US FED RATE HIKE SOUNDS LIKE ALARM BELL

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Global equity markets are dancing on the tune of US Fed’s comments since long time. In the beginning of this year, the Fed signaled that four rate hikes were likely in 2016, but that was scaled back in March due to a global growth slowdown, financial market volatility and concerns about tepid US inflation.

In September FOMC meeting, the US Federal Reserve left the federal funds rate target range unchanged at 0.25-0.50%, but seemingly prepared the ground for an increase in 2016, saying it had decided to wait “for the time being”.

The US Federal Reserve’s decision to stand pat on interest rates eased concerns of fund flows into emerging markets being hit. The US central bank left interest rates unchanged and decided to wait for further evidence of continued progress in the economy, even as the case for a rate hike has strengthened.

Fed’s latest economic projections signaled that an increase in interest rates was likely in December. However, projections for the next couple of years were lowered, which further boosted sentiment.

The FOMC members’ updated economic projections also signaled that an increase in interest rates was likely in the last quarter of the current calendar year, most likely in December. According to the projections, only three out of the 17 FOMC members expect the target range to remain at 0.25-0.50% by the end of 2016. The median of members’ estimates, however, suggests just the one rate hike of 25 basis points in 2016, down from two in June.

The Fed will next meet on November 1-2, which is being discounted by the markets as a possible rate hike opportunity due to the presidential elections which will be held in the week after the Fed’s meet. The Fed’s last meeting for 2016 is slated for December 13-14.

The median of FOMC members’ expectations of the federal funds rate at the end of 2017 and 2018, too, were lower than the June projections by 50 bps each. The median for longer run interest rate expectations was down at 2.875% as against 3% in June.

Commenting on the economy, the FOMC’s statement said the labour market had continued to strengthen, and the growth of economic activity had “picked up from the modest pace seen in the first half of this year”. Job gains had been “solid, on average”. FOMC expected one rate hike this year if the job market continued to improve and major new risks did not arise.

IPO: HPL Electric and Power Ltd

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Company & Business Profile

HPL Electric and Power Limited (“HPL”) is an established electric equipment manufacturing company in India, manufacturing a diverse portfolio of electric equipment, including, metering solutions, switchgears, lighting equipment and wires and cables, catering to consumer and institutional customers in the electrical equipment industry.

HPL has the largest market share in the market for electricity energy meters in India in fiscal 2015, with one of the widest portfolios of meters in India and the 5th largest market share for LED Lamps during the corresponding period.

Their manufacturing capabilities are supported by a large sales and distribution network with a pan-India presence. HPL currently manufacture and sell their products under the umbrella brand ‘HPL’, which has been registered in India since 1975.

HPL supply switchgears, lighting equipment and wires and cables through their network of 2,400 authorized dealers or distributors from their warehouses located in 21 States and union territories in India to institutional, non-institutional and corporate customers. HPL also supply their products to power utilities, which primarily includes supply of meters under direct contractual arrangements to electricity boards and power distribution companies, as well as through project contractors.

The sales and marketing activities are managed through over 90 branch offices and representative offices in India as on March 31, 2016.

HPL has a strong focus on upgradation of the technology that is used in their products and the processes used in manufacturing thereof, through their continuing research and development efforts. HPL has established 2 in-house research and development centres, the Kundli R&D Centre and the Gurgaon R&D Centre.

HPL also operate 2 tool rooms at Gurgaon (Haryana) and Kundli (Haryana), within their R&D Centres, where they have in-house component designing and tool designing facilities.  As on March 31, 2016, HPL employed over 97 engineers at their R&D Centres.

HPL currently own and operate 7 manufacturing facilities located across the states of Haryana and Himachal Pradesh, having in-house testing capabilities.

All the manufacturing facilities have accredited with management system certificates for compliance with ISO 9001 requirements. Company’s certain products has certified with various national and international quality standards, including the ISI mark issued by the BIS, the CE mark and KEMA certification for conformity with requisite European quality standards.

Objects of the Issue 

  1. Repayment/prepayment of certain indebtedness.
  2. Funding working capital requirements.
  3. General corporate purposes.

Apply in IPO now in ASBA mode, to apply call us at 0731-4217261.

IPO: ICICI Prudential Life Insurance Company Limited

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Company & Business Profile

ICICI Prudential Life Insurance Company Limited, largest private sector life insurer in India by total premium in fiscal 2016 and assets under management at March 31, 2016, is a joint venture between ICICI Bank Limited. India’s largest private sector bank in terms of total assets with an asset base of 7.2 trillion at March 31, 2016, and Prudential Corporation Holdings Limited, a part of the Prudential Group, an international financial services group with GBP 509 billion of assets under management at December 31, 2015. It is one of the first private sector life insurance companies in India and commenced operations in fiscal 2001.

The Company offers the customers a range of life insurance, health insurance and pension products and services. It offers a range of products to cater to the specific needs of customers in different life stages, enabling them to meet their long-term savings and protection needs. It also offers customers access to its products and services through an extensive multi-channel sales network across India, including through the branches of bank partners, individual agents, corporate agents, its employees, offices and its website.

As of June 30, 2016, the Company had 124,155 individual agents. As of July 12, 2016, the bank partners had over 4,500 branches. The Company believes that it is at the forefront of leveraging technology in the Indian life insurance sector, with focus on digitization and transformation of sales, customer on-boarding and internal processes. It also believes that its focus on technology has enriched customer experience and enhanced the productivity of its employees and distributors.

Objects of the Issue 

  • To achieve the benefits of listing the Equity Shares of the Company on the Stock Exchanges.
  • To carry out the sale of up to 181,341,058 Equity Shares by ICICI Bank Limited (the “Promoter Selling Shareholder”).
  • To enhance the “ICICI Prudential” brand name and provide liquidity to the existing shareholders.
  • To provide a public market for the Company’s equity shares in India.
  • The Company will not receive any proceeds from the Offer.

Apply in IPO now in ASBA mode, to apply call us at 0731-4217261.

IPO: GNA Axles Ltd

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Company & Business Profile

Established in 1993, GNA Axles Ltd. is among the leading manufacturers of rear axle shafts used in on-highway and off-highway vehicular segments in India. Since its first supplies in 1996-97 and first exports in 2001, company has grown to production levels of more than 2.26 million components in FY16.

Company manufactures and supplies a diverse range of rear axle shafts, other shafts and spindles for the on-highway segment, i.e. for LCVs, MCVs and HCVs and other transport vehicles such as buses. It also manufactures and supplies a diverse range of rear axle shafts and other shafts for the off-highway segment, i.e. for agricultural tractors and machinery, forestry and construction equipments, electric carts and other specialty vehicles used in mining and defence sectors. Company also manufactures solid and hollow spindles used in the axle assembly for various vehicles and equipments in the on-highway segment which they supply to their export customers.

Company has a broad customer base for both the on-highway and off-highway segments and customers are based in India and overseas. Customers primarily include OEMs such as Mahindra & Mahindra Limited, John Deere, TAFE, and tier-1 suppliers to OEMs such as Automotive Axles Limited, Meritor HVS AB and Dana Limited.

Company exports rear axle shafts, other shafts and spindles to various countries including USA, Sweden, Turkey, Brazil, Italy, Germany, Spain, Mexico, Japan, UK, France, China and Australia. Major global customers include Meritor HVS AB, John Deere, Transaxle Manufacturing of America, Dana Limited and Kubota Corporation.

Objects of the Issue

 The issue proceeds would be utilized for

  • Purchase of plant and machinery.
  • To meet the working capital requirements.

Investment Positives 

  • GNA Axles is among the leading manufacturers of axle shafts in India.
  • Company has diverse product range of axle shafts and spindles.
  • Strong long term customer relationships and diversified customer base.
  • Strong engineering, product development and technological capabilities.
  • Sustained financial performance.

For IPO note, read http://bit.ly/2cwXvor, to apply call us at 0731-4217261

IPO: L&T Technology Services Ltd

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Company & Business Profile

L&T Technology Services delivers a range of technologies, services & solutions across transportation, industrial products, telecom and hi-tech, process industry, and medical devices through Imagineering, Engineering & Adjacent Engineering. It has more than 8,000 engineers from nine nationalities serving over 200 customers, including more than 50 Fortune 500 customers. It leverage the strengths of its parent company, Larsen & Toubro, a leading Indian conglomerate in technology, engineering, construction, manufacturing and finance, It has been recognized as the Company of the Year by the Indo American Chamber of Commerce in July 2016.

L&T Technology Services operate in five industry segments (transportation, industrial products, telecom and hi-tech, process industry and medical devices, each of which represent a significant component of Top 500 global ER&D spenders. Half of its revenue in FY 2016 is derived from the three segments of industrial products, process industry and medical devices.

Objects of the Issue:

The objects of the Offer are
1. To achieve the benefits of listing the Equity Shares on the Stock Exchanges and
2. To carry out the sale of up to 10,400,000 Equity Shares by the Selling Shareholder.

Listing: 

The equity shares of the company are proposed to be listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

 

Retirement Planning

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A case study ✍ elderly couple

As we were returning from Goa, we happened to share our bench with an elderly couple who had just crossed seventy. Husband has retired from senior level position in Central Government. The wife has retired as steno typist from one of the respected names in private sector after forty years long service.

While sharing general topics, inadvertently we touched my favourite topic of retirement planning.

Here are some of the gems that I picked up from uncle:

1) Do not dream on behalf of your children. They have their own dreams and aspirations. Parent’s job is only to fund education.

2) The generation to generation view of life changes drastically.  Learn to take it cool.

3) Do not over invest in real estate. The children are too busy to maintain property which is outside their place of work. This couple in their seventies visits Goa every month to maintain their second home.

4) Land purchased by the couple has been encroached with only a third portion of it in their possession. Children do not have inclination to fight it out in court.  Children are highly educated and well placed in life. With their spouses also working, no one is interested in assets owned by parents.

5) Cash invested in some form which gives regular interest or is easily encashable is most important than anything else. The uncle gets monthly pension of Rs 35,000 and yet even one monthly pension is delayed, they get jitters.

6) Major investments of family are in real estate and Gold. Both they are not able to sell.

7) Mediclaim was ignored when the health was perfect. Now both partners had to undergo sugeries where a total of Rs 8 Lacs has gone from savings.

His parting message

My son, Cash is very important. Invest in asset which gives you regular income and easy liquidity. Also take very good care of your health. Good health plus Good Cash is Happy Retirement.

Lots of learning from this lovely couple.