Author Archives: Equity Right

Equity Right

What Happens when Businesses go Bankrupt.

What Happens when Businesses go Bankrupt.


How India handles Bankruptcies:

In recent years, India has changed the way it handled bankruptcy. From a bad bankruptcy system to one where simple laws and regulations are in a position to assist promoters, company owners, businessmen, and other stakeholders to deal with bankruptcy in an organized manner. For example, the new Insolvency and Bankruptcy Act specifically outlines how bankruptcies can be managed and how companies can be liquidated to benefit all stakeholders in the process of bankruptcy rather than tackling losses. The law was enforced due to huge pressure from small companies. Since the government had a perception of the very relaxed process towards large promoters and well-known industrialists.


What is the process of Bankruptcy:

Towns Insolvency Act of 1909 will be the rule if you live in Chennai, Mumbai, or Kolkata. However, the Provincial Insolvency Act of 1920 applies to other places in India. You can apply for insolvency under Provincial Insolvency Act if you don’t repay the debt of more than ₹500. You need to fill out an application. The court may approve or reject the request after evaluating the criteria for filing. A temporary recipient will take possession of the debtor’s property until any decision. The court is entitled to stay in legal proceedings against the debtor’s property or assets if the application is accepted. In other words, creditors may order you to be against further recovery efforts.

Once your request is accepted, the property will be handed, to the receiver’s designation by the court. The representative will then distribute the assets to creditors. The debtor will be released from bankruptcy after the process is completed by the courts. There will be no restrictions to establish and live with no concern for previous creditors. One can ask for a minimum maintenance charge for your survival as a result of the ongoing court proceedings. However, several restrictions apply to you until released from the case. The unreleased insolvent under existing law cannot act as a director, public servant, elected or sit or cast a vote as a representative of any local authority. However, you are not completely free if you have government debt or involvement in any fraudulent activity.


Righteousness to all the stakeholders:

Although, there is no reason to worry when companies go bankrupt. However, bankruptcy does not give a good experience for promoters, employees, or shareholders. The employees are dismissed immediately after fraud. While the shareholders risk losing their money. The rules around the world often fail to protect shareholders. As per corporate law, shareholders are paid only, if money is left after the payment of the creditors.

The debtholders are assisted to recover their money and the legislation focuses to ensures that the assets are disposed to the new owner. Moreover, there are no explicit guarantees in the legislation specifically to protect employees. Although, provisions exist for the fair disposal of the assets and the payment of dues to the employees. Hence, it is always important that shareholders and employees must exercise their proper research before investing or joining the companies.


Cases of the bankruptcies in the Aviation sector:

After reviewing the Indian aviation industry, which can show how bankruptcies can become messy and trigger pleasant turnarounds. For instance, Kingfisher is an example of how bankruptcies can turn the company if not managed. For the last decade, the case has dragged on, without an end to the afflicted creditors or the former staff. The former promoter lives abroad. The case of Spice Jet is, on the other hand, an example of how to deal with severe financial distress well. To turn the companies around somewhere is the main objective of Jet Airways, which seems to be trying to move towards some kind of resolution after a prolonged fight to tide the crisis. In a nutshell, all stakeholders should make sure that they do not rest when companies go bankrupt and focus instead on discovering their feet again.


Analysing the law on Airline Insolvency in India



Easy Steps to File a Bankruptcy Petition in India

Stamp duty and registration laws for rentals in Maharashtra

How this pandemic will change the Auto Industry?

How co-working spaces can restart post lock down


Investing in real estate

Investing in Real estate.

Ways to Invest in Real estate.


The very first thing that immediately springs to mind as you talk of investing in real estate is your house. However, when it comes to property, real estate owners have plenty of other choices because they are not just tangible assets. Property investment can improve an investor’s overall portfolio investment-and-return profile, providing better risk-adjusted returns. The real estate sector typically has low volatility, particularly as contrasted with equities and bonds. Real estate is therefore valuable in contrast with more conventional income streams. Investing in real estate provides diversification, passive income, and tax benefits. Following are the ways to invest in real estate.


1. Ownership:

Ownership of property is one of the most famous ways to invest in real estate. People with expertise in decorating and construction, have the experience to handle residents. It takes substantial resources to fund initial operating expenses and to support empty months.
Pros: Rental properties generates regular income. There is a good appreciation of real estate.
Cons: Managing tenants can be tedious. The tenants can also damage the property.


2. Real Estate Investment Groups:

Individuals that already own rental immovable property without wanting to run it invest in real estate investment groups. It necessitates capital and funding. A business owns or builds a series of apartment blocks or condos in a traditional real estate investment scheme. It also enables buyers to acquire them through the firm, thereby completing the market. The business takes a proportion of the monthly rent in return for fulfilling certain administrative activities. A typical investment community lease for the property market is in the interest of the owner. All units share a part of the lease to protect against rare vacancies.
Pros: It is a much more realistic alternative to property that also generates revenue and respect.
Cons: For real estate investment companies, there is a vacancy chance, whether it is distributed through the company or if it is unique to the investor.


3. House Flipping:

House flipping is for individuals with extensive real estate research and marketing knowledge. It requires resources and the capacity and the ability to do, or oversee, repairs as needed. Real Estate traders frequently look for under-priced properties. And later sell them at profit in less than 6 months. Pure real estate flippers sometimes do not engage in property development. Hence, the investment will either have the inherent interest required to make a profit with no changes, or they will remove the properties from consideration. Yet another type of flipper helps make money by purchasing affordable properties and creating wealth through renovation.
Pros: Flipping has a smaller period in which money and energy are bound together in a house. Yet, there will be large gains, sometimes over shorter periods, depending on the business conditions.
Cons: Trading in real estate needs a greater understanding of the business combined with a chance. Uncertainty in the market can leave traders with short-term losses.


4. Real Estate Investment Trusts (REITs):

Investors may like access to real estate assets without a conventional land sale. It requires Investment capital. A REIT is generated when a company utilizes capital from creditors to purchase and manage rental assets. REITs are purchased and sold at big exchanges. Like traditional dividend-paying securities, REITs are a good commitment to buyers on the capital exchange who want monthly income. Taxes such as the capital gains tax are not favourable to gaining significant amounts of creditors. This is one of the indirect ways of investing in real estate without actually buying a property.
Pros: REITs are dividend-paying securities. Its main assets comprise commercial real estate property with long-term, cash-generating contracts.
Cons: REITs are simply reserves, which ensures that the risk correlated with conventional rental assets does not occur.


5. Real Estate Limited Partnerships:

It is an organization formed to purchase and hold a diversified portfolio, or even sometimes only one. RELPs only operate for a limited number of years. An accomplished real estate consultant or construction company serves as the general contractor. International buyers are then found to provide funding for the real estate scheme, in return for an equity stake as limited partners. The partners will obtain annual dividends from the income produced by the property of the RELP. But the real payout arrives when the assets are sold.


6. ETFs:

An exchange-traded fund is a portfolio of securities or bonds of mutual investment. ETFs are comparable to mutual funds and index funds that offer with same large diversification and small total costs. When you are gearing up to invest in property but also want to widen, it may be a wise decision to participate in a real estate ETF.


7. Real Estate Mutual Funds:

Real estate mutual funds invest mainly in REITs and property development companies. Firstly, they provide the opportunity to achieve diversified access to comparatively low sums of capital. Secondly, depending on their approach and diversifying goals, they provide creditors with a far larger range of assets that can be accomplished when purchasing individual REITs. These funds are liquid. Moreover, the institutional investors get the strategic and analysis knowledge offered by the company. This can provide specifics on the properties obtained and the management viewpoint on the feasibility and success of particular real estate transactions as well as on the type of assets.

Investing in real estate
Real Estate



What RERA timeline extension means for developers, homebuyers?



Equity Right

Why do commodities Exchange Exist?

What are commodities Exchange?

The Commodities exchange allows traders to buy and sell goods. It includes both simple goods and manufacturing goods. The function of Commodity exchange is to provide a centralized marketplace where commodity producers and commercials can directly sell to those who want them for consumption or manufacturing. Commodity future exchange connects buyers and sellers easily. It helps businesses to enhance while there is a buyer for every seller. It makes the economy much more efficient with standardized prices for a commodity. Commodities are into two broad categories: hard and soft. Hard commodities consist of natural resources that must be mined or extracted, whereas soft commodities are agricultural products such as grain, meat, dairy, and livestock. Investors use these commodities to diversify their portfolios. Commodities are considered a risky investment class.
It is affected by many uncertainties and risks, such as epidemics, natural calamities, or other unpredictable circumstances. Individuals can invest in commodities through futures, options, exchange-traded funds, and contracts. There are six major commodity trading exchanges in India:

1. Multi Commodity Exchange (MCX)
2. National Commodity and Derivatives Exchange (NCDEX)
3. National Multi Commodity Exchange (NMCE)
4. Indian Commodity Exchange (ICEX)
5. Ace Derivatives Exchange (ACE)
6. The Universal Commodity Exchange (UCX)

Types of commodities:

1. Metals Commodities – This includes the trading of precious metals such as gold, silver, copper, and platinum. Gold is traded by investors as it is the safest way to diversify their portfolios against any uncertainties like inflation or currency devaluation.

2. Energy – This includes commodities like gasoline, natural gas, heating oil, and crude oil. Normally, oil price fluctuates due to the increasing demand for energy commodities. However, individuals entering energy commodities should be aware of economic reforms, a shift in production by OPEC, and new advances in technology.

3. Agriculture commodities – Commodities such as soya, rice, wheat, coffee, corn, cocoa, sugar, and cotton come under agriculture commodities. These commodities are bought by the wholesaler or a firm that uses them as a raw material. 

4. Meat and livestock – This includes commodities like feeder cattle, pork bellies, lean hogs, and live cattle. The trading of livestock is not popular in India. It is mostly done in the US, UK, China, etc.


Ways to Invest:

A derivative Contract (Financial Instrument) is a contract between two parties for deriving value from any underlying assets. As the Price of underlying assets changes, the value of underlying assets also fluctuates.


The types of Derivative Contracts:

Options – Options are contracts where the buyer has a right to buy or sell a particular security at a predefined price. It is commonly known as a strike price. However, they don’t have obligation to buy or execute the option. One who executes the contract is known as the option writer.
Forwards – It has an obligation in the contract, which is unstandardized and not traded on stock exchanges. Forwards are available over the counter only and cannot de traded directly on market. However, forwards can be customized according to the parties involved. Forwards contract has third party risk. There are chances that the other party defaults in the payment or delivery of the product are not done as there is no regulatory party involved.  
Futures – This is the same as forwards, but futures are standardized and allow holders to sell or buy security at a specified price and date. Futures can directly be traded on market.
Swaps – It involves swapping of obligations between the two parties depending on cash flows which are depended on the rate of interest and agreed upon at the period while entering into the contract. Here, one cash flow is fixed and the other depends on the market interest rate and usually, these rates are swapped.

The best way to trade in commodities is through futures contracts. An agreement to buy or sell a commodity in the future agreed on a date at a pre-determined price.


Role of commodity market:

1. Food security – Farmers can use the future market more effectively by selling at a future price by fixing the price. This will ensure that they are not susceptible to future fluctuation in price. Hence, food security can be achieved using the commodity market. Many times commodity markets help farmers in hedging the commodity which is prone to uncertainties and risk. 
2. Agricultural ecosystem – Substantial amount of food grains are lost in the transmission process. The commodity market helps farmers, brokers, middlemen, and customers. If the food gains are not stored properly they get attacked by rats and pests.  
3. Aggregation – Currently, the middleman acts as an aggregator which is not a transparent mechanism. So, commodity exchange provides an organized and guaranteed mechanism for all the essential commodities.
4. Hedging and risk – One important role and function of the commodity market is to hedge and distribute the risk in the market.
5. Speculative excess – The commodity market absorbs speculative excess risk in the market, especially in the spot market. It helps various retail investors to participate in the new asset class.


What are Gold funds and what are the benefits?


Equity Right

How this pandemic will change the Auto Industry?

How this pandemic will change the Auto Industry?


Most car manufacturers are appearing brave even when some manufacturing facilities are shut down due to pandemic. The pressure to move to Bharat Norm 6 is escalating. People have reduced the travel when they’ve realized how much they can do it from home.

The automobile sector was bracing for a harsh year even before Corona virus wreaked havoc with their best laid plans.

The sector is set to reshape in ways that will have a significant effect on the eight million workers around the world who work for auto companies.


The effect due to COVID-19:

For the first time in history, the Indian automobile sector reported almost Nil monthly sales. Car producers disclose nil performance numbers on account of the closing of manufacturing plants in April 2020. This is because of a national lock down in the battle against the corona virus pandemic. Changes in consumer behavior and the effects of COVID-19 is expected to affect car sales. COVID-19 has resulted in disruptions in the supply chain and its effect on employment, wages, and so far most showrooms have seen few visitors. When sales tend to drop, closing down underutilized plants can be a concern of survival. According to Peter Wells, founder of the Center for Automotive Industry Research, several of the major plants in Europe are still going to struggle.

This will be challenging for companies that manufacture smaller cars that appear to be less competitive, such as Volkswagen, Renault, and Fiat. Nissan intends to slash about 300 billion Yen in annual operating expenses and book investment charges while the COVID-19 pandemic further disturbs the automotive industry’s revenues. According to Toyota Motor Corp, the terrible economic effect of the COVID-19 pandemic was almost over, vehicle sales can be recovered in its largest markets by the end of the year. Toyota has cash stockpiles of $74.4 billion, the result of a decade-long effort to cut costs. According to Frank Witter, Chief Financial Officer of Volkswagen AG, nobody has a clear understanding of the period and intensity of the crisis. Some auto manufacturers are collecting cash and slashing expenses to ensure that they will withstand a protracted downturn.



The move to BS-VI standards is to put pressure on the auto sector. Besides, the effects of BS-VI emission regulations and job losses will affect sales. The problems of the automobile industry are growing. For the Indian car industry, FY20 has been a difficult year. After facing market crunch due to GST and the upcoming BS-VI standards, the corona virus desperately hampers vehicle production in all categories. Combined with the market restriction arising from BS-VI standards, this has generated a cascade impact for the sector that is unlikely to bounce back soon.


Electric vehicles:

Electric vehicle sales have been remarkably robust though, lock-down sales of petrol and diesel-driven automobiles have slowed. As much of Europe closed in March, auto sales in the continent dropped by more than half. However, the registration of Electric vehicles grew by 23 percent. Sales of electric vehicles fell 31 percent in April. This is nothing compared to the overall European automotive industry, which dropped by 80 percent. Auto producers may not be as inspired to market hybrid vehicles over the coming months. Alternatively, they will be forced to drive SUVs that yield much greater revenues and are cheaper to market now that fuel costs have collapsed. Everything is going to rely on policy opportunities and regulations.

China and Europe are more encouraging than the United States to embrace electric vehicles. Electric Vehicles are also much more costly than petrol and diesel-driven. In this crisis, few customers will be able to buy it without subsidies. The government will create a scrapping program to promote battery-driven cars with tax cuts to subsidies. The emphasis needs to be on investing in regional manufacturing around the supply chain, upgrading skills, and building up EV Infrastructure throughout the nation.


About the stock:

The Nifty auto index has under-performed the market since January as it is not hopeful of any near term improvement in the sector prospects. Mahindra & Mahindra has a Market cap of Rs.47,402.93 crore. Its 52 weeks low is Rs.245.40 and its 52 weeks high is Rs.683. M&M’s closing price was Rs.381.30 and was 4.78 percent low. Maruti Suzuki’s 52 weeks low is Rs.4,001.10 and its 52 weeks high is Rs.7,758.70 having a market cap of Rs.1,54,032.08. Maruti Suzuki’s closing price was Rs.5100.40 and was 0.27 percent low.



Auto sector seeks special package to save industry from Covid-19 crisis

Equity Right

How to invest in Insurance sector with tax planning.

How to invest in Insurance sector with tax planning.


Investment in insurance tools is a major part of everyone’s investment planning exercise. Although, it is important for people to be covered by certain risks, it is equally important that they buy insurance in which they accomplish their long term financial goals and helps them in tax planning. In recent years, the insurance sector has been at the forefront since the government opened it for private companies. Private insurers launched many new products and a healthy competition. This is good for investors because they have more options and a range of investments, but on the other hand it’s just as bad as it creates more uncertainty and the possibility of losing money occasionally.


All insurance products have their own pros and cons, so before making an investment decision investors should carefully understand all the aspects of the policy. Diversification and the development of a multi-product portfolio is one way to fix this challenging situation. Investors need to have knowledge of the various insurance products offered in the market and the positive or negative implications of these products. A stable insurance basket should contain Life Insurance cover, Medical Insurance cover, and Retirement/ Pension plans.


Life insurance:

The policy is available in 3 broad categories viz. endowment plans, life insurance plans, i.e. term plans and ULIPs. Endowment policies provide insurance and have some maturity returns. In this plan, maximum of the funds are invested in corporate bonds, Government securities, and various instruments from the money market. They deliver a healthy and stable return from 5% to 8%.


Term insurance is basically an insurance scheme. The premium covers the risk factor (mortality charges), revenue, and operating expenses in this package. This is why the premium paid for insurance policies is low as compared to the endowment plans. The premium charged in term insurance has no savings element and therefore no maturity benefits are paid to the individual.


Funds in the ULIPs scheme are mostly invested in the stock market and corporate bonds. The main distinction between ULIPs and standard insurance policies is the allocation of funds in stocks. These schemes pledge better maturity benefits, as stock markets have historically produced better returns over the long term. Nevertheless, investments in stocks are likely to lose money to a certain degree. Investors should opt for life insurance policies as soon as possible as age is one of the key determinants of the risk premium decision. As the income of an individual rises, they should increase their cover. It is normally said that the cover must be approximately 4 to 5 times of the annual income. An individual must fusion all three plans to limit the cash outflow and also to get the balance returns and reduce the risk.



Medical Insurance cover:

Medical compensation plans cover the massive medical expenses that occur in the care of an illness. As daily medical treatment is expensive, every person must have a medical insurance policy. Until accepting a policy, most health insurance plans do not cover chronic illnesses. It is therefore necessary to comprehend your medical policy in depth and invest early to offset the policy’s full grievances.



Future Provisions with Pension and retirement plans:

Insurance pension schemes offer life insurance to the investors when they are in the earning stage and monthly retirement benefits once they retire. ULPP is a type of pension plan where the funds are invested in market instruments. Investors can invest in ULPPs early, say at the age of 20, because they can afford to lose equity funds. Later, they can transfer their funds slowly into capital security schemes.



Tax planning:

While the majority think of tax planning as a process which reduces their tax liabilities, investing in the right instruments at the right time is also important in order to reach your financial goals as per your maturity period i.e. short, medium, and long. Basically, four different forms of tax planning exist.



Tax planning under Short Range:

It is a term used for tax preparation, which is used and conducted at the end of the financial year. Investors use this strategy to find ways to shrink their tax payments officially at the end of the financial year. Suppose if you decide at the end of the financial year that your taxes are high relative to the previous year, you might want to diminish it. Assessments can be done to get benefits under Section 88. Short-term tax planning does not require long-term obligations, though substantial tax savings can also be promoted.


Tax planning under Long Range:

The long range tax strategy is one that the taxpayer implements over the year. This policy does not provide immediate tax relief benefits as short-term plans do, but maybe beneficial in the long term. Typically you will begin investing at the start of the new financial year and continue to invest for a period of more than one year.


Tax planning under Permissive Measures:

Permissive tax planning means managing investments under different terms of India’s taxation legislation. There are various legal provisions in India that include exemptions, deductions, and benefits. Like Section 80C provides various types of exemption on tax savings investments.


Tax planning under Purposive Measures:

Purposive tax planning states planning of your investments for specific purposes thus ensuring that you can make the most of your investments. This includes the correct selection of investment instruments, the creation of an appropriate plan to substitute (if necessary), and Revenue and business assets diversification depending on your residential status.

In a nutshell, spending on Income tax is a moral and financial obligation which we all bear as citizens of India. The taxes we pay are used for our country’s growth. In a way, the taxes we pay are used for our benefit. According to the different income slabs, we each pay a different percentage of taxes, but all Indian people are entitled for the benefits equally.




Equity Right

What RERA timeline extension means for developers, homebuyers?

What RERA timeline extension means for developers, homebuyers?


The Finance Minister, Nirmala Sitharaman announced that due to the effect of COVID-19 pandemic, the time limit for the completion of real estate projects will be extended by up to six months. The Center is advising both states and union territories to treat the Pandemic as an ‘act of God’ and increase the project completion dates. Although, this will offer help for real estate developers in the execution of projects because no lawsuits may be filed against them, nor will they be liable to pay any fines. Homebuyers are not likely to receive any specific relief in the form of interest / EMI exemptions to buyers. The law safeguards their confidence in seeing their homes completed within a few months. With that directive, if and when provided by the particular states, all projects in those states will be extended. 

Effect on sector:

The lock down, placed on 25 March to curb the spread of corona virus, has a significant effect on the real real estate and building firms. Huge number of employees coming from villages in other states have relocated back when the lockout started. It will provide some extra space to ventures when they slowly resume activities after the lock down constraints have been relaxed. 

What are the penalties:

In real estate regulations, investors are subject to a penalty if they refuse to follow the building completion deadlines. They will have to pay a fee equivalent to 10% of the expense of the project if they do not report their current projects with the Real Estate Regulatory Authority (RERA). Likewise, homebuyers are often liable for not paying any payments owed to the builder. Regulators may be asked to extend the deadline given by real estate developers to complete the project so that they will not default on incurring fines. Likewise, homebuyers may even be given an option to compensate whatever balance is owed to the builder.


According to Sitharaman, these steps would de-stress real estate developers and enable the execution of ventures such that homebuyers can receive booked houses with new deadlines. Developers asked for an extension of the RERA time limits and for Covid-19 to be included in the force majeure provision. The housing authority in Maharashtra has already given an extension of three months. The Government has declared liquidity support to non-bank borrowers by offering partial or absolute guarantees value of Rs 75.000 crore on investment in debt securities issued by these companies to enable them to generate capital. Non-banking finance companies, the major borrowers in the real estate market, have seen bad loans grow and are unable to collect money. Regulatory bodies in states including Maharashtra, Gujarat, Tamil Nadu, and Uttar Pradesh have provided both builders and customers an extension. Madhya Pradesh also extended the deadline by six months for the completion of listed projects to be finished after March 15. 


Benefits to builders:

These benefits will allow six months for the project registration and execution of projects. Due to lack of immediate regulatory corrective action under the RERA Act 2016, there is also a risk that certain real estate developments may be delayed leading to litigation, etc. This growth eventually contributes to the delays in the delivery of apartments to homebuyers who have spent their entire savings in their new home. A notable change is the acceptance by the developer community of expanding project execution targets and other regulatory compliances under RERA by six months. They will be able to deliver homes to the home buyers within the new time frame. 


Benefits to buyers:

The Government has declared that the extension of deadlines will safeguard the interest of customers when they get the house. Although, delayed by six months. Delay of only a few months is better than not having the home at all. Homebuyers will have to face further six months delay in delivery of the property. The consumer will have to face the extra burden of charging the rent for six months. Construction is related to the payment package for most customers. If there is no on-site construction activity for 3 months, there will be no claim for payment from the developer to the customer for that duration. Indirectly, the customer will get relaxation. Furthermore, the support given to the builders is just for the timetables of the project and not on the financial side. They will have to start meeting their borrowers financial commitments.



Weekly market update (11th May – 15th May)

Equity Right

What are Gold funds and what are the benefits?

What are Gold Funds and what are its benefits?


Gold funds are unique type of mutual funds, through which investors can invest directly or indirectly in Gold Reserves. They can invest in the gold producing stocks, mining company stocks or in physical gold. Gold funds are the most convenient asset to invest, without the risk of theft or paper work as they are in digital form. This fund is kind of an open ended investment, where investor can issue or redeem at any point of time based on the units which they hold. However, their price directly depends on the metal (gold). Some investors use gold funds to hedge and diversify their portfolio and protect against uncertain economic condition. Many investors diversify around 10 to 20 percent of their portfolio by investing in gold funds. Golds funds are regulated by the SEBI and it is ideal for investors who are risk averse.


Types of gold funds available across globe for investors:

Gold Mining Funds:

In this, funds are invested in stocks of the mining companies and returns depends on the performance of these stocks. However, investment does not get affected due to any fluctuation in economy as gold price is affected mainly due to the fluctuation in demand and supply of gold. Gold exchange traded funds were first introduced by Benchmark Asset Company in India. This funds basically invest in the gold through Demat account. Returns and value of the investments totally depend on the price of gold. Investment in Gold Fund of Fund is same as exchange traded funds as in this, investments are made in particular unit of the Exchange traded funds without opening the Demat account.


Main purpose of Gold Funds:

Main purpose for investors to invest in gold funds is to grow their investment value and create wealth in whatever period the investment is made with protection against the market fluctuation. Price of Underlying asset varies according to change in demand of gold and at the time of maturity returns are calculated on current gold price. If gold price is increased, it gives more returns at the time of redemption.


What are tax charges for Gold Funds?

Normally, the tax which is charged on the Gold Jewellery is applicable to the Gold Mutual Funds schemes. But, taxes also vary according to the tenure. If investments are made for less than three years than revenue is added to the total gross income and considered as short term. But if investments are made for more than three years than 20 percent tax is applicable with indexation norms and CESS charges. However, if capital gains is through exchange traded funds (Gold ETFs), tax exempt is given. No TDS is applicable to Golds Mutual funds. During the time of buying or selling of funds, same tax is applicable as on Gold Jewellery.


Benefits of Gold Funds:

Flexibility in investment:

Gold funds allows investors to invest according to their convenience, comparing to the physical purchase of the gold. Investment can be made as low as Rs 500 and even small income class can also invest in this fund rather than purchasing physical gold which costs higher than these funds and gives flexibility. Gold mutual funds are one of the safest investment as these funds are regulated by Security exchange board of India and they continuously monitors the performance of this type of funds so that investors can analyse their future returns. Gold Funds are also safer than holding physical assets (Gold) as it is in de-materialized form.


Highly liquid:

Gold funds are high liquid funds as investors can redeem them in short term and are also protected against the uncertain economic situation. However, during market hours only, it can be buy or sell and net asset value of previous day is considered at the time of selling and trade is offset in one or two working day. To balance the overall portfolio, investor may always choose gold funds. Gold price is not directly affected to one investor’s overall investment and stocks in which investment is made. Gold fund is considered as one of the safest investment with good returns.


Some finest Gold Mutual Funds in India:

Axis Gold Funds has given return in a year up to 26% and for 3 to 5 year period 4%.
SBI Funds has given returns up to 22% in a year and 6% in 5 years.
HDFC Gold Fund has given returns of 22% in a year and 6% in 5 year period.




Equity Right

Importance of Financial Literacy. Why it is a must have today

Importance of Financial Literacy.


One of the main concern is Financial literacy in this present situation, as it is directly affects the country’s economic development. India stands way behind in financial literacy level comparing to other countries. As per the media reports, India accounts for nearly 20% of the world’s population, but 76% of India’s adult population is not even mindful of the simple financial theories. It discloses that financial literacy is very low in India vs. the rest of the world.


Financial literacy, like other developed nations, has still not been a priority in India. The lack of basic financial knowledge contributes to deprived investment and decision-making. Thus a maximum of Indian people invest in plans which have short maturity and physical assets to achieve their personal goals, which offer fewer benefits and do not contribute to the country’s economic growth.


As per the media reports, nearly 76% of Indian adults do not grasp the fundamental financial principles and are thus financially illiterate. The studies suggest that India always had a low rate of financial literacy relative to the rest of the world. In fact, we are still far behind other countries and now is the time for developing countries like India to realize the value of financial literacy.


Why it is Important?

It is important because it will help us to know how money is to be invested and handled and how it can be used in ways that makes a person financially more secure in the future.

Justification for its importance is as follows:


Value of money:

Firstly, it is very imperative for all of us to know the value of money. This will help us to handle our finances efficiently. Financial literacy will teach us the importance of saving and appropriately budgeting the funds. We should not waste our money on unnecessary and expensive products. We can understand better, the difference between our wishes and needs and we should prioritize things in our daily lives according to our quintessence.


Keep the Debt in Control:

Being financially literate will help us to have a proper check-in our debt. Too much debt will make us profoundly troubled. If we are financially competent, we can decide how debt can be afforded and will be able to pay off timely, especially if we have mortgage and insurance bills. This will teach us to plan for the education and future needs of our children as well as medical and hospital expenses without the need to lend money.


Imparting financial Knowledge among Youngsters:

Being financially aware will enable us to protect the future of the coming generation. We should teach them how to make budgets and save for years to come. They will also understand how their parents work hard to fulfill all their needs, even at their young age. In making them understand the importance of financial literacy, responsibility and reverence for their parents will also be taught. This will also help them realize that they will be financially secure as soon as they age. Imparting financial knowledge will help them to be more responsible and street-smart.


To be ready for any kind of uncertainties and to add other income streams:

We face emergencies that need cash, or resources to sustain or overcome our financial and emotional crises. In times like these, being financially educated saves us the trouble of borrowing money, which only brings us more problems. Financial literacy will benefit us to invest in stocks and develop more income sources besides our salaries. The creation of multiple revenue streams gives us the buoyancy that financial crises can survive.


Assistance in old-age:

If you are financially literate at a young age, you will be stress-free for the rest of the life, as all the provisions to secure the future would be initiated earlier itself. An appropriate retirement and pension plan at the age to 30 will be rewarding for an entire life.


Works as a helping hand:

If we spend a certain amount of money for instance we invest in stocks, we assist the company’s business to expand. This will generate more jobs and will help the company to generate more profits. This results in improving jobs and helps to create a more progressive nation. Being financially stable gives us the opportunity to share our blessings with the poor. Helping others brings us an overwhelming feeling of fulfillment.



How co-working spaces can restart post lock down.

Equity Right

Corporate bond funds: A mix of risks and returns.

Corporate bond funds: A mix of risks and returns.


Investors in debt funds have been worried in the past few years, considering the uncertainty in the market. Investors want to allocate their money in schemes which have less volatility and provides decent gains. Banking bond schemes and Public Sector Undertaking Bonds (PSU Bonds) schemes are the preferred sectors by the debt fund investors. Nonetheless, corporate bond funds can also be worth investing. As of April 2020, corporate bond funds approximately have ₹86,000 crore in assets under management.


Mistakes committed while investing:

For more than two decades, debt funds invested in bonds issued by corporations have been in existence. But in the long run while chasing for high returns, some debt funds are invested in the instruments which have low credit rating and did not perform well over a period of time. In fact, a small part of the portfolio invested in such securities which really has a good strategy. However, a credit risk overload in the portfolio will harm if the underlying bonds fail to repay interest or principal.


Corporate bond funds:

As part of its reclassification exercise, the Securities Exchange Board of India (SEBI) tightened the concept of debt fund categories. Thus, corporate bond funds have been separately developed as a group. They are a more secure group of debt funds. Most schemes are open-ended and invest primarily in highly rated corporate bonds like AA+ and contributes almost 80% in the portfolio of investors. Looking at Corporate bond funds as a category, these type of funds fetched 8.8% return in the timeline of one year.


Corporate bond funds vs Public Sector Undertaking Bonds (PSU Bonds) vs Banking bond schemes:

Corporate bond funds, Public Sector Undertaking Bonds (PSU Bonds) and bond schemes issued by banks, all three categories create a safe bunch of investments in debt funds. However, all the three categories are not similar and have their own characteristics. Banking & PSU Debt funds must be invested in the bonds issued by banks and bonds from public sector undertakings (PSUs). Banking & PSU Debt funds may also invest in bonds issued by the banks and public sector undertakings (PSUs) with a lower credit rating.

In case of corporate bond funds, the sector is not restricted but investment in bonds with ratings below AA+ has been strictly limited by the regulator to 20% of the scheme. Obviously, comparatively higher ratings do not mean that returns are guaranteed or credit incidents will not take place. But the probability is very less. In the wake of Covid-19, the country is under lock down and many corporates are suffering due to market failure and poor liquidity. Although, Indian government made various provisions for the revival of economy as well as banking sector.

Reserve bank of India (RBI) made provisions like providing money to banks which further they can lend to corporates. But the truth is, companies which have low credit ratings find it difficult as banks hesitate to lend money to them. Therefore, it is rational for investors to stick to funds invested in top-rated bonds. Corporate bond investments fetch almost more 100 basis points than government bonds compared to returns on top-rated corporate bonds with the same maturity period.


Precautions before investing:

Past returns and performance offer a sense of the scheme’s success. However, search the portfolios for the risks involved. Unless the fund has a paper exposure below AA+, there is an increased risk. The Nippon India Prime Debt Fund, for example, has 5.5% exposure to A rated bonds. On the credit side, some funds can take limited or no risks. However, they may be at risk by investing in long-term government bonds and corporate securities. The L&T triple ace bond fund, for instance, has been updated over a 5.36-year cycle.

While the UTI Corporate Bond Fund has changed over a 3.73-year period as of 31st April, 2020. These funds show strong numbers in the declining interest regime, such as the one we are in, as portfolio bond prices are growing. However, if the tide turns, such schemes may see silent returns unless fund managers properly churn out the portfolio.

Invest in a fairly short-term and high credit quality fund if investors wants to shrink the risk. Capital gains earned from assets held for more than 3 years in corporate bond funds are taxed at 20% after indexation benefits. Then the profits would be added to the income of the investors and taxed at a marginal rate. In a nutshell, it is always better to do your own research before investing into any schemes this will help an investor to get the clear idea about the scheme and also the expected future gains.



Market update 19th May 2020. Vodafone Idea rises 17%

Behavioural Finance

How co-working spaces can restart post lock down

How co-working spaces can restart post lock down.


Most co-working spaces are now outlining radical steps to reopen their company post lock down, maintaining participants’ health and sanitation at the maximum standard of premises. The risk and uncertainty of COVID-19 pandemic is increasing each day. Although, policy measures are in full swing to stem the dramatic effects of this pandemic, which is quickly tolling human lives. There is also little clarification as to when regular business resumes. This is well known that the lock down cannot stay in effect permanently.


Measures to implement:

When the lock down is ended and firms can function out of their office buildings, several innovative initiatives and procedures will need to be enforced in all working settings to take care of the possibility of contracting the infection. The organizations will have to introduce improved protection procedures higher than a conventional workplace to maintain business-as-usual and guarantee strong organizational interest into co-working work spaces.


Work from home:

Indian IT industry allowed workers to Work From Home according to policy order during the lock down. As a result, nearly 90 percent of workers operated from home, with 65 percent from urban areas and 35 percent from small-town areas. The IT industry moved to the Work from the home system during the lock down very smoothly offering operational continuity to consumers without reducing efficiency or profitability, shocking both major companies and customers. So several workers operating from home amid reports that a substantial portion of them will continue even once the condition returns to normal life. Companies will now need to reconsider their approach particularly in office, interior and architecture real estate, to make the segment more appealing to customers.



When the job continues after the lock down, optimizing the use of workspace is a concern. The workplace will entail large-scale behavioural and physical room changes. Organizations would now take advantage to revaluate their working course of action to give more adaptability to their staff, particularly thinking about the advantages of profitability and commitment, This will push up the demand for co-working space.



Risk reduction must now be an essential part of organizational decision-making, particularly as businesses follow their business continuity plans. Organizations will intend to make decent variety in the geography, expanding the opportunities for adaptable workspaces in Tier 2 and Tier 3. They may likewise observe a piece of organizations moving to Tier2 and 3 urban areas to keep away from a shutdown during emergency. Expanding activities through geographies is intended to work well with the co-working group.


Co-working space:

Co-working facilities have often provided an advantage in terms of cost-efficiency. The world hopes to see the quickest post-lockdown recovery. At the point when the pandemic hazard facilitates, more organizations look to continue their business. Co-working spaces is the main decision for some organizations since they are more flexible in the time of the rent agreement. Businesses cannot afford to operate from home for so long, because many of them have tasks needing a high degree of direct control that are only possible in a structured office environment. These enterprises are heavily reliant on the office facilities to work efficiently.


Looking on, co working spaces will continue to restructure their work environments, such as relying mostly on activity-based workplace and collaborative zones. The co-working space team will have to focus on other things, such as ramping up hygiene procedures with daily sanitization of premises, beginning shift-based jobs, simulated meetings, even sanitizing the hands of each participant entering the property, and sitting in offices in compliance with social distance norms. It may include the supply of hand sanitizers and the substitution of bio-metrics with card access.


Workspace administrators will have to enable participants to make the most possible use of their collective senses when allowing the use of community resources in co-working spaces since sanitation is the highest priority. They will also have to make sure that members comply with shift-based systems to eliminate the possibility of congestion. They will also be expected to establish a new regulatory structure or regulations. People should maintain social distancing and carry face masks for good effect. Co-working spaces will be required to re-plan their work areas and make sure their encounters do not lead to infection.



For all the undoubted upsides of co-working spaces that are primarily funded by companies, freelancers, small to medium-sized organizations and start-ups. They also have drawbacks and constraints. Besides most of them missing independent canteens they often prevent businesses from holding activities in local places. Trying to maintain these services is another problem. While several major businesses utilize co-working spaces, these drawbacks have usually driven some others away from the possibility of adopting them due to lower rentals.



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