There have been demands to slap higher duty on overseas power gear to provide a level-playing field for domestic manufacturers, mainly from China
New Delhi: The Prime Minister's Office (PMO) on Wednesday asked the Power Ministry to float a new Cabinet note on increasing duty on import of cheap equipment, mainly from China, and to provide a level-playing field to domestic manufacturers, reports PTI.
"The Power Ministry will send to the Cabinet a new note to impose (higher) duty on imported power equipment, and it is expected to be taken up in the next 20 days," an official said after attending the PMO meeting.
The meeting, which was chaired by Principal Secretary in the PMO, Pulok Chatterjee, was attended by officials of the ministries of finance, power and heavy industries.
Currently, equipment imported for projects of less than 1,000 MW capacity attract 5% customs duty, while those above that are exempt.
There have been demands to slap higher duty on overseas power gear to provide a level-playing field for domestic manufacturers, mainly from China.
In May, the Cabinet had deferred the proposal to raise the duty on imported power gear.
On the quantum of duty on imported power equipment, the official said, "The Power Ministry will take call in regard to quantum of the duty."
Earlier, the ministers of power and commerce had suggested 19% levy, while the Heavy Industry Ministry has recommended a duty of 14%.
The three ministries had differences on the quantum of basic customs duty that can be slapped on overseas power gear.
While the Power Ministry has pitched for five% customs duty, Commerce and Heavy Industry Ministries are seeking 15% and 10%, respectively.
A committee headed by Planning Commission Member Arun Maira in its report had suggested imposition of 14% levy -- with a customs duty of 10%.
Meanwhile, the Co-ordinating Committee of Secretaries (CCoS) had pitched for 19% levy on imported power gear including five% customs duty.
Besides disseminating the information on real-time basis to investors and others, the XBRL technology-based new system will also help SEBI itself as also other regulatory and investigative agencies in monitoring any irregularities
Mumbai: Market regulator Securities and Exchange Board of India (SEBI) said it will set up a single platform to help companies report and disseminate mandatory regulatory filings, including financial statements, in the new XBRL-based format, reports PTI.
XBRL is a globally accepted standardised business reporting tool that enables easy dissection of bulk documents without delay.
"SEBI is in the process of setting up a SEBI Unified Platform for Electronic Reporting and Dissemination (SUPER-D), which will be a XBRL (eXtensible Business Reporting Language) technology based platform for reporting by listed companies, mutual funds and other SEBI registered intermediaries" it said in a statement.
It added that a tender process has already been initiated in order to set up the SUPER-D.
XBRL technology enables the computers read and divide the information provided in the filings under various heads and thus makes it easy to find any relevant details and to identify any irregularities.
The new system, called SUPER-D (SEBI Unified Platform for Electronic Reporting - Dissemination), is being developed in such a way that it is capable to manage simultaneous filing of 500 documents on normal days and have peak-period capacity to handle 15,000 simultaneous filings.
Besides disseminating the information on real-time basis to investors and others, the XBRL technology-based new system will also help SEBI itself as also other regulatory and investigative agencies in monitoring any irregularities in the affairs of companies and market intermediaries.
SEBI further said it has asked mutual funds to volunteer for XBRL filings.
"These XBRL filings will be in addition to the filings under the current system," it said.
Mutual funds and assets management companies can file reports like monthly cumulative report, percentage of assets under management from city clusters, ageing analysis of assets by AUM, number of branches of the AMCs, half yearly portfolio disclosures, deployment of funds in equity and debt schemes, and balance in load account.
"Till date, ten Mutual funds have joined in this pilot project of SEBI and have started XBRL filing of the specified reports with SEBI on voluntary basis," it said.
At present, BSE and NSE have a XBRL-based financial reporting platform for listed companies for all their filings and the system helps the investors get real-time access.
Pramerica’s variation of the traditional SIP may seem like a good strategy but investors should know that portfolio performance depends far more on selection, price paid and weightage of stocks in the portfolio
Under a Systematic Investment Plan (SIP), an investor invests a fixed amount of money every month. This has been touted as a great investment strategy but as our cover story (now on the stands) makes it clear, SIP cannot be used mindlessly. There are occasions when SIP can even lead to a capital loss.
Fund companies have SIPs of varying kinds to get over the performance problem of plain vanilla SIPs. Pramerica has now come out with what it calls "Power Sip". It is an investment plan under which the amount you invest each month is determined by the Sensex trailing P/E. This approach is based on the principle of mean reversion, which means, prices and returns eventually move back towards the mean or average. By popular belief, P/E ratio can be used to predict the future movement of stock prices. Such arguments are based on the belief that P/E ratios are mean-reverting.
In theory, by comparing the P/E of the Sensex at the time of investing with the historical mean of the Sensex P/E, one can tell whether the Sensex is cheap or expensive depending whether it is below or above the mean. Thus if the PE of the Sensex is below the mean, it would be an opportune time to invest as prices may go up. But does this methodology work? It would if you are investing only in Sensex stocks.
Using the Sensex PE may be an error
Pramerica uses the Sensex PE as it is the general market indicator. Is that correct? We see several problems with this:
In sum, the actual PE of the stocks in the portfolio may be different. Whether the Sensex is cheap or undervalued, may not necessarily mean that the stocks in the portfolio have the same valuation level. Using Sensex PE was simpler but not quite the best option.
How does the Power SIP work?
In the Power SIP, your monthly investments would be routed through Pramerica Ultra Short Term Bond Fund, to either Pramerica Equity Fund or Pramerica Dynamic fund. The amount transferred to the equity scheme depends on the "Pramerica Multiplier Value" which is determined by the PE variation of the Sensex. This would range from 0 to 2 based on the level of variation of the Sensex PE from the mean. In the earlier version of the Power SIP launched in December 2011, the multiplier went up to four times. The reduction in the multiplier was done as per market feedback to reduce the frequency of capital calls to investors. According to the model developed by Pramerica if the PE falls 20% below the mean, twice the monthly instalment will be invested and so on, as per the table below.
Calculation of mean
One of the main issues in this approach, and one that has puzzled researchers all over is: How is the mean to be calculated? The mean of the trailing P/E of the Sensex from 2 January 1991 to 15 June 2012 works out to 20.80; the mean for the last 10 years works out to 18.36 and for the last five years works out to 18.82.
Mean reversion may be a good approach to start with but its implementation is not as simple. However, there are studies that show the P/E reverts to its long term average. Pramerica has calculated the mean taking a weighted average of the average PE of BSE Sensex since 1991 and the average PE over the last five years. This calculation has worked for them over different periods compared to the normal SIP strategy.
For the period from 2 January 2000 to 2 February 2012, the Power SIP has given a return of 16.26% compared to a basic SIP which gave an IRR of 15.03% in the same period. Even in one of the worst five-year period for SIP from September 1996 to September 1991, when the basic SIP gave an IRR of -5.29%, Power SIP returned -3.01%.
Should one go for it?
Though this approach has worked in the past, this is based on the return of the Sensex. The actual performance of the scheme depends on the performance of the equity schemes of Pramerica. However, both of the schemes were launched in December 2010 and do not have a sufficient track record. In the one-year period ended 15 June 2012, Pramerica Equity Fund returned -12.12% while its benchmark returned -5.64%, a huge underperformance. The Pramerica Dynamic Fund returned -4.76 in the same period.
In our recent cover story "SIP Smartly" (Issue dated: 28 June 2012) we have explained the facts and myths about SIPs and when it works and when it doesn't. We have mentioned that one should not be committed to an unnecessarily rigid SIP strategy and there should be some approach to timing the market. Pramerica has followed a valuation-based approach to timing, which is good to start with, but the performance of the schemes will finally tell what investors get. And while the performance of a portfolio can be influenced by some amount of broad market-timing, it can be grossly negated by the choice of stocks, price paid, and weights. After all, if you had bought various Reliance stocks in a portfolio three years ago when the Sensex valuation was cheap, your performance would have been dragged down badly.