About MICR Code

One willing to know about banking features would look at various aspects. Do you know what is ifsc code and what it indicates. So is the case with MICR code too. You should be aware what is MICR code is and where these details are put in the check leaf. If you ask yourself what is MICR code on cheque and want the reply of it then for sure you have genuine reply of this query.

The best thing is that you keep your urge for knowledge going and ask yourself what is ifsc code and how important is it to ease banking operations, especially online transactions. Similarly you should also keep asking yourself what is MICR code and how does it play an important role in the banking operation. If you are aware what is MICR code on cheque then your task gets simplified and things go on order.

Don't query much about what is ifsc code. Simply go ahead and crosscheck the details on the checkbook. Rather than thinking unnecessarily without preparation you should have your checkbook to find what is MICR code and how does it make difference. As a bank account holder you should have detailed knowledge of everything and know what is MICR code on cheque. If you don't take interest about what is ifsc code and or what is MICR code in the checkbook then you would literally land into a situation that brings typical phase in which knowing more about banks would become difficult task.

If you ask what is MICR code on cheque then keep this fact in mind that such codes are mentioned in the bottom of the check nearby the check series number. Getting this much of detail about what is MICR code and how important it can be for an accountholder indicates your tasks are eased and you enjoy great online banking facilities and transferring of funds. Rather than querying what is ifsc code you should have a look at checkbook to get the details.

It is ensured that there is no need to make further queries about what is MICR code on cheque as things have already been clarified above.

There is much universality that helps banking industry of all countries to work in a system. India has progressed a lot in this area hence MICR code India says volumes about universality in the functioning of banks operating in the country. The fact is that MICR code is equipped with certain types of generic features that make it excellent option. The MICRocode of a particular bank indicates lots of things that it offers to account holders.

All banks have their specific MICR codes that indicate many things about a particular banking operation. All third party transactions and processing of any such kind can't be possible without MICR code. That is why MICRocode is considered so important in the banking transactions. If you are willing to know more then check MICR code India and have detailed information. The main role of MICR codes has to be understood for all types of financial transactions done from one bank to the other.

A bank indicates its MICR code for the account holders by printing it on the check leaves. The bottom of the check carries the MICRocode of the bank so that one can trace it as and when used. The role of MICR code India in linking all the banks on different grounds is much important to know. The digit classification of MICR codes of all the Indian banks are same and uniquely adjusted.

Mere MICR code of a bank can speak up many things about a particular bank and its branch. In fact MICRocode is set in such a manner that only concerned banking personnel can explore them for authentication purpose. Of course MICR code India has many features that need to be understood for one reason or the other. There are varied roles of MICR codes that should be explored for better understanding.

Getting access to MICR codes is not a big deal. It can be found out easily. All scheduled and private banks have their MICR code India association that link them on various grounds. The need is that how MICRocode is used and what step is taken in making banking transactions hassle free.

All such steps demand mentioning of MICR code without which nothing can be made worth usable.

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Independent directors’ liability not defined

Companies can pay an annual fee of Rs 20,000 to independent directors , but they can get a slice of profits which could run into lakhs, occasionally even up to a crore. However, that is clearly no longer an incentive for the kind of quality talent that could really enhance a board's performance-especially when directors are being asked to cope with unprecedented uncertainty. 

"Fee is no longer the attraction ," says HDFCchairman Deepak Parekh, who sits on the boards of companies such as HUL, M&M and Indian Hotels. "People won't join boards if the liability on the independent director is not well defined." 

Unfortunately, there is lack of clarity on the exact liability of independent directors . A few months ago, the Company Law Board asked the Registrar of Companies not to routinely treat all directors as culpable and to instead focus on whole time directors. In case of fraud, the CLB wants to focus on whether the independent director was party to it or ignorant about it. But Haldea insists, "I think ignorance is almost connivance to fraud." 

Former Sebi chairman M Damodaran believes one cannot hold a non-executive director liable in cases like bounced cheques. However, he adds, "All directors should be held equally responsible for matters that ought to come to the board." 

Sanjay Nayar, India CEO of KKR (a private giant giant ), agrees, "Directors need to be responsible for every decision taken by the board. Independent directors need to play a more active role on boards." 

All this, though, begs the obvious query: Why do some boards fail to perform their core job of asking the right questions? One reason is that the criteria for selecting independent directors continue to be ad hoc. Damodaran warns that there is no point in accepting a board position just because "you went to school with the promoter" . But even today, many directors serve on boards due to personal connections . Gautam Doshi, a career professional, joined ADAG as group managing director as he was known to Anil Ambani. Today, he is in Tihar Jail, caught up in the 2G scam. 

Cosy personal relationships mean that tough professional questions rarely get asked. Damodaran, who cracked the whip on many listed companies during his Sebi stint, warns against falling into the "presentation trap and becoming a prisoner of colorful illustrations" on Powerpoint. "A board that doesn't add value is like cardboard," quips Ganguly. 

Corporate coach Ram Charan has some good advice in his book "Boards That Deliver." His list of top questions a board should ask includes, "Do you have the right CEO" ? As he puts it, boards fail not just when they are unable to root out fraud but also when they "allow faltering performance" . 

Then, there is the practice of having "trophy" directors like film actors and celebrities who may add a glamour quotient but may not know much about the business. However, even well-informed directors fret that there is only so much information they can get out of a promoter. "How can an independent director determine what a businessman does to get a licence at some stage?" asks Parekh. 

Says another director, who did not wish to be named, "Directors will only know matters that come to the board. A promoter who gives bribes will not share this with the board and it's very hard for any director to ascertain this information ." 

Not everyone agrees. Rajesh Shah, a past president of CII who is not only a promoter of Mukand Steel but also sits on boards such as Ranbaxy's , claims the onus is on the director. "All decisions can't be only the management's . When you can see that the telecom sector is shrouded in controversy, the board should advise the management against venturing into it." 

So, is there a solution? India could consider a National Institute for Company Directors, just as in the US and the UK, to help think through some of the more complex issues. Ganguly says such a body "may not be a bad idea." 
At the end of the day, though, there is always a "moral compass" that directors should observe, says Ganguly "You can always sense which way the wind is blowing," he asserts. 
Increasingly, it no longer makes sense to ignore it.

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Govt wants to monitor Facebook, Twitter

TNN Aug 8, 2011, 07.12pm IST

NEW DELHI: The Union home ministry has written to the department of telecom asking it to "ensure effective monitoring of Twitter and Facebook".

Milind Deora, minister of state for communications and information technology, said in written reply to a question on Friday in the Rajya Sabha that DoT has received a letter from MHA to ensure monitoring of social networking websites like Facebook and Twitter in order to "strengthen cyber security paraphernalia".

Deora told the Parliament "the telecom service providers (already) provide facilities for lawful interception and monitoring of communication flowing through their network including communications from social networking websites like Facebook and Twitter."

Courtesy: Times of  India 


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Guidebook: Interpreting company results

You will soon be flooded with another set of quarterly numbers in October. Here is how to make sense of them

If you are a shareholder you must be anxious to know what's happening in the company whose shares you hold and how it has been performing.

One of the ways to find out is to look at the quarterly numbers published by companies.

Quarterly results are the window made available to the general public to understand the company's performance. These are produced in a predefined format that a company must adhere to.

According to the market watchdog, Securities and Exchange Board of India ( Sebi), guidelines it is compulsory for every listed company to produce quarterly results.

Quarterly results are early indicators of the company's progress towards its projected yearly profit targets. Have you had a look at the results of the companies whose share you hold? May be you have. But did you go beyond looking at the net profit figures. If you are one of the millions who are not expert at reading the numbers, the chances are that you did not.

From an investment point of view, zeroing on net profit may not give you the right picture at a given point. This is because there are certain deductions that may ' artificially' eat away earnings leaving nothing on table. It happens when deductions such as depreciation, tax or amortisation is taken into account. This eventually shows up as a ' technically' loss- making enterprise but it may not be the true picture.

Alex Mathews, head of research at Geojit BNP Paribas Financial Services, says, " Investors should look not only at the net profits figures but also other details like sales growth, debt structure, whether the net profit growth is due to any one time gain and reasons for increase or decrease in expenditure." Though, it is not easy to analyse numbers like a professional would do but even a lay person can go beyond the net profit figures to try and gauge what's happening in the companies. So what should you look at while reading the quarterly results put out by the company? We give you a snapshot of some of the more important parameters that you should look at and what they mean.

Other than net profit, there are few more terms such as gross sales, net sales, expenditure, operating income and earning per share ( EPS) that can help you to get a better understandings of where the company stands.

GROSS SALES:

Gross sales are also called as the ' topline' or revenue or total sales. Samar Vijay, director, InvestCare, says, " A consistent increase in the topline shows strong growth in business. However, the quality of topline needs to be examined.

Sale of fixed asset can increase the topline, which should not be confused for strong growth. This can be verified from the balance sheet where fixed asset will show a reducing pattern." Gross sales are the sum of all sales during a given period.

NET SALES:

From gross sales you can derive net sales by deducting sales return, sales allowances, and sales discount from gross sales.

OPERATING EXPENSES:

These are expenses that arise during the course of running a business. Operating expense consists of items such as salaries paid to employees, research and development costs, legal fees, accountant fees, bank charges, office supplies, electricity bills, business licenses.

OPERATING PROFIT:

When operating expenses are deducted from net sales you get the operating profit, or earnings before interest, tax, depreciation and amortisation ( EBITDA).

Sanjeev Zarbade, vice president ( private client group research), Kotak Securities says, " Operating profitability reflects ongoing business conditions and shows how efficiently the management is running the business."

NET PROFIT OR NET INCOME:

In the income statement you can find details about tax and loan repayment which when deducted from operating profits gives you the net profit. The term net profit or net income is popularly known as ' bottomline', which shows the company's net earnings or losses.

EARNING PER SHARE ( EPS):

It is the amount of earnings per outstanding share of a company.

Outstanding share refers to those shares which are trading in the market. EPS is arrived at by dividing net profit by numbers of share outstanding.

Rajesh Jain, executive vice president and head of retail research, Religare Securities, says, “Rising EPS is a good sign of a profitable company." In the quarterly results you will find the term basic and diluted EPS. Basic EPS is the total earnings per share based on the number of shares outstanding.

On the other hand, diluted EPS is used to gauge the quality of a company's earnings per share if all convertible securities were exercised. Convertible securities refer to all outstanding convertible preference shares and convertible debentures. Unless the company has no additional potential shares outstanding ( a relatively rare circumstance) the diluted EPS will always be lower than the basic EPS. EPS also helps you to calculate price- to earnings ratio or P/ E ratio.

The P/ E ratio of a share is a measure of the price paid for a stock relative to the annual net income earned by the firm per share. In general, a high P/ E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/ E. Price- to- earning need to be compared with peers to find out relative valuation. A low P/ E compared to peers trading at high P/ E makes the stock a better buy at times.

INTEREST COST:

It is the cumulative sum of the interest paid on loans by the company.

" Rising interest cost depicts that the company has increased its debt. However, proper deployment of debt is important along with rise in sales and profit otherwise rising interest will eat the profitability of a company," says Jain.

APPLE TO APPLE

A single set of numbers will not tell you much. You need to compare it with the prior periods to gauge the direction the company is taking. There are two methods to compare the quarterly performance, that is, quarter- on- quarter ( QoQ) or year- on- year ( YoY).

QoQ is a comparison of a quarter just prior to the current quarter. For instance a comparison of the quarter ended March 2011 with the quarter ended December 2010.This is also known as sequential comparison.

However, YoY is the comparison of the quarter with the corresponding quarter a year ago such as comparison of the quarter ended December 2010 with the corresponding quarter ended December 2009.

R. Murali Krishnan, head ( institutional broking), Karvy Stock Broking, says, " YoY is used to measure the direction and consistency in performance.

QoQ reflects the nearterm pressures on the company and gives an indication on it abilities to achieve its long term projections as estimated by the consensus in the YoY." Kaushik Dani, head ( equity), Peerless MF says that sectors which are prone to seasonal or cyclical fluctuations should be compared YoY and those that are not, should be analysed QoQ or sequentially. Sectors like FMCG, retail, cement, auto and infrastructure can be analysed on a year- on- year ( YoY) basis. Similarly, growth in sectors like technology and telecom should be compared on a sequential basis.

TACKLING SUDDEN FALLS

In some cases the net profit of companies shows a sharp and sudden decline during a quarter.

Recently, the bottomline of State Bank of India ( SBI) for the quarter ended March 2011 tanked around 99 per cent to ` 20.88 crore against ` 1,866.60 crore in the corresponding quarter of the previous year. However, the stock price of the company declined around eight per cent from ` 2,413 on May 17, 2011 to ` 2,236 on May 30, 2011.

In other examples, Shipping Corp of India ( SCI) registered a net loss of ` 6.17 crore, down 104.54 per cent in the March 2011 quarter against ` 135.85 crore a year ago. During the same quarter, net profit of Sterlite Technologies dipped 85.73 per cent to ` 10.30 crore against the corresponding quarter a year ago.

However, the share price of SCI declined barely 1.85 per cent to ` 100.90 while Sterlite Technologies declined 20.21 per cent to ` 48.35 till June 24, 2011.

As you will see, share prices in the above three cases reacted differently to the sudden fall in profits. Hence, there is no standard yardstick to gauge the impact of such a fall.

A chance of a stock declining after a net loss or vice versa depends on the anticipation of investors and how the results have matched their expectations. If investors believe that it is a short- term phenomena, markets ignore the sudden drop in profit or revenue.

" It is not necessary that a stock will fall after a sudden fall in the quarterly numbers. It is all a function of street expectations.

If the street is expecting a loss and actual loss is lower than expected, then the stock price can actually move up," Sanjeev Zarbade of Kotak Securities added.Sometimes, long- term investors take advantage of short- term negative sentiments by taking long positions causing a fall in the price of a share.

However, if the long- term outlook is bad for the company, then both short and long- term investors should move out.

TRADING ON NUMBERS

So, should you buy or sell on the basis of the numbers put out by the company? Our advice is that generally you shouldn't unless you are certain about the direction that the company's business is taking.

There are many other factors such as the business environment, plans and the fundamentals of the companies that one should take into the account while buying or selling.

D. D. Sharma, senior vice president- research, Anand Rathi says, " Do not take buy or sell decision on the basis of quarterly results only.

Investor should check other factors such as policies of the company and other fundamentals of companies."

The chance of a stock dipping after a loss or vice versa depends on investors & how the results match expectations

THINGS TO KNOW

·        HOW EPS WORKS?

In simple terms, earnings per share mean ( EPS) is how much a company is earning in terms of shares that they have been floated in the market. For example, if a company makes ` 20 lakh in profit and has 5,000 outstanding shares, the earnings per share would be:

·        EPS IS CALCULATED AS FOLLOWS

Net earnings/ outstanding number of shares OUTSTANDING NUMBER SHARES are the number ordinary shares that, after their issue, have been sold to and are held by shareholders.

·        P/ E RATIO

P/ E ratio is calculated by dividing the current market price of a share by the annual earning per share. A high P/ E ratio suggests that investors are expecting higher earnings growth in the future compared to firms with lower P/ E ratios.

The ratio needs to be compared with peers to determine the relative valuation.

·        AMORTISATION

Amortisation means paying off a debt in regular installments over a period of time or the deduction of capital expenses over a specific period of time ( usually over the asset's life)

 Courtsey: Yahoo Financial

Women Director in Company Bill, 2009

I just wanted to share this post which appeared on www.moneycontrol.com  your comment is solicited.

you can navigate yourself through this link. 

http://www.moneycontrol.com/news/business/onefive-directors-should-bewoman-new-companies-bill_528272.html

Coinciding with International Women's Day, the Corporate Affairs Ministry on Tuesday said it would make it mandatory for companies having five or more independent directors to have at least one female independent director.

Companies having five or more independent directors would have to necessarily have at least one female independent director, Corporate Affairs Minister Murli Deora said.

The proposal would be part of Companies Bill 2009, which is expected to be tabled in the current session of Parliament.

Industry body Assocham in a study titled 'Corporate Women: Close the Gender Gap and Dream Big' on Monday said that women executives would play a fundamental role in shaping market-leading institutions.

However, the study said that presently out of 1,112 directorships of 100 companies listed on the Bombay Stock Exchange, only 59 positions -- or 5.3 per cent -- are held by women.

This figure compares with 15% in Canada, 14.5% in the US and 12.2% in Britain.

Last month, Finance Minister Pranab Mukherjee said Companies Bill 2009, which seeks to replace a half-a-century-old Act, would be presented in Parliament in the ongoing session.

"The Companies Bill introduced in Parliament in 2009 has been received by the Parliamentary Standing Committee. The proposed Bill will be introduced in Lok Sabha in current session," Mukherjee had said.

Meanwhile, sources within the Ministry of Corporate Affairs have said that the decision to reserve board posts for women is final. Sources said at least 27,000 companies will need to have women directors. The ministry does not anticipate any shortage of candidates. The proposal will empower women in India Inc.

Corporate Citizenship in Letter not in Spirit

There is a concept of Corporate Citizenship which tells us about the commitment to improve community well being through voluntary business practices and contribution of corporate resources leading to sustainable growth. It is not business activity mandated by law or moral or ethical in nature but certainly expected of the corporates.  Corporate responsibility is achieved when a business adapts all of its practices to ensure that it operates in ways that meet or exceed, the ethical, legal, commercial and public expectations society has from such business.

JRD Tata the chairman of the Tata Group believed that "to create good working condition, to pay the best wages to its employees and provide decent housing to its employees are not enough for the industry, the aim of  an industry should be to discharge its overall social responsibilities to the community and the society at large, where industry is located."

Today scene is changed, competition is throat cutting. Corporate are facing stern competition. they mean business at any cost, let country be at stake in respect of security, we have to make money. Recently there was a news on IBN7 about the sell of Pre-Activated Sim Card at Indo-Nepal border. Any body can pay the sum without any identity proof and use it (may be against country) because there is no proof of identity of the person with operators.

Who bothers about corporate responsibility. Even BSNL Sim is available without any identity proof. Corporate is sleeping so is government.

Term corporate citizenship implies the behavior, which would maximize a company's positive impact and minimize the negative impact on its social and physical environment. It means  moving from supply driven to more demand led strategies; keeping in mind the welfare of all stakeholder.

But for the mobile operator it is all limited to compliances and annual return and not more than that. Hope they will wake up and will show the corporate citizenship atleast for the shake of country and its security.