Sebi Allows Real Estate Mutual Funds

India’s first real estate mutual fund could be just around three months away. What will it offer?

How often have you stared at a gleaming skyscraper in a tony address in your town and wished you could afford to buy a house there? If you have ended up sighing wistfully and walking away, here's some good news. Now, you may easily be able to own a small portion of a very swanky address.

After years of deliberation and planning, the Securities and Exchange Board of India (Sebi) has approved the launch real estate mutual funds (Remf); it issued a detailed set of guidelines on 16 April. All you may now need to shell out is as low as Rs five to 10 thousand to participate in real estate investing.

How will it work?
A Remf is a scheme much like any other MF scheme (which invest in shares and bonds) but it will invest in real estate. The Sebi guidelines mandate that a Remf has to invest at least 35 per cent in completed real estate assets (read flats, row houses, bungalows, shops). These could be either residential or commercial properties, but must be finished and ready-to-use and not under construction. The Remf will get title deeds and will be owners of these premises – it’s like you buying a second home or a small office. In simple words, instead of reading a name like ‘Ms Shirin Batliwala’ against, say a first floor flat number on the name-plate board at your building’s entrance, you could now have a neighbour by the name of, say, ‘HDFC Real Estate Fund.

Your Remf will then rent out these properties and earn rental income that it will pass on to you – the unitholder. When your Remf’s tenure ends, it will sell off these properties and earn – and eventually pass - capital appreciation to you. With as low as Rs 5,000, you can now own a part of this flat through your Remf. Assume your Remf collects Rs 500 crore and invests Rs 200 crore out of it (40 per cent of the collections) in 40 flats costing Rs 5 crore each. If you have invested Rs 10,000 in this fund, then your share out of the appreciation and rental income of these flats would be 0.0002 per cent.

Over and above this, your Remf can invest in under-developed properties. But it can neither buy a barren land nor can it undertake construction activities. What then? It will partner with a real-estate developer and then take a stake in a special purpose vehicle (SPV), that the developer would have set up for constructing a particular project. Note, that your Remf will take a stake in that project and not in the developer company or its other projects across the country. Your Remf will buy unlisted shares in that SPV. Once the project is ready and complete, the gains arising out of it are your Remf’s to the extent to its stake.

Additionally, your Remf can also invest in debentures of real estate companies and mortgage-backed securities and equity shares of real estate companies listed on stock exchanges. All of the above must be at least 75 per cent of the scheme’s corpus. A Remf will be closed-end (this means limited tenure and no on-going sales of units) and units will be listed on the stock exchanges. You can trade units on the exchanges though, much likes shares.

Remf not the same as Reit
If you remember sometime back Sebi had issued a draft set of guidelines for Real Estate Investment Trusts (Reit) So what is the difference between a Reit and Remf?

A Reit is also an investment vehicle to invest in real estate. Like Remfs, these too are closed-end schemes and listed on the stock exchanges. But there’s a big technical difference between the two though. A Reit is mandated to distribute at least 90 per cent of the gains that it makes in a year, to its unitholders. Secondly, Reits can only invest in finished projects and not those that are under-construction. Hence it earns its major chunk from rental income. “While Reits help you to earn a regular income, Remfs give you capital appreciation”, adds Milind Barve, managing director, HDFC MF and head of the Amfi appointed sub-committee to recommend norms for Remfs.

Note that Sebi guidelines mandate a Remf to invest at least 35 per cent in completed and ready-to-use properties, it resembles a Reit to that extent and can infact invest this portion in a Reit.

Many countries across the world, especially the developed markets like US, have both Reits and Remfs running simultaneously. India is set to follow that path as Sebi has shown enough intent to allow both these products to be launched.

Of checks and balances
For a beginning, the Sebi Remf guidelines cover a lot of ground. They mandate that each real estate property is to be valued by two valuers - these must be rated by a credit rating agency - and the Remf will invest in that property at the lower of the two values. Each property will be valued once in 90 days. So if your Remf has invested in four properties, say in March, June, September and December, respectively, then each of those four properties will be valued once each of them completes 90 days.

However, your Remf will have to declare its net asset value daily. Your fund’s NAV will also change on a daily basis because apart from real estate assets, it would have also invested in marked-to-market securities such as debentures and mortgage-backed securities.

While your Remf will charge you an expense ratio of a maximum of 2.5 per cent, just like equity funds, the tax status is unclear. Sources say that Remfs will carry a tax status akin debt funds – long-term capital gains tax of 11.33 per cent, and short-term capital gains tax as per your income-tax rates. This compares well to investing in physical real estate directly, as there the long-term capital gains tax kicks in after three years as against a year in a Remf.

…but beware of risks
Although a Remf opens up a new asset class to investors that was otherwise restrictive, it comes with its set of risks.

The ‘others’: A Remf is mandated to invest at least 75 per cent of its corpus in real-estate securities. Beyond that it is free to invest in any security, related or unrelated to real-estate. It can either invest this 25 per cent corpus directly across equity market or debt instruments or can even sit on cash; Sebi has left it for Remfs to decide. How your Remf decides to invest this portion can have a bearing on its risk profile.

Flexible asset allocation: That’s not the only flexibility that Sebi has awarded to Remfs. Beyond the mandated 35 per cent in finished real-estate projects and within 75 per cent of the scheme’ corpus, it has about four different types of securities to choose from. Here’s where one Remf can significantly look and behave different from another.

For instance, a Remf can choose to hold 35 per cent in completed real-estate assets and hold the next 40 per cent in equity shares of real-estate companies and then hold the balance 25 per cent in another set of equity shares. Or a Remf can invest up to 50 per cent in completed real-estate assets and the rest in an SPV of an under-construction project. Such Remfs will be riskier compared to those that have a healthy dose of mortgage-backed securities and debentures of real-estate companies that earn a fixed interest income. Look up the Remf’s asset allocation before investing.

Mis-selling: The same agent through whom you invest in MFs will now also sell you Remfs. Only time will tell whether they will be able to tell the nuances of one Remf from another. And although Barve says that the MF industry is geared up to train the agents and spread awareness, it will take some time - and possibly some heart-burn - before investors realise the true worth and potential of Remf. Your only genuine hope currently will be your Remf’s offer document. And, of course, keep reading Outlook Money.

Apart from Sebi’s nomination of cities in which Remfs can invest their finished-projects’ composition and the taxation incidences on unitholders, most other things are in place. Hopefully, India’s first Remf should be born in another three months.

My Favourite Fire-Temples

Although the real prayer comes from - and is felt in - the heart, you cannot deny the peace you get when you enter a temple - any temple. More than it has got to do with any religion, I feel a temple is a place where you can just go and channelise your thoughts and pray to the Lord. But I frequent my Parsi fire-temples regularly and although all temples are equal in my eyes, there are some that hold a special place in my heart. Not because they are greater than the rest or something, but because I visit them often and have built a connection sort of.

Fire-temples are quiet little places tucked away from the hustle and bustle of the street or locality on which they are located. There are around 52 fire-temples in Bombay. You'd be surprised to know that in most of them, no matter how noisy the locality is, once you enter the temple premises and the complex, it gets very quiet and the outside noise gets blanked out. Inside, you'll often see a couple of people here and there, mostly elderly, near the main Fire sanctum, praying diligently from their books and quietly. You could hear their soft hymns and muttering prayers, but thankfully no loud noises, shouting at the top of their voices or ferociously beating drums or ringing bells as if God is going to come down the very next moment and bless them only first!

Although conventional opinion says that mornings are the best time to pray since you start the day, fire temples do look very beautiful during and after sunset. Especially, the Udwada Pak Iranshah fire temple - Zoroastrianism’s highest order fire-temple situated in Udwada, Gujarat. Because in this temple, no electricity is allowed, the only light present inside the temple after hours are that of the Holy Fire from the sanctum and from lamp shades and chandeliers lit up not by electricity, but by lighted diyas. It's ironical because its darkness, yet there are good vibrations all around. Inside the main Fire room, you feel at times that you can't see, yet you feel guided. It looks very romantic. You'll notice a few priests -Parsees call them dasturs - praying quietly in some corners, while a few benches would be occupied by visitors. Most fire temples allow electricity though, but still evenings in agiaries bring about some nostalgia and great peace of mind.

I visit the Vatcha Gandhi agiary at Hughes Road almost on a daily basis. This is like my home agiary and one that's been there for many generations. This is also one of the few agiaries of the world where young priests undergo their practical training before they are formally inducted into priesthood. Around 3-4 times a year, the secondary prayer hall gets converted into a boarding school types as a bunch young priests camp for almost 10 days till their ceremonies take place.

The two big fire-temples on Princess Street (Anjuman and Wadiaji) are much bigger. I like going there, alternatively with also the Dadiseth and Banaji temples at Chira Bazar and Charni Road, respectively, on Wednesdays. Nothing special that day, but just like that. Earlier when the Bastani restaurant was open, I used to pop in there for a quick breakfast – they used to serve the best bun-maska and chai in town, now that honour goes to Sassanian Boulangerie, also near Metro cinema – every time I visited either of the two at Princess St. Now I have made my peace with Kayani Bakery, opposite to the erstwhile Bastani that has now shut shop because of some legal problems amongst its partners. Sassanian bakery also gets to see me sometimes and they serve very good bun muska.

I also used to go to Yasdani bakery once upon a time in Fort, but those buggers apply layers of butter in the bun that makes me run for my life, far far away from all that cholesterol. Irani cafes and restaurants are a dying breed, what a pity. The second or third generations chaps are interested in doing MBAs; they are not interested in continuing the restaurant heritage. By the way, if you had visited the Bastani when it was open, do you remember that long board of rules and regulations that said stuff like, ‘No smoking’, ‘No gambling’, ‘No fighting’, ‘No standing up on the chairs’, ‘No talking’, etc. That board, hung on a wall, was like a monument.

The Banaji Limji agiary, tucked away in a remote street in Fort, is the oldest fire-temple in Bombay. Like all fire-temples, this one too has a dome over and on top of the holy fire, but is the only one where you can actually climb upstairs - via a narrow staircase outside the building - to be able to see that dome. The chimneys are on top of such domes. Legend has it that this particular room inside of which the top of the dome falls in was once the home of the Fairy godmother in whose name and worship a lone sailor used to come here and light a lamp whenever his ship used to dock on the Bombay port. The Fairy godmother, it is said, was pleased by this gesture and granted him a wish. Till then, and up till now, the belief is that if you want something, you climb up to this sanctum and light a diya in the fairy's name and make a wish. Although my general past experiences have taught me to not only wish for possible things, but also that wishes granted comes after having made some respectable effort, I will never forget that day when I had wished here for a summer placement job after having tried desperately for over 2-3 months and have almost given up hope, and then went home only to get an interview call that same day. I started my summer project 2 days later!

Another favourite is the Navsari Atash Behram in Navsari, Gujarat. (picture to the left) The structure is most majestic with a large garden and the big entrance akin to a palace. The garden is not as well-kept as before, but it still holds a certain charm. I have spent almost all my childhood vacations here during my schooling as my grandparents used to live right next to it. Now the mohallas surrounding the Atash Behram, once full of Parsis whose earlier generations had come, settled and thrived there for generations, bear a deserted look. Locked houses in neglected and ruin-like state remind you of those that have migrated to Bombay and abroad for greener pastures. Now I feel lucky if I manage to go there once in even 2-3 years.

Anyways, my most favourite fire-temple in the world is the Panchgani’s Chowksi Agiary. This is one of the most serene temples I have ever visited. That it is situated in one of the most beautiful hill-stations and my favourite abode in the world – Panchgani – makes it all that more special. The place was spotless clean years back during one of its ex-dasturs regime, but is not as well-maintained these days. But still I love it. Surrounded by trees and lot of greenery and tall pine-like trees, you could just go and sit there for hours and you won’t get bored. (picture to the left) The highway is just outside, yet it sounds like its miles away – the sounds of buses and trucks passing by miraculously get blocked out. One of the best things about this structure are a row of stained glass that you can see in the picture next to this.

All Parsi fire temples must also have a well inside the complex. Many Parsis light a diya near the well as also inside the temple, itself. But Panchgani is full of monkeys, if you light and keep it on the periphery of the well and out in the open, they swoop down from tall trees and take away the diyas thinking its food.

Sreesanth is no saint

Although the ban on Harbhajan Singh was just about well-intentioned, but should have been more severe, its surprising why Sreesanth was let off with just a warning

I am no fan of cricket. I think both the game and its players, especially Indian players, are over-hyped and do not deserve such national recognition, coverage and importance that they are so used to getting. I was terrible at cricket myself - still am - when I was a child. I always used to get picked up last when teams were formed and although my captains (by compulsion, not choice) were never rude or something, I couldn't help but notice that they were going through a WTF moment when I used to be 'inducted'. I do not understand the difference between a square-leg and a fine-leg or a deep square leg, mid-off or even slips. Even today, I do not know how to play - and what to do to win - a Test match, except that both the sides do or can come to the pitch to play their respective innings twice. I used to be a ball dropper and could hardly catch a catch. My teammates, as a child, used to frown upon me when I used to act like a goofy on the cricket field. I think that's partly responsible for my hatred toward the game, but I am not sure. Anyways, naughty minds reading this would do well to note that all the puns are strictly unintended.

But when it comes to sportsmanship and respecting the spirit of game, any game, I feel certain things must be said. So when the Indian Premier League (IPL) started , I was least bothered and was like this is yet another opportunity for players to make more money at the expense of other sports. But keeping my feelings aside, I have come around to appreciate the spirit of IPL. Not that I follow voraciously who's won and who's lost, but I quite like the idea of players of different nationalities and otherwise opponents, all jumbled up and then randomly bundled into a set of 6-7 teams. Who would have thought that Andrew Symonds, after all those controversies about monkey-chanting and his run-ins with Harbajan Singh when he accused the latter of racially abusing him, would fetch a whopping USD 1.35 million - the most-expensive foreign player and second only to Dhoni (USD 1.5 million). It also speaks volumes on professionalism that many of the foreign players were auctioned for far higher amounts that many Indian players.

Now coming to the point.

1) I think the 11-match ban on Harbajan Singh is not adequate. Cricket is and has always been and will always remain a gentleman's sport. It's a no-contact sport where there is no scope and place for physical aggravation. In a society where violence is increasing with every passing day, sport remains one of the few areas where violence has no place (except perhaps some heavy-duty ones like boxing, rugby, etc) and the term sport itself encourages fair play and healthy competition that unites teams and countries across the globe. I am given to understand that a physical assault on a fellow player constitutes to be a Level 4 offence that calls for a maximum punishment of a life ban or a minimum of five Tests or 10 ODIs. Singh was punished with only 11 ODIs, a negligible hike from the minimal level. Whether BCCI punishes him further still remains to be seen. However, a more stricter ban - considering that his temper is well-known in the Indian cricketing circles if certain news reports are to be believed - would have set a perfect example for the fraternity. Also, sticking to the bare minimal level of punishment terms prescribed under the laws, somehow, reduces the credibility of the concerned authorities.

2) Not many news reports have covered this, but i find the punishment on Lalchand Rajput - Mumbai Indian's coach to be a good step. We can debate on the punishment terms, but the fact that he was pulled up speaks well of the officials. It seems the slap happened right in front of him, but he didn't restrain Singh or reprimanded him immediately or at least comforted Sreesanth as a goodwill gesture. As a coach he has certain responsibilities and to reign his players is his duty; which he didn't do as he should have.

3) Umpire Amiesh Saheba, who umpired that match, was banned for two matches. The IPL did nto want this incident to escalate and so pulled up Saheba for telling the media that Sreesanth was constantly sledging throughout the game and indicated that that might have provoked Singh. I completely agree with him and I will get to this later. However, I do not agree with the punishment. Even though he was contracted not to say anything to the media, he should have been reprimanded, not suspended. A bit too harsh for an umpire who has just spoken out the truth. But if rules are rules, then so be it.

4) Last, but not the least. Sreesanth must be punished. He is no saint. He is the most notorious slegder on the Indian side. Even though nothing justifies a slap, he must have done something that provoked Singh, going by his dubious track record. The BCCI should make an inquiry and if found guilty, should punish Sreesanth. His crying face on TV after being slapped may have moved the nation, but make no mistake, Sreesanth is no saint. On numerous occasions he has been caught on camera (more than willingly) being rude and unnecessarily intimidating. It's high time he is reigned and taught to behave on a cricket field. After all, he is nowhere among the top 10 bowlers of the world.

And though Singh and Sree 'made up' later by calling each other small brother-big brother, I think they should just keep this small brother big brother emotional Hindi filmi nonsense in their bedrooms. Sledging and assault is just that. It should be stopped and punished. Ditto for those who abate it, either by provocation or sweeping under the carpet.

Of lies and mis-selling

SBI Cards caught lying and mis-selling

I haven't had much luck with credit cards, despite being a cautious spender and paying all my bills on time. On account of a lack of credit scoring facilities in India, here typically there's not much reward to be had from the credit card community if your spending are in control and ensure timely bill settlements. Also, my pathetically low salary ruins whatever little chance I had to get a good credit card deal; an important criteria that credit card companies look while deciding what type of card (silver, gold, platinum, etc) should you get and the spending limit (higher your salary, higher your spending limit, and vice-versa).

Earlier this month, I was offered an SBI Platinum card; one of their call centre executives called me on my mobile to offer me one. I said yes, since i only use one credit card and there too I had a much lower spending limit - despite using the card for around five years - till i took my case to its CEO's doorstep and thus got it enhanced. SBI cards took my salary slip, completed its formalities and almost asked the entire world whether they know me - they came to my office and residence, made enquiries, etc.

I got my new SBI card's delivery today morning and much to my shock, i discovered that I was given an SBI Gold card. They had promised me an SBI Platinum card, instead. Also, instead of a spending limit of between Rs one and five lakh that SBI cards had offered and promised me, they gave me a spending limit of only Rs 30,000!

Not only did SBI cards approach me and not vice-versa, they also lied to me and deceived me into believing that I would get a product when they actually gave me something else. This is quite repugnant and unacceptable on two counts:

• If SBI Card felt that my salary did not deserve a Platinum card, they had no rights to give me any other product, instead - like an SBI Gold card in this case. They should have the decency to ask my permission first.
• They had promised me an SBI Platinum card and given me a clear, spoken and unmistakable impression that this is the product that they were offering. Instead, they gave me SBI Gold card, that also with a much lower spending limit. This is mis-selling and also a blatant lie.

Next time, a credit card company calls me and offers me one of their products, I will take it with a pinch of salt. Having said that, I do not intend to sit back and take this lying down. I will complain to SBI card and, if need be, also to RBI.

Is It Really Focussed?

ICICI Prudential Focused Equity Fund aims to limit its portfolio to around 20 stocks

You invest in a mutual fund (MF) scheme because apart from being unable to track direct equity investments, you also want diversification. So your MF that diversifies across 40 to 60, sometimes even more than 80, scrips, steps in. But too many scrips can also dampen your fund’s portfolio as a bunch of them should see their share prices appreciate to have any decent impact on your fund’s net asset value (NAV). ICICI Prudential aims to address this issue as it has launched a new scheme that will neither under nor over-diversify.

Called, ICICI Prudential Focused Equity Fund (IPFEF), this scheme will invest in around 20 scrips as that’s the ideal number of scrips the MF believes a scheme should have. IPFEF will choose from the top 200 companies as per their market capitalisation.

Should you invest?
While having a tight and an adequately diversified portfolio has its merits, there is no thumb rule on the number of stocks that a MF scheme should hold. Further, the number of stocks in a portfolio is just an approach to fund management; it does not guarantee performance.

Look closely at ICICI Prudential MF’s bouquet of schemes and you realise that the focused approach could just be an excuse to launch a new scheme, as typically all its schemes have a much higher number of stocks. Even its other large-cap oriented funds like ICICI Prudential Growth Fund and ICICI Prudential Power Fund hold more than 30 scrips. Ultimately, IPFEF’s offer document says it can diversify beyond 20 stocks if its assets cross Rs 1,000 crore. That is a low threshold to have for a large-cap oriented fund. With giants like ICICI Prudential having the marketing and financial muscle to woo distributors and investors alike, it doesn’t take time to either mop Rs 1,000 crore or come up to that level in case they mop up a lower amount.

Avoid IPFEF. Instead opt for some of JM’s well-performing equity funds if you want to get the most out of a tight portfolio.

US-64 DRAWS TO A CLOSE; WHAT SHOULD YOU DO?

As the country oldest mutual fund scheme, now US-64 Bonds, are set be redeemed, it’s tough to find an equally alternative investment. There are some that come close

The oldest mutual fund scheme in India, Unit Trust of India (UTI)’ Unit Scheme – 64 (US-64), will soon be no more. After more than 40 years of existence, curtains will fall on the US-64 bonds that mature on 31 May 2008. UTI has already sent out letters to all bond-holders about the redemption; investors are told to submit their original certificates, take their money back and leave.

For investors like Kolkata-based, Kumaresh Mukherjee, 72 it’s the end of an era. Soon after he retired from Philips India, he invested his provident fund corpus in fixed – return instruments like company fixed deposits. An electrical engineer by profession, in 1995 he also invested Rs 12 lakh or around one-third of his retirement corpus in the erstwhile US-64. After years of above-average returns, then trapped doors and turmoil that shook the Indian financial markets, and finally a repackage, the curtains are now set to fall on the ubiquitous run of US-64 scheme, now US-64 bonds. Like Mukherjee, if you’re invested in US-64 bonds and are about to get your principal money back, what to do?

The story so far
It was a red-letter day in the Indian financial markets on 2 July 2001 when India’s then-largest mutual fund the Unit Trust of India suspended the redemptions of its flagship scheme – US-64, for six months on account of its weak financials. All the skeletons came tumbling out of US-64’s closet.

For instance, up until then, US-64 could be bought or sold only at a fixed sale or repurchase price fixed by UTI and which was Rs 14.25 in May 2001; a month before the death knell was sounded. However, six months down the line on 2 January 2002 UTI disclosed its net asset value (NAV) for the first time in its history, under a huge public outcry, at Rs 6. All hell broke loose. After having used to its annual dividend – it rose from 16 per cent in 1987 to 26 per cent in 1993, where it stayed till 1995 – and therefore under an impression that US-64 was much like a assured-return scheme, investors felt trapped when UTI not only suspended redemption for six months, but also gave rise to aspersions whether investor money was safe or not. The difference between the scheme’s repurchase price of Rs 14.25 in May 2001 and its first-disclosed NAV was Rs 7.44 or 56 per cent, even after adjusting Re 1 dividend in the interim. In 2002, US-64 skipped its dividend – a first in 37 years of its history, up till then.

Then came the government of India’s bail-out package for US-64 investors. Apart from allowing investors to redeem up to a maximum of 5,000 units between August 2001 and May 2003 at an assured price between Rs 10 to Rs 12, UTI also gave a choice of US-64 bonds that paid an interest rate of 6.75 per cent to all the unitholders holding above 5,000 units. Investors were offered either that or redemptions at Rs 10 per unit. Not only did these bonds give 25 basis points more than what the Reserve Bank of India bonds yielded at that time, they were also completely tax-free at the hands of the unitholder. Around 75 per cent of investors, including Mukherjee, opted for the US-64 Bonds because of the assured returns and lack of attractive alternative options.

How to redeem your money?
The redemption process is pretty simple. If you hold up to 200 bonds, all you need to do is to give your bank account details, latest by 15 May 2008 to UTI if they do not already have it. If UTI has been sending you interest payments so far by Electronic Clearing Service or by cheques with your bank account details printed on them, it means that UTI already has your bank details. They’ll send your principal amount cheque in the first 10 days of June 2008. You need not surrender your bond certificates.

The key to look up the number of bonds is your customer identification number (ID). When the UTI letter says that its 200 bonds, it means 200 bonds per customer ID. So even if you have more than one folio but have less than 200 bonds in each of them, you do not need to submit your bond certificates.

If you have more than 200 bonds in a single folio, you need to send your bond certificates before 25 May 2008. Here too, bank account details are mandatory. Fill out the bank particulars form that UTI has sent you alongwith the redemption notice. Submit this form and bond certificates, if necessary, to the UTI Branch in your city (visit http://www.uti.co.in/ to know your nearest centre) or send them by courier or ordinary post.

Where to invest the redemption proceeds?
In the communication that UTI has sent you, it has suggested five of its existing schemes to invest your bond proceeds in. Although if you wish to invest in any other UTI MF scheme, you can do by just mentioning its name and the plan (dividend or growth) that you would like opt for.

We suggest you skip these schemes. Except for UTI Fixed Term Income Fund (UFTI), all other alternatives are diversified equity-oriented funds. UTI Infrastructure Fund (UIF) is a thematic fund and therefore riskier and we wouldn’t advise you increase the risk levels of your monthly income-yielding corpus by notches. And although UFTI is a fixed maturity plan where downside risk is minimal, it won’t pay you regular income.

Remember, you invested in US-64 bonds because you wanted some kind of regular income. Plus, it also offered tax efficiency like none other. For instance, if you are in the highest tax bracket, your effective tax rate works out to be 10.22 per cent. Ideally that is what you should get from your alternative instrument avenue where you will now park your redemption proceeds.

Presently, there are no instruments that pay you a tax free and assured return to the tune of 10.22 per cent. But if you are risk averse and like to avoid equities, your first priority should be Senior Citizens Savings Scheme (SCSS) if you haven’t already exhausted its upper limit of Rs 15 lakh. Mind the age requirement though.

The next best alternative is the Post Office Monthly Income Scheme (POMIS). The maximum limit has only recently been raised to Rs 4.5 lakh in a single account and Rs nine lakh in a joint account. If you have exhausted your SCSS limits, take advantage of the increased limit in POMIS. Both of the above carry the government of India’s guarantee.

If, however, you do not mind taking on some risk, try mutual fund schemes that invest zero to up to 40 per cent in equities. These are debt-oriented schemes that invest marginally into equities; we call them Equities – marginal exposure and Equities – significant exposure. <’Introducing the OLM 50’, 10-23 April 2008>

Or, if you to invest in equities the whole way, stick to exchange-traded funds. These are close cousins of index funds as they invest in all the scrips in the same proportion as they lie in their benchmark indices, like Nifty or Sensex. They are passively-managed and do not carry the fund manager’s risk. And due to their inherent structure, their expense ratios are lower than index funds.

Delhi Metro rocks

One of the areas that Delhi scores over Bombay is quick implementation of infrastructure projects. Here in Bombay, infrastructure projects, partly due to lack of open space and partly due to political corruption, gets procrastinated for months and months. So this time, after more than a year of planning, I finally got to ride the Delhi Metro. So i went to Rajiv Chowk (the station at Cannaught Place) - this is an underground station - and took a train to Indraprastha - the last station on one of the three lines and one station after Pragati Maidan. Like the Calcutta Metro, the Delhi Metro is very systematic. You first buy your ticket - Delhi Metro calls it a token - and only then you pass through the barricades by punching the token. If you do not have token, the barricade does not open and you cannot step onto the platform. This way, you do not get any ticketless travellers on the Delhi Metro. Plus, spitting or chewing pan/gutka is strictly not allowed, unlike Bombay local train network where you have scores of people at any given square km of any platform, spitting, spitting and spitting. While a part of the line is underground, a significant chunk of the line runs over the ground on elevated tracks, on top of a viaduct in the middle of main roads of Delhi. The railway stations are also elevated.

There are indicators on all platform telling you exactly the time left for the next train to arrive. I wish I could have had the time to go all the way to Dwarka and back, but I had to meet my chicks in 1/2 hour, so a short ride was meant to be. I got into my train, took a seat next to one of the compartment's large windows, and watched the train speed away, underneath, passing stations like Mandi House, etc, the train resurfacing to the ground and onto elevated tracks, like on a bridge over the ground. Within minutes, I was passing Pragati Maidan and remains of what was India's first amusement park - Appu Ghar - which was recently shut down. At Indraprastha, I got off, went over the booking window after surrendering my token to the barricades - only then the barricades open and allow me to pass - took another ticket, this time all the way to Tagore Garden. But I got off at Patel Nagar because time was up. I enjoyed my ride on the Delhi metro and I wish Bombay too could soon have its own Metro that the city can be proud of.

Himalee joined me later and we went to this restaurant called 'Legends Of India'. A chic and upmarket place at Cannaught Place, Legends of India serves sumptuous and declicious Mughlai cuisine, like Copper Chimney of Bombay. The place was very clean and decent, service was great and above all, food was absolutely delicious. We had Murg Qorma Nizami, Meat Beli Ram and steamed rice. The place is steep and expensive, but totally worth it. Try it the next time you visit Delhi and then cross over to Nirula's and have their chocolate fudge. Later Juhi (not Chawla, Bahl) joined us and we went to watch a movie (Shurya) at a mall in Saket called Select City Walk. This mall was so large that it took us 10 minutes to drive out of that mall's underground parking, after the movie got over.

I bought tickets through the ATM-type ticket vending machine. Select your show, select your seats and then swipte your credit card and enter your CVV number and you get a printout of your tickets, instantly. Amazing mall that also had a large multiplex inside. By the way, Shaurya was decent and I would give 3/5 stars. End of a very enjoyable day. Oh and by the way, the next time girls asks you this question; "What & where do you want to eat?", they actually mean: "Chup. Quietly come where we take you." ;)