Tuesday, October 30, 2012


This stock recommended as a buy below Rs.200/- .Today hits 52 week high @ Rs.394 and closed @ Rs.376/-, reported September quarter result as follows:

Related Readings :
Link -1


Old posting HERE

This stock recommended @ Rs.95/- and currently trading @ Rs.127/-, reported September quarter result as follows:

Old Posting HERE

Recommended @ Rs.40/- and currently trading @ Rs.54/-.Today company filed its latest share holding pattern to BSE .In September quarter ,holdings under promoter category increased slightly which currently stands @ 74.32 %

Old posting HERE

Monday, October 29, 2012


I have recommended a BUY on DE- NORA(India) Ltd on 25th December 2010 @ Rs.79/- ( For Old posting HERE ) .Currently it is quoting @ Rs.163/- .In September qtr company reported good numbers as follows   .HOLD it for further gains.

Thursday, October 25, 2012


Granules India initially recommended at Rs.79/- ( Old posting HERE) and currently trading around Rs.190/-

Today company declared good results with a rise of more than 200 % in net profit compared with same period last year. Recommending to hold the stock for long term

For details and management's comment ,click HERE
For latest information on company's joint venture with Ajinomoto Omnichem ,Click HERE


HEG Ltd earlier  recommended at Rs.218 /- ( Old posting HERE) and currently trading around Rs.232/-
Company posted 165 % jump in next profit in latest September quarter,Recommending to hold it  for long term


I have recommended a BUY on   Godrej Industries @ Rs.186 /- on March 20 ,2011(Old Posting HERE)  .Currently stock is trading near to its  52 week high @ Rs.310 , an appreciation of about 70 % .Those with low risk appetite can book partial profit and others can still hold the same for long term.

Wednesday, October 24, 2012


Indo Amines Ltd ( IAL - BSE CODE 524648)  may be an unknown stock to many of you .Even this stock  is not a widely discussed one  , this  company is a silent performer showing steady business growth for the past many years.IAL originally incorporated as Techno chemical industries in 1979 and later changed its name to the present one.This Thane based company manufacturing various types of  Specialty,Fine and Performance chemicals finding applications in Petroleum industry,Agrochemicals,Pharmaceuticals ,Construction and Fertiliser.Company operating three manufacturing facilities in India at Thane,Baroda and Mumbai.It is one of the largest producers of fatty amines in India..Its turnover grow  from Rs.85 Cr to Rs 200 Cr during 2008-1012 period.But the growth in bottom line was slow compared with top line growth. The following points demanding a close look at the company now even if it is trading at its 52 week high price. First one is , company’s plan to concentrate in high margin products  including some new additions to its existing products list .Effect of this initiatives already started reflecting in first quarter itself where its net profit improved 100 % compared with last year same period.Second is ,promoters of the company now subscribing  4300000 warrants at a price of Rs.17/-  and also merging  some of their privately held companies into this listed entity.These process will increase their stake in the listed company from the current level of 56 % to near the maximum permissible level  . Excluding this ,promoters already hiked their stake in recent past very aggressively through preferential allotments. (For details ,click HERE) Another point is ,In a recent filing to BSE, (To read ,click HERE) company informed their decision to set up a new plant at Dhule, Maharastra with a capital outlay of  Rs.20 Cr .At present company having some debt in its balance sheet but promoters decision to pump more money through equity route will bring down the debt equity ratio going forward.Watching the trend of past few trading sessions ,I feel  some kind of an accumulation is going on in this stock and it is a stock worth keeping in our watch list and high risk investors may even add a small quantity with a long term view.This Rs.200 Cr turnover, dividend paying  company is trading with  a market cap of just Rs 28 Cr  @ CMP Rs.29/-

Link to Company website HERE

Saturday, October 20, 2012


Adiya Birla Chemicals is a member of Aditya Birla Group .This company taken over by Aditya Birla Group  in 2005 and now it is a 51% subsidiary of Hindalco Industries.ABCIL manufacturing inorganic chemicals, like  caustic soda, chlorine, resins , hydrochloric acid, aluminium chloride , bleaching powder ..etc.Its products find applications in sectors like Soaps and Detergents ,Pulp and paper,Textiles ,Water treatment,Dyes and colours ,Aluminium ,Food Processing ,Lubricants .etc .After the acquisition by Aditya Birla Group , company added capacities substantially and also included many new products into its offering.Last year Company completed a large acquisition by buying out Kanoria Chemical’s chloro chemicals division at a cost of Rs.830 Cr.With this acquisition ABCIL’s caustic soda capacity increased  from 1,05,000 tpa to 2,20,000 tpa.Now ABCIL is upgrading the caustic soda plant of this facility by most modern technology with a capital outlay of another Rs.150 Cr . Renovated plant is expected to re-start commercial production in next few months.This new technology will increase capacity and reduce power cost substantially ,which will reflect in margins going forward. Chlor Alkali business is cyclical in nature and it is going through better times . Considering the tight supply demand conditions in favor of Chlor –Alkali producers  ,further price hikes also expected in next few quarters . This company will be one of the biggest beneficiary of the emerging opportunities  in this sector backed by the large capacity and strong management capabilities of Aditya Birla Group. Company raised its debt level to fund the above mentioned large acquisition but a favorable pricing situation for its products is expected support the cash flow going forward. Investors with medium  term view may consider it @ CMP of Rs.89,  and keep a close watch on the price trend of its products.Sock is traded both in NSE and BSE

Link to Company Website HERE

Thursday, October 18, 2012


I have recommended a BUY on HONDA SIEL POWER PRODUCTS on October 8,2011 @ Rs.337 .(For Old posting Click HERE) .Yesterday stock hits its 52 week high @ Rs.570 , an appreciation of about 70%. Low risk investors may book partial profit and those with high risk appetite can still HOLD the stock with a long term view.

Wednesday, October 17, 2012


I have recommended a BUY on Sabero Organics @ Rs.55/-(For old report Click HERE) which is currently  trading around Rs.143/-. For the quarter ended September 2012, company posted excellent result .Operating income increased from Rs.105 Cr to Rs.141 Cr  .After a gap of five quarters company back to black with a profit of Rs.4 Cr where it was a loss of Rs.16 Cr in last year same quarter.Under the new management of experienced Murugappa group , company is expected to grow ahead .Recommending to HOLD and those with some risk appetite can even consider a BUY with long term view at CMP of Rs.143/-

Tuesday, October 16, 2012


I have recommended a BUY on Hikal Ltd  @ Rs.269/- on March 18,2012.( For old Posting Click HERE) .Yesterday stock hits  its 52 week  high of Rs.467 before closing @ Rs.450 ,an appreciation of about 65 % in 7 months . Requesting to  book partial profit at CMP and Hold the rest cost free.

Saturday, October 13, 2012


Bambino Agro is a stock I recommended last year almost at the current rate.Thereafter company altered its Memorandum of Association to venture into some  un related fields .On the basis of this decision ,later I expressed some negative opinion on this stock.After touching a low of Rs.24 now it recovered and ruling close to its 52 week high price of Rs.40 .Now it is learned that ,even the company altered its MOA, it is not in a hurry to move into these fields and decided to concentrate in its core business.Hence re-looking into this  once again.


BAMBINO is a  well known brand with pan India marketing network.Company selling pasta, macaroni , noodles and a number of ready to eat items under the BAMBINO brand . Company producing almost 75 items  from 4 manufacturing facilities. Even this company is in operation for the past many years with a good brand recall ,its financial performance so far not creating any excitement.Higher debt level and a possible conflict of interest due to more entities owned by the same promoters are the key reasons for concern.If the promoters are willing to change their mind there is huge scope for wealth creation in this company .Since they hold almost 75 % stake in it, it is easy to dilute some stake and raise funds to bring down debt burden.Considering the brand value and the premium valuations realised in some private equity deals in food sector  it is not an impossible task. In the past I have recommended two companies which faces same situation ( Butterfly Gandhimathi ( to read click HEREand DFM Foods - HERE ) and later we realised what has happened with a change in the attitude of management .The market capitalisation of both these companies improved multi fold after some minor proactive steps taken by the management of both these companies.Here in the case of BAMBINO too this is very relevant and the same miracle is possible just by some simple initiatives by the promoters.I believe this will happen in future and they will not waste the big opportunity available .In recent times company expanding to new territories  and introducing various new products.To ramp up its sales force, company recruited many employees in recent past. To sell its ready to eat items BAMBINO started to open retail outlets in multiplexes. Earlier company entered into a distribution tie up with Domino's Pizza ( For details click HERE). Even in the financial front too , company improving its performance in past few quarters. For the quarter ended June 2012 net profit rose 91.55% to Rs 1.36 crore as against Rs 0.71 crore during the previous quarter ended June 2011. Company's year ending is in September and it already posted an EPS of Rs.4.8 in nine months  against last full year EPS of Rs.2.34 .I feel , now things are started to move slowly in the right direction.If management is willing to take some steps like reducing debt,increasing corporate governance standards ..etc  ,this stock will be a multi bagger in long term even from its 52 week high price of Rs.40/-.

Disc:I have vested interest in BAIL



Thursday, October 11, 2012


1) Granules India will declare its Second Quarter Result on 25 Oct ,2012.

2) As per the latest share holding pattern , Mr Basava Sankararao Kolli - Former Executive Vice - President(now  consultant for  Dr.Reddy`s Lab ) acquired 1.62 % stake in Granules India.

3)  Based on the available information , Company's expansion program for PFI facility now completed and will start commercial production in near future after completing necessary trials.Expansion for Finished Dosage  is in-process and  it is also expected to  start commercial production in October - December quarter itself.

Tuesday, October 9, 2012


Heritage Foods recommended around Rs.200 in  2011,which is now trading around Rs.300/- .Inviting your attention to an investor presentation  submitted by the company to BSE today .(For those having academic interest :) ) . I believe , company's integrated business model having great relevance  in coming years . .Heritage's deep rooted relationship with farmers in the field of dairy  and contract farming is a big positive factor and the same is difficult to replicate by competitors easily .The good performance in recent quarters is very encouraging and expecting better days for the company ,especially at a time of increasing food prices and the ongoing re rating in farming related stocks.

For latest investor presentation click HERE

For latest AR , click HERE


Disc: I have vested interest in HFL

Step by step guide for NRIs to sell inherited property in India


In this two-part series, we outline the entire process step-by-step, beginning from the time you inherit the property. In part one, we will look at what documents you need, how you can arrive at the sale value and how to complete the sale transaction. In part two, we will look at tax implications and repatriation rules.

Step 1: Transfer title of inherited property to your name

When you inherit property, the first thing you must do is to transfer the title of the property to your name. You can do this by a process called 'mutation of revenue records.' You would need either a copy of the Will or in absence of a Will a
Succession Certificate issued by the local court.

Step 2: Get documents in order

Once you have transferred the title of the inherited property, you need to put together all the papers that are needed in order to sell the property. Here's a list:

- Original purchase agreement

This is the title document of the property.

- Original share certificate in case of residential unit in a co-operative society

A share certificate is issued by the co-operative housing society to each member. In case this certificate has been misplaced, the member must apply to the society for a duplicate. The member would need to indemnify the society for all costs and give an undertaking that the property is not mortgaged. He would also need to publish a notice in the newspaper and in the society notice boards so that it is clear that no objections exist.

- No objection certificate from the society

The certificate confirms that members of the society do not have any objections to the sale of the apartment. It should also confirm that the seller has no default/outstanding payments to be made to the Society as of date. "Usually this is received once the buyer is finalized as the society gives an NOC stating that it does not have any problem in the owner selling the property to the buyer)," explains Amar Shah, Co-founder of property consultancy firm Golden Abodes.

- Copy of approved plan and occupation certificate issued by the concerned authority such as a municipal corporation

- Lawyer certificate

In the absence of originals of the above documents, the seller must approach a lawyer who would help him with a certificate to prove that he is indeed the rightful owner of the property. "The lawyer would take out a search and title report of the property. This report will track the owners of the property over the last 3-5 decades by tracking records in government registry offices. He will then place a public notice in a regional language and English/Hindi newspapers and wait for the prescribed period of time to see if anyone is claiming rights for the said property. After that, if the search and title report shows the seller as the final title bearer and no objections/claims are raised, he would issue a certificate mentioning that the seller is the rightful owner of the property" Shah explains.

- PAN number

A Permanent Account Number (PAN) is a must for all big ticket transactions in India. "An NRI must get a PAN for making the sale of property as after sale of property, it will be required to apply for Tax Exemption Certificate under section 197. If he does not have a PAN, he can apply for one by sending the signed application along with copies of ID and address proof documents," says Shah.

PAN application form is available here. Indian citizens can apply for PAN by using form 49A while foreign citizens can use form 49AA. You can furnish a foreign communication address while applying for your PAN card. Currently PAN cards are issued to addresses in select countries.

"In the absence of a PAN, the NRI can also furnish Form 60 at registrar office," adds Vaibhav Sankla, Director, H&R Block India.

Step 3: Identify your preferred sales method

In order to carry out the sale transaction, an NRI must decide whether he wants to do it himself or use the services of a professional company or firm. Unless you have close relatives or friends in India who you can trust, it might not make sense to venture out on your own. "The real estate space in India is unregulated. Property rates vary vastly even within a particular area. There is no license for brokers and the entire process can be cumbersome if one is not familiar with the market. The most important thing for a successful transaction is to be in the right hands," says Om Ahuja CEO - Residential Services, Jones Lang LaSalle India.

"Professional consultants help you make decisions such as whether to rent out the property or to sell it. Firms also usually have their empaneled lawyers and tax consultants to help you with issues such as obtaining duplicate copies of certificates, getting PAN etc.," Shah says.

These firms usually charge a percentage of the sales consideration as their fees and they provide end to end solutions including identifying a buyer, conducting due diligence, handling legal and tax issues etc. all the while maintaining the confidentiality of the seller. In case of Jones Lang LaSalle India for instance, brokerage charged is 2% plus applicable service tax of the sale consideration. Charges related to registration, advertisement and legal counsel fees is charged at actuals. In case of Golden Abodes, which is also into asset management for NRIs, Shah says the fee is 2% percent of the sale value plus all out of pocket expenses such as lawyer's fee, tax consultant's fee, associate broker's fees, etc.

"It's important that NRIs confirm brokerage fees upfront as most of them face challenge finalizing with brokers at a later stage. Transparency becomes a big challenge when it comes to sale transactions. NRIs get carried away with the price quoted by brokers and there is no authentic process to confirm the sale value. We have seen many times brokers build their margins over and above the sale value that NRIs may not realize," Ahuja advises.

Step 4: Complete the transaction

The actual sales process itself can be further divided into several steps. These include:

- Identifying the right sale value

If you are hiring a consultant, the firm would help you arrive at the right price. "We pick several data points in order to arrive at the right value. For instance, we may refer to the registered value of similar properties in the same area. However, that alone might not be fool proof because the value of cash transactions is not reflected. So we also use our in-house research reports for reference. We also compare values of similar properties in the surrounding area," Ahuja explains.

If you are going on your own, you would need to use similar data points.

- Managing the structure of the transaction

Use of cash in property transactions is quite common in India, something that NRIs usually do not want to deal with. "Things are changing in India," Ahuja and Shah both agree, "Today it is very much possible to sell property in India without any cash component."

- Issuing a Power of Attorney

"It is a misconception that the NRI will have to give complete power of attorney for all property related matters to someone in India. What the NRI would need to give is an 'Admit PoA.' The Admit PoA only says that while all the documents are executed by the owner, the PoA holder would represent him in the registration office because of the NRIs inability to be present physically." Shah explains.

This means that all documents and certificates would need to be signed by the NRI himself and the PoA holder would only represent him for registration purposes.

Ahuja adds, "For NRIs, a PoA drafted in India and signed in person by the NRI in front of the Indian Consulate is acceptable by registrars. This PoA can be made in favour of a relative/friend to complete the registration process."

Remember that each firm may have its own process regarding this. For instance, Golden Abodes requires the NRI to visit India once to complete the Power of Attorney process. Shah says, "The NRI will have to come to India once to give us or any friend or relative the PoA. After that we will have all the documents ready and send it over to him for signature. Once he sends them back to us, the PoA holder will admit them for registration."

Jones Lang LaSalle India on the other hand prefers NRIs to visit to meet the buyer and register the documents. "We don't recommend NRIs signing 'admit PoA' in favour of brokers/consultants as this becomes a very risky proposition specifically in India. We recommend that NRIs visit India twice; once for finalizing the deal, to meet the buyer in person to build comfort and enter into Memorandum of Understanding and secondly to accept the final payment and complete the transaction. Facilitating through PoA is possible but we strongly recommend that NRIs meet the buyer in person. Considering the market is unregulated, the risk remains very high and ideally getting to meet in-person improves the comfort," says Ahuja.

- Sort out tax issues

Long term capital gains, that is, gains from an immovable property sold after 3 years of purchase, are taxed in India at 20.6%, including education cess. The benefit of basic exemption of Rs 200,000 is not available to NRIs on long term capital gains. Further, in case of NRIs, the buyer is required to deduct tax at source. This presents another set of complications for NRIs to which there is a solution and the tax deduction at source can be avoided. We will look at these in detail in the next part.

This brings us to the end of part one. In part two, we will look at how NRIs can overcome certain practical issues with respect to tax and repatriation of their sale proceeds.

Part 2 of 2: In part one of this series, we took you through a step-by-step process to sell inherited property in India. Having zeroed in on a buyer and finalised the agreement, the next thing to look at is tax and repatriation. In this article, we see how NRIs can deal with these two issues.


If you sell the property after 3 years from the date of purchase, you will be liable for long term capital gains tax of 20%. The gains are calculated as the difference between sale value and indexed cost of purchase. Indexed cost of purchase is nothing but the cost of purchase adjusted to inflation. You can find the index

In case of inherited property, the date and cost of purchase for purposes of computing the period of holding as well as cost of purchase is taken to be the date and cost to the original owner. "While computing the amount of long term capital gains, the cost to the previous owner (i.e. the person from whom the property is inherited) would be considered as the cost of purchase. Though the plain reading of the law suggests otherwise, the courts have taken a view that the indexation benefit can start from the year in which the previous owner acquired the property," explains Vaibhav Sankla, Director, H&R Block India.

Index values are from financial year 1981-82 onwards. If the property was purchased prior to 1982, you would have to get the fair value of the property assessed as of April 1, 1982. This will be available from the valuation officer at the local municipal authority. In case you do not have records of the cost of purchase of the previous owner, you would have to get the valuation done by the municipal authority of the jurisdiction where the property is situated.

As an NRI, you will be subject to a TDS of 20% on the long term capital gains.

If you sell the property within 3 years of purchase, you will be liable for short term capital gains tax at your respective tax slab. Short term capital gain is calculated as the difference between the sale value and the cost of purchase (no indexation benefit is available). You will be subject to a TDS of 30% irrespective of your tax slab.

But there are certain instances when the NRI can get a waiver of the TDS such as if the NRI is planning to re-invest the capital gains of the property in another property or in tax exempt bonds (discussed below). In such cases, the NRI will be exempt from tax in India and would not like to have TDS deducted.

"In such cases, the seller can apply to the
income tax authorities for a tax exemption certificate. Remember that he must make this application in the same jurisdiction that his PAN belongs to. He will have to show proof of reinvestment of capital gains. If he is planning to buy another house, he would have to show the allotment letter or payment receipt. If he is planning to invest in capital gains bonds under section 54EC, he would need to submit an affidavit stating that he would invest the capital gain amount in to bonds. Usually, the buyer holds back the last installment of payment until this certificate of exemption is furnished to him by the seller. In case of bonds, the certificate usually mentions that the buyer can make the complete payment once the money is invested in bonds and receipt of investment is received," explains Amar Shah, Co-Founder of Golden Abodes.

Usually, a seller of property has up to 2 years from the date of sale to invest in another property or up to 6 months to invest in bonds. In case of NRIs however, if they would like to complete the transaction as soon as possible, they would need to complete either of these as early as possible.

The payer of the sale proceeds; even if he is an individual will be responsible for deducting tax at source and paying it to the Government. He must get a Tax Deduction Account number (TAN) and issue a TDS certificate for the same. What if the payer/buyer does not go through this process and fails to deduct tax? The onus of deducting tax is on the payer. So in case the individual does not deduct tax and the NRI too fails to declare the income and pay the tax, the income tax authorities can hold the payer responsible.
Tax exemptions

Section 54

According to section 54 of the Income Tax Act, if you sell a residential property (after 3 years from date of purchase) and purchase a residential house within 2 years from date of sale (or construct a residential house within 3 years from the date of sale), your gains will be exempt to the extent of the cost of new property. Suppose your capital gains is Rs 30 lakh and the new property is for Rs 20 lakh, then Rs 10 lakh will be treated as long term capital gains.

The residential property that you sell may either be a self-occupied property or one that was given on rent. Further, the new property must be held for at least 3 years.

Now an important question that NRIs have: Can you invest the proceeds in a foreign property and still avail the benefit of section 54? "The appellate authorities have held that exemption can be claimed under section 54 even if the new house is purchased outside of India. However, a contrary view exists too," Sankla says. So it might be best to consult an expert for your individual circumstance before you take the decision.

Section 54EC

According to section 54EC of the Income Tax Act, if you sell a long term asset, in this case, the residential property (after 3 years from date of purchase) and invest the amount of capital gains in bonds of NHAI and REC, within six months of date of sale, you will be exempt from paying capital gains tax. Your bonds will remain locked in for a period of 3 years. The total amount which can be invested in such bonds cannot exceed INR 50 lakh per financial year. Lastly, if the amount invested in such bonds is less than the amount of long term capital gains then only a proportionate exemption is available.

Section 54F

According to section 54F of the Income Tax Act, if you sell an asset, other than a residential house, say a residential plot (after 3 years from date of purchase), and purchase a residential house within 2 years from date of sale (or constructs a residential house within 3 years from the date of sale), your gains will be exempt. "Note that if the cost of the residential house is less than the amount of capital gains then only a proportionate exemption is available. Further, to be eligible to claim exemption, you should not own more than one residential house at the time of the sale of the asset. Further, the house purchased/constructed for claiming exemption should be held for at least 3 years and no additional residential house (apart from the one purchased/constructed for claiming tax exemption) should be purchased within 2 years (or constructed within 3 years)," Sankla explains.


General permission is available to NRIs and PIOs to repatriate the sale proceeds of property inherited from a person resident in India subject to the conditions mentioned below. If those conditions are fulfilled, the NRI need not seek permission from the RBI. However, if the property has been inherited by an NRI from a person resident outside India, then the NRI must seek specific permission from the RBI

Conditions for repatriation in case of property inherited from person resident in India:

(i) The amount of repatriation should not exceed USD 1 million per financial year

(ii) The NRI must produce documentary evidence in support of the inheritance and an undertaking and certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes
(iii) In cases of deed of settlement made by either of his parents or a close relative (as defined in section 6 of the Companies Act, 1956) and the settlement taking effect on the death of the settler the original deed of settlement and a tax clearance / No Objection Certificate from the Income-Tax Authority should be produced for the remittance

(iv) Where the remittance as above is made in more than one installment, the remittance of all such installments shall be made through the same Authorised Dealer

Which account will the sales proceeds be credited into? Sankla explains, "The sale proceeds of inherited property have to be credited to NRO account. An NRI may remit an amount not exceeding USD 1 million per financial year from out of his balances in his NRO accounts. The limit of USD 1 million per financial year includes sale proceeds of immovable properties. Remittance exceeding USD 1 million per financial year requires prior permission of the Reserve Bank."

Finally, Sankla gives these important tips, "Never forget to check the income tax implications in the country of residence. Many countries tax their residents on their worldwide income. Some countries do provide partial or total exemption on capital gains arising on sale of a residential house if certain conditions are met. Most important point is, if there is income tax liability in the country of residence on the amount of gain then tax payer should re-evaluate if he should consider claiming exemption under section 54/54F/54EC. In such cases, the tax payer may be better off claiming only partial or no exemption in India on the capital gains."


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