This is with reference to MoneyLIFE issues dated 23rd November 2006 and 1st March 2007 about complaints regarding India Infoline. I have filed a complaint at (complaint no. K-722M3346-HBB) two months ago, after reading about it in your magazine. The status shows that it is still awaiting response from the company. I have also filed an online complaint with SEBI which also I came to know through your magazine for which I got acknowledgement no. 76117 and Reference no.2007/0004552/01 dated 17th February 2007. I have also sent a letter to NSE and BSE where India Infoline is listed. In spite of all this, nothing has happened. India Infoline has not responded to my letter either. I have also met some other investors who have same problem with India Infoline; it is not responding to their letters as well. Please guide us on the course of action when an investor faces such a situation.
Hitendra Kumar Jain, Bangalore, by email

We had applied for IDFC's IPO through collecting agent India Infoline. The collecting agent did not bid for the IPO. Due to the negligence of India Infoline, we did not get any allotment, though we were eligible for allotment of shares. But we got full refund. We have sent several letters and proof of documents for past 15 months to SEBI as well as India Infoline but no action has been taken in this regard against India Infoline. After 15 months, we received a letter from India Infoline on 31st January 2007 saying that they have not received the application though we have sent documents of proof and acknowledgment issued by India Infoline several times. This is clear harassment of the small investors by India Infoline.
Jitendra Kumar, by email

Excellent Cover Stories

I liked the cover story (Stocks That Resisted the Fall). This does not guarantee that that they will outperform in bull market but the stocks selected are standard sound stocks. MoneyLIFE is a pioneer in innovating new concepts in cover stories. You take efforts to create some magic out of your database. I will give you two new concepts for cover stories. One is high management optimism. If you go through various interviews, some managements are much more optimistic about their business. For instance, Clutch Auto recently said that they expect a growth of 50% for next five years. Bartronics expressed similar views for the next few years. These stocks are very cheap and their business models are different. Clutch Auto has its own R&D and has applied for patents. It is expanding at a very low cost. The second idea is private placement of shares at a rate above the market price. Gitanjali Gems did a placement at Rs290 when the market price was Rs190, McNally Bharat at Rs140 with a lock-in of five years to Goldman Sachs, Madhucon Projects at Rs291 (market price Rs195). Both these themes can be very useful. Your picks Menon Bearings, Gujarat Petronet and Radio Mirchi are very good ideas.
Santosh Mhamunkar, Mumbai, by email

Look deeper

One thing intrigues me regarding "The Attractiveness of Bank FDs" in the MoneyLIFE issue of March 29th. While providing comparison with benchmark returns for FMPs, some of the FMPs have beaten their benchmark indices by as much as 4%. My limited knowledge of debt markets cannot somehow fathom this. In a debt and liquid fund, where even a small basis point movement in the interest rates or the yield curve sometimes creates havoc in the market and on the NAV, if a fund could outperform the benchmark by such a huge margin, a lot of credit needs to go to the fund manager. On the other hand, it's time to ask whether benchmarking is serving the purpose for which it was originally introduced or is it being done to just fulfil a SEBI requirement. Such huge outperformances prompt me to think that either the benchmark selected was not appropriate or the investment pattern of the FMP may not be in line with the composition of the benchmark selected. I did have a look at the composition or the structure of the Composite Bond Fund Index.  The Index assigns 46% weightage to call index and gilt index returns.  Now, mutual funds are not allowed to operate in the call market and most FMPs surely don't invest in Gilt securities. Is it then appropriate to compare the performance of an FMP with such an index and comment on the out-performance or under-performance. Retail investors use such comparisons to base their investment decisions and distributors use the same information to influence decisions of the investment community they are serving. I feel it's time to look beyond the straight-line comparisons before investing one's hard-earned money.
Vikas Morzaria, Mumbai, by email

Very disappointed

I am a Certified Financial Planner, practising financial planning for more than 20 years. I read your article "The Attractiveness of Bank FDs". I expected a high standard of analysis from your magazine. I was very disappointed, to put it mildly.

An attempt has been made to compare tax-adjusted yields on bank FDs with FMPs of mutual funds. But you have taken historic yields on long-term FMPs and compared with current interest rates on bank FDs. Was interest rates on Bank FDs more than 9% p.a. a year back, when these FMPs were floated? The correct comparison could be current indicative yields on FMPs with current interest rates of bank deposits or the one-year yields on FMPs with interest rates prevailing on bank FD's one year back. Nobody is interested in history; so the present yields on one year/13months/15 months FMPs with indicative yield of more than 10% p.a. should be compared with bank FDs currently offering around 9%-10% p.a. Growth option is the recommended option in short-term FMPs of mutual funds and, hence, the increase of Dividend Distribution Tax proposed in the Budget 2007 will have no impact on the tax-adjusted yields; no mention has been made about this option available in FMPs. Debt mutual funds if redeemed after a holding period of more than one year are entitled to indexation benefit and the resultant capital gains are taxable as long term capital gains and taxed at a flat rate of 20% + surcharge + cess, etc. Tax-adjusted yield, after the double indexation benefit on currently available plethora of FMPs, of slightly more than one-year duration hovers around 9.5%-10% p.a. which beats bank FDs hands down. I wonder whether this article has been written with a product bias because I dare not think that the writer lacks the knowledge of products/taxation, etc. I shall also be glad to know what the size of the corpus has to do in efficiently managing debt funds. I shall appreciate a line in reply.
Dr D Sundararajan, Mumbai by email

1. The average FMP return is poorer than FDs, especially because of the risk element added. The return from FDs is certain, not the return from FMPs. If you can sense who the winners would be well in advance, you happen to be a seer. But the average investor may not be so well-endowed. Did you know that last year some FMPs earned only 5%?
2. We used last year's data because that is what we have with us, to go by. But even on a like-to-like basis, many FMPs did not manage to beat the returns from bank FDs last year.
3. It is only the 13-month FMP that is more attractive than FDs, provided you hold on to it for 13 months.
4. Yes, we should have incorporated the calculation of LTCG. But it is not as simple as you make it out to be. We should have created a model incorporating LTCG and the risk of FMP's deviation of performance based on the fund house's record and then worked out a model to show which option is better. Too complicated, we feel.
5. Your barb about 'motivated' analysis is unfair and not based on facts. We get ads from some fund companies and hardly any for bank FDs.
- Editor


I have been a reader of MoneyLIFE for about a year now. I have really liked some of the articles published. One suggestion that I have is that you start analysing one stock (could be monthly or every issue) where you use some method advocated by Benjamin Graham or Philip Fischer or the dividend discount model. This could be an exercise on real data/balance sheet/financial ratios and not necessarily with buy/sell recommendation. I think this would be of tremendous use to those like me who are self-educating themselves. Readers could then use the method to analyse their own ideas. With analysis of financial ratios/market-cap/future business potential/ impact of equity dilution, readers would be better armed than having just OPM/Sales growth to decide. I am sure with your expert staff this should not be a difficult task.

One other suggestion, if you could also do a follow-up on your worst recommended stocks of the past one year (rather than just the best performing ones). Not all the recommended stocks have done well and some might have just flattered to deceive with their OPM growth or might have had high equity dilution. I think MoneyLIFE rocks and I eagerly await my copy.
Hitesh Sharma by email

Dividend Discount Model is not relevant anymore as an article in this issue makes clear. - Editor


I was pleased to see my name listed as High Networth Individual (HNI) in Sucheta Dalal's column "How Naïve Retail…" in 12th April issue of MoneyLIFE. However, I am nowhere close to being an HNI. My name perhaps is in wrong database due to which I get those calls. However, thanks to you, I got momentary happiness seeing my name listed as HNI. The points made in your columns are very relevant. If I had followed my brokers' advice, I would have gone bankrupt by now (e.g., I bought SRF @ Rs328).This is not to say my own research has been great (e.g., I bought LITL @ Rs190). I have a list of recommendations given by the broker which I shall research soon and let you know how much closer I would have been to bankruptcy. If you confront the broker, the standard disclaimer is that the stock market is "fraught with risk". I have some recommendations listed in MoneyLIFE which have gone right. However, yours being an ethical magazine, I am sure you would publish those which have gone the other way as well.
Girish Mittal, by email

This issue carries a piece on how our recommendations have done over the last one year of our existence. We are the only publication we know of to publish such a complete self-evaluation. - Editor


I would like to report evasion of VAT by a hotel in Mumbai. I would be grateful if you could tell me the procedure for bringing the hotel to book. My friends and I had visited a sports bar in Andheri West on 21st March. When the bill was given to us, it contained additional VAT for the food and drinks separately. What was strange was that the bill was on a simple cash memo, with the name of the establishment stamped on it. There was no mention of their VAT registration number. I asked the waiter to get me a proper bill with the VAT number on it, as they had computerised POS terminals. After about 15 minutes, the waiter came back with the same bill and instead of mentioning the VAT registration number, he had removed the amount of VAT from the bill. The excuse was that the computer terminals were not working and they could not generate a proper bill.

I have the original bill with me and I would like to register a complaint about the establishment to the proper authorities. The hotel has recently converted into a sports bar and I suspect they have not received all their licences as yet.
Manish Keswani, by email


India among 40 most improved economies easing biz regulations

Washington: India is among the 40 most-improved economies since 2005 which made significant changes in improving business regulations at a steady pace, reports PTI quoting the International Finance Corporation (IFC), a wing of the World Bank.

"Since 2005, India has implemented 18 business regulation reforms in seven areas covered by doing business, creating more opportunities for local firms," the IFC said.

In its report 'Technology makes compliance easier, less costly, and more transparent', the IFC said many of these reforms focused on technology - implementing electronic business registration, electronic filing for taxes, an electronic collateral registry, and online submission of customs forms and payments.

Other economies in South Asia are also improving regulation with fast, transparent, electronic systems.

Pakistan, the region's highest-ranking economy on the regulatory ease of doing business (with a global ranking of 83 among 183 economies), reduced the time for exporting by improving electronic communication between the Karachi Port authorities and private terminals in the past year.

Bangladesh made business start-up easier by enhancing the country's online registration system.

'Doing Business 2011' finds that from June 2009 through May 2010, four of the eight economies in South Asia reformed business regulation to expand opportunity for local firms.

In the past year, governments in 117 economies worldwide carried out 216 business regulation reforms aimed at making it easier to start and operate a business, strengthening transparency and property rights, and improving the efficiency of commercial dispute resolution and bankruptcy procedures.

More than half the policy changes eased business start-up, trade, and the payment of taxes, it said.

Another IFC report released yesterday said that in the past five years, about 85% of the world's economies have made it easier for local entrepreneurs to operate, through 1,511 improvements to business regulation.

Worldwide, more than half the regulatory changes recorded in the past year eased business start-up, trade, and the payment of taxes. Many of the improvements involve new technologies.

"New technology underpins regulatory best practice around the world," said Janamitra Devan, vice president for Financial and Private Sector Development for the World Bank Group.


Number Tampering

Earnings estimates are the bedrock of investments. What if these estimates are tampered with?

Premium Content
Monthly Digital Access


Already A Subscriber?
Yearly Digital+Print Access


Moneylife Magazine Subscriber or MSSN member?

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation

We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)