Monday, October 29, 2001, Chandigarh, India





B U S I N E S S

Y O U R  M O N E Y
A GUIDE TO PERSONAL FINANCE

Debt funds attract investors
Chandigarh
The ongoing market recession has put the investor in a criss-cross situation, trying to be over cautious, yet unable to decide upon various investment options. While a large chunk of people are shying away from all the other options preferring to put their money in banks only despite low returns , there is another segment posing full faith in the share market and expecting enormous returns.

MARKET UPDATE

Pharma stocks continue to hog limelight
P
harma stocks have continued their winning streak during the last week as well. The news of an 11 per cent increase in retail sale of pharmaceuticals in the month of August has helped to boost the sentiment. Though this is in line with the expectations, as pharmaceuticals sales pick up during the monsoon season. Anti-infective which form about one fourth of the total retail sales, helped to pick up the overall pharmaceutical sales. The major gainer were Dr Raddy (up by 12 per cent to Rs 1100.35), Ranbaxy (up by Rs 34 to Rs 724.8), Glaxo (up by 4 per cent to Rs 257), Cadilla (up by five per cent Rs 118.75).




EARLIER STORIES

National Capital Region--Delhi

THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

REAL ESTATE

Moving to the periphery of Chandigarh
C
handigarh has expanded tremendously during the last decade. In order to maintain its architectural beauty and ecological balance, to give it a healthy and planned development and prevent the growth of slums and ramshackle construction on its periphery, it was decided to regulate the construction activity around this planned city by “the Punjab New Capital Periphery Control Act 1952”, which prohibits any change of land use within the radius of 16 km of its outer boundaries except for bona-fide use, that too, with prior permission, exempting the areas falling within in the villages’ redline and limits of notified area or municipality.

ANALYST’S DIARY

‘Happy days’ back again
E
arlier last week, the sensex bounced back to close at 3042, for the first time after the September 11 terrorist attacks on WTC when the Sensex closed at 3032. The market capitalisation of actively traded stocks increased by around Rs. 60,000 crore in 17 trading sessions. With this, the BSE Sensex and market capitalisation of BSE traded stocks almost pulled back to the levels of September 12, 2001, the day the Sensex crashed by 117 points on the wake of the terrorist attacks in the US.

CHECK-OUT


An elderly woman walks past a banner protesting against the International Monetary Fund (IMF) and the World Bank (WB) as part of an anti-globalisation demonstration in Hong Kong on Sunday.
An elderly woman walks past a banner protesting against the International Monetary Fund (IMF) and the World Bank (WB) as part of an anti-globalisation demonstration in Hong Kong on Sunday. More than 300 protesters participated in the protest. Anti- globalisation activists meeting in Hong Kong on Saturday ahead of the World Economic Forum said the agenda of big business was increasing the problems of unemployment and poverty for many developing countries.
— Reuters

Check price, quality & warranty of product
I
t’s the stuff that movies are made of! Squeeze a tube of cream and out comes a diamond or better still, a diamond pendant! Open a toilet soap wrapper and you will find gold! And these are not tricks used by smugglers to evade customs officials. These are ‘prize catches’ offered by manufacturers to sell their product! And these are only samples of the kind of goodies being offered by manufacturers this season!


Wood carving trade hit by attacks in USA
Saharanpur, October 28
The traditional wood carving business has been hit hard following the US reportedly discouraging foreign buyers from placing fresh orders.

Volkswagen to enter Indian car market
Wolsburg (Germany), October 28
Even as the domestic car industry in India is finding the going tough in the face of entry of increasing number of new foreign cars, the German auto giant Volkswagen is all set to make a grand entry into the country with the launch of its Skoda brand of cars this year.
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Debt funds attract investors
Shveta Pathak

Investment Adviser, Mr Iqbal Singh, HDFV Bank advises following parameters while investing in MFs:

* Past Performance of the fund-most debt funds gave 15-17 per cent returns last year but the same is not going to happen this year.
* Size — smaller the size easier it is for the fund manager to handle the fund.
* Objective of the fund, Portfolio turnover, Sharpe’s ratio and Fund Manager.
* Age — Older the fund, better it is.
* Characteristics of the fund — check composition of the portfolio, or at least top 10 holdings. Fund should not be concentrated towards one industry/company.
* Expense Ratio — ratio of expense to average NAV
* Timing of the fund — that is, when it enters the market. Entry during bearish phase can be rewarded whereas in bullish phase can be disastrous

Chandigarh
The ongoing market recession has put the investor in a criss-cross situation, trying to be over cautious, yet unable to decide upon various investment options. While a large chunk of people are shying away from all the other options preferring to put their money in banks only despite low returns , there is another segment posing full faith in the share market and expecting enormous returns.

Investment advisers suggest the mid way approach. That is where Mutual Funds assume importance. “There has been a visible shift from share market and banks to the Mutual Funds”, says Mr Iqbal Singh, Investment Adviser, HDFC Bank. In the MFs also, a majority of the investors have shifted from equity funds to debt related funds, he said.

Debt Funds

Every investment option can be judged in terms of five basic characteristics viz. liquidity, returns, safety, tax efficiency, convenience of transaction and monitoring , says Mr Umesh Sood, Investsmart India ( FF and FS) which provides investment advisory services. “Debt funds”, he said, “score well on most of these parameters. Increasingly, investors are also considering them to protect their capital and deliver reasonable returns”.

Income Funds

According to HDFC Bank Investment Advisory, the recommended Income Funds with low to medium risk are IDBI Principal which has shown 16.93 per cent return since the date of its inception. During the last six months, the annualised returns of the fund were 15.63 per cent and for three month returns were 9.38 per cent. HDFC Income Fund is also recommended in the low to medium risk category. DSP ML bond fund, Birla Sunlife Income Plus and Sundaram bond are recommended funds with medium risk outlook. These funds have shown more than 13 per cent returns since their dates of inception and between seven and more than 9 per cent annualised returns during last three months.

Investsmart India recommends Templeton India Income fund-growth and JM Income growth also.

Gilt Funds

Gilt Funds have bounced back after RBI measures. It is better to spread money between gilt and liquid funds, says Mr Sood. Recommended gilt funds by investment advisors are: Templeton Government Security (long term), Prudential ICICI Investment Plan, Kotak Mahindra K-Gilt Investments (LT), Prudential ICICI Treasury Plan, Birla GP Plan- growth, Tata Gilt Securities Fund etc. “These funds have shown consistent returns and good local clearing”.

Liquid Funds

HDFC recommends Birla Sunlife Cash Plus, Prudential ICICI Liquid Plan, Zurich India Liquid Saving, Alliance Capital Cash Manager — all with low risk outlook and Pioneer ITI Treasury Management with low to medium risk outlook. Annualised returns for 182 days of all these funds have been more than 8 per cent, for 28 days (analysed on October 19 this year) more than 7 per cent.

Investsmart recommends HDFC Liquid Fund — growth , Pioneer ITI Treasury Management, Templeton India Liquid Growth and few others.

“Given the present situation, Liquid Funds are a good option as they do not carry any entry or exit load. Moreover there is no lockin period, so more liquidity”, says Mr Sood.

Equity Funds

The recent market fluctuations have seen investors shifting away from the equity funds. However, higher returns are the major attraction these funds offer. The fund should have sound fundamentals and its investments should be diversified between various sectors, suggest the experts.

The recommended equity funds include Templeton India Growth Fund, Prudential ICICI Growth Fund, Pioneer ITI Bluechip, Zurich India Equity Fund, Alliance Capital Equity Fund .

The balanced funds recommended by experts are Zurich India Prudence Fund, Prudential ICICI Balanced Fund (both medium to high risk) Sundaram Balanced Fund (low to medium risk), Pioneer ITI Balanced Fund (low risk). In their three year performance these funds have shown more than 20 per cent return to as high as 37.38 per cent.

Other recommended balanced funds are HDFC Balanced Fund, DSP ML Balanced Fund and Birla Balanced-growth.

The HDFC Bank Investment Advisory recommends investment in income funds with an investment horizon of 8 to 12 months, while long term gilt funds are recommended in long term investment horizon. Short term gilt funds are recommended with investment horizon of 4 to 6 months.
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MARKET UPDATE

Pharma stocks continue to hog limelight
Lalit Batra

Pharma stocks have continued their winning streak during the last week as well. The news of an 11 per cent increase in retail sale of pharmaceuticals in the month of August has helped to boost the sentiment. Though this is in line with the expectations, as pharmaceuticals sales pick up during the monsoon season. Anti-infective which form about one fourth of the total retail sales, helped to pick up the overall pharmaceutical sales. The major gainer were Dr Raddy (up by 12 per cent to Rs 1100.35), Ranbaxy (up by Rs 34 to Rs 724.8), Glaxo (up by 4 per cent to Rs 257), Cadilla (up by five per cent Rs 118.75).

Bajaj Auto

Bajaj Auto was the big winner last week and it gained over seven per cent to close the week at Rs 329.2. The company declared its second quarter results during the week. The results undoubtedly show strong signs of improvement. If, other income of Rs 72 crore is excluded, then the company’s profit before tax works out to Rs 119.96 crore, 43 per cent higher than the corresponding quarter of the previous year. The top line grew by 11 per cent to Rs 920.58 crore.

Indian Hotels

Indian Hotels made hectic gains during the week to close at Rs 131.7, a gain of over 6 per cent for the week. The gains were made on the back of a strong performance that company has put up for the last quarter. For the quarter ended September 30, 2001, the company registered an 875.32 per cent jump in net profit to Rs 82.61 crore compared to Rs 8.47 crore in the corresponding period last year. Total income increased 4.05 per cent to Rs 155.38 crore from Rs 149.33 crore on September 30, 2000. The profit figure was boosted by an exceptional one-time income of Rs 88.64 crore from the sale off the air catering business to a new joint venture company. The increase in price was on the back of increase in volume.

NIIT & SSI

The companies in software education business, NIIT and SSI made a spirited comeback on the bourses. NIIT ended the week with a gain of 13.5 per cent and SSI gained over 10 per cent in the last week. There were rumors that one of the biggest Foreign Institutional Investor (FII), Capital International, was a big buyer in both the companies during the week.

ICICI & ICICI Bank

Both the company’s stocks have been in limelight since the talks of merger have surfaced. ICICI was up by over 8 per cent to Rs 52.6 and ICICI Bank also firmed up to Rs 106.25, up by Rs 22. The board of directors of both the companies has approved the merger of ICICI with ICICI Bank. One share of ICICI Bank will be swapped for every two shares of ICICI. ICICI Bank also declared excellent results for the quarter ended September 30, 2001. The net profit leaped by 120 per cent to Rs 66.15 crore on a total income of Rs 560 crore.

The coming week

The sentiment in the market has improved substantially after the declaration of excellent results by the software major Infosys, Wipro and Satyam Computers. The market is showing firm undertone and after a brief correction the sensex might touch 3200 in the coming weeks. The sensex faces minor resistance at 3080 and 3100. The news of increase hike in the creeping acquisition limit from 5 per cent 10 per cent will also aid the sentiment. All the Tata and Birla Companies may see some action due to creeping in acquisition by the promoters. The strength in the stock like ACC will also help the index to move up-wards. ACC is slated to declare the results during the coming week. 
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REAL ESTATE

Moving to the periphery of Chandigarh
R.P. Malhotra

Chandigarh has expanded tremendously during the last decade. In order to maintain its architectural beauty and ecological balance, to give it a healthy and planned development and prevent the growth of slums and ramshackle construction on its periphery, it was decided to regulate the construction activity around this planned city by “the Punjab New Capital Periphery Control Act 1952”, which prohibits any change of land use within the radius of 16 km of its outer boundaries except for bona-fide use, that too, with prior permission, exempting the areas falling within in the villages’ redline and limits of notified area or municipality.

The unplanned and haphazard growth is no doubt mainly attributed to the influx of the large scale migratory labour and other population and inability of the Administration to provide affordable housing accommodation within the city limits but at the same time the role of the neighbouring state governments’ indifferent attitude, for not taking timely and appropriate action against the violators, converting the agricultural land around the city into unauthorised colonies in total contravention to the provisions of the Periphery Control Act, is also a major reason for this problem. A trend to notify illegally developed rural periphery area around big cities just to create vote bank has further added to the problem. The Punjab Government has notified its entire periphery around Chandigarh under the state’s jurisdiction by recently giving final touches by notifying Naya Gaon area.

By virtue of Punjab Apartment and Regulation of Property Act 1995, developing of any piece of land for colonisation/housing purposes, in the state of Punjab, shall be governed by the provisions laid down thereunder, which shall only allow the sale/resale of a piece of land in three or more parts by an authorised licence holder coloniser; the licence to be issued by PUDA. Even the real estate agents dealing in the sale/purchase of real estates falling in the state of Punjab shall have to obtain a licence from PUDA.

A number of unscrupulous colonisers without possessing any licence are operating around the city periphery under political patronage, especially in the state of Punjab. The underhand sales by way of GPA are being pushed in, where size of the plot is less than 1000 sq mts as the registration of sale deed of the piece of land below 1000 sq mts is debarred as per High Court orders. Plots offered for sale for residential purposes are mentioned as an agricultural piece of land in the sale deed/sale agreement thus putting full liability on the purchaser to face the legal implication, under the provisions of Periphery Control Act, while constructing a house later on. These colonisers violate and flout the prescribed norms with impunity by shifting the legal responsibility to the landholders/original owner of the agricultural land by getting the final sale agreement executed directly with the purchasers.

Thanks to the blind eye being put up by the enforcement agencies while the unauthorised construction in progress, the clusters of houses are either gets regularised politically, at the time of polls, or face demolition. If the authorities at the helm of affairs or as a matter of fact the Government has the will and the determination to stop this menace, why don’t they nip the evil in the bud and act while the construction just start? Why they wait for a colony to come up in full bloom?

With the rates of residential plots, in certain pockets of the cities of Panchkula and Mohali, almost touching the rates of these illegally carved out residential colonies (prevailing rate of residential plots in Sector 25 & 26 Panchkula are roughly @ Rs 3000 per sq yd in the open market at par with the rates of certain PUDA approved colonies), the intending purchasers are advised to give preference to the city areas. The responsibility of the future maintenance of the area rests with the Government in case of a planned city whereas in case of a private colony who knows what to happen. Moreover the quality of life, availability of basic amenities and the law and order situation in the planned cities is certainly better to these privately developed suburbs.

Still planning to buy a plot outside the city limits, the intending purchasers are advised to invest in government approved colonies even if the proposition happens to be a little costlier one. It is mandatory for the approved colonisers to earmark a set percentage of land area for common utility purposes such as parks, wider roads and other utility services like shops, schools and hospitals, thus ensuring a quality living to the habitats. Otherwise, also, the purchaser must ensure, before going for a bargain, that the plot in question falls out of the Capital Periphery Control Act area and the required permission for the change of land use for the purpose the plot is ultimately meant for, has been obtained by the seller/coloniser.
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ANALYST’S DIARY

‘Happy days’ back again
Ashok Kumar

Earlier last week, the sensex bounced back to close at 3042, for the first time after the September 11 terrorist attacks on WTC when the Sensex closed at 3032. The market capitalisation of actively traded stocks increased by around Rs. 60,000 crore in 17 trading sessions. With this, the BSE Sensex and market capitalisation of BSE traded stocks almost pulled back to the levels of September 12, 2001, the day the Sensex crashed by 117 points on the wake of the terrorist attacks in the US. Now, all this is fine and something we had not only forseen, but also predicted when the Sensex had dipped to the 2,600 points level. However, the speed of the bounce-back and the stocks that have risen in the interim raises some serious doubts about the bonafides of this rally.

There is a buzz on the street that the rogue bull operator of Y2K infamy has returned to his ramping ways at the Indian bourses. Like in countless other instances, that is almost part of Indian stock market culture, excessive time is spent in mulling over the counters the rogue operator is active in. So much so, that the bigger picture is completely lost. Nevertheless, all the ‘bad old’ so called ‘momentum stocks’ have begun to witness heavy buying interest. So, what is the message emanating from our bourses now ? To us it seems, the time is ripe for some profit-booking and standing on the sidelines to see whether our good old mutual funds which lacked the nerve to back the market at the 2600 points level choose to take the plunge now. If they pump in fresh funds, which is quite likely as they are sitting on cash at the moment, there is a good chance that the rally might gather some more steam, but then, I guess would be a good time to book another round of profits and laugh one’s way to the bank.

Then of course, it is also worth noting that the government and its organisations are using every trick in the book to revive the market. Take the example of the rather extravagant CRR cut and cut in interest rate against the backdrop of minimal offtake. It would still have passed muster, if only the ulterior motive of the need to get UTI onto its knees at least were not lurking in the backdrop. Let us hope good sense prevails and the needle of suspicion no longer points to an unholy nexus between the institution and the rogue bull operator whose portfolios mirror those of one another, hence suggesting a commonality of interest.

So, marketmen seem to feel that ‘happy days’ are back again. It is here that one understands that happy days for them means, operators on the rampage, a generous ‘ostrich’ approach by the regulating authorities and furiously rising prices. Will it imply riskier lending? What about the nearly extinct small investor, especially of the retired variety who is being pushed closer to the smouldering Indian stock market with every cut in bank deposit interest rates? Finally, what do you think will happen to the world markets when the inevitable terrorist retaliation on the USA occurs? All in all, this seems a potent mix for trouble ahead, which is almost inevitable when short-cuts become the chosen path. I reiterate, begin to book profits. You can always re-enter the party a little later, if need be.
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CHECK-OUT

by Pushpa Girimaji

Check price, quality & warranty of product

It’s the stuff that movies are made of! Squeeze a tube of cream and out comes a diamond or better still, a diamond pendant! Open a toilet soap wrapper and you will find gold! And these are not tricks used by smugglers to evade customs officials. These are ‘prize catches’ offered by manufacturers to sell their product! And these are only samples of the kind of goodies being offered by manufacturers this season!

Buy a shirt and you get a watch free. Purchase a personal computer and you get a printer free. Pay for a microwave oven and you earn a two-in-one music system! Carry your old television set to the dealer and he will give you two new ones, for a price of course. Then there are refrigerators and washing machines at a big discount and of course lucky draws or ‘scratch a card’ schemes on almost every purchase that you make. Perhaps the most attractive ones are those being offered on interest-free instalments, one of them even claiming that you don’t have to make any down payment!

Well, it’s festival time folks! And that time of the year when manufacturers tempt you with ‘festival offers’. And this time, there is also an undercurrent of desperation in the way the manufacturers are wooing consumers. So splurge by all means and make the best of the bargain offers. You might well get a good deal this season, so long as you are a discerning consumer. For that of course, one has to do some home work. Fortunately these days, most advertisements carry the names of the dealers and their telephone numbers. So make use of that and call up. Make enquiries.

Let’s take the ‘zero per cent interest on instalments’ offers. In most such cases, the dealer demands that you pay 50 per cent of the cost at the time of purchase and the rest in limited instalments and even here, he may charge processing fee, installation charge, annual maintenance contract, etc, all adding up to the interest that he claims he is not charging. Similarly, an advertisement may say ‘no down payment’ at the time of purchase, but the dealer tells you that you have to pay 10 per cent of the cost along with Rs 500 as ‘file charges’ in cash at the time of purchase. And he also gives you a list of papers that are required to complete the formalities- the most important being the ‘ration card’. So find out how genuine the offers are.

Again, most discount offers are made on only certain models. So find out how it is different from the other models offered by same company. Is it an outdated model? Did the price of that particular model go up recently? Was there any problem with that particular model? How does the price compare with the same model of another company? And what about the after sales service? Is it good? Check these out. Also do not forget to read the small print in the advertisements that refer to ‘terms and conditions’.

It is equally important to check on the ‘free gifts’ being offered. Is it really free? Is it of good quality? What is the price of the gift? Only last week a consumer complained about how she was lured by the ‘gold coin’ offer. She imagined that the coin would weigh about eight grams and dreamt of how she would convert it into a chain. As it turned out, the coin weighed one gram and cost less than Rs 500!

Again with exchange offers, it would be better to consider the pros and cons very carefully before entering into a deal. In fact I would suggest that you choose a product on the basis of its quality and after-sales service and then try and bargain for a better deal. These days dealers are more than willing to give discounts. So do not decide on a product purely on the basis of the allurements being offered. The bottom line is, make an informed choice. Here are a few tips:

1. Always exercise your right to choose and right to information. Check on price, quality, warranty, after-sales service, date of delivery and all other relevant facts about the product and compare them with others.

2. And when you do buy, make sure that you get the receipt with all the relevant details about the product as well as the warranty card with the dealer’s name, signature and date of purchase duly stamped. If you are getting an expensive product ‘free’ along with the one that you are buying, ensure that it comes with the relevant warranty.

3. Avoid deals that require you to pay first and take delivery later.

4. If you are opting for an ‘instalment scheme’, look for hidden costs that actually jack up the interest rate. Read the terms and conditions carefully before signing and keep a copy.
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Wood carving trade hit by attacks in USA

Saharanpur, October 28
The traditional wood carving business has been hit hard following the US reportedly discouraging foreign buyers from placing fresh orders.

The ongoing US war against terrorism has given a severe jolt to major world economies. The repercussion of this is being felt by Saharanpur’s export-oriented wood carving market too.

With the export orders from America virtually drying up, nearly two lakh workers, mainly dependent on the Rs 140 crore annual export business, are on the verge of losing their livlihood.

Talking to ANI, exporter Rehan said, “Our nine existing orders have been cancelled and we have not been given any new order. Everyone, including the manufacturers and workers have suffered”.

He informed about 80 per cent of their production was meant for export to America but after the September 11 attack no fresh orders were received.

Rehan said, “We expected something out of the New Delhi fair but this year we have had no buyers.”

The wood-carving has been Saharanpur’s important industry since the Mughal period. At least two lakh people of the region are involved in this 400-year-old export-oriented wood-carving industry catering to countries like the US, Europe and the Middle East. ANI
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Volkswagen to enter Indian car market

Wolsburg (Germany), October 28
Even as the domestic car industry in India is finding the going tough in the face of entry of increasing number of new foreign cars, the German auto giant Volkswagen is all set to make a grand entry into the country with the launch of its Skoda brand of cars this year.

The company is expected to roll out 200 cars initially in semi-knocked down basis and imported kits would be assembled in Aurangabad, a company spokesman said. PTI
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BIZ BRIEFS

Inflation falls
New Delhi, October 28
Pressure on commodities’ prices eased further as inflation was at 18-months’ low of 3.04 per cent in the week ended October 13 compared to 7.20 per cent in the corresponding period a year ago, despite an over 7 per cent rise in the price of vegetables.

The point-to-point inflation as measured by Wholesale Price Index (WPI) again fell by 0.14 per cent from the previous week’s figure of 3.18 per cent, even as there was considerable price hike for fruits, mutton, milk and eggs.

However, rate of change in prices with base year 1992-93 was contained mainly on account of relatively strong downward pull by tea, fish-marine, soyabean, jowar, maize, textile products, bajra and barley. PTI

IDBI
Mumbai, October 28
The board of Industrial Development Bank of India (IDBI) will submit a draft proposal for conversion into a universal bank to RBI on October 31, 2001, with reverse merger as a possible preferred option. PTI

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