Vol. XIII, Issue IV May 2012 50

4/2012

Catch us also on

MAY

201

2

CONSUMER24 VOICE

APR

IL 2

012

CONSUMER24 VOICE

Due to high inflation and rise in

interest rate investors have

less money at their disposal,

today people are reluctant to invest

in stock market. Major reforms

appear unlikely, because of political

compulsions. There is no trigger to

boost the investment climate. As

many as six companies that made

their debut on BSE recently are trading

well below their issue price, resulting

in significant negative returns for

the investors. According to analysis

done by Consumer VOICE Finance

Unit, based on data available with the

Bombay Stock Exchange, all the six

companies, including gold financing

firm Muthoot Finance and Kishore

Biyani's Future Ventures India, which

hit the secondary market in 2011-12

are attracting negative returns in the

range of 10-70 per cent.

On the basis of market analysts we

are of the view that the companies

listed during the year are trading way

below their issue price because of

one simple reason - the aggressive

pricing issue. Today companies are

greedily unmindful of leaving some

appreciation in the hand of investor

and they are marketing the issue at

maximum price, resulting in killing the

market itself. Today the sluggishness

we witness is only due to these greedy

promoters.

Both, the Government and the

Securities Exchange Board of India

are watchful and concerned about

these trends Two major objective

of SEBI is to protect the interest of

investors in securities and to promote

the development of the securities

market.

In this year’s budget the Finance

Minister has announced plenty of

measures to boost the investment in

stock market, and one of the options

the government has adopted, is

giving tax incentive. Rajiv Gandhi

Equity Savings Scheme under which

new investors, whose annual income

is below Rs 10 lakh, will be allowed

deduction from taxable income of

50% on investment of up to Rs

50,000, made directly in equities. The

scheme will have a lock-in period of

three years. The tax benefit under

the new scheme could be higher than

other similar equity schemes available

to investors, which will help drive retail

participation and push up delivery-

Share Market : Consumers be attentive

and selective

Share Market!! It is a public market where stocks, mutual funds, bonds etc. are sold. Stock market, Mutual fund market etc. all comes under Share Market. Primarily Share Market refers to stock market. Buy buying a stock of a particular company you got ownership of that company to the extent of your investment. In other words the company shared its ownership with you. Due to this reason it is called Share Market.

Finance Special

http://young.consumer-blog.blogspot.com/

MAY

2012

CONSUMER VOICE 25

MA

MAY

Y

2020202012121212

CCCCCCCCCCOOOOOOOOOOONNNNNNNNNSSSSSSSSSSUUUUUUUUUUMMMMMMMMMMMMMMEEEEEEEEERRRRRRRRRR VVVVVVVVOOOOOOOOIIIIIICCCCCCCCCEEEEEEEEE 2222225555555

based trading in the future. However,

it will take some time before smaller

players make a strong comeback to

the market, which also depends on

economic and political developments

in the country.

In his Budget for 2012-13, finance

minister Pranab Mukherjee also

announced 20% cut in cash

deliveries which is a positive attempt

towards encouraging investment

and discouraging speculation in the

market. A relaxation in the STT rates

from the existing 0.125% on delivery-

based turnover in the cash market,

to 0.10%. At the new rate, STT of Rs

10,000 will be charged on every Rs 1

crore of turnovers in the cash market.

The rates for other transactions,

including non-delivery based equity,

mutual funds, futures and options -

are left unchanged.

The proposed reduction in STT will

marginally bring down transaction

costs for investors. At present, the

cost of delivery based cash market

transaction worth Rs 1 crore includes

STT of Rs 12,500, stamp duty of Rs

1,000, Sebi fees of Rs 10, exchange

charges ranging from Rs 225 to

Rs 350 and a 10.3% service tax on

exchange charges, both on purchases

and sales.

Gone are the days when people had

to stand for long hour in queues to

get application forms of companies

like Colgate, Reliance, TATA, ITC, and

many others, for share allotment in

new issue of shares. This was an era

prior to the establishment of Securities

and Exchange Board of India April 12,

1992. At that time new issues were

few, hence got heavily oversubscribed

and allotment was like a lottery.

Prior to 1992 no company could bring

new issue without the approval of

finance ministry, even the premium

charged decided by controller of capital

issue in ministry of finance. Today, the

open liberal – environment norms are

based on disclosure; investors are

expected to be informed.

However in those days market

manipulation was rampant, new

issue forms were black-marketed,

basis of allotment favored those

who corrupted the system, and

small investors always receive step

motherly treatment. Companies held

back investor’s refundable money to

earn interest. Most of the complaints

to the companies fell on deaf ears.

Brokerage cost of buying and selling

was extremely high. In case of

purchase, investors always paid

highest cost of the day, whereas while

selling they were paid the lowest rate

of the day. When the seller gives the

share certificate in physical form

(a paper certificate) to the broker so

that through settlement it goes to

the buyer, he has to wait for almost 6

months for the settlement to happen.

Even then various excuses are given

to show the transfer deed as bad

delivery, hence instead of getting

back sale proceeds he receives his

share back as bad delivery. Further

when his sold shares are auctioned on

his account, some time he can suffer

20% to 100% loss.

Time before SEBI was most frightening

for the investors, Today investors are

unaware of the kind of advantages

they have compared to investors,

even a decade back. Investors are

advised to have a fresh look before

investing in initial public offering of

the company. Today they should first

see the grade which is mandatory and

understand it.

These are explained below (as given

by a credit rating agency):

IPO grade 1 Poor fundamentals

IPO grade 2 Below Average funda-

mentals

IPO grade 3 Average fundamentals

IPO grade 4 Above average funda-

mentals

IPO grade 5 Strong fundamentals any

grade the best grade

The best part is, SEBI has made these

credit rating which are extremely

complex, simpler by converting from

AA+ to B- to simple 1 to 5. Here 1 is

lowest and 5 is highest grade. Hence

investors can apply to those new

issues which receive Grade 5 rating.

Additionally IPO related to grading

requires inclusion of ratings of other

products/instruments, and their

performance for more clarity. Because

Credit Rating Agencies registered with

SEBI should also carry out rating of

other securities and include any kind

of borrowing/ equity participation

under any other regulator and the

same may also be mentioned in draft

prospectus.

Further, in order to understand

performance over a period, all

Ratings by any CRA registered with

SEBI for same company, issued in

previous year and up-to the time of

filing of offer document; should be

required to be made part of offer

document. As multiple grading of an

IPO is permissible, different grades

mentioned under DIP Guidelines

create confusion in the mind of

investors. The suggested comparative

chart clarifies why Second Grading

is required by issuer may provide

transparency.

Under Schedule XXVIII contents of

the advertisement to be issued in

terms of clause 8.3.5.4 the grading

Finance Special

http://www.linkedin.com/pub/consumer-voice/33/a85/849

as prescribed by SEBI is not included,

it requires a re look and should be

included. In 'debt instruments' more

complex rating is still being mentioned,

the same should be changed and

made simpler, as in case of equity.

Unproductive investment in gold,

in place of stock market is of great

concern, Govt on it's part in the recent

budget has used taxation to make our

economy less gold centric, Reserve

Bank of India recently become very

strict with gold companies in order to

regulate selling gold- related product,

investment schemes and loan schemes

and stipulated various guidelines on

KYC and margins. VOICE takes this

opportunity to alert about danger of

over investment in gold.

Recently people have been

observed using SEBI's name to

collect money from people in the

name of investment in gold, where

promise is made to give gold in

future. An advertisements by one

Gold ornament company which is

collecting money from general public

and promising two installments as

their contribution ( mis- representing

in place of interest), also using

SEBI’s name “proposing to make a

public issue of shares and has filed

a draft offer document with SEBI’.

This may give false hope of safety of

investment and legitimize the illegal

scheme.

We caution our readers that this kind

of gold investment/deposit schemes

to lure common people to part with

funds have no sanction from SEBI.

We have taken up advocacy on this

issue with SEBI and expect action on

part of SEBI, so that people are not

misled.

Sunil Prabhakar

Handy Tips

How to Clean Your LCD Monitor/Laptop

TAKE : A soft lint free cotton cloth (microfiber cloth works best).

Distilled Water. Isopropyl Alcohol or white vinegar (if there are oil stains)

A bottle (atomizer bottle works best)

If it is just dust you are getting rid of, distilled water would be sufficient. If there are fingerprints on the screen or

some oily stains, then use a solution of distilled water and isopropyl alcohol. Note that you should NEVER clean

off the screen with a dry cloth, because the surface of the screen can get scratched .

If you are going to need Isopropyl Alcohol, you should make a solution consisting of equal amounts of distilled

water and isopropyl alcohol.

Put this solution (or just distilled water if that is the case) into an atomizer bottle.

Spray the contents of the atomizer bottle onto the soft lint free cloth, DO NOT spray directly on the screen, make

sure that you are holding the cloth away from laptop when spraying. A damp cloth is what we are looking for,

we don’t need to soak it in the solution.

Gently wipe the screen with the cloth. Horizontal and vertical movements work best,

What you should not do

Never use cleansing agents like window cleaners, soap solutions etc. These contain chemicals that can harm the

screen. In particular you should avoid anything that contains the likes of ammonia, acetone, toluene or ethyl

alcohol.

Don’t spray directly on the screen. If you can’t find an atomizer bottle, you can pour some liquid onto the cloth

just make sure it is not soaking wet. Again do all this away from the laptop

Do not use tissue papers, newspaper or shower towels to clean the screen. You can easily scratch the screen

with these.

Don’t use tap water, it always contains some dissolved salts that can harm the screen.

Don’t clean while the laptop/computer is powered on. Don’t put too much pressure on the screen while cleaning.

Doing so can permanently damage the screen.

Finance Special

http://twitter.com/#!/consumervoice1

MAY

201

2

CONSUMER26 VOICE