Repowering of the Wind Power Projects ..... Beneficiary Suzlon energy

Ministry of New & Renewable Energy

Draft Policy for Repowering of the Wind Power Projects

1. Introduction:

Major share of renewable power capacity in India is from wind energy. India started harnessing of the wind power prior to 1990. The present installed capacity is over 25 GW which is fourth largest in the world after China, USA and Germany.

Most of the wind-turbines installed up to the year 2000 are of capacity below 500 kW and are at sites having high wind energy potential. It is estimated that over 3000 MW capacity installation are from wind turbines of 500 kW or below. In order to optimally utilise the wind energy resources repowering is required.

2. Objective:

Objective of the Repowering Policy is to promote optimum utilisation of wind energy resources by creating facilitative framework for repowering.

3. Eligibility:

Wind turbine generators of capacity 1 MW and below would be eligible for repowering under the policy.

4. Incentive:

i. For repowering projects Indian Renewable Energy Development Agency (IREDA) will provide an additional interest rate rebate of 0.25% over and above the interest rate rebates available to the new wind projects being financed by IREDA.
ii. Benefits available to the new wind projects i.e. Accelerated Depreciation or GBI as per applicable conditions would also be available to the repowering project.

5. Implementation Arrangements:

The repowering projects would be implemented through the respective State Nodal Agency/Organisation involved in promotion of wind energy in the State.

6. Support to be provided by States:

i. In case augmentation of transmission system from pooling station onwards is required the same would be carried out by the respective State Transmission Utility.
ii. In case of power being procured by State Discoms through PPA, the power generated corresponding to average of last three years’ generation prior to repowering would continue to be procured on the terms of existing PPA and remaining additional generation would either be purchased by Discoms at Feed-in-Tariff applicable in the State at the time of commissioning of the repowering project or allowed for third party sale.
iii. State will facilitate acquiring additional footprint required for higher capacity turbines.
iv. For placing of wind turbines 7D x 5D criteria would be relaxed for micro siting.
v. A wind farm/turbine undergoing repowering would be exempted from not honouring the PPA for the non-availability of generation from wind farm/turbine during the period of execution of repowering. Similarly, in case of repowering by captive user they will to be allowed to purchase power from grid during the period of execution of repowering.

7. Financial Outlay:

No additional financial liability to be met by the Ministry for implementing the Repowering Policy. The repowering projects may avail Accelerated Depreciation benefit or GBI as per the conditions applicable to new wind power projects.

8. Review:

The Repowering Policy would be reviewed by the Government as and when required.

Happy investing

Money steps that you must take before initiating your start up

Money steps that you must take before initiating your start up


Start up is no fun. It requires financial prudence, failing which not only the business but also the personal life can go down the drain.

You must have surely opened the papers and read about how another ecommerce company has raised a few million dollars from venture capitalists. But behind this hype over unicorns, eyeballs and venture funds, there is a much starker truth that most of us tend to overlook. 

According to conservative estimates, 80-85% of the start-up s go out of business due to lack of financial planning and bad cash flow management. 

In fact, with some prudent financial planning and conservative spending habits, entrepreneur s can have a much better chance of making a success of their venture. 

Take the case of Vivek, a bright young software engineer who has decided to chuck his cushy job in the US and don the role of a web entrepreneur in India. He has savings of Rs.30 lakh approximately, which he accumulated during his stint in the US. In addition, his investments yield him a monthly income of Rs.25,000. As his son is a toddler, his wife is not in a position to take up a job for the next couple of years. 

So how should Vivek manage this balance between his business needs and running his family? 

The answer, as we mentioned previously, lies in prudent financial planning and conservative spending habits. This is especially true in case of Vivek since he has no other source of income for a couple of years and his business will suck up a lot more cash than he can imagine. 

Step 1: Have a separate income stream for your family expenses... 

Most of us think we have sufficient savings to start without thinking much how much we need and how long. More importantly, how much our family needs during the time, we don’t have sales and only the costs. 

So, if our families and business are going to fall back upon the savings, then it will deplete faster than anticipated. We need to ensure that in the early stages of business, family expenses do not become a burden on business. 

Setting aside a corpus like 1-year of household expenses for the family would help to focus more objectively on the venture. If your monthly expenses are Rs.25,000, then set aside Rs.300,000 in safe and liquid investments. If options are available, it is also advisable to take up part-time jobs which should help to manage the liquidity better. 

Step 2: Ensure that you are adequately insured for exigencies... 

This may sound like an added expense, but it is worth it. Firstly, you need to ensure that your life is insured, ideally through a low cost term policy, for giving security to your family. 

Secondly, take medical insurance for yourself and your family. Today, there are plentiful insurance options available at very low prices. This will protect your family first and if required your business as well in the times of exigencies. 

Health and term policies are an absolute must before you embark on a business venture. 

Step 3: Focus on getting revenues and collections... 

Let us assume that Vivek projects to earn Rs.2 lakh per month from client fees and spend Rs.3 lakh per month on developing and running his business. He will be falling back upon his savings to bridge the gap of Rs.1 lakh each month. If his projected revenues are short of Rs.2 lakh for a few months, then he will be depleting his saving corpus faster. 

How can Vivek address this issue? Give discounts and incentives for early payments. Give importance to collections as cash today is more valuable than cash tomorrow. 

Step 4: Be a penny-pincher on managing costs... 

Steve Jobs, while recounting his experience at Apple, clearly underlines the need to be miserly with respect to costs. It is costs that are entirely in your control. 

There are a few basic steps that an entrepreneur can take. Firstly, prefer to rent office and furniture and avoid splurging on fancy interiors. 

Secondly, small costs tend to balloon over a period of time. Be tight-fisted with respect to cost items like stationery, electricity, consumables etc. Today, most of the facilities are available on rent. Look for flexible offices, which could not only reduce your fixed costs, but also help you not to touch your savings kept for the family.

 Develop a habit of recording expenses and analysing, which should further help you to identify relevant and non-relevant expenses and curtail them where possible. 

Step 5: Avoid the lure of too much debt in the early stages... 

When you start your venture, you tend to go aggressive in your early enthusiasm. This typically means taking on a higher debt. This can be dangerous for a variety of reasons. 

Firstly, early stage businesses tend to get debt at a higher cost. The servicing of the debt adds an additional burden to your cash flows as you need to use up your uncertain inflows to service your certain outflows. This argument also extends to your personal debt. Taking a mortgage loan or a car loan can always wait till your business stabilizes. 

Credit cards can be quite enticing but remember you end up paying 3% per month. Such costs are best avoided in the initial stages. 

More importantly, if you have any high cost debt like personal loans ensure that they are repaid before you embark on your venture. 

So what Vivek needs to do is to get the simple rules of personal financial planning right. 

• He needs to ensure that his high cost debts are first paid off. 

• Secondly, he needs to take adequate insurance at least to cover risk to life and health. 

• Thirdly, he must be passionate about front-ending his revenues and ensure that cash flows into the business. 

• Last, but not the least, Vivek must put a lot of focus on managing costs at low levels. 

After all, prudent financial planning and cost management can go a long way in giving your business a much better chance of success.

Happy Investing

Source:Moneycontrol.com

How To Know If Someone Is Actually Rich

How To Know If Someone Is Actually Rich

A rich person is not defined by a huge house or an expensive car. People who live pay-check to pay-check can also be found leading this lifestyle. There are, however, certain things that separate the supposedly rich person from those who are actually rich.

Here are 5 ways to spot a person who is actually rich.

#1. Their spontaneity in planning and selecting vacation destinations

A person who is actually rich does not choose vacation destinations based on their commercial popularity. Such a person goes to places that attract his interest and attention. 

The person also chooses to go when they want to rather than when tickets are priced lower. You will find them taking off on foreign trips without much pre-planning.

#2. Their choice of schools for their children

Genuinely rich people send their children to schools that hold a good reputation and are known for their academic excellence and contributions. They do not believe in schools that just provide luxuries without working on the child’s education.

Their ultimate goal is to provide their children with a good education, along with relative comfort.

#3. Their gifts to friends and loved ones

A person who is actually rich believes in gifts that are thoughtful as well as meaningful. They do not believe in gifts that are just expensive and over the top, but have no meaning or emotions attached.

#4. Their donations to causes they care about

A rich person will almost always make donations and charities towards a cause they personally believe in. For a person that is actually rich, money serves as a means and a resource to contribute to something that they feel strongly about.

#5. Their children have a financially independent and secure future

Children coming from a wealthy family may enjoy the luxury of being able to afford almost anything. In case of the “real” rich though, these children don’t necessarily have it easy.

A rich person will not only invest and leave behind abundant resources for his family, but he also ensures that his children become financially independent and learn the value of the money that they earn. These children are taught to handle their expenses and money from a very early age.

Happy Investing

Source:Moneycontrol.com

Why to Choose Dividend Yield Stocks instead of Bank FDs?

Why to Choose Dividend Yield Stocks instead of Bank FDs?

What is Dividend Yield?

Dividend yield is the ratio of dividend per share (in Rupees) and the market price of the share. It is expressed in percentage, just like the yields on fixed deposits (FDs).

Dividend Yield = ( Dividend Per Share / Market Price ) * 100

For example, if the dividend per share is Rs. 10, and the market price of the share is Rs. 400,

Dividend Yield = (10 / 400) * 100 = 2.5%

Now, if the dividend is fairly consistent, a parallel can be drawn to banks FDs.

Isn’t it similar to investing Rs. 400 in an FD, with the interest rate being 2.5%?

On the face of it, yes. But remember, the interest received on bank FDs is fully taxable in the hands of the investor, while dividend is tax free. Thus, in effect, it is equivalent to investing Rs. 400 in an FD, with the interest rate being 3.57% for an investor in the highest tax bracket.

What kind of companies to invest in?

One & only condition – the dividend should be fairly consistent. Only then, a conservative investor can utilize this strategy in place of investing in FDs.

So, we need to look for companies that have a record of consistent dividend payments. And the best part is there are many good companies that pay regular dividends.

In general, companies in high growth industries, like Telecom or Information Technology, plow back most of their profits to fuel their growth. So, they usually don’t declare attractive periodic dividends.

But companies that are in mature industries and are the leaders in their fields usually have lesser need to reinvest their profits. These are the companies that declare handsome dividend, time after time. And these are the companies you should invest in to implement the strategy of dividend yield.

Advantages of the Dividend Yield Strategy

There are two big advantages of the dividend yield strategy:

1. Capital Growth:

Since you invest in stocks as a part of this strategy, naturally, you also reap all the benefits of investment in stocks. And the biggest advantage is Capital Growth.

This means that the dividend you receive gives you a fairly regular income, and the capital growth (in the form of an increase in the stock price) keeps you ahead of inflation.

2. Dividend Yield increases over time:

The calculation of dividend yield uses the market price of the stock. Thus, in our example, dividend yield was 2.5%.

Now, since you are a long term investor, you buy a stock and hold it for a long term. During this time, the stock may undergo stock splits and bonuses. Also, the price of the stock goes up over time. This means that although the prevailing price of the share is high, your cost of acquisition of the stock could be fairly lower compared to the market price.

In that case, what is the yield for you? Let’s stick to our example – the market price is Rs. 400, and the dividend per share is Rs. 10. Also, due to increase in the stock price over time and due to stock split and bonus, your cost per share is Rs. 200.

In this case, although the dividend yield is 2.5%, the yield for you is:

Yield = (Rs. 10 / Rs. 200) * 100 = 5%

And this is equivalent to an FD with the rate of interest of 7.14%. Isn’t this great? This means that the dividend yield strategy give you not just regular income and capital growth, but also an increase in the regular income over time!

What about Taxes?

As discussed earlier, the interest received on bank Fixed Deposits (FDs) is fully taxable in the hands of the investor, while dividend received is tax free. Thus, the effective yield for an investor in the highest tax bracket is even better.

Effective Yield = Dividend Yield / (1 – Your tax rate / 100)

Thus, for people in the highest tax bracket,

Effective Yield = Dividend Yield / (1 – 30 / 100),

E.Y = Dividend Yield / (1 – 0.3)

E.Y = Dividend Yield / 0.7

One very important point to note is that dividend is tax free only for long term investors. If you buy a share and sell it after receiving the dividend, it is called Dividend Skimming. Dividend received in this case is fully taxable in your hands.

Happy Investing

Source:Saralgyan.com

Buying ready property? Collect these 12 documents from builder

Buying ready property? Collect these 12 documents from 

builder

At the time of buying a property, they may not be ‘the thing to do’ on your list. However, they matter a lot when you want to sell your property.

We do a lot of due-diligence while buying a property from an individual re-seller of a ready property, but almost do nothing while buying from a developer. The reason behind it is the comfort shared by the lender stating they have already scrutinised the title and it is 'clear' for you to go ahead and buy quickly. Mostly, builders refer these lenders to you and the target of both is to conclude your business and move ahead.

What we fail to understand at this stage is that one day you will be a 're-seller' and your buyer and his lender will ask for whole lot of papers from you which neither your lender will give you nor the builder, as they will have no direct interest in the paperwork then.

"I don't have any papers. This is a property built by a renowned builder and banks have approved it. I never needed any of it while buying myself." - heard this many times from a potential seller. At least 50% of them land up not being able to sell the house, because the new buyer wants to send one set of papers to his personal lawyer for clearance, plus his new lender (these days there are a lot of fresh lenders in the market who did not exist 5 years back) wants it too!

So, be wise and take all the relevant papers that your future buyer will seek from you. Here's the list:

1. Commencement certificate(CC): When the building construction starts, the builder needs to get this document from the local authority, without this the construction cannot start.

2. Approved Plan: A plan submitted by the builder will be sanctioned by the authority again. A copy of this plan with seal and signature will be provided by the builder.

3. Joint Development Agreement(notarised): If the land on which the property constructed by the builder has not purchased outright by the builder but is a joint-development with the landowner, then this document will be available. This should be notarised in registrar's office and stamp duty paid by the builder.

4. Sharing Agreement: If the property is under a joint-development scheme, then some of the inventory will be with the landowner. The description and the unit numbers shared by the builder and the landowner will be detailed in this document.

5. Chain Deed of last 30 years: Acquisition of the land parcel will have to be from a legitimate source and any issues (cases pending, probate etc) will trigger issue in future. So, it is important to know the history of the land (all agreements that establish the change of ownership) and the documents through which the title has passed.

6. Khata extract/Mutation certificate: Even after registration, the title may not pass to the new owner without this document.

7. No Due letter: The builder should issue a 'no-due' letter to you to avoid any pending payments, levy, interest or penalty.

8. Possession letter: Without this document you cannot even move your furniture in the house. It may sound to you that why will this piece of paper required by your future buyer, may be after five years, but you will surprised to know that some lenders/lawyers do seek this paper as well.

9. Nil Encumbrances certificate (EC)/Search Report: A lawyer's report that the property is not encumbered. This is done by a court-search by the lawyer. It is to confirm that the property was not sold to any other party in the meanwhile.

10. Updated tax receipts: Builder often delay on the tax payments, especially when the project gets delayed. they generally do pay at the time of the possession/registration in your name. It is good to take the tax receipt from the builder so that your tax payments post that is effortless.

11. Occupancy certificate (OC): This is one of the most important documents. The builder receives this paper from the authority certifying the building to have been constructed as per than plan approved and is habitable without a demolition risk. This certificate is issued after installation of the water connection, sewerage and many other mandatory amenities a building should possess in recent times. Most lenders do not approve loans for properties not having this document, so please pay special attention to this.

12. Copy of your registered deed: Do not be surprised when I tell you that we have come across many people who do not even have this. The builder would have submitted the original directly to the lender in a hurry to receive the loan disbursement and did not send even a copy to the borrower. So, please collect your copy-either from the builder or from the lender without feeling lazy and thinking you are safe. Do not omit the slight possibility of lender losing the original!

Hope the above checklist helps you complete your paperwork and you be content with the matter that it's going to a piece of cake for you while selling! Happy Homes!

Happy Investing

Source:Moneycontrol.com

Are cement shares a good buy at current levels?

Are cement shares a good buy at current levels?

With economic growth expected to rebound, cement has been one sector that some analysts say offers plenty of investment opportunities.

In an interview with CNBC-TV18, Harsha Upadhya of Kotak MF said that from a three-five year cycle perspective, the sector looks good. "We are just seeing demand recovery. The GDP is moving up and the demand for cement can also move up significantly from here," he told CNBC-TV18.

He added that compared to the previous cement boom cycle [between 2004-2008], one thing has changed in favour of the companies "If you look at the industry over the last ten years, the industry has got consolidated in favour of larger players. Larger players today account for are nearly half of the overall capacity in the industry which means that the pricing power is going to be much more substantial in this cycle compared to the previous cycle," he said. "It is also a clean sector, there is no financial stress in the sector and if you want to play the infrastructure recovery in the country, this is one of the cleanest ways to play that."

There is still one problem. The expectation that the cement sector is on the cusp of a turnaround has been prevailing for about two years now -- right since the NDA government came in.

Consequently, this has shown up in the price. "Valuations are stretched because people have been expecting a bull run in cement sector for a pretty long time. I don't think that is coming," Rakesh Arora of Macquare said.

Happy Investing

Source:Moneycontrol.com

3 Smart Ways to Save Money

Posted by David Morgan on March 18, 2016 · Leave a Comment      

3 Smart Ways to Save Money
BY DANIEL AMEDURI

According to GoBankRate, 56% of Americans have less than $10,000 saved for retirement. Over half of this group actually said they have ZERO in savings when participating in the study.

When looking at demographics, it is no surprise that 72% of millennials are in the category for the worst savers. This generation has been plagued with low wages and a government-fueled bubble in college tuition. This has left them saddled with student loans, credit card debt, and part-time jobs with bachelor’s degrees.

Even though I am not a big fan of conventional retirement, I do think savings is a must. No matter where you are in life, here are 3 great ways to save money regularly.

1. Create barriers. Savings shouldn’t be easily accessible. If it is, you’ll be tempted to spend it. In my own personal life, I can tell you when my wife and I were in our 20s, because our savings was not connected to our checking account, we became creative and thrifty when we needed to be, rather than just simply making a transfer out of our savings.

When I say create a barrier, it just means make a withdrawal inconvenient for yourself or in an account where it will take days to become spendable cash. For liquid currency, try a small credit union 30 minutes from your house, and don’t set up online access. Start a whole life policy, where in order to make a withdrawal, you have to pick up the phone and wait 5 days for a check to arrive.

2. Precious metals. I don’t know what it is about holding a physical gold or silver coin in your hand, but believe me, you don’t want to sell it… Which is why precious metals do make a great way to save – they preserve your purchasing power over time, and in order to convert your coins into cash, you have to either go find a local shop or call up a bullion dealer, who will force you to go to the post office, send the metal in, and wait for a check or wire.

Savings should be inconvenient to withdraw, otherwise it will just be a regularly tapped source to fill spending deficits. Force yourself to save and not spend too much.

3. Make it automatic. Set up contributions to a Roth IRA, or a bill pay that sends a check to your local savings account at a credit union. Have the money taken out — no matter what — on a specific date. The second new income hits your bank account, either have an automatic plan for disbursement into savings, or create a habit of making it the first thing you do on a payday.

Savings is the source of wealth; it’s opportunity cash, peace of mind, and what separates the rich from the poor

A Coin Has How Many Sides?

A Coin Has How Many Sides?

Posted by David Morgan on March 20, 2016 · Leave a Comment 

This month’s essay may seem to have a different focus than the ones I have penned over the last couple of years. But its central message has the power to inform and clarify your precious metals’ decisions – and just about everything else in life.

More than ever before, making the decision to own precious metals is not enough by itself to safeguard your family’s assets and personal safety. It’s equally important to know why you believe this way – and be able to clearly articulate the reasons to others.

In late February, David Morgan, Editor of The Morgan Report, was invited by the producers of The Real Estate Guys radio show to speak to a group of high net-worth investors on the topic of precious metals during the annual Summit at Sea cruise, sailing out of Miami, with ports of call in the Caribbean. A scheduling conflict kept him from doing so, and I was asked to speak in his stead.

At this engagement, a number of well-known analysts participated. G. Edward Griffin (The Creature from Jekyll Island) discussed the profound differences between Collectivists – those who believe all answers to problems lie with the state and who accept the idea that our rights and freedoms are granted (and can thus be taken away) by this all-powerful entity. On the other hand, the Individualist believes that the people create the state and grant it authority and that free ownership of property (including precious metals) is instinctive.

Peter Schiff spoke eloquently about the unresolved 2008 financial morass which threatens to bring down the global economic system. Simon Black (Sovereign Man) – talked about diversification of assets and living in an interdependent global universe.

Money Metals podcast guest Jim Rickards gave an informative presentation via Internet screen cast. Rickard’s recently-published book, The New Case for Gold, is a work of such timely and compelling importance that every Money Metals Exchange reader should make it a priority to read, consider, and then act upon its recommendations.

Speaking on the same panel as me was Anthem Blanchard, son of the late James Blanchard II – the man who more than any other person in the precious metals investment/conference sector was responsible for helping to re-establish the legal right (in 1974) of Americans to invest in and own physical gold.

Readers might recall that in 1933, President Franklin D. Roosevelt made the very possession of this increasingly important wealth-preservation element an illegal act for American citizens.

Businessman, self-help author and financial literary activist Robert Kiyosaki was also a Keynote speaker. In 1997, Kiyosaki published his book Rich Dad Poor Dad comparing the manner by which his own father viewed the accumulation of wealth – via a salaried position in education – versus his Rich Dad acquaintance, who showed him how to achieve financial independence through the consistent application of powerful entrepreneurial and financial-acquisition skills. Kiyosaki is a very strong proponent of direct gold ownership.

The Sides of a Coin Are the Front, the Back, and…

Though I have read several of Kiyosaki’s books over the years, it was the opportunity to meet with and hear him speak, which really drove home the relevance of his philosophy. A core aspect of his work is to bring financial education – a precursor to financial freedom – to as many young people as possible.

His latest book, Second Chance for Your Money, Your Life, and Our World, will hopefully soon find its way to your reading desk. Robert Kiyosaki is truly a man who dedicates his life to doing both well… and good.

Please consider his powerful concept of the three-sided coin.

Three Sides to a Coin

We tend to think of coinage as having just two sides – front and back. Or in the trade, it’s referred to as the obverse and the reverse.

But there’s actually a third side – the edge – which serves as a metaphor for how we can approach problem-solving and the acquisition of knowledge in just about any situation.

When you view something from the edge, by definition you’re able to see both sides. It forces your mind to open to the other person’s outlook, and in the process helps broaden your own perspective. Kiyosaki’s other points can serve to clarify and strengthen your precious metals’ beliefs:

– Go “Big Picture” as much as possible.
– Study the past to see the future.
– Be first a pessimist (to get prepared); then an optimist (to seize the gains).
– The rich focus on assets; the poor focus on income.
– The less you focus on money, the more you’ll have
– After viewing things from the edge… think, prepare, then act.

Gold and Silver Bull Market Tectonic Plate Drivers 2016 – ?

My presentation provided an overview – elements of which should be familiar to many readers – of where we are, how we got here and where we may be headed. Specific to the precious metals, I covered the increasing struggle between supply and demand, declining mine yields, and longer development curves.

Two historic quotes demonstrate just how far back people have understood the answers to our current economic dilemma. See if you agree:

The budget should be in balance, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance of foreign lands should be curtailed lest the Republic become bankrupt. People must again learn to work instead of living on public assistance.
Marcus Tullius Cicero, 55 BC

Everyone wants to live at the expense of the state. What they forget is that the state wants to live at the expense of everyone. Frédéric Bastiat, c. 1848

Backed by the research and beliefs of the speakers at this Conference, readers should feel even more confident about their decisions going forward. By holding physical gold and silver as insurance in an uncertain world – not to mention for the strong likelihood of significant price appreciation in the months and years ahead – you are doing what is both honorable and right for yourself, for your family, and for your country.

India's golden decade just beginning

India's golden decade just beginning

Tell anyone who has spent a long time in India that the country's economy is about to take off and chances are that they will either laugh or tell you you are crazy. But emerging economies often experience a rapid growth spurt at some point in their development, and many believe that India is on the cusp of such a period.

Following in the footsteps of China, Brazil

With a weakening currency and sluggish share prices, you could be forgiven for thinking the outlook for the Indian economy is bleak. The recent introduction of an infrastructure tax on vehicles casts doubt on India's new vehicle market, which had been the lone grower among major emerging economies.

Yet other figures paint a different picture. According to the International Monetary Fund, India's per capita gross domestic product probably reached around $1,700 in 2015, despite the weaker rupee. In many emerging countries, a $2,000-$3,000 range indicates that the country has acquired basic economic and social infrastructure and its various industries are ready to thrive. India is not far off that figure.

China saw its nominal GDP per person soar over a decade from $1,700 in 2005 to $7,600 in 2014. Brazil saw its figure swell from $2,900 in 2002 to $13,200 in 2011 partly because a stronger real boosted its output figure in dollar terms. India is expected to follow in the same path. Annual economic growth of around 8% over the next 10 years will almost double India's nominal GDP, not accounting for inflation or changes in the foreign exchange rate.

Skeptics are unlikely to share such optimism, citing issues such as inefficient government, contradictory policies between the central and state governments, bickering between local administrations, and state companies' dominance in several industries.

However, these issues are far from endemic to India. Anyone who tried doing business in China during the 1980s and 1990s will look back with dread on the process of getting approval for just about anything. Even if you stuck it out and permission was eventually granted by Beijing, local governments could still put their oar in leaving you back at square one. The Kafkaesque nightmare worked both ways and many just gave up. Brazil is no different, with ever-changing administrative decisions and infinite amounts of red tape putting off many would-be investors and entrepreneurs before they even start.

Some complain that doing business across different states in India results in additional taxes and fees. But that also was not uncommon across China. Moreover, inefficient government and dominant state companies are just as problematic in China and Brazil as in India. Shielded by regulations, cumbersome state-owned giants stifle the growth of private companies.

Despite being mired in problems, once growth gets underway, emerging economies often see it snowball for a period. Both China and Brazil continued to grow at an extraordinary pace for 10 years.

Happy Investing

Source:Moneycontrol.com

10-POINT FORMULA FOR SUCCESS IN STOCK MARKET

10-POINT FORMULA FOR SUCCESS IN STOCK MARKET

10-POINT FORMULA FOR SUCCESS IN STOCK MARKET

(i) Never be dependent on the stock market for your livelihood or day-to-day living. Have an alternative source of income. This will insulate you from the volatility of the market and give you holding power;

(ii) Never buy a stock except after thorough study into the stock’s fundamentals. The stock market is not a gamble. You must also be fully aware of news and developments that affect your stocks and learn to “connect the dots”;

(iii) Invest according to your risk profile. Ensure that other asset classes also have an allocation. This will again insulate you from the risk that equities carry and give you holding power;

(iv) Never trade in stocks. Never use borrowed funds to buy stocks. It is extremely risky and can lead to “instant death”. Less than 1% of the trading population makes money. Also, trading requires special aptitude which a normal person lacks;

(v) Invest for a minimum period of five years. “Rome was not built in a day”. It takes time for companies to mature and grow;

(vi) Invest only in the best managed companies and don’t worry about day-to-day volatility in stock prices;

(vii) Remember that the “Investment belongs to the market and only the profit belongs to you”. In other words, don’t get carried away by notional and paper profits;

(viii) Book profits periodically. When a stock looks overvalued, don’t hesitate to cash in the gains;

(ix) Be balanced in your approach. Don’t be very optimistic in an uptrend and very pessimistic in a downtrend. Also, never have regrets;

(x) Do good karma and be a good human being. Stock market is a mind game. Good deeds will ensure that your mind is calm and is able to think rationally.

Happy Investing

Source:Vijay kedia

PTC India

Buy ...PTC  India

PTC India Finance Ltd: A compelling option! – BUY 

CMP: ₹62, 1-yr Target: ₹88, Upside: 30%

PE- 7.42,    Price/BV - 0.70

25-30% pa loan growth sustainable without taking undue risks

We see PFS comfortably sustaining its strong loan growth momentum of 30% pa in the coming years. This would be driven by substantial investments in the renewable energy space that country will continue to witness. Government’s ambitious green energy capacity addition target and supportive policy impetus has opened a gigantic financing opportunity. Strong credibility and efficient and robust sanction process greatly positions PFS amid a benign competitive environment. No wonder that contribution of renewable energy in company’s loan assets and sanctions is creeping up fast. While being excited about growth, the management has been cautious while selecting the promoters for funding. Share of renewable projects in loan book is expected to cross 55% by end FY18.

Portfolio concentration a key risk, but is gradually receding
In project financing, loan concentration is the key risk that a financier has to live with. For PFS, it is more prominent given its small size. However, the trending of asset mix towards renewable segment is gradually de-risking balance sheet given granularity in renewable lending (lower ticket size) and smooth execution experience of the projects. NPLs in renewable portfolio are negligible. Even in thermal portfolio where high concentration is worrisome, PFS does not expect any exposure to turn bad in the near term. Rather, traction in this book has improved off-late as execution on many projects has picked-up. About 80% of the projects funded are likely to get commissioned in FY17.

Healthy lending franchise available at valuation of a PSU Bank
In our view, PFS’s RoA and RoE would settle at 2.7-2.8% and 16-17% in the long run. This would be underpinned by stabilization of spread and credit cost at 4% and 1% respectively. The company has room to respond to any increase in competitive pressure as cost of funding is moderating. PFS is trading at an undemanding valuation of 0.7x FY18 P/ABV; in-line with PSU Banks, which seems unfair considering higher inherent profitability, robust growth prospects and strong capitalization. Recommend BUY with a 12-month price target of ₹88.

Happy Investing

Your 5 step guide to being home loan ready

Your 5 step guide to being home loan ready


Buying a home could be a daunting task especially if you are a first time home buyer. You have to do some background research on suitable neighbourhoods, zero in on a project that meets your needs and want and most importantly allocate funds for it.

Since a majority of the home buyers resort to taking a home loan there are a few things you need to keep in mind before signing on the dotted line.

Below we give you a few pointers that will help you get your dream home in a hassle free manner.

1) Look for options After you have decided on the property you want to buy start your research. Begin by looking for options as the market is filled home loans which have different rates. So instead of blindly trusting an agent, do you research and ask questions. Sit down and draw an estimate keeping in mind you future and talk it out with the bank executive.

2) Calculate your EMI Draw an estimate of your monthly income and expenditure and based on the remaining amount calculate your EMI (Equated Monthly Installments). The amount you can spare on a monthly basis can be your EMI. It’s not a bad idea to get a second opinion so speak to a professional agent who can help you ascertain an EMI amount that you can afford.

3) Bargain Despite the ROI (Rate of Interest) being fixed by financial authorities there is still space for a bargain. So don’t think twice before negotiating. You could end up saving a few thousand on the entire amount that needs to be paid. So base your conversation on that and grab a good deal.

4) Credit card scorecard You might think you are eligible to avail a bank loan but the bank might not think the same. So begin by collecting the history of your credit card payments. The bank is very particular about verifying your credit card payment history so ensure you have been paying your debts on time. If your CIBIL score is high it will be an added advantage so ensure your score is more than 750. If you do, you could bargain on having a lesser ROI.



5) Scrutinize the papers Before you sign on the dotted line, please read all the documents carefully. There are high chances your papers could miss out a few points where you might have negotiated. Do not trust the agent and blindly sign papers. Scrutinize the papers, read all the terms and conditions and only then sign.

Happy Investing

Source:Moneycontrol.com

Bad loans: Mallya not the only one giving banks sleepless nights

Bad loans: Mallya not the only one giving banks sleepless nights

For the past week the 9,000 crore rupee loss that Vijay Mallya has caused the banking system has dominated headlines and mind space.

For the past week the 9,000 crore rupee loss that Vijay Mallya has caused the banking system has dominated headlines and mind space.

A part of this has been paid back by way of pledged shares. So the net principle loss to banks may be closer to Rs 5000-6000 crores.

It's surprising that this amount is causing so much consternation. Almost every business journalist knows that Mallya will not rank even among the top 25 biggest defaulters.

The list of top non performing loans or NPAs is still a closely guarded secret. But one can guage the most stressed assets.

Here's the list of some of the largest borrowers, many of whose group companies are known to be loss making.

LARGE STRESSED BORROWERS              GROSS BORROWING -FY15 (rupees cr)

Essar Group                                                      1,01,464

GMR Group                                                     47,976

GVK Group                                                     33,933

Jaypee Group                                                  76,180

Lanco Group                                                  47,102

Reliance ADAG                                            1,24,956

Videocon Group                                           45,405



Most of these borrower-groups comprise companies whose earnings are way lower than their annual interest outgo.

Here's a list of corporate borrowers whose loans are larger than Mallya's Rs 9,000 crore and whose earnings are less than their interest dues for the last 1-3 years:

Adani Power

GMR Infra

GVK Power

KSK Energy

Rattanindia Power

Monnet Ispat

Jindal Stainless

Electrosteel Steels

IVRCL

Many of these loans may not be repaid. Indeed even now many of them have been kept outside the non-performing asset (NPA) list only because banks have been giving them working capital loans large enough to cover the monthly interest repayment.

That may explain why banks' exposure to some of these companies has been rising steadily for the past five years or more despite there being no capex.

The only reason why Mallya has become the poster boy of defaulters is probably because of his flamboyant life style. Much larger defaulters have escaped the public eye by being low key.

Take for instance the Essar group. Essar group's Essar Oil and Essar Steel came for corporate debt restructuring (or CDR) first in 2003-04. The group blamed the Essar Oil CDR on a cyclone in Vadinar and the first Essar Steel loan restructuring on the global slowdown from 1998-2003. Already by then the group companies had defaulted on a bunch of debentures and foreign floating rate notes. 

In less than ten years after the first corporate debt restructuring, Essar Steel once again had trouble repaying its loans. Its debt was downgraded to default status by rating agencies in 2013. Banks continued to look at ways of restructuring the company's loans through the 5/25 route and called it an NPA only when the RBI forced them to recognize stressed loans as NPAs at its recent sector-wide asset quality review.

Short point the loss caused to the financial system by some of these large groups is much higher than that caused by Mallya.

Besides these, are the government owned defaulters: Dabhol, discoms, Air-India.

This is along list that will put Mallya to shame.

It's true that the prime cause of the current large loan defaults is the global financial crisis of 2008 and the inability of global demand to recover thereafter.

The recent plunge in commodity prices has made matters worse.

Bad loans is thus a global phenomenon.

But a few features stand out in the Indian context:

1. In most large loans, Indian banks have much more at stake in the projects than the promoters. Which explains why banks are keener to save the project than the promoter is to bring matching funds.

2. One big reason for this penchant to save previous loans is the legal system. With no recourse to quickly resolve a bad loan or recover their money, banks are forced to evergreen the loan ie give more loans (in the guise of working capital) only so that old loans are serviced.

3. Banks appear to have given loans based on the group's strength rather than the balance sheet of the borrowing company.

4. The political ownership of the banks also blurs their commercial responsibilities. Bankers recall that in early 2009 there was practically weekly hounding of bankers by the ministries asking them to clear more loans. The UPA was facing its re-election and there was also a general feeling that while the West had problems, India, along with the BRICS countries was set for 10 percent growth. Caution was scarce.

5. The political connections of the borrowers also made it difficult for government owned banks to refuse loans as well as to recover them. It is clear that while private banks also have large bad loans, public sector banks have come out looking much worse.

If both sets of banks have the same regulator and regulations, clearly the fault lies with the ownership. The government as owner is not subject to market discipline. Government doesn't bother if the share prices of its companies crash, unlike private bank owners.

For the same reason government banks are also willing to lend below breakeven rates, just as Air India sometimes flies at cut throat rates.

Governance clearly is the huge difference between private and public banks. With such pathetic balance sheets it wont be possible to bring down government stake below 50 percent in public sector banks in the near term.

But when the dust settles, this is the first reform that needs to be effected.

Happy Investing

Source:Moneycontrol.com