Know about Swiss bank and its banking system

There is a common misconception that people who cannot store their unaccounted wealth in their own country open accounts in Swiss banks. Even though this may be true to an extent, Swiss banks are well known for their sophisticated and discreet banking services.

Many of the rich and famous like film stars, business entrepreneurs, top government officials, presidents, etc, are reputed to have Swiss bank accounts. Then again, it is also said one need not be a multi-millionaire to open a Swiss bank account.

Brief Background of the Swiss Banking System

One of the most prosperous and economically advanced nations, Switzerland has the worlds largest gross domestic product (GDP). There are nearly 400 banks in Switzerland, which range from the Two Big Banks, to smaller banks, serving single communities or selective clients. Considered as the worlds largest offshore financial center, the Swiss banking sector is renowned for its privacy, stability and protection of their customers information and assets. The Federal Banking Commission (FBC) regulates these banks.

Opening a Swiss Account

Often freely available, a Swiss bank account provides total confidentiality, strict privacy, and is tax-free. However, certain documents are required as proof to open a Swiss account. For example, people who are not residents of Switzerland need to furnish their passports, along with a passport size photograph. Depending on the profession, a current bank statement would be required to determine the clients current financial condition. Along with this, certain personal information, like the date of birth, country of origin, etc., is also required.

A useful feature of Swiss banking is that it can also be done via correspondence as long as the customers follow bank rules and regulations. The bank and customer could interact through the Internet, telephone or snail mail.

However, a drawback of Swiss banking is that non-residents are expected to pay a hefty amount as deposit, and, the smaller accounts are more expensive to maintain. There is a clause especially for US citizens wherein they are expected to refrain from making any business transaction through their Swiss accounts, to keep their account privacy intact.

Deposit

A security deposit is needed in case the customer wants to obtain a credit card. Approximately 1.5 to 2 times the monthly credit limit is demanded, depending on the bank the customer chooses. This deposit is returned when the customer decides to discontinue the credit card, and has paid all outstanding bills.

Confidentiality

There are legends about mysterious numbered accounts in Swiss banks. Some high security bank accounts are given pseudonyms or special names instead of issuing them in the name of the customer, to preserve the anonymity of the customer. This number or name is used wherever the customer is referred. Moreover, even bank employees are expected to respect the customers privacy, the failure of which could land them in prison for several months.

However, Swiss banks, being very particular about preventing money laundering, crosscheck the authenticity of the information provided by the customer. If, during the scrutiny, the bank finds the information of a potential or existing customer connected to some criminal activity, a Swiss judge or prosecutor issues a lifting order. These investigations could include international criminal investigation for tax fraud, insider trading, or the infamous terrorist financing of recent times.

Closing of an Account

Despite a few negative notions about Swiss banking, closing an account is said to be easier than expected. No financial penalty is demanded, and neither is the money held hostage, like it is done in other off shore banking.

To conclude, the secrecy and discreet nature of Swiss banking makes them convenient and dependable. This not only helps customers to save money, but also is a viable means of attaining economic superiority in the business world and society as a whole.

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Easily start your own business

More people are going into business. However, many are not mentally prepared. Many are lacking the business knowledge when they first start their business. You can get some key points here in starting your own business.

1. Watch your cashflow

Cashflow is the bloodline of your business. Most business fail because they ran into cashflow problem. Most new business owners start to spend lots of money before the businesses start making money.

Spending money on renovating luxury offices, buying unnecessary things or renting too big an office space. Even buying small items can bring huge burden to your to your cashflow.

If you are not someone who is good at managing cashflow, get someone who is good to do it for you. My business partner is good at that, she is the one who manages all the money in the company.

In the first year of our business, she had stopped me numerous times in buying unnecessary things.

Learn to watch your cashflow. Your business depends on it.

2. Marketing business

When I was young, someone told me this, "as long as you start a business, they will come and you wil be rich." That may be true many years ago. But it's no longer true now.

When you start your business, you must make known to the world. Tell everyone about your business. Learn to do effective marketing not just marketing that everyone else does.

All businesses are in the business of marketing. If you sell pens, you are also in the business of marketing. Just that you are marketing pens.

Marketing is a huge subject. Many business owners start business without knowing even the basic of marketing. I done lots of test about marketing. I started to learn about marketing five years ago. Only in the last years, I discover I had moved to a deeper level in understanding marketing.

3. Negotiate, Negotiate, Negotiate

Learn this skill and you can get many good deals. You may even get people who's willing to work for you free. A tip for you before going into a negotiation is to understand what the other party wants. Know that and you'll find your negotiation goes much smoother.

Understand this point, negotiation is about win-win. Creating a win-win deal in a negotiation. If a negotiation turns to win-lose, one party will definitely walk away from the deal.

4. Taking care of your customers

You have to think your customers as long term friends. If you take care of your customers, they will take care of you. Build trust and rapport with your customers, they will buy from you for a life time.

Build a system so that you can always keep in touch with your customers. When your business grows, you do nt have the time to keep in touch with all of your customers. That's when this system will come in handy. Build it early, so you will not lose any customers.

Get yourself prepared for a new business. Be mentally prepared, physically prepared too. You will find great success in your business if you are prepared.

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Review on BSE and Nifty this year

 Our celebration of Sensex’s new highs was a little muted as the 50-stock Nifty had not joined the festivities. However, last week, the two finally rocked together.

With the Nifty’s 1.77% (66-point) move, the two indices are in sync, doing the tango at new life highs. From a technical perspective, you could ask for no better confirmation that the trend across all-time frames is indisputably up.

How deep & how wide?

Let’s look at the BSE500. This 500-stock index is constructed to represent close to 93% of the total market capitalisation of the Bombay Stock Exchange (BSE). Though it contains all the market heavies (or probably because of it), the BSE500 is a bit of an elephant, and elephants, we know, can’t dance. Or can they? Consider this.

The BSE500 index is up nearly 50% from June ’06 lows, and is just a shade under its May ’06 highs. It has already posted the weekly highest closing ever. And the BSE500 has not had a negative week for the past 15 weeks, since late August ’06.

Now, if an index that covers over 93% of market capitalisation can show such strength (we are not finicky, we just round that off to 100%), it’s surely sufficient reason to think that the market is in good shape.

Sectorally speaking

Sectors that have joined frontline indices at new life highs include banking, IT, cement and the BSE Tech pack (which includes IT, media and telecom). The BSE500, BSECapgoods, BSEOil&Gas indices trade a shade under their respective May ’06 highs, and are a step away from new highs.

Sectors that significantly underperform the Sensex are FMCG, BSE Consumer Durables, Healthcare, Metals, Sugar, Mid and Small Caps. Sectoral analysis broadly suggests traders coming into the post-June ’06 rally seem to have chosen the ‘infrastructure-led growth story’ over the ‘massive middle class’ rationale.

However, as trend followers we are more concerned with the ‘how’ than the rather nebulous ‘why’. And we will continue to buy strong sectors, while looking for fresh emerging strength among the current underperformers.

Tank up

Speaking of underperforming sectors showing promise, we checked out the BSE Oil &Gas sector. This sector is buoyed by RIL’s outperformance, helped along by gains in HPCL and BPCL, that come after a 2-1/2 year bear market. Despite this, the sector underperforms, held back by ONGC’s reluctance to move.

However, this week, ONGC breaks its shackles with a 12% move. (In fact, much of the Nifty’s ascent into historical highs is thanks to this stock.) ONGC is now likely to find support from Rs 825-840 level, a range that previously resisted all gains since June ’06. Going forward, we think the stock is on a move to retest May ’06 highs at Rs 1,010. Once ONGC makes and sustains new highs of its own, we expect it to trade in the Rs 1,200-1,400 range.

Which way ahoy?

Now that the market heavyweight ONGC starts to rock, what does this imply for frontline indices? The Nifty has just edged up above 3770. The Sensex is yet to move above the equivalent level of 13135. Once these levels are firmly in place as supports, we expect the market to test 4030-4050/13500-13550 levels.

We will look for weakness only under recent lows at 3700-3725/12800-12900. For those with cold feet about buying with the market at all-time highs, these are levels to watch out for as acceptable downside risk before calling a reversal of this 4-1/2 month old upmove. Trade well. Trade wisely.

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Investing in Bharti or Reliance Communication

 The players in the domestic telecom sector couldn’t have wished for better times. Though Bharti Airtel (Bharti) has had the benefit of listing early on the bourses, coupled with robust performance, Reliance Communications (RCom) is not too far behind either.

Bharti has been commanding better valuations. However, the mist on the business and financials of RCom is getting cleared, and the same is reflecting in its stock price. RCom remains an attractive investment proposition, along with Bharti.

Both these telecom majors operate in 23 circles. Though they are vying for the same circles for their potential subscriber base, there is still substantial room for growth, as the wireless penetration in India continues to be low, at less than 10%.

Segments

RCom’s business segments are classified as wireless, global and broadband. The capital expenditure (capex) in the wireless segment stood at Rs 1,499 crore during the latest quarter. The company has a market share of 20.5% in the wireless segment, with 27 million wireless and mobile customers.

In the past one year, till September ’06, RCom’s subscriber base has risen at a rate of 99.9%. The revenue per minute stands at 77 paise. Under the global business segment, the company has operations and customer base in 28 developed countries, globally.

It has a market share of over 40% in the international long distance (ILD) market and 22% in the national long distance (NLD) market. During the September quarter, RCom commissioned its submarine cable system, Falcon was launched four months ahead of schedule at 80% of the projected cost.

The company has the largest next generation IP-enabled connectivity infrastructure, comprising over 1.5 lakh km of fibre optic cable systems, giving it a presence in six continents. The company’s global and broadband businesses will be the growth drivers in future. Its broadband business grew at 201% over the same quarter in the previous year to Rs 271 crore. The EBITDA margin of this sector stands at 44.8%.

Investment rationale

RCOM is hiving off its towers used for wireless communication into a separate company, which will be a subsidiary of RCom. Globally, tower companies attract a valuation of 20x EBITDA. Overall, this development is likely to have a positive impact on RCom as the depreciation and interest cost will fall, though network operating costs will rise.

The company is set to launch a new technology — Converged Home & Office Integrated Services (CHOIS) — which can be a substantial revenue-earner for the company, going forward. CHOIS is a complete end-to-end technology for constructing a fully dually-redundant, ethernet everywhere, fibre-to-home network.  Market leadership in the CDMA space has proved beneficial for the company. Though it is easy to switch service providers in the GSM space, this is not the case for CDMA technology. The company’s CDMA distribution reach for handsets in smaller towns has worked in its favour.

RCom has been a pioneer in e-charge and refill vouchers in small denominations. Reliance Netconnect allows the use of internet through the mobile phone. Reliance mobile phones, fixed wireless phones and data cards can be used to connect to the internet. This service is highly popular in B and C circles.

RCom currently provides GSM-based wireless services in eight circles in eastern and central India. In September ’06, the company had over 29 lakh GSM-based subscribers. It is looking at expanding it GSM-based services to metros and other areas. RCom is confident of successfully providing CDMA and GSM-based services simultaneously.

The company is well-placed to take advantage of growth in the telecom sector. Its focus on affordable schemes, coverage, and wider reach of handsets and recharge vouchers can help it to become a volume player, thus removing its susceptibility to margins. Adlabs Films, with which the Reliance group has a tie-up, can be an important mobile content provider, which can work in RCom’s favour.

Financials & valuations

RCOM’s revenues grew 40% to Rs 3,526 crore in Q2 FY07, compared to Rs 2,522 crore in the corresponding period last year. EDITDA and net profit for Q2 FY07 stood at Rs 1,353 crore and Rs 702 crore, respectively, compared to Rs 427 crore and a loss of Rs 19 crore, respectively, in the year-ago period. Interest costs fell significantly from Rs 65 crore in Q2 FY06 to Rs 5.6 crore in Q2 FY07.

Debt stood at Rs 2,057 crore at the end of the quarter. Access charges and licence fee dropped by Rs 125 crore over the same quarter in the previous year to Rs 906.8 crore. Based on expected FY07 results, the estimated earnings per share (EPS) works out to Rs 12.4. The stock currently trades close to Rs 390 and commands a P/E of 31x.

RCom has over 27 million subscribers, while Bharti has over 28 million subscribers. For Q2 FY07, Bharti’s revenues and net profit stood at Rs 4,357 crore and Rs 934, respectively. Bharti’s stock is trading close to Rs 540. Based on expected FY07 results, the estimated EPS works out to Rs 18.8; it commands a P/E of 29x.

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Huge investment by FIIs in this quarter

 The market is back with a bang — and this is not without reason, as Corporate India has put up an exceedingly good show for H1 FY07. The earnings surprise has led to a re-rating of the domestic market, driven by earnings upgrades and higher Indian exposure among overseas investors.

For the September ’06 quarter, foreign institutional investors (FIIs) were net buyers of around Rs 12,400 crore, which is the highest ever since the start of the bull run. While FIIs have been rushing to the market, domestic funds seem to be taking to the market more tactically, by collectively buying stocks worth Rs 1,686 in the latest quarter.

This is a fall from Rs 8,568 crore seen in the June quarter, when the market was seeing a broad correction. However, mutual funds (MFs) have definitely not exhibited the same enthusiasm as that shown by FIIs in the September quarter.

FIIs have increased their share of stock ownership in all Sensex scrips, except in Larsen & Toubro (L&T), Hindalco, Ranbaxy and Reliance Communications. The sharpest jump was seen in Reliance Energy, wherein the FII holdings rose to almost 20% from 14% in the last quarter.

The increasing FII exposure seems to have come off falling levels of MF holdings, with mutual funds reducing exposure in 15 out of 30 Sensex stocks.

However, domestic funds have been increasing exposures selectively in counters like Gujarat Ambuja, Hero Honda and Reliance Energy. Reliance Energy seems to be finding favour with both domestic and overseas funds.

However, Reliance Communications has been at the receiving end, with both domestic and overseas funds reducing exposure to the scrip. Stocks that saw a reduction in domestic fund exposures were HDFC, L&T, ICICI Bank, Tata Motors and Tata Steel. Clearly, domestic funds are buying selectively and acting cautious at current market levels.

Barring the index scrips, both MFs as well as domestic funds seem to be actively managing their portfolios. Some of the big exits by FIIs were Thermax, Navin Fluorine, Elecon Engineering and Man Engineering, where MFs have reduced exposure to zero levels. Other stocks where MF holdings seem to have dropped sharply are Bharat Electronics (BEL), i-flex solutions and PVR.

Domestic funds seem to be betting on the mid-cap segment, with their strongest additions being in Himatsingka Seide, Ceat and Kalpataru Power. Other strong additions include mid-cap banks like Union Bank of India, Bank of India and Bank of Baroda.  However, domestic funds have exited from some infrastructure construction companies like IVRCL and Nagarjuna, while adding relatively lower-priced mid-cap banks and financial service providers like LIC Housing Finance and IDFC during the quarter.

What’s interesting here is that in some counters, MFs seem to be providing FIIs with an entry into the stock. Examples of these counters are PVR, IVRCL, Educomp Solutions, Indiabulls Financial Services and Shoppers’ Stop. All of these have been witness to selling by domestic funds, only to be lapped up by FIIs.

Consider Indiabulls, which saw an around 2% reduction by domestic funds, but this was more than made up by a huge 12% increase in FII ownership. The same is the case for Educomp Solutions, in which domestic funds reduced their exposures by around 5%, while FIIs increased their stake by 7%.

There are also some instances of the reverse situation, with FIIs cashing out and domestic funds buying — these include LIC Housing Finance, Himatsingka Seide and KEC International.

Concurrent action was also visible in counters like Thermax — where both domestic and overseas funds have exited — and Kalpataru Power Transmission — where both have been buyers. Other scrips that have found favour with both groups include IDFC, Manugraph Industries and Gokaldas Exports.

Other major exits by FIIs, apart from the index space, during the quarter include Prajay Engineering, Astra Microwave, Alok Industries, Max India and Himachal Futuristic. However, despite higher flows from FIIs, there hasn’t been any significant change in the ownership profile, with percentages remaining more or less stagnant for both the Nifty and BSE 500.

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Floating home loan rates never drop

The Indian home loan market, bedazzled by the low rate home loans, forgot to ask one basic question: what is my floating rate loan benchmarked to?

A floating rate loan is one, which is pegged to a rate and should rise and fall with the benchmark, according to the rise and fall of the cost of funds in the country. So far so good, but the most obvious things break down in India because the organised institutions profit from and exploit the financial illiteracy of the retail customer. Here is how benchmarks lose relevance in India.

What is a benchmark? A benchmark is usually a rate that is used as a yardstick to either evaluate performance or set other linked rates in the market. For example, diversified equity funds use the Sensex as a reference point for their funds' performance. A good benchmark, of course, needs to be independent.

This means that the person measuring performance or using it to set other rates should not be able to influence it in any way. Hence, the mutual fund rules have the need for an independently determined benchmark (the market determines the Sensex and not one fund or company) to enable the investors to evaluate performance.

The same rules do not apply in the home loan market. Who, do you think, sets the 'benchmark' prime lending rate that your loan floats against? The RBI? No, it is the banks themselves who fix the benchmark.

This gives them the ability to change the benchmark at will and introduce new ones when old ones stop going their way. For example, ICICI Bank has two benchmarks in operation. Borrowers till early 2004 are on what is called the Internal Retail PLR (or RPLR) and those after that are on Floating Reference Rate (FRR). This, in early 2004, was set 2 per cent lower than RPLR, at 7.75 per cent.

What this means is that instead of passing on the benefit of the falling rates in 2004, the bank preferred to float a new benchmark, that was lower, rather than reduce the old one.

New customers got a market benchmarked competitive rate, and the old customers, who thought their rates would float down, continued to pay more - defeating the very purpose of being on a 'floater'. Today these benchmarks are at 10.25 per cent for FRR and 12.25 per cent for RPLR.

And then there were none. The only banks that tried out independent benchmarks in India were ING Vysya and Kotak Mahindra Bank, and this October, both withdrew these. For Kotak Mahindra Bank, the benchmark was its own one-year fixed deposit rate, along with a regular PLR-based (internally fixed) rate.

The FD-linked rate would truly reflect the cost of funds because a hike in the FD rate would mean that the bank would have to pay its lenders a higher rate as well. Mid-October, the FD-linked rate was recalled. ING Vysya used the three-month FIMMDA-NSE Mumbai Inter-bank Offer Rate (Mibor) index operated by the National Stock Exchange.

This is as independent as a benchmark can get and most countries use a similar inter bank rate as a measuring rod.

Mibor rates have ranged from a low of 5.51 per cent in January 2005 to a high of 8.63 per cent in March 2006, and are ruling at 7.48 per cent today. A loan at Mibor plus 2 would have moved from a high of 10.63 per cent to a low of 7.51 per cent over this time period without the bank being able to influence its movement - up or down. It is indeed a pity that the only truly transparent home loan benchmark in India was discarded before it could become the industry standard.

Though both banks cite customer indifference to the independent benchmark rates as the main reason for dumping these, could it be that these banks were losing competitive margins because of not being able to set the rates as other banks with captive benchmarks were doing?

What now? The market is left with no independently fixed home loan benchmark. Two things can happen - RBI can make it mandatory for banks to disclose transparently their benchmarks like banks in Australia. Or, the RBI can make it mandatory for banks to fix home loans to an independent benchmark, like the Mibor. Outlook Money is rooting for option two.

Till then, carefully look at what your loan is benchmarked to and start engaging with the banking ombudsman in case you are unhappy with the way your bank tinkers with its benchmark.

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Temporary employment jobs gets good money

Are you looking for a job that offers you learning opportunities in various areas, flexi-scheduling and a decent pay packet? The answer to this, even a decade ago, would have been, "Get real." But now, with temporary employment (temping) becoming a big human resources phenomenon in India, jobs with all these attributes are well within the realm of reality.

A temporary staffing solution provider puts the size of temporary staffing in India at about Rs 1,360 crore (Rs 13.60 billion). He adds that there are over 2.5 lakh (250,000) temp workers in India and that 120 lakh (12 million) temp jobs are expected to come up in the next five years.

Temping has many advantages: it helps you develop new  skills, gives you broader experience and provides you the opportunity to work with various levels of management.

Who temps?

Right from a college student to a 50-year-old professional can find a temp job in the corporate world. Companies look for temps to fill any short-term gap arising due to the absence of an employee or unplanned termination.

Manjit Kaur, 32, temped as a secretary in an embassy till the permanent employee she was filling in for came back from her three-month-long maternity leave. She feels this exposure helped her secure her present permanent job in another embassy.

Organisations mostly hire workforce on lease for non-core activities like frontline sales, HR, administration and accounts. Companies also employ manpower on lease if they are scouting for people with special skill sets.

Areas of temping

Temping opportunities exist across all industries and almost all job functions. "The demand is mainly in human capital-intensive sectors like financial services, telecom, insurance, banking, IT/ITES, FMCG, retail and manufacturing," says Achal Khanna, country manager, Kelly Services India, a temp staffing solutions provider.

Temping is more pronounced at the entry level than at higher positions. If you are a fresher, temping is the perfect launch pad to get introduced to the sector you are interested in. You are free to choose a job function and, as you gain experience, you can move across functions and sectors.

Fruits of temping

Temp jobs help you network and don a variety of hats. They can be enticing enough to even draw people with permanent jobs. Take the case of Sunita Bhardwaj, 32, who quit her permanent job in the administration department of a company to work as a sales coordinator in a US-based Fortune 500 firm. A year and a half later, she got a chance to make yet another job function transition when she became executive assistant to the CFO.

"It doesn't matter that I am a temp. I am working for a Fortune 500 company and am exposed to a world-class work culture. I don't feel victimised either on salary or treatment. Besides, I am acquiring new skills," says Bhardwaj.

Remuneration

Temp salaries are decent enough. Though temp jobs are not yet giving  permanent jobs a run for their money, at times, temps can earn more than permanent employees. Jaychandran Pillai of Alps Management, a hiring firm, points out that in the case of specific time-bound projects, temps get about 20 per cent higher salary than regular employees. The starting salary of a fresher in a sales function in a large financial or insurance firm in a metro is Rs 9,000-10,000 per month.

An HR executive can get a starting salary of Rs 7,000. While the average salary in the lower management rung is around Rs 7,500 per month, for middle levels, it is Rs 35,000 and at senior levels, it can go up to Rs 4.5 (Rs 450,000) lakh per month. Bhardwaj is quite satisfied with her salary of Rs 3 lakh (Rs 300,000) per annum.Says Ashok Reddy, MD, TeamLease Staffing Solutions, "The average salary of our associates is around Rs 9,000 per month. The average growth rate in compensation has been about 15 per cent." The remuneration depends on experience, qualification, the job function, sector and the city where the opening is (See table below).

Temp Pay: Admin/Logistics/Sales
City	Undergraduates	Graduates	Post-graduates
Ahmedabad	4,000-6,000	5,000-8,000	7,000-14,000
Bangalore	4,000-6,500	6,000-13,000	6,000-14,000
Chennai	5,000-7000	6,000-10,000	7,000-11,000
Delhi	5,000-8,500	7,000-10,000	8,000-11,000
Hyderabad	5,000-9,000	5,500-9,500	6,000-10,000
Kolkata	4,000-6,500	4,500-8,500	6,000-10,000
Lucknow	4,000-8,000	5,500-9,000	6,000-10,000
Mumbai	N/A	7,000-9,000	6,000-10,000
Pune	5,000-6,500	6,000-8,500	6,500-11,000
Salaries in Rs per month                Source: TempLease Staffing Solutions

The gap between the pay packages of leased and permanent employees could be as wide as 40 per cent. Omprakash, 30, who works as a systems engineer with a top Indian IT firm, says that his salary shot up by over 40 per cent when he was absorbed in the company after working as a temp for three years.

Temp to perm

This transition is another reason why temping is so popular globally. It is used as a stepping-stone to permanent employment. Organisations often absorb leased employees when vacancies arise. Staffing companies differ on the percentage of temps who become perm: the figure ranges from 15 to 40 per cent.

Conclusion

Despite its advantages, companies are reticent in talking about temping. "That's because of stringent, unclear and non-flexible labour laws," says Pillai. Some companies feel they would lose face and be stigmatised if they are perceived as temping firms. Some companies go to the extent of signing non-disclosure agreements with their recruiting agency. Unlike the West, temping is still not a lifestyle choice in the Indian job market. However, that is certainly changing. So, go ahead and temp, it could be fulfiling and fun.

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Advice investing in Parsvnath and Lanco

Deven Choksey of KR Choksey Securities gives his perspective on Lanco Infratech and Parsvnath Developers.

According to him, Parsvnath Developers offers a good amount of opportunity. Moreover, he feels that there is a good amount of appetite for such issues because in the realty space, the institutional buyers and the overseas buyers are equally interested. Hence, he feels that it should find good response from investors.

As regards to Lanco Infratech, Choksey feels that given the kind of issue and the kind of a complexity, it is largely for those investors who are institutional investors and who have an appetite to stay in the infrastructure space for a longer period of time.

Openion on the price band for Parsvnath Developers is valued?

I think if one is looking at comparative valuation with Unitech, what we find is that sales to market cap ratio of Unitech is probably 30 times and this company is being marketed at less than 5 times. So if one looks at it from this angle, then this particular company should be revalued.

Secondly, the land bank of about 102 million square feet is equally impressive because as it unfolds into projects and realizing into revenue and profits, in the coming years, it will significantly contribute to topline and bottomline of the company.

So, to a great extent, the issue offers a good amount of opportunity. Moreover, there is a good amount of appetite for such issues because in the realty space, the institutional buyers and the overseas buyers are also equally interested. This company is a relatively known company as far as the operations are concerned. Probably that would find good amount of interest in the market. So all put together, it should find good response from investors.

At Rs 250-300, would put a subscribe on Parsvnath Developers?

Yes, I think the retail investor should go towards the higher band of the price and probably ask for subscription. They should get better subscription prospects in this particular range.

Lanco is a little bit more of a complex business; it has got many elements, which ones of those elements do you like?

I think you are very right, there are two aspects, one is the holding company aspect, the holding company holds investment in various power projects, which are either commissioned or are in the process of being commissioned.

They are putting up further capacities and taking over some of the stakes. If you look at the holding company structure and the investment in the power project and then look at the revenue coming into the books of the company, maybe I think the valuations are looking quite stretched.

But as we have seen, in such a scenario, where in the companies will unfold their projects, at some point of time and maybe unlock the valuation, the shareholders who have been holding company would get a little bit more benefited in the second stage.

In my viewpoint, given the kind of issue and the kind of a complexity, this particular IPO is largely for those investors who are institutional investors and who have an appetite to stay in the infrastructure space for a longer period of time.

The other business model of this company, which they are entering into, is in the realty space. They will be coming out with around 19.5 million sq ft of land, which is either owned or given the development rights. I think they should develop those lands over a period of time. So to that extent, I think the valuation would be seen over a period of time from that area.

The only issue, which I probably wanted to find out more from the management of the company is that they have a larger part of the development belonging to the company's own development efforts.

To a great extent, I think it should be seen whether the timely delivery will happen. I think it will be in Hyderabad and Andhra Pradesh with the IT park as well as the residential complex that they are developing in the realty space.

So, I think it is dependent on one particular geography of the country. Otherwise, I think as I have said that the investors who are having a long-term horizon for this kind of business, should be coming into this company.

So how would you value the land bank and the sort of orderbook they have in the construction part of their business?

About Rs 1600 crore worth of orderbook is seen. And out of that, Rs 1200 crore belongs to the group activities in this space. Land bank valuation would be slightly tricky at this point of time to get into.

But as far as the cost part of the valuation is concerned, if you are looking at the diluted equity of Rs 220 crore, it comes to somewhere around Rs 35 per share. We will have to actually see the market valuation part of the land and maybe the property when they develop it, I think we will have to see it further but Rs 35 per share is largely the cost part of the valuation.

So what is the bottomline, subscribe on Parsvanath and stay away from Lanco?

For retail investors, yes, I think one should subscribe to Parsvanath possibly stay away from Lanco. For institutional investors, who have infrastructure as their focus and want to stay invested for 4-5 years, then one should equally subscribe to Lanco.

Maybe I think at every opportunity you get, you may get further to buy from this stock as well in the market post listing.

How are you finding the market now? Do you think it is going up even from here?

In my viewpoint, I do not doubt that the market will have an upside, maybe 13,400-13,500 at this point of time is reasonably placed. Cairns Energy issue will slightly re-rate some of the oil companies particularly ONGC and it has started the process since last week.

I think that ONGC and Reliance will be the drivers in my view, also Bharti and certain other cement companies. I see that at this point of time, the market will move in the 12,925 and 13,400 band and maybe consolidate before it makes a bigger move thereafter.

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