Deepak Shenoy's blog

Prem Watsa's Annual Report: 25% p.a. over 25 years!

Prem Watsa's Fairfax Financial Holdings has published its annual report, and it makes for great reading. (Thanks Lovesh Vashist)

They've grown their book value 25% per year, compounded, in the last 25 years, which is pretty awesome. Fairfax's stock price has compounded 21% per year. Incredible performance.

They are big on insurance, and to add an Indian connection, own 26% in ICICI Lombard.

Budget Summary, Tax Sop-Madness and More: The MarketVision Chronicle - Mar 05, 2011

On March 5, the MarketVision Chronicle, which I edit, talks about the budget, rants about tax sops and gives you all at MarketVision and in the outside world.

You need to register. (Free) You can get the Chronicle by mail every Saturday.

Primary Articles Inflation on 19 Feb 2011: Down to 14.85%

A sharp drop was seen in primary articles inflation over last year, with the 19 Feb number going to 14.85%. Primary Articles Inflation

India Composite PMI goes to 61 from 59.6 in Feb

HSBC India Composite PMI has gone to 61.0, up from January's 59.6. Services has strongly increased the PMI - the composite is a mix of the Manufacturing (last at 57.9) and services. Anything about 50 is expansion and below is contraction.

 

India Services PMI

MarketVision Beta Chat on 2 March 2011: Transcript

We had a test chat over at http://marketvision.in/chat.php today at 10:30 AM for an hour. You need to be registered (Free!) to get to the actual chat, which will happen on Saturdays. Pre-Announced Theme and Time - on Twitter and a blog post here. Thanks to all the participants for helping test the piece, and do let us know what you think?

Here's the transcript.

HSBC India Manufacturing PMI: Up at 57.9

HSBC's India Purchase Managers' Index (PMI) is up to 57.9 from last month's 56.8. The PMI is an imageearly indicator, which quantifies the orders received by firms. India gets two PMIs - Manufacturing and Services.

Budget: Mutual Fund Dividends To Companies at 30% Dividend Tax

Now for an interesting hidden (i.e. not yet spoken about) aspect of the budget.

According to the finance bill, any income distributed by debt funds to companies (or anyone other than an individual) will get hit with dividend tax of 30%.

Earlier the rate was 25% for liquid funds and 20% on other funds. Now it's all been bumped up to 30%, presumably to remove the discrepancy with fixed deposits.

Saudi Takes Up Libyan Shortfall, RIL benefits

A fallout of the Libyan Crisis is that Saudi Arabia is taking up the slack. Except, it can't easily replace Libyan Crude.

“Libya is a producer of light, sweet crude,” says Andy Lipow, president of Lipow Oil Associates, a Houston consultant. “The spare capacity among Opec members is heavy, high-sulphur crude.”

Heavy, sour = higher density, higher sulphur content than "light, sweet". I doubt people are weighing or tasting the darn thing.

The spiel is that refinining heavy-sour is much more difficult, and there are a lot of refineries doing only light-sweet (in industry parlance, aren't "complex" enough). The article goes on to say that these refineries are in trouble, they have to find other light, sweet sources, blah blah.

NPS Gets a Tax Saving Fillip in Budget2011

The Central Government pays 10% to the National Pension Scheme (NPS) for all its employees, with employees putting in another 10%. Even private employers may do so.

Your own contribution had the exemption upto Rs. 1 lakh, an overall limit for all such tax saving avenues such as insurance payments, children's education fees, ELSS mutual fund investments ad so on. Earlier even the employer's payments came into the same deduction, and employers weren't allowed to reduce that amount as a business expense.

Now the employer's payment does not come into the 1 lakh limit, and they can expense it. But if it's not taxed to your employer (i.e. the money is allowed as an expense), does that mean it will be taxed as a perquisite? We don't know - the bill doesn't say!

Two cases then: one, the employer's contribution is taxed in your hands as a perk. What's the point, then? You pay taxes today on money you can't touch till you retire, and when you get that money you pay taxes on it again.

Second, that such employer's contribution is not taxed in your hands. That makes sense, and brings it on par with other superannuation fund payments (like pension schemes). This is cool, but remember any withdrawal from a pension scheme is taxed, so all you're doing is deferring the tax. Nevertheless, policy clarity would be welcome.

Budget2011: No Need For Salaried Employees To File Returns?

There's a lot of talk about whether salaried employees will not need to file returns, because Pronob-da mentioned something in the budget speech. What he said was:

The Board shall soon notify a category of salaried taxpayers who will not be required to file a return of income as their tax liability has been discharged by their employer through deduction at source.

As far as I know, who qualifies has not been announced. But it won't apply to you if:

a) you have a house and rent it out