Insurance companies keen to grab client details of independent financial advisors

 Source :Moneylife :Aaron Rodrigues :May 17, 2010 06:53 PM

Insurance agencies are providing incentives to IFAs to get your contact details—everything from emails to cell phone numbers

You trust them with your money, you have faith in them as they will guide you to the right financial path, you believe in them as they are completely independent and loyal to their clients. These of course are your independent financial advisors (IFAs). However, we now learn that some of these IFAs are being wooed by insurance companies to part with your contact details.

Companies like Reliance, HDFC Life Insurance, SBI Life Insurance, Aviva Life insurance, Birla Sun Life Insurance and other insurance majors are understood to be inducing IFAs with incentives to get contact details of clients. These are either meant to locate new customers for unit-linked insurance plans (ULIPs) or, simply to poach customers from other insurers.

An IFA gets paid for his co-operation in providing other details of a competitor’s clients to an insurance company. All your details, right from your telephone numbers to email IDs, even residential addresses, are also provided to the insurance company.
This is all part of a desperate attempt by insurance companies to keep selling ULIPs after a very public brawl between the Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA) brought ULIPs sales down to a trickle. Thanks to that imbroglio, many ULIP customers are worried about their investments and are having second thoughts of continuing with premium payments for a product plagued by high default rates. Insurers are trying to reach out to existing and potential customers to dispel doubts and fears.

Secondly, insurance companies need to find other ways to bring in new customers. It is not clear whether they can launch new ULIP products before the courts pick the winner of the SEBI-IRDA fight; so they have to sell more to their existing customer base and need to interact with them directly. Or they have to incentivise IFAs to lure investors from other insurance companies.

“Insurance companies have often come to us to either sell their ULIPs or ask for our contact list in order to create a greater database to sell them directly to the clients,” said a certified financial planner who wished to remain anonymous. He calls this “a routine affair.”
These deals are obviously not done transparently. “There is no paper trail or a black-and-white agreement,” says Neeraj Bahal, a certified financial planner (CFP), from Fasttrack Investments. Usually, an executive from an insurance company would meet an IFA and tell him about a chance for him to make some money by parting with his clients’ details for a fee. Depending on the deal, the IFA will either part with the data which the insurer uses to contact a potential customer; or, in some cases, the insurance executive will actually accompany the IFA to client meetings to sell a product. This enhances the credibility of the insurance product being sold.

We learn that many IFAs who sold mutual fund products are tempted by the kickbacks from insurance companies after their business was hit by SEBI's ban on entry loads. "Since mutual fund commissions were dwindling and distributors were affected, it created an opportunity for the sales of ULIPs,” said Harish Mohan, managing director, Time Financials (Chennai).
Some distributors have a different perspective. Jayant Vidwans, president of the Society of Financial Planners said, "Sharing of data with various organisations is not wrong.”

Not all IFAs are jumping in to grab the money. “If he is a serious advisor then he shouldn’t be selling his clients’ details. He shouldn’t do that as this is his bread and butter,” says Sumeet Vaid, founder and managing director, Freedom Financial Planners.

The function of an IFA is to provide the best possible financial option for his clients. However, when an IFA’s conduct is influenced by incentives, he becomes just like any other insurance agent and clients’ interests are compromised.

SBI seeks more time for higher NPA provisioning

 

 Source ; PTI :May 16,2010

 

New Delhi,  Stung by a severe fall in its Q4 net profit due to higher provisioning for bad loans, the country's largest lender State Bank has sought more time from the Reserve Bank to meet the new requirement of setting aside funds to the tune of 70 per cent of the bad loans.

The SBI request assumes importance as its profit dropped by a whopping 32 per cent to Rs 1,867 crore in the fourth quarter of 2009-10 even when it raised provisioning only marginally from 56.19 per cent to 59.23 per cent of its total non-performing assets on quarter-on-quarter basis.

SBI's competitor ICICI Bank has already got six months relaxation to meet the new norms beyond the RBI stipulated September 2010.

"The RBI has allowed us time till March 31 next to reach a provisioning coverage ratio of 70 per cent.

Tata Steel, SAIL explore joint venture

 
Mr S.K. Roongta

Source : BL Bureau:may18,2010

Kolkata, May 17
Tata Steel and Steel Authority of India Ltd (SAIL) have initiated discussions to float a joint venture to produce steel.
Giving this information here on Monday, Mr S. K. Roongta, Chairman, SAIL, said, “Discussion is at a preliminary level and nothing has been finalised as yet in regard to the details of the project such as capacity, investment, technology and the location of the plant.”
Tata Steel sources, when contacted, declined to comment.
ArcelorMittal too had evinced interest in joining hands with SAIL for a joint venture to produce steel, he said, adding that the details were being worked out. A recent report quoted Mr L. N. Mittal, CEO of ArcelorMittal, as saying that he was happy with the progress of projects in the country and in talks with SAIL for a joint venture.
There could be one joint venture or more than one with each of them, Mr Roongta said. He, however, declined to give any timeframe for the finalisation of the details and conclusion of the agreements.
Referring to the joint venture with Korean steel major Posco he said the two-million-tonne capacity plant, using Posco's patented Finex technology would be set up probably in Jharkhand, while the CNRO (cold-rolled non-grain-oriented) mill would be in Maharashtra. “The proposed CNRO plant would be different from the one being set up by the Korean steel giant itself also in Maharashtra,” he added.
Asked if the world steel giants were keen to join hands with SAIL because of the huge reserves of iron ore it had at its command, Mr Rungta replied, “it was for those companies to reply”.
Earlier, while addressing a meeting organised by the Merchants Chamber of Commerce, the SAIL Chairman pointed out that the government offer as early as 1990s inviting bids for IISCO, having an iron ore reserve of two billion tonnes, went unheeded.
Raw material prices
Expressing concern over rising raw material prices, the SAIL Chairman said that this was bound to have an impact on steel prices. Asked if SAIL would renegotiate prices with its customers, he said that there was no scope for such exercise in respect of long-term contracts accounting for less than 20 per cent of the total sale.
He also expressed concern over the rise in imports of steel to one million tonnes in April from the earlier level of around 500,000 tonnes a month, thus entailing nearly 100 per cent jump.
“While the international prices of raw materials have skyrocketed, there has not been any significant rise in steel prices,” he added.
International merchant banks appointed by International Coal Ventures Ltd had already done some due diligence and a few bids had been received. ICVL is a joint venture between CIL, SAIL, RINL, NMDC and NTPC, and Mr Roongta is its Chairman.

Ignore China at your own risk

Source : FC :Arun Kumar Jain May 17 2010

There is an old Chinese saying that the mountains are high and the emperor
is far away. 

Since China is such a huge country, many events occurring in one region remain unknown in other regions for a long time. In the globalised world, this proverb could also means that trends and events happening in China may remain hidden from the rest of the world for a long time!
We know that Chinese manufacturing has already made its way all over the world. Open any laptop, mobile phone, flat or plasma TV set, or video game. Irrespective of brand, it is most likely that the complex piece of technology has been made and assembled in China including the chips, battery, and casings.

Yet, somehow, the impression persists that Chinese goods are inferior and generally unreliable. Much of this emanates from publicity about Chinese sweat-shops and business practices. China has faced anti-dumping charges and duties in many countries. In 2006, it was taken to court at WTO by the US. Its companies have been marked for unsafe and dangerous exports of dairy and food products, lead-painted toys and toothpaste. No doubt, China is also one the world’s largest producers of copycat, counterfeit and pirated software, luxury goods, videos, and even medicines. Senates and parliaments have debated imposing penalties on China for currency manipulation, restrictive and unfair trade practices, and intellectual property rights.

But that is a small and superficial part of Chinese global industrial juggernaut. Most developed countries are running huge trade deficits with China. US alone had a trade deficit of above $300 billion in 2008. Most think that such trade surpluses are a result of low-cost platform that China provides. This is partly true, but not entirely.

As a rule, one must be respectful to any country that becomes No. 1 in any area. China is already the world’s leading exporting nation, having overtaken Germany in 2008-09. However, unlike Germany, the range of goods and industries in which Chinese firms have taken a lead position is astounding. Starting with commodity such as steel, the country also leads in production of electronics hardware, textiles, toys, shoes and leather products (including ladies handbags), telecom equipment, military hardware, solar panels for photo-voltaic conversion, electric bikes, batteries for electric cars, to name just a few. The country is slated to be amongst the top two producers of passenger aircrafts within a decade, and will give Boeing and Airbus a run for their money.

The point here is that it is time to review some of our embedded perceptions about China, and to understand how the country and its firms systematically scour global markets for business opportunities, technologies, and resource mobilisation. We already know of some Chinese firms such as SAIC (automobiles), CACC (commercial aircraft), Haier, Huawei, Lenovo, Goldwind and TTI that are aggressive in global markets.

Not many know of another quiet revolution happening around the globe, where Chinese companies are strategically buying majority shares in unlisted SMEs. These companies provide resources such as innovation capability, hi-technology and access to big consumers. Consider the following examples. Schiess Gmbh is a respected construction machinery maker in Germany having a history of more than 150 years in high-technology innovations. Though multinational in character, the company remained unlisted, privately owned entity. It specialises in machining components of very large size such as turbines or tunnel cutting. The company also boasts of micrometre precision even for lengths of 10 metres. Schiess was gradually taken over by Shenyang Machine Tool, the biggest tool manufacturer in China, specialising in small and medium-scale cutting machine tools. Schiess provides strategic depth to SMTCL in terms of product range and geographic coverage. The best part of this unpublicised acquisition is that the entire original German structure remains intact and Chinese ownership is hardly felt either by the customer or by its employees.

In a recent issue, the weekly Economist mentioned similar Chinese acquisitions of smaller Japanese companies. BYD, a Chinese car maker in which Warren Buffett has invested, acquired the Japanese dye maker factory of Ogihara for its unique capability for precision drill technology. The deal was never publicised. The weekly also mentions another acquisition of Laox by a Chinese appliances retailer Suning. The reasons for this acquisition are again strategic — learning to match famed Japanese quality and service standards at the supplier’s and distributor’s end, learning to innovate.

The writings are clear: disregard competition from China in innovation and high-technology areas at your own risk. Till not long ago, South Korea and Taiwan were considered sweatshops. Now they have some global leaders in their ranks (Samsung, LG, Acer). The Chinese have arrived and are coming in hordes.

Tanishq rediscovers the shine of platinum

Source :FC: Sangeetha G May 17 2010 , Chennai

Soaring gold prices have increased consumer interest in platinum, according to Tata’s jewellery chain Tanishq. Initially introduced in 2004, platinum had almost vanished from Tanishq stor­es a couple of years back due to continuous decline in sal­es. But the chain is now relaunching the white metal, mainly in its city stores.

Around 250 platinum je­wellery designs are being la­unched in select stores in a phased manner. In the first phase, the new collections will be launched in 11 stores. By the end of the year, 25 to 30 more stores will have th­em. Next year, the platinum jewellery will be launched in large town stores too.

“Thirty per cent of the new collection will be plain jewellery and the rest diam­ond-studded ones,” Sande­ep Kulhalli, VP, retail and marketing, Tanishq, told Fi­nancial Chronicle over pho­ne. “We will be investing aro­und Rs 10 crore on the inve­ntories, which will be procu­red from vendors,” he said.

Tanishq has also aligned itself with Platinum Guild India, the trade body that pr­omotes platinum sales in India. According to the Platinum Guild, the white metal sales have been registering year-on-year growth of 30-40 per cent.

“Unlike soaring gold pric­es, platinum prices are less volatile. Most jewellers now provide buy-back guarantee and purity assurance which increases the metal’s resale value,” said Rajesh Rajendran, trade manager (south) of Platinum Guild India

According to Kulhalli, the jewellery market in India is now mature enough for plat­inum. “Though we launch­ed platinum jewellery in 2004, sales went on declining every year and we almost withdrew the collections. There was some leftover sto­ck in a few stores,” he said.

The jewellery chain that clocked an annual turnover of Rs 3,600 crore last year, however, has not set a sales target for the white metal this year.

SBI Mutual Fund floats PSU fund

Source : Press Trust of India May 17 2010 , Mumbai

SBI Mutual Fund on Monday launched SBI PSU Fund, an open-ended equity scheme, which will invest in the stocks of public sector undertakings.

The new fund offer opens on Monday and will close on June 14.

“PSUs have a tremendous growth potential. They have helped in creating a diversified industrial base for the country. With their strong fundamentals and sound financials, they offer a good investment avenue,” Achal Kumar Gupta, managing director and CEO of SBI Mutual Fund, said.

SBI MF’s PSU Fund would invest in stocks of domestic public sector undertakings and in debt and money market instruments issued by PSUs.

The company’s chief marketing officer, R S Srinivas Jain, said that the company was targeting a collection upwards of Rs 1,000 crore from this PSU fund.

“PSUs have necessary scale and size which is critical at this stage of economic growth in India. PSU stocks are available at reasonable valuations despite being consistent wealth creators and holding strong potential for future growth,” SBI Mutual Fund chief investment officer, Navneet Munot, said.

In the present global context, PSU funds fit nicely into any equity portfolio from a risk-reward perspective, he added.

ISE to launch trading in Oct,2010

Source :FC : Rajesh Abraham May 17 2010

The stock exchange business in India is set to become fiercely competitive with yet another player announcing its tentative entry date.

The Inter-connected Stock Exchange of India (ISE), promoted by 13 regional stock exchanges, on Monday said it would launch live trading on its platform in October.

MCX-SX, promoted by Financial Technologies and MCX, is already awaiting regulatory approval for its launch.

Anticipating cut-throat competition, Bombay Stock Exchange (BSE), Asia’s oldest exchange, has reduced the deposit money for new membership from Rs 1 crore to Rs 10 lakh.

ISE on Monday said it has appointed Tata Consultancy Services (TCS) to provide software solutions for the trading platform. Financial Chronicle in its March 28 issue had reported that TCS bagged the deal to set up the trading platform for the exchange.

ISE will offer “cost-effective trading, clearing and settlement, risk management and surveillance support to over 800 trading members across 79 cities in India supported by its 9 branch offices,” managing director PJ Mathew said.

At one shot, 1,250 companies listed on the 13 regional exchanges will come for trading on the ISE platform. “There will be value unlocking for these stocks, which are more or less illiquid now,” he said.

Out of the 13 promoter exchanges, Kochi, Bangalore, Jaipur, Madras, Madhya Pradesh, Guwahati and Uttar Pradesh exchanges are active.