Shriram Transport Finance NCD 2011

The liquidity in the market is decreasing quarter after quarter. Hence, companies are coming up with bonds and non-convertible debentures(NCD) to raise money. After applying for SBI bonds and PFC Infrastructure bonds, I am again contemplating investing in this. Here I present more details as per my research:

1. Two options to begin with : Option 1 –> 3 years & Option 2 –> 5 years
2. For Option 1 : Investment below 5 lakhs, Interest = 11.35%
3. For Option 2 : Investment below 5 lakhs, Interest = 11.60%
4. For Option 1 : Investment above 5 lakhs, Interest = 11.10%
5. e. For Option 2 : Investment above 5 lakhs, Interest = 11.30%

Some important things to note:

a. If the NCD is in demat form then no TDS is deducted, else TDS will be deducted at the time of encashing/redemption

b. Each NCD is valued at Rs.1000/-

c. Minimum invetsment amount is Rs.10000/- (10 NCDs will be issued)

d. Put and call options available. And NCDs can be traded using demat and trading account

e. NRI’s cannot apply

Considering the above, and the good interest rate in the offering, an amount of Rs.25000/- and above would be a good investment option. And this can be a route preferred over traditional FDs.

Issue opens on 27th June and closes on 9th July. Since its first-come-first-serve basis, better earlier than later. If interest rates fall further, the value of the NCD will rise further.

Update-1: Indiabulls has the option of applying for this NCD online. Maybe other demat/trading accounts also have this facility. Plz check once before running after the paper based form.

Update-2: TODAY IS THE LAST DAY TO APPLY. DUE TO OVERSUBSCRIPTION, LAST DATE HAS BEEN PREPONED TO 29-June.

Update-3: My amount was refunded although I had applied on the first day. I guess retail investors were not given much consideration.

This post was also published on Yahoo Network

 

My Own ‘Capital Protection Oriented Fund’

Last year, in March’ 2010, I made the mistake of creating a FD for Rs.100000/-. I did not have time to look into other investment options and blindly went for this option through my ICICI a/c. What was worse is that, the interest rate offered, back then, was 7%. The only clever thing I did was that, I made the FD for 390 days only. So, at the end of the term, sometime in April’ 2011, an amount of Rs.106500/- was credited to my a/c, after deducting TDS etc.

This time around, I had the same option of renewing that FD at about 9.25%; but I decided against it. I made up my mind to create a ‘Capital Protection Oriented Fund’ of my own and test its performance for a period of 1 year. I know it sounds silly, but I did. Its a bit experimental, but all I wish to achieve from it is growth at 12-14%. Here’s what my fund now consists of:

a. I made a FD of Rs.40000/- at 8.5% for 390 days only. The interest generated is Rs.3400/-. I could have got a higher interest, but I would have to go for a longer term.

b. I put another Rs.10000/- in a NFO called ‘Sundaram Equity Plus’, so I now have 1000 units of it. The reason for investing in this NFO was that, it balanced out the equities with gold; 5 – 35% to be placed in gold and 65 – 95% in equity.

c. The remaining Rs.50000/- I put it in the stock market in the following scrips in a balanced portfolio:

i. Jaypee Infratech – 100 nos @ 52.15

ii. Punj Lloyd – 75 nos @ 56.5

iii. IRB Infra – 50 nos @ 158.38

iv. Next Mediaworks(Mid-day Multimedia) – 50 nos @ 5.75 [penny stock purchased so I don’t leave out a single paisa]

v. Zee News – 25 nos @ 11.05 [penny stock purchased so I don’t leave out a single paisa]

vi. Rajesh Exports – 50 nos @ 86.7

vii. Reliance Com – 50 nos @ 82

viii. Vijaya Bank – 50 nos @ 69.6

ix. Manappuram – 75 nos @ 57.5

x. IPO Muthoot Finance – 40 nos @ 175 [had applied for more, allotted 40]

xi. FPO Power Finance – 43 @ 192.85 [5% discount to retail investor]

I shall keep updating this as and when I do a buy/sell. Suggestions/comments welcome!

This post was also published on Yahoo Network

Update 1 in Feb-2012: I sold Rajesh Exports @ 136.15, giving me a profit of 2472.05.  I should have sold it earlier, when it had touched a high of 145, but I missed the opportunity as I wasn’t able to track my portfolio during that period. Anyways, I re-invested the amount in buying the following:

i. Manappuram – 45 nos @ 45.15

ii. Jp Power – 45 nos @ 45.35

iii. Vijaya Bank – 50 nos @ 57.75

Update 2 in May-2012: The FD of Rs.40000/- matured and I decided that this time around I would not renew the FD for that high a value. Too much money in debt instrument isn’t a good idea. So, I created a new FD for Rs.30000/- at 9.25% interest. This FD matures in June’13 and the maturity amount is Rs32974/- . The remaining proceed of Rs13400/-, I re-invested it in the following:

i. Adani Power – 50 nos @ 50.75

ii. IRB Infra – 25 nos @ 111.15

iii. JP Associates – 45 nos @ 59.4

iv. Manappuram Fin – 25 nos @ 23.65

v. Muthoot Fin – 20 nos @ 131.5

vi. Power Fin – 17 nos @ 140.25

 

Akshaya Tritiya & Investment In Gold

As is customary, this Akshaya Tritiya too, I showed up at a Tanishq store to purchase the yellow metal in all its demand and glory. Very cleverly I timed my arrival at around 3pm, so I would face minimal rush. There was a huge crowd of people at the jewellery sections, but I just wanted to purchase a gold coin; no rush there.

There were just a few people, given the timing. I purchased a 10 gram gold coin of 24 karat; and it cost me 20,000+. For the past few years I have been purchasing gold coins on Akshaya Tritiya, so I went back and checked the previous bills.

In 2008, the same coin cost me 13,000+
In 2009, it cost me 16,000+ and now 20,000+

So, what does this say? Just the simple fact that gold is a great investment. Considering my 2008 purchase, the value has gone up by 50% and considering my 2009 purchase, the value has increased by 25%. So, there has been a consistent rise in prices by 25% every year.

No investment, except property and real estate, gives such high returns. If the money is locked up in FD’s or EPF’s, then too a 13,000 rupee investment would have given me 15,200 at simple interest of 8.5% and 16,000+ at compound interest of 8.5%. But 8.5% is a thing of the past, as of now 6.75% seems to be the norm for FD’s.

A friend of mine has been buying 1 gram gold every month, for the last 5 years. Instead of placing the amount in recurring deposit[RD], he buys gold. So, his 1 gram purchased in 2005 for 950/- is now worth 1950/-. Taking 1 gram for every month, in a year he bought 12 grams of gold. His investment of 11,400/- in 2005, is now worth 23,400/-. More than double!

Though gold rates too have their ups and downs, but being a precious metal its value will always be on the rise. Even if the value falls in future, the gold purchased can be used for making jewellery, all we need to pay is making charges and wastage; but not the price of gold. So, its a good investment overall. In fact, online trading has enabled trading in bullion as well. People are buying gold in their demat accounts, that seems to be the future. All that glitters is not gold, but all that is gold will always glitter.

Update 1:  Its May 2011, and this year too I purchased another 10gm coin and it cost me 24000+. A jump by 20% when compared to 2010. Gold prices just keeps appreciating.

Update 2:  Its Apr 2012, and this year too I purchased another 10gm coin and it cost me 30000+. A jump by 25% when compared to 2011.