Some good news for homemakers

BY Kairav Shah
Insurance is normally meant for the income-earner of the family. This is because the earning capacity of the head of the family decides the insurance coverage that his family would require, in case of his demise.

However, insurance for housewives does not get that much importance as she is not an income-earner. So how does the insurance sector define women? They are broadly divided into three categories including:

Working women, who have their own incomes are treated on par with the males. Women, who have sizeable income by way of interest, dividend, rent and other streams that attract Income-Tax are also given life insurance without any extra premium or restrictions.

However, for housewives, the income of the husband is taken into account for life insurance purposes. That is, since the housewife does not earn an income, it is the husband whose income comes into focus here. As a result, the amount of insurance is often smaller. Here are some of the policies that such women can have.

Personal accident policy

Insurance companies provide compensation in the event of death or disability directly due to accident. This policy offers compensation in case of death or bodily injury to the insured person, directly and solely as a result of an accident, by external, visible and violent means.

The policy operates worldwide and is a 24-hour cover. Different policies are available ranging from a restricted cover of death only, to a comprehensive cover covering death, permanent and temporary disability. In case of a housewife, the maximum coverage has a cap of Rs 100,000 or 50 per cent of the husband's sum insured, whichever is lower.

Health policy

A normal health policy (by general insurance companies) can also be bought. The maximum sum assured here is Rs 500,000. One could also take two health insurance policies of Rs 500,000 each as the maximum limit for the non-salaried person is Rs 10 lakh (Rs 1 million).

This policy takes care of financial worries in case of hospitalisation. This policy also provides for cashless hospitalisation in India for the treatment of any illness or disease or accidental injury suffered during the policy period.

Critical illness policies

Housewives can also get themselves covered under critical illness policies. In a critical illness plan, one can insure oneself against the risk of serious illness in much the same way as one insure one's car and one's house.

It gives the same security of knowing that a guaranteed cash sum will be paid, if the unexpected and the unfortunate were to happen. A host of critical illnesses like cancer, multiple sclerosis, paralysis, coronary artery bypass surgery, major organ transplant, primary pulmonary arterial hypertension, first heart attack, aorta graft surgery and kidney failure are covered under this. There are no limits to the amount that one can take through these policies.

Overseas travel insurance

When they are travelling abroad, housewives can get themselves insured. The limits are different for different sectors. For instance, the minimum limit is $25,000 for whole Asia except Japan sector. For the rest of the world, it is $50,000. This policy covers medical expenses while travelling abroad for holidays. The premiums are payable in rupees and claims settled abroad in foreign currency.

Another policy, which is not directly meant for housewives is the insurance of risk during child birth and care policy. These policies are available from Rs 50,000 up to Rs 200,000.

This policy covers defects, deformity, malformation, congenital abnormality of any kind whatsoever at the time of delivery of the new born. Even if such a condition manifests itself within 200 days of the date of delivery, or before the expiry of the policy, whichever is earlier, is covered as long as it is of congenital nature.

However, there are exclusions that include post-delivery complications, still-born child, death of the mother, miscarriage, infanticide and any defect, which is not congenital, malfunctioning of any organ defect, which manifests itself after 200 days of the delivery.

Though there aren't many options at present, but housewives should use the ones that are there and get themselves insured adequately.

The writer is head of financial planning at Sykes & Ray Equities

The genesis of corruption in India

They laugh at [Railway Minister] Lalu Prasad. They mock [Uttar Pradesh Chief Minister] Mayawati. They heckle [former chief minister of Tamil Nadu] Jayalalithaa. They taunt virtually every politician in India; for that matter every institution, secular or sacred. They have nothing but unadulterated scorn reserved for our leaders in public life.

Before the reader come to any other conclusion, let me hasten to add that this article is not about politician-bashing, or, indeed, supporting the politico.

Rather, this piece in is all about the declining morality of the elite Indian (not all, but a significant number of them) -- comprising lawyers, chartered accountants, doctors, management graduates and, of course, the media. In short, it is about all those who make, mend and mar every public debate, discourse and decision in India.

They usually have a view -- a lowly view on everyone -- except on others of their ilk for whom they reserve a holy view. Being rich, articulate and connected, they virtually terrorize everyone in public. They would always point at the problem in our systems, never to offer any solution. And precisely for that reason you can never argue with them, nor can you reason with them.


Naturally, when it suits them they would point out to the excellent traffic management abroad and when it doesn't suit them they would simply jump traffic signals in India. If caught they would flaunt their purse. If the policeman is unimpressed, they would flaunt their connections. Morality is always for others, for them it is flexible morality.


What is startling about them is the fact that the stench would be overwhelming should you dare to have a mere peek into their functioning. A former chief vigilance commissioner once remarked that corruption is respectful in India because people in respectable professions indulge in it. Despite their lack of morality, strangely, their opinion matters -- from Marx to markets -- in every public domain.

Consider the following:

The Supreme Court Bar Association (SCBA) in the first week of June suspended senior advocates R K Anand and I U Khan, days after a sting operation by a news channel showed them purportedly colluding to influence a witness in the sensational BMW hit-and-run trial.
The SCBA had also issued show-cause notices then to the two criminal lawyers asking them to respond by July 20.
On June 19, the SCBA revoked the suspension of these two senior advocates. The suspension was revoked by its Executive Committee after considering a report by a three-member subcommittee, which said that "prima facie" it did "not find anything corrupt and/or offensive" against both the advocates.
Strangely everyone has greeted this development, including the television channel that originally exposed the two lawyers through a sting operation, with a thundering silence. If instead of lawyers the chief protagonists were MPs, would our reactions been as muted as it is now?

Did we not as one man seek suspensions for our MPs based on similar circumstances and evidences in a scam recently? Is it because of the fact that those MPs were not as educated or articulate as these gentlemen are that our decisions were swayed? Do we expect only our MPs to be punished based on such evidences while we extend the benefit of the doubt to others in similar circumstances? Or is our bias against the polity blinding us to the morality of the elite?

At an abstract level, Caesar's wife is above suspicion

What is amusing to note here is that professional bodies such as the Bar repeatedly harp on the maxim that Caesar's wife must be above suspicion. But that is at the abstract level, where everyone pontificates perfectly. However, when such majestic positioning is put to the simplest of tests, as in the present case, we have seen arguments getting stretched, technicalities invoked and benefit of the doubt getting extended to the maximum.

In such circumstances what is often forgotten is the 'fundamental requirement' from Caesar's wife.

This instance merely provides the contextual reference to a larger debate. What has been outlined through the revocation of these suspensions merely foretells the fate of the show-cause notices issued and the action that would follow by the SCBA.

Banks go belly up, yet no one is punished

The decision of the SCBA merely reflects the national character of compromise, especially when the elite of the country are involved.

As a case in point, let me highlight yet another classical instance of how morality becomes flexible in cases concerning the elite in my profession (i.e. accounting), too.

Readers may be aware of the disciplinary mechanism of the Institute of Chartered Accountants of India (ICAI) to ensure complete compliance of the professional ethics and Code of Conduct prescribed by it.

The provisions contained therein are one of the most stringent when compared to any other in the world. Naturally, actions taken by the ICAI against errant members have also been on similar lines. There have hardly been any cases where Indian courts have prescribed a tougher punishment against such members than what was originally proposed by the ICAI. On the other hand, there are a number of cases where the courts have reduced the punishment prescribed by the ICAI.

But this fact hides something more than what it reveals. In a report published in December 2004 by the World Bank, titled 'India Report on Observance of Standards and Codes (ROSC) - Accounting and Auditing,' it is mentioned: 'In one case, a private bank that failed in July 2004 was accused by the Reserve Bank of India [Get Quote] of misreporting its net worth and assets in 2001-02 and 2002-03. The RBI accused the auditor of providing an inappropriate auditor's report and referred the case to the ICAI disciplinary committee.'

Obviously, the World Bank was referring to the collapse of the Global Trust Bank (GTB) that went belly up then. Poor World Bank, even in December 2004 it was unaware of the constraints with which institutions in India operate -- especially when it involves the elite of this country. The obfuscation had begun immediately as the bank collapsed.

When institutions begin to protect the elite

According to a Hindu Business Line report, dated July 29, 2004, even the RBI's letter alleging 'misconduct' by statutory auditors of GTB did not constitute a formal complaint as far as the ICAI was concerned. "We have received the letter from RBI stating that there has been misconduct by auditors in the GTB case. The letter is not a complaint as far as the institute is concerned. But we will act on this information from the central bank and seek information from all relevant parties," the then ICAI president told the media.

Nevertheless, he also pointed out that the Chartered Accountant Act and Regulations requires a form (Form-8) to be filled along with the requisite fees and evidence to support the complaint.

"There is a procedure for complaint against a member. Even if such a procedure is not adhered to, we can act on information provided to us," he is reported to have said.

While one is not sure (the disciplinary proceedings of ICAI are confidential) as to whether and how this complaint of RBI was registered by ICAI or if RBI was forced by ICAI to resubmit its complaint in the prescribed forms, one is yet to hear the final word on this issue even three years after the bank had collapsed.

But a simple reading of the statement of the then president clearly indicates how the ICAI reacts to cases involving the elite.

Another fatal flaw in the systemic functioning of ICAI is that one of the partners of the firm accused of alleged misconduct in the above-mentioned case is an elected Council member -- the apex body that governs the ICAI functioning. While one does not wish to speculate the ability of a Council member in influencing his colleagues in the Council on the case involving his firm, the fact of the matter is that even after three years of the bank going belly-up, things remain gloomy.

Crucially, look at the duplicity of our elite. While we expect our MPs and MLAs to resign when they are charge-sheeted by the courts, on a similar footing, we do not expect our elite to be penalised when confronted with similar charges.

Readers may recall as to how more than 100 senior audit firms were blacklisted by ICAI in the aftermath of the financial sector scam that rocked the country in early 1990s. A senior chartered accountant and a former Council member tells me that virtually all those auditors were exonerated as no case was made out against them as 'appropriate evidences were not forthcoming from other institutions.'

Simply put, ask ICAI and it would blame RBI. Ask RBI and it would blame ICAI. And jointly both of them would blame the system -- a euphemism for the lack of will to nail the culprits. And in all such circumstances, the beneficiaries are the elite who escape scot-free. Obviously, the losers are you and me.

The (Im)-Moral of the story

According to Indian scriptures, we sacrifice the goat, but never the horse or an elephant and definitely not the tiger. Paraphrasing the same, the former chief vigilance commissioner remarked that it is always the small fry who is sacrificed in any scam, the elite are never caught.

Indian democracy is fast turning into by the elite, for the elite and of the elite.

Mkts flat amid low volatility, RIL, ICICI down

The Bombay Stock Exchange benchmark index Sensex opened lower by over 26 points Monday on emergence of profit selling by retail investors.

The Sensex traded lower by 26.75 at 14,440.61 in the first five minutes of trading. The National Stock Exchange's index Nifty was also down by 11.30 points at 4,240.75.
The markets were trading flat in the red zone amid low volatility since opening. All the key BSE indices were in marginal green except the BSE bankex, which was down over 50 points. Volumes were low however the breadth was nearly 2:1.
At 10.24 hours IST, the Sensex was down 17.07 points or 0.12% at 14,450.29, and the Nifty down 2.40 points or 0.06 per cent at 4249.65. About 1067 shares advanced, 536 shares declined, and 33 shares remained unchanged at 10:24 hours IST.

Top gainers on the Sensex were Reliance Energy at Rs 601.50 up 1.91%, BHEL at Rs 1,459.90 up 1.37% and ONGC at Rs 920.50 up 1.30%.
Top losers on the Sensex were HDFC at Rs 1,858 down 1.15%, ICICI Bank at Rs 945.50 down 0.87% and Maruti Udyog at Rs 758 down 0.52%.
Most active shares on BSE were Reliance at Rs 1,698 with 1,20,504 shares, Educomp Sol at Rs 2,337 with 69,033 shares and Praj Industries at Rs 478 with 2,65,856 shares

Reliance, ICICI Bank, L&T, HUL, Satyam, Tata Steel, Sterlite Industries and ITC were down in the opening trade.
Asian Markets: Asian markets were trading mixed today following sharp US losses, Japan's Nikkei plunged 0.51% or 92.49 points at 18,096.14, Singapore's Straits Times was down 0.44% or 15.91 points at 3,599.47, However, Taiwan's Taiwan Weighted surged 1.63% or 144.02 points at 8,956.93, Hong Kong's Hang Seng was up 0.04% or 9.72 points 22,009.63 and South Korea's Seoul Composite rose 0.48% or 8.54 points at 1,779.52.

Market cues:
FIIs net buy USD 402.5 mn in equity on June 21
FII's June 21 includes money from DLF IPO

MFs trade figure for June 21 not reported yet
NSE F&O Open Interest up by Rs 1,270 crore (Rs 12.70 billion) to Rs 75,711 crore (Rs 757.11 billion)

Satyam eyes $75 mn from pact with Nestle

Satyam has signed a three-year agreement with Nestle. The company is partnering with Nestle to roll out a global template across 85 countries worldwide.
The IT bellwether expects to generate revenues of around $75 million over next three years from this contract.
New York-listed Satyam said it would provide services ranging from software development, maintenance and support to infrastructure management.

"As a result of this agreement, the number of Satyam consultants working for Nestle is expected to grow close to 500 over the next year," it said.

Satyam Technologies has now found place in the Information Technology 100, BusinessWeek's ranking of the top tech performers in the world.

The IT major is a top ranker among the top IT 100 companies of the world, according to the financial data from Standard & Poor's Compustat.

The company’s revenue have grown beyond USD 300 million over the past 2-years

TCS limits salary hike to 12-15 pc

The wages of Tata Consultancy Services employees would rise to 12-15 per cent in April-June, the fiscal first quarter, but the rise in the wage bill, including new recruits, would be closer to 15 per cent, Chief Financial Officer S Mahalingam has said.
Mahalingam said that the company had the ability to neutralise the impact of higher wages through measures like cost-cutting, containing the wage bill relative to growing revenue, and at times replacing experienced workers with younger recruits.

"Fundamentally the business operates on sound principles. There is an appreciation of rupee, which will definitely have an impact, which the market has priced," Mahalingam said.

He said that the company's margins were usually the lowest in the fiscal first quarter, when salaries were reviewed. “The company was also cutting costs to ease the impact on margins by balancing the need to cut travel costs with the need to visit potential clients to boost business,” he added.

India’s largest software export firm TCS sees strong demand for software services but it is not likely to sustain last year's 41 per cent revenue growth in part because of the rising rupee. TCS shares, which have fallen nearly 10 per cent in the last three months, closed 0.4 per cent lower at Rs 1,140 , the lowest finish this year.
Mahalingam said, “The operating margins of TCS would shrink by 2 percentage points in the current quarter compared to the January-March period due to the wage bill. Rupee appreciation was likely to have a similar impact.”

The rupee has risen about 8.5 per cent against the dollar this year, to be Asia's best performing currency. It closed at 40.77/ 78 per dollar.
"In the short term, maybe because we have so much money coming in, the rupee may go to 39 or so, but we will gain from hedging," Chief Financial Officer S Mahalingam told the media.

“India's largest software services exporter was not likely to repeat last fiscal year's revenue growth of 41 per cent,” he said. Revenue in the period was Rs 186.85 billion ($4.6 bn).

"The demand environment is good but certainly on a bigger base we can't repeat those high percentages," he said. Mahalingam added that he expected pressure from the appreciating rupee to ease over time.

India's low-cost, English-speaking workforce has attracted foreign firms like IBM, the world's largest technology services company, and helped local rivals including Infosys Technologies and Wipro to grow.
Mahalingam said, “India remained an attractive place for software firms despite rising wage costs and the appreciating currency. "You can still develop a lot of intellectual property in India and be able to command much better prices. So pricing becomes a driver," he said in an interview at his office overlooking the Arabian Sea.

India, computer world's next big thing

Next month, Dell will open a factory in the southern Indian city of Chennai, the U.S. company's first foray into manufacturing in India

Compared to giant tech complexes in China operated by electronics manufacturers such as Hon Hai Precision Industry or Flextronics International, companies that employ tens of thousands of employees at factories producing all sorts of machines, this Dell plant will be modest in scope.

The company has invested just $30 million in the Chennai plant and only has plans to employ about 400 workers to make desktop computers.

Still, this latest addition to Dell's manufacturing team has significance far greater than its small size. According to Stephen J. Felice, Dell senior vice-president and Singapore-based head of Asia-Pacific for the company, India is emerging as one of the most important markets for Dell.

"India is Dell's largest-growing country in the world," he says. Sales amount to $500 million now, Felice says, adding that the company predicts ". . . 50% to 70% year-on-year growth in the foreseeable future."

The Chennai factory is the clearest sign yet that India is emerging as the Next Big Thing in the global PC world. In 2006, there were over 22 million computers in use in India, compared with just 9.5 million in 2003.

That's only one for every 50 Indians. Still, with the number of machines more than doubling in three years, this is a "a watershed era in the history of the Indian PC market," says Kapil Dev Singh, country manager of market research firm IDC, in a recent press statement.

China Slowing, India Gaining

It wasn't too long ago that India was an afterthought for many people in the computer industry. For years, the country took a back seat to China. For good reason: China has quickly grown to become the world's second-largest PC market, after only the U.S., and it's likely to become No. 1 in the next few years.

This year, Chinese are likely to buy 33.6 million desktops, notebooks, servers, and other computers, according to projections from market research group Gartner. For Indian computer buyers, the number is just 8.8 million.

But the market in China is slowing down just as India is accelerating. Both countries will enjoy growth between 16% and 18% this year, says Martin Gilliland, Asia-Pacific research director for Gartner. But next year India will move ahead, he says.

While China's PC market will still enjoy respectable growth of 14%, India's computer sales will grow at a rate higher than 20%. And it won't be a one-year rise. Growth that fast will continue "to at least 2011," says Gilliland.

Until now, Dell hasn't been well positioned to take advantage. In market share, it's in a tie with Acer for fourth place, far behind the market leader Hewlett Packard. Local champ HCL [Get Quote] is No. 2, and Lenovo, thanks to the Indian operations it acquired in its 2005 takeover of IBM's (IBM) computer division, is No. 3.

More Choices Available

That's largely because India's tax structure makes it difficult for companies to import computers, with a price tag that has grown by some 10% thanks to import duties. Not surprisingly, HP, HCL, and Lenovo all put together PCs inside India, while Dell has been importing its machines from its manufacturing center in Malaysia.

"If you are importing finished goods, you can be uncompetitive because of duties," says Gilliland. For a company such as Dell that doesn't yet manufacture in India, having to pay import duty "totally blows you out of being competitive in a bid."

Nonetheless, Felice disputes the suggestion that Dell has been an Indian also-ran, pointing out that Dell is No. 1 among large corporate customers in the country, with more than 40% market share among such big buyers. The new Chennai plant will enable Dell, he says, to diversify its customer base.

"Now we can start to really go after the consumer and small-business" markets, he says. The Chennai factory will produce desktop PCs when it opens next month, but Felice says that by the end of the year Dell workers in Chennai will also make notebook PCs. This will enable Dell to provide more choices for local would-be buyers.

Will Its Model Work?

Dell's choice of Chennai is no coincidence. The city has some of India's best infrastructure and is home to other electronics manufacturers such as Nokia, Flextronics, and Hon Hai.

Nissan and Samsung Electronics are among the other multinationals that have chosen Chennai for their Indian manufacturing base, prompting some people to predict that the southern Indian city can become the country's answer to Shenzhen, the southern Chinese manufacturing hub.

Felice says that Dell based its decision in part on the local government's pro-business policies. The local government, in addition to offering the usual types of incentives, also helped the company find a location and work with local villages to ensure that the investment went smoothly.

The politicians won't be able to help too much with the next big challenge, which is making sure that Dell's business grows smoothly. The new factory -- and the new commitment to the Indian market that it represents -- should provide Dell with a boost.

But Dell will face some challenges in India where credit card usage is low and people are not accustomed to buying directly over the Internet. Those facts of life should make it more difficult for Dell to pursue its direct-sales model in India.

But Gartner's Gilliland believes that the challenges are not insurmountable. Indians "have some suspicions" about making purchases online, he says. "But that will go over time." In the meantime, he says, "I see the potential for a massive opportunity" in the Indian PC market

TCS among 10 most profitable cos

Tata Consultancy Services [Get Quote] has been ranked among the leading global IT companies by global magazine BusinessWeek, besides being the only Indian entity to be listed among the world's top 10 profitable firms.

BusinessWeek in its '2007 Information Technology 100 listing' has placed TCS on 23rd position among world's leading IT companies.

TCS was the only Indian company ranked among the top 10 most profitable companies with a return on equity of 46 per cent, a TCS release said.

According to BusinessWeek, ever since TCS went public in 2004, the Mumbai-based company has been on a tear. It's growing rapidly with 41 per cent rise in revenues to $4.3 billion for the fiscal year ended March 31.

Of all of the Indian tech-services outfits, TCS has the largest network of delivery centres outside of India.

In Latin America alone it employs more than 5,000 people, most of them locals, and it just announced a new service delivery centre in Mexico.

TCS CEO and MD S Ramadorai said: "TCS is focused on delivering the best results for our global customers. This recognition from BusinessWeek is testament that our dedication to customers is helping to fuel our global growth and success."

Infosys may review its dividend policy

Infosys Technologies Ltd chief mentor, NR Narayana Murthy has hinted that the company’s board may look into the dividend policy, if the circumstances change.

“I think the board will have to obviously decide about the dividend every year. If the circumstances change, we will certainly look into it,” Murthy said on the sidelines of the company’s 26th annual general meeting.

Murthy’s reply was in response to a Mumbai shareholder seeking a review of the company’s policy, which limits dividend up to 20 per cent of the net income.
“As a growth company, as a high-tech company, we have taken a decision that we will distribute dividend up to 20 per cent of the net income in a year. So we have stuck to that,” said Murthy.

“In the USA, high-tech and growth companies don’t give anything (read dividend) because they want to plough back all that into the business. As there is a tradition of giving out dividend in India, we have decided to have a policy of 20 per cent,” Murthy pointed out.

Earlier, Murthy told the shareholders that the dividend policy dictated that the company would limit any dividend to 20 per cent of the net income generated during the year.

What makes Prez poll 2007 the dirtiest election ever

The presidential poll of 2007 will probably be remembered as one of the dirtiest and most political election to Raisina Hill.
While choosing India’s first citizen was never a simple process anyway, this year the contest has been reduced to mere political mudslinging.

Murder and financial impropriety charges against the next possible first citizen, a people’s president who appears to have political ambitions and a vice-president playing to his own tune - how did it come to all this?
In a special show Kaun Banega Rashtrapati CNN-IBN Editor-in-Chief Rajdeep Sardesai conducted a debate on the big questions plaguing the election to India’s highest office.

Congress spokesperson Abhishek Manu Singhvi, BJP spokesperson Ravi Shankar Prasad, MP and General Secretary of Samajwadi Party Amar Singh and Tuglaq Editor Cho Ramaswamy were among the panelists to discuss the issue.

Pratibha Patil formally entered the race for presidency when she filed her nomination as the UPA-Left candidate on Saturday. And not surprisingly, the entire Cabinet including Congress president Sonia Gandhi was present to cheer the chosen one.
"She was not UPA's first choice. Why choose this woman when she is going to be rubberstamp?" - Cho Ramaswamy.

Saturday might have been Patil's big day but ironically, it’s only been a time when the past has returned to haunt her.
A story broken by CNN-IBN on loan defaults by a co-operative of which she was once a chairperson have raised several embarrassing questions for Patil.


Is Pratibha Patil the right choice for President?
When Pratibha Patil was chosen by the UPA-Left combined a week ago the Congress said she was a candidate who exemplified honesty and decency in public life. The last 48 hours there is now a question mark on the issue of property.
Reacting to the charges against Patil, Singhvi said, “I think there is no question mark at all. If you have a set of facts which are unrelated and do not convert to any conclusion it does not become a question mark. Here is a person who resigned as director and chairman well before she became even governor of Rajasthan. Seventy-six societies of a similar kind are sick in Maharashtra. Twenty-six of them have been issued notices under the securitisation act. No single notice to her and no personal guarantee, “ he added.

But the fact remains she was also the founder president of that co-operative. She took the loan in 1994, the loan was taken from farmer cultivators and was not paid back.

Singhvi ran to his party’s candidate defence and said every society and sugar factory in Maharashtra started with a loan and hers was not an exception. He also pointed out that all the 76 factories were sick. “Twenty-six of them have notices issued on normal cause. She had nothing to do with the whole issue. She has been associated with an entity that entity is in the process of dealing on a securitisation notice. What is the moral issue here? “ Singhvi questioned.

Strongly reacting to Singhvi’s statement, Ravi Shankar Prasad insisted it was indeed a moral issue considering the sanctity of President’s office. “It’s a question of the highest constitutional office in the country something of a constitutional propriety and moral question has come from there. There were 70 or 75 companies but there directors are not in the race to become the president of India that is the most important feature. Here as you rightly pointed out she took the loan she remains the life member of the society. Her brother today is the chairman of that society. All this makes involvement of public money.”

5 GREAT money mantras

We have already discussed the analogy between a financial planner and a doctor.

Most people I meet have had a bad experience with their previous financial planner, albeit, their reasons are different.

I am citing one such incident.

Midway through a meeting, my prospective client who was a doctor confided in me that her experience over the past five years had taught her, that most financial planners were not concerned about their clients.

I asked her to share her experiences.

Dr Priya: I wanted to invest in IPOs, but never got the information from my advisor. He always recommended products that were either too risky or with no returns at all. He did not try to advise me personally.

He categorised me, as a client who expects less returns and has little risk appetite. We never discussed my goals; he never pushed me to invest in products that were apt for me.

Me: I have not met a good doctor so far. The last time I suffered from fever, I bought a tablet. I was told to have it thrice a day for three days and was assured that I would be fine once the course was over.

On the second day, I discovered I developed an allergy to the tablet and my condition got worse.

It took me a total of 15 days to recover, which could have happened in three days had I been given the right course of medicine.

Dr Priya: You should have considered going to someone who could examine you and prescribe the right treatment, which would be effective and take care of your allergies.

Me: I am tempted to repeat the same comments as far as your finances go.

Dr Priya understood my train of thought.

We are now working on her financial plan where she is setting her goals and prioritising her needs.

She has now realised that the onus is not only on the financial planner but also on her as a client, to make her voice heard.

It is important that she subjects herself to a complete financial check up, so that her financial advisor can prioritise her goals and help her achieve financial independence in her golden years.

This can only happen if she invests in the right products that suit her risk profile and are in line with her financial plan.

Money matter mantras

Financial planning is the ideal way to start investing.
The sooner you start working towards your goals, the easier it gets.
Inform your Financial Doctor of all symptoms, allergies and aims.
Treat your FP like you would your doctor, and see how it work.
Trust him (or her)!
The author is a Certified Financial Planner and Managing Director of International Money Matters Pvt Ltd.

10 myths about Systematic Investment Plans

SIP is a method of investing a fixed sum, regularly, in a mutual fund. It is very similar to regular saving schemes like a recurring deposit.

An SIP allows you to buy units on a given date each month, so that you can implement an investment / saving plan for yourself. Once you have decided on the amount you want to invest every month and the mutual fund scheme in which you want to invest, you can either give post-dated cheques or ECS instruction, and the investment will be made regularly. SIPs generally start at minimum amounts of Rs 1,000 per month and the upper limit for using an ECS is Rs 25000 per instruction. Therefore, if you wish to invest Rs 100,000 per month, you may need to do it on 4 different dates.

As is customary, I started with describing the concept of an SIP.

Let us break some myths on SIP now.

Investment in equity mutual funds or unit linked insurance should always be done in SIP mode: I remember in 1999 when Templeton Mutual fund would talk about SIP � the market looked at it skeptically. And it took a lot of convincing for customers to accept it. Now, life has come a full circle. Everybody wants to (always) invest using an SIP. If you have the maturity and calmness to realize that equities are for the long term and are willing to give your funds about 10 years, and you have a lump sum, you can afford to give the SIP route a pass. However, if your horizon is less than five years, you must do an SIP.

I do rupee cost averaging in a single equity � that is a kind of SIP is it not? This is a question I face every day. No, a rupee cost averaging in a single scrip cannot be equated to an SIP. When the market brings down the price of a single scrip, it is giving you information. You need to react to that.

Let us take two examples - Lupin Laboratories - has moved from a high of Rs 700 to Rs 100 and back to Rs 700. The question to ask here is not whether an SIP would have worked. The question to ask is whether you would have had the stomach to continue the SIP through this period.

Silverline Technologies moved from Rs 30 to Rs 1300 to Rs 7! In this case, if you had started an SIP at a price of Rs 1300, today you would be licking your wounds. SIP works in a portfolio, not in a single scrip.

You cannot invest a lump sum in the same account in which you are doing an SIP: Many people assume that if they are doing an SIP in a particular fund, and suddenly they have a surplus, they cannot put that lump sum in that account. Fact is, in case you are doing an SIP of Rs 10,000 per month in an equity fund, and suddenly you have a surplus of Rs 100,000 and clearly you have a 10-year view on the same, then you can just push it into your SIP account. SIP is just a payment mode, not a scheme!

If I miss investing for a particular month, will they prosecute me? Now, this is the fear of EMI that people have. In an SIP you are buying an investment every month (or quarter), there is no question of prosecuting you for missing one investment. As a matter of discipline, you should not miss any month; however, missing one month's investment is not a crime!

When you have a surplus (accumulation stage of your life) you should do an SIP and during retirement you should do a SWP: No. You should ideally keep your withdrawals only from an income fund or a bank fixed deposit. You should sell an equity fund on some other basis, say deciding to sell 20 per cent of your portfolio in a year so that the return is 4 times the 30 year historic return. SWP, by definition cannot work in an equity fund! (Also read - 7 good reasons to invest in SIPs

SIP works for everybody, but does not work for me: Another myth. SIP works in a well-diversified equity fund in the long run. When people put forth arguments that it does not work for them, they have either not chosen a good fund or are looking at a 12 month horizon.

SIP is only for small investors: Nothing can be farther from the truth. I have a client who has invested Rs 32.66 lakhs using SIP, starting from January 1998 till date. Obviously, he has invested much more in later years as his income went up and the funds together are worth Rs 97 lakhs (Rs 9.7 million), substantially higher than his provident fund.

Market is at very high level to start an SIP: I have heard this when the index was 3000 also. I have no clue where the market is headed, but I know SIP works!

All fund houses are now charging a full load on the SIP, so now SIP will not work Why not time the market? Introducing an entry load was expected to happen and it has happened. What actually hurts the retail investor is the asset management charges � 2.5% in most cases is a bigger threat to compounding!

If I do an SIP in a tax plan, can I withdraw all the money on completion of 3 years? Another regular question almost! Every installment has to be with the fund house for 3 years. The lock-in comes from the Income tax rules, which say that a tax saving scheme should have a 3-year lock-in. You cannot escape that by doing an SIP!

Indian economy overheating? Bah!

Several international and domestic economists, policymakers, and journalists, and including prominently The Economist, offer one explanation after another to justify their predetermined, ideological (?) and/or confused conclusion that the Indian economy is overheating, and/or that the rupee is mismanaged (read that it should be allowed to appreciate).

The list of distinguished economists (both Indian and foreign) within and outside India is large; can they all individually and collectively be in error? I believe so; so bear with me as I go through the arguments offered. At the end, you can't take both sides and conclude everybody is right; one view is "right", the other "wrong" even within the bounds of two-handed economics and multi-faced research.

So here goes. First, what does overheating mean? For most honest brokers, it means an unsustainably high rate of acceleration in economic growth. How does one know that the acceleration is unsustainable? By noting that the rate of inflation has also increased to a high and undesirable (even if sustainable) level. There is a third parameter--trade deficit--whose pattern can also reveal overheating.

However, the trade deficit may indicate other factors at work, most importantly the exchange rate. Ordinarily, a rising trade deficit can indicate overheating, but this is often misleading.

For example, if one went by the rising trade deficit view, one would be forced to conclude that the US economy was overheating, even as it accelerated to a growth rate below 2 per cent per annum. And, equivalently, one would be forced to conclude that the Chinese economy was spiralling towards a recession as its trade surplus reached beyond 10 per cent of GDP.

Analogously, the rate of growth of credit expansion can also be misleading--it can either mean an overheating economy or an economy moving towards a higher growth path, or an economy becoming more monetised (more transactions in the formal sector).

Perhaps the least useful indicator of anything, let alone overheating, is the rate of growth of money supply. In a closed economy, it had meaning, but even the wisest of the overheating aficionados acknowledge that India is not the closed economy it was five years ago, let alone the super-closed economy it was in the late 1980s.

There are three major determinants of growth--investment (capital), labour, and productivity. While the growth rate of employment has accelerated to a long-run average of now close to 2.5 per cent per annum, the unemployment rate has not budged, as labour force growth has also increased to this average (powered by increases in the labour force participation rate of urban women).

So no signs of overheating here. Just five years ago, India was saving and investing about 23 per cent of GDP. Since then, the savings rate has increased by at least 10 percentage points and in 2005-06 was more than 32 per cent of GDP and in 2006-07 is likely above 34 per cent (Prime Minister Manmohan Singh, please note: If conspicuousness has increased, it is in the arena of negative consumption, i.e. savings).

But savings do not determine growth, investment does. And the rate of investment is close to 36 per cent plus of GDP, up some 13 percentage points over just a few years ago. This translates into a rate of growth of capital of 10 per cent per annum, compared to a 5 per cent growth rate before.

Not too many of the sceptical growth experts have argued, either, that this increase in investment is a spike and therefore unsustainable, nor have they argued that increased investment financed mostly by increased savings is a sign of overheating (not yet, anyway, but who knows what they will say in order to "save" their ideological beliefs).

Simple and conservative calculations suggest that these extra inputs into production will yield an extra growth rate of 2.8 per cent per annum. Take almost any time-period post 1980 and India's GDP growth rate has been close to 5.6 per cent. Thus, one reaches the conservative conclusion that the expected, sustainable, non-inflationary GDP growth rate in India is 5.6 + 2.8 = 8.4 per cent per annum.

These calculations do not factor in the increased productivity growth that comes in from a step jump in investment spending. This is easily at least 1 per cent per annum. So look out for GDP growth above 9.4 per cent to even begin thinking about an overheating India. And forget 7 or even 8 per cent per annum as the non-inflationary trend rate of growth.

What about all the extra inflation, the other favourite of the (confused) naysayers and/or the present government? Isn't the high inflation we are experiencing a sign of an overheated economy? There are several indicators of inflation available, and one can choose the consumer price index to make the point that for a brief period, supply-side factors (a steep increase in the price of cereals and oil) did cause the inflation rate to jump by 2 percentage points.

But these indicators are outdated (in terms of "base" year) and restricted (only sample either industrial workers, or agricultural workers). The GDP deflator is an accurate indicator of trends in inflation. Since 2003, this indicator has not wavered much beyond 4.3 per cent per annum, and in the last problematic year (2006) registered 4.6 per cent.

This trend is supported by the WPI--an inflation rate in 2006 equal to that in 2005 at 4.7 per cent per annum. So far this calendar year, seasonally adjusted inflation is running at a 3.5 per cent rate. Overheating, anyone?

Given this freely available data and reality, why do the overheating protagonists blissfully parrot this grossly inaccurate line? Does the hugely increased investment spending not add to any extra GDP growth? As a forecaster, one should always remind people of when one is right--and quietly change one's opinion when one is wrong.

Some quotes of Keynes that will help those in error to correct themselves. "It is better to be roughly right than precisely wrong". Or "there is no harm in being sometimes wrong--especially if one is promptly found out" and finally, "when facts change, I change my mind. And what do you do, Sir?"

Simplest way to make money in stocks

Though his salary may run into six digits, the average young executive would wait for that annual discount sale to buy his favourite brand of clothes, shoes and accessories.

A well-heeled housewife would probably squeeze the last paise out of the corner vegetable vendor, before deciding to buy her daily quota. You will probably haggle for those ten rupees with the porter before handing over your luggage , even if you are traveling first-class by Rajdhani.

But when it comes to stocks, we prefer to buy the ones that are rising and shun those that are falling. A slight fall in value of stock reduces the number of investors who would want to invest.

We are not discussing the professional trader or a pock-marked technical analyst, who is seasoned enough to know when to run and when to bail out. We are discussing the common investor, who sells when a stock falls and buys when it rises. We are not discussing the trader who has no capital to take delivery and must square up in case stocks plummet.

Those who sit in front of the screen get carried away by the wild swings of the markets. Those who are glued to their TV sets and mobiles will also commit these mistakes.

The main reason for this behaviour is the lack of conviction in the stock, which stems from the fact that the stock has probably been bought in a jiffy on some hot flying tip.

A factor helping this phenomenon is the ease with you can buy and sell stocks. When have you seen someone booking a loss in his house, if the price falls from the levels which he has bought? But an investor will sell Rs 1 crore (Rs 10 million) worth of stocks at a loss if he sees the prices stumbling.

As investors, we should see market sell offs and corrections as an opportunity to buy rather than panic and sell. It is akin to a sale. When the stock is available at a massive discount to the recent prices, there are no takers.

Going back to our example of garment sale, the clothes in the sale may be export rejects, seconds or with other manufacturing defects, whereas in the stock sale, the stocks are the same class-1 shares. In fact, lower prices means locking of a higher dividend yield also.

If we have fundamentally liked the stock at a particular level, when the price drops 20 per cent lower, we should like the stock even more, if there has been no adverse fundamental change meanwhile. But investors tend to sell on weakness.

In order to see whether this theory holds true, I backtracked the Sensex for the last 17 years and studied its movements since January 1, 1990. In these 17.5 years there have been 43 instances when the Sensex has dipped 10 per cent or more, in terms of swings.

If an investor were to invest after all the 43 falls, he would have got positive returns in 34 of the instances, within three months. In nine instances there would have been negative returns.

On average, counting for the losses, his returns would have been 11 per cent in three months, non-annualised. And if you hold on for another three months in eight of those nine loss-making cases, the losses turn into profits.

But you don't have to wait for the Sensex to lose 10 per cent to start investing. Sometimes, individual stocks correct with in a broader market up-move. Unless there are fundamental reasons to believe that you should avoid the stock, dips are good opportunities to enter the stock.

Then there are other opportunities that come your way. When an analyst recommends a particular stock on television, you may find the stock doing an Indian Rope Trick. If you like the argument, do not run after the stock concerned. Give it some cooling time and it will be back at the same or even lower levels in a few weeks. That is the time when you close in on your prey.

The easiest and the simplest way to make money in the markets is to buy low and sell high. Keep that in mind for a sound sleep and a fatter wallet.

SANIA MIRZA

Birthdate: November 15, 1986
Age: 20 years
Height: 1.71m (5' 7 1/2")
Birthplace: Mumbai

Highest Singles ranking: No. 31
Highest Doubles ranking: No. 28
Status: Pro (2003)
Current coach: S Narendranath
Former coaches: Vasudeva Reddy and C G K Bhupathi

Personal:
Sania was born in Mumbai but now resides in Hyderabad. She began playing tennis at age 6 and was coached by her father, Imran Mirza. She has one sister, Anam. She is the first Indian to break into the top 50 WTA rankings. Tennis legend Steffi Graf is her idol. Ocean's 11 is one of her favourite movies, as are actors Brad Pitt and Hugh Grant.
She loves listening to hip-hop, rap and Hindi remixes and likes playing cricket and swimming. He favourite colors are red and black.


Career highlights:

2006 - Second straight Top 100 finish in season highlighted by one SF run, at Tier III Kolkata (as No.5 seed, d. No.4 seed Rezai 64 75 in QF, having trailed 4-1 second set; l. to top seed and eventual champion Hingis) and four QF, incl. Cincinnati (l. to Schnyder 76(7) 75, after holding set point during first set tie-break) and Seoul (d. No.8 Hingis 46 60 64 in 2r for first Top 10 victory of year, third of career; l. to Ruano Pascual 76 third set);

Roland Garros and Wimbledon; impressive doubles results, claiming second and third career Tour doubles titles at Bangalore and Kolkata (both w/Huber; pairing is now 12-0 when playing in India, having also won 2004 Hyderabad together); three-time doubles runner-up as well, with different partners; withdrew from Rome w/low back and wrist injury.

2005 Japan Open: Reached the semi-finals of women's singles and doubles. Shahar Peer of Israel was her partner in doubles. Also reached her highest doubles ranking -- 114.

2005 US Open: Lost in 4th round to top seed Maria Sharapova. Voted 'Best Player of the day' on the 3rd day for winning her 2nd round match despite bleeding toes.

2005 Forest Hills Women's Tennis Classic, New York: Reached second WTA final but lost.

2005 Acura Classic: Lost in the third round to Akiko Morigami of Japan. By beating 8th-ranked Petrova, she broke into the WTA top 50 for the first time.

2005 Dubai Tennis Championships: Upset reigning US Open champion Svetlana Kuznetsova in 2nd round to reach the quarter-finals.

2005 Hyderabad Open singles: Won the tournament defeating Alyona Bondarenko of Ukraine in the final and became the first Indian woman to capture a WTA singles title.

2005 Australian Open singles: Became first Indian woman to reach the 3rd round of a Grand Slam tournament.

2004 Hyderabad Open doubles: Won the tournament partnering with Liezel Huber to become the youngest Indian to win a WTA or ATP tour title and the first Indian woman to capture a WTA tour title. Entered the singles as wild card but lost in the first round to the eventual winner, Nicole Pratt.

2003 Wimbledon Championships Juniors doubles: Won the tournament partnering with Alisa Kleybanova to become the youngest Indian and the first Indian woman to win a junior Grand Slam title.

2003 Afro-Asian Games: won four gold medals - Women's singles, Mixed doubles (with Mahesh Bhupathi), Women's doubles and Women's team events (the last two golds in partnership with Rushmi Chakravarthy) [5]