Sunday, April 28, 2013

Chit Funds Explained.


Chit funds have been around for as long as money and stock markets began. Well, at this stage, with so many prior lessons and experiences to learn from, one can only say that the people were stupid but at the same time, one has to realize that subscribers to chit funds are usually people will modest or poor means and who need money to tide over desperate times. 

So how exactly do these chit funds work? 

Actually, they were started between groups of people in small towns and villages, where there was no or poor access to bank loans to meet day-to-day or emergency expenses like marriage of daughter, fixing the roof, digging the well and so on. How this worked was - a group of know 15-20 people came together; let us assume 30. Each person was supposed to contribute Rs.1000 per month for the next 30 months ( usually number of people in the group and months match). So each month, the group collected Rs.30,000. There would be one person, who would be the organizer who will schedule the meetings and the venue and time. When the group meets every month, the people who need the money desperately make the bid. The one who makes the lowest bid gets the total money of that month. Suppose 2-3 people made bids , depending on their need for say, Rs.28,000 or Rs.29,000 or Rs.27,000. The lowest bid was at Rs.27,000 so that person will get the money. The organizer gets around 5% of Rs.30,000 per month as his 'fees' which is Rs.1500. So the winner of the bid will get Rs.25,500 (Rs.27,000 - Rs.1500) that means he has taken a loss of Rs.4500 which will be a profit for the other 29 members, and that will get divided between them, which is Rs.150. Thus the lowest bidder because he is in a desperate need, suffers a loss while the others benefit. The next month, the one who took the money cannot bid but will continue to contribute the said amount of Rs.1000 and the rest of the process will remain the same. There is no repayment of loan or interest payment. But the one taking the money on a discount indirectly pays an interest and those who stay back, earn more, like dividends. The last person earns the most.

Thus essentially, chit funds are like self-help groups formed by people will poor or modest means. But then big companies got in, giving it a 'corporate' feel but essentially operated the same way. The companies being the 'organiser' pocketed all the money but more importantly, they were getting funds at much cheaper rates than commercial, which in turn were thus diverted into more lucrative deals like real estate or gold.

South India and Delhi are notorious for the amount of chit funds operating and some of the biggest scams in chit funds, not surprisingly, happened in these places. When scams became rampant, the Govt put in place the token Chit Funds Act, 1982, which does not really offer much protection. The law does not stipulate the maximum number of subscribers per scheme, thus allowing scores of people in one scheme. Also there is no law on the required minimum quorum for the bidding - though there could be 1000's of subscribers, if even two members come for the monthly meet, the lowest bidder amongst the two will be given away the money. Thus companies ensure poor subscriber participation thus once again pocketing the money. The schemes are allowed to run for 5 or 10 years. And when the subscriber base gets large, the promoter of the company usually scoots away with all the money and people are left high and dry.

Courtesy: https://www.sptulsian.com/article/74212

Saturday, April 27, 2013

US GDP Calculation Changes.


In JULY 2013, the Bureau of Economic Analysis (BEA) will release the initial results of the 14th comprehen­sive, or benchmark, revision of the national income and product accounts (NIPAs). The last comprehensive revision was released in July 2009.
- Recognize expenditures by business, government, and nonprofit institutions serving households (NPISH) on research and development as fixed investment 
- Recognize expenditures by business and NPISH on entertainment, literary, and other artistic originals as fixed investment
- Expand the ownership transfer costs of residential fixed assets that are recognized as fixed investment and improve the accuracy of the associated asset values and services lives
- Measure transactions of defined benefit pension plans on an accrual accounting basis by recognizing the costs of unfunded liabilities and showing the pension plans as a subsector of the financial corporate sector
- Harmonize the treatment of wages and salaries by using accrual-based estimates consistently throughout the accounts 


So what is the BEA doing, and why should anyone care?
First, some basics: GDP aims to capture the value of goods and services produced within U.S. borders in a given periods. The Bureau of Economic Analysis generally does this by measuring the value of goods purchased by consumers. The logic goes like this: When you buy a washing machine, the price you pay captures the value of the work of everybody in that chain of labor and materials that went into creating that washing machine: The sales clerk who sold it to you, the trucker who delivered it to the store, the factory worker who assembled it, the marketing person who designed the logo, the steel and copper that are the raw materials for the machine, and the chief executive of the company that made it. Instead of trying to measure each of those inputs from the ground up, they are all encapsulated in the “personal consumption expenditure” that takes place when you buy the washing machine.

But when the washing machine company invests in long-lasting assets—a factory, for example, or a package of accounting software—it contributes to GDP through a second column, for fixed investment. Investment—spending money on things expected to have a payoff over a long period of time—are treated differently than the routine expenses involved in making something.
Which brings us to George Lucas. When he made a Star Wars movie, his company spent a lot of money to create the film. It then owned a copyright, and could make money for many years afterward on that investment. In other words, it’s a lot more like our washing machine company building a factory than it is like the routine process of making washing machines. The same is true for a lot of types of intellectual property: When Apple researchers develop the iPad, or Suzanne Collins writes a Hunger Games novel, it is an upfront investment that will have a long payoff.
So now BEA will treat research and development and creation of artistic works as longer-term investments, not unlike factories,  equipment, or software. On a purely technical level, this should more precisely match GDP in any one quarter to the actual economic value the nation generates in that span. In the old system, the value of the economic output of a Star Wars movie would only show up in GDP over decades to come, in the form of personal consumption expenditures like movie tickets and DVD sales.
Indeed, BEA will revise data going back to 1929 using the new approach, essentially creating a new historical record of the U.S. economy (while it will change the level of GDP, it shouldn’t result in any meaningful change in the ebb and flow of business cycles, however).



Courtesy:

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/22/huzzah-the-u-s-economy-is-3-percent-bigger-than-we-thought-thanks-george-lucas/


http://www.bea.gov/scb/pdf/2013/03%20March/0313_nipa_comprehensive_revision_preview.pdf


Saturday, April 13, 2013

BSE newly added T2T Stocks.


As a part of Surveillance measures the Exchange transfers various scrips for settlement on a Trade-to-Trade basis. The criteria for shifting scrip’s to/fro for settlement on trade to trade basis are decided jointly by the stock exchanges in consultation with SEBI and reviewed periodically. 
The detailed criteria of shifting scrip to/from Trade-to-Trade are available on website at http://www.bseindia.com/markets/equity/EQReports/sur_Price_monitoring.aspx?expandable=5.
The Exchange with a view to take preventive surveillance measure to ensure market safety and safeguard the interest of the investors, has decided to take the following Surveillance actions:
The under mentioned scrip’s will be included in "T" Group and they would be traded and settled on Trade to Trade basis w.e.f. April 12, 2013 and would attract a circuit filter of 5% or lower as applicable. The category applicable to the scrip for transfer to “T” Group from the detailed criteria available on the website as stated above is mentioned alongside the scrip.
 Sr. No.
Scrip Code
Scrip Name
Reason- Criteria
1
533292
A2Z Maintenance & Engineering Services Ltd.
Criteria I and II and III
2
520155
ABG Infralogistics Ltd.
Criteria I and II and III
3
532811
Ahluwalia Contracts (India) Ltd.
Criteria I and II and III
4
530713
AJEL Ltd.
Criteria I and II and III
5
532875
Allied Digital Services Ltd.
Criteria I and II and III
6
532633
Allsec Technologies Ltd.
Criteria I and II and III
7
530715
Alps Industries Ltd. **
Criteria I and II and III
8
500009
Ambalal Sarabhai Enterprise Ltd.
Criteria I and II and III
9
500014
Apple Finance Ltd.
Criteria I and II and III
10
512344
Aravali Securities & Finance Ltd.
Criteria I and II and III
11
524760
Arvind International Ltd.
Criteria I and II and III
12
511427
ATN International Ltd. **
Criteria I and II and III
13
506971
B&B Realty Ltd.
Criteria I and II and III
14
532694
Bartronics India Ltd.
Criteria I and II and III
15
514272
Bhilwara Spinners Ltd.
Criteria I and II and III
16
513333
Bhuwalka Steel Industries Ltd.
Criteria I and II and III
17
500058
Bihar Sponge Iron Ltd.
Criteria I and II and III
18
532871
Celestial Biolabs Ltd.
Criteria I and II and III
19
532902
Consolidated Construction Ltd. *
Criteria I and II and III
20
526785
Crest Animation Studios Ltd.
Criteria I and II and III
21
532332
Cura Technologies Ltd. *
Criteria I and II and III
22
532903
Dhanush Technologies Ltd.
Criteria I and II and III
23
500132
Empee Sugars & Chemicals Ltd.
Criteria I and II and III
24
532219
Energy Development Company Ltd. *
Criteria I and II and III
25
531155
Epsom Properties Ltd.
Criteria I and II and III
26
533090
Excel Infoways Ltd.
Criteria I and II and III
27
532666
FCS Software Solutions Ltd. **
Criteria I and II and III
28
532379
Firstobject Technologies Ltd.
Criteria I and II and III
29
532183
Gayatri Sugars Ltd.
Criteria I and II and III
30
532773
Global Vectra Helicorp Ltd. **
Criteria I and II and III
31
532015
Gravity (India) Ltd.
Criteria I and II and III
32
530605
GSL Nova Petrochemicals Ltd. **
Criteria I and II and III
33
532744
GTN Textiles Ltd. *
Criteria I and II and III
34
500174
Gujarat Lease Financing Ltd. *
Criteria I and II and III
35
524019
Hydro S & S Industries Ltd. **
Criteria I and II and III
36
500202
India Lease Devl. Ltd.
Criteria I and II and III
37
517433
Innovation Software Exports Ltd.
Criteria I and II and III
38
526523
Jay Energy And S. Energies Ltd.
Criteria I and II and III
39
532673
K. M. Sugar Mills Ltd.
Criteria I and II and III
40
526209
K.S.Oils Ltd.
Criteria I and II and III
41
514322
Kamadgiri Fashion Ltd.
Criteria I and II and III
42
532291
KDL Biotech Ltd. *
Criteria I and II and III
43
526015
Kemrock Industries & Exports Ltd. *
Criteria I and II and III
44
530547
Ken Financial Services Ltd.
Criteria I and II and III
45
507180
Kesar Enterprises Ltd.
Criteria I and II and III
46
504269
Khaitan Electricals Ltd.
Criteria I and II and III
47
514221
K-Lifestyle & Industries Ltd.
Criteria I and II and III
48
524232
Maharashtra Polybutenes Ltd.
Criteria I and II and III
49
531176
Mefcom Capital Markets Ltd.
Criteria I and II and III
50
532127
Mobile Telecommunications Ltd.
Criteria I and II and III
51
532376
MRO-TEK Ltd.
Criteria I and II and III
52
530435
MVL Industries Ltd.
Criteria I and II and III
53
532986
Niraj Cement Structurals Ltd.
Criteria I and II and III
54
503780
NRC Ltd.
Criteria I and II and III
55
504864
Orissa Sponge Iron And Steel Ltd.
Criteria I and II and III
56
511525
Pan India Corporation Ltd. **
Criteria I and II and III
57
534796
Pankaj Polypack Ltd.
Criteria I and II and III
58
533211
Parabolic Drugs Ltd.
Criteria I and II and III
59
514326
Patspin India Ltd. **
Criteria I and II and III
60
500329
Pentamedia Graphics Ltd.
Criteria I and II and III
61
532626
Pondy Oxides & Chemicals Ltd.
Criteria I and II and III
62
533100
Premier Energy and Infrastructure Ltd.
Criteria I and II and III
63
500337
Prime Securities Ltd.
Criteria I and II and III
64
534060
Priti Mercantile Company Ltd.
Criteria I and II and III
65
530281
Quantum Digital Vision (India) Ltd.
Criteria I and II and III
66
532866
Quintegra Solutions Ltd.
Criteria I and II and III
67
500357
Rama Paper Mills Ltd.
Criteria I and II and III
68
507490
Rana Sugars Ltd.
Criteria I and II and III
69
531583
Rap Media Ltd.
Criteria I and II and III
70
513583
S.B.& T.International Ltd.
Criteria I and II and III
71
532905
Saamya Biotech (india) Ltd.
Criteria I and II and III
72
523025
Safari Industries (India) Ltd.
Criteria I and II and III
73
515043
Saint-Gobain Sekurit India Ltd.
Criteria I and II and III
74
507315
Sakthi Sugars Ltd. **
Criteria I and II and III
75
530025
Samyak International Ltd.
Criteria I and II and III
76
511076
Sat Industries Ltd.
Criteria I and II and III
77
512499
Shalimar Productions Ltd.
Criteria I and II and III
78
512289
Shirpur Gold Refinery Ltd.
Criteria I and II and III
79
532793
Shree Ashtavinayak Cine Vision Ltd. *
Criteria I and II and III
80
531962
Shree Metalloys Ltd.
Criteria I and II and III
81
531149
Shree Rang Mark Travels Ltd.
Criteria I and II and III
82
526049
Shri Lakshmi Cotsyn Ltd.
Criteria I and II and III
83
532293
Software Technology Group Intl. Ltd.
Criteria I and II and III
84
521034
Soma Textile & Industries Ltd. **
Criteria I and II and III
85
532669
Southern Online Bio Technologies Ltd.
Criteria I and II and III
86
508976
Spanco  Ltd.
Criteria I and II and III
87
517166
SPEL Semiconductor Ltd.
Criteria I and II and III
88
500399
Steelco Gujarat Ltd.
Criteria I and II and III
89
512299
Sterling Biotech Ltd.
Criteria I and II and III
90
508998
Sterling International Enterprises Ltd.
Criteria I and II and III
91
532154
Sun and Shine Worldwide Ltd.
Criteria I and II and III
92
531945
Sunitee Chemicals Ltd.
Criteria I and II and III
93
532874
Suryachakra Power Corporation Ltd.
Criteria I and II and III
94
531173
Syschem (India) Ltd.
Criteria I and II and III
95
532790
Tanla Solutions Ltd.
Criteria I and II and III
96
532812
Transwarranty Finance Ltd. **
Criteria I and II and III
97
505854
TRF Ltd
Criteria I and II and III
98
532356
Triveni Engineering & Industries Lt
Criteria I and II and III
99
526879
UT Ltd.
Criteria I and II and III
100
532729
Uttam Sugar Mills Ltd
Criteria I and II and III
101
524394
Vimta Labs Ltd.
Criteria I and II and III
102
517429
VJIL Consulting Ltd.
Criteria I and II and III
103
533427
VMS INDUSTRIES Ltd.
Criteria I and II and III
104
522080
Vulcan Engineers Ltd.
Criteria I and II and III
 Note:-  *  Of the commonly listed scrip/s, the scrips satisfying all the criteria only at BSE           
**  Of the commonly listed scrip/s, the scrips satisfying all the criteria only at NSE

Trading Members are requested to take adequate precaution while trading in above scrip’s, as the settlement will be done on trade-to-trade basis and no netting off positions will be allowed.