June 13, 2017

What's happening in Madhya Pradesh wrt rule of law

"napm india" <napmindia@gmail.com>
Date: Jun 13, 2017 6:09 PM
Subject: Press Note | June 13, 2017: Leading Activists Found Shocking Anarchy in Madhya Pradesh leading to and following Death of Farmers in Police Firing & Torture

> Press Note on Mandsaur Police Firing : 13th of June
> New Delhi | June 13, 2017: Following a call given by Jai Kisan Andonlan of Swaraj Abhiyan, NAPM, Kisan Sangharsh Samiti of MP, Bandhua Mukti Morcha and several farmer organisations, a delegation of their representatives went to visit Mandsaur in Madhya Pradesh where 7 farmers were killed in a police firing on 6th of June. The delegation comprised about 25 representatives from Gujarat, Maharashtra, Tamil Nadu, West Bengal, Bihar, UP, Haryana, Rajasthan and Delhi, besides local farmers and farmer leaders. These included Ms. Medha Patkar, Swami Agnivesh, Dr. Sunilam, Paras Saklecha, Kalpana Parulekar, Avik Saha, Ajit Singh, Balakrishnan and Yogendra Yadav.
> What follows are some of the key observations made by this delegation.
> Law & Order, Legal & Human Rights – Nightmarish Situation
> ·         Democratic Rights & Human Rights at an unbelievable low in MP – Constitution & Laws of India seem not to apply here – has it ceded from the Union of India?
> ·         Police & Civil Administration of Ratlam District keep strong surveillance on, illegally stop (from visiting Mandsaur) & arrest activists like Medha Patkar, Swami Agnivesh, Yogendra Yadav & Avik Saha, with lifelong adherence to peace and non-violence, on ground of breach of peace!!
> ·         In agitation-free Neemuch District, police illegally prevent Yogendra Yadav, Dr. Sunilam, Avik Saha & Ajit Yadav from interacting with villagers; use sheer brute force to push them out of MP into Rajasthan
> ·         Delegation interacts with farmer leaders and activists and finds complete break-down of rule of law; reign of terror as Districts affected by and surrounding locations of farmers agitation cordoned off and jungle law implemented
> ·         Independent persons and agencies barred entry while full might of state appears to be influencing & torturing witnesses to the murder of farmers by police, causing disappearance of material evidence and running an extortion racket by intimidation
> Probable Background Causes of Present Situation – Deep Rooted & Long Neglected Life & Livelihood Issues of Farmers
> ·         Already un-remunerative and further downward spiraling prices of all produce (Report annexed), despite MP reporting highest agricultural growth in the country and winning prizes, seems to have lead to wide spread discontent; State Government's inaction in this crisis fuelled unrest
> ·         Non-fulfillment of ruling BJP's Manifesto promise of 50% profit above cost price compounded with the slow down of purchasing power of traders in mandis due to demonetisation completed the cycle of despair, disillusionment and discontent
> ·         Local reports complained of extreme bureaucracy at mandis & looming threat of disentitlement of rights; e.g. compulsory registration of seller-farmers only through Aadhar, downgrading of ration entitlement under PDS ration if sales above 50 quintals made, 50% payment through bank, which forthwith deducts all loans
> ·         Drought of 2 consecutive years have severely depleted the MP farmers and have led to the 4th highest farmers' suicides in the country in 2015; with added pressure of loan repayment and almost 50% price fall in produce, farmers have reached the end of their tether
> ·         Non-payment & whimsical small payments of insurance for crop loss made farmers desperate for redressal of their financial grievances    
> Murder of Farmers by State of Madhya Pradesh  
> ·         Since the State has already admitted that firing was done without any formal order and without following due process, the death of farmers in police firing is nothing but murder by machinery of state
> ·         The heinous and brutal killing of a farmer by beating and torture in the hands of police, after the gunning down of 5 farmers, is unbelievably shocking & can only be termed state sponsored terrorism
> ·         It is sad to note that Madhya Pradesh has learnt no lesson from the findings of the Commissions that investigated the Multai Firing during Congress regime, when 23 farmers were brutally gunned down; Again, there was no dialogue with the protestors before firing; such dialogue could have easily prevented this unnecessary loss of life
> We Demand
> ·         The State of Madhya Pradesh must immediately ensure remunerative price for all crops grown in Madhya Pradesh in fulfillment of the promise made by BJP in its manifesto (cost + 50%) and also ensure guaranteed purchase of the produce through market stabilization funds and other mechanisms; agriculture is a state subject and Madhya Pradesh, like Karnataka can ensure relief for farmers through agriculture price commission and allied statutory interventions  
> ·         We demand that farmers of Madhya Pradesh be given a one-time waiver of all loans, which, coupled with remunerative prices, will pull them out of the vicious cycle of debt and death though debt-trap
> ·         The State of Madhya Pradesh must immediately, in consultation with farmers organizations (1) appoint an Independent Commission headed by a sitting High Court Judge (2) prepare comprehensive TOR of the Commission to go into all circumstances that lead to the murder of farmers by police firing
> ·         The State of Madhya Pradesh must immediately register murder case against all policemen and administrative officers who ordered firing on farmers and executed the order
> ·         The State of Madhya Pradesh must immediately withdraw all cases registered against farmers in connection with the Farmers Movement in Madhya Pradesh during 1st to 10th June 2017
> ·         The State of Madhya Pradesh must immediately ensure that comprehensive crop insurance is provided for all crops grown in Madhya Pradesh and not just a few crops as presently stipulated under the PMFBY
> ·         Opposition parties like the Congress who have extended support to the farmers must establish their credential by ensuring that in the states of Punjab and Karnataka, where they are in power, there is no shooting on and killing of farmers, MSP at cost + 50% is given in terms of the recommendation of the Swaminathan Commission  and all loans of farmers are waived

> National Alliance of People's Movements
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June 11, 2017

Brokerage firms' Jan-Mar performance

A story I wrote last week on brokerage firms' Jan-Mar 2017 financials -- http://www.cogencis.com/differentiators/ShareNews.aspx?newsId=937744

Institutional brokerages Jan-Mar PAT growth better than retail firms
    Profits of large domestic brokerage firms with a heavy dependence on retail clients fell in Jan-Mar even as those with a decent institutional clientele saw profits rise.
    During the quarter, trading turnover rose across the board on stock exchanges.
    The mixed performance of large brokerage firms followed a slide in the profits across the board in the December quarter.
    Cash market turnover on the National Stock Exchange of India rose 20% on quarter to 14.38 trln rupees in Jan-Mar, which was much better compared to the 10% on-quarter decline seen in Oct-Dec.
    Key factors driving up stock market trading volumes were a sharp rise in benchmark equity indices and increase in trading activity by institutional investors.
    Investor sentiments picked up in Jan-Mar after the previous quarter had seen it taking a big hit. The December quarter had seen subdued stock market activity due to the demonetisation-induced fall in corporate earnings in many sectors. Also, foreign funds outflow in Oct-Dec, on the back of uncertainties around Donald Trump's win in the US presidential elections.
    Net inflow by foreign portfolio investors in the equity cash market was 365 bln rupees in Jan-Mar, compared with a net outflow of 343 bln rupees in Oct-Dec.
    On gross turnover basis, an indicator of overall trading activity, FPIs traded more in Jan-Mar.
    The sum of FPIs' purchases and sales rose 16% on quarter to 6.44 trln rupees in Jan-Mar. This was an improvement over the 5% on-quarter fall in the previous quarter.
    Net inflow of mutual funds into the cash market fell 64% on quarter to 115 bln rupees in Jan-Mar. But they still fueled the trading momentum in the stock market as their gross cash market turnover--sum of purchases and sales--shot up by 31% on quarter to 2.34 trln rupees during the March quarter.
    The equity derivatives market of the NSE too, saw total turnover rise by 11% on quarter to 276.24 trln rupees in Jan-Mar. NSE makes up for over 99% of all equity derivatives trading in the country,
    BSE's cash market turnover jumped up 132% on quarter to 4.23 bln rupees in Jan-Mar, which stock market analysts was aided in a big part by bulk trades involving transfer of shares by promoters.
    In the previous quarter, BSE had seen it cash market turnover fall 12% on quarter to 1.82 trln rupees.

    Out of four large brokerage firms, for which Jan-Mar earnings data was available from their listed parent companies, two firms recorded on-quarter rise in profit from broking activities while two firms saw it fall on quarter.
    All these four brokerage firms saw a 9-14% on-quarter fall in profit in the December quarter.
    ICICI Securities, which operates ICICIdirect, the largest online retail broking platform in the country, is pre-dominantly dependant on revenues from its retail clients.
    The firm saw its net profit decline 6% to 830 mln rupees in Jan-Mar. It was, however, less severe than the 11% on-quarter fall in net profit recorded by the brokerage firm in the previous quarter.
    Faring better was Kotak Securities, having a decent institutional business along with national retail operations. The firm's net profit in Jan-Mar stood at 1.21 bln rupees, up sharply from 850 mln rupees in Oct-Dec.
    Kotak Securities' net profit had fallen 11% on quarter in Oct-Dec. Revenues rose 28% on quarter to 3.67 bln rupees in Jan-Mar.
    According to the firm, the firm had 1.4 mln secondary market customers at the end of March, up from 1.3 mln rupees a quarter ago. The number of its branchises and franchises, however, declined to 1,281 from 1,300.
    Edelweiss Financial Services Ltd carries out equity broking operations through its subsidiary, Edelweiss Broking, and also has a significant institutional business. The firm also other subsidiaries, including one into commodity broking business.
    In Jan-Mar, the subsidiaries of Edelweiss Financial, collectively clocked a net profit of 400 mln rupees, up 29% from the previous quarter. Their collective revenues rose 12% to 2.49 bln rupees during the March quarter.
    Retail-oriented brokerage firm, Motilal Oswal Securities, earned 1.98 bln rupees as revenue from broking activities in Jan-Mar, up 8% from the December quarter, according to an earnings presentation of the parent company, Motilal Oswal Financial Services Ltd, which is listed on the stock exchanges.
    The broking firm said the March quarter saw disproportionate high cash volumes in the market due to large-scale inter-promoter transfers.
    This led to a muted revenue growth during the quarter and the broking firm's net profit fell to 180 mln rupees in Jan-Mar from 214 mln rupees in Oct-Dec recording a 16% decline.
    In the December quarter, Motilal Oswal Securities had seen its net profit fall by a lower degree of 9% on quarter.
    These four broking firms are among the top 20 broking firms in terms of numbers of unique client codes held with the NSE. Every investor account of a brokerage firm carries a unique client code at the time of transacting on the stock exchanges.
    Data from NSE showed that as on Apr 30, these four brokerage firms had 1.20 mln unique client codes, accounting for around 26% of aggregate across all NSE brokerage firms.
    All in all, the March quarter saw an across-the-board rise in turnover on the stock exchanges and institutional investors traded more than they did in the previous quarter.
    But since retail investors were not as active as the institutional investors during the quarter, the brokerage firms with heavy reliance on retail clients did not do as well as those with a better retail-institutional mix of business.

June 09, 2017

Flows in balanced MF schemes increase multi-fold in Jan-May

An article I wrote for the news organisation I work for currently.

Flows in balanced MF schemes increase multi-fold in Jan-May
    Flows into balanced schemes of mutual funds have shown extra-ordinary growth in the last three years, with the first five months of the current calendar year witnessing more net inflow than in the whole of last year.
    As the stock market continues to run up there is a growing number of investors who perceive balanced funds to be less riskier than equity funds and at the same time giving higher returns compared to income funds, said Vivek Mahajan, head of research at Aditya Birla Money.
    Mutual fund investors are turning slightly wary of the high valuations in the stock market and are getting cautious by turning to balanced funds.
    Balanced funds are hybrid in nature investing in both, equities and debt securities, with an orientation towards either. An equity-oriented balanced fund, would have 50-65% exposure to equities and balance in debt, and vice-versa for debt-oriented balanced funds.
    The balanced funds recorded net inflows of 286 bln rupees in Jan-May this year, exceeding the net inflow of 247 bln rupees in entire calendar 2016. This is the highest in over seven years, data of flows from Association of Mutual Funds in India showed (see table).
    In May, assets under management in balanced funds crossed the one-trln-rupee mark ending the month at 1.02 trln rupees, more than double from the year ago level.
    Equity funds have recorded net inflows worth 335 bln rupees in Jan-May while income funds have seen net inflows of just 230 bln rupees.
    Last year, balanced funds saw net inflows grow 16% on year, compared to 7.7 times on-year growth in income funds' net inflow and a 46% on-year fall in net inflows in equity funds.
    But it was in 2015 when flows in balanced funds increased dramatically. In that year, the net inflow in balanced funds jumped 3.7 times on year to 214 bln rupees, even as equity funds' net inflow increased just 74% on year and that in debt funds declined by 37%.
    According to analysts, the relationship managers in financial services firms and equity brokerage firms which sell financial products to retail investors find it easy to market balanced funds to existing and new investors as a safe product.
    Since November last year, when demonetisation made investments in real estate un-attractive, and with gold prices continuing to be subdued, the entire surplus investible surplus of most investors have been ploughing into equities and debt instruments.
    In their aggressive marketing of systematic investment plans, mutual funds are giving balanced funds the same importance as they typically give to equity funds.
    For instance, in the market commentary of its latest monthly factsheet for the current month, ICICI Prudential Mutual Fund said since the uncertainty of global events cannot be ruled out the equity market could be volatile in the near term and that new or first time investors looking for equity exposure could consider SIP in ICICI Prudential Balanced Advantage Fund.
    All balanced funds which invest minimum 65% in equities qualify as equity schemes under tax rules. Tax norms allow for zero long-term capital gains liability and tax-free dividends for equity schemes of mutual funds. The tax norms do not factor in the net exposure to equities after the use of equity derivatives to hedge.
    But some mutual funds also offer a variant of balanced funds which in law are equity funds but which have a net equity exposure of less than 65%. Typically known as balanced advantage funds these schemes provide tax benefits to investors by having 65% of their corpus as investments in equity shares at all times and additional significant exposure in the equity derivatives market which hedge a good part of their equity holdings.
    For instance, ICICI Prudential Balanced Advantage Fund, which had assets to the tune of 184 bln rupees in April, had 65.11% of it invested in equities and the balance in debt securities and money market instruments. But the net equity exposure of the scheme was 50.11% since it had equity derivatives positions in the form of stock futures and index futures and options to the extent of 15% of its AUM.
    The trend of robust inflows in balanced funds may continue for some more time till the current market rally lasts, according to Aditya Birla Money's Mahajan.
    Gold ETFs or exchange traded funds, which offer investors a non-physical way of investing in gold, have been steadily losing assets in the last four years. In Jan-May of current year, too, gold ETFs have seen net outflow of 3 bln rupees.
    The table below lists the trend in net inflow in select mutual fund
categories in the last few calendar years
            Net inflow (in bln rupees)
       Balanced   Equity   Income   Gold ETFs
       --------   ------   ------   ---------
2017*     286      335      230       -3
2016      247      463     1375       -9
2015      214      851      178       -9
2014       57      490      285      -17
2013      -11      -87      270      -18
2012       -4     -141      567       18
2011       13       68     -122       40
2010        8     -162     -835       17
* till May                       
Data source: AMFI

May 11, 2017

Citizens of India have a right towards genuine Election process

"...there are also substantial number of well informed scientists and technologists who believe that even those machines which are stand alone, not networked and hardwired, as an Indian EVM is, can be tampered with. These are well-intentioned people, they want to save and strengthen democracy. They cannot be treated as criminals or enemies. If this attitude is not changed we will progressively weaken the Indian democracy, and people will lose trust in their vote. A change of attitude is required...."

Very true.

Its not about AAP, BSP, Congress or any other party asking questions to Election Commission on the tamepring of EVMs.

It is first and foremost to us, the citizens of this country, to whom the Election Commission needs to prove beyond all doubts that the EVMs can not be tampered illegally by vested political and corporate interests.

And, if the Election Commission of India can not convince us citizens then we have every right to expect the voting in all elections in the country to take place only through physical ballots.


May 01, 2017

Growth trend in TCS-Infosys verticals' annual EBIT margins

An analytical story I contributed recently to the media organisation I work for currently:

Segment dynamics weigh on TCS and Infosys margins growth

Over the last 4-5 quarters the stock market has accepted the grim reality of sluggish revenue growth in the information technology sector on the back of slowdown in business from banking and financial services clients as well as those from the retail and consumer major challenges and events.
There are also expectations of hi-tech and telecom business driving the growth engine of the software companies. Upsides from high end digital and next gen services offerings are expected by most analysts from the large software companies in the long term.
But how did past expectations play out last year. A fine reading of segment-wise margin numbers of the two largest Indian software companies, Infosys Ltd and Tata Consultancy Services Ltd, whose Jan-Mar quarter results are out, brings out interesting revelations.
Breaking down the segment-wise EBIT margin numbers shows Infosys and TCS getting better EBIT margins in 2016-17 from their manufacturing and retail verticals as compared to the previous year, according to an analysis of segment results data.
On the other hand, the EBIT margins fell in the verticals of banking and financial services, energy and utlities, communication and hi-tech for the two software majors.
The net impact was adverse since manufacturing and retail verticals had a 27% revenue share in both the companies while banking and financial services, energy and utilities, communication and hi-tech verticals together ha 57% revenue share each in Infosys and TCS.
Analysts have downgraded earnings growth for TCS since it delivered an earnings before interest and tax margin of 25.7% in 2016-17 (Apr-Mar) which was lower that the company’ stated EBIT margin guidance band of 26-28%.
Infosys' performance has invited similar reactions from the analyst community so far. Axis Capital said in its post-results research note that Infosys' margins performance in Jan-Mar and its lowered guidance for 2017-18 were below the brokerage firm's expectations.
The EBIT margin from the manufacturing vertical rose on year to 24.6% from 22.5% for Infosys, and to 28.6% from 26.8% for TCS, in 2016-17, an analysis of segment results data from Cogencis Corporate Fundamental Database showed. The earnings before interest and tax margin was considered as the operating margin in the analysis of the segment-wise financials.
Revenue from manufacturing clients accounted for 11% of total revenues for both the major software companies. The retail and consumer vertical also delivered better operating margins for Infosys and TCS in 2016-17 as compared to the previous year.
However, in terms of on-year revenue growth in 2016-17 this vertical, which contributed nearly 17% each to Infosys’ and TCS’s total revenue, saw growth fall more sharply as compared to 2015-16 compared to most other verticals.
Traditional retailers in developed markets, the main clients for the large Indian software companies, have undergone challenging times in the last one year.
Deceleration in retail and consumer vertical weighted on overall growth for 2016-17 for TCS, said Prabhudas Lilladher brokerage in its research note.
TCS, analysts said, has already cautioned of structural headwinds in this vertical going forward.
In the case of Infosys, Axis Capital noted that for Infosys retail and consumer vertical was likely to remain soft with volatile performance throughout 2017-18. "Despite headwinds, opportunity exists around data analytics, legacy transformation and digital initiatives," the brokerage firm noted.
The 2016-17 performance of the banking and financial services vertical, the biggest contributor to revenues for both the companies, was hit the hardest, due to caution in spending by the large global banking and financial service clients.
For TCS, the EBIT margin from coming from this vertical, which contributed 41% of the company's revenues, declined sharply to 27.6% in 2016-17 from 29.1% in the previous year.
In its post Jan-Mar quarter results interaction with analysts, TCS tried to allay concerns for the banking and financial services vertical. The company attributed the on-quarter decline in revenue in Jan-Mar from this vertical to the closure of one project and said it was confident of pick-up in growth from Apr-Jun quarter of 2017-18 itself, according to a post-results research note by IDBI Capital.
Infosys, which had 27% of 2016-17 revenues coming from banking and financial services vertical, has said recently that it is more optimistic on the US markets given the rate hikes which it expects would lead to an uptick in budgets of banking and finance clients in Jul-Dec.
"In Europe, (Infosys) management sees opportunity from catch-up exercise by banks (they are behind the curve in tech adoption), and (from) the under penetration in Europe," said Axis Capital in its research note.
The energy and utilities vertical hit Infosys' EBIT margins hard in 2016-17 as the margin from the vertical fell to 28.7% from 29.7%.
For Infosys, margins from its hi-tech vertical also came under a lot of pressure. The EBIT margin recorded a sharp decline to 24.9% in 2016-17 from 26.6% in 2015-16. Expectations from analysts were high from this segment, but performance on the ground did not match up.
With slowdown in revenue growth being the expected norm in 2017-18, it will be the margin trajectory which will hold the key for the two largest Indian software companies.

April 22, 2017

Analysis of ACC's Jan-Mar 2017 earnings

A story I wrote yesterday analysing ACC's earnings figures for Jan-Mar 2017:

ACC Jan-Mar consol PAT hit by surge in input costs

    Significantly higher increases in power and freight costs,and excise duty, proved to be a drag on the bottomline of ACC Ltd in Jan-Mar.
    The cement major's consolidated net profit fell 8.9% on year in the March
quarter to 2.11 bln rupees despite the fact that total income increased 8.8%
on year to 36.63 bln rupees.
    Freight and forwarding costs surged 13.4% on year to 8.26 bln rupees and
accounted for 23% of total expenses during the reporting quarter. The company
said in a statement accompanying the earnings release that the cost of
packing materials and freight had hardened in Jan-Mar.
    "There was a shortfall in regular availability of flyash, a part of which
was procured over longer leads, entailing higher transportation costs," the
company further said.
    Power and fuel expenses, which accounted for 18% of total expenses, also
rose sharply by 14.1% on year to 6.48 bln rupees in Jan-Mar.
    The 8.8% on-year rise in consolidated total income in the March quarter
came each of the preceding three quarters recording on-year fall.
    This was mainly due to consolidated cement sales gaining traction for the
first time in four quarters. The Jan-Mar cement sales increased 3.8% on year
to 6.60 mln tn.
    In the quarters ending December, September and June, cement sales volume
had recorded on-year declines of 9.2%, 9.6% and 1.3% respectively.
    Growth in sales volume of ready-mix concrete, however, slowed down in the
reporting quarter compared to the Oct-Dec quarter. ACC sold 0.72 mln cu mtr
ready-mix concrete in Jan-Mar, up 7.5% on year. In the previous quarter,
ready-mix concrete sales had risen by 13.6% on year to 0.67 mln cu mtr.
    ACC was expected to report a consolidated net profit of 1.60 bln rupees on
net sales of 29.89 bln rupees, according to an average of 11 brokerage firms'
estimates. The reported figures came above the analysts estimate.
    Brokerage firm KR Choksey noted in a post-earning research note that
ACC's cement volume growth was exceptional in a quarter which was
significantly affected by demonitisation.
    ICICIdirect noted in its post-result research note that ACC beat its
topline estimate as the 3.8% on year increase in volumes came in as a
positive surprise as core industry data in the first two months of CY17
showed pan India production volumes to have fallen by 15.0% on year.
    Analysts were also expecting rise in operating costs to hit ACC's
consolidated net profit and while it did, ACC's net profit was above the
analysts' average estimate. "Net profit remained above our expectation due to
higher than expected operating margins," said ICICIdirect in its note.
    The consolidated operating margin in Jan-Mar stood at 11.6%. Although
this was lower than 13.9% in the year ago quarter, it was higher than the
operating margins of 9.4% and 10.9% in the quarters ending December and
    Apart from surge in power and fuel, and freight costs impacting ACC's
bottomline the 5.5% on-year rise in raw material costs also had an impact
since each of the preceding three quarters had seen raw material costs record
on-year declines.
    ACC attributed the rise in material costs to the hardening in petcoke
prices in the reporting quarter. In Jan-Mar raw material costs accounted for
13% of total expenses.
    ACC's managing director and CEO Neeraj Akhoury said during the reporting
quarter the company launched two new products and continued to build its
specialised building products segment. He said the company will continue to
invest in new capacity at its Jamul plant which stood fully commissioned in
the March quarter and was catering to the cement major's customers in the
eastern region of the country.

Story also at: 
Higher power/fuel & freight costs (together accounting for 41% of total expenses) hit net profit -- http://www.cogencis.com/differentiators/ShareNews.aspx?newsId=901962


April 11, 2017

IT/software companies' top management pay ratios

In the wake of Naryana Murthy's recent dissent on rise in management pay at Infosys, here are some interesting stats on Infosys and 4 other large-cap IT companies:

Aggregate remuneration of Infosys' top management was 1,190 times the median remuneration level at

Infosys, much higher than TCS's 592 times, Wipro's 663 times and HCL Tech's 954 times. It was lower only than Tech Mahindra's 4330 times.

Top management included CEO, COO, CS, Chairman, Vice Chairman, Chief Strategy Office etc.

Median mean remuneration Key management persons' KMP remuneration
remuneration over median
(in rupees) (in mln rupees) (number of times)
Infosys 521000 619.9 1190
TCS 558000 330.2 592
Wipro 525000 347.9 663
HCL Tech 587000 559.9 954
Tech Mahindra 522000 2260.1 4330
Figures pertain to financial year 2015-16 (Jul-Mar) for HCL Tech
and 2015-16 (Apr-Mar) for rest

March 29, 2017

SEBI's own financial statement

A story I did last week, in the organisation I work for currently, on India's stock market regulator SEBI's own financial statement for 2015-16 (Apr-Mar) which the regulator released last week, almost a year after the 2015-16 financial year got over. It has taken SEBI almost 25 years to make its own financials public.

SEBI 2015-16 annual accounts show 52% YoY rise in total expenditure
Mar 23, 2017
    NEW DELHI - The capital markets regulator, Securities and Exchange Board of India, spent 2.64 bln as staff costs in financial year 2015-16 (Apr-Mar), up 67% on year, while administrative expenses rose 32% on year to 778 mln rupees.
    This was revealed today in SEBI's annual accounts for 2015-16 which was made public by the regulatory body today on its website.
    SEBI's total expenditure stood at 3.74 bln rupees, up 52% on year, while its total income was 6.02 bln rupees in 2015-16, up 17% on year.
    Staff costs were termed as establishment expenses by SEBI in its annual accounts and nearly three-fourth of it was through salaries and wages with remaining being allowances, bonuses, and other expenses.
    The regulator makes most of its money from the intermediaries and other entities it regulates in the securities market. In 2015-16 (Apr-Mar) it collected fees and subscriptions from the regulated entities to the tune of 3.91 bln rupees, up 21% on year.
    SEBI also earned income from investing its accumulated cash reserves which is kept in a general fund account. Its income from investments, which were predominantly in bank deposits, was 1.86 bln rupees in 2015-16, up 9% on year.
    Interestingly, the highest fee collection by SEBI is from equity derivatives segment brokers of the stock exchanges. SEBI collected 786 mln rupees from them in 2015-16, 11% more than the year ago period. Fees for offer documents filed by companies and mutual funds amounted to 730 mln rupees in 2015-16, down 2.5% on year.
    Registration, annual, renewal and other charged by SEBI to foreign portfolio investors and their sub-accounts amounted to 609 mln rupees in 2015-16, up 40% on year.
    Among other intermediaries, SEBI collected 342 mln rupees from cash market segment brokers of stock exchanges in 2015-16, up 6% on year, while it got 339 mln rupees worth of takeover fees from companies which was 24% lower than the year ago figure.
    After transferring the excess of income over expenditure to it, the general fund account of SEBI had 28.22 bln rupees on Mar 31, up from 24.58 bln rupees a year ago.  End.

March 13, 2017

Paper trail needed to deter manipulation of electronic voting machines

It is a no-brainer that a vital thing in a Democracy like an Election should be as much as fool-proof as possible.

So, if you have electronic voting machines being used in an Election, you must have the system give a small printout to the voter which will give him/her the vote he/she cast and another printout must be kept with the electoral office.

In case of recounting of electronic votes, the votes in the paper printouts have to tally with the electronic votes.

It is not enough for the Election Commission, the authority which conducts the elections, to ensure that EVMs are physically secured after voting. It is equally important that remote control of EVMs is eliminated and one of the ways to esnure this is for the Election Commission to make public on its website the details of the manufacturer and maintenance company of EVMs. The Election Commission should also employ techies to monitor whether EVMs are being remotely controlled before an election and between an election date and the election results date.

In a blog post in 8 years ago in April 2009, I had highlighted the issues surrounding the EVMs. In that post, http://natant.blogspot.in/2009/04/life-in-general-whom-did-i-vote-for.html, I wrote "One quick thought on the election process. The last 2-3 elections has been through electronic voting machines. Today, for instance, I pressed the button against Kalyan Galphade's name and that was that. My vote was cast. Now, all this is cool. But it only makes it convenient for a voter to cast his/her vote. What about safety against rigging?
We saw how Bush and his team rigged the electronic machines in some states in the US presidential elections of 2000 and 2004. The same thing can happen in India...To prevent it, a unique numbered printed receipt should be issued to each voter with a copy kept in Election Commission's files. If there is a dispute then the recounting can cross check with the printed receipts. Rigging normally happens such that no matter against which candidate you click the button the machine will register your vote against the candidate in favour of whom the machine would be rigged/programmed to do so."

Below are some examples of how the risk of fraud in Elections can happen and how fraud may be already taking place in some elections.



Are EVMs really fool-proof? The recent Maharasthra civic body polls show this may not be the case. (Rhythum Seth/The Quint)
Not Just Mayawati, ‘EVM Fraud’ Also Reared Head During Maha Polls
Ashish Dikshit
March 11, 2017, 7:18 pm

Refusing to concede her rout in UP elections, Mayawati has accused the BJP of tampering with the EVMs (electronic voting machines). She didn’t stop there. In a letter to the Chief Election Commissioner of India, the BSP chief has demanded fresh polls with the use of ballot papers. SP’s Akhilesh Yadav, too, has echoed her views.

Something similar (something worse, even) had unfolded in Maharashtra a few weeks ago. As counting for the local body polls in Maharashtra drew to a close on the evening of 23 February, news channels began to flash an unexpected development.

Violence erupted in Panchavati, in the heart of Nashik city, following complaints of tampering of EVMs. The city BJP chief’s son was declared the winner from the ward, but the Shiv Sena claimed that the total of the votes received by each candidate exceeded the total number of votes cast.

    This led to clashes between Shiv Sena and BJP workers in the streets. Soon, mobs began vandalising and burning vehicles. Police had to resort to lathi-charge and firing in the air to disperse the crowd of 800 people. Nine policemen, as well as some local residents, were injured in the rampage.

A similar charge of EVM fraud swirled in Pune, only the reaction was thankfully non-violent. In Yerawada ward, 15 candidates from different political parties registered a complaint against the Returning Officer (RO), alleging “misappropriation” of EVMs during the counting of votes.

They claimed that a total of 33,289 votes were cast, but 43,324 votes were counted. They demanded a re-poll using ballot paper. A police complaint was registered against the RO.

As the State Election Commission, which conducts local polls, turned down the demand for re-polling, a united opposition first held a protest meeting. As more cases emerged, they took out a mock funeral procession of replicas of EVMs on Tuesday, which were then symbolically cremated at the Vaikunth crematorium.

Defeated candidates from all parties participated in this unusual protest; many of them had shocking stories to share.

    I was announced as the winner and given the official letter under Section 149 (of the Representation of Peoples Act). Then we were asked to leave. But when we began our victory march, after about an hour, we were told that votes from one EVM were yet to be counted. And then suddenly, the BJP candidate was declared the winner.

Manisha Mohite, NCP Candidate, Pune

BJP MP Sanjay Kakde, who played a crucial role in getting criminals into the BJP fold, had accurately predicted the results for Pune. He had vowed to give up politics if his prediction proved wrong. Opposition parties now cite this claim as proof that the ruling party had manipulated the poll results.
“How Can I Get Zero Votes?”

In Mumbai, independent candidate Shrikant Shirsat got zero votes at the booth near his residence in Saki Naka in the western suburbs.

    I voted for myself, so did my family and neighbours. The EVM has to be defective. How else can I get zero votes?

Shrikant Shirsat, Independent Candidate, Mumbai

Similar complaints are being reported from various parts of the state. Efforts are being made to collate data. A body called the Lokshahi Bachao Andolan has been formed in Nashik to collect data related to alleged tampering of EVMs.

Along with Nashik, Pune and Amravati, a protest march was organised in Kolhapur too. Former High Court judge and social activist BG Kolse Patil is now trying to unite all these protesters and launch a state-wide agitation.

    Going by Modi and Shah’s past, I strongly feel they may have manipulated the machines. Many scams (relating to EVM fraud) are now emerging. So, I’ve decided to launch a protest against them. We want paper trail machines. If that doesn’t happen, we should go back to ballot paper.

BG Kolse Patil, Former HC Judge and Social Activist

The paper trail which Kolse Patil is referring to is an idea the Election Commission of India is experimenting with. It’s officially called the ‘voter-verified paper audit trail’ or VVPAT, wherein a voter immediately gets a printout of his vote. This has to then be put into the ballot box. So, every voter gets to see that his or her vote is rightly registered and in case of recounting, the printouts can be counted.

    The Election Commission tried out VVPAT machines in 8 Lok Sabha constituencies in 2014. This happened after the Delhi High Court ruled in 2012 that EVMs in the present form “are not tamper-proof” and the Supreme Court ordered the Commission to use VVPATs along with EVMs by 2019.

But the Election Commission is likely to miss the 2019 deadline, according to BJP MP Kirit Somaiya, who had led an anti-EVM movement when Congress was in power. He had said that “EVMs can be easily tampered with, manipulated as well as hacked”. But after the BJP came to power in 2014, his stance has changed completely and he finds nothing wrong in the system anymore.

    The process of replacing old EVMs with VVPAT machines has started. The Modi government has allotted Rs 5,000 crore for it, but it will take 10-12 years to replace all machines. Improvement is a continuous process and it takes time. (Shiv Sena chief) Uddhav Thackeray and (NCP boss) Sharad Pawar are making allegations as they have vested interests. If they think there’s an EVM scam, all their elected representative should first resign.

Although the BJP is happy with the system today, before 2014, it would complain of misuse and malfunctioning of EVMs. In fact, Somaiya and Devendra Fadnavis, who is now Maharashtra CM, were present at an anti-EVM event in 2010, where Hyderabad techie Hari Prasad had demonstrated how easily an EVM can be manually manipulated at various stages.

Hari Prasad was later arrested for stealing EVMs from the collector’s office in Mumbai. The police officer who had handled this case recently told MaxMaharashtra:

    Today, a lot of allegations are being made (against the BJP). When Congress was in power, the BJP had made the same allegations. In our democracy, the priorities of political parties change with time… I feel enraged.

Sanjeev Kokil, Retired Police Officer
In 2010, Hyderabad techie Hari Prasad (centre) had demonstrated how easily an EVM can be manipulated. (Photo Courtesy: indiaevm.org)

The State Election Commission has maintained that the entire election process was transparent and foolproof. Talking to The Quint, Maharashtra State Election Commissioner JS Saharia admits that there are various issues involved in acquiring paper trail machines.

    The Supreme Court has said that the VVPAT system has to be implemented only in stages. Even the Election Commission of India has tried it out only on an experimental basis. There are a large number of issues, including supply and finance. We will implement it as per the order of the SC.

JS Saharia, Maharashtra State Election Commissioner

When asked about the protests in Pune, Nashik, Kolhapur and Amravati, he ruled out any possibility of re-polling anywhere in the state.

    We take proper care. Machines are sealed in the presence of polling agents. There is no possibility of tampering with the machines at all. In any case, they are tamper-proof. The complainants have only expressed suspicion. If anyone comes with proof, we will definitely probe that. There is no system of re-polling as results have been declared.

The defeated candidates in Pune, Nashik and Mumbai have announced that they will move the High Court against the “EVM scam”.

Once the matter reaches the HC, the Election Commission as well as the Centre will likely have to inform the court about the progress on introducing the paper trail (VVPAT) machines. For, the court of the land is already convinced that the present EVM-based system cannot be called foolproof unless a paper trail is added to it.

March 12, 2017

Analysis: Food products growth of FMCG cos outpaced non-food segments in Apr-Dec 2016-17

An analytical story I wrote a few days back (in the news organisation I work for) on food products growth of FMCG cos outpacing non-food segments Apr-Dec2016-17


[C] Foods business drives growth of FMCG cos in Apr-Dec
Cogencis, Wednesday, Mar8
By Rajesh Gajra
NEW DELHI -  The foods products segment in the fast moving consumer goods industry is showing better revenue and net profit growth rates in Apr-Dec compared to the non-food products. The growth rates in operating margins of the two product categories, however, rose equally but marginally.
Among eight FMCG companies, forming a part of the sector's benchmark index, Nifty FMCG, the aggregate foods revenues grew 6.3% on year in Apr-Dec while the aggregate earnings before interest and tax went up by 7.7%, an analysis of data from Cogencis Corporate Fundamental Database showed.
On the other hand, the non-food segment recorded on-year aggregate revenue and EBIT growth of 2.2% and 3.1% respectively.
The foods segment's collective EBIT margin for the Apr-Dec period went up to 11.5% from 11.30% a year ago, while the non-food businesses recorded a collective EBIT of 18.7% up marginally from 18.5%.
Besides Hindustan Unilever Ltd and Dabur India Ltd which operate in food and non-food businesses, the analyis encompassed companies which operated purely in food products segment such as Britannia Industries, Jubilant Foodworks India and Tata Global Beverages Ltd or which were non-food FMCG companies such as Colgate-Palmolive (India) Ltd, Godrej Consumer Products Ltd and Emami Ltd.
ITC Ltd, the largest listed FMCG company by market capitalisation, could not be covered in the analysis since the company did not disclose the numbers of its foods business separately.
"The foods business of FMCG companies has seen stable growth compared to personal care products where the growth, though present, has deteriorated a bit," said Ajay Thakur, analyst--consumer at Anand Rathi Broking.
In the wake of demonitisation-induced liquidity squeeze during the Oct-Dec quarter consumers deferred their purchases of personal care and home care products but food products such as edible oils continued to be purchased as before, said Thakur.
Hindustan Unilever's EBIT from its foods and refreshments business grew by 6.4% on year to 43.77 bln rupees in Apr-Dec which represented better growth than the 2.2% on-year rise seen in its non-food products revenues of 211.89 bln rupees.
The Apr-Dec revenues of HUL from its foods and refreshments segments rose 6.4% on year to 43.77 bln rupees while the growth in non-food segments was less than 1% at .
In the Oct-Dec quarter HUL’s refreshment segment’s strong growth of 8.1% on year was led by its tea brands and its ice cream segment, according to a recent research note by ICICI Securities.
The personal care segment of HUL declined 2.7% on year during the quarter led by personal wash category which witnessed price hikes amid a tough environment to curb the impact of rising input cost, the research note said.
HUL’s EBIT margin in foods and refreshments stayed flat on year at 13.5% in Apr-Dec while the collective non-food business’ EBIT increased marginally to 17.5% from 17.3% in the year ago period.
Among other FMCG companies (see table below)in the analysis, Britannia Industries, a food products-only company, registered on-year growth rates of 8.7% and 4.9% in its revenues and EBIT in Apr-Dec. On the other hand, Emami Ltd, a non-food products FMCG company, recorded a EBIT growth of 4.1% on year on the back of a 9.1% on-year rise in revenues.
In the case of Tata Global Beverages and Godrej Consumer Products, the former, a food products-only FMCG company, logged a higher growth rate of 28.7% on year in its EBIT in Apr-Dec while for the latter, a non-foods FMCG major, EBIT grew by 13.6% on year.
Analysts said while the demonitisation effect was not acutely felt by many FMCG companies the current sluggishness in non-foods business is likely to continue for a few more quarters and last till the Jul-Sep quarter of 2017-18 (Apr-Mar).

The table below shows the on-year growth in revenues and earnings before interest and tax of eight major FMCG companies in Apr-Dec




On-year change (in per cent)

Colgate-P India
Jubilant Foodworks
Tata Global
Godrej Consumer
Hindustan Unilever