Money Today 2014-03

EQUITIES
MUTUAL FUNDS
TAXATION
Investing in stocks trading

below their book value 20
How technology funds are

likely to fare in 2014 52
Avoiding tax-saving
investment mistakes 74
PLUS: INTERVIEW WITH SAMIR SHAH, MD & CEO, NCDEX 40
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MoneyToday
MAKES YOU RICHER
MARCH 2014
www.moneytoday.in
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Executive Editor: Sarbajeet K Sen

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Volume 9, Number 3, for the month

March 2014, released on February 25, 2014
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From the Executive Editor
he social media universe, consisting of websites such as

Facebook, Twitter and LinkedIn, is gigantic and everexpanding. Legions of new users are joining in every
moment, while at any point several million are logged on
to one or more of these sites. Take for instance, Twitter.
According to Statisticsbrain.com, Twitter adds 1,35,000 users every
day. The platform in buzzing with activity and it takes merely five days
to register a billion tweets. Facebook, the largest social networking
site, had some 1.23 billion active monthly users in December 2013. The
reasons for being on social networking sites vary. They could range
from being logged on merely for fun to the more serious purpose of
networking for job and business opportunities. Whatever the purpose,
there are billions of eyeballs fixed on social networking sites at any
point providing a ready platform for marketers to look for clientele. It
offers an ocean of opportunity. There are people from all age groups
out there, and not just the relatively younger ones
as the general perception may be. A survey has
found that the fastest growing demographic on
Twitter are those in the 55-64 age group, up 79%
since 2012. So, if you are setting up your own shop,
can the social media complement your wealthcreation efforts by helping you to market your
products and to create your own brands? It
definitely can. It is actually already happening. The
power of social media has already been understood by a majority of
established marketers. The fifth annual Social Media Marketing
Industry Report, 2013, says 97% marketers were doing social media
marketing, up from 92% in 2012. And nearly half of all marketers have
integrated social media into traditional marketing activities. But if you
are a start-up, how should you go about tapping these readily available
platforms, which might at once be effective and inexpensive? In our
cover story, starting on page 26, we tell you how the hugely popular
social media can be an important ally in your efforts to grow your
business. Besides helping you reach out to your target audience,
cutting across boundaries, at the click of a mouse at minimal costs, it
also allows you the unique opportunity to interact with your customers
and your potential clientele to understand your shortcomings and
where you need to improve. If you are one of those who are starting off
on your own, we hope our story helps you understand how to tap the
power of the social media to maximise your gains.
We also analyse technology funds which had a great run in 2013 on
the back of a bull run in tech stocks and tell you whether they are still
good investment bets.
SARBAJEET K SEN, Executive Editor

@sarbajeets
For reprint rights and syndication enquiries contact

syndications@intoday.com or call +91-120-4078000
www.syndicationstoday.in
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MONEY TODAY
March 2014
03
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CONTENTS
WEALTH
FROM SOCIAL
NETWORKING
Cover Story
26
We tell you how to tap the potential of the social
media to gain clientele and promote your
business.
Illustration: PRAGATI
Investing
20
LOOKING FOR VALUE

Several good stocks are trading
below their book value. Some can
give decent returns in 2014.
44
52
Will the bull run in

technology funds
continue in 2014?
Expert Speak
40
On his plans for
increasing retail
participation in
commodity
trading.
SAMIR SHAH Managing Director and Chief
Executive Officer, NCDEX
IN THE DUMPS
Some commodities did
not do well in 2013. We tell
you whats in store for
investors in 2014.
mutual fund offerings,

but critics think otherwise
72
52
GAINING SPEED There are

concerns over Marutis
manufacturing deal with
Suzuki, but experts say its a
good time to buy the stock.
BEING TECH SAVVY

Investors made huge money from
tech funds last year. The returns
may be modest this year.
56
WAITING FOR A SHAKE-UP New

proposals promise to improve
Cover: RAJ KISHORE VERMA
DISCLAIMER MONEY TODAY aims to inform readers and impart knowledge on investment options and schemes. Every possible care is taken in providing the most
accurate, updated and objective analysis and data, but readers are expected to make their own decisions. MONEY TODAY will not be held liable for any loss arising out
of any investment or business decision taken on the basis of features and articles published in the magazine.
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Advisory
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68
ZEROING IN ON THE BEST

We give you some tips to choose a mutual
fund scheme.
70
BEYOND RETURNS Guest writer Nimesh

Shah, MD & CEO, ICICI Prudential AMC, on
how to select a fund house.
74
MISTAKES WE MAKE Common errors you

should avoid while investing to save tax.
78
BEST OF BOTH WORLDS

Insurers are routing online term plans
through agents as most buyers find it tough
to purchase on their own.
90
SICK OF MOTION
Does travelling by road make you a little
dizzy? If yes, we give you some tips on how to
prevent car sickness.
bring to you the perception of the common people on the

82 We
state of the economy and how it impacts their household finances
MT Repose
14
Pushed Out of Circulation
NPS for Another Round of Changes
Third Party Premiums Set to Rise

96
44

A look at prospects of
10 commodities which
failed to perform
in 2013.
Fund Anatomy
Best Performing Stocks
Best Loan Buys
2014
SOYA
PALMOLEIN
ERIC
TURM
JEERA
SOYA
PALMOLEIN
Mustard
Seed
20
130 stocks among the the
BSE 500 index were trading
below their book value on
31 December 2013.
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From time to time, you will see pages titled An

Impact Feature or Advertorial in MONEY TODAY.
These are no different from advertisements and
the magazines editorial staff is not involved in
their creation in any way.
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TALK BACK |
LETTERS TO THE EDITOR
The cover story Finding

Your Way Out (February
2014) was very interesting
and helpful. It has covered
procedural issues that are
hardly discussed in media. I
had been thinking of buying
some unlisted shares but was
not sure where to buy from
and how to value the price of
unlisted shares. Your cover
story was very insightful and
helpful in this regard.
There are other issues
such as importance of listing

nominee(s) in mutual funds
that have been discussed in
the story. Though this is a
Your article on the new unit-linked insurance

plans (Rating New Ulips, February 2014) could have
been much more comprehensive and useful for
investors if you had rated the Ulips on more than
one parameter. You have taken the easy way out by
rating the plans based on three-year CAGR return.
This has resulted in other aspects of insurance
schemes, such as the fee insurers charge or claims
ratio, being completely ignored.
PALAK MALHOTRA,
Kanpur
The interview of Anis Lahlou-Abid of

JP Morgan (February 2014) talks only about the
merits of investing in Europe. However, the interviewer seems to have forgotten to ask about the
risks of investing in an economy that was, just a year
ago, growing at a negative rate.
NIKHIL SAHAY,
Patna
The story on options- Finding the Right Path

was quite comprehensive. A detailed explanation
of the basics was very helpful in understanding the
mechanics of the derivative instruments to a layman
investor like me. Though I am a regular investor in
stocks, I didnt know exactly how derivatives work.
AVNEET KAUR, Delhi
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WRITE TO: INDIA TODAY CUSTOMER CARE, A-61, Sector 57, NOIDA, 201301
very important point,

investors are often found
ignoring it.
ANJAN ASWATH, Chennai
FORM-IV
1. Place of Publication
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3. Printers Name
Nationality
Address
New Delhi
Monthly
Ashish Bagga
Indian
Ashirwad, A 4/2, DLF City
Phase I, Gurgaon 122 002
4. Publishers Name
: Ashish Bagga
Nationality
: Indian
Address
: Ashirwad, A 4/2, DLF City
Phase I, Gurgaon 122 002
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: Joseph P John
Nationality
: Indian
Address
: K 9, Connaught Circus,
New Delhi 110 001
Names and Addresses of individuals who own the newspaper
and partners or shareholders holding more than one percent of
the total capital:
Owner:
M/s. Living Media India Limited,
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Shareholders holding more than one percent of the
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New Delhi 110 057.
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New Delhi 110 001.
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I, Ashish Bagga, hereby declare that the particulars given above
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Dated: March 1, 2014
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How to Talk Back
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06 March 2014
MONEY TODAY
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On the Web
BEST OF MONEY TODAY
24x7
MoneyToday
Untangle all aspects of personal finance by going through our

stories, tools and interactive features on www.moneytoday.in.
Real estate is considered a healthy investment. However, its not
easy to make all the correct decisions. Read our following covers
and the current one to know what you need to get right.
MT ARCHIVES
MT IMPACT
Evergreen Advice
COVER STORY
ADVISORY
The Healthy Approach
Apartment or Land? Its a real(ty) debate. The pros and

cons of investing in either of these options.
There are things to be kept in

mind when buying a policy to
ensure you enjoy all benefits.
Look Beyond Projects: Dont

buy a house only on the basis
of a proposed infra project in
an area. Know the other important issues as well.
Master Your Money

Identify your spending personality and customise your financial planning to suit it.
Tips to Buy a Pre-owned

Home: Be sure to inspect the
property for structural and legal
soundness before purchasing it.
INVESTING
Celebrating the Tortoises

A look at mutual funds that
have been slowly and steadily
building wealth for investors.
The House Trap

The Key Risk: Know how to tread the path to property ownership without being trapped by the ways of Indian realty sector.
Home Truths: Booking
agreements for apartments
favour the builder. Read it
carefully before investing.
POLL VERDICT
No-Frills Houses:
Developments in the
low-cost housing segment
could make houses affordable in the near future.
FEATURE
Free Stuff Online

Not everyone believes in charging for services. Read this story
for a list of Internet-based
options that can
suit your
needs for
alternatives
to proprietary software.
OUR QUESTION
Do you see WPI inflation dropping by the end of March?

Your Answer
13.33%
Cant say
Buying your Dream Home

How to avoid frauds and ensure a
smooth property deal: Property scandals
46.67% Although around 40% of the

Yes
respondents believed a decline
in WPI was unlikely, the past
two months (Dec & Jan) has
seen WPI go down due to
softening of food prices. In
January it touched an eight
month low of 5.05%.
40%
No
keep popping up every once in a while and

there is widespread apprehension that
developers are failing to adhere to contracts.
Knowing your rights as a consumer and the
nuances of the law can keep you safe.
Poll conducted between 24 January

and 19 February
POLL QUESTION
Was FM right in announcing moratorium on study loans?

Right
Wrong
Cant say
Log on to www.moneytoday.in to cast your vote
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To access the relevant story, type the headline in the search box on our Website www.moneytoday.in. So, to read stories on spending, type How to be a Smart Spender or Your Financial Rights.
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PERSPECTIVE |
N E WS YO U CA N U S E
Illustrations: PRAGATI
BANK
Pushed Out of
Circulation
C
ome April 2014, and you could be checking

all rupee notes that are handed over to you
to verify whether it bears the year of printing on it. That is because from April 1,
you will have to queue up at some bank
branch to exchange any pre-2005 issued rupee note
that you hold.
According to the Reserve Bank of India (RBI),
which announced the move to phase out the old notes
14 MMarch T2014
ONEY ODAY
on January 22, the measure is being taken since the

older notes lacked the enhanced security features that
notes issued from 2005 have.
There is also a view that the process will deal a
body blow to those hoarding black money since the
currency notes will not be used for any transaction
from the cut-off date though it will still be legal tender
and would hold its value. Only thing is that each pre2005 note has to be exchanged for a new one.
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PERSPECTIVE |
Figures from Interim Budget
17.5%
is the compounded
annual growth rate of
the government
expenditure under
health and family
welfare in the past
10 years
79,451cr 30%
Rs
was expenditure on
education by the Union
government at the end
of March 2013 against
Rs 10,145 crore
10 years ago
Currency notes issued after 2004 will

have the year of issuance printed on
the reverse side of the notes
Indications are that the process is likely to be smooth

since the RBI seems to have quietly worked with banks
to already suck out a lot of pre-2005 notes.
However, there may be concerns in your mind on
how the process will impact you. Here we list out some
of the queries that might naturally come to your mind.
How do I know the year of printing of the rupee
note?
For currency notes issued from 2005 onwards, the year
of printing is mentioned on the bottom of the reverse
side of the note. The year of printing is not mentioned
in pre-2005 notes. If you hold notes that do not have
the date of printing, you need to go to a bank and get it
exchanged.
In case I hold some pre-2005 notes after March 31
PRE-2005 NOTES CAN BE

REFUSED FOR TRANSACTIONS
BY MERCHANTS OR FOR ANY
OTHER PURPOSES FROM
APRIL 1, 2014
16 MMarch T2014
ONEY ODAY
of the Gross Domestic

Product (GDP) was
the savings rate at the
end of March 2013,
while 38.4% was the
investment rate during the same period
628cr
Rs
was the total amount

transferred under
Direct Benefit
Transfer to the beneficiaries of 27 government welfare
schemes till
31 January 2014
what will be their value?

You need not be in a hurry if you have enough post2005 notes with you to take care of your cash needs.
These currencies will remain as legal tender and will
retain their monetary value. However, pre-2005 notes
can be refused for transactions by merchants or
for any other purposes from April 1. The value
of the currency remains intact and you will get
a currency of similar value against the pre2005 currency you hold.
Can banks refuse to exchange the currency
notes?
No. Banks have to necessarily give you a new currency note against the old one. You also need not be
an account holder/regular customer of the bank to get
the currency exchanged.
Do I need to provide identification and residence
proof to exchange these notes?
You need not provide any such proof for exchanging
notes till 30 June. However, afterwards, if you want to
exchange more than 10 notes of Rs 500 or Rs 1,000 in
a bank branch, where you are not a customer, you will
have to produce proof of identity and residence.
If you are a customer of that bank, you will not
have to provide these proofs.
Are there any caps on transactions?
There is no cap on transaction. You can exchange
notes in as many branches as you want on the same
day.
Will there be a rush closer to the deadline?
The RBI does not envisage any major problems in carrying through the exercise. In fact, the central bank
has advised public not to panic and to cooperate with
the exercise. There are expectations that the process
would be carried out smoothly. The RBI has already
been withdrawing these notes from the market in a
routine manner through banks. In RBIs view, the volume of the bank notes printed prior to 2005 that are
still in circulation is not significant enough to impact
the general public in a large way.
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PERSPECTIVE |
NPS Set for Another Round of Changes
he National Pension System (NPS), the government-approved pension scheme, is set for
another round of changes in terms of investment norms and fund management fees.
The Pension Fund Regulatory and Development
Authority (PFRDA) has recently asked private pension
fund managers not to invest directly in equities and
instead invest in equities only through index mutual
fund or exchange-traded funds.
These index funds or ETFs should track either the
Bombay Stock Exchange (BSE) Sensex or the National
Stock Exchange (NSE) Nifty indices. The fund managers will have to choose the index they want to track
in advance on a yearly basis.
Earlier, fund managers could invest in shares of
companies which were listed on BSE or NSE and on
which derivatives were available or are part of the
Sensex or the Nifty indices.

However, fund managers managing government
employees money can continue to invest directly in
shares of companies on which derivatives are available
on the BSE and the NSE.
NPS portfolio of non-government employees can
have a maximum of up to 50% exposure in equities
while that of government employees can only have up
to 15% exposure.
Sumit Shukla, CEO, HDFC Pension Management,
one of the eight pension fund managers which manage
private sector money, said the new norms would eliminate the scope of higher-than-the-benchmark returns.
The long-term goal of the regulator is to minimise risk
from NPS investment, he said.
Meanwhile, the PFRDA has asked for fresh bid for
the selection of pension fund managers. Eight new pension fund managers would be selected based on the
lowest fund management fee quoted by them.
At present, fund managers can charge a maximum of up to 0.25% as fund management fee. The
new bids could change the fund management fees,
if the fund managers choose to bid aggressively.
According to a pension fund manager, who
refused to be identified, they are already finding it
tough to survive at 0.25%; if the new bids results in
downward revision of rates, it would be disastrous
for the industry. He says ideally the fund management fee should be 0.4-0.5%.
No tax on redemption of MF
Se
c
un
TA
these entities would be liable to pay additional income

n a big relief to mutual fund investors, the Central
tax on such distributed income at the prescribed rates.
Board of Direct Taxes (CBDT) has clarified that no
The income tax officials were of the view that
additional tax will be levied on redemptions or
redemption or repurchase and issue of bonus units in
repurchase of units and issue of bonus units.
a mutual fund is a distribution of income (like the
The CBDT has clarified in its statement that
dividend paid) to investors, and hence the proceed
redemptions of units or repurchase of units would not
should be taxed. Fund houses had argued that
attract levy of tax under sub-section (2) to Section
redemptions are not distribution of income, and
115R of the act as such income is
any move to tax redemptions would amount to
not of the nature of income
double taxation. The redemption proceeds
distributed to the unit holders and
are anyway taxed under capital gains tax.
hence lies outside the purview of
r
The clarification has brought big relief
this section.
d e 1 5R
for
both
the investors and the mutual fund
The Section 115R of the
1
houses as they dont have to spend time and
Income Tax Act says that any
money in unnecessary litigations,
amount of income distributed by a
says Amit Maheshwari, partner,
company or a mutual fund to its
Ashok Maheshwary & Associates.
unit holder should be taxed, and
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PERSPECTIVE |
Third-party Premiums Set to rise
rivate car owners may have to pay up to 137%

higher premium for third-party insurance from
the next financial year.
An Insurance Regulatory and Development
Authority (IRDA) exposure draft has proposed 25-137%
increase in the third-party insurance premium for private cars from April 2014.
The hike proposed is highest (137%) for cars with
engine power less than 1,000 cc. For cars with engine
power between 1,000 cc and 1,500 cc, the increase in
premium proposed is 50%, while for those above 1,500
cc the increase proposed is 25%.
For the two-wheeler category, the proposed premium hike for bikes with less than 75 cc engine power is
highest at 45%, while that for two-wheelers with 100150 cc engine power is 13%. Those riding highpower bikes with engine power 350 cc or
more would see their premium come
down drastically by 62%.
The hike has been proposed
amid growing third-party losses,
and rising death claims. According
to the IRDA, the average death claim
under third-party motor insurance
has grown from Rs 2.1 lakh in
2007-08 to Rs 3.9 lakh in 201213, a jump of 85% in the last 5
years. The average loss ratio
REGULATOR WATCH
A look at recent rulings which can affect you
CAPITAL MARKETS
The Securities and Exchange Board of India (Sebi) has
approved certain proposals like exclusion of nominee director
from the definition of independent directors, compulsory whistle
blower mechanism, expanded role of audit committee and prohibition of stock options to independent directors. It has also
approved the proposals of at least one woman director on the
board, and restricting the tenure of an independent director to 2
terms of 5 years.
in third-party motor business is 140%, which means

against Rs 100 premium, insurers paid Rs 140 in
claims.
Third-party losses have always put insurers in
dire situations when it came to assess their profitability. With every passing year, insurers are facing huge
quantum of losses in this category. Hence, it is
inevitable to consider the revision of premiums in this
segment, says Dr Sandeep Dadia, CEO and Principal
Officer, Aditya Birla Insurance Brokers.
Motor insurance has two componentsthird party,
which covers losses to a third party (other than the
owner of the insured car) in case of an accident involving an insured car, and own damage, which covers the
insured vehicle against damage and theft.
Third-party insurance is mandatory by
law. The premium for third-party insurance is decided by the government.
De-tariffing of the third-party
premium is necessary so that good
customers get the benefits. The current tariff regime is cross-subsidising the bad customers with uniform
pricing for both good and bad
customers," says Dr Amarnath
Ananthanarayanan, MD and
CEO, Bharti AXA General
Insurance
and the nature of the unclaimed amount (death claim, maturity

benefit, etc) by 31 March 2014 to ensure timely payment of dues.
The IRDA has withdrawn its order requiring insurer agents
to maintain a minimum persistency rate of at least 50% of life
insurance policies sold for the renewal of their agency license.
It has now left it to the discretion of insurance companies to
decide their own persistency rate at which they would like to
renew the license of agents.
INSURANCE
The Insurance Regulatory and
Development Authority (IRDA) has asked
insurance companies to make various disclosures such as the amount which
remained unclaimed for more than six
months from the due date of settlement
COMMODITIES
The Forward Markets Commission has

allowed exchanges to charge differential transaction charges on delivery based and non-delivery based commodities. Exchanges incur substantial cost differential in offering a delivery
based and a non-delivery based commodity.
Rs 2,600cr
worth of interest on
education loan has
been waived off by
in the interim
budget
WorldMags.net
MONEY TODAY
March 2014
19
WorldMags.net
STOCKS |
B O O K VA L U E
LOOKING
FOR VALUE
Illu
str
ati
on
:P
RA
GA
TI
Several good stocks are trading below their book value. Some can give decent returns
in 2014 | By Rahul Oberoi
130
SE 500 index
stocks in the B low their
e
were trading b ec 2013
1D
3
n
o
book value
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GOING BY THE BOOK
We bring you the best picks among stocks

trading below their book value
1
BEML
CMP:
197.30
RECOMMENDED BY: AXIS SECURITIES
284
1 Jan13
237
1 Jan14
173
3 Jun13
OCT-DEC
2012
NET
PROFIT 2013
NET
SALES
-63.3
5.5
670.4
2012
772.2
2013
108.7%
ES (%
AL
ange)
ch
nge)
cha
FIT (%
RO
NET S
OCT-DEC
AN INDICATOR
15.18%
2
Dewan Housing Finance Corporation
CMP: RS 204.75
RECOMMENDED BY: HBJ CAPITAL
217
1 Jan14
184
1 Jan13
105
1 Oct13
NET
PROFIT
OCT-DEC
91.2
138.4
2013
840.2
2012
1301
2013
FIT (%
RO
51.68%
ES (%
AL
ange)
ch
NET P
NET
SALES
2012
NET S
OCT-DEC
nge)
cha
Put simply, book value represents that part of the

accounting value of a business that will be left after
debts are paid off. You can arrive at the figure by
deducting liabilities from assets (he will be left with
shareholders equity). Dividing this by the number
of shares will give the book value per share.
When compared with the market value, book
value can indicate whether a stock is overvalued or
undervalued. For companies with negative earnings
which cannot be valued using the price-to-earnings
ratio, the price-to-book value multiple can be used,
especially for relative comparison, as the number of
companies with negative book value is far less than
the number of companies with negative earnings,
says Rajiv Mehta, assistant vice president,
research, India Infoline.
It is useful when earnings are low and the
price-to-earnings multiple does not reflect the businesss true worth. It is especially suited for valuing
capital-intensive industries, says Arun Gopalan,
vice president, research and investments,
Systematix Shares.
Some big companies that are trading below
book values are Tata Steel, Bajaj Hindusthan, Steel
Authority of India, Reliance Communications and
State Bank of Bikaner and Jaipur.
RS
NET P
avvy investors are always on the

lookout for stocks that are not fully
valued or, still better, are grossly
undervalued. An important measure of value is the book value per
sharetotal assets minus intangible assets and liabilities divided by
the number of outstanding shares. If the price-tobook value per share is less than one, it means the
stock is trading below its book value.
But does this in itself make the stock a good
investment? Not necessarily. For, experts say that
the price-to-book value indicates just whether the
stock is undervalued or overvalued, and has to be
seen with other factors such as the companys
earnings record. However, for most investors, its a
good starting point to look for undervalued stocks.
For the record, more than one-fourth stocks in
the Bombay Stock Exchange (BSE) 500 index are
trading at less than their book values. Out of these
130 stocks, 84 were below their book values on
January 1 last year as well. Of these, 70 gave negative returns in 2013.
The S&P BSE 500 index accounts for nearly
93% market capitalisation of the BSE.
54.85%
BUT WHY?
A stock may trade below its book value for several
CMP is current market price as on February 17; graphs show share price movement;
net profit and net sales in Rs crore; Data Source: Ace Equity
WorldMags.net
MONEY TODAY
March 2014
21
WorldMags.net
B O O K VA L U E
3
National Aluminium Company
CMP: Rs 32.40
RECOMMENDED BY: AMBIT CAPITAL
49.40
1 Jan13
38.05
1 Jan14
26.20
1 Aug13
OCT-DEC
1,670.1
2012
NET
SALES
1,621
10.16%
NET S
FIT (%
RO
ES (%
AL
ange)
ch
NET P
2013
-2.94%
4
Oriental Bank Of Commerce
CMP: Rs 163.10
RECOMMENDED BY: ESPIRITO SANTO
359
1 Jan13
229.4
1 Jan14
143.5
1 Aug13
OCT-DEC 2013
2012
NET
PROFIT
326.4
224.3
2013
OCT-DEC
4,468.7
2012
NET
SALES
4,723.2
-31.28%
ES (%
AL
ange)
ch
FIT (%
RO
NET S
2013
nge)
cha
Book value should not be seen in isolation. This is

because many companies create revaluation
reserves to inflate book value. Many also raise equity at a substantial premium. Investors should
adjust for these factors.
Also, in industries such as information technology, where the requirement for capital is low, the
book value tends to be low. This does not mean that
they do not offer value.
Ideally, while deciding to invest in a capitalintensive industry, the investor needs to ascertain if
the current market price is less than the assets
replacement cost or book value.
Sonam Udasi, senior vice president and head of
research, IDBI Capital Markets, says book value
should be one of the factors to be considered while
taking an investment decision. For example, a companys book value may look high, but if the management is unable to add to it, it is futile. Or, an emerging companys book value may be small but may not
capture the future growth potential.
Dipen Shah, head, private client group
research, Kotak Securities, says, It all depends
upon what type of company we are talking about.
Companies with a lot of fixed assets (say manufacturing companies) have a high book value. In contrast, labour-intensive companies may have a lower
book value. One needs to differentiate while
applying this methodology.
131
2013
OCT-DEC
SHOULD YOU BUY?
118.9
2012
NET
PROFIT
nge)
cha
reasons, the foremost being lack of investor confidence in the companys future. If it is widely
believed that the companys performance will deteriorate, its stock will possibly trade at a discount to
its book value. Another reason could be belief that
the company is adopting aggressive accounting
policies to bloat its net worth.
Pankaj Pandey, head of research, ICICI Direct,
looks at the positive side. If the fundamentals are
in place, a stock that is trading below book value
may indicate that the company is being incorrectly
valued. It may be a good opportunity to own the
stock at a discounted price.
Book value should not be seen in isolation. At
times, due to its cyclical nature, the whole industry
may be going through tough times. Such companies, as a result, may trade at a discount to their
book value, says Modan Saha, joint managing
director, Axis Securities.
A good example right now is capital goods,
infrastructure and metal companies, which are
trading at discount to their book value as their
near-term profit outlook is not bright.
NET P
STOCKS |
5.69%
22 MMarch T2014
ONEY ODAY
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B O O K VA L U E
INVESTMENT OPTIONS
283.7
250
1 Aug13
1 Jan13
OCT-DEC 2013
2012
NET
PROFIT
83.6
175.2
2013
OCT-DEC
1,083.2
2012
NET
SALES
1,416
FIT (%
RO
109.57%
NET S
NET P
2013
ES (%
AL
ange)
ch
30.72%
6
Bank Of Baroda
CMP: Rs 533.75
RECOMMENDED BY:ICICI DIRECT
883
1 Jan13
658
1 Jan14
472
2 Sep13
OCT-DEC 2013
2012
NET
PROFIT
1011.6
1047.8
2013
OCT-DEC 2013
2012
NET
8844.9
9,690.7
2013
FIT (%
RO
3.58%
NET S
SALES
ES (%
AL
ange)
ch
ONEY ODAY
377.7
1 Jan14
nge)
cha
24 MMarch T2014
Vardhman Textiles
CMP: Rs 348.45
RECOMMENDED BY: AXIS SECURITIES
nge)
cha
We talk to experts to find out which sectors and

stocks are looking attractive at this point from the
price-to-book value, or P/BV, angle.
IDBI Capital Marketss Udasi says investors
can look at large PSU banks with a two-year view.
Now we talk about specific stocks.
Dewan Housing Finance Corporation: For the
past 25 years, the company has been specialising in
providing home loans to lower and middle income
families. It has been scaling up rapidly and has
expanded its balance sheet by four times over the
last five years.
The gross non-performing assets are less than
0.75% of the total loans. It also has a conservative
provisioning coverage ratio of over 100%.
Provisioning coverage ratio is the ratio of provisioning to gross non-performing assets.
Dewan Housings return on equity, or RoE, has
been 20% a year for the last 10 years. Its earnings
are also not volatile, with lowest RoE in the last 10
years being 15.2% (in 2006-07). For a company that
has a huge market to serve, strong moats, long
operating history and rising business profile, it is
available at a very low valuation of 0.8 times book
value and around five times 2013-14 earnings,
says Gokul Raj P, portfolio manager, HBJ Capital.
Bank of Baroda: The second-largest public sector
bank has a well-diversified book with 32% exposure
to overseas markets. Unlike other PSU banks, the
market share of the bank rose between 2006-07
(3.5%) and 2012-13 (4%). Though gross non-performing assets, or NPAs, rose from 1.36% in 2011 to
2.40 in 2013, we expect the pace of asset quality
deterioration to slow down. Domestic net interest
margins are expected to be 2.8% by 2014-15, says
Pandey of ICICI Direct.
On February 13, the stock was at Rs 531.60,
with a price-to-book value of 0.65.
Oriental Bank of Commerce: In 2013, the stock
fell 36% from Rs 358 to Rs 228.80. Net NPAs rose
from 2.21% in March 2012 to 2.27% in March 2013.
Still, Saikiran Pulavarthi, head of research,
Espirito Santo Securities, is bullish on the bank.
The bank is trading at a P/BV of 0.5 primarily due
to asset quality concerns. We recommend the stock
as a play on economic recovery and interest rate
cuts as the bank will benefit significantly from both
asset quality improvement and treasury gains (as
interest rates fall).
National Aluminium Company (Nalco): The stock
fell 23.38% to Rs 37.85 in 2013. The net profit for the
year ended March 2013 fell 31.39% from Rs 849.50
crore to Rs 582.83 crore.
NET P
STOCKS |
9.56%
WorldMags.net
TAKING NOTE
WorldMags.net
Gaurav Mehta, vice president, institutional equities, Ambit Capital, sees an

upside.
Our buy stance on Nalco is driven by
the companys decision to reduce exposure
to aluminum, rising exposure to the highmargin alumina segment and strong balance
sheet (cash per share of Rs 19, 50% of the
current market price). At the current market
price, the stock is trading at 2014-15
EV/EBITDA of 3.9 times, much less than the
eight-year average of 7 times. The 2014-15
P/BV is 0.8, which appears in line with peers.
However, Nalco has cash per share of Rs 19
and on an ex-cash basis is trading at a P/BV
of 0.6, which is cheaper than its peers, which
are at 0.7. On February 13, the Nalco stock
was trading at Rs 32.55 with a P/BV of 0.68.
Vardhman Textiles: VTL, one of Indias
largest integrated textile manufacturers, is
trading close to book value. At present,
China is buying cotton from farmers at a
substantial premium to the international
prices. While this has made yarn and textile
manufacturing unviable, Saha of Axis
Securities believes this is an opportunity for
companies like VTL which earn a significant
amount from yarn exports. Rupee depreciation may also generate higher margins. VTL
has expanded during the lean period, which
is reflected in its steadily-increasing book
value. Given the improved business environment, it can be a good investment for 2014,
says Saha. In 2013, the stock rose 50.32% to
Rs 375.80.
BEML: BEML is a public sector undertaking
that makes rail coaches, spare parts and
mining equipment. It offers high-quality
products for diverse sectors of the economy
such as coal, mining, steel, limestone, power,
irrigation, construction, road, aviation,
defence and rail. On February 13, the stock
was trading at a 40% discount to its book
value.
Saha of Axis Securities says, We
believe that BEML will be the biggest gainer
once regulatory hurdles that are impacting
the mining sector are removed. Given the
green shoots of revival visible in the economy and the improved order book from
defence organisations, BEML is poised for a
turnaround in 2014. We believe the concern
over past trucks orders is overdone and that
BEML can be a good investment for 2014 at
the current market price.
MT
@iamrahuloberoi
Equities may present

fresh opportunities
S
SANDESH KIRKIRE
ince 1 Jan 2009, Sensex

and Nifty have returned
15.39% and 14.68% CAGR
respectively. In other
words, the investments have more
than doubled in around five years.
But this performance usually gets
subdued applause. That is because
many retail investors may not have
availed this benefit due to the expe-
riences of 2008.
Between 1 Jan 2008 and 2014 CNX Nifty and BSE
Sensex returned around -0.28% and -0.35% CAGR
respectively. The sharp decline from those heady days
may have deterred many investors.
But this does not mean that market did not present
investment opportunities even in 2008 peaks. For
instance, the FMCG, pharma, healthcare, IT, auto and dividend sector indices, provided more than 12% CAGR return
during this 6 year period. Some of these sectors even
grew in the 15-17% range, implying that investments in
them may have grown by more than two -and-a-half times.
The broad market did get pulled down since 2008
because sectors like realty, infra, metals etc got badly
beaten. But investment opportunities were also readily
available, even in a difficult market. Yet many of the retail
investors may have lost out on this.
This has to do with the herd investment psychology.
Herein, the retail investor waits for the market momentum
to occur; then allows the investment climate to convert
into the exuberance; and then, when climate is almost on a
crescendo, rushes into the market on speculative advice.
This usually ends up in buying at market peaks.
On the other side, when the market is on a downward
trend, investors hold onto their investment in hope and
continue to absorb losses, and sells it in despair, mostly
when the bottom has being reached. Such experience can
effectively exhaust the investor from any further investment ventures. And it is for this very reason, that objective-driven investments; backed by a well-thought out and
disciplined asset allocation strategy is a must.
We are saying this because the upcoming years present sizeable investment opportunities in the equity market. In the immediate, while the repo rate has been
increased to 8% mark, what is being missed out is that
fiscal deficit is getting reined in. Moreover, the CAD
(expected around 1.5-2% of GDP) is also improving structurally; with non essential imports declining - and exports
expanding. Therefore, once inflation is reined in and the
policy issues with respect to infrastructure investments
realised, Indian economy and Indian markets can look at
next phase of the growth boom.
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COVER STORY |
S O C I A L M E D I A S T R AT E G Y
TAPPING
THE WEB
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By
Sam Abraham & Shoaib Zaman

ay back in 2008, Bill Tancer, a self-described
data geek, analysed the behaviour of over 10
million web users and concluded that social networking had dethroned pornography as the most
frequent activity on the Internet. No mean feat.
McKinsey Quarterly, November 2012, notes
that it took 13 years for commercial television to
reach 50 million households and three years for
Internet service providers to get 10 million subscribers. In comparison, Facebook had 50 million
users in a year, and Twitter in nine months.
We are already nodes of a web thats expanding. Were rapidly moving parts of our lives
there. And where theres life, there will be commerce.
The social network cannot be ignored, whatever be the size of your business. In fact, it could
become your closest ally if you are running a
small enterprise.
Lets see how one can use social media to
ones advantage to promote ones business, however small or big.
Why You Need Social Media
Social media, at the basic level, can be used to
build a community around ones offering.
Building a customer base is important in all
businesses. But here, online, its more than that.
An online community should ideally be a large
number of current and prospective clients or
buyers talking to each other, even if they air criticism about the many ways youve messed up.
Illustration: RAJ KISHORE VERMA
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COVER STORY |
Karthik Srinivasan, social media national head, Ogilvy,

says, The idea is that when we portray something
through social media, it should be a person trying to
communicate to another. Even when it is a planned
reach, such as on Facebook, it is usually at a community level. At that point, the person brings his unique personality to the post. This humanises the brand.
Smita Ramakrishna, co-founder & managing
trustee, Rang De, an NGO providing microfinance, says
they have used Facebook and Twitter for both marketing the organisation and specific campaigns.
If you have a Facebook page, keep it alive and
updated. When you update regularly and people comment and engage with you, thats when you notice that
the community is growing, says Ramakrishna.
Besides building a community, the second area

where social network can help is expanding reach.
There are thousands of small businesses that offer
services or products that are not limited by distance, for
example, those offering software as a service, app makers, freelancers and consultants.
Theoretically, you can take your business global at
relatively low costs. More realistically, you can reach
out to a few neighbouring states or get customers that
pay the most from all over the world.
For example, if you are an exporter of, say, Indian
handicrafts, spending on social media for brand building will give good results since you have a global
market to serve. It can also save you a lot of expenses,
as spending on physical advertising abroad can be
Nivedha Charles
Co-founder, Pigtails and Ponys

WHEN DID YOU START USING SOCIAL MEDIA?
We started Pigtails and Ponys in our second year

of college and had our Facebook page up and
running immediately. It was our main
marketing platform from the start. However,
promotions and advertising

(through Facebook) happened much later.
WHAT IS YOUR SOCIAL MEDIA STRATEGY?
We connect with customers and

keep them up to date on events.
Weve managed to connect with our exact
clientele. Our main strategy has always been to
engage targeted customers.
HOW DO YOU MEASURE YOUR STRATEGYS SUCCESS?
Facebook is our only medium for marketing

and most of the traffic on our site is
from there. Our success can, therefore,
be measured in terms of the orders
we receive.
28 MMarch T2014
ONEY ODAY
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Do you use social media to market
beyond the average small business budget.

Third, small enterprises need to get the most out of
their promotional budgets. There are probably very
few ways to engage with customers that are cheaper
than social media. The concept has become so acceptable among businesses that social networking sites
even have advertising schemes to help businesses
reach the most relevant audience.
To make the most out of your plan, you must have
a precise idea about what you want. A strategy for
social media engagements is useless without an
objective. This means you should have a way to
measure the efficacy of your campaign.
Four, at the core of a social media strategy is managing the brands reputation. Several studies show that
consumers do base decisions on recommendations of
other customers, especially those known to them. A
McKinsey research, for example, has showed that peer
recommendation generates 30 times higher engagement rates than the traditional online advertising.
When you start out, you can use the most common
social medium to talk to your customers. One tool that
often goes unnoticed is blogging. The fifth annual
Social Media Marketing Industry Report, 2013, by
Social Media Examiner, found that nearly 58% of
marketers surveyed used blogging, the fourth most
used platform. It was also the third most important
social platform, with B2B (business to business)
marketers rating it higher than the B2C (business to
customer) marketers.
Frequent updates on your product or service, in a
way that invites customers to respond, are useful.
These help you address negative commentary and
realise the potential for improvement.
The most visible use of social media is by web
entrepreneurs, especially online retailers. For this
section, boosting website traffic is paramount. Its
often a goal in itself. In fact, the popularity of social
media has resulted in even search engines such as
Google including indicators from social media websites
in search engine ranking algorithms. This means that
sites that have a greater presence on Facebook,
LinkedIn or Twitter and are linked to social media profiles will probably get more traffic.
Five, inexperienced start-ups can use the feedback
offered by customers through social networking sites
to improve their product. This is an extension of
crowdsourcing. (Crowdsourcing is the practice of
obtaining ideas or content by soliciting contributions
from a large group of people, especially online).
your business?
NO
%
YES
97%
The overwhelming majority (97%) of marketers indicated they are doing social media
marketing. This is up from 94% in 2012.
I have integrated social media into

my traditional marketing activities
49%
Agree
21%
Strongly Agree
11%
Uncertain
8%
Disagree
2% Strongly Disagree
Commonly used social media platforms
92% 80%
70% 58%
56% 42%
41%
You
Planning Your Strategy
Yo
utu
be
Go
og
le+
Pin
ter
es
t
ge
r
Blo
g
in
Lin
ke
d
tte
r
Tw
i
oo
Fa
ce
b
Having a specific number of Facebook likes or Twitter

followers should not be the goal of an online marketing
campaign. As long as you start with a clear business
aim, such as reaching so many prospective buyers or
Tube
Source: Fifth Annual Social Media Marketing Industry Report, 2013
WorldMags.net
MONEY TODAY
March 2014
29
WorldMags.net
engaging customers to iron out flaws in your offering,

youre on the right track.
Reaching the right 5,000 people is more important
that reaching any 20,000 in a crowd. Its a clich that
must be respected.
Adhvith Dhuddu, founder, AliveNow, a Bangalorebased social media agency, says, The social media
strategy of a company should be based upon its objective. The objective can be building an online community,
lead generation, increasing store walk-ins or website
traffic, data collection, revenue generation online, providing product information to customers or building a
platform to service customers.
Sachin Rao, country SMB (small and medium businesses) manager, Facebook India, gives similar advice.
Be planned about your content strategy. It shouldnt be
a series of random updates. Plan your updates and figure out how they resonate in the context of your product and value proposition.
He says popular, but unconnected, links or content
may get likes, but that should not be your objective as

eventually the customer will walk away from the conversation. What you dont want to do is spam a customer, says Sachin.
Experts stress the need to understand your customer before drafting a social media strategy. Its a very
important task.
Deepak Goel, CEO, Drizzlin, a social media analytics
firm, says, Its a broad market, but like in any other
marketing effort, you need to decide who you are plan-
Smita Ramakrishna
Co-founder & Managing Trustee, Rang De, an NGO

Rang De was set up in 2008 and has been using

social media for the past four-and-ahalf years (Since August 2009).
We use four different mediums

(Facebook, Twitter, LinkedIn and blog) to reach
our target audience. Our engagement on each of
these platforms is driven by the
audience we address. We aim to
educate, engage and evoke participation.
One of the things we look at is the traffic

that the website has generated
from a social media platform. There are various
tools out there that can help you measure the
success of your social media strategy
T
30 MMarch 2014
ONEY ODAY
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Photograph: NILOTPAL BARUAH
COVER STORY |
WorldMags.net
Social media is important for my
business: A significant 86% of
marketers said that social media was

important for their business. In 2012,
83% thought social media was important
Disagree
Strongly Disagree
4%
1%
9%
Uncertain
37%
Agree
49%
Strongly Agree
Benefits of social media marketing

89%
Improved sales
47% 43%
Reduced marketing expenses
54%
Grown business
partnerships
Improved search
rankings
Generated leads
Developed loyal fans
69% 65%
61% 58%
Provided marketplace
insight
Increased traffic
75%
Increased exposure
ning to reach. Only once I understand my customer, can

I understand if he or she uses social media. Goel gives
the example of a wholesale manufacturer of parts that
are used by other manufacturers, in other words, a B2B
supplier. Here, customers may not be digital and so one
can choose to not use social media, he says.
In contrast, if you run a company thats introducing a new electronic product or if youve started a
restaurant, there is a high chance that your customer
is online. In the latter, you have many options to engage
customers, including popular review sites such as
Zomata and Burrp.
Consider Fab Bag, an online retailer of beauty
products, which concentrated on engaging customers
when it started out. Kaushik Mukherjee, co-founder of
the website, says, Our customers are 18-30 years old
(female), smart phone-friendly, active on Facebook and
Twitter, and love to share and talk. If they like a product, they endorse it, and if they dont, they trash it.
They are vocal. This helped us spread the word.
Social networking can also help small companies
take a bit of risk. They have the advantage of being
small and local. Therefore, the perception of taking the
customer for a ride is not there. While the product is
essential, it is not a situation where the primary notion
is to be careful, says Sheldon D'Souza, social media
strategist, Grey India, a marketing and branding firm.
Another important role of social media is keeping
the community engaged. When you start out, look for
Facebook pages or LinkedIn groups related to your
business. Get involved with these communities before
marketing your product aggressively. Social media is
social by nature and, therefore, the best tactic will be
not to pursue aggressive expansion as the number of
followers or likes may not translate into higher sales or
brand recall, says DSouza.
Smaller companies should have a policy of replying
to customers and asking for their feedback as fast as
possible. You can use the feedback as testimonials,
giving loyal users 15 minutes of fame, he says.
Facebooks Sachin Rao agrees: Dont shy away
from a two-way conversation. Its not just this one customer that is engaging with you. There are others
whore watching this conversation.
Once youve established yourself, the most important thing is to make sure that the content, be it a blog
post, a picture or a video, is interesting, informative
and entertaining. This will ensure that you dont annoy
or irritate those who view your posts. Also, as users get
more used to a platform, they start choosing content
more carefully.
If youre in the service industry, it will be a good
idea to communicate with as many customers as possible for reviews, which can then be used to either
improve the service or as testimonials.
Many people who have expert knowledge can influ-
The most important social platform

for marketers is
Facebook
Linkedin
Blogger
Twitter
16%
14%
12%
4% Youtube
2% Google+
1% Pinterest
WorldMags.net
49%
Source: Fifth Annual

Social Media Marketing
Industry Report, 2013
MONEY TODAY
March 2014
31
WorldMags.net
ence perceptions about your product. You can always

identify your local reviewers, often with popular blogs,
and publish their views.
An interesting way to engage is to launch offers or
promote specific events, offline or online, for customers
that come through social media. Such posts have a higher potential for going viral.
Moksh Juneja, founder & CEO, Avignyata, a digital
marketing agency, says, A small company can use
social media for a specific objective, say, to promote
itself during an offline event. This can be the testing
phase. Once you have the numbers (hits, likes, conversions and so on), you can revisit the strategy.
You can even use testimonials and combine them
with an offer like Fab Bag did. We saw customers posting photographs (on Facebook) of how good a deal they
got. So, we placed these in an album and asked our
members to share it and win a coupon. This is when the
site picked up tremendously, says FabBags Mukherjee.
But, do evaluate if promotional offers are working
for you. Shopnineteen.com, for instance, began by posting offers and showcasing products, but tweaked the
strategy later. If we want to engage people, we have to
put up posts that look beautiful on their walls and which
they can relate to, says CEO Narinder Mahajan.
Kaushik Mukherjee
& Vineeta Singh, Founders, FabBag.com
Fab Bag started social media

marketing in July 2012. We have
been active since September 2012,
beginning with Facebook.
After Twitter and Facebook became good referral channels, we extended via YouTube, Pinterest
and Instagram. Till early 2013, our strategy was
to push content to members.
Later, we realised we should let members
share their content.
Social media is a great way to increase the

reach of your brand. We rigorously measure
our growth and fluctuations in

reach across all social media.
WorldMags.net
Photograph: NISHIKANT GAMRE
COVER STORY |
WorldMags.net
Platforms used by B2B versus B2C
B2C vs B2B
The Best Tools

The best tool for social media has two parts, the best
platform and the best management tool. When it comes
to the former, there is no single best platform. A mix of
platforms and varied focus are likely to work the best
for all small businesses.
Based on the 2013 Social Media Marketing
Industry Report, the reply to My Facebook marketing
is effective was 37% in the affirmative. This means the
largest social network is still not enough for a large
majority of marketers. Of course, as expected, the percentage was 44% for B2C marketers and 29% for B2B
counterparts.
The main consideration is most probably ones
budget. The cheaper it is, the better it is for small
enterprises. Of course, realistically, there is very little
probability that you can avoid Facebook, LinkedIn or
Twitter. The decision will be about how much you want
to spend on each platform.
Both Facebook and LinkedIn offer CPC (cost per
click) and CPM (cost per thousand impressions) ads.
Youll have to find out which works for you.
Pin
ter
es 35.5%
t 45.9%
B2C
44.5%
40.2%
+
Go
og
le
Yo
utu
be
63%
53.3%
er
Blo
gg
Tw
itt
er
56.9%
in
Lin
ke
d
oo
k
Fa
ce
b
53.1%
58.4%
81.5%
79.4%
86.4%
86.4%
96.3%
B2B
Fifth Annual Social Media Marketing Industry Report, 2013
The most important platform is...

1
4 3
2 1 1
4
5
10
29
29
67
B2C(%)
11
B2B(%)
19
16
Facebook
Youtube
Blogger
Pinterest
Twitter
Google+
Linkedin
Forums
What weve learned from 120 billion

Facebook impressions
160-179
Character length (of a post)
There is a general agreement that B2C marketing is

easier on social media compared with B2B promotions.
FinCom (financial companion) is a mobile interface for
tally released by ZeroOne Technologies. Its main consumers are small and medium enterprises.
However, Selva Prakash, CEO & director, says
social media has not helped the enterprise division as
much as it has been a boon on the consumer front. But
there has been an unexpected benefitit has helped
the company in recruiting employees.
People want to join big companies when they
graduate, which is understandable, but it makes it difficult for us to find resources. However, posting our
work and technical articles on Facebook has helped us
attract some guys, says Selva.
Nishant Rao, country manager, LinkedIn India,
says social networks can help strengthen the brand
with employees from a pool of skilled candidates. A
good recruiting platform is worth its weight in gold.
Social media platforms such as LinkedIn have
played a strong role in democratising information,
allowing SMEs to cut through the clutter and enter a
level-playing field, whether it is for their marketing or
hiring requirements.
However, such anecdotal evidence does not mean
that it is or it is not a viable medium. It depends upon
your aim. You can make it work for you. Spend time to
understand conversations on social media and, based
on that, take them forward. It may seem that it is fairly simple to achieve numbers for a B2C business than
it is for a B2B one, but be clear with the objective, says
Avignyatas Juneja.
140-159
120-139
100-119
80-99
60-79
0.000% 0.005%
Engagement rate
0.010%
0.015%
Questions
0.020%
Non Questions
Study by BlitzLocal over a six-month period from June 2011 to December 2011
WorldMags.net
MONEY TODAY
March 2014
33
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COVER STORY |
We would suggest starting with a primary platform. There will be a temptation to go to Facebook and
Twitter at the same time, but thats not the best way.
You should choose your primary platform and work
slowly on others as it will be difficult to manage all of
them, says Deepak Goel of Drizzlin.
AliveNow founder Dhuddu says taking too much on
is a common mistake. Its better to have one or two
active, engaging and interactive social media pages
than six or seven pages with redundant content.
Decide which social platform to use on the basis of
factors such as your target audience and sector. For
example, a retail brand with stores and outlets needs to

focus on platforms such as Facebook, Twitter and
Foursquare, but a B2B brand may have to focus more on
LinkedIn, SlideShare or a company blog.
Once youve got the basic platforms right, youll
have to choose some supporting ones. This should be
based upon three major points--time needed to make
your content appealing, your objective and the type of
content that you have.
For example, Pigtails and Ponys, started by two
design students, specialises in hair accessories.
Facebook was their primary platform. But now, theyve
Selva Prakash
CEO and Director, ZeroOne Technologies

The company was started in April

2004, but weve been comparatively
active on social media for a little
over a year now.
It has not worked for the enterprise division.

But, on the consumer front, it has.
FinCom, our mobile app, was marketed entirely
using social networks. It increased the
number of downloads and now users
connect with us via social media.
Content matters. If our content
Photograph: H.K.RAJASHEKAR
wasnt fresh, innovative and interesting,

we wouldnt have much of a captive
audience, and without an
audience, we are just talking to
ourselves in a crowd, arent we?
Also, we have used feedback to improve
our app.
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chosen to expand to Pinterest and Instagram, with a

Twitter handle still only on the way. Considering that
their customers will be more moved by pictures, the
two relatively new social networking sites are ideal for
the business.
Theyve got two things going right for them. Since
they already have pictures used to market their products, they do not have to spend too much time updating
their profile on Pinterest or Instagram. And, the content they have is ideal for these two platforms.
Nivedha Charles, who runs the business now, says,
We use social media to connect with customers and
keep them up to date on upcoming events, be it a new
collection or a flea market. Because Facebook has
excellent targeting tools, weve managed to connect
well with our clientele. Our main strategy has always
been to engage targeted customers.
Goel of Drizzlin explains: Each platform attracts a
certain type of people, creating a specific mentality. So,
currently, if you look at the Indian shores of Twitter,
you will see a large number of people from the media
industry, politics or people who are popular as experts
on certain subjects. However, the Average Joe is not
out there. So, if you have a B2B proposition, where you
want to be in touch with subject experts, then Twitter
is a good option.
A new factor could be the reach that each has on
mobile devices. Facebooks Rao says, When we look at
the return on investment, it is not just in terms of revenue. For small businesses, time and money are equally important. So, keep in mind that popular social networking sites such as Facebook and Twitter have a
good mobile presence.
This means that you can create one campaign that
will reach customers across devices, including smartphones and tablets. Its worth a look considering that
Facebook has about 31 million active daily users in
India on mobile devices, while Twitter has 42 million
daily active tweeting users globally on all platforms
(PeerReach report).
500 million 750 tweets
PLUS USERS
ARE SHARED ON
TWITTER PER SECOND
The fastest growing demographic

on Twitter is the 5564
age bracket. It has grown
79% since 2012.
blog.bufferapp.com
I am able to measure the

return on investment on my
social media activities
10%
Strongly Disagree
28% Disagree
36% Uncertain
23% Agree
3% Strongly Agree
Some common tools recommended

by experts
Measuring Returns
The Social Media Examiner survey found that 87%
marketers want to know how to measure their return
on investment for social media activities. Its been the
top question in their annual survey since 2010. So,
understandably, its not been the easiest thing to do.
Analytics can give you some idea about how many
people come from where, but itll be harder to pinpoint
if your campaign is working as you want it to.
Sales, visibility and share of voice will be an ideal
way to measure. Online tools such as Klout Score are
also an interesting indicator of your social presence,
says Juneja of Avignyata. However, this is easier said
than done, especially on a low budget.
Ogilvys Srinivasan says: If you are looking to con-
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MONEY TODAY
March 2014
35
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COVER STORY |
vert something from social media, you need to look at

how it impacts your business. Social media platform
metrics such as likes or retweets are just the output of
your efforts and not the outcome of your efforts.
So, when you put something that is smart, funny or
shocking, people are just reacting to it, and that is what
you see in terms of likes or tweets, he says.
This means that you cant always count on the numbers to meet your business goals.
Once again, the process starts with your objective
for having a social campaign. Not all companies are trying to get direct sales. The objective could be to build a
community in six months or drive traffic to a website or
increasing unique page views by 50% in three months.

These are more quantifiable goals.
Sachin Rao of Facebook says as much. Our
(Facebook) plans have tied ad formats to objectives of
marketers. If youre in an online business, youre probably concerned about website traffic or conversions. We
can track website traffic from Facebook. Its easy to
track who your demographic is, whos interacted with
your ad and the conversion rate through whos completed an action on your website.
You will need to use these numbers and find correlations with your objectives, without which it is useless.
Drizzlins Deepak Goel says it could also be more
Vishal Patel
MD & CEO, Sayitloud.in
is not only a platform to market a product but

also to develop it.
We launched in July 2012 and have
always used social media since
our primary focus is to build an online store.
The traffic to the site has gone up by

multiples since we started taking social media
seriously. We could attract more registered
users to our site. Sales have gone up as well.
Our strategy is to create content that

engages and expands our user base. And,
we get feedback for each
design before launching it. Social media
VA
LESH RA
ph: SHAI
Photogra
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COVER STORY |
about brand building than immediate returns. It is not

an active sales medium. Social media is a medium to
build a brand because people do not (usually) transact
on the social platform. Transactions happen in the real
world. This is more of a branding activity. Therefore,
returns are in terms of how many people are aware
about your brand.
Of course, there are direct indicators available to
some. Paromita Bir Chakraborty, co-founder,
TerrainSpotter, relies on social media analytics, something that many companies do. You can map your success through data on various social sites. You can know
how many users have seen it (content on social media),
who have liked and who have forwarded it. Facebook
Insights, Google Analytics and Sprout Social are some
of the tools we use. In fact, we have been surprised by
social media, as it has given us some very good results
in terms of leads as well.
Getting good business leads is fine, but it is also
difficult to value. The easiest thing would be to just ask
your customers which route got him to you. This will
show you which platform has been the most efficient in
getting you more customers.
Many forms that you fill online have an option
saying Where did you hear about us? So, there is
always a way for B2B organisations to ask how the
prospective lead was generated, says Srinivasan.
Rang De also concentrates on traffic, but uses an
extra variable. We use customised URLs to measure
the impact of a particular post or update. Depending
upon the metrics for each campaign or post, we have
devised different ways to measure the impact, says
Ramakrishna.
With changes in the technology of social networks, tracking outcomes and impact is simpler and
measurable, she adds.
The most important thing is to keep track of whats
happening. We measure growth and fluctuations to
reach rigorously across all social media channels,
says Kaushik Mukherjee of Fab Bag.
Each channel has a unique way of translating
reach to eyeball and ultimately to traffic we get on our
site. With more customer engagement, we could see
our brand reach the timelines of prospective customers who were not directly connected to us.
A simple way to calculate conversions from the
number of likes or followers or members of community
is to offer a specific discount for members of only that
community. Just calculate the number of people that
take up the offer and youll have some idea of how useful a particular platform has been for your business.
This will work best for those in fashion, electronics and
similar retail sectors.
T
38 MMarch 2014
ONEY ODAY
Likes vs Engagement, an explanation
http://www.youtube.com/watch?v=oVfHeWTKjag
Engagement is far more important than the

number of likes on Facebook. This principle
applies to other social networking sites as
well. This video by Youtube channel
Veritasium cites two case studies where a
profile and a fake business with no substance
was liked by people. Do not take such numbers for granted. The effect of like farms
set-ups where people are paid to like pages
can skew numbers. Look at how engaged your
fan base is. Keep evaluating you strategy,
especially if youre paying for promotions and
ads. If possible, try and build a community
without paid advertising. Itll be hard, but its
more likely to be authentic and more valuable. Once you have a following, you can
experiment with paid advertising.
Way back in
2008
Bill Tancer, a self-described
data geek, analysed over
10 million web users to
conclude that social
networking has beaten
pornography as the most
frequent activity online.
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COMMODITIES |
INTERVIEW
Samir Shah, Managing Director and Chief

Executive Officer, NCDEX, tells Rahul Oberoi that the
exchange will encourage physical traders, farmers and
retail investors to actively participate in the market
and become stakeholders in its growth
What steps are being taken by NCDEX to increase retail participation in commodity
trading?
Commodity futures are fairly new compared to equity markets in India. The
task at hand is to build a healthy, secure marketplace, with innovative products which will attract retail participants. For the next decade, there are
three priority areas for us. The first is deepening and widening the participation in commodity markets. Second, we want to make it easier for the different stakeholders/segments to participate in the market, be it farmers,
traders or investors. Last, but not the least, is to improve and upgrade the
warehousing infrastructure, electronic accounting of commodities and
adoption of global best practices, all of which are integral to the development of commodity markets.
We have launched some investor-friendly contracts. We started with a
smaller 1MT contract for guar. The contract is seeing good interest after it
was re-launched. The latest example is the recently launched GoldHedge (1
kg contract) and a smaller GoldH100 (a 100 gram contract). These are
excellent contracts to attract retail investors with some very easy-to-understand terms and conditions and help convert gold into a financial asset for
investors. More such contracts are in the offing.
What new contracts can we look forward to?
We plan to augment our non-agri portfolio significantly as well as strengthen offerings in the agri domain, especially in products which have close
linkages with global markets and the physical APMC markets.
What are your plans to increase trading volumes in 2014?
While trading volumes are widely tracked, we believe the true barometer of
an exchange is the healthy open interest (OI) on the platform and the
WorldMags.net
Photograph: NISHIKANT GAMRE
We would like
to demystify
commodities
for investors
WorldMags.net
efficiency and transparency in price discovery. Our

plan to drive growth in 2014 has following five
elements.
Product Innovation: Last year, we had some exciting
launches of GoldHedge, steel, cotton seed and crude
palm oil contracts. We will continue with more exciting
offers. Our theme is more specific product launches for
different types of participants so that there is wider
participation in commodity markets. We would like to
keep our products simple and safe and demystify commodities for investors. We plan to launch smaller contracts and unique contracts that will better suit
members of the physical trade such as farmers, traders
and hedgers.
Safer ecosystem: We will launch our next generation
of warehouse reforms, making storage of commodities
in NCDEX-approved warehouses an even safer experience for traders and farmers. We plan to integrate more
efficient commodity financing processes and lenders
into our commodity registry, Comtrack, so that better
financing options are available to farmers and traders.
Market tools: We will provide state-of-the-art market
tools to traders to enable them to participate more easily in the market. A recent example is our spread trading tool which has been well received. We plan to make
further enhancements to that. We plan to significantly
enhance our trading experience through workstations
that traders use.
Customer satisfaction: We are focusing on making it
easier for our members and their clients. Our new team
of specialist relationship managers will ensure that our
members are well-trained to serve their own and their
clients trading needs.
Market reform: We are working closely with the
Forward Markets Commission (FMC) to bring in market
reforms that will help make commodity markets safer
and deeper.
The transaction cost has shot up after introduction of

commodity transaction tax (CTT) of 0.01%. Has this hurt
retail investor sentiment?
While CTT has had its effect, contracts which provide
genuine price discovery and risk management tool
havent been much impacted. The business value that
hedging with these contracts adds remains undisputed.
That is why our business in terms of volumes and OI
has grown despite adverse market situation. The average daily trading volume (ADTV) has grown 38% in
December 2013 as compared to May 2013 and 13% in
the quarter October-December 2013, compared to the
quarter July-September 2013.
The industry has shown resilience in using our
price discovery and risk management products despite
higher costs due to genuine value perceived. A case in
point being the NCDEX Refined Soya Oil contract,
which has seen an increase in open interest q-o-q post
imposition of CTT. Contracts which havent stepped up
to the plate as regards genuine price discovery and risk
management have fallen by the wayside and have borne
the brunt of CTT. Falling volumes in natural gas, copper, crude could be indicative of lack of value to the
hedgers.
Open Interest is the total number of

outstanding contracts that are held by
market participants at the end of the day.
It can also be defined as the total number
of futures contracts or option contracts
that have not yet been exercised (squared
off), expired or fulfilled by delivery.
What steps are being taken to reduce speculative trading and

facilitate genuine price discovery?
With India being the largest producer and consumer of
major agricultural commodities in the world, price discovery takes place within the country unlike in nonagricultural commodities. Our volume-to-open interest
ratio is the healthiest in the industry. Our network of
NCDEX-approved warehouses across the country
ensures that state-of-the-art storage capacity is available at all times for farmers and traders to deliver commodities on the exchange.
Deliveries of actual commodities drives efficient
price discovery. We enable 1 lakh metric tons of deliveries every month. Additionally, we are awaiting FMC
approval on some sops for hedgers and some of the proposed measures like reduction of margins, easier position limits, etc. which could go a long way in increasing
hedger participation.
Investors who take steps to reduce the

risk of an investment by making an
offsetting investment
WorldMags.net
MONEY TODAY
March 2014
41
WorldMags.net
COMMODITIES |
INTERVIEW
Hedgers' participation in India is very

low compared to the rest of the world.
How do you plan to address this?
NCDEX will continue to focus on
commodities that are crucial to the
Indian economy as well on increasing the participation of hedgers
those with genuine exposure to the
underlying commodity such as producers, processors, industrial consumers, exporters, importers and
traders. Moreover, the sheer size of
the agricultural market in India is
exciting. India produced crops
worth Rs 9.23 lakh crore in 2012-13.
Only a tiny fraction of this is currently being traded in the futures
market. So the headroom for growth
in agricultural segment itself is
enormous. If international futures
multiplier holds true for the domesPhotograph: NISHIKANT GAMRE
tic market, our maize annual trading volume will grow from the current 5.6 million tonnes to 190 million tonnes.
While the hedger-friendly measures in offing will
help, what could give a definite boost will be a synergistic approach from the banking fraternity who can offer
innovative products that juxtapose credit with risk
management solutions for clients. A coordinated effort
between the commodity and banking regulations could
help address this effectively.
What steps are you taking to grow NCDEXs proportion of nonagri business?
We hope to significantly expand the NCDEX non-agri
basket. Our target is to have around one-third of our
business come from metals, energy and bullion in the
next couple of years. We have rationalised transaction
charges for all members, resulting in savings by up to a
third. The GoldHedge contract has received an encouraging response from the market and we hope to build
on it. We have also relaunched the steel long contract
based on BIS 2830 grade, encouraging the migration of
the steel industry towards approved BIS norms.
What according to you are the regulatory/legal changes that
are required to improve commodity trading?
We would like to encourage corporates, physical
traders, farmers, government institutions and retail
investors to actively participate in this market and take
42 MMarch T2014
ONEY ODAY
Those who attempt to anticipate price

changes and, through buying and selling,
make profits.
a stake in its growth. Needless to say this needs support
of the policymakers and strengthening of the regulatory system. We are enthused with FMCs setting up of the
Technology Advisory Committee and the Risk
Management Group where a variety of far-reaching
market reforms and market development initiatives are
being discussed. Passing of the FCRA Bill will pave way
for major reforms in the commodity derivatives market.
It will also help the country to take its rightful place in
the global commodity markets as a price giver, being
one of the major markets, as also the largest producer
and consumer of agricultural commodities.
MT
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COMMODITIES |
OUTLOOK 2014
2014
RIC
URME
Mustar
Seed d
PALMOLEIN
JEERA
SOYA
PALMOLEIN
SOYA
IN THE
DUMPS
Some commodities did not do well in 2013. Lets see
whats in store for investors in 2014 | By Rahul Oberoi
n our previous issue, we looked at commodities

that gave positive returns in 2013. Now, we bring
you the outlook for those that did not perform
well.
Guar Gum: Futures trading in guar gum and guar seed
resumed in May 2013. It was suspended in March 2012
to control price volatility. Guar gum prices fell 57% to
Rs 11,635 per quintal between May 14 and December 31
last year.
Prospects of higher guar seed availability dampened guar gum prices. The output was estimated at 2.25
million tonnes compared to 1.5 million tonnes in 2012.
Demand from Europe and the US was also sluggish,
says DK Aggarwal, CMD, SMC Investments and
44 MMarch T2014
ONEY ODAY
Advisors.
High prices and good monsoon have ensured a rise
in acreage this year. Experts say guar seed production
is estimated to be 28-30 lakh tonnes in 2013-14. Add to
this the carryover stock of six lakh tonnes and we are
staring at a situation of excess supply this year as well.
On January 31, guar gum was trading at Rs 13,788
per quintal on the National Commodity and Derivatives
Exchange (NCDEX). Aggarwal is bullish for 2014. At
Guar International 2013, an event organised by the
NCDEX, participants were bullish on guars long-term
prospects due to fresh demand from China, Argentina
and West Asia. Forward contracts hint at price stability
in the coming months. Guar gum futures are expected
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Guar Seed
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Guar Gum
Rs 9,200
14 May 13
OUTLOOK
Rs 5,033
31 Jan 14
Rs 7,200
31 Aug 13
Rs 27,115
14 May 13
Rs 13,788
31 Jan 14
OUTLOOK
Rs 19,621
31 Aug 13
Return (in %)
Return (in %)
-6.96
-1.47
-52.65*
-4.88
-3.89
3 Months
6 Months
in 2013
3 Months
6 Months
Comfortable supply may keep guar prices under check during the
most part of 2014. However, in the second half of 2014, prices will
take cues from sowing progress and the monsoon.
-57.09*
in 2013
Demand from China, Argentina and West Asia will keep prices high.
Forward contracts hint at price stability in the coming months.
Futures are expected to find support above Rs 12,000 a quintal.
Prices are in Rs/Quintal; * since 14 May 2013; Data as on 31 January 2014; Data source: NCDEX
57%
was the fall in guar gum

prices in 2013. The
reason was prospects of
higher guar seed output
to find support above Rs 12,000.

Guar seed futures will possibly
remain above 4,000. Guar seed may
touch Rs 7,000 while Rs 19,000 is a
key resistance for guar gum
futures.
Guar Seed: Guar seed fell 52.65%
to Rs 4,356 per quintal between
May 14 and December 31 last year.
Guar seed production rose sharply
in 2012-13 as farmers planted more
due to high returns in the preceding
season. However, demand, mainly
from oil and gas exploration companies, slowed. This pushed up inventory. Good monsoon has boosted
yields in the 2013-14 season also,
says Vedika Narvekar, chief manager, agri commodities, Angel
Commodities Broking.
Before investing, look at the
demand and supply situation.
Monsoon is a key determinant of
output. One also needs to track the
stock levels as the shelf life of guar
seed is more than 10 years. India
accounts for more than 80% global
guar gum exports. High prices trigger a shift to alternatives and
impact exports.
Market experts expect 2.5-2.7

million tonnes production in 201314. Exports this year have been
higher following demand from international food and oil exploration
companies. Around 50% guar gum
exports are to the oil sector. The
Agricultural and Processed Food
Products Export Development
Authority says exports during
April-October 2013-14 stood at 3.33
lakh tonnes. In 2014, the export
scenario will largely depend upon
prices, says Narvekar.
On January 31 this year, guar
seed was trading 15% higher than
the
December
31
level.
Comfortable supply may keep guar
prices under check during most of
2014. However, in the second half of
year, prices will take cues from sowing progress and the monsoon.
NCDEX guar seed futures may
trade in the range of Rs 4,000-8,200
per quintal in 2014, says Narvekar.
Chana: Chana alias chickpea fell
25% to Rs 2,938 per quintal in 2013.
The price was as high as Rs 5,000
per quintal in July 2012.
Prices fell after traders realised
WorldMags.net
MONEY TODAY
March 2014
45
WorldMags.net
COMMODITIES |
OUTLOOK 2014
Chana
Refined Soy Oil
Rs 3,938
1 Jan 13
Rs 710
1 Jan 13
Rs 2,900
31 Jan 13
OUTLOOK
OUTLOOK
Rs 659
1 Aug 13
Rs 2,817
1 Aug 13
Rs 678
31 Jan 13
Return (in %)
Return (in %)
-9.40
2.87
-4.07
-5.51
2.96
-25.38
3 Months
6 Months
in 2013
3 Months
6 Months
in 2013
The market sentiment will remain bearish in the first half of the
season with prices falling below Rs 610 per 10 kg. But the El nino
weather pattern and lower area under kharif oilseeds may
support prices at lower levels.
rospects of
higher guar seed
availability dampened
guar gum prices. The
output was estimated
at 2.25 million tonnes
compared to 1.5 million tonnes in 2012.
DK AGGARWAL
Chairman and Managing Director,
SMC Investments and Advisors
46 MMarch T2014
ONEY ODAY
If production remains close to 72 lakh million tonnes and export

restrictions stay, availability will be comfortable. Hence, prices will
remain near or slightly above Rs 3,100 per quintal in March-June.
that stocks were comfortable and

area under the crop was rising due
to high minimum support price or
MSP. India started marketing year
2013-14 with a stock of 2.6 lakh million tonnes. Production was 71.8
lakh million tonnes. Hence, availability at the start of the marketing
year (March 2013) was well above
74 lakh million tonnes, as against
the annual consumption of 70 lakh
million tonnes, says Navneet
Damani, associate vice president,
commodity research, Motilal Oswal
Commodities Broker.
Before investing, look at the
governments import/export policies. For instance, export of pulses
has been banned since 2006. Given
the current abundance, the industry is lobbying for a change. If it
happens, prices may rise. Damani
says India has the potential to
export three-four lakh million
tonnes chana in 2014.
The MSP of Rs 3,100 per quintal
is quite remunerative. According to
the agriculture ministry data, the
area under rabi pulses in the cur-
rent year was 156.17 lakh hectares

for the week ended 17 January 2014
compared to 149.29 lakh hectares
the same time last year. Chana is
the largest crop in this segment.
One must also keep an eye on
reports of damage to the standing
crop in parts of Madhya Pradesh
and Rajasthan in the second half of
January due to unseasonal rain.
If production remains close to
72 lakh million tonnes and export
restrictions stay, availability will be
comfortable. Hence, prices will
remain near or slightly above Rs
3,100 per quintal in March-June
when government agencies procure
the
produce
from
farmers.
Thereafter, they will plunge to Rs
2,700-3,000 per quintal until sowing
for the next season resumes in
October, says Damani.
Mustard seed: Prices fell 15% in
2013. The fall started in the beginning of 2013 after China banned
Indian mustard meal as some consignments were found to be contaminated, says Rohit Gadia, founder
and chief executive officer,
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Sugar
Mustard Seed
Rs 4,264
1 Jan 13
OUTLOOK
Rs 3,540
1 Jan 13
Rs 3,500
1 Jun 13
Rs 3460
31 Jan 14
Return (in %)
OUTLOOK
Rs 3,310
1 Aug 13
Rs 2,991
31 Jan 14
Return (in %)
-9.66
2.26
-14.40
-7.65
-9.64
-11.55
3 Months
6 Months
in 2013
3 Month
6 Month
in 2013
Expectation of higher yield this year will also put pressure on

prices. After this we can expect prices to recover and test Rs
3,550 and Rs 3,810 per quintal in another four-six months.
The market sentiment will remain bearish in the first half of the
season with prices falling below Rs 610 per 10 kg.
Price of refined soy oil in Rs/10kg; Prices of chana, mustard seed and sugar in Rs/Quintal; Data as on 31 January 2014; Data Source: NCDEX
omfortable supply may keep

guar prices under
check in 2014.
However, from June,
prices will take cues
from sowing progress
and the monsoon.
VEDIKA NARVEKAR
Chief Manager, Agri Commodities,
Angel Commodities Broking
CapitalVia Global Research.

In addition, the rise in the MSP
by Rs 50 per quintal to Rs 3,050 in
the middle of 2013 encouraged more
farmers to sow the crop. Prices continued to be under pressure due to
expectation of higher yield.
On January 31, mustard seed
was trading at Rs 3,472 per quintal.
Technically, prices are likely to test
the Rs 3,020 per quintal level in the
next two-three months. Expectation
of higher yield this year will also
put pressure on prices. After this
we can expect prices to recover and
test Rs 3,550 and Rs 3,810 per quintal in another four-six months. Rs
3,810 per quintal is a good resistance level. If prices remain above
this, they may test Rs 4,050 per
quintal till December 2014, says
Gadia.
Production in 2013 was 70 lakh
million tonnes as against 68 lakh
million tonnes in 2012. Domestic
consumption was 69.75 lakh million
tonnes as against 69 lakh million
tonnes in 2012.
Production is expected to rise
11% to 78 lakh tonnes due to

favourable climate, says The
Mustard Research and Promotion
Consortium. Acreage is expected to
be 71 lakh hectares as against 63
lakh hectares last year.
Jeera: India is the worlds largest
producer, consumer and exporter of
jeera. This makes prices vulnerable
to changes in local demand and
supply. In 2013, for instance, excess
supply pulled down prices by 13.5%.
Experts are bearish for 2014 as
well. Sudha Acharya, senior
research analyst, pulses and spices,
Kotak Commodities, says, The
jeera market has been facing a glut
for three years. High stocks at the
start of 2013 and higher production
later in the year resulted in a 12%
rise in supply year-on-year. We continue to be bearish on the spice.
Futures prices are expected to test
Rs 10,650 per quintal on the lower
end. On January 31, jeera was
trading at Rs 12,431 per quintal.
In 2014, we expect supply to
rise by 17% to 6.7 lakh tonnes and
demand by 7%, resulting in high
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MONEY TODAY
March 2014
47
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COMMODITIES |
OUTLOOK 2014
Gur
Rs 1,079
1 Jan 13
Turmeric
Rs 1,171
1 Aug 13
OUTLOOK
Rs 6,398
31 Jan 14
Rs 5,680
1 Jan 13
Rs 1,054
31 Jan 14
OUTLOOK
Rs 4,800
1 Oct 13
Return (in %)
Return (in %)
-9.51
-9.95
-3.05
31.91
18.27
3 Months
6 Months
in 2013
3 Months
6 Months
Taking into account higher production prospects, prices are likely

to remain weak. But probable rise in demand due to lower prices
may limit any sharp fall.
ow production in
Syria and
Turkey due to political
tensions increased
demand for Indian
jeera. We expect
2014-15 exports to
fall by 5% YoY.
SUDHA ACHARYA
Senior Research Analyst, Pulses and
Spices, Kotak Commodities
48 MMarch T2014
ONEY ODAY
-0.28
in 2013
Turmeric prices are expected to trade higher in 2014 and touch Rs

8,000-8,500 per quintal. The major factor that will support prices
is expectation of lower output this year.
stocks, says Acharya.

Experts say 2013 exports are
estimated to touch an all-time high
of 1.13 lakh tonnes as compared to
0.77 lakh tonnes in 2012, a rise of
47% year-on-year. The reasons for
high exports are fall in prices and
low supply from other countries.
The 12% rupee fall last year also
gave an edge to exporters.
Low production in Syria and
Turkey due to political tensions
also increased demand for Indian
jeera. We expect 2014-15 exports to
fall by 5% year-on-year, says
Acharya.
Sugar: Prices fell 11% on the
NCDEX in 2013. The main reason
was the demand-supply mismatch.
Fundamentals suggest that the
bearish trend will continue, says
Aurobinda Prasad, chief research
analyst,
commodities,
Karvy
Comtrade. On 31 December 2013,
sugar was trading at Rs 3,131 per
quintal as against Rs 3,540 per
quintal at the start of the year.
Experts say supply was high in
2012-13 and led to high carryover

stocks. Thats why prices fell in
spite of subdued production in
2013-14.
Global sugar production was
174.85 million tonnes, slightly higher than the previous years figure.
Brazil, the worlds largest sugar
producer and exporter, managed to
increase production by 4.66% to
40.40 million tonnes.
Besides, the industry remained
crippled by pricing and other regulations, and expressed its inability
to pay cane farmers the price set by
the government. In response, the
government promised them Rs
7,600 crore interest-free loans to
pay farmers and financial help for
exporting up to 40 lakh tonnes raw
sugar for two years. However,
Prasad of Karvy Comtrade says,
We believe that these two steps are
not sufficient for the Indian sugar
industry.
In 2012-13, imports were 1.8
million tonnes. The US Department
of Agriculture (USDA) has predict-
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Jeera
Rs
Maize
14,704
Rs 1.450
1 Jan 13
1 Jan 13
Rs 12,508
31 Jan 14
OUTLOOK
Rs
13,656
Rs 1,240
31 Jan 14
Rs 1,605
1 Oct 13
OUTLOOK
1 Jul 13
Return (in %)
-4.09
3 Months
Return (in %)
-7.83
-13.54
6 Months
in 2013
-12.57
3 Months
Futures prices are expected to test Rs 10,650 per quintal on the

lower end due to higher supply. The market has been facing a glut
for the last three years.
-15.07
-11.27
6 Months
in 2013
Prices are likely to remain under pressure till June 2014, mainly
because of rise in production, lower exports and sustained local
consumption.
Price of gur in Rs/40kg; Prices of turmeric, jeera and maize in Rs/Quintal; Data as on 31 January 2014; Data Source: NCDEX
entiments will
remain weak in
the first half of the season with refined soy oil
prices falling below Rs
610 per 10 kg. They
may end the year at Rs
630.
INDRANIL MUKHERJEE
Senior Manager, Retail Research,
Religare Broking
ed a similar figure for 2013-14.

According to secondary sources,
India will subsidise shipments of
raw sugar to ease the domestic
financial crisis and help millers
clear arrears of about Rs 2,600
crore to farmers. Food Minister KV
Thomas has said that the government will give incentives for exporting four million tonnes raw sugar
over the next two years. Therefore,
according to the USDA estimates,
raw sugar exports in 2013-14 may
rise 295% to 0.75 million tonnes.
Total exports may rise 61% to two
million tonnes compared to last
years 1.2 million tonnes due to rise
in demand for ethanol globally. The
major export destinations may be
Asia and the Middle East.
Prasad is bearish for 2014.
Prices may remain low in at least
the first half of 2014. Consumption
will increase after June, resulting in
a fall in stocks, causing prices to
gradually rise. Our technical
research suggests a fall to Rs 2,500
per quintal. On January 31, sugar
was trading at Rs 2,987 per quintal.

Maize: Prices were range-bound in
January-April 2013 but fell after a
rise in output and weak demand for
the Indian produce in export markets. Prices fell 11% to Rs 1,290 per
quintal during the year. Globally,
too, prices were under pressure.
In 2014, high production and
strengthening dollar will put pressure on prices. But bad weather in
some countries may increase
demand and support prices in the
coming months, says Vibhu
Ratandhara, assistant vice president, commodity, Bonanza Portfolio.
According to trade estimates,
maize exports for marketing season
October-September 2013-14 are
expected to be 30% lower than the
last years figure, mainly because of
cheaper supplies from Brazil,
Argentina and the US.
India, Asias largest exporter,
cultivates maize in both summer
and winter, but most of the output is
in the summer season. According to
traders estimates, Indias maize
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MONEY TODAY
March 2014
49
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COMMODITIES |
OUTLOOK 2014
Jaggery prices
fell because of
better production
prospects amid
higher diversion
of cane for
making gur due
to delay in cane
crushing
4%
was the fall in refined soy

oil prices in 2013 due to
increase in acreage
50 MMarch T2014
ONEY ODAY
output will be 22.5 million tonnes in

2013-14 compared with 22.23 million tonnes in the previous year.
Maize prices are likely to
remain under pressure till June
2014, mainly because of rise in production, lower exports and sustained local consumption. Maize
futures on the NCDEX are expected
to fall towards Rs 1,115-1,100 per
quintal. However, after June, monsoon and global weather patterns
will give direction to prices. On
January 31, maize was trading at
Rs 1,240 per quintal.
Refined Soy Oil: Refined soy oil
prices fell 4% to Rs 687 per 10 kg in
2013. Indranil Mukherjee, senior
manager, retail research, Religare
Broking, says, Soy oil markets
opened on a firm note in the first
quarter of 2013 due to tight supply.
However, from June, prices dipped
due to 15% increase in acreage.
Experts say Indias soy oil production in 2013-14 is likely to be
around 17 lakh million tonnes,
slightly lower than the last years
figure. However, imports will be
higher at 12.3 lakh million tonnes
compared to 10.86 lakh million
tonnes last year. The domestic consumption is expected to rise by
50,000 tonnes to 30 lakh million
tonnes. The current years carryover stocks will fall to 1.55 lakh million tonnes from 2.26 lakh million
tonnes last year. But global soy oil
production and consumption will
rise proportionately, keeping the
carryover stock unchanged.
The market sentiment will
remain bearish in the first half of
the season with prices falling below
Rs 610 per 10 kg. But the El nino
pattern, predicted by weather analysts, and lower area under kharif
oilseeds may give support at lower
levels. The commodity may end the
year around Rs 630 per 10 kg, says
Mukherjee.
Gur: Prices fell 3% to Rs 1,050 per
40 kg on account of higher production. CP Krishnan, whole-time

director, Geojit Comtrade, says,
Jaggery prices fell due to better
production prospects amid higher
diversion of cane for manufacturing
gur due to delay in cane crushing.
In the season ended September
2013, 50-55 million tonnes cane was
crushed by gur units in Uttar
Pradesh. The states total cane output was 140 million tonnes.
Krishnan is bearish for 2014.
Indias gur production for 2013-14
is projected to be 7.24 million
tonnes compared to 5.8 million
tonnes in the previous year. And
consumption is estimated to be 6.5
million tonnes. But probable rise in
demand due to lower prices may
prevent a sharp fall.
Turmeric: Turmeric prices fell
0.28% to Rs 5,663 per quintal in
2013 due to high carry-over stocks
and good output. In 2013, the output was 75 lakh bags while carryover stocks were 45 lakh bags, taking the total supply to 120 lakh bags
as against the yearly consumption
of 74 lakh bags, says Kunal Shah,
head, commodity research, Nirmal
Bang Commodities.
India is one of the largest
exporters of the spice. According to
market experts, in 2013, the country exported 54 lakh bags. This
demand is likely to stay firm.
Turmeric prices are expected
to trade higher in 2014 and touch Rs
8,000-8,500 per quintal. The major
factor that will support prices is
expectation of lower output this
year. Crop damage in the key producing regions of Nizamabad due to
excess rainfall has already reduced
supply by 15-20% this year. Another
factor that could affect supply is the
quality
of
the
crop
from
Nizamabad, says Shah.
(For our earlier story, see link
bit.ly/1d1IlQa)
MT
@iamrahuloberoi
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INVESTING |
T EC H N O LO GY F U N D S
BEING
TECH
SAVVY
Investors made huge money from tech
funds last year. The returns may be
modest this year
| By Renu Yadav
ast year was disappointing

for
investors.
Markets delivered paltry
gains. Had you invested
in an index or exchangetraded fund based on the Bombay
Stock Exchange (BSE) Sensex, you
would have earned just 9%, equal to
returns from a one-year bank fixed
deposit. Given the kind of risk
involved in buying equities, such
returns, to say the least, are disappointing.
But those who invested in one
sector, technology, were better off
than the rest. The S&P BSE IT
index returned an impressive
52 MMarch T2014
ONEY ODAY
59.78% in 2013. This was reflected

in the performance of technology
funds as well. The category delivered a return of 52.42% on an average. Had you invested in the best
performing technology fund for the
year, ICICI Prudential Technology
Fund, Rs 100 invested at the start of
2013 would have grown to Rs 163 by
the end of the year. The second best
performer, SBI IT Fund, delivered a
54.50% return. Even the worst performer, DSPBR Technology.com
Fund, returned as much as 41%.
DID YOU MISS THE BUS?

Investors dont have to fret, as the
Illustratio
n: PRAG
ATI
rally is not over yet. The Infosys

stock, the top holding (30% allocation on an average) of technology
funds, rose 50.33% in 2013. TCS, the
second-biggest holding of four out
of five technology funds (ICICI
Prudential Technology Fund doesnt have TCS) did even better. It
returned 73% last year. HCL
Technologies rose 104%.
However, experts are not
expecting a 2013-like run this year.
Strengthening of global economies
and depreciation of the rupee
against the dollar were the main
drivers of technology stocks in
2013. Experts say the 2013-like
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rupee depreciation is unlikely in
2014, though improved earnings of
companies will help their stocks
maintain momentum.
In 2014, say experts, all eyes
will be on results. We expect that
earnings momentum will remain
strong in the coming quarters,
which will drive stock performance.
We expect 2014 to be a better year
than 2013. Top five IT companies
(Wipro, Infosys, TCS, Cognizant
and HCL) grew revenues by 14% in
2013. In 2014, we expect improve-
of equities & portfolio manager,

Franklin Templeton InvestmentsIndia.
The demand is strong in the
new technology segments of social,
mobility, analytics and cloud
(SMAC). As per a report by
Deutsche Bank, the US, along with
Asian companies, is likely to be an
early spender on new SMAC technology.
For Europe, too, the worst
seems to be over, as its economy
has stopped contracting. European
governments and companies, due to

the financial crisis, are under pressure to cut costs and improve profitability. As a result, their protectionism is giving way to increase in
offshoring. Therefore, IT companies
are scouting for opportunities in
European markets.
Indian companies are also benefiting from rise in market share in
Europe. The outsourcing trend is
gathering momentum and unlike
earlier when players focused on different themes or a few countries,
Valuation Gap
Daily P/E and daily 5-year average P/E of CNX IT index show the sector is overvalued
29.6
31.04
1 Feb07
25
6 Jan11
20.7
5 Feb14
P/E
9.91
P/E (5-year average)
15 Dec08
we are seeing Indian IT companies

make a pan-European effort to get
large outsourcing deals says
Anand.
ment in the global economy, particularly in developed economies,

which should augur well for the
demand environment, says Dipesh
Mehta, analyst, IT & Media, SBICAP
Securities.
GLOBAL OPPORTUNITIES
The biggest plus for IT companies
as they plan for 2014 is improving
US economy and profitability of
companies. The US accounts for
60% revenue of the big IT companies. The IT sector had come
under pressure after 2008 as clients
cut discretionary spending. This
has changed in the last year or so,
says Anand Radhakrishnan, head
RUPEE DEPRECIATION
The passage of the

US Immigration Bill
could result in escalation of labour
costs and reduction
in profitability of
IT firms
ANAND RADHAKRISHNAN|
Head of Equities & Portfolio
Manager, Franklin Templeton
Investments-India
Rupee fell 13% in 2013 and touched

an all-time low of Rs 68.36 against
the dollar in August 2013. It has stabilised at 60-62 levels since 2013end, which is still 40% below the
level it was in mid-2011 (45-54 levels). As IT companies earn most of
their revenue from exports, any
rupee depreciation adds to their
bottom lines. Even if the rupee
doesnt depreciate further from the
current levels, it has significantly
WorldMags.net
MONEY TODAY
March 2014
53
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INVESTING |
T EC H N O LO GY F U N D S
Not in Tandem
CNX IT movement vis-a -vis Re/Dollar rate
174.1
136.7
116.9
141.8
4 Feb14
102.5
100
6 Jan11
2 Jan07
CNX IT
36.27
Rs/US dollar
3 Mar09
Graphs rebased to 100
Tech Funds Year of Grace

All IT funds gave stupendous returns in 2013
Birla SL New Millennium
2013
5 Yrs
3 Yrs
50.25
24.07
10.43
DSPBR Technology.com
2013
5 Yrs
3 Yrs
41.44
24.97
8.50
Franklin Infotech
2013
5 Yrs
3 Yrs
53.34
32.59
12.58
ICICI Pru Technology

2013
5 Yrs
3 Yrs
39.19
19.08
SBI IT
2013
5 Yrs
3 Yrs
15.33
35.37
62.55
54.50
Data as on February 4; Source: Accord Fintech, returns in %
The five technology funds

delivered a return of 52.42% on
an average in the previous
calendar year
improved the competitiveness of Indian IT

companies.
This advantage may vanish if the rupee
falls significantly from the current level.
However, the probability of this happening is
very low at present.
POSSIBLE THREATS IN NEAR TERM

US Immigration Bill: The Bill is a result of
increased protectionism of the US government to support its economy. At present, it is
the biggest threat to the Indian technology
sector, as it will force IT companies to hire
more locally. This will put pressure on their
margins. The passage of the US
Immigration Bill (in its current form) could
result in escalation of labour costs and
reduction in profitability of Indian IT companies says Anand.
Valuations: After a great run last year, valuations are not cheap. The price to earnings,
or PE, ratio of the CNX IT was around 23 on
February 5, higher than the five-year average of 21. There are not many cheap stocks
within the sector any more. Not just the
frontline stocks, even the second-line stocks
have run up quite a bit. But if growth keeps
surprising on the upside, valuations will continue to remain modest, says Anand
Radhakrishnan.
KEEP EXPECTATIONS REASONABLE

Investors with a medium- to long-term
horizon can enter the sector but with reasonable expectations. Those who dont
have the time and ability to invest directly
can take the mutual fund route. There are
five technology funds (see Tech Funds
Year of Grace) Like any sector fund,
investors should use technology funds as a
topping to a core portfolio for higher
returns. Investors who like the risk/return
equation of the sector but do not have time
to construct a portfolio and manage it will
also find such funds appealing says
Anand.
We would advise investors to use these
funds to complement the core portfolio.
Concentration of funds in a particular sector
is risky. Therefore, investors who are
comfortable with the risk-return profile of
these instruments can allocate 10-15% funds
to them.
MT
@renu2014
54 MMarch T2014
ONEY ODAY
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MUTUAL FUNDS |
PROPOSED CHANGES
WAITING FOR A
SHAKE-UP
New proposals promise to improve mutual fund offerings,

but critics think otherwise | By Dipak Mondal
he Securities and Exchange Board of India

(Sebi) has proposed measures to make
mutual funds more popular. These include
tax incentives, more disclosures and high
entry barriers.
Though these are just proposals and their implementation will require the government to make changes
in tax laws, the mutual fund industry feels that Sebi is
moving in the right direction. However, proposals for
seed capital and increasing the minimum net worth
have not gone down well with the smaller fund houses.
High net worth: Sebi has proposed that the minimum
56 MMarch T2014
ONEY ODAY
net worth of an asset management company (AMC) be

increased from Rs 10 crore to Rs 50 crore. It had initially proposed an increase to Rs 100 crore.
If you are a serious player and want to take mutual funds to smaller cities, you need presence in those
places. You cannot do this unless you have invested a
certain amount in the business, says Nimesh Shah,
managing director, ICICI Prudential Mutual Fund. ICICI
Prudential Mutual Fund had a net worth of Rs 186 crore
as on 31 March 2013.
The proposal has been opposed by the smaller fund
houses.
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I dont know what is the purpose of such a high
entry barrier. They probably want only the big players
in the industry, says Waqar Naqvi, chief executive officer, Taurus Mutual Fund. Taurus Mutual Fund had a
net worth of Rs 13 crore on 31 March 2013.
We are very much in the business and there has to
be a way out of this. We are waiting for the fine print,
says Jimmy Patel, CEO, Quantum Mutual Fund.
Quantum has a net worth of just Rs 25.64 crore.
Introduction of seed capital: AMCs will be required to
invest 1% of the amount raised or Rs 50 lakh, whichever is less, in all open-ended schemes. The idea is that if
the AMCs money is at stake, it will act more responsibly, thus increasing investor confidence in its schemes.
However, Jimmy Patel of Quantum Mutual Fund
says that these attempts will be short-lived unless
mutual funds improve performance, lower cost and
evolve alternative distribution channels.
80 C, while RGESS investments get an additional deduction of up to Rs 25,000.

Globally, it has been seen that people come to the
stock market only when pension money is invested or
there are tax benefits. So, in a sense, this is a right
move, says Shah.
The regulator also plans to exempt merger of equity mutual funds from capital gains tax. At present, if a
person has invested in a fund for less than a year and
the fund is merged with another, he is liable to pay a
short-term capital gains tax of 15%.
These changes are subject to government approval.
More disclosures: When it comes to mutual funds, no
amount of disclosures seems to be enough. Sebi now
wants mutual funds to disclose assets under management, or AUM, garnered from different categories-equity schemes, debt schemes, etc. It also wants them
to disclose how much they have collected from cities
Out of the Big League

Net worth of some of the smaller fund houses
MUTUAL FUNDS
NET WORTH (Rs crore)
17.49
Baroda Pioneer Mutual Fund

BOI AXA Mutual Fund
ING Mutual Fund
Indiabulls Mutual Fund
Principal PNB Mutual Fund
Quantum Mutual Fund
Religare Invesco Mutual Fund
Taurus Mutual Fund
PPFAS Mutual Fund
17.49
22.91
13.4
14.18
25.74
36.46
12.64
14.53
* Figures as on 31 March 2013, Source: Company websites
Some experts say that keeping out close-ended

funds from the ambit of seed capital requirement will
serve little purpose as AMCs are now on an overdrive to
launch such funds.
More tax incentives: Sebi has also proposed an additional tax exemption under Section 80C or increase in
the Rs 1 lakh limit under this Section to Rs 2 lakh for
investments in mutual fund-linked retirement plans,
equity-linked savings schemes (ELSS) and Rajiv
Gandhi Equity Savings Scheme (RGESS).
At present, investments in ELSS are eligible for
income tax deduction up to Rs 1 lakh under Section
other than the top 15, how much their sponsors have
contributed and how much associates have contributed.
EPF and PSU money: Sebi wants 15% of this to come
to mutual funds. It also wants EPFO members with
basic salary of more than Rs 6,500 to be given the option
of investing in mutual fund schemes.
Another proposal is to allow central public sector
enterprises to invest surplus funds in Sebi-registered
mutual funds. At present, these units can invest only in
public sector mutual funds. These measures also
require government approval.
MT
@dipdown80
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March 2014
57
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MUTUAL FUNDS |
I N D U ST RY P E R FO R M A N C E
MUTUAL
DISLIKE
Why investors are shunning mutual funds | By Mahesh Nayak
ipul Sarvaiya is a 53-year-old distributor of financial products,

based in Uran, 65 km from
Mumbai. Lately, he has been
struggling to convince clients to
hold on to their mutual fund units. Since
October last year, when the equity market
started to rally, many of Sarvaiyas clients
have moved out of mutual funds. For the
past few years investors have not made
money on mutual funds. With the market
touching new highs, they were able to recover their cost and, therefore, many exited by
selling their funds, says Sarvaiya who has
been selling funds for the past 25 years.
People who have moved out have a simple argumentthey would have earned more
had they kept the same money
in fixed deposits. Today no
fresh investments are coming into mutual funds.
They go for fixed deposits
and bonds.
Indeed, in the past
one year, up to 30
November 2013, the
equity assets under
management (AUM)
of the entire mutual
fund industry has fallen by 10%, even though
the Sensex went up 7.5% (See Moving Away).
Why? The track record of mutual funds
in India does not inspire confidence. Most
have not delivered the kind of returns that
would convince investors to stay put for the
T
64 MMarch 2014
ONEY ODAY
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MOVING AWAY
The equity assets under management of fund houses have been falling, as are the equity
folioswhich shows investors are withdrawing from mutual funds
2010 2009
30.31
85.89
2011
83.49
2012
82.02
2013
79.33
75.45
Equity AUM (Figures are % of total AUM)
Folios (in million)
Source: AMFI
MIXED BAG
The top 11 fund houses hold 86% of the total equity assets under management of the industry,
but many of these have struggled to give substantial returns over their benchmarks
Fund Fouse
AUM (in Rs crore)
NOVEMBER 13
ICICI MF
IDFC MF
Birla Sun Life MF
HDFC MF
Franklin Templeton
Kotak MF
DSPBR MF
SBI MF
TATA MF
UTI MF
Reliance MF
16,598.96
5,688.12
10,057.67
31,082.57
13,863.31
2,360.56
9,262.39
12,917.44
3,338.09
17,818.04
22,743.25
Beats Funds Stated

Benchmark (in %)
Y- O-Y
(% CHANGE)
1-YR
0.10
-2.57
-4.61
-7.37
-4.59
-16.78
-26.46
-13.65
-18.86
-11.80
-13.42
100.0
94.3
79.5
58.0
55.4
36.2
29.7
28.3
26.7
25.6
17.8
3-YR
100.0
97.3
73.5
59.0
93.2
48.0
63.3
76.1
61.1
69.6
54.4
Excluded: Index funds, Inst. plans, ETFs; Data as on November 2013; Source: Morningstar
long term. The equity AUM of

Indias top 11 mutual funds,
accounting for 86% of the total
industrys equity AUM, have struggled to give substantial returns over
their respective benchmarksthe
BSE Sensex or the NSE Nifty in
most cases.
According to Morningstar, an
independent mutual fund data
provider, in the past year, only two
mutual fundsICICI Prudential
Mutual Fund and IDFC Mutual

Fundhave given good returns.
Almost the entire equity AUM managed by ICICI Prudential Mutual
Fund and IDFC Mutual Fund beat
the benchmark. But, in the same
period, the other nine leading mutual funds, including biggies such as
Reliance Mutual Fund, HDFC
Mutual Fund and Birla Sun Life
Mutual Fund, have seen their equity
AUMs underperform, most of them
unable to beat the benchmark even

by half (See Mixed Bag). Reliance
Mutual Fund fared the worst, with
only 17.8 per cent of its equity AUM
beating the benchmark.
Many fund managers have
blamed it on the skewed market,
which favours select stocks. The
phenomenon is seen across the
globe. Passive investment is in
favour and this is the reason many
active funds have underperformed,
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March 2014
65
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MUTUAL FUNDS |
I N D U ST RY P E R FO R M A N C E
says Kenneth Andrade, head of

investments, IDFC Mutual Fund,
among the top performers.
Fund managers attribute the
trend to the underperformance of
certain key sectors such as infrastructure and energy as well as the
lack of participation of mid-cap and
small-cap stocks in the recent rally.
Most fund managers, then,
appear to have got it all wrong. For
instance, Indias largest mutual
fund in terms of AUM, HDFC Mutual
Fund had only 58% of its equity
AUM beating the benchmark. The
underperformance is due to the
revamp of its portfolio by moving
out of overvalued stocks, especially
consumer staples, pharmaceutical
and IT, which despite overvaluation
remained in limelight over the last
year, said a source at the fund
house on condition of anonymity.
This also impacted the funds
three-year performance with only
59% of equity AUM beating the
benchmark. Focus on short-term
performance, emotional bias in
investment decisions and most
importantly, no investment philosophy, has been the reason why mutual funds have been underperforming even their benchmarks, says
Vikas Gupta, executive VP,
Arthveda, a Mumbai-based fund
management firm. If you look at
large-cap funds in the past five
years, only seven of the 49 have
beaten the benchmark.
Star ratings of mutual funds by
various rating agencies have also
proved unreliable. These ratings
are based on a funds historical
risk-adjusted performance compared with other funds in the same
category. The star ratings and relative returns have to go. These have
been deceptive and investors have
been taken for a ride. We have
decided to focus on absolute
returns and only sell funds to
investors that have performed withT
66 MMarch 2014
ONEY ODAY
RELATIVE RETURNS
FROM MUTUAL FUND
INVESTMENTS
SHOULD BE THE REAL
MIRROR OF THEIR
PERFORMANCE
NIMESH SHAH
Managing Director,
ICICI Prudential Mutual Fund
out actually considering star ratings, says Rajiv Bajaj, vice chairman and CEO, Bajaj Capital, a
mutual fund distributor.
He is doing it by concentrating
on capital protection funds that
focus on protecting the invested
capital at any given point. The primary focus of investors is protection of their capital, which many
funds have not been able to ensure.
Investors have lost confidence and
are moving out of the market.
Bajaj seems confident that capital protection funds will give
investors 100-200 basis points more
than savings deposit rates of 4%.
Many in the mutual fund industry think it unfair to compare relative
and
absolute
returns.
Everyone thinks mutual fund

returns should be 2% more than
fixed deposit returns. This is not
possible. Mutual funds invest in
markets, which are volatile, and,
therefore, relative returns should
be the real mirror of performance,
says Nimesh Shah, MD, ICICI
Prudential Mutual Fund.
He feels his funds have outperformed peers because of the strong
processes followed at the fund
house. It takes time to execute any
change. At least 1,000 days are
required to get the set result, he
adds. None of my fund managers
manages more than Rs 5,000 crore
of AUM. More importantly, we have
a culture where fund managers are
encouraged to develop their individual styles, but at all times, these
have to be within the overall investment framework.
The challenging times are a
wake-up call for the mutual fund
industry. It was a cruel year for
actively managed funds, but the fact
is only 150 of 750 funds are investment grade. The time has come for
the industry to focus on solutions
rather than products, says Sanjay
Sinha, Founder and CEO, Citrus
Advisors, a Mumbai-based financial
advisory firm. The solution is packages that help investors attain
financial goals.
Some funds have already taken
the route. Puneet Chaddha, CEO,
HSBC Mutual Fund, concurs. As a
fund house, we have taken a conscious decision to offer solutions,
rather than just products, he says.
Mutual funds will have to adjust
to this new reality. Going forward
giving healthy returns and selling
solutions rather than products will
be the mantra to survive and grow
in the industry, which seems to have
a large pool of players, but is actually dominated by a few.
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INVESTING |
MUTUAL FUNDS
Zeroing
in on the
Here are some tips to choose a

mutual fund scheme
| By Rahul Oberoi
Best
ndians have the option of investing in more than

5,500 mutual fund schemes. These include 300 in
the equity category alone. Within these, the person can choose exposure to different avenues
such as debt, equity and gold. Then there are dif-
ferent investing styles that individual fund managers

follow and which impact the returns their schemes give.
Thats why finding the right fund is not the easiest of
jobs. We discuss a few pointers investors can use to
select mutual fund schemes.
Investment objective
Usually, people invest with an objective. The time

period to meet the aim may vary from a few
months to years. For instance, saving for a downpayment for a car is a short-term goal. Working
out finances for retirement and childrens education and marriage is a long-term goal.
Typically, we look at equity funds for long-term objectives and
money market and debt funds for short-term goals. A lot
depends upon the investors risk appetite. Hence, approach
your financial planner to identify your objectives and link them
with your risk appetite. After this, find out about the funds
what type of fund it is (equity, debt, hybrid, money market) and
how and where it will invest your money? says Harshad
Chetanwala, head, customer delight, Quantum Asset
Management Company.
Anil Rego, chief executive officer, Right Horizons, says, The
objective clarifies the investors risk
appetite and, hence, lays the foundation for his portfolio. All investments should be made after assessing ones objective and risk profile.
But where can one look for this
information? Key information document and scheme information
document have all the details
about the scheme, including its objective,
strategy and where it will invest.
68 MMarch T2014
ONEY ODAY
FUND
HOUSE
Know the fund house
When we invest in a fund,

we give a mandate to the fund
house to manage the money
on our behalf. We expect the
fund house to take due care of
our investments. It is the decisions taken by the fund house
that will take us close to our goals and
secure our future. If the fund house fails in
its objective, we will end up losing our
money and, maybe, our faith in mutual
funds as well.
Knowing the fund house, hence, is very
important. The key questions here are
what is its investment approach, how
many schemes it offers, does it offer same
type of funds under different names or
does it come up with products that make
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Fund performance
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sense for investors? Plus, it is

important to know how it
invests and if it dependent
upon a star fund managers
whims or follows a process.
How easy it is to invest or
redeem investment with the
fund house is also an important
factor, says Quantums
Chetanwala.
Some of this information is
there in key information document and scheme information
document. But it is
imperative to question either the fund
house or its representative on these
points.
The ultimate goal is returns. Investors should look at

returns given by the fund during different time periods and
compare them with the benchmark, usually an index, and
other funds in the same category. For equity mutual funds,
check the long-term (three-five years) performance, while
for debt funds look at returns over the short to medium
term.
An important yardstick can be alpha. It shows returns
over and above that given by the benchmark. A positive alpha
is desirable and shows performance that is better than the
benchmark, says Rego of Right Horizon.
Chetanwala of Quantum says investors must avoid
funds whose returns are volatile. Look for consistency
and long track record.
Where to look for this information: Fund fact sheets
and websites like www.valueresearchonline.com and
www.morningstar.in give information about the performance of funds.
Loads & recurring expenses
These small costs can have a big impact on returns in the long
run. A difference of 0.50% in recurring cost over a long period of, say, 10 years can make a big difference. The recurring
cost in mutual fund is the expense ratio.
Unfortunately, not many people look at the fund houses
expense ratio before investing. Ideally, the bigger the size of
fund, the lower is its recurring cost.
The other cost is the exit load, which is paid by the investor when he
redeems the investment before a certain period. Different types of funds have
different exit loads depending upon the nature of assets held by them.
A lot of us invest in mutual funds through SIP (systematic investment plan). At the time of redemption, first in
first out method is followed. This means units purchased first are liquidated first. This information can be found
in key information document, scheme information document and fund fact sheets.
Research on
fund manager
It is important to
know the fund manager
as well. One can do so by
analysing the performance of funds managed by
him, especially during
periods when markets went
through difficult times.
If the fund manager has expertise
over different investment categories and
fund styles, it can be considered an advantage by investors, since it may help him
design a portfolio that is efficient,
says Rego.
Be disciplined
It is easy to start investing in mutual

funds but difficult to keep the investments going. However, you can avoid this
by adopting a more disciplined approach.
For this, it is a must to resist the temptation of following the latest market trend.
Jaideep Bhattacharya, managing director, Baroda Pioneer
Asset
Management
Company, says, Set up
a schedule for adding
units while being careful to keep cash for
emergencies. Investing at regular intervals will reduce the risk
of volatility. Consider SIPs.
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MONEY TODAY
March 2014
69
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GUEST COLUMN |
MUTUAL FUNDS
Beyond
Returns
Photographs: RACHIT GOSWAMI
ver the years, Indian investors

perception about mutual funds has
evolved from suspicion to acceptance
and eventually to respect, which has
helped the industry gain a rightful place
next to traditional products such as bank
deposits. Unfortunately, investors are
unable to assess mutual funds
holistically; what is viewed is merely assessment of the recent
performance. While it is true that what matters to investors is
returns, to comprehend the robustness of the potential for
returns on a consistent basis, investors also need to understand
how these returns are achieved. The how encompasses a
fund houses philosophy, its organisation structure, quality of
people, processes, governance standards, investment style,
strategy and client servicing, among others. While it is true
that these qualitative factors do not guarantee sustainability
of returns, they nonetheless provide the basis for a higher
potential for continued good performance. Lets understand
these factors.
ORGANISATION STRUCTURE
The efficient functioning of any business is based upon the
foundation of a robust organisation structure that operates
smoothly and with the necessary controls over activities.
These include the quality and commitment of the
owner/sponsor, quality of the executive management, and
the role and effectiveness of the board of trustees. An
asset management company, or AMC, should also be
assessed on its ability to adopt and absorb technology
advantageously, expand its distribution network,
mitigate losses and retain talent. While the financial
strength of the mutual fund house can be gauged
from its annual reports, an investor can assess the
strength of the organisation by looking at its
reach and processes adopted to benefit the endcustomer.
NIMESH SHAH
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Managing Director & CEO ICICI Prudential AMC
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INVESTMENT DECISION-MAKING
Investment styles, processes, philosophy and strategies differ among AMCs and
there is no one best practice. However, the key is to adopt comprehensive
processes and adhere to them in a disciplined manner. This provides assurance to
investors and other stakeholders. In addition to processes, the quality of the
investment team, the experience of the team members in terms of managing
different investment styles, the teams commitment to the fund houses investment
strategies and policies, the quality and independence of in-house research and the
quality of dealing operations are critical factors. Information about these aspects
can be garnered from the AMCs website, scheme documents and financial advisors
associated with the fund house.
RISK MANAGEMENT
Indian markets have become globally integrated and, therefore, are vulnerable to
external developments, resulting in volatility and increasing complexity. As a result,
risk management has become critical. Investors should assess the attitude and
approach of the management and the experience of the fund houses investment
team in implementing sound risk management practices. They should assess riskmitigation measures adopted by the fund house at the macro and portfolio levels.
TRUE TO LABEL PRODUCTS
Each scheme has an objective. The fund manager needs to strictly adhere to the
objective. This ensures clear
positioning of the scheme. More
important, this assures investors
Will you send your children
that the fund manager is abiding
to a school where teachers
by the mandate.
dont admit their own kin?

Then how can you invest in
a fund whose managers
dont put their money
alongside yours?
TRANSPARENCY
Clear disclosure about functioning,
policies and practices makes a
fund house stand for integrity and
reliability within the investor and
financial advisor community. In
addition,
investor
education
initiatives are clear differentiators. The fund houses website should offer investors
comprehensive information to ensure transparency and build investor knowledge.
AMC EMPLOYEES INVESTING IN ITS SCHEMES

Will you eat at a restaurant where chefs dont eat food cooked by themselves? Will
you send your children to a school where teachers dont admit their own kin? Then
how can you invest in a fund whose managers dont put their money alongside
yours? Its comforting to know that fund managers believe enough in the fund to
invest own money in it.
COMPARING PERFORMANCE WITH THE BENCHMARK
Comparing a schemes performance with its benchmark is an objective method of
assessing its performance. However, investors should compare performance across
time periods to make a fair judgment.
In conclusion, investors need to form their view about a fund house on the basis
of multiple parameters and not just returns. Only the fund houses pedigree,
philosophy, mission, vision, quality of processes, distribution reach, customer
service and performance compared to benchmarks can give the investor a true
picture of its robustness.
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INVESTING |
STOCK IN THE NEWS
Gaining
Brokerage View
Speed
There are concerns over Marutis manufacturing

deal with Suzuki, but experts say its a good time
to buy the stock | By Rahul Oberoi
aruti Suzuki has

announced a plan to
expand its Gujarat
plant through a 100%
subsidiary. This has
raised many questions in the minds
of investors. As a result, the stock
plunged over 8% on January 28, the
The land will now be leased by

Maruti Suzuki to the subsidiary
company of Suzuki Motors for
establishing production and related
facilities. The subsidiary will sell
vehicles only to Maruti Suzuki. The
price of the vehicles to Maruti
Suzuki will include the actual cost
TARGET PRICE
Karvy Stock Broking
Rs 1,725
Kotak Securities
Rs 1,608
Religare Institutional
Rs 2,080
Shah Investors Home
Rs 1,768
Firstcall Research
Rs 1,681
LKP Securities
Rs 1,828
VALUATIONS
On February 7, the stock was at Rs
1,665 with price-to-earnings ratio
and earnings per share, or EPS, of
15.61 and Rs 106.68, respectively.
Dhawan of Equentis Capital
says the valuation is attractive.
Rs 1,847
7 Jan 14
Rs 1,661
2 Dec 13
Free fall
The stock of Maruti Suzuki
retreated over 8% on the day the
Suzuki deal was announced
Rs 1,621
3 Feb 14
Graph represents share price movement
day the announcement was made,

to Rs 1,563. The announcement
overshadowed
the
healthy
December
quarter
numbers
announced on the same day.
However, on account of buying at
lower levels, the stock rebounded
and rose 7.11% the next day.
STORY SO FAR
Maruti Suzuki India acquired 640
acres in Becharaji and 550 acres in
Vithalapur in Gujarats Mehsana
district for manufacturing facilities.
72 MMarch T2014
ONEY ODAY
of production and adequate cash

(net of all tax) to cover incremental
capital expenditure requirements.
According to Karvy Stock
Broking, the arrangement will not
have any near-term impact as it will
take three-four years for the
Gujarat plant to be operational.
Vikram Dhawan, director,
Equentis Capital, says, The exact
financial implications of the deal
are not known. This has led to some
uncertainty about future earnings
and volatility in the stock.
Maruti is one of the better plays in

the four-wheeler sector and is fairly
valued at Rs 1,500-1,600. This is the
level to start accumulating the
stock. We expect the stock to return
9% in the next few quarters. In spite
of the economic slowdown, we
expect EPS growth and steady
operating margins in the second
half of 2014 as recovery in the global economy will bolster exports,
which will more than compensate
for the slack in domestic sales. MT
@iamrahuloberoi
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T A X S AV I N G
Illustrat
ion: PR
AGATI
INVESTING |
Mistakes
We Make
Common errors you should avoid while investing
to save tax | By Dipak Mondal
young married couple walks into the local

branch of a private bank on a cloudy, cold
weekday of January. Both of them are getting late for office, but have enough time to
start a tax-saving fixed deposit (FD).
The bank executive, instead, sells them a better
product, whose gains are non-taxable, unlike FDs.
The product that he offers is a tax-saving plan that
also gives them life cover, guaranteed returns and
bonus. And guess what, they can withdraw the money
after five years, when they will receive the premium
along with added bonus. They think its a good deal and
write the cheque.
This story is repeated so many times every year
74 MMarch T2014
ONEY ODAY
between January and March. The ending, too, is always

the samepeople making costly financial mistakes
while investing to save tax or declaring expenses
against which they can claim tax deduction. We discuss
a few such mistakes.
Delaying tax-saving investments: The most vulnerable are those who consider tax saving as once-in-a-year
ritual to be repeated at the end of every financial year.
The first casualty is the monthly budget, which may
go haywire because of a large one-time investment.
Therefore, the mantra is to plan early and invest in a
staggered manner.
You can start systematic investment in a tax-saving
fund or put a small amount every month in Pubic
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Provident Fund (PPF) or National Pension System Aligning with Existing Portfolio
(NPS). Both PPF and NPS allow 12 transactions a year. (Portfolio of a 30-yr-old)
Investing in endowment insurance plans: This usuCase 1
ally happens when you walk into a bank and seek the
advice of its executives. Banks usually prefer to sell a
product that gets them the highest commission, which
Direct Equity
PPF
is invariably an endowment insurance plan. So, while
they receive 30-35% of the first-year premium as commission and 5% in the subsequent years, the investor
earns 6-7% a year if he pays premium for the full term.
EPF
Most people do not realise that an endowment plan
is a long-term product with a maturity period of 10-20
Equity MF
years. If you pay premium for only five years and then
redeem the investment, its likely that you will get less
than even your principal. They also do not realise that
FD (including
tax-saving FDs)
a part of the endowment plan premium goes towards
Tax-saving MF
mortality charges and distributor commission.
All you need is a simple investment plan such as a
Considering Rs 10,000 is paid as
tax-saving mutual fund or PPF, both of which give tax- EQUITY-DEBT
premium for a term plan, and Rs
free returns. For insurance, buy a term plan. The pre30,000 is contributed towards EPF,
mium is eligible for tax deductible.
IDEAL RATIO
the rest of the amount should be
Having too much money in FDs and NSCs: Another
invested in tax-saving mutual funds
common tax-saving strategy involves starting a fiveto improve the ratio
year FD or purchasing national saving certificates
(NSC). The interest earned on both is taxed, which
makes these products less attractive. Interest earned
Case 2
on both FDs and NSCs is taxed as per the persons
PPF
income tax slab. Besides, the interest rate on tax-savDirect Equity
ings FDs is lower than what normal FDs pay.
FDs and NSCs give post-tax returns that are less
than the inflation rate, says Tanwir Alam, CEO and
EPF
founder, Fincart, a financial planning company.
Tax-saving out of sync with overall portfolio: The
tax-saving investment is a subset of your overall portfolio. The two should not be viewed separately.
Not choosing tax-saving options keeping in mind
the overall portfolio is wrong. It causes imbalance,
Equity MF
says certified financial planner Pankaj Mathpal.
Tax-saving MF
For example, if your overall portfolio is equityheavy, you may want to save tax using fixed income
Figures in pie chart in Rs lakh
products such as PPF.
But most investors usually have a debt-heavy portConsidering Rs 10,000 is paid as prefolio due to employee provident fund, fixed deposits, EQUITY-DEBT
mium for a term plan, and Rs 30,000
endowment plans, etc. So, they can look at tax-saving
is contributed towards EPF , Rs 40,000
mutual funds, which have 100% exposure to equity, or
IDEAL RATIO
should be invested in ax-saving mutual
NPS, where equity exposure is up to 50%.
funds, and the rest in PPF
You must figure out the ideal equity-debt ratio for
your portfolio and allocate funds accordingly. The equity-debt ratio of your portfolio will depend upon your
tific research, rural development and government relief
age, risk appetite and financial goals.
Not looking beyond Section 80 C: People often do works are also deductible.
While making donations under Sec 80 G make sure
know that they can save tax over and above the Section
80C limit of Rs 1 lakh. Interest on housing and educa- you are doing it to institutions approved under Section
tion loans, health insurance premium, medical expens- 80G of the Income Tax Act, says Kapil Narang, chief
es, etc, are also eligible for income tax deduction. Apart operating officer, Ameriprise India Advisory Services. MT
@dipdown80
from these, donations to political parties and for scien-
1.333
1.5-2.33
2.5
1.5-2.33
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March 2014
75
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with the World
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BEAUTIFUL PEOPLE. BEAUTIFUL PLACES.
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ONLINE TERM PLANS
INSURANCE |
Best of Both
Worlds
O
nline term insurance

plans, launched as a
liberating product that
will free buyers from the
clutches of agents and
known for their low costs, have
turned a full circle.
Agents are slowly making a
comeback as insurance companies
find them irreplaceable for ensur-
78 MMarch T2014
ONEY ODAY
Insurers are routing online

term plans through agents as
most buyers find it tough to
purchase on their own |
By Dipak Mondal
ing customer stickiness and minimal application rejection.

Many insurers have started selling online terms plans through
agents as they believe that buying
online is difficult for those who are
not comfortable navigating the
internet. So, their agents help customers buy online plans, as these
are cheaper than the offline ver-
sions. The attempt is to mix the

service of an agent with the low
price of an online plan.
Named assisted online sells, it
seems that re-routing of online term
plans through agents is becoming
an accepted industry practice. This
assisted purchase may, of course,
cost more.
While some insurers are offer-
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Questions Life Insurers Ask
Q: Do you (or intend to) live or travel
LIFESTYLE
ing this (assisted online purchase) as an

option (other than direct purchase), one is
offering online plans only through agents.
Birla Sunlife Life Insurances Easy
Protect Plan is a term plan that you can buy
online only through an agent. HDFC Life
offers the choice of assisted purchase.
Bharti AXA Life, which sells eProtect Term
Plan, has an option for assisted purchase on
its website. However, the company says that
this feature has been disabled.
According to the company, Bharti AXA
Life eProtect cannot be sold through agents.
However, in future, if the company decides to
launch more products that need agents
help, it will activate the assisted by an
agent option. That is why, says the company,
it has built this feature, although it is currently disabled.
Spokespersons for Aegon Religare,
Aviva Life, Bajaj Allianz Life and ICICI
Prudential Life said they do not sell online
term plans through agents, though insurance customers as well as agents say some
of these insurers allow sale of online plans
through agents.
Harshal Shah, director, marketing,
Aegon Religare Life, says, We believe that
online plans are to be bought without intermediation. The customer is better off doing
research himself and calling the company
for assistance during the buying process.
He says direct purchase forms have much
more disclosures. This helps the customer
at the claim stage.
Q: Are you currently taking any medication
MEDICAL
WHY DO YOU NEED AN AGENT?

Insurers say that only a small number of
individuals who enquire about online plans
buy on their own. The rest drop off. Insurers
want to target this segment by roping in
agents.
As per our understanding, less than 2%
who inquire about online term plans buy on
their own. Hence, there is a huge opportunity in providing services to customers who
wish to buy an online term plan but require
some assistance to complete the sale, says
Sanjay Tripathy, senior executive vice president, marketing, products & direct channels,
HDFC Life.
Another argument in favour of such
online assistance is that the application
form has many lifestyle- and medical-related
questions, which most buyers find it difficult
to answer on their own. Even if they manage
outside India for more than six months in a

year?
Q: Do you (or intend to) engage in any hazardous occupation or hobby, for example, working
at heights, underground or offshore. Does your work
involve using explosives, flying other than as a
fare-paying passenger, diving, mountaineering, etc?
Q: Have you smoked or consumed tobacco or nicotine
products in any form in the last three years? (Tobacco
products include but are not limited to cigarettes, beedis,
cigars, gutka and flavoured pan masala). If yes, specify
the quantity consumed per day.
Q: Do you consume or have you consumed any form of
alcohol/liquor exceeding 90 ml or three pegs of hard
liquor or two glasses of beer/wine per week?
Q: Do you consume or have you consumed any form of
narcotics, for example, heroin, cocaine, ganja, LSD, etc?
Q: Have you ever suffered from drug or alcohol
addiction or been advised by a doctor to reduce your
alcohol/drug consumption?
or drugs, other than for minor conditions

(such as cold and flu), either prescribed or
not prescribed by a doctor?
Q: Did you suffer from any illness, disorder,
disability or injury during the past five years
which required any form of medical or specialised
examination (including chest x-ray, gynaecological
investigation, pap smear or blood test), consultation,
hospitalisation or surgery?
Q: Do you suffer from any medical ailmentdiabetes,
high blood pressure, cancer, respiratory disease (including asthma), kidney or liver disease, stroke, blood disorder, heart problem, hepatitis B or tuberculosis, psychiatric disorder, depression, HIV/AIDS or related infection,
congenital/birth defect, pain or problem in the back,
spine, muscles or joints, arthritis, gout, severe injury or
other physical disability?
Q: Have you been incapable of working for more than
five days during the last two years or are you currently
incapable of working?
Q: Has your weight altered by more than five kg in the
last two years?
Q: Is any surgery planned or are you currently aware of
or have been advised that you may need to seek medical
advice in the near future?
Q: Have you or your spouse ever tested positive or been
treated for any sexually transmitted disease?
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MONEY TODAY
March 2014
79
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INSURANCE |
ONLINE TERM PLAN
Cost of Cover
Premium for a Rs 1-cr cover for a
35 -yr-old non-smoker (tenure: 30 yrs)
Bharti AXA Life

PLAN
eProtect
PREMIUM
Rs.10,899
Aegon Religare
PLAN
iTerm
PREMIUM
Rs.11,012
Aviva
PLAN
iLife
PREMIUM
Rs.11,076
Max Life
PLAN
Online Term
Option 1
PREMIUM
Rs.11,461
Reliance Life
PLAN
eTerm
PREMIUM
Rs.15,394
Max Life
PLAN
Online Term
Option 11
PREMIUM
Rs.15,731
HDFC Life
PLAN
Click 2
Protect
PREMIUM
Rs.16,180
DO YOU PAY MORE?
Max Life
PLAN
Online Term
Option 111
PREMIUM
Rs.17,304
Birla Sun Life*

PLAN
to fill the forms on their own,

there is a high chance of error(s)
creeping in, leading to rejection of
the application.
Rajesh Soi, a New Delhi-based
insurance agent, says, There are
many technical points that you
need to follow while filling the
application form. Often, investors
commit errors, due to which
applications get rejected.
Another reason insurers are
roping in agents for selling these
plans is that they want to prevent
polices from lapsing. Since one
needs to renew the insurance
cover every year, insurers think
that without reminders/encouragement from an agent, people
often lose interest in renewing
policies, causing them to lapse.
Manish Jain, a Gurgaonbased certified financial planner,
says companies offer online term
plans through agents probably
because they think its necessary
for better persistency.
According to insurers and distributors, people also prefer to go
through agents for better postsale servicing.
In the event of death, you
would not want your family members to be left at the mercy of a
faceless organisation for claim
settlement. If you have an agent,
your family can always take help
from him for claim settlement,
argues Harsha Roongta, CEO,
Apnapaisa.com, an online personal finance service provider.
PREMIUM
Easy Protect Rs.13650
Source: Policybazaar.com
* Easy Protect is a term plan sold online only through agents
In some cases, the insurer may

charge more if you are taking
help from its agent. HDFC Life
says the cost of the online term
plan goes up if it is purchased
through an agent. However, it
refused to give the extent of the
increase, saying that it differs on
a case-to-case basis.
Birla Sunlife Life Insurances
Easy Protect Plan is priced more
WorldMags.net
than the online term plans

because of the fact that an agent
is involved.
According to Roongta of
Apnapaisa.com, the premium
does go up, but only marginally.
If you are availing of services
from an agent, you would not
mind paying a little more for the
convenience, he says.
However, unofficial estimates
suggest that the premium can go
up by 5-10% depending upon the
kind of assistance you are taking.
This is still cheaper than offline
term plans, which are 25-30%
more expensive than the online
products.
However, not all insurers may
charge more for assistance. This
is because, in an online term plan,
agent commission (10-15% of the
premium) is part of the price. In
direct sales, insurers save this
amount. Most insurers launched
online plans in the hope that people would prefer to buy directly
through their websites. But it did
not happen.
But why would an agent sell
an online term plan when he can
earn a 25-30% commission on
selling offline plans?
A simple answer to this is
anything is better than nothing.
With increasing awareness about
online term plans, if a customer is
not interested in buying a product
an agent is pushing (usually
plans offering higher commissions), and instead insists upon
buying an online plan, the agent
can facilitate the purchase for a
10-15% commission.
Anil Rego, founder and CEO,
Right Horizons, a financial planning company, says if the cost is
not high, it is always better to
purchase online plans with help
from an agent because of the
complex details one has to fill in
the application form.
MT
@dipdown80
MONEY TODAY
March 2014
81
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SURVEY |
HOUSEHOLD FINANCES
Financ
i
a
l
WellBeing
Index
The stud
y
Indian ho attempts to hig
h
their ow useholds percep light the
n
economy financial health tion of
and
What people
want after
retirement
Buying a house,
childrens
education and
children marriage
are the top three
aspirations post
retirement
Top Financial Priorities

Childrens goals and
marriage are the top
priorities across
age-groups.
25 -30 yrs 31-40 yrs

395
584
41-50 yrs
518
>50 yrs
167
Childrens education
47
68
69
50
Buying a house
54
54
51
46
Childrens marriage
29
43
53
43
Buying a car
45
34
31
24
Planning retirement
35
33
36
38
Guarding against concerns 38
32
28
41
23
22
16
19
Planning a holiday
82 MMarch T2014
ONEY ODAY
WorldMags.net
Top Areas of
Concern in the
Economy
79%
Fuel Prices
74%
Rising
Inflation
WorldMags.net
Spending Across Categories
42% people plan to cut down on non-essential

items to meet expenses
Top 5 areas where households expect spending

to increase
Say they will cut

down expenses on
non-essential items
41%
36%
Have good amount of

saving
Will redeem their

investments
Food products
83
17
Family care
79
21
75
25
Apparels
69
31
Financial services
68
32
Increase
42%
Education
33%
Will borrow from
family, friends,
colleagues
28%
10%
Will sell off property
Say will use credit

cards
25
Figures in
percentage
Expectation of
Prices of
Household Items
Buying a house
23
Childs education
Decrease
Planning for Unexpected Expenses
Respondents feel that increase in

prices for food & beverages and
transportation are likely to affect the
budgets seriously
72%
Food & beverages
18
Childs marriage
69%
Transportation
(Fuel, driver etc.)
18
Utilities
Can make trip
63%
(Electricity, water charges, etc)
Children education
16
62%
(Books, school fee, etc)
Buying a luxury car
Housing & maintenance
53%
Healthcare
53%
(Rent, society charges, etc)
16
Future plan
investment
(Medicine, doctor fees, etc)
Figures in percentage
Fuel prices, food prices, rising inflation and unemployment are seen as top concern areas for
the economy in the next 1 year
69%
69%
59%
54%
51%
50%
48%
48%
44%
43% 39%
Food
Lack of
Falling
Economic
Rising
Political Increasing
Tax
Healthcare Stock Housing
Prices Employment Rupee & Uncertainty Poverty Uncertainty Population Increase
Costs
Market market
Forex
Graphic: PRAGATI
Survey By: Principal Retirement Advisors
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TECHNOLOGY |
TRENDS FOR THE YEAR
Smart watches will become smarter

Smart watches was the news in 2013.
In 2014, companies are promising even
smarter watches. Sony and Samsung have
recently launched their 2013 variants of
smartwatches but we can expect to see competition from Google, LG, Microsoft, and
even Apple. Long-rumoured to be in production, Qualcomm also has Toq, a concept
smartwatch for OEMs original equipment
manufacturer) in the works.
64-bit chip in smartphones

The recent announcement by Apple of using a 64-bit
chip in its latest iPhone has been followed by
Qualcomm unveiling its own 64-bit processors. While
the former is a flagship smartphone, the latter is
likely to make it to affordable smartphones at a sub
$150 price point. The year will see more smartphones running on this architecture. Well have to
wait and see how long it will take for apps to benefit
from this chipset.
TECH FOR
Here are seven
technologies that
are most likely to
come to the fore
of the market this
year | By Nidhi Singal
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Flexible OLED TVs
The next step in the evolution of flat
panel TVs will be the dominance of
the curved/flexible OLED TVs.
Samsung and LG, after launching
the 55-inch curved OLED TVs, are
looking at something even bigger.
LG has announced a massive
105-inch curved 4K Ultra HD TV4k
OLED TV. It is believed that the
flexible and adjustable curve will
allow users to angle their TVs to
better suit the seating positions of
multiple viewers.
Water resistant smartphones

Last year saw the entry of smartphones that were water-resistant, but the number
was significantly low. This will see a rise. While many devices will be water resistant, there will a rise in the number of options available where one can get their
devices electrical parts coated with warranty intact.
Curved smartphones
Curved display was a highlight of CES 2013. It was
seen mostly on TVs but we got a glimpse of it with the
LG Flex smartphone. Since then, Samsung has already
launched a curved Galaxy Round phone in South
Korea. We are expecting more such devices. Rumours
claim we will get screens that wrap around the side of
a phone for quick notification access.
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TECHNOLOGY |
TRENDS FOR THE YEAR
Voice and Gesture control

Siri on the Apple iPhone and Microsofts gaming
console Kinect were the perfect examples of voice
and gesture interface. This is set to expand. But
talking to these devices is a more difficult task as
it doesnt understand all accents. Companies are
working on software that will take care of this
challenge. On the gesture front, Samsung is
planning to offer more fine-grained, finger-sensitive functionality in its smart TVs of 2014.
Fingerprint scanners
Motorola thought ahead of the times when it installed
a fingerprint scanner in its smartphone. But, it is
Apple that has set the ball rolling. Apple has added a
touch ID scanner to the iPhone 5s and it is rumoured
that the Samsung Galaxy S5 will now have the same.
Many other smartphones too are expected to follow
suit. Soon, there will als be applications that can
work well with the scanners.
Tech Resolutions for
2014
I will not check my phone in the middle of the

night.
I will not take gadgets to the bathroom.
I will not use my phone when meeting people.
I will recycle my old devices, including
mobiles, laptops, batteries and desktop.
I will run an anti-theft alert on my mobile
devices.
I will regularly change my password for all
my accounts.
I will not download pirated content.
I will delete apps and software i dont use
from my phone and laptop.
I will backup my data regularly.
I will remove my charger from the plug when
not in use.
WorldMags.net
Courtesy: Gadgets & Gizmos
WorldMags.net
QUERY CORNER |
R E S O LV I N G F I N A N C I A L D I L E M M A S
I am 64 years old,
retired and in the 10%
tax bracket. I want to
invest in gold funds or
buy gold in my wifes
name. What are the tax
implications? Whose
income will the returns
be added to? What if I
die before her or she
dies before me, what
are the implications?
INVESTING
Sameer Dagia, via email
As per Indian tax laws, there is no gift tax on any

transfer of assets to a spouse or lineal
ascendant or descendant. But, any
income derived from these assets
or investments is clubbed with the
income of the individual making
the investment. You can have the
investment jointly, in both your
names or you can be the nominee if
you invest in your wifes name. If she
dies before you, you would get the investment, while she can change the nominee if the
reverse happens. Make wills to ensure there is no
other claim for assets in either of your names.
TAX
Illustrations: PRAGATI
I have physical shares (certificates of the

shares) that belong to my grandfather. He died a
couple of years ago and left my father the
shares. How do transfer these shares to my
father? What legal steps should I take?
2014), I have to pay a penalty of Rs 16,000 (4%

on Rs 4 lakh) if I close the loan before three
years. I was thinking that if I deposit the lump
sum in an FD, I will earn an interest on it with no
risk. Should I do this or prepay?
INVESTING
Karan Sharma, New Delhi
If there is a Nominee
Since you have the physical certificates, you have
to to send one or more of the following documents to the Registrar and Share
Transfer Agent (RTA):
7/&$&+)0%/" "/1&#& 1"0
7/+0*&00&,+/".2"01#,/*
7+##&!3&1,/!" )/1&,+61%"
nominee declaring rights
7,1/&0"! ,-6,#!"1% "/1&#& 1"
If there is no Nomination
+",/*,/",#1%"#,)),4&+$!, 2*"+10
4&))"/".2&/"!
7/&$&+)0%/" "/1&#& 1"0
7/+0*&00&,+/".2"01#,/*
7,1/&0"! ,-6,#!"1% "/1&#& 1"
72 "00&,+ "/1&#& 1"
7/,1",/)"11"/,#!*&+&01/1&,+!2)611"01"!
6,2/1##& "/,/,1/6
After you transfer it to your fathers name, you
can demat the shares to sell it.
I have a personal loan of Rs 4 lakh (13.99%) with

monthly EMI of Rs 13,699 for three years. If I
close the loan after the thirteenth month (March
Purnima Unnikrishnan, Mumbai
Q
A
Considering the interest rate (13.99%), repay the

),++!01/1+0601"*1& &+3"01*"+1-)+
to the extent of the EMI that you are saving. The
lower loan will also lower risk for you.
2/1%"/1%"/"&0+,15"+"#&1,+&+1"/
est payments for personal loans, unless
you are in business and the loan was
taken by the business. The fixed deposit
4,2)!"1*2 %),4"/&+1"/"01
rate. If you are in the higher tax brackets, you would also have to pay tax on
6,2/&+1"/"01&+ ,*"#/,*1%"
I am about to start a company. We have angel

funding and would require only partial investment from my side. Im 38 and have about Rs 20
lakh as personal savings. I want to invest about
Rs 15 lakh. I already own large-cap equity funds
and stocks worth Rs 20 lakh. My wife has a regular income and we own a house. Which funds
should I invest?
Rakesh Yadav, Noida
You need to assess your financial ability to achieve
your goals. Having your spouses income and owning a house work well for you. Assuming you have
no debt, part of the Rs 15 lakh can be invested in
WorldMags.net
MONEY TODAY
March 2014
87
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QUERY CORNER |
R E S O LV I N G F I N A N C I A L D I L E M M A S
I am 45 years
old. I had an angioplasty five years back.
Which insurer, or plan,
is the best for someone with such a medical history? What is
the cover I can expect
to get and how much
costlier, in percentage,
would my premium
payments be?
INVESTING
Alok Kumar, via email
The premium depends on several factors and each

insurer is governed by its own underwriting principles. Given your medical history,
you might be offered a cover with
restrictions related to your condition. However, it is advisable
to get yourself enrolled in a
group health plan. Group plans
are widely offered by employers
as well as by associations to
members. There are also banks that
offer health plans for its account holders, which
could suit you. Do disclose all facts to the insurer
whose policy you wish to buy.
debt and balanced funds. You can also use dynamic

asset allocation funds as part of a low-risk portfolio. In case you need regular income, use tax-free
bonds. If not, choose short-term income funds or
bonds. Since you have a lump sum to invest, any
further investments in equities should be through a
systematic transfer plan (STP). This means you
can invest the amount in a debt fund and a certain
amount will be transferred to an equity fund periodically. Go for a combination of large-cap, balanced and gold funds. Gold funds complement
your equity portfolio as it tends to do well
when markets fall. Also, evaluate your
life cover needs when investing.
I am 21. I have selected some funds

in which I want to start SIPs: ICICI
Prudential Focused Bluechip Equity
(Rs 2,000), HDFC Top 200 Fund (Rs
2,000), Birla Sun Life Dividend Yield
Plus Growth (Rs 1,000), IDFC Premier
Equity (Rs 1,000), HDFC Prudence
(Rs 1,000). Am I on the right track if I hope
to make about Rs 20 lakh in about five years?
years you need to invest Rs 25,000 per month

(again assuming 12% y-o-y return).
The funds you have chosen have a good longterm track record, but do consider HDFC Balanced
as an alternative to HDFC Prudence.
T
88 MMarch 2014
ONEY ODAY
am 40 years old and was diagnosed

with Type 1 insulin-dependent diabetes some
years back. However, I am quite healthy and exercise regularly. Ive been living abroad and have
just moved back. Can I buy a health insurance policy in India?
Naresh DSa, via email
Though most retail health insurance policies, as available in India today, offer
cover only to people living with Type 2
diabetes. We advise you to enroll in a
health plan offered as part of a group
plan. Group plans are offered by
employers and associations to members.
There are also banks that offer health
plans for its account holders, which could
suit you. Evaluate features and benefits
of the plan for the best claims experiences while
choosing a cover.
Mutual
T-FB
unIdLL
Surdeep Singh, via email
Considering that you will invest Rs 7,000 per

month for 5 years and based on the current projections, assuming the investment yields about 12% yo-y (year-on-year), your corpus will only yield
about Rs 5.75 lakh at the end of five years. This is
just 25% of the corpus you expect to have. In order
to make a corpus that could earn Rs 20 lakh in five
INSURANCE I
Q
A
Do health insurance policies only cover the treatment done in hospitals?

Raj Ganguly, email
Health insurance policies most often cover inpatient treatment at hospitals, nursing homes, clinics
and so on. However, there are some policies available that cover doctors consultation, pharmacy
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My father gave
me a plot in 2006 as a
gift. It was sold in 2013
to pay off a loan and to
pay fathers medical
expenses. It was sold
for Rs 18 lakh. However,
since it was a panic sale
I got paid less than the
market value. How do I
calculate tax liabilities
on this transaction?
TAXATION
Sandeep Sharma, via email
Capital gains on a gifted property is calculated on

the basis of the cost to the previous
owner (cost of acquisition),
indexed to purchase year. If the
property was bought prior to
1 April 1981, acquisition cost
is the actual cost incurred or
fair market value as on 1 April
1981, whichever is higher. You
will have to pay long-term capital
gain tax at 20%. You can save tax
by buying a residential property costing over
Rs 18 lakh or purchase capital gain tax saving
bonds under as per Section 54 EC.
TAX
expenses, health check-ups and such allied medical expenses as part of OPD cover. Naturopathy,
homeopathy and ayurveda treatments are also covered by some insurers. As part of the domiciliary
benefit, some policies also cover medical treatments at home if a patient is not fit enough to be
shifted to a hospital or if there are no beds available at a hospital. Do review all features, benefits
and exclusions carefully when buying a plan.
You must be the owner of the house and should

have gotten possession for claiming tax benefit on
interest and repayment of home loan. If you have
not got possession, interest is accumulated and
deduction is allowed in five equal installments
from the year you get possession. Repayment of
home loan in financial year can be used for deduction up to Rs 1 lakh under section 80C.
My mother and I own an apartment. However,

she lives in my village, where she owns
another house. Can I pay rent to my mother and get benefit of HRA? What would
be my mothers tax liability?
TAXATION I
recently transferred
Rs 50,000 to my father, who is 65
years old and retired. Is there any
way this transaction can be made
such that I get tax benefits?
Eliash Xavier, Kochi
Nandini P, Bangalore
A
Q
If you are living in your fathers

home and getting HRA from your
company, then it can be paid as rent for
claiming HRA exemption. If you are doing your
own business using your fathers house or skills,
then it could be claimed as business expense to
compute taxable profit.
I will be paying rent for house and also interest

and repayment of a home loan. Am I eligible for
tax deduction on these? What are the relevant
rules and sections?
Louis Zach, Pune
DO YOU HAVE QUERIES ON TAX, INSURANCE, INVESTMENTS?
Yes, you can pay rent for the share of

ownership in her name for claiming HRA.
Your mother will have to declare rental
income and tax would be payable as per
her tax slab. A 30% standard deduction from rental
income is available for repairs and maintenance.
Q
A
If I make a payment to an employer for notice

period not served, is there any way to gain a tax
benefit from it?
Rajesh Sharma, Pune
No, as per tax laws, notice pay is not deductible
from salary income for tax benefit.
Anil Rego, CEO, Right Horizons, has tackled financial planning; Antony Jacob, CEO, Apollo Munich Health Insurance, has answered
insurance queries; and Sudhir Kaushik, Co-founder and CFO, Taxspanner.com, has provided tax solutions.
Log on to to submit your questions.
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March 2014
89
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ADVISORY |
MOTION SICKNESS
SICK OF MOTION
Does travelling by road make you a little queasy or even dizzy?
If yes, here are some tips on how to prevent car sickness
otion sickness is a
surprisingly common
condition. Medically,
its defined as nausea from any type of
motion or travel. Most people suffer
during long trips on the road. It
could result in mild or painful
headaches, a feeling of dizziness or
fatigue, and, as the name suggests,
feeling sick to your stomach.
Motion sickness is the result of
your body sensing a discrepancy
between what you see (when travelling, the inside of a vehicle and that
youre sitting still) and what you
T
90 MMarch 2014
ONEY ODAY
feel (your bodys vestibular system,

which senses balance from your
inner ear, tells your brain that
youre moving).
While it is impossible to prevent
it at all times, the following tips can
help you lower the severity of
motion sickness and, maybe, even
enjoy the drive.
OPEN THE WINDOW
make it worse. Leave the window

open whenever possible. It would be
great if you could remove the
source of the offending odour. You
could also try using a soothing
odour such as lavender or mint to
help you cope. If its not possible to
leave the window open, lean
towards the bottom part of the window and breathe. There are usually
leaks that let in fresh air.
Fresh air can help in most cases.

Poorly ventilated cars with certain
odours trapped inside (such as air
fresheners, heavy perfumes, smoke
or the smell from packed food) often
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Its not clear why car sickness affects some children more than others. While the
problem does not seem to affect most infants and toddlers, children between the
ages of 2-12 are particularly susceptible. Children usually sit low in the back seat
without being able to see out the window or often read or play games in the car.
The inner ear will sense motion, but the eyes and joints wont. Just as for adults,
this could result in an upset stomach, cold sweat, fatigue, dizziness, loss of
appetite or vomiting. If your child feels any of these symptoms, stop the car and
let him walk around for a bit. You could also make him lie on his back for a few
minutes with the eyes closed. Placing a cool cloth on the forehead might help as
well. Also, take care of what children eat during the journey. Keep it light and avoid
dairy or any other acidic food. Ask your peadeatrician about possible medication
that might help. Of course, it would be best to avoid the use of drugs.
AVOID HEAVY FOODS AND

ODOURS
The smell of spicy or greasy foods is
a known trigger of motion sickness.
So is any heavy odour that might
stay with you for some time. You
coud carry ginger or ginger tablets
with you. Ginger is known to help in
preventing motion sickness. Ginger
candies or biscuits will also work.
EAT LITTLE OR NOTHING

Eating can work for your or against
you, depending on how your body
reacts to food. See what works for
you. Its better to have something
light so that theres no acid reflux.
Going hungry might also trigger a
headche and could make you even
more nauseous.
In any case, if you do eat something, it must be at least an hour
before you start. Dont eat greasy,
heavy and acidic foods. Try dry
toast or plain bread, or something
simple like a cracker. If youre more
used to Indian foods, plain roti or
idli could also work. It must be easily digestable.
If it makes you feel worse, dont
eat the next time, especially if its a
short journey. Your body prefers
your stomach calm and empty.
TRY USING
MEDICATION
There are over-the-counter
and prescription drugs that
are effective against motion
sickness. Most of them
contain dimenhydrinate,
meclizine or scopolamine.
Some popular brands are
Dramamine and Gravol.
Read about any possible side
effects before using one.
SIT IN THE FRONT

Drive if possible. Drivers rarely get
car sick as they focus on the road.
The next best thing is to sit in the
front passenger seat. By focussing
on a fixed point in a distance, say
the horizon, you can resolve the
mismatch between your balance
system detecting motion and you
being still. The front seat will give
you more window space to look
through and the ride is less bumpy
in the front.
TAKE BREAKS
Stop the car, stretch your legs and
relax as many times as possible. It
is especially important if the jour-
ney is long and involves twisty

roads. Breathe deeply from your
stomach as it helps you to relax.
Taking breaks will also give the
driver some rest.
LEAVE THE READING AT HOME

If you focus on a fixed point in the
car, again, your brain is confused by
the feeling of motion and you being
stationary. Let your senses confirm
you are on the move. So, try not to
read or play board games.
KEEP YOUR EYES CLOSED

Sleeping when travelling is a good
option to avoid motion sickness. If
your eyes are closed, there is no
discrepancy between what you see
and what your inner ear is signalling to the brain. If you cant
sleep, it would be best to keep your
eyes closed and get some rest.
Courtesy: AutoBild India
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MONEY TODAY
March 2014
91
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MUTUAL FUNDS
Growth
FUND FACTS
INCEPTION: January 2010
CATEGORY: Equity Tax Planning
TYPE: Open-ended
AUM: Rs 755.32 crore
BENCHMARK INDEX: S&P BSE 200
Option
WHAT IT COSTS
NAV: Rs 16.78 (G), Rs 13.38 (D)
MIN INVESTMENT: Rs 500
MIN SIP AMOUNT: Rs 1,000
EXPENSE RATIO: 2.84%
EXIT LOAD: NA
AXIS LONG TERM EQUITY

The fund has a three-year annualised return of
12.58%, compared with the benchmarks 1.97%
HOW HAS THE FUND PERFORMED?

The fund delivered
a one-year annualised return of
17.31%, compared
with the category
average of 5.70%
and benchmark
return of 1.26%.
Annual returns (%)
Value of Rs 10,000 invested in the

fund since January 2010.
Rs 16,781
31 Jan 14
Rs 15,068
3 Jan13
40
20
0 2010
2011
2014
2012
2013
-20
-40
Rs 10,863
20 Dec 11
Rs 10,000
31 Dec 09
*As on 31 January 2014
FUND
INDEX
CATEGORY AVERAGE
WHERE DOES THE FUND INVEST?

c Sectoral break-up
a Asset mix
96.2%
0.03% 3.74%
Equity
Debt
b Investing style
Cash
d Top holdings
Financial
services
Others
22.53%
25.51%
FUND BOX
Growth Blend Value
CAPITALISATION
Large Medium Small
The mutual fund

scheme invests in
a blend of growth
with large-cap
stocks.
FMCG
8.15%
Technology
Automobile
8.38%
14.28%
Healthcare
STOCK
13.23%
As % of corpus
WHY INVEST IN IT?
Portfolio holdings as on 31 January 2014
MEET THE FUND MANAGER
Axis Long Term Equity is flexible on market capitalisation, with a substantial

45% of the portfolio in small-cap and mid-cap stocks. The objective is to find
growth stocks to generate extra returns. The fund doesnt have any bias
based on sector or market capitalisation. It started off with good performances in its first two years. It returned 16.5% in 2013, 10% over the category
average. The funds trailing four-year return of 14.8% is substantially higher
than the category average of 5.23%. Attributes such as flexibility in picking
stocks, downside protection in tough markets and its record in outperforming peers make it ideal for investors looking for growth through equity.
Jinesh Gopani has been the fund

manager since April 2011. He has
also worked with Birla Sun Life
AMC as portfolio manager (20082009), with Voyager India Capital
as a research analyst and portfolio
manager (2006-2008), with Emkay
Shares & Stock Brokers as a
research analyst (2002-2006) and
with Networth Stock Broking.
Data and analysis of the fund have been sourced from
96 MMarch T2014
ONEY ODAY
% OF CORPUS
TCS
6.77
HDFC BANK
6.72
LARSEN & TOUBRO
6.34
ITC
5.73
KOTAK MAHINDRA BANK 5.65
TOP FIVE SCRIPS
31.21
TOP THREE SECTORS
53.02
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STOCKS
Best Performing Stocks
Index Moves
BF Utilities is among the top gainers in the past

six months with return of 275%.
The BSE IT index delivered a

return of 42% over 1-year
period on the back of
depreciating rupee and
improving global
economies. The surprise
repo rate hike of 25 bps by
RBI dragged the realty
stocks down. BSE Realty
was worst performing
index with a loss of 41%.
STOCKS
PRICE (Rs)
P/E CHANGE (%)
6 MONTHS
BF Utilities
Aurobindo Pharma
Ceat
TVS Motor Company
Tata Elxsi
Aban Offshore
Hatsun Agro Products
Hinduja Global
KEC International
Firstsource Solutions
519
487.8
296.4
80.2
413.6
509.2
300.2
597
53.3
28
256
15.7
4.2
21.6
21.8
40.5
38.6
14.4
14.2
275.4
166.7
162.2
150.2
137.5
127.6
112.9
112.2
98.3
98.1
300.2
296.4
487.8
28
391.5
944.7
173.3
353.6
561.5
597
38.6
4.2
15.7
14.2
28.0
18.7
11.1
16.2
32.8
14.4
944.7
517.9
391.5
681.1
300.2
88
306.2
561.5
318
370.2
The chart shows the daily price movement of the indices (normalised to a base of 100)
S&P BSE IT
1 YEAR
2.98%
42.12%
6 Months
6 Months
S&P BSE REALTY

1 YEAR
-41.38%
6 Months
5.01%
20.79%
-8.12%
3 Months
3 Months
3 Months
9.01%
-5.22%
STOCKS
239%
is the return given by the

Hatsun Agro Products stock
in the past one year
Easing Prices
The wholesale price inflation
eased to an eightmonth low in January
to 5.05%, well below
expectations. The
drop in WPI was led by
deceleration in food
inflation which dropped to
8.8% as core inflation inched up
to 3%.
132.5
126.3
120.8
116.4
96
96
91
87.9
86.4
85.9
WPI Inflation
7.31
4.58
Jan13
May13
Jan14
RETURN ON METALS
6 months (%) 1 year (%)
Beating estimates TCS, consolidated net profit

was up 49.75% at Rs 5,377 crore on a yearly
basis while 15.1% on quarterly basis. In Q2 it
had reported a net profit of Rs 4,672 crore.
362
770.1
681.1
53.9
52.2
5.6
79.1
74.3
242
102.1
138.1
10.4
10.3
9.3
9
8.9
8.5
8.1
7.9
7.8
Least Expensive Stocks

STOCKS
PRICE (Rs)
Strides Arcolab
Alok Industries
HPCL
Monnet Ispat & Energy
Syndicate Bank
Sintex Industries
SBBJ
Union Bank Of India
Allahabad Bank
Rei Agro
5.05
Source: eaindustry.nic.in
For the quarter ended December 2013, DLF

posted a consolidated net profit of Rs 135.15
crore, down 45.48%, against Rs 247.88 crore
in the same quarter a year ago.
PRICE (Rs) DIVIDEND YIELD (%)
Strides Arcolab
Akzo Nobel India
Accelya Kale Solutions
Andhra Bank
Dena Bank
Rei Agro
Syndicate Bank
Allahabad Bank
Corporation Bank
Union Bank Of India
P/E
362
6.5
234.6
80.7
79.1
32.3
292.4
102.1
74.3
5.6
0.6
1.5
1.7
2.4
2.6
3
3
3.4
3.5
3.6
The least expensive stocks are the ones with the lowest
P/E ratios; data as on 13 February 2014
Figures in %
Price is rounded off; data as on 13 February 2014; shares of

BSE-500; 3-year and 5-year returns are annualised
13 Feb14
Highest Effective Dividend
18.7
144
16.4 100.6
28 97.2
12.7 88.6
38.6 85.1
27.8 83.7
37.6 80.2
32.8
68
23.1 65.1
18.2 64.3
27.8
18.9
18.7
28
12.7
30.9
10.6
37.6
38.3
46.8
59
IN FIGURES
5 YEARS
Vakrangee
88
Symphony
449.4
Ajanta Pharma
944.7
Astral Poly Technik
391.5
Accelya Kale Sltns
681.1
TTK Prestige
3015
Bajaj Finance
1481.4
The Byke Hospitality 306.2
Som Distils & Brws
272.3
Eicher Motors
4825.2
104
Figures shows % change as on 13 February 2014
3 YEARS
Ajanta Pharma
Kaveri Seed Company
Astral Poly Technik
Accelya Kale Sltns
Hatsun Agro Prdts
Vakrangee
The Byke Hospitality
PVR
Kajaria Ceramics
Amara Raja Batteries
142
13 Feb13
-0.01%
239.4
196.3
169.4
166.4
156.1
150.7
119.2
117.9
117.3
113
S&P BSE IT
100
S&P BSE SENSEX

1 YEAR
1 YEAR
Hatsun Agro Products
Ceat
Aurobindo Pharma
Firstsource Solutions
Astral Poly Technik
Ajanta Pharma
Finolex Industries
Infotech Enterprises
PVR
Hinduja Global Sltns
S&P BSE Sensex

S&P BSE Realty
Gold
Silver
1.97
-3.11
-0.69
-22.01
Most Expensive Stocks

STOCKS
PRICE (Rs)
P/E
Sun Pharma
Bajaj Electricals
Future Retail
Nitin Fire Protection Indst
GMR Infrastructure
BF Utilities
Bajaj Finserv
Advanta
KSK Energy Ventures
Fortis Healthcare
614.7
225.1
81.2
57.6
19.4
519
682.8
105.6
54.5
97.9
646.6
376.2
357.9
328.1
274
256
195.6
191.5
185
169.9
Data as on 13 February 2014
WorldMags.net
P/E is based on trailing 12-month EPS;

data as on 13 February 2014. Source: Ace Equity
MONEY TODAY
March 2014
97
WorldMags.net
BANKING
Best Loan Buys

Are you scouting for a loan to buy a house, a car or for your childs education? Given
below are the best deals on offer from public and private sector lenders.
Best housing loan rates on offer by banks and housing finance companies
Floating rate loans : Tenure - 20 years; Loan Amount - Rs 40 Lakh; Salaried Persons
Private Banks
PSU Banks
HDFC Bank
10.25%
State Bank of India
10.15%*
ICICI Bank
10.25%
Indian Bank
10.20%
Axis Bank
10.25%
Canara Bank
10.25-10.50%
Citibank
Dena Bank
10.75%
HSBC
10.20%
10.25%
10.25%
Bank of India
*10.10% for women
Fixed rate loans: Tenure - 20 years; Loan Amount - Rs 40 Lakh; Salaried Persons
Private Lenders
ICICI Bank
PSU Banks
South Indian Bank
10.50-11.00%#
11.75%
HDFC
Axis Bank
11.00%
IDBI Bank
10.25%
11.50%
Dena Bank
11.75%
Indian Bank
11.75%
12.00%*
Syndicate Bank
Loan reset clause may vary; The rate is fixed for the entire tenure of the loan. Fixed rate not available for smart home and loan against property;
Borrowers are advised to seek further details. # up to 2 yeras. *-Up to 10 years
Car loan rates
Rs
Personal loan rates
Education loan rates
IDBI Bank
10.25%
HDFC Bank
12.99-20%
IDBI Bank
11.25%
Bank of Baroda
10.50%
Dena Bank
13-14%
State Bank of India
11.75%
Bank of India
10.70%
ICICI Bank
13.5-18.5%
Dena Bank
11.80%
Union Bank of India
10.70%
Kotak Mahindra Bank 13.75-19%
Bank of Baroda
12.00%
State Bank of India
10.95%
Bank of India
Union Bank
12.25%*
Tenure: up to 5 years; Amount: Rs 3 lakh.
14.25-15.25%
Amount: up to Rs 4 lakh; Tenure up to 5 years;

All floating rates.
Rs
Rs
Rs
Rs
Tenure: 5-7 years; Amount: above Rs 7.5 lakh;

Floating rates; *11.75% for girls (fixed rate)
Fixed deposit rates

1 year
2 years
9.30% 9.25%
9.75%
9.36%
5 years
9.5%
9.25% 9.05%
9.00% 9.00%
9.05% 9.00% 9.00%

9.10% 9.10% 9.05%
Lakshmi Syndicate Vijaya

Bank
Bank
Vilas
Bank
IDBI
Bank
Canara
Bank
Vijaya
Bank
Lakshmi
Vilas
Bank
Canara Syndicate IDBI

Bank
Bank
Bank
Union Lakshmi Canara

Bank of Vilas
Bank
India
Bank
All rates updated till 11 February 2014
98 March 2014
MONEY TODAY
Vijaya Syndicate
Bank
Bank
Data provided by Deal4Loans.com
WorldMags.net
Volume 9, Number 3, for the month March 2014, released on February 25, 2014 Total number of pages 100 (including cover pages)
WorldMags.net
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on your Mobile
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EQUITIES

Investing in stocks trading

How technology funds are

PLUS: INTERVIEW WITH SAMIR SHAH, MD & CEO, NCDEX 40

Editor-in-Chief: Aroon Purie

Executive Editor: Sarbajeet K Sen

Group Business Head: Manoj Sharma

Volume 9, Number 3, for the month

From the Executive Editor

he social media universe, consisting of websites such as

SARBAJEET K SEN, Executive Editor

For reprint rights and syndication enquiries contact

LOOKING FOR VALUE

Will the bull run in

mutual fund offerings,

GAINING SPEED There are

BEING TECH SAVVY

WAITING FOR A SHAKE-UP New

ZEROING IN ON THE BEST

BEYOND RETURNS Guest writer Nimesh

MISTAKES WE MAKE Common errors you

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From time to time, you will see pages titled An

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The cover story Finding

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Your article on the new unit-linked insurance

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The Healthy Approach

Apartment or Land? Its a real(ty) debate. The pros and

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Look Beyond Projects: Dont

Master Your Money

Tips to Buy a Pre-owned

Celebrating the Tortoises

The House Trap

Free Stuff Online

Do you see WPI inflation dropping by the end of March?

Buying your Dream Home

46.67% Although around 40% of the

keep popping up every once in a while and

Poll conducted between 24 January

Was FM right in announcing moratorium on study loans?

Log on to www.moneytoday.in to cast your vote

ome April 2014, and you could be checking

on January 22, the measure is being taken since the

Figures from Interim Budget

Currency notes issued after 2004 will

Indications are that the process is likely to be smooth

PRE-2005 NOTES CAN BE

of the Gross Domestic

was the total amount

what will be their value?

NPS Set for Another Round of Changes

Sensex or the Nifty indices.