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GOLDEN RULES FOR INVESTOR

CONITNUED FROM YESTARDAY......

Why has Warren Buffett been the best investor in history?

The Warren Buffett Way describes what is, at its core, a simple approach.
There are no computer programs to learn, no two-inch-thick Investment manuals to decipher. Whether you are financially able to purchase 10 percent of a company or merely a hundred shares, this book can help you achieve profitable investment returns.

We need to convert a country of savers into a nation of investors.

it contains the thinking and the philosophy of an investor that consistently made money
using the tools available to every citizen no matter their level of wealth And investment principles do not change. Warren Buffett’s investment approach never changed. He has continued to follow the same principles outlined below:-

• Think of buying stocks as buying fractional interests in whole
Businesses.
• Construct a focused low-turnover portfolio
• Invest in only what you can understand and analyze
• Demand a margin of safety between the purchase price and the
company’s long-term value
The advice may not make you rich, but it is highly unlikely to make you poor

Stop predicting the direction of the stock market :-

Stop trying to predict the direction of the stock market, the economy, interest
rates, or elections, and stop wasting money on individuals that do this
for a living. Study the facts and the financial condition, value the company’s
future outlook, and purchase when everything is in your favour. Many people invest in a way similar to playing poker all night without ever looking at their cards.

Warren Buffett enjoys both teaching and writing about business in general
and investing in particular. He taught on a volunteer basis when he
was twenty-one at the University of Nebraska in Omaha.

"LEADERS ARE THE READERS , READERS ARE THE LEADERS"

TO BE CONTINUED TOMORROW...........

“ENJOY TODAY ,WAIT FOR BEAUTIFUL TOMORROW ”

what are weakness and strength you find while reading this article/section ?
please give your comment below (in comment label) as how can this article/section be improved further ? it will GIVE THE OPPORTUNITY TO MEMBERS OF “ jab we met CA “ BLOG TO IMPROVE THEMSELVES. WAITING FOR YOUR REPLY....

SATBIR SINGH
PRESIDENT
JAB WE MET CA
REDEFINING PROFESSIONALISM......

“LEADERS ARE READERS, READERS ARE THE LEADERS”

e-payment clearance

Real time e-payment clearance on cards

Customers may soon be able to make payments towards utility services or equated monthly installments on loans on a real time basis. The Reserve Bank of India is looking at expanding the reach of the electronic clearing service to a national scale. Currently, this service is available only at 15 centres, where the central bank manages the clearing house operations. Addressing a conference on mobile payments, the central bank’s executive director, RB Barman said: “While the national electronic fund transfer takes one to two hours for settling the transaction, this would help finish the process in a few seconds. We are also looking at releasing the final guidelines on mobile banking over the next fortnight.” Mr Barman said that 53 banks have joined in the pilot project for cheque truncation services in the National Capital Region. He added that RBI may extend the cheque truncation service to facilitate clearing of cheques across different cities. Customers can transfer funds from one bank to another, through the ECS i.e. by routing the transaction through a clearing house. Typically, many corporates use the ECS for bulk transfers of salaries, interest and dividend payments. Retail customers at banks can also use the ECS debit facility to make utility payments towards telephone or electricity, taxes or loan installments.
On the other hand, the NEFT system helps transfer funds across India between bank branches, but the funds get credited within few hours of the execution either on the same day or on the following day, depending upon when the transaction is settled. Till date, 46,363 branches of 87 banks are covered under the NEFT system, which RBI is looking at widening further. The central bank launched the NEFT system in November 2005. While RBI gives banks the option to decide whether they wish to join the network for real time gross settlements, rolling out ECS systems on a national scale will automatically bring all branches under a single platform. PayPal, a Singapore-based online payments solution provider, is also in talks with RBI. The central bank has sought from PayPal, certain insights on how online payments are regulated globally, with special reference to know-your-customer norms. Also present at the conference, TechProcess Solutions’ CEO, Bikramjit Singh, which acts as a intermediary between banks and merchant establishments, said, “most of the transactions still cater to the higher-end needs of customers and in that sense, electronic payments have still not penetrated to the ground level masses. The main deterrent under mobile banking is the lack of regulatory norms as of now.”

Investment in higher education

Govt to ease investment norms in higher education

Private and foreign corporate investment may soon get to flow into Indian higher education with the government considering a move to reform policy that hinders such financing.

Currently, it is not possible for non-profit companies under Article 25 of the Companies Registration Act — like industry associations — to set up an institution and get university status and recognition from the University Grants Commission.
Educational institutions in India can be set up only by trusts, societies and charitable companies, but the profits cannot be taken out of the institution and have to be reinvested. Not only does this restriction hamper expansion, it also encourages promoters to resort to creative accounting to take out profits from the institutions.
Now, under encouragement from an influential political ally from Maharashtra, the United Progressive Alliance government is expected to clarify this clause, sources told Business Standard.
There is also renewed hope for a Bill allowing foreign universities and institutions into India to be tabled in Parliament, judging by Human Resources Development Minister Arjun Singh’s remarks at a conference of state education ministers two days ago.
The Left parties were the principal opponents of the Foreign Education Providers (Regulation) Bill, which was cleared by the Cabinet in 2007 but never introduced in the Lok Sabha although it was listed in the agenda papers.
“We have tried to accommodate some of the concerns. We will try to introduce the Bill in the Lok Sabha session beginning August,” Singh said. The Bill seeks to regulate foreign institutions setting up campuses in India. A contentious issue is whether caste-based reservations would apply to these institutions.
Both Oxford and Stanford Universities have evinced interest in setting up campuses in India but have been hesitant about moving forward until they are clear about the degree of regulation, funding and other issues.
Experts say the moves would provide clarity on funding of higher education institutions by overseas entities. "This will probably provide funding clarity for foreign institutions like charitable organisations or NRIs wanting to set up facilities in India.
The passage of the Bill shall give a boost to foreign universities and enhance competition in the country. It will be survival of the fittest, although care will have to be taken to ensure that fly-by-night operators are kept out and quality is maintained," said Vidya Yeravdekar, principal director, Symbiosis Society.
Those supporting the opening up of the higher education sector to foreign investment argue that India should open its doors to investment before the World Trade Organisation forces it to do so.
However, the HRD ministry has argued that WTO pressure for foreign investment in education may take time coming as several Islamic countries are opposed to such a move.
Whether the Foreign Education Bill will involve the appointment of a regulator or afford more autonomy to foreign institutions will have to be decided by the government before it is tabled in Parliament.

source :-business standard ,27.07.2008

slapp on colour TV picture tubes

Anti-dumping duty slapped on colour TV picture tubes

source- BUSINESS STANDARDS , 27.07.2008

The government today slapped a steep anti-dumping duty on imported picture tubes for colour TVs from China, Malaysia, Thailand and Korea after it found that these countries were “dumping” the product into India.
The duty will range between Rs 878 and Rs 4,369 on a cathode ray colour picture tube (CPT) depending on the size of screen.
The companies affected by the notification of the Department of Revenue include Samsung (Malaysia), LG Philips (Korea), Irico Group Electronics (China), Shenzen Samsug (China).
The decision was based on preliminary findings of the designated authority in the commerce ministry. The findings showed that the goods were being exported to India below their normal value, causing “material injury to the domestic industry”. It was also found that the “injury had been caused by the dumped imports from the subject countries”.
The consumer electronics industry reacted sharply to the government’s decision saying it would make colour TVs more expensive.
“The prices of colour television are set to go up due to the duty,” said Consumer Electronic Appliances Manufacturer Association (CEAMA) President R Zutsi. However, the impact would differ depending on the size of the TV.

A soft ruling

A soft ruling on software export turnover
Most software companies claim deduction under Section 10A/10B of the I-T Act, which postulates deduction in respect of the profits and gains derived from the export of computer software.

Recently, the Income-tax Appellate Tribunal (ITAT), Bangalore, passed a favourable decision in the MphasiS Ltd case, granting relief to the assessee in respect of the deduction under Section 10B of the Income-Tax Act, 1961.
According to the Tribunal, where the assessee is not involved in providing technical services, expenses incurred in foreign currency need not be excluded from the export turnover.

Section 10A, 10B
Most software companies claim deduction under Section 10A/10B of the Act, which postulates deduction in respect of the profits and gains derived from the export of computer software. The deduction would be in the proportion that the export turnover of the undertaking bears to the total turnover of the undertaking.
‘Export turnover’ is defined in Section 10A/10B. The definition provides that telecommunication, insurance and freight attributable to the delivery of software outside India would be required to be excluded from the export turnover. Further, expenses incurred in foreign exchange in providing technical services outside India should also be excluded.

Facts of the case
The assessee, a company involved in software development, claimed deduction under Section 10B. The assessee took a position that since it is not involved in providing technical services, it need not exclude foreign currency expenditure from the export turnover for computing the deduction under Section 10B. The assessee took an alternative argument that, if excluded from export turnover, such expenses should also be excluded from the total turnover.

The arguments

The assessing officer (AO) took a call that the expenditure incurred in foreign currency was in respect of the assessee’s personnel deputed outside India for providing technical services outside India and concluded that expenses incurred in foreign currency should be excluded from the export turnover.
Further, as total turnover is not defined in the Act, the AO did not make similar exclusions from the total turnover. The Commissioner Appeals confirmed the AO’s action as being correct.
On appeal before the Tribunal, the assessee explained that the expenses incurred in foreign currency in respect of the assessee’s personnel deputed outside India were in connection with the development of software and software development services provided by the assessee from India. The assessee is not engaged in the business of providing technical services outside India, the Revenue was not able to dispute these facts.

The Tribunal’s observations
The Tribunal relied on the Bangalore ITAT’s decision in the Infosys Technologies Ltd case, and concluded that since the assessee is not involved in the business of providing technical services outside India, expenses incurred in foreign currency for providing software development outside India need not be excluded from the export turnover.
Further, the ITAT also emphasised that incentive provisions should be construed liberally and in a manner so as to promote the object and not frustrate it.
In respect of exclusions to be made from total turnover, the ITAT, relying on the Infosys and Tata Elxsi decisions, held that based on the parity of basis between export turnover and total turnover, the exclusions made from export turnover should also be made from total turnover.

A good precedent
The ITAT had analysed the fact pattern before delivering its judgment on the interpretation of law.
In these types of cases, it is important for the assessee to substantiate that it is engaged only in software development and software development services that do not involve any element of rendering technical services.
Typically, the statement of work (SoW) and contracts with clients go on to illustrate the true facts of the case. The fact is that many software companies are predominantly involved in offshore delivery and onsite work only for data collation and installation. Hence no technical services are being rendered. The same may not be true of a product company which may be involved in customisation of the same, which would tantamount to technical services.
This decision lays down a good precedent on this issue. We now see an alarming trend of the need to take every matter before the ITAT even when it could have been very well adjudicated at the Commissioner Appeals level.
Also, there is this trend where the Revenue appeals against every judgment which is pro-assessee, thereby increasing the whole cost of litigation, which at the very first instance could have been avoided. A complete overhaul of the adjudication process by the Revenue authorities is needed.

source :Business Daily from THE HINDU group of publicationsSaturday, Jul 26, 2008

(The author is a Bangalore-based chartered accountant.)

MONEY MARKET

CONITNUED FROM YESTARDAY......
Certificate of Deposit: It is a short term borrowing more like a bank term deposit account. It
is a promissory note issued by a bank in form of a certificate entitling the bearer to receive
interest. The certificate bears the maturity date, the fixed rate of interest and the value. It can
be issued in any denomination. They are stamped and transferred by endorsement. Its term
generally ranges from three months to five years and restricts the holders to withdraw funds
on demand. However, on payment of certain penalty the money can be withdrawn on demand
also. The returns on certificate of deposits are higher than T-Bills because it assumes higher
level of risk. While buying Certificate of Deposit, return method should be seen. Returns can
be based on Annual Percentage Yield (APY) or Annual Percentage Rate (APR). In APY,
interest earned is based on compounded interest calculation. However, in APR method,
simple interest calculation is done to generate the return. Accordingly, if the interest is paid
annually, equal return is generated by both APY and APR methods. However, if interest is
paid more than once in a year, it is beneficial to opt APY over APR.
Banker’s Acceptance: It is a short term credit investment created by a non financial firm and
guaranteed by a bank to make payment. It is simply a bill of exchange drawn by a person and
accepted by a bank. It is a buyer’s promise to pay to the seller a certain specified amount at
certain date. The same is guaranteed by the banker of the buyer in exchange for a claim on
the goods as collateral. The person drawing the bill must have a good credit rating otherwise
the Banker’s Acceptance will not be tradable. The most common term for these instruments
is 90 days. However, they can very from 30 days to180 days. For corporations, it acts as a
negotiable time draft for financing imports, exports and other transactions in goods and is
highly useful when the credit worthiness of the foreign trade party is unknown. The seller
need not hold it until maturity and can sell off the same in secondary market at discount from
the face value to liquidate its receivables.
An individual player cannot invest in majority of the Money Market Instruments, hence for
retail market, money market instruments are repackaged into Money Market Funds. A
money market fund is an investment fund that invests in low risk and low return bucket of
securities viz money market instruments. It is like a mutual fund, except the fact mutual funds
cater to capital market and money market funds cater to money market. Money Market funds can be categorized as taxable funds or non taxable funds.
Thus there are two modes of investment in money market viz Direct Investment in Money
Market Instruments & Investment in Money Market Funds.

TO BE CONTINUED TOMORROW.......

TOPICS OF TOMORROW WILL BE......

Functioning of Money Market Account.................

“ENJOY TODAY ,WAIT FOR BEAUTIFUL TOMORROW ”

what are the weakness and strength you find while reading this article/section ? please give your comment below (in comment label) or mail me at casatbirgill@gmail.com, as how can this article/section be improved further ? it will GIVE THE OPPORTUNITY TO MEMBERS OF “ jab we met CA “ TO IMPROVE THEMSELVES. WAITING FOR YOUR REPLY..........

SATBIR SINGH
PRESIDENT
JAB WE MET CA
REDEFINING PROFESSIONALISM......

IT TAKES TIME ...

THE ROSE BUDA ......IT TAKES ITS OWN TIME

young boy wanted to learn music. He had a good voice and he wanted to train to become an Indian classical singer. He visited a renowned music teacher and expressed his desire to him. The teacher conducted a preliminary test on him to guage his talent and decided to give him a try. The boy asked, “Guruji, how much time would I need to train under your guidance, how soon can I become a singer?”The teacher said, “Well, that depends upon how much work you are able to put into it. But one thing you can be sure of, its not going to be a short time, because singing is about learning more and more each day, even as long as you live.” The boy, smiled inwardly and thought, “I’ll soon learn everything there is to learn. I am determined.” A few months later, the boy asked the same question, “Guruji, how much time....?”The teacher said, “Do you see that rose bud on the bush outside. The number of days it takes to unfold its petals to become a full grown flower, that’s the number of years you’ll take to learn.”That evening, the boy went and squatted near the bush. Slowly and carefully he tried to open up the petals of the rose bud to make it look like a flower. However, hard he tried, some of the petals got torn and mutilated; others fell off. The inner most that were just beginning to form; got crushed into the stamen. The next morning the teacher saw the plight of the rose bud and understood what had happened. He called the boy and said, “Look son, this bud, it seems, was in a hurry to bloom from a bud into a flower overnight. It seems to have outdone its potential to grow. Just look at the state of its petals; it shall never become a perfect rose flower now. Hurry has now become a cause for worry. Had the bud grown naturally it would have been beautiful at each stage of its life. It would have spread fragrance all around and its beauty would have lent splendour to our garden. But, perhaps the bud was in too much of a hurry... ”By now, the boy was in tears. He wept, “Guruji, it’s not the buds fault. I pried it open. I am the cause of its present state. I have made a mistake. I cannot give back its babyhood to the bud, but I promise to let you shape me as you wish. Please unfold me petal by petal at your own pace and will.”

SANJAY TANDON

Golden Quotes

Calmness and tolerance act like air-conditioning in a room; they increase man’s efficiency...

Warren Buffet's-Golden Tips for Investor

CONITNUED FROM YESTARDAY......

How can the average investor employ Warren Buffett’s methods?

Love everything :-

Warren Buffett is, first of all, very content. He loves everything
he does, dealing with people and reading mass quantities of annual and
quarterly reports and numerous newspapers and periodicals. As an investor
he has discipline, patience, flexibility, courage, confidence, and
decisiveness. He is always searching for investments where risk is
eliminated or minimized. In addition, he is very adept at probability
and as an odds maker. I believe this ability comes from an inherent love
of simple math computations, his devotion and active participation in
the game of bridge, and his long experience in underwriting and accepting
high levels of risk in insurance and in reinsurance. He is willing
to take risks where the odds of total loss are low and upside
rewards are substantial. He lists his failures and mistakes and does not
apologize. He enjoys kidding himself and compliments his associates in
objective terms.

Become wonderful listener :-

Warren Buffett is a great student of business and a wonderful listener,
and able to determine the key elements of a company or a complex
issue with high speed and precision. He can make a decision not to
invest in something in as little as two minutes and conclude that it is
time to make a major purchase in just a few days of research. He is always
prepared, for as he has said in an annual report, “Noah did not start
building the Ark when it was raining.”


willingness to learn:-

Two examples of Warren Buffett’s willingness to learn and adapt
himself are:-

1) public speaking

In the 1950s Warren invested $100 in a Dale Carnegie course “not to prevent my knees from knocking when public speaking but to do public speaking while my
knees are knocking.”

2) computer usage

To be able to play more bridge, early in 1994 Warren learned how to use a computer so he could join a network where you can play with other individuals from their locations
all over the country. Perhaps in the near future he will begin to use some of the hundreds of data retrieval and information services on companies that are available on computers today for investment research.

Do not care stock market :-

Warren Buffett stresses that the critical investment factor is determining
the intrinsic value of a business and paying a fair or bargain price. He doesn’t care what the general stock market has done recently or will do in the future. He purchased over $1 billion of Coca-Cola in 1988 and 1989 after the stock had risen over five fold the prior six years and over five-hundredfold the previous sixty years. He made four times
his money in three years and plans to make a lot more the next five, ten, and twenty years with Coke. In 1976 he purchased a very major position in GEICO when the stock had declined from $61 to $2 and the general perception was that the stock was definitely going to zero.

Identify “Circle of Competence” :-

How can the average investor employ Warren Buffett’s methods?

Warren Buffett never invests in businesses he cannot understand or that
are outside his “Circle of Competence.” All investors can, over time,
obtain and intensify their “Circle of Competence” in an industry where
they are professionally involved or in some sector of business they enjoy
researching. One does not have to be correct very many times in a lifetime
as Warren states that twelve investments decisions in his forty year
career have made all the difference.

TO BE CONTINUED TOMORROW.......
what are weakness and strength you find while reading this article/section ?
please give your comment below (in comment label) as how can this article/section be improved further ? it will GIVE THE OPPORTUNITY TO MEMBERS OF “ jab we met CA “ BLOG TO IMPROVE THEMSELVES. WAITING FOR YOUR REPLY....

SATBIR SINGH
PRESIDENT
JAB WE MET CA
REDEFINING PROFESSIONALISM......
“ENJOY TODAY ,WAIT FOR BEAUTIFUL TOMORROW ”