Let me bring to your notice an anti-investor practice initiated by the mutual fund industry. If I have invested through one intermediary in a fund and, later, if I want to switch to another one, I need a non-objection certificate (NOC) from the first intermediary! This is true even when I am not even switching from one fund house to another. And the worst part is that the Association of Mutual Funds of India (AMFI) has given its blessings to this. A letter from Franklin Templeton tells me that the NOC requirement is in accordance with AMFI regulations.
My cases pertain to some physical units of Fidelity and some in demat form with ICICIdirect. The physical units were bought through Bajaj Capital and the demat ones though ICICIdirect. I wanted to consolidate them in one folio. In order to do that, I have been told to get an NOC from my previous broker, i.e., Bajaj Capital. This is strange. These are my investments; Bajaj is not providing me any service for the investment except at the time of buying them. I surely don’t need an NOC from a direct sales agent when I want to switch from one credit card to another or from one insurance company to another or from one savings bank account to another. So why should it be necessary in case of a mutual fund? I think this practice is not fair to retail investors. Why do I have to run after my previous broker? And what is the guarantee that they will provide the NOC?
Nagender Prasad, by email
We have asked SEBI about this bizarre new rule that is patently against investors’ interests. We will let our readers know if and when we get an answer from the regulator - Editor
Recently, our Commerce Minister, Kamal Nath, proudly proclaimed at an international audience, “You cannot buy a fake Rolex watch in India”. This drew tremendous applause which further ignited him to add, “I can tell you in which countries you can get one?” Dear Minister, a fake Rolex watch, even if made in India, would affect only a wealthy person who opts to buy it. What about the millions of fake ration cards, fake PAN cards, fake Voter ID cards, fake Employment Guarantee Muster rolls, etc. which effect all of us, including the poorest of the poor?
Angelo Extross, 150, St. Patrick’s Town, PUNE, by email
It refers to “Wrong Time for Debt” (MoneyLIFE issue dated 19th July 2007). R Balakrishnan is absolutely right in his suggestion about not going for loans now. Inflation has been under 5% for the past 2-3 weeks and our finance minister says that interest rates will not increase further. ICICI Bank has also reduced the home loan rates by 50 basis points; still it is not advisable to take on fresh loans, as interest rates are yet to stabilise for a longer timeframe. Home loans are the only smart option we have mainly because of the tax benefit. All other kinds of loans can simply be avoided.
Bal Govind, Bareilly, by email
I read MoneyLIFE regularly. I find “Sucheta’s Solutions” section the right forum to highlight malpractices that affect consumers and investors and the options available to get them resolved. I seek your advice in such a case. I had accessed “makemytrip.com” on 10th April ‘07 to book return air tickets. After entering the necessary details, I proceeded with the payment using my credit card. The transaction, however, failed with some “time-out” error. No air tickets were issued.
During a routine check on my credit card account two days later, I discovered that “makemytrip.com” had charged an amount of Rs21,226 (the air fare) for the failed transaction. I called makemytrip.com and they confirmed the failed transaction and assured me that the amount will be reversed immediately. Despite repeated calls and reminders, “makemytrip.com” kept replying that the amount has been reversed on 14/04/2007, whereas my bank denied any such reversal transaction from makemytrip.com.
I also had an email confirmation from them on 15th April ‘07 that the amount has been reversed and it will be reflected within next five business days. I called them after receiving the credit card statement in which the charges had appeared. As they could not give any satisfactory explanation, I was compelled to lodge a case of dispute with the credit card company. It seems that both the bank and “makemytrip.com” are considering this as a case of cancellation whereas it is an obvious fault with the web transaction as no tickets were issued. I was also amazed to discover that if the outcome of the case is in my favour, I do not have to pay penal interest but the merchant is not penalised either. I wish to know how I can proceed further not only to get my money back but also ensure that such malpractices are discouraged.
D Borkar, by email
“makemytrip.com” has agreed to resolve this issue. - Editor
MoneyLife had another good issue. I think you are very bullish about GMDC; you are the only publication to have recommended this stock twice. Evinix and Ess Dee were also first noticed by you. You must keep up the practice of recommending some stocks repeatedly. Your comments on Ess Dee were an eye opener for me. But it is going to figure in the FMCG space in a big way because of the interest of Lehman Brothers and other FIIs in it. It also plans to raise Rs600 crore very soon. Tayo Rolls is very cheap and can be considered for investment, despite its low-margin business.
Among the value picks, GMDC is catching the market’s fancy and will go a long way.
Thank you for replying to my last letter. I too get a sense of the changing business environment and of the changing attitude to micro-caps. Two examples of this are: Diamond Cable recently bought Apex Electrical, which will change its business model, i.e., de-risk its business. Mcnally Bharat is expecting an order from a single customer that is twice the size of its current order book. Many small-caps are engaged in takeovers in India and abroad which was not the case before.
Meawwhile, I am fed up of government meddling. I was bullish on cement and so I bought Shree Cement, Kesoram and Century. Then the government tried to kill pricing power a few months ago. Meanwhile investors like me sold their holdings.Now cement stocks are again in the limelight. Who is responsible for dampening my potential profits? The government, punters or the bull cartel? The government messed up the sugar industry the same way. One regime invited investment in UP while another regime took away all the incentives. When will this kind of governance change? If government allowed our companies to export when sugar price was high, there was no need to award special packages to sugar mills now. Is the India story limited to middle class, industrialists, IT people, etc. Politicians are of different mindset. One of your recommendations, Evinix, is going great guns. It caught the attention of market. As I mentioned in the past, please start some section where you will update your previous recommendations, telling your readers what has changed. iGATE Global has announced its results. Can you tell us whether you have the same bullish stance on it?
Santosh Mhamunkar , by email
As we had clarified sometime ago, we will review our recommendations next April. We will find it hard to run a continuous advisory service, especially because we are finding new stocks for our readers in every issue. Even the largest of brokers cannot find new stocks every two weeks and also provide continuous update of recommendations. Most of the large brokers cover just about 150 top stocks. We have also specified an exit rule: when a stock falls 25% from the purchase price, simply sell. - Editor
Refer to “Brain Power” (Wellness ML July 2007). Those who use their brain effectively live longer. Modern education is providing many easy tools -- computers, calculators, Internet, etc. So the result is poor exercise of brain. Professionals always use their brain more effectively. The same goes for politicians and, therefore, they are actively involved in politics till they are in their ‘70s and ‘80s. In any case, as per a research, only 10% of a human brain’s capacity is used throughout one’s life.
Mahesh Kapasi, New Delhi, by email
This refers to the complaint in the matter of Hitendra Kumar Jain as published in the May 10, 2007 issue of your magazine. The complaint of Hitendra Kumar Jain was lodged with SEBI only on February 2007; there was no earlier reference to the complaint from the SEBI acknowledgement card. Pursuant to receipt of the complaint, the matter was taken up with India Infoline Ltd (IIL). IIL has informed us that the demat credit has been made to HK Jain on June 26, 2007. India Infoline has also informed that it will initiate the due process of recovery of excess shares allotted to Ms Chandanbala through HK Jain later.
R K Nair, Executive Director, SEBI
In response to our article ‘Clear Risk, Unclear Returns’ (MoneyLIFE June 21st), Franklin Templeton has clarified that its Franklin India High Growth Companies Fund is not a three-year closed-end fund as we had mentioned; it is an open-ended one. It also denies having said that there are no pure growth funds in India - although media reports have quoted Franklin’s senior officials as having said so. Finally, Templeton disputes our comment that India does not have pure value funds. It claims that Templeton had launched India’s first value fund in 1996 (Templeton India Growth Fund) while Templeton India Equity Income Fund (launched in 2006) is also a value fund. - Editor
Mumbai: Consumer electronics major Videocon today announced its plans of entering into the financial services business through a general insurance company in partnership with US-based property and casualty insurer Liberty Mutual Group (LMG), reports PTI.
The foreign partner will hold a maximum permissible 26% stake in the joint venture (JV) with Videocon owning the majority. An agreement is expected to be signed between the partners soon.
The partners will be infusing $67 million as the initial capital for the company which will go up till $100 million after five years, by which time they expect to break even by collecting a premium of $300 million.
The JV will primarily focus on personal non-life products like motor, health, homes and small commercial business solutions, LMG's president David H Long told reporters here.
The company will be applying for necessary licenses from the regulator by December and hopes to go operational after September 2011, Mr Long said.
This is LMG's second shot to enter the lucrative Indian insurance sector, Mr Long said, adding the firm's two-year-old tie-up with FMCG major Dabur for general insurance did not progress due to myriad reasons like the global slowdown.
"We have not yet dissolved the agreement, however, it could not work out due to slowdown and time was not right. So we agreed to part ways," Mr Long said, adding de-tariffing is a big booster for entering Indian market now.
For most Indians, the Himalayas are not merely a mountain range that spans the country's north,...