Arshiya International’s first FTWZ near Mumbai will be launched by end of July

Arshiya International Ltd, a flagship company of the Arshiya Group, said that India's first free trade warehousing zone (FTWZ) near Mumbai, which was scheduled to be launched on 23 May 2010, has been delayed and will be launched by the end of July 2010.

Besides Mumbai, Arshiya International is also developing the country’s first FTWZs in Khurja (near Delhi) and Nagpur. The group's principal activity is to provide end-to-end services and solutions in logistics and supply chain management. It operates through three segments: logistics operations and related services, container freight station/free trade warehousing operations and related services and rail transport operations.

Arshiya International ended 2.58% down at Rs177.25 on the Bombay Stock Exchange, while the benchmark Sensex closed 0.45% down at 16,445.61 points.


Weekly Market View: A short bounce?

After the heavy hammering last week, markets may bounce back a bit next week

The market was down 3% on a weekly basis on concerns over the Euro debt crisis affecting the global markets. Domestic indices plunged on Wednesday following the ban on speculative trading on Euro zone government bonds and certain other financial instruments. Although the market recovered on Thursday, the sentiment on the bourses was subdued as worries over the economic recovery in the Euro zone and certain economic data in the US weighed on investors’ risk appetite.

The top gainers in the BSE Sensex during the week were Larsen & Toubro (up 5%), ONGC (up 5%), SBI (up2%), ITC and Cipla (up 1% each). The top losers on the benchmarks were Tata Motors (down 13%), DLF (down 10%), Jaiprakash Associates and Sterlite Industries (India) (down 9% each) and ICICI Bank (down 8%). In the sectoral space on the BSE, capital goods and FMCG were the top gainers while metals and realty were the laggards.

The board of directors of Piramal Healthcare on Friday (21st May) announced signing of a definitive agreement with Abbott of Illinois, USA to acquire the former's domestic formulations business for a total consideration of $3.72 billion.

The deal will make Abbott the largest player in the Rs 60,000-crore domestic market, with a share of over 7%.

Of the total consideration, Piramal will receive a down payment of $2.12 billion on closing the sale and $400 million each in the subsequent four years starting 2011. The deal is expected to close in the second half of this year.

The World Trade Organisation (WTO) said that the Doha Trade talks should be pushed forward to help countries emerge from the global economic crisis. The International Monetary Fund (IMF) said that some countries should control their expenditure; however, large economies can wait till 2011. The multilateral funding agency said that the global economy needs policy support and risks exist in the system, which is clear from the Greece debt crisis. The Asian Development Bank (ADB) said that strong growth outlook and prospects for better returns will increase capital inflow in the region, however, it will also increase appreciation pressure on the currencies.

Back home, the Indian Meteorological Department (IMD) said that arrival of the monsoon is not likely to be affected due to the cyclone in the Bay of Bengal. A depression in the Bay of Bengal intensified and the country had issued a cyclone alert at ports in the eastern parts of the country on Monday.

The food price inflation picked up for the second consecutive week in early May.
It was up 16.49%, higher than the previous week’s reading of 16.44%. The fuel price index was steady at 12.33%, while the primary articles index was up 16.19% versus 16.76%. The Reserve Bank of India (RBI) said that the Greek debt crisis may have an impact on India’s trade. Meanwhile, India’s imports in April rose an annual 43% to $27.3 billion.

Germany has banned selling of naked short on euro-dominated government bonds, credit default swaps based on those bonds and shares in Germany's 10 leading financial institutions. It said that Euro zone nations must control their fiscal deficit to bring confidence in the financial market. European finance ministers on Tuesday approved new regulations for hedge funds. The European Union (EU) also plans to limit the amount of debt, or leverage that foreign-based funds can use to increase their trades and profits. The euro was down to a four-year low on the ban of naked short selling of some of the financial instruments and also on the remark of the German chancellor that the euro is in danger.

Jobless claims rose again in US for the first time since early April. Initial claims for state jobless benefits increased 25,000 last week to 471,000, the highest level in five weeks, the Labor Department said. The index of leading economic indicators slipped last month for the first time since March 2009, while factory activity in the US mid-Atlantic region accelerated less-than-expected in May. Greece said that the banning of some speculative trading in Euro zone debt indicates the determination of European leaders to defend the single currency and protect the economy.

The RBI said that the US dollar will remain a major component of India's foreign exchange reserves as most of the country's overseas trade is denominated in that currency.

The government’s $14.6 billion haul from third generation (3G) auction is likely to increase the short-term interest rate as auction winners pay up from their accounts, draining out money from the banking system. However, the bounty is expected to help the government control its high fiscal deficit. Combined with the proceeds of an upcoming auction of broadband wireless spectrum, the government could raise a combined Rs921 billion ($19.7 billion) from selling the rights to its airwaves.


“Upfront commissions were making everybody think short-term. They will think long-term now”

KN Vaidyanathan, an executive director of SEBI, sees mutual fund companies evolving into a changed business model, based on simple products, ethical distribution and technology to reduce costs. This is the third and final story of a series

The Securities and Exchange Board of India is confident that the mutual fund industry will emerge stronger and more investor-oriented following the slew of recent fundamental regulatory changes made that affected the fund industry badly so far. “The changes will force everyone to think hard on how to develop a robust long-term business model,” says KN Vaidyanathan, an executive director of SEBI, in an exclusive interview to Moneylife.

Following the regulatory changes over the last 12 months the business model of mutual funds has been profoundly affected. Fund companies have been losing assets while well-established selling and distribution strategies of fund houses have gone haywire since upfront commissions and the various ways in which intermediaries were being compensated, have been plugged. How does the regulator view these changes, especially since we are witnessing a continuous decline in equity assets over the last few months, since SEBI has a development role to play as well? “The industry will adjust. Maybe the asset size will shrink but that may be good for all, especially the serious players,” says Mr Vaidyanathan. “The industry is full of bright people. I am sure they will put their heads down and work out a better business model. That would be good for all—including the investors.”

SEBI is pushing fund companies to face the new reality which Mr Vaidyanathan goes on to articulate as follows: “The challenge for the fund industry thereafter is to find out where the scale will come from. According to me it will come from simplicity, distribution and technology.” According to him, fund companies must offer simple products with low volatility based on asset allocation, distribute the products through large distributors and ensure that their operations are backed by the best technology, which reduces cost. “That may also mean that those who were not serious would exit.”

Ever since SEBI has changed the business model of the fund companies by changing the way mutual funds are sold, equity funds are losing money. This has led to market speculation that SEBI may partially relax the regulations, allowing for some upfront commissions. “A large number of people (mainly the sponsors) keep checking whether SEBI will revisit the policy of scrapping entry loads because they argue ‘it has not worked’.”

However, when asked, Mr Vaidyanathan asserted with a simple: “No. That is a closed chapter.”

Having changed how the funds are being distributed, SEBI is changing how the funds would be created. In the first couple of decades of growth of mutual funds, fund companies have launched almost similar products, which confuse investors. SEBI is already making some changes in the fund-approval process which will change this. “It is their business, but I guess funds will have to change. One of the things we are asking funds to do is to explain clearly how fund A is different from fund B. This has to be done for all the funds that are being sold today no matter when they were launched. They have to redo their Key Information Memorandum (KIM).”

One of the key issues for the fund industry is that while SEBI has banned upfront commissions for mutual funds, insurance companies were pushing their products, especially Unit-linked Insurance Products (ULIPs) with hefty upfront commissions. The fund industry has been quietly complaining that this has tilted the playing field against them. Since banks and financial institutions make easier money selling other products, why would they sell mutual funds, goes their argument. Mr Vaidyanathan counters this as a myth. “People confuse between upfront and trail. Business models based on upfront will die. Irrespective of how the dispute between ULIPs vs mutual funds works out, the writing on the wall is clear. Upfront commissions and entry loads will become zero. It is a matter of time. Therefore what it leaves us with is trail commissions. There is nothing to match the attractiveness of trail commission of mutual funds because the trail is on the total kitty, not like the upfront commission on a single product. But that means everybody has to think long term, especially after upfront commissions are gone. Until now nobody was thinking long term.”



Dilip Davda

7 years ago

Well, this was largely happening for private sector insurance companies and that took the toll on their NAVs. As far as LIC Of India is concerned, this was not the case. LIC never gave any extra ordinary commission to their agents and hence gained faith of investors.


7 years ago

The good article. But every rule should be frame with confidence of advisors also. All advisors doesn't know how to do the work and what will happen tomorrow.


7 years ago

If SEBI cant act in favour of brokers-then atleast it should think otherway-that our MF indutry does not get paralysed-
the only institution is LIC right now which has capability to support the free fall-but it is not its only responsibility to act always-there has to be others who should shoulder it-
SEBI people please wake up and act wisely-atleast for the benifit of this country-dont let our markets play to the mercy of FII-


7 years ago

See the free fall of our markets since last week-all fundamentally strong cos are getting heavy beating-our fundamentals are best in the world-but the reason for beating is that FII(godfather of indian markets) are in selling mood-is there some one to stop this panic selling?
how can be there because our regulator has well tried to curtail their growth-
all our institutional investors are paralysed due to redemption pressure-how they can stop this free fall?
i guess its necessary for SEBI to act wisely in the interest of the of this country and its people-
which may not hamper the investment objectives of coommon man-
SEBI should stop practicing of 'paralying MF industry'so that they have nails and tools to act in such panic situation

Ghanashyam Adhalkar

7 years ago

Why sebi not making clear picture about charge of fees? There should be some research to be done & some implications to be made about fees. SEBI should aware customers through mass media to give fees to the brokers.

Ranjan D Gupta

7 years ago

Mr.Vaidyanathan has only concentrated his idea to give more benefit to the investors.It is true that Investors are getting benefit of zero entry load but SEBI could not able to perceive that in India investors mindset are tuned towards putting money in Banks and Post Offices.It requires great effort to convince them to put money into mutual Fund.
Who will do it? Intermediaries or SEBI.SEBI is only the regulator,the responsibility of development of MF industry does not come upon SEBI.Who will think about it. Poor response in NPS launched by Govt is an eye opener.It is suffering because there is no intermediary to canvass for NPS which in the first year of operation generated very good return.


Kamal Singhi

7 years ago

I would like to draw the attention of SEBI to the following facts. SEBI wants MF to think long term. It is right but something more to be done to have this happen.
There are two main players in the stock market Speculators and Investors. Investing is by nature long term and MF industry is an investor's destination. But the problem is that everybody is confused and no one knows what they are doing. Look at the followings.
When the stock market cheap it is described as KHARAB or BAHUT KHARAB by the market players. When a cheap thing is described in this way, can any retail investor invest. Thus cheap market is avoided for buying.
Similarly when the market is most expensive it is described as Achha or Bahut Achha. When an expensive market is described as such then can any body sell and come out of the market. Thus expensive market is avoided for selling.
Buying in a cheap market and selling in an expensive market, the basic rule of wealth creation and also the fundamental investment rule is gossely violated.
Investment and speculation are so mixed that it has become difficult to distinguish one from another.
Once investor's destination like mutual funds houses start describing the stock market from the investment perespective i.e. when it is cheap, it should be proclaimed cheap and when expensive it should be proclaimed as expensive and such proclmation should happen widely through various media. Rather investment houses should also refran from bringing any schemes during most expensive times of the market. This coupled with training to IFA on 2nd level asset allocation can really bring desired changes at thinking level not only among fund houses but also among investing public.

gerard barros

7 years ago

trail commission is a good idea, if it can be done on a monthly bases, rather then quaterly currently, are expenses are monthly and that need to be addressed.

Ishwar Bhatewara

7 years ago

Because of this regulatory changes, Mutual Fund will be only restricted to 8 cities. Death of Mutual Fund penetration. Instead of that if SEBI had put a uniform cap of 1% for all big or small distributors, it would have not hurted. SEBI is very good at theorotical implications but has miserably failed in practical application and the numbers reflect the same.

sandeep kumar upadhyay

7 years ago

With due respect, i would like to ask a very small and single question to mr vaidyanathan that " Is all your these regulatory frameworks regarding commissions and payouts for mutual funds is really feasible in the country like india where awareness level for mutual funds and stock market is really upto the mark or you people are just replicating U.S. model where awareness level is near to 80% when such framework was introduced or really boged down by seening the growth of 8% nearly in metro cities only, is really india means this 8to9% in metros?What about rest of india? my dear sir , my simple view is that be comprehensive in your thought and patriotic also. And also do not creat Huge unemployment.

with best regards,
sandeep kumar upadhyay

Anup Agarwal

7 years ago

It is a nice thought by the writer. Now may i request the writer to please quit his job & salary for 6 months & then think about all the logistics. While we r on job & our salary package is not tampered with, we think of many things. But the brunt is borne by the lady who gives the birth to the child.

I m not opposing the concern sebi has for the investors bcoz it is investor market and we r here bcoz of him. Sincerely, i have never favoured churning, or upfront comm as the income making tool. But as you have put it, "people are doing it", all those advisors who were not involved in churning have unnecessary fallen pray.

Instead why don't sebi conduct atleast 20-50 checks in various parts of the country & terminate license of people who are churning instead of demotivating mf.

When your genuine earnings are hampered Sir, it pinches you deep in your heart.

Thanx & Regards,
Anup Agarwal


7 years ago

The upfront incentive is necessary for proliferation of financial literacy in to masses,More and more people were coming in for investing to make the industry stronger.What is the percentage of population is investing in equities through MF.This will help FIIs to rule Indian Markets.That will further damage the returns and the stock market well.Our mf industry and stock markets are not that mature enough so that the investor himself will come directly to the markets.

R Balakrishnan

7 years ago

The present ed of SEBI seems to be hell bent of practically shutting down the mutual fund industry. The first thing SEBI should have done is to level the playing field. It could have taken IRDA long back ago. If SEBI is so keen on improving the markets, the most important thing SEBI should do is to enable institutional investors to trade in stocks without going through brokers. Why do they need brokers at all? SEBI should focus on this. In the debt markets, RBI has enabled trade to happen directly between institutions. With technology in place, there is no need for stock brokers also.

PK Sachdeva

7 years ago


In India we do not believe in long term planning, even at grass root level. We always try to find out short cuts - for degrees (Copy Cat) financial gains (unethical deals) and so on.

Most of the people do not know where they want to be after 5 yrs.

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