EPF amendments

EPF amendments to pursue India's social security pacts
New Delhi, Nov 20 (PTI) To bring into effect social security pacts signed by India with countries like France, Germany and Belgium, the government has initiated registration for "International workers" after amending the Employees Provident Fund Act.The amendment in the Act will include Indian employees who are posted to these countries and foreign nationals working in India into the ambit of the Employees' Provident Fund (EPF) scheme.The modifications to the EPF scheme were brought to effect from November 1, and so far about 30 Indian IT and Construction firms have completed necessary registration process of the International workers employed with them."The modifications to the scheme will benefit the Indian workers for availing their pension benefits right here in their country of origin. It will also allow for exportability of social security benefits accrued in these countries back to India," an EPFO official told PTI here.Since the social security pacts are on a reciprocity basis, citizens from France, Germany and Belgium would not be required to register themselves under the 'International worker' category and they can continue contributing to social security schemes in their country of origin.However, there is yet some time before the social security pacts could be actually brought to effect.Modifications to the Employees' State Insurance Act are still awaited to ensure continuity in insurance term for Indian employees covered under similar schemes in foreign countries.This figures as one of the major condition of the social security pacts with foreign nations. PTI

sunk cost

Definition
Money already spent and permanently lost. Sunk costs are past opportunity costs that are partially (as salvage, if any) or totally irretrievable and, therefore, should be considered irrelevant to future decision making. This term is from the oil industry where the decision to abandon or operate an oil well is made on the basis of its expected cash flows and not on how much money was spent in drilling it. Also called embedded cost, prior year cost, stranded cost, or sunk capital

work measurement

Application of time and motion study and activity sampling techniques to determine the time for a qualified worker to complete a specific job at a defined level of performance. Work measurement is used in budgeting, manpower planning, scheduling, standard costing, and in designing worker incentive schemes

proxy contest

proxy contest
A strategy that may accompany a hostile takeover. A proxy contest occurs when the acquiring company attempts to convince shareholders to use their proxy votes to install new management that is open to the takeover. The technique allows the acquired to avoid paying a premium for the target. also called proxy fight

STORY-OF-THE-WEEK

WOULD YOU DIE FOR ME?

A young man called Ramaswami died an untimely death. His parents, wife and nine year old son were crying bitterly, sitting next to his dead body. They all happened to be disciples of a holy man whom they called ‘Maharaj Ji’.When Maharaj Ji learnt that Ramaswami had died, he came to visit the family. He entered the house and found the family wailing inconsolably. Seeing Maharaj Ji, the wife started crying even louder. She sobbed saying, “Maharaj Ji, he has died too early, he was so young. Oh! I would do anything to make him alive again. What will happen to our son? I am so helpless and miserable.” Maharaj Ji tried to pacify the crying lady and the old parents, but the loss was too much for them to come to terms with so easily. Eventually, Maharaj Ji said, “Alright, get me a glass of water.” Maharaj Ji sat near the dead body and put the glass next to it. He said, “Now, who ever wants that Ramaswami should become alive again may drink this water. Ramaswami shall come back to life, but the person who drinks the water shall die!” Silence!“Come, did you not say that Ramaswami was the sole breadwinner of the family? Who would die instead of him? It is a case of fair exchange, isn’t it?”The wife looked at the old mother and the old mother looked at the wife. The old father looked at Ramaswami’s son. But no one came forward. Then Maharaj Ji said to the old father, “Babuji, wouldn’t you give your life for your son?” The old man said, “Well, I have my responsibility towards my wife. If I die who will look after her? I cannot offer my life to you.”Maharaj Ji looked questioningly at the old woman and said, “Amma?” She said, “My daughter is due to deliver her first baby. She will be coming to stay for a month. If I die who will look after her and the newborn. Why don’t you ask Ramaswami’s wife?”Maharaj Ji smiled and looked at the young widow. She widened her tear filled eyes and said, “Maharaj Ji, I need to live for my son. If I die, who will look after him? He needs me. Please don’t ask me to do this.”Maharaj Ji asked the son, “Well little boy, would you like to give your life for your father?” Before the boy could say anything, his mother pulled him to her breast and said, “Maharaj Ji, are you insane? My son is only nine. He has not yet lived his life. How could you even think of such a thing?”Maharaj Ji said, “Well it seems, that all of you are very much needed for the things you need to do in this world. It seems Ramaswami was the only one that could be spared. That is why God chose to take him away. So shall we proceed with his last rites? It’s getting late.”Having said that, Maharaj Ji got up and left.God’s plan is impeccable. Sometimes man is unable to understand God’s design. The time of entry and exit for each one of us, is in God’s hands. It is His prerogative alone to pluck the flower He wishes to. It is no body’s prerogative to question His will.In the words of Baba, “We tend a plant only when the leaves are green; when they become dry and the plant becomes a life-less stick, we stop loving it. Love lasts as long as life exists.”

GOLDEN QUOTE

When you know you need help, don’t delay in asking for it.

Quote of the Day

Quote of the Day
The government who robs Peter to pay Paul can always depend on the support of Paul.- George Bernard Shaw

Back Office

Term of the Day - back office
The administrative functions at a brokerage that support the trading of securities, including trade confirmation and settlement, recordkeeping, and regulatory compliance.
More generally, administrative functions that support but are not directly involved in the operations of a business, such as accounting and personnel.

ICAI to oppose Valuation Professionals Bill

THE government’s move to create a separate breed of corporate valuers in the country is set to face stiff resistance from the Institute of Chartered Accountants of India (ICAI), that trains and regulates the professional conduct of chartered accountants. The Institute is expected to tell the government that financial valuation of companies is best done by chartered accountants and this job be reserved for them. The government’s attempt is to institutionalise this profession with a well laid out code of conduct. It also wants to set up a panel of independent valuers that shareholders and clients would find credible. ICAI is now studying global valuation models, where CAs or their professional equivalents play the dominant role. The study results may be used to tell the government to reserve the work of financial valuation for CAs. The ministry of corporate affairs is expected to set up an expert panel to work out the modalities of a proposed law that will regulate the business of corporate valuation by creating a pool of government-recognised valuers. Even though the proposed panel of government-recognised valuers will comprise CAs in large numbers, the institute fears that such a move may affect its professional dominance, and also affect the quality of valuation work. Corporate valuation has always been a domain strength of chartered accountants because of their in-depth skills in auditing and finance. Corporate valuation is an essential part of initial public offerings, mergers and acquisitions, strategic corporate alliances and corporate restructuring. An official with ICAI said that world over, valuation of companies is done mainly by chartered accountants or certified public accountants (CPA), which is the statutory title of qualified accountants in the USA. The government’s expert panel that will decide on the draft valuation professionals bill is also likely to have representation from the ICAI, apart from other specialised bodies. The government intends to introduce the bill in the next session of Parliament, an official with the ministry of corporate affairs who did not want to be identified said. The proposed bill will seek to create a council of valuation professionals, which will set standards for the valuers, ensure for their training and monitor their performance.

Bonds

While you can probably pick up a lot about how the stock market works simply from following the news, the same cannot be said for the bond market. Because it is considered less exciting, the bond market doesn't get a lot of coverage. But it is essential that you understand the basics. Here are some of the most important bond-related terms.
Par Value
Par value is the amount that will be received at the time of maturity. It is also known as the principal, face value, or par value. Par value will vary depending on the type of bond. Most corporate bonds have a $1000 face value, while some government bonds will carry a much higher par value. Savings bonds can be purchased for sums under $100, so there is a wide variety of options. When the bond matures and the lump sum is returned, the debt obligation is complete. It is important to remember that bonds are not always sold at par value. In the secondary market, a bond's price fluctuates with interest
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rates. If interest rates are higher than the coupon rate on a bond, the bond will have to be sold below par value (at a "discount"). If interest rates have fallen, the price will be higher.
Maturity
Maturity is the length of time before the principal is returned on a bond. It is also called term-to-maturity. At the time of maturity, the issuer is no longer obligated to make interest payments. Maturities range significantly, from 1 month for some municipal notes to 40+ years for some corporate bonds. When evaluating your goals, keep in mind that bonds of different maturities will behave somewhat differently. For example, bonds with long-term maturities will be more sensitive to changes in interest rates. Shorter term bonds are more stable and, because you are more likely to hold it to maturity, are more predictable. There are some circumstances where a bond will be "called" before maturity .
Coupon
The coupon rate is the interest rate that is paid out to the bond holder. The name derives from the old system of payment, in which bond holders would need to
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send in coupons in order to receive payment. The coupon is set when the bond is issued and is usually expressed as an annual percentage of the par value of the bond. Payments usually occur every six months, but this can vary. If there is a 5% coupon on a $1000 face value bond, the bondholder will receive $50 every year. If two bonds with equal maturities and face values pay out different coupons, the prices of these bonds will behave differently in the secondary market. For example, the bond with a lower coupon rate will be less expensive because the bondholder is going to be getting more of his/her return from the return of principal at maturity than will the holder of a bond with a higher coupon. There are some bonds that do not pay out any coupons; these are called zero-coupon bonds .