Despite slowdown, auto firms upbeat about expansion plans
Centre seeks SC norms for speedy disposal of cheque bounce cases
Benefits of traditional pension plans
Despite slowdown, auto firms upbeat about expansion plans
New Delhi, September 8
Three major car manufacturers of the country said recently they would go ahead with their planned capital investments despite the continuing slowdown which has seen the industry seeking even a stimulus from the government.
Honda Cars India Ltd (HCIL), home-grown Mahindra and Mahindra and Tata Motors said they would continue with the expansion plans which would see the three together investing upwards of Rs 15,000 crore in enhancing their production capacities.While HCIL said it would invest Rs 2,500 crore as announced earlier this year, M&M said it would pump in Rs 10,000 crore in the next three years on capex and launching new products. Tata Motors will go ahead with its planned investment of Rs 3,000 crore in the current financial year.
Talking to reporters on the sidelines of Society of Indian Automobile Manufacturers (SIAM) annual convention here recently, the officials of the three automobile manufacturers said they were closely watching the depreciating value of the rupee, but ruled out going back on the investment plans.
While HCIL SVP (marketing and sales) Jnaneswar Sen said there was no change in the company’s investment plans, Pawan Goenka, president (automotive and farm equipment), M&M, said the company was scouting for locations, including options outside its Chakan plant in Maharashtra, to set up a plant to manufacture new products and will take a final decision within this fiscal.
"At Tata Motors we are talking about Rs 3,000 crore in this fiscal and that remains the same as far as our investment plans are concerned," Tata Motors managing director Karl Slym said.
In the beginning of April, HCIL had announced Rs 2,500 crore investment plans. The company is investing in three verticals - a new car assembly line, a diesel engine plant and a forging plant at its manufacturing facility at Tapukara in Rajasthan.
While the diesel engine plant is ready, the other two projects will be ready by the end of next year.
Goenka said, "In the next three years we are investing Rs 10,000 crore out of which Rs 7,500 crore are for capex on automotive and farm equipment and another Rs 2,500 crore investment will be on group companies".
As part of overall capex, the company is developing two-three new platforms for brand new products which will hit the market around FY 2016.
"These new products will be rolled out from completely new plant, the location for which will be decided within this fiscal," Goneka said.
The company is still in discussion with the Maharashtra Government. Earlier, the company had decided to put on hold all investments at its Chakan plant due to VAT refund issues with Maharashtra Government.
Optimistic about the future at Tata Motors, Slym said, "This kind of environment causes us to make sure that we are not forsaking future for trying to look after today. So, investment plans on new products that were committed by us continue to be like that".
* Honda Cars India would invest Rs 2,500 crore as announced earlier this year
* M&M will pump in Rs 10,000 crore in the next three years on capex and launching new products
* Tata Motors will go ahead with its planned investment of Rs 3,000 crore in the current financial year
Centre seeks SC norms for speedy disposal of cheque bounce cases
New Delhi, September 8
Arguing before a Bench of Justices KS Radhakrishnan and AK Sikri, Additional Solicitor-General (ASG) KV Viswanathan said the Law Commission had estimated the number of cheque bounce cases at 38 lakh in 2008 and “it is much more now.”
Acknowledging the need for simplifying the procedure for disposal of such cases, the ASG said there was no logic behind bank officers going to the court with account books for the hearing of such cases. “If the problem of cheque bounce cases is sorted out, other cases will start moving faster automatically,” the ASG said.
The SC Bench was hearing a PIL filed by the IBA, seeking SC guidelines for optimum utilisation of bank employees who were at present dealing with cheque bounce cases. The apex court had issued notice to the Centre on January 21 seeking its response to the IBA plea.
The ASG pleaded for interim guidelines, pending final disposal of the PIL. The Bench, however, said it would issue the final guidelines and posted the next hearing for September 30. Acknowledging that the problem of such cases was a “very serious issue,” the Bench said it would try to find a solution.
According to the IBA, such cases also result in huge funds getting blocked and erosion of people’s confidence in the banking system, besides adding to the woes of pending cases and banks find it difficult to carry out their operations due to the cash flow problem.
Soap business is no mean business. With increasing competition, it has become an area which not only needs innovation but also innovation to attract consumers’ attention. At ITC, the endeavour has always been to accelerate growth by leveraging deep consumer insight and combining innovative and differentiated offers that deliver superior value to consumers. Sandeep Kaul, Chief Executive, Personal Care Products Business, ITC Limited, talks to Girja Shankar Kaura about the future plans.
Q. What was the reason behind modernisation of the Vivel brand at such a short phase of its launch?
A. At ITC, we believe in remaining contemporary and relevant, hence we are continuously refreshing our brand proposition in order to stay ahead of the curve. In the recent past, there has been an evident shift in consumers’ attitudes towards their personal grooming and there is a growing need for multiple skin benefits from soap. In sync with this attitudinal change, we have fortified the already well-established brand of Vivel soaps. With the launch of the new skin nourishing range of soaps, we have evolved from just skin softening to skin nourishment with vitamin E.
Q. What would the modernisation envisage for the brand?
A. Vivel with its skin nourishing range modernises the well-established soap portfolio. Nourishment is the core brand thought. The genesis of this new platform lends itself to the finding that good skin is a manifestation of deep nourishment. The new range catapults Vivel’s soap portfolio into a league of its own.
The assortment of soaps introduces four innovative mixes of ingredients that have been trusted over the years for their skin care properties and vitamin E as the core nourishing ingredient for the range. Vivel with green tea, aloe vera, mixed fruit + cream and refresh + moisturiser with zesty orange extracts and milk cream is well poised to charm consumers and deliver consumer delight in every moment of truth. We are confident that the new portfolio will make brand Vivel even more endearing and will soon etch a distinct consumer need-oriented growth story in its segment.
Q. How old is Vivel as a brand? Is it close to break-even as a brand?
A. Vivel launched its portfolio in June 2008. In five years, Vivel has been ranked 4th in the personal care segment as India’s most exciting brand (a survey by Brand Equity & AC Nielsen). It is estimated to have attracted an annualised consumer spend of Rs 500 crore and has strengthened its consumer franchise with one in every five households to have tried the brand.
With the increasing urbanisation, favourable demographic trends and a strong proposition of nourishment across its portfolio, Vivel is poised to grow phenomenally in the coming years.
Q. What is Vivel's current market share in the top categories?
A. Vivel in its soaps’ portfolio has garnered a strong consumer mindshare. In some markets, Vivel is well ahead of its well-entrenched competitors. The skin care portfolio, Cell Renew, was launched in December 2012 and has been well received. The range comprising body lotions, face moisturiser and hand crème has garnered positive reviews from consumers.
Q. In what categories does Vivel operate?
A. Vivel is present in bath care with its range of soaps and body washes, skin care with Cell Renew, Vivel Active Fair and a range of face washes and lip balm and in hair care with Vivel ultra pro anti- dandruff shampoo.
Q. What are the categories where Vivel would be extended?
A. Vivel continues to grow in the intensely competitive personal care segment in India. It is poised to seize emerging opportunities in any category that will seamlessly fit into the brand belief of offering differentiated value propositions and will enhance consumer experience.
Q. At what pace is Vivel growing its sales for ITC's personal care business? What is the revenue growth rate of the personal care business?
A. Vivel has emerged as a vibrant consumer brand and is one of the ITC’s fastest-growing FMCG brands in India with an estimated annualised consumer spend of Rs 500 crore in just five years.
by AN Shanbhag
Q: I am a professional in the highest tax bracket. I fully avail the benefit of Section 80C. My wife and children do not have any source of income whatsoever. Can I put surplus from my income in the PPF account in their names? I understand that the interest will be clubbed with my income, but will it be tax-free (since PPF interest is tax-free) or will it be taxable? — Chitpawan
A: This is an excellent strategy. There is no restriction on you from investing in the name of your wife and children. The interest will be clubbed, but since such interest is tax-free, the clubbing loses its teeth. In other words, it is a neat way to earn tax-free interest for oneself and one's family.
Q: My grandfather’s (70) estimated income from all sources (pension, interest from FDs, interest from post office savings, LIC, etc) is Rs 2,90,000 for 2012-13. He is investing Rs 5,000 per month through SIP in the ELSS fund. He has been filing returns every year. He feels that he does not need to file tax returns as his income after deducting Rs 60,000 investment is less than the exemption limit of Rs 2.5 lakh. Is this true? — Hiren
A: It is the gross income before availing of any deductions that needs to be considered for the purpose of filing a tax return. In your grandfather's case, the same is Rs 2,90,000 and since this is more than the basic exemption of Rs 2.5 lakh, he needs to file a tax return. It will be a nil tax return on account of the Section 80C exemption, nevertheless, it needs to be filed.
Q: The government has announced that one can send $75,000 instead of $200,000 to relatives abroad. I have sold a house and from the proceeds I am gifting $75,000 to my son living in Canada. I have also given Rs 1 crore to my wife as a gift from the house sale. From the gifted money I gave, can my wife send $75,000 to my son? Will it be allowed or considered as circumventing the law to send the Foreign exchange to my son abroad. — Ravi Kumar
A: The limit under the Liberalised Remittance Scheme (that was earlier $200,000 and now brought down to $75,000) is applicable per person per financial year. Now, when you gift any asset (including any sum of money) to anyone, including your wife, ipso facto, you transfer ownership of the asset from yourself to the donee. Therefore, once you gift the funds to your wife, the funds become hers to apply as she wishes to. If she wishes to use her limit under the LRS to send money to her son, she is perfectly within her rights to do so.
Q: We have NSCs in the name of our HUF, the Karta for which was my father, who passed away three years ago. These were taken at the time when HUF was allowed to purchase NSCs, which I understand is no longer allowed. The NSCs are matured since over a year now, but the post office is refusing to provide the same to us, saying that we need to provide them with succession certificate and legal heir etc. Please advise what is the procedure to claim the amount in such case? My elder brother is now the new Karta for HUF and for all other investments we were able to get back dues by providing new Karta certificate, however, the post office is not accepting the same. — Vikas Gupta
A: As per the Post Office Rules, on the death of the certificate holder/s, the nominee can demand premature encashment or get it transferred in his name. However, if there is no nomination in force, and probate of the will or letters of administration or a succession certificate is not produced within 3 months, and if the total amount does not exceed Rs 1 lakh, payment may be made by the authority to any person appearing to it to be entitled to receive the sum. However, an HUF never dies. The Karta of the HUF is the certificate holder. On the death of the existing Karta, the senior most member of the HUF takes over the mantle of the HUF. Obtaining a probate for HUF is legally not possible. You will do well by bringing this to the notice of the post master. On failing to convince him, you will have to go to the post master of the head office and on failing to convince him, go the general post office and thereafter to the commissioner of small savings organisation. It is unfortunate but true that the systems and procedures handling these schemes are clumsy, laborious and outdated. The lethargy of bureaucrats in taking remedial actions results in frittering away of scarce and valuable resources. The clerks are overloaded with work and are naturally uncooperative. We fully sympathise with their lot. Most of them do not know the rules and regulations connected with their schemes, causing a lot of heart burns to the investors.
Financial education is important to be successful in life. Becoming financial literate isn’t about passing an exam and getting good grades. It is about continuously learning the power of money; it is a long-term process which should ideally begin at a young age
Rohit Mahendra Beria
Education is the foundation of life and it is vital for one's success in life. Just as scholastic education is vital, so is financial education. General literacy — the ability to read and write is given fundamental importance, financial literacy is often not taken into equation. We as children are thought to have good manners, importance of eating healthy, and importance of working hard, yet in a way we do not give equal importance to financial education. In some societies talking about money to children are even considered a taboo. Financial education is neglected in our education system. We spend all our childhood in school learning how and why to work hard for money. But we should also learn how money can work for us. We can let money work for us only if we are financially literate.
Children don’t remain young forever; they grow, chase aspirations, choose careers, but unless someone decides to go in exile and leave the world for a spiritual journey, everyone necessarily deals with money, no matter what career they choose and anyone who deals with money should be financially literate. The usual mis-conception is financial education is important for investors only. But the reality is, financial education is important in every aspect of life. Aspects like how to plan for buying a house, how to fund for children’s education, have enough stream of income during retirement phase, how much to spend on a holiday, or even when and for how much to buy a new furniture for.
So what really is financial literacy? It is a simple concept of effectively managing your own money. There is an old saying “A penny saved is a penny earned”, but the new saying is “A penny saved and invested is two pennies earned.” Financial literacy is not about the complex financial instruments inside-out, it doesn’t mean to understand and interpret economics, it definitely doesn’t mean doing research on financial product and predicting which product would make the highest profit. Financial literacy means a person who knows the best way to manage his own finances. He knows importance of savings, he knows the cons of over-spending would bring onto him, etc.
A person who is financially literate can spend well and still have more surplus than a person who is financially illiterate earning double his income. Such is the power of being financially literate.
People who are not fully financially aware are the easiest target for mis-selling of financial products. They are the loved scapegoats of financial fraudsters. So many people get into a trap of a mis-sold financial product due to which their financial life suffer drastically. Some don’t even realise that a mis-guided financial product has been sold to them until it’s too late. People invest in products that gives returns lower than the inflation, which is effectively negative return, but financial illiterate people don’t realise this.
There are numerous advantages of being financially literate from a very young age. Some of the advantages and skills to be thought can be named as:
* Basic financial management skills
* Improved savings skills
* Understanding the importance of investing
* How to manage spending
* Understanding credit (loans)
* Building wealth
* Ability to manage well during financial crisis, etc.
Becoming financial literate isn’t about passing one exam and getting good grades. It is about continuously learning the power of money; it is a long-term process, which should ideally begin at a young age.
Parents have the experience and perspective of financial life, thus they should try to inculcate such values in their kids with other important life’s lesson they are constantly taught at home. No matter how the economy or the markets are performing, a financially literate society leads to a more stable and prospering society. Improved financial literacy, particularly early in life, leads to a higher standard of living for the person, no matter what career path he chooses.
Thus the important thing is not to earn high income, but to remain stable financially and always grow financially. To soundly manage your finance is not a daunting task, but knowing whom, when and why to approach a financial expert for help in finances itself is a sign of being financially literate. People think money is the most important thing in life when they are young; they know it when they get old.
But it is never too late!
The author is a Research Analyst, Apnapaisa. The views expressed in this article are his own
Benefits of traditional pension plans
Pension products offered by life insurance companies are either on ULIP (market-linked) or traditional (non-linked) platform. When customers want to de-risk his/her retirement planning from market volatility, traditional pension products have an edge and have been quite popular with this set of customers. Traditional retirement solutions are of two types:
Participating — These plans participate in profits of the fund. 90% of the profits get distributed to the policy holder/s as bonuses. Hence, these are also referred to as ‘with profits’ plan.
Non-Participating — These plans do state a rate of return at outset and are not linked to market or any index. They offer guaranteed returns.
1Secured returns: Traditional pension plans offer secured and guaranteed returns. For participating plans, the secured returns are in the form of bonuses. Once declared, bonuses are guaranteed to be paid at maturity or death. For non-participating plans, the secured returns are in the form of additions. These additions are fixed percentages of sum assured that are added every year or on maturity. Today, in addition to the above, traditional pension plans also have minimum guaranteed benefit at maturity and on death.
2Easy issuance: Pension plans are the true over the counter plans. They do not require any medical tests and hence can be purchased without much hassle. This feature makes these plan a plan for all — irrespective of health condition.
3Guaranteed income for life: On maturity of the pension plan, one needs to purchase an annuity. This annuity is a guaranteed income stream for life time. This helps in meeting post- retirement needs.
4Tax benefits: Premiums paid in traditional pension plans are eligible for tax benefit u/s 80CCC of the I-T Act. This is subject to prevailing tax laws.
5Health care needs in old age: Health expenses are major concern in old age. With improved life expectancy and increased medical expenditure, it’s imperative that health care expenses are kept in mind while doing retirement planning, more so because at old age eligibility for a health assurance or life assurance has its own limitations. By investing in pension plans one can easily create a fund for any contingency.
6No limitation on maximum premium: You can invest as much as you need to in these plans. Investing higher amounts means you have higher chances of better fund creation and consequently better income post retirement.
7Death benefit: Though the primary objective of any pension plan is to build a corpus for post retirement expenses, it also brings with it benefits on death of the life assured. The nominee then can either choose to take the complete death benefit or can invest the same in an annuity plan that will offer a guaranteed income for life.
An individual should always keep the following in mind while planning for retirement:
* Maximum duration for the investment horizon to build adequate corpus
* Start early to gain from effects of compounding
* Invest as much as you need
The author is Vice-President, Product, HDFC Life. The views expressed in this article are his own
What are Options & Futures*
An option gives you the right to buy or sell the underlying asset . A call option gives you right to buy the underlying asset while a put option gives you the right to sell. An option contract specifies the strike price, that is, the price at which you can buy or sell the underlying asset.
In Futures, you buy a contract which will have a specific lot size of shares. When you buy a Futures contract, you don’t pay the entire value of the contract but just the margin. Open interest is the the total number of contracts not closed or delivered on a particular day.