February 2015 – OneMint

Edelweiss’ ECL Finance Limited 10.60% NCDs – February 2015 Issue

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

ECL Finance Limited, a subsidiary of Rashesh Shah’s Edelweiss Group, is launching its third public issue of secured, redeemable non-convertible debentures (NCDs) from the coming Thursday, February 26th. The issue will carry a maximum of 10.60% coupon rate with monthly, annual and cumulative interest payment options and will remain open till March 16th.

Size & Objective of the Issue – The company plans to raise Rs. 800 crore from this issue, including the green shoe option of Rs. 400 crore. The company plans to use at least 75% of the issue proceeds for its lending activities and to repay its existing loans and up to 25% of the proceeds for general corporate purposes.

Coupon Rate & Tenor of the Issue – Last time, the company offered its NCDs with 12% coupon rate and 70 months maturity period. This time the company has decided to issue its NCDs for a duration of 36 months and 60 months. The company has cut its offered rate of interest sharply to 10.45% and 10.60% for 36 months and 60 months respectively.

Minimum Investment – Investors need to apply for a minimum of ten bonds in this issue with face value Rs. 1,000 each i.e. an investment of Rs. 10,000 at least.

Categories of Investors & Allocation Ratio – The investors have been classified in the following three categories and each category will have the below mentioned percentage fixed in the allotment:

Category I – Institutional Investors – 30% of the issue is reserved

Category II – Non-Institutional Investors – 20% of the issue is reserved

Category III – Individual & HUF Investors – 50% of the issue is reserved

NCDs will be allotted on a first come first served basis.

NRIs Not Allowed – Non-Resident Indians (NRIs), foreign nationals and qualified foreign investors (QFIs) among others are not eligible to invest in this issue.

Credit Rating & Nature of NCDs – CARE and ICRA have rated this issue as ‘AA’ with a ‘Stable’ outlook. As mentioned above, these NCDs will be ‘Secured’ in nature.

Listing, Premature Withdrawal & Put/Call Option – These NCDs will get listed on both the national exchanges i.e. Bombay Stock Exchange (BSE) as well as National Stock Exchange (NSE). The listing will take place within 12 working days after the issue gets closed. Though there is no option of a premature redemption, the investors can always sell these bonds on the exchanges.

Demat & TDS – Demat account is not mandatory to invest in these bonds as the investors have the option to apply these NCDs in physical form as well. Also, though the interest income would be taxable with these bonds, NCDs taken in demat form will not attract any TDS.

Financials of ECL Finance

Loan Book of ECL Finance

Should you invest in these NCDs?

Though the interest rates have fallen in the past one year and it is widely expected that there will be more rate cuts by the RBI and the commercial banks in the next 6-12 months, I think the rates offered by ECL Finance are on a slightly lower side for me to call it an attractive issue. I think these NCDs are suitable for those investors who have no taxable income or who seek regular monthly income. The investors would do well to invest in Gilt funds or bond funds as I think they should fetch higher returns in the next 3-5 years.

Application Form of ECL Finance NCDs

Note: As per SEBI guidelines, ‘Bidding’ is mandatory before banking the application form, else the application is liable to get rejected. For bidding of your application, any further info or to invest in ECL Finance NCDs, an investor can reach us at +919811797407

Cricket World Cup 2015 Schedule – How to Add it to Google Calendar

Cricket World Cup 2015 has started with a big bang for India. India have beaten its biggest sporting rival Pakistan by 76 runs. It seems that Pakistan cricket team require some kind of commando training before they can even think of beating India in a World Cup match.

It also seems that Virat Kohli has fallen in love with Adelaide Oval. After scoring centuries in each of the innings of the first test against Australia, Kohli smashed one more century here yesterday against Pakistan and most importantly, it was a match winning century.

But, I was more impressed with the innings Suresh Raina played. He provided the much required momentum to the Indian innings and scored 74 runs off 56 balls. This Indian win has sent temperatures soaring among Indian cricket fans and now we all are waiting for India’s next league match, and the most crucial one, against South Africa.

After the match got over, I wanted to check the World Cup schedule and also save the dates of some of its crucial matches. As I was not sure about the date and the day of India’s next match, I quickly searched for it on Google and reached ICC’s World Cup 2015 App on my mobile. It was great to find India’s next match against South Africa to be on Sunday, I mean the coming Sunday, February 22. So, I hope we have a Super Sunday this time as well!

I found ICC’s World Cup App quite helpful and that’s why I decided to write a post on it. It has a feature through which you can add World Cup fixtures to your Google Calendar. So, all those cricket fans who want to remain updated with who is playing who during this cricket cup and want to add World Cup’s schedule to their Google Calendar, here is the step-by-step process, followed by the schedule itself.

Step 1: To have the World Cup schedule on your device, you first need to have your Google account set up on your device. You need to go to Settings > Mail, Contacts, Calendars. Moreover, you also need to make your default calendar to be Google. Just scroll down to the bottom on the same Mail, Contacts, Calendars page and see which calendar is selected as your ‘Default Calendar’.

Step 2: Download Cricket World Cup 2015 app for iOS or for Android and then launch it.

Step 3: Just tap on Fixtures, which will show you the complete schedule of the matches.

Step 4: Now tap on the calendar icon at the bottom of any fixture. Then tap on ‘Add all fixtures.’

Step 5: All the fixtures will get added to your Google Calendar and it will give you a reminder as well half an hour before a match starts.

There is one more way by which you can add the schedule to your Google calendar. Click on the Google Calendar in your Gmail. Go to My Calendars > Settings > Browse Interesting Calendars > Sports > Cricket > International Cricket Council – ICC and subscribe to the teams whose fixtures you want to add to your calendar. It will add all their matches to your calendar.

So, having World Cup 2015 schedule added to your Google Calendar will keep you updated with your favorite matches and hopefully you will not miss the day’s action on the field.

Schedule of ICC Cricket World Cup 2015

Courtesy: www.india.com

Also, which team do you think is going to win the World Cup this time around? I am putting my bets on South Africa as I think they have the most balanced side with De Villiers, Amla, Du Plessis, Miller, Steyn and Morkel, all ready to fire with their guns. If not South Africa, I think it would be Australia as they too have an extremely talented batting side with Maxwell, Smith, Finch, Warner and Johnson in form and they have the benefit of playing under their home conditions also.

But, whichever team wins, it has always been a fun watching Cricket getting played in Australia and New Zealand. I truly love it! 🙂

Weekend Links 13th February 2015

It seems such a long time ago since I’ve done one of these weekend links posts. I have not been reading enough to come up with seven good links, and I wish I could say I was busy, but it was actually a case of lethargy. Cricket and the Delhi elections were exciting enough for me to go through several articles this week, and although I wasn’t thinking of it at that time, it did make me read other things, and ultimately help write the weekend links post after a long while.

The first post this week is a nice editorial in Business Standard about the reasons behind the AAP victory.

Along the same lines, the next article writes about how Arvind Keriwal’s cabinet is likely to be one of the youngest cabinets in India with an average age of 37.

That’s it for politics, now on to something completely different, which is how the brain physically looks like when you’re in love; very interesting.

Another opinion piece on the economic optimism and frustration of India.

Sachin Tendulkar writes about the world cup.

On Mahendra Singh Dhoni. Nice to see this appear in a Pakistan newspaper.

Finally, If symptoms of being sick (mucous, sore throat, fatigue) are immune system responses, what does the cold virus actually do?

Enjoy your weekend!

“HDFC Focused Equity Fund – Plan A” NFO Review – Tax Saving RGESS u/s. 80CCG

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

It is that time of the year again when people start exploring tax saving options other than their routine 80C investments and one of those options is Rajiv Gandhi Equity Savings Scheme (RGESS). A few days back, Kunal asked me to review one such scheme launched by HDFC mutual fund under this category.

Here is what he had quoted:

Kunal February 9, 2015 at 12:08 pm

Dear Shiv

Can you please review the Mutual Funds coming up under Rajiv Gandhi Equity savings scheme. I believe right now – HDFC RAJIV GANDHI EQUITY SAVINGS SCHEME is Open. It would be good if you can review and list pros and cons of investing there as it seems like close ended with 3 year lock in, but normally everyone advertise equity mutual fund in long term more than 5 yrs or so. Is this scheme or others like it really worth the risk.

Regards

Kunal

Before I focus on HDFC’s new fund offer, let me first share some features of RGESS.

What is RGESS and under which section it provides tax benefits to its investors?

Investment in Rajiv Gandhi Equity Saving Scheme provides tax exemption to its investors under section 80CCG of Income Tax Act, 1961. Manshu covered RGESS when it got introduced during financial year 2012-13.

As per Section 80CCG of the Income Tax Act, 1961, a resident individual who is a ‘New Retail Investor’ and acquires listed equity shares or listed units of equity oriented mutual fund in accordance with the RGESS, is entitled to a deduction of 50% of the amount invested from his total income to the extent the deduction does not exceed Rs.25,000.

These schemes provide tax exemption of up to Rs. 25,000 on an investment of up to Rs. 50,000 i.e. 50% of the amount invested and carry a lock-in period of 3 years.

There are certain conditions which a retail investor needs to fulfill in order to avail tax benefits u/s 80CCG. Here are those conditions:

* The gross total income of the investor for the relevant year should not exceed Rs.12 lakhs.

* The investor should be a ‘New Retail Investor’ as per the definition of RGESS.

* The investment should be made in such listed equity shares or listed units of equity oriented mutual fund as specified in RGESS.

* The investment is locked-in for a period of 3 years as provided in RGESS.

Who is a New Retail Investor?

New Retail Investor means a resident individual:

* Who has not opened a demat account and has not made any transactions in the derivative segment before the date of opening of a demat account or the first day of the relevant year, whichever is later.

* Provided that an individual who is not the first account holder of an existing joint demat account shall be deemed to have not opened a demat account for the purposes of RGESS.

* who has opened a demat account but has not made any transactions in the equity segment or the derivative segment before the date he designates his existing demat account for the purpose of availing the benefit under RGESS or the first day of the Initial Year, whichever is later.

HDFC Focused Equity Fund – Plan A

HDFC Mutual Fund launched one such scheme last month called “HDFC Focused Equity Fund – Plan A”. This scheme got launched on January 15th and is getting closed tomorrow, February 13th. It is an 1100-days closed-ended diversified equity fund which will invest in “eligible securities” as per the terms of RGESS.

The eligible securities for HDFC Focused Equity – Plan A are as follows:

Equity shares of those companies which are part of “BSE-100” and “CNX-100”;
Equity shares of public sector enterprises which are categorised as Maharatna, Navratna or Miniratna by the Central Government;
Shares issued in a public offer by companies covered in (a) and (b) above;
Initial Public Offer (IPO) of a public sector undertaking (PSU) wherein the Government shareholding is at least fifty-one per cent which is scheduled for getting listed in the relevant previous year and whose annual turnover is not less than four thousand crore rupees during each of the preceding three years.

Objective of this scheme: The scheme aims to generate long term capital appreciation by creating a portfolio of eligible securities in RGESS.

Term/Duration of the Scheme & Liquidity: As it is a closed-ended fund of 1100 days, it will cease to exist on maturity i.e. after 1100 days and the investors will get their investment back along with the returns generated by this fund during this period.

Moreover, the units of this scheme will get listed on both the stock exchanges, NSE and BSE, in order to provide liquidity to its investors. But, if you sell your units prior to maturity, you’ll be liable to pay taxes on the amount of exemption you claimed in the relevant year.

Benchmark: The performance of the scheme will be benchmarked against S&P BSE 100, which is an index of the top 100 companies listed on the Bombay Stock Exchange.

Entry/Exit Load: Neither entry load will be applicable at the time of investment nor exit load will be payable by the investors at the time of maturity.

Is it mandatory to have a demat account to invest in HDFC Focused Equity Fund – Plan A?

If you wish to avail tax benefit u/s 80CCG, then it is mandatory to have a demat account in which the units of this fund will be credited by HDFC AMC.

How to open RGESS demat account with a Depository Participant (DP)?

You need to approach a stock broker or a registered DP to open a demat account under RGESS.

Profile of the Fund Manager

As I mentioned earlier in other posts as well, I think the fund manager is the most important factor to be considered while investing in any of the mutual fund schemes, especially an NFO. So, let me put some light on this scheme’s fund manager.

Srinivas Rao Ravuri, aged 41 years, will be managing this fund on behalf of its investors. He is a B.Com (H) and MBA (Finance) with over 19 years of experience in the Indian financial markets, primarily in equity research and fund management.

Prior to joining HDFC AMC, he worked with Motilal Oswal Securities Ltd., Edelweiss Capital Ltd. and Securities Capital Investments (I) Ltd. He has been a fund manager with HDFC Mutual Fund since October 2004 and is already managing four of its schemes, namely HDFC Growth Fund, HDFC Infrastructure Fund (jointly with Prashant Jain), HDFC RGESS – Series 1 and HDFC RGESS – Series 2.

Here is some relevant data for the schemes he is already managing:

As it is a new fund offer, it is not possible for me to review its performance. But, the past performance of other funds which are solely managed by Mr. Ravuri does not provide enough comfort to me to advise investors here to put their investment in this scheme. So, I think it would be better for the investors to explore other RGESS options for their tax saving u/s 80CCG.

If you are planning to invest in this scheme or any other eligible RGESS, then you please feel free to put any of the your queries here and I’ll try to respond to it as soon as possible.