The Smart Investor

Tata Motors: 500,000 Nano forms = Rs.15 crore

Atul Karmarkar — Fri, 24 Apr 2009 00:59:45 +0000

Just days after Tata Motors began the booking process for the Tata Nano, the company has reaped a windfall of almost Rs.15 crore, purely by selling close to 500,000 application forms @ Rs.300 each. The sale of forms started on April 1, bookings began from April 9 and close on April 25. State Bank of India (SBI), which is offering loans at 10% now, has already sold over 100,000 forms.

All the booking applications will be subjected to a computerised random selection procedure. Within 60 days of the closure of bookings on April 25, Tata Motors will announce the allotment of 100,000 cars in the first phase of deliveries, scheduled to commence from July onwards.

The Nano can be purchased by taking a loan for a seven year period as compared to the normal maximum tenure of five years.

Nice way to get some extra cash, huh?

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Axis Bank – Shikha Sharma takes over as Nayak moves out

Atul Karmarkar — Tue, 21 Apr 2009 01:23:20 +0000

Shikha Sharma, CEO and MD of ICICI Prudential Life Insurance, has decided to move on.

She has been offered the top job at Axis Bank, which caused current chairman and CEO JP Nayak to put in his papers after being at the helm for nine years. Nayak was against her appointment, and wanted an insider to take over the top job, but he was overruled by the Board 8:1. Sharma beat two others shortlisted by the board, MM Agarwal and Hemant Kaul.

Shikha Sharma probably took this decision once Chanda Kochhar got the top job at ICICI Bank. On the other hand, Nayak, who has steered Axis Bank through troubled waters, still had time on his hands as his term gets over only on July 31. A couple of years ago, the RBI had asked Axis Bank to separate the posts of chairman and managing director, but Nayak didn’t agree, and as a compromise, the post of managing director was abolished and Nayak became chairman and wholetime director.

Shikha Sharma’s replacement at ICICI Prudential Life Insurance is likely to be V Vaidyanathan, currently Executive Director at ICICI Bank.

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Morningstar starts India operations

Atul Karmarkar — Thu, 16 Apr 2009 02:25:07 +0000

Morningstar Inc, a Chicago based independent investment research company has commenced operations in India. Aditya Agarwal has been appointed as the Managing Director of the company in India. Agarwal was one of the founders of MutualFundsIndia.com (later acquired by ICRA).

Morningstar already has a presence in India; it’s data centre, which houses around 150 people. This centre was part of the deal when it acquired Hemscott from Ipreo Holdings LLC for $51.6 million.

Morningstar is a 25 year old company, founded by Chairman and CEO, Joe Mansueto with an initial investment of $80,000. They went public in 2005, and Mansueto still holds around a 57% stake in the company. The firm’s rating system for mutual funds and stocks is coveted by all industry players.

They plan to offer a mutual fund product soon, but it remains to be seen how it will fare during this ongoing global meltdown in stocks and growing risk averseness among investors towards equity.

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SBI Chota SIP, a micro SIP from SBIMF

Atul Karmarkar — Wed, 15 Apr 2009 16:34:49 +0000

SBI Mutual Fund has launched an equity–based micro SIP called SBI Chota SIP.

This scheme is targeted at low income households in rural and semi-urban areas. The idea behind the scheme is basically to introduce them to long term investments in equity.

The minimum investment needed is Rs.100 per month and the minimum duration is 5 years.

Those investing thru the Chota SIP can invest in SBI Magnum Balanced Fund, MMPS 93, MSFU Contra Fund, and SBI Blue Chip Fund.

This will certainly help those from the lower income group but I see one problem with applying for this scheme – one needs to have a PAN card, and I think this is a big hurdle. If they can use some other document(s) in lieu of that, they can rope in more people to invest.

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Hindalco shareholders approve financial restructuring plan

Atul Karmarkar — Mon, 06 Apr 2009 16:36:27 +0000

Hindalco informed the BSE that it’s shareholders have approved the financial restructuring to use a portion of its reserves to write off expenses incurred by the company on international acquisition and domestic expansion. As per the scheme, the balance lying in the Securities Premium Account would be transferred to the Business Reconstruction Reserve Account, which could also result in a reduction of capital.

The company had earlier said “the present global economic scenario had an adverse impact on its domestic and overseas operations which may result in impairment in value of its assets or investments”.

The company had said that it would undertake the financial restructuring in a manner such that its operating results do not get impacted by such costs. In February, the board had approved the arrangement.

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SBI gives highest return of 9.7% on EPFO funds

Atul Karmarkar — Sun, 05 Apr 2009 06:52:45 +0000

In July last year, the EPFO had appointed HSBC AMC, ICICI Pru AMC, Reliance AMC and SBI as fund managers to manage a part of it’s overall corpus, the main objective being an improvement in returns on EPFO’s investments.

Based on performance figures, SBI has given a return of 9.7%, which is better than that given by HSBC (8.5%), ICICI (9%) and Reliance (9.1%). The period under review was September 17 to December 31, 2008.

EPFO has invested Rs.30,461 crore in central government securities, which earns a return of 7.25%, and Rs.20,000 crore in state government securities and loans, which fetches a return of 7.5%.

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Good Bye BCTT

Atul Karmarkar — Thu, 02 Apr 2009 15:22:18 +0000

With effect from April 01, cash withdrawals from bank will not attract tax. This is following abolition of the banking cash transaction tax (BCTT) in the Union Budget 2008-09.

The BCTT was introduced in Budget 2005-06 with the aim for setting an audit trail and to prevent money laundering using the banking channels and was applicable in whole of India except Jammu & Kashmir.

Cash withdrawals over Rs.50,000 in a single day by individuals and Hindu undivided families from current accounts attracted BCTT at the rate of 0.1%. The limit for others was Rs.1,00,000. Cash withdrawals from savings bank account did not attract the levy after an initial proposal to do so raised a furore among people.

The total collection of BCTT stood at Rs.600 crore in 2008-09.

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ICICI Bank and Singapore Airlines launch co-branded credit card

Atul Karmarkar — Wed, 01 Apr 2009 01:37:00 +0000

ICICI Bank and Singapore Airlines have launched a co-branded credit card, the ICICI Bank Singapore Airlines VISA Platinum credit card. (pdf)

Singapore Airlines’ Regional Vice-President (West Asia and Africa) Lee Lik Hsin said this was the first time they were launching a credit card in India, and hoped the card would bring unparalleled benefits to its loyal customers and further boost the appeal of their KrisFlyer programme in India.

KrisFlyer is Singapore Airlines’ frequent-flyer programme under which its enrolled members can redeem their miles for free flights on over 20 global airlines to more than 820 destinations across 160 countries.

The ICICI Bank Singapore Airlines Visa Platinum Credit Card has exclusive privileges especially designed for members, which include

Complimentary membership to Singapore Airlines KrisFlyer Club and Silver Tier Hilton Honors Program
5000 KrisFlyer miles earned when you first use the credit card and up to 18 miles for every Rs. 200 spent on the card.
Exclusive and fabulous fares from Singapore Airlines
Access to Golf courses, airport lounges
Discounts at international duty-free shops, Spa packages in Singapore, Hertz rent-a-car, Matrix calling cards

To apply for the card, SMS to 5676766 or apply online.

The best option? Wait for a representative to call you. Though they say the card is meant for premium members, having a platinum card is really no big deal nowadays.

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LIC launches credit card with Corp Bank

Atul Karmarkar — Tue, 31 Mar 2009 00:41:16 +0000

Insurance behemoth Life Insurance Corporation of India (LIC) has launched it’s credit card in association with Corporation Bank, who is the card issuer. They have formed a separate company, LIC Credit Cards Services, to manage this new business. The company will be headed by its Director and Chief Executive Hemant Bhargav.

Initally, the cards will be offered to existing policy holders and will enable them to make payment of their premiums.

I don’t think having an additional credit card player in this sector makes any sense… There are already too many out there and not much to choose from if you compare all credit cards.

Secondly, payment of LIC policy premium is allowed thru netbanking so I don’t see why anyone will necessarily do so using the credit card.

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Proposal to invest 15% of EPFO funds in stocks rejected

Atul Karmarkar — Thu, 26 Mar 2009 16:47:21 +0000

The Finance Ministry’s ambitious plan of investing Employees’ Provident Fund Organisation (EPFO) money in the stock market has come a cropper.

In August 2008, the ministry had put up a proposal seeking to invest upto 15% of the EPFO corpus (Rs.1,82,000 crore) in shares of listed companies along with ELSS funds. With the markets tanking the way they have, I guess this wasn’t a difficult decision to make. Even the trade unions were totally opposed to this move. So for the time being, these funds will continue to be deployed in central government securities, state government loans and government guaranteed securities.

The finance ministry had initiated this proposal after the EPFO allowed private players to manage PF funds.

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The Smart Investor

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