SUCHETA DALAL ON:

BARRING DEFAULTERS’ BIDS, NO IMMEDIATE WORRY

A GOOD MOVE BY GOVT ABOUT DEPOSIT INSURANCE
Personal Finance Magazine 8 December-21 December 2017 Rs 45

Pages 68 (SUBSCRIBER COPY NOT FOR RESALE) www.moneylife.in

STOCKS

Khushi Ram Behari Lal PC Jewellers Tasty Bite Eatables UPL

Cover Page_308.indd 1 01-12-2017 18:30:03

Advertisements.indd 3 28-11-2017 16:37:07
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 ISSUE CONTENTS
8-21 Dec
De 2017

Get The Best out of Mediclaim

I s health insurance worth buying? Is it good

to safeguard your savings because you can
be faced with a medical issue any time? If you
do not face any health issue, it is a blessing,
even though the insurance cover was a wasted
expense. Buying early helps; but the premium
increases with age. Unlike life insurance, you
cannot lock-in the premium for long term.
At times, even buying a policy is not possible
due to undisclosed underwriting rules. While
mediclaim is useful, Raj Pradhan highlights
three major issues with mediclaim, which can
let down consumers. One of the common ones

32 Cover Story
is your proposal itself. Health insurers dig up
issues with your proposal when it comes to
paying claims—even though you may have paid
your premium diligently for decades. To avoid
this, declare every single health issue diligently. Three Reasons Why Mediclaim Fails You
Also, expensive medicines and injections, not Expectations from mediclaim are, often, belied after purchase. At
covered by mediclaim day-care, can defeat the times, even buying a health insurance policy is not possible due
to undisclosed underwriting rules. Raj Pradhan finds mediclaim
purpose of buying mediclaim. No insurer has failing to address the key consumer need—to protect their
addressed this ‘gap’ in cover and no media has savings—when there is a health issue
talked about it. Make sure you don’t miss this

12 Public Interest
very important Cover Story.
In her Different Strokes column, Sucheta
tells you why the Financial Resolution and – Shareholder Activism, Corporate Protectionism:
Deposit Insurance Bill, 2017 (FRDI Bill) But Poor Corporate Governance
may not be as worrying as viral social media – Dengue Death at Fortis: Pride, Prejudice, Ignorance of
messages seem to suggest. Her Crosshairs Influencers
column is about how dubious promoters game
the system with the connivance of international
banks and financial intermediaries, to help
them bleed Indian lenders - mainly public
14 Your Money
– ETF Units for PF Subscribers Likely Soon
sector banks. In his legal column, advocate S – Ministry of Finance: No Proposal To Withdraw Cheque
Prasanna tells us how, and why, the Delhi High Book Facility for Bank Accounts
– Government to Airlines: Reconsider High Cancellation
Court has upheld the political appointment Charges on Air Tickets
of BJP spokesperson Dr Sambit Patra as an – SEBI Considers Reducing Shares Listing Time to Three
independent director on ONGC’s board. In Days after IPO
Legally Speaking, SD Israni writes about a – Price of Flat Not Relevant in Case of Claim for Refund
shocking case where a hapless widow fought a – Plot Owner or Society Not Liable in Case of Default by
Builder: MahaRERA
successful battle to force State Bank of India to – NCDRC Directs Amrapali To Deposit over Rs10 Crore
honour a free insurance on home loans that it for Delay in Noida Project
had quietly withdrawn without proper notice
to borrowers. In his column on stocks, Bala
addresses the crucial question of when to invest
in commodity stocks. As always, I look forward
to your views and suggestions.
16 MONEYLIFE

QUIZ
Debashis Basu  Disclaimer: Moneylife has a policy of not allowing its editorial staff to
buy and sell stocks that are written about in the magazine. All personal
transactions in individual stocks are subjected to internal disclosure rules.
MONEYLIFE | 8-21 Dec 2017 | 4

Content.indd 2 01-12-2017 17:57:00

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 CONTENTS
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Sectors of Mutual
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Accident Insurance
– HC Sets Aside Accident Tribunal 60 Dietary Guidelines:
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Solution
Travel Insurance – Ban on Junk Food Ads till 9pm: UK
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– Tactics of Infant Food Manufacturers
Health Insurance Are Like Tobacco Companies
How To Evaluate
Commodity Stocks – LIC Cancer Cover Review
TECHNOLOGY
Fine Print
48 Stock Watch
Khushi Ram Behari
61 Ensure Your Digital
Privacy and Security
Lal: Continued MONEY MANTRA
Excellence LEGALLY SPEAKING

42 Savers
Are 62 BetheWary of Freebies;
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PC Jewellers: Losers
Shining Bright
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Tasty Bite
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TAX HELPLINE
66 IndiGo
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56 Queries at Moneylife
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– How RTI Can Help
UPL: Fertile
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Market Trend: Certainty of the
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58 Delhi High Court
Judgement Clears Path Readers’ Response ........... 8
of the Future for Politically-connected Book Review ....................63
Board Appointees Money Facts ....................64

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 Volume 12, Issue 22
8 December–21 December 2017
Debashis Basu
Editor & Publisher
editor@moneylife.in
Sucheta Dalal
Managing Editor
sucheta@moneylife.in
Editorial Consultant
Dr Nita Mukherjee
nitamuk@gmail.com
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Total no of pages - 68, Including Covers
RNI No: MAHENG/2006/16653
MONEYLIFE | 8–21 Dec 2017 | 8
Letters.indd 2
WOMEN UNDERSTAND BETTER!
This is with regard to “8 Secrets for Women
To Achieve Financial Nirvana” (Moneylife,
24 Nov-7 Dec 2017). It is important that every
woman is financially independent. The general
feeling in our society is that men understand
Mutual Fund investments
money better than women. The fact is that are subject to market risks,
read all scheme related
women understand and analyse men’s feelings and documents carefully.
requirements (including money) quite correctly and
take timely decisions in a variety of situations—be
it business, profession, politics or at home. Men,
however, cannot accept this. The best would be if Write to
the wife handles (and plans) all financial obligations the Editor!
naturally, with a definite percentage of savings for
old age with the total earnings of the husband. This
WIN
a prize
is as it should be whether she is a housewife or a
working woman.
Mahesh Kapasi, by email
TOUCHES ALL RIGHT NOTES
This is with regard to “From Panama to
Paradise—No Sign of the Bulk of Indian Black
Money” by Sucheta Dalal. Nice piece; it
touches all right notes. Until now, Panama
or Paradise are just naming and shaming of
those having presence in tax havens without
establishing any illicit money or crime. It is up to the re
regulatory
egul
eg
egul
ula
lat
atorry
authorities how they use this data. There is a very interesting
terestin
tingg
observation about export reported vis-à-vis export realised over few
decades. This is how money is siphoned off. Related-party transactions
must be investigated in depth. The suggestions by Dr Swamy appear
to be good and worth considering, but these may not be practical and
may have unintended consequences.
Ninad, online comment 
29-11-2017 15:11:25
 DISCOUNT

Pathbreakers.indd 4 01-12-2017 19:12:51

 LETTERS

A List of Topics to be
the
Best Covered in Moneylife
letter
I am a recent follower of
Moneylife’s (ML’s) opinions
and articles via the Moneylife
instruments, e.g.,
bonds, debt MFs for
investment purpose.
Mutual Fund investments
are subject to market risks,
read all scheme related
documents carefully.
magazine and various videos A list of the different
on YouTube ML channel.
Among the plethora of financial
credit rating agencies
in India and their Congratulations
awareness content available on the web, I find that domain of expertise Karthik Padmanaban
ML’s sessions and articles provide deep insight about should be given. Case
financial matters for people, like me, who are from studies of motivation
YOU WIN A
PERSONALISED
non-financial background having certain disposable of credit rating agency CLOCK
income and wondering how to get away from the behind ratings upgrade
traditional investment options like post-office, bank / downgrade of an
fixed deposits (FDs), gold & property that was organisation.
practised in our parents’ generation. (b) REITs and
I have to say that I am impressed with the ML’s InvITs: Basic
quality of content, deep expertise of the team, concept of real estate
unbiased opinion and being blunt about commenting investment trusts Karthik Padmanaban

about the shortcomings of various entities/individuals and infrastructure

in the financial domain. With this mail, I would like inveterate trusts.
to propose some topics that can be considered, to What is the
publish as articles / videos in future. significance /
I propose them assuming they have not been covered advantage of some
recently, based on my subscription tenure of less than MFs allocating portfolio into tthese
o thhe
hes instruments.
ese in
ese inst
nst stru
rume
ru ment
me s. IIss
nts.
nt
ts.
a year. this categorised as equity or a debt instrument? More
(a) Credit Rating: Basic concept of credit ratings information about choosing MFs and direct shares in
and the different categories of ratings. How to REITs / InvITs should be given.
read the ratings and understand them for various Karthik Padmanaban, by email

 VERY INFORMATIVE! 24 Nov-7 Dec 2017). Most politicians have amassed

This is with regard to the Cover Story, “Where Do
Smart Investors Park Their Money?” by Debashis Basu
and Clinton Fernandes. This is very informative and is
a good guide. Just this afternoon, I had a talk with two
gentlemen promoting mutual funds. When I showed
interest in arbitrage schemes, I was given the fact sheets
of BNP Paribas Enhanced Arbitrage Funds-Reg (G) and
ICICI Prudential Advantage Balanced Fund (G). Had it
not been for the article, I would not have understood
the fact sheets.
Harish Kohli, online comment
ARE OUR ELECTED REPRESENTATIVES
READY?
This is regard to the articles “From Panama to
Paradise: No Sign of the Bulk of Indian Black Money”
and “A Coercive State, in Full Flow” (Moneylife,
wealth worth crores of rupees—after joining politics
or holding important portfolios and admitting it by
declaring their amassed wealth at the time of filing
their nomination papers, etc. But never is there any
enquiry conducted, or their tax returns scrutinised
about how their wealth has increased manifold over a
short term because of their political status.
A rule must be made that declaration of wealth at the
time of filing nomination papers for elections—must
be certified by the income-tax department saying tax
dues are nil and that taxes have been correctly paid
in accordance with all accretions of incomes during
the year. Year-wise their balance sheet and income
statement along with taxes paid—copies of their
income and wealth tax returns must be published
in all major newspapers—after all, these politicians
are playing with public money and are accountable 

MONEYLIFE | 8-21 Dec 2017 | 10

Letters.indd 4 29-11-2017 15:12:06

 LETTERS

 to people at large—transparency of their financial
dealings must be open for public inspection. Are our
elected representatives ready for it?
M Kumar, by email
PREVENT EXCESSES OF POLITICAL
EXECUTIVE!
This is with regard to “A Coercive State, in Full Flow”
by Sucheta Dalal. A fine article. I agree with all points
and queries raised by Ms Dalal. No government or
RBI (Reserve Bank of India) employee
will publicly admit to have goofed up
in implementing the demonetisation
exercise, which eventually didn’t achieve
its stated goals. This was perhaps the
biggest agony-inflicting scheme of
any government since 1947. It was no
gain, but enormous pain. I wish India
had a Constitutional authority like the
comptroller and auditor general on
India (CAG) which can vet government
policies BEFORE they are allowed to be
implemented, to prevent the excesses of
the political executive.
Moreover, prime minister (PM) Modi has
kept Arun Jaitley, a career lawyer, as finance minister
(FM) purely for political expediency. Being an autocrat
who, as chief minister (CM) of Gujarat, relied more on
hand-picked bureaucrats than on his Cabinet ministers,
his insecurity with having a strong competent FM is
obvious.
Both, demonetisation and implementation of goods
and services tax (GST) have been disastrous, although
the latter is at least acceptable in principle, with long-
term gains for India as a whole. If PM Modi had a
finance expert (or CA) as his FM, who would probably
understand the nuances of financial system and
banking systems, in particular, both, demonetisation
and GST, would have been implemented with much
less ‘pain’ to the people.
Ramesh I, online comment
TAX CUTS ARE NOT PASSED ON?
This is with regard to “Consumer Raises Storm in a
Tea Cup” (Moneylife, 24 Nov- 7 Dec 2017). Most
businessmen or companies never pass on benefits, once
taxes are reduced. Now, it is the turn of restaurant-
owners to do so. Even if some branded companies/
retail outfits, etc, pass the benefit of tax cuts—it is to
please the government for a short term only.
In the long term, after a while, they, too, will increase
their prices pleading that the price of commodities has
increased. The best course is not to tax
or have moderate rates in the first place.
The government should not indulge in
levying high rates and then lower it on
political grounds which never results in
the desired tax cut benefit to consumers.
Mahesh Kumar, by email
A PLEASURE TO READ
This is with regard to “Preserving
Capital… and Sanity in a Bull Market”
by R Balakrishnan in (Moneylife, 24
Nov-7 Dec 2017). It is a pleasure to
read his columns. His writings are to
the point and simple. He is one of the
few voices telling people to be cautious.
Jaidev Shah, online comment
BE MORE DISCREET!
This is with regard to “Subramanian Swamy: The First
Two Decades of His Political Life” by Debashis Basu in
(Moneylife, 24 Nov-7 Dec 2017). Mr Swamy is a great
guy, very intelligent and persistent. He can help his
party BJP (Bharatiya Janata Party) a lot, by being more
discreet, and getting his point across by speaking with
prime minister (PM) Modi instead of always talking to
the press. It will make him a press hero, but does not
help the nation benefit from his idea(s). Mr Swamy
should discuss with a nationalist Mr Modi and help
this nation go where he would like it go.
Sanjay K, online comment

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11 | 8-21 Dec 2017 | MONEYLIFE

Letters.indd 5 29-11-2017 15:12:33

 Public Interest
Shareholder Activism, Corporate Protectionism:
But Poor Corporate Governance
P
roxy advisory firm InGovern
thinks that 2017 has
been a “tipping point for
shareholder activism”
with an unprecedented
number of cases where the
board and management
faced shareholder dissent.
However, a tipping point
would suggest a substantive
change—for better or worse.
We think it was more a
case of unprecedented
turmoil which exposed how good
governance is easily discarded by
the most reputed business groups
and companies when their personal
Dengue Death at Fortis: Pride, Prejudice,
Ignorance of Influencers
T he Rs15.79-lakh hospital bill,
presented to the parents of a seven-
year old who died of dengue after 15
days of treatment at Fortis Hospital
Gurugram, has triggered a nationwide
debate over hospital charges. We learn
that Fortis Hospital reached out to the
medical community and corporates
associated with pharmaceuticals and
healthcare to justify the bill and counter
the public anger spilling out on social
media. Reliable sources tell us that
hospitals, leading doctors and influential
persons were sent emails explaining the
cost of treatment and its break-up.
But anecdotes about elite hospitals
ripping off hapless patients are too
rampant to be countered with aggressive
challenges by super-privileged corporate
honchos associated with healthcare and
pharmaceutical companies. So, when
TV Mohandas Pai (associated with the
MONEYLIFE | 8-21 Dec 2017 | 12
Public Interest.indd 2
power or interest are at stake.
InGovern has compiled an
interesting set of facts. It says
eight companies faced shareholder
activism; but, for the first time,
it was institutional investors
and fund houses, such as Unifi
Manipal group) and Kiran Mazumdar-
Shaw (chairperson of Biocon ltd)
attempted to slap down all those who
commented against the Hospital, it made
for an ugly spectacle. Some gems from
these encounters are worth narrating,
mainly because, ultimately, it is these
influencers who have the ear of policy-
makers and politicians, while ordinary
people only face the consequences.
Mr Pai launched a personal attack on
Dr Ashok Khemka, the whistle-blower
IAS officer from Haryana who had
questioned the exorbitant Fortis bill
in his tweets. Mr Pai retorted that he
disliked “people like you (Khemka)
passing judgement without data! shows
prejudging and prejudice!” (unedited).
Dr Khemka pointed out that the bill was
ex-facie high. By way of comparison, he
said, Rs18 lakh was his “annual salary
after completing more than 26 years in
Capital, Florintree Advisors, IDBI
Trusteeship and India Horizon Fund,
who led the charge, rather than
individual shareholders.
It adds the Infosys
founder N Narayana
Murthy’s activism to
the list, even though Mr
Murthy abruptly aborted
attempt to seek answers to
uncomfortable questions,
once he had managed
to oust Sandeep Sikka
as CEO. This, and the disgraceful
sacking of Cyrus Mistry as CEO
of Tata Sons and the removal of
Nusli Wadia as an independent 
the IAS. My professional qualifications,
too, match the best in industry.”
Mr Pai ticked off a journalist
specialising in healthcare saying, “Why
do you patronise private hospitals if you
think they exploit you? Boycott them, go
to govt hospitals; enjoy the care of the
socialist experience.”
Ms Mazumdar-Shaw told people that
they didn’t understand how healthcare
works and went on to rant against people
failing to get themselves insurance. She
said, “People don’t mind charging their
phones every month but desist buying
insurance which costs less!” She added
that they then blame hospitals for this
‘crazy psychology’. (Unedited comment.
She possibly meant, “changing their
phones.”).
Confident that the little girl’s family
had no insurance, she lectured –“A 1000
p.a. insurance cover can save you from 
30-11-2017 20:12:49
  director through extraordinary
general meeting (EGMs), are a
huge blot on the effort to enforce
good corporate practices. However,
both, regulators and governance
experts, would prefer not to dwell
on it. An interesting trend noted by
InGovern is the increased scrutiny
of appointment and remuneration
of directors and objections
recorded by shareholders. Here
were the headline-grabbing cases of
shareholder activism in 2017.
• In Raymond Ltd, chairman
Gautam Singhania tried to
acquire a prime property
for himself and relatives at
one-tenth its market value.
Shareholders voted against the
proposal in large numbers.
On the other hand, attempts
by activist shareholders of
 such exorbitant costs.” This preposterous
statement triggered hundreds of tweets
demanding to know which insurer would
offer them a Rs18-lakh cover for Rs1000
per annum. Anoo Bhuyan, the journalist,
offered a fact correction: “The family,
whose 7 yr old died from dengue with
a bill of Rs 15.79 lakh, had an
insurance amount paid of Rs 5.21
lakh (figures from Fortis press
release).” But Ms Mazumdar-
Shaw simply doesn’t know
how insurance works; neither
does she get it when explained.
She seemed to think that all
costs, no matter how high,
were covered by insurance and
fitting them into the coverage
was “the hospital’s headache
not patient’s.” Fortis and the
insurance company “must explain this
unacceptable situation” (presumably
explain why insurance wouldn’t cover
any amount of exorbitant charges). This
triggered another barrage of tweets that
hopefully served as a lesson to her on
basics of insurance and how premium
Public Interest.indd 3
Alembic (portfolio manager Unifi
Capital), PTC India (proposed by
Florintree Advisors Pvt Ltd) and
Mro-Tek to seek board positions
failed, but not before some
serious issues of governance were
highlighted. In Alembic and PTC
India, shareholders have been
upset with the undervaluation,
for a long time.
• Religare Enterprises is facing
two lawsuits—one filed by IDBI
Trusteeship Services Limited
and the other by India Horizon
Fund Limited. Both are against
Religare writing off Rs500-crore
investment in a loss-making
100% subsidiary Religare
Capital Markets Limited. The
proposal had been passed,
even though 99.95% of the
institutional shareholders voted
is linked to overall quantum of coverage
as well as the risk of claim rejection and
other issues.
After this Marie Antoinette-type
exchange (the last Queen of France
before the French Revolution who is
credited with the infamous comment
that if the masses don’t have bread, let
them eat cake), Ms Mazumdar-Shaw
mercifully dropped the discussion with
a neat about-turn, saying:– “hospitals
must be penalised for overbilling through
fast-track consumer protection courts”
(edited) and that “the Fortis case needs
against it in a postal ballot.
• Finally, there is the case of
Supreme Tex Mart where
squabbling between promoters
took the fight to shareholders
for removal of two promoter
executive directors. The proposal
was defeated.
Is such increased shareholder
activism by shareholders and
promoters a positive development?
It is too early to say. There are some
positives; but the unsavoury actions
and allegation by highly regarded
management or founders at Tata and
Infosys have muddied the waters.
Worse, the Uday Kotak committee,
which was expected to provide some
clarity on the road-ahead, only came
up with additional red-tape and
procedures which are most likely to
be ignored. 
to be investigated for this inordinate
billing.” Most hospitals, as Dr Khemka
pointed out, get land at subsidised rates.
Also, the government heavily subsidises
the education of all ‘good’ doctors on
merit lists, who often go on to work at
these hospitals.
Unaffordable or unreliable
healthcare is a serious and
emotive issue and not one where
influential billionaires should be
sniping and sneering at those
seeking good treatment at
affordable rates. What we need
urgently is serious academic
research on healthcare costs
which cover the actual cost of
medical education (public and
private) as well as the cost of
running hospitals (including
government hospitals with permanent
staff on lifelong pensions). This will help
us to do a rational cost comparison and
understand of the extent of subsidisation
by the exchequer—eventually paid by
taxpayers who may not even use the
services. 
13 | 8-21 Dec 2017 | MONEYLIFE
30-11-2017 20:13:23
 Your Money
RETIREMENT BANKING

ETF Units for PF Subscribers Ministry of Finance: No

Likely Soon
P rovident fund subscribers will
soon be able to track and redeem,
at market price, the portion of
their PF (provident fund) money
invested in shares. The retirement
fund body’s central board of trustees
gave permission to introduce a new
accounting policy for its equity-linked
investments. Under the policy,
15% of the PF
contribution parked
in equities will be
allotted as mutual-
fund like units to
the subscribers.
This can be
redeemed when
the subscriber
exits the fund or
withdraws the
accumulated money,
labour minister Santosh Kumar
Gangwar said after the 219th meeting
of the central board of trustees.
The Employees’ Provident Fund
Organisation (EPFO) is allowed to
invest up to 15% of the PF money
in equity through exchange-traded
funds—the rest is parked in debt
instruments. “The policy will help us
monetise equity investments,” labour
secretary M Sathiyavathy said. After
the implementation of the new policy,
PF subscribers will have two accounts:
one for the 85% money put in debt
on which the EPFO will pay interest
and the other for the part invested
in equity. On the equity part, returns
will depend on the market price of the
ETF (exchange traded funds)
at the time the investment is
redeemed. When a
subscriber decides to
withdraw PF, 85%
of the total
investment
would be paid
back along with
the accumulated
interest. On
the remaining
15%, the payment will be calculated
by multiplying the number of
accumulated units with the prevailing
market price of the ETF. The
subscriber would have an option to
defer the withdrawal of the equity
investment for up to three years if the
subscriber thinks that it can fetch him
better returns.
Proposal To Withdraw
Cheque Book Facility for
Bank Accounts
T he finance ministry said that there
was no proposal to withdraw
the bank cheque book facility. The
clarification comes in the backdrop
of reports in a certain section of
media that there is a possibility
that the central government may
withdraw bank cheque book facility
in the near future, with intent to
encourage digital transactions.
“The Government of India has
reaffirmed that there is NO proposal
under consideration to withdraw
the bank Cheque Book facility,” the
finance ministry said in a tweet.
The ministry emphasised that while
the government is committed to
transform India into a less cash
economy and promote digital and
electronic transactions, “cheques
are an integral part of the payments
landscape.”
STOCKS
SEBI Considers Reducing
Shares Listing Time to Three
Days after IPO

CONSUMER ISSUES T he market regulator SEBI (Securities and

Exchange Board of India) is considering
reducing the number of days taken for listing
Government to Airlines: Reconsider High of a company’s shares on the domestic stock
exchanges from the date of closure of its initial
Cancellation Charges on Air Tickets public offering (IPO) to T+3 (three working

T he government believes the Rs3,000 cancellation fee charged by a few airlines on

domestic tickets is too high and needs to be rolled back. It will soon speak to airlines on
the issue and ask them to reduce the fee to a reasonable amount. “We believe cancellation
days) from T+6 (six days), at present. The
guidelines for this are likely to be finalised by
January 2018. Since the market sentiment
charges are on the high side and onerous for passengers. The Rs3,000 fee is in many changes overnight, the more the days to
cases more than the price of the ticket itself. Our UDAN (subsidised regional flying) scheme list, the higher the risk for investors, as the
has capped fares at Rs2,500 per hour of flying. These cancellation charges need to be bid money is blocked till the listing day. Any
brought back into balance,” aviation minister Jayant Sinha told media persons. Mr Sinha weakness in the market also hurts the listing
has ordered a review of the exorbitant amount charged by airlines. day price movement.

MONEYLIFE | 8-21 Dec 2017 | 14

Your Money.indd 2 01-12-2017 18:38:32

 REAL ESTATE
Price of Flat Not Relevant in
Case of Claim for Refund
R uhi Seth had booked an apartment
in a housing project to be
constructed by Ireo Grace Realtech,
a private construction company. Out
of the total agreed consideration
of Rs1.84 crore, Ms Seth had paid
Rs33.56 lakh.
When the builder sent
the draft of the agreement,
Ms Seth objected to
certain clauses and refused
to sign the agreement.
He sent it back to the
builder, who revised the
agreement, which too was
not accepted. So, Ms Seth
refused to pay further
instalments till the dispute
about the agreement
clauses were resolved.
Taking umbrage, the builder cancelled
the flat allotted to her and forfeited the
entire amount paid by Ms Seth.
Ms Seth filed a complaint before
the Delhi State Commission seeking a
refund of the amount of Rs33,56,942
paid by her together with interest
Plot Owner or Society Not Liable in Case of Default by Builder: MahaRERA
I n an affidavit filed before the division
bench of Justice Naresh Patil and
Justice Rajesh Ketkar, MahaRERA
(Maharashtra Real Estate Regulatory
Authority) secretary said that the order
had been withdrawn “in order not
to disturb the various steps that are
already taken by all stakeholders and
the statutory authority... so as to dispel
various apprehensions expressed by the
petitioners.”
The court was hearing a petition
filed by owners of a three-acre plot
on the Goregaon-Mulund Link Road
Your Money.indd 3
amounting to Rs34,24,081 computed
at 24% per annum from 20 March
2013 till date. She also claimed
compensation and costs.
The sum total of all the reliefs
claimed under various heads came to
Rs73,81,023. The State Commission
referred to the National Commission’s
judgement in Ambrish Kumar Shukla
& Ors versus Ferrous Infrastructure
Pvt Ltd case and observed that the
aggregate value of refund claimed and
the value of the flat would exceed state
challenging the May order. In the order,
MahaRERA had gone on to define the
term ‘co-promoter’ under the Real
Estate (Regulation and Development)
commission’s pecuniary limit of
Rs1 crore. So, it asked for filing of case
before the appropriate forum having
jurisdiction.
Ms Seth then filed the same
complaint before the National
Commission. The National
Commission stated that the value of
the flat would have to be added only
when the complaint is in respect of
possession, construction, or defects
in a flat. Since Ms Seth’s
dispute was restricted to
the claim for refund of the
amount along with interest,
compensation and costs.
Accordingly, by
its judgement on 13th
November delivered
by Prem Narain, the
Commission concluded that
that the claim for refund
of the deposit along with
interest, compensation
and costs aggregating
Rs73,81,023 was below its pecuniary
jurisdiction and would have to be
adjudicated by the State Commission.
The National Commission asked Ms
Seth to a fresh complaint or revive
her earlier complaint before the Delhi
State Commission.
Act (RERA) to mean plot-owners and
organisations which have signed a
development agreement with the builder.
Such entities had to register under RERA
as co-promoters and were to be liable for
defaults committed by the builder.
Faced with litigation, the MahaRERA
informed the Bombay High Court that
it has rolled back a May 2017 order
that had the effect of holding a housing
society or plot-owner responsible for
violations or irregularities committed by
the developer under the new housing
regulation law.
15 | 8-21 Dec 2017 | MONEYLIFE
01-12-2017 18:03:09
 Your Money
REAL ESTATE
completion of the project.
The court ordered the developer to
NCDRC Directs Amrapali To Deposit over deposit the amount after home buyers
Rs10 Crore for Delay in Noida Project expressed fears that the company
faces insolvency. Amrapali Sapphire

T he National Consumer Disputes

Redressal Commission (NCDRC) has
ordered builder Amrapali to deposit
the compensation payable to 96
home-buyers of its delayed Sapphire
project in Noida, an amount that’s
estimated to exceed Rs10 crore.
NCDRC directed Amrapali group
managing director Anil Kumar Sharma
to appear at the next hearing on
7 March 2018, for failing to comply
with its order in July to furnish an
affidavit stating the timelines for
Developers is a special purpose
vehicle under Amrapali Ultra Homes
which is under insolvency resolution
proceedings. According to Saikrishna
Rajagopal, managing partner of law
firm Saikrishna & Associates, which
represented the buyers in court,
says, “Since the lead member of the
SPV is already undergoing insolvency
resolution process, there is an
imminent threat that the SPV will also
meet the same fate.”

Moneylife

MONEYLIFE
Quiz no

273
QUIZ Answer
Correctly! Win
Another quiz to tease your brain. The answers are in a personalised
sed
this very issue. The winner will be chosen by a lucky clock with an Kaushik Paul

investmentnt
draw from correct entries and answers published in the Mutual Fund
investments are quote!
issue dated 18 January 2018. Send in your answers to subject to market risks,
read all scheme related
quiz@moneylife.in with the Quiz no., name, address & documents carefully.
telephone number before 27 December 2017.

1. Approximately, how many mutual fund (MF) schemes are 5. When did the US president take the US off the gold standard
there in India that invest in equity? and grant the government the licence to print money?
a. 500 b. 700 a. 1971 b. 1973
c. 750 d. 900 c. 1984 d. 2000

2. What were the percentage gains in the value of the banking 6. Which Section of the Insolvency and Bankruptcy Code was
sector index, Nifty Bank, in the past one year? amended on 23rd November?
a. 8.55% b. 8.95% a. Section 29A b. Section 80-G
c. 9.15% d. 9.55% c. Section 80-D d. Section 4

3. What percentage of the top 50 popular stocks invested in by 7. For the quarter ending September 2017, how much were
MFs are also a part of the Nifty50 stocks? the sales reported by PC Jewellers?
a. 50% b. 55% a. Rs2,523 crore b. Rs2,622 crore
c. 86% d. 91% c. Rs150.60 crore d. Rs278 crore

4. How many times is the number of Smartphone users as a 8. To which city in India did the late Surisetti Venkata Rao
multiple of the number of hungry children in the world? belong?
a. Two times b. Five Times a. Vijayawada b. Secunderabad
c. Ten Times d. Twenty times c. Vishakhapatnam d. Rajahmundry

In all, 14 readers got all the answers right last time. The answers to Moneylife Quiz-271 are: • 1-c. Warren Buffett
The winner of Quiz-271 is Kaushik Paul from Nashik. • 2-c. Section 197 • 3-b. Construction Week India • 4-c. Sanjay
Congrats! You win a personalised clock with an Chandra • 5-d. 0.96% • 6-b. Meditation • 7-c. Bruce Schneier
investment quote! • 8-a. Rudrapur

MONEYLIFE | 8-21 Dec 2017 | 16

Your Money.indd 4 01-12-2017 12:07:55

 www.moneylife.in
News & views with a big difference
Indian Banks’
Association is a public
authority under RTI,
rules full bench of CIC
In a landmark decision, a full bench of
the Central Information Commission (CIC)
has declared Indian Banks’ Association
(IBA) as public authority under the Right
to Information (RTI) Act. Asking the IBA
to appoint a public information officer
(PIO), the CIC has directed the Association
to provide desired information to the
applicant within 30 days.
The Commission was hearing the case
of RK Jain and Ita Bose against IBA, an
association of Indian banks and financial
institutions. Citing Section 2(h) of the
RTI Act, the IBA had refused to provide
information stating that it is not a public
authority. Earlier on 20 October 2017,
M Sridhar Acharyulu, Central Information
Commissioner, had declared IBA as public
authority.
The full bench of CIC observed that
IBA performs important role in decision
making process of banking industry. From
the website of IBA, their submissions
and documents, it appears that the
managing committee of the IBA consists
of 31 members, of which 16 are from
public sector banks (PSBs), three from
cooperative banks and two are from the
associate state banks. The chairman of
IBA has always been a chairman of a PSB.
The chairmen of PSBs are public servants,
being appointed by the government

Pensioners not required to be physically present in bank for life certificate

November is the month for all pensioners to provide life certificates to their bank so that they continue to receive their
pension. While most of these senior citizens visit bank branches during November and sign on the register as proof of
living, some find it difficult to be physically present for this. This usually means a lot of trauma for elders who are not
in good health or too old to make it physically to their bank branches

When LIC’s PIO asks for a fee on forwarded RTI application

In a strange incident, the central public information officer (CPIO) of Life Insurance Corporation of India (LIC) had
asked an applicant to pay additional fee of Rs10 for an application forwarded by another public authority under Right
to Information (RTI) Act. As per RTI Act, the applicant is not required to pay separate or additional fee for application
transferred by one public authority to other for providing information. LIC seems to have cooked up this change on its
own

2017 becomes tipping point of shareholder activism in India: Report

The year 2017 has become tipping point of shareholder activism in India during which the number of cases, where
shareholders dissented over their board and management is unprecedented, when compared with previous years.
The year even included cases where members of promoter groups dissented against the board and functioning of the
companies, says a research note

EXCLUSIVE VIEWS On issues that matter to you

Law and Order - The “We Can Do

Missing Reform That”: The
Rahul Deodhar Dilemma Faced by
Entrepreneurs
Jayant Kadambi

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 CROSSHAIRs
IBC Amendment: Defaulting Promoters
Have Repeatedly Gamed the System
“W
e don’t mind haircut, but we don’t
want to be bald,” quipped State Bank
of India (SBI) chairman, Rajnish
Kumar, to make the point that the Bank was willing to
take a discount while resolving bad loans, but wouldn’t
be willing to accept a deep discount that leaves them
with nothing. On a facetious note, a few months
from now, the state of the chairman’s hair should tell
us whether the much-discussed amendment to the
Insolvency and Bankruptcy Code (IBC) has worked or
failed. But the issue is deadly serious.
On 23rd November, the President of India gave his
assent to an ordinance amending Section 29A of the
IBC barring wilful defaulters, guarantors and others
connected with them from bidding to retain control of
companies facing insolvency proceedings. The quick
amendment has triggered a barrage of criticism from
lawyers, consultants, accountants, commentators and,
of course, corporate defaulters themselves, who are in a
fix after having lined up plans to retain control of their
companies.
The IBC and its amendment are far from perfect
and some good companies going through bad times
may get caught in its crosshairs. But the first resolution
under the IBC of a company called Synergy Doorays
ended with lenders talking a 94% cut and speculation
that the management retained indirect control. It
would have been politically disastrous not to plug
the loophole and allow this story to be repeated with
bigger defaulters. Especially when the government has
sanctioned Rs2 lakh crore of public funds this year to
recapitalise public sector banks (PSBs), which is just a
fraction of the gross bad loans of PSBs that stand at
Rs6.84 lakh crore and are growing.
The amendment barring defaulting promoters
MONEYLIFE | 8-21
27 November
Dec 20172014
| 20 | 14
Crosshair.indd 2
Exclusive news, the stories behind the
headlines and the truth between the
lines by Sucheta Dalal
from bidding to regain control has led to a chorus of
voices making the astonishing argument that those
who have already extracted repeated debt restructuring
and interest write-offs, who brazenly diverted funds
to profitable new business, who have not hesitated to
pressure bankers with their political connections and
who have been caught bribing bank chairmen, will now
make higher bids for their companies. In effect, they
will be allowed to vitiate an open bidding process that
may ensure a change in management for the first time.
Newspapers quote Neeraj Singhal, promoter of
Bhushan Steel, saying that existing promoters will
bid aggressively to retain control because of their
“emotional attachment with the assets that they built.”
But they make no mention of the fact that he was
arrested in 2014 by the Central Bureau of Investigation
(CBI) for bribing the Syndicate Bank chairman. Or that
his companies, Bhushan Power & Steel, along with
Bhushan Steel, have a combined outstanding debt of
Rs1 lakh crore and the company is under investigation
by the Serious Frauds Investigation Office (SFIO).
Bhushan Steel’s plants have seen serious interest from
Indian and foreign bidders. Isn’t it time to try out a
new management?
The big question for every apologist of defaulting
management is this: how would the wilful defaulters,
or, ‘dubious promoters’ (according to Sajjan Jindal’s
tweets) find the money to buy back their companies?
And, if they were capable of raising these funds, why
haven’t they repaid banks before being pushed into
insolvency proceedings? The answer is simple. Most
intend to game the system, again, in tried and tested
ways by leveraging personal wealth built abroad.
Here are some strategies that have been adopted and
successfully used for decades in India. 
01-12-2017 11:59:22
  • In the late-1990s, a large corporate group when
forced to sell some assets as part of a restructuring
deal, got an international trading company to
purchase 51% of its equity in a steel manufacturing
facility. This was the first time that the trading
company was getting into manufacturing. It openly
smacked of a backdoor deal; but even bankers
celebrated it as a reduction in debt. Five years later,
when the heat was over and the furore over its
bad loans had died down, the group was able to
borrow freely again; it bought back the equity. The
backdoor arrangement was known to the industry
and bankers. The foreign company had refused
to answer my queries about its sudden interest in
manufacturing, only in India.
• Around 2003-4, the same conglomerate, which had
repeatedly negotiated massive write-off by banks
since the late-1980s, emerged as a big player in
new businesses such as telecom and IT services.
Once again, a large
European bank stepped
in as a 50% partner
to help it acquire a
huge US call centre; it
smacked of a backdoor
deal guaranteed by the
group’s overseas assets.
This company went
on to raise large funds
overseas and make
further acquisitions
under the benign watch
of the UPA government.
The European bank, Bhushan Steel Plant
which managed the
overseas fund raising, quietly slipped out of the
picture and finds no mention when the company
was finally sold recently to pare the group’s massive
debts.
• Shockingly, another bidder for this call centre was
the front company of another Indian industrialist
who had fled to the US after the Ketan Parekh
scam. Did bankers and our political leaders know
about these machinations? Undoubtedly, they
did. But India’s crony capital system ensured their
silence. The shenanigans of another high-profile
industrialist, who is into power, telecom, films,
finance and defence, are already well known—
including his cooption of foreign banks and reputed
foreign institutional investors to add credibility to
high-profile foreign tie-ups that tend to vanish after
a media splash.
Do we want another round of such chicanery? Our
saintly commentators say that if Russian and European
bankers want to bailout dubious Indian promoters,
why not take their money? Well, simple! Over the past
Crosshair.indd 3
30 years, we have seen that this money is eventually
repaid out of funds extracted from Indian banks or the
Indian taxpayers. The correct argument would be to
question the basis on which global bankers are willing
to back Indian defaulters when our own banks are at
a standstill. After all, hasn’t this government promised
a crackdown on Indian wealth stashed overseas?
Illegal wealth never sits idle in tax havens—we have
a slew of marquee financial sector institutions that
are willing to offer funds or be a front for the Indian
business of the companies against the security of assets
stashed overseas. It earns them a fat fee. Are our
commentators, lawyers or consultants so naïve and
unaware, or are they on the gravy train themselves?
Public patience is wearing thin with the loot of
people and institutions. Large realty companies, whose
cases have landed up in the Supreme Court, show
that the judiciary has also turned impatient at their
attempt to cheat home-buyers. The immediate problem
originated with the UPA
government which,
during the global
financial crisis in 2008,
asked banks to bailout
the sector. Instead of
forcing them to repay
loans after the crisis
had blown over, they
were allowed to keep
prices high and pile
up inventories, leaving
banks saddled with
massive bad loans.
They soon began to
cheat buyers as well.
Mainstream media was a tacit partner in this loot as
the biggest beneficiary of their massive advertising
budgets. The gullible investors lost their life’s savings.
So, yes; the IBC and its amendment may not
be perfect; but it is time to experiment with tough
measures for ‘dubious’ promoters. One would expect
that bankers, who have generously supported political
cronyism so far, will also go the extra mile for genuine
promoters who may be seeing a down cycle and
temporary issues. The IBC does not envisage throwing
every borrower under the bus at the first sign of
trouble—in fact, it is the last resort. There are several
other measures available to promoters including an
RBI-mandated committee that approves of debt recast.
On 28th November, Financial Express reported that
the “Stressed Assets Stabilisation Fund (SASF) formed
in 2004 to recover IDBI Bank’s bad loans has settled
certain cases with haircuts of more than 90%, a public
accounts committee (PAC) has found.” This included
the completely dubious Malavika Steel. We surely do
not want to see that happening again and again! 
21 | 8-21 Dec 2017 | MONEYLIFE
01-12-2017 11:59:48
 DIFFERENT STROKES SUCHETA DALAL

Do Bank Depositors Need To

Worry about FRDI?

A
t every financial literacy seminar of Moneylife bail out distressed organisations in the event of a financial
Foundation (an NGO engaged in advocacy and crisis, by providing a resolution framework to handle
financial literacy), I have made it a point to say the failure of banks, insurance companies and financial
that we, Indians, are lucky that public sector banks (PSBs) sector entities. Bank unions, however, believe that it will
comprise 63% of our banking system. This means that give the government sweeping powers to wind up public
there is an implicit sovereign guarantee that protects our sector banks. Meanwhile, depositors have another reason
deposits no matter how badly government-owned banks to panic.
perform. This is why depositors could happily keep all A WhatsApp message (provocatively titled “This
their savings in term deposits with a United Bank of India Tsunami will wipe out your money lying in the Banks” and
(UBI) and United Commercial ostensibly written by a chartered
Bank when their net worth was accountant) is going viral with a
badly eroded, without worrying link to an article in The Hindu,
about the bank going bust or which suggests that our bank
the fact that only Rs1 lakh per deposits are no longer safe;
depositor was guaranteed by they can be appropriated by
deposit insurance. the government and converted
Moreover, seven years before into equity to bail out banks.
the global financial crisis and The culprit is, apparently, a
collapse of Lehman, India’s ‘bail-in’ clause in the FRDI Bill
Reserve Bank of India (RBI) that allows the government
had followed the ‘too big to to convert your deposits into
fail’ principle. It force-merged equity in order to recapitalise
Global Trust Bank with Oriental and bail out banks that are
Bank of Commerce to prevent facing bankruptcy.
widespread losses to depositors, Seven years before the global Depositors, who have gone
doesn’t matter that the decision financial crisis, India’s Reserve through enormous hardships to
may have been motivated by a access their own savings during
Bank of India (RBI) had followed
need to avoid a close scrutiny the currency demonetisation of
of how it was sleeping on its
the ‘too big to fail’ principle. It 2016, find it is easy to believe
job. In fact, over the past several
force-merged Global Trust Bank that the government may
decades, the only payments with Oriental Bank of Commerce appropriate their hard-earned
made out of deposit insurance is savings to bailout banks. Most
on account of failed cooperative Indians hold the bulk of their
banks, which are under dual regulation (RBI and registrar savings in property or bank deposits and there is already
of cooperatives) and completely controlled and manipulated a gnawing worry over the government’s inability to deal
by politicians across the spectrum. Hence, as consumer with the mammoth bad loans of banks, which are in
activists, we had argued that deposit insurance must excess of Rs10 lakh crore. So, let’s examine whether we
remain at Rs1 lakh, because a higher insurance will be an really need to panic.
incentive for crooked politicians to use public money to The FRDI Bill is based on a 2014 working paper of
make good their loot of cooperative bank funds. RBI. It is in line with a global move to create statutory
Suddenly, all this is set to change. The government structures to contain the contagion effect of the kind that
has introduced the Financial Resolution and Deposit shook the world in 2008 by the failure of large financial
Insurance Bill, 2017 (FRDI Bill) in parliament this June institutions. In November 2014, India, as part of the
which has evoked strong opposition by all trade unions. G20 nations, had agreed to create a legal structure which
The FRDI Bill aims to limit the use of public money to includes a ‘bail-in provision’ to recapitalise banks. But such 

MONEYLIFE | 8-21 Dec 2017 | 22

DIFFERENT STROKES.indd 2 01-12-2017 16:12:02

 DIFFERENT STROKES SUCHETA DALAL

 a contingency is a matter of last resort. In fact, most global unresolved. Bad loans of banks spiralled from Rs39,030
banks, including those in India (State Bank of India, ICICI crore in 2008 to Rs2,16,739 crore in 2014—all under the
Bank and Bank of Baroda had done this), have been asked incredibly corrupt coalition called the United Progressive
to work on the concept of a ‘living will’, where they put Alliance (UPA). Consequently, even Opposition leaders
in place a disaster management plan, if you will, on what have been reluctant to question government policies too
is to be done in the event of a massive melt down. The closely, probably fearing it would boomerang on them.
FRDI Bill’s bail-in provisions that are a source of panic, I believe that the government ought to be speaking
will kick-in only if the organisation is facing bankruptcy. to the people to allay their fears, instead of orchestrating
What is a bail-in? It is the opposite of a bailout, where discussions on business channels to counter the meeting
governments use taxpayers’ money to save large institutions. of bank unions. The finance ministry must realise that
A bail-in gives statutory powers to a resolution authority people want to be assured that 100% of their deposits
to convert existing creditors (including depositors) into would be safe and bankers will be made accountable for
shareholders in order to recapitalise the bank. The FRDI their loans. Merely raising deposit insurance under the
Bill creates the statutory basis for such action by replacing FRDI Bill is cold comfort to millions of retirees whose
the current deposit insurance guarantee corporation (or entire savings are in low yield, taxable, bank fixed deposits,
converting it) with a Resolution Corporation that will cover only because they safe.
banks, financial institutions and Secondly, the FRDI Bill
insurance companies. intends to keep out cooperative
The FRDI Bill also envisages banks, which go belly-up with
a ‘Corporation Insurance monotonous regularity. Then,
Fund’ that will insure a part again, this government has been
of the deposits. The extent of very soft of cooperative banks,
deposits insured is likely to whether it is re-capitalising them
be substantially higher than in 2014 or giving up its tough
Rs1 lakh insured today. These initial stance against allowing
insured deposits will be out of them to exchange demonetised
the purview of appropriation for currency. If political compulsions
a ‘bail-in’. We understand that, will bring cooperative banks
in the US, 100% of the deposits under FRDI Bill it will be a cause
are insured; hence, the bail-in, for concern.
if it happens, will primarily Thirdly, we need clarity on
affect bondholders and other the FRDI Bill intends to keep where non-banking finance
unsecured creditors. While it is out cooperative banks, which companies, micro-finance
important to remember that a companies and payment banks
go belly-up with monotonous
bail-in is envisaged only as a fit into this equation. While
last resort, it is also a fact that
regularity. Then, again, this none of these are yet in a
Cyprus has already invoked this
government has been very soft position to create systemic issues
clause to bailout banks. of cooperative banks if they go bankrupt, we do have
Bank unions are correctly the example of the Ponzi-like
worried about sweeping powers deposit collection companies
in the hands of a government that rushes statutory changes (Sahara, PACL and Saradha) destroying the savings of
through parliament as money bills, without proper ordinary, disempowered people.
discussion or explanation. On the other hand, those who It appears that FRDI Bill is part of a piecemeal response
were part of the RBI working group are less worried, to a problem that afflicts countries that are either heavily
because any hasty action that takes away the implicit indebted or have allowed banks to make risky bets. We
safety and guarantee of deposits associated with public don’t have that problem. We have other problems. If we
sector banks would only cause a run on deposits and no have to put this law in action, we need a holistic thinking
government in its right mind would dare do this. about the entire financial sector. 
Indian banks are also more tightly regulated and do
not have the same exposure to derivative products as Sucheta Dalal is the managing editor of Moneylife. She was
those in the US and other countries. The flip side to this awarded the Padma Shri in 2006 for her outstanding contribution
is that we have a massive bad loan problem that remains to journalism. She can be reached at sucheta@moneylife.in

23 | 8-21 Dec 2017 | MONEYLIFE

DIFFERENT STROKES.indd 3 01-12-2017 16:14:08

 MUTUAL FUNDS POINTERS

subscribed to by MF schemes.
The IPO Hunters As one can see, only half of the IPOs gained in
value, post-listing. The schemes which had the highest

A
t the start of the financial year, many mutual participation in terms of investment amount as a part of
fund managers spoke about the glorious past and their total assets under management (AUMs) are mentioned
the cautious future, in the table below.
hinting at lower returns in It is surprising that IDBI
the next one year, due to high Small Cap scheme didn’t
valuations of stocks. What to deliver much even after taking
do when you’re out of ideas such a risky bet. The scheme
to invest? You stop new had invested in the IPOs
subscriptions into the scheme of GIC and Indian Energy
or find different avenues for Exchange (IEE). Similar
investing the excess inflows. is the case with the two
One of the avenues is initial schemes of Sundaram Mutual
public offerings (IPOs). Fund which had invested in
October 2017 witnessed the offerings of IEE. These
five IPOs, with an average stocks declined after being
issue size of Rs1,000 crore excluding the Rs11,370 crore listed. Our analysis was to find out how investment in
IPO of General Insurance Corporation Ltd (GIC-Re). The an IPO affected a scheme’s immediate performance. We
six IPOs collected a total Rs16,000 crore through the shouldn’t use it to draw any conclusions about a scheme’s
primary market. IPOs are a somewhat risky method of performance.
getting returns. Not all IPOs get listed at a higher price in
the secondary market, especially in a bull market; some get
High Allocation to IPOs
hammered due to high valuation and exit by speculators
who invest only to avail the listing gains. Scheme % of AUM No. of 1-month
The table below shows the total amount invested by invested IPOs Returns
mutual funds in each of the offerings and the resulting IDBI Small Cap 9.01 2 0.29
gains/losses from the investment.
SBI Magnum COMMA 4.90 1 3.51
Axis Small Cap 4.85 3 4.11
IPO Exposure by MFs in October Sundaram LT Micro Cap Tax 4.06 1 1.84
Company Total Invested Gains/Loss up Adv - Series V
Amount (Rs cr) to 10 Nov Sundaram Select Micro Cap 4.05 1 1.86
MAS Financial Services 179 25.7% - Series XVI

Godrej Agrovet 246 19.6%

Reliance Nippon Life AMC 138 13.1% Since we covered schemes which had the highest
Mahindra Logistics 113 0.0% exposure to IPOs, we looked at schemes which had invested
in the offerings of MAS Financial Services, Godrej Agrovet
GIC - Re 202 -9.1%
and Reliance Nippon Life. Since these stocks fared positively
Indian Energy Exchange 351 -3.3%
in the secondary market, how much did the investing
schemes fare in the same period? 
Since the shares of Mahindra Logistics got listed on
the stock exchange on 10th November, we had to consider
returns till this date. Indian Energy Exchange saw the Exposure to Performers
highest number of schemes subscribed to its IPO, at 40 Scheme % of AUM No. of 1-month
Invested IPOs Return
schemes. Out of these, 17 are from Sundaram Mutual Fund.
Also, MFs had a bigger footprint (35%) of its Rs1,000 SBI Magnum COMMA 4.9 1 8.1
crore issue size. Godrej Agrovet was second in terms of UTI Banking Sector 4.0 2 3.0
mutual fund subscriptions, at 33 schemes. Least interest in SBI Long Term Advantage 3.1 2 8.3
terms of percentage of issue size subscribed by MFs, was - Series IV
in the shares of GIC - Re. Only 2% of the issue size was

MONEYLIFE | 8-21 Dec 2017 | 24

Fund Pointer.indd 2 01-12-2017 18:16:55

 MUTUAL FUNDS POINTERS

Comfort Stocks & Sectors of Mutual Funds

I
nvestors find it comforting to own a stock which is of HDFC Bank. This is way lesser than the 41% held by
very well-known and has built sort of a ‘brand’ value foreign portfolio investors.
in the stock market. The comfort comes from long It is interesting to know the sectors mutual funds are
years of performance with a promise of growth potential bullish on, at an aggregate level. This analysis expresses
ahead. In the same way, mutual funds (MFs) also have their the perception of fund managers towards the Indian equity
favourite stocks. markets. We have
For this analysis, listed the sector-
we considered wise distribution
the stocks in the of mutual funds’
portfolios of equity assets.
schemes which Banking and
are allowed to finance sector has
invest in equities. around 29% of
These range from the total assets of
the pure equity the MF industry.
schemes, dynamic The value of
equity schemes, these assets is a
ETFs, hybrid whopping Rs2.35
schemes, among lakh crore as on
many other types. 31 October 2017.
In all, there are For a developing
700 schemes in this country like India,
broad category. Here are the top five favourite stocks which this sector ought to have the lion’s share in assets, since
are present across a majority of these schemes. other industries’ and consumers’ financing needs are
dependent on these.

Popular Stocks of MFs Popular Sectors of MFs

Stock Footprint Sector Ownership*
across
Schemes Banking
& Finance
HDFC Bank 78% Banking 11.7

ICICI Bank 76% Banking 22

State Bank of India 59% Banking 9.7

Larsen & Toubro 58% Engineering 13

Maruti Suzuki India 57% Automobile 6

Auto Industry
*-as % of total of public and promoter shares

The banking sector is the favourite here, dominating the
highest interest among mutual funds. While the banking
sector index, Nifty Bank, went up only 8.55% in the past
one year, the three bank stocks mentioned rose at least
30% in the same period. HDFC Bank is the most popular;
more than a third of the 700 schemes have allocated more
than 5% of their AUMs (assets under management) to this
stock. While it may be a popular stock, MFs, as a category
of institutional investors, hold only 12% of the total shares
Pharma Engineering
Software & IT
Another quick analysis of the top-50 popular stocks
of MFs showed that 86% of these are a part of the broad
market Nifty 50 index. Basically, large-cap stocks are the
basic ingredient of any mutual fund scheme’s portfolio.
Yet, many schemes can’t beat their benchmarks (usually
being broad indices), even after following the index. 

25 | 8-21 Dec 2017 | MONEYLIFE

Fund Pointer.indd 3 01-12-2017 18:17:16

 MUTUAL FUNDS FUND FACTS

Best & Worst Mutual Fund Schemes

The best# three and the worst three schemes over the past three years ranked by their
quarterly rolling returns. Premium members get access to a more refined list of top
schemes by logging in to Moneylife Advisory - advisor.moneylife.in
Equity Schemes (Quarterly Rolling Returns)
Large Cap (Category Avg: 3.58%, Sensex: 2.05%) Launch Corpus Avg. Quarterly 1-Year 3-Years** Exp
Date (Rs Crore)* Rolling Returns Ratio
Aditya Birla Sun Life Pure Value 27-Mar-08 2,020.04 5.82% 45.07% 23.26% 2.41%
L&T India Value 08-Jan-10 6,142.70 5.44% 33.77% 21.77% 2.01%
Tata Equity P/E 29-Jun-04 2,066.76 5.21% 35.81% 20.85% 2.24%
Taurus Bonanza 04-Aug-95 178.37 2.60% 21.58% 10.39% 2.59%
ICICI Prudential Select Large Cap 28-May-09 665.21 2.58% 20.44% 10.33% 2.68%
HDFC Large Cap 18-Feb-94 1,326.52 2.48% 29.35% 9.91% 2.20%
Multi-cap (Category Avg: 3.65%, BSE 200: 2.97%)
Motilal Oswal MOSt Focused Multicap 35 28-Apr-14 9,965.52 6.29% 35.04% 25.16% 2.12%
Aditya Birla Sun Life Advantage 24-Feb-95 4,904.10 5.18% 34.98% 20.74% 2.29%
DSP BlackRock Opportunities 16-May-00 3,961.62 4.78% 34.01% 19.12% 2.50%
Union Equity 10-Jun-11 207.29 2.14% 24.01% 8.55% 2.67%
Tata Regular Saving Equity 23-Jul-97 214.65 1.84% 6.68% 7.36% 1.76%
UTI Wealth Builder 17-Dec-08 969.32 1.59% 15.30% 6.36% 2.57%
Mid-and Small-cap (Category Avg: 5.56%, Nifty Midcap 100: 9.13%)
SBI Small & Midcap 09-Sep-09 808.18 8.28% 61.58% 33.12% 2.33%
Aditya Birla Sun Life Small & Midcap 31-May-07 1,376.47 6.88% 46.60% 27.52% 2.48%
L&T Emerging Businesses 12-May-14 2,283.36 6.87% 54.91% 27.49% 2.17%
IDFC Premier Equity 28-Sep-05 6,064.51 4.00% 31.00% 16.02% 2.00%
Union Small and Midcap 10-Jun-14 263.96 3.92% 33.25% 15.69% 2.64%
DHFL Pramerica Midcap Opportunities 02-Dec-13 143.42 3.90% 28.64% 15.62% 2.63%

Debt Schemes
Income (Category Avg: 2.27%, Crisil Composite Bond: 2.47%)
ICICI Prudential Long Term Plan 20-Jan-10 3,528.97 2.77% 4.10% 11.07% 1.26%
DHFL Pramerica Dynamic Bond 12-Jan-12 191.07 2.57% 4.25% 10.30% 1.73%
ICICI Prudential Income 09-Jul-98 2,207.37 2.57% 2.74% 10.28% 1.46%
L&T Triple Ace Bond 31-Mar-97 466.14 1.93% -0.19% 7.72% 0.97%
DHFL Pramerica Premier Bond 21-Jan-03 1,521.61 1.87% 4.41% 7.48% 1.58%
Invesco India Bank Debt 29-Dec-12 109.64 1.67% 4.71% 6.67% 0.65%
Liquid (Category Avg: 1.86%, Crisil Liquid Index: 1.86%)
Escorts Liquid Plan 03-Oct-05 183.11 1.96% 6.69% 7.83% 0.90%
Indiabulls Liquid 25-Oct-11 6,079.44 1.91% 6.74% 7.64% 0.20%
JM High Liquidity 31-Dec-97 3,492.45 1.90% 6.74% 7.60% 0.20%
Reliance Liquid Fund - Cash Plan 07-Dec-01 6,969.04 1.69% 5.75% 6.77% 1.05%
HDFC Cash Mgmt Fund - Call Plan 06-Feb-02 101.78 1.64% 5.89% 6.55% 0.31%
L&T Cash 27-Nov-06 453.41 1.62% 5.36% 6.46% 0.78%
# Please note the table represents a comparative performance of mutual fund schemes over a three-year period and it is not a recommendation; * Latest quarter average
assets under management; We have only considered schemes having a corpus above Rs100 crore. **Annually compounded

MONEYLIFE | 8-21 Dec 2017 | 26

Fund Fact.indd 2 01-12-2017 17:28:04

 TAX/ FIXED INCOME

Should You Continue with Long-term Debt Fund?

L
ong-term debt mutual fund and Morgan Stanley, expect the start climbing up. It is sometimes
(MF) schemes had a great Reserve Bank of India (RBI) to start difficult to time the interest rate
run for three years. The top raising key policy rates from the cycle; hence, an investor may get
performing long-term debt schemes next year, for the first time in four caught on the wrong foot. Investing
have given annual returns of 10% years, as economic growth may pick in short-term debt schemes,
to 11.5% in the past three years. up and also inflation would rise including liquid and ultra-short-
Its continuation of success will on account of higher crude oil and term funds, give returns in line with
depend on the direction of interest commodity prices. short duration interest rates. It does
rates. The 10-year not have the risk of
benchmark G-Sec giving negative returns
yield, which sets the due to interest rate
tone of the fixed- cycle change.
income market, has Long-term debt
jumped by 61 basis schemes, on the
points (bps) in the other hand, can give
past four months, negative returns when
after touching interest rates start
6.41% on 24th July. shooting up. Long-term
It is currently at debt schemes need
7.02%. monitoring of interest
Long-term debt rates cycle to ensure
schemes work well that you know when
when interest rates to get out of it. Short-
are declining. It term debt schemes’
will not work well, returns can vary with
once interest rates begin to rise. It is If the assumption is right, short-term interest rates; but they
difficult to tell whether the interest investing in long-term debt schemes may not need monitoring of interest
rate cycle has reversed and whether can be risky, going forward. Astute rate cycle. Neither do they need
it will continue to rise. Major global investors in long-term debt schemes redemption when the interest rate
investment banks, Goldman Sachs get out of them, when interest rates cycle changes.

G-Sec Yields Unchanged

Issuer Maturity Next Last Yield ISIN Rating

1
Date Coupon (%)
0-year benchmark G-Sec yield,
which sets the tone of the fixed- Exim Bank 7.22% 03 Aug-27 03 Aug-18 7.68 INE514E08FP6 CRISIL AAA
income market, has been unchanged CRISIL AAA
REC Ltd 8.11% 07 Oct-25 31 Oct-18 7.68 INE020B08963
in the last fortnight to end at 7.02% on (unsecured)
29th November. HDFC Ltd 8.98% 26 Nov-20 26 Nov-18 7.64 INE001A07FW0 CRISIL AAA

NSE data as of last trade date of 28 November 2017

G-Sec Maturity Yield to CARE AA+

ILFS Transportation
Date Maturity 21 Dec-24 21 Jan-18 11.50 INE975G08082 (structured
Networks Ltd 11.80%
obligation)
01 December 2044 7.57
Tata Capital Fin Services 31 Dec-27 31 Dec-17 8.15 INE975G08223 CRISIL AA
02 July 2040 7.54 Ltd 8.61%

19 December 2034 7.47 Chola Inv & Fin Ltd 8.80% 15 Jun-27 15 Jun-18 7.70 INE121A08OC8 ICRA AA

G-Sec yields on 29 November 2017 BSE data as of last trade date of 28 November 2017

27 | 8-21 Dec 2017 | MONEYLIFE

Fixed Income.indd 1 30-11-2017 19:59:04

 INSURE CORRECTLY:
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• The Right Health Insurance • Health Insurance Selection Tool
• Free Accident Insurance

We are not agents, distributors, brokers or lead

generators; so, you get ethically correct advice

1. Right Life Insurance

Insurance is supposed to protect you. But the

real business of insurance companies is pooling
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Which insurance product then is right for you? As a member of Moneylife Advisory, you
get advice on selected term insurance products, identified after deep, unbiased research.
Most importantly, you will get special support during your claims, as long as you make the
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MSSN GB (Insurance 1-3 ).indd 2 16-12-2016 17:29:15

 2. Right Health Insurance

Health insurance products are complex. Policies

es differ
in exclusions, conditions and fine print. If
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Subscription to Moneylife magazine is included in MAS Premium Membership

About MAS
MAS is a SEBI-registered investment adviser and part of Moneylife, India’s most unbiased and
pro-investor research and information group. We run India’s best personal finance magazine,
Moneylife. We are not afraid to call a spade a spade. We are India’s only media company to have
set up a non-profit trust, Moneylife Foundation, which is now the largest savers’ and investors’
association with more than 35,000 members. MAS was set up to help investors and savers make
the right financial decisions and handhold them through the entire process.

MONEYLIFE
ADVISORY
FIX YOUR FINANCES, FOREVER

advisor.moneylife.in

MSSN GB (Insurance 1-3 ).indd 3 16-12-2016 17:29:45


INSURANCE TRENDS
New products, regulations, features and options,
interpreted from your perspective
A c c i de n t I n s uranc e
HC Sets Aside
Accident Tribunal
Claims Rejection
T he Motor Accident Claims
Tribunal (MACT) claim
rejection may not mean the end of
the road for accident victims to get
justice. Grievance redressal options
can be pursued to get justice even
if MACT declines. The Madurai
Bench of the Madras High Court
(MHC) has set aside an MACT
order and directed payment of
compensation to the victim’s family
who was fatally knocked down
by a police van. MHC ordered
a compensation of Rs11.90 lakh
to be paid by the office of the
superintendent of police, Madurai,
to MACT which will transfer the
amount to the claimants.
MACT had rejected the victims’
claim for compensation based
on the police version—that the
accident victim and his pillion rider
were under the influence of alcohol
at the time of the accident. A police
van allegedly knocked down a
bike rider who died on way to the
hospital. A case was registered by
the traffic police. The deceased
bike rider was the sole breadwinner
of the family. His wife stated that
she had to take care of her minor
children.
The MHC judgement observed
MONEYLIFE | 8-21 Dec 2017 | 30
Insurance.indd 2
that the police had failed in their
statutory duty to prepare a rough
sketch and map while filing an FIR
which could not be accepted. The
police did not send the pillion rider
for a check-up. The post-mortem
was conducted after 15 hours of
the accident and that, too, without
blood and urine tests. MHC
asked 40% of compensation to be
withdrawn by the victim’s wife and
the remaining would be deposited
in a nationalised bank as a fixed
deposit in the name of the minors
for their future benefit.
T ravel Insurance
Travel Insurance
Covers PED?
B uying travel insurance is easy.
Insurance companies want you
to quickly buy it online before you
fly. With a few clicks, you are done
with buying. But the real test starts
when there is a claim, as insurance
companies do not cover pre-existing
diseases (PED) and anything arising
out of PED. So, while the chances
of hospitalisation when abroad due
to PED-related ailment is high, the
insurance companies wash their
hands off when claim arises. What
is the purpose of buying travel
insurance if it does not cover you in
your hour of need? The insurance
company should cover PED with
increased premium if necessary;
but it does not do so, to reduce its
liability.
The Amritsar District Consumer
Disputes Redressal Forum directed
Bajaj Allianz to pay the treatment
cost of Rs5.88 lakh to an elderly
woman who was hospitalised in
the United Kingdom (UK) last
year. The insurer has been asked
to pay Rs5,000 as compensation
for causing her mental harassment
and Rs2,000 as litigation expenses.
The complainant, along with her
husband, had been buying travel
insurance policies to visit their son
in the UK for several years. The
policy purchased in March 2016
was for maximum medical expenses
of US$50,000.
The policyholder suffered
a hemorrhagic stroke and was
admitted to Royal Berkshire
Hospital in UK where she
was diagnosed with primary
intracerebral hemorrhage. Bajaj
Allianz rejected her hospitalisation
claim. The insurer stated that, as
per the documents, the complainant
was suffering from hypertension,
diabetes type-II and, hence, she was
not entitled to any claim due to
PED exclusion in the policy.
The Forum noticed that the UK
hospital doctor had stated that the
stroke suffered by the complainant
was not a result of PED. It means
the insurance company should have
paid the claim. It further stated that
hypertension and diabetes were not
material diseases; hence, its non-
disclosure was not suppression. 
30-11-2017 20:03:11
 INSURANCE TRENDS
 Hopefully, the judgement will help
others with similar experiences with
insurers.
H e a lt h I ns uranc e
LIC Cancer Cover
Review
L ife Insurance Corporation
of India (LIC) Cancer Cover
is a regular premium payment
health insurance plan to cover the
specified early and/or major stage
cancer during the policy term. The
policy can be purchased offline as
well as online (licindia.com). The
plan offers two benefit options
wherein you have the flexibility to
choose the type of sum insured at
the inception—level sum insured
and increasing sum insured.
Early stage cancer benefits are
payable on first diagnosis of any
one of the specified early stage
cancers of specified severity. It
pays lump-sum benefit of 25%
of applicable sum insured. The
premium waiver benefit waives
premiums for next three policy
years or balance policy term
Fine Print
LIC Warning on Aadhaar SMS
L IC has cautioned
policyholders against
sharing their Aadhaar number
through SMS as it has not
started any such facility for
policyholders. It seems messages
were circulated in social media
with LIC emblem and logo
asking policyholders to link their
Aadhaar number by sending
SMS to designated number. LIC
added that, as and when LIC
will enable linking of Aadhaar
Insurance.indd 3
whichever is lower. There are destruction of normal tissues. This
exclusions like carcinoma in-situ diagnosis must be supported by
of skin and melanoma in-situ, all histological evidence of malignancy.
tumors in the presence of HIV The term cancer includes leukemia,
infection, all tumors which are lymphoma and sarcoma. Major
histologically described as benign, stage cancers pay lump-sum of
borderline malignant, or low 100% of applicable sum insured
malignant potential. These are a
few more exclusions present for
(SI) less any previously paid claims
in respect of early stage cancer shall
major stage cancers. be payable.
Major stage cancers cover
malignant tumor characterised by
the uncontrolled growth and spread
In addition to lump-sum
benefit, income benefit of 1% of
sum insured shall be payable on
of malignant cells with invasion and each policy month following the
payment of lump-sum, for a fixed
period of next 10 years irrespective
LIC Cancer Cover Premium of the survival of the life insured
Age Policy Men Women and even if this period of 10 years
Term Premium Premium goes beyond the policy term. Once
30 20 Rs1,190 Rs2,420 a major stage cancer benefit is
30 30 Rs1,690 Rs3,090 paid, no payment for any future
35 20 Rs1,670 Rs3,440 claims under early stage cancer
35 30 Rs2,620 Rs4,220 or major stage cancer would be
admissible. Premium for women is
40 20 Rs2,580 Rs4,700
higher than that for men for entry
40 30 Rs4,220 Rs5,610
at younger age. The premium rates
45 20 Rs5,090 Rs6,540 under this plan are guaranteed for
45 30 Rs7,910 Rs7,660 the first five years from the date of
50 20 Rs8,420 Rs8,290 issuance of the policy. The premium
LIC’s Cancer Cover premium for Rs10 lakh rates for future years will be subject
cover level sum insured to revision based on LIC experience
under this plan. 
number with policies through
SMS, its website will be duly
advantage of the fear created
by mandatory Aadhaar link
updated for this option. Recently, a compliance.
circular from Insurance Regulatory
and Development Authority of
India (IRDAI) said that linkage
of Aadhaar number to insurance
Flipkart Selling Insurance?
A ccording to media reports,
Flipkart has filed for
policies is mandatory under the approval from IRDAI to sell
Prevention of Money-laundering insurance products. Flipkart may
(Maintenance of Records) Second venture into solicitation and
Amendment Rules, 2017. It has servicing of insurance policies
asked insurers to comply with as a corporate agent. They may
the statutory norms. Due to lack offer end-to-end transactions—
of any more details, IRDAI’s discovery, payment, delivery
circular can cause more confusion and post-sales services—on the
among insurers and the insured. platform but won’t itself act as
The fraudsters are ready to take an insurer or an underwriter. 
31 | 8-21 Dec 2017 | MONEYLIFE
30-11-2017 20:02:09
 Expectations from mediclaim are, often, belied
after purchase. At times, even buying a health
insurance policy is not possible due to undisclosed
underwriting rules. Raj Pradhan finds mediclaim
failing to address the key consumer need—to
protect their savings—when there is a health issue
T
he social media is abuzz with the startling
case of a seven-year old child who died of
dengue at Fortis Hospital. The Hospital
billed the parents around Rs16 lakh over
a fortnight. Their health insurance cover
was for just under Rs6 lakh. The point that many
people, including celebrities like Biocon founder Kiran
Majumdar-Shaw who publicly took the side of Fortis, do
not know is that even if the parents had a health insurance
of Rs16 lakh, the insurance company may not have paid
up the full amount. Is mediclaim (health insurance) then
a product worth buying? Financial advisors tell clients
to go for Rs5 lakh cover or more. After all, safeguarding
your savings when faced with medical issue is important.
MONEYLIFE | 8-21 Dec 2017 | 32
Cover Story.indd 2
The advice is to buy early as the premium increases with
age. But, unlike life insurance, you cannot lock into
the premium for the long term. Mediclaim buyers get a
shock when they see the premium rates going up at the
time of renewal. It can happen with age as well as overall
claims experience of the insurance company.
Another grouse is that the insurer may change the
product benefits or discontinue the product to force move
to ‘new’ product. Clearly, mediclaim is not a clear-cut
product. The product limitation can force exclusions and
sub-limits; dealing with the fine print is another issue.
Partial claim settlement and delay in claim settlement is
also a major complaint. The number of grievances taken
to the insurance ombudsman shows that policyholders’ 
01-12-2017 17:32:34
 COVER STORY
 expectations with mediclaim are, often, not met.
But what are the main issues which actually make
mediclaim a failure? First, do you deserve to buy a
mediclaim? If you are a cancer survivor, you will not
get mediclaim. As permanent exclusion for an ailment
cannot be done by insurers, the proposal itself is rejected
and, hence, the customer cannot even get covered for
other ailments (ailments other than cancer, in this
example). Insurers have a right to decide which proposal
they want to underwrite; but this right can be misused.
Porting from one company to another, for those who are
old or having ailments, does not work.
Second, for insurance companies, the risk assessment
actually starts when there is a claim. Did you buy in utmost
good faith is the question insurers raise, only when a
claim is lodged. Insurers pick issues in the proposal form
after several years—when there is a claim. Why are they
so lax at the underwriting stage? Even unrelated claims
are rejected due to ‘misrepresentation’ in the proposal.
Is it not unfair to customers who have been paying
premium for years or even decades? In
2015, the government brought in an
amendment to Section 45 of the
Life Insurance Act which prevents
claims rejection after three years
of policy issuance. Will the
same solution work for health
insurance too?
Third, insurers try their best
to label your claim as one that
is without merit. If there was
hospitalisation, was it justified?
Was it really for 24 hours or could it
have been less so that insurer can reject
claim? If there was no hospitalisation and the procedure
is not covered as a day-care procedure, then the
insurance company is relieved, as it can reject the claim.
But it means there are several procedures / treatments
which cannot be covered by mediclaim; making it a
fl awed product. Increasingly, more and more day-care
procedures are covered; but it does not cover many
procedures/treatments. So, procedures/treatments not
requiring 24-hour hospitalisation and not in day-care
procedures list are excluded even though it can be major
expense for a consumer. Does it not make mediclaim a
failure? Should regular mediclaim not cover expensive
procedures/treatments (say, above Rs50,000) when there
is no hospitalisation and even when they are not covered
as day-care procedures? After all, a person having
mediclaim which cannot pay for procedure/treatment
above Rs50,000 will find the product flawed. Moneylife
asked just three questions on mediclaim issues for the
Cover Story.indd 3
cover story to six insurers, but only two were willing to
answer. It tells it all.
1. Right To Underwrite Abused
If you have any critical illness (CI), the chances of
increasing cover, or getting new cover, is zero. According
to Rajive Kumaraswami, MD & CEO, Magma HDI,
“Once a medical condition sets in, especially conditions
like cancer, insurers are unable to underwrite these
policies as the claim becomes a certainty rather than a
probability. In medical science, any future ailment can be
attributed to an underlying existing medical condition;
for example, a kidney failure can be attributed to diabetes
or heart ailment can be attributed to hypertension, etc.
Thus, if any medical condition is permanently excluded,
possibility of paying claim of any futuristic related
ailment also decreases.”
But what about CI survivors? Proposals having
declaration like ‘cancer survivor’ are usually not offered
mediclaim policy. “I write to you regarding a large gap
Once a medical condition sets
in, especially conditions like
cancer, insurers are unable to
underwrite these policies as
the claim becomes a certainty
rather than a probability
- Rajive Kumaraswami, MD & CEO,
Magma HDI
in the medical insurance market,” wrote a Moneylife
reader. “In 2009, one of my young family members
was diagnosed with cancer. With treatment, the patient
survived and is an active child today. For the past eight
years, this child has not been granted a medical insurance
cover by any health or general insurance company in
India. As you are aware, there are a large number of
people who are diagnosed with cancer and who survive
the disease. Imagine, none of them can get cover from
any disease (even unrelated to cancer) or accident which
requires them to get hospital and medical treatment.
This is not acceptable and insurers need to offer suitable
products to this segment of the population along with
the suitable restrictions.”
There can be outright denial of proposal as
insurance companies do not want to take any chance
for underwriting cancer or other CI survivors. “Cancer
survivors would be specifically evaluated depending 
33 | 8-21 Dec 2017 | MONEYLIFE
01-12-2017 17:34:05
 MONEYLIFE
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 COVER STORY

 on what type of cancer it was, at what stage was it Even for ailments mandated by law, like cover for
diagnosed, chances of recurrence, period elapsed after those with HIV and mental illness, insurance companies
recovery, results of screening tests, etc.” insurers say do not follow the law and nothing is done by IRDAI. We
officially. But, in reality, it’s not easy to get covered, once even know of a cancer survivor who personally knew the
a person has had any serious ailment in the past (even if chief executive officer (CEO) of a large private insurer,
he/she has survived it). but still could not enhance the cover amount. She did
Denial of insurance proposal is a reality often faced get cover from a government insurer; but even they have
by customers. Insurance is a business of risk handling; become choosy now. So, anything is possible. You just
the higher the risk perceived by the insurer, the higher have to keep trying instead of trying to fight about why
will be the premium or the higher the chances of proposal a specific insurer is rejecting you proposal. For cancer or
rejection. Insurers are only looking for an answer to other CI survivors, many insurers may reject it outright;
“How risky is this proposal?” They don’t want to suffer some may accept, with loading. But you will not know
losses from underwriting your policy. Build your case until you put your proposal with many the insurance
with positives so that the companies. You will not
insurer wants to do business have too many options
with you. Read our Cover and, hence, cannot be
Story — https://tinyurl.com/ choosy.
glmc5kj. A health condition According to a ICICI
is evaluated on the basis of Lombard spokesperson,
type of adversity, treatment “Most cancers have a high
taken, current health recurrence percentage.
status, correlation between Covering cancer survivors
different adversities and will lead to a considerable
their ultimate effect on increase in the cost of the
longevity of the life to be overall product portfolio,
covered. When it comes to which in turn will lead
a case of diabetes, insurance to higher premiums for
cover can be offered Even for ailments mandated by law, all customers. Researches
with medical loading, if (cover for those with HIV and mental state, the cost of care for
diabetes is within control. illness), insurance companies do not cancer is increasing at
Read our Cover Story— an exponential rate of
https://tinyurl.com/zuyquka
follow the law and nothing is done by 15% per year, which is
Another Moneylife IRDAI. We know of a cancer survivor almost three times the
reader wondered why his who personally knew the CEO of a rate of increase of overall
cancer survivor wife cannot private insurer, but still could not health costs. Although
get additional cover for enhance her cover disease based loading
the existing policy when is commonly done for
the wife has had no health lifestyle conditions such as
issue in the past five to six years and, hence, no pre- diabetes and hypertension, the same cannot be used for
existing disease (PED). He asked, “Should I approach ailments such as cancer due to the unpredictable nature
the insurance ombudsman to seek redressal of our of and severity of the disease. However, companies are
grievance? If I do, how should I present my case before coming up with pilot products approved by the regulator
the ombudsman?” In this case, even though there is which enable the companies to cover the risk of such
no PED, the insurer can still reject the application for cases. Products designed specifically to cover cancer
a new policy or cover enhancement. There will be no survivors are best suited to meet their health needs
use in approaching insurance ombudsman or even the throughout the customer cycle.”
Insurance Regulatory and Development Authority of
India (IRDAI). Insurance companies are free to reject a 2. Proposal Scrutiny When Claim Is Lodged
proposal as per their wishes under ‘right to underwrite’. The general perception among consumers is that the
There is a discrimination against many other groups, like insurance company is happy to collect the premium for
those with sight impairment (blind) and those with other a policy, but not too happy to pay the claims. We cannot
disabilities. say that insurance companies do not pay legitimate 

MONEYLIFE | 8-21 Dec 2017 | 36

Cover Story.indd 4 01-12-2017 17:34:56

 COVER STORY

 claims. They do; but they will minutely scrutinise your relevant documents and proofs which are checked by the
proposal form when the claim is lodged. You may have insurer before paying to the customer. In this process,
purchased the policy years, or even decades, ago, but the customer may be questioned whenever needed and
the insurance company can find the proposal allegedly a hence, Section 45 cannot be applicable in such cases. By
misrepresentation, even after several years. having such a clause in a health policy, the customer who
It is as if they wake up from slumber to complete the is being honest in his disclosure will not be motivated to
underwriting process when faced with a claim that needs continue to do so if others get claims after two years even
to be paid. Why can’t the insurer complete this step at on non disclosure.”
the time of policy issuance? There are cases wherein Consumer Court to the Rescue: The Hindu newspaper
an insurance company ignored the medical test reports reported the case of a policyholder of the Varistha
and just relied on proposal form until the claim was Mediclaim policy of the National Insurance Company
submitted. Picking holes in the proposal is almost like who was refused reimbursement of medical expenses
finding a way out to not pay the claim. on the ground of PED of hypertension and diabetes and
Mr Kumaraswami of that the cardiac problems
Magma HDI, says, “In life arose from complications
insurance, the claim is a of such PED. Kerala
one-time event and limited State Consumer Disputes
to a life event, whereas in Redressal Commission
health insurance policy, upheld a compensation of
claim may happen for Rs1.57 lakh awarded by the
each hospitalisation in district consumer forum.
each policy year. That is The Commission
to say, a health insurer’s pointed out that the
liability is more frequent certificate issued by the
and is spread on a longer doctor after medical
duration of time, thus examination of the insured
making it a more costly had noted such PED and
proposition compared to There are cases wherein an insurance also diastolic dysfunction
life insurance. Secondly, company ignored the medical test on echo cardiogram. In
pre-existing chronic health case any extra premium
reports and just relied on proposal
conditions like diabetes, was required for coverage
chronic kidney problem,
form until the claim was submitted. of the PED, the insurance
etc, may impact the patient Picking holes in the proposal is company should have
in the long run. In our almost like finding a way out to not demanded and collected it.
opinion, similar solution pay the claim While utmost good
as Section 45 amendment faith declaration in the
may not be effective for proposal form is important,
health insurance as it will lead to more non-disclosure to the medical test done by the insurance company is also
avoid non-acceptance of policy. This will, ultimately, lead a proof of existing ailments. The insurance company
to high claims and thus a general increase in premium cannot pretend to be ignorant of the medical test reports.
rating for all the customers.” The customer has done the medical tests at the location
ICICI Lombard spokesperson, says, “In case of a life of the insurer’s preference; hence, the insurer needs to
insurance plan the payout will take place on death or crosscheck the reports with the proposal form and get
maturity of the life insured, however, in case of a health it updated from the customer, if necessary. It will help
insurance policies the frequency of claim is much higher. to complete robust underwriting. Any new revelation in
There is no impact of minor diseases on the life cover. the report should be updated in the proposal and policy
Health insurance policies offer guaranteed renewability document to clearly define the PED.
for life hence having complete health related information Claim Rejected Due to Agent’s Apathy and Insurer’s
becomes very relevant. Most health insurance products Practices: Moneylife had written about Star Health’s
are indemnity based, which means the purpose of the claim rejection case in September 2015 Cover Story -
policy is to indemnify for the customer’s expenses. For 6 Mediclaim Blunders To Avoid (https://tinyurl.com/
claims of such nature, every claim must be supported with ybq4fjhj). The heart ailment was revealed during the 

37 | 8-21 Dec 2017 | MONEYLIFE

Cover Story.indd 5 01-12-2017 17:35:27

 COVER STORY

 medical examination which was evident from the noting a normal fever, cough or cold and does not declare it,
in his report. But, when the first policy was issued, NIL it is acceptable. To be on safer side, we advise declare
was mentioned in the PED column. This matter was everything. In one proposal, the customer did not declare
brought to the notice of the agent. The agent assured that ‘one episode of non-epileptic seizure’ which happened in
necessary rectification will be effected and that note has the past 48 months. This was a blunder. A ‘seizure’ not
been made about the medical condition. A claim made in declared is tantamount to misrepresentation. The person
fifth year was rejected on the grounds of concealment of consulted a neurologist and even took medicines for it
medical condition and suppression of facts. and, hence, ought to have included it in the declaration.
The case shows both, the apathy of the agent who Unfortunately, the person met with an accident and had
fooled the customer about PED declaration and also to be hospitalised for more than 1.5 months. The insurer
the customer’s lack of understanding. It also casts a rejected the claim stating “There has been non-disclosure
shadow on the insurer who did the medical tests which of material facts/PED at the time of proposal. The patient
had revealed the medical had a history/known case
condition. It is, indeed, of epilepsy and this fact
baffl ing that PED is not was not disclosed at the
specifi de in the policy time of taking policy.”
when medical tests clearly So, let’s assume that
show it. The lesson is: You the policyholder, indeed,
will have to help yourself did not have 'epilepsy'
and ensure your proposal as a PED; this means
has all the declarations and that the insurer is wrong
these also appear in the in its reasoning. But the
policy document. If not, customer is also wrong in
make a written complaint not declaring treatment
to the insurer or even taken for ‘non-epileptic
cancel the policy as it is seizure’. The fact of the
worthless without proper If your health condition is not in the matter is that epilepsy or
PED declarations. non-epilepsy has nothing
You need to keep a
given illness list of proposal form, you to do with the accident. But
copy of the proposal that should declare it under ‘others’. You its non-declaration in the
the insurer has, and not cannot try to say later that you did not proposal cost the customer
just the copy of what you understand the meaning of ‘others’ a lot. The premiums paid
had submitted. It may were wasted and the claim
be diffi ult
c for you to also rejected.
fathom; but there are devious agents who tear off your Be Able To Justify Even No PED: A 19-year-old insured
PED declarations and substitute them with a blank was operated for a torn anterior cruciate ligament
PED declaration so that the insurer will not reject the resulting from a fall on the college staircase. The insurer,
proposal. After all, the agent gets commission only if Religare, had many queries about the case which were
the insurer underwrites the proposal. If there is a serious answered, but more questions followed. The parents of
ailment, the insurer is likely to reject the proposal. the insured wrote: “Religare has dragged an authentic
Unrelated Claim Rejection due to Misrepresentation: and straightforward claim for nearly three months
The health insurance proposal form can have a question since the surgery. That’s not all. Religare is also hinting
such as “Has anyone been diagnosed/hospitalised or at litigation against the patient for which I’m ready to
under any treatment for any illness/injury during the last battle to get the ultimate justice.” The insurance broker’s
48 months?” Another question in the proposal can be help was not yielding results.
for declaration of ‘Pre-existing Diseases (PED) Details’ From Religare’s investigation, it was clear that it
mentioning specific illness/diseases by name and an suspected that the injury was due to a pre-existing
option ‘others’. condition. If surgery can be delayed by a few months,
If your health condition is not in the given illness/ a fraudster will go out and buy an insurance policy and
diseases list of proposal form, you should declare it then go in for the surgery showing that the injury was
under ‘others’. You cannot try to say later that you did recent. As the policyholder was only 19 years old, the
not understand the meaning of ‘others’. If someone has suspicion was stronger, since people that young rarely 

MONEYLIFE | 8-21 Dec 2017 | 38

Cover Story.indd 6 01-12-2017 17:35:57

 COVER STORY

 take insurance. Moreover, the parents were not covered; sent to the insurer. The surgery cost was Rs35,000.
only the 19-year-old son was. We advised the parents that We received claim repudiation letter from the insurer.
they would have to request the surgeon to provide all the Reasons stated non-disclosure of April 2014 PED. I
required details, namely, whether the injury was recent accepted the inadvertent mistake of not disclosing his
or old; what exactly the issue was; and the solution (in 2014 hospitalisation, since we were under impression
medical terminology). They would have to submit the that this is normal with infants’ excessive crying. Above
orthopaedic report, operation theatre notes, hospital’s all, the surgery has no relation, whatsoever, with his
fi nal bill with admission and discharge dates, payment delayed milestone symptoms. This is not a ‘disease’ and
receipt of final bill and so on. can happen to any kid. Some kids grow slow. In fact, he
We informed the parents that, even after submission has even secured an admission in a ‘normal’ school after
of all these documents, if the insurer still rejects the claim, being examined by teachers and principal of the school.
we would look at the case again. Luckily, Religare paid “They cancelled his name from the policy and
the claim. The insured had returned the proportionate
to get a written letter from premium amount. I filed a
the surgeon to prove that complaint with insurance
the surgery was not due ombudsman. In May 2017,
to any PED; the injury the verdict came in our
was due to a recent fall. favour. The case was closed
Sometimes, the insured is in less than five minutes.
held guilty until he proves The insurer released the
his innocence. Depending amount on time. However,
on your profile, type of they did not add his name
procedures done and other in the policy. After multiple
circumstances, you will follow–ups, they reinstated
have to be ready to prove policy. But a lesson learned.
that your claim is genuine. Even minute details need to
Ombudsman to the Rescue You will be surprised to know that be disclosed.”
as PED Not Proved: Do The insurance
treatment for hepatitis- A (jaundice
not take claim rejection ombudsman order stated:–
due to ‘misrepresentation
in layman’s terms) can easily be “The Forum observed that
in proposal’ as the final Rs25,000 due to expensive medicines convulsion can happen to
decision. There are redress prescribed by the specialist. Having a anyone and this cannot
options which can be regular mediclaim does not help here be conclusively linked to
availed. Here is another any serious or unusual
case of a Moneylife consequences. The health
subscriber which highlights that insurance ombudsman condition of the insured person did not manifest to any
can ensure justice. Here is his story. “My son was born in alarming proposition, and therefore cannot be attributed
December 2013. In April 2014, he suffered seizure-like to pre-existing disease. Therefore, company’s decision of
symptoms. Doctors suggested that he should get admitted repudiation of claim and cancellation of the policy is not
to a hospital that would keep him under observation for sustainable.”
a day. His EEG report was normal and suggested no
evidence of epileptiform activity. The discharge card of 3. Will Your Claim Fall through the Mediclaim ‘Gap’?
the hospital also suggested that ‘symptoms observed but You will be surprised to know that treatment for hepatitis-
reasons unknown’. We were told that this can be normal A (jaundice in layman’s terms) can easily be Rs25,000
with infants due to excessive crying. We purchased health due to expensive medicines prescribed by the specialist.
insurance policy later in 2014. We did not mention Having a regular mediclaim does not help here. Different
above hospitalisation considering it as ‘normal’ incident. estimates put outpatient department (OPD) expenses
Between October 2014 and March 2016, we started in India at 40% to 65% of the total healthcare spend;
witnessing delayed growth milestones with our child. this means that hospitalisation expenses constitute 35%
We started consulting a senior paediatrician and couple to 60%. OPD expenses (doctor’s visit, diagnostic tests,
of neurologists. In June 2016, he underwent ‘Trigger medicines, etc) are on-going and relatively smaller, while
Thumb Release’ surgery. All necessary intimations were hospitalisation is once in a while and a big expense. 

39 | 8-21 Dec 2017 | MONEYLIFE

Cover Story.indd 7 01-12-2017 17:37:18

 COVER STORY

care procedures are expensive procedures which would

Day-care versus OPD have entailed at least 24-hour hospitalisation, but due

M ediclaim covering OPD comes at a higher

premium and is, usually, taken for availing
Section 80D tax deduction
to advancements in medical technology, they take less
time. Sometimes, there is not much difference between
the two and hospitals take
limit. So, unless you have advantage of it by charging
a mediclaim with OPD a higher amount if you wish
product, you should ensure to file the claim as day-care
that what you are doing is procedure instead of OPD.
a day-care procedure and You can ask the hospital
not OPD. There is a fine if they will give any better
line between the two. In a service or room to rest after
day-care procedure, you the procedure for the extra
should be hospitalised for charge they will levy. There
the treatment, even if it is are separate hospital forms
for a short while. Only then for day-care procedures and
will you be able to claim OPD. Hospitals have their
your expenses if the day- own way of fleecing the
care procedure is covered by the mediclaim. patients, as they know that the insurer is, ultimately,
OPD treatments do not require hospitalisation. paying for it.
OPD relates primarily to small expenses, while day-

 Regular mediclaim covers specified day-care procedures fertilisation’ which requires very expensive injections
along with hospitalisation which is usually covered when and can be done in day-care. We expanded the list of
it is for 24 hours or more. It does not cover OPD unless day-care procedures being covered to 540+ procedures
you buy an expensive mediclaim which covers OPD. which is the highest in the industry.”
Procedures/treatments not requiring 24-hour According to ICICI Lombard spokesperson, “With the
hospitalisation and not in day-care procedures list advent of newer technologies and advanced medicines,
are excluded, even though most insurers have increased
it can be major expense. It their scope of cover to include
can be a big issue especially Procedures/treatments almost all day care procedures,
if the medical expenses not requiring 24-hour thereby ensuring that most
for uncovered procedures/ hospitalisation and not in major medical expenses are
treatments are high (say, day-care procedures list are covered. Outpatient expenses
above Rs50,000). It certainly contribute to almost 60% of
is a gap in mediclaim which
excluded, even though it can healthcare expenses. The reason
is not addressed by insurers. be major expense. It can be could be rampant fraudulent
Mr Kumaraswami says, “A a big issue especially if the activities that take place in the
few years ago, there were no medical expenses for uncovered unorganised healthcare sector
day-care procedures covered procedures/treatments are high or lack of a governing body to
as the healthcare industry keep a check. However, routine
providing such treatments was outpatient expenses are covered
unorganised. Hence, insurers had little faith in claims by paying an additional premium.”
being lodged for such procedures. Now, with more and Recently, a Moneylife subscriber’s wife developed a
more organised players in this sector, health insurance benign growth near the retina of the eye called ‘Choroidal
industry is comfortable in offering these kinds of cover. Haemangioma’ in medical terms. It requires a special
Further, you would notice that many expensive injection laser treatment (photodynamic therapy) followed by an
and medicines being used in many treatments, such injection in the eye after a couple of days. Regular laser
as chemotherapy, are being covered now. At Magma can damage the eye and, hence, the need for expensive
HDI, we have also taken a bold step to cover ‘in vitro special laser. If the treatment is not done, it can eventually 

MONEYLIFE | 8-21 Dec 2017 | 40

Cover Story.indd 8 01-12-2017 17:38:45

 COVER STORY

 lead to blindness. But such a treatment does not need seriously ill. They just go with the rules of the policy.
a 24-hour hospitalisation nor is covered as day-care Policy rules are cast in stone for them. If the policyholder
procedure. The cost of treatment was over Rs1 lakh. had stayed for 24 hours, the insurer would have paid the
The main cost of treatment is specialised photodynamic claim, even if it was for a higher amount. By staying for
dye for the laser treatment and injection. The cost of 16 hours, the insurer’s money is saved but the company
the dye (Visudyne from Novartis) was Rs53,000 (MRP still would reject the claim completely. Is that fair in
is Rs79,670) and cost of the Accentrix injection is case of a genuine serious illness? Can customers trust
Rs22,000. So, the total cost of just the dye solution plus mediclaim policy?
injection was Rs75,000. As the treatment itself is not There are cases where, although hospitalisation is for
covered as mediclaim day-care procedure, the consumer over 24 hours, the insurance company gives a lame excuse
has to bear the total cost of over Rs1 lakh to solve the that hospitalisation was not justified. Does it mean that
medical issue. It is worth fighting with the insurance you need to get hit by a bus to make your claim valid?
company to get such a While health insurance
claim reimbursed. is supposed to take care
Advisors, who tell of medical emergencies
people to buy health and hospitalisation,
insurance to cover many individuals are not
their risks, will have no convinced if it will pay,
answer here. Neither when you need it most.
do such advisors know There is a trust deficit with
the shortcomings of regard to health insurance
mediclaim. Insurance companies. The consumer
companies should allow assumes that the insurance
mediclaim to pay for company will not pay
such expenses when which, in turn, leads to
above a specific amount fewer people buying health
(say Rs50,000). While More and more day-care procedures insurance.
mediclaim, covering OPD Medical science has
are covered in mediclaim, due to
would have included such advanced leaps and
expenses, the product is
technological advancements that bounds. Ailments for
not cost-effective. Read do not need 24 hours or more of which a patient had to be
our Cover Story - https:// hospitalisation. You need to be hospitalized for days are
tinyurl.com/ya33ssdz. We aware of them now being cured in the
checked the various day- matter of a few hours. To
care procedures covered catch up with this changing
for eyes for different insurers, but it will still fall short face of technology, health insurance plans in India have
for several eye procedures/treatments. also changed their scope of coverage. The concept of
24-hour Hospitalisation Rule: Several insurers/third- day-care treatments is available in almost all of the
party administrators (TPA) mechanically reject a claim plans these days. Insurers cover day-care procedures like
if hospitalisation is for less than 24 hours. A Moneylife lithotripsy, chemotherapy, dialysis, etc. More and more
subscriber’s experience says it all. “I have a medical day-care procedures are covered in mediclaim, due to
insurance coverage for my family from my company. technological advancements that do not need 24 hours or
Recently, my wife was admitted to the hospital due to more of hospitalisation. You need to be aware of them.
acute upper respiratory infection. But the claim was If the day-care procedure you intend to undergo is
rejected stating that according to the insurance policy not specified in the policy wordings, it is a grey area.
claim can be approved only if the patient is admitted But don’t lose heart as you may be able to persuade and
only for minimum of 24 hours. This seems to be strange, prevail. A lot will depend on the negotiation power of
because my wife was seriously ill and was hospitalised the intermediary. Group policies carry more weight;
till she felt better and she was ready to get discharged a good intermediary can prove to the insurer/TPA the
after 16 hours.” medical nuances of the procedure that will actually help
It is an unfortunate case; but insurance companies the insurer due to lower cost than regular procedures
fi nd reasons to deny payment even if the insured was that need hospitalisation. 

41 | 8-21 Dec 2017 | MONEYLIFE

Cover Story.indd 9 01-12-2017 17:39:06

 MONEY MANTRA MEHRAB IRANI
Savers Are Losers
I
f you assume that saving is equal to investing, you
might be in for a nasty surprise. You are also living
with a big delusion because you don’t understand
the ‘rules of money’. The rules of money permanently
changed in 1971 when the then US president Richard
Nixon took the US off the gold standard and granted itself
the licence to print money. Since then, the US dollar and
other world ‘currencies’ have depreciated while prices of
all commodities measured against it—be it precious metals
like gold, silver or industrial metals like steel, copper,
aluminium or agricultural commodities—have gone up
and will continue to go up over the long term. That’s why
we call money as currency.
Although we all love money
but, invariably, we are all fooled
by it. The problem is that, while
most of us love money, we don’t
realise how to value it. If you
think hard, you will realise that
money is nothing but paper and has
no value in itself except that it can be
exchanged for goods and services. Thus,
the value of money is not intrinsic; it is
what it can be exchanged for in return.
Which is why money, today, is nothing
but a currency which can be exchanged
for other goods and services. And
the more the goods and services
we derive for a given amount of
money, the more the value of
money and vice versa. This
is what I meant by knowing
the value of money.
If you are still confused,
let me give you a simple but
a very common and practical
example. As I mentioned
earlier, most of us have illusions
about money—the more the money
we get, the better off we think we are
and vice versa. But this may not always be the
case. Let us consider a simple example of an employee
Mr X who got a 10% salary increment when inflation was
12% while, in another year, he got 5% increment when
inflation was 3%. Which one would he prefer and which
one should he prefer? In all likelihood, he will prefer the
first case of 10% increment, although the second one is
superior. The reason is very simple and logical. In the
first case, the employee is getting negative real increment
MONEYLIFE | 8-21 Dec 2017 | 42
Irani column.indd 2
since inflation is higher than the salary increase; while,
in the second case, he is getting positive real increment
since inflation is lower than the salary raise. Thus, in the
first case, the value of money in his hand is lower while,
in the second case, the value of money in hand is higher.
Again, I repeat that money is just a currency with no
real intrinsic value. Its value is derived from how much
of goods and services one can buy with it; the more the
amount of goods and services which can be bought with
a given amount of money, the more is its value and vice
versa. This is called the money illusion and one of the main
reasons why people prefer investment in fixed deposit at
negative real interest rates after
tax rather than long-term tax-free
gains through stocks.
One of the other facets of
the money illusion is tax as it
eats into your gross income.
Although almost everybody
hates to pay tax but people,
often, don’t realise how they can
legally reduce their tax liability.
It’s very simple. The government
has made very discriminative
tax laws. The rich know it and
take advantage of it, while the
poor and middle-class become its
victims. The government’s tax system
is regressive, i.e., it puts maximum taxes
on ‘earned income’—the income that
you work hard for like, say, salary.
At the same time, it totally exempts
from income-tax certain other forms
of income, such as dividends, long-
term capital gains, etc, which constitute
all passive and portfolio income—the
income derived from your investment
assets whether it be shares, real estate, etc.
The tax is also regressive because it taxes
the rich at a much lower rate. For example,
the ‘net marginal tax rate’ after deductions is
much lower on a business than it is on salary. A salaried
employee hardly gets any deductions and most of his
earned income is almost fully taxed, while a businessman
gets all kinds of expenses—whether he actually spends
or not—as deduction and the net taxed money is lower.
I say whether he spends or not because there are certain
expenses which the businessman actually spends money
on, like staff salaries, telephone bills, electricity bills, etc, 
01-12-2017 11:07:06
 MONEY MANTRA MEHRAB IRANI

 which are allowed as a deduction from income; but there money from your pocket’ by diminishing its value.
are certain other items, such as deprecation, which is not If you still don’t believe how income-taxes and inflation
a cash expense but is still a deductible business expense. are eating into your wallet, then consider this simple
That is why the tax system is regressive and favours the example. Say, today, you have Rs100 and the price of your
rich, i.e., middle-class people buy assets in their individual favourite slice of cake is Rs100. So, with your Rs100, you
names while the rich buy assets in their businesses; typically, can buy and eat the cake. Now, if you ‘save’ that money in
the companies which they own buy the assets for them and a bank fixed deposit at 8%pa (per annum) rate of interest
enjoy all the legally allowed benefits on it. Thus, the rules and are subject to, say, between 20% to 30% rate of tax,
of money are not fair and give the rich an unfair advantage. your Rs100 adds up to around Rs106 after one year.
Coming back to inflation, unlike income-tax which goes Now, assuming the current inflation rate in the economy
out from our pocket and pinches is 10%, your favourite cake now
us; hence, we know it, inflation is a costs Rs110 and, hence, out of your
hidden monster with a double-edged Unlike income-tax reach. Therefore, while, today, you
sword. Although we may know it, were able to enjoy your cake with
we simply fail to recognise it and
which goes out from the Rs100, you are not able to enjoy
accept its presence. As the famous our pocket and pinches it after one year, in spite of having
economist Milton Friedman said, us, inflation is a hidden ‘saved’ your money, thanks to tax
“Inflation is always and everywhere and inflation. You can neither have
a monetary phenomenon.” That
monster with a double- nor eat your cake!
is why it is very important to edged sword. Although Therefore, in today’s fast
understand the concept of ‘fiat we may know about changing technological currency
money’ as currency. Those who age, savers are losers. Instead, invest
are ‘savers of money’ and hold
it, we simply fail to in assets like equities, real estate,
their savings as currency will be recognise it commodities, etc, which actually
big losers over a period of time. benefit with inflation and also give
The government can, and will, keep you tax breaks. No doubt, nothing
printing money which will result in larger and larger is linear and every asset goes through its own cycles, but
amounts of money chasing the same limited quantity of the long-term compounding benefits will ensure that your
goods and services. And as we know from the basic premise purchasing power remains intact and you can have as well
of economics—demand and supply—when the supply of a as eat your cake. 
particular item (money) increases without actual increase
in output (goods and services), it invariably results in a
fall in the value of money. The simple rule is that more the Mehrab Irani is the author of acclaimed
money chasing a fixed supply of goods and services, the 10 Commandments for Financial
more will the rise in price of those goods and services get Freedom and best-seller Mad Money
expressed in terms of ever increasing money supply. Thus, Journey, India’s first finance thriller
by printing money, the government is, in effect, ‘stealing

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Irani column.indd 3 01-12-2017 11:07:48

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 SMART MONEY R BALAKRISHNAN

How To Evaluate Commodity

Stocks

W
e use a term ‘cyclicals’ to include a wide range
of industries that are engaged in the business
of extracting/processing and selling resources
such as iron, aluminium or chemicals, etc. These products
are not differentiated and are sold as generic items rather
than being differentiated by brands and claimed attributes;
hence, the term ‘commodity stocks’. The sole buying
decision is, in most cases, price and ready availability
rather than name. Sometimes, commodity dity stocks
give great returns. What should one keep eep in
mind while buying commodity stocks??
Commodities go through pricee
cycles, since their demand is driven by
businesses. It’s a business-to-business,
or B2B, operation rather
ather than
being a business-to- ss-to-
consumer or B2C— C—
these are businessess
driven directly by
consumers. For
instance, if you
are in the business
of selling soaps or
bread, you are selling
something that iss
unlikely to change too
much with economic cycles.
B2C remains fairly smooth th and d
grows with time. The B2B businesses
are vulnerable to economic expansions
and contractions.
Since the turn of this century, China ina
emerged as one of the biggest producers rs and
consumers of virtually all commodities—minerals,
i l
metals or chemicals. After a scorching pace of growth,
their own demand started to slow down and they started
to export. This meant that globally, domestic producers
started to face competition; price wars with China are hard
to sustain and most producers started to bleed. Add to
that, the expansion by Indian commodity producers, the
grinding slow down in real estate and sluggish economic
growth all added to the misery of the commodities business.
In the past couple of quarters, some cheer has returned
to this business. Part of it is attributed to reported supply
cut from China. As a result, there are sharp moves in
prices of many commodities. Add to this, the huge
infrastructure push announced by the government has
created a favourable outlook for the commodities business.
What do these cycles have to do with the share prices?
My observations are that investment in this sector is a
function of capital costs rather than just revenue. In most
of these industries, capital costs are standard and so is
the product. Thus, it is difficult to continually make more
money beyon
beyond a reasonable return on the investment.
If the re
returns go very high, it will encourage new
investments and the excess profits will vanish
inves
sooner or later. Thus, profits peak when the
soo
industry reaches full capacity utilisation.
in
And, in today’s world, capacity is not
A
just local or regional, but global.
Yes, tariff
ta barriers do offer
some protection; but those
som
barriers are political
ba
barriers and create
b
ttheir own implications
such as retaliation.
So, over the longer
tterm, an investment
decision
d should not
rest
re on a tariff barrier.
Tariff barriers could be
Tari
quantitative or financial, but
quantit
tend to be short-lived; they are
not the reason to establish a commodity
n
business or buy a commodity stock. It was
b
possible to make tariffs the sole basis for
po
business decisions until the late 1980s when
busin
we werwere like frogs in the well.
Cyclical
C li l industries, due to this nature of ups and
downs, tend to enjoy lower return on invested capital.
Lack of entry barriers is one reason and the total absence
of differentiation in the end product. Thus, as an investor,
the touch points for me are the costs of setting up a facility
(replacement cost), the capacity utilisation in the industry
and the cyclicality in the demand supply.
The nearest proxy for the replacement cost is the ‘book
value’ per share. However, this number is a historical
number. The older the company, the lower the number.
Thus, a better way to approach is to relate the replacement
costs to the ‘enterprise value’ (EV is calculated as market 

MONEYLIFE | 8-21 Dec 2017 | 46

column_Balakrishnan.indd 2 01-12-2017 11:01:46

 SMART MONEY R BALAKRISHNAN
 capitalisation plus long-term debts). In the down cycle,
capacity utilisation drops, margins drops and a company
could lose money. At that stage, the price drops sharply,
the price-to-earnings ratio (P/E) might actually shoot up
due to poor earnings and the EV comes down. In a bullish
cycle, the opposite happens. Thus, the best time to buy a
commodity stock is when the EV is low rather than look
at P/E or price-to-book-value (P/B). The closer the EV is
to the ‘replacement’ cost, the better the chances of making
money on the stock. Let me take an example of a cement
company. The basic details are:
1. Can produce and sell 30 million tonnes of cement
every year;
2. Has a power plant of 600MW, used party for own
consumption and rest sold;
3. Has around 35 crore shares outstanding. Share face
value is one rupee;
4. The market price is currently around Rs1,800;
5. The book value of the share is around Rs250;
6. No debt and cash in hand of around Rs5,000 crore.
7. Made a profit of around Rs1,400 crore after taxes
last year.
8. In the previous year, it produced/sold around 20 million
tonnes of cement;
9. An expansion of 9 million tonnes is, probably, in
progress.
This gives me the following information:
Replacement Cost: Cement - 30 million tonnes @$140
per tonne = Rs25,000 cr. Power- 607 MW at Rs5 cr / MW
= Rs3,000 cr
Cash of around Rs5,000 crore
So, the company is worth around Rs33,000 crore or
so. As against this, there are around Rs35 crore shares.
So, it could have a replacement value of around Rs1,000
What’s Your Bahana for Not Subscribing?
I am not interested in honest & insightful advice on money matters
I never have any problems with banks, credit-cards or insurance companies
I always invest on the basis of tips from friends and brokers
Finance bores me to tears
I would rather spend two year’s of knowledge on one evening of eating out
I always buy from the newsstands
column_Balakrishnan.indd 3
per share. If we take three years of set up time and
some financing costs, it could give me a value of around
Rs42,000 crore. Or it would give me a value of around
Rs1,200 per share, at best.
I agree that these are not precise numbers and each one
can value things differently. Someone will add profits of
the unused 9 million tonnes also. Giving all that leeway,
even if I push the share value to Rs1,500, on a best-case
scenario, it does not make sense to buy the scrip at Rs1,800.
When I buy commodity stocks, I would definitely like
a good margin of safety. People may like to argue that,
in India, with a 20-year spend on infrastructure and
housing set to grow, commodity stocks should be valued
like fast-moving consumer goods (FMCG). That is also a
perspective. It all depends on what you are comfortable
with and what you think the market will swallow. After
all, unless there are buyers in plenty at a given price, you
cannot realise your value.
However, bull market treats the rupee accounted
as earnings and a rupee actually earned, as the same.
Otherwise, we will not have infrastructure companies
getting fancy valuations in this market. Thus, valuations are
an art and also a matter of what the mood of the market
is, at any given time. In this environment, if I have to put
in my money, I have to either play the same game as the
other investors in the market, or do my numbers and take
a conservative approach justified by the balance sheet. The
nature of the industry is such that it goes through boom
and gloom. And it is dependent on the well-being of the
economy and of industries in general. Commodities do
not enjoy a secular demand like soaps or toothpastes.
Price trends of a bull market should not form the basis
for buying commodity stocks. 
The author can be reached at balakrishnanr@gmail.com
For subscription offers
that are a steal, look for
a form elsewhere in this
issue or our website at
www.moneylife.in
47 | 8-21 Dec 2017 | MONEYLIFE
01-12-2017 11:02:47
 StockWatch Stocks and sectors that catch our eye

K H U S H I R A M BEHARI L AL domestic market. Its flagship-brand, ‘India Gate’, is a

market leader, commanding a premium of more than
Continued 18% over most other brands in the industry. KRBL
is also planning to tap the changed preferences of the
Excellence upper middle class by adding healthy cereal like quinoa
as a premium product.

K hushi Ram Behari Lal Limited (KRBL), India’s top

basmati rice processing company, reported flat
revenues for the quarter ending September 2017, while
An estimated 70% of basmati rice is produced in
India (Rs28,000 crore by value) and the rest of it in
Pakistan. Basmati rice accounts for a small proportion
its operating profit and net profit grew on account of of the total rice produced in India amounting to 9.46%
margin expansion, the highest ever achieved by the in volume terms but its value, being regarded as one of
company. Operatingg p profit margin
g ((OPM)) was 26% the ppremium q quality
y rice,, accounts for over 60% of the
and net profit margin
rgin (NPM) was 18%. On the back export market. The global de demand for basmati rice has
of higher margins,, operating profit grew grown at a CAGR (compounded
(compoun annual growth rate)
at 23% year-on-yearear (y-o-y), from of around 20%, over ove the past six years.
Rs153.3 crore to Rs187.8 crore, while The demand for fo basmati comes mainly
net profit grew at 31% y-o-y from Iran, Saudi Arabia, the UAE,
from Rs98.6 croree to the U US and Europe. Non-
Rs129.2 crore. Overver basmati
basm varieties, especially
the years, KRBL parboiled
parb rice, are in great
has increased its demand
dem in some African
margins significantly;
tly; countries
cou including Benin,
OPM was 14.2% Senegal
Sen and South Africa,
and NPM was 7.2% 2% besides
bes the US which,
in FY12-13, which h along
alo with South Africa,
has expanded to China,
Ch and Mexico, has
20.6% and 12.7%, %, emerged
em as a new market
respectively, in for the industry, in recent
FY16-17. KRBL’s years.
yea KRBL, Kohinoor,
profits come from Chaman
Cha Lal Setia and LT
its very strong position in a unique business: basmati Foods compete in terms of shelf space, raw material
rice. procurement, distribution network and share of export-
While KRBL sells rice, furfural, seed, bran and based revenue.
bran oil, among others, and also generates energy,
which includes power generation from wind turbine, Business Model
husk-based power plant and solar power plant, it has In a business that has traditionally been trading-
a 25% market share of branded basmati exports from oriented, KRBL has kept a focus on manufacturing
India and a 30% share of branded basmati sales in the and branding. Over time, it has built up the ancillary 

Disclaimer: None of the stock information presented constitutes a recommendation or a solicitation of any offer to buy or sell any securities. Information presented is general in nature that does not take into
account your individual circumstances, financial situation or needs Although information has been obtained from and is based on sources we believe to be reliable, we do not guarantee its accuracy and the
information may be incomplete or condensed. All opinions and estimates constitute our judgement as on the date of the report and are subject to change without notice. Past performance is no indication of future
results. Investors must do their own research before acting on them. Data Source: Centre for Monitoring Indian Economy’s Prowess database.

Those who have subscribed to the stockletters should only follow the stocks recommended there.

MONEYLIFE | 8-21 Dec 2017 | 48

StockWatch.indd 2 01-12-2017 11:13:31

 STOCK WATCH

 businesses which add to the value they create in rice.
KRBL is a fully integrated business; it is involved from
procurement to the customer’s end point. It has a goal
of maintaining consistent quality by being involved
in each and every stage of the business and, thereby,
demanding a premium for its product in the market.
About 30%-35% of the procurement is done through
a concept pioneered by the company, such as contract
farming where the company grows seed on its own,
stores it and, after applying certain chemicals and
pesticides to make them disease-resistant, it passes them
on to commission agents and distributors who then sell
it to farmers. When the rice is ready, it buys back the
rice from farmers at a pre-fixed price.
To reach out to all levels of consumers and keep the
India Gate brand intact in the premium segment, the
company has created different brand names based on
quality differences. It has a total product portfolio of
over 20 brands of basmati and non-basmati, with the
majority of revenues generated by India Gate, followed
by Doon, Nur Jahan and Unity. Recently, the company
has started selling brown rice and also added quinoa.
Risks Faced by the Industry
As a large part of the revenue for most players comes
from exports. Any appreciation of rupee, vis-à-vis
other currencies, would impact revenues. Basmati rice
cultivation depends on rainfall and weather conditions.
Final sale prices of basmati keep fluctuating. Since
manufacturers have to keep high inventory due to the
long aging process, they may suffer inventory losses if
prices correct significantly.
The industry is a highly regulated one, starting
with the government, putting a ban on exporting non-
basmati rice till 2011, followed by US sanction on Iran
in 2011 due to which the biggest importer of basmati
rice was unable to import rice from India. Then Iran
itself banned any import of rice to support its own
healthy crop and clear the inventory, in 2014. The
ban on rice imports by Iran has been lifted in early
January of the current year. In 2016, China had agreed
to import basmati rice from 14 Indian companies
including KRBL. But it turns out that the Chinese
market, the world’s largest rice consuming nation,
prefers a version of short grain, sticky rice which gives
basmati rice companies a very small market of Indian
restaurants and international five-star hotels in China.
Financials
KRB generates 95% of its revenue from selling rice,
while the rest of it comes from selling traded goods,
such as seed, rice bran, bran oil, furfural, oil cakes,
glucose, and through its energy segment. KRBL’s
revenues are driven by commercialising Pusa 1121
which is known to be of high quality and has been
consistently demanded by exporters, even after trying
new types of basmati like Pusa 1509.
Revenue Mix
Particulars (Rs Cr) 2014 2015 2016 2017
Rice-Domestic 14,97.90 16,96.50 13,89.97 18.21.86
Rice-Exports 11,55.46 12,87.13 17,49.97 10.84.35
Domestic Share (%) 56% 57% 44% 58%
Export Share (%) 44% 43% 56% 34%
Basmati rice is a very working capital-intensive
business; almost 70% the KRBL’s total assets are
utilised in working capital. This is because the
inventory requirement for whole year is bought in
almost one shot, during October-November when crop
arrives after processing. KRBL finances its working
capital by taking loans through a mix of pre-shipment
credit in foreign currency (PCFC) loans and short-term
rupee loans. PCFC loans are helping the company
reduce its interest cost, because these loans are only
granted to companies selling exports on a cash basis,
compared to other companies selling their goods on
liberal credit terms in the exports market. Compared
to its peers, KRBL’s inventory cycle seems to be longer
because its proportion of aged rice sold in the market 

Realisation Data
Domestic Sales (basmati) Export Sales
Particulars Quantity Value Realisation per Quantity Value Realisation
(In MT) (In Rs Crore) MT (In Rs) (In MT) (In Rs Crore) per MT (In Rs)
2014 3,05,694 14,97.89 49,000 1,27,456 11,55.46 90,656
2015 3,28,636 16,96.50 51,622 2,34,024 12,87.13 55,000
2016 3,48,752 13,89.97 39,856 4,47,507 17,49.97 39,105

49 | 8-21 Dec 2017 | MONEYLIFE

StockWatch.indd 3 01-12-2017 11:15:25

 STOCK WATCH

 is much more than that of the industry. This is due rice for more than a year. KRBL, on the other hand, is
to higher share of aged rice in revenues. Such rice is compromising on its cash conversion cycle by keeping
aged for a period of 18 months to 24 months after its inventory for longer duration but, simultaneously,
processing; hence, it blocks working capital for a compensating for it by charging a higher premium in
longer time. While un-aged rice is sold immediately the export as well as domestic market.
after processing. Reduction in Debt Levels: While the company is not
The company’s debt proportion is mainly short- looking to actively invest in energy segment anymore,
term in nature. Lately, the company has been reducing it makes sense to use those retained earnings either
debt which has resulted in the increase in PAT margins into core operations, or pare down debt which the
and interest coverage ratio. company has been doing. This has, again, resulted in
increase in its margin and an advantage over its next
big competitor, viz., LT Foods (Daawat).
Lower Long-term Debt Management: One of the key factors in running a
Particulars (In Rs Crore) 2016 2017 rice processing company is the ability to procure the
Long-term Debt 2,00.62 87.32 raw material at the correct time and price. As raw
Short-term Borrowings 9,61.16 10,04.66 material forms 75% of the total costs, it becomes
extremely crucial to run a good inventory management.
KRBL, with its experienced promoter, Anil Kumar
Mittal (chairman and managing director), along with
Improving Interest Coverage
Arun Kumar Gupta and Anoop Kumar Gupta (joint
Particulars 2014 2015 2016 2017
managing directors), has maintained a great network of
Interest Coverage 5.0 5.9 6.2 9.1 around 90,000 farmers, covering more than 250,000
Ratio (x)
acres of land. It has always kept a check on its
operational costs and tried to reduce it, whenever the
The company has been performing really well for industry had faced headwinds due to macro-economic
the past five years increasing its operating margins and factors, as in 2011 and 2012 when rice exports to Iran
net margins. were banned. At its conference calls with investors and
Such margins are exceptional and show that KRBL analysts, it has always been clear on two things: one,
is doing something different; its competitors, like consistent quality and distribution network to charge
LT Foods, Kohinoor or Chamanl Lal Setia earn just premium for its brand; and, two, never compromise on
half of such margins. margins in order to boost sales.
The market has recognised the exceptional execution
Are These Business Drivers Sustainable? skills of KRBL. The current market-capitalisation of
The main drivers of such performance are the following the company is Rs14,700 crore. The stock is trading
factors and these would remain in place for a long at a price-to-earnings (P/E) multiple of 31.8x, market-
time. capitalisation to sales of 4.5x and price to book ratio
Brand Value: No other company in the industry ages its of 7x. — Saloni Hemnani 

Better Financials Than Competition

Company Particulars 2014 2015 2016 2017
Operating Margin 15% 16% 13% 20%
KRBL
Net Margin 9% 10% 9% 13%
Operating Margin 7.75% 7.25% 12.13% 13.09%
Chamanlal Setia Exports
Net Margin 4.38% 3.38% 7.71% 7.80%
Operating Margin 10.64% 9.64% 10.51% 11.19%
LT Foods
Net Margin 3.16% 2.65% 2.42% 3.57%
Operating Margin 8.18% 1.35% 9.89% -11.96%
Kohinoor Foods
Net Margin 0.52% -6.26% 0.34% -14.14%

MONEYLIFE | 8-21 Dec 2017 | 50

StockWatch.indd 4 01-12-2017 11:15:51

 STOCK WATCH

P C J e we l l e rs Services Tax (GST) from July onwards has boosted

business for jewellers, since the 3% GST on jewellery
Shining Bright is accepted well by the industry as it is in line with
the previous taxation. Recently, the government has

F
or the quarter ending September 2017,
PC Jewellers (PCJ) reported sales of Rs2,622
crore, an increase of 20% over that in the
corresponding quarter for previous year, while
operating profit increased by 55% year-on-year
(y-o-y), from Rs178 crore to Rs278 crore, and net
profit jumped 41% y-o-y, from Rs106.9 crore to
Rs150.6 crore. PCJ is maintaining a steady operating
margin between 8% and 10% while net profit margin
is between 5% and 7%. The borrowings are low; the
debt:equity ratio stands at 0.24, while return on equity
is 13% and return on capital employed is
at 15%. In an interview, Sanjeev Bhatia,
CFO of PCJ, said that it is gaining market
share from the unorganised players and
can expect a growth rate of 30% in top-
line for the current financial year. Will
this growth be sustainable?
India’s domestic jewellery segment
is highly fragmented and continues
to be dominated by a very large
number of unorganised players
whose business practices have
not changed over the years.
They deal in cash and, often,
short-change the customers on
carat-age. An estimated 70% of
jewellery sold in the country is on
account of weddings and wedding-
related functions. In addition to this traditional and
steady demand, new demand is arising from the
perceived use of jewellery—from just being an item of
adornment and as a store of value—to a lifestyle and
fashion accessory. Rising awareness of quality amongst
customers has provided a fillip to the organised retail
segment, to compete against the unorganised jewellers.
Organised players have steadily gained market share
by addressing the need for enhanced experience from a
demanding customer base which is marked by shifting
demographic and socio-economic profiles and different
aspirations.
removed the ceiling on cash sales under Prevention of
Money Laundering Act (PMLA).
Innovators Will Win
The winners among the organised sector players
would be those who can continuously offer more
innovative customer experience and better delivery
models. For instance, PCJ has been in the wedding
jewellery segment predominantly, but it is now trying
to increase its presence in small-ticket segments such
as daily-wear, casual-wear, party-wear, etc. To attract
the younger generation, PCJ has launched various new
collections of jewellery in the past two quarters, such
as Amalia, Sway with Me, Holy Spin and Grecia. The
idea behind this is to make PCJ a one-stop shop for
all age groups and all occasions. PCJ is adding a
manufacturing facility for one of its
brand ‘Azva’ in Jaipur.
To further strengthen
this brand, the company
is also collaborating
with University of Arts
(London), to create an
international range of
designs. About 70% of PCJ’s
revenue comes from domestic sales
and the remaining from exports. The
company doesn’t expect the export segment to
grow by leaps and bounds but says that it will remain
a steady earner.
PCJ has also revamped its online store with a
new name ‘aucent.com’. After the revamp, there will
be online-offline integration of inventory of Delhi/ 
Y-o-Y Sales Growth
30%
25%
20%
15%

The market share of organised players is now 10%

approximately 30%-35%, which is slowly increasing,
5%
providing room for organised players like PCJ to grow,
as can be seen from the graph (6 quarters of sales). 0%

Except for the December quarter, when sales were -5%

affected on account of demonetisation, PCJ is growing Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17
at a steady pace. The introduction of the Goods and

51 | 8-21 Dec 2017 | MONEYLIFE

StockWatch.indd 5 01-12-2017 11:16:10

 STOCK WATCH
 NCR stores which will facilitate faster dispatch of
orders. There are over 1,000+ designs available for
shipping the same day. Similar integration will be
rolled out for stores in other regions too. PCJ has made
‘aucent.com’ largest collection of curated jewellery
designs comprising 12,000+ designs. To enhance
customer experience, it is leveraging technology and
using augmented reality to try on jewellery virtually.
Additionally, PCJ has rolled out home try-ons, on a
trial basis, in Delhi/NCR which also has received good
customer response, according to the company.
PCJ is increasing its presence through company-
owned as well as franchisee stores. In the half-year
T a s t y B i t e E at abl e s
Justifying Its Premium
Valuation
T asty Bite Eatables reported superb results for
the September 2017 quarter when revenues
jumped 45% year-on-year (y-o-y), from Rs58 crore
in the September 2016 quarter to Rs85 crore in the
September 2017 quarter. The operating profit shot up
102% y-o-y to Rs15.7 crore on the back
of an expanded operating margin
which was up from 13.3% to
18.47%. Thanks to increased
revenues and expanded
margin, net
profit leapt
107% y-o-y to
Rs8 crore in the
September 2017
quarter.
Tasty Bite had a good
year in 2016-17 as well when it
recorded revenue growth of 21%, to
Rs237 crore, and net profit growth of 41%,
to Rs22.8 crore. Operating profit grew 27% to Rs27.2
crore and operating margin increased from 10.96% to
11.48% in FY16-17. The exports business grew 22.4%
in FY17, thanks to better distribution as well as the
success of new categories, such as ready-to-eat rice.
Growth was also partly due to fall in raw materials
costs in FY16-17 due to a combination of good
agricultural yields and strategic decisions to buy key
commodities, such as onions, rice, tomato paste, etc,
that insulated the company from inflation and price
volatility of these commodities.
MONEYLIFE | 8-21 Dec 2017 | 52
StockWatch.indd 6
ending September 2017, it opened five owned stores
and added four franchised stores. To establish an even
stronger brand presence, it signed up Akshay Kumar
and Twinkle Khanna as PCJ’s brand ambassador
during the September quarter.
PCJ’s current market-capitalisation is approximately
Rs14,200 crore. The price-to-earnings (P/E) multiple
is 28x, while price to book value is 3.9x. The market-
cap to sales ratio stands at 1.6x. The management of
the company has been successful in executing in the
past and, if the various steps taken by the company
to capture the market play out well, the stock may do
well over the coming years. 
Tasty Bite brand was launched in the US in 1995
with five all-natural, ready-to-eat Indian entreés. Some
20 years later, the company claims, it is America’s
largest brand of prepared Indian meals, Asian meals
and noodles and a line of organic ready-to-eat rice
and whole grains. It launched Tasty Bite Food Service
business (TFS) in 2006 in India that makes sauces and
frozen products (entreés, noodles and rice, frozen-
patties, appetisers and ready meals and tomato-
based sauces, gravies and pastes, emulsion sauces
and specialty sauces) for leaders in the food service
industry, from its factory in Pune.
It has also started developing export
market for foods service products and has
established business links in Singapore,
Malaysia, Sri Lanka,
UAE, Kuwait and
South Africa, with
leading fast-food
restaurants. It expects
this to be an important
growth driver. It has also
begun marketing its products
in the UK through a subsidiary of Preferred
Brands International Inc (PBI). This is a large
but competitive market. Tasty Bite became the first
company in the country to produce ‘All Natural’—
preservative-free pizza sauce for all leading pizza
brands in India and invested considerably in R&D
and new technology in FY16-17. The company claims
it is now the dominant supplier of pizza sauce across
the industry. Both the consumer business (CB) and
the Tasty Bite Food Service (TFS) business underwent
major capacity expansion and modernisation in
FY16-17. The company, in its annual report, said
that it expected capital expenditure to be a recurring
activity over the next few years to meet the growing 
01-12-2017 11:16:41
 STOCK WATCH
 demand across all its three segments of ready-to-serve
(RTS), sauces and the formed frozen products (FFP).
Revenues from the consumer business in FY16-17
were Rs175 crore -- 68.6% of the total revenues. This
segment caters to the US, Australia, Canada, New
Zealand and UK in the ready-to-eat food segment,
marketed through PBI, which distributes the product
in retail chains, such as Costco, Kehe, Krogers and
Woolworths. In its largest consumer market North
America, all categories saw market share and double-
digit volume growth in 2016-17. Significantly, this
growth was widespread across all channels of grocery,
club and private labels and was reflected in export
growth of 22% to Rs160 crore.
The food service business provides frozen food and
specialty sauces to quick-serve restaurants (QSR) chains
like Dominos, Pizza Hut, Subway, Faasos, McDonalds,
KFC, Burger King and also Hindustan Unilever (HUL),
had revenue of Rs80 crore in FY16-17 (31.4% of the
total revenue). The QSR industry in India had a rough
year with declining SSSG (same store sales growth)
across all leading brands, as competition increased in
metros. However, TFS managed to maintain its growth
path on the basis of strong product innovation and
customer partnership. The TFS business grew 18%
over FY15-16 to Rs77 crore in FY16-17. Tasty Bite’s
strategy, of focusing on natural foods even for the QSR
industry, helped drive market share. It has announced
that it was in a QSR test market with an innovative
frozen multi-cuisine rice bowl. TFS launched for its
key customers spicy cheese poppers, hara bhara kabab
and paneer burger patty in FY16-17. In FY16-17, it
added a new specialty line of sauces to its portfolio for
HUL and expects this product line to sharply increase
business for the company in FY17-18.
The natural food industry is now a $120 billion
opportunity in the company’s biggest market, the US,
Segmental Share in Revenue in FY16-17
Consumer Business
31%
Food Service
69% Business
StockWatch.indd 7
and has been growing at a rate of 10% per annum
(pa) over the past seven years. The organic market
has been growing even faster, at 14%pa. Tasty Bite
products are all natural with a clean label, vegetarian
and non-GMO, which is a great positive for a market
veering towards organic food. Further, Indian and
Asian cuisines, with their robust flavours and spices,
are among the fastest growing international foods in
the US. As per the company’s annual report, nearly
half of ethnic food consumers say that they are willing
to spend more on authentic ethnic/international
foods. This is also a great sign for the company that
specialises in Asian flavours. The food service industry
in India has attractive dynamics and is poised for
sustained long-term growth. Food constitutes the
largest retail consumption category in India with a
contribution share of 43% in FY14-15. Growing at an
average annual rate of 12%-13%, food consumption
spend is expected to be more than twice its current
value by 2025.
Tasty Bite also made improvements to production
and utilities that resulted in lower wastage and higher
yields. While interest costs reduced from Rs2.4 crore
in FY15-16 to Rs1.6 crore in FY16-17, the total long-
term loans increased, from Rs20 crore in FY15-16
to Rs36 crore in FY16-17. This was on account of
the lower cost of capital availed from the company’s
new Japanese bankers (Mizuho Bank and The Bank
of Tokyo Mitsubishi). Working capital reduced from
Rs16.8 crore in FY15-16 to Rs13.6 crore in
FY16-17 on account of strong internal cash flows from
the business and efficient cash utilisation.
The company also undertook a series of capital
expenditure projects in FY16-17. It first added
capacity in the ready-to-eat manufacturing line. This
first phase of capex was completed in November
2016. Almost immediately, it embarked on the second 
Increasing Revenue
Rs Cr
90
80
70
60
50
40
Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17
53 | 8-21 Dec 2017 | MONEYLIFE
01-12-2017 11:18:28
 STOCK WATCH
 phase of capital expansion. This included a further
expansion of the ready-to-eat manufacturing capacity
(taking capacity up to 210,000 packs per day) and
the doubling of its sauce manufacturing line. The new
sauce line will allow it to manufacture basic sauces
using a hot-filled and preservative-free technique. This
will not only double the existing capacity but will also
provide a significant competitive advantage, given the
pull from customers and consumers for preservatives-
free products. It plans to add an incremental capacity
of 50,000 meals per day for the ready-to-eat segment,
to meet anticipated growth.
The promoter shareholding in the company is
very high, at 74.23%. The stock is also trading at a
high price-to-earnings ratio (P/E) of 68.6 at a price
of Rs6,607 per equity share. Investors expect a lot of
growth from Tasty Bite, given its proven execution
skills and large future opportunity. 
UPL
Fertile Growth
U PL Ltd operates in the global agrochemicals
industry. Sales growth for the quarter ending
September 2017 was slow, at 6% year-on-year (y-o-y),
due to a 2% decrease in
the price of its products,
but the growth in
volume, of 11%, helped.
Operating profit grew at a
healthy rate of 31% y-o-y,
while net profit grew at
43% y-o-y, though from
a very low base. Volume
growth could have been
even higher, but it was
impacted due to low
rainfall in southern India.
Rupee appreciation has
also affected realisation.
Agrochemicals industry is marked by economies
of scale and distribution, wide product suite and
proprietary research requirement. New products take
a long time to penetrate new markets which is why
a company that wants to grow fast, needs to go for
acquisitions. UPL has done a string of acquisitions
over the years to acquire respectable size. Companies
in this sector enjoy significant bargaining power over
customers and suppliers. As a result, the industry is
able to retain most of the value that it creates. UPL’s
MONEYLIFE | 8-21 Dec 2017 | 54
StockWatch.indd 8
is a story of long-term vision and execution. Started in
1969, UPL has acquired 25+ companies between 1994
and 2012 with the primary objective of establishing
a manufacturing, distribution and logistics network
worldwide. Since 2012, the company has focused on
product innovation and manufacturing efficiency. It
has increased its product suite in the past few years
and appears to have been successful in leveraging its
global distribution strength. It has gained competitive
advantage by being the lowest-cost manufacturer
in generics due to its scale and India’s advantage of
cheap labour and processes. Its ability to manufacture
active ingredients in India and final formulations near
the customer and established brands, like Vendozeb,
Super Wham, Lance Gold and Ulala, contribute to its
advantage over its peers.
As a result, sales have increased 150% to Rs17,124
crore in the past five years. Post-tax and operating
margins have improved marginally. However, its return
on invested capital has increased significantly, from
14.8% in 2013 to 23.2% in 2017. The company has
established higher financial integrity by capping its
gearing ratio at 0.45, reducing it from 1.16 in 2011. It
also tightened working capital management, reducing
from 146 days in 2012 to 91 days in 2017, in an
industry characterised by long receivables and high
inventory. Cash profits increased in line with sales—
from Rs1,021 crore to
Rs2,594 crore in the past
five years.
UPL increased its
distribution reach by
14% in India, between
2012 and 2015, and
international distribution
reach by 40% in the same
period. It has rationalised
its processes and, as a
result, manufacturing cost
as a percentage of total
revenue has declined by
more than 4% in the past five years. After rationalising
its product portfolio in 2012, it increased its portfolio
by almost 40% in the subsequent years. Also, it is
adding more and more solutions under its services to
emerge as a one-stop-shop. Also, the share of branded
products in its revenues is increasing gradually.
UPL expects to continue to increase its penetration,
particularly after merger with Advanta in 2016. Cost
savings due to economies of scale should slow down
because the company is trying new solutions and
products which come with a steep experience curve. 
01-12-2017 11:18:59
 STOCK WATCH
Segment Revenue
India
18%
20%
Europe
13% North America
32%
Latin America
17%
Rest of World
 Also, the pace of product introduction should remain
steady or even speed up. With patents worth $4.4
billion expiring in the next four years and growth in
global agrochemicals industry expected to pick up,
the company should find enough space to increase its
product suite. Added focus on branded and premium
products should help expand margins. The business
faces risks in the form of competition risk, product
portfolio risk and risks of commodity prices, foreign
exchange rates and heavy dependence on monsoon.
MARKET TREND
Certainty of the Recent
Past versus Probability of
the Future
Lreport about valuations in the US market. According
ast week, Goldman Sachs released an interesting
to Goldman, the longest bull market for balanced equity/
bond portfolios in over a century, boosted by a strong
growth without inflation, has pushed valuation to historic
levels. The average valuation percentile across stocks,
bonds and credit, is highest since 1900! “A 60/40
portfolio has not had a drawdown of more re than
10% since the great financial crisis,” wrote
te
Christian Mueller-Glissmann, a London-
based equity strategist of Goldman.
“It has seldom been the case that
all assets are expensive at the same time—historical
e—historical
examples include the Roaring ‘20s and Golden
olden ‘50s. While
in the near term, growth might stay strong and valuations
could pick up further, they should become a speed limit
for returns, in our view,” he wrote. Other commentators,
like Jeremy Grantham, have been making similar points
StockWatch.indd 9
Y-o-Y Sales Growth
21%
18%
15%
12%
9%
6%
3%
Sep-16 Dec-16 Mar-17 Jun-17 Sep-17
Even though UPL has reduced risk of monsoon by
distributing markets equally in five continents, major
events like El Nino continue to pose a threat.
UPL seems to be fairly valued at price-to-earnings
(P/E) multiple of 19x and market-capitalisation to sales
of 2.3x but, given the size of opportunity and past
track record, if sales keep growing steadily at a higher
rate and the rupee depreciates, the stock may continue
to do well over the long term. Investors may like to
buy the stock only at declines. —Anurag Sundarka 
too. As if to mock such predictions that
have been consistently off the mark, the
Dow Jones Industrial Average rose by
331 points on Thursday, 30th November,
the highest rise this year. Does it mean that
conclusions about the market being expensive are
meaningless?
There are multiple issues here. Commenting that
the market is expensive does not necessarily mean that
a top is near, a crash is coming and that you should sell
everything and get out. It only means that the probability
of future returns
retu is low, when the market is expensive
and risky, as it is now. How do we arrive
at that view? By looking at the past. The
most
m robust investment approach is to
find out what happened in the past and the
context
con thereof and formulate a strategy for
the future. To get a sense of what’s coming, it
is preferable
p to have a process rather than rely
on beliefs and hopes based on the certainty of the recent
past. Also, if you dismiss the market overvaluation as an
irrelevant factor, make sure you have your own robust
metric to know when to reduce risk.— Debashis Basu 
55 | 8-21 Dec 2017 | MONEYLIFE
01-12-2017 16:09:05

Queries
At Moneylife Foundation’s
Ask tax-related questions at moneylife.in/taxhelp. It’s free
Tax Benefits of Two Home
Loans
I have two houses in different cities
which are deemed to be let out.
Until FY16-17, I was getting a tax
benefit for both the houses under
Section 24 of the I-T Act. The
total interest amount for the two
houses minus the nominal rent was
considered non-taxable and was
deducted from my income to arrive
at the taxable income.
But, during the current year, I
have been told that there are some
major modifications in the house
property component and the new
rule says that, even if you have two
houses on home loan and both are
deemed to be let out, the maximum
amount that will be considered non-
taxable is Rs2 lakh.
Is this the correct
understanding? This is very harsh
as, all this while, an individual was
encouraged to buy a second home
with home loan and, now, all of a
sudden, the benefits are taken away
and the individual is pushed to
suffer. Please advise.
Nikhil Vadia’s Reply:
Your information is correct. The
maximum loss
under the head
‘income from
house property’
is restricted to
Rs2 lakh, from
this year onwards. Excess loss can
MONEYLIFE | 8-21 Dec 2017 | 56
Tax Queries.indd 2
Tax Helpline
be carried forward for the next
eight years for set-off against future
income from house property.
Overdraft & Tax Returns
I am a taxpayer and have now
taken an overdraft (OD) of Rs20
lakh from my bank. While filing
my tax returns the next time, do
I have to disclose how I used this
Rs20 lakh? Or can I just hide this
overdraft from income-tax (I-T)
department?
Ameet Patel’s Reply:
Nothing is hidden from the
government today. Rest assured
that the full details of all your bank
accounts are easily available to
the I-T department at a very short
notice.
The technical
reply to your
question would
depend on what
category of a
taxpayer you
are. If you are a businessman/
professional and if the overdraft is
part of your business/profession,
there is no question of the balance
in that OD account not being
shown in the income-tax return
(ITR), as it will appear in your
balance sheet.
In case you are not a
businessman/professional, you
may still need to show the liability
in your ITR if your total income
Supported By
exceeds Rs50 lakh and if the money
has been used to acquire an asset
which you need to disclose in the
ITR Form.
If you do not fall in any of these
categories, then, in any case, you
do not need to disclose the bank
account balance in the ITR Form.
But it is mandatory to disclose all
bank account numbers in the ITR
Form. So, there is really no getting
away from disclosures to the I-T
department.
Tax on EPF for Senior
Citizen
I am a senior citizen and retired
from a private company in 2016.
I would like to know whether the
interest earned on my employee's
provident fund (EPF) account is
taxable after my retirement. In an
article that I read, I remember that
interest up to 9.5% is not taxable.
Also, in a recent news item, it was
mentioned that interest on EPF
is not taxable for those above 58
years. I request your guidance in
this regard.
Subodh V Shah’s Reply:
The common understanding has
been that interest
EPF is exempt
from tax once
you have been
in service for a
period exceeding
five years.
However, we need to understand the
tax treatment of the interest earned
on EPF after retirement.
Recently, the Bangalore
Tribunal, in one case, has held
that any interest earned on EPF,
after retirement / termination of
employment, will be liable to tax.
So, in case you retired in 2016, in
my opinion, all the interest earned
thereafter on the EPF account
would be liable to income-tax. 
28-11-2017 19:40:53
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 CIVIC ISSUES PRASANNA S
Delhi High Court Judgement Clears Path for
Politically-connected Board Appointees
T
he Delhi High Court (DHC), recently, upheld the
appointment of Sambit Patra as an independent
director of the Oil & Natural Gas Corporation
(ONGC), a public sector energy enterprise. Mr Patra, a
surgeon by professional education and training, is a BJP
spokesperson and is a regular on television and other
media defending the government and the ruling party at the
Centre. His appointment was effected on 29th September
and was challenged in a public interest litigation (PIL) writ
petition by the organisation known as Energy Watchdog.
Independent directors, under the law, act as conscience-
keepers of the company’s board and are important actors
in holding high standards of corporate governance in
the company. When a ruling party appoints a person
who has been its media
face as an independent
director of a public
sector company, with
sitting fees and other
perks that are a part of
such an appointment, it
is inescapably opening
itself up to charges of
nepotism.
The legal challenge to
Mr Patra’s appointment
was laid under several
grounds—chief among
those were: a) that he lacked the experience and expertise
necessary in the domain relevant to the company, in this case
energy; b) that his close relationship with the ruling party
and, by implication, the government which is a promoter
in ONGC, disqualifies him from being an independent
director; and c) that his appointment was effectively a
distribution of State largesse to a person apparently close
the ruling powers and, therefore, unreasonable, legally
speaking.
The DHC upheld Mr Patra’s appointment on each of
the grounds, holding that there is nothing wrong with
the search committee having taken a view that he was a
person of eminence in the field of management—given
that he has been at the helm of a little-known NGO called
‘Swaraj,’ which supposedly works for the welfare of the
poor and downtrodden in Delhi; and that his experience as
a doctor and a surgeon since 2002 is not wholly irrelevant
to the domain of energy and oil as is required under the
Act (independent directors are expected to have relevant
MONEYLIFE | 8-21 Dec 2017 | 58
Prasanna - column.indd 2
domain expertise under the Companies Act, 2013, and
rules of the Securities and Exchange Board of India—
SEBI). In the judgement’s words, “ONGC would also be
concerned with the health of not only the large numbers
of its employees but also would require to address health
concerns of the public at large on account of the activities
(including explorations for oil, etc) which are undertaken
by it, i.e., the large social and environmental impact of its
core businesses which only a scientifically trained person
could best evaluate and understand.”
The DHC also went on to hold that Mr Patra’s
connection with the ruling party had nothing to do with his
connection with the government and that there is nothing
that constrains him from effectively performing a checks-
and-balances role
against the decisions and
actions of the promoter
of ONGC, the Central
government.
The DHCwent on to
hold that a mere sitting
fee and perks, even if it
may amount to as much
as Rs23lakh per annum,
as was shown by the
petitioners, cannot be
said to be ‘State largess’,
without recording any
special reasons why it cannot be considered so.
It is a settled law that appointments can be questioned,
legally speaking, only on eligibility and not suitability.
However, the DHC, with great respect, has erred in
construing the phrases ‘person of eminence in management’,
and ‘relevant domain’ as merely the absence of their clear
opposite. That approach is inappropriate in the case at
hand because public monies are involved, irrespective of
the quantum. The DHC missed a great opportunity to
advance the interests of public accountability and has
ended up giving cover for a brazenly nepotistic act, even
if not an unprecedented one. 
A Delhi-based lawyer & a constitutional
law enthusiast and commentator.
@prasanna_s
30-11-2017 21:21:25
 USEFUL APPS YAZDI TANTRA
NewOCR: Convert Document
from Any Format to Text
N ewOCR.com is a free online OCR (optical character
recognition) service which can analyse the text in any
uploaded image file and then convert the text from the
image into text that you can easily edit
on your computer. You may upload
your image file in JPG, TIFF, PDF or
even ZIP format. It has 106 recognition
languages; these include even Hindi,
Gujarati and Telugu. The output can
be downloaded in plain text (TXT) or Microsoft Word
(DOC) or Adobe Acrobat (PDF) formats. It supports low
resolution and poorly scanned pages too! It also recognises
mathematical equations and allows rotation of text while
converting. Multi-column support for newspaper and
magazine articles is also in-built. The best part is that the
conversion is free and there is no registration. Just head
to http://www.newocr.com, upload the file and convert
it into text. A very convenient tool for daily use online.
ShareTheMeal: Help the
Hungry Children
T here are 20 times as many Smartphone users as hungry
children. If every one of us gives just a little, we can
make this world a better place! This
simple app allows you to donate to
hungry children in war-torn, poor and
famine-struck areas. The cost of the
meal is just Rs30 per day per child.
You just have to tap on the area where
you would like to donate and the amount, give your
credit card number and the app takes care of the rest.
This app is part of the World Food Program (wfp.org) of
the United Nations (UN), which provides the food and
monitors the impact. More than 13.5 million meals are
already shared—what are you waiting for? More details
at https://sharethemeal.org
Android: https://goo.gl/24e4xI iOS: https://goo.gl/tb1gk7
Car Maintenance Reminder:
Maintain Cars Immaculately
C ar Maintenance Reminder is an all-in-one car
application that helps you to: (1) keep track of
mileage, fuel efficiency and cost; and (2) log services and
get maintenance reminder when a due date approaches.
Tantra - column.indd 1
For the fuel efficiency section, you may enter the petrol
filled and the mileage every time you fill petrol. And
you will get the fuel efficiency, frequency and multiple
graphs as reports for daily costs, driving distance, etc. For
the other maintenance services like oil change, air-filter
replacement, brake checking, PUC, etc,
etc, you may fill in the last date done
and the frequency required and the
app will pop up a reminder when these
things have to be done. The free version
allows you to enter data for just one
car and the paid version allows you to
enter data for multiple vehicles and also take back-ups,
etc. A very useful app for those who want to maintain
their cars immaculately! Android: https://goo.gl/KKpQCc
Medisafe: Take the Right
Medicine in the Right Dose
M edisafe is a medicines & pill reminder—if you are
on medication and have to juggle and take several
medicines daily, this app is for you. If you do not take
your medicines in the right dose and the right time, you
could be playing a risky game. Protect yourselves and your
loved ones by taking your medicines
regularly using this app. Millions use
Medisafe to stay safe with their medicines
and keep track of blood pressure,
glucose and other measurements. With
Medisafe, you can easily share the results
with doctors to track better outcomes, faster. You also
have the option to read about the side-effects, contra-
indications, etc, for the drugs you take, in clear intelligible
language. Medisafe is capable of managing drugs for
many complex health conditions, such as diabetes, heart
disease and cancer. It also acts as a perfect companion
for those who need a mobile organiser for vitamins,
blood pressure medication, glucose level tracking, period
tracking, and other health concerns. Medisafe is a MUST
HAVE app for anyone who takes medicines, temporarily
or permanently. Android: https://goo.gl/lWN2sz
iOS: https://goo.gl/9EevLL 
Yazdi Tantra is a chartered accountant
by training, computer consultant by
profession, entrepreneur-developer by
hobby and trainer in his leisure time.
He is currently the vice-chairman of
Zoroastrian Co-operative Bank Ltd
and has been running a medium-sized computer
company ON-LYNE for the past 24 years.
59 | 8-21 Dec 2017 | MONEYLIFE
01-12-2017 18:58:44
 DIETARY GUIDELINES:
AGAINST CONVENTIONAL
SOLUTION
A bunch of 26 doctors, many
of them PhDs as well as
MDs, led by Richard Feinman,
had written a paper in 2015 in
Nutritional Journal which is
interesting in its approach and
conclusion. It points out that the
conventional recommendations
of ways to improve health, and
especially control diabetes, are
simply not working. So, we need
to open our minds to solutions
that seem to be at the fringes, but
actually deliver better results. The
current dietary recommendations
are to eat a low-fat diet to reduce
obesity, cardiovascular risk, or
improve general health. This does
not seem to be improving health
or reducing diabetes. For instance,
rates of type-2 diabetes have
quadrupled and obesity has nearly
doubled in the US since 1980, the
very year that the dietary guidelines
were launched. Besides, there are
persistent reports of some serious
side-effects of commonly prescribed
diabetic medications. On the other
hand, low-carbohydrate diet in the
treatment of diabetes and metabolic
syndrome seems to be yielding
better results without significant
side-effects.
“All this points to the need for
a reappraisal of dietary guidelines.
The benefits of carbohydrate
restriction in diabetes are immediate
MONEYLIFE | 8-21 Dec 2017 | 60
Health.indd 2
MEDICAL DEVELOPMENTS FROM
AROUND THE WORLD
and well documented,” write the
authors. “While concerns about
the efficacy and safety are long
term and conjectural rather than
data driven. Dietary carbohydrate
restriction reliably reduces high
blood glucose, does not require
weight loss (although is still best
for weight loss), and leads to
the reduction or elimination of
medication. It has never shown
side effects comparable with
those seen in many drugs.” The
authors presented 12 points of
evidence supporting the use of
low-carbohydrate diets as the first
approach to treating type-2 diabetes
and as the most effective adjunct
to pharmacology in type-1. “They
represent the best-documented,
least controversial results… The 12
points are sufficiently compelling
that we feel that the burden of proof
rests with those who are opposed,”
conclude the authors.
BAN ON JUNK FOOD ADS
TILL 9PM: UK EXPERTS
A study by the Obesity Health
Alliance, which includes several
Royal Medical Colleges among its
membership and the University of
Liverpool, analysed TV commercials
shown before and during some of
the most popular TV programmes
on the maximum
number of children
watch TV. They
found that a
single episode
of a popular
programme watched by an average
of 140,000 children, showed as
many as of nine commercials of
high fat, sugar and salt (HFSS)
products, in just 30 minutes from
McDonalds, Domino’s pizza, Oreo
and others. Paediatrics and child
health experts have argued that junk
food advertising should be banned
within the family viewing hours of
6pm-9pm to combat the relentless
rise in child obesity.
TACTICS OF INFANT FOOD
MANUFACTURERS ARE LIKE
TOBACCO COMPANIES
T he nutrition chief of United
Nations Children’s Fund
(UNICEF) in Pakistan, Melanie
Galvin has likened infant formula
manufacturers to tobacco
companies, charging that they have
been using tactics similar to tobacco
firms in the developing countries,
after the West tightened the screws
on them. Pakistan has banned infant
formula marketing and samples in
all hospitals. It has also put stricter
rules on manufacturers that import
such products. Ms Galvin said that
Pakistan’s breastfeeding rates were
going down because doctors were
advising mothers to bottle-feed their
babies. 
30-11-2017 20:00:24
 TECHNOLOGY
Ensure Your Digital Privacy and Security
Days of privacy are over as the Big Brother has all means and tools to track you.
Yogesh Sapkale tells you how to secure your digital privacy…
R
enowned security expert Bruce Schneier, in his
book Data & Goliath says, “You are under
surveillance right now. Your cell phone provider
tracks your location and knows who is with you. Your
online and in-store purchasing patterns are recorded,
and reveal if you are unemployed, sick, or pregnant.
Your e-mails and texts expose your intimate and
casual friends. Google knows what you are thinking
because it saves your private searches. Facebook can
determine your sexual orientation without you ever
mentioning it… Corporations
use surveillance to manipulate
not only the news articles
and advertisements we each
see, but also the prices we
are offered. Governments use
surveillance to discriminate,
censor, chill free speech,
and put people in danger
worldwide. And both sides
share this information with
each other or, even worse,
lose it to cybercriminals in
huge data breaches,” he says.
Shocking, isn’t it?
We share our data (and
thus allow surveillance) with
private parties because they
promise us convenience. The
government, on the other hand, forces us to share
such data for providing some benefits or protection,
irrespective of whether the citizen is seeking it or not. All
this data-grabbing, however, turns the entire society into
a huge mass surveillance project with wide implications
for everyone. So how can anyone protect his/her own
privacy 24x7? For things like hacking into your service-
providers, or email or bank, and data-stockers like
government, there is nothing much you can do, except
may be pray. But you can avoid falling prey to a phishing
attack by not sharing your details over email. Here are
few tips to protect your digital privacy and security…
1. Update/Patch: Most cyberattack takes place after
finding some flaws or vulnerability in a software or
application (app). So, you need to continuously update
all software (including firmware) and apps that you use
on your PC/laptop or mobile device. Keep the updates
Technology.indd 1
on auto mode. Many a times, the software or app
developer releases a patch to fix some vulnerabilities. If
your device is on auto-update mode, such patches will be
automatically downloaded and installed. While there is
no guarantee that, after this, you will be protected, but
update will make sure that you are not the first victim.
2. Password: It is not possible to remember dozens
of unique, strong and robust passwords. Create good
quality passwords for different use through passphrase,
random words that are easy to remember. You can also
use one robust password with
13 and more characters as
the base and then add site
specifics. For example, if your
password is KatAppa1234$,
then, for SBI, you can change
it to KatAppa1234$Sbi or
SbiKatAppa1234$.
3. Use Multi-factor
Authentication: Cyber
criminals love people who
are lazy about protecting
themselves. This is where
MFA comes handy. Most
popular example of
MFA is how we use our
plastic card and personal
identification number (PIN)
for transactions. You can add
one security layer, like one-time passcode (OTP). Apart
from financial service-providers, several others like
Apple, Google, Microsoft, Amazon, Facebook and
Twitter also offer MFA for login.
4. Control App Permissions: Especially for a mobile
phone, make sure to know what data the app you had
just installed or are going to access. Not all apps require
access to your contact list and camera. Use privacy
guard, if available and define permissions for each app.
Apart from these, you need to use a good (not
costly) anti-virus, security plugins, like no-script and
ad-blockers. Other important factor is to check whether
all the websites where you transact have https or not.
Use of virtual private network (VPN), especially if
you are on a public network is another good idea to
safeguard your digital life. And, lastly, do not forget to
back up all your important files. 
61 | 8-21 Dec 2017 | MONEYLIFE
01-12-2017 16:16:54
 LEGALLY SPEAKING SD ISRANI
Be Wary of Freebies; the SBI Story
C
onsumer goods companies, often, offer a free
gift on specific products or services, to entice
customers. Many buyers fall for the bait, especially
if freebies are offered by well-known brands and companies.
However, if the freebie is an insurance cover that is suddenly
withdrawn, the abrupt withdrawal can have serious
consequences. This is what happened to late Surisetti
Venkata Rao of Vishakhapatnam, as is evident from a
case filed by his wife and two sons.
Venkata Rao had taken two housing loans from the
State Bank of India (SBI). The first for Rs8 lakh and the
second for Rs5.80 lakh adding up to Rs13.80 lakh. These
were repayable in equated monthly instalments (EMIs)
from his salary account. Clause 7 of the loan agreement
signed by Venkata Rao with the Bank on 24 August 2009
said that the loan was covered by free personal accident
insurance policy. In case of any
unfortunate incident leading
to the death of the borrower
(Venkata Rao), the loan taken
by him would be adjusted
against the insurance. On
26 October 2013, Venkata Rao
died due to injuries sustained
in an accident. Thereafter, his
wife wrote to the Bank asking
it to adjust the loan amount against the insurance policy.
She was in for a rude shock when the Bank informed
her that the accident policy was discontinued from 1 July
2013 and asked her to pay the outstanding loan amount
due from her husband. The Bank also displayed its muscle
by sending her a notice under Sarfaesi (Securitisation
and Reconstruction of Financial Assets and Enforcement
of Security Interest) Act. When the Bank tried to force
the wife and sons to pay, they filed a complaint with the
district consumer disputes redressal forum (district forum)
alleging deficiency of service and unfair trade practice on
the part of the Bank.
SBI’s contention was that the group personal accident
insurance (death only) was made available to home and
car loan customers as a complimentary service through
New India Assurance Company Limited from 01.07.2003
to 01.07.2012. The accident insurance policy was offered
and was valid for a period of one year only. Thereafter, it
was renewable every year and the Bank claimed that it had
the discretion to continue or to discontinue the policy at
any time. The receiver of the complimentary policy cannot
compel that the offer be continued forever.
The Bank claimed that it decided to discontinue the
MONEYLIFE | 8-21 Dec 2017 | 62
Legally Speaking.indd 2
complimentary group personal accident assurance cover
on the expiry of master policy on 01.07.2013 midnight.
It further said that it had advised its home and car loan
borrowers, who did not have any insurance cover for their
loan liabilities, that they may like to opt for policies being
offered by the SBI Life Insurance Company Ltd, or any
other insurance of their choice.
The district forum, after hearing both sides, decided
in favour of Venkata Rao’s wife and sons and directed
the Bank to adjust the policy amount against the loan
account and to pay Rs15,000 to the complainants towards
legal expenditure. Besides, the Bank was directed to serve
personal notices to all customers who had availed car and
home loans in case there was any modification or any
cancellation in the terms and conditions of the scheme,
to avoid future consequences and liabilities.
SBI filed an appeal before
the state commission, but all
its contentions were dismissed.
Typical of large entities, SBI
wasn’t willing to give up and
approached the National
Consumer Disputes Redressal
Commission (NCDRC)
seeking reversal of the state
commission’s order.
It was defeated, again, with the NCDRC agreeing
that the Bank, having offered a personal accident cover
as one of the conditions of the sanction letter, could not
have discontinued the policy suo motu without informing
the insured who had opted for it and was covered by the
insurance.
NCDRC observed that the Bank was bound to inform
the insured by a personal notice mentioning that the
insurance cover offered in the sanction letter was proposed
to be withdrawn and borrowers could make alternate
arrangements. It also needed to publish this in a newspaper.
It is unfortunate that a large bank like SBI should
indulge in the sharp practice of enticing borrowers with
free insurance and then quietly withdrawing it without
specific notice. This case should be an eye-opener for people
who should learn to take freebies with a pinch of salt. 
SD Israni is a corporate lawyer & Fellow
of ICSI. Email: sdisrani@gmail.com
28-11-2017 18:46:47
 BOOKS

Democracy’s XI: The Great Indian Cricket Story Manjrekar here but you will find many of your favourite
cricketers including Sachin Tendulkar, Mahendra Singh

Cricketing Lore Dhoni and Virat Kohli. You will read about the Nawab
of Pataudi and Bishen Singh Bedi; you will also read about
Sunil Gavaskar and Mohammad Azharuddin. Each profile

O
nce, when Indian test batsman VVS Laxman is detailed and has nice titles which are a throw back to
was asked about one of his great innings, he Rajdeep days as a print journalist.
remarked “Oh it was nothing much. I just went For instance, the chapter on Sunil Gavaskar is titled
out to the field and expressed myself.” Rajdeep Sardesai “Original Middle Class Hero”. The title of Sachin
may well say that about this book. A self-confessed failed Tendulkar’s chapter is “Boy Genius”. The one on
cricketer who could not rise beyond club cricket, despite Mohammed Azaruddin is “Destiny’s Child” and the title of
his great passion for the game, Rajdeep has found his Mahendra Singh Dhoni’s is “Small Town Revolutionary”.
mettle as a journalist and, now, as an author. Growing up These profiles are detailed and the author has extensively
in the 1970s, Rajdeep used to spend every weekend at the interviewed the cricketers and those around. They reminded
Brabourne Stadium watching the Mumbai cricket team me of the profiles from the New Yorker magazine. They
play Ranji Trophy matches. are wide ranging and extensive and Rajdeep’s love of the
This was a towering Mumbai game shines through in every profile. Rajdeep also seems to
team which won 14 Ranji have some sort of karmic connection with cricket because
Trophy titles in a row, some he was present for Sachin Tendulkar’s first innings for the
sort of world record. The Mumbai Ranji Trophy team and got his first by-line in
worthies who used to play The Times of India when he reported the story.
for Mumbai included Sunil Sachin Tendulkar came in when Mumbai were at a
Gavaskar, Ashok Mankad, precarious position and the batsmen at the non-striker’s
Ramnath Parkar, Padmakar end told him to be careful, lest they lose the match. Sachin’s
Shivalkar and Milind Rege. reaction was bindaas, which very much stays in your mind
Apart from the Dara Singh even when you finish the book and sums up the man and
bouts where the outcome his career, in one word. Of course, you might complain that
was foregone, Mumbai only two bowlers are included in Democracy’s X1 (Kapil
winning the Ranji was the Dev and Bishen Singh Bedi) and one of them is an all-
DEMOCRACY’S XI: THE only sure bet in town and rounder. I would say, in Rajdeep’s defence, that the chapter
GREAT INDIAN CRICKET that was before the days of on Bishen Singh Bedi includes all the four great spinners
STORY match-fixing! I should know Bedi, Chandrasekhar, Prasanna and Venkatraghavan and ,if
RAJDEEP SARDESAI because I used to be there there were a chapter on, let us say Anil Kumble, who would
Juggernaut too. you drop is not clear. But why is it called Democracy’s X1?
Pages367; Rs599 Rajdeep has carried his Rajdeep believes that the rise of the Indian cricket team
enthusiasm for the game of has run parallel to the evolution of India as a democracy.
cricket into his book and his pedigree, as Dilip Sardesai’s The most interesting profile, for me, was one of Sachin
son, has certainly helped his writing about cricket. This Tendulkar and one of the most poignant moments is when
book has portraits of eleven of India’s great test cricketers Virat Kohli goes out to bat in a Ranji Trophy game the
who changed their game; but actually it is a little more. day after his father’s death. That shows the determination
It is the story of Indian cricket after independence. You to succeed over all odds and win the game. I would give
may not find Vijay Merchant or Vijay Hazare or Vijay this book four stars. — Harsh Desai 

THE DHARMA OF BUSINESS and to some extent religion. Therefore, Smith wasn’t called an
economist. He was a moral philosopher. Exactly in the same
The Moral Girders of Commerce vein, the business laws of mediaeval India called Dharmashastra
acted as the moral rafters, beams and supports of commercial

A dam Smith’s classic treatise titled An Inquiry into Nature and

Causes of the Wealth of Nations, is seen as an economic text
that explained the theoretical foundations of capitalism. But in
those days, all knowledge was linked to philosophy and ethics
transactions. It is law mixed with ethics and virtue. This book,
part of a historical series on Indian businesses, explains what
Dharmashastra was all about and how it is still relevant for modern
business. A nice short introduction to the topic. 

63 | 8-21 Dec 2017 | MONEYLIFE

Book Review.indd 2 01-12-2017 16:18:43

 MONEY FACTS STOCKS

INDIAN MARKET TRENDS FUND FLOWS

The Sensex and the Nifty fell 1% each during the fortnight Foreigners: Foreign institutional investors were
ended 30th November. ML Large-cap Index and ML Small- net sellers of equities (Rs4,642.83 crore). They sold
cap Index rose 3% each, while ML Mega-cap Index ended shares worth Rs57,929.55 crore. 
flat. ML Mid-cap Index advanced 5%. 
100

Share Prices Index, June 2017=100 -230

130
-560
FII Net Investments
-890 (Rs Crore)
120

-1,220

110
-1,550
20 Nov-17 30 Nov-17

100 Indians: Domestic institutional investors were net

buyers of equities (Rs4,540.45 crore). They bought
shares worth Rs34,856.96 crore. 
90 1,250
Jun-17 Sep-17 Nov-17
DII Net Investments
910 (Rs Crore)
ML Large-cap ML Small-cap Nifty ML Micro-cap
ML Mid-cap ML Mega-cap Sensex
570

230
Index 17 Nov 30 Nov +/-
ML Micro-cap Index 94.60 100.88 7% -110
ML Mid-cap Index 118.29 123.62 5%
-450
ML Large-cap Index 112.39 115.79 3% 20 Nov-17 30 Nov-17
ML Small-cap Index 105.53 108.55 3%
ML Mega-cap Index 110.97 111.29 0% GLOBAL MARKET TRENDS
2,650
Nifty 10,283.60 10,226.55 -1%
S&P 500
Sensex 33,342.80 33,149.35 -1%
2,590
Mega-cap Gainers/Losers 17 Nov 30 Nov Change
2,530
Minda Industries 1053.00 1248.45 19%

L & T Finance Holdings 190.15 172.65 -9% 2,470

Large-cap Gainers/Losers 17 Nov 30 Nov Change

2,410
Jai Corp 118.45 186.3 57% Jun-17 Sep-17 Dec-17

Zuari Agro Chemicals 564.85 518.9 -8% Nikkei and NASDAQ Composite rose 1% each, while
Hang Seng ended flat. Shanghai Composite and
Mid-cap Gainers/Losers 17 Nov 30 Nov Change
Bovespa fell 2% each. S&P 500 advanced 3%. 
Seya Industries 502.6 762.6 52%
Index 17 Nov 30 Nov + / (-)
Steel Exchange India 119.7 83.4 -30%
S&P 500 2,578.85 2,647.58 3%
Small-cap Gainers/Losers 17 Nov 30 Nov Change
Nikkei 22,396.80 22,724.96 1%
High Ground Enterprise 8.26 14.22 72% NASDAQ Composite 6,782.79 6,873.97 1%

Suyog Telematics 396 330 -17% Hang Seng 29,199.04 29,177.35 0%

FTSE 7,380.68 7,326.67 -1%
Micro-cap Gainers/Losers 17 Nov 30 Nov Change
Taiwan Weighted 10,701.64 10,560.44 -1%
DS Kulkarni Developers 17.7 27.15 53% Shanghai Composite 3,382.91 3,317.19 -2%
Patspin India 41.5 30.45 -27% Bovespa 73,437.28 71,970.99 -2%

(All Prices in Rs) Korean Composite 2,533.99 2,476.37 -2%

MONEYLIFE | 8-21 Dec 2017 | 64

Money Fact.indd 2 01-12-2017 18:36:33

 MONEY FACTS STOCKS

What’s H T ML SECTORAL TRENDS


Stocks of consumer durable companies were in demand during the
fortnight. Value Industries, Mirc Electronics, Butterfly Gandhimathi, Safari
Shares of education companies,
paper & paper products companies
and consumer durable companies
Industries and Salora soared 49%, 47%, 33%, 30% and 29%, respectively.  advanced 8% each, while shares
of glass companies and media
Companies 17 Nov 30 Nov +/- companies rose 6% each. Stocks
of non-ferrous metals companies
ML Consumer Durable Index Value Industries 6.90 10.25 49%
declined 4%, while stocks of cement
Mirc Electronics 36.95 54.30 47%
140
companies fell 3%. 
Butterfly Gandhimathi 359.95 478 33%
130
Safari Industries 442.95 573.65 30%
ML Sectoral Trends
120 Salora International 45.50 58.55 29% Education 8% Trading -6%
BPL 66.40 79.65 20% Paper & Paper Products 8% Non-ferrous Metals -4%
110
Bajaj Electricals 400.70 469.45 17% Consumer Durables 8% Cement -3%

100 Acrysil 508.00 594.60 17% Glass 6% Airlines -3%

Whirlpool of India 1,348.15 1,557.65 16% Media 6% Odds -2%

90
IFB Industries 1,225.95 1,407.45 15%
Jun-17 Sep-17 Nov-17
All Prices in Rs
URBAN INFLATION


N T
Urban inflation rose to 3.81%
What’s in October 2017 from 3.44%
in September 2017. Combined
Stocks of non-ferrous metal companies were a mixed bag. Hindalco inflation for urban and rural areas
Industries, Ram Ratna Wires and Gravita India declined 7%, 5% and 4%, in October 2017 rose to 3.58%,
respectively. Arfin India and National Aluminium ended flat.  from 3.36% in September 2017.
Inflation for clothes and footwear
Companies 17 Nov 30 Nov +/- items in urban areas was 3.59% in
Hindalco Industries 258.85 240.45 -7% ML Non-ferrous Metal Index October 2017 compared to 3.37%
in September 2017. Inflation for
Ram Ratna Wires 185.55 175.40 -5% 140
household goods and services
Gravita India 159.85 153.25 -4%

Hindustan Zinc 310.95 299.65 -4% 130 Shooting Up?

Alicon Castalloy 593.65 577.80 -3%
4.00%
Hindustan Copper 96.95 95.00 -2% 120

Arfin India 379.50 377.85 0% 3.35%

National Aluminium 81.75 82.15 0% 110

2.70%
Deccan Gold Mines 38.20 38.55 1%
100
Arcotech 52.10 54.35 4% 2.05%
Jun-17 Sep-17 Nov-17
All Prices in Rs
1.40%

BULK DEALS Oct-16 Apr-17 Oct-17

Date Company Buyer Seller Rs Cr in urban areas was marginally

lower, at 3.05% in October 2017
24 Nov-17 Jai Balaji Industries Followel Engineering Jhunjhunwala Glass 0.82
compared to 3.06%, in September
23 Nov-17 International Combustion Prabha Mohta Ginni Finance Pvt 0.70 2017. Inflation for housing in
urban areas increased to 6.68%
30 Nov-17 TV Vision Ajinkya Mercantile Pvt Discord Exim Pvt 0.47
in October 2017 from 6.10% in
22- Nov-17 Universal Credit Securities Sunilkumar Bhikhabhai Nayi Vinod Vrajlal Nirmal 0.43 September 2017. In urban areas,
23 Nov-17 HK Trade International Jeel Manoj Gada Minor Dear Projects Pvt 0.35
inflation for personal-care and
effects was higher at 3.15% in
20 Nov-17 Athena Constructions Sushma Maheshwari Amonker Trading Pvt 0.20 October 2017 increasing from
30 Nov-17 Tirupati Industries (India) Sudeshkumar Saboo Vijay Lakhotia 0.13 2.64% in September 2017. 

65 | 8-21 Dec 2017 | MONEYLIFE

Money Fact.indd 3 01-12-2017 18:36:59

 PS
IndiGo Passengers Beware!
A ditya Ghosh, President of IndiGo
Airlines, has led the massive fire-
fighting effort that was required after
a video of its ground staff assaulting
and pinning a passenger to the
ground went viral. Unfortunately for
him, consumer complaints continue
to hit social media at a ggreater
velocity than his PR team can place
interviews in the media stories of
how the airline is re-training its staff
on handling customers. But here are a
few things to watch out for, the next
time you fly IndiGo, or,
probably, any of the
budget
airlines.
1. A WhatsApp message going
around suggests that IndiGo staffers
deliberately allow people standing in
check-in queues to miss flights (despite
requests for help) and offer to place
them on the next flight at an extremely
high rate. Since this almost happened
to one of our colleagues, we have no
reason to disbelieve it. This is scary
for students, or low-budget travellers,
who have got cheap fares by booking
well in advance. Please note that even
when you have a refundable ticket,
the actual refund would be just a few
hundred rupees.
2. A Mumbai activist, Achintya
Mukherjee, while travelling from
Jaipur to Mumbai with his wife,
took the precaution of weighing
their handbags at home to ensure
that hey were within the 14kg limit
MONEYLIFE | 8-21 Dec 2017 | 66
PS.indd 1
(it was 12kg). When weighed at the
counter, it showed 19kg and an excess
baggage charge was demanded. Mr
Mukherjee called in the supervisor.
He says, “After fiddling around with
the machine, the weight showed
correctly.” His advice to passengers is
to weighg their baggage
gg g at home before
departing and check in well in time, to
avoid being forced to pay extra at the
last minute. One needs to have enough
time for a complaint and verification!
3. Mr Mukherjee’s
wife (73) has
a back
problem and
issues with
her knee, so
they requested a
wheelchair almost 10 days
before the flight (6E 339)
even though the airline’s
website asks passengers to do
so 48 hours before the flight. He
was told that IndiGo has only four
wheelchairs and all of them were
booked 10 days before the scheduled
departure. Please note, that all new
airports involve long walks that
are hard for senior citizens. Despite
paying airport taxes, airport buggies
are hard to find even for elders. Isn’t
it strange that neither the airline nor
Airport Authority of India is under
any obligation to make arrangements
(even at an additional charge)?
4. Musicians and sports persons—
as evidenced by issues faced by
badminton star, PV Sindhu, and
Sarod maestro, Amjad Ali Khan—face
innumerable hardships, from paying
extra, to having their equipment
dumped carelessly. But, here, IndiGo
actually comes out a little better than
the others. Along with Jet Airways
and Air India, it does not charge extra
(anymore) for musical instruments and
does not send them on the luggage
belt. — Sucheta Dalal 
How RTI Can
Help
A little effort, some perseverance
and, often, just a Google search
is all that it takes to resolve issues
niggling issues that make our everyday
lives hell. Whether it is a provident
fund that hasn’t been credited or a tax
refund that has gone into limbo, there
are solutions that have resulted from
someone or the other battling it out.
All that is needed is to find out what
to do.
So, on 17th November, a consultant
tweeted seeking help on how to get
the provident fund office to credit
his money that was remitted by
his previous employer. Typical of a
government office, calls, emails, the
help desk and the grievance system
yielded no results. We suggested that
he try filing a Right to Information (RTI)
application. On 27th November, the
user who goes by the twitter handle
‘ekselens (@charashpunjabi) had this
to report: “@rtiindia is amazing...
my PF transfer was stuck for 100+
days with PF office not responding
to repeated mails, phone call and
letters. Raised an RTI application. Got
transferred in 7 days flat. Thanks @
suchetadalal for suggesting this way
out.” Incidentally, as activist Rajesh
Gada has pointed out at Moneylife
Foundation seminars, this works well
for tax-related queries too. In fact, the
query leads to action. So don’t hesitate
to use it. — SD 
01-12-2017 11:10:53
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 REGISTERED WITH THE RNI UNDER NO. MAHENG/2006/16653. Postal Registration No: MCW/184/2015-2017. POSTED AT PATRIKA
CHANNEL SORTING OFFICE, MUMBAI 400001. Date of Publishing 1 December 2017. Date of Posting Alternate Tuesday & Wednesday.

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