Stage set for life insurance floats

Private life insurers planning maiden issues can submit their proposals from Friday. However, the Life Insurance Corporation of India, the country’s largest insurer set up under an Act of 1956, will have to wait till Parliament ratifies the Life Insurance Corporation (Amendment) Bill.

According to the IRDA notification on regulations governing the issue of capital by life insurers, only those having a track record of 10 years can go for an initial public offering but before that they will have to seek approvals from two regulators — the insurance regulator and then Sebi.

Only after obtaining a written approval from the IRDA can an insurer file its initial public offer document with the Securities and Exchange Board of India (Sebi).

On its part, the Insurance Regulatory and Development Authority will first evaluate the applicants on certain parameters such as the period for which it has been in business, the company’s history of compliance with regulatory requirements and corporate governance, solvency margin and financial strength.

Besides a 10-year business history, the IPO aspirant should have an embedded value twice its paid-up equity capital, including the share premium. Embedded value is measured by the present value of the company’s future profits plus adjusted net asset value.

Though the IRDA regulations have not specified a uniform threshold below which domestic promoters of an insurer cannot dilute its stake, the regulator retained its discretionary powers to decide which promoters can dilute how much of their shareholding.

At present, foreign direct investment is allowed up to 26 per cent in a life insurance company. A domestic promoter thus can hold up to 74 per cent stake in a life insurance venture. To prevent any such situation from arising wherein such a domestic promoter can dilute its stake below 51 per cent, the insurance regulator has made its approval for an IPO application conditional.

“While granting its approval, the authority may prescribe the extent to which the promoters shall dilute their respective shareholding, the maximum subscription which could be allotted to any class of foreign investors, and the minimum lock-in period for the promoters from the date of allotment of shares,” the regulations said.

In its draft regulations for IPOs for life insurance companies in June, the IRDA had spelt out the way companies should compute future profits from the current block of assets, or the embedded value, which would set the benchmark for share pricing.

All insurance companies will have to follow a uniform formula set by the Institute of Actuaries of India for embedded value calculation.

Under the regulations as notified today, all life insurance companies planning an IPO will have to prepare an embedded value report by an independent actuarial expert and that report has to be reviewed by another independent actuary.

The rules specify that the insurer should disclose the embedded value on the valuation date and also one year before the valuation date. This, IRDA officials said, would help investors compare the change in the embedded value.

Though a number of private life insurance companies have evinced interest in coming out with their maiden IPOs, they may not be in a hurry to do so now.

At the company’s annual general meeting this year, HDFC chairman Deepak Parekh had said, “We are planning to come up with an IPO for insurance in two years.”

A recent research report by HSBC noted that “only a brave Indian insurer” will come out with an IPO now, given the impact of the new regulations on unit-linked insurance plans (Ulips) and the pending direct tax code (DTC) bill.

“Besides declining sales, new business margins are also under pressure given the burden of fee and surrender penalty caps in Ulips,” the report said.

Courtesy- http://www.telegraphindia.com/1111202/jsp/business/story_14827638.jsp

Cheer for savers in December

Public provident fund (PPF), small deposits and post office schemes will fetch a higher rate of return from December.

The government today notified an increase in interest rates on PPF to 8.6 per cent from 8 per cent, and raised the ceiling on annual contributions to the fund to Rs 1 lakh from Rs 70,000.

Interest rates on savings accounts in post offices will go up to 4 per cent from 3.5 per cent. Rates on deposits of other maturities, too, will be raised from next month.

The sale of Kisan Vikas Patras (KVP) will be discontinued from November 30.

The maturity period of monthly investment schemes (MIS) and National Savings Certificates will be reduced to five from six years.

MIS will earn an interest of 8.2 per cent, but accounts opened on/after December 1 will not be entitled for bonus.

Further, every Rs 100 invested in an NSC will fetch Rs 150.90 at the end of five years.

Besides, loans taken from PPFs will attract an interest of 2 per cent per annum from December.

The government has done away with the commission paid to the agents for opening PPF accounts and Senior Citizens Savings Schemes, while the commission for Mahila Pradhan Kshetriya Bachat Yojana has been fixed at 4 per cent. The commission for all other schemes has been halved to 0.5 per cent.

The Centre has also notified an increase in the interest rate on recurring deposit schemes of post office. According to the calculation, a recurring deposit of Rs 10 every month will fetch Rs 738.62 after five years.

Insurance ruling

An insured person can be denied a claim if he has concealed relevant facts such as existing ailments, the National Consumer Disputes Redressal Commission has ruled.

The commission gave the ruling while setting aside a judgment of the Kerala consumer commission that had directed the LIC to pay Rs 50,000 as insurance claim to Shakuntala Devi, wife of a policy holder who died of tuberculosis in 2001.

The panel said there was credible evidence that the policy holder was suffering from tuberculosis and he had concealed it from the company, thus entitling the company to deny him the claim.

“Since, an insurance is a contract entered between the parties in utmost good faith, suppression of any material facts by the insuree, as was done in this case, entitled the insurance company to repudiate the claim,” the bench headed by Justice Ashok Bhan said.

Mukesh Ambani richest Indian, Anil biggest loser

India’s richest are getting poorer, according to Forbes, as falling stock prices, corruption scandals in Asia's third-largest economy and a global slowdown wiped 20 percent off the total value of the country's 100 wealthiest in the last year.

Mukesh Ambani, head of Reliance Industries, India's most valuable company, retained the top spot with a value of $22.6 billion, despite seeing his net worth drop by $4.4 billion.

In the same period, Ambani completed construction of a 27-storey house in Mumbai, costing an estimated $1 billion.

The biggest loser in the list was Ambani's younger brother, Anil, whose net worth stood at $5.9 billion, down from $13.3 billion. His Reliance Group companies have been some of the worst performers on the Mumbai bourse this year.

A major drag for Ambani has been telecom firm Reliance Communications, which has $7.5 billion in debt and has so far failed in efforts to ease debt and raise money.

The combined wealth of India's richest 100 people fell to $241 billion in 2011, according to the Forbes India Rich List, which includes 57 dollar billionaires, a dozen less than a year earlier.

"This has been a turbulent year for India's richest," Naazneen Karmali, India Editor of Forbes Asia, said in a statement.

"Despite the economy growing at close to 8 percent, a spate of corruption scandals and rising inflation have taken a toll."

The world's second-fastest growing major economy after China grew only 7.7 percent in the three months to June, its weakest in 18 months, and Mumbai's benchmark stock index is down 16 percent since January.

India has raised its interest rates 13 times in 19 months, hurting demand for big-ticket items and making it more expensive for businesses to raise capital.

Of the 85 alumni from last year's list, 66 saw their worth drop this year. A net worth of $370 million was enough to make the 2011 list, down from $500 million a year ago.

BIG TEN

Mukesh Ambani led a top ten dominated by industrial tycoons, including ArcelorMittal chairman Lakshmi Mittal, who came in second with a net worth of $19.2 billion.

Energy and metal barons Shashi and Ravi Ruia lie fourth with a combined worth of $10.2 billion.

Kumar Birla, head of the fabrics-to-cement Aditya Birla conglomerate, Adi Godrej of the Godrej Group and construction tycoon Pallonji Mistry -- the largest individual shareholder of the Tata Group and father-in-law to Noel Tata, touted as a likely successor to Ratan Tata -- are also in the top ten.

Many of those companies are benefiting from India's plans to spend $1 trillion in the five years to 2017 to overhaul its creaking infrastructure, seen as a barrier to continued economic growth.

Only one name from India's showpiece IT sector made the top ten: Azim Premji, chairman of Wipro, India's No. 3 software services provider, ranked third with a net worth of $13 billion.

Savitri Jindal, head of Jindal Steel and Power Ltd, was India's richest woman, sitting fifth on the list with a net worth of $9.5 billion. Jindal was one of only five women on the list of one hundred.

A $39 billion telecom scandal, likely India's largest ever graft scam, made its mark on the list, with two accused in the case, Vinod Goenka and Shahid Balwa, falling out of the top 100. Both deny any wrongdoing.

Debutants on the annual list include Kapil Bhatia and his son Rahul, founders of budget airline IndiGo, and V.G. Siddhartha, whose coffee shop chain Cafe Coffee Day gave him a net worth of $595 million.

India's biggest gainer in percentage terms was Brijmohan Lall Munjal, head of two-wheeler HeroMoto Corp, whose net worth rose to $2.7 billion in the year his firm ended a 26-year partnership with Japan 's Honda Motor .

India's auto industry has seen car sales declining on high interest rates while families of four continue to buy two-wheelers, most of which can be bought without relying on loans.

http://in.finance.yahoo.com/news/Forbes-list-Mukesh-Ambani-reuters-1288442712.html

LIC’s tobacco stain shows

The Life Insurance Corporation (LIC) invested more than Rs 3,600 crore last year in the tobacco industry, anti-tobacco activists and cancer specialists said today, describing the investments as ironical and unethical.

Figures obtained through the right to information route by a consortium of activists and doctors show that in 2010-11, LIC had invested in shares of ITC and VST Industries and in debentures of Dharampal Satyapal Ltd, which makes chewable tobacco products.

The LIC investment in ITC had a book value of more than Rs 3,561 crore, while its investment in VST Industries was about Rs 15 lakh, according to information released by the company. It also invested Rs 50 crore in Dharampal Satyapal.

“It’s ironic that LIC is investing in an industry that contributes to ill-health and death, and an industry that some arms of the government are trying to discourage,” said Pankaj Chaturvedi, associate professor at the Tata Memorial Hospital, Mumbai.

“The public should know where LIC is investing its funds,” Chaturvedi told The Telegraph. “The government has enforced the ban on public smoking and it has also outlined steps to phase out tobacco cultivation in the coming years.”

The RTI application had been filed by a consortium called Voice of Tobacco Victims, mainly representing patients with cancer. LIC officials were not immediately available to explain its policy of investing in the tobacco industry.

The number of shares held by LIC in ITC jumped from about 522,089,903 on March 31, 2010, to 995,891,658 on March 31, 2011, according to the company’s response to the RTI query.

Tata Memorial doctors said the RTI response from LIC suggested it was not charging extra premium on all tobacco users. “It is ridiculous.… LIC invests in tobacco, it doesn’t charge higher premium from addicts, but they may reject the claims of addicts,” Surendra Shastri, head of preventive oncology at Tata Memorial, said in a statement.

In response to the RTI query on LIC’s policy on insurance for tobacco users, the company said the risk assessment for consumption of tobacco would take into consideration multiple health factors ranging from quantity and type of tobacco to health conditions of the applicant.

“The adverse health effects of tobacco consumption is dependent on (the) quantity of consumption, type of tobacco consumed, duration of consumption and any other associated health condition of the insurance applicant,” LIC said. “Depending on these factors, while large numbers of customers are accepted without any extra premium, some of the applicants may be charged higher premium.”

Public health specialists campaigning against tobacco said the investment was unethical because it was against the principle that governments should not invest in tobacco, enshrined in an international convention to which India is a signatory.

“On the one hand, India incurs a cost of nearly Rs 10,000 crore each year from tobacco-related health expenses, on the other, LIC invests Rs 3,600 crore in tobacco,” Prakash Gupta, director of the Sekhsaria Institute of Public Health, Mumbai, said in a statement.

Courtesy: http://telegraphindia.com/1111013/jsp/frontpage/story_14618444.jsp

Steve Jobs at Stanford University Commencement on June 12, 2005

I am honored to be with you today at your commencement from one of the finest universities in the world. Truth be told, I never graduated from college.

This is the closest I have ever gotten to a college graduation. Today I want to tell you three stories from my life.

That's it. No big deal. Just three stories.

The first story is about connecting the dots.

I dropped out of Reed College after the first 6 months, but then stayed around as a drop-in for another 18 months or so before I really quit. So why did I drop out?

It started before I was born. My biological mother was a young, unwed college graduate student, and she decided to put me up for adoption.

She felt very strongly that I should be adopted by college graduates, so everything was all set for me to be adopted at birth by a lawyer and his wife. Except that when I popped out they decided at the last minute that they really wanted a girl.

So my parents, who were on a waiting list, got a call in the middle of the night asking: "We have an unexpected baby boy; do you want him?"

They said: "Of course." My biological mother later found out that my mother had never graduated from college and that my father had never graduated from high school. She refused to sign the final adoption papers.

She only relented a few months later when my parents promised that I would someday go to college.

And 17 years later, I did go to college. But I naively chose a college that was almost as expensive as Stanford, and all of my working-class parents' savings were being spent on my college tuition. After six months, I couldn't see the value in it.

I had no idea what I wanted to do with my life and no idea how college was going to help me figure it out. And here I was spending all of the money my parents had saved their entire life.

So I decided to drop out and trust that it would all work out OK. It was pretty scary at the time, but looking back it was one of the best decisions I ever made.

The minute I dropped out I could stop taking the required classes that didn't interest me, and begin dropping in on the ones that looked interesting.

It wasn't all romantic. I didn't have a dorm room, so I slept on the floor in friends' rooms, I returned coke bottles for the 5¢ deposits to buy food with, and I would walk the 7 miles across town every Sunday night to get one good meal a week at the Hare Krishna temple. I loved it. And much of what I stumbled into by following my curiosity and intuition turned out to be priceless later on. Let me give you one example:

Reed College at that time offered perhaps the best calligraphy instruction in the country. Throughout the campus every poster, every label on every drawer, was beautifully hand calligraphed.

Because I had dropped out and didn't have to take the normal classes, I decided to take a calligraphy class to learn how to do this. I learned about serif and san serif typefaces, about varying the amount of space between different letter combinations, about what makes great typography great.

It was beautiful, historical, artistically subtle in a way that science can't capture, and I found it fascinating.

None of this had even a hope of any practical application in my life. But ten years later, when we were designing the first Macintosh computer, it all came back to me. And we designed it all into the Mac. It was the first computer with beautiful typography.

If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts. And since Windows just copied the Mac, it's likely that no personal computer would have them.

If I had never dropped out, I would have never dropped in on this calligraphy class, and personal computers might not have the wonderful typography that they do. Of course, it was impossible to connect the dots looking forward when I was in college. But it was very, very clear looking backwards ten years later.

Again, you can't connect the dots looking forward; you can only connect them looking backwards.

So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever.

This approach has never let me down, and it has made all the difference in my life.

My second story is about love and loss.

I was lucky — I found what I loved to do early in life. Woz and I started Apple in my parents garage when I was 20. We worked hard, and in 10 years Apple had grown from just the two of us in a garage into a $2 billion company with over 4000 employees. We had just released our finest creation — the Macintosh — a year earlier, and I had just turned 30. And then I got fired.

How can you get fired from a company you started? Well, as Apple grew we hired someone who I thought was very talented to run the company with me, and for the first year or so things went well.

But then our visions of the future began to diverge and eventually we had a falling out. When we did, our Board of Directors sided with him.

So at 30 I was out. And very publicly out. What had been the focus of my entire adult life was gone, and it was devastating.

I really didn't know what to do for a few months. I felt that I had let the previous generation of entrepreneurs down - that I had dropped the baton as it was being passed to me. I met with David Packard and Bob Noyce and tried to apologize for screwing up so badly.

I was a very public failure, and I even thought about running away from the valley. But something slowly began to dawn on me — I still loved what I did. The turn of events at Apple had not changed that one bit.

I had been rejected, but I was still in love. And so I decided to start over.

I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me.

The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.

During the next five years, I started a company named NeXT, another company named Pixar, and fell in love with an amazing woman who would become my wife. Pixar went on to create the world’s first computer animated feature film, Toy Story, and is now the most successful animation studio in the world.

In a remarkable turn of events, Apple bought NeXT, I returned to Apple, and the technology we developed at NeXT is at the heart of Apple's current renaissance. And Laurene and I have a wonderful family together.

I'm pretty sure none of this would have happened if I hadn't been fired from Apple. It was awful tasting medicine, but I guess the patient needed it. Sometimes life hits you in the head with a brick. Don't lose faith.

I'm convinced that the only thing that kept me going was that I loved what I did. You've got to find what you love. And that is as true for your work as it is for your lovers.

Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.

If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don't settle.

My third story is about death.

When I was 17, I read a quote that went something like: "If you live each day as if it was your last, someday you'll most certainly be right." It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: "If today were the last day of my life, would I want to do what I am about to do today?" And whenever the answer has been "No" for too many days in a row, I know I need to change something.

Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure - these things just fall away in the face of death, leaving only what is truly important.

Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.

About a year ago I was diagnosed with cancer. I had a scan at 7:30 in the morning, and it clearly showed a tumor on my pancreas. I didn't even know what a pancreas was.

The doctors told me this was almost certainly a type of cancer that is incurable, and that I should expect to live no longer than three to six months. My doctor advised me to go home and get my affairs in order, which is doctor's code for prepare to die.

It means to try to tell your kids everything you thought you'd have the next 10 years to tell them in just a few months. It means to make sure everything is buttoned up so that it will be as easy as possible for your family. It means to say your goodbyes.

I lived with that diagnosis all day. Later that evening I had a biopsy, where they stuck an endoscope down my throat, through my stomach and into my intestines, put a needle into my pancreas and got a few cells from the tumor.

I was sedated, but my wife, who was there, told me that when they viewed the cells under a microscope the doctors started crying because it turned out to be a very rare form of pancreatic cancer that is curable with surgery. I had the surgery and I'm fine now.

This was the closest I've been to facing death, and I hope it's the closest I get for a few more decades. Having lived through it, I can now say this to you with a bit more certainty than when death was a useful but purely intellectual concept:

No one wants to die. Even people who want to go to heaven don't want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life's change agent. It clears out the old to make way for the new.

Right now the new is you, but someday not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it is quite true.

Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma — which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice.

 And most important, have the courage to follow your heart and intuition.They somehow already know what you truly want to become. Everything else is secondary.

When I was young, there was an amazing publication called The Whole Earth Catalog, which was one of the bibles of my generation.

 It was created by a fellow named Stewart Brand not far from here in Menlo Park, and he brought it to life with his poetic touch. This was in the late 1960's, before personal computers and desktop publishing, so it was all made with typewriters, scissors, and polaroid cameras.

It was sort of like Google in paperback form, 35 years before Google came along: it was idealistic, and overflowing with neat tools and great notions.

Stewart and his team put out several issues of The Whole Earth Catalog, and then when it had run its course, they put out a final issue. It was the mid-1970s, and I was your age.

On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath it were the words: "Stay Hungry. Stay Foolish." It was their farewell message as they signed off. Stay Hungry. Stay Foolish. And I have always wished that for myself. And now, as you graduate to begin anew, I wish that for you.

Stay Hungry. Stay Foolish.

Thank you all very much.

Steve Jobs

Steve Jobs, the visionary who transformed the worlds of personal computing, finally lost his years-long battle with pancreatic cancer.

Six years ago, Jobs had talked about how a sense of his mortality was a major driver behind that vision.

It truly takes real courage to swim against the current and smile even when you are writhing in pain.

"Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life," Jobs said during a Stanford commencement ceremony in 2005.

"Because almost everything -- all external expectations, all pride, all fear of embarrassment or failure -- these things just fall away in the face of death, leaving only what is truly important.”

"Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.”

Cash remittance from Gulf

Indians working abroad, particularly in the Gulf countries, are rushing to send money home to take. advantage of a depreciating rupee. In the last couple of months, inward remittances from Gulf countries have increased more than 30 per cent over the same period last year. At present, remittances from Gulf countries account for more than 30 per cent of the total money transfers to India. There were significant increases in NRI remittances from the Gulf region, Europe and Africa whereas those from North America and East Asia declined. For example, one could hardly get more than Rs 120 in exchange of one Oman rial. With the Indian rupee now trading at Rs 128 a rial, it means my family will get nearly 7 per cent more in rupee terms on the same amount of rial transfer. Remittances from the Gulf region have been steadily increasing since 2008-09. The trend has spiked since August after the rupee started weakening against the greenback. Remittances to India from Gulf countries have grown more than 30 per cent in the July-September quarter compared with the previous quarter.  Large-ticket money transfers have increased, particularly in the last couple of weeks. These people send money for investments rather than domestic commitments. According to money exchangers, the increase in the volume of money remitted has been more than the number of transactions, suggesting that high-income expatriates are taking advantage of the depreciating rupee. The UAE’s dirham and Kuwait’s dinar have all gained against the rupee. Banks in India such as the SBI, Bank of Baroda (BoB) and HSBC, which have money transfer network in these Gulf countries, are witnessing a heavy inflow of remittance.

Happy Durgapuja

                     Wish all the readers a Happy Durga Puja'2012. May the Holy mother bless all of us.

2G scare for Anil Ambani

Stock prices of the Anil Dhirubhai Ambani Group (ADAG) companies plumbed new depths on Friday after the Central Bureau of Investigation (CBI) said it was investigating the role of the group chairman in the 2G telecom scam.

The federal investigators spooked the markets even more after raising the prospect that three ADAG executives currently being held in Tihar jail could turn approvers in the case.

The Reliance Communications and Reliance Power (RPower) scrips hit new lows, falling 8 per cent to Rs 71.75 and 4 per cent to Rs 76.80, respectively, at Friday’s close on the Bombay Stock Exchange.

Reliance Capital, the group’s financial arm, dropped as much as 12 per cent to Rs 315.20, while Reliance Infrastructure fell 7 per cent to Rs 373.55 and Reliance Mediaworks by 6 per cent to Rs 90.95.

The 30-share Bombay Stock Exchange (BSE) Sensex fell 244 points to 16453 points on Friday.

ADAG stocks have been battered in the stock markets this year and have lost nearly half of their market capitalisation.

The Anil Ambani group scrambled to limit the damage. In a statement, the ADAG group denied its involvement in the 2G telecom scam but that did not stop investors from selling the stocks.

The statement said none of the ADAG companies, including Reliance Telecom, had illegally benefited from the sale of the 2G licences in 2008.

ADAG also denied that the three arrested executives — group managing director Gautam Doshi and senior vice-presidents Surendra Pipara and Hari Nair — had expressed any intention to turn app rovers.

“The CBI is now raising (these) new issues to oppose bail to the three Reliance executives,’ the statement said.

The three Reliance executives have been accused of breaking rules by using Swan Telecom as a front company to bag additional licences and spectrum from Reliance Telecom.

However, it was not all bad news for the Anil Ambani group on Friday.

The RBI gave its approval for RPower to raise $2.2 billion, or Rs 11,000 crore, from the US Exim Bank and Chinese banks that will go towards funding the company’s 3,960MW Sasan power project in Madhya Pradesh.