ICICI November 18 Issuecontent.icicidirect.com/MoneyManagerMagazine/November_2018.pdf · crore lying unclaimed with Insurance companies, and over Rs. 8,000 crore in unclaimed Bank

4

Shilpa KumarMD & CEO

ICICI Securities Ltd.

If there is a will there is a way, if not, the

way can be arduously difficult. The

following numbers just proves this

point. As per an estimate, there are

investments to the tune of Rs 15,000

crore lying unclaimed with Insurance

companies, and over Rs. 8,000 crore in

unclaimed Bank deposits.

There could be many reasons for this

money perhaps not reaching or

benefitting its right full owner or

inheritor – lack of awareness of these

investments, improper documentation,

no nomination or even dispute. The

point is that all these factors can be

taken care of by a simple document and

action – that of making a Will.

Yet the numbers above amplify the fact

that we do not put in as much effort to

ensure that our hard earned wealth

reaches its rightful inheritors, compared to the effort we put in to earn this

wealth in our lifetimes.

Benefits of drafting a will go beyond the points stated above. For one it also

serves as an inventory to what one has earned and helps the family identify and

claim its inheritance.

Contrary to popular belief a will is a simple legal document that contains wishes

of a person regarding transfer of assets or even responsibilities. A hand written

will, witnessed by two is legally valid. It is however advisable to get the

provisions of the will checked by an expert or a lawyer to ensure that there are

no ambiguous statements or conditions.

A will serves another important aspect of succession planning. It helps you give

your assets to whom you wish to and not as per the normal course of

distribution as per law. In the absence of a will, your estate is distributed

according to Indian succession law.

ICICIdirect Money Manager November 20181

The succession laws do not consider specific needs of an individual family,

consequently distribution of property may not be executed as per your wish.

Without a will, wealth of the deceased person is distributed among his legal

heirs in accordance with the laws of inheritance applicable to him. It could be

the Hindu Succession Act, the Islamic Inheritance Law or Indian Succession Act.

Apart from distribution of property, a will can also help entrust responsibilities

such as responsibility of a minor child in absence of your spouse, guardianship

of children until they come of rightful age.

Forming a Trust is another way in which estate planning can be done. Used

when the scale and complexities are larger and cannot be handled by a simple

will.

A private or family trust acts as a legal caretaker of your financials, according to

the trust guidelines set by you. A trust can be used in complex ownership in a

multiple businesses, case of a special child or medical illness of a family

member or when the business succession is distant as the inheritor is young

and inexperienced.

The best of plans are meaningless without proper execution and it is our

endeavor to guide you at every turn of your life. I am sure this edition of

ICICIdirect Money Manager will help you realize the importance of estate

planning. Through our website www.icicidirect.com and this magazine we want

to make an earnest attempt to partner with you in setting and achieving your

financial goals. Do walk into any of your Neighbourhood Financial Superstore

and talk to us. Or call your Relationship Manager to know more about our Will

Drafting Services.

Your magazine is now also available on www.magzter.com, a digital newsstand.


Editor & Publisher : Abhishake Mathur, CFA

Editorial Board : Sameer Chavan, CWM®, Pankaj Pandey

CMEditorial Team : Nithyakumar VP CFP , Sachin Jain, Research Team

2

Any amount of financial planning is incomplete if it is not ring fenced by an estate plan in

place. Internationally, estate planning is an integral part of the overall financial planning

exercise. In India, however, it is an often ignored aspect.

The name estate planning in itself leads to a perception of something complex and an

arduous process when in reality it can be accomplished by something that actually is

quite simple to do – just write a Will.

However, the ennui to actually getting down to writing a will stems from many excuses

or factors. In the Indian context it is primarily the negative connotation a Will brings to

mind. But it is inevitable.

The other factor being procrastination – we all know it is important but keep putting it off

for later. It would really make sense to sit down one weekend and get yourself to writing

that will. Think about it, you have assets to protect and/or a family to think about. Only

by writing a will can you ensure that what happens is what you intended to happen in

terms of your estate passing on to the right full inheritor.

Another belief that stops us from making a will is the understanding that all our assets

will eventually pass on to our spouse and children. This may not be the case. In India we

are governed by Succession Laws that depends on one's religion. So if you think that

your spouse will eventually get you assets or your daughter will have an equal right. It is

a good time to check on the Succession Law that governs the religion you follow.

Making a will ensures that your estate is passed on exactly the way you want it to.

And finally it is also time to start thinking about your Digital Legacy, an area that is

evolving but one which could be addressed through a will.

The November edition of our magazine attempts to guide you through the various

aspects of drawing up an estate plan. We also have an interview with Mr Jatin S. Popat,

Director

WillJini Succession Services Pvt. Ltd, in which he brings in his experience of helping

innumerable people plan their estate.

We welcome your comments and queries on personal finance or any other money-

related matter. Please write to us at [email protected] . Read on, stay

updated.


MD Desk ................................................................................................. 1

Editorial .................................................................................................. 2

Contents .................................................................................................. 3

News ...................................................................................................... 4

Stock ideas: Bata India and Ramco Cements ....................................... 5

Flavour of the Month: Effective estate planning can protect your loved ones

Estate planning helps you to transfer you're wealth to the deserving

individual that are worth your estate. Letting your desired wish in the

form of a Will keeps you at ease than an intestate succession. This

edition not only ensures you make an estate plan but also makes

sure that you keep updating your plan in case of a Will. Read on

for better understanding……….................................................................... 14

Tête-à-tête

An Exclusive interview with Mr. Jatin Popat, Founder and CEO of

WillJini, giving his insights on estate planning.................................... 24

Ask Our Planner

Our financial expert answers your personal finance queries .......….. 30

Mutual Fund Analysis

Which are the top performing mutual funds in current market

scenario? Check these top pharma funds recommended by our

research team........................................................................................ 38

This month on iCommunity

Take a look at the latest activities on our unique information

platform- iCommunity (for November 2018) .................................... 51

Equity Model Portfolio .............................................................................. 52

Quiz Time ................................................................................................ 56

Prime Numbers ........................................................................................ 57


Reserve Bank of India plans payments ombudsman

The Reserve Bank of India is likely to establish an ombudsman for digital payments by

March to take the load off the increasing number of complaints currently being handled

by the banking ombudsman, said two senior bankers with knowledge of the matter. RBI

did not immediately reply to queries on the matter. With digital transactions gaining at a

rapid pace over the past year, multiple issues such as failed transactions or funds sent to

the wrong address have been cropping up as well. This has forced RBI to sit up and take

notice of such issues through an ombudsman mechanism, the bankers said.

Courtesy: Economic Times

Reliance Industries planning expansion of Jamnagar refinery

Billionaire Mukesh Ambani-owned Reliance Industries Ltd is considering a plan to boost

its oil refining capacity by about half, people with knowledge of the matter said. The

proposed plant, to come up at the world's biggest refining complex in Jamnagar, will be

able to process as much as 30 million tonnes of crude a year, the people said asking not

to be identified because the discussions are private. Reliance has begun discussions

with global refinery process licencers and equipment vendors for the new refining train

at the Jamnagar complex, the people said. The plant of the size planned by the company

may cost $10 billion, they said.

Courtesy: Live Mint

Direct tax collections to exceed target this fiscal: CBDT chief

Direct tax collection has already crossed Rs 5 lakh crore and will exceed the budgeted thtarget of Rs 11.5 crore set for the current fiscal, CBDT Chairman Sushil Chandra said 14

November. He further said that so far the I-T department has issued refunds to 2.15 crore

assessees amounting to Rs 1.15 lakh crore and from now onwards the net collections

will increase. The number of people voluntarily filing tax returns has gone up

substantially, and 6.85 crore income tax returns were filed last year. This year so far 6.02

crore ITRs have been filed with the Income Tax Department. The number of direct

taxpayers was 3.8 crore when the Modi-led government took office in May 2014. The

CBDT chief said that so far the net growth rate in direct tax collection is 14.5 per cent,

while the gross collection grew 16.5 per cent.

Courtesy: Business Today

Banks get 3.7 trillion lending boost with RBI-Govt ceasefire`

The decision of the Reserve Bank of India's (RBI) board to extend the timeline for full implementation of Basel III rules for bank capital by a year would free up as much as �3.7 trillion for potential lending, a person with direct knowledge of the matter said on

thcondition of anonymity. The central bank's board on 19 November decided that banks would have to meet the capital conservation buffer norms under Basel III regulations by 31 March 2020, instead of the earlier deadline of March 2019. The government and RBI were locked in a bitter public standoff on a host of issues, including a liquidity squeeze in the banking system. While the finance ministry holds the view that there is a shortage of liquidity, especially after the debt-laden IL&FS started defaulting on loan repayments, the central bank is of the view that the situation is much better.

Courtesy: Live Mint

STOCK IDEAS


Bata India – Revenue, margin enhancement augurs well…

Company Background

B a t a ' s I n d i a o p e r a t i o n s

commenced in 1931 when it was

incorporated as Bata Shoe

Company Pvt Ltd for

manufacturing and marketing all

types of footwear, footwear

components, leather and

products allied to the footwear

trade. The company went public

in 1973 and the name was then

changed to 'Bata India Ltd'. Bata

manufactures footwear for men,

women and children. Its product

portfolio includes leather, rubber,

canvas and PVC shoes. It has

various brands such as Bata,

Hush Puppies, Naturalizer, Power,

Marie Claire, Weinbrenner, North

Star, Scholl, Bata Comfit and

Bubblegummers. It has a strong

Pan India presence with total

store count of 1300+.

Investment Rationale

EBITDA margin expansion

sustains in H1FY19

For H1FY19, Bata registered

revenue growth of 11% YoY to

` 1470.4 crore with EBITDA

margin improving 280 bps YoY

to 14.9%. Efforts towards

premiumisation of product

portfolio yielded better margins

for Bata. The proportion of

premium products is currently

at 30%. The management

expects to scale it up to 35% by

FY19E. Controlled operational

c o s t s t r u c t u r e s u c h a s

consolidation of suppliers,

building long term agreement

w i t h s u p p l i e r s a n d r e -

negotiating rental terms are

further expected to contribute

to EBITDA margin expansion.

We anticipate EBITDA margins

will improve to 15.9% by FY21E

f rom 13 .5% in FY18 . In

conjunction with the launch of

new collections, Bata has

increased investments in

branding, with advertisement

expenses rising 66% YoY to

` 40 crore in FY18. Higher ad

spends are expected to

enhance footfalls across the

retail network and spur revenue

growth.

New format stores to enhance

footfall across retail network

In FY18, Bata added ~100 COCO stores and 30 franchisee stores (net store addition 82)


STOCK IDEAS

6

with total store count to 1375 outlets. The company has aggressive expansion plans in Tier II/Tier II I cities. The management expects to add ~150 stores in FY19E (100: COCO, 50: franchisee). Besides adding new stores, Bata is redesigning its existing store model with specific focus on categories like sports, youth and women. Bata opened its first standalone 'Power' store in Noida and introduced a 'Red-Concept' store format that would house latest premium collections with a rich shopping ambience. For the same, the company has planned a capex of ~ 100 crore for FY19E to be `funded by internal accruals.

Focus on high growth categories along with margin improvement…

Fo c u s o n f a s t g r o w i n g

categories of sports, youth and women with brands placed at v a r i o u s p r i c e p o i n t s i s expected to drive revenue growth. To maintain profitable growth, the management is expected to maintain a subtle balance between volume and rea l i sa t ion g rowth w i th enhanced share of premium produc ts a id ing marg in improvement. We roll our estimates to FY21E and expect revenue, EBITDA to grow at a C A G R o f 1 4 % , 2 0 % , respectively in FY18-21E. Bata has a robust balance sheet having virtually debt free status, healthy return ratios (RoCE: 20%+) and negative working capital cycle. We reiterate our BUY rating on Bata with a revised target price of

` 1160 (35.0x FY21 EPS of

.` 33.1).

Key Financials

` Crore FY18 FY19E FY20E FY21E

Revenue 2,629 3,018 3,430 3,854

EBITDA 354 438 528 613

Net Profit 224 302 366 425

EPS (`) 17.4 23.5 28.5 33.1


STOCK IDEAS

7

Stock Data

Particular

Market Capitalization (` Crore) 13,109.9

Total Debt (FY18) (` Crore) -

Cash and Investments (FY18) (` Crore) 676.3

EV (` Crore) 12,433.6

52 week H/L (` ) 116 / 656

Equity capital 64.3

Face value (` ) 5.0

Key risks include:

Raw material price fluctuation may impact operat ional efficiency

L i k e any m anu f ac tu r ing company, raw material costs entail the largest share of B a t a ' s e x p e n s e s . A n y fluctuation in raw material prices that cannot be passed on to the end user may impact the operational efficiency of the company. The company typically passes on the impact of increased input costs with a lag of about three months. Hence, the margin impact may be for a relatively short period.

I n c r e a s e d t h r e a t o f competition

The unorganised footwear market is fairly large in India, especially at lower price points. Apart from this, Bata is also likely to face competition f rom impor ted Ch inese products as they are priced competitively. Also, with the government opening up FDI in single brand retail, more and more foreign players are likely to tap the Indian markets where the growth potential is high. All these factors could pose a threat to Bata's sales and growth plans.

Valuations Summary

(x) FY18 FY19E FY20E FY21E

P/E 58.6 43.4 35.8 30.8

Target P/E 66.6 49.4 40.7 35.0

EV / EBITDA 35.4 28.4 23.2 19.7

P/BV 8.9 7.7 6.8 6.0

RoNW (%) 15.1 17.8 19.0 19.5

RoCE (%) 19.9 22.1 23.7 24.4


STOCK IDEAS

8

ANALYST CERTIFICATIONWe /I, Bharat Chhoda, MBA and Cheragh Sidhwa, MBA Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.

Terms & conditions and other disclosures:ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a Sebi registered Research Analyst with Sebi Registration Number – INH000000990. ICICI Securities Limited Sebi Registration is INZ000183631 for stock broker. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India's largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com.

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financialinstruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice.

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months.

ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.

ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report.

It is confirmed that Bharat Chhoda, MBA and Cheragh Sidhwa, MBA Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report.

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report.It is confirmed that Bharat Chhoda and Cheragh Sidhwa, MBA Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report.

ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.

We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction..


STOCK IDEAS

9

Ramco Cements – Cementing its path to growth...

Company Background

Ramco Cement (Ramco)

started its operations in 1962

with an installed capacity of

0.07 MT. Today, the company is

one of the largest cement

players in south India with a

total production capacity of

16.5 MT (out of which capacity

of satellite grinding units is 4

MT). Further, it is also one of

the most cost efficient cement

p r o d u c e r s , w i t h c o s t

advantage emerging from the

captive thermal power of 175

MW and s t ra teg ic p lan t

locations (split grinding unit

near the markets and clinker

plant near the mines). The

company sells cement in Tamil

Nadu (TN), Kerala, Karnataka,

Andhra Pradesh (AP), West

Bengal and Odisha. Out of the

total cement sales 59% is sold

in TN and Kerala, 11% in West

B e n g a l , 1 0 % e a c h i n

Karnataka, AP and Odisha.

Apar t f rom cement , the

company also produces ready

mix concrete and dry mix

mortar

Investment Rationale

Key beneficiary of increased infra spends in its key operating markets…

The pick-up in road tendering ac t i v i t y, improved sand availability in the company's operating markets and healthy d e m a n d f r o m t h e g o v e r n m e n t ' s l o w c o s t hous ing programme are expected to be key drivers of cement demand. As a result, we expect demand (15 MT) to o u t p a c e s u p p l y ( 7 M T ) positively impacting utilisation levels. Hence, we expect Ramco's operating markets to post 7-8% growth annually in the next three to four years.

Capacity expansion to further drive growth…

Over the years, the company has penetrated the West Bengal and Odisha market. Ramco is planning to further penetrate in the east through capacity expansion. Of the 4.5 M T c a p a c i t y e x p a n s i o n planned by the company, 2 MT will be in the east (1 MT each in


STOCK IDEAS

10

West Bengal, Odisha) while 2.5 MT will be set up in the south (in Andhra Pradesh). The capacity expansion in the east will enable the company to remove capacity constraint and also increase its market share. Apart from expansion in t h e e a s t , t h e c a p a c i t y expansion in AP (south) will enable it to tap the growing opportunity of this market (that is expected to grow at 14% CAGR in the next two to three years).

Healthy cash flow generation to keep balance sheet light!

During the downturn in south in FY10-15, efficient cash flow management enabled the company to reduce debt-equity from 1.6x to 1.0x in FY15 and further to 0.3x in FY18. Going forward, we believe Ramco's robust cash flow generation (~ 2,500 crore in `

FY18-20E) will not only enable it to fund its capex through internal accruals but also maintain its debt-equity at 0.3x.

Cost pressure to stabilise going forward, demand set to improve

Better sand availability in Tamil

Nadu, one of the key markets of

Ramco Cement (~60% of

capacity share), is expected to

be a key contributor to volume

growth in coming years. This,

c o u p l e d w i t h h i g h e r

penetration in the eastern

markets will provide tailwinds

to overall volume growth.

Apart from higher penetration

in the east, we expect the

southern region to witness an

upturn mainly led by higher

government spending on low

cost housing, irrigation in AP &

Telangana and revival in the

Kerala market (which was

affected by floods in Q2). With

this, coupled with capacity

e x p a n s i o n , w e e x p e c t

revenues to grow at a CAGR of

15.6% in FY18-20E. In addition,

we expect the EBITDA margin

to improve from H2FY19

o n w a r d s m a i n l y l e d b y

stabilisation of power costs

and improvement in freight

c o s t s . T h e c o m p a n y i s

currently trading at attractive

v a l u a t i o n s p o s t r e c e n t

correction. Hence, we maintain

our BUY rating on the stock

and an SOTP based target price

of 760 ( i .e. 12x FY20E `

EV/EBITDA).


STOCK IDEAS

11

Key Financials

Valuations Summary

Stock Data

` crore FY17 FY18 FY19E FY20E

Net Sales 3949.5 4406.4 5113.0 5883.6

EBITDA 1176.4 1099.4 1189.6 1578.1

Net Profit 649.3 555.7 601.4 813.9

EPS 27.3 23.5 25.5 34.5

FY17 FY18 FY19E FY20E

P/E 22.5 26.1 24.1 17.8

Target P/E 27.9 32.4 29.8 22.0

EV / EBITDA 13.5 14.2 13.4 10.0

EV/tonne (US$) 160.7 157.5 151.4 125.6

P/BV 3.9 3.6 3.3 2.9

RoNW (%) 17.4 13.7 13.6 16.2

RoCE (%) 12.7 10.4 9.9 12.2

Stock Data ` crore

Market Capitalization (` Crore) 14,617.9

Total Debt (FY18) (` Crore) 1,113.2

Cash and Cash Equivalent (FY18) (` Crore) 146.8

Enterprise Value (` Crore) 15,584.3

52 week H/L (`) 879 / 649

Equity Capital 23.6

Face Value (`) 1.0

Key risks include:

Capacity expansion in east to

outpace demand…

Although demand in the east is

expected to grow at 7.8% per

annum, capacity addition is

expected to grow at a CAGR of

8.2% per annum. We believe

this will keep utilisation levels

lower and also limit price hikes

in the region. Due to higher

lead distance, Ramco operates

at a lower margin compared to

its other markets. Hence, any

deterioration in demand in the

reg ion or adverse pr ice

movements could hamper the

company ' s revenue and

profitability


STOCK IDEAS

12

November

Delay in expansion may dent

growth, return ratios…

The company is planning to increase its capacity by 4.6 MT at a cost of 1930 crore. Out of the `4.5 MT, 1 MT expansion at Odisha is Greenfield and the rest are Brownfield, at Kolaghat,

Vizag and Jayanthipuram. These projects are expected to be commissioned in the next 18 months. Hence, delay in commissioning and statutory clearances required if any, could lead to cost overrun and also hamper growth in the near to medium term.

ANALYST CERTIFICATION We /I, Rashesh Shah, CA, and Romil Mehta, CA Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures:ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a Sebi registered Research Analyst with Sebi Registration Number – INH000000990. ICICI Securities Limited Sebi Registration No. INZ000183631 for stock broker. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India's largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com.

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financialinstruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice.

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months.

ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.

ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report.

It is confirmed that Rashesh Shah, CA, and Romil Mehta, CA Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.


STOCK IDEAS

13

November

ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report.

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report.It is confirmed that Rashesh Shah, CA, and Romil Mehta, CA Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report.

ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.

We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securitiesdescribed herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

FLAVOUR OF THE MONTH


Effective estate planning can protect your loved ones

Estate planning comprises arranging for the disposition and management of one's

assets or estate at the of life time through the use of will, trusts and other devices.

Simply put it is nothing but securing the safe distribution of your wealth to your

heirs, family or any other entity as you deem fit.

However, it is the “not so discussed” and rather unpopular part of financial

planning. Estate planning seldom occurs in the horizon of our thinking and is often

overlooked because it is considered a “means” and not as a goal by itself.

In this edition will get you thinking towards estate planning especially the urgency

to make a Will also suggestions that can add on to the process of making a Will.

Read on for better understanding.

Why do you need estate planning?

We work hard for years, may

be 35 to 40 years, to build

asse ts - a home, a ca r,

i n v e s t m e n t s , p e r s o n a l

belongings, etc., but barely

take any time to plan for

distribution of these assets.

Doesn't it make sense to work

just as hard to pass on the

legacy to our heirs? It's actually

not so difficult. An estate plan

allows us to do so. It helps

direct how and to whom our

assets will be distributed in the

event something untoward

happens to us. Without a

proper estate plan, a court

could decide the distribution,

in accordance with succession

laws, which may not fit our

wishes. Yet, majority of us

don't have an estate plan in

place, leaving us vulnerable to

legal battles. Most of us think

we are not old enough or

wealthy enough to make an

estate plan. However, if a

person is over the age of 21, no

matter how small his estate is,

it is advisable to begin the

process. Here we help you

make the process easy and

understandable.

What's covered under estate plan?

• The stock of all your assets, including investments, retirement

accounts, cash, real estate, collectibles, cars, jewelry, etc.



Ways to plan your estate

A p lanning done for

transferring your assets and

proper ty to the des i red

individuals before your demise

is said to be an estate planning.

Estate Planning is divided into

two parts that is until your life

expectancy and post death.

Until Life Expectancy:

Trust

A trust is where the ownership of the assets is transferred from the owner to the trust. In simple words, it acts as a third party who technically owns the cash, stocks, bonds, l i fe insurance or real estate of the testator. Trust handles the wealth of the owner while he is alive as well as after his death. The biggest advantage is that any property transferred to the Trust during your lifetime will p a s s d i r e c t l y t o t h e beneficiaries; it doesn't need to go through a Probate court. It is

good way to make gifts to minor children or to provide for the care of elderly parents.

Power of Attorney

Power of Attorney is a formal arrangement by which one person gives another person authority to act on his behalf a n d i n h i s n a m e . T h i s document enables you to appoint someone to take decisions on your behalf. It's an instrument in writing whereby one person, as principal, appoints another as his agent and confers authori ty to perform certain specified acts or kinds of act on behalf of principal.

The Power of Attorney does not mean that the agent owns any of client's property. It allows the agent to make financial decisions when the client can't. The client can withdraw a Power of Attorney whenever he wants as long as the c l ient is competent .

• Assigning power of attorney to someone you trust to manage your

affairs.

• Detailing any life-saving medical treatments you want or don't want

if you're unable to communicate.



Appointing someone as agent doesn't mean that the client gives up the right to manage his own affairs. Even if you own the financial affairs, in case of paying off your debts, you cannot use wealth your assets to cover the outstanding debts.

Partition

It's a judicial process that divides co-owned real estate among its owners. In simple words the court decides how to divide the property amongst the joint tenants, tenants in common or coparceners.

Gift

It is a voluntary transfer of assets from one person to the other without compensation or any consideration. In this case of a gift deed, the assets are transferred immediately. The person giving is said to be a donor and the one receiving is said to be donee. The gift could b e a n y m o v a b l e ( c a s h , investments, vehicle, etc.) or immovable (land) property. If the donor wishes to change his mind and wants to claim ownership in the property, the gift deed cannot be revoked.

Mutation

Transferring ownership of the

property in the others name,

under the guidance of the

municipal record. A mutation is

done to keep a revenue record

for the government. Here,

when the property is muted the

right owner of the property will

be entitled to pay off the

property taxes.

Joint owners

Joint ownership is that estate

plan where on the death of the

o w n e r t h e p r o p e r t y i s

transferred to the surviving

owner. Here, assets such as

property, bank accounts and

investments can be owned

jointly. In situations to the joint

owner not able to pay off the

bills, the joint owners to it i.e.

spouse or parents and children

will take care of their financials.

This is most likely used to

reduce or avoid the estate

complications such as probate

fees or estate administration. If

something goes wrong, the

deceased joint owner cannot

own the joint property and

doesn't become a part of the

d e c e a s e d j o i n t o w n e r ' s



personal estate. That means,

the joint property won't be

d i s t r i b u t e d a s p e r t h e

deceased persons Will.

Post Death:

Nomination

During an estate plan, the most

important requirement is to

register a nominee for your

property, investments and

bank related matters. A minor

can be registered as a

nominee, but can claim the

value after turning 18.

Nomination is just a way to

claim the value owned by the

deceased member. I t 's

essential to keep a nominee or

beneficiary registered or

register during financial goals

while you're alive, to avoid

unnecessary trouble to your

family.

Succession

Succession means the person

next after the predecessor or

the person who dies. That

means if the father dies his

wealth will proceed to his wife

or/ and children accordingly. If

there is a Wil l made the

document will state the exact

proportion to be distributed

according to the deceased

members wish. But if the Will is

not made, i t ' s ca l led as

intestate Succession and the

proceedings will be on the

bases of set Acts. These Acts

are different for few religion

and the family will have to go

according to those rules.

Most individuals assume that

succession planning is an

option but it is a necessity.

Indian Succession Act, 1925

This Act is divided into two

category namely testamentary

succession (written Will) and

intestate succession (No Will).

The law is not applicable to a

H i n d u , M u h a m m a d a n ,

Buddhist, Sikh, or Jain. Indian

Christians native of India come

under this Act and for property

matters domicile certificate of

the dead indiv idual is

important.

Hindu Succession Act

The Indian Succession Acts, law related to testamentary succession is applicable for the



Hindus. For the purpose when the Will isn't drafted they go according to the Hindu Succession Act, 1956. One of the most important features of H indu Law is the H indu Undivided Family (HUF), while considering the intestate succession. This Act is applicable to whole of India except the State of Jammu and Kashmir.

Succession for Muslims

The Indian Succession Act d o e s n ' t a p p l y f o r b o t h testamentary succession and intestate succession because they follow the Quran. Hedaya or Fatawa Alamgiri is the authority that handle the subject of Wills for Muslims.

The following payment has to be made if the deceased member is a Muslim

· Funera l expenses and deathbed charges

· Wages due for services rendered to the deceased within three months just preceding his/her death by any labourer, artisan or domestic servant

· Expenses o f obta in ing

p r o b a t e o r l e t t e r s o f

administration or succession

certificate

· Legacies not exceeding one-

third of what remains after all

the above payments

· Remaining two third should

go to heirs as on intestacy.

· Other debts of the deceased

according to the respective

priorities (if any).

Succession for Jains

As per drafted Will, the Jain law

goes according to the Indian

Succession Act whereas, in not

drafting a Will the law goes

a c c o r d i n g t o H i n d u

Succession.

Succession for Buddhist

Buddhist law states that the

owner with Will drafted come

under the Indian Succession

Act whereas, it goes for Hindu

Succession if the Will isn't

drafted.

Succession for Sikh

The Sikh follow the Jain and



no particular age for drafting a

Will but the individual has to be

above 18 years. Also that while

drafting the Will the individual

has to be of sound mind

otherwise it will considered as

void.

Why do you need to draft a Will?

While we build our estate, we

have a few wishes that needs

to be accomplished. Such as

d i s t r i b u t i o n o f e s t a t e ,

protection to your loved ones,

etc. The first question that

comes to the mind is would

you die with leaving the wealth

behind creating fights among

the individuals? Causing your

family members at stress due

to your unexpected death. An

answer to that would be no

right, so a Will takes care of all

these matters. Without a Will

the state is in charge of making

decisions and the probate

courts choice may not be

pleasant as expected. This

complexity could be avoided

only when a Will is drafted.

The best part of a Will is that

y o u c a n m a k e c h a n g e s

whenever you want, till you're

alive.

Buddhist law when it comes to

Succession.

Probate:

It's a legal process that is done

for settlement of estate, even if

you are without a will. The

court and executor pay off

debts, file tax returns and

notify potential heirs during a

probate. The process will last

for months and generates legal

and administrative expenses

that erodes your estate.

Probate can be controlled and

a v o i d e d b y h a v i n g a

beneficiary in place and also

use a trust which distributes

t h e a s s e t s a m o n g t h e

members. The trust will then

ensure your loved ones get

their inheritance faster and

avoiding unnecessary fees.

Will:

A Wil l or testament is a

document that states all the

details of the individual along

with the proportion of wealth

to be transferred to the family.

While most of us f ind i t

uncomfortable to plan before

the death, it is yet essential to

plan on drafting a Will. There is



What is the purpose of a Will?

It is a written legal statement that specifies the ownership of the wealth to the spouse and chi ldren. The process of making a Will is relatively s t r a i g h t f o r w a r d a n d inexpensive. It comes into act ion when you are incapacitated or physically unable to communicate. It serves various benefits such as disposition of property i.e. pe rsona l p roper ty been distributed at the time of death. Acts as a guardian for the minor children, here the name is stated as to a caretaker. Many people appoint care g ive rs fo r the i r pe ts o r domestic livestock and keep some portion of the funds for their care.

In situations being killed or a wrongful death, the Wil l contains a section where you need to name an estate executor. This individual will bring the wrongful death lawsuit on behalf of your heirs and family. If you wish to donate to a charitable trust or gift part of wealth to someone also can be stated in the Will.

Specific funeral wishes are fulfilled as to being buried or cremated and a ceremony requests stated in the Will.

In case of debt, the Will states a

bank account that will credit to

pay off the debts. If there's

money yet in the bank after

paying off debt the remaining

will go to a charitable trust. If

there is not enough cash to

complete the dues, the Will can

command to extract the dues

from other funds or sell part of

the property.

Who needs to draft a Will

Very often we think that Will is

drafted before you near death

or if you are having a big house

or surplus wealth. Either you

tend to get lazy or are confident

that the wealth will go to the

family rightly. It's advisable to

all the owners to draft a Will

irrespective of your size of

wealth.

There are different kinds of Will:

Conditional and Contingent Will:

This kind of Will is based on

occurrence of a particular

event or condition. An



example could be an individual

taking a Will stating that the flat

in Mumbai to be entitled by the

son after the death of the

tes ta to r on ly i f the son

becomes a lawyer. If the son

plans on becoming a chartered

accountant he won't be entitled

of the flat after his father's

demise.

Joint Will:

A joint Will consist of two or

more people on a single legal

document. The purpose to a

joint will is to ensure that the

remaining party wi l l not

change their mind regarding

what happens to the property

after the party dies.

Mutual or Reciprocal Will:

Here, two or more person

makes the Will whereby they

bequeath (leave the property

to someone) the property to

each other. Such Wills may be

revoked by any of the testators

so as to make changes in the

will. An example, a husband

and a wife make a reciprocal

Will bequeathing the property

to each other

Hollograph Will:

This type of Will is hand written

by the testator himself. There

are some states that don't

recognize the holographic

Wills. States that allow this kind

of Wil l needs proper

documentation that can assure

its validity. The proof that they

require is that the testator

wrote the Will, evidence that

the testator was in his sound

mind while writing the Will and

the testators wish to distribute

the property to its beneficiary

needs to be mentioned.

Privileged or Oral Will:

This Will is valid in law only by a

solider employed engaged in

war fare, airman or sailor at

sea. The individual should be

above 18 years, and needs to

dispose his property by a Will.

Here the Will could be in a

written or verbal form, no need

of an attestation or a signature.

Sham Will:

It's a document where the

testators entitles his whole

wealth to the party, if the

testators wish is granted by the



party. An example, a father

entitles the whole wealth he

owns in the name of the son

until he becomes an engineer

as per the fathers wish.

Concurrent Will:

This kind of will consist of

making two or more wills

based on convenience, where

one Will would be on movable

property and the other would

be on immovable property.

Such wills are treated as

independent and Probate may

be granted to one Will, unless

there is any indication to the

contrary. But, if the both the

Wills are property based,

probate would be applied on

both the Wills.

Duplicate Will:

The tes ta tor p repares a

duplicate wil l , where the

original lies in the bank locker.

For the sake of safety measure

the duplicate will is prepared.

The copy as well as original

needs to be s igned and

attested in order to be valid. If

the testator destroys a part of

h is custody i .e . the wi l l

destroyed under his custody,

both the Wills need to be

revoked.

Case study on estate plan

These few situations will help you understand better the importance of making an estate plan:

When nominee isn't registered

A similar case, but the matter here is the nomination not registered. An individual had an FD and a bank account, without the name of the nominee registered. The bank forgot to get the nominee details from the individual. Though it was some technical issue that the nominees name wasn't asked to the individual before. After the death of the individual, the family took the death certificate to the bank to claim the value. The bank refused to do so immediately, without the name of the nominee.

At these situations, the family member will need to visit the branch and ask for their assistance. An affidavit will be needed from the court to prove the relationship. The most important factor here is always have a nominee registered for any financial asset so that the money is not lost. This plays an important role in preparing for an estate plan that will reduce the burden on the family members for excess documentation and Hassel.

When you save on little legal expenses:

Singer Barry White died in 2003, was separated but did not get legally divorced from his second wife who owned everything. His living girlfriend and children filed a lawsuits as they received nothing.

At this situation, when ones getting divorced the law considers your legal marriage unless and until the judge signs the decree ending your marriage. Till then the one who's legal to the



marriage is the owner of the property. Just to avoid the legal fees the singer didn't get divorced and caused the later family in trouble. Thus, one needs to keep in mind to update the estate plan on regular basis and in such cases try to remove the beneficiaries name from the estate plan as and when required.

Keep the legal documents safe:

Olympic sprinter Florence Griffith Joyner made a Will, but her family couldn't find the legal documents. She died at the age of 38 in 1998, even after planning a Will before death, post death there was disputes among her mother and husband. This disputes was either the mother gets to continue to live in rent free condominium for the rest of her life.

In this situation, the individual could have a duplicate copy at home and conserve the original document in the bank locker. Here, testators need to keep in mind that it is essential to keep the trusted member aware of what is stated in the Will.

Summing Up:

An Estate plan planned in advance keeps you assured that even after your death, you have kept a managed legacy for your loved ones. You can avoid unnecessary hurdles and expenses that will be

incurred if there's no estate plan. Even when you plan for estate make sure there's a proper follow up, as changes are bound to happen i.e. requirement for your family goals.

The views expressed in the article are personal views of the author and do not necessarily represent the views of ICICI Securities


Tête-à-tête

Are you in a Dilemma to have an estate plan or not?

Estate planning ensures you to safeguard your family's future peace.

Drafting a Will saves on the nominal cost and the time spend on creating

a Will. It also ensure smooth distribution of wealth as per their wishes

without much delay and hassles/cost for court processes to get a

Succession Certificate. Further, the asked questions over an interview

conducted with Mr. Jatin Popat, Founder and CEO of WillJini will help

you understand better about estate planning.

Mr. Jatin PopatFounder & CEO,

WillJini.com

Q. Why do u think Will planning is essential to a household or is it required for big family business?

A. Writing a Will is part of financial planning and action to safeguard your family's future peace. We all agree that “No one here is Immortal” and also “No one knows his/her Date of Expiry”.

For example, most financially disciplined individuals aged 30+ avail cover under Life and Medical insurance so that during untoward life-events,

their families have financial support and cushion. In such events, financial support shall be available to the family in the form of insurance claims - BUT family will be confused for “whom to distribute insurance claim and in what ratio?”

Here, a Will shall guide the family about one's wishes for distribution of his/her wealth.

If there is a 'No-Will' situation, the family has to approach the court to declare names of all l e g a l h e i r s a n d w e a l t h distribution ratios as per personal law. For example – If a Hindu male dies without a Will, his legal heirs are living Mother, Wife, all sons and all daughters (married/ unmarried) and they all hold EQUAL rights over a s s e t s l e f t b e h i n d . A n i n d i v i d u a l w h o h a s


Tête-à-tête

accumula ted wea l th fo r decades and has taken all efforts to keep his/her family happily bonded for so many years, but his one mistake of not writing a Will for smooth wealth distribution may create confusion, misunder standing within family and may also add hassles to get their rights. Such processes many a times lead to misunderstandings within the family, legal disputes and de-bonding etc. Normally, in a "No-Will” situation, the overall cost and time-frame for getting a court order viz. Succession Certificate is more than Rs. 1 lacs and a minimum 6-8 month time frame.

So, by writing a Will and spending l i t t le t ime and nominal cost, one can ensure smooth distribution of wealth as per their wishes without much delay and hassles /cost for court processes to get a Succession Certificate.

With the above logic, a Will is not only necessary for big families or HNIs but is also must for every individual who owns even a single asset like a Flat, Bank FD, Insurance policy

etc. Many NRIs write a separate Indian Will for their assets in India, as per Indian laws, to save huge inheritance taxes in their resident countries.

Q. Do you suggest to draft a Will o n l i n e o r g e t i t d o n e b y a professional?

A. Having understood the importance and necessity to write a Will, the immediate next question is “How to draft a Will and Where to find experienced legal professionals for drafting your Will?”

I n e a r l i e r d a y s w h e n

t e c h n o l o g y w a s n o t s o

advanced, we all used to

a p p r o a c h p r o f e s s i o n a l s

through a known friend or our

contacts in tax matters, legal

matters, medical issues, etc.

We are all aware that drafting a

W i l l i n a c o n v e n t i o n a l

/ tradit ional way requires

finding a legal professional

with expert subject knowledge,

m i n i m u m o f 2 v i s i t s t o

c o m p l e t e t h e p r o c e s s ,

revealing confidential personal

and asset details and all this

along with highly variable


Tête-à-tête

cost / fees as per the fee

structure of each such legal

professional. In today's fast

m o v ing w o r l d w i th

t e c h n o l o g i c a l m i r a c l e s ,

modern time smart individuals

prefer online services against

conventional / traditional

services.

In most developed countries, writing a Will from 30+ age through online Will writing is the preferred mode and similarly in India since last 5 years or so, we have had successful online Will drafting portals where thousands of Ind ians have comple ted drafting their Will. Drafting a Will online is now becoming a way of life for most Indians due to fixed costs, confidentiality, speedy processes, no visits, no calls, and conformity as per Indian laws, availability of Will lawyer's on-call for any help, etc.

Q. What's the difference in a Will and a trust? Which one is advisable the best?

A. Writing a Will is a good financial planning action for all individuals which helps your family for guiding them in the

future for distribution of your a s s e t s w i t h o u t hassles/cost/delays. By way of a Will, an individual's assets are distributed to family members a s p e r h i s / h e r w i s h e s mentioned in a Will.

A Private or Family Trust is an

instrument or arrangement

whereby an Individual can

continue his/her 'virtual control'

over the assets even after

he/she departs from this world.

Creation of Trust is like creating

a separate 'legal person' to

control your assets for few

years and such a Trust shall use

your wealth exactly as per the

Trust rules which you have set,

and no way else. Such Private

or Family Trusts shall have

ownership and control as Life-

Trustees and other family

members, close relatives,

f r i e n d s , p r o f e s s i o n a l s .

Trustees who shall be duty

bound to follow Trust rules to

use assets belonging to the

Trust for all beneficiaries

named in Trust deed. Trust are

of two types – discretionary or

non-discretionary. Normally a

Trust is for a few years till

achieving few objectives and

thereafter wealth or assets are


Tête-à-tête

distributed to the family. By

way of a Trust, a person can

'keep control over his/her

wealth via Trustees, for its use

for the benefits of family.

A Private or Family Trust is a very good option for wealth management even you leave this world against Will in situations where (1) there are mult iple businesses with c o m p l e x o w n e r s h i p / management structure, (2) w h e r e p r o p e r b u s i n e s s succession is not fully arrived a t , d u e t o y o u n g a g e / inexperience of GenNext, (3) when there is a special child or medically ill family member, (4) w h e r e t h e r e i s a l i k e l y challenge on the Will from a family member which could be long-drawn legal battle within family etc.

As per succession laws in India, all individuals following Muslim religion can write a Will for only one-third of his/her wealth and the rest of the wealth is distributed to the family & relatives as per the applicable sharia laws. Many individuals following Muslim religion prefer

forming a Trust so that their wealth is used exactly as per their wishes mentioned in the Trust Deed.

Q. Could you advise some important facts that needs to be considered while planning an estate?

A. Estate Planning is a wider plan which covers many aspects including succession planning for each business, arrangement to succeed ownership and management of each business, consideration of joint ownership of assets, required amendments to constitutionals documents of companies / LLP / Firms, taxat ion of each type of bequeath and each of family m e m b e r / b u s i n e s s , r e q u i r e m e n t o f l e g a l documents like Gift Deed, Family Settlement, Power of Attorneys, creation of a Family or Private Trust, Consideration of foreign assets and laws a p p l i c a t i o n t h e r e f o r inheritances / taxes, creation of trust in foreign country etc.

Q. Once a will is drafted, can any of the distant family member/relatives claim on it and treat it as invalid?

A. For individuals following


Tête-à-tête

Hindu, Jain, Sikh, Parsee,

C h r i s t i a n r e l i g i o n s , t h e

succession laws allow them to

bequeath all of his/her assets

whereas for Muslims such

rights is restricted to one-third

of wealth where Will is

allowed. A Will document

either hand -written or typed in

clear and simple language

without any vagueness or

ambiguity about wishes, signed

by the Will maker with full

senses without coercion in

presence of two witnesses is a

Legal Will and is acceptable in

all courts of law of India. Many a

times a close family member or

relative who has not got/ got

less bequeaths or a share in the

asset distribution, he/she may

try to challenge the validity of

the Will on frivolous grounds

like – when Will was made, the

testator (Will maker) was

mentally unfit (solution: for

which a Medical certificate has

to be obtained on same day or a

day prior), Will is not signed by

the testator (solution: either of

two witnesses need to testify

before the court to confirm that

Will was signed in his/her

presence), etc. However, such

claims or challenges may delay

distribution of wealth but with

judiciary processes, the Truth

prevails for such illegal claims.

Due to such apprehensions, normal ly H igh Networ th Individuals or business house founders prefer creation of Private Family Trust over Will as it is a safer mode of succession.

Q. Is it appropriate for an estate plan to either give incentives or disincentives for behavior? Why or why not?

A. Many individuals have their faith, emotional expectations, r u l e s , v i s i o n s , c a r e e r e x p e c t a t i o n s , b e h a v i o r expectations from family members when they leave wealth behind for use and these are normally conveyed in various forms including oral wishes mentioned at various times/occasions, mentioned in the Will as 'wishes' which are just wishes and not conditions.

I n s o m e c a s e s , w h e n individuals do estate planning, they document a l l the i r expectations by way of rules or conditions by linking them to the 'incentive & disincentive'


Tête-à-tête

model, which we may also call as conditional bequeaths. There are many benefits to using an incentive trust, including increased control over your assets well after your death. Such trusts can inspire a strong work ethic in the named beneficiaries while helping p r e p a r e t h e m f o r t h e challenges that lie ahead. They can also prevent beneficiaries from relying on your money to live a comfortable lifestyle with little or no effort of their own.

On the other hand, many people use incentive trusts to p u s h t h e i r c h i l d r e n o r grandchildren into the family business. They may also use the trusts to set goals that are u n r e a l i s t i c f o r c e r t a i n beneficiaries. It is important to take such concerns into consideration when creating an incentive trust, as strong family resentment could develop as a result.

Q. How do you feel about banks or other financial institutions as trustees? Please give reasons for your feelings.

A. A private Family Trust is the

most preferred way of estate

planning for many HNI families

or large business houses,

parents of special children -

which assures future wealth

usage or distribution exactly as

per his/her wishes without any

legal tangle or disputes. This

"Trust" mode of succession

r e q u i r e s e f f i c i e n t a n d

trustworthy professionals to

administer each and every

aspect of Trust exactly as per

the wishes mentioned in the

Trust Deed including usage of

funds, professional business

control and management,

p r o t e c t i o n o f a s s e t s /

properties, safe investment

policy, accurate accounting,

governance, tax compliances,

legal matters for decision

making, other compliances

related to properties and Trust

Fund. In India, the succession

services industry is rising and

appo in t ing bank ing and

f i n a n c i a l i n s t i t u t i o n s i s

becoming need of the day.

Hence professional trusteeship

is the preferred way for most

HNIs, Corporate Founders, and

Business Houses due to a

professional role playing on

various aspects as mentioned

above.

ASK OUR PLANNER


Q. I am a business woman, aged

40, earning up to Rs 1, 50,000 p.m.

What are the tax implications on

my earnings? How should I protect

my earnings from tax?

Aruna Subramaniyam

A F r o m y o u r b u s i n e s s

i n c o m e , y o u c a n c l a i m

deductions for the allowable

expenses incurred towards

your business, to arrive at the

net profit. Then, based on

certain investments, expenses

and donations as listed below,

deductions can be further

claimed to arrive at the taxable

income. From the taxable

income, then the first Rs.2.5

lakh is exempt from tax and tax

is payable at 5% for income

between Rs. 2.5 lakh & 5 lakh;

20% for income between Rs. 5

lakh & Rs. 10 lakh and 30% for

income above Rs. 10 lakh. A

health & education cess 4% is

additionally payable on the tax

payable amount.

List of investments / expenses

/ d o n a t i o n s t o c l a i m

deductions:

a. Expenses / Inves tments under section 80C/80CCC/ 80CCD (capped at Rs. 1.50 lakh p.a. combined)

i. Annua l p remium pa id towards life insurance policy in the name of self, spouse & ch i ldren (deduct ion is applicable on premium paid which is less than 10% of sum assured)

ii. Investments in PPF (ideal long term safe investment vehicle for non-salaried; lock in period of 15 years)

iii. Investments in NPS (ideal retirement savings vehicle, lock in till retirement age)

iv. Investments in Sukanya Samriddhi Yojana (ideal investment vehic le for accumulating daughter's educat ion requirement /marriage needs)

v. Inves tments in Equ i ty Linked Savings Scheme (mutual fund category with a lock in of 3 years for each contribution, ideal for long term wealth creation)

Have you saved your earnings from tax?

ASK OUR PLANNER


vi. Tu i t i o n f e e s p a i d f o r

education of two children

(paid to any institute within

India, for a full time course)

vii.Repayment of Principal

portion of Home Loan EMIs

(inclusive of stamp duty,

registration fees & transfer

expenses)

viii. Investments in Tax Saving

FDs (which have a lock in

period of 5 years)

ix. Annual premium towards

annuity plan of any insurer

x. Additional contribution in

NPS (additional contribution

under section 80CCD(1b) of

Rs. 50,000 p.a., over and

above the Rs. 1.50 lakh limit)

b. Rental Expense – Deduction

is for the rent paid in case

self/spouse & child do not

o w n a h o u s e . A c t u a l

deduction amount that can

be claimed is determined by

a formula, capped at Rs.

5,000 p.m.

c. P a y m e n t o f M e d i c a l

I n s u r a n c e P r e m i u m –

Deduction of Rs. 25,000 p.a.

is applicable for premium

paid for self, spouse, and

dependent children. An

additional deduction of Rs.

25,000 is available towards

payment of premiums for

parents. This amount is

increased to Rs. 50,000 if

parents are senior citizens.

d. Repayment o f In te res t

portion of Home Loan EMIs –

Deduction upto Rs. 2 lakh

p . a . c a n b e c l a i m e d ,

depending on certain rules,

towards interest portion of

Home Loan EMIs.

e. Payment of Interest portion

of Higher Education Loan –

Entire interest portion of

Higher Education Loan EMI

can be claimed as deduction

for a maximum of 8 years;

which can be taken for self,

spouse or children.

f. Donations towards certain

Funds / Temples / Institutions

/ Political Party – Partial or

entire donation amount

t o w a r d s n o t i f i e d

funds/institutions/charities/p

olitical party is eligible to be

claimed as deduction.

ASK OUR PLANNER


provides this feature, which is

called SEP – Systematic Equity

Plan. It's the SIP equivalent for

listed securities like equity

shares or ETFs (equity / gold /

liquid). The only difference in

this case is that the minimum

unit for each transaction

should be 1 unit. If the gold ETF

trades at Rs. 2,800, your SEP

amount must be more than

this price to ensure you get at

least 1 unit.

An alternative can be to invest

in Gold Funds, which come

under Fund of Funds category

where you can set up a SIP for

Rs. 1,000 and you will be

allotted units even in decimals.

The Gold Fund invests in the

Gold ETF of the same AMC,

and hence expense ratio will

be on the higher side due to

e x p e n s e s o f b o t h t h e

schemes. You can also look

t o w a r d s i n v e s t i n g i n

Sovereign Gold Bonds if you

p l a n t o h o l d y o u r g o l d

investments for long term (8

years). Apart from tracking

gold price, you get additional

interest income of 2.50% p.a.

and there are no capital gains

on holding the bonds till

Q. Should I start SIP in gold ETF? Is

it worth for a long run?

Manish Shah

A. I t is important to f irst

understand the objective of

buying/investing in gold,

whether your needs are from

consumption or investment

point of view. Gold is a global

asse t c l ass and has

demonstrated low correlation

to asset classes like Equity. A

d i v e r s i f i e d i n v e s t m e n t

portfolio with a long term time

horizon can have allocation to

gold of not more than 10% -

15% of the total portfolio.

Gold ETFs are open ended

funds that are listed and traded

on stock exchanges. You can

transact in ETFs only if you

have a demat account and you

have to pay brokerage charges

for each transaction. You

cannot start a SIP for ETFs,

however some brokers allow

you to set up an automated

periodic transaction in ETFs,

by which you can invest a pre-

decided amount at each

interval (say monthly or

quarterly). ICICIdirect also

ASK OUR PLANNER


requirement is Rs. 25,000 p.m., you need to set up a SWP of the same amount. If and when you require additional funds due to unexpected events, you can withdraw the additional amount from your existing m u t u a l f u n d c o r p u s a s lumpsum withdrawal. This way, you are only taking out the amount that you actually require and the remaining corpus keeps on growing.

If the withdrawal amount is more than your requirement, you can re-invest the amount into the same fund or any other fund. However, practically, the excess amount remains in the savings bank account in most cases and gets used. Hence, to avoid such a scenario, it's better to reduce your SWP amount to the extent of your requirement.

It is also essential to identify the right category of mutual funds to start your SWP. If you decide SWP from equity funds, near term negative returns can adversely impact the longevity o f your corpus . SWP is recommended from Ultra-Short Duration / Low Duration /

maturity i.e. 8 years. The

b o n d s a r e o p e n f o r

subscription only during

specified intervals and listed

on the stock exchanges.

Q. As a senior citizen, I have taken

a SWP in my mutual fund, but I only

use half of the funds for my

personal use. Is there any way to

invest the remaining? Or should I

reduce my SWP? What do u

suggest?

Dhiraj Dutta

A. Starting a SWP (Systematic

Withdrawal Plan) from your

accumulated investments is a

s e n s i b l e s t r a t e g y f o r

individuals looking for fixed

and stable income, especially

for re t i rees . A carefu l ly

analyzed strategy of SWP

helps in meeting the periodic

requirement of funds from

your investments, and at the

same time lets the unutilized

corpus g row and en joy

compounding benefits.

Firstly, you need to evaluate y o u r r e q u i r e d m o n t h l y expense (net of any other i n c o m e e a r n e d ) . I f t h i s

ASK OUR PLANNER


find out the exact amount to be

repaid. Interest will keep on

accruing till the time the

amount remains outstanding.

However, after your pay off the

loan, the property will remain

in your name only, when the

bank removes the mortgage,

as you are alive. Once the

mortgage is removed, you can

then consider transferring the

property to your son by a

separate agreement.

Since your son cannot come to

India, he can get the property

registered in his name through

a Power of Attorney (POA).

The POA needs to be attested

by the Ind ian Embassy/

Consulate in the city/country

he resides, by paying certain

fees. Through the POA, your

son as an NRI can choose

someone else, like his parent

or a trusted friend and allow

t h e m t o c o m p l e t e t h e

transaction on his behalf. You

will need to prepare a POA

based on the rights it provides:

a. Special POA: where the

actions of the representative

(agent) is limited to a specific

purpose

Short Duration category of debt oriented mutual funds. It is also important to analyze your cash flow situation to assess the possible impacts from this strategy.

A c u s t o m i z e d a n d comprehensive retirement p l a n w i l l t a k e i n t o consideration these inputs and provide optimal strategies to achieve your needs. To know more about this, you may write to us at

[email protected].

Q. In case of reverse mortgage,

the term is completed and my son

wants to take the possession of the

property in his name but is in

abroad. He cannot make it to India

as he's busy and now a non-

resident. How can he take the

property on his name?

Nikunj Damani

A. It is possible to get back the

ownership of the property,

once the loan amount with

accrued interest and other

charges/fees are paid to the

lender. You will have to first

ASK OUR PLANNER


adequately for future financial

goals.

In order to determine the ideal

amount of health cover, you

can check history of medical

expenses or hospitalization

events in the family and take

appropriate cover. Ideally it is

recommended to have a Rs. 5-

10 lakh family floater basic

heal th cover, apart f rom

e m p l o y e r h e a l t h p l a n .

Additionally, you can opt for a

Rs. 10-15 lakh super top up

family floater in addition to

basic plan. Suppose you go for

a Rs. 5 lakh basic & Rs. 15 lakh

super top up. In this case if

anytime during the policy year

you incur an expense of Rs. 8

lakh, the basic plan gets

exhausted. However the

remaining amount (Rs. 8 lakh

less Rs. 5 lakh) can be claimed

under super top up plan. The

super top up policy comes at a

m u c h l o w e r p r e m i u m

compared to the basic plan, as

the policy has a deductible and

gets activated only on its

exhaus t ion . Hence , th i s

combination of basic plan +

super top up would work out

cheaper than taking the entire

b. General POA: where the

agent can carry out various

activities on behalf of the

p r i n c i p a l w i t h o u t a n y

limitation

Q. I a m 2 8 y e a r s , w o r k i n g

individual, having company's

health plan of Rs. 4, 00,000. Is it

necessary to purchase another

health plan? If so, how much of the

health plan should it be?

Rohini Sharma

A. It is always advisable to

h a v e a s e p a r a t e h e a l t h

insurance policy, apart from

the employer provided health

cover. I t is important to

understand that this is a benefit

offered to an employee and

can be stopped anytime in the

future. Once you switch job, it

might also be possible that the

new employer does not

provide such benefit. In such

instances, if you or your family

member is hospitalized or

diagnosed for any ailments,

the re lated expense can

a d v e r s e l y i m p a c t y o u r

finances and also pose a risk of

n o t b e i n g a b l e t o s a v e

ASK OUR PLANNER


cover through a basic family

floater.

Also, if there is a history of

certain critical illnesses in your

family, you can opt for a

standalone Critical Illness

cover, which provides either

lumpsum or periodic payout in

case the insured is diagnosed

with the illness covered in the

policy.

Q. Elaborate me on the concept on

NPS.

Reema Gupta

A. National Pension Scheme

(NPS) is a voluntary, defined

contribution based retirement

savings scheme. The NPS has

been des igned wi th the

objective to enable long term

systematic savings during the

subscriber's working life, in

order to create a sustainable

retirement corpus. It follows

the model of Mutual Funds,

where subscribers' funds are

pooled together and invested

across major asset classes:

Equ i t y (E ) , Government

Securit ies (G), Corporate

Bonds (C), and Alternative

Assets (A), as per the investor's

preferred allocation.

You can open an NPS account

o n l i n e b y f i l l i n g o n l i n e

application and providing KYC

details. You can also visit any of

the Point of Presence – Service

Prov iders and f i l l PRAN

( Pe r m a n e n t R e t i r e m e n t

Account Number) application.

Anyone who is in the age

group of 18-65 years can open

N P S a c c o u n t . B e i n g a

retirement product, early exit is

discouraged & is subject to

restrictions.

NPS subscribers also have the

option of choosing the Pension

Fund Managers (PFM) among 8

PFMs and have the option to

change the PFM once a year,

f r e e o f c o s t . N P S f u n d

management charges are

among the lowest at 0.01% of

the investments. Subscribers

also get to choose the %

a l locat ion in each asset

themselves or leave it to the

fund:

a. Active Choice – Allocation is defined by the user, with exposure to Equity (E) capped at 75%, which will keep on

ASK OUR PLANNER


Do you also have similar queries to ask our experts? Write to us at: [email protected].

reducing after subscriber is 50 years old. Investments in Al ternate Assets (A) are capped at 5%.

b. Auto Choice – Allocation is defined by the scheme, based on Risk Profile selected i.e. Aggressive, Moderate or Conservative. Exposure to Equity (E) is capped as per the r i s k p r o f i l e : 7 5 % f o r Aggressive, 50% for Moderate and 25% for Conservative and this % keeps on reducing ever year, after subscriber attains a certain age. There is no option for investing in Alternate Assets (A).

NPS investments suffer from

liquidity constraints. At the age

of 60, you can withdraw 60% of

the accumulated corpus in

lumpsum, and 40% of the

corpus has to be compulsorily

converted into annuity. If you

exit early, the ratio changes to

20% lumpsum and 80%

annuity. Partial withdrawals are

possible with restrictions only

upon certain events, after

staying with the scheme for 10

years.

NPS offers tax savings as

deduct ions f rom taxable

income under overall limit of

1.50 lakh under section 80C,

and additional deduction of Rs.

50,000 p.a. under section

8 0 C C D ( 1 b ) . 4 0 % o f t h e

lumpsum withdrawn at or after

the age of 60 is tax exempt,

while the rest is taxable as per

tax slab of the subscriber.

Annuity amounts received are

also taxable as per the tax slab

in the years of receipts.

MUTUAL FUND ANALYSIS


Investing in pharma funds

Indian equity markets have

been extremely volatile since

the start of 2018. After hitting

highs in January and early

February, there have been

b o u t s o f i n t e r m i t t e n t

corrections. While a smart

recovery took place in July,

September and October have

seen a pronounced drop

across indices. The earlier

recovery was narrow and

limited to a few stocks at the

bellwether index level while

broader markets continued to

lag behind and come off their

elevated bases. Quite a few

midcap and small cap names

suffered huge drawdowns.

Amid volatil ity, defensive

sectors like IT and pharma

have done bet ter by

preventing the downside.

While the IT sector had started

outperforming since early

2017, the pharma sector

witnessed increased investor

interest in the last few months.

We have been positive on the

pharma sector for the last few

months due to suppressed

valuations, a smart recovery in

t h e d o m e s t i c m a r k e t ,

normalisation of US market

related issues like compliance

and pricing pressure along

with current tailwind. Although

the growth trajectory has come

down from 20-25% to 10-15%

(on a normalised basis), we

believe visibility has improved.

Therefore, the pharma sector

offers a reasonable return

potential with better visibility.

In the previous few years, US related structural business issues like pricing pressure and U S F D A r e l a t e d p l a n t c o m p l i a n c e i s s u e s h a d contributed to the overhang on pharma stocks. However, in recent few months, pharma stocks have attracted investor interest. Expectations of a recovery in earnings (albeit on a lower base) have helped lift sentiments resulting in some pick-up after these stocks had been beaten down severely from their life-time highs. Favourable regulatory updates such as plant clearance and approvals have also aided sentiments. Q1FY19 results were a mixed bag but domestic



fo rmula t ion growth was strong. Rupee depreciation in recent months has acted as a further tailwind.

Most US centric pharma stocks witnessed a strong run up in FY12-16, thanks to stupendous growth in their US franchisee on the back of the impending patent cliff (scores of patent expiries) in the US supported by aggressive product filing as well as US focused capex and rupee deprec ia t ion. The pharma sector (NSE Pharma) traded between 30x and 35x one year forward PE band consistently during this period. However, in FY16-18, as the US situation became increasingly difficult due to compliance issues and persistent pricing pressure, there was a sharp de-

rating of the sector PE. While the Nifty PE currently is still t rad ing a t 25x one year forward, many stocks are trading below their 10-year average PE multiples.

We believe the pharma space offers a favourable risk-reward proposition. Investors can consider investments into pharma funds from a medium to long term perspective. However, being a thematic allocation, it should not exceed more than 5-10% of the overall e q u i t y a l l o c a t i o n . O u r preferred funds in this sector are Reliance Pharma Fund, UTI Healthcare Fund and SBI Healthcare Opportunit ies Fund.



Reliance Pharma Fund

Fund Objective:

The pr imary inves tment

objective of the scheme is to

generate consistent returns by

investing in equity/equity

re la ted or f i xed income

securities of pharma and other

associated companies.

NAV as on October 31, 2018 ( )` 155.8Inception DateFund Manager Sailesh Raj BhanMinimum Investment ( )` Lumpsum 5000

SIP 500Expense Ratio (%) 2.42Exit Load 1% on or before 1Y, Nil after 1YBenchmark S&P BSE Health Care - TRILast declared Quarterly AAUM( cr)` 2741

Key Information

June 5, 2004

Product Label:This product is suitable for investors who are seeking:

• Long term capital growth

• Investment in equity and equity related

securities of pharma & other associated companies

Investors understand that their principal will be at high risk

Performance:

The fund has been among the best performing pharma funds across time frames. It has d e l i v e r e d a c o n s i s t e n t outperformance by a large margin compared to the index as well as its peers (as of S e p t e m b e r 3 0 ) . I t h a s generated CAGR of 1% and 16.7% in the last three years and five years vs. -4.9% and 10.3% returns by benchmark, respectively (as of September 30).

Performance vs. Benchmark (CAGR Returns %)

16.8

-0.3

16 2

1

3.7

-6

9.5

0

-10

0

10

20

30

1 Year 3 Year 5 Year SinceInception

Fund Benchmark

Portfolio:

The portfol io comprises 21 stocks. Currently, the portfolio is tilted towards large caps (~57%) while midcap and small cap

stocks make up the rest. The fund displays conviction in its picks and a l locat ion is concentrated. Companies held by the fund have a strong domestic business profile and some US exposure as well,



with some companies having higher US geography exposure compared to others. The fund also holds some MNCs as well as companies into CRAMS and

bios imi lar bus iness. I t has diversified some part of the p o r t f o l i o i n t o h e a l t h c a r e companies as well.

%

9.4

8.9

8.3

7.2

6.8

6.7

6.5

6.1

6.0

5.3

Top 10 Holdings Asset Type

Divis Laboratories Ltd. Domestic Equities

Sun Pharmaceutical Industries Ltd. Domestic Equities

Dr. Reddys Laboratories Ltd. Domestic Equities

Sanofi India Ltd. Domestic Equities

Biocon Ltd. Domestic Equities

Abbott India Ltd. Domestic Equities

Cipla Ltd. Domestic Equities

Aurobindo Pharma Ltd. Domestic Equities

Syngene International Ltd. Domestic Equities

Lupin Ltd. Domestic Equities

%75.5

11.0

7.5

1.7

Top 10 Sectors Asset Type

Miscellaneous Domestic Equities

Finance - Investment Domestic Equities

Pharmaceuticals & Drugs Domestic Equities

Hospital & Healthcare Services Domestic Equities

%Whats In

%Whats out

Our View:

The fund's strong performance

since inception and a long

history are comforting factors

even though the fund holds

concentrated positions and has

considerable midcap exposure.

The fund management team is

able and has managed to

d e l i v e r a c o n s i s t e n t

performance. We feel that

investors can consider the fund

from a three-year perspective



You can view performance of other schemes being managed

by the fund manager of this scheme on the following link:

https://www.reliancemutual.com/InvestorServices/Factshe

etsDocuments/Fundamental-October-2018.pdf

Data as on October 30, 2018; Portfolio details as on September-2018 Source: ACE MF, ICICI Direct Research

NAV as on October 31, 2018 ( )` 86.1Inception DateFund Manager V. SrivatsaMinimum Investment ( )` Lumpsum 5000

SIP 0Expense Ratio (%) 2.52Exit Load 1% on or before 1Y, Nil after 1YBenchmark S&P BSE Health Care - TRILast declared Quarterly AAUM( cr)` 452

Key Information

August 1, 2005



UTI Healthcare Fund

Fund Objective:

The primary objective of the

scheme is to generate long

term capital appreciation by

investing predominantly in

equity and equity related

securi t ies of companies/

institutions engaged in the

healthcare services sector.

However, there can be no

assurance or guarantee that

the investment objective of the

scheme would be achieved.

Product Label:This product is suitable for investors who are seeking• Long term capital appreciation•Investment predominantly in equity and

equity related securities in the Healthcare Services sector


Performance:

The fund performance has been

subdued in recent times but its

l o n g e r t e r m p e r f o r m a n c e

continues to remain encouraging.

It has delivered -5.4% CAGR and

9.4% CAGR returns, respectively,

for three and five-year time frames

vs -6% CAGR and 9.5% CAGR

performance of the benchmark

over these time frames (as of

October 31).

Performance vs. (CAGR Returns %)

0.4

-5.4

9.4 1

7.6

3.7

-6

9.5

0

-10

0

10

20


Fund Benchmark

(Note - The benchmark was not in existence at the time of the fund's inception)

PortfolioT h e p o r t f o l i o f e a t u r e s companies that are relatively

more focused on domestic formulations, which is the fastest growing segment in



current scenario. The US generics business forms a comparatively lower portion of these companies' overal l business. The portfolio has more unique picks compared to some other funds. Currently,

there are 23 stocks in the portfolio, making it slightly less concentrated than some other funds. Overall, the portfolio is well placed with respect to current growth opportunities in the pharma sector.

%

10.0

9.9

8.7

6.9

6.6

6.3

5.5

4.8

4.8

4.4



Cadila Healthcare Ltd. Domestic Equities


Torrent Pharmaceuticals Ltd.


Alkem Laboratories Ltd. Domestic Equities

Ajanta Pharma Ltd. Domestic Equities

Domestic Equities

Sanofi India Ltd. Domestic Equities

Ipca Laboratories Ltd. Domestic Equities

Pfizer Ltd. Domestic Equities

%83.1

7.9

3.2

2.7

Top 10 Sectors Asset TypePharmaceuticals & Drugs Domestic Equities


Miscellaneous Domestic Equities

Finance - Investment Domestic Equities

%Whats In

%

0.1

1.5

Whats out

Unichem Laboratories Ltd.

Indoco Remedies Ltd.

Our View:The fund is on the aggressive side with higher allocation to midcaps than large caps. However, the

portfolio is well constructed in terms of diversification. Investors can consider the fund from a three-year perspective.



You can view performance of other schemes being managed by the fund manager of this scheme on the following link: https://docs.utimf.com/v1/AUTH_5b9dd00b-8132-4a21-a800-711111810cee/UTIContainer/UTI%20Fund%20Watch%20October%20201820181012-213004.pdf


NAV as on October 31, 2018 ( )` 122.7Inception DateFund Manager Tanmaya DesaiMinimum Investment ( )` Lumpsum 5000

SIP 0Expense Ratio (%) 2.64Exit Load 0.50% on or before 15D, Nil after 15DBenchmark S&P BSE Health Care - TRILast declared Quarterly AAUM( cr)` 1076

Key Information

July 14, 1999



SBI Healthcare Opportunities Fund

Fund Objective:

To provide investors with the opportunity of long-term capi ta l appreciat ion by investing in a diversified portfolio of equity and equity related securities in healthcare space.

Product Label:

This product is suitable for investors who are seeking• Long term capital appreciation • Equity investments in stocks of companies

in the healthcare sector


Performance:

The fund has outperformed its

benchmark over longer time

p e r i o d s b u t h a s

underperformed heavily in the

last year. The one year, three

years and f i ve - year

performance (as of October 31)

is -2.9%, -7.3% CAGR and

11.3% CAGR, respectively,

compared to benchmark index'

3.7%, -6% CAGR and 9.5%

CAGR. Nevertheless, decent

outperformance over longer

holding periods provides

comfort.

Performance vs. Benchmark (CAGR Returns %)

-2.9

-7.3

11.3

14.8

3.7

-6

9.5

0

-10-505

101520


Fund Benchmark

Portfolio

The portfolio has 25 stocks

with a near equal split between

large cap stocks and midcap/

small cap stocks. It has some

differentiated stock picks.

Recent additions indicate a

play towards US markets.

Overall portfolio stocks feature

a decent mix of domestic



facing and US facing

bus inesses . In te rms o f

portfolio construct, it is less

concentrated than our other

picks, with lesser weights to its

top picks as well.

%

11.6

10.4

8.1

6.8

5.9

5.5

5.1

5.0

4.6

4.2



Dr. Reddys Laboratories Ltd. Domestic Equities



Aurobindo Pharma Ltd. Domestic Equities

Strides Pharma Science Ltd. Domestic Equities

Torrent Pharmaceuticals Ltd. Domestic Equities

Biocon Ltd. Domestic Equities

Cadila Healthcare Ltd. Domestic Equities

Alkem Laboratories Ltd. Domestic Equities

%93.7

5.1

Top 10 Sectors Asset TypePharmaceuticals & Drugs Domestic Equities


%Whats In

%Whats out

Our View:The fund is more suited to investors who do not prefer heavy concentration among top holdings or in general.

However, the s igni f icant midcap bias makes the fund s l i g h t l y m o r e p r o n e t o volatility.



You can view performance of other schemes being managed by the fund manager of this scheme on the following link: https://www.sbimf.com/en-us/lists/schemefactsheets /october%202018.pdf

Data as on October 30, 2018; Portfolio details as on September-2018Source: ACE MF, ICICI Direct Research



Performance of other schemes managed by these fund managers:

1. Reliance Pharma Fund

10.39 -0.21 15.530.23 -6.18 9.210.54 11.49 17.86-0.26 11.34 14.02-2.70 8.31 ---1.51 9.90 12.51

-7.44 7.84 ---1.51 9.90 12.51-9.24 9.05 --

-1.51 9.90 12.51-- -- --

-1.51 9.90 12.51

Performance of other schemes managed by the fund manager - Sailesh Raj Bhan

Reliance Large Cap Fund(G)S&P BSE 200 - TRIReliance Close Ended Equity Fund-II-A(G)S&P BSE 200

Fund Name 1 Year 3 Years 5 Years

Top 3 Performing Schemes Reliance Pharma Fund(G)S&P BSE Health Care - TRI

S&P BSE 200

Bottom 3 Performing SchemesReliance Close Ended Equity Fund-A(G)S&P BSE 200Reliance Close Ended Equity Fund-B(G)S&P BSE 200Reliance India Opp Fund-Sr-A(G)

Note : The schemes may or may not have been managed by the same Fund Manager since its inceptionNote : The concerned Fund Manager manages 8 other schemes of the concerned Mutual Fund

18.61 12.89 --5.48 11.08 12.0710.39 -0.21 15.530.23 -6.18 9.218.37 7.53 8.127.33 7.22 7.86

-- -- ---1.51 9.90 12.51

-- -- ---1.51 9.90 12.51

-- -- ---1.51 9.90 12.51

Crisil Liquid Fund Index

Bottom 3 Performing SchemesReliance Capital Builder Fund-IV-C(G)

Top 3 Performing Schemes Reliance US Equity Opp Fund(G)S&P BSE SENSEX - TRIReliance Pharma Fund(G)S&P BSE Health Care - TRIReliance Inv-Qrtly-II(G)

Performance of other schemes managed by the fund manager - Kinjal Desai


Reliance India Opp Fund-Sr-A(G)S&P BSE 200

S&P BSE 200Reliance Capital Builder Fund-IV-D(G)S&P BSE 200




2. UTI Healthcare Fund

3. SBI Healthcare Opportunities Fund

-7.33 -7.45 11.000.23 -6.18 9.21


Top 3 Performing Schemes SBI Healthcare Opp Fund-Reg(D)S&P BSE Health Care - TRI

Performance of other schemes managed by the fund manager - Tanmaya Desai


3.87 -- --1.84 7.67 9.603.56 -- --1.84 7.67 9.603.09 -- --1.84 7.67 9.60

-7.10 7.39 12.84-3.86 12.22 17.63

-- -- --

-- -- ---- -- --

1.84 7.67 9.60


Top 3 Performing Schemes UTI Dual Adv FTF-III-II(G)CRISIL Hybrid 85+15 - Conservative Index

Bottom 3 Performing SchemesUTI Core Equity Fund-Reg(G)

Performance of other schemes managed by the fund manager - V. Srivatsa

UTI Dual Adv FTF-III-III(G)CRISIL Hybrid 85+15 - Conservative IndexUTI CPO-VII-III(1279D)(G)CRISIL Hybrid 85+15 - Conservative Index

CRISIL Hybrid 85+15 - Conservative Index

Nifty LargeMidcap 250 Index - TRIUTI Equity Savings Fund-Reg(G)Crisil Equity Savings IndexUTI CPO-X-II(1134D)(G)




This month on iCommunity

51

1. Expert event:

A special session with Mutual Funds Research

Analyst - Mr. Sachin Jain. Some questions asked by

customers were:

a) As a fresh/new purchase, which of the following

fund should I select from the same AMC family, as far

as financial growth is concerned, I'm bit confused as

to which fund is better for lumpsum purchase/

investment for atleast 3-5 years :

(1) Growth Plan

(2) Dividend Reinvestment Plan.

b) What are the advantageous elements of an aggressively shuffled Hybrid Fund

during high volatility like now and what are the disadvantages of a passively held

Hybrid Fund during a volatile share market ride?

2. Q & A Forum:

Seek answers to your queries regarding

investments and market updates for free.

Questions like:

> What is mutual fund NFO?

> What's the process to apply for rights issue?

> I have 50 shares of XXXX stock. Should I hold or sell?

What's more?

What is iCommunity?iCommunity is ICICIdirect's interactive platform where one can answer and get answered as well. With extensive range of forums, events & discussions iCommunity serves as an opportunity to learn more about financial world.

EQUITY MODEL PORTFOLIO


Our indicative large-cap equity model portfolio is delivering an impressive return (inclusive of dividends) of 130.29% till date (as on October 31, 2018) since its inception (June 21, 2011) vis-à-vis the benchmark index (S&P BSE Sensex) return of 96.87% during the same period, an outperformance of 33.42. This validates our thesis of selecting companies with sound business fundamentals that forms the core theme of our portfolio. We have revised stocks in our midcap portfolio. It continues to outperform, delivering 232.53% (inclusive of dividends) till date (as on October 31, 2018) vis-à-vis the benchmark index (CNX Midcap) return of 123.29%, an outperformance of 109.24. Our consistent outperformance demonstrates our superior stock picking ability as markets aligned to our view of favourable risk reward, good franchisee vs. reward-at-any-risk businesses.

We have always suggested the SIP mode of investment and still find a lot of merit in it as the preferred mode of deployment given the market conditions and volatility associated since the inception of the portfolio. We highlight that the SIP return of our portfolio has consistently outperformed the indices.

Following the same pace and opportunities in the market, our latest portfolio (large caps) remains overweight on BFSI sector – HDFC Bank (10%), HDFC Limited (9%), Axis Bank (6%) Bajaj Finance (6%) and SBI (6%). Affirming our view on consumption demand, Dabur (5%) and Marico (4%) continue to be part of our large cap portfolio.

We remain positive on auto, IT and pharma. We remain overweight to neutral on pure play defensives (IT, FMCG) as secular earnings coupled with sector rotation could lead to consolidation in near term valuations and offer stock specific opportunities.

We continue to remain underweight on metals and oil & gas with our only pick being Gail Ltd., which has a better risk reward opportunity. Among individual names, we recommend TCS in the IT space, HDFC and HDFC Bank in the BFSI space and ITC in consumer space.



Name of the company

Largecap Stocks

Model Portfolio

Largecap(%)

Midcap(%)

Diversified(%)

Maruti Suzuki 6.0 4.2

EICHER Motors 4.0 2.8

Mahindra & Mahindra (M&M) 4.0 2.8

HDFC Bank 10.0 7.0

Axis Bank 6.0 4.2

HDFC Limited 9.0 6.3

Bajaj Finance 6.0 4.2

SBI 6.0 4.2

Larsen & Toubro 6.0 4.2

UltraTech Cement 4.0 2.8

Dabur 5.0 3.5

Marico 4.0 2.8

ITC 6.0 4.2

Nestle India 4.0 2.8

TCS 6.0 4.2

Hindustan Zinc 6.0 4.2

Sun Pharmaceutical Industries 3.0 2.1

GAIL Ltd. 5.0 3.5

Largecap share in diversified 100.0 70.0



Bharat Forge 6.0 1.8

Exide Industries 6.0 1.8

Bajaj Finserve 8.0 2.4

Indian Bank 6.0 1.8

AIA Engineering 6.0 1.8

Kalpataru Power transmission 6.0 1.8

Ramco Cement 6.0 1.8

Kansai Nerolac 6.0 1.8

Pidilite Industries 6.0 1.8

Tata Chemicals 6.0 1.8

Bata India 6.0 1.8

Graphite India 6.0 1.8

Firstsource Solutions 6.0 1.8

Container Corporation of India 6.0 1.8

Syngene International 8.0 2.4

Arvind 6.0 1.8

Total 100.0 30.0

Midcap share in diversified 30

TOTAL 100 0 100.0

ICICI Securities has received an Investment Banking mandate from Mahindra & Mahindra and Indian Bank.



Performance so far since inception*

130.288282

232.5319463

159.1576672

96.87064644

123.2922623102.3767593

0

100

200

300

Large Cap Midcap Diversified

%

Portfolio Benchmark

*Returns (in %) as on October 31, 2018

Large-cap Portfolio Benchmark: BSE Sensex; Mid-cap Portfolio Benchmark: CNX Midcap; Diversified Portfolio Benchmark: Combination of BSE Sensex and CNX Midcap

Value of Rs 1,00,000 invested via SIP at end of every month

8900000

8900000

8900000

13046068.8

1

20512440.9

6

14411778.3

3

11335754.5

3

12419700.9

9

11917990.8

6

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

16000000

Largecap Midcap Divesified

|

Investment Value of Investment in Portfolio Value if invested in Benchmark

Start date of SIP: June 30, 2011; *Value as on October 31, 2018

QUIZ TIME


1. A _______ acts as a third party who technically owns the cash, stocks,

bonds, life insurance or real estate of the testator.

2. The most important requirement is to register a _______ for your

property, investments and bank related matters.

3. You can have an original and duplicate copy of a Will?

True or False?

4. A document that enables you to appoint someone to take decisions on

your behalf?

5. When a Will isn't drafted it is said to be _______ succession.

Note: All the answers are in the stories that have appeared in this edition of

ICICIdirect Money Manager. You may send in your answers at:

[email protected]. The answers will be published in our

next edition. The names of the earliest all correct entries will be published

too. So jog your grey cells and be quick to send in your entries.

Correct answers for the October 2018 quiz are:

Quiz Time

.2 R1.

P E

E T3.

A

N .4 I N S U R A N C E

S 5.

I N F L A T I O N

I U

6.C O P O U N D I N G

N T

Y

R E M

E

N

T

PRIME NUMBERS

Equity Markets


Domestic Equity Indices

Global Equity Indices

Sectoral Indices

57

31-Oct-18 28-Sep-18 Change (%)

CNX Nifty 10386.6 10930.0 -5.0%

CNX Midcap 17189.2 17154.4 0.2%

S&P BSE Sensex 34442.1 36227.1 -4.9%

S&P BSE 100 10681.7 11141.0 -4.1%

S&P BSE 200 4440.2 4631.6 -4.1%

S&P BSE 500 13881.7 14445.9 -3.9%


Dow Jones 25,115.8 26,458.3 -5.1%

S&P 500 2,711.7 2,914.0 -6.9%

Nasdaq 7,305.9 8,046.4 -9.2%

FTSE 7,128.1 7,510.2 -5.1%

DAX 11,447.5 12,246.7 -6.5%

CAC 40 5,093.4 5,493.5 -7.3%

Nikkei 21,920.5 24,120.0 -9.1%

Hang Seng 24,979.7 27,788.5 -10.1%

Shanghai Composite 2,602.8 2,821.4 -7.7%

Taiwan Weighted 9,802.1 11,006.3 -10.9%

Straits Times 3,018.8 3,257.1 -7.3%


S&P BSE Auto 19,881.1 21,476.5 -7.4%

S&P BSE Bankex 28,359.6 27,992.2 1.3%

S&P BSE FMCG 17,488.6 17,108.9 2.2%

S&P BSE Healthcare 14,726.6 15,025.3 -2.0%

S&P BSE Metals 12524.55 13278.8 -5.7%

S&P BSE Oil & Gas 13,246.9 14,855.4 -10.8%

S&P BSE Power 1,958.1 1,929.4 1.5%

S&P BSE Realty 1,679.8 1,702.9 -1.4%

S&P BSE Teck 7,234.6 7,730.7 -6.4%

PRIME NUMBERS


Debt Markets

Volatility Index (VIX)

58

31-Oct-18 28-Sep-18

VIX 19.79 16.99

Government Securities Yield (in %) Oct-18 Sep-18 Change (bps)

10 year 7.85 8.02 -17

5 year 7.83 8.07 -25

3 year 7.64 7.97 -33

1 year 7.38 7.55 -17

Corporate Bond Yields (in %) Oct-18 Sep-18 Change (bps)

AAA 10 year 8.90 8.90 0

AAA 5 year 8.90 8.87 3

AAA 3 year 8.73 8.74 -1

AAA 1 year 8.60 8.68 -8

AA 10 year 9.40 9.39 2

AA 5 year 9.48 9.39 10

AA 3 year 9.28 9.19 9

AA 1 year 9.11 9.10 1

Commercial Paper (in %) Oct-18 Sep-18 Change (bps)

12 Months 8.80 8.50 30

6 Months 8.10 7.90 20

3 Months 7.75 7.25 50

1 Month 0

Note : Data not available on Bloomberg for 1 month CP post 3/28/18

T-Bills Yields (in %) Oct-18 Sep-18 Change (bps)

91D TB 0

182D TB 0

364D TB 0

Note : Data not available on Bloomberg for 3,6 and 12 month Tbill post 3/28/18

PRIME NUMBERS

10-year benchmark yields (%) across countries


Macro-economic Indicators

Consumer price index (CPI)

Wholesale price index (WPI)Month

59

Countries 31-Oct-18 28-Sep-18 Change in bps

US 3.144 3.061 8

UK 1.437 1.573 (14)

Japan 0.127 0.130 (0)

Spain 1.545 1.498 5

Germany 0.385 0.470 (9)

France 0.749 0.802 (5)

Italy 3.427 3.147 28

Brazil 10.210 11.755 (155)

China 3.536 3.625 (9)

India 7.853 8.024 (17)

MF Investment Oct-18 Sep-18 Fy18

Equity 24047 11638 141769

Debt 27364 18686 370716

FII Investment Oct-18 Sep-18 Fy18

Equity -27622 -2029 22272

Debt -10019 2367 120387

Items Weights(%) Aug-18 Sep-18 Oct-18

Food&bev. 45.86 0.85 1.08 -0.14

Pan,tob& intox. 2.38 5.34 5.57 6.13

Cloth & Foot 6.53 4.88 4.64 3.55

Housing 10.07 7.59 7.07 6.55

Fuel & light 6.84 8.47 8.47 8.55

Misc. 28.31 5.52 5.65 6.73

CPI 100 3.69 3.77 3.31

Weights Aug-18 Sep-18 Oct-18WPI 100.0 4.53 5.13 5.28 Primary Articles 22.6 -0.15 2.97 1.79 Fuel & Power 13.2 17.73 16.65 18.44 Manufactured Goods 64.2 0.30 4.22 4.49

*WPI numbers are based on new series with 2011-12 as the base year’

PRIME NUMBERS

Commodities


Mutual Funds: Category Average Returns

Equity Funds Returns (in %)

Debt Funds Returns (in %)

Index of industrial production (IIP) Sector-wise growth rate (%)

Currencies and Commodities

Currencies

Sources for above data: Bloomberg, Reuters, CRISIL, MOSPI, ICICIdirect.com Research

60

Categories Sep-18 Aug-18 Jul-18 Weight(%)Mining 2.7 -3.6 -9.0 14.4Manufacturing 0.8 2.2 -0.8 77.6Electricity -2.6 3.1 1.4 8.0Overall 0.6 1.7 -1.6 100.0

*IIP numbers are based on new series with 2011-12 as the base year’

31-Oct-18 30-Sep-18 Change (%) StatusUSDINR 74.0 72.5 2.0% DepreciatedEURINR 83.9 84.0 0.0% AppreciatedGBPINR 94.5 94.6 -0.1% AppreciatedAUDINR 52.5 52.3 0.5% DepreciatedCHFINR 73.6 74.2 -0.8% AppreciatedJPYINR 0.7 0.6 2.2% DepreciatedCNYINR 10.6 10.6 0.5% Depreciated

31-Oct-18 30-Sep-18 Change (%)Crude ($/barrel) 73.9 83.0 -11.0%Gold ($/ounce) 1,222.9 1,192.5 2.5%

Multicap Midcap Large Cap Small cap ELSS6 months -8.59 -14.76 -6.38 -20.75 -11.581 year -6.27 -11.64 -3.93 -16.13 -8.333 year 8.65 8.19 8.07 8.58 8.825 year 15.11 20.87 13.41 22.83 15.57

Returns as on October 31, 2018

Liquid Debt ST Ultra ST Debt LT

6 months 6.49 4.88 5.45 3.57

1 year 6.70 4.26 5.85 0.73

3 year 6.94 6.69 7.02 5.59

Returns as on October 31, 2018

Printed by jasmine Art Printers Pvt. Ltd., A-737/3, TTC Ind. Area, MIDC, Navi Mumbai - 400 710.