Skype operation returning to normal

Skype on Friday said its services were returning to normal after the internet communications group experienced its biggest global outage in three years.

Tony Bates, Skype's chief executive, told customers via a blog and accompanying video that the engineers had identified the problem and stabilised the core instant messenger, audio and video services, which were running at about "90-plus per cent of what we'd typically see from a user load on a day like today".

Bates said the outage, which hit during a peak period for the online calls service on Wednesday, was caused by a "software issue" and not by a malicious attack.

Millions of people rely on Skype for calls to friends and family overseas over Christmas because it is cheaper than using landline and mobile networks. Skype provides free calls between users of its service, charging for outbound and inbound calls between landlines or mobile phones.

Bates apologised for the problems and promised Skype users calling credit vouchers as compensation. Pay as you go and pre-pay users are being offered a Skype voucher for 30 minutes of free calling to landlines anywhere in the world. Active subscribers are being offered a week's extra subscription service.

"It's been a tough 24 hours for many of you — and I'd like to thank you for your patience as we bring Skype back to normal," Bates said.

Stock market offering

The service failure comes ahead of Skype's planned stock market offering next year, which it postponed as it seeks to push harder into the competitive business telephony market. Skype, which is partly owned by Ebay, was completely offline for more than three hours on Wednesday evening, UK time.

At peak times, more than 25 million people use Skype simultaneously. Skype's 800 employees rely on their own service for internal communications too, forcing them back on to e-mail and traditional phones during the downtime.

Skype explained that the outage was caused by problems with the "supernodes" upon which it relies to route much of its traffic.

As a peer-to-peer service, Skype does not have a central exchange like a regular telephone network, instead it passes call information along a chain of users across the regular internet. Although Skype has some of its own dedicated servers, supernode functions can often be performed by regular users. Skype's engineers repurposed some of their servers that were running non-core functions, such as group video chat, to try and fix the problem.

The distributed nature of Skype's network removes a "single point of failure" which can affect traditional telephone exchanges, but also means that errors can be more widespread and difficult to fix.

Skype's last major outage, in August 2007, was caused by a different problem relating to a software update.

Fund managers face tough choices as year ends

After a splendid run through much of 2010 Indian shares are panting for breath in the final lap of the eventful year, and a recovery in world equities could pose a challenge to fund managers on where to put their money in the New Year.

The near 15 per cent rise in the top-30 Sensex this year was largely driven by foreign portfolio inflows of $28.6 billion (Dh104.9 billion) during the period, but with the year winding down there has been net outflows as money managers take some profit off the table.

The widely-tracked Sensex has come off 4.9 per cent since reaching within 100 points of a record high in early November, and foreign institutional investments have dropped from almost $30 billion.

"It's going to be a bumpy ride in the next few weeks," said Biju Dominic who advises retail investors in Mumbai. "Inflation is rearing its head and this increases the risk of higher borrowing costs which will be a big dampener for consumer spending."

India's $1.3 trillion economy has been riding on robust domestic demand thanks to a burgeoning middle class of more than 300 million people that have been buying houses, cars, consumer goods and luxury items as never before.

However, soaring prices of foodstuffs — onion prices have leapt seven-fold from around Rs10-Rs12 (Dh0.80 to Dh0.96) a kilogramme to as high as Rs80 in a span of two to three weeks — have begun to pinch the family budget in a big way.

Embroiled in a series of corruption scandals, Prime Minister Manmohan Singh's coalition in New Delhi was caught napping as the price spiral was caused by hoarding after unseasonal rains damaged some crop. The government woke up too late and the initial comments from Farm Minister Sharad Pawar only helped traders to keep prices high.

With world oil prices rising above $91 a barrel, India, which imports over 70 per cent of its crude requirement, is under pressure to raise heavily subsidized retail prices of diesel and cooking gas.

Fuel prices

A ministerial meeting is scheduled on December 30 to take a call on the fuel prices, and if the government decides to raise prices it could accelerate inflation pressures as all goods in India are transported in trucks or railway wagons that run on diesel. "The macro headwinds are formidable," said equity strategist Roshen Seth. "If the government does not raise fuel prices it would bloat the subsidy burden and state refiners will be saddled with huge revenue losses." Higher fuel prices, however, would light a fire under inflation and the Reserve Bank of India (RBI) would raise interest rates sooner than later.

The food price index jumped an annual 12.13 per cent in the week ended December 11 from 9.46 per cent the week before, while the fuel price index climbed to 10.74 per cent from 10.67 per cent. The RBI's next scheduled policy meeting is on January 25. India's economy is on course to clock a growth of nine per cent or more in 2010-11, but it may find it hard to maintain the pace in the following year unless the government aggressively push reforms such as opening up the retail sector and boost farming in the nation of more than 1.2 billion people.

And, if the belief that US equities can rise about a fifth in 2011 — it was Goldman Sachs's Jim O'Neil who said last week he expected so — gathers momentum there could be a slowdown in money flows to emerging markets such as India.

"It is fair to say that we are somewhat more concerned about flows into the emerging markets," Alok Sama, president and founder of Baer Capital Partners Ltd, told CNBC-TV18.

He said O'Neil's expectations were based on an optimistic return to normalcy in the US, but the jury was still out on this. For India, he was more cautious than a few months ago.

The Sensex rose 1.1 per cent last week to 20,073.66, still way off 21,108.64 hit on November 5. "For this rally to be sustained, you need to see some real evidence of Indian mutual funds, in particular, stepping in and participating in a major way," Sama said.

The World Privacy Survey

The World Privacy Survey

Will your Nominee get the money on your death ?

Did you think that your nominee is the person, who will get all the money legally from your Life Insurance Policy and Mutual funds investments? Ha! That is exactly what you’d think if you aren’t aware of the legal aspects. We assume a lot of things which sounds like they’re obvious, but are not true from the legal point of view. Today, we’ll concentrate on nominations in financial products.


For whom are we earning? For whom are we investing? Who, do we want to leave all our wealth to, in case something happens to us? It might be your children, your spouse, parents, siblings etc., or just a subset of these. You also might want to exclude some people from your list fo beneficiaries!. So you think you will nominate person X in your Insurance policy, and when you are dead and gone, all the money goes to person X and he/she becomes the sole owner? You’re wrong, dude ! It doesn’t work that way. Let’s see how it actually does!

What is a nominee ?
According to law, a nominee is a trustee not the owner of the assets. In other words, he is only a caretaker of your assets. The nominee will only hold your money/asset as a trustee and will be legally bound to transfer it to the legal heirs. For most investments, a legal heir is entitled to the deceased’s assets. For instance, Section 39 of the Insurance Act says the appointed nominee will be paid, though he may not be the legal heir. The nominee, in turn, is supposed to hold the proceeds in trust and the legal heir can claim the money.

A legal heir will be the one whose is mentioned in the will. However, if a will is not made, then the legal heirs of the assets are decided according to the succession laws, where the structure is predefined on who gets how much. For example, if a man during his lifetime executes a will. In the will, he mentions his wife and children as legal heirs, then after his death, his wife and children are the legal owners of his assets. It is essential that one needs to execute a will. It is the ultimate source of truth and replaces the succession law. Nominee can also be one of the legal heirs.

Important

Mention the Full Name, Address, age, relationship to yourself of the nominee.
Do not write the nomination in favour of “wife” and “children” as a class. Give their specific names and particulars existing at that moment.
If the nominee is a minor, appoint a person who is a major as an appointee giving his full name, age, address and relationship to the nominee.
Why is the concept of nominee ?
So you might be wondering, if the nominee does not become the sole owner, why does such a concept of “nominee” exist at all? It’s pretty simple. When you die, you want to make sure that the Insurance company, Mutual fund or your shares should at least get out of the companies and go to someone you trust, and who can further help, in process of passing it to your legal heirs.

Otherwise, if a person dies and hasn’t nominated anyone, your legal heirs will have to go through the process of producing all kind of certificates like death certificates, proof of relation etc., not to mention that the whole process is really cumbersome! (For each legal entity! The insurance company, the mutual funds, for the shares, for the real estate..) . So, to simplify, if a nominee exists, these hassles don’t happen, since the company is bound to transfer all your money or assets to the nominee.The company the goes out of scene & then, it’s between nominee and legal heirs.

Example of Nomination
Ajay was 58 years old who died recently in an accident. As his children were settled, he wanted to make sure that his wife is the sole owner of all the monetary assets. This includes his insurance policy and mutual funds. So during his lifetime, he nominated his wife as a nominee in his term insurance policy and mutual funds investments. However, after Ajay’s death things didn’t turn up the way he wanted. The reason being Ajay did not leave a will. Though his wife was the nominee in all his movable assets, as per the law, his wife, along with children, were the legal heirs and all of them had equal right to Ajay’s assets.

One simple step which could have saved the situation was that Ajay should have made a will which clearly stated that only his wife was entitled to get all the money and not his children.

Nomination in Life Insurance
A policyholder can appoint multiple nominees and can also specify their shares in the policy proceeds. Nomination in life insurance has one limitation, as insurance policies are bought to secure your financial dependents, your first choice of nominee has to be your family members. In case you want to nominate a non-family member like a friend or third party, you will have to show/PROVE the insurance company that there is some insurable interest for the person. This happens because of a Clause called PRINCIPAL OF INSURABLE INTEREST in insurance. Note that provision of nomination in life insurance is related to Section 39 of the Insurance Act. Note that as per LIC website

Nomination is a right conferred on the holder of a Policy of Life Assurance on his own life to appoint a person/s to receive policy moneys in the event of the policy becoming a claim by the assured’s death. The Nominee does not get any other benefit except to receive the policy moneys on the death of the Life Assured. A nomination may be changed or cancelled by the life assured whenever he likes without the consent of the Nominee.
Make sure, you have a nominee for your policy for easy settlement of the claim, if you do not have any nominee mentioned in the policy, it can turn out to be a disaster for your dependents to get a claim.

Nomination in Mutual funds
In case of mutual funds, you can nominate up to three people, who can be registered at the time of purchasing the units. While filling in the application form, there is a provision to fill in the nomination details. Even a minor can be a nominee, provided the guardian is specified in the nomination form. You can also change nomination later by filling up a form which is available on the mutual fund company website. Nomination in mutual funds is at folio level and all units in the folio will be transferred to the nominee(s). If an investor makes a further investment in the same folio, the nomination is applicable to the new units also. A non-resident Indian can be a nominee, subject to the exchange control regulations in force from time to time.

Nomination in Shares
Quiz for you . Now you know what a nominee means and who actually gets the money. So if there is a husband H, with wife W and nephew N, and he has nominated his nephew N to be the nominee of his shares in demat account, who will have the legal right to own the shares after husband’s death? If you answer is wife, you are wrong in this case! In case of stocks, it does not work the usual way, if a will does not exist.

In the verdict, Justice Roshan Dalvi struck down a petition filed by Harsha Nitin Kokate, who was seeking permission to sell some shares held by her late husband. The Court noted that as she was not the nominee, she had no ownership rights over the shares. Ms KokaThe’s lawyer had argued that as she was the heir of her husband who had died intestate (without a will), she should have ownership rights of the shares, and be able to do anything with them as she wished. In this case, Ms Kokate’s husband had nominated his nephew in favour of the shares. Justice Dalvi however noted that under the provisions of the Companies Act and the Depositories Act, Acts which govern the transfer of shares, the role of a nominee was different.

“A reading of Section 109(A) of the Companies Act and 9.11 of the Depositories Act makes it abundantly clear that the intent of the nomination is to vest the property in the shares which includes the ownership rights thereunder in the nominee upon nomination validly made as per the procedure prescribed, as has been done in this case.”


It means that if you have not written a will, anyone who has been nominated by you for your shares will be the ultimate owner of those stocks, The succession laws on inheritance will not be applicable but in case, you have made a will, that will be the source of truth.

Nomination in PPF
Let me give you some shock first. If you have Rs 10 lakh in your public provident fund (PPF) account and you have not nominated anyone for your PPF account, your legal heirs will get maximum of Rs1 lakh only! Yes, it’s so important to have a nominee, now you get it . You can nominate one or more persons as nominee in PPF. Form F can be used to change or cancel a nomination for PPF. Also note that you cannot nominate anyone if you open an account for a minor.

Nomination in Saving/Current/FD/RD Account in Banks
FD’s also come with nomination facility. While opening a new account, there is a column for nomination in the same form and you should fill it. You can nominate two persons with first and second option. Note that in case you have not done any nomination till now, you should request Form No DA-1 from your Bank which is used to assign a nominee in future. (Examples of ICICI Bank , HDFC Bank , Canara Bank) . In the same way to change/cancel the nomination you need to fill up Form no DA-2. Read about Corporate Fixed Deposits

As per a famous case, A Bench of Justices Aftab Alam and R M Lodha in an order said that the money lying deposited in the account of the original depositor should be distributed among the claimants in accordance with the Succession Act of the respective community and the nominee cannot claim any absolute right over it.

Section 45ZA(2)(Banking Regulation Act) merely put the nominee in the shoes of the depositor after his death and clothes him with the exclusive right to receive the money lying in the account.It gives him all the rights of the depositors so far as the depositors’s account is concerned. But it by no stretch of imagination make the nominee the owner of the money lying in the account,” the Bench observed.
Conclusion
Now you know! Taking Personal finance for granted can be fatal Just investing knowledge, isn’t enough to have a great financial life. You also need to be well versed with basic legal aspects and make sure you carry out all due arrangement . Nomination is one important aspect you should seriously consider, when checking for the financial products you have bought or plan to buy in future. Mistakes in Personal Finance

Its important to make sure that your loved one’s do not face legal issues and only say and think lovely thoughts about you when you are not around, rather than crib & grumble

SBI offers up to 9.5% in planned 1,000 crore bonds

India’s largest lender SBI is selling bonds worth Rs 500 crore to retail and institutional investors with an option to retain oversubscription for another Rs 500 crore. The Rs 1,000 crore proposed to be raised will be part of the bank’s lower Tier-II bonds, which will help it enhance its capital adequacy ratio (CAR).

The issue offers investors two options – Series 1, having a maturity of 10 years with a coupon of 9.25% paid annually. It will have a call option after five years and one day with 0.5% additional step-up after five years, in case the call option is not exercised by SBI. Similarly, in case of Series 2, which will have a maturity of 15 years, it will provide a coupon of 9.5% annually .

It will have a call option after 10 years and one day with 0.5% additional step-up after 10 years if the call option is not exercised. This means that in case the call option is not exercised by SBI, the coupon on bonds shall be increased by 0.50% for the balance tenor of the bonds. The minimum investment in these bonds is Rs 10,000.

According to Arvind Konar, head of fixed income, Almondz Global Securities , “SBI is offering the bonds at very attractive rates to investors. We expect an oversubscription , considering the attractive rate at which it has priced the issue” He added that SBI was offering a higher return to retail investors as given its triple A rating, it can raise funds at around 8.6-8 .65%.

Investment bankers are also optimistic after the success of bond issues by earlier issuers , including Tata Capital, which is quoting at a premium in the secondary market .

The issue will be opening from October 18 to October 25, 2010, with an option to close earlier and /or to extend up to a period as may be determined by ECCB. There will not be any TDS since the bonds are listed on NSE and will be compulsorily issued in dematerialised form, so investors without demat a/c will not be eligible.

The interest received on these bonds will be treated as income from other sources and shall form a part of the total income of the assessee in that financial year in which they are received. There are no tax benefits for investing in these bonds.

Resident Indian individuals, HUF, partnership firms, corporates, banks, financial institutions, insurance companies, mutual funds, provident/superannuation/ gratuity/ pension fund, private/public religious / charitable trust, co-operative society can invest in these bonds.

Analysts feel that the interest rate is very attractive and due to adequate safety of the issue, it is expected to get good response . “Investors should allocate some portion of their investment portfolio in these bonds as the returns are much better than any other similar instrument. Also, it comes with high safety and has chances of higher interest rates in case of non-exercise of call option by the bank.

Since these bonds have a call option after five years and 10 years, if the bank fails to exercise the call option, the investor gains further as the interest rate will go up by 0.5%,” says Bajaj Capital chief operating officer Harish Sabharwal.

Sensex@20K: Should you spend, invest or save?

Two years after Lehman Brothers went bankrupt, the investment bank is back on its feet again. In these two years though, much has happened that has brought some of the biggest economies in the world, including the mighty USA, down on their knees.

India, in the meantime, has gone from strength to strength. On September 21, the Sensex breached the 20,000 mark for the first time since January 2008. The economy is booming at a stupendous 8.5% of GDP. But while there’s a sense of jubilation all around, the common man is in a quandary about how to use his money well? Should he spend, invest or save? Is it the beginning of another bull-run or is it time to make the moolah and stay put?

Roopa Purushothaman, head of research at Everstone Capital, who co-authored the famous BRICS report of 2003, says, “In the short term, 8-8.5% growth is expected. In the long term, it will be close to 7%, which will be driven by India’s demographics and also by the fact that India needs to catch up as its income per capita is lower compared with other BRIC nations.” She says that all engines of the economy are firing, but longer-term labour reform and progress in education indicators will be crucial to sustainable growth. If not, this will be a delicate and shorter-lived boom cycle.

“We are going to see favourable consumption dynamics over the next two years and even longer over the next ten years. This is because the baby boomer generation is now getting into the workforce and because of this, different sectors will start to do well,” she adds. A Religare India Economics report too is optimistic about GDP getting closer to the 9% mark. ”With domestic growth drivers firmly in place and fiscal year 2011 growth estimates at 8.5%, our preliminary estimate for fiscal year 2012 stands at 8.9%. The Indian economy is surely ‘making haste slowly’ towards the 9% mark,” it says.

So go out and make the best of this boom time, says Shankar Sharma, global trading strategist at First Global. “If you really want to get rich, think of an innovative idea. Over the next twenty years, India will see many of these innovative ideas turning into big companies. This is the best way to become super rich. If something doesn’t go terrible wrong, one can cash out or go public to make good money.” If you play with the stock market, you will either be just moderately rich or bankrupt. on Saturday, the real economy offers more opportunities than the stock market does, he adds.

Economists say there is reasonable visibility for most people about their jobs and career growth. So, it is a good time for some spending as well. Saumitra Chaudhuri, member of the Economic Advisory Council to the Prime Minister and member, Planning Commission says that the growth of the GDP at 8.5% is favourable.

The industrial output figures have been as expected. Investor sentiment seems to have started to pick up now. “High inflation was a problem last year but various measures have been taken to curb it. Now, food price inflation has turned a corner and the monsoon too has been good. As far as manufactured goods are concerned, we expect it to turn the corner in the next couple of months.”

In the medium term, the Reserve Bank of India will be the arbiter of growth. If it further tightens credit and pushes interest rates up, growth will be hit. “In the short term though, I sense the vibrations of a growth momentum on Saturday. We expect the economy to sail past the 8.5% mark this year,” says Dr Amit Mitra, secretary general of the Federation of Indian Chambers of Commerce and Industry.

A word of caution though. In the medium to long term, the growth rates are going to depend on how much further infrastructure India can create. Sustaining 8.5-9% growth without creating proper infrastructure would be difficult. Reforms regarding land acquisition and labour regulations still remain on the table and need to be addressed. “Political scenario is a serious cause of concern,” says Bajaj Auto chairman Rahul Bajaj.

That said, a few analysts and experts are not so euphoric about the Sensex crossing 20,000. “I’m certainly not euphoric. With India being one of the few bright spots growthwise across the world, the influx of portfolio flows was expected—and these are the key drivers of our stock markets.

But these are fickle flows, here on Saturday, there tomorrow... and I am, to be honest, a bit worried about the instability that they tend to generate... in asset markets, real estate and in exchange rates. I’m sure the RBI is watching this fairly closely,” says Dr Veena Mishra, senior economist, office of strategy management at auto maker Mahindra & Mahindra.

“Year 2008 still remains very fresh in people’s mind and no body is really celebrating. Retail investors have really not made much money in this up move,” says Motilal Oswal, chairman and managing director, Motilal Oswal Financial Services.

“I am afraid that interest rates may rise in the near term. I am apprehensive that this could make exciting projects unviable, sadly so,” adds Mr Mitra.

An article from Economic Times

Guidelines to follow when taking personal loans

1. Take the amount you actually need and no more.

2. Avail of loan from a bank you can trust.

3. Check whether the rate of interest is competitive. Call up different banks and compare the rates.

4. Make sure the repayment period is within an acceptable time frame.

5. Insist on an amortisation schedule.

6. Ensure that the loan is insured.


Why do I take a Personal Loan?

Personal loans can be used to anything from funding an unexpected medical emergency, marriage, home renovation to even education fees.

Can I build assets with Personal Loans?

Yes, you can. But an asset will only build if its value grows higher than the rate of interest paid by you on the loan. So, a personal loan that you take for your child's education will fetch you greater returns in future than investing in a Plasma TV, which depreciates with time. A well planned Personal loan can go a long way in creating personal wealth.

A salesperson called me on my phone offering a personal loan: is it safe?

Yes, only if you need it, and if it is from a renowned bank. Make sure you understood all the terms and conditions correctly. Do not be pressurised to take hurried decisions. Ask for much information as you need.

Some banks promise faster processing while others talk of lower interest rates. Which one should I opt for?

Often the lowest quoted EMI (Equated Monthly Instalments) could actually lead to longer payment period. A high loan amount instead of helping you might become a burden and fast processing may force you to take a hasty decision, without complete information.

How much can I borrow on a Personal Loan?

Most banks prescribe certain limits on a Personal Loan based on your income and ability to repay. However it is always advisable to borrow an amount that you will be able to safely repay without much discomfort.

How do I choose a bank to take a personal Loan?

The key to finding a bank that you can trust is to do research. Talk to your associates and friends about their experiences with a particular bank. Other key factors to consider: 1. Branches and ATMs network: you should never be too far away from your branch; 2. Systems and processes: Choosing a bank that does not have the systems, processes and well trained staff to help advice you and manage your Personal Loan is an unnecessary hassle and even a risk.

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UAE regulator to suspend BlackBerry services from October 11

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New symbol for Indian Rupee

IIT post-graduate gives Rupee its symbol


The jury has given its verdict: the rupee will retain its Indian character with an international flavour. The five-member panel has chosen IIT post-graduate D Udaya Kumar’s design from among five shortlisted symbols and recommended it for Cabinet approval.
Kumar’s symbol (on the left) is an amalgam of the Devanagari ‘Ra’ and the Roman capital ‘R’ without the stem, very much in line with what Finance Minister Pranab Mukherjee had envisioned. “We intend to formalise a symbol for the Indian rupee which reflects and captures Indian ethos and culture,” Mukherjee said in his Budget speech this year.

The chosen symbol has the Finance Minister’s approval, said a Ministry official.

The Ministry had organised a symbol design competition with a prize money of Rs 2.5 lakh with the condition that it should be applicable to the standard keyboard, be in the national language script or a visual representation and should represent the historical and cultural ethos of the country.

While the basic aim of the new symbol is to provide the Indian rupee international recognition as the country’s economy exerts more influence in the global space, the unique sign will also help isolate the currency from the current abbreviation ‘Rs’ which is used by neighbouring Pakistan, Nepal and Sri Lanka.

Kumar’s concept, an official said, is based on the Tricolour and “arithmetic equivalence”. While the white space between the two horizontal lines gives the impression of the national flag with the Ashok Chakra, the two bold parallel lines stand for ‘equals to’, representing balance in the economy, both within and with other economies of the world.

When contacted, Kumar said he was unaware of his design having been ranked first by the jury. “I hope your news is real,” he told The Indian Express from IIT Bombay. He joins IIT Guwahati as a faculty member in the Department of Design tomorrow.

All about PAN

Frequently Asked Questions and Answers (FAQs)regarding PAN

1. What Is PAN?
Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department.
A typical PAN is AABPS1205E.
{Section 139A(7) Expln (b) and (c)}
2. Why Is It Necessary To Have PAN?
It is mandatory to quote PAN on return of income, all correspondence with any income tax authority. From 1 January 2005 it will be mandatory to quote PAN on challans for any payments due to Income Tax Department.
{Section 139A (5) (a) and (b)}
It is also compulsory to quote PAN in all documents pertaining to financial transactions notified from time-to-time by the Central Board of Direct Taxes. Some such transactions are sale and purchase of immovable property or motor vehicle or payments in cash, of amounts exceeding Rs. 25,000/-to hotels and restaurants or in connection with travel to any foreign country. It is also mandatory to mention PAN for obtaining a telephone or cellular telephone connection. Likewise, PAN has to be mentioned for making a time deposit exceeding Rs. 50,000/- with a Bank or Post Office or depositing cash of Rs. 50,000/- or more in a Bank.
{Section 139A (5) (c) read with Rule 114B}
3. How does Income Tax Department ensure that PAN is quoted on transactions mentioned above?
It is statutory responsibility of a person receiving document relating to economic or financial transactions notified by the CBDT to ensure that PAN has been duly quoted in the document.
{Section139A (6)}
4. Is it compulsory to quote PAN on return of income?
Yes, it is compulsory to quote PAN on return of income.
5. How will these authorities verify PAN?
A facility for verifying PAN is available on the website of the Income Tax department.
6. Who must have a PAN?
i. All existing assesses or taxpayers or persons who are required to furnish a return of income, even on behalf of others, must obtain PAN.
{Section 139A (1) and (1A)}
ii. Any person, who intends to enter into financial transaction where quoting PAN is mandatory, must also obtain PAN.
{ Section 139A (5) (c) read with Rule 114B}
iii. The Assessing Officer may allot PAN to any person either on his own or on a specific request from such person.
{Section 139A (2) and (3)}
7. Can a person obtain or use more than one PAN?
Obtaining or possessing more than one PAN is against the law.
{Section 139A (7)}
8. Where to apply for PAN?
In order to improve PAN related services, the Income Tax department has authorized UTI Investor Services Ltd (UTIISL) to set up and manage IT PAN Service Centers in all cities or towns where there is an Income Tax office and National Securities Depository Limited (NSDL) to dispense PAN services from TIN Facilitation Centers. For convenience of PAN applicants in big cities, UTIISL has set up more than one IT PAN Service Center and likewise there are more than one TIN Facilitation Centers.
9. How to apply for a PAN? Can an application for PAN be made on plain paper?
PAN application should be made only on Form 49A. A PAN application (Form 49A) can be downloaded from the website of Income Tax department or UTIISL or NSDL (www.incometaxindia.gov.in,www.utiisl.co.in or tin.nsdl.com) or printed by local printers or photocopied (on A4 size 70 GSM paper) or obtained from any other source. The form is also available at IT PAN Service centers and TIN Facilitation centers.
10. Can an application for PAN be made in Form 49A obtained from anywhere?
Yes, PAN application may be made on Form 49A obtained from any source other than IT PAN Service Centers or TIN Facilitation Centers. For instance, a PAN application may be made on form downloaded from the website of Income Tax department or UTIISL or NSDL; or on form printed by local printers or a photocopy of downloaded or printed form.
11. Can an application for PAN be made through Internet?
Yes, application for fresh allotment of PAN can be made through Internet. Further, requests for changes or correction in PAN data or request for new PAN card (for an existing PAN) may also be made through Internet. For more details visit (www.tin-nsdl.com)
12. How do I get a PAN allotted quickly (TATKAL)?
If an application for allotment of PAN is submitted through Internet and payment made through a 'nominated' credit card, the PAN is allotted on priority and communicated through email.
13. How to find an IT PAN Service Center or TIN Facilitation Center?
Location of IT PAN Service Centers or TIN Facilitation Centers in any city may be obtained from local Income Tax Office or any office of UTI/UTIISL or NSDL in that city or from websites of the Income Tax department (www.incometaxindia.gov.in or UTIISL(www.utiisl.co.in) or NSDL (http://tin.nsdl.com)
14. What services are provided by these IT PAN Service Centers or TIN Facilitation Centers?
IT PAN Service Centers or TIN Facilitation Centers will supply PAN application forms (Form 49A) and forms for 'Request For New PAN Card Or/ And Changes In PAN Data', assist the applicant in filling up the form, collect filled form and issue acknowledgement slip. After obtaining PAN from the Income Tax department, UTIISL or NSDL as the case may be, will print the PAN card and deliver it to the applicant.
15. What if I submit incomplete Form 49A?
IT PAN Service Centers or TIN Facilitation Centers shall not receive any incomplete and deficient PAN application. However, these centers will assist applicants to correctly fill up form 49A or 'Request For New PAN Card Or/ And Changes In PAN Data', as the case may be.
16. What documents and information have to be submitted along with the application for Form 49A?
a. Individual applicants will have to affix one recent, coloured photograph (Stamp Size: 3.5 cms x 2.5 cms) on Form 49A;
b. Any one document listed in Rule 114 must be supplied as proof of 'Identity' and 'Address'; and
c. Designation and code of the concerned Assessing Officer of Income Tax department will have to be mentioned in Form 49A.
17. Which documents will serve as proof of 'Identity' in case of Individual applicants, including minors and HUF applicants?
Copy of school leaving certificate or matriculation certificate or degree of a recognized educational institution or depository account or credit card or bank account or water bill or ration card or property tax assessment order or passport or voter identity card or driving license or certificate of identity signed by a MP or an MLA or a Municipal Councilor or a Gazetted Officer;
In case the PAN applicant is a minor, any of above documents of any of the parents or guardian of such minor shall serve as proof of Identity;
In case PAN application is made on behalf of a HUF, any of above documents in respect of Karta of the HUF will serve as proof of Identity.
18. What is proof of 'Address' for Individual applicants, including minors and HUF applicants?
Copy of electricity bill or telephone bill or depository account or credit card or bank account or ration card or employer certificate or passport or voter identity card or property tax assessment order or driving license or rent receipt or certificate of address signed by a MP/ MLA/Municipal Councilor / a Gazetted Officer;
In case the PAN applicant is a minor, any of above documents of any of the parents or guardian of such minor shall serve as proof of Address;
In case PAN application is made on behalf of a HUF, any of above documents in respect of Karta of the HUF will serve as proof of Address.
19. What documents will serve as proof of Identity and Address for other applicants?
Copy of Certificate of Registration issued by the Registrar of Companies or Copy of Certificate of Registration issued by the Registrar of Firms or Copy of Partnership Deed or Copy of Trust deed or Copy of Certificate of Registration Number issued by Charity Commissioner or Copy of Agreement or Copy of Certificate of Registration Number issued by Charity Commissioner or Registrar of Co-operative Society or any other Competent Authority or any other document originating from any Central or State Government Department establishing Identity and Address of such person.
20. How to find 'Assessing Officer code'?
Assessing Officer code may be obtained from Income Tax Office where you submit your return of income. Applicants who have never filed return of income may find out Assessing Officer code with the help of IT PAN Service Center or TIN Facilitation Center or jurisdictional Income Tax Office.
21. Is a photograph compulsory for making an application for PAN?
A photograph is compulsory only in case of 'Individual' applicants.
22. What is the procedure for applicants who cannot sign?
In such cases, Left Hand Thumb impression of the applicant should be affixed on Form 49A or 'Request For New PAN Card Or/ And Changes In PAN Data' at the place meant for signatures and got attested by a Magistrate or a Notary Public or a Gazetted Officer, under official seal and stamp.
23. Is father's name compulsory for female (including married/divorced/widow) applicants?
Only father's name is required to be filled in the PAN application (Form 49A). Female applicants, irrespective of marital status, should write only father's name in the PAN application
24. Is it compulsory to mention telephone numbers on Form 49A?
Telephone number is not compulsory, but if provided it may help in faster communication.
25. Who can apply on behalf of non-resident, minor, lunatic, idiot, and court of wards?
Section 160 of IT Act, 1961 provides that a non-resident, a minor, lunatic, idiot, and court of wards and such other persons may be represented through a Representative Assessee. In such cases, application for PAN will be made by the Representative Assessee.
26. I had applied to the department but I do not know my PAN?
Please contact the Aaykar Sampark Kendra (ASK) at 0124-2438000 (or 95124-2438000 from NCR) or visit the www.incometaxindia.gov.in and go to 'know your PAN'.
27. Are there any charges to be paid at IT PAN Service Centers or TIN Facilitation Centers?
UTIISL and NSDL have been authorized to collect Rs.85 + Service Tax as applicable, per PAN application and this includes cost of a tamper proof PAN card. This amount will have to be paid in cash at IT PAN Service Center or the TIN Facilitation Center.
28. Do you need to apply for a PAN when you move or transfer from one city to another?
Permanent Account Number (PAN), as the name suggests, is a permanent number and does not change during lifetime of PAN holder. Changing the address or city, though, may change the Assessing Officer. Such changes must, therefore, be intimated to nearest IT PAN Service Center or TIN Facilitation Center for required correction in PAN databases of the Income Tax department. These requests will have to be made in a form for 'Request For New PAN Card Or/ And Changes In PAN Data'
29. I had applied to UTITSL/ NSDL a month ago but I have not received my PAN card and I have to file my return of income.
Please contact Aaykar Sampark Kendra (0124-2438000 or 95124-2438000 from NCR) or www.incometaxindia.gov.in or send an email to pan@incometaxindia.gov.in.
30. Will the existing PAN cards issued by the Department remain valid?
All PAN allotted and PAN card issued by the Department will remain valid. All persons who have been allotted a PAN need not apply again.
31. Income Tax Department has issued me a PAN card; can I obtain a new tamper proof PAN card?
For obtaining the tamper proof PAN card an application will have to be made in the form for 'Request For New PAN Card Or/ And Changes In PAN Data' to IT PAN Service Center or TIN Facilitation Center, in which existing PAN will have to be indicated and old PAN card surrendered. The payment of Rs.60 + Service Tax as applicable, will also have to be made.
32. I had applied for PAN and received PAN number but have not received the PAN Card?
Apply in the form for 'Request For New PAN Card Or/ And Changes In PAN Data' at any IT PAN Service Center or TIN Facilitation Center quoting the PAN allotted to you.
33. How will the new PAN card be delivered to me?
The UTIISL or NSDL, as the case may be, will ensure delivery of new PAN card at the address indicated by you in the PAN application form or form for 'Request For New PAN Card Or/ And Changes In PAN Data'
34. I want to pay taxes today but I do not have a PAN?
It takes about 15 days to get a new PAN allotted. However, PAN can be obtained in around 5 days if application is made through Internet and processing fee paid through credit card. It is advisable to initiate action for obtaining PAN will in time.
35. Who should be contacted for inquiries regarding PAN applications?
All such inquiries should be addressed to:
For UTIISL
________________________________________
The Vice President
IT PAN Processing Centre,
UTI Investor Services Ltd
Plot No. 3, Sector - 11
CBD_ Belapur
Navi Mumbai-400 614
e-mail.- utiisl-gsd@mail.utiisl.co.in
Tel No. 022-27561690
Fax No. 022-27561706 For NSDL
________________________________________
The Vice President
Income Tax PAN Services Unit, NSDL
4th Floor, Trade World, A Wing
Kamala Mills Compound,
S. B. Marg, Lower Parel,
Mumbai-400 013
e-mail.- tininfo@nsdl.co.in
Tel No. 022-2499 4650
Fax No. 022-2495 0664
Coupon number or Acknowledgement number, as the case may be, should be mentioned in all communications.

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Personal finance management tips for women

Women need to handle their finances differently from men. Mainly because of the differences in the earning patterns and priorities that women set for themselves their finances should be managed in a different manner. The basic goals of personal finance remain the same, i.e.,

> Ability to meet daily expenses and lead a quality life

> Provide for emergencies and unplanned expenses and

> Savings for life after retirement

However, the way in which men and women achieve these goals is different. While men earn money uninterruptedly throughout their working lives, women often need to take a break, especially when they have children.

Other reasons like orthodox family backgrounds, change in location after marriage, change in spouse's job location, household responsibilities etc can also require women to put their career on the back burner.

We have the much debated case of Mrs. Sudha Murthy- wife of Mr. Narayana Murthy, founder of Infosys. The couple was instrumental in building the Infosys dream. As the business started taking shape, the couple decided that one person was required to take care of their home and family.

Mrs. Murthy gladly stepped aside to be the homemaker and let her husband fulfill his dream. Cases of women going abroad on a dependent visa with their husbands are not uncommon.

So, if a woman earning Rs. 50,000 per month takes a 5 year break from her job because she wants to be at home with her child, her earnings and thus savings take a hit of Rs. 30L.

We have not yet considered any increment in her salary. If we consider that her salary increments by 20 percent each year, her loss of earnings will come to Rs. 44.65L. That's a big number.

Also, when she resumes work, she may have to compromise on the job profile, position and hence salary. Therefore, the percentage of savings should be higher for women during their working life.Besides, the life expectancy for women is higher than men. So, the amount of retirement savings for women should also be higher.

Statistics show that, on an average, women live 5 years longer than men, earn 25 percent less during their life time and work 11 years less in their careers.

Importance of having an individual personal plan separate from your spouse

It is important that women have a separate personal finance plan from her family, be her parents or her husband. With changing times the need for separate finances has increased. The rise in divorce rates is alarming. The surety of life is also lower with increase in accidents and stress related ailments.

If a woman handles her own finances she is well prepared to handle money matters individually if the need arises. Knowledge of different investment avenues, savings and expenses is important to run a family.

A separate personal finance portfolio will prepare a woman to face financial challenges. Also, she will not have to bear a monetary loss in the event of a divorce

Regular Income: Even when women take a break from their careers, it is a good idea to earn income from working a few hours a day. Taking tuitions, teaching a hobby etc are common ways to earn a regular income even when one is not working full time.

> Keep an emergency fund. Do not touch it unless it is a real emergency.

> Save and invest as much as you can. Invest in 'high return' investments. Some part of the savings should go in to stocks and mutual funds as they have a high earning potential. Look for women oriented products.
> Time your investments for known expenses likes children's education or marriages

> Demarcate clear boundaries with your spouse for routine expenses. It will be easier to determine personal monthly expenses and hence monthly savings.

> Track your savings and investments regularly.

> Have a financial plan. Save as much as you can at an early age when you have limited responsibility.

Assuming you plan to save 50 per cent of your income every month and wish to invest in different investment products, you could compartmentalize your investment into various risk categories. Click to see some risk categories for investments

You can change the portfolio as per your risk appetite. Life Insurance is a must. However, it is advisable that you set aside the money for making premium payments even when you are not working

India must tread careful path between growth, inflation fight

India must balance any measures it uses to control rising prices with any risks they pose to economic growth in the wake of the European debt crisis, Finance Minister Pranab Mukherjee indicated.

Inflation in India "is a matter of concern," Mukherjee said in an interview in Washington yesterday.

"I do hope that the steps we've taken both on the demand side and supply side will have a moderating influence," he said.

India's benchmark wholesale-price inflation unexpectedly accelerated 10.16 per cent in May from a year earlier, near the fastest pace in 17 months, government data showed.

The Reserve Bank of India said it would raise interest rates in a "calibrated" way given the cash squeeze in the economy and the threat posed by Europe's crisis, Governor Duvvuri Subbarao said June 18.

"It is a matter of time" before the central bank increased rates, said Shubhada Rao, chief economist at Mumbai's Yes Bank.

"The central bank is waiting for normalcy in the liquidity situation before raising rates."

Cash crunch

Indian lenders are short of cash after telecommunication companies including Bharti Airtel paid $14.6 billion in licence fees for wireless phone services and businesses withdrew money for taxes.

The next monetary policy announcement was scheduled for July 27.

The Reserve Bank has increased rates twice since mid-March in a bid to control prices.

Overnight interbank rates advanced to 5.3 per cent in Mumbai yesterday, higher than the repurchase rate of 5.25 per cent at which lenders borrow from the central bank.

"We shall have to strike a balance between these two situations," Mukherjee said, referring to economic growth and the acceleration in prices.

"We are watching the situation," he said. Commenting on any interest rate change would be "premature" the minister said.

India's inflation may slow to about five per cent by March, the finance minister said this week.

The country's $1.2 trillion economy expanded 8.6 per cent in the three months through March from a year earlier, the fastest pace after China and Brazil.

The nation's growth rate may reach "8.5 per cent plus" this year and nine per cent next year, Mukherjee said yesterday.

Expansion in manufacturing and services had "contributed substantially to the higher growth".

Four things that drain your cash

Have you ever given much thought to the real cost of an item, compared to the listed retail price? A perfect example is if you chose to buy a new computer on credit. The real cost of the computer would be the purchase price and the interest that you have to pay.

The true cost of an item can often go unnoticed and consumers end up paying much more than they bargained for. Here are four things that are more expensive than you might think.

Active trading

You might believe that it would be exciting to become a daytrader because you can get rich by aggressively buying and selling stocks. All you have to do is buy an investment and sell it for more than you paid. That sounds pretty easy!

So, should you start actively trading your account in hopes of getting rich? Not if you want to hold onto your hard-earned money. The only person who is guaranteed to get rich from your constant buying and selling is your stockbroker.

Brokerage firms absolutely love customers that actively trade their account. The brokerage firm makes money regardless of whether a stock increases in value or decreases because they charge commissions on every buy and sell order.

You could end up paying thousands of dollars a month in commissions, just for the privilege of trading stocks. Once you see how quickly these commissions eat up your investment return, you won't be in such a rush to quit your day job.

Refinancing

Refinancing theory says you can get some extra cash by taking the available equity out of your house by extending the years on your payments. Sounds great! Who couldn't use some extra cash to pay off credit card debt or refinish the basement? Not so fast!

Refinancing can cost you more than you think. Not only are you extending your mortgage obligation for more years; you are also draining the equity out of your home. As the recent financial crisis showed, housing prices are not guaranteed to increase. When housing prices drop precipitously as they have over the past few years, you could find yourself owing more money on your new loan than your house is even worth.

Late fees

Late fees are like little pests that drain your finances and rob you of financial freedom. Creditors are famous for adding late fees to any bill paid after the due date. Late fees may be added to a bill that is one hour late, one day late or one week late.

Credit card companies can charge high fees for late payments, in addition to the interest. Add these little late charges together, and you could be losing hundreds of dollars a year. Over a 30-year time period, you could easily be losing thousands of dollars to late fees.

Credit card purchases

Credit card purchases should come with the following cautionary warning: This purchase will cost you more than the price advertised! Most credit card users end up paying way more than the stated purchase price. The only exceptions are people who pay their bill in full each month.

Small purchases may not appear to be a big deal initially, but over time these little items will end up costing you more than you think.

Building brands on social networks

Businesses trying to cherry-pick their way through the many social networking sites for their branding campaigns will not find it necessarily easy.

However, it would be better to stick with the social networking sites that have already made it big, as a rule of thumb.

The four obvious ones are Facebook, Twitter, YouTube and LinkedIn. Each differs greatly in their structure and purposes, but businesses have a lot of leeway in harnessing their potential.

According to a survey by YouGovSiraj, 41 per cent of those polled said they interact with their favourite brands through platforms such as Twitter, Facebook, YouTube and LinkedIn.

"Social networking sites work because people want to listen to conversations and contribute to them," said Rick Itzkowich, Internet marketing consultant and vice-president of marketing at VP Productive Learning and Leisure. However, to ensure that it works for them, companies need to define their primary goals they hope to attain from being on such a platform.

According to the 2010 Social Media Marketing Industry Report, social book-marking sites such as Digg and Reddit edged Twitter slightly to emerge tops. Facebook was third, and there was also a prominent placement for LinkedIn.

Businesses that have yet to be convinced should look to Barack Obama and how he ran his campaign. "Obama was a master at using social media for his campaign — it paved the way for winning the election," said Ernesto Verdugo, an internet marketing consultant.

Gulf News looks closely at what the big social networking sites have to offer by way of branding.

Facebook

Companies can benefit from the mass some would say, captive audience Facebook attracts by creating a fan page or corporate profile. By encouraging friends to join, the network is able to expand exponentially through recommendations made by one's friends.

Through these and the fan page, the business is able to market itself to a specific audience while the wall allows for interaction and activity encouraging feedback.

"In Facebook whenever you fill out a profile, you state whether you're male or female, age, the likes and dislikes, political affiliations, etc," said Larry Loik, founder and president of The Real Estate Investor Network and an online marketing specialist.

Applications are another marketing tool. One of the most popular to date is Farmville, which has over 80 million users. Businesses can increase awareness of themselves by creating in-game items that help the user's farm. Users don't see this just as marketing, but as a helping hand in the game.

YouTube

YouTube, the video-sharing website now owned by Google, is one of the most popular networking sites. Putting a video up on YouTube immediately adds to a company's presence, directly and subliminally.

"YouTube can be a very powerful thing, if you know how to use a video camera, you'll be able to have an instant TV studio on hand," Verdugo said. "You'll be able to make and distribute videos to millions of people."

It's about giving the potential customer free information, thus adding value to the product. A lot can be done through video.

"One way to grab your audience is by establishing a news channel that's dedicated to your business," Verdugo said.

"Say you're a plumber you can have a programme dedicated to plumbing and tips showing just enough information for free.

"If the audience wants more information they can click on a link where they can buy a product to get more information," Verdugo added. "The video has to be educational and engaging to a point where you want to have a further look. The more free value you can provide upfront, the more business you can get on the back."

Twitter

While Twitter isn't as popular as YouTube or Facebook — though the Twitterati may beg to differ — it is a vehicle to promote, announce or get a feel of the market and consumer mood.

"One powerful example is when the movie Bruno came out," said Verdugo.

"The first movie, Borat, was an overwhelming success all over the world. On the day Bruno opened in theatres around the United States it was packed as people expected it to be a great success," he said.

"However, it wasn't well received and the audience came out tweeting the message. In one day that film was destroyed."

While other sites are great for building up a client base, Twitter is best used as a search engine or listening tool. "By finding out what people are talking about, you can see the market trends emerge," said Itzkowich.

On the downside, techies believe Twitter is becoming inundated with spam and static and is slowly losing its popularity. "I think Twitter is going to decline little by little," Verdugo said. "The reason is there's a lot of static and spam and people don't really understand the concept."

LinkedIn

While not as widely used as Facebook, Linked-In works well for specific business-related purposes.

"The strategy is different for LinkedIn compared to Facebook LinkedIn is mostly for business-to-business contact," said Itzkowich. "From a business angle it's the No 1 business tool corporate-wise."

LinkedIn is not a sales channel but a relationship channel, according to Itzkowich. If used well, a business can position itself to be at the hub of a network and thus be the go-to platform for someone looking to establish a connection.

On LinkedIn, a search can be done to find everyone who works in a company and what the position in it. From there, information can be garnered on who in your network is connected to the person you need to speak to in that business. Taking it to the next step, one can facilitate a meeting through this.

But Itzkowich throws in a caveat: "LinkedIn is a very slow process. On social media sites you are can either hunt or farm, and LinkedIn has more of a farming mentality. If you're in a hurry, Linked In is not the way to go."

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Now Hotmail in your pocket for free

Microsoft India announced that Hotmail users can get alerts on SMS without GPRS connection and for free, starting today

Hotmail users need to log on to www.mobile.live.com, feed their mobile number and enter verification code received on mobile to get started, the company said in a statement

"With this fun and simple service, you can forget about going to the cyber cafe or logging on to your computer every time you want to check your mails", it said. This service makes checking mails as easy as checking SMSs.

"You can now receive, read and reply to emails on your SMS. The service also enables efficient viewing of emails by specifying the email address/domain from which you'd like to receive alerts on your SMS", the company said.

Out of the 506 million mobile users in India, only 18 million have GPRS on their mobile phones. With email access available only to a mere four per cent of the total mobile user base, 'Hotmail alert on your SMS' "breaks all technological barriers" and helps one stay connected anytime, anywhere. All one needs is a Hotmail/Live ID and a mobile phone, it was stated.

Wider euro debt crisis would hurt India

India's economy would be hurt should the sovereign debt crisis that originated in Greece spread in Europe, Finance Minister Pranab Mukherjee said.

"If the whole of Europe is affected by the debt crisis it will be harmful to us," Mukherjee said yesterday in an interview in Busan, South Korea, where he is attending a meeting of finance officials from the Group of 20 nations.

The European Union is India's biggest overseas market, accounting for a fifth of the nation's merchandise exports. The South Asian nation, which opened its market to foreign investors in 1991, has become vulnerable to slowdowns and financial crises abroad as exports play a bigger role in the economy.

Trade represented 35 per cent of gross domestic product for the year ended March 31, 2008, up from 21 per cent in 1997-98, the year of the Asian financial crisis, according to the central bank.

India's economic growth accelerated to 8.6 per cent last quarter, the fastest pace after China among the world's major economies.

Growing consumer demand is stoking inflation, with the benchmark wholesale-price index climbing 9.59 per cent in April.

Inflation is "an area of concern, but I'm not pressing the panic button," Mukherjee said. "There is a disturbing signal as core inflation is likely to go up."

Core inflation

Core inflation, which excludes food and fuel prices, is currently close to 6 per cent from 1.8 per cent at the end of 2009, Kaushik Basu, chief economic adviser in the finance ministry, said on Thursday.

The Reserve Bank of India has raised interest rates twice since mid-March by a quarter percentage point each time. The bank's benchmark reverse-repurchase rate is 3.75 per cent.

Last month, Subir Gokarn, the deputy governor in charge of monetary policy at the Reserve Bank, said the central bank will pursue a "cautious" pace of monetary tightening because of risks to growth posed by Europe.

The G20 is meeting at a time when the US and Europe are split on the scale and timing of increases in bank-capital requirements, which have been under discussion since governments were forced to bail out lenders, an official from a G20 government said.

Countries such as the US, whose economies are largely financed by markets, want banks to be required to hold more assets on their balance sheets to buffer against future crises, the official told reporters on condition he not be named.

Policy makers in continental Europe, where banks provide more financing, are concerned that too-high reserves risk choking off growth, the official said.

Morgan Stanley cuts Asian currency forecasts

Morgan Stanley lowered its forecasts for Asian currencies, including the South Korean won and the Indian rupee, as Europe's debt crisis saps demand for the region's exports.

"A weak euro and fiscal drag in euroland will impart weaker external-demand conditions for Asian currencies ex-Japan," analysts Stewart Newnham and Yee Wai Chong wrote in a report on Thursday. "We are mindful that if China slows too, this would further soften the regional currency outlook."

South Korea's won will likely strengthen to 1,175 per dollar by year-end, compared with an earlier forecast of 1,050, the report said. India's rupee may climb to 46 and the Singapore dollar to S$1.39 by end-December. Previous estimates were at 43.50 and S$1.32, according to the US bank.

DU TO START VOIP FROM UAE

A service which allows users to make cheap international calls through the Internet will soon be launched by du, the company’s commercial director said.

The service will serve as an alternative to Skype, which is banned in the UAE, and will be the first locally developed voice over Internet protocol (VoIP) service.

It comes after the Telecommunications Regulatory Authority (TRA) relaxed several important restrictions on VoIP in March, allowing the country’s two telecom companies Etisalat and du to begin providing the popular service.

Farid Faraidooni, chief commercial director for du, said full details of the new service will begin to emerge
 in the next two months.

“As soon as the TRA altered its policy on VoIP, we began developing this kind of service,” he told Khaleej Times.

“It will not be free, but then not even Skype is free,” he added. “But it will definitely be cheaper to use VoIP for international calls.

“We will be offering different tariffs based on the subscription of the customer.”Faraidooni declined to say whether or not the service would be available to smart-phone users.

The comments by Faraidooni reflect the first effort by local firms to capitalise on the popularity of VoIP programmes, particularly Skype.

Expatriates looking to make cheap calls to home have traditionally used Skype, which is officially banned yet still remains popular.

While traditional mobile phones charge around Dh1.60 a minute for a peak-hour call to India, Skype offers calls at a fraction of that rate.

Skype CEO Josh Silverman told reporters at the Abu Dhabi Media Summit in March that the UAE’s ban on the VoIP programme was “short-sighted”.

“We think it is in the interest of the residents of the UAE and the Emirati government and economy to allow Skype as almost every other country on earth does,” he said.

Two weeks later after Silverman’s comments, the TRA relaxed its policy on VoIP but reiterated that only UAE firms — including newcomers Yahsat and Thuraya — could provide 
the service.

So far, du is the only local firm to announce it will provide an independent VoIP service.

A spokesman for Etisalat said that there was no update to the company’s policy on VoIP.

UAE's Etisalat in talks with Reliance Communication

Abu Dhabi's Etisalat confirmed it is looking to buy a stake in an Indian mobile operator, after a report that it was in talks with cash-hungry Reliance Communications for a $3.8 billion deal.
Buying a stake in India's second-biggest mobile operator would give Emirates Telecommunications Corp or Etisalat, a vital presence in the world's fastest-growing mobile market, where it owns a stake in a start-up telecoms firm.

For Reliance Comm, controlled by billionaire Anil Ambani, this would bring in much-needed funds, especially as the company is caught in a margin-destroying price war and is paying billions of dollars for next-generation licences.

Reliance Comm, one of the worst performing shares in Mumbai's 30-share index so far this year, closed 11 percent higher on Wednesday, while Etisalat stock was down 0.5 percent.

K.K. Mital, head of portfolio management services at Globe Capital in New Delhi said: "Not only Reliance Communications but some other players will also be looking at selling some stake to raise funds to cut debt." "Players like Etisalat are looking at long-term opportunities of the Indian telecoms market despite the short-term pain due to competitive pressure," he said.

India has more than 600 million subscribers and nine of the fifteen operators already have foreign partners. Reliance Comm is the only big telecom firm not to have a direct foreign stake. Call rates have slumped to as low as 0.4 U.S. cents per minute in the world's largest market after China.

Etisalat's Chairman told Reuters his firm could decide within weeks about a deal in India. Reliance Comm said it has been receiving proposals from time to time from international telecom companies expressing interest in acquiring a strategic equity stake in it.

The Times of India newspaper said the Gulf region's biggest provider of telecoms services was in advanced talks to buy a quarter of Reliance Comm for 180 billion rupees ($3.8 billion). The market is currently valuing the Indian company at about $7 billion. The stake sale could mean a change in strategy for ambitious Ambani, who made several smaller acquisitions to expand his firm overseas, and in 2008 set his sight for a tie up with South Africa's MTN in an ultimately thwarted deal.

Last month, Anil Ambani ended an agreement not to compete in businesses with his long-estranged brother Mukesh, which also frees him to bring outside investors into his firm. A person close to Reliance Comm, who declined to be identified, said the report was speculative.

Skype VOIP calls from UAE and Middle East

VoIP technology provider aims to become a legitimate way to communicate with customers and suppliers and is currently gearing up to set up a representative office in the Middle East before the end of the year

Skype's Voice over Internet Protocol (VoIP) technology enables 600 million users around the world to place phone calls via the internet for free or from computer to phone, for pennies on the dollar, far less than traditional landline and mobile phone rates in the UAE.

Skype, however, is banned in the UAE and its website, www.skype.com, is blocked by authorities.
Rouzbeh Pasha, Skype's Head of Middle East and Africa discuss with Gulf News daily the future of Skype in the Middle East and a possible presence in the UAE amid newly relaxed regulations by telecom authorities.

Pasha was a panellist yesterday participating at the Middle East Communications 2010 conference in Abu Dhabi.

In March, the Telecommunications Regulatory Authority (TRA) announced that it had revised for the first time its policies in order that "licensees may offer VoIP as a technology." The TRA said in a statement that "offering VoIP is considered a regulated activity which requires a licence. Therefore, only licensees may provide VoIP services... However, they [VoIP companies such as Skype] can always approach and collaborate with the licensees to legally provide their services." What is Skype's view on the latest TRA announcement and does this mean that expatriates should look forward to legally using Skype service in the UAE soon?

Obviously, this is going in the right direction. However, it is a small step. If you look at the potential UAE has, it is great. From our point of view, it's not really about any one country specifically. I'm in charge of a big region, [the] Middle East and Africa; it's 1.3 billion people with 300 million Arabic-speaking people.

If you look at what Skype brings to these people, this is an amazing product, it helps people get close to their loved ones. If you look at the average number of contacts people have on Skype, it's less than 10.

These are people who you want to see their face. Thirty-four per cent of all Skype calls are video calls. On special occasions such as Ramadan and New Year, more than 60 per cent of all our calls are on video. This helps [our users] stay in contact with people who matter.

Can you confirm that Skype is in talks with TRA or etisalat, du, Thuraya and Yahsat, to bring your VoIP services legally to the UAE through a partnership that would see a portion of Skype revenues stay in the country?

Usually we don't comment on any financial discussions we have with government agencies. However, we do work with partnerships.

We are a Luxembourg-based company. All of our servers are based there. We do work with local partners. We don't comment until we have something we can report on. Our strategy is to globally work with partners. A lot of potential partners have reached out to us. We're in discussions with quite a few.

There are reports that suggest Skype could be up and running freely in the UAE within the next two years. Is that optimistic?

I don't want to speculate. The sooner that everything can be fine, and... Skype can be everywhere, that will be better. But we will have to have relationships in place.

We are working toward that goal. It has to make sense. It is working in every part of the world and it should be working in the Middle East and Africa. But I don't want to put a timeline on it.

Is it your opinion that if a less expensive alternative was given to expatriates to call abroad, more Skype phone calls would be placed, creating higher revenues that would be shared in a partnership with a traditional UAE telecom partner?

How people communicate has really changed. People used to communicate only through voice calls. The device you hold in your hand now does a lot of other things including video. You can read the news on it, talk to a colleague, and also because of this development people aren't confined to voice any more.

Up to 50 per cent of calls depending on the occasion are done on video, a paradigm shift from low-quality voice on the other end. This is what technical innovation has brought us. If you don't upgrade your business model, you will end up losing the whole lot.

Working with a company like Skype helps future-proof your business model. In the short term you would be able to make additional money on what you are doing. You would be looking at making more money on data than on pure voice.

Pure voice is a disappearing thing. As more tools become available to you, you choose more online things. It's about the quality. The volume increases so much that you are making more money. This is an opportunity for... operators to make more money.

[Skype] is an application that drives the user to go get a data subscription, broadband subscription or mobile subscription so that they can use it. It's like you have a fast car and then going through the toll road to use it.

This region is as promising as any other region especially if you look at how the ICT trend is growing in the Middle East and Africa. The average speed of internet access is increasing. Some of the youngest and most tech-savvy people are living in this region. It really is a high growth region in all aspects of online services and Skype is one of them.

There are reports that Skype is already hunting for office space on Shaikh Zayed Road in Dubai to set up [its local] headquarters in the UAE. Can you confirm this?

We're looking at setting up a regional support office in the Middle East. It will be a representative office for Skype to support marketing and develop business activities in the region. We will announce soon which country it's going to be. We're not commenting yet where it will be.

We are an online company so that whatever we do is online. A geographical presence is to reach out to partners. It's not going to be an operation out of here, not like Blackberry selling out of an office. This will be closer to partners in the region. It will be this year, sometime this year. This is for us to show the long-term view we are taking in the region. Even though our software is available in every corner of the world, we have very few offices.

Dubai has always been a business hub and in most recent years has become an international destination to conduct commerce. Does Skype believe that less expensive calling rates internationally would improve affordability and access to other global centres for small businesses, exponentially increasing the flow of capital and trade into the UAE?

Totally. It is one of the main reasons that Skype can benefit the region and this country in particular. If you can use Skype as an official tool to communicate with customers and suppliers, it can give you a tool to be more efficient.

In economic development, communications is one of the key elements. This is really a global trading hub. You have suppliers in the Far East and customers in the Far West. You have to communicate with people. The easier you can communicate the more efficient you can be.

In the long run, it is one of the basic components for economic development and one way for businesses to become more profitable and more sufficient. If that happens, it does benefit the total economy of a country.

As the largest VoIP provider on the planet, what kind of numbers has Skype been enjoying in recent years?

We recorded 8 per cent [of international calling minutes] in 2008, 12 per cent in 2009. Skype was one of the companies driving the increase in total volume. Not only did we increase our share, but we also helped increase the total volume of calls. We now have 600 million users globally.

We just celebrated the concurrent logging in of 20 million users at the same time. This shows you the power of the technology. We do want to be seen as a company that breaks down barriers, this is one of the driving principles Skype has. We want users to feel part of the global community. If you are online, this is a tool that enables people to communicate wherever they are. This is the first time you can do it so cost-efficiently. Here this is really using the power of the internet to offer these services at a very low cost.

With an estimated 65 per cent of the Middle East population under the age of 30 constantly connected through handheld devices and laptops, do you see Skype emerging even stronger in coming years over traditional telephone platforms?

Skype is going to be one of the strongest platforms for communication online. It will allow users to do more online communication rather than single-device use. You log in, you check your e-mail, your news, you Skype your friend, do whatever you want. This region has great potential. The ICT is catching up now, it is improving and is great. People can get online faster than before.

VoIP technology provider aims to become a legitimate way to communicate with customers and suppliers and is currently gearing up to set up a representativeoffice in the Middle East before the end of the year

600m: number of Skype users worldwide representing roughly nine per cent of the world's population
20m: Skype recently celebrated a milestone in its history with 20 million Skype users logged on at the same time
34%: of all Skype callsare video calls
54b: Skype's share of 406 billion international calling minutes logged last year worldwide
7: Skype was founded sevenyears ago in Luxembourgh

India inflation cools slightly

India’s year-on-year inflation cooled slightly in April, official data showed Friday, easing pressure on the central bank for a swift hike in interest rates.

Wholesale price inflation, the country’s main cost-of-living measure, slipped to 9.59 percent last month from 9.9 percent in March — broadly in line with market expectations, the commerce ministry said.

The Reserve Bank of India hiked its key interest policy rates by 50 basis points in March and April and has begun unwinding monetary stimulus measures used to shield the country from the global financial downturn.

Earlier this week, the bank said it would take a “calibrated” approach to further rate increases amid uncertainty about the fallout on India from the eurozone debt crisis.

“With the external situation highly uncertain and India’s financial system highly vulnerable to sudden capital outflows, now is not the time to aggressively withdraw liquidity and hike borrowing costs,” Nikhilesh Bhattacharyya, economist at Moody’s Analytics, said in a research note.

Slower-than-expected industrial output growth of 13.5 percent in March as the government withdrew stimulus measures also has reduced pressure on the central bank to raise rates swiftly, economists say.

The central bank is expected to wait for the onset of the monsoon rains that sweep the country from June to September to see whether they bring down food prices before taking any further tightening action.

Last year’s rains, the weakest in nearly four decades which hit agriculture output, sent the cost of food soaring and caused huge hardship for India’s poor masses.

The food price inflation index clocked up a still-strong 16.87 percent year-on-year rise but analysts expect food prices to ease amid hopes of a good harvest.

However, some economists said there could be a move by the central bank to tighten monetary policy before its July 27 policy meeting.

“We expect the Reserve Bank to maintain its tightening stance and we don’t rule out an inter-policy meeting (tightening) action,” Shubhada Rao, chief economist at India’s Yes Bank, told AFP.

The central bank could increase policy rates by a further 150 basis points this financial year to March 31, 2011 if inflation pressures do not ease, economists have forecast.

DU PREPARES UP FOR VOIP SERVICES FROM UAE

Emirates Integrated Telecommunications Company, the UAE telecom operator known as du, said yesterday that it is building a base to offer Voice over Internet Protocol (VoIP) services but has not yet zeroed in on a partner.

The company said net profit before royalty for the first quarter of this year more than quadrupled to Dh194 million, compared to Dh47 million in the first quarter of 2009. Revenue for the period was Dh1.58 billion, a 36 per cent increase over the same period last year and 3 per cent more than the fourth quarter.

"We are very pleased with the results. It shows our continued growth," said Osman Sultan, du's Chief Executive Officer, during a conference call yesterday. "It's a growth that has translated into a record revenue for us," he said.

An increase in the number of subscribers has been the main driver behind the record revenues, Sultan said. The number of active mobile subscribers increased by 262,000 in the first quarter, bringing the total active mobile subscriber base to more than 3.7 million.

Proposition

Du is currently "building a VoIP proposition", but hasn't decided on a partner yet, Sultan said. VoIP telephony allows users to make phone and video calls and send text messages using the internet at costs significantly lower than those charged by traditional network operators. Etisalat recently slashed international call costs to Dh0.50 per minute on landlines.

"We are now exploring different routes," Sultan said. "We will be announcing this year a value proposition for the enterprise and residence markets," Sultan said.

The extraordinary general assembly of shareholders agreed to the proposal to increase the company's capital to Dh4.57 billion by selling 571,428,571 new shares on a rights basis for Dh1.75 each.

The rights shares will be priced at 33 per cent discount to Monday's closing price (Dh2.55) on the Dubai Financial Market and at 38 per cent discount compared the price before the rights issue announcement last month, Sultan said.

The proceeds of the issue, about Dh1 billion, will be used to increase the company's capital in order to position it for future growth.

Capital structure

"This Dh1 billion that the company will be collecting is not needed for deadlines. I think we need to plan for a three- to four-year road map. We need to have a better capital structure," he said.

"The company has the highest growth among all telecom operators in this region and we anticipate remaining on the high end for 2010."

Asked about potential expansion plans outside the UAE, Sultan said there were "no intentions for any acquisition or any plans to go outside the UAE". The company's primary focus is to grow further in the country, he said

Etisalat slashes international call rates to 50 fils per minute

In a move to offer the best international calling rates to landline customers, Etisalat has slashed the International Direct Dialing (IDD) rates to 50 fils per minute from May 10 till August 9, 2010.

All UAE landline users can call anywhere in the world, anytime, at just 50 fils per minute during this period, Etisalat said in a statement.

The offer is applicable for all landline users in the UAE, benefiting both, e-Life as well as non-Etisalat landline users. Users, who do not have an Etisalat landline connection, can also benefit from the reduced rates through the Etisalat Select Service that is offered free of charge; the user only pays for usage.

Available in two customised packages, the promotion offers additional flexibility to the customers to choose the most appropriate package as per their requirements.

First offer: Customers can benefit from the best international calling rates of 50 fils per minute (all day), for one selected country of their choice for a flat fee of AED 20 per month. Customers can call 125 to select their preferred country and enjoy the discounted rates. Rates of all other local and international calls will remain unchanged.

Second offer: Besides reduced call rates of 50 fils per minute for a selected country, subscribers to this offer have an option to pay a connection charge of Dh1 per international call to the selected country, rather than the flat fee of Dh20 per month. Hence, customers in this plan can choose to 'pay-as-used', rather than paying a monthly fee of Dh20. Rates of all other local and international calls will remain unchanged.

Customers also have an option to switch from one offer to another, based on their utility. Customers can subscribe to this promotion by dialing 125, or by visiting any Etisalat business center or outlet in shopping malls throughout the country. Etisalat mobile customers can subscribe to Etisalat Select service by sending an SMS "ES" to "1010". For all other mobile users, they can call 800-101 and request the service.

Subscribers of special IDD tariff plans such as "Super off Peak", "Favorite Country", and "Friends & Family" can also benefit from this promotion by subscribing to the above mentioned offers. The IDD tariff plans will be put on hold during the promotion period, and customers would automatically be reverted to their original plans after the promotion.

RBI TO INCREASE REPO & REVERSE REPO RATES TO FIGHT INFLATION

Equity investors in India will keep their eyes on the central bank for direction this week, with the possibility of aggressive monetary tightening being a big concern for the market.

Quarterly earnings from big companies will also set the trend.

The Reserve Bank of India (RBI) is widely expected to raise its benchmark lending and borrowing rates by a quarter of a percentage point on Tuesday when it announces policy to dampen inflationary pressures that are spreading from food to manufacturing.

It would be the second increase in two months after the RBI lifted rates unexpectedly in March, citing rising prices and stronger economic growth, after keeping them at record lows for more than a year.

"The market has discounted a 25 basis point rise," said equity trader Rajesh Shah. "Anything more could upset the apple cart."

The blue-chip 30-share Sensex, which is a barometer of the stock market, posted its first weekly fall in 10 when it shed 1.9 per cent last week to 17,591.18, its lowest close in April.

The widely tracked index had risen 11 per cent over the previous nine weeks in its longest run of gains in almost a year.

Like all central banks, the RBI is wary of inflation and the consequences it could cause while the government is focused on growth.

Some economists have predicted the RBI may raise rates by 50 basis points and increase the percentage of deposits that banks must keep with the central bank in reserve, or CRR, by a quarter point.

The RBI had hiked the CRR by 25 basis points in March.

On Friday, after RBI Governor D. Subbarao met Finance Minister Pranab Mukherjee ahead of the policy review, government officials indicated only a small rate rise was needed as inflation was set to start cooling.

"I think actually we've peaked. Inflation's still got to remain high for a while but on a downward trajectory from now on," Kaushik Basu, the chief economic adviser to the finance ministry, told reporters.

Annual wholesale price inflation in March was 9.9 per cent, the strongest since October 2008, but below economists' estimates of above 10 per cent. The data seemed to back Basu's point that inflation was likely to moderate in the coming months.

Samiran Chakraborty and Anubhuti Sahay, economists at Standard Chartered Bank, said the RBI would likely adopt a gradual and calibrated tightening as the economy was still too early in the recovery cycle.

They predicted the RBI would raise the repo and reverse repo rate by 25 basis points each and the CRR by 50 basis points. "We believe that would be appropriate to demonstrate the RBI's resolve to counter inflation," they wrote in a report.

The bank expects wholesale price inflation to average 6.75 per cent in 2010-11 and ease to five per cent in 2011-12. There is also an opinion the central bank should hold its fire for the time being, especially because of the action in March.

"As the RBI moved barely a few weeks ago, the best policy would be to wait and watch," the Indian Express wrote in an editorial yesterday.

"The difficulties in the transmission mechanism of monetary policy mean that it's not clear how much and how long it would take for higher policy rates to get transmitted to higher bank lending rates."

So, will the RBI tone down its aggressive stance?

"While these developments are unlikely to stop the RBI from hiking rates again at next Tuesday's quarterly policy meeting, they increase the chances the move will be 25 bps rather than 50 bps," said Robert Prior-Wandesforde, senior Asian economist at HSBC.

Investors will also be watching quarterly earnings from companies. Some of the top results due this week include: Reliance Industries, Tata Consultancy Services, Wipro, Hero Honda Motors, ACC, Ambuja Cements and UltraTech.

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Indian stock market is still a good place to invest

Losing the share certificates of a stock turned out to be fortuitous for the young Raamdeo Agrawal on his journey to be one of India's most successful equities investors.
It was 1980, when 23-year-old Agrawal first invested in India's stock market. Anticipating its future growth, earnings potential and profitability, he picked up shares of Vysya Bank at almost a throwaway price of Rs25 (Dh2.02). Over the next few years, the stock climbed to Rs2,000, but subsequently fell to Rs300. Thinking it might go down further, he placed a sale order at this price.

To his dismay he found he had lost the share certificates, which were required to complete the transaction. That was the era of pre-electronic trading. So the sale order was cancelled. Eight months elapsed before he got replacement certificates and that too at a cost of Rs50 per share. Rather than selling the shares right then, Agrawal patiently waited.

Finally, he sold the shares at Rs2,000, making good on his initial investment by "simply sitting on the stock and not flipping" as share prices went up and down and up again.

In 1987, Motilal Oswal and Agrawal founded Motilal Oswal Securities Limited (MOSL), today considered one of India's leading diversified financial services firms.

On a short visit to meet clients in Dubai last week, Agrawal, co-founder and managing director of Motilal Oswal Securities Limited, not only shared his investment philosophy but also answered in the positive when asked (as many readers might be wondering) whether there's still an adequate margin of safety to enter the Indian market at the current levels.

He isn't the one to get carried away by the astounding rise of the Indian stock market's Sensitive Index, popularly known as Sensex, in 2009. He reminds that last year's rise of 80 per cent was after a 67 per cent decline the year before. But he feels the annual federal budget presented last month has set the tone for further growth momentum in the economy.

In the last three years, the Sensex's earnings per share (EPS) aggregate has been prevailing at around Rs800-825. He expects this stagnation will end this year.

"In 2010-11, I think it should move up to about Rs1,000 to Rs1,100, depending on what happens to Corus, State Bank of India and, also, what happens to credit growth, etc.

"We are hoping anywhere between 25 and 30 per cent earnings growth. It will take four quarters of earnings growth for that to materialise. So markets will move up as earnings become clearer to the minds of the market men. My sense is we have seen the bottom, pre-budget, unless some black swan event happens.

"Now how much can the market climb up on a 25 per cent earnings growth? My sense is about 15 to 20 per cent."

Uncertainty

He doesn't downplay the continuing uncertainty surrounding global economic recovery and whether the Foreign Institutional Investors (FIIs) will sell or buy.

"They should buy what they bought last year, which was about $14 billion [Dh51.4 billion] to $15 billion. If they do, then we will see the market scaling up," Agrawal adds.

The place of emerging markets amidst the unrelenting globalisation is always a factor to keep in mind, he says.

"India is not moving in isolation to other emerging markets. We are very closely tied to what happens to the entire emerging market, and globally whether emerging markets will be in favour or out of favour."

The second challenge could be more domestic.

"It is important to consider issuance of new papers, whether from the government or the private sector side. When you have too many issues coming together, market tends to soften. So, these are the challenges for the market. My sense is that with a strong earnings growth ahead for the next 12 months, we see markets to be on the positive side from the current levels."

With the Sensex surging from the lows of 7,700 to the current level of 17,000, and its 2009 performance turning out to be one of the best in the world, many investors, still sitting on the sidelines, are not sure whether they have missed the boat. Agrawal strongly believes they have not. He says it all boils down to whether you are in it for investing or speculating.

"If you are talking about holding for one year, it's pure speculation," Agrawal says. "If you are talking about three to five years, that's a decent period. I will be surprised if managed funds don't double in five years. And 15 per cent compound return [on such funds] is a decent return I would say. In no bank deposit you can get such a return anywhere in the world."

What about the current valuation of about 16 times price earnings next year as a criterion for entering the Indian markets now? He feels it's reasonable, given the expected corporate earnings growth in the year ahead.

"We are definitely not at A throwaway price but we are also not at euphoric levels of 20 times or 30 times earnings. In other words, I would say, a $10 stock is now available for $10. It is not available for $8 or $9.

"Markets are very evenly poised and the economy is looking very good for 8 or 9 per cent growth. Corporate profits are going to zoom for the next three, four, five years. So the setting is perfect for a doubling in five years or even less than five years," he says.

Agrawal, who prides himself as a ‘100 per cent' equity investor, has one more piece of advice. An equity investor should have the heart to see prices going down and remaining steady in the face of it. After all, equities are considered one of the riskiest assets to be putting your money in.

"One of the things about investing in India or any part in the world, if you can't take 20 or 30 per cent correction from your purchase price, then you don't belong to the game. You can't get it at the lowest, because at the lowest you are scared. The moment some companies slightly move up, the markets also go up. Then you say that you've missed the bus. So, when do you get in?"

He concedes, however, it is not for everybody to play the market directly.

"It is for you to decide whether you are going into the market on your own or you should take professional help," says Agrawal.

"If you yourself understand what companies are worth investing in, you can very well double your money in a few years. ‘Bigger the better' for the guy who is managing himself. But if you are not competent, irrespective of the size of money you have, you must take professional guidance. It is very complex, and you have to be on top of things."

Even a seasoned stock market investor like Agrawal himself goes wrong sometimes.

In 2000 he sold his Infosys (India's leading IT company) shares at Rs8,000 per share and with the profit, bought shares of a small company (the name of which he would not like to disclose) at Rs400, which immediately slumped to Rs20. It has stayed at the same level since then.

Having digested this experience, the master investor draws this lesson: "Quality [of companies] matters a lot," he says.

Fund managers

As for guidance for those who need it, he means taking the mutual fund route. Without taking names, he says, he has high regard for several of what are available, both in terms of fund managers and funds. But he underscores the point that the investor should carry out his or her own due diligence on them.

"If you go for professional help, you have all these fund managers. Look at their track record, what they have been able to achieve over the past five to 10 years. Smart talk everybody can do it. Go for the tested products. After all, there's quite a plethora of them. Portfolio management services (PMS) and foreign houses offer a lot of exciting equity products, and [there are] brilliant managers in India. You must know the person and fund you have to do the homework."

Coming back to investing directly, he lays down the investment criteria of what makes him think that a stock is worth a second look.

Valuation is absolutely important, but with it, he looks at how much money the company can make in the future, he says.

"One is profit [what it makes now] and the other is profitability. Most of the people don't focus on profitability. Is the business going to need Rs1 billion to earn Rs100 million, or incur Rs100 million to earn Rs100 million. That's the real differentiator between two businesses.

How important is tangible asset backup to minimise the downside risk?

"It depends on the businesses," Agrawal points out. "Some of the businesses are tangible asset based businesses, some of the others are completely brand equity-driven kinds of businesses where real assets are intangible."

He then goes on to explain the two with examples.

Like when you buy a cement company stock, you are looking at the tangible assets. The valuation criteria of such a company is based on enterprise value (which is the total takeover value) per ton. The replacement cost (that is, cost to replace an asset at current prices) must be judged in terms of whether one pays the full price but buys a superior machine or one buys an average machine, but at half the price.

On the brand equity side, for example, companies like Nestlé India and Hero Honda Motors do have factories. But their valuation is not based on tangible assets but their earnings power.

"The kind of brand equity such companies enjoy, the kind of scale they enjoy, the kind of low cost of production they enjoy because of that there's always a certain level of profitability, cash flow and dividend payout ability," he says.

"These companies are looking at some staggering growth potential into the future — and competition is limited for them because they have almost killed all competition on the way to becoming number one or number two. So that's the kind of opportunity you look at, but at a reasonable price, which is available at 13 times or 14 times earnings current year and 12 times next year. So that's how I approach."

Agrawal believes in the philosophy of buy and hold. So when does he sell? Well, he doesn't bother too much about the selling if he feels his buying has been at the right price.

"I suggest to others three to five years, but personally, for myself, I look at 10 to 20 to 25 years. So selling is not on my horizon, but I am not averse to it. Of course, you have got to have those kinds of businesses to hold on to. There are not many of that type, even in the US. You come across a few and you are lucky to buy into them."

Investing mantras of Agrawal

Inspired by Benjamin Graham, the guru of value method of investing, and his most famous follower Warren Buffett:

1. Focus on great growth businesses. Growth is all around, but growth combined with superior business is fountain of wealth creation.

2. Terrific management team the horse is important but the jockey is even more important. A combination of good horse and even better jockey wins the race.

3. Look for large opportunities with few players. When the scaling up of economy will happen in next 10 to 15 years, all the values in that business will converge at one or two places.

4. Buy at reasonable valuations. Avoid bubble valuation, even in best companies.

His top stock picks:

HDFC Bank
State Bank of India
Hero Honda Motors
Bajaj Auto
Nestle India
Maruti Suzuki (later, when the price is right)