Friday, February 10, 2017

Budget 2017

Arun Jaitley last week presented his fourth Union Budget. Expectations were high and so were the challenges, and it was indeed a tough task for the Finance Minister to play a balancing act between growth stimulus and fiscal consolidation. The Budget places a lot of emphasis on agriculture, rural economy, social sector investments and infrastructure, but it is not at the cost of fiscal prudence. There is no attempt to resort to blatant populism, but needs of the poor and the underprivileged are taken care of. Key reform measures, including revamping of political funding and phasing out of  FIPB, are also proposed. Overall, Jaitley has managed to hit a fine balance to a fair degree.

As far as the MSME sector is concerned, it is a big relief to see the Budget coming up with several sops for the sector. One of the major announcements is reduction of corporate tax from 30 percent to 25 percent for those units whose annual turnover is less than Rs 50 crore. According to available data, out of 6.94 lakh companies filing returns, 6.67 lakh companies fall under this category and it means 96 percent of the companies will get the benefit. This is a welcome decision that will help MSMEs become competitive compared to large companies, which, according to an estimate, pay an effective tax rate of 24 percent due to various subsidies and rebates, including preferential land allotment they enjoy.

Another important benefit doled out to the sector is the cutting down of the presumptive tax from 8 percent to 6 percent for units with turnover up to Rs 2 crore. This step is expected, besides easing the burden of taxation, to add transparency in the sector, encouraging SMEs to adopt digital means of doing business. In addition, start-ups will also benefit as the Budget proposes that they will have to pay taxes for three out of seven years (up from five last year), only if they make profits. In addition, it is encouraging that lending target under MUDRA is proposed to be doubled from the 2015-16 target to Rs 2.44 lakh crore.

Not everything sits well with many, however. Despite welcoming the reduction in corporate tax rate, some SMEs feel that the number of beneficiaries will be limited as many small firms run either as proprietorship or partnership firms. Some others lament the lack of specific support schemes and allocations for the sector to fight the demonetisation shocks. It is also quite rightly pointed out that the Budget has nothing to push employment generation in the sector. Similarly, with no incentives offered to MSMEs to invest in plant and machinery, the Budget hardly encourages capital investments. No attention is paid either for revival of the sick MSME units.

Tuesday, July 19, 2016

The Monsoon Session 2016 | Except GST Bill

The Monsoon session is on the way and most of the parties are optimistic for the bill and so as the investors. Most of the conditions are fulfilled by the ruling party and opposition is looking much satisfied as well. Except GST Bill, another 21 bills are lined up and this time, experts are expecting them to get clearance as well.

Logistics industry is projected to grow at a compounded annual growth rate of 15-20 percent between 2015-16 and 2019-20 that will get a further boost if GST is rolled out from this year, which can trim costs by 20 percent, says a report. The much-delayed GST rollout can help boost the GDP by 100-200 bps as this will help faster and cheaper movement of goods across the country with a uniform taxation structure, said a report by Care Ratings.

Since GST will be levied on goods transportation and full credit will be available on interstate transactions, logistic cost is expected to come down by 1.5-2 percent of sales due to warehouse optimization and the resultant lower inventory cost. According to a recent World Bank report, corporates can save up to 40 percent of their logistic costs incurred at check-posts and toll plazas. According to the report, the higher growth of the logistic industry will be driven by e-commerce, GST rollout, government focus on local manufacturing, the new national integrated logistic policy, and 100 percent FDI in warehouses, food storage facilities etc. But in spite of large potential, the industry remains entangled in complexities such as higher costs, a myriad of complex tax structures. The logistic sector is primarily divided into four segments -- transportation, warehousing, freight forwarding and value-added logistics. The transportation contributes the lion's chunk of 60 percent of the logistic pie, followed by warehousing compromising industrial and agricultural storage at 24.5 percent.

Tuesday, July 12, 2016

Kotak Select Focus Fund Growth Five Year Performance

     Kotak Select Focus Fund - Regular Plan (G)

Five Year Performance
Investment Amount `1000/- month (SIP)

2011
2012
Month
Nav
Unit
Month
Nav
Unit
Jan
Jan
10.48
95.45
Feb
Feb
11.47
87.15
Mar
Mar
11.02
90.74
Apr
Apr
11.28
88.65
May
May
10.44
95.80
Jun
Jun
10.93
91.48
Jul
11.83
84.55
Jul
11.22
89.16
Aug
11.07
90.30
Aug
11.63
85.98
Sep
10.65
93.94
Sep
12.02
83.19
Oct
10.76
92.90
Oct
12.34
81.02
Nov
10.15
98.57
Nov
12.36
80.92
Dec
10.15
98.56
Dec
13.10
76.31
Total A
558.83
Total B
1045.87
2013
2014
Month
Nav
Unit
Month
Nav
Unit
Jan
13.59
73.60
Jan
13.90
71.94
Feb
12.89
77.59
Feb
13.75
72.71
Mar
12.60
79.37
Mar
14.63
68.34
Apr
12.17
82.15
Apr
15.10
66.22
May
13.29
75.26
May
16.49
60.64
Jun
12.36
80.89
Jun
17.84
56.04
Jul
12.81
78.08
Jul
18.15
55.09
Aug
11.88
84.20
Aug
18.85
53.06
Sep
12.60
79.40
Sep
20.17
49.59
Oct
13.36
74.86
Oct
19.37
51.62
Nov
13.63
73.39
Nov
21.79
45.89
Dec
13.69
73.07
Dec
21.59
46.31
Total C
931.85
Total D
697.45
2015
2016
Month
Nav
Unit
Month
Nav
Unit
Jan
22.98
43.52
Jan
21.29
46.97
Feb
23.58
42.41
Feb
20.64
48.45
Mar
23.46
42.63
Mar
21.62
46.26
Apr
23.49
42.57
Apr
22.82
43.82
May
22.64
44.18
May
22.87
43.73
Jun
22.40
44.65
Jun
23.81
42.00
Jul
23.88
41.88
Aug
24.30
41.16
Sep
22.57
44.30
Oct
23.45
42.65
Nov
22.54
44.36
Dec
22.60
44.24
Total E
518.53
Total F
271.22
Total unit (A+B+C+D+ E+ F)
4023.76
Current NAV as on 12.07.2016
25.01
Current Value
100638.25
Investment
60000.00
Appreciation
40638.25


Monday, July 11, 2016

Monsoon Update

Monsoon Update 

Monsoon progressed well during the week, with cumulative rainfall now 1% surplus of normal as compared to 25% deficit in the mid of June. Monsoon has now covered all major agricultural states. However, sowing is down 22% YoY, which is understandable given that Kharif season has been delayed by around 15 days. There has been a sharp drop in Cotton and Oilseeds sowing, as certain state governments including Maharashtra advised farmers against sowing Cotton till monsoon sets in.

The focus would now be on the progress of monsoon through July-August (around 60% of total South West monsoon), as rainfall was above-normal in June last monsoon also (CY15) but dwindled as the season progressed. However, both IMD and Skymet have forecast above-normal rains in July and August this monsoon. 

Saturday, July 9, 2016

Outlook June'16

The credit policy of June '16 was along expected lines with RBI staying on hold until further clarity emerges on monsoon and its impact on food prices. RBI has reaffirmed that the stance of monetary policy will remain accommodative. The expectations of strong monsoon, low MSP hikes for kharif crops of 2016-17, continued reforms by the government and higher public capital expenditure to augment supply side capacity forms the basis for our positive view on inflation going forward. Additionally, continuing fiscal consolidation, and low current account deficit are also supportive of lower yields.

Source for various data points: RBI Website, Bloomberg and Reuters.

Saturday, July 2, 2016

Pay hikes to boost retail loan growth by 17-20%: SBI VG Kannan, Managing Director, SBI

Pay hikes to boost retail loan growth by 17-20%: SBI 
VG Kannan, Managing Director, SBI
30th June 2016; CNBC-TV18
·           Discussing the stressed asset situation, Kannan told CNBC-TV18 that the worst is probably over. However, it does not mean that all bad news is done for. With monsoon playing well and implementation of 7th Pay Commission, growth trajectory is coming back in the economy, he says. Pay hikes will boost retail consumption and housing sector both. Kannan expects SBI's retail growth to be in the range of 17-20 percent on back of pay hikes. While there is also a possibility of a jump in inflation, it will not be substantial.
·           SBI has always been raising this foreign country funds overseas at regular intervals. We are raising from half a billion to USD 1.5 billion over the last so many years and this is one of the regular fund raising activities to enable our foreign offices to fund the assets. The exact timing will be decided and we are looking at the various global scenarios and the Brexit scenario also. May be certain advantages also because we do expect good pricing -- the exact timing is not yet decided. It will be decided in due course.
·           We have been expecting around 17-20 percent growth at the worst scenario because this is directly a retail demand that is likely to come up. Therefore, 17-18 percent or even 20 percent could not be ruled out.
·           I would say that probably the worst is over and I won't say any bad news is not there but the worst is possibly over. We expect now the monsoon also playing out very well, I think the future should be much better than what we had in the past.
·           I should see a good pick up in the retail especially in the housing as also in the retail and that should act as a boost to the economy. So there are certain positives to it. Overall, we expect there should be improvement in demand therefore add to the growth of the Indian economy.
·           Give us an update on the SBI merger, the last time we spoke you guys mentioned to us that by end of FY17 it would be completed, just wanted to know when you would be sending the merger plan to the government and just a status check on that? A: It is work in progress. We are on schedule.