Monday, November 22, 2021

HOME LOAN: Fixed EMI & Rising Interest Rate... BE CAREFUL

In today's anemic loan offtake environment, bankers are screaming from giant hoardings offering lowest interest rates that are good enough to make you want to buy a house even if you don’t need it…….  6.5% Home Loans come with a silent warning.

Banks seeking low risk and return of capital enabled by a 0.35% risk weight from the regulator, they are betting their house on our houses.

In this lies a Caveat Emptor. These rates are floating rates only. They will rise faster than what you may have budgeted for monthly EMI. And with it will increase your tenure and you may realise that after paying for 5 years, your twenty year home loan still has a residual tenure of  twenty years.

While the jury is still out on when the rates will start moving up, that they are unlikely to go down further is near certain. I see inflation coming faster than what the pundits are telling us and with this will begin the rate ride up.

If you are taking a home loan this is a great time but in your calculation, mentally budget and be ready for 8% - 8.5% interest rate, for when it does go near there you have room to increase EMI payments. So enjoy it while it lasts, but don’t bet on it to stay this way for too long. If you cannot increase the EMI with rising rates, your tenure will keep extending making you into a modern day Sisyphus.

आज यदि आपने सड़को पर बड़े बड़े होर्डिंग्स देख कर सिर्फ 6.50% या 7.50% ब्याज पर, Fixed EMI होमलोन ले लिया, तो इसके अंदर छुपी हुई रिस्क से सावधान जरूर रहिए । क्योंकि जैसे ही ब्याज की दर वार्षिक 1% बढ़ती है, और आप EMI नही बढ़वाते है तो बैंक, आपके होमलोन की अवधि 20 वर्ष से 24 वर्ष हो जाती है, और यदि ब्याज 2% बढ़ गया, तो फिक्स EMI में आपकी लोन अवधि 20 वर्ष से 30 वर्ष तक बढ़ जाती है । अतः ब्याज दर बढ़ने के साथ, मासिक EMI भी बढ़ाते रहे, नही तो लोन का Tenure बढ़ता रहेगा ।

For the statistically inclined, if interest rates move up by 1% yearly, after you avail the 20 year loan the tenure goes over 24 years (from 20 years) and if interest rate move up by 2% yearly, your tenure goes over 35 years (from 20 years), assuming constant EMI. So by all means take a home loan, but when interest rates move up, be mentally ready to increase your EMI payments. This is a teaser rate. If you are fully stretched now, when rates move up you won't find yourself in a happy place. In your calculations budget a minimum 2% rate increase and enjoy the discount right now while it lasts. Teaser rates on Adjustable Rate Mortgages were at the heart of the 2007 meltdown in the US, memories can sometimes be short.

Remember, banks are betting on multiple houses, you are betting on only one so your room for error is ZERO. Keep that in mind......before signing a home loan mandate.

Disclaimer : This is purely a knowledge sharing article, not offering or influencing any deal or transaction or investments.

CA Yogesh Birla
Director
Birla WP Management Co.
read my blogs : www.YogeshBirlaCA.Blogspot.com





Sunday, September 5, 2021

Share Market.... real learning for common Investor

Let's understand Indian Stock Market, how it works with balancing of Sensex, Nifty and Share prices, with a example case study on TATA MOTORS listed shares.

On 1st December 2017, Tata Motors share was at INR 399

On 3rd April 2020, Tata Motors share was at INR 65

Today 3rd September 2021, Tata Motors share is at INR 295

Those who have bought this stock in year 2017, will have a significantly different view on this share than those who have bought it in year 2020.

And between 2017 and now, fundamentally nothing much has changed in Tata Motors to warrant this kind of volatility.

So, despite all the research and analysis, predicting stock movement can't be perfected because ultimately the price will depend on views, opinions and calls. Research and analysis will always have a time lag.

And yes Tata Motors is not any ordinary company, if this is the treatment to stock price of such a reputed company think what research analysis will you do for any other company

"It is easier to Buy & Sell than fry an Egg".  The hidden role of chance in life and in the markets, as written by Nicholas Taleb.

One may think that the stock market seems very simple but when you include randomness to the equation, everything changes. 

Bottom Line Learning: Stock Market seems very simple, but not easy. 

You could be a world class Neuro Surgeon if you spent 5 years studying Neuro Surgery. But even after 5 years studying Stock Market there's no guarantee that one will be anywhere close to be a world class trader.

Remember, Too many variables involved here (Psychology, Money Risk management, Liquid Capital, Stock in question, it's History, Management background, Product plans, market Sentiment, war /  famine / corona / pandemic etc etc...)

It's indeed a very demanding profession. One needs to put the heart & soul (read passion) behind it, to achieve something while most wannabes think it's a type of get rich quick scheme. 

Sounds simple right....... always Buy at low and sell at high.

I am still learning.... you may also learn and earn.....

Disclaimer : This is purely a knowledge sharing article, not offering or influencing any deal or transaction or investments.

CA Yogesh Birla
Director
Birla WP Management Co.
read my blogs : www.YogeshBirlaCA.Blogspot.com


Sunday, July 18, 2021

Making Profits from E-commerce Companies in Emerging India

India an emerging digital consumer market, wherein it appears to be a wonderful time if you want to be a reasonably successful internet company in India.
CA. Yogesh Birla
CA. Yogesh Birla

First, there are more unicorns being created than anytime in the recent past. It looks like practically everyone is getting funding in India. In fact, the total funding raised by startups in India this year has exceeded the previous year by a billion dollars. And we are still just in July 2021.

Second, if you are an internet company that’s been around for a while, there’s an even more attractive option—going public. Yes. For far too long, CEOs of Indian internet companies have made promises and teased the idea of wanting to do an Initial Public Offering (IPO), and finally, it looks like some of them have bitten the bullet. Zomato’s IPO is going live next week. And there are reports of companies like Paytm*, Delhivery, and Flipkart who are going down this path too.

Prime reasons are…… There’s a lot of liquidity in the private and public markets right now—which is true. Others may argue that this was inevitable, and represents the coming-of-age of internet companies, many of whom witnessed growth during the pandemic or in the case of Zomato, Flipkart, Paytm, have been operating thanks to venture capital for nearly a decade. This is the endgame. It’s here. It’s India’s moment.

All of this is true to varying degrees, but the actual reason is quite different.

It’s a secret that’s being whispered among some VCs, founders, and market researchers in India. It’s something many people have noticed, but are somewhat uncomfortable talking about openly.

And today, I’ll use it to explain why all of these companies are suddenly getting funded or going public. And along with that, we’ll also see why India’s internet sector, which boomed for over a decade with several companies going from smaller companies to unicorns and from unicorns to decacorns, will likely never see a global pure play 100 billion dollar internet company emerge anytime soon.

Here is the secret.... The number of active internet customers in India has stopped growing. This customer base represents the total addressable market for most Indian internet companies. Until now, this market was growing rapidly.

Now, this growth has essentially flatlined.

But if the number of customers has mostly stayed the same, then why are we seeing a surge in funding for these companies? And why are some companies going public?

Let’s dive in...... If you are an internet company in India and a VC asks you what your addressable market size is, you may be tempted to say that it’s 1.4 billion.

So you may say, well, it’s the number of Indians with a mobile connection in India, which is a little less than a billion. But not all of them have access to the internet. So you say, well, then, it’s the number of people who have mobile data. Which brings it down to around 400 million. But then that includes feature phone users, who can’t run most apps anyway. So you cut them out. Then users who technically have a smartphone, but it’s a smartphone in name only and can’t do much. Cut. Access to online payment mechanisms. Cut. Disposable income for consumption. Cut.

Then we remove the ones who have used their phones just to do digital transactions like, say, transfer money to each other or recharge their mobile plan. Also those who use it just as a free media consumption device, like watching videos on TikTok or YouTube.

After all of this, you’ll end up with an estimate of the number of annual active customers (AAC) in India. These are the users who have access to the internet through a smartphone, use mobile apps, have some disposable income, and have bought something online at least once a year. E-commerce. Shopping. Food Delivery. Rides. Subscriptions.

Well, if you really stretch it, it’s about 70 million users (realistically, it’s closer to 40-50 million, but more on this later). That’s about the population of the United Kingdom.

There are empirical ways to validate this. A great proxy is the number of postpaid mobile users in India, which is around 50 million, who form the bulk of this base. There are multiple reports from a couple of years back which validate this 50 million number as well. Maybe it’s grown since then to, say, 70 million users, but that’s more or less where the outer limit is today. According to a source I spoke to, that’s also more or less the number of unique customers who have bought a product at least once last year on the biggest horizontal e-commerce platforms in India—Amazon or Flipkart.

Essentially, if you want to make money online in India, you’ll need to take it from these 70 million users.

Well, let’s see. Broadly, these 70 million users can be broken down into three categories, assuming it’s a pyramid.

Level C : India’s entry shoppers. At the lowest level, with the broadest base, comprising roughly 40 million users.

These users are the ones who have bought something online, but have done it very sparingly. Maybe once or twice last year, and they have done it because they heard that one gets a good deal online for a really important purchase, which is usually a mobile phone. They buy one product, and almost never buy anything else online, certainly not from websites outside the big horizontal e-commerce players.

Level B : India’s occasional shoppers. At the middle level, comprising roughly 20 million users

These users may buy something online, but will venture outside online shopping very, very sparingly. Think of users like our moms and dads, who spend money online to get food from Zomato as a treat, or maybe take an Ola once a month if they are feeling particularly generous.

Level A : India’s California users. At the highest level, comprising 10 million users

If you are reading this, you are likely in this category. You are a digital native. You buy nearly everything online—from products, to groceries, to food. You may even have a Netflix subscription. You are the elite user—the one with a lot of spending power, and who is comfortable buying that lipstick from Nykaa or that cold brew from that fancy direct-to-consumer startup in Indiranagar, Bangalore. You probably use Dunzo, and maybe even pay your bills on CRED.

This is the customer everyone desperately wants, especially because India’s California users punch above their weight. They may be just 15% of the active transacting customer base, but according to one founder I spoke to, they account for nearly 40% of the money spent by this pyramid.

Again, there are ways to triangulate this. In its recent pre-IPO report, Zomato, which is a food delivery service and had a strong use-case during a pandemic, reported an average monthly transacting user base of...10 million users. Netflix has about 3 million subscribers in India (and has started tapping out) CRED claims to have about 6 million. Amazon Prime has 6-7 million users.

10 million users. …..That’s the population of Sweden.

The reason why everyone is fighting for the same users is because this base of 70 million users isn’t growing as rapidly as it should. The growth of this pie is tied to one thing, and that’s the per capita GDP of India. If more Indians make wealth, then more people will fall into this consumer pyramid. Right now, that does not seem to be happening fast enough. Here’s a graph of the GDP per capita growth of India. Notice the growth rates below in green bars. See how they’ve gotten smaller with time.

India’s current per capita GDP is a little over $2,000 right now. There’s a direct link between the per capita GDP and the number of active transacting customers online. And it’s not linear. 

Take China for instance, which has a per capita GDP of around $10,000. That’s five times of India. Alibaba, their largest online horizontal commerce platform, has an active transacting customer base of 800 million users. 

India has just a tenth of that, assuming the best case scenario.

And this was before the pandemic. We still don’t know the full impact of Covid, but it has almost certainly set us back by several years, with millions thrown back into poverty. China, on the other hand, has rushed ahead. Remember, any growth we may have seen in the GDP per capita has also almost certainly been inequitable— it’s gone to the rich people and less to the poor. This is likely why we probably haven’t moved much from the 70 million number.

All of this leads to a few implications........

Implication 1 : Horizontal players like Flipkart and Amazon are at the outer limits

Both of them have practically captured most of this pyramid, and are now in the business of trying to maximise repeat purchases or even a second purchase from a large part of the 70 million of this pyramid, and a first purchase from those outside it.

This does not mean that they won’t grow. They will. But it will be a long, hard, and expensive grind.

Implication 2 : The rise of vertical-specific players from this 50-70 million pyramid

Any new internet company has to play within this pyramid, and the more successful ones are creating use-cases for verticals. Food Delivery. Rides. Fashion. Groceries.

The best part is that winning that vertical is good enough. If a company is able to get just 2-3 million users, especially from that top 10 million India-Californian customers, they are golden. Take Licious, which recently reported that it had delivered to over 2 million users. Poof. Unicorn.

Take my money, says the VC. You are a market leader in that vertical, so I’m going to back you.

This is one of the reasons why leaders in individual verticals are getting a surge in funding. VCs have decided that winning a vertical is good enough for now, and so they are backing the leaders.

But why? Because...

Implication 3 : It doesn’t take a lot to compete in a vertical and stay competitive

Remember that these 10 million users aren’t value conscious. They are product and service conscious. If something is a better product, these users switch to it. Everyone was buying cosmetics and beauty on Myntra and Flipkart until Nykaa came along. Licious took money away from offline groceries. Pharmeasy took money away from medicine stores.

You don’t need a lot of money to stay competitive if you are a vertical leader. Maybe $200-300 million a year tops, according to the aforementioned founder I spoke to. It’s a no-brainer for a VC to fund a vertical leader for that amount and give them a unicorn valuation.

This is why we are seeing a sudden rise in unicorns in India. Salaries go through the roof. All these companies are competing for the same talent in India. The pie of qualified, smart developers in India is also not growing.

Implication 4 : However, at a certain point, it gets harder to justify valuations from VCs

From a VC standpoint, returns are expected over a 3-5 year period. And that’s why we’ll see the rise of many unicorns in India, and maybe even a couple of decacorns, but no more.

There are limits to vertical companies. And that limit is 10 million users. Once a company hits that number, very few private capital players are willing to fund companies because it’s clear that the next level of growth is going to take a long, long time.

Much more than 3-5 years, which is a typical VC horizon.

Implication 5 : So some companies go public

At this point, companies just choose to go public. Public issue markets have more liquidity, and they have more patience with companies, which need a place to wait it out until the pie grows, which may take 7-10 years. And if VCs can’t wait that long, maybe the public will.

The question is how many companies can enter into the public issue market, and at what point does the valuation stop making sense, even for an excited public market.... That’s the real question based on entrepreneurial capabilities with smart working professionals....

Year 2021 & beyond.......

~ Data is new oil

~ Technology is new consumption

~ Equity is new real estate

~ Rural is new middle class

~ Retail is new institution


~ Small to mid quality companies will be chased

~ Famed sectors of old days will face slow death

~ Millennials dictating the trend

contributed by : (expert advisor for raising private equity and entrepreneurial funding for innovative start-ups)

CA Yogesh Birla
Director
Birla WP Management
read my blogs : www.YogeshBirlaCA.Blogspot.com




Saturday, May 22, 2021

Shares & Mutual Funds मुनाफे पर..... Income Tax कैसे लगता है

CA Yogesh Birla



पुरातन समय से कहावत चली रही है कि अपनी मासिक आय में से, भविष्य हेतु बचत करने के बाद ही, वर्तमान का खर्चा करना चाहिए, वही व्यक्ति सदैव सुखी रहता है इस बचत को हमलोग Share, Mutual Funds, Realestate, Gold आदि में Invest करते है, एवं जब उनको वापिस बेचते है, तो Income-tax लगता है बहुत बार लोगो को आयकर का ज्ञान नही होने से, वो बहुत कम मुनाफे पर शेयर्स बेच देते है, एवम फिर पता चलता है कि, जितना प्रॉफिट कमाया, उससे तो ज्यादा इनकम टैक्स भरना है अतः इन बातों का ध्यान रखें :-

शेयर बाजार में निवेश :-

Short Term Capital Gains :- यदि हम किसी शेयर को खरीदने के 12 महीने के भीतर ही बेच कर लाभ कमा लेते है, तो यह शार्ट टर्म केपिटल गेन कहलायेगा इस पर 15% की दर से आयकर लगेगा यदि आप शेयर को नुकसान में बेचते है, तो loss को अगले 8 साल तक carry forward करके भविष्य के profit से setoff किया जा सकता है

Long Term Capital Gains :- यदि हम किसी शेयर को खरीदने के 12 महीने के बाद बेच कर लाभ कमाते है, तो यह लांग-टर्म केपिटल गेन कहलायेगा यदि कुल मुनाफा 1 लाख रुपये से अधिक है, तो इस पर 10% की दर से आयकर लगेगा यदि आप शेयर को नुकसान में बेचते है, तो loss को अगले 8 साल तक carry forward करके भविष्य के सिर्फ Long term capital gains से ही setoff किया जा सकता है

Share Day Trading (without Delivery) :- यदि आप रोजाना शेयर खरीद बेच रहे है, परंतु डिलीवरी नही ले रहे है, तो यह आपकी सट्टे से होने वाली आय  (Speculative Profit) कहलाएगी। इस पर आपकी normal slab rate के हिसाब से ही आयकर लगेगा बेचने में यदि नुकसान हुआ है तो वह सिर्फ अगले 4 वर्षो तक carry forward किया जा सकता है एवं भविष्य में होने वाली सिर्फ Speculative income से ही setoff किया जा सकता है

म्यूचअल फण्ड में निवेश :-

Equity Mutual Funds :- यदि इक्विटी म्यूच्यूअल फण्ड में किया गया निवेश, खरीद के 12 माह से कम में बेच दिया गया है तो मुनाफे पर 15% आयकर लगेगा यदि निवेश को खरीद के 12 माह से अधिक होल्ड करके बेचा गया है, तो मुनाफे पर  सिर्फ 10% आयकर ही लगेगा (यदि मुनाफा 1 लाख से कम है, तो यह आयकर मुक्त है)

Debt Mutual Funds :- यदि डेब्ट म्यूच्यूअल फण्ड में किया गया निवेश, खरीद के 3 वर्ष के भीतर बेच दिया गया है, तो इस पर नार्मल आयकर स्लैब के हिसाब से ही आयकर लगेगा।  यदि निवेश को खरीद के 3 वर्ष से अधिक होल्ड करके बेचा गया है, तो मुनाफे पर 20% आयकर लगेगा (indexation का लाभ लेना ना भूले) यदि इस निवेश को बेचने से नुकसान हुआ है तो इसको अगले 8 वर्षो तक carry forward करके setoff किया जा सकता है

यदि निवेश करने के साथ ही साथ आप इस पर मिलने वाले डिविडेंड पर आयकर, खरीद बेचान के मुनाफे पर आयकर आदि का ध्यान रखेंगे, तो अपने निवेश पर अधिक मुनाफा कमा पाएंगे एवं अपने Investment Advisor / Broker से उचित मार्गदर्शन भी प्राप्त कर पाएंगे

contributed by :

CA Yogesh Birla
Director
Birla WP Management
read my blogs : www.YogeshBirlaCA.Blogspot.com


Sunday, May 16, 2021

RBI Loan Restructuring Plan 2.0 - लोन एवं EMI कोरोना राहत 2021

CA Yogesh Birla



पिछले वर्ष 2020 की तरह इस वर्ष भी कोरोना की दूसरी लहर से Loan की EMI भरने वालो को राहत देने हेतु Reserve Bank of India ने 6 मई 2021 को Restructuring Plan 2.0 के तहत, नई स्कीम की घोषणा की है ।

Restructuring Plan 2.0 में 25 करोड़ रुपए तक के व्यक्तिगत कर्जदार, छोटे कारोबार और MSME को राहत दी गई है। एक ही शर्त है कि 31 मार्च 2021 को Loan Account - Standard होना चाहिए……. यानी उसमें किसी तरह का Default नहीं होना चाहिए। इस प्लान के तहत कर्जदार को अपने बैंक से संपर्क करना होगा और वे दो साल तक का Moratorium ले सकेंगे। इसके लिए आवेदन करने की Last date 30 September, 2021 तय की गई है।

  •  यदि आप अपने लोन की EMI नहीं चुका पा रहे हैं तो 31 सितंबर 2021 तक अपने बैंक से संपर्क कर सकते हैं… Loan Restructuring option पर बात कर सकते हैं।   
  • बैंक आपकी बची हुई लोन राशि, आपके रीपेमेंट ट्रैक रिकॉर्ड, आपकी आय आदि को ध्यान में रखते हुए, आपका लोन रीस्ट्रक्चर कर सकता है।    
  • इसमें अधिकतम दो साल तक का EMI Holiday या Loan Repayment Period बढ़ाना शामिल है।     
  • जिन लोगों ने पिछले साल रीस्ट्रक्चरिंग का लाभ उठाया, वे भी नए मोरेटोरियम के तहत अपने लोन रीपेमेंट पीरियड को दो साल बढ़ा सकते हैं।

लेकिन, लोन रीस्ट्रक्चरिंग के लिए आवेदन देने से पहले इतना ध्यान रखें कि :

  • अगर आप बिना रीस्ट्रक्चरिंग के भी अपनी EMI को चुका सकते हैं तो रीपेमेंट पीरियड बढ़ाने या मोरेटोरियम की कतई सोचें।        
  • EMI हॉलीडे से लेकर रीपेमेंड पीरियड बढ़ाने तक का फैसला बैंक का होगा।·        
  • रीस्ट्रक्चरिंग प्लान की शर्तें बैंक तय करेगा। जब वह आपको योग्य समझेगा, तभी रीस्ट्रक्चरिंग प्लान को मंजूरी देगा।·        
  • रीस्ट्रक्चरिंग प्लान को अंतिम हथियार के तौर पर चुनें। यह स्थायी राहत नहीं है।·        
  • किसी भी मोरेटोरियम या रीपेमेंट पीरियड बढ़ाने का आवेदन करना आपके लिए महंगा साबित होगा क्योंकि इससे आपको अधिक ब्याज चुकाना होगा।·        
  • आप रीस्ट्रक्चरिंग प्लान ले रहे हैं तो पता कर लें कि आपको कितना ब्याज अतिरिक्त चुकाना होगा। उसे ध्यान में रखकर आप जल्द से जल्द उसका भुगतान करने की योजना बनाएं। इससे आपको अधिक ब्याज का भुगतान बैंकों को नहीं करना होगा।

अगर आपने Home Loan Restructuring कराया तो कितना ज्यादा ब्याज चुकाना होगा ???

  • अगर आप रीस्ट्रक्चरिंग का विकल्प चुनते हैं तो आपका रीपेमेंट पीरियड दो साल बढ़ जाएगा। यानी अगर 20 साल का लोन है तो 22 साल तक उसका रीपेमेंट करना होगा।·        
  • अगर ब्याज दर 8% ही रहती है तो 25 लाख रुपए के बकाया पर आपको approx 3 लाख और 50 लाख रुपए के बकाया पर 6 लाख रुपए additional interest चुकाना होगा।        
  • Interest Rate and Outstanding Amount के आधार पर आपके अकाउंट में लगने वाला Additional Interest कम या ज्यादा हो सकता है।·        
  • आपको यह भी देखना होगा कि बैंक आपको रीस्ट्रक्चरिंग के वक्त क्या ऑफर दे रहा है। यह ऑफर रीपेमेंट हिस्ट्री, क्रेडिट स्कोर और बकाया राशि के आधार पर हर कर्जदार के लिए अलग-अलग हो सकता है ।

निश्चित जानकारी हेतु अपने Bank या Loan देनेवाली संस्था से संपर्क करें।  यहाँ लिखित तथ्य, सिर्फ आपकी जानकारी हेतु है, यह किसी ऑफर या बाध्यता हेतु नही है ।

contributed by :

CA Yogesh Birla
Director
Birla WP Management
read my blogs : www.YogeshBirlaCA.Blogspot.com