MLF seminar on safe and smart with your money
Moneylife Foundation continues its successful series on financial literacy 
 
The two basic aspects of managing your financial life are: avoid losses by staying away from scams; and invest smartly and steadily to generate wealth from your savings. This is encapsulated in the educative and highly interactive seminar—“Be Safe and Smart with Your Money”, the flagship seminar of Moneylife Foundation (MLF). MLF has taken this message across the country. Most recently, we were Pune, for the fourth time with this seminar.
 
Sucheta Dalal, managing editor of Moneylife and founder trustee of Moneylife Foundation, in the session titled “How to Be Safe with Your Money”, spoke on the several ways an unsuspecting saver can be made to part with his hard-earned money.
 
In the second session on “Be Smart with Your Money”, Debashis Basu, editor & publisher of Moneylife and founder trustee of MLF, took the audience through simple steps for investing smartly. The event, which had a packed audience, was held at the Mahratta Chamber of Commerce Industries & Agriculture (MCCIA).
 
Ms Dalal started by pointing out that financial products are fundamentally different from consumer products. You can test-drive a car but you cannot test-drive a mutual fund; the fate of your investment becomes clear only later. Moreover, in consumer durables, brand names mean something. Not so in financial world. However, people translate their experience of buying consumer products into financial world and regret their decision.
 
The six mantras, articulated by Ms Dalal, include: protect your money, insure for securing future, avoid credit & investment traps, focus on a few safe products, avoid emotional traps and maintain financial hygiene. “Smart people are easier to cheat,” she noted, adding, “high-achieving professionals are often defrauded.” 
 
Ms Dalal explained that credit history and credit score reports have become increasingly important.
 
While Indians save a lot, they keep their money safe in bank deposits. Majority of savers are left confused about how much to invest and in which financial products. Left with confusing choices, majority of savers opt for bank fixed deposits which is a safe and easy option. In the second session, Mr Basu highlighted that this is just the wrong thing to do, especially for those who are in the highest tax bracket. 
 
Usually, we have different financial goals, such as saving on taxes, buying a house, child’s education etc. Mr Basu explained that there are specific products for each goal and one should invest only in these.
 
Further, he explained the risk and returns associated with each financial investment. He took the audience through the pluses and minuses of different asset classes, such as fixed-income, gold, real estate, stocks/equity mutual funds and insurance. He also repeatedly emphasised that most people don’t see the huge risk of inflation eating away their wealth.
 
Mr Basu asked the audience to calculate everything on a post-tax and post-inflation basis. If you really want to gain from the enormous wealth that stocks and mutual funds (MFs) can create, you have to understand this and stay patiently invested in good MF schemes or a bunch of good stocks, advised Mr Basu. The three and a half hour seminar concluded with a lively question & answer session.

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SEBI Acts under Pressure To Protect Investors

Companies listed exclusively on closed regional exchanges to re-list

 

Virendra Jain of Midas Touch Investors Association may have won yet another battle for marginalised retail investors, without even having to file a public interest litigation (PIL) this time.
 
In June 2014, we had reported how Mr Jain had sent a strongly worded letter to UK Sinha, chairman of the Securities & Exchange Board of India (SEBI) on behalf of investors of companies that were listed exclusively on regional stock exchanges (RSEs) that were being derecognised by the regulator. He claimed that the exit option for such investors, mandated by SEBI, was not being implemented. Among the 17 regional exchanges to be shut down, many, such as Pune, Kochi, Delhi, Vadodara and Ahmedabad, have already been de-notified. SEBI’s circulars in 2008, 2012 and 2014, which spelt out the de-notification process, had said that companies listed exclusively on RSEs should either get listed on national bourses or go for mandatory de-listing by giving an exit price to investors.

However, Mr Jain alleges that SEBI had not bothered to ensure that the re-listing process was properly instituted and completed before permitting the exchanges to close. His letter pointed out that most RSEs had significant assets (property) and valuable reserves built through tax concessions granted by the government; these should be equitably distributed among all stakeholders including investors. This meant that, although companies that would be de-listed may not want to offer an exit to investors, this should not stop the stock exchanges from doing so. This would, however, be a difficult exercise, since many companies listed only on RSEs have already vanished; but there are some profitable companies as well.
 
Data going back to 2002 suggest that there are 4,644 companies listed exclusively on RSEs. For the past two decades, Mr Jain has been doggedly fighting the apathy of SEBI and the ministry of corporate affairs in tracing companies which vanished with investors’ money in the primary market mania of the early 1990s. He believes that the investment bankers and chartered accountants of such companies should, at least, be held accountable for helping to cheat investors. But regulators are reluctant to act.
 
Midas Touch followed up its letter to SEBI with a final legal notice indicating that it planned legal action. On 17th April, SEBI finally issued a circular to bourses to protect investors of RSE-listed companies. According to SEBI, RSE-listed companies have pleaded that “although they are interested and eligible to migrate to the main boards of nationwide stock exchanges, they are not in a position to opt for the same due to paucity of time.” SEBI has now given them 18 months to complete the formalities and compliances involved in listing on national stock exchanges. 
 
SEBI’s de-listing circulars of 2012 and 2014 had said that companies that were exclusively listed on RSEs would be moved to ‘dissemination boards’ of national exchanges. It then went ahead and de-notified some exchanges. But, now that it has granted the companies 18 months to get listed on national bourses, it needed to relax some compliance rules as well. There are 274 companies on the dissemination boards of national exchanges. The dissemination board is like a transition point allowing some form of direct sale and purchase of shares until the companies are formally listed on the national bourses. 
 
If companies on the board have filed returns with the RoC (registrar of companies) for the past two financial years, they would be treated as compliant, based on a certificate from an independent professional, and be given direct listing without the need for a ‘no objection certificate’. The national exchanges would conduct an independent verification. SEBI further says that if such RSE-listed companies do not make an effort to get listed, or provide a proper exit option to retail investors in 18 months, their promoters and directors will face stricter scrutiny with regard to their future association with the securities market. SEBI may also initiate action against them. However, companies on the dissemination board, whose promoters cannot be traced, will be removed from the list after the RoC declares them as ‘vanishing companies’. This detailed re-listing process probably makes Mr Jain’s PIL redundant, but he and other investors and activists may want to keep an eye open to see if SEBI’s orders are actually complied with in the specified time.

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COMMENTS

lalit

2 years ago

I think SEBI should seek details from all the RSE towards listed companies on this exchanges,and the list of investors so that investors holding shares in physical form should also be given a chance to exit....

secondly what about those companies whose shares have been demateralised or demat is pending...why SEBI does not get the same tranferred in their account and liquidate the same on investors behalf...so at least some money can be recovered.since companies to have vanished.

SEBI's Lip Service on Governance

Market regulators unconcerned about Helios & Matheson’s shenanigans

 

Astudy by FTI Consulting on disclosure standards shows that a majority of Indian companies have a long way to go in complying with mandatory as well as voluntary corporate disclosures mandated under listing regulations. It would be interesting if another study were to check whether there are any consequences to not complying with disclosure requirements. We have observed that SEBI’s ever expanding list of disclosure requirements is so onerous that it is pushing many blue-chip companies to de-list. On the other hand, many dubiously governed companies that plan to keep raising public funds have discovered that there are hardly any consequences to non-disclosure. 
 
SEBI is so busy with its tough posturing on inconsequential issues, like mandating women directors on corporate boards, that it has no time to ensure compliance. Someone should enlighten investors how women directors will improve profitability, or enhance disclosures, when companies brazen it out, like Helios and Matheson Information Technology (H&M) and many others that we routinely report in our “Unquoted” Section. 
 
Not just the regulators, even the mainstream media is stunningly silent about H&M’s shenanigans. On 16th April, Moneylife Digital (our e-magazine) wrote about how the economic offences wing (EOW) of the Tamil Nadu police had arrested three directors of H&M for failure to repay fixed deposits and interest to hundreds of investors. Those arrested include H&M’s former chairman V Ramachandran, the company’s chief executive and managing director GK Muralikrishna, and director Diwakar Sai Yerra.  
 
It required a long effort by Moneylife to obtain a confirmation from the Chennai police, while the directors remained in custody. In Mumbai, too, a retired banker told us that he had obtained a non-bailable warrant against H&M’s directors in a cheque-bouncing case. Thousands of depositors have written to the company law board (CLB); one group has also filed a winding-up petition in the Madras High Court. 
 
None of this has been disclosed to the two national stock exchanges. Instead, H&M’s only disclosures are about its plans to start a skill development programme and that it has sought additional time from CLB to repay depositors. We know that stock exchange officials have read our report on H&M but feel no pressure to act on it. SEBI has often claimed that it intends to track social media for price manipulation through tips and rumours. Have reports about H&M, which has been extensively investigated by the regulator, missed its attention? 
 
Ours is not the only reportage available on H&M’s financial problems. A simple Google search on H&M will take you to job sites and forums loaded with angry posts from former employees who have not been paid. They say that the company seems to have no human resources department and does not respond to requests. Some anguished posts are from people deputed by Accenture to work at H&M. Through all this, H&M’s share continues to trade at a healthy Rs50+. But the regulator has no time for this; it is busy thinking of action against companies that have failed to appoint women directors on their board.

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COMMENTS

Nikhil S Girme

11 months ago

Ms Dalal,
Can we raise a PIL or something to catch attention of Media ..I mean electronic media..Do you have any contacts who can run our stort which concerns 75000 depositors with total scam amt of almost 1000 Crores ?

Pls help us

REPLY

Sucheta Dalal

In Reply to Nikhil S Girme 11 months ago

Dear Mr Girme

well, you depositors can get together and file a class action suit that is now permitted under the new companies act.

And No I have no contacts on television. May be some of your depositors who have lost money should make the time and effort to connect with media.

we are too tiny and organisation and you obviously think our way of doing things is not good enough.

Let me mention that there are so far ONLY 150 responses to the survey -- you yourself have claimed that a few hundred people have lost money in HELIOS and Matheson alone.
If depositors are too busy or unconcerned to fill out even that small survey, then are you surprised that they cannot get together to put up a fight???

Nikhil S Girme

11 months ago

Since this article has been published and all the government agencies SEBI, ROC and CLB are aware of defaults in FDs by
Unitech
Jaiprakash Associates
Plethico Pharma
Phadnis Group, Pune
Helios and Matheson, Chennai
Birla Power Solutions Ltd
Tricom India ltd, Mumbai
Elder Pharma

nothing simply nothing has moved or happened...Where should Sr Citizens go and ask for help ? Arun Jaitley is also of simply no use...He should be directing MCA to take action on these companies, recover the money of depositors..I want to knwo what was Ministry of Corporate Affairs doing when approving /regualating these FDs and when today nothing is happening they are still SLEEPING...BJP govt is on same platform as Congress Govt..Both dont want to help...

Ashok Shah

1 year ago

sucheta dalal

thank you very much for your deeply search about listed company
about crime director financial market higher authority not taken any action

so many company issue preference share pass resolution below market price company want to increase directors stack buy from stock exchange regular market but minority share holder cant do bcoz promoters have big stack so resolution pass and promoters relative price riging and AAM investor loss big
present example name of company of H n M
pl inform to us any news in H n M company or other chor company promoters

very very thanks for your search about chor promoters n financial market regulator

Nirmalya Sengupta

2 years ago

I am an anguished and distraught investor who has put hard-earned money in FD/NCD issued companies, Neesa and H&M being two of them. The money simply seems to have gone down the path to nowhere, cheques have bounced, the trustees are pussyfooting but the share prices are remaining healthy! On what basis? Who is in a better position to investigate that than SEBI? Who should these companies give priority to - those who have put in lumpsum, hard cash in their pockets or who are creating notional wealth by speculation, presumably being helped by unseen manipulations? Does SEBI have the ability to bark or is it given to bleating only?

S Majumdar

2 years ago

It is not surprising that mushrooming "Chit" Fund scheme operators are minting money. All agencies like ED, SEBI, SFIO, CLB - just name any institution and any government keep silent on such irregularities where retail investors are involved. They are active only when media breaks the news and public outcry force them to act post-facto. One can see the genesis of SAHARA, SARADHA and numerous other such scamsters fleecing public and getting away with mere time out in prison. It is difficult to accept that this is possible without connivance between both the parties. Where are the nation's custodians? What about the abject failure of Banking system is providing a bona-fide investment opportunity to micro-investors? What about disappearance of small savings organisations in the country?

Hemlata Mohan

2 years ago

In a company when an employee does not deliver, he is sent home packing. As SEBI is not doing its job- and there are a lot of instances to prove this, can anyone ask for winding up of SEBI? Why should these fatcats get their salaries from the taxpayers if they do not deliver?

Silloo Marker

2 years ago

To my knowledge, this problem is not unique to H & M. In recent amendment to Companies Act 2013, companies are required to create mortgage against borrowing. H & M being an IT company, probably did not have enough assets to mortgage, hence was prevented from raising fresh deposits (under Companies Rules 2014, art. 62, "Power to Borrow"). It seems H & M was raising fresh deposits and paying off the maturities hence landed in trouble.
Can you enlighten us with facts? My personal feeling is that filing of winding-up petitions will further damage the company and ultimately, none of the deposit-holders will get anything. A practical solution has to be found to bail out the company like in the case of Satyam Computers. Action later. Tehemton Marker

MOHAN SIROYA

2 years ago

Yes, I have experienced lack of Governance or even a desire to be investor centric on the part of SEBI.
Earlier, it used to accept Investor complaints even by email. Now no more. Even the Investor Guide operating for this special purpose does not bother. For last one week I wanted to lodge a complaint against negligence of a Registrar and Transfer Agent but now SEBI accepts complaint ONLINE only thru'SCORES .And this website SCORES is most hostile to the consumer, work erratically and seldom a consumer is successful in lodging a complaint. By not providing alternatives ,is in itself a bad Governance. And how SEBI expects that even semi-literate investors will all have computers and skills to take advantage of only ONLINE service ?

frkhodaiji

2 years ago

Ms Dalal,
Congrats on the superb work Moneylife is doing. Our family has 3 FDRs already matured.
Apart from sweet talk & letter, H&M has blatantly avoided giving us the correct picture.
As very senior citizens this is cause for grave concern for us.
Agents & brokers mouth the same sweet replies that the Company gives.
Appreciate yr championing the cause of the helpless public.
Good luck..

Anita Pai Raiturker

2 years ago

There are over 75000 depositors, most of them senior citizens who have no source of income other than the interest from investments in companies like Neesa, Phadnis and Helios & Matheson. These companies claim to have huge reserves/assets, yet refuse to pay investors their rightful interest or return the capital. What kind of governance do we have, that such companies are allowed to get away with blatant dishonesty and swindling? What is Modi's government doing about bringing such culprits to book? What faith can we place in the country's justice system when the dishonesty is obvious for all to see, yet no step is taken towards retribution? Shame on such a government that supports wrongdoers and large-scale swindlers, simply by doing nothing. Shame.

lalit

2 years ago

ALSO ELDER PHARMACEUTICALS LTD DEFAULTED FOR LAST 6 MONTHS

SuchindranathAiyerS

2 years ago

The last 65 years have established the signature Indian culture of non accountability and impunity. It would be opiate, indeed, to even begin to imagine that India's Institutions from the Courts, to the National Human Rights Commission, the Reserve Bank of India exist for the purpose for which they were set up or for any purpose other than to provide sinecures in terms of wages and etortion opportunities for those who infest them. To reenunciate the Jabberlal Dictum, "Show me the person, and I shall show you the law" of a nation that slices and dices "justice", "opportunities". "punishments" and even the right to contest elections by caste, tribe, gender, religion, vote bank, influence, power and wealth. Indian leaders are badly prepared and educated and easily fall prey to their own hubris and self image as has happened with every one of them since Jabberlal. Further, the quality of their staff has deteriorated by design far more rapidly than can be imagined by a corrosion of the education system and the corruption of the selection and promotion process by over valuing birth (SC/ST/BC/OBC etc), sycophancy, corruption and under valuing merit and competence. India is, in all ways, a victim of its own post 1947 culture, traditions and laws. In the same time that India devoted to devolving to its dregs , the rest of the World has grown stronger and evolved.

dhananjay

2 years ago

I am an ordinary depositor in Helios , i know hundreds of other depositors who are senior citizens like me . All of them are dependent on interest income to spend on their day today expenses . My question to various regulatory authorities is ... how can a company like Helios declaring reserves to the tune of 300 crores plus in their financial statements and which was initially rated 5/5 by crisil, claim not to have funds enough to honour rs 900 interest warrant ? Are the finacial statements fudged ? is the company conveniently taking refuge under changed company law excuse and using FD funds to finance projects which otherwise would have cost them higher financing costs ? Are the unmet committments made by this company to repay , being faltered more than once knowing well that there is no one who can rein in their malpratice ? If there are several companies faltering and causing trauma to depositors , was the change in rules per revised company law in the larger interests of the society ? is there any ONE in the present government , who will stand up and take action in the larger interests of community ? or is that there is not enough money in this cause for politicians and governments to take heed ?

shanti Patel

2 years ago

As Dr.Swamy told in his speech that Punish Big Defaulters-others will automatically learn the lesson. Unfortunately in our country defaulters ultimately gains and honest people only suffers
I entirely agree that this matter requires to be taken up at highest possible level and if required laws should be changed and stringent punishment should be prescribed in law and fact should be given to to the defaulters.
Moneylife should take a very sincere view and take up the matter with the finance ministry
supporting the names of companies.

Shanti Patel
Secreatry-Bombay Shareholders Association

Gandhali Girme

2 years ago

We are 75000 depositors pleading you to take the issue of defaulting corporate deposits with arun Jaitely Finance Minister.We need your help to teach these fradulent companies (Helios, Unitech, Plethico, tricome india , jaiprakash Assoc, Ansal hsg, avon corporation, Neesa group, Roofit ) a big lesson.How will you do it Ms Dalal pls..Do you need any inputs from us ? Helios you know in detail..Neesa we can help you with data..Give us an appointment..give us a strong lawyer who can fight for us..Do suggest something..Merely by exposing cos nothing will happen.You have a team of legal experts but we did not get a single strong lawyer who is with us

REPLY

lalit

In Reply to Gandhali Girme 2 years ago

Please add RAJ OIL MILLS,CHAMPAGE INDAGE LTD,MICRO TECHNOLOGIES,ANKUR DRUGS & PHARMA

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