment-worthy; there was was identified decades ago by the
nothing great about the companys high priest of investment analysis:
financial composition, growth potential, or strategic Benjamin Graham. The standard textbook on investment
capabilities, write Priest and McClelland. But, to Bill analysis, Security Analysis: Principles and Techniques by
Simon and Ray Chambers, Gibson was a hugely attractive Graham and Dodd, published in 1934, focused almost
investment opportunity. This is because they were valuing completely on earnings. As a result of this early singular
companies differentlyon the basis of cash flows. In focus on earnings, most of those who study, or work in,
Gibson, W.E.S. Ray saw: the investment field believe that the fundamental analysis
A stable revenue base that could take on a significant of a company was all about the bottom-line, argue Priest
amount of leverage; and McClelland.
The ability to consistently generate high levels of free However, they write in their book Free Cash Flow and
cash flow that could cover the cost of the acquirer's Shareholder Yield, in most MBA programs, there was a
debt and still allow the firm to grow. quiet revolution taking place that subsequently led to an
W.E.S. Ray went about restructuring Gibson. They explosion of novel ideas in finance that would turn the
gave the Gibson management a 20% stake in the company. traditional earnings paradigm on its head. What was it?
Simon and Chambers put up $1 million for $81 million It was the displacement of earnings with cash flows as the
T
he consumer sector in India is reeling under advertisement spends. For instance, the advertisement
tepid growth in volumes with a challenging
g g spend
p of Colgate
g Palmolive India has risen to 15.5% of
macro-level environment sales in the June quarter compared to
characterised by low growth 12.5% in the same quarter
in demand. In addition, of the previous year, reports
competition from the new Religare research.
entrant Patanjali products What about the margins?
is giving sleepless nights to According to Religare, gross
consumer majors. margins have risen by 120
The sales growth across basis points y-o-y. EBITDA
the FMCG (fast moving margins expanded by 85 basis
consumer goods) majors was points y-o-y to 22%. This is
just 7.3% for the June quarter. the highest margin in the last
Except Emami, Asian Paints eight quarters. These margins
and Nestl, all the consumer were aided by soft raw material
majors have reported single digit prices with the raw materials
pr
growth in the June quarter. Nestles
es index rising by merely 3.5% y-o-y
ind
growth number is not comparablee due and 1 1.3% quarte-on-quarter (q-o-
to the low base effect on account of small rise in margins implies that
q). The sma
the Maggi fiasco last year. Thanks to a benign raw is extremely difficult for margins to expand further,
materials scenario, FMCG companies have reported especially as raw materials prices seem to have already
20
15
10
0
Emami Nestl Asian Paints ITC Britannia United Colgate Godrej Jubilant HUL Titan Dabur Marico
Spirits Consumer Foodworks
O
wnership of foreign portfolio investors (FPIs) significantly in Crompton Greaves, Axis Bank and
in the BSE-200 Index rose by 6.87%, to Eicher Motors. It declined significantly in Rural
US$311 billion, in the June 2016 quarter Electrification Corp (REC) and Dhanuka Agritech.
compared to that in the March 2016 quarter. In In addition, holdings of Life Insurance Corporation
percentage terms, FPI holdings in BSE-200 companies (LIC) saw a significant increase in NHPC, Tata
increased to 24.9% vis--vis 24.5% in the previous Communications and Oil India. Mahindra and
quarter. Holdings of domestic institutional investors Mahindra, Indraprastha Gas, Ashok Leyland and
(DIIs), including mutual funds (MFs) and banks, Grasim Industries saw a decline in stake by this life
Change in Stakes in Individual Companies (June 2016 quarter over March 2016 quarter)
Category Highest Increase in Stake Highest Decrease in Sectoral Changes
Stake
Foreign Portfolio Investors HDIL, Bharat Financial Inclusion J&K Bank, IPCA Laboratories Bought automobiles and banking; sold
(includes ADRs and GDRs) and Castrol India and United Breweries pharmaceuticals
Mutual Funds Castrol India, United Breweries Sanofi India, Kaveri Seed and Bought pharmaceuticals and banking;
and Ipca Laboratories Vedanta sold automobiles and metals & mining
Banks, Financial Institutions NHPC, Tata Communications and Axis Bank, Ambuja Cement Bought pharmaceuticals and metals
and Insurance Companies Indraprastha Gas and Asian Pa ints & mining; sold consumers and
automobiles
Source: Kotak Institutional Equities
Disclaimer: None of the stock information presented constitutes a recommendation or a solicitation of any offer to buy or sell any securities. Information presented is general in nature that does not take into
account your individual circumstances, financial situation or needs Although information has been obtained from and is based on sources we believe to be reliable, we do not guarantee its accuracy and the
information may be incomplete or condensed. All opinions and estimates constitute our judgement as on the date of the report and are subject to change without notice. Past performance is no indication of future
results. Investors must do their own research before acting on them. Data Source: Centre for Monitoring Indian Economys Prowess database.
Those who have subscribed to the stockletters should only follow the stocks recommended there.
Holding for June 2016 Quarter Top 5 Companies in Terms of Highest Stake by
Various Investors
Category Companies
4.32% Indian Promoters
(non-government) FPI HDFC, Bharat Financial Inclusion, ICICI Bank,
6.80% FPIs, ADRs and GDRs Indiabulls Housing and Infosys
7.06% 28.27% Government
Mutual Funds Crompton Greaves, Sadbhav Engineering, Federal
Bank, Orient Cement and KEC International
7.67% Foreign Promoters
BFIs Tata Power, ITC, MCX India, Larsen & Toubro and
9.26% Retail Tata Steel
24.85% BFI Retail Karnataka Bank, Karur Vysya Bank, City Union
11.78% Bank, South Indian Bank and Tata Elxsi
Others
Source: Kotak Institutional Securities
Mutual Funds
I
G Petrochemicals Ltd (IGPL) which the quarter ended June 2016
makes phthalic-anhydride (PAN) is were Rs255.53 crore (Rs283.93
equipped with one of the largest production crore), down 10.00%, and the
capacities at a single location. The company quarterly net profit was Rs30.08
has the ability to cater to local and international crore (Rs29.29 crore), up 2.71%.
market requirements. PAN is used in industries The annual sales of IGPL for the year ended
such as flexible PVC, plastics, paints, construction, March 2016 were Rs952.84 crore (Rs1,186.65
transportation and marine. crore), down 19.70%, and the annual net profit was
IGPL has a technical collaboration with Lurgi Rs60.37 crore (Rs8.90 crore), up 578.51%, from a
GmbH (Germany). The plant is located at MIDC, really low base.
Taloja (in Raigad district, Maharashtra), 50km from Over the past five quarters, the quarterly rate of
Jawaharlal Nehru Port Trust (JNPT), Nhavasheva, growth of the companys quarterly sales was negative
Maharashtra. at 18% and the growth rate of its quarterly operating
IGPL claims that its strengths include: being one profit was 71%. The average operating margin is
of the lowest cost producers of PAN; a strategic plant 13%. But the stock is very reasonably valued. The
location; strong clientele across industries; consistent market-capitalisation of IGPL is 0.64 times its sales
high capacity utilisation and better recovery processes. and 5.25 times its operating profit. The RoNW (return
growth in revenues.
Anticipating a Turnaround? The book value of the companys share is Rs94.73
Volume and the cash earnings per share were Rs25.30.
Price in Rs
The shareholding pattern of IGP includes 72.22%
210 691,100 shareholding with promoters and 27.78% shareholding
with the public. IGPL distributed dividends of 20%
180 552,880 for FY15-16 and 10% for FY14-15. Previously, in
FY-06-07, IGPL had distributed a dividend of 5%.
150 414,660 The company is a constituent of S&P BSE SmallCap
Index on the Bombay Stock Exchange with a face
120 276,440
value of Rs10. The IGPL share price has risen from
a 52-week low of Rs72.00 on 26 February 2016 to a
90 138,220
52-week high of Rs210.00 on 20 September 2016. The
60 0
companys share price closed at Rs197.45 on Friday,
23 September 2016.
Jun-15 Jan-16 Sep-16
B
harat Puri, with experience of over 30 years
OPM 8% 11% 18%
Y-o-Y Revenue Growth -22% -23% -10%
in FMCG/ paints sector, has joined Pidilite as
Y-o-Y OP Growth 272% -51% -2% managing director. He was a director of Pidilite
March Ending FY14 FY15 FY16 in mid-2008. Edelweiss Securities met him and CFO,
RoNW 1% 4% 21% Pradeep Jain, recently for a discussion. These are a
OP: operating profit, OPM: operating profit margin, RoNW: return on net worth few takeaways from Edelweiss report which could be
useful for those tracking the stock:
R e l i a n c e Capit al Dem erge rs enterprises have done extremely well, drawing more
and more investors. Does Reliance want to cash in
Commercial on this? What would be the speciality of Reliance
Commercial Finance in lending to small and medium
Opportunism? enterprises (SMEs) and Reliance Housing in a crowded
housing finance market?
According to the management, it is a leading
T
he shareholders of Anil Ambani-run Reliance player in the SME segment with focus on asset-backed
Capital have approved the transfer of its lending and productive asset creation. Its various
commercial finance division into a separate divisions include SME, infrastructure financing, loan
wholly-owned subsidiary; the demerger process will against property and commercial vehicle loans. It had
be over by October 2016. Currently, the shares of total assets under management (AUMs) amounting
Reliance Commercial Finance are held by various to Rs16,451 crore (US$2.5 billion) on 30 June 2016.
arms of Reliance Capital. After the demerger, Reliance These assets also include securitised portfolio.
Capital will apply to the Reserve Bank of India It had net interest margins (NIMs) at 6.8%, for
(RBI) to become a core investment company (CIC). the June 2016 quarter, which rose from 6%. Its entire
The management intends to complete the changes in book is secured, as it has wound up its unsecured loans
Reliance Capital between October 2016 and January portfolio. The business has a strong seasonality factor;
2017, to be in compliance with CIC guidelines. The it does 15% of its business in the first quarter. Around
board has also approved a proposal to independently 40% of its business happens in the fourth quarter.
list its home finance businessReliance Home Finance Going forward, the management intends to reduce
Ltd. its focus on the commercial vehicles segment as this
Is Anil Ambani-run Reliance trying to jump into industry is under stress. According to the management,
two areas that are currently seen as hot by market- this demerger will enhance management focus and
men? Over the past couple of years, housing finance provide flexibility to the company to unlock value
companies and non-banking finance companies through stake sale. We will have to wait to see how it
(NBFCs) lending to small- and medium-sized performs over the coming quarters.
UN UOTED
STORIES OF PRICE MANIPULATION
Agri-Tech (India) (Rs28) a day over the past year, in July and
(Rs)
August 2016, the number of shares
A gri-Tech (India), earlier a part of 50 traded averaged about 100 per day.
Nath Seeds, is into horticulture The result?
40
business, as per its latest annual In just over a month, the stock
report. 30 483% price shot up 347%, from Rs10.39 at
However, this micro-cap stock has the beginning of July 2016 to a peak
not generated any significant revenue 20 of Rs46.45 on 18 August 2016. The
over the past few years. For the year stock consistently hit the upper circuit
ended June 2016, the Aurangabad- 10 limit of 5% on the BSE. The euphoria
based company reported revenues did not last long as in all pump and
0
of just Rs7 lakh compared to sales dump operations; the stock price soon
Apr-15 Dec-15 Sep-16
of Rs8 lakh reported a year ago. It crashed. Even though the stock is now
reported a net loss in eight of the past down 40% from the peak, to Rs28 on
10 quarters. Strangely, a few months the stock, despite its poor financials. 22 September 2016, it is still up 483%
ago, a strong interest developed in From just about 1-10 shares traded from a low of Rs4.8 on 28 April 2015.
MARKET TREND
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Record of US Investment
Consultants Recommendations
I
nvestment consultants have been an integral spread in performance was negative for an equally
part of the financial system. They are considered weighted portfolio. The results from a value-weighted
experts in their field and believed to be more portfolio were a little better; the spread was flat.
knowledgeable than the ordinary Joe. Many However, investment advisors are hired to deliver
individuals and institutions actively seek their out-performance and not flat performance. The gross
recommendations and depend on them for their returns from the recommended products for a value-
investment decisions. A few of them become famous weighted portfolio stood at 4.90% compared to
with their recommendations, being actively tracked 5.16% for the products which were not recommended.
and followed by the public. Do investment consultants The average excess returns over the benchmark for
really add value? Do their recommendations actually recommended products stood at 1.25% compared to
outperform the broader indices? 2.35% for products which were not recommended.
Tim Jenkinson, Howard Jones and Jose Vincente The spread for one-factor, three-factor and four-
Martinez carried out a factor alpha models was
study to find out whether negative for an equally
recommendations of investment weighted portfolio. One-factor
consultants add value. For alpha relates to use of capital
this, they constructed two asset pricing model (CAPM)
portfoliosone consisted of model which says that the
recommended products and the expected return of a portfolio
other one of not recommended or a security is the risk-free
products. They further divided rate of the security plus the risk
the portfolios into equally premium. Alpha is a measure
weighted and value weighted of the return on investment
portfolios. The weights were over a suitable market index.
defined by using total net assets at the end of the The components of three-factor model include size and
previous year. They compiled the performance of value, in addition to market risk. Four-factor model
portfolio of all US actively managed equity products adds the momentum factor to the three factors. Coming
recommended by investment consultants during the to a value-weighted portfolio, the gross returns spread
period between 1999 and 2011 as well as the returns was negative for one-alpha model. However, it was
of institutional products not recommended by them. slightly positive for three-factor alpha and four-factor
Their value addition was gauged by the difference in alpha models at 0.72% and 0.62%, respectively.
performance between the two. Hence, the researchers concluded that there was
They calculated the difference in performance no evidence that the recommendations of investment
relating to raw returns, the returns in excess of the consultants add value. According to the researchers, it
benchmark (taking into account the product style is futile to search for winners, encouraged and guided
and market-capitalisation) and one, three and four by investment consultants. We agree with the results.
factor alphas. The returns were expressed in terms The fact is that it takes a lot of hard work and strong
of percentage per year. To compute the returns, they passion to identify winning ideas. Those simply running
calculated the monthly returns and annualised them by a plain vanilla business of advising wont have the
multiplying them by twelve. time, patience and resources to pull it off.
The results of the study would appear surprising The study covered some other issues as well. What
to many who believe investment consultants are are the factors that drive recommendations of these
experts. The average gross returns in an equally consultants? It is not the past performance, but the soft
weighted portfolio of recommended products was factors that drive these recommendations. They also
a little lower, at 7.13%, than those of the products found that these recommendations have a significant
which were not recommended, at 8.13%. Thus, the effect on fund flows.
About MAS
MAS is a SEBI-registered investment adviser and part of Moneylife, Indias most unbiased and
pro-investor research and information group. We run Indias best personal finance magazine,
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Ask tax-related questions at moneylife.in/taxhelp. Its free exemption is lower of (a) actual
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Fitness Targets
phone pointing to a strategic area such as the door or the
window where a break-in is most likely.
It uses the phones camera to detect motion. Once
Option1: Do nothing.
Option2: Rely on friends, relatives, neighbours, oce accountant, derived wisdom from social media
or the press/TV. (But do they know more than you? And how do you know that?)
Option3: Rely on relationship managers, insurance agents, distributors, wealth managers. (But you
are only a sales target for them)
Option4: Research insurance, mutual funds, markets, stocks, financial theories Become a financial
expert yourself. (Is this practical?)
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set up a non-profit trust, Moneylife Foundation, which is now the largest savers and investors
association with more than 35,000 members. MAS was set up to help investors and savers make
the right financial decisions and handhold them through the entire process.
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W
e claim that our research, which is based on accompanied by large swings; a daytime measure of high
the short-term randomised controlled trials blood pressure may actually become low blood pressure
(RCT), is very scientific and based on evidence. at night, and there are some indications that this change
Is this premise right? Do our RCTs, even remotely, have may be a bigger concern than blood pressure itself.
anything to do with reality and science? I do not think so, I had been opposing the night doses of BP pills for this
especially in the realm of so-called killer lifestyle diseases very reason; lest I should fall into the trap of disregarding
like hypertension, diabetes, cancer and coronary artery primum non nocere (first do no harm)!
disease. Studying BP over a period in the same person would
Hypertension has been my research interest for more give us great insight into this enigma called hypertension,
than four decades; I have had a feeling that we have been if it is a disease at all. Labelling hypertension with
predicting the unpredictable future of our patients based one or even many readings over a short period
on our short and dirty experiments called RCTs where might have a specificity and sensitivity of less
the researcher can manipulate one measure in the cohort than 50% making it look like a roulette
as s/he wants. gamea big gamble.
Long-term observational studies, on the other hand, Of course, people
allow one to study what happens to the subjects over a have studied
period of time where one cannot manipulate the measures. continuous BP
This apart, humans are not identical, like molecules in a monitoring
laboratory, to be compared with others.
I had written about this in my book on hypertension,
in 1993. In retrospect, three major very long-term
observational studies have now proved me right. Multiple
risk factor intervention trial (MRFIT) study is a very long-
term observational study of a large cohort over a period of
25 long years. It has proved that both, hypertension and
diabetes, are, at best, ONLY risk factors. MRFIT clearly
showed that there have been NO RISK FACTORS that
could lead to heart attacks and stroke.
Even if one were to believe in the risk factor theory over
and modify those risk factors with outside interventions, a period,
the risk will still be the same! MRFIT clearly shows the may be for
hollowness of our thinking in this area. What is average days at best; but
for the general population may be an alarming disease that does not refine the
for any given person when we treat averages as normal in diagnosis significantly. I tried it
our RCTs which give a distorted version and label many and stopped doing that when I realised the
healthy people as sick needing unnecessary intervention futility of that approach.
(false positives); but the industry loves that. I am reminded of what the German author, Jorg
Longitudinal monitoring can look at trends as a Blech, wrote in his book Disease Inventors about the
function of age in the same person, starting with presumably early days of labelling hypertensives in those small cute
healthy subjects, feels Germaine Cornellissen, head of WellMan clinic vans outside the churches and malls in
the Halberg Chronobiology Centre at the University of Germany offering to check their BP for free! This is how it
Minnesota. He feels that Blood pressure and heart rate all started. He opposed it then; see how right he was in the
rise during the day and fall at night. The changes are under light of new knowledge! (Inventing Disease and Pushing
E arly menopause
has been found to
be an additional risk
AROUND THE WORLD
G erman drug and
crop chemical
maker Bayer clinched
factor for heart attacks, high BP saviour! In a shocking revelation, a a $66 billion takeover of U.S.
(blood pressure) and many other new study has shown that the sugar seeds company Monsanto on
vascular complications says a study industry paid Harvard scientists in Wednesday, reports Reuters. If
published in the British Medical the 1960s to play down the risks the deal closes, it will create a
Journal (BMJ) recently. However, of sugar associated with coronary company commanding more than
what worries me is why women heart disease and highlight fat as a quarter of the combined world
have premature menopause these the culprit, instead. market for seeds and pesticides
days. Is it because they have early An industry group, then called in the fast-consolidating farm
menarche with all the hormones in the Sugar Research Foundation,
quill and our food, thanks to greedy which is known as the Sugar
industry? If that were so, we will Association today, sponsored some
have to tackle it at the root. To treat research on fat as the dietary
menopausal women with drugs is culprit in heart diseasean attempt
a foolish reductionist science in a to refute concerns about sugars role
holistic closed system of human in heart disease.
biology (physiology). The Sugar Association paid
three Harvard scientists the
THE STORY OF FAT PROFILE equivalent of about $50,000 in
AND THAT GHOST, todays dollars to publish the supplies industry. I am sure that
CHOLESTEROL research, which they published future medical scientists, when they
W
hen securities are held jointly in two or three deed duly notarised; and
names, on the death of the first holder, the b. An Indemnity bond made on appropriate non-judicial
securities will stand transmitted to the surviving stamp paperindemnifying the issuer company.
security-holders; the name of the first holder will be deleted. c) For value of securities more than Rs2,00,000 per issuer
However, there is no automatic deletion of the name of company as on the date of application:
the deceased shareholder/debenture-holder. The surviving It will be necessary to produce the succession certificate,
shareholder/debenture-holder has to submit a certified or probate of Will, or Will, or letter of administration,
copy of the death certificate with a request to delete his/her or court decree, as may be applicable in terms of Indian
name. While, on the face of it, the process of transmission Succession Act, 1925.
appears simple, different companies follow different Investors should note that the best way to avoid the
procedures. cumbersome procedure is to ensure that all the securities are
To make the process more investor-friendly, SEBI held in joint names and or, at least, a nominee is appointed
(Securities & Exchange Board of India) had issued a circular and registered with the company in accordance with the
on 28 October 2013. But the confusion continued. So, now, provisions of the Companies Act, 2013 and, in case of
SEBI has decided to modify a clause of the 2013 circular. demat securities, with the concerned depository.
The following rules apply, in case of transmission:
1. For securities held in single name, with a nominee, Investor Education & Protection Fund (IEPF)
a company may ask for: An important change in the interest of securities-holders
i. Duly signed transmission request form by the nominee. has been made by the ministry of corporate affairs (MCA)
ii. Original or copy of death certificate duly attested in the rules relating to IEPF. Investors would be aware that,
by a notary public or by a gazetted officer. until now, the entire amount of unclaimed / unpaid dividend
iii. Self-attested copy of PAN card of the nominee. and interest lying with a company has to be remitted to
(Copy of PAN card may be substituted with ID proof, in MCA after a period of seven years. Once deposited, the
case of residents of Sikkim, after collecting address proof). securities-holder lost all rights to claim any refund.
2. For securities held in single name, without a Now, in addition to the aforesaid amount, even
nominee, the documents mentioned above and the underlying shares on which dividend has remained
the following additional documents may be sought unclaimed for seven years or more have to be transferred
by the company: by the concerned company in favour of the IEPF Authority,
a.) Affidavit from all the legal heirs made on appropriate a newly created statutory authority which will administer
non-judicial stamp paperto the effect of identification the IEPF.
and claim of legal ownership to the securities.
According to SEBI, in case the legal heir(s)/claimant(s) Good News for Investors
is named in the succession certificate or probate of Will, The good news for investors is that they can now reclaim
or Will, or letter of administration, an affidavit from such the unclaimed/unpaid dividend, interest, matured deposit
legal heir/claimant(s) alone would be sufficient. amounts, matured debentures, share application money,
b) Where the value of securities is up to Rs2,00,000 per etc, for seven years or more. They can now approach the
issuer company, as on date of application, one or more of IEPF Authority to claim it. The Authority has prescribed
the following documents will be necessary: the procedure to be followed by the investors while lodging
i. Succession certificate or probate of Will or letter of their claim with the authority.
administration or court decree, as may be applicable in
terms of Indian Succession Act, 1925.
ii. In the absence of the documents as mentioned at (i)
above, the following will be required: SD Israni is a corporate lawyer & Fellow
a. A no objection certificate, (NOC) from all legal heir(s) of ICSI. Email: sdisrani@gmail.com
executed by all the legal heirs of the deceased holder not
objecting to such transmission (or) copy of family settlement
Jio: Why Its there are no boundaries. The subscriber can use Jio
across the country without worrying about roaming
(exorbitant) charges. In addition, Jio has clarified that
Different the data used for the voice calls will neither be charged
nor deducted from the data balance of the subscriber.
Nevertheless, keep in mind that a Jio subscriber may
Jio offers only 4G (not 2G and 3G) and, so, face difficulty while calling a subscriber from other
will ensure that a subscriber can always networks due to inter-connectivity issues. Other
access the network, says Yogesh Sapkale operators are already up in arms against Jio, over this
issue.
T
he entry of Reliance Jio in the Indian telecom This brings us to the tariff of Jio. Similar to
segment is important for three reasons. One, other operators, Jio offers pre-paid and post-paid
it has created a buzz in the mobile market subscription, with plans ranging from Rs19 to
that was stagnating for quite some time. Second, it Rs4,999 in pre-paid (28 days validity), and from
has forced other players to reduce tariffs and increase Rs149 to Rs4,999 for post-paid monthly billing cycle.
customer-care. Third, Jio operates only in fourth Subscribers are offered 100MB to 75GB data per
generation (4G) space. This means that, even if it wants month, in addition to almost double the data in Wi-Fi.
to, it cannot offer to a subscriber 2G or 3G network. Jio also offers unlimited data at night. However, the
So, the subscriber is assured of minimum basic data night, for Jio, lasts only for three hours, between 2am
speed for which she is paying. Add to this the free voice to 5am!
calls and you will understand why people are thronging So, can you simply buy a Jio SIM and start using
to Jio stores. this service? Yes, if you have a 4G-enabled handset
In addition to the existing pan-India 2,300MHz capable of voice over LTE (Long Term Evolution).
spectrum and 1,800MHz in 14 circles, Jio has invested Handsets (even if you have bought a new one) that
over Rs10,000 crore during this years auction to use 3G, cannot be used for Jio. Yes, if you are ready
acquire 800MHz spectrum in 10 circles and 1,800MHz to stand in the long queues at Jio stores and have the
spectrum in six circles. Also, Jios 250,000 kilometres patience for your SIM card activation. The company
of fibre-optic cables cover 18,000 cities and over says that, with Aadhaar e-know your customer
100,000 villages. With h such high-scale infrastructure in connection faster
(e-KYC), it can activate a new conne
place, Jio is better placed
ced than incumbents in coverage according to feedback from
within 48 hours. However, accordin
as well as capacity. Moreover,
oreover, all this is pure several customers, tthis is not the case.
4G with capacity to migrate to higher I have met some ccustomers who are
standards (5G & 6G) as and when required. activation for the past 20
waiting for activa
The main differencee between 4G and the days or more. This is for a new
previous standards, likeke 3G (denoted by H connection.
connection Mobile number
or HSPA+ or simply H+) and 2.5G (denoted portability (MNP), although
by E), is the use of network
twork nodes. Both, offered by Jio, may take even
3G and 2.5G, use packet-switched
ket-switched time.
more time
nodes for data servicess and circuit- you want full value
If yo
switched nodes for voiceice calls. In of your money, especially
4G systems, the circuit-switched
t-switched for data,
dat then go for it.
infrastructure is abandoned
doned and Voice ccalling to other
only a packet-switched d network is networks is not really
network
provided. Thus, in 4G,, traditional good, at prpresent, and you
voice calls are routed through may want to continue to use
Internet telephony, as data. your current
curren SIM. In any
What does this mean an to a case, Jio is free up to 31
common subscriber? The December
Dece 2016; so, no
subscriber may get Jios s harm
ha in testing it
4G network across thee out, especially if
country, well, most you have a 4G
of the times. And handset.
Sue the Messenger and South Gujarat baited the Bombayite. Vapi was the
preferred destination. Asias biggest chemicals estate, it
A Muffled Voice was billed; and caution was thrown to the winds. Winds
carried the deadly fumes for miles around. Rivers turned
to every rainbow hue, fruits shrunk by 30%. Well-water
T
he first two chapters made me jot down: was contaminated, effluent discharged into nullahs.
putdownable. Thank God, I continued. Sue the I know. As a young salesman, I had tried to sell pollution
Messenger then starts to read like a detective novel. control equipment in Vapi. I sold none. The stock excuse
Each Smart-Alec chapter-title is followed by journalistic was that the inspector could be paid off; why invest in
sleuthing, digging up dirt, exposing the filthy tricks bag of equipment and waste money.
corporatesbe they chemicals manufactures, the fourth With this attitude, chemicals banned in other countries,
pillar robber baronsor sundry nasty characters, out to along with forbidden and scrapped plants, found ready
stifle, not dissent, but truth. buyers in India. Worse was to follow. The font of the estates
Shooting the messenger may seem more humane. Here sprayed the entire country with poison. And any attempt
are examples of harassment, hounding, ingestion of fatal to expose the noxious nexus was thwarted by crushing
substances; and the ever- litigation. Read it. Its all there in this book.
present halo-backed denials. There are two distinct writing styles discernible in the
Sabse Badaa Rupaiya. And book. One staid. The other racy. But the research and facts
to hell with the public! Mark stand out. One never feels that there is any wavering from
Twain said, attributing to the truth. Where the authors, Paranjoy Guha Thakurta
Benjamin Disraeli, that and Subir Ghosh, were personally involved, they make
there are lies, damn lies it clear. It is for the reader to decide whether they have
and statistics. We now add axes to grind.
unholy refutations, doctored
reports, manipulative
press conferences, et al. In the penultimate paragraph of his
Finally, there is resort to 29-page ruling, Justice Bhat spoke of
ruinous litigation where the perils of SLAPPs, Free speech
the small guy is driven into
the ground, not allowed and expression is the life blood of
to function, financially democracy. Any actionthreat
SUE THE MESSENGER
SUBIR GHOSH &
decimated and made to to damages, are bound to chill the
PARANJOY GUHA
shut up. exercise of that invaluable right of
As a lawyer, I asked
THAKURTA
myself: Would I issue the people and the press
AuthorsUpFront
notices, actually legally
Pages 203; Rs216
worded threats, if I were Constant vigilance is the price of freedom. Newsmen,
offered a million bucks? and women, help in no small measure. But investigative
As one who has often said that the Lets-teach-him-a- journalism is not for the faint of heart nor for the weak
lesson litigation is taboo, what would I do? The answer, of spirit.
my friends, is blowing in the wind. The answer is blowing Moreover, is there a journalist who has made his pile
in the wind. by exposing the crooks and the corrupt, the high and
This very magazine has faced similar tribulations. the mighty? Methinks not. The breed will live and die
Laws do not allow me to elaborate on sub-judice matters, penniless. But we, and the truth, will survive.
especially where I was involved; but the reader will find At the end of the day, we must understand this. Every
fairly accurate reportage in the book. Maybe one day, time David slays Goliath, we can rejoice. Not because of
Sucheta and Debashis (and why not I too), will be able victory, wherein we need to demonstrate magnanimity, but
to pen a volume. Till then, this is all you get. because we live in a free world. A world where informed
Its frightening to read. To think that we are exposed choice overcomes lies and deceit, where human bulldozers
to toxicity every waking and sleeping moment. In the are stopped in their tracks, and men and women enjoy the
mad rush of the 1950s and 1960s, the Holy Grail was fruits of their labour; and those that seek to prosper by
import substitution. Chemicals formed no mean part oppression are laid waste. Bapoo Malcolm
W I
hile talking about police reforms and f you come across a missing person, contact the nearest
accountability, we need to make sure police station and a hospital, if required. Seniors suffering
that there is an effective mechanism, like from dementia should always have an identification card
allowing people to register complaints without making with them. Also, make it a habit to keep a mobile with
them face consequences of it, said senior counsel Mihir them with numbers that can be contacted when required
Desai. He was speaking at the 9th session under the Police by someone who is helping them. This advice came from
& You series. Moneylife Foundation, with Police Reforms Prabhat Kumar, Special IG of police for law & order in
Watch, supported by Saraswat Bank, has launched the Maharashtra. He was speaking at the 10th session under
12-week programme (every Wednesday) that aims to the Police & You series. Mr Kumar, the man behind
spread knowledge about protecting yourself, your rights, Shodh, a search engine dedicated for searching accident
victims and missing persons says, We should have a
unified portal with an integrated system. This must run
on artificial intelligence software which can identify faces
and other details.
Also speaking at the session were Vasant Dhoble,
former assistant commissioner of police (ACP) in Mumbai
and activist Samir Zaveri. Mr Dhoble, who developed
Mihir Desai Sudhakar Suradkar Maja Daruwala and implemented new protocols for the Missing Persons
Senior Advocate (IPS) retired IGP Advocate
Unit at Mumbai Police, which resulted in finding about
the Indian Penal Code (IPC), cybercrime and economic 7,000 missing individuals, including children, in just six
offences. months, says, I have witnessed and rescued women and
Advocate Desai, who has been practising in matters children from flesh trade, begging rackets, child labour and
related to human rights and civil liberties said, While organ-trafficking. It had become unbearable and, therefore,
expecting accountability from the police, we also need after retirement, I decided to take the initiative to curb
to understand the conditions under which they are made such immoral activities. For locating mission person, we
to work. Police are on duty virtually all times of the day use search engine, face recognition and detection engine,
and night. This is also extremely stressful job, laden with web and Internet services. The former ACP is now using
interference from seniors and politicians. his vast network of informants and volunteers, along
Also speaking at the The Police & You- Demanding with some Bollywood celebrities, like Ajay Devgn, for
Reforms and Accountability in Policing were: Sudhakar sharing information on missing persons on a website,
Suradkar, former inspector general of police, Maja missingpeopleinfo.com.
Daruwala, director of Commonwealth Human Rights Mr Zaveri, a rail accident victim, informed the audience
Initiative (CHRI), apart from advocate Desai. Mr Suradkar about efforts being taken by the Central and Western
said, The fear of the police has waned. Corruption by Railways as well as government railway police (GRP) in
some in the force is one of the reasons. Politicians are also providing information on missing persons on rail tracks.
-245
120
-700
FII Net Investments
(Rs Crore)
110
-1,155
12 Sep-16 21 Sep-16
Housing Development & Infrastructure 100.95 83.70 -17% NASDAQ Composite advanced 3%. The FTSE and
Bovespa rose 1% each. Shanghai Composite and
Mid-cap Gainers/Losers 09 Sep 21 Sep Change
Hang Seng fell 2% each.
Gitanjali Gems 47.70 64.50 35%
Index 09 Sep 21 Sep +/-
Hinduja Foundries 55.00 34.60 -37%
NASDAQ Composite 5,126 5,295 3%
Small-cap Gainers/Losers 09 Sep 21 Sep Change
S&P 500 2,128 2,163 2%
SVOGL Oil Gas & Energy 3.34 4.87 46% FTSE 6,777 6,835 1%
Man Industries (India) 58.75 49.75 -15% Taiwan Weighted 9,165 9,229 1%
Bovespa 58,000 58,394 1%
Micro-cap Gainers/Losers 09 Sep 21 Sep Change
Korean Composite 2,038 2,036 0%
Sarda Plywood Inds 53.50 83.00 55%
Nikkei 16,966 16,808 -1%
Supreme Tex Mart 9.60 6.85 -29% Shanghai Composite 3,079 3,026 -2%
Whats H T
Chemicals companies were in demand during the fortnight. Bhageria
Industries, Thirumalai Chemicals, Aksharchem (India) and Pondy Oxides &
ML SECTORAL TRENDS
Shares of packaging companies and
chemicals companies advanced 5%
Chemicals soared 37%, 33%, 32% and 30%, respectively. and 4%, respectively. Shares of sugar
companies, textiles companies and
Companies 09 Sep 21 Sep +/- garment companies rose 3% each.
Stocks of shipping companies, steel
ML Chemical Index Bhageria Industries 376.05 515.05 37%
companies, glass companies and
150 Thirumalai Chem 429.85 571.05 33% retail companies declined 5%. Stocks
Aksharchem (India) 346.45 458.25 32% of oil & gas services companies
140
fell 4%.
Pondy Oxides 143.95 186.75 30%
130 Kiri Industries 282.95 357.75 26% ML Sectoral Trends
Dynemic Products 64.60 80.20 24% Packaging 5% Shipping -5%
120
Ultramarine 141.00 169.35 20% Chemicals 4% Steel -5%
110 Sudarshan Chemical 351.10 413.20 18% Sugar 3% Glass -5%
URBAN INFLATION
Whats N T Combined inflation for urban
and rural areas declined to
Shipping companies were a mixed bag. Gujarat Pipavav Port, Reliance
5.13% in August 2016, from
Defence & Engg, Mercator and Bharati Defence & Infrastructure declined
11%, 9%, 2% and 1%, respectively. 6.07% in July 2016. Inflation in
urban areas declined to 4.31%
Companies 09 Sep 21 Sep +/- in August, from 5.39% in July.
ML Shipping Index Food inflation in urban areas
Gujarat Pipavav Port 194.90 172.50 -11%
Significant Decline
Reliance Defence 65.15 59.00 -9% 110