Was Finance Minister right in reducing Corporate tax rate ?

Was Finance Minister right in reducing Corporate tax rate ?

Recently FM has reduced corporate tax rate and made it at par with many global economies . The step has been taken to counter economic slowdown . Many feel its incorrect and rather than this individual tax rate should have been reduced or tax on product reduced or interest rate reduced to augment consumption . Well these people can have their own logic but I support what FM has done .

Lets analyse both Corporate vs Individual cases .

I feel the one who takes risk , whose earnings are more transparent , who pays taxes should be rewarded first which is corporates here . The one whose survival is in growth and non growth is a concern should be rewarded first than the one whose major concern is survival and not growth and most importantly his( individual ) survival is dependent on growth of first ( corporate ).

A promoter takes risk on his capital, spends time and energy to build and develop a business and a employees enjoys the fruit of this growth . Yes employees do contribute for business growth but are paid salary , perks etc. They go on official tour , stay in good hotel , move by flight etc . Are they worried about the expenses which they are incurring ? No . Its being born by their employer company . So a employees lives and enjoys a good life at company’s cost and has no risk of company business failure . The only time he is worried when his salary gets reduced or retrenched from job . Who has got the first hit from the risk of business failure – corporate or its employee ? So who needs to be protected first ? If a company fails employees loses his job , if the company grows employees also grow in terms of salary etc . Also whose fortune is dependent on whom ?

Now coming to individual ( consumer ) . We all are individual so will always look for our benefit first . We want ourselves to be protected and rewarded because we feel all are paying tax .  But that’s not the reality . How many of individuals disclose their earnings correctly particularly those who are doing business, self employed , professional or even in private sector ? How many pay taxes correctly ? If a businessmen showing less earning , paying less tax why he should be rewarded for his purchase of big car by lower interest rate or lower tax . Has he contributed to the revenue of the country for which he should be given the benefit ?

It’s a reality that is I have to pay 10000 as EMI I will think twice for going for loan but if the same EMI becomes 4000 due to reduced interest rate then most Indians will try to take advantage of it . This will lead to more consumption , revival of growth and increase in inflation . That will force RBI to increase the interest rate and the EMI will get increased . So are we not going to end up a situation where people might have borrowed more than their paying capacity ( main reason for present slowdown ) , cases of default might creeps in and again entering into economic slowdown phase . Is it a long term solution ?

Reduced corporate tax makes India attractive investment market for foreign companies , competition will lead to better quality products  , competition will also lower the cost and lowering the cost means consumer will get at a lower price.

Yes I do agree that honest tax payer should be rewarded but that when I look at dishonest tax payers . Government already doing a lot to increase the tax base and there has been increase in tax revenue last few years. I am sure that individuals tax rate will also get reduced in coming years as felt by many but it’s a step by step process .

AM I PRODUCTIVE ?

AM I PRODUCTIVE ?

What has tempted me to think on above topic ? If I see anywhere I find people just glued to their mobile phone . After that to TV or internet or Netflex movie . The pattern of our life has changed and becoming from bad to worse . I don’t know what life means to different person . So I tried to ask myself what my life means to me ?

Answer was “happiness every second of my life “ . Going by this logic for most may be mobile , social media ,entertainment if gives happiness then they have right interpretation of life . So again thinking I got the answer “ happiness every second of my life but through what is productive for life “ .

I have been hearing the word productive since beginning of my career . In my early part of my career when anyone used to say about productivity or productive employee it was more related with how that person was helping in growth of organisation , business , adding more revenue . So productivity was more with success , money and career growth . Yes this gives happiness to many but is it a perfect scenario ?

With passage of time , experience and interaction with hard realities of life my interpretation of productivity has now got changed . My understanding of productivity is now in holistic sense , more to do with life .

 We live 60 or 70 or 80 years of life . If I take a person who lived say 75 years of his life it means he has lived 236.53 crore seconds of his life . But how many of his second has been productive ?

When I am saying Productive I mean am I using every second of my life correctly ? We all know time is the most precious thing in our life , it has a limit and we live a fixed life . But in that life also we do not live a single life but multiple life ( childhood, youth , mid , old ) . Time once lost is not recovered . I can not again become 40 year old or 17 year old .

Productivity for a kid is enjoying freely , productivity for a student means studying well but at the same time enjoying his youth times as well . For the ones who are in job productivity does not only mean earning more revenue for the company and salary in return but spending quality time with family and others who matter in his life .

In life there are many aspects – work , relationship, health, entertainment , relaxing , enjoyment etc etc . We spend our 24 hours every day involved in any one of these . The allocation of time to different aspects varies for different age group but there is limit of everything . Overindulgence in any activity is never good . Doing exercise , meditation , doing puja are all good things but these aspects also have a limit . one should not end up spending time more than required or for some things even less than required . Balancing of time w.r.t every aspect of your life which adds productivity is very important .

What is important from Productivity point of view if whatever we do should make us happy but at the same time not at the cost of harming anyone .  So now I will redefine Productivity as  “ happiness every second of my life but through activities which is productive for life and that does not harm anyone “,

Generally we have seen people working 12-14 hours a day regularly , called workaholic , praised by all but is he really productive  ? yes he might not be harming anyone else but harming himself . Is he spending some time to meditate , relax his mind , spending quality time with family . We have only 24 hours and you require a minimum 6-7 hours of sleep also . yes this person might be productive for his employer but not for himself in true sense . Yes he might be finding happiness but at what cost . if ignoring child when young will he get same response from his later years adult child when he has retired ?.  There can be many different types of examples . 

How to know the deviations , overindulgence or underindulgence and not balancing between each important aspects of life .

List down each aspect fully understanding its relevance for life as a whole . Of 24 hours earmark minimum time you should be giving to each aspect . Try to maintain that . We are all human being and bound to err so every day before sleeping spend at least 5-10 minutes with yourself -sit quietly , ask yourself, introspect what you did the whole day and your inner self will give you answer what you should not be doing , what you missed and improvement will come slowly but surely .

The basic purpose of this article is to awaken everyone before its too late and we repent after 20-30 years . Looking at todays generation over indulgence only in tech related things I don’t know what the life will be then.

Zee Business Mutual Fund Helpline 10 Sept 2019 Mr Prakash Ranjan Sinha ...

Economic slowdown. cause and remedy

Economic slowdown. cause and  remedy

( PL READ - YOU DONT NEED TO BE AN ECONOMIST TO UNDERSTAND THIS ISSUE )

Everyone is blaming government for slowdown . This article is make people understand what economic slowdown means , how it happens and how can be corrected . 

The creation and correction lies totally in the hand of consumer . So any citizen if he blames government should read this article .

Consumer or citizens create demand by buying any product . Industries and companies are supplier who cater to the demand I.e manufacture and sell to the consumer . 

Now since everyone wants a better life , have aspiration for better lifestyle products demand grows and so grows the purchase . To meet the growing demand supply also grows through more products manufacturing . Up till now no issues .

Now enters the lending institutions ( Banks and NBFCs) . Seeing the growing demand they start providing loans to individuals and  capital for investment for more manufacturing . 

It's a general principal of life " paav Uti hi pasaro Jitni lambi Chadar Ho " . Simply meaning live within your means or spend from your earnings or borrow only that much which you can pay comfortably on time . 

But since everyone is chasing growth , availability of money is easy so overspending starts . All of us took pride in 8% GDP growth but anyone ever even questioned that was it a sustainable growth ? 

What happened that very soon individuals expenses which has overgrown the income realised this and the only way they could have countered the situation is go slow in purchase I.e buying getting deferred or lowered till the income -expenses mismatch normalised . This is what led to economic slowdown . In India there are other structural changes also happening ( consumer choices and preferences changing like shared mobility through Ola ,Uber preferred in place of car purchase ) .There are many structural and demographic changes also happening leading to emergence of new style of living , emergence of new type of industries and may be some traditional industries either die or reshape themselves . 

Now the supplier I.e companies have already taken loans from bank and they have to pay interest . they have got other costs ( salary cost of increased manpower strength ) but there income from reducing sales gone down and so profit also getting reduced . Now these companies think one of the decision is to lay off some employees to counter the situation . 

I request my readers to see the audited balance sheet and profit and loss statement of any company which is laying off employees and crying of losses . I find in last 5 years all have earned huge profit every year , good reserves and surplus , paid good dividend also to their shareholders , good book value . So where is the loss which any of these companies are talking about . Yes profit might have got reduced vis a vis last year but is that a loss ?

Now the moment companies lay off employees or do salary cut more people are now added who have lesser money to purchase and again adding to more slowdown . 

Government has to step in and through certain policy measures along with RBI they try to reduce interest rate so that loans are cheaper , some tax advantage also given so that more money for spending at the end of individuals .

Economic slowdown is nothing but an after effect of chasing unrealistic aggressive growth by all in economy but it is led by individuals and only individuals can again end this slowdown by their normal purchasing activities . 

My only fear is that this economic slowdown might not get compounded because of greed of promoters of companies . They might aggravate the situation by laying off employees rather than taking the brunt for a year as they all have huge accumulated profit in their balance sheet . If these companies operate at a low profit for a year believe me this economic slowdown is just a matter of some months or max a year but if they add fuel to the fire ( laying off employees ) then will prolong. Government role is just to make policies which can ease the situation but action of individual consumers and companies will what eventually make this good or worse. 

Economic Slowdown catalysed by few Individuals

Economic Slowdown catalysed by few  Individuals

To understand economic slowdown and massive talk about auto slowdown I tried to look into balance sheet and income statement of Maruti ( which has 50% market share in car segment ) .

Some facts

Profit & Loss account of Maruti Suzuki India

------------------- in Rs. Cr. -------------------

Mar '19

Mar '18

Mar '17

Mar '16

Mar '15

Sales Turnover	86,020.30	81,994.40	77,266.20	65,054.60	55,133.60
Reported Net Profit	7,500.60	7,721.80	7,350.20	5,364.30	3,711.20
Earning Per Share (Rs)	248.30	255.62	243.32	177.58	122.85
Equity Dividend (%)	1,600.00	1,600.00	1,500.00	700.00	500.00
Book Value (Rs)	1,527.46	1,382.33	1,206.01	989.28	784.70

Balance Sheet of Maruti Suzuki India

------------------- in Rs. Cr. -------------------

Mar '19

Mar '18

Mar '17

Mar '16

Mar '15

Reserves	45,990.50	41,606.30	36,280.10	29,733.20	23,553.20
Networth	46,141.50	41,757.30	36,431.10	29,884.20	23,704.20
Current Liabilities	15,976.80	16,915.50	13,865.00	11,564.70	8,013.60
Book Value (Rs)	1,527.46	1,382.33	1,206.01	989.28	784.70

I do not have last 3-4 months data but assuming that sales are down as per various report should this company can be called a loss making company which has fired thousands of employees .

Sitting on a net profit of 7500 cr which rose from 3711 cr in just 4 years . Reserves doubled in same 4 years . Its very simple the promoter wants book value not to go down and so be the very very high dividend payout rate ( 1600% on face value of a share ) so has reduced the current liability through salary cut/losses by firing employees .

Economic showdown is a result of lesser spending due to lesser earning . Those thousands employee will add more to slowdown and not solve the economic slowdown problems . If the Management had been prudent they would have withered the present situation at least for a year as has enough reserves ( 3 times of their current liability ) , can think of skipping/reducing extremely high dividend ( reward to shareholder but most going to promoter ) .

This is the analysis of just one company . If 100 such companies behave the same manner then the economic slowdown which could have been avoided will definitely balloon to unmanageable level as personal income will get reduced drastically ( layoffs ) which will have an impact on spending and consumption ,

Just think and analyse how economic slowdown are catalysed even by a profit making big company . Its not a God creation but a result of greed of few individuals .

Nurture India Consultants : Confusion of an Equity investor – what to do now ...

Nurture India Consultants : Confusion of an Equity investor – what to do now ...: Confusion of an Equity investor – what to do now   ? Last 2 years return from equity fund has been low to negative , present looks ba...

Confusion of an Equity investor – what to do now ?

Confusion of an Equity investor – what to do now  ?

Last 2 years return from equity fund has been low to negative , present looks bad and future many saying worse yet to come. Now many equity investors might be thinking

1.       Did we do mistake by investing in equity mutual fund ?

2.       Should we get out and stop our notional loss ?

3.       How long we need to wait ?

Today economy is slowing down , corporate earnings reducing , job cuts happenings in various industries , bad debt rising in banking sector .

If someone ask me how long this slowdown will continue or when we will see reversal in these negative trends it will be just a guesstimate based on what I am reading or hearing . There also what I am reading , hearing is contradictory. Some say nothing wrong but its structural issue, some saying its cyclical problem  , some saying worse yet to come ….. . some defensive , some optimist , some pessimist . whom to believe and whom to not ?

I have always believed that there is no other teacher in this world than your own experience and observation ?. Believe yourself and what you can cross check yourself. So here I have tried to answer based on what I have seen and I will like others to also cross check based on their own observation on what has actually happened and is supported by facts .

The biggest risk comes from economy and all good or bad we have seen or talked has been  emanating from state of economy and economic factors .

Economy has always been growing in long term ( > 7 years time horizon ) and have been unpredictable/uncertain /good/bad in short term ( < 3 to 5 years ) . In every long term please remember there are many short terms . So even if I take my 20 years of experience which is good that has mix of some small term bad experience also .

Market is a reflection of how the economy stands at that point of time . Again this also has to be viewed in long term and short term .

Market ( Stock market ) has always been growing in long term ( > 7 years time horizon ) and have been unpredictable/uncertain /good/bad in short term ( < 3 to 5 years ). In every long term please remember there are many short terms . So even if I take my 20 years of experience which is good that has mix of some small term bad experience also .

Market movement is also linked to behaviour of different participants in it . There also I have observed tow things – (1) Market always over react in both situation more bullish when economy expanding and more bearish when economy is slowing down (2) whether its speculators or arbitrageurs or investors ( different type of participants ) no one wants loss , all wants profit .

Lets look now life and analyse what it was 10 , 20, 30 ….years back and what we can expect 10,20,30….. years ahead . Lets answer one question were more products/services earlier ? Answer is No . Do we expect more products/services in future ? Answer is YES . But why it is so ?

Life for all is governed by GROWTH aspiration . Growth and Aspiration of what ? --- Better life , better lifestyle  --- and that is catered through some or the other product /service provided by some or the other company – so investment if done is some good product manufacturing company which is in demand by people it will earn good return as sales will lead to profit and profit will translate to better valuation of that company share and that will translate to NAV growth .

Yes the risk is of short term as explained above but since our life is of 60,70,80 … years and we do require any product/service every second of life and its demand growing due to growth aspiration in long term good positive return will come .

Life is uncertain in short term but life always want to be good . So in this uncertain world one certainty is we all want a good life .

Now let me answer earlier question which might be hounding the minds of many investors

1.       Did we do mistake by investing in equity mutual fund ? – Definitely NOT . It’s a right decision

2.       Should we get out and stop our loss ?  -- It will be a big mistake if you do now . If you invested without understanding short tern uncertainty then you were misguided

3.       How long we need to wait ? – any recessionary trend ( worst form of economic slowdown  ) does not last long for more than 3 -4 years so may be notional pain for couple of years . You have another 20.30.40…. years to live so why to worry of this short term .

One thing which you should always be taking care is no risk of your short to mid term liquidity requirement and that investment at any point of time should be in safe asset i.e debt and that is liquid, in better quality company and is less or not effected adversely by rising interest rate .