Pharmaceutical Sector: Recent News

Pharmaceuticals Sector: Recent News

Following are the key developments in the pharmaceuticals space in October 2014:

• US Congress is probing around 14 companies over price escalation of generic drugs including Dr Reddy’s Laboratories and Sun Pharmaceutical Industries. Other companies include Actavis, Apotex Corp, Endo International, Global Pharmaceuticals, Heritage Pharmaceuticals, Lannett Company, Marathon Pharmaceuticals, Mylan, Par Pharmaceuticals, Teva, West-Ward Pharmaceuticals and Zydus Pharmaceuticals.
• As part of its strategy to boost the presence in Iranian pharmaceuticals market, valued at US$4bn, Cipla is planning to set up a manufacturing plant in partnership with its local distributor. As per the agreement, Cipla will own a 75% stake in the plant and will invest Rs2.25bn (US$36.65 mn) over three years in areas including machinery and equipment for the facility.
• The National Pharmaceutical Pricing Authority (NPPA) has clarified to the Delhi High Court that the Centre's recent decision to withdraw its power to fix prices of non-essential medicines  will not affect its earlier order dated 10 July 2014 on the prices of 108 drug formulations.
• Ranbaxy has settled its litigation with Texas Medicaid Program (a public-funded healthcare programme for people with low income) under the settlement agreement and agreed to pay a penalty of US$39.8mn to the State of Texas in a series of tranches through August 2015.

Mergers & acquisitions/joint ventures/partnerships

• American private equity fund TA Associates is in advanced stage of talks with the promoters of Famy Care and private equity investor AIF Capital to  acquire a 35% stake in the company for US$200mn (Rs12bn), as per media reports.
• Ipca Laboratories has acquired the high-potency oral solid dosage formulations facility of Alpa Labs, situated at Pithampur near Indore, on a going-concern basis for a consideration of Rs717.1mn (US$12mn) including non-compete fees. The acquisition will allow Ipca to forward integrate hormonal APIs manufactured at its Nandesari plant (acquired from Tonira) with hormonal formulations.

• Cipla has entered into a sales and distribution agreement with Teva, whereby its South African subsidiary, Cipla Medpro, will exclusively market Teva’s product portfolio in South Africa. The partnership is subject to approval of the Competition Commission of South Africa.

• As per media reports, ChrysCapital, India's largest home-grown independent private equity (PE) firm, is negotiating with a number of potential buyers to sell its 11% stake in Mankind Pharma for  more than US$200mn, valuing the company at more than US$2bn.

If you want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for seminar in your city just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

Various Available Instruments for Investors

Various Available Instruments for Investors

On the account of festival of light, I wish to all my readers and investors to Happy Diwali. From Diwali in India it is the beginning of new year called “Samvat Year”. The businessman makes new accounts book for the year and prayer goddess Laxami and Subhkarta Sri Ganesh. The new earning or young investor should begin investment for wealthy and prosperous future.

I have many times felt that when we discuss about investment with investor they often feel that they need a big amount of sum for it. It is not true, you can begin from small amount. There is no need of wait for big amount of money. On this Diwali, start some investment with financial planning. We will discuss about some available investment options today.

Fixed Deposit and Post Office Deposit:

It is the safest option but it is not much effective to counter the inflation. At present, banks provide 8-9% return for long term fix deposit. There is possibility of interest rate cut by RBI to the last quarter of this fiscal.

Post office RD is offering 8.40% return and return is taxable. You can start as little as Rs 10 in the post office schemes. National Saving Certificate offers 8.80% return

PPF:

It stands for Public Provident Fund. From this financial year, the investment limit has been increased till Rs 1.5 lakh from Rs 1 lakh. The return of PPF is 8.7% for this year. The lock in period of PPF is 15 year and it may be extended in 5 years block by subscriber.

Mutual Fund:

On the sign of improvement in economy, there is much possibility of great return from mutual fund in long run. For your records, there are many mutual funds schemes which have delivered more than 10 times return in the last 10 years. It is less risky in compare with direct investment in the shares. It is very good option for small investors as you can begin the investment a little Rs 500 for each month as SIP (Systematic Investment Plan).

Company bonds and deposit:

There are various companies which are offering till 12% return comes with various ratings according to their risk profile. Before investing in this, you should check the rating and risk profile of the companies.

In the point of returns, the shares and equity mutual funds have outperformed the all asset classes. The average return of shares and equity mutual funds has been more than 15% in the last 15 years.

If you want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for seminar in your city just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

When should be invest in the shares?

When should be invest in shares ?

The above written question is in the mind of various investors. Unfortunately, many of us are not able to find the difference between saver and investor. India is country of great savers but poor investors. Most of us enter in share market for short term gain but become investor forcibly when the rate of our shares drops below from the purchasing price.

Investing require three main things. First is investment period, second is well understanding of the asset in which you are going to invest and third is know about the risk. In this article I will pick the 2 example of stocks which had created extra ordinary wealth.

In 1993 Infosys came with IPO of Rs 95 per share. If you had bought 100 shares of Infosys for Rs 9,500 at 1993, the value of that Rs 9,500 has become today Rs 5.05 crore.

Year	Corporate Action	Shares
1994	1:1 Bonus	200
1997	1:1 Bonus	400
1999	1:1 Bonus	800
Nov-99	Split to Rs 5 Face Value	1600
2004	3:1 Bonus	6400
2006	1:1 Bonus	12800
2014	1:1 Bonus	25600

  

The value of 25,600 share of Infosys today is 5.05 crore without including dividend. Keep in mind dividend is tax free amount which company gives to its shareholder.

The other wealth creator is Wipro. The IPO had come in 1980 Rs 100 per share. If you had bought 10 share of Wipro at that time worth Rs 1000 then, the value of that Rs 1000 has become today worth Rs 56.05 crore.

Year	Corporate Action	Shares
1981	1:1 Bonus	20
1985	1:1 Bonus	40
1986	Split to Rs10 Face Value	400
1987	1:1 Bonus	800
1989	1:1 Bonus	1600
1992	1:1 Bonus	3200
1995	1:1 Bonus	6400
1997	2:1 Bonus	19200
1999	Split to Rs 2 Face Value	96000
2004	2:1 Bonus	288000
2005	1:1 Bonus	576000
2010	2:3 Bonus	960000

The worth of Rs 1000 which you had invested in 1980 is Rs 56.05 crore today without including tax free dividend.

The above mentioned two example indicate the one thing very strongly that you should invest in shares with the view of long term goal like retirement kitty, children’s education and marriage etc. If you have not enough time to study of stocks then you should invest in large cap equity mutual fund.

Please do not try to time the market. For long term investor market is always good. For example, since last one year market has given decent 60% return but many investor has missed this market rally because they want time the market.

If you want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for seminar in your city just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

Bank Fix Deposit: How much safe?

Bank Fix Deposit: How much safe…?

Whenever I met my investors and friends, I have seen a lust for fix deposit in all of them almost all time. Many times I have experienced that people do the fix deposit in banks with very confidence. In our country, people have high degree faith in banks. They consider it very much safe. In the view of safety, they may be right but there are also other important aspects associated with your investment which you ignore many times. I am not saying that you should agree with my views but at least try to understand what I want to say here. In this article we will discuss all aspects associated with bank fix deposit.

Safety: Till now you know or understand that all money deposited in banks are safe. Please update and correct yourself only amount Rs 1 lakh insured by the banks regardless whatever money you have deposited in banks. It means if you deposit Rs 10 lakh fix deposit in your banks and in case of any bad events occur with bank will be liable to pay only Rs 1 lakh.

Now you will argue that the bank will never bankrupt in India. Please remember 2008 events in US, even more than 100 years old banks had got bankrupt in that year so nothing is impossible in financial world.

Return: We Indian always much concern about safety not return. When we say return then your focus should be on net return after deducting tax and inflation effect. We many times ignore inflation and taxes and blindly do the fix deposit at the published rate by banks or corporate.

Here I take example of one of my friend for much understanding about net return. My friend Ashutosh has done fix deposit of 10 lakh with bank for 1 year at 9% return offered by the banks. My friend comes in 30% tax bracket. After 1 year when his fix deposit became mature he had got Rs 10.90 lakh. Now he has to pay 30% tax (ignore other taxes for calculation) on return so after deducting tax Rs 27,000 now the amount in his hand remain 10.63 lakh. After deducting tax his return was 6.3%. If inflation in that year average remains 8% then his net return become negative -1.7%. It is the real picture of your fix deposit whether you believe or not. Inflation is real culprit which eats your significant part of your return.

Goal: Always associate your each investment with a specific goal and make plan according to your near and long term plan. If your investment does not generate net positive return then it cannot fulfill your goal. Investment without planning ultimately will not give you a satisfaction and you will always confused about investment and will do some mistake during investment.

There are many other options available to fulfill your goal in the market. Keep in mind that at least your investment should generate positive return after considering tax and inflation.

If you want more information regarding investment or you need investment services, feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

Are you going to invest in real estate.?

Are you going to invest in real estate..?

I know your answer would be yes that the people more tend to buy a property. The last week I have read the story about the deal of the iconic film actor Rajesh Khanna’s bungalow which is situated on Carter Road , Bandra in Mumbai. It considered a very posh area as it also have a sea facing location. Rajesh Khanna bought this bungalow for Rs 3.5 lakh in 1970. After 44 years his heirs sold it for Rs 85 crore. The property has multiplied by 2428 times or in other words annualized return og 19.38% over 44 years.

In Mumbai, there are many more examples of the same type of property deals which has given handsome returns. Samudra Mahal in Mumbai is another expensive property. A flat purchased in 1970 at Rs 700 per sq. feet was sold at Rs 1,18,000 sq. feet in 2013. Money multiplied by 168 times in 43 years means 12.66% annualized return.

In 1963 Godrej paid Rs 1 lakh to buy his first house in south mumbai. In 2011 the property was sold for Rs 25 crore. Money multiplied by 2500 times in 48 years. It means the annualized return of 17.70% over 48 years.

Now assume if you had invested Rs 100 in Sensex in 1980. Not it has become more than 27000. If dividend yield also include assume 2% then Sensex has delivered 20% annualized tax free return. It means sensex has beaten most expensive prime properties in the point of view return.

Good mutual funds and many stocks have delivered awesome return like 25% to 30% far superior to sensex itself. Unfortunately, in India the investor are least understood about this investment. Only about 3% saving goes into stocks or mutual fund. Investment in equity have one another benefit except tax free return. You can sell it anytime according to your need and get sell amount within 2 days. You need not to sell entire mutual funds holdings or stocks. You can sell stocks or mutual funds in the part. In the case of property you have to sell whole property and it is very difficult to sell immediate. In normal cases of property deals happens between 1 month to many years. You cannot sell in part of your flat or bungalow. You need not annual maintenance or local tax for your mutual funds or share holdings.

I observe many time when I meet my friends or investors that they are more willing invest into property instead of equity mutual funds. Investment in the flat or property always their first choice and they happily take loan for it if they do not have lump sum amount. They completely ignore the cost of acquisition of that property which is very significant. The cost of acquisition means the brokerage you pay the broker, stamp and registration duty, annual municipal tax, maintenance of the property and the interest you are paying on the loan.

Give some importance to equity as you give to real estate. Give it also at least more than 10 years and ignore bull or bear run of the market. If you hold it for more than 20 to 30 year you would be amazed at the fortune created for your retirement and next generation.

If you want more information regarding investment or you need investment services, feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

Beware of Ponzi Schemes

Beware of Ponzi Schemes..!!!!

I was travelling in the train from Mumbai to Ujjain. In the train compartment, I was happily travelling with the fellow traveler. Although we never met before but got very close to each other during conversation. We all were 4 persons including me. All were between 30-40 year age group. One person was businessman and other 2 were doing job in MNC. When they knew about my profession about financial adviser then the subject of our discussion turned towards investment and I was told that all of them had recently invested in PACL (Pearls Agrotech Corporation Ltd), s deposit scheme. They were very happy after investing in this scheme as the scheme were promising very high return than bank FD or a plot subject to availability. One of very close friends of that businessman had advised and forcibly done the investment. MNC employee had invested as their boss had invested in that scheme.

I cautioned them to invest in such type of schemes but they were very confident. After all scheme was suggested by their very close friends. They all were very happy and carefree about investment and told me that many people had invested in this scheme and even you should also participate in this scheme. I have refused their advice and warned them about these types of schemes in future. After reaching destination we had exchange mobile no. and said goodbye to each other.

Before few days I have received a call one of them and he had told me that you were saying right the PACL was banned by court to collect further deposit from the investors. Many times we all get trapped in such type of schemes after emotional advice from our relative, neighbor, co-worker or companies agents.  

Ponzi schemes are schemes that makes the tall promises of high return which is many time more than bank FD return on your investments and invest in opaque and unregulated instruments. Often these types of scheme are not on the regulatory radar.

I again advise all of you please do not invest in any scheme only on the basis of anyone’s advice, do your own homework before investing after all it is your hard earned money and you have to decide where it should be parked. If anyone offers you an assured high return product that offers more than simple bank fix deposits, be alert.

Never trust on oral promises read all term and condition and know about instrument where your money would be invested and how the return would be generated. Check the schemes rating and do not follow the herd mentality. Herd mentality means many times you invest in the same investment of your best friends. Often they told you their friends got great return and forced you to invest. Listen to all advice but invest if it makes sense. Do not fall for those schemes that seem too good to be true.

If you want more information regarding investment or you have any other query about investment feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

Nifty Crossed 8000...What next..?

Today Nifty crossed 8000 marks…..What next..?

Today, CNX Nifty has closed the above 8000 marks at record high for the first time on the back of April-June quarter,14 GDP data. In 1QFY15 India has posted a robust growth of 5.7% compared to 4.7% growth in 1QFY14. The reason behind this fantastic improvement is significant improvement of industrial sector. Manufacturing and electricity generation have been major contributor to the industrial sector.

The CNX Nifty has rallied almost 13% since election results. We have witnessed the significant move in Capital goods, Banks, Power and Metals sector indexes. The rally in the Indian markets which began on hope post Mr. Narendra Modi’s anointment as the Prime Ministerial Candidate of India in September of last year, would continue to sustain, now that he is in charge of the world’s largest democracy. Initial signals – on foreign policy, economics (including reforms of FDI and otherwise in various sectors), continuity of constructive policies of the UPA and also a reach-out to every citizen to be self accountable in his Independence Day speech has helped continue the wave of optimism.

Now the big question is what should do the existing or new investor. New investor means who want to take advantage from market but still has not entered in the market. After posting a near 60% rally on the Nifty since the August 2013 lows of 5100, investors should invest very carefully in growth and value stocks rather than taking a sector overweight/underweight call at this point in time.

I also help to choose these types of stocks to my clients besides financial planning and other providing advice for other asset class investment.. In past many of our investors has created a significant wealth compared with other asset classes. After doing research and analysis I have found re 10 stocks portfolio for the 3 year time frame and we would also review these 10 stocks quarterly and annual basis during this investment period. For some reason I am not mentioning here the all 10 stocks here. For your guess companies like Colgate and Bata India are the part of these 10 stocks portfolio.

There is no reason for cheering up for the nifty no. like 8,000, 10,000 or 15,000 if you do not make profit or create wealth. If anyone interested for investment in companies through direct mode I am always available to you. For getting the personal advice you can mail me on arvind.trivedi79@gmail.com or call me on 09892724426.

If you want more information regarding investment or you have any other query about investment feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com