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OUT OF REACH
FOR BUYERS
P14
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Women
know your
,
inheritance
rights
Whether you are a wife,
daughter or mother, find out
what you are entitled to and
how you can claim it. P2

When failures Why you should How life Keep an eye on

are indicators lock into high insurance policies the net profit
of success annuity rates are changing margins
P7 P8 P10 P16
 cover story
02 The Economic Times Wealth July 29-August 4, 2019
WOMEN,
KNOW YOUR
INHERITANCE
RIGHTS
Whether you are a wife,
if
daughter or mother, find out
what you are entitled to and
how you can claim it.
By Riju Mehta
I
t has never been a good time to be a
woman. Shackled at home, deprived
of rights in society, and subjected to
gender bias at the workplace, women
have borne the brunt of being the
weaker sex all through history. Though the
skew in rights and treatment hasn’t quite
corrected itself, women are possibly in a
better place today than ever before. This
is because rising awareness, availability
of global forums and social media to voice
their anguish and angst, changes in laws
to empower them, and proactive govern-
ments to implement gender neutral laws
have all converged to give women a hearing
and heft.
Still, there are many areas that can do
with a nudge to empower them, one being
the succession and inheritance laws. For
years, women in India have been discrimi-
nated against and denied the right to ances-
tral property due to various reasons.
One, there is no uniformity in inherit-
ance laws, with various religious commu-
nities governed by their own personal laws
and different state tribals by their custom-
ary laws. Most of these laws discouraged
passing on property, agricultural or oth-
erwise, to women for fear of fragmentation
of land holding or losing it once the woman
got married. “The basic framework for
inheritance differs on the basis of religion
in India and not on the basis of the nature of Strangely enough, though, laws have a significant rise in the number of women
asset. While Hindu families and other iden- not always been the motivating factor for claiming their inheritance.
tified religions have their own inheritance women asserting their inheritance rights. Ironically, however, the inheritance
laws, inheritance rights of the remain- According to a report by the Thomson laws that are supposed to empower women
ing groups are governed by the Indian Reuters Foundation in March this year, have also had a contrarian impact, accord-
Succession Act, 1925,” says Soumya Rajan, shooting land prices in Haryana have seen ing to a 2018 study conducted by King’s
MD & CEO, Waterfield Advisors.
Second, there is low awareness and lit-
eracy among women about their own rights
and, understandably, they have shown lit- My father had a self-acquired property and
tle inclination to contest in courts. Thirdly,
died intestate in 2000, while my mother died
in 2017. I am the only daughter and have a
strong patriarchal traditions have trans-
younger brother. My brother claims I have no
lated into fear of violence and threat of vio-
S
ER‛
share in the property as I got married before
lation by their male relatives, preventing
D 2005. Do I have a right to the property?
REAUERY
women from fighting for their inheritance
rights. In fact, in several northern and Sukanya Kumar, Bhopal
western states, women give up their claim Q
over ancestral property due to the custom
of ‘haq tyag’ or voluntary renunciation of
rights. This is justified on the grounds that
as the father pays dowry and finances the
daughter’s wedding, only sons should get
the family property.
“Till as late as the formulation of the
Hindu Succession Act, 1956, the law was
As it was the father’s self-acquired property, the
blatantly biased against women,” says daughter, being a Class I legal heir, will get an equal
Rohan Mahajan, Founder & CEO, LawRato.
com. “It was only after the amendment in
share along with the son. Marriage will not make
the Hindu Succession Act in 2005, whereby any difference to the daughter’s share. You can claim
equal rights were awarded to daughters in
their fathers’ ancestral property, that it be- your share by filing a suit for partition.
came more balanced,” says Raj Lakhotia,
Founder & Director, Dilsewill.com, an on- All queries have been answered by Rajesh Mahindru, Advocate, Delhi High Court
line will-maker.

Which Act applies to whom?
Hindu Succession Act, 1956
Laws of succession apply to Hindus,
Sikhs, Jains and Buddhists for the non-
testamentary or intestate succession and
inheritance.
Indian Succession Act, 1925
Applicable to Parsis for intestate
succession, specifically under Sections
50 to 56.
Indian Succession Act, 1925
Laws of succession applicable to
Christians and Jews, specifically under
Sections 31 to 49.
Muslim Personal Law (Shariat)
Application Act, 1937
Laws of succession governing Muslims
for non-testamentary succession. Where
a Muslim has died with a will,
the issue is governed
by the Indian Succession Act, 1925,
where a will relates to immovable
property within the states of West
Bengal, and that of Madras and
Mumbai jurisdiction.
Special Marriage Act, 1954
Laws of succession in case of inter-
faith marriages.
GETTYIMAGES
cover story
The Economic Times Wealth July 29-August 4, 2019 03
College London, New York University and
the University of Essex. The report states
that awarding inheritance rights to women
between 1970 and 1990 led to increased
female foeticide and higher female infant
mortality rates, a finding supported by the Till as late as the
Economic Survey 2017-18. This is because
some people consider girls to be a liability
formulation of the
since the inherited property falls into the Hindu Succession
hands of her in-laws. There is also a big
incentive to reward a son with inheritance,
Act, 1956, the
since he works on the land and creates succession law was
wealth, while looking after the parents in
their old age. blatantly biased
Despite such discouraging develop-
ments, gender neutral inheritance laws are
against women.
the need of the hour. What will help power
these is the increase in awareness among
women and quick implementation of laws.
To help with the former, we list the inherit-
ance and succession rights of women, be
it a wife, daughter, mother or sister for the ROHAN MAHAJAN
main religious groups in India. FOUNDER & CEO,
LAWRATO.COM
WHAT ARE YOUR
INHERITANCE RIGHTS?
Hindus, along with Buddhists, Jains and
HINDUS Sikhs. This is applicable to both women
and men. The Act makes no distinction
The Hindu Succession Act, 1956, governs between movable and immovable prop-
the succession and inheritance laws for erty. It only applies to intestate succession
 cover story
04 The Economic Times Wealth July 29-August 4, 2019

Who has the right over a woman’s I am the karta of an HUF account, which has
mutual funds and bank deposits. I have a wife
property after she dies? and a daughter, who is married. Can my wife or
daughter continue with my HUF account using it
S
ER‛
Here’s how the property of a Hindu woman devolves if she dies without a will. after I die? Should I continue or dissolve the HUF

D while I am alive?

HINDU WOMAN REAUERY V.K. Sharma, Pune

If she is married
A Sections 14, 15 and 16 of the Hindu
Succession Act, 1956, govern the
manner in which the property of a
married woman is passed on to heirs.
Section 14 describes what constitutes a
woman’s property—both movable and
immovable, owned and acquired by her.
It does not distinguish between inherited
and self-acquired property. It includes all
property obtained through ‘inheritance
or devise, or at a partition, or in lieu of
Section 15, sub-section 1
Heirs of the
Explains the devolution of
the woman’s property as
per the following priority:
First preference to sons
and daughters, including
children of any pre-
deceased son or daughter,
and the husband
Section 15, sub-section 2
This explains the distribution of
property depending on whether
she has inherited it from her
parents, or husband, or in-laws.
Any property inherited by a Hindu
woman from her father or mother
devolves, in the absence of any son or
daughter of the deceased (including kids
maintenance or arrears of maintenance, or
by gift from any person, whether a relative
or not, before, at or after her marriage, or
by her own skill or exertion, or by purchase
or by prescription, or in any other manner,
and also any such property held by her as
streedhana.’
Father and
husband
mother
Heirs of
the father
Heirs of the
mother
of predeceased son or daughter), not
upon the heirs referred to in sub-section
(1), but upon the father’s heirs.
Any property inherited by a Hindu
woman from her husband or father-in-
law devolves, in the absence of any son
or daughter of the deceased (including
kids of predeceased son or daughter) not
upon the heirs referred to in sub-section
(1) in the order specified, but upon the
heirs of the husband.
Q
After the 2005 amendment in the Hindu Succession
Act, 1956, your daughter is a coparcener in the HUF.
So, after you, she can claim the HUF account. You can
safeguard their interests by informing the bank about
HUF members and making your daughter a nominee.
(where there is no will) and to anyone who assets whether these are earned, inherited
converts to Hinduism. It has no application or gifted. She is also entitled to mainte-
in case of testamentary succession (where nance, support and shelter from her hus-
there is a will). band, and if they stay in a joint family, then
“The property owned by a person can from the joint family.
be classified only as ancestral or self- If the couple is divorced, all issues
acquired. Ancestral property is one that related to maintenance and permanent
is inherited up to four generations of male alimony are ordinarily decided at the time
lineage without any division, and the right of divorce. It leads to total severance with
to share in it is accrued by birth,” says husband and the wife does not have any
Rajesh Narain Gupta, Managing Partner, right in his estate if he dies without a will.
SNG & Partners, Advocates & Solicitors. “If during the lifetime of the first wife,
On the other hand, self-acquired prop- the husband remarries without a divorce,
erty is the one that has been purchased the second marriage will be considered
by the person from his own resources or void. The second wife will not inherit
through any property acquired from his anything and the rights of the first wife
share in an ancestral property. “For a will not be affected. However, the children
self-acquired property, the Hindu father from second marriage will get a share
continues to enjoy unfettered discretion to along with other legal heirs,” says Rajesh
will it to anyone he wishes. This can allow Mahindru, Advocate, Delhi High Court.
him to discriminate against women with In case of an inter-faith marriage, the
impunity,” says Lakhotia. wife is entitled to inheritance as per the

If she is not married

When a man dies without a will, it de- personal laws applicable to the religion of

B Devolution is still governed by Sec-

volves to his heirs according to four catego-
ries—Class I, Class II, Agnates (if two peo-
her husband. “So, if a Hindu woman mar-
ries a Muslim man without converting to
tion 15, with no distinction between ple are related by blood or adoption wholly
through males) and Cognates (who are
married and unmarried woman, and
related to the intestate by blood or adoption
follows the same priority. but not wholly through males)—with first
preference to Class I heirs. In the absence
There is no
MUSLIM WOMAN of any Class I heirs, the property devolves
upon Class II heirs. If a man leaves no Class
inheritance or gift
Under Muslim Law, there is no distinction between self- I or Class II heirs, the property devolves to
acquired or ancestral property. Legal heirs are divided agnates, and then to cognates. tax if the property
into two categories: sharers and residuary. Sharers get Here’s how the various women in a man’s
their share first and residuary get what is left. If a Muslim life inherit his property if he dies intestate. is inherited from
woman inherits property from any relation (husband,
son, father, mother), she becomes the absolute owner of a relative or
Wives
her share and can dispose it. If a Muslim woman wants to
make a will, she cannot give away more than one-third A wife is entitled to an equal share of her acquired through
share of her property, and if her husband is the only heir,
she can give two-thirds of the property by will.
husband’s properties like other surviving,
entitled heirs. If there are no other sharers,
a will.
the wife has full right to inherit the entire

OTHER RELIGIONS property of her deceased husband.

“According to Section 10 of the Hindu
Succession Act, the distribution of prop-
The distribution of women’s inheritance, other than those erty takes place among all heirs, including
who are Hindus, Buddhists, Sikhs, Jains and Muslims, is RAJ LAKHOTIA
governed by the Indian Succession Act, 1925. The blood the deceased’s widow,” says Mahajan.
FOUNDER DIRECTOR,
relatives of a woman inherit even in the presence of A married Hindu woman also has exclu- DILSEWILL.COM
husband and husband’s relatives. sive rights over her individual property.
She is the sole owner and manager of her
 cover story
The Economic Times Wealth July 29-August 4, 2019 05

Islam beforehand, the marriage would nei-

ther be ‘regular’ nor ‘valid’, under the exist-
ing laws. While she will be entitled to dower
(mehr), she cannot inherit her husband’s
Take these steps if your father or husband dies...
property,” says Gupta. For women to safeguard their inheritance, here are the things they should take care of on a priority basis.
If the husband is a Christian, typically, the
wife’s religion does not prevent her from in-
heriting. If the husband has left behind both In case of mutual In case of real
a widow and lineal descendants, she will get agreement among estate, have the
one-third the share in his estate, while two-
thirds will go to the latter. If there are no lin-
STEP 1 family members, a
will is the best way to STEP 3 property transferred
in your name at STEP 5
pass on assets. While the sub-registrar’s
eal descendants, but other kindred are alive, nominations help in
Get multiple copies office. Here, you
one-half of the estate passes to the widow and transferring movable If there is no will will need the will Inform the banks
of death certificate so that no one can
the rest to the kindred. assets like bank or nominee, in (with probate)
and have them withdraw the money
deposits or insurance case of movable or a succession
attested, if needed. from accounts and
Daughters This is because it is
policies, a will takes
legal precedence
property, get certificate. Without
also file a petition for
required at all the a succession a will, you may also
“To end discrimination against women, succession certificate
over a nomination. certificate. This need an affidavit
changes in the Hindu Succession Act, 1956, financial institutions (as mentioned
If there is a discord, is a must if there with a no-objection
were made on 9 September 2005 through the for transferring earlier) to claim your
a will is the best is neither a will certificate from
the assets or share in the account
Hindu Succession (Amendment) Act, 2005, option, especially in nor a nominee, or other legal heirs. The
investments, making balance. In case of
wherein Section 6 of the Act was amended,” case of self-acquired both the parents next step is mutation
a claim, or selling any apprehension,
says Mahajan. property. Get a pass away without of property, which
the deceased’s also file an injunction
probate, if required, a will. In case means transferring
This means that now a daughter has an assets. It is issued by suit to prevent
as it’s needed in of immovable the title in land
equal right to ancestral property as a son the zonal office of other legal heirs
some states. property, the revenue records.
and her share in it accrues by birth itself. the local municipal from denying you
body. For multiple property is
Before 2005, only sons had a share in such divided as per the your share in the

2 4
copies, you can accounts, or other
property. So, by law, a father cannot will simply download succession laws
STEP among all the STEP properties of your
such property to anyone he wants to, or de- these from the
legal heirs. father or husband.
prive a daughter of her share in it. municipal website.
If the father dies intestate, that is, without
leaving a will, all legal heirs have an equal
right to the property. The Class I heirs have
 cover story
06 The Economic Times Wealth July 29-August 4, 2019

the first right and these include the

widow, daughters and sons, among
others. Each heir is entitled to one part I am a Hindu woman, who married a
of the property, which means that as Muslim man and changed my religion. My If during the lifetime
S
ER‛
a daughter you have a right to a share parents disowned me. Can I still stake a claim
of the first wife, the
D
in your father’s property. “A share of to my parents’ self-acquired property?
a predeceased daughter, which she A
RE UERY Saima Khan, Delhi husband remarries,
would have got had she been alive at
the time of partition, shall be allot- Q the rights of the
ted to her surviving children,” says
Lakhotia.
first wife will not be
Before 2005, the Hindu Succession affected. The second
Act considered daughters only as
members of the Hindu Undivided
wife will not inherit
Family (HUF), not coparceners. The anything.
latter are the lineal descendants of a There is no legal concept of disowning a child, but
common ancestor, with the first four
generations having a birthright to parents can deprive a child of his share in their self-
ancestral or self-acquired property.
However, once the daughter was mar-
acquired property through a will. Marrying a person
ried, she was no longer considered of another religion or converting does not deprive you RAJESH MAHINDRU
ADVOCATE,
a member of the HUF. After the
amendment, the daughter has been of your rights. You can claim a share in their property. DELHI HIGH COURT

recognised as a corparcener and her

marital status makes no difference to
her right.
Also, a daughter will have the same “In February 2018, the Supreme Court right of residence in her father’s house if there is more than one daughter, they collec-
rights as a son to the father’s property, held that a daughter, living or dead, on the she is deserted, divorced or widowed,” says tively receive two-thirds of the inheritance.
be it ancestral or self-acquired, irre- date of amendment will be entitled to the Mahajan.
spective of her date of birth. It does not share in father’s property. This implied that In the case of a self-acquired property, he Mothers
matter if she was born before or after even if the daughter was not alive on the date has the right to gift the property or will it to A mother is entitled to receive one-third
9 September 2005. On the other hand, of amendment, her children could claim par- anyone he wants, and a daughter will not be share of her deceased son’s property if the
the father should have been alive on tition,” says Gupta. able to raise an objection. latter dies without any children, but will get
9 September 2005 for the daughter to In April 2018, in the case of Mangalaam vs a one-sixth share of a deceased son having
stake a claim over his property. If he T.B.Raju, the Supreme Court held that the Mothers & sisters children.
had died before 2005, she will have no living daughters of living coparceners would Since a mother falls under the Class I heir
right over the ancestral property, and
self-acquired property will be distrib-
be entitled to claim a share in the ancestral
property, adds Gupta.
category, she is entitled to receive an equal
share of property of her predeceased son like
CHRISTIANS
uted as per the father’s will. “A married Hindu daughter also has a other surviving entitled sharers. Besides, a Christians are governed by the Indian
widowed mother is entitled to maintenance Succession Act, 1925, specifically by
from her children who are not dependants. Sections 31-49 of this Act. Under this, the
The sister, after a brother’s death, being a heirs inherit equally, irrespective of the
Class II legal heir would inherit along with gender.
Gender bias in others as per entry II only if there is no Class
I legal heir and the father of the deceased has Wives
succession laws also expired. If the husband leaves behind both a widow
and lineal descendants, she will get one-
Here are instances where women’s
rights are affected due to a clear MUSLIMS third the share of his property, while the
remaining two-thirds will go to the descend-
skew in favour of men. These laws
need an immediate overhaul. In case of Muslims, inheritance laws are ants. If there are no lineal descendants, but
governed by personal law. There are four other relatives are alive, one-half of the prop-
sources of Islamic law governing this area— erty will go to the widow and the rest to the
the Quran, the Sunna, the Ijma and the Qiya. kindred. If there are no relatives, the entire
When a man dies, both males and females property will go to the wife.
become legal heirs, but the share of a female A Christian man can legally marry a sec-
heir is typically half of that of male heirs. ond time only after the death of the first wife
While two-thirds share of the property de- or after legally divorcing her. If he has a sec-
Woman’s Agricultural Tribal Muslim volves equally among legal heirs, one-third ond wife even as his first wife is alive or not
property land women women can be bequeathed as per his own wish. divorced, the second wife or children will
have no right over his property. However, the
As per Sections In some agrarian Customary laws The share of Wives children of a legally divorced wife have an
15 & 16 of the states, women of tribals are inheritance of a A wife without any children is entitled to equal share over their father’s property as
Hindu Succession don’t inherit mostly patriarchal, woman is half receive one-fourth the share of property of that of the second wife and her children.
Act, 1956, if agricultural land divesting women that of a man.
to avoid frag- of their inheritance Since upon mar- her deceased husband, but those with chil-
a woman dies
intestate, her mentation of land rights. The riage, a woman dren are entitled to one-eighth the share of Daughters
self-acquired holding. Schedule Himachal Pradesh receives mehr and the husband’s property. If there is more than A daughter has an equal right as her brother
property goes to IX of the Indian High Court ruling maintenance from one wife, the share may diminish. In case of to the father’s property. She also has full
husband’s heirs, Constitution has in 2015 and the husband, as well divorce, her parental family has to provide right over her personal property upon at-
not her parents. the Zamindari Bombay High as inheritance,
maintenance after the iddat period (about taining majority.
In case of a man, Abolition and Court ruling in while a man only
Land Reforms 2019 grant women has the inherited three months).
the property is
inherited by his Acts of various rights as per the property, it is gen- Mothers
relatives, not the states that govern Hindu Succession erally considered Daughters “If a person dies without a will and has left
woman’s heirs. agricultural land Act, 1956, but that the woman “A son always takes double the share of no lineal descendants, then after deduct-
This is a clear holdings, and the tribal women should have a
lesser share in a daughter in the property of a deceased ing his widow’s share, the mother will be
bias, wherein her the government’s in many states
stance disfavours like Jharkhand the inherited father. However, the daughter is the abso- entitled to receive an equal share as other
property goes to
husband’s heirs. women. continue to suffer. property. lute owner of the inherited property,” says surviving entitled sharers,” says Lakhotia.
Lakhotia. In the absence of a son, the daugh- These sharers could be the brother, sister,
ter gets half the share of the inheritance. If or the widow of such sibling, or the children

of any predeceased siblings.
HOW IS YOUR
INHERITANCE TAXED?
In India, inheritance tax was abolished in
S
ER‛
1985. “There is no inheritance or gift tax if
D
REAUERY
the property is inherited from a relative or
is acquired through a will. However, on sale
of property that has been inherited, capital Q a legal notice to the party denying her
gains tax is applicable,” says Lakhotia.
An inherited property, either movable or
immovable, is a transfer of an account with-
out any consideration in return and, hence,
it is considered a gift for taxation purposes.
However, the Income Tax Act, 1961, excludes
transfer of property through will or inherit-
ance from the purview of gift tax.
Since the father purchased the property after
selling the ancestral property, and expired after the
Tax on income from property
“Once the property is inherited, any source
amendment in the Hindu Succession Act, you are
of income, such as rent or interest, is trans- now a coparcener. Hence, you have an equal share
ferred to the new owner. Thus, when the heir
receives any such income from the inherited in the property. You can enforce the same by filing a
property, he must declare it as a part of his
income and pay tax,” says Mahajan.
suit for partition.
Tax on sale of property
Tax is levied on capital gains on the sale of the period for which it was held by the previ-
inherited property. This gain is based on the ous owners.
period for which the property is held by the If the holding period is less than 24
owner. If the inherited property has been months, the actual cost of acquisition and
held for more than 24 months, it is treated as any cost of improvement are deducted and
a long-term gain. This period also includes the balance is treated as a short-term gain
Why failures indicate success
When a crisis hits it becomes apparent which investment is good or bad.
T
here’s a really trite saying that
‘when the going gets tough, the
tough get going.’ However, no mat-
DHIRENDR A KUMAR
ter how cliched this sounds, the
CEO, VALUE RESE ARCH
fact is that it’s a cliche because it’s
money
true. While this saying is generally trotted
out to inspire students and sportspersons
mysteries and so on, it’s actually of great practical
use for investors. Whether it’s investment
strategies, or stocks, or mutual funds, or
investment managers, you cannot evaluate
anything effectively unless there’s a crisis.
When the expected is happening, everyone
Crises are not does well. Most strategies appear to be good.
just tests, they are Most companies look like well-run outfits.
Only when events deviate from the script
a mechanism of
and a crisis hits, or multiple crises hit, that it
evolutionary selection.
becomes clear what’s good and what isn’t.
When the dud From this observation, follows a conclu-
businesses fall by the sion that may be surprising to some inves-
wayside, it clears the tors but makes perfect sense. Investors
way for better ones. should welcome problems and crises in
Resources get freed companies and sectors that they are in-
vested in. Take an obvious example from
up, and general quality
Indian business—that of airlines. At one
improves.
time, fuel was relatively cheap and so was
money. Competition was modest and no one
was overly interested in cut-throat pricing.
Customers were used to delays and ineffi-
ciencies because no domestic airline was all
that much better than any other. The base
My father bought a house after selling the
ancestral property. My father died in 2011 and
my brother refuses to give me a share in the
property. Can I stake a claim to my share in this
property?
Vinita Sarin, Chandigarh
and taxed as per the tax slab applicable to the
owner or transferer.
If the combined holding period exceeds
24 months, then the transferer has the right
to deduct the cost of acquiring and improve-
ment, while adding the rate of inflation to
standard was set by Air India and Indian
Airlines and if an airline was somewhat
better than the public sector outfits, then
customers were happy and actually grateful
that they didn’t have a terrible experience.
So let us imagine for a moment that noth-
ing much ever changed from the above
situation. In that case, as investors, you
may never have discovered that the IndiGo
management was vastly more competent
than the Jet Airways management. Maybe
IndiGo would have done a little better some-
times, or maybe not. Basically Naresh Goyal
would have appeared to be about as good an
airline entrepreneur as Rahul Bhatia and
Rakesh Gangwal. As we now know, that’s far
from the truth, but the point is that we know
this only because in terms of regulations,
cost and competition, the going got tougher
in the airline business. Of course, IndiGo is
now facing an internal crisis and in a way we
should welcome that because that’s yet an-
other test whose outcome will tell us whether
the airline will live up to its true potential.
Airlines are just an example. The same is
true for virtually every sector facing a crisis
in India. Actually, this idea of crisis as a test
for quality runs much wider. Crises are not
just a test, they are a mechanism of evolu-
tionary selection. When the dud businesses
fall by the wayside, it clears the way for bet-
cover story
The Economic Times Wealth July 29-August 4, 2019 07
cost for the holding period. Then the
tax is levied as per the tax rate applica-
ble to the owner or the transferer.
WHAT TO DO IF YOUR
RIGHTS ARE DENIED?
If a woman does not get her due share
in the ancestral property, she can send
the right. If she is still restrained from
seeking her claim, she can file a suit
for partition in a civil court claiming
her share.
She can also seek partition of the
properties occupied by other legal
heirs. “If physical partition of proper-
ties is not possible, the court can auc-
tion the properties to give her share to
the woman,” says Mahindru.
“In order to ensure that the property
is not sold during the pendency of the
suit, she can also seek an injunction
from the court,” says Mahajan. If the
property has been sold without her
consent, she can add the buyer as a par-
ty in the suit if she has not instituted
a suit yet, or can request the court to
add the buyer as a party if the suit has
been filed.
Please send your feedback to
etwealth@timesgroup.com
ter ones. Resources get freed up, and general
quality improves. This is the reason why
one of the most important reforms that have
taken place in India is the bankruptcy law
and related rules. Pretending that dead busi-
nesses are actually okay is one of the worst
things to do and could be the most damaging
legacy of the old Indian economy.
In recent days, there has been a spate of
lament on social media about how some
stocks have collapsed to a 50th or even less
than what they once were. I think it started
with some research outfit tweeting such a
list and then a chorus of investors joined in,
taking this as proof that there was some-
thing wrong with the stock markets. I would
argue the opposite in most cases. A book that
I read recently pointed out that globally, the
industry with the highest mortality rate of
businesses was infotech, and yet that’s the
industry that has had some of the biggest
successes and has transformed our world.
Is there a paradox here? I don’t think so.
Computers and software have developed so
magically precisely because failures are
ruthlessly and rapidly weeded out. That
failures should fail quickly and obviously is
a great feature of any business environment
and investors should look out for failures
because they are much more valuable indica-
tors than successes.
 insurance
08 The Economic Times Wealth July 29-August 4, 2019

Seven ways how life insurance

policies are set to change
The regulator has announced new rules for life insurance policies. Find out how this will affect buyers.

by Preeti Kulkarni policy approaches maturity. Despite the

L
rise in guaranteed surrender value, howev-
ife insurance products are under-
going major changes, and mostly Regulations that mostly er, exiting traditional non-linked products
remains an expensive and tedious affair.
to the benefit of policyholders.
The Insurance Regulatory and
benefit policyholders Flexibility to reduce premium
Development Authority of India “The regulations
(Irdai) recently released the final product EXISTING RULES NEW RULES also provide poli-
regulations covering term, endowment, cyholders the
Ulips and pension plans. Minimum 10 times for Minimum seven times flexibility to re-
Life cover in Ulips duce their premi-
those under 45 for those under 45
Higher withdrawals allowed um after the fifth
in pension plans Maximum lump sum policy year,” says
The maximum withdrawal at vesting of One third 60% Tarun Chugh,
withdrawal al- pension plans MD and CEO,
lowed at maturity Bajaj Allianz Life. Being long-term prod-
under pension Minimum term for ucts, insurance premiums have to be ser-
plans has been in- acquiring surrender value Three years Two years viced annually and any financial crunch
creased from one
in traditional plans around the premium paying date can re-
third to 60%. sult in policy lapsation. Instead, now you
Annuities to be Policyholders can
However, this will can reduce your premiums by 50% and still
Freedom to choose purchased from the approach insurers
not bring insur- annuity provider insurer who has issued offering higher rates for keep the policy in force.
ance pension plans at par with the National deferred pension plan 50% of the corpus
Pension System (NPS). In NPS, the 60% Lower life cover in Ulips
withdrawal allowed at maturity is tax free. Flexibility in asset Guarantee meant insurers Policyholders to decide On the Ulip front,
In pension plans, 60% withdrawal is al- allocation in pension had to invest in debt whether they want the minimum
lowed now but only one third is tax-free. Ulips products assured returns or not cover offered will
“Withdrawal of up to one third of the cor- come down from
pus would be tax-free, but anything above Premiums for riders like Direct premium 10 times the annu-
that is taxable,” says Anilkumar Singh, Direct premium payment accident or disability payment means a larger al premium to
Chief Actuarial Officer, Aditya Birla Sun for Ulip riders benefit accounted for by proportion of base Ulip seven times. At
Life Insurance. Rules have also been cancelling units premium is invested present, insurers
tweaked for premature part withdrawals. have to offer a
Once the five-year lock-in ends, policyhold- minimum cover of 10 times the annual pre-
ers can make partial withdrawals of up to mium to those under 45 and seven times to
25% of the fund value, but only thrice dur- invested over the long-term can choose to Shorter period to acquire those over 45. For policyholders who are
ing the policy tenure. However, such with- deploy funds in equity. surrender value not keen on the protection element, smaller
drawals will be permitted only if funds are You needn’t wait cover will mean lower mortality charges. A
needed for specified goals—higher educa- Greater choice when three years for higher proportion of premiums will be di-
tion, children’s wedding, purchase or con- buying annuities your policy to ac- rected towards investments. However,
struction of a house and treatment of criti- Annuity pur- quire a guaran- there is a catch. To maximise tax benefits
cal illness of self or spouse. chase conditions, teed surrender under Sec 80C and 10(10D), the life policy
too, have been lib- value – the has to offer a cover of at least 10 times the
Freedom to take risks, eralised. “Open amount you will annual premium. “For policies with seven
invest in equities market for the op- receive if you de- times cover multiple, tax breaks under
The change that is tion of purchas- cide to exit prema- 10(10D) is not applicable,” says Agarwal.
likely to make the ing annuity, up to turely. “Irrespective of premium paying
maximum impact 50% of the investi- terms, policies will now acquire the mini- Extended revival period
pertains to unit- ble corpus is a key mum guaranteed surrender value if they Policyholders
linked pension change,” notes Aalok Bhan, Director and have paid at least two years’ premiums, wanting to revive
segment, which Chief Marketing Officer, Max Life against three years now for policies with a their Ulips will
lost steam after Insurance. Currently, a policyholder has premium paying term of over 10 years,” now get three
insistence on no choice but to purchase annuities at ma- says Singh. At present, you are entitled to years instead of
guarantees and turity, from the insurer who has issued the 30% of premiums paid (minus any survival two. For non-
purchase of annuities from the insurer policy. Lack of competition hurts policy- benefits paid out) if you surrender your pol- linked plans, it
who issued the deferred pension plan. “As holder interests, as they cannot shop icy during the third year. The new rules has gone up to five
of now, insurers have to give a guarantee at around for higher annuity rates. have raised this to 35%. If you have paid years.Insurers
the vesting date, which means they have to Annuity is regular, guaranteed pension two premiums, you will get 30% of the will have to intimate them within three
PHOTOS: GETTYIMAGES

invest largely in debt and are not able to
generate higher returns. Now, this is op-
tional. Policyholders can decide whether
they want assured benefit or not,” says
Singh. Those in the younger age brackets
who can stomach risks and afford to stay
income payable to the policyholder from
the date of vesting till death. “Relaxation
of this restriction will allow policyholders
greater flexibility to seek better rates,”
says Santosh Agarwal, Chief Business
Officer, Policybazaar.com.
amount. In case of policies with tenures months of lapsation for them to initiate ac-
greater than seven years, insurers had to tion in case they want to revive the policies.
file surrender value structure with Irdai.
Now the regulator has specified that the
surrender values should increase progres- Please send your feedback to
etwealth@timesgroup.com
sively and converge to at least 90% as the

Book profits in dynamic bond funds
Recent rise in returns may not sustain. Investors should also restrict exposure to 20% in debt fund portfolio.
by Sanket Dhanorkar
L
ong duration funds and gilt funds
have benefited the most from the
bond market rally that started
about six months ago. The long
duration category has given av-
erage returns of nearly 20% while the gilt
fund category has delivered almost 15%
in the past year. But dynamic bond funds,
where fund managers have the flexibility
to shift between bonds of varying maturi-
ties, have also done well, delivering 9.5%
average returns in the past one year.
This performance is heartening, but
the patchy track record of dynamic bond
funds remains a concern. Long-term bond
funds do well when interest rates are
falling. When rates decline, bond prices
go up, which boosts the funds NAV, espe-
cially of funds holding bonds of very long
durations. Short-term debt funds tend to
outperform when interest rates are flattish
or rising. Dynamic bond funds endeavor
to be all-season offerings, allowing inves-
tors to play the entire interest rate cycle by
mutual funds
The Economic Times Wealth July 29-August 4, 2019 09
Dynamic bond funds call on interest rate movements. lio in dynamic bond funds. Also, be very
But dynamic bond funds have been selective when picking such funds. Only
have impressed lately caught on the wrong foot in the past. Most a few of them actually take advantage of
1-year funds have not been able to sustain perfor- the flexibility they have.
Fund mance at both ends. As mutual fund ana-
returns (%)
lyst Vidya Bala says, “Most thrive on the
Edelweiss Dynamic Bond 15.6
long end of duration, but fail to reduce the
IDFC Dynamic Bond 14.1 portfolio duration to the extent required
when interest rates are inching upwards.”
SBI Dynamic Bond 13.9
Over time, investors experience normal-
Kotak Dynamic Bond 13.3 ised returns from dynamic bond funds,
DHFL Pramerica Dynamic closer to what one expects from short-term
13.0 or accrual funds. At the same time, these
Bond
exhibit lesser volatility relative to pure
DATA AS ON 23 JULY. SOURCE: VALUE RESEARCH.
duration funds.
constantly shifting between instruments Similarly, many dynamic bond funds
of different maturities as per the fund man- are late to enter a bond rally. But this time,
ager’s reading of interest rate movements. several funds seem to have played their
They switch to longer tenure instruments cards right, delivering over 13% returns
when rates are expected to fall and move in the past year by focusing on long-term
to short-term instruments when rates are bonds (see table). However, the recent up-
hardening. Since these have the flexibility tick in returns may not sustain, and Bala
to switch the portfolio, they can potentially says investors should consider periodical-
take advantage of interest rate movements ly booking profits in dynamic bond funds.
in either direction. As such, these are con- Experts also suggest investors should not
sidered ideal for investors who can’t take a have more than 20% of the debt fund portfo-
 insurance
10 The Economic Times Wealth July 29-August 4, 2019
Why you should lock into
high annuity rates
Use the gap between the fall in 10-year yield and fall
in yields of other products to lock into higher rates.
by Narendra Nathan
I
nterest rates move in a cyclical man-
ner. The yield to maturity on 10-year
government bonds has come down
by around 150 bps over the past year.
It fell 100 bps, or one percentage
point, in the past three months. Like the
10-year yield, other rates in the system also
move in cycles. However, they move with
a time lag, creating a short-term opportu-
nity for investors. Experts believe the fall
in yield will continue. “Chances of further
RBI rate cuts are high due to concerns over
economic growth and the prevailing low
inflation,” says Ankur Maheshwari, CEO,
Equirus Wealth Management. Lakshmi
Iyer, Head of Fixed Income and Product,
Kotak MF concurs. “I expect the 10-year
yield to be in the range of 6%- 6.25% by
March 2020 because RBI is expected to cut
rates by 50 bps more by then,” she says. Let
us examine the options investors should
consider.
Immediate annuity
Immediate annuity offered by insurance
companies can be the first option for in-
vestors because annuity rates come down
slowly. Most insurance companies are yet
to match rates with the falling government
yield. However, the rates offered on these
products are lower than that of other com-
peting products (see table).
Despite the low rates, experts say you
should park a part of your retirement
corpus in immediate annuity plans that
offer annuity till death. “All retired people
should look at immediate annuities and
park a major portion of their retirement
corpus here,” says Prateek Pant, Head of
Products and Solutions, Sanctum Wealth
Management.
Immediate annuities come with differ-
ent options. The most common are annuity
for life, joint annuity for life with 100%
annuity for partner and annuity with re-
turn of premium. So which one should you
choose? It depends on your objective. “If
the objective is regular income, it makes
sense to go for annuity for life and not
the one with return of purchase price be-
cause the IRR will be far lower then,” says
Santosh Agarwal, Head of Life Insurance,
Policybazaar.
However, annuities are taxable and
therefore, useful only for investors who
are non taxpayers or are in the low tax
brackets. “You can calculate the expected
tax slab on the basis of expected future
incomes like pension, annuities, interests,
rents, etc,” says Agarwal.
GETTYIMAGES
In low tax bracket, Sr Citizens’ Saving Scheme is best option
The next best option is to retain PPF account after maturity and make annual tax-free withdrawals
Expected Investment
Instrument Features Taxability
returns (%) limit (`)
Senior Citizens’ Saving Scheme 8.60 15 lakh 5 years; Only quarterly payouts Taxable
PM Vaya Vandana Yojana* 8.30 15 lakh 10 years Taxable
Public Provident Fund 7.90 1.5 lakhs p.a. Only one withdrawal per annum Tax free
SBI FD (for sr citizens) 7.10 No limit 5-10 years Taxable
Immediate annuity with ROP 6.8-7.1 No limit Life time Taxable
Defered payout plans 6-6.1 No limit Life time or 99 years Tax free
Tax-free bonds 5.6-5.9 No limit Bonds available for up to 16 years Tax free
*8% rate offered for monthly option, IRR will be higher for annual option.
10-year yields are falling steadily
Rates on other products have not fallen as much, creating opportunity for investors.
Tax-free bonds
As no new tax-free bonds are available,
7.81 investors have to buy them from the sec-
23 Jul 2018 7.41 ondary markets. The cut in tax-free bond
7.22 26 Apr 2019 yields is not as drastic as that of 10-year
19 Dec 2018 yield. However, tax-free bonds are favoured
by ultra high networth investors and yields
6.46 may fall further soon.
23 Jul 2019
Other structured plans
Investors who want regular income can
generate it by using other structured plans
like systematic withdrawal plans (SWP)
from mutual funds, etc. “Though annuities
Source: ETIG Database, Policybazaar.
are fine, SWP is a better option because it is
tax efficient. The chance of capital growth
Government schemes the annual withdrawal facility is a good is higher,” says Ankur Maheshwari, CEO,
If you are not in the high tax bracket, no option. The 7.9% tax-free interest on PPF Equirus Wealth Management. This capital
plan can beat the returns offered by some is higher than the 7.1% taxable interest on appreciation is also needed to match the
of the government-sponsored schemes like SBI 10-year FDs. However, the 7.9% being rise in expenses due to inflation and there-
Senior Citizens’ Savings Scheme (SCSS) offered on PPF now may go down in future. fore, investors have to go with balanced
or Pradhanmantri Vaya Vandana Yojana funds or dynamic asset allocation funds
(PMVVY). The rate offered on SCSS now is Deferred payment plans instead of pure debt funds. Since only a por-
8.6%. The 8% rate offered under PMVVY is Deferred payment plans of normal insur- tion of your corpus will be invested here,
for monthly pension and if we calculate it ance policies is an option for those who are the risks will also not be much.
on an annual basis, the IRR goes up to 8.3%. likely to remain in the high tax bracket
Public Provident Fund (PPF) is giving 7.9% even after retirement. An advantage of
Please send your feedback to
tax-free interest and therefore, leaving these products is some also offer guaran-
etwealth@timesgroup.com
the accumulated corpus intact and using teed payouts.

Know the benefits and
risks of endowment plans
A PIL was recently filed against LIC by investors in the Jeevan
Saral plan. Here’s a look at how such endowment policies work.
by Preeti Kulkarni
T
he spotlight is back on endow-
ment plans. Life Insurance
Corporation of India’s (LIC)
Jeevan Saral, withdrawn in
2014, was in the news recently
after a PIL was filed in the Supreme
Court , alleging that LIC had mis-sold
the product by misleading policyholders.
The apex court made it clear it was not
expressing any opinion on the merits of
the case.
A not-so-Saral affair
Launched in 2004, Jeevan Saral was
sold as an easy-to-understand plan. The
policyholder had to choose the premium,
and the sum assured would be at least
250 times the monthly premium, besides
loyalty additions. In this ‘simple’ struc-
ture lay the genesis of a controversy.
“Irrespective of whether the policyholder
was 25 or 50, the sum assured was the
same—minimum 250 times the monthly
premium. Mortality charges were levied
accordingly. Many agents sold the prod-
uct to older individuals, without consid-
ering whether the life cover was needed
or not,” says Melvin Joseph, Founder,
Finvin Financial Planners.
Pure protection cover is meant to re-
place the breadwinner’s income in the
event of her death. In India, however, life
insurance has been sold as a savings-
cum-insurance product, despite the
fact that most endowment policies yield
low returns—4-6% per annum. Many
policyholders end up shelling out mortal-
ity charges for a cover they do not need.
Since mortality charges are linked to
age, older policyholders have to shell out
more. “In case of Jeevan Saral, returns
for higher age groups were in the nega-
tive in many cases. The higher mortality
charges ate into the final corpus. Some
ended with a corpus much lower than to-
tal premiums paid,” adds Joseph.
An ET Wealth analysis of nearly 50
Jeevan Saral-related complaints filed
with insurance ombudsman offices
between 2015 and 2017 shows that some
complainants received merely 30-40%
of total premiums paid till maturity.
Complainants alleged that LIC reached
out to them closer to maturity with the
contention that the maturity sum as-
sured figures were either omitted or erro-
neously interchanged with the death sum
assured, and the actual maturity sum
assured was different. This ‘revised’ sum
assured, plus loyalty additions declared,
insurance
The Economic Times Wealth July 29-August 4, 2019 11
was much lower than premiums paid.
LIC explained the discrepancy as a “ty-
pographical error”, as per complaint re-
cords on the website of Executive Council
of Insurers. “The respondent (LIC) has all
the support system like manpower, tech-
No compounding,
nology and actuarial expertise. It cannot low returns
take 11 years for detecting the error—at
the time of maturity of the policy. The pol- HOW MUCH A 35-YEAR-OLD MALE
icy document is an evidence of contract POLICYHOLDER STANDS TO GAIN
and the respondent cannot be allowed
the liberty to issue incorrect policy docu-
ment on the pretext of some snag,” the ANNUAL
order passed by Mumbai Ombudsman PREMIUM
office on 26 July 2017 noted, directing `50,000 POLICY
the company to pay all premiums paid TENURE
by the complainant so far, minus the 15 years
maturity payout already paid, along
with loyalty additions. A Maharashtra
state commission announced a similar
PREMIUM
verdict in December 2018. However, some PAYING
10 years MATURITY
insurance ombudsman offices chose to
buy LIC’s typographical error argument.
SUM ASSURED
Then there are cases where the maturity `5 lakh
sum assured was not mentioned clearly
and policyholders’ pleas to treat the death SIMPLE
sum assured as maturity sum assured ANNUAL
were dismissed. LIC did not respond to an
BONUS* ANNUAL BONUS
email seeking comments.
3.80% `19,000
Sequels not likely **Sum assured plus
The saga is unlikely to be repeated, say EXPECTED annual accumulated
experts. “In other products, premium bonuses paid over
MATURITY 15 years for a
is decided on the basis of age and sum IRR regular premium,
assured chosen at the time of purchase. VALUE**
`7.85 lakh 4.32% participating
endowment plan.
But in this policy, the same sum assured
was offered for all age groups,” explains
Joseph. Identical premium and sum as-
sured as younger age groups meant high- Awareness is the key
er mortality charges for older individu- Do your own research and understand
GETTYIMAGES
als, which affected the maturity corpus. the product instead of relying on the
The product is not available any more. agent’s explanation or insurers’ brand
All old endowment products were with- image. Endowment plans come primar-
drawn after Irdai’s fresh guidelines ily in two forms: participating and non-
on traditional, non-linked products participating. The latter are simpler to
came into force in 2013. The regulations understand as the maturity payouts are
brought in a host of changes, including clearly defined. It’s the participating,
cap on commissions, higher surrender also called with-profits, plans that can
values and customised benefit illustra- be difficult to comprehend. They are
tions where projected maturity values not market-linked, but the returns, in some plans could offer loyalty additions,
for participating endowment plans take the form of annual, interim or terminal expressed as a percentage addition to the
into account premiums paid, age, sum as- bonuses, are not guaranteed. Annual bo- base sum assured. The idea is to encour-
sured and projected rate of return of 4% nuses can be simple bonuses that do not age the policyholder to stick. While the
and 8% per annum. compound, but some insurers could offer returns are likely to be stable, they are
Remember, even these are not assured compounded reversionary bonuses. neither guaranteed nor attractive. Also,
returns but are used for illustrative Though endowment plans are seen as returns remain low because bonuses ac-
purposes. The customised benefit il- risk-free products, the returns for par- crued do not compound over the tenure or
lustrations can be used to calculate IRR, ticipating policies depend on surpluses rates are low.
which will hint at the impact of charges, generated by the participating fund
including mortality, on the maturity managed by the insurer, which are then
value, even though they are not disclosed distributed amongst policyholders. After Please send your feedback to
etwealth@timesgroup.com
separately. completion of a certain number of years,
 mutual fund
12 The Economic Times Wealth July 29-August 4, 2019

Patience must for value funds

Investors should note that value funds can underperform significantly for extended periods of time.

by Sanket Dhanorkar rather than earnings growth. Experts say

O
ver the years, the benefits of
value investing have been
espoused by several market
gurus and fund managers.
Discussions around this invest-
ing philosophy dwell on the rewards that
await patient value-conscious investors.
However, in recent years, those dabbling
in the value theme have been left largely
frustrated. Multiple value funds have given
poor returns over extended time periods.
So is there any point in keeping the faith in
value funds?
For the past five years or so, the equity
market has been powered largely by so-
called growth stocks. Companies that ex-
hibit higher earnings growth trajectory or
‘quality of earnings’ have been favoured by
investors. They have not been deterred by
the rich valuations of the high growth com-
panies. Expensive names from this space
have become more expensive. Meanwhile,
value stocks have been left behind. Value
investing refers to picking businesses
whose share price is trading below the
intrinsic value, or at a price that is not re-
flective of their true worth. The perceived
value residing in these names is far from
being realised. Not surprisingly, value
funds have been off the boil in recent years.
Over the past three years, multi-cap funds
delivered 9% even as value funds clocked
7.8%. Sonam Udasi, Fund Manager, Tata
Mutual Fund, says, “Value as a theme has
not fared well globally in recent years.
the strength of a value-driven fund lies
more in its ability to outperform or pro-
tect the downside better during a market
decline. Over many years, this superior
downside protection allows the fund to
deliver healthy return. But this requires
that investors remain patient and stay in-
vested for the duration when returns seem
elusive.
Indeed, the merits of value funds become
more apparent when looking at longer term
performance. Over the past 10 years, these
funds have clocked 13.7% return even as
multi-cap and large-cap funds have man-
aged 12.8% and 11% respectively. The five-
year and 10-year rolling returns for these
funds also show healthy outperformance.
In fact, returns from value funds can be
outsized if given sufficient time. Over 10
years, several value funds have delivered
alpha in excess of 5% over their chosen
benchmark index. Funds like Aditya Birla
Sun Life Pure Value, ICICI Prudential
Value Discovery and L&T India Value have
particularly impressed. However, this re-
turn from value funds would not have been
visible at shorter intervals. So it would
not be prudent to dismiss the potential of
value funds based on recent sub-par re-
turn. Rajeev Thakkar, CIO, PPFAS Mutual
Fund, says, “Various investing strategies
tend to perform in cycles. Eventually, re-
turns tend to revert to mean.”
Experts say investors should not opt for
value funds if they cannot digest extended
bouts of underperformance. Investors
GETTYIMAGES

Given the heightened uncertainty, inves-
tors have chosen to remain with what is
known and visible.”
However, looking purely at this recent
performance would be overlooking a
critical facet of value investing. Investors
should note that value funds can underper-
form significantly for extended periods of
time. This is particularly true in market
conditions like the present, when price-
earnings (PE) multiples drive share prices
Value funds have given good returns over the long-term
These funds may exhibit bouts of underperformance over the short-term
17.2
should be willing to give value funds a
longer rope than others. It can take a lot
of time for the underlying value to unlock
and translate into returns. When the
swing towards value does happen, returns
usually come in a burst. “The upswing in
returns tends to be very sharp for value
funds. Investors have to be patient,” says
Udasi. These funds are not known for
their consistency, but for offering superior
risk-adjusted return over the long haul. In
today’s market environment, value funds
offer a better risk-reward proposition. If
the market corrects in the coming years,
value funds would be in a position to cush-
ion the downside better than others. “The
early signs of value staging a comeback are
3-year returns
5-year returns
10-year returns
already visible,” insists Udasi. “As growth
falters, investors begin to question rich
valuations and that is when value begins
to assert itself,” he adds. This is evident in
the pull-back in share prices of some of the
high-growth names in recent weeks.
Even if you are willing to put in the time,
value funds are best utilised towards diver-
sification; to complement existing funds
in your portfolio. In a growth market like
India, funds biased towards growth stocks
will continue to deliver healthy returns.
These funds should form the core of an

investor’s mutual fund portfolio. When

11.7
15.5

picking value funds, investors need to be

15.0

15.0

14.7
10.3

selective as there are a lot of variations

13.5

9.9
12.7

12.7

in approach. Stick to funds that maintain

11.7

8.6
7.9

10.9

reasonable quality in portfolio and not

7.2
10.0

9.8
9.6

compromise in the hunt for value. “Certain

9.1

8.8
5.1

value funds are run differently, with low

7.4
3.2

quality stocks finding space in the portfo-

lio on account of low PE. But these can be
value traps,” points out Thakker.

ICICI Prudential Aditya Birla Sun IDFC Sterling Tata Equity Invesco India Value funds Multi cap funds Large cap funds
Value Discovery Life Pure Value Value PE Contra average average average Please send your feedback to
Data as on 22 July. Figures are percentage annualised returns. Source: Value Research. etwealth@timesgroup.com

Model Tenancy Bill: How it
benefits tenants and owners
The draft legislation proposes to set up a rent court for addressing issues related to tenancy and rent.
by Shipra Singh
W
hether you are planning
to let out your property
or find a house on rent,
there’s good news in
store for you. The re-
cently drafted Model Tenancy Bill, 2019
has proposed a few measures that can
address some of the reasons for disputes
between tenants and landlords. The
prevailing laws are skewed, giving more
power to one party over the other. For in-
stance, there is no limit on the amount of
security deposit a landlord can demand.
For young earners, arranging an enor-
mous deposit worth 10-12 months’ rent
can be challenging. On the other hand,
property owners have little control over
tenants who do not vacate the property
even after the agreement has expired.
The bill aims to bring both the parties
on an equal footing. “The draft seeks
to protect interest of both tenants and
owners,” says Mudassir Zaidi, Executive
Director-North, Knight Frank India.
Find out about the provisions of the draft
legislation.
Regulator for disputes
The draft has proposed to set up a rent
authority and rent tribunal that will
specifically examine disputes related
to tenancy, ranging from issues related
to rent to bigger dispute of non-vacation
of premises. Currently, all such issues
are taken up in small causes courts and
civil courts. “The burden on the judici-
ary is so high that such cases take years
to get resolved. Sometimes people don’t
take up tenancy related matters with the
court fearing the long legal battle. A spe-
cialised rent court will ensure speedy
redressal of disputes,” says Sandeep
Jhunjhunwala, Director, Nangia
Advisors (Anderson Global).
The aggrieved party can take the
matter further up to the rent court and
rent tribunal. “All orders of the rent au-
thority can be appealed before the rent
court and all orders of the rent court can
be further appealed before the rent tri-
bunal if the party is not satisfied by the
order at any level,” says Mukesh Jain,
Founder and Real Estate Specialist,
Mukesh Jain & Associates.
Revision of rent
As per the draft bill, the landlord will
have to send a notice to the tenant about
the increase in rent three months’ prior
to the revised rent coming into effect.
“Unless otherwise agreed in the agree-
ment, the landlord cannot unilaterally
increase the rent. Three months’ notice
will give the tenant ample time to look
for another house if he doesn’t agree
with the proposed hike,” says Ashoo
Gupta, Partner, Shardul Amarchand
Mangaldas. The tenant, on the other
The Economic Times Wealth July 29-August 4, 2019
hand, will have to send a notice to the
landlord to terminate the tenancy, fail-
ing which he will be deemed to have ac-
cepted the proposed hike in rent.
As for the rent amount, the rent au-
thority will fix or revise the rent after
the landlord or the tenant has filed an ap-
plication with it. To ensure this happens,
the draft also mandates the tenants and
Tenancy disputes take
years to get resolved in
civil courts. A separate
regulator will expedite
the redressal.
landlords to get into a written tenancy
agreement and jointly submit it to the
authority within two months. The docu-
ments should have details about the rent
amount, tenure of tenancy and details
of rent revision, if any, which will be re-
viewed by the authority to fix the rent.
Vacation of house
Current rules around vacation of prop-
erty favour the tenants. The landlord
cannot ask the tenant to vacate the prop-
erty mid-term without giving a valid
reason. On the other hand, there are no
penal provisions for those who default
on paying the rent or overstay after the
agreement has expired. To resolve this,
real estate
13
the draft has laid out that if the tenant
does not pay the rent for over two months
or some construction has to be done on
the property, the landlord can ask the
tenant to leave.
The draft has also proposed a compen-
sation of twice the monthly rent if the
tenant overstays for up to two months.
This penalty will increase to four times
the rent if he overstays for more than two
months.
As for tenants, they will have the right
to leave before the agreement ends in
case the premises becomes uninhabit-
able due to disrepair and the landowner
refuses to carry out the repairs.
Cap on security deposit
A high security deposit is a major pain
point when searching for a house on
rent. While it is a moderate 2-4 months’
rent in cities like Delhi and Pune, in
Bengaluru and Mumbai the deposit
can be as high as 12 months’ rent. The
draft has capped the security deposit to
two months’ rent for residential prop-
erties and one month for commercial.
However, this limit could prove to be
insufficient for landlords if major dam-
age is caused to the property. “In such
a case, the owner can recover costs by
approaching the rent authority. But the
owner will have to bear the inconven-
ience of going through a legal process,”
says Jhunjhunwala.
GETTYIMAGES
 learn & keep
14 The Economic Times Wealth July 29-August 4, 2019

HOMES GOING OUT OF REACH FOR BUYERS

Indians are spending more of their income to service home loan EMIs and taking larger loans compared to their incomes to buy a property, says a RBI report. Narendra Nathan and Preeti Kulkarni look at the key findings.

Mumbai remains the least affordable city but other

metros are also not affordable for the average Indian
The HPTI ratio is the average house price expressed as a multiple of a borrower's average monthly income.

74.4 58.6 58.5 56.1 56.5 56.5 66.6

MUMBAI CHENNAI DELHI BENGALURU HYDERABAD KOLKATA PUNE

Buying a house in Mumbai, Ahmedabad
or Pune require larger loans
Loan-to-income ratio is an indicator of average home loan size vis-à-vis annual income.
55.9 63.4 70.4 58.6 56.2 54.3 61.5

JAIPUR CHANDIGARH AHMEDABAD LUCKNOW BHOPAL BHUBANESWAR ALL-INDIA

As of March 2019, the average house price in India was equal to 61.5 times an average Indian's monthly
income. A rise in the ratio means that houses have become less affordable in cities across India.

EMIs rising, but no threat of debt trap 4 3.3 3.2 3.1 3.3 3.2 3.7
The EMI to income ratio represents EMIs as a percentage of monthly income.
MUMBAI CHENNAI DELHI BENGALURU HYDERABAD KOLKATA PUNE
Some cities have become more All Mumbai Pune
42.9
Ahmedabad
43.5 43.3 43.5

unaffordable than the rest

41.8 42.8 42.7
42.6
40.6 41.9
40.8 40.7
There has been a 10% jump in HPI ratio over past four years. 40.3 40.8
39.1 38.9
3.1 3.2 3.9 2.7 3.2 2.8 3.4
Quarter All India Hyderabad Chandigarh Ahmedabad Mumbai 37.8 38.4 38.2
37 JAIPUR CHANDIGARH AHMEDABAD LUCKNOW BHOPAL BHUBANESWAR ALL-INDIA
Mar 2015 56.1 47.9 52.2 59.5 64.1
Jun 2015 59.3 52.7 53.2 62.9 66.5
A borrower in Mumbai has to take a loan that is four times his annual income. But
Sep 2015 56.4 47.2 48.9 56.5 64 the average loan of a borrower in Bhubaneshwar would be lower at 2.8 times his
Dec 2015 57.1 46.3 57.4 57.4 66.2 annual income as of March 2019.
Mar 2016 61.3 51.7 64.7 64.4 70.1
Jun 2016 61.5 53.1 58.9 66.6 71 March 2015 March 2016 March 2017 March 2018 March 2019

Sep 2016 60.5 51.6 62.4 66.7 69.9

Dec 2016 60.2 51.9 60.5 64.9 69.3 Over four years, the share of EMIs in Indians' monthly income has risen marginally. The loan burden of Indians has risen 13% since 2015
However, it adheres to the thumb rule of EMIs not exceeding 40% of monthly income.
Mar 2017 60.6 53.6 61.7 64.7 70.1 Home buyers on average have to take a loan that is 3.4 times their annual income to afford a house.
This points to prudent assessment of borrowers' loan-repaying capacity by banks.
Jun 2017 61.9 53.6 64 66.9 73.4
Quarter Mumbai Chennai Delhi Hyderabad Kolkata Chandigarh Ahmedabad Bhopal All-India
Sep 2017 62.4 54.9 63.3 67.1 75.4
Dec 2017 62.6 56.1 61.4 65.4 76.4 Average home loan size has grown Mar 2015 3.40 2.90 2.80 2.70 2.70 2.30 3.20 2.70 3.00

Loan-to-value ratio (LTV) is the size of loan as a percentage of property value. Mar 2016 3.70 3.30 3.20 2.90 3.10 3.50 3.50 3.10 3.30
Mar 2018 62.7 57.8 63 67.6 76.8
71.1 Mar 2017 3.60 3.40 3.10 3.00 3.10 3.00 3.50 3.00 3.30
Jun 2018 61.1 56.3 64.8 68.4 75.1 70.6 70.5
69.7 Dec 2017 Jun 2018
68.2 Dec 2018 Mar 2018 4.00 3.50 3.30 3.30 3.40 3.20 3.80 3.40 3.50
Sep 2018 61.8 57.7 64.7 69.2 75.5 69.2 Jun 2016 68.8 Jun 2017 70.8
68.1 Mar 2018
70.5 69.6 Mar 2019 4.00 3.30 3.20 3.30 3.20 3.20 3.90 3.20 3.40
Dec 2015 Dec 2016
Dec 2018 62 59.2 63.5 69.7 76.9 Jun 2015 69.5
Sep 2018 Mar 2019
68.7 Sep 2017 % growth
Mar 2019 61.5 60.3 63.4 70.4 74.4 67.7 67.9
Mar 2016
68.5
Sep 2016
Mar 2017 since 2015 18% 14% 14% 22% 19% 39% 22% 19% 13%
Mar 2015 66.4
% Jump
in 4 yrs 10% 26% 21% 18% 16% Sep2015
The biggest jumps are seen in Chandigarh, Hyderabad and Ahmedabad, where home prices have risen faster
than the rise in incomes. Borrowers in these cities have to take bigger loans compared to their incomes.
The average house price in Mumbai, which was was 64 times the
average monthly income in March 2015, shot up to 74.4 times Note: Cities where the growth rate exceeds the national average (13%) are taken into account.
in March 2019, indicating rise in unaffordability over the long- While the average LTV has increased since March 2015, it has started shrinking Source: RBI's Residential Price Monitoring Survey, March 2019.
term. Rise in unaffordability has been the sharpest in Hyderabad since June 2018, pointing to banks becoming more conservative in sanctioning
(26%), followed by Chandigarh (21%) and Ahmedabad (18%). large loans. As of March 2019, banks financed 69.6% of property purchase price.
 stocks
16 The Economic Times Wealth July 29-August 4, 2019
Invest in companies with
high profit margins
Due to tight operating and overhead cost controls, these firms can better navigate periods of unexpected losses.
by Sameer Bhardwaj
M
ore than 66% of the stocks
in the BSE500 index have
lost money in 2019. The
BSE Sensex has tanked
over 1,900 points since the
Budget. Slowing economic growth, fading
expectations of aggressive rate cuts by the
US Federal Reserve, rising tensions in West
Asia, and lack of adequate stimulus to re-
vive consumption in the recent Budget has
been fuelling the market volatility.
With investment values eroding, one of
the strategy for direct equity investors is
to consider stocks that have strong earn-
ings potential. This potential is measured
by looking at the net profit margin, which
is calculated by dividing the net profit by
the sales revenue. Higher the net profit
margin, the better is the financial health of
a company as it implies larger profits rela-
tive to revenue.
Rising net profit margins over a period of
time demonstrate the ability of a company
to control its operating and overhead costs,
which can help navigate periods of unex-
pected losses. However, these margins dif-
fer across industries due to their varying
cost structures. For example, companies
in the foods and beverages industry tend
to have high revenues but low margins
because a lot of money is spent on advertis-
ing, marketing and sales. Therefore, the
analysis of companies based on net profit
margins should be made in the context of
the sectors in which they operate.
We identified companies whose net profit
margins have been higher than the average
industry margins consistently over the
past five quarters—March 2018 to March
2019. Further, only companies whose mar-
gins more than doubled between March
2018 and March 2019 were considered. The
27 companies that passed our filters have
delivered one-year average point-to-point
return of 14.1% between 18 July 2018 and 18
July 2019. Comparatively, BSE500 and BSE
Growing faster than their peers
Net profit margins of these companies have consistently grown faster than those of their respective sectors.
Stock
Company
price (`)
NCC 80
The Jammu & Kashmir Bank 38
Cipla 531
Brigade Enterprises 272
ments. It has reported robust numbers
for the fourth quarter of 2018-19, register-
ing 41.5% and 69.8% year-on-year (y-o-y)
growth in its revenue and net profit,
respectively. Analysts believe that NCC’s
well-diversified order book provides clear
revenue visibility. Also, the reduction in
the company’s gross debt will help keep its
balance sheet healthy. The stock is trading
at an attractive valuation and the company
has suggested that its debt will be cut fur-
ther in 2019-20. According to Bloomberg an-
alysts’ estimates, the company is expected
to report a 60% jump in its adjusted EPS in
the first quarter of 2019-20.
Jammu & Kashmir Bank
This private sector bank functions as a uni-
versal bank—commercial and investment
bank—in Jammu and Kashmir and as a
specialised bank—focused on financing
select sectors—in the rest of the country.
Analysts believe that rising margins,
improved asset quality and normalisation
of credit costs will improve the bank’s op-
erational performance and boost its profit-
ability. There is also an opportunity for
the bank to expand its retail base without
diluting margins. Its asset quality is likely
to remain stable and the return ratios
should gradually improve. According to
Bloomberg analysts’ estimates, the lender
is expected to report 28% y-o-y growth in
adjusted EPS in the first quarter of 2019-20.
Cipla
GETTYIMAGES
This global pharma company manufac-
tures branded and generic medicines.
Besides India, it is present in South Africa,
the US, and some emerging economies.
Sensex delivered 1.8% and 6.9% returns (EPS) growth in the first quarter of 2019-20 Analysts are bullish on it because of its
during the same period. as estimated by Bloomberg analysts. Let robust US business, which is likely to drive
Out of these 27, we selected stocks cov- us look at four of these stocks whose recent its profitability. Cipla’s domestic business
ered by at least five Bloomberg analysts and research reports are available: is growing at a steady pace helped by strong
whose one-year forward price appreciation double digit growth across chronic therapy
potential is more than 10%. The shortlisted NCC segments. The ramp-up in its existing prod-
companies were then evaluated in terms of This infrastructure company is engaged ucts and new product launches will also
their expected adjusted earnings per share in civil construction projects across seg- support the company’s growth.
Brigade Enterprises
This realty developer caters to residential,
office, retail, hospitality, and education sec-
tors. Analysts are bullish on the stock due
Estimates 2019-20 Analysts’ recommendations
to its robust track record, strong portfolio
1-yr target Upside of operational rental assets, steady residen-
ROE (%) PE Buy Hold Sell
price (`) potential (%) tial sales and diversified revenue profile
across real estate, lease assets and hospital-
158 97.1 14.1 6.2 17 7 1
ity. New launches and sharp recovery in
73 89.9 8.6 3.6 7 2 0 pre-sales in the fourth quarter of 2018-19
will help the company gain market share.
596 12.3 11.7 22.6 24 13 5
307 12.7 10.5 13.9 9 1 0
Please send your feedback to
Current price as on 22 July 2019. Source: ACE Equity and Bloomberg. etwealth@timesgroup.com
 family finance
The Economic Times Wealth July 29-August 4, 2019 17

Increase equity PRASHANTH & SUSHMA, 35 & 30 YEARS, SALARIED, KALLIGE

investment How to invest for goals

GOAL
FUTURE COST (`) /
TIME TO ACHIEVE
RESOURCES
USED
INVESTMENT
NEEDED
(`/MONTH)
The couple will need to align their investments with
goals and cover their risks with higher insurance. Emergency fund 1.86 lakh / 1 yr Cash 5,328

Start business 18.9 lakh / 4 yrs - 34,258

by Riju Mehta

P
rashanth and Sushma stay with Portfolio Down payment for
21.4 lakh / 10 yrs
RD, stocks,
8,400*
their three-year-old child in house insurance
Kallige, Karnataka. They are CURRENT
ASSET
VALUE (`)
both engineers and get a com- Child’s education 41.7 lakh / 15 yrs - 8,777
bined monthly salary of `1 lakh. Real estate 60 lakh
They have a house worth `60 lakh and are EPF, PPF, NPS,
repaying a `2 lakh home loan with an EMI Cash 1.2 lakh Retirement 2.1 crore / 25 yrs 3,910**
pension plan
of `9,000. After considering household ex-
penses, EMI, insurance and investment,
Debt
Investible surplus
they are left with a surplus of `43,924. 60,673
EPF 4.5 lakh needed
This should be put to work immediately to
achieve their goals, which include build- PPF 1.1 lakh * Investment of `25,177 is needed but due to lack of surplus they can start with `8,400 for now.
ing an emergency corpus, setting up a **Continue investing `42 a month in the PPF till retirement.

business, buying a house, saving for their Recurring deposits 40,000 Annual return assumed to be 12% for equity, 8% for debt funds. Inflation assumed to be 6%.

child’s education and retirement. Insurance value 40,000

The financial planning team from
Fincart suggests that they build the emer- Atal Pension Yojana 23,000 Insurance portfolio
gency corpus of `1.86 lakh, which is equal
to six months’ expenses, by allocating Equity EXISTING SUGGESTED
EXISTING
cash and starting an SIP of `5,328 for one MONTHLY MONTHLY
NPS 65,000 INSURANCE COVER SUGGESTIONS
year. This should be invested in a liquid PREMIUM PREMIUM
(`)
(`) (`)
or a short duration debt fund. Next, the Stocks 6,000
couple wants to set up a business in four
Life insurance
years, for which they want `18.9 lakh. To Total 68.59 lakh
achieve this goal, they will have to start End the plan. Buy `1
an SIP of `34,258 in a short duration fund. Term plan (1) 60 lakh 1,000 1,512
LIABILITIES CURRENT VALUE (`)
crore term plan
For their child’s higher education in 15
years, the couple wants to amass `41.7 Home loan 2 lakh Traditional
40,000 36 Continue 36
lakh and can achieve the goal by starting plan (1)
Total liability 2 lakh
an SIP of `8,777 in an equity fund.
Ulip - - - -
The couple also wants to buy a house
worth `53.7 lakh in 10 years, by making Net worth `66.59 lakh
a down payment of `21.4 lakh. For the re- TOTAL 60.4 lakh 1,036 `1 crore 1,548
maining amount, they can take a loan and
the EMI can be furnished from the sur- Health insurance
plus. For this goal, they can assign their
recurring deposit, stocks and insurance
Cash flow
Employer’s - - - -
value. Besides, they will have to start an EXISTING SUGGESTED
(`) (`)
SIP of `25,177 in a diversified equity fund. Discontinue own plan.
Due to lack of surplus, they can start only 3 lakh
Income 1 lakh 1 lakh 518 + Continue parents’ plan. 1,360 +
with `8,400 and raise the amount with the Own + 6 lakh
2,833 Buy `5 lakh family 2,833
Outflow (parents)
increase in income. For retirement in 25 floater + 20 lakh top-up
years, the couple will need `2.1 crore, and Household 17,000 17,000
can assign their EPF, PPF, NPS and pen- expenses TOTAL 9 lakh - `31 lakh 4,193
sion plan. They also need to start an SIP of Contribution
`3,910 in an equity fund. to dependants 5,000 5,000
Critical illness
For life insurance, Prashanth has a & accident - - - -
Home loan 9,000 9,000
term plan of `60 lakh and a traditional EMI disability
plan of `40,000. Fincart suggests he end
the term plan and buy a new `1 crore plan, Insurance TOTAL - - - -
premium 4,387 5,741
for `1,512 a month. He should continue
Insurance cost - 4,387 - 5,741
with the traditional plan as a debt com- Investment 20,689 60,715
ponent of his portfolio. For health insur-
Total outflow 56,076 97,456 Premiums are indicative and could vary for different insurers.
ance, the couple has a `3 lakh family float-
er plan, and Prashanth has bought a `3 Surplus 43,924 2,544
lakh plan each for his parents. He should
end the family floater plan and buy a `5 Write to us Looking for a professional to analyse your investment
portfolio? Write to us at etwealth@timesgroup.com with
lakh plan, besides a `20 lakh top-up plan.
This will cost `1,360 a month in premium.
for expert ‘Family Finances’ as the subject. Our experts will study
your portfolio and offer objective advice on where and
Financial plan by FINCART
He should also continue his parents’ plan. advice how much you need to invest to reach your goals.
 financial planning
18 The Economic Times Wealth July 29-August 4, 2019

Why debt is important PAPER WORK

:: Contribute to NPS
Pension accounts maintained
Fixed income investments stabilise the overall returns of the portfolio. under the National Pension System
(NPS) allow regular contributions
from subscribers. This creates
a retirement corpus while
providing tax benefits during the
contributing tenure. There are
several ways in which one can
make contributions to NPS Tier I
and Tier II accounts.

Minimum contribution
During account opening,
subscribers have to
contribute `500 for Tier
I (pension) account and `1,000
for Tier II (investment) account.
Each fiscal, the subscriber has to
contribute a minimum of `1,000 for
Tier I and `250 for a Tier II account.

Modes of contribution
The subscriber can
contribute either using
physical mode or online
mode through eNPS.

Form

GETTY IMAGES
To use the physical mode,
the subscriber must fill up a
NPS contribution instruction

Bharat is young and invests only
in equities. He has no immedi-
ate need for funds, has age on his
side and is financially secure.
He has opted for SIPs in equity
funds and all his savings are
channeled into these funds. His
salary is more than adequate
for his needs and Bharat makes
sure all his excess funds are im-
mediately invested. Bharat has
considered debt investments
only from the returns angle and
how much he is likely to earn
from it. He intends to keep away
from them, as they seem like a
drag. Has Bharat constructed a
good portfolio for himself?
W
hile returns is an impor-
tant factor to consider
while deciding on where
to invest, Bharat must
consider the benefits
that debt can bring to his portfolio and
financial situation. The returns from
his equity investments can be volatile
and be depressed for long periods of time.
Having some debt investments will stabi-
lise the earnings of the portfolio since it
will bring in steady and regular returns.
Bharat should realise that his Provident
Fund contribution is a fixed income in-
vestment.
Bharat must have an emergency fund
that he can use in situations of loss of in-
come or a sudden requirement for funds.
His existing equity investments may not
be suitable for this purpose since they
The content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
slip. This can be obtained from the
may be in a downturn when he needs nearest POP-SP or the NPS website.
the money, and redeeming at that stage Details such as subscriber’s PRAN,
name, contribution and payment
will imply losses. The money earmarked
for emergency should be held in a debt mode need to be provided.
investment, preferably a short-term debt
fund so that it earns steady market re- Visit to POP–SP
turns and at the same time can be easily Duly filled up
accessed in case of need.
Bharat can also use debt in his tactical
contribution slip must be
submitted to any POP-SP.
portfolio to benefit from high returns. The subscriber can find the nearest
Some debt funds, such as gilt funds, POP-SP by clicking on https://
generate high returns in situations like npscra.nsdl.co.in/pop-sp.php.
falling interest rates in the market. But
these are short-term opportunities and
Bharat should be careful to time his en-
Using eNPS
try when he is likely to benefit and exit Subscribers can register on
https://enps.nsdl.com. One
when the conditions are expected to turn
needs to submit PRAN and
negative. Bharat’s overall financial situ-
date of birth for authentication.
ation will only improve if he makes the
right use of debt in his portfolio.
An OTP will be sent to the
subscriber’s registered number.
Contribution can be made using
Net banking, debit and credit card.

Charges

smart things to know

At the time of opening
Cash flow statement the account, the

1
charges applicable

4
Total cash flows of Cash flow are `200. For all subsequent
The a firm are the sum statements transactions, the charges are
0.25% of the contribution

2
statement of cash flows arising are
of cash from operations, prepared amount, subject to a minimum of
flows shows investment and It measures how well on a `25 and a maximum of `25,000.

3 5
inflows and financing activities. a company manages cash-basis, In case contribution is made
outflows of Each tells us how its cash position, while other using eNPS, the charges would
cash for an Cash inflows represent much cash is moving how it generates financial be 0.10% of the contribution
enterprise generation of cash, in and out due to cash to pay its debt statements amount, subject to a minimum of
over an and cash outflows each activity, and obligations and use accrual- `10 and a maximum of `10,000.
accounting represent cash usage how that pattern has fund its operating based
period. or spending. changed over time. expenses. accounting.

Teach spouse to be self reliant
The elderly often find it difficult to manage finances on their own, says Uma Shashikant.
S
mita is recently widowed. She is in
her mid-sixties and has grown up
children living abroad. They are
willing to take care of her, but Smita
wants to live in India, on her own.
It is just that she has never managed money
in her life and is unsure where to begin. Her
problem is not money alone, but the fears and
mindset issues that women of her generation
UMA SHASHIK ANT have to deal with.
IS CHAIRPER SON, CENTRE Aging women of today have lived in typical
FOR INVES TMENT silos and roles in a family, with very avoid-
EDUC ATION AND LE ARNING able dependencies. The husband has no
qualms in announcing that he can’t make
anything but a cup of tea; and the wife says
she does not deal with bank accounts or in-
vestments, almost proudly. This generation
has missed the advantages of seamlessness
when it comes to everyday living.
A financially In a world where the young behave very
differently, and where working women find
independent spouse
it tough to even accept that women like Smita
should be able to
can be so submissive and non-assertive,
initiate a money
makes it even more difficult. Such women
decision on her own.
struggle to make modifications to their be-
Encourage your wife
haviours and get on with life after the spouse
to plan, act and hold is gone. They are too old to change, and the
herself to account world around has no patience for them.
for the outcomes: How can retired men today help their
ask her to review wives to pick up life skills that will be of use
and draft the final when they are gone? Let’s make a check list.
version of that will. Does your wife find it tough to initiate an
activity that involves decision making with
money on her own? We have seen how con-
versations about assets tend to lean on neigh-
bours and friends for support. Or how the
decision to act on writing a will, after a meet-
financial planning
The Economic Times Wealth July 29-August 4, 2019
GETTY IMAGES
ing with the financial adviser, is left to the
husband. Or how women seek justifications
from social norms, rituals, traditions and
such to initiate a large expense. A financially
independent spouse should be able to initi-
ate a money decision on her own. Encourage
your wife to plan, act and hold herself to ac-
count for the outcomes: ask her to review and
draft the final version of that will.
Do you find that she makes simple every-
day decisions about money with hesitation
and trepidation? Your wife needs support
and reassurance that you are confident about
her abilities to make these decisions. If she
returns from a shopping trip and faces a bar-
rage of questions about the price she paid, or
told that there were better bargains, or if she
was pulled up for making wrong decisions,
she would slowly lose the confidence to make
money decisions. She would fail to expand the
scope of her money decisions. Encourage her
to make small decisions; do not be derisive
or critical; allow small mistakes and enable
building up of confidence.
Does your wife refuse to take up responsi-
bility for major areas of her own life, or lean
on you instead of taking control? Do you find
that she passes on decisions to you, even if it
affects her life? Is there a kitchen that needs
remodeling, but she fails to get involved as
she worries about how much of a budget is
reasonable? Does she cut back on family vis-
its and expenses on her side of the family and
becomes resentmentful about it? Create an
environment of responsibility and account-
ability in the household, and offer authority
for doing what needs to be done. If all major
19
decisions are centralised and not discussed,
financial dependencies develop even as you
remain unaware of them.
Do you find your wife is unwilling to disa-
gree with others? Or seeks validation and
approval of her actions from the family? Or
seeks martyrdom as a voluntary position to
place others ahead of herself? Does she con-
stantly strive to fulfill the expectations of
others? Does she blame herself if things go
wrong? She may be lacking the confidence
to see herself as an independent decision
making entity with personal boundaries
that should be protected. She will need help
to learn to assert her rights and speak for
herself. Create the space for conversations
about money where she is confident that she
is being heard. Allow her to critique your
decisions and offer another point of view.
Do you find her shirking typical financial
tasks like drawing money at the ATM, visit-
ing the bank, verifying account statements,
or logging into Netbanking? Involve her in
these decisions as you make them. She will
learn if you patiently hand hold with the ob-
jective of enabling her to skillfully navigate
the operational aspects of managing money.
Does she complain it is very boring? Offer
to help with tasks in the kitchen and learn
some skills like cooking a meal, in exchange
for conversations about money and finance.
Perhaps your giving up a boring task from
your perspective might motivate her.
Do you have all documents and records in
place? Does she know where the assets are?
Does she know who the financial advisers
are and how the investments can be ac-
cessed? Does she know the paperwork asso-
ciated with your passing away? If there is no
handy list of assets, make it with her. Clean
up where needed. Close unused accounts,
complete nominations and ensure she is a
joint holder. Involve her while doing this to
increase familiarity with these matters.
Does she know the basics of managing
income, growth and liquidity? When she
is alone and has the responsibility of using
and passing on the assets you have accumu-
lated, she will have to understand funda-
mental principles that govern how invest-
ment choices are made. She needs to know
risk, return and liquidity, and how asset
allocation affects all three elements. Smita
has been struggling to ward off product
sellers. She thinks that not doing anything
might be better.
Smita believes that she should draw from
the bank the money she needs for her ex-
penses, and let everything else be managed
by her children. But they do not live here
to take charge of her finances. She knows
how to use the ATM card and think that is
enough. Pause to consider the risk and deep
dependency in that stance. Protect your
wife from these risks while you still can.
Please send your feedback to
etwealth@timesgroup.com
SMART STATS
The Economic Times Wealth
July 29-August 4, 2019

In This Section
MUTUAL FUNDS - P21
LOANS AND DEPOSITS - P23

ET WEALTH TOP 50 STOCKS

Every week we put about 3,000 stocks through four key filters and rate them on a mix of factors. The end result
of this is the listing of the top 50 stocks based on the composite rating to help ease your fortune hunt.
RANK PRICE ` GROWTH%* VA LUAT I O N R AT I O S RISK R AT I N G
Current Previous Stock Net Div Downside Bear No. of Consensus
Rank Rank Price Revenue Profit PE PB Yield PEG Risk Beta Analysts Rating

Apar Industries 1 1 528.5 19.72 54.80 14.80 1.68 1.79 0.27 0.98 0.57 11 4.91
1 Fast growing stocks
Finolex Cables 2 2 385.9 25.24 53.44 14.26 2.12 1.05 0.27 1.22 0.59 11 4.64
Top 5 stocks with the highest
National Aluminium Co. 3 3 45.0 10.57 58.23 4.99 0.80 12.09 0.09 1.60 0.45 12 3.83
expected revenue % growth
JK Cement 4 4 976.2 19.18 61.14 26.59 2.80 1.03 0.43 1.01 0.67 22 4.50 over the previous year
Apollo Tyres 5 10 161.2 17.57 26.38 13.58 0.92 1.98 0.50 1.38 1.08 28 4.46 Sterlite
Technologies 36
Somany Ceramics 6 8 380.7 16.68 118.82 30.27 2.63 0.72 0.25 1.71 0.70 21 4.76
VA Tech
VA Tech Wabag 7 5 306.8 32.54 43.96 18.91 1.58 1.32 0.41 1.77 1.60 17 4.06 Wabag 33
Capacit'e
Star Cement 8 7 108.0 29.61 43.20 17.15 4.17 0.96 0.37 1.33 0.68 11 4.64 Infraprojects 30
HG Infra Engineering 9 14 227.0 29.87 34.52 11.66 2.24 0.22 0.32 2.06 0.57 12 5.00 Aurobindo
Pharma 30
KEC International 10 6 316.5 21.49 28.14 16.86 3.37 0.87 0.60 1.39 0.69 30 4.67
HG Infra
Jagran Prakashan 11 12 94.0 8.55 29.64 10.18 1.49 3.23 0.35 1.19 0.64 14 4.21 Engineering 30

Aurobindo Pharma 12 11 553.9 30.17 24.61 13.75 2.34 0.46 0.52 1.42 1.27 36 4.64
Capacit'e Infraprojects 13 15 248.0 30.22 38.11 17.63 2.00 0.40 0.42 1.34 1.24 12 4.83
2 Least expensive stocks
Zensar Technologies 14 16 217.1 19.51 25.66 3.10 0.50 1.12 0.13 1.79 1.58 16 4.31
Top 5 stocks with the lowest
Ahluwalia Contracts India 15 13 300.0 23.63 40.44 17.14 2.74 0.10 0.42 1.42 1.05 16 4.75 price-earnings ratio
Bharat Heavy Electricals 16 17 61.2 9.96 51.91 21.89 0.69 2.94 0.41 1.68 1.25 34 2.79
Zensar
Technologies 3.10
DB Corp 17 9 164.2 5.14 24.64 10.54 1.58 6.72 0.32 1.26 1.13 15 4.13
National
NCC 18 21 74.2 19.71 15.56 7.82 0.96 1.33 0.50 2.12 1.46 18 4.89 Aluminium Co. 4.99
Gujarat Gas 19 18 161.7 28.47 39.97 26.69 5.06 0.49 0.55 1.28 0.86 27 4.26 Arvind 6.36
Allcargo Logistics 20 19 100.2 15.73 12.73 9.99 1.21 5.53 0.52 1.35 0.84 10 4.60
NCC 7.82
Emami 21 22 319.3 14.62 86.34 47.90 7.00 2.19 0.59 1.47 0.90 33 4.18
Redington
Redington India 22 20 107.7 14.28 16.11 8.49 1.08 2.97 0.55 1.90 0.49 10 4.70 India 8.49

Ashok Leyland 23 29 72.3 19.94 15.56 10.20 2.43 4.27 0.66 1.61 1.15 47 3.40
Motherson Sumi Systems 24 23 111.8 14.63 33.42 21.60 3.18 1.36 0.67 1.80 1.26 33 4.30
3 Best PEGs
Engineers India 25 26 104.1 23.16 19.82 17.93 2.82 4.59 0.91 1.55 0.75 16 4.31
Top 5 stocks with the least
Power Grid Corp of India 26 24 212.8 10.02 9.80 8.84 1.88 4.11 0.80 0.97 0.61 29 4.45 price-earnings to growth ratio
Jubilant Life Sciences 27 30 449.3 11.55 28.00 12.24 1.46 0.68 0.42 1.63 1.47 13 4.77 Zensar Apar Industries
Technologies
Parag Milk Foods 28 27 259.8 20.96 26.60 18.09 2.64 0.29 0.69 1.25 0.68 17 4.59
Petronet LNG 29 42 232.3 7.56 19.49 15.67 3.42 4.26 0.80 1.16 0.82 39 4.31
0.09 0.13 0.25 0.27 0.27
Century Plyboards India 30 38 127.8 15.49 33.70 19.09 2.91 0.77 0.56 1.69 1.18 20 4.20
Jamna Auto Industries 31 31 42.2 12.84 24.28 12.30 3.32 2.16 0.49 1.43 1.06 11 4.55
National Somany Finolex Cables
Info Edge India 32 36 2,245.2 23.67 121.23 43.59 10.36 0.21 0.36 1.70 0.10 28 3.79 Aluminium Co Ceramics

4 Income generators
Cipla 33 33 536.7 17.17 29.89 28.35 2.89 0.58 0.92 1.03 0.56 42 3.88
NTPC 34 35 129.9 12.34 4.53 10.26 1.18 3.78 1.31 1.06 0.77 27 4.85
Alkem Laboratories 35 28 1,809.8 15.90 32.58 28.03 3.92 0.90 0.88 0.87 -0.19 16 4.56 Top 5 stocks with the highest
dividend yield (%)
Lupin 36 34 773.1 15.07 74.04 57.79 2.55 0.68 0.78 1.26 0.93 46 2.96
National
DLF 37 NR 176.4 0.87 58.41 24.05 1.17 1.58 0.44 2.05 1.43 17 3.71 12.09
Aluminium Co.
Rallis India 38 25 157.6 15.37 24.59 19.74 2.38 1.57 0.79 1.17 0.33 19 3.74 Vedanta 11.42
DB Corp 6.72
Persistent Systems 39 43 562.0 10.05 15.84 12.89 1.91 1.96 0.73 1.54 0.61 36 3.67 Allcargo
Logistics 5.53
Sterlite Technologies 40 44 149.5 36.16 15.19 10.51 3.49 2.34 0.77 2.01 1.01 12 4.42
Engineers India 4.59
UltraTech Cement 41 46 4,463.9 26.32 68.63 50.52 4.33 0.26 0.82 1.25 1.25 39 3.77
VRL Logistics 42 41 251.2 13.51 32.13 24.60 3.50 1.39 0.55 1.28 0.73 13 4.00
5 Least risky
Ipca Laboratories 43 NR 944.7 17.20 37.14 26.86 3.83 0.11 0.72 1.15 0.69 26 4.39
Top 5 stocks with the lowest
Mphasis 44 47 921.7 17.88 13.67 16.81 3.33 2.95 1.04 1.27 1.19 32 4.28 downside risk
Arvind 45 NR 58.5 11.87 11.41 6.36 0.55 4.12 0.59 1.88 0.54 13 4.08 Power Grid CCL Products
Corp of India India
NBCC India 46 NR 48.1 28.29 41.80 23.10 5.73 1.14 0.55 1.91 2.26 14 4.07
CCL Products India 47 49 244.8 22.42 22.26 20.93 3.86 0.71 0.94 1.00 0.31 11 4.73
0.87 0.97 0.98 1.00 1.01
HeidelbergCement India 48 50 196.8 10.82 32.14 20.13 3.79 1.76 0.62 1.46 1.35 14 4.43
Vedanta 49 NR 171.4 4.58 16.24 9.00 1.01 11.42 0.53 1.92 1.12 23 3.61
Alkem Apar JK Cement
Minda Industries 50 37 292.1 20.09 42.55 26.40 4.43 0.34 0.72 1.73 1.48 17 4.65 Laboratories Industries
SEE DOWNSIDE RISK AND BEAR BETA COLUMNS
IN THE ADJACENT TABLE.
*REVENUE AND NET PROFIT GROWTH IS BASED ON CONSENSUS ANALYSTS' EXPECTATIONS. NR: NOT IN THE RANKING. DATA AS ON 25 JULY 2019. SOURCE: BLOOMBERG
 smart stats
The Economic Times Wealth July 29-August 4, 2019 21

ETW FUNDS 100

BEST FUNDS TO BUILD YOUR PORTFOLIO
LAGGARDS & LEADERS
Taking a long-term view of fund returns, here is a list of 10
funds in each category—five leaders (worth investing) and
five laggards (that may be a drag on your portfolio).

LAGGARDS LEADERS

ET Wealth collaborates with Value Research to identify the top-performing Equity: Large-cap 5-year returns
funds across categories. Equity funds and equity-oriented hybrid funds are
4.59 13.19
ranked on 3-year returns while debt-oriented hybrid and income funds are Principal Nifty 100 Equal Weight Fund Quant Focused Fund
ranked on 1-year returns. 5.04 12.91
Baroda Large Cap Fund Mirae Asset Large Cap Fund
RETURNS (%)
Value Research Net Assets Expense
Fund Rating (` Cr) 3-Month 6-Month 1-Year 3-Year 5-Year Ratio (%) 5.67 10.90
Taurus Largecap Equity Fund Reliance Large Cap Fund
EQUITY: LARGE-CAP 12.8% 6.52 10.74
Axis Bluechip Fund  6,302.95 0.1 6.78 0.53 12.76 10.74 2.08 THE 3-YEAR DSP Top 100 Equity Fund Axis Bluechip Fund
Mirae Asset Large Cap Fund  13,617.57 -2.65 4.59 4.47 12.31 12.91 1.76 RETURN
OF AXIS
6.58 10.63
Reliance Large Cap Fund  13,076.21 -4.56 3.27 4.19 11.21 10.9 1.77
BLUECHIP IS IDFC Large Cap Fund SBI Bluechip Fund
HDFC Top 100 Fund  17,911.82 -2.62 5.41 8.37 11.17 9.10 1.87
THE HIGHEST
Canara Robeco Bluechip Equity Fund  210.66 -1.25 4.58 0.87 10.5 9.36 2.5
IN ITS
ICICI Prudential Bluechip Fund  22,117.05 -2.64 3.77 1.75 9.71 9.83 1.83 CATEGORY.
Edelweiss Large Cap Fund  165.75 -3.19 3.1 -3.25 9.32 9.52 1.66 Equity: Multi-cap 5-year returns
JM Core 11 Fund  50.67 -9.53 -0.4 -10.18 9.01 10.16 —
Motilal Oswal Focused 25 Fund  1,113.38 -2.79 3.98 -5.65 8.58 10.20 2.25
4.42 15.14
Aditya Birla Sun Life Frontline Equity Fund  21,663.66 -3.49 2.28 -1.03 7.50 9.14 1.78
LIC MF Multicap Fund Motilal Oswal Multicap 35 Fund
SBI Bluechip Fund  22,679.43 -1.97 5.49 -0.04 7.20 10.63 1.7
4.73 13.38
EQUITY: LARGE- & MID-CAP Union Multi Cap Fund Kotak Standard Multicap Fund
Mirae Asset Emerging Bluechip Fund  7,750.82 -3.46 3.56 5.67 13.82 18.39 1.99
5.43 12.88
Sundaram Large and Mid Cap Fund  711.45 -5.05 0.26 -2.9 10.86 11.27 2.54
LIC MF Large & Mid Cap Fund  505.17 -3.8 0.54 -3.4 10.53 — 2.78
Taurus Starshare Fund Franklin India Focused Equity Fund
Canara Robeco Emerging Equities Fund  4,929.13 -6.33 0.42 -6.22 10.36 14.63 1.91 6.22 12.82
Invesco India Growth Opportunities Fund  1,539.16 -5.35 0.15 -4.09 10.2 10.91 2.17 IDFC Focused Equity Fund SBI Magnum Multicap Fund
Kotak Equity Opportunities Fund  2,577.47 -4.42 2.36 -0.76 8.88 11.46 2.15
6.50 12.72
Principal Emerging Bluechip Fund  2,213.46 -6.28 -1.83 -9.64 8.43 13.68 1.99
HDFC Focused 30 Fund SBI Focused Equity Fund
EQUITY: MULTI-CAP 12.6%
Axis Focused 25 Fund  8,044.17 -2.09 5.82 -7.06 12.57 12.69 2.08 THE 3-YEAR
Parag Parikh Long Term Equity Fund  1,974.44 -3.06 4.92 -1.07 11.46 10.73 2.1
RETURN
OF AXIS Equity: Mid-cap 3-year returns
SBI Focused Equity Fund  4,864.29 -1.56 8.01 4.58 11.21 12.72 2.1
FOCUSED 25
Tata Retirement Savings Fund  649.90 -3.42 2.93 -5.19 10.88 12.47 2.47 FUND IS THE -0.25 10.15
Kotak Standard Multicap Fund  25,844.74 -3.09 4.11 0.55 10.74 13.38 1.75 HIGHEST
Edelweiss Multi Cap Fund  391.99 -3.57 1 -3.96 10.65 — 2.39 IN ITS SBI Magnum Midcap Fund Axis Midcap Fund
Quant Active Fund  6.97 -3.72 1.11 -1.7 9.79 11.4 2.48 CATEGORY. 1.22 8.28
SBI Magnum Multicap Fund  7,650.41 -1.82 4.91 1.09 9.57 12.82 1.82 DHFL Pramerica Midcap Opportunities Fund L&T Midcap Fund
Franklin India Focused Equity Fund  8,651.84 -2.3 6.61 7.06 9.46 12.88 1.84
HDFC Retirement Savings Fund Equity Plan  735.06 -3.65 1.23 -1.59 9.38 — 2.57
1.43 7.71
Motilal Oswal Multicap 35 Fund  13,450.26 -4.11 0.93 -8.18 9.23 15.14 1.86 Motilal Oswal Midcap 30 Fund Reliance Growth Fund
Aditya Birla Sun Life Equity Fund  11,222.83 -4.8 0.39 -1.56 9.19 10.5 1.93 2.15 7.35
ICICI Prudential Multicap Fund  4,002.38 -3.37 3.76 1.6 9.06 10.68 2.2 UTI Mid Cap Fund DSP Midcap Fund

EQUITY: MID-CAP 10.2% 3.35 7.05

Axis Midcap Fund  2,655.82 -5.11 0.64 -2.92 10.15 11.4 2.23 THE 3-YEAR Motilal Oswal Midcap 100 Tata Midcap Growth Fund
RETURN OF Exchange Traded Fund
L&T Midcap Fund  5,026.07 -7.97 -5.19 -11.35 8.28 13.1 2.01
DSP Midcap Fund  6,302.32 -5.19 0.3 -5.41 7.35 12.59 1.97 AXIS MID-
Kotak Emerging Equity Scheme
HDFC Mid-Cap Opportunities Fund


4,500.54
22,599.42
-5.58
-8.56
0.09
-2.77
-5.18
-10.86
6.87
6.51
13.87
11.61
2.02
1.84
CAP FUND IS
THE HIGH- Equity: Small-cap 3-year returns
EST IN ITS
Franklin India Prima Fund  7,168.59 -5.49 -1.61 -5.6 6.37 12.4 1.87 CATEGORY.
Taurus Discovery Fund  50.44 -8.77 -5.56 -12.69 6.36 10.47 2.51
-3.26 11.61
Quant Small Cap Fund SBI Small Cap Fund
EQUITY: SMALL-CAP -1.17 10.61
SBI Small Cap Fund  2,258.10 -4.86 0.26 -4.04 11.61 18.37 2.35 Sundaram Small Cap Fund HDFC Small Cap Fund
HDFC Small Cap Fund  8,427.17 -10.03 -6.07 -10.13 10.61 12.97 1.94
Axis Small Cap Fund  492.95 0.94 6.54 4.08 9.77 12.78 2.67
-0.89 9.77
L&T Emerging Businesses Fund  6,079.30 -9.18 -7.15 -14.23 9.75 13.12 2.01 Union Small Cap Fund Axis Small Cap Fund
Reliance Small Cap Fund  8,232.06 -9.34 -5.54 -11.69 9.15 13.42 2.02 0.29 9.75
Franklin India Smaller Companies Fund  7,368.89 -9.57 -5.04 -13.59 2.77 10.89 1.84 HSBC Small Cap Equity Fund L&T Emerging Businesses Fund

EQUITY: VALUE-ORIENTED 1.16 9.15

Kotak India EQ Contra Fund  865.22 -4.52 2.23 -1.81 11.27 10.07 2.61 DSP Small Cap Fund Reliance Small Cap Fund
Invesco India Contra Fund  4,027.01 -5.37 -0.26 -4.57 11.21 12.37 2.02
Tata Equity PE Fund  5,499.16 -4.82 0.49 -8.17 10.08 11.47 1.88
L&T India Value Fund  8,259.70 -4.12 1.29 -4.31 7.82 12.37 1.86 Hybrid: Aggressive 5-year returns
EQUITY: TAX-SAVING 15.4% 2.59 12.40
Mirae Asset Tax Saver Fund  2,201.51 -2.12 5.04 5.19 15.42 — 2.19
THE 3-YEAR JM Equity Hybrid Fund Tata Retirement Savings Fund
JM Tax Gain Fund  32.43 -3.05 3.73 -3.75 10.64 10.78 —
RETURN OF
Axis Long Term Equity Fund  19,717.72 -1.74 6.02 -3.36 10.33 12.73 1.81 MIRAE ASSET 5.87 11.09
Motilal Oswal Long Term Equity Fund  1,410.43 -4.16 0.95 -10.57 10.09 — 2.21 TAX SAVER LIC MF Equity Hybrid Fund SBI Equity Hybrid Fund
Tata India Tax Savings Fund  1,902.77 -2.07 5.32 3.13 9.98 13.03 2.12 FUND IS THE
Kotak Tax Saver  942.11 -2.55 4.31 2.6 9.55 12.13 2.43 HIGHEST IN 5.96 11.01
IDFC Tax Advantage Fund  2,059.85 -6.4 0.94 -5.7 9.35 10.71 2.04 ITS CATEGORY. DHFL Pramerica Hybrid Equity ICICI Prudential Equity & Debt Fund
DSP Tax Saver Fund  5,646.03 -2.84 5.4 1.86 9.32 11.47 1.9 6.40 10.70
Quant Tax Plan  10.09 -3.26 1.45 -1.17 9.15 14.61 2.48 Baroda Hybrid Equity Fund HDFC Hybrid Equity Fund
Invesco India Tax Plan  878.07 -4.59 0.31 -5.85 8.88 11.09 2.53
Aditya Birla Sun Life Tax Relief 96  8,849.88 -8.44 -4.19 -8.58 7.96 11.55 2.03
7.01 10.47
Shriram Hybrid Equity Fund Canara Robeco Equity Hybrid Fund
ANNUALISED RETURNS IN % AS ON 24 JULY 2019.
 smart stats
22 The Economic Times Wealth July 29-August 4, 2019

ETW FUNDS 100 Value Research

Fund Rating
Net Assets
(` Cr) 3-Month 6-Month
RETURNS (%)
1-Year 3-Year 5-Year
Expense
Ratio 1 Top 5 SIPs
Top 5 equity schemes based
HYBRID: EQUITY SAVINGS 8.4% on 10-year SIP returns
HDFC Equity Savings Fund  5,422.35 -0.23 3.38 4.82 8.43 8.03 1.96 THE 3-YEAR
ICICI Prudential Equity Savings Fund  1,672.31 1.52 5.35 8.11 7.81 — 1.36 RETURN OF Canara Robeco Emerging Equities Fund
HDFC EQ-
Kotak Equity Savings Fund  2,121.50 -0.53 2.67 3.23 7.28 — 2.14
UITY SAVINGS 18.04
Edelweiss Equity Savings Fund  124.01 -0.06 2.81 2.07 7 — 1.74 FUND IS THE SBI Focused Equity Fund
HIGHEST IN
HYBRID: AGGRESSIVE (EQUITY-ORIENTED) ITS CATEGORY. 15.63
Mirae Asset Hybrid Equity Fund  2,195.81 -1.05 5.48 6.22 10.77 — 2.08 Principal Emerging Bluechip Fund
HDFC Retirement Savings Fund  303.29 -1.88 2.7 3.36 10.65 — 2.62
15.35
Principal Hybrid Equity Fund  1,687.75 -4.69 -0.68 -1.96 10.57 10.2 1.99
ICICI Prudential Equity & Debt Fund  25,616.79 -1.37 5.59 6.16 9.89 11.01 1.73 Franklin India Smaller Companies Fund
SBI Equity Hybrid Fund  29,831.59 0.45 6.2 5.93 9.53 11.09 1.65 15.27
Canara Robeco Equity Hybrid Fund  2,315.82 -1.66 3.55 2.31 9.41 10.47 2.09
DSP Small Cap Fund
HDFC Children's Gift Fund  2,840.10 -2.45 1.63 1.02 9.36 10.28 2.14
15.18
Tata Retirement Savings Fund  1,092.15 -4.52 0.99 -4.78 9.32 12.4 2.28
HDFC Hybrid Equity Fund  22,221.20 -1.39 3.95 3.16 9.18 10.7 1.77 SIP: SYSTEMATIC % ANNUALISED RETURNS
INVESTMENT PLAN AS ON 24 JULY 2019
HYBRID: CONSERVATIVE (DEBT-ORIENTED) 7.3%
2 Top 5 MIPs
ICICI Prudential Regular Savings Fund  1,640.31 1.51 4.39 7.33 8.63 9.89 1.96 THE 1-YEAR
Indiabulls Savings Income Fund  20.28 1.48 3.43 6.4 9.19 — 2.22 RETURN OF
Tata Retirement Savings Fund 131.82 0.9 3.97 3.97 7.18 8.69 2.24 ICICI PRU

REGULAR Top 5 MIP schemes based on
Reliance Hybrid Bond Fund  1,782.80 -0.57 0.54 3.8 6.05 7.76 1.87
SAVINGS 3-year SWP returns
SBI Magnum Children's Benefit Fund  63.61 -3 0.21 1.5 9.11 10.71 2.22 FUND IS THE
Aditya Birla Sun Life Regular Savings Fund  2,150.69 0.47 3.15 0.71 5.97 9.25 1.84 HIGHEST IN ITS Indiabulls Savings Income Fund
CATEGORY.
UTI Regular Savings Fund  2,465.63 -2.52 -0.14 0.09 5.85 7.86 1.78 9.04

DEBT: MEDIUM- TO LONG-TERM ICICI Prudential Regular Savings Fund

SBI Magnum Income Fund  1,181.83 4.89 6.83 10.12 7.87 8.67 1.47 8.35
Baroda Conservative Hybrid Fund
DEBT: MEDIUM-TERM
SBI Magnum Medium Duration Fund  1,692.54 4.01 6.3 10 8.96 9.37 1.09
7.32
Franklin India Income Opportunities Fund  3,670.24 2.32 2.96 7.9 8.39 8.71 1.7 BNP Paribas Conservative Hybrid Fund
Axis Strategic Bond Fund  1,183.24 0.74 2.75 6.91 7.54 8.67 1.05 6.17
UTI Medium Term Fund  319.30 1.47 2.9 6.12 6.95 — 1.57
DHFL Pramerica Hybrid Debt Fund
DEBT: SHORT-TERM 9.3% 6.17
Axis Short Term Fund  2,556.66 2.89 5.15 9.27 7.43 8.07 0.9 THE 1-YEAR SWP: SYSTEMATIC % ANNUALISED RETURNS
HDFC Short Term Debt Fund  7,991.50 2.83 4.97 9.19 7.69 8.33 0.4 RETURN OF
WITHDRAWAL PLAN AS ON 24 JULY 2019
Indiabulls Short Term Fund  108.03 2.74 4.71 9.12 7.53 8.2 1.48
AXIS SHORT
TERM FUND
Baroda Short Term Bond Fund  288.83 3.03 4.9 8.97 8.13 8.52 1.29 IS THE HIGH-
Franklin India Short Term Income Plan  13,235.76 1.68 3.05 8.67 8.64 8.82 1.49 EST IN ITS
BNP Paribas Short Term Fund

DEBT: DYNAMIC BOND

 135.42 0.65 2.37 6.28 6.52 7.49 1.18 CATEGORY.
3 Mid-cap
cash holdings
SBI Dynamic Bond Fund  991.53 7.22 9.97 13.93 8.59 9.38 1.65
Kotak Dynamic Bond Fund  680.04 5.18 7.68 13.32 9 9.38 1.08 16.43
DHFL Pramerica Dynamic Bond Fund  40.52 5.49 7.86 12.95 8.73 9.58 1.25 13.89
ICICI Prudential All Seasons Bond Fund  2,750.14 4.15 6.24 10.19 8.4 9.87 1.3
Franklin India Dynamic Accrual Fund  3,923.13 1.91 3.55 9.12 8.68 9.39 1.68
9.13 8.79 8.60
DEBT: CORPORATE BOND
HDFC Corporate Bond Fund  12,257.68 3.81 6.27 10.76 8.15 8.8 0.46
Franklin India Corporate Debt Fund  903.87 3.47 5.14 10.3 8.69 8.98 0.9
Aditya Birla Sun Life Corporate Bond Fund  15,662.09 3.18 5.46 10.18 8.04 8.73 0.39
Exp. ratios as on 30 June 2019
Kotak Corporate Bond Fund  2,148.87 2.69 4.9 9.23 8.07 9.16 0.59
Returns as on 24 July 2019 ICICI Axis BNP IDBI L&T
Reliance Prime Debt Fund  1,172.59 1.53 3.65 7.78 7.27 7.96 0.71 Assets as on 30 June 2019 Prudential Midcap Paribas Midcap Midcap
All equity funds ranked on 3-year returns. Debt funds ranked on 1-year returns. Ratings as on 30 June 2019 Midcap Fund Midcap Fund Fund
Did not find your fund here? Fund Fund
Log on to www.wealth.economictimes.com for an exhaustive list. % AS ON 30 JUN 2019

Methodology EQUITIES (figures over the past one year)

Debt: Corporate Bond
The Top 100 includes only those funds that have a 5- or
4-star rating from Value Research. The rating is determined
Large-cap: Mostly invested in large-cap companies.
FUND 4 lowest expense ratios
RAISER
by subtracting a fund’s risk score from its return score. Multi-cap: Mostly invested in large- and mid-cap
The result is assigned stars according to the following companies.
0.51 0.51
distribution: Mid-cap: Mostly invested in mid-cap companies. 0.46 0.48

`3,494
  Top 10% Small-cap: Mostly invested in small-cap companies. 0.39
  Next 22.5% Tax planning: Offer tax rebate under Section 80C.
(Not covered
  Middle 35% in ETW Funds International: More than 65% of assets invested abroad.


 Next 22.5%
 Bottom 10%
100 listing) Income: Average maturity varies according to objective.
Gilt: Medium- and long-term; invest in gilt securities.
crore
is the exposure of
Fixed-income funds less than 18 months old and equity funds Equity-oriented: Average equity exposure more
less than three years old have been excluded. This ensures than 60%. mutual funds to the Yes
that all the funds have existed long enough to be tracked for Debt-oriented aggressive: Average equity exposure Bank bonds that were
Aditya HDFC DSP Sundaram UTI Cor-
consistency of performance. Given the focus on long-term between 25-60%. downgraded last week
investing, liquid funds, short-term funds and FMPs are not Birla Sun Corporate Corporate Corporate porate
Debt-oriented conservative: Average equity exposure by ICRA. At `2,216 crore, Life Cor- Bond Bond Bond Fund Bond
part of the list. For the same reason, we have considered only
the growth option of funds that reinvest returns instead of less than 25%. Reliance Mutual Fund has porate Fund Fund Fund
offering dividends that increase the NAV of funds. Arbitrage: Seek arbitrage opportunities between equity the highest exposure to Bond
Fund
Despite these rigorous filters, the list includes 2/3 funds of and derivatives. the downgraded papers. % AS ON 30 JUN 2019
% EXPENSE RATIO IS CHARGED ANNUALLY.
each category to maximise choice from the best funds. Asset allocation: Invest fully in equity or debt as per METHODOLOGY OF TOP 100 FUNDS ON
The fund categories are: market conditions. WWW.WEALTH.ECONOMICTIMES.COM
 loans and deposits
The Economic Times Wealth July 29-August 4, 2019 23

LOANS & DEPOSITS

ET WEALTH collaborates with ETIG to provide a comprehensive ready reckoner of loans and fixed-income
instruments. Don’t miss the information on investments for senior citizens and a simplified EMI calculator.

Top five bank FDs

TENURE: 1 YEAR
Interest rate (%)
compounded qtrly
What `10,000
will grow to
BANK Top banks for 2 years

MCLR
RBL Bank 7.90 10,814 BANK NAME MCLR (%) WITH EFFECT FROM
Lakshmi Vilas Bank 7.75 10,798
State Bank Of India 8.50 10 July 2019
IndusInd Bank 7.60 10,782
South Indian Bank 7.40 10,761 Union Bank Of India 8.65 1 July 2019
Bandhan Bank 7.35 10,756 Indian Overseas Bank 8.75 10 JULY 2019
TENURE: 2 YEARS Marginal Cost of funds-based Lending
Rate (MCLR) is the new benchmark lending Axis Bank 8.80 2 July 2019
IDFC First Bank 8.50 11,832
RBL Bank 8.00 11,717 rate designated by RBI and will replace the HDFC Bank 8.80 8 July 2019
AU Small Finance Bank 7.87 11,687 base rate for new borrowers.
Lakshmi Vilas Bank 7.85 11,682
IndusInd Bank 7.75 11,659

TENURE: 3 YEARS
Top banks for 6 months Top banks for 3 years
DCB Bank 8.25 12,776 BANK NAME MCLR (%) WITH EFFECT FROM BANK NAME MCLR (%) WITH EFFECT FROM
AU Small Finance Bank 8.10 12,720
Lakshmi Vilas Bank 7.85 12,627 State Bank Of India 8.25 10 JULY 2019 Punjab National Bank 8.60 1 July 2019
Bandhan Bank 7.65 12,552 Punjab National Bank 8.30 1 JULY 2019 State Bank Of India 8.60 10 July 2019
RBL Bank 7.60 12,534
Allahabad Bank 8.40 14 June 2019 Union Bank Of India 8.70 1 July 2019
TENURE: 5 YEARS
Lakshmi Vilas Bank 7.85 14,751 Central Bank Of India 8.40 1 July 2019 Axis Bank 8.85 2 July 2019
AU Small Finance Bank 7.77 14,693
Union Bank Of India 8.45 1 JULY 2019 Indian Overseas Bank 8.85 10 July 2019
DCB Bank 7.75 14,678
Bandhan Bank 7.65 14,607
RBL Bank 7.60 14,571
Top banks for 1 year Top banks for 5 years
BANK NAME MCLR (%) WITH EFFECT FROM BANK NAME MCLR (%) WITH EFFECT FROM
Top five senior citizen bank FDs Punjab National Bank 8.40 1 July 2019 Karur Vysya Bank 9.55 7 July 2019
Interest rate (%) What `10,000
TENURE: 1 YEAR compounded qtrly will grow to State Bank Of India 8.40 10 July 2019 City Union Bank 9.95 6 August 2018
RBL Bank 8.40 10,867
Lakshmi Vilas Bank 8.35 10,862
Central Bank Of India 8.50 1 July 2019
IndusInd Bank 8.10 10,835 Allahabad Bank 8.55 14 June 2019 * STRATEGIC PREMIUM OF 0.25%. # BUSINESS STRATEGY SPREAD OF
Bandhan Bank 8.10 10,835 0.30%. FOR ANY CHANGES IN MCLR RATES,
Union Bank Of India 8.55 1 July 2019 PLEASE E-MAIL US AT ETIGDB@TIMESGROUP.COM
South Indian Bank 7.90 10,814

TENURE: 2 YEARS
IDFC First Bank 9.00 11,948

Your EMI for a loan of `1 lakh

RBL Bank 8.50 11,832
Lakshmi Vilas Bank 8.45 11,820
Bandhan Bank 8.40 11,809 TENURE 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS
AU Small Finance Bank 8.37 11,802
@ 8% 2,028 1,213 956 836 772
TENURE: 3 YEARS
@ 10% 2,125 1,322 1,075 965 909
DCB Bank 8.75 12,965
AU Small Finance Bank 8.60 12,908 @ 12% 2,224 1,435 1,200 1,101 1,053
Lakshmi Vilas Bank 8.45 12,851 @ 15% 2,379 1,613 1,400 1,317 1,281
Bandhan Bank 8.40 12,832
FIGURES ARE IN `. USE THIS CALCULATOR TO CHECK YOUR LOAN AFFORDABILITY.
RBL Bank 8.10 12,720 FOR EXAMPLE, A `5 LAKH LOAN AT 12% FOR 10 YEARS WILL TRANSLATE INTO AN EMI OF `1,435 X 5 = `7,175

TENURE: 5 YEARS
Lakshmi Vilas Bank 8.45 15,191 Post office deposits Interest (%)
Minimum
invt. (`)
Maximum investment (`) Features
Tax
benefits
Bandhan Bank 8.40 15,154
AU Small Finance Bank 8.27 15,057 Senior Citizens' Savings Scheme 8.6 1,000 15 lakh 5-year tenure, minimum age 60 80C
DCB Bank 8.25 15,043 Sukanya Samriddhi Yojana 8.4 250 1.5 lakh per year One account per girl child 80C
RBL Bank 8.10 14,932
Public Provident Fund 7.9 500 1.5 lakh per year 15-year tenure, tax-free returns 80C

Top five tax-saving bank FDs 5-year NSC VIII Issue 7.9 100 No limit No TDS 80C
Interest What `10,000 Time deposit 6.9-7.7 200 No limit Available in 1, 2, 3, 5 years 80C#
TENURE: 5 YEARS AND ABOVE rate (%) will grow to
Lakshmi Vilas Bank 7.85 14,751 Post Office Monthly Income Single 4.5 lakh 5-year tenure, monthly returns Nil
7.6 1,500
AU Small Finance Bank 7.77 14,693 Scheme Joint 9 lakh 5-year tenure, monthly returns Nil
DCB Bank 7.75 14,678
Kisan Vikas Patra 7.6 1,000 No limit Can be encashed after 2.5 years Nil
IDFC First Bank 7.75 14,678
Recurring deposits 7.2 10 No limit 5-year tenure Nil
Bandhan Bank 7.65 14,607
Savings account 4.0 20 No limit `10,000 interest tax free Nil
ALL DATA SOURCED FROM ECONOMIC TIMES INTELLIGENCE GROUP
(ETIGDATABASE@TIMESGROUP.COM) Data as on 25 July 2019 # Benefit available only for 5-year deposit
 financial planning
24 The Economic Times Wealth July 29-August 4, 2019
Invest in less volatile products
Instruments that give stable returns fare better over the long-term compared to products with high volatility.
by Avneet Kaur
I
nvestors often fail to follow legendary
investor Warren Buffet’s two famed
rules for successful investing. Rule 1:
Never lose money, and Rule 2: Don’t for-
get Rule 1. Simple behavioural changes,
however, can help investors implement
and benefit from these rules, accord-
ing to Neil Parag Parikh, CEO, PPFAS
Mutual Fund.
“Preservation of capital, earning a
reasonable rate of return and investing
in a disciplined manner can help you
avoid large negative returns in your
portfolio,” said Parikh at the at the 14th
edition of the ET Wealth Investment
Workshop held in Surat on 12 July.
But what is a reasonable rate of re-
turn? Can one go by simple average
return of a product? Parikh highlighted
how focusing on average historical
returns from a product can often lead
investors to make the wrong choices. He
presented two sets of returns (see table),
both showing annual returns of two
products for four years. The first product
delivered large double-digit returns for
three years—40%, 50%, 65%—and a
large negative return—-60—in one year.
The other product offered modest double-
digit returns in all the four years—20%,
15%, 17%, 20%. The simple average
Make sure your investment beats inflation
Besides inflation, one must also take into account the tax outgo for efficient financial planning.
by Avneet Kaur
P
eople can take care of their financial
well-being, if they keep a few impor-
tant things in mind. For instance,
investing in products likely to beat infla-
tion is critical, said Kartik Iyer, Founder
and Managing Partner, Investmart, a
Vadodara-based wealth management firm.
He was speaking at the 14th edition of the
ET Wealth Investment Workshop held in
Surat on 12 July.
The first step to financial planning is
protection via insurance. Having life and
health insurance is a must for one’s finan-
cial well-being, and it must not be treated
as an ‘investment’, or just a tax-saving in-
strument, Iyer cautioned. A term life cover
of at least 10-times one’s annual income
is desirable. Similarly, adequate health
insurance is also needed, given the rising
medical inflation. It is also imperative
to have a contingency fund that can help
manage financial exigencies—job loss,
out-of-pocket medical expenses, etc. “You
can park your emergency fund in a savings
bank account, a bank fixed deposit or liq-
have grown in four years.
The `100 invested in the first product
would have become `139 at the end of
four years, while the same amount in-
vested in the second product would have
almost doubled to `194.
“The second option might seem bor-
ing, but it has given decent, stable re-
turns compared to the first option. It is
not losing money,” said Parikh. The first
option’s compound average growth rate
(CAGR) is a little about 9%, whereas the
second product’s CAGR is double at 18%.
GETTYIMAGES
“The point is to make sure there is no
large negative return in your portfolio,”
said Parikh.
How badly can a single large negative
Average YEARLY RETURNS GROWTH OF `100 return hit your portfolio? “Suppose a
stock worth `100 falls by 25% to `75. This
returns OPTION A OPTION B OPTION A OPTION B
stock will have to rise 33% to recover
can be Year 1 40% 20% 140 120 its original price,” explained Parikh.
Similarly, if a `100 stock falls by 50%, it
misleading Year 2 50% 15% 210 138 has to go up by 100% to reach its original
Even though the Year 3 -60% 17% 84 161.46 value. “So, the more a stock falls, the
average return from tougher it will be for it to get back to its
Year 4 65% 20 % 138.6 193.75
Option A is higher, original price. A fall of 5%, 10% or 15% is
investment in Option Average normal, but if your investment falls 30-
23.75% 18%
return
B has grown more. 40%, it will be really hard to recover to
your principal,” warned Parikh.
return of the first and the second products most chose the product with 23.75% aver-
comes to 23.75% and 18%, respectively. age return. They were all in for a surprise
Please send your feedback to
When Parikh asked which product when Parikh then showed how an invest-
etwealth@timesgroup.com
would the workshop participants invest in, ment of `100 in the two products would
not get the same kind of returns.”
Besides inflation, one must also take
into account taxes for proper financial
planning. “While you do not have much
control over taxes, you can always choose
tax-efficient investment products,” he
said. Iyer told the participants not to focus
only on the inflation announced by the
government and include lifestyle inflation.
“Lifestyle inflation is when you switch
from ordinary shoes worth `500 to buy
branded shoes worth `3,000, a 500% life-
style inflation,” explained Iyer.
Tracking one’s investments is as impor-
GETTYIMAGES
tant as important as choosing the right
products. Iyer advised that the participants
review their portfolio at least once a year.
He also touched on succession plan-
uid mutual funds,” said Iyer. “Your savings should be invested in such ning: “An investor must prepare a will,
After taking life and health insurance, a way that they grow enough to beat infla- cross-check the holding pattern and nomi-
you need to define your financial goals and tion,” advised Iyer. Touching on the theme nations in investments and verify bank
carefully choose suitable investment prod- of the real rate of return, Iyer said that eq- details and addresses for smooth trans-
ucts. Invest in products based on your risk uities can help beat inflation but one needs mission of assets.”
profile and time you have to reach a goal, to stay invested in them for longer tenures.
advised Iyer. He also told investors to un- “You need to give equities time to produce
derstand the product features thoroughly returns. If you keep on churning your port- Please send your feedback to
etwealth@timesgroup.com
before investing. folio fearing short-term volatility, you will
 pick of the week
The Economic Times Wealth July 29-August 4, 2019 25

Jubilant Life: Long-term growth story

The sharp correction in the stock price offers long-term investors a good buying opportunity.

W
arning letters from the US Food and Drug
Administration (FDA) to Indian pharma-
Isotopes, and this should help improve Jubilant Life’s oper-
ating leverage and segment margins. The company is also a
Fundamentals
ceuticals companies have led to sharp price leading contract manufacturer of sterile injectables. CONSENSUS
ACTUAL
ESTIMATE
corrections in these companies’ stock pric- Jubilant Life has benefitted from the industry-wide shift
2017-18 2018-19 2019-20 2020-21
es. For instance, the stock price of Jubilant from generic to speciality pharma segments. Since Jubilant
Revenue (` cr) 7,517.84 9,110.82 9,762.31 10,633.17
Life Sciences has fallen 49% since it received the US FDA’s Life’s pharmaceuticals segment has limited competition, it
warning letter concerning its formulations plant in Roorkee, generates decent profit margins, which explains the compa- Ebitda (` cr) 1,522.49 1,739.01 1,967.76 2,154.58
Uttarakhand, and official action indicated (OAI) letter ny’s better growth rates. The compound annual growth rate Net profit (` cr) 642.81 574.46 931.84 1,115.53
concerning its active pharma- of Jubilant Life’s revenue and net EPS (`) 41.25 36.07 58.36 70.03
ceutical ingredient (API) plant in profit was 16% and 31% respectively,
Nanjangudm, Karnataka. Analysts’ views between 2015-16 and 2018-19. Though Valuations PBV PE
DIVIDEND
YIELD (%)
However, analysts feel that these growth rates may moderate now due Jubilant Life Sciences 3.16 12.39 0.67
concerns are overdone because 1 12 to the company’s higher base, the
Pfizer 5.41 33.81 0.63
these letters are due to procedural Sell speciality pharma structural story
Buy Sanofi India 6.44 36.53 1.35
lapses and, therefore, the chance of is expected to continue for the next
Abbott India 10.80 40.58 0.64
escalation—import ban from these 3-5 years. Operational leverage of
plants—is low. Though some price its contract manufacturing segment Glaxosmithkline Pharmaceuticals 9.47 45.08 1.67
correction is warranted due to the should also improve after the modi-
US FDA letters because this may fication in its plants that will allow Latest brokerage calls TARGET
delay launch of the company’s new them to be operational throughout RECO DATE RESEARCH HOUSE ADVICE PRICE (`)
products from these plants by 9-12 the day. Plant upgrades are expected 22 Jul ’19 Nomura Buy 660
months, the magnitude of the cut is to be completed in 2019-20.
15 Jul ’19 Macquarie Outperform 810
unwarranted and therefore, offers
9 Jul ’19 Motilal Oswal Sec. Buy 640
a good opportunity for long-term Selection Methodology: We pick
8 Jul ’19 ICICI Securities Buy 775
investors. Sharp stock price correction, strong growth rates, focus up the stock that has shown maxi-
More importantly, the long term on the growing speciality pharma segment, a bouquet mum increase in “consensus ana- 8 Jul ’19 Nirmal Bang Inst. Eq. Buy 596
growth story of this integrated of niche products, among other things, have made lyst rating” during the last 1 month.
pharmaceuticals and life science
Jubilant Life analysts’ pick of the week.
Consensus rating is arrived at by Relative performance 90.51
ingredients (LSI) company is still averaging all analyst recommenda- 1
100 MARKET PRICE: `446.85 SENSEX 102.64
intact. Though a mid-cap player, Jubilant Life boasts of niche tions after attributing weights to each of them (ie 5 for strong
products in segments like radiopharmaceuticals, allergy buy, 4 for buy, 3 for hold, 2 for sell and 1 for strong sell) and
therapy, among others. With 14 products in the market, the any improvement in consensus analyst rating indicates that
company commands around 10% of the radiopharmaceuti- the analysts are getting more bullish on the stock. To make
cals market share in the US. The growth in this segment will sure that we pick only companies with decent analyst cover-
remain intact because several products are under phase-2 age, this search will be restricted to stocks with at least 10
57.81
of clinical trials and may be launched in due course. To aug- analysts covering it. You can see similar consensus analyst 25 JUL 2018 JUBILANT LIFE ET PHARMA 25 JUL 2019
ment its forward integration, Jubilant Life acquired a loss- rating changes during the last one week in ETW 50 table. JUBILANT LIFE COMPARED WITH ET PHARMA AND SENSEX. STOCK PRICE AND INDEX
making radio pharmaceuticals distribution company, Triad —Narendra Nathan VALUES NORMALISED TO A BASE OF 100. SOURCE: ETIG AND BLOOMBERG.

WHAT EXPERTS ADVISE

BUY *STOCK PRICES AS ON 25 JULY

RESEARCH STOCK 1-YEAR TARGET POTENTIAL

STOCK ADVICE COMMENT
HOUSE PRICE* (`) PRICE (`) UPSIDE (%)

Strong up-country presence and focus on the niche used commercial vehicles market gives Shriram
Shriram Transport Fin. HDFC securities Buy 986 1,375 39 Transport Finance an edge over other asset financiers.

Bank of Baroda reported decent pre-provision operating profit. While asset quality and costs have
Bank of Baroda Jefferies India Buy 110 150 37 disappointed, net interest margin and net interest income have beaten expectations.

It has seen strong growth in earnings before income and tax in a challenging climate. Margin should
Coromandel International Elara Cap Buy 384 511 33 improve further due to easing prices of key raw materials such as ammonia and sulphuric acid.

Consolidated earnings per share CAGR of around 17% is expected between 2018-19 and 2020-21
Larsen & Toubro JP Morgan Overweight 1,373 1,730 26 and this may improve further, if domestic private capex cycle recovers.

SELL RESEARCH STOCK 1-YEAR TARGET POTENTIAL

STOCK ADVICE COMMENT
HOUSE PRICE* (`) PRICE (`) DOWNSIDE (%)

Downgrade to 'sell'. The stress on its business is evident. No significant near-to-medium term
Just Dial JM Financial Sell 726 620 -15 positive triggers for the stock are also expected.
Downgrade to 'sell'. Valuations are high. Near-term outlook for 4-6 weeks remains negative due to
TVS Motor IDBI Cap Sell 364 310 -15 delayed monsoon, uneven spread, weak consumer sentiment and tight liquidity conditions.
Maintain 'reduce'. Valuations are high. While the management plans to ramp up its business beyond
V-Guard Industries Edelweiss Finance Reduce 240 155 -35 South, the road ahead would be challenging, given the presence of established, larger players.
 QA
your queries

&
26 The Economic Times Wealth July 29-August 4, 2019

I am planning to sell a I am constructing a new

commercial property. Can house and have availed of a
I purchase a residential bank loan. Will I be eligible
apartment to save capital for income tax deduction on
gains tax? my home loan interest
Yes, according to
outgo on this second house?
Section 54F of the You will be eligible for
Income-Tax Act, a deduction on the
you can save capital gains tax on the sale of a interest outgo on this
commercial property by purchasing a Our panel of experts will house, provided the construction is completed
residential property within a year before or answer questions related to within five years from the end of the financial year
within two years after the date of sale of the in which you took the home loan. The deduction can
property. Please note that the new house must any aspect of personal be availed starting the year in which the
not be sold before three finance. If you have a query, construction of the house is completed. The interest
for the period during which the house was under
years from its purchase,
else you will lose your
mail it to us right away. construction can be availed in five equal
tax benefits. instalments after the construction is completed. The
maximum deduction on home loan interest is `2
QUESTION OF THE WEEK lakh, if a house is self-occupied. If it is let out, there
is no specified upper limit on interest deduction.
Amit Maheshwari, However, the overall loss one can claim
Partner, Ashok Maheshwary
and Associates I am 29 years old and have been under the head ‘house property’ is
investing `2,000 per month in restricted to `2 lakh only.
each of the following funds for the
past two years: Reliance Tax Saver,
I have been investing in the
Motilal Oswal Long Term Equity, Shubham Agrawal
following funds for the past two Mirae Asset Tax Saver and Aditya Senior Taxation Advisor,
TaxFile.in
years via monthly SIPs: `3,000 Birla Sun Life Tax Relief ’96. Do I
in Franklin India Taxshield, need to make any changes?
`2,000 in Mirae Asset Tax Saver,
`1,000 each in Axis Long Term
Equity and SBI Equity Hybrid, Investing All the funds you have invested in are
and `1,500 in HDFC Mid Cap via SIPs is tax-savings schemes and have a lock-in
Opportunities. My investment the best period of three years. Out of these four I am 54 and I just left my job.
horizon is 15-20 years. Should I way to I want to invest `50 lakh in
funds, Mirae Asset Tax Saver is a top
make any changes? build mutual funds to earn a
performer, but the remaining three have
monthly income of `50,000.
wealth been faring poorly, especially Reliance Please advise.
over time. Tax Saver. You can instead invest in Kotak
The funds you have selected have been good Tax Saver which has delivered higher To earn a monthly,
performers in their respective categories. This returns compared to all the other three pre-tax income of
portfolio can see a compound annual growth funds, across one, three, and five years. `50,000 from an investment of `50 lakh, you need
of 12-14% over the long-term. Remember, Besides Kotak Tax Saver, other to earn a return of 12% per annum. While equity-
investing in tax-saving funds will lock-in each replacement funds can be DSP Tax Saver oriented mutual funds have the potential to deliver
SIP investment for three years. So, you may and Canara Robeco Equity Tax Saver, both such returns, they tend to be volatile and are thus
initiate systematic transfer plans out of these of which have delivered more consistent riskier. You can earn a regular income by investing
tax-savings funds after the three-year lock-in returns compared to Motilal Oswal Long the amount in debt funds and opting for systematic
is complete and invest in diversified equity Term Equity and Aditya Birla Tax Relief withdrawal plans (SWPs). An SWP allows the
funds of the same fund house. Considering the 96. You won’t be able to shift your investor to choose the amount of money that is
tenure of your investment, you may existing investments as they will be withdrawn from the scheme on a monthly basis.
reconsider your investment in SBI Equity under the lock-in period, but your fresh Remember, if your withdrawal rate is more than the
Hybrid Fund and switch to SBI Magnum monthly investments can go into the new fund’s return, your capital will start depleting. If you
Multi-cap. Keep evaluating these funds. Remember, the performance of all go for low-risk products—liquid or short-term debt
funds annually and make a equity funds, including tax saver funds, funds—you can expect around 7-7.5% return. This
tactical shift, if needed. varies with time. No fund outperforms all will allow you to start an SWP of around `30,000
the time. So, make sure that without eroding your capital. Only the capital gain
you stick to your funds will be taxed and not the entire SWP amount.
for 1-2 years before Overall, the amount of withdrawal and the choice of
Dinesh Rohira the schemes for SWP depend on factors such as
Founder and CEO, 5nance.com re-evaluating them.
other sources of income, liabilities,
taxation-slab and risk appetite
which haven’t been
Ankur Choudhary mentioned by you.
Co-Founder and CIO, Goalwise
My NRI son owns two houses and I
get the rent in my account on his
behalf. Will I have to include this
in my income, or will he have to Prableen Bajpai
Founder, Managing Partner,
file a tax return to show this FinFix Research and Analytics
income? What’s the process for an
NRI to pay tax in India?
The owner of the house has to report the rental income. So, your son will have
to report this income. NRIs are required to file income tax return in India, if
their annual taxable income in India crosses `2.5 lakh. The return has to be filed through form ITR-2.
Your son can claim deduction for municipal taxes paid to arrive at his net taxable rental income.
From the net rental income, your son can claim a flat 30% standard deduction. It is important to note Ask our experts
that Indian tenants paying rents to NRIs are required to deduct tax at source at 31.2%.
Have a question for the experts?
etwealth@timesgroup.com
Archit Gupta, CEO, ClearTax
 tax optimiser
The Economic Times Wealth July 29-August 4, 2019 27

Pay rejig can reduce tax to zero

Sudhir Kaushik of Taxspanner.com tells readers how they can
optimise their tax by rejigging their income and investments.

P
une-based IT professional
Snehdeep Kawade has a
low tax outgo even though
his salary structure is
not very tax friendly and
INCOME
he doesn’t avail of the tax deduc-
tions available to him. Even so,
FROM EMPLOYER
Taxspanner estimates that Kawade
can reduce his tax to zero if his pay ACTIONS
structure is rejigged, his company INCOME HEAD CURRENT SUGGESTED TO TAKE
offers him the NPS benefit and he
invests in the scheme on his own. Basic salary 2,85,000 2,85,000
Kawade should start by asking Reduce this
his company to replace the medical House rent allowance 1,42,500 1,42,500
taxable portion of
and transport allowances (which the pay package.
Special allowance 4,66,700 3,72,400
are now taxable) with some tax-free
reimbursements like telephone Transport allowance 19,200 0 These perks are
and newspaper bills, food coupons now taxable.
Replace with tax
and LTA. These perks are tax free Medical allowance 15,000 0 free allowances.
against submission of bills and
actual usage. If he gets `1,000 for Food coupons 0 22,000 These perks
telephone expenses, `500 for newspa- are tax free
pers and food coupons worth `1,833 Newspaper reimbursements 0 6,000 on submission
every month and `60,000 as LTA in a of actual bills
Telephone and internet 0 12,000 and subject to
year, his annual taxable income will reasonable limits
reduce by `1 lakh. Leave travel allowance 0 60,000 and usage.
Next, he should ask for the NPS
benefit under Sec 80CCD(2). Up to Employer's contribution to Provident 21,600 21,600
Fund 10% of basic put in
10% of the basic salary put in NPS is
tax free. If his company puts `2,375 the NPS is tax free.
Contribution to NPS under Sec 80CCD(2) 0 28,500
(10% of his basic) in the NPS every
month, it will reduce his taxable TOTAL 9,50,000 9,50,000
income by `28,500. Another `50,000
can be shaved off if he invests that
amount in NPS on his own. INCOME FROM OTHER SOURCES
Kawade should buy a health insur-
ance for his family. It will cost him Interest income 2,600 0 Shift to debt funds
roughly `16,000, which can further to avoid tax on FD
Capital gains 0 0 interest.
reduce his taxable income.
The combined deduction of `1.94
lakh will reduce Kawade’s taxable
Rental income 0 0
income to `4.99 lakh, making him TOTAL 2,600 0
eligible for full tax rebate under Sec
87A. But he should avoid FDs and All figures are in `
bank deposits as the interest can
push up his income above `5 lakh.
Denotes suggestion to increase Denotes suggestion to reduce

Tax-saving investments
INVESTMENT CURRENT SUGGESTED
OPTION

Provident Fund
(`)

21,600
(`)

21,600
Snehdeep
Life insurance 14,500 14,500
Kawade’s tax TOTAL TAX SAVED WRITE
TO US
ELSS funds 1,20,000 1,20,000
`43,576
TAX ON TAX ON

NPS under Sec 80CCD(1b) 0 50,000

Consider this
new tax-saving
TAX ON
SALARY
OTHER
INCOME
CAPITAL
GAINS
FOR HELP
option.
TOTAL ADMISSIBLE 1,50,000 2,00,000 CURRENT PER YEAR Paying too much
tax? Write to us
at etwealth@
Other deductions `43,035 `541 0 TAX RATIO timesgroup.com with
‘Optimise my tax’
(Total tax as % of annual income)
EXEMPTION OR CURRENT SUGGESTED `43,576 as the subject. Our
DEDUCTION (`) (`) EXISTING SUGGESTED experts will tell you
(`) (`) how to reduce your
Medical insurance 0 16,000 SUGGESTED tax by rejigging your

HRA exemption 84,000 84,000 `0 `0 0 4.5% 0% pay and investments.

TOTAL 84,000 1,00,000 `NIL

 your feedback & more...
28 The Economic Times Wealth July 29-August 4, 2019

Readers’ response, online and in print, to ET Wealth stories has been enlightening.
We pick some that add information and perspective to our articles from previous issues.

Among the five stocks mentioned in research. Otherwise, you will sink. Most of
the story, ‘Invest in stocks that scale the experts and researchers promote
new peaks often’, Titan Company is companies on the basis of dubious figures.

Avoid the
You must do your own fundamental and
highly overrated. The stock is over-
technical analysis. Scan financial
valued and a big correction is in the statements and company reports. Track
offing.
Sunilkumar Tejwani debt traps how share prices rise and fall and find out
what are the factors responsible. If you
The cover story, ‘Smart money can’t do all this, stick to fixed deposits.
Don’t invest in the stock market in the moves for new earners,’ was very Cosmic Astro
present scenario, what with LTCG and
informative. It focused on smart
Budget 2019 announcements. You can
ways of saving when you start The article, ‘Fight financial
expect to make some gains only after
working and earning. It also vulnerability’, struck a chord. The
the government completes sale of
highlighted smart investment writer has candidly shared her
stakes in PSUs.
techniques for new earners who often childhood memories of her family
Anshu Prakash Satapathy running out of money as the end of the
fall into unnecessary debt traps.
month approached. Our attitude
Sasmita Jena
This refers to the story, ‘Traded in towards money is largely shaped by the
F&O? Must use ITR3’. families we are born into.
This is another way to increase Nandakumar Venkatachary
bureaucracy in the system. If a person
has traded in F&Os, why can’t the encourage work from home schemes. There The column, ‘Should you trust the This refers to the story, ‘Can parents evict
income tax department simplify the are many individuals who are sitting at expertise of experts?’ made a good read. their adult children from their house?’ It is
process of declaring it by just adding home. They have Internet connection but in The so-called experts are bought by the only on paper. There are hundreds of
another column specific to it? the absence of suitable opportunities, they companies they speak on behalf of. So do cases pending with the district
Rameshwar Parsad cannot earn. Abroad, there are thousands of not believe these experts. magistrate’s office in Delhi but no action
people earning by working from home. Why S.S. Vembakkam is taken, resulting in more harassment for
This is in reference to the story, ‘How can’t similar opportunities be developed the senior citizens. The authorities are not
to change jobs when you are clueless’. here? Self-help is the best help. Hear what the concerned about senior citizens.
experts are saying but still do your own
The government should actively Logical Indian Basant Jain

REALTY A sought-after area in Mumbai

HOT SPOT This location in south-central Mumbai hosts both residential and commercial properties.

DADAR (W)- Mahim

Lady Jamsetjee’s Sai Baba Temple
HIGHLIGHTS Consumer preference by
Rd. Inauguration budget segment (`)
MAHIM (W), stone 1846
Kings Circle
Situated in South-Central Mumbai, it is a popular & densely
Rd

populated residential-cum-commercial area 1.5-1.75 crore

Hanuman
Tulsi Pipe

MUMBAI
Asavari Nagar 1.75-2 crore
Mahim (W) A busy place, well-known for its shopping markets, Shivaji 24%
Shri Saath 1.25-1.5 crore
Citylight Aasra Park, Siddhivinayak Temple and Dadar Beach 45%
Cinema Manmala BMC Ward 9% 3.0-3.25 crore
PRICE RANGE Devi
Matunga
Office F
Shradhanand Centrally situated having proximity to the airport as well as 9% 2.25-2.50 crore
Mandir North
`24,970-42,550 Road Cross Road major business hubs of BKC & Nariman Point 6% 7% Others
Matunga (W) Cafe
per sq ft Chhatrapati Madras Good infrastructure such as Shardashram Vidyamandir, PD
Shivaji
Demand: HIGH
Maharaj Park
Doctor
Matunga Hinduja National Hospital, Star Mall, Nakshatra Mall, etc Consumer preference
d

D Wing
by BHK
ipe R

Supply: MID Doctor Shantlal

Harkant K Sanghani Well-connected through Senapati Bapat Marg, Dr Annie
M Trivedi Chowk Besant Road, Bandra-Worli Sea Link & the Suburban Rail
iP

Chowk
10%
Tuls

1 BHK
Shree Akkalkot
Dadar (W) Swami Samarth
Maharaj Math LOCALITY SNAPSHOT 26%
64%
2 BHK
3 BHK
Distance from: Schools 15+
20+ Hospitals
Hospitals12+
16+ Restaurants
Restaurants14+
20+

Airport: 38
9 km
km Railway
Railway
station:
station:
2 km45 km WEH: 5 km Banks 10+
20+ Grocery
GroceryStores
Stores12+
20+ Petrol
PetrolPumps
Pumps14+
9+
Consumer preference by
VALUES covered area (sq ft)
PROPERTIES AVAILABLE SECTORS Price Rental 4%
(`/sq ft) (`/month) 500-750
11%
1 BHK: 591 (sq ft) 1,000-1,250
Dadar West 25,100-40,240 67,885-1,02,810
1.87 crore (avg) 15% 750-1,000
54%
` 3 BHK: 1,984 1,500-1,750
Matunga West 25,360-38,570 66,817-1,04,736
(sq ft) 16% Others

2 BHK: 1,087 (sq ft)

` 6.46 Mahim West 24,970-38,250 52,861-79,942

` 3.62 crore (avg) crore (avg) Mahim 25,990-42,550 56,471-87,087

In dia’s No. 1 P ropert y Sit e

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