Companies & Sectors
Wockhardt locked in upper limit on strong Q3 profit

Records good growth across geographies; strong operating performance 

New Delhi: Wockhardt Limited has posted a consolidated net profit of Rs141.67 crore for the third quarter ended 31 December 2010. The company had recorded a net loss of Rs181.23 crore in the corresponding period a year ago, it said in a statement to the Bombay Stock Exchange (BSE).

Net sales stood at Rs950.80 crore in the period, compared to Rs889.33 crore in the corresponding three months in the previous year, PTI reported. The Wockhardt share price gained nearly 5% to Rs398.40 today on robust results.  "The company has reported good growth across geographies. Its operating performance is very strong," said an analyst at a brokerage.

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LIC’s Bima Account: You will make a capital loss over 9 years!

Life Insurance Corporation of India has launched a new product, Bima Account, which offers liquidity, flexibility, transparent charges and guaranteed returns. But its performance has got to be among the worst, as you will make a capital loss for more than nine years

Can a guaranteed return of 6% a year land you in a situation where you make a loss over nine years? Yes, if you buy LIC's newly launched Variable Insurance Plan (VIP) products Bima Account-I and II.

The ads for these products are all over the print media. LIC is splashing full-page ads in The Times of India and other publications. According to the ad, the product guarantees returns of at least 6% per annum. Unfortunately, the ads conceal the most toxic aspects of the product.

While a guaranteed 6% per annum is prominently advertised, there is no mention about the astronomical charges and the simple fact that 6% per annum is on the investment, net of all the charges! The charges are astronomical-27.5% in the first year, 7.5% in the second and third years and 5% each year thereafter, of the premium paid.

The premium you pay for 10-15 years (policy term) of Bima Account-II will break-even in nine years even with a guaranteed 6% per annum for a policyholder of age 45 going for insurance of 20 times annualized premium. What might save the day for Bima Accounts is a hefty bonus from LIC.

At this time, LIC is not willing to comment on the bonus factor. The bonus will be given only if the policyholder pays the premium for the policy term even though the lock-in period is only three years. Remember that while the low returns are "guaranteed", the bonus is not.

If you have to depend on a bonus to do better than only breaking even in nine years, you are taking an investment risk. The irony is that these plans are targeted for conservative investors. The Bima Account products are obviously timed to attract naïve customers during the tax-savings season-the very customers who are in a hurry to shove in up to Rs1 lakh in some financial instrument to get 80C tax savings. Thanks to LIC's mighty network, which gives it a presence in every corner of the country, it will rake in the money, but at what cost to customers?

There are far better plans than the Bima Accounts. Like the traditional plan ICICI Prulife GSIP which gives real 5% guaranteed returns on your investment rather than the surreal 6% guaranteed returns from LIC's Bima Accounts. Moreover, GSIP will also give a bonus. A conservative investor looking for 80C savings would be better off putting money in PPF or opening a five-year tax-saver FD that offers interest up to 9.25% per annum. (IDBI Bank offers this rate today). As such, the funds in LIC's Bima Account cannot be withdrawn during the lock-in period of three years even if you discontinue premium payment. The insurance need can be taken care of by a term plan.

It took the Insurance Regulatory and Development Authority (IRDA) a long time to ban the Universal Life Plan (ULP) that was rechristened as the Variable Insurance Plan (VIP). How did it clear this product and the advertisement? Will IRDA be caught napping this time too?

The Bima Accounts offer you the flexibility of reducing the sum assured during the term of the contract, subject to a minimum limit. When the sum assured is reduced, such change will be effective from the policy anniversary following the date of request. The premiums can be paid regularly on a yearly, half-yearly, quarterly or monthly (through ECS mode only) basis over the term of the policy. The minimum premium is Rs600 per month through the ECS mode for Bima Account I, while it is Rs1,250 per month under Bima Account II. The minimum yearly premium for Bima Account I is Rs7,000 and Rs15,000 for Bima Account II. The policy term for Bima Account I ranges from five to seven years, while it ranges from 10 to 15 years for Bima Account II.

There is an option to pay additional (top up) premiums without any increase in risk cover, to the extent of total basic premiums paid under the policy. A loan facility is also available immediately after the first policy anniversary.

If premiums are not paid within the grace period, the policy will become a paid-up policy. The policyholder has the option to revive the paid-up policy within 12 months from the date of the first unpaid premium. During the revival period, the life cover will cease and no mortality charges shall be deducted. The balance in the policyholder's account during the period of revival will earn guaranteed interest rate of 5% per annum without debiting any expenses. On revival of the policy, the guaranteed rate of interest on the policyholder's account will again be 6% per annum from the date of revival.

The sum assured under Bima Account I ranges from a minimum of 10 times the annualised premium to a maximum of 20 times of the annualised premium up to the age of 35 years, 14 times of the annualised premium for between 36 and 45 years of age and 10 times of the annualised premium for between 46 and 50 years of age.

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COMMENTS

JITESH

5 years ago

Guys.. Thts Correct.. I am planing to buy a plan which gives guarantee.. i am shocked to see that LIC is doing that kind of hiding the facts... further, Agent told me that LIC profits goes to Govt.. however, when i asked how , he did not give me satisfactory answer..
When i chked with my family Chartered accountant he clarified that there is nothing like LIC is a Govt. Company .. however , its Promoted by Govt. in past. Even he told me that all the Insurance Companies are regulate by IRDA.. so it doesn't matter in which company u r investing.. Whether LIC or TATA or ICICI .. all are same for that matter.
My suggestion: If you are buying a Insurance a Product.. Don't look at companies ..look and check product only... There are many more profitable Guaranteed products rather thn this LIC Mania... Best of Luck !

ashish kumar

6 years ago

LIC is much better than ICICI

KNSAKTHIVEL DO LIC CHENNAI

6 years ago

we cant accept the authors stream,pls understand BIMA ACCOUNT plans,6% guarenteed and also max 10% we expect in the circular.so dont worry abt this plan.LIC profits goes to only govt, govt welfare plans & policyholder not to owner.but ICICI PRUDENTIAL like pvt why come to insurance sector..they want earn money only for long term min return not for indans welfare or people welfare,anytime they can windup from india.....understand friends....knsakthivel,development officer,LIC OF INDIA,CHENGALPATTU BRANCH,CHENNAI CELL;099440 55277.

R Patil

6 years ago

Rate of interest is 6% compounding.
Charges are nominal for insurance. Please appreciate the transparency instead of paying for hidden costs and complaining afterwards.Bima Account gives you all that is ethical and all that is good- 6% compounding interest+insurance+additional interest+ no lapses+no charges for surrender+A request,Please study the plan well, it will grow on you when you realise the finer aspects.

MIB

6 years ago

Dear Friends,
Before commenting about an insurance product you should analyze the market. I've been working in this field for more than 3 years. Nobody is ready to take a pure term plan although it is available at cheaper rate. People wants minimum guaranteed returns from the premium he pays. That is the main reason for introducing these plans. No matter whether it goog or bed but it will be sold like a hot cake.

Bhushan Antani

6 years ago

I presume that the views and said to be calculations are only and only for your own self only and not meant for the gineral public who is having trust / faith in functioning of LIC of india who runs the economy of India, who stables the stock market when it needs stability, who supports the infra projects of India and so on.
Kindly keep in mind that everybody buys or invest money in any of the available instrument with a specific purpose and idea and hence nobody can generalise any thing with anything.
Thanks for cleating awareness in public so as now people will ask us more questions before buying this product. Thanks once again.

bhushan

6 years ago

Thanks to Money Life , i am saved. I had applied for this policy and my agent told me it was not an ulip , as i amavoiding them due to all the things associated with them .
Then i am told my policy is rejected since it is available only for those people who don't have any other policy with LIC .

REPLY

Bhushan Antani

In Reply to bhushan 6 years ago

Dear Bhushan,
It is defenitely not a ULIP. Your agent has not understood the policy as such. Secondly, there no such criteria that only who has or does not have can get this policy. Ant body can get. Do not depend only on agent and be wiser then your agent always to get best product at best price.

Shreeniwas Gadiyar

In Reply to bhushan 6 years ago

The policy is available to all policyholders of LIC.

Deepak R khemani

In Reply to Shreeniwas Gadiyar 6 years ago

This policy is available to anyone who wants to buy it. There is no question if you are an LIC policyholder or not,

anil

6 years ago

lic ne public ko bevkoof banane ke liye ak aur plan launch kiya. ab 14 lack lic agent public ko bekoof banane nikal padenge. 7000 per year primium 5 year tak dene per . 35000 total ki maturity 37000 milegi. 2000 ka profit 5 years me.lic agent jindabaad.

REPLY

R Patil

In Reply to anil 6 years ago

You seem to have forgotten the insurance part. If the Life Assured dies at any time during the term, the nominee gets Sum Assured plus account value. You have also missed out on Additional interest. You have also not mentioned if any other insurance company offers better returns.

vijay anthony

In Reply to anil 6 years ago

iam from rti u will have to prove your statment or meet you at high court.

anil

In Reply to vijay anthony 6 years ago

mr. vijay i am very sorry for my comment, please forgive me, I am very very sorry.

Vivek

In Reply to vijay anthony 6 years ago

helli rti activist vijay... i have line a lawyer in punjab& haryana highcourt who will fight moneylife case for free. I PROMISE YOU WILL BE MADE TO PAY A FIND OF AT LEAST Rs.50,000

U FOOL first read RTI act
.. High Court is not a forum for RTI Act...
...RTI act is not applicable to private cos.
...RTI act is not for finding ur paternal origins

OM

In Reply to vijay anthony 6 years ago

if ur a RTI activist, go to small cities, towns & villages. LIC agents has missell in such a terrific way that u cant even imagine. MONEYPLUS which got thousands of crores from unaware, uneducated, rural based peoples by telling them that it is just like BANK FIX DEPOSIT. innocent people from rural areas invested in these ULIP bcoz they are told that these are guranteed return policies. people invested only bcoz of Goodwill of LIC Brand. even the BRANCH MANAGER, DOs, SOLD THESE ULIP AS A GURANTEED RETURN PRODUCT BY TELLING THAT IT WILL DOUDLE YOUR MONEY IN 3 YRS. brouchers, pamphelets r distributed giving rosy pictures that from 4th u wil not need to PAY premiums as it will automatically paid out of surplus after 3 yrs. premium paid.

AS RTI ACTIVST U SHOULD MORE BOTHER ABOUT UNAWARE, INNOCENT POLICYHOLDERS MONEY, WHO DONT HAVE ANY RISK APPETITE FOR ULIPs.

Jeevan Pendhari

6 years ago

I think any insurance plan should be compared by saperating Risk & Investment.

First one should try to cover himself for unforseen Risk by calculating HLV. Thumb rule we follows is that 15 Times of Annual House Hold Expenses less your current liquid asset should be your risk cover. Now for general middle income person spending Rs.2,00,000/- p.a. will require 30,00,000 lacs insurance. No policy other than Pure Term Insurance can suffies this requirement. As all other policies will have annual premium at least equal to half of his expenses. HENCE THINK WISELY & COVER FIRST FOR RISK.

Now about investment, why should I pay such heavy charges when I have other alternatives available at cheaper cost in the market?

See you arived to an answer, where you must compare the cost paid for getting benefits.

Jeevan Pendhari
CERTIFIED FINANCIAL PLANNER(CM)

Sanjita

6 years ago

Good Article for New Product of LIC.

Raajeish S Agrawal

6 years ago

Dear Mr. Raj Pradhan,

above as u suggested

“There are far better plans than the Bima Accounts. Like the traditional plan ICICI Prulife GSIP which gives real 5% guaranteed returns on your investment rather than the surreal 6% guaranteed returns from LIC's Bima Accounts. Moreover, GSIP will also give a bonus.”

I think u have not gown through the total calculation of GSIP.

What I got after calculation of their illustration is:
i) If person dies, nominee will get return of money at 5%. &
ii) If person alive, he will get return of money at 4%.

REPLY

Dipankar kundu

In Reply to Raajeish S Agrawal 6 years ago

Is ICICI Pru is in a Position to Give 5% .But the Cos track record says that it is not in a position to pay because of High Claims Ratio & Bad position of the Books Of A/cs of India's Largest Pvt Sector Life Insurer.

Vivek P

In Reply to Dipankar kundu 6 years ago

Can u know give high claim ratio in % rather than just stating bad?
Regarding position to pay, IRDA annual report says ICICI Pru has more than required solvency ratio ( more than 150%) to pay its liabilities to pay.
IRDA annual report says ICICI Pru made profits in 2010 so please prove how the books of a/c are bad? Are Policy Holder's A/c & Shareholder's A/c in bad status?

Raj Pradhan

In Reply to Raajeish S Agrawal 6 years ago

http://www.iciciprulife.com/public/Broch...

Read the brochure. Guranteed Death Benefit is 5% pa on all the premiums paid; Guaranteed Maturity Benefit is also 5% pa on all the premiums paid. The difference is maturity benefit will be given on policy maturity and death benefit given on death. There is no mention of 4% anywhere in brochure.

R Patil

In Reply to Raj Pradhan 6 years ago

This article is biased. A good reporter will always give a substantial comparison of at least 2-3 companies. You,sir, have not done so. You have canvassed only one company. Very sad your Editors/Publishers should have checked the article or marked it as 'ADVT' on behalf of ICICI.

lakhvir bansal

6 years ago

hello sir ur lic,mutual funds,banking and other financial product detail is exclent servics. so i give u MANY MANY THANK
From :- DIL SE

dnrao

6 years ago

The author who has written this article is short sighted person. Better he should check his eye sight with the doctor before analysing any OTHER product with LIC.

REPLY

VPS

In Reply to dnrao 6 years ago

DN rao -who has commented- is short sighted person. Better he should check his eye sight with the doctor before READING & WRITING anything on LIC

santosh

6 years ago

COMMET

Jyoti

6 years ago

At the end of the day this plan will be sold as 2 years premium paying plan especially because policy will continue for full term EVEN THOUGH REGULAR PREMIUM ARE NOT PAID.Indeed we are likely to have "inclusive growth for aam aadmi" through these plans.Instead of three years compulsory payment of regular premium in previous ULIPs, India is changing. It is not IRDA but CEOs of private life insurance companies are sleeping like KUMBHKARNAS.

REPLY

Yogesh

In Reply to Jyoti 6 years ago

The clearance of this plans indicates how much CLOUT LIC enjoys.Similar type of plans from Reliance & Aviva were banned.If this plan with 2 year premium payment is allowed,what was wrong with ULIPs[pre-Sept.2010].This plan is neither transparent[where money will be deployed to get 6% returns] nor liquid[It does not allow partial withdrawal] or flexible[there is no provision for increase in sum assured or reduction in regular premium payments after 2 years].Like other institutions our REGULATORS are also in the grip of govt and are showing open partiality for state owned company.

SEBI wakes up from its deep slumber, bars 39 entities from the market

The market ‘watchdog’ has finally clamped down on entities which have been brazenly manipulating the market. If only they had had the time to read what we have been constantly exposing, a number of hapless investors would have been a happier lot now    

Time and again, Moneylife has been highlighting stories of price manipulation. It has been well over two years since our articles have been appearing, fortnight after fortnight, but the Securities and Exchange Board of India (SEBI) has been looking the other way.

Finally, somebodyor somethingseems to have woken up SEBI from its deep slumber.    

On 2nd February, the market 'regulator' barred 39 entities from "accessing securities markets for allegedly creating artificial volumes and price rise in certain scrips."

These entities belong to the Pabari-Parikh and Walmiki-Shah groups, according to SEBI. The scrips which they manipulated were LGS Global, Spectacle Industries, Goldstone Technologies, Gemstone Investments and Well Pack Papers.

But the sheer irony of this SEBI diktat will not be lost on readers of Moneylife. In our current issue (dated 10 February 2011), we reported that Spectacle Infotek's financials are absurd (despite many websiteswhich we prefer not to nameclaiming that it is a "profit-making" company). We added, "Investors have surely been trapped."  

If only the powers-that-be at SEBI had been reading Moneylife, they surely would have had their hands fulland their task cut out for them. And a number of investors wouldn't have parted with their money.

Last year (15 November, 2010), we had written (Insider trading: Why has it taken SEBI so long to wake up?)  on how the 'watchdog' has chosen to look the other way, despite the repeated instances of price manipulation and insider trading that we have constantly been trying to highlight.

In November last year, a senior official (who preferred anonymity) had told reporters: "Suspicious trading activities have been noticed in SEBI's routine surveillance of market activities; the regulator has decided to probe further into these cases and enhance its oversight for such matters going ahead."

"Suspicious activities have been noticed in many other shares also but those are minor (emphasis ours) in terms of trade value and nature," this official had said.

Moneylife had argued that this was a contentious statement. "If SEBI had indeed 'noticed' suspicious activities in other shares, why has it chosen to ignore them, in its own words, because they are "minor in trade value and nature"; shouldn't the regulator have come down hard on each and every case of market manipulation, irrespective of the number of shares, size of the company and value of transactions?"

Of course, SEBI did not bother to reply or clarify its position.

ML Bhakta, a Senior Partner of Kanga & Co., one of the country's leading barristerswith over half a century of experience in the legal domainhad told Moneylife: "I still wonder whether SEBI will ever wake up to the problem faced by unsuspecting investorsthe sudden rise in prices of unknown scrips without any logic or reason, particularly when Moneylife is repeatedly pointing out instances of such cases."

The market regulator has finally woken up. But is this action too feeble, and too late?

We'll leave that for Moneylife readers to decide.

User

COMMENTS

Parmod Bhalla

6 years ago

I think SEBI is still sleeping on much bigger issues. Indian investors are watching helplessly to the price manuplations by FII's every day. When operators sell/buy huge quantities simultanously in different counters, why is there no regulation to check the same. In essence, it is no different than circular trading. Sometimes, I wonder why do we need FII's in Indian equity markets.

REPLY

sriram

In Reply to Parmod Bhalla 6 years ago

indian stock mkts - FII = 0.

Parmod Bhalla

In Reply to sriram 6 years ago

Well, I donot know what you mean by this. I have been an active investor for thirty years in the Indian markets and have seen much better predicatble returns from this market based on fundamental approach to stock selection. My worry is that the wild swings induced by power money traps the newer investors in losing money. Has anyone seen any FII losing money and withdrawing from Indian markets? Who feeds the profits they make?

Rajan Manchanda

6 years ago

The entities involved in circular trading to rig prices and increase volumes and are barred from operating in the market will continue to function under different names. All are aware that scamsters barred from the market are openly trading today. The company managements are most often hand in glove with these unscrupulous operators. Not only the company managements loan the shares to the operators but even fund them to share the loot at the cost of the retail investors. Having lost heavily, the retail investors are absent from the markets today.

The operators found guilty along with the managements must be penalised heavily so that such practises come to an end. The companies should be barred from raising fresh capital and also from availing furter bank funding.Today trere is no detterent. Unless SEBI uses the stick , investors will continue to be taken for a ride. How difficult is it for SEBI to gather the information if it is serious to weed out these elements ? If there is a will there is a way.

Angelo Extross

6 years ago

It only goes to show that SEBI under Mr. Bhave has a very low score on accountability.
If watchdogs have low or no accountability then who will come to the rescue of the hapless investor?

Ramsaran

6 years ago

Only when such irregularities are exposed will the common investor become confident and make strides into the market instead of sitting on the sidelines. Applaud Moneylife for blowing the whistle as often as they do. Glad SEBI is finally pulling its socks and regulating the market. Hope they tighten their reins on shady companies regularly.

Narendra Doshi

6 years ago

Several Moneylife issues need to be sent REGULARLY to newer members of SEBI each time to create a volcanic action enmass, internally. It is a constant effort expected of SEBI, irrespective of volume, size etc etc.
Maybe Moneylife organizes a special seminar with SEBI officials, someday, for the lonely investors?

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