In our last issue, NR Desai wrote to us about his 6000 defunct shares of Electrolux lying in IDBI Bank demat account. IDBI charges him Rs100+ per month. The shares cannot be rematerialised. The Bank puts a price of Rs25 per share when the shares are not traded. Desai claims to have paid over Rs3000 to IDBI over the last nearly three years. He wanted to know how to get out of this. In fact, there is a solution as our reader points out. -- Editor

This is with reference to the letter by NR Desai in which he wrote that he is saddled with defunct shares of Electrolux and has to bear the demat charges from IDBI Bank. There is a remedy for this, which is to close the account in a particular fashion. This should be done as per NSDL circular No. NSDL/PI/2005/1692 dated 09 Sept 2005. The procedure is as follows:
- An account closure application to the depository participant (DP).
- The account should have only those ISIN (s), which are in ‘suspended’ status or pending rematerialisation status.
- The client authorises the DP to remove the standing instruction to receive credits in the account.
If such undertaking is given, the DP will suspend all future debits like AMC charges. I think if Mr Desai takes these steps, his problem can be solved, as per the circular issued by NSDL.
Arun Kamat, Kumta, Karnataka, by email

Analyse One stock

I have been a reader of MoneyLIFE for about a year now. I have really liked some of the articles published.

My suggestion is that you should start analysing one stock (could be monthly or in every issue) where you use a method advocated by Benjamin Graham or Philip Fischer or the dividend discount model. This could be an exercise with real data/ balance sheet/financial ratios and not necessarily with buy/sell recommendation. It would be of tremendous use to someone like me who is self-educating myself. Readers could then use the method to analyse their own ideas. The analysis of financial ratios/ market-cap/future business potential/ impact of equity dilution will make readers better armed than decisions based on OPM/sales growth alone.
I am sure your expert staff should not find this difficult.

Could you also do a follow-up on your worst recommended stocks of the past year (rather than just the best performing ones)? I think MoneyLIFE rocks and
I eagerly await my copy.
Hitesh Sharma, by email

MoneyLIFE is the only magazine to have a published a full analysis of all the stocks we have recommended and their returns in the issue dated 10th May ’07. I am sure you have seen it by now. -- Editor

SEBI’s Strange Benevolence

The Securities and Exchange Board of India’s (SEBI) clearance of the DLF Limited’s IPO is surprising. After going through DLF’s draft red herring prospectus (DRHP) filed in January 2007, we find the disclosures inadequate. Some crucial material disclosures have not been made and some statutory requirements have not been complied with.

We sent our views to SEBI on 25th January, to which we received a response on 12th February saying that our letter had been forwarded to DLF’s lead managers and we would receive a response from them, with a copy to SEBI. We did not receive a response from any of the eight lead managers to the DLF issue, although the IPO has been cleared.

The media has reported that SEBI’s scrutiny of offer documents from real estate companies revealed claims of non-existent land banks and exaggerated valuations. In some instances, issuer companies had misled the merchant bankers. When SEBI is in the process of revising disclosure guidelines for realty IPOs, clearing an IPO pending such revision is quite a surprise.

The Indian Express had reported that SEBI specifically made an example of DLF’s disclosures to its Board to consider tighter rules for IPOs by real estate companies and introduction of mandatory IPO grading. A SEBI press release now says that IPO grading will be mandatory only for applications made after 30th April. This means that the DLF IPO will conveniently not be graded.

SEBI’s disclosure guidelines require that “The prospectus shall contain all material information which shall be true and adequate so as to enable the investors to make informed decision….”. DLF does not meet these criteria. For instance:

Profit after tax (PAT) rose from Rs191 crore (in FY05-06) to Rs1,830 crore in the eight-month period ended November 2006. Of this, Rs1,742.4 crore came from sales to a company owned by one of the promoters. The revenue from these transactions was Rs2,159.5 crore of which Rs2,109.5 crore is payable to DLF Limited. Details of these transactions are not provided, raising questions about whether they are mere book entries. Incidentally, the cumulative PAT for the past five years was Rs494.5 crore and net worth as on March 31, 2006 was Rs955.5 crore, which increased to Rs2,925.8 crore on November 30, 2006. Providing details of these transactions in the annual report is mandated by the Companies Act.

The main object of the issue is “acquisition of land and development rights” aggregating Rs6,500 crore. In the DRHP, a land bank of 10,255 acres has been claimed for which partial payments (amount not disclosed) have been made and Rs5,537.5 crore is yet to be paid. No details regarding individual agreements, details of vendors or amount paid as goodwill is provided.

Adjusted EPS for FY05-06 is shown at Rs12.34 (stated to be calculated as per AS-20). By our calculation, it works out to Rs1.31.

These disclosures have an important bearing on determining the final offer price that investors would be willing to pay, especially in view of the poor governance record of the promoters. For instance, in the case of Bhoruka Financial Services, SEBI imposed a penalty of Rs1 crore on DLF; in its December 2005 rights issue, DLF specifically indicated that it did not plan to list its shares in the near future to discourage existing minority shareholders and then sought listing. Some investors did not receive the rights offer at all. Consequently, investors cannot assume continued listing of its shares after the IPO. Any effort by the regulator to protect investors and prevent such occurrences in future, needs to be disclosed.

We hope that SEBI would issue directions for grading of the IPO to ensure true, fair and adequate disclosures.
Virendra Jain, Director, Midas Touch Investors Association, Delhi, by email

Understanding Ratios

I have been your subscriber since the third issue. The analysis and reporting style on various financial products is, indeed, very useful for me. I have three queries:
1. You often use the term market-cap to sales and market-cap to operating profit. My understanding is that if the market-cap to sales is close to 1 and the market-cap to operating profit is also low, then the company is attractively valued. Is there any thumb rule for both these ratios?
2. You rarely take the PE ratio into consideration when you identify a stock. Why is it so? Many research reports suggest that if the P/E ratio is low, then the stock is attractive. MoneyLIFE ignores P/E, does it mean that this ratio is not really reliable?
3. How do I read the following numbers: EV/EBITA? What does a high EV/EBITA mean?
Your reply to these questions will help me make informed decisions.
Ramaswamy, Madurai, by email

1. The thumb rule is that market-cap/sales below 1.5 is cheap for long-term investing, but hardly any stocks meet this criteria. We would like to consider market-cap/operating profit below 5 to be a great long-term bet but again very few stocks qualify. Finally, no financial ratio ever works in isolation.
2. As our analysis in the April 26 issue of MoneyLIFE demonstrated, P/E is not predictive of future price performance. P/E is easy to use and is popular but is of limited use. -- Editor

PAN Double

I had applied for PAN way back in 2000 and was assigned a specific PAN number (PAN-1) through a letter from the Income Tax Department dated 6th December 2000, but no card was sent. On 20th May 2001, I received another letter stating that, due to internal issues, a new number (PAN-2) has been issued to me. This letter had a PAN card attached to it. I have since been using PAN-2 for all my transactions and for filing my IT Returns. Suddenly, last year, my tax consultant told me that the IT Dept had informed her that PAN-2 is incorrect and PAN-1 is correct.
I had tried to surrender PAN-1 on 21st September 2006 through the website and was issued a complaint number. There is no response or status update available on the website. Email reminders to [email protected] on 28th September 2006 and 12th October 2006 have got no response. Recently, my demat and trading account (ICICI Direct) was deactivated because my PAN verification failed. Is there any escalation process for expediting these PAN-related grievances and how do I get PAN-1 cancelled and PAN-2 validated?
Shankar Ganesh Srinivasan, TCS, by email

Risky Business

Apropos your cover story “10 hot stocks to buy now” (MoneyLIFE 24 May 2007), one must realise that the share market is very risky. In business, the more the risk, the higher is the profit or loss. The market is OK for those willing to invest on this basis, but it is a distant dream for investors who want to play safe. However, a few select shares of reputed companies or blue chips can be bought for long-term investment when their market price is lowest. Keep them in the locker and sell them only when you need funds on a rainy day. Until then, enjoy the dividend very year.
Mahesh Kapasi, New Delhi, by email


UIDAI does not have any statistics of UID progress to share

The UIDAI has rolled out its ambitious UID or Aadhaar project. However, there is no information or update about the progress of Aadhaar, except from Mr Nilekani who said the same would be made available in two weeks. 

Nandan Nilekani-led Unique Identification Authority of India (UIDAI), which started collecting data, including biometrics and issuing unique identification (UID) numbers to people does not have any update on the progress.

Moneylife sent a mail to Mr Nilekani asking about the progress of its ambitious UID project, Aadhaar. We asked him about the total number of people enrolled for Aadhaar, the number of de-duplications required for fingerprints, iris scan and face pictures (all forms part of biometrics) and the number of cases where de-duplication was not possible. (De-duplication means to eliminate duplicate or redundant information).

We asked the UIDAI chairman if its database is ready for authentication process and number of people who have successfully authenticated their UIDs at least once as well as percentage of false positives and negatives during the authentication. Moneylife also asked if the authority can share the statistics and update it on a regular basis.

We received just one line mail from Mr Nilekani, in which he says, "We will be shortly be having a Public Data Portal on our website within two weeks which will answer all the relevant questions in your email."
Separately, according to a report from the Hindu, the government of Kerala, the only State that mandates the use of Free and Open Source Software (FOSS) in governance recently found that the client enrolment software used is only compatible with Windows.

The UIDAI is using a software that is compatible only with Microsoft's Windows operating system (OS), for its ambitious UID or Aadhaar project. However, this has irked many activists as well as advocates of open source software since UIDAI itself has mandated that all the middleware used in Aadhaar must be vendor neutral. This means it should not be dependent on any particular software and must work across the OS or platforms.

In Kerala, which has embraced open platforms, this is a vexatious issue because virtual device managers, which provide an interface for applications to devices such as biometric devices - are not Linux-compatible, the newspaper report said.
Kerala has declared that it will provide the UID number to over 60 lakh schoolchildren in the state under the UIDAI initiative and has selected Akshaya, [email protected] and Keltron as enrolment agencies for the work. However, in countries around the world where a national ID card system is being used, these IDs are given only to those above the age of 14 years and not to school-going children between five years and 14 years of age. (Read Is the UIDAI database vulnerable? )

What is interesting in the case of Kerala is all three agencies appointed to do the enrolment of students use only Linux OS, which is completely different from Windows OS. Speaking with the Hindu, Ashok Dalwai, deputy director-general, UIDAI, said this is a "Kerala-specific issue." He confirmed that all enrolment software is 'purely for the Windows platform.' "For now, we have asked Kerala to go ahead with laptops with Windows. Our developers will work towards Linux compliance later," he told the newspaper.

This has left many activists and advocates of open source software furious as they feel depending on a particular vendor, especially Microsoft, which is known for its Windows and the unending security issues associated with the OS, to speed up the UID process.

Just last month, VK Saraswat, scientific advisor to the defence minister said that the Defence Research and Development Organisation (DRDO) would spearhead an effort to develop India's own futuristic computer OS to thwart cyber crimes like data theft.

Mr Saraswat, who is also director general of DRDO, said, "In today's world, where you have tremendous requirements of security on whatever you do... economy, banking and defence... it's essential that you need to have an operating system."

UIDAI has been facing criticism for rolling out UID numbers to 'residents' and not to 'citizens' of India in addition to privacy and security issues related with its database. Many activists and analysts are now questioning the motive behind the authority's approach to align with one particular vendor and diluting its vendor neutral mandate.



David Moss

6 years ago

May I bring to your attention the following article, 'India's ID card scheme – drowning in a sea of false positives', available at

... more questions which it would be nice if UIDAI could answer them.


6 years ago

Please visit the Below URL for the UID Progress

Anil Kabra

6 years ago

We have to see the overall good it is likely to do.
Let's face it Windows is being used by over 95% of Computer users. OS issues can always be sorted out late.
Till then whoever has OS issues may opt not to join, but cannot be a hindrance to such a potentially good work.


Samir Kelekar

In Reply to Anil Kabra 6 years ago

What the heck is the overall good?
Millions of dollars in contracts to L-1 identiy solutions, which is owned by dubious elements involved in Iraq war?

Yes, OS issues can always be sorted out late.
Before that, let us loot and scoot! :-)


V Malik

6 years ago

Here's a copy of the RTI application I sent to UIDAI, to which I have not rcvd a response as yet . . .

Unique Identification Authority of India,
3rd Floor, Tower II, Jeevan Bharati Building,
Connaught Circus, New Delhi - 110001.

dtd: 12th September 2010

Greetings & Jai Hind!!

Most humbly request information under the RTI Act of India, 2005, Please provide me with the following information.

Notes:- (1) I wish to specify that you may please not provide to me that information (or particular portion thereof) which would impede the prosecution of offenders under any law of India, and also any personal information which is unconnected with any public activity/interest or which invades the privacy of any person. (2) THIS INFORMATION IS SOUGHT IN THE PUBLIC INTEREST, AND THERE IS OVER-RIDING PARAMOUNT LARGER PUBLIC INTEREST TO BE GIVEN THE INFORMATION I HAVE ASKED FOR.


1) Kindly provide me with information including full name, address and website, on the foreign companies and/or entities entrusted with work for UIDAI which are of US origin or control.

2) Kindly provide me with information including full name, address and website, on the foreign companies and/or entities entrusted with work for UIDAI which are non-US origin or control.

3) Kindly provide me with information on which of the foreign companies and/or entities entrusted with work for UIDAI are redirecting the work to subcontractors or subsidiaries or other entities in India.

4) Kindly provide me with information on what precautions have been taken by UIDAI to prevent any adverse impact on Indian interests in case of unilateral sanctions of any sort by US Government or other foreign Government. (eg: Shut down of Visa / MasterCard / AmEx services to Indian credit card issuers and holders in Iran)


sent by eMail and signed hard copy

Humbly submitted,

Veeresh Malik,
Defence Colony,
New Delhi - 11oo24

mobile: 00-91-99118-25500

Note 1:-Application fee of Rs. 10/- in cash shall be submitted within 30 days as per procedure laid down by DoP&T at PIO, UIDAI, Delhi 11oo01 or at any one of the nominated APIOs located at the specified Post Offices in India, and a copy of this application along with receipt shall be sent to you co-terminus. Interim, you are requested to commence processing this RTI Application as per the RTI Act-2005 with effect from date of submission of this electronic copy, also as per the RTI Act-2005.

Note 2:- The public authority, Office of UIDAI, has not yet published their arrangements to accept / accompany electronic payments for e-filings as per section 6 of the Information Technology Act 2000, is requested to do same, - and hence I am constrained to go to extra expense / trouble to file a routine email request by Postal Department also.


6 years ago

Stat needs minimum sample. One should be at least have few months of patience. Its foolish to expect stat within a month for a project that is going to be there for 5 years!! Do you not believe that the citizens are at risk not only from fellow citizens but also from other residents? UID is a must for as many as possible.



In Reply to Vijay 6 years ago

Please visit this UID Portal and see the progress

Samir Kelekar

In Reply to satheesh 6 years ago

How many among these could be enrolled with no problems in de-duplication? How many had trouble getting de-duplicated? Further, how many have been able to authenticate their UIDs without any problem ? Was everything hunky-dory or not? Giving all the info would be being transparent.


Bada Recharge

In recent years, we have seen a rapid change in telecom services. It is almost a revolution. In one lifetime, I have gone from waiting patiently for a phone connection (it took years after getting all documentation right), to reduced queues for phone connections; from assisted dialling to automatic subscriber dialling, booking trunk calls, to STD, to differential pricing on calls (remember those calls after 10pm at quarter rates?); from expensive mobile phones, to affordable mobile phones and now a choice of operators in every circle on all services. We have come a long way but this has unfolded over 30 years since I got my first phone at home in my small town, Hubli. The change can sometimes surprise you, even though you are used to the convenience of modern telecom. Here is an example.

Recently, I left Pune in the morning for a routine business trip to Mumbai. I parked my laptop in the rear seat and got into the more comfortable front seat with the taxi-driver. We had driven for perhaps 15 minutes and I wanted to SMS a friend when I discovered that I had left my mobile phone at home. I told the driver to pull up, looked at my watch and realised it would cost me 30 minutes to go back and start over. I nervously asked the taxi-driver if I could use his phone to make one call and in the same breath told him I would pay him. He let me do that and we started off on the journey. I didn’t call. I sent an SMS to my friend asking him to call me back at the number. A few kilometres later, the driver veered off into a petrol pump and went to a little shop in the far corner towards the exit. He acquired a Rs60 card, scratched the mask with a coin and sent an SMS to some number. We instantly got an acknowledgement that the charge was topped up. With a grin on his face, his chin held high, a protruding lower lip and a hint of the paan showing, he mumbled that I was set for the day. What the man had done during his minute-long pit-stop enabled me to pay for and work for a day - with his phone. Back in the shop, a little board said “it’s a good idea!” which, indeed, it turned out to be. I didn’t use the phone until 8 that morning as I was a bit amazed with this rapid sequence of events that eliminated my worry of not having carried along my mobile phone. My day went well and I did what I set out to do. But even today I wonder about how well the taxi-driver has assimilated the mobile technology that saved my day.

I’d like to believe that this sort of progress is now inevitable. The press has been glorifying Dayanidhi Maran’s actions as the main reason for the proliferation of telecom services. I am not sure if we can attribute it to him. The key is enabling multiple providers and fostering competition. More the merrier. At least for me. I am bullish on India.
D Venkatesh, Pune, by email

Music & Accounting

This refers to “Notes - musical & accounting” (MoneyLIFE 7 June 2007). In my student days, while learning about accounting and mathematics, I noticed slow background music helped me in understanding these subjects better. If you are doing online trading, slow background music may help also in more concentrated thinking and may result in more profits but do try it at your own risk! I remember, in the old and golden days, you could listen to music of your choice at many restaurants by inserting coins in a Juke Box. Everybody sitting in the restaurant used to enjoy it. Now with Walkman, Ipod, mobile, etc., music has been reduced to something only for personal pleasure.
Mahesh Kumar, Kolaba Chambers, Connaught Place, New Delhi, by email

Unbiased Analysis

I have been reading your magazine for about a year now. I also subscribe to Outlook Money. From Outlook Money, I get elementary knowledge about new investment opportunities. For unbiased analysis, I read MoneyLIFE.

I eagerly look forward to reading the special interviews (Careers: turning point). The interviews are in depth and inspiring. Keep it up. I look forward to an interview with Capt Gopinath, MD of Air Deccan. Hope to read more about ULIPs focusing on its mis-selling by agents. Please do a special feature on how even LIC took many investors for a ride on Money Plus.

Also, MoneyLIFE helps me in making an independent investment decision. Do keep us updated about the series of capital protection funds being launched or recently launched. Also publish a page of glossary, which would help readers understand some financial concepts.

Give a chart about Mediclaim Policy offered by various companies, chart on interest rates for auto, car and home finances. It helps a lot.

I have written a lot on consumer rights during my days as a journalist with PTI and Business Standard. Now, I work for Down to Earth magazine published by Centre for Science & Environment, New Delhi)
Sandip Das, Mall Road, Indirapuram, Ghaziabad, UP  by email

Thanks. We will soon put a glossary of terms and your other suggestions on our website -- Editor

Long-term Picks, Please
I have been reading your magazine for a long time. I am a long-term investor. I really get confused by your stock recommendations in each issue. I would like you to give some suggestions for long-term investors like me. Can you select the stocks in large-, mid-, small- and micro-cap to buy for a long term (2-3 years), when the market falls?
Manmohan S Negi, by email

Too Good

The last two issues of MoneyLIFE were just too good. Your stock picks of Kotak Mahindra and Centurion are very good. Another assured growth story in banking is Yes Bank. Excel Crop is a good idea but will remain at the current level for the next few years. I think the current market is more for high-quality growth stocks. The last few interviews (Alka Deshpande, Shivajirao Patil, Keki Gharda) were all wonderful. I expect an interview of Medha Patkar or Dr Abhay Bang. Congrats for your new section on SME. But also cover interviews with small, listed companies. Sucheta wrote about loans to needy people. I remember, a few days ago, I went to Prime Finance’s well-furnished office near Mulund station (in Mumbai). The interest rate was 2.5% per month. They charged 3.5% for 1st year and 1.75% for the next year. This is a market where the poor and needy have to pay more.
Santosh Mhamunkar, Mumbai,  by email

Whose Side Is SEBI On?

I would like to bring to your notice how retail investors who apply for IPOs are suffering losses due to the inefficiency of intermediaries like brokers (who do not bid though application are submitted  to them on time), bankers (who misplace the cheque or DD), registrar to the issue (who wrongly rejects the application though applications are perfect for allotment). Many investors who apply for IPOs do not inquire about why their application is rejected, though they were eligible for allotment. Either they do not know why the application got rejected or they may be small investors who do not have the knowledge and resources to find out and fight against injustice.

Indeed, it is very difficult to know the reasons for non-allotment. If any application gets rejected, the registrar to the issue does not give reasons for the rejection. Investors assume they have been unlucky.

This happened to me and my client. I am a sub-broker. One of my clients applied for Idea IPO (application no. 72521612) for 630 shares. Though he was eligible for allotment of 172 shares as per the basis of allotment, he did not get any shares and received full refund. On inquiry, the registrar told him that his demat account was blocked by SEBI and he was asked to get in touch with the depository participant India Bulls. The DP confirmed in writing that the demat account was active and there was no ban by SEBI. In spite of writing several letters to the registrar Bigshare, they refused to reply in writing. It shows that they are covering up their mistakes by keeping quiet.

The same client has also suffered at the hands of India Infoline, the collecting agent, who did not bid for the IDFC IPO, where his application was rejected and money refunded, though he was eligible for allotment as per the basis of allotment. After writing several letters to India Infoline and SEBI, he got a letter from India Infoline offering shares 13 months after the IPO had closed. But the letter was a false promise. India Infoline has not given IDFC shares. It is ignoring the investor’s complaints - as is SEBI.

Another investor I know applied for the Opto Circuits issue where the banker, ICICI Bank, misplaced the demand draft causing loss of opportunity and interest. He has now filed a case in the court against ICICI Bank. It is very difficult for the investor to get justice in these types of complaints. They can file complaints with SEBI and investor helpline but it simply does not work.

Some people sincerely try to get the grievance redressed. Praveen Raghvan (Deputy General Manager, SEBI), Jeevan Sonparote (Deputy General Manager, SEBI), and MoneyLIFE did their best to get the complaint against India Infoline addressed. But companies like India Infoline get away by giving vague replies to investors, SEBI and media. Also when a complaint is sent to stock exchanges, no action is taken. Two years after closure of IDFC’s issue, investors are still waiting for justice. I hope SEBI will initiate measures to ensure justice for small investors.
Hitendra Kumar Jain, Bangalore,  by email


In our 7th June issue, we had labelled DSP Merrill Lynch Mutual Fund’s Equity Fund Scheme as a laggard. The article, “10 Laggards in Any Market”, identified the worst performers in terms of returns coupled with their record of underperforming their benchmarks in 7 distinct bull and bear periods that we identified in the last four years. In response,    Mr S Naganath, Chief Investment Officer of DSP Merrill Lynch Fund called to clarify that this was incorrect. The scheme is a dividend scheme not a growth scheme, even though it is called an Equity Fund. Therefore, it should not have figured in our sample.

We rely on the database of Mutual Funds of India (MFI)  for the raw data, which classifies this scheme as a growth scheme instead of an income scheme. MFI also does not take into account the re-investment of dividend as an option, resulting in incorrect calculation of returns. In all MFI analyses of growth schemes, this scheme of DSP Merrill shows up as a growth scheme. We have written to MFI for clarification and suggested that they make appropriate changes to the database. When reclassified, the Scheme is not a laggard. 


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