How to Identify & Pick & Hold to a Multi-Bagger Stock

Everyone loves to pick multi-bagger stocks. Though the framework to select multi-baggers is quite well-known, we hardly find investors having stocks that multiplied several times in value in their portfolio. 

Here are some mistakes that investors make in identifying or holding on to multi-baggers.

1. Fundamentals: You don’t know what you don’t know :

Investors in general have evolved & they are quite aware of the fact that they are not buying stocks, but are investing in businesses. Hence, an understanding of businesses is a must. But given the dynamic world we are living in, even sound & fundamentally strong companies can go out of business & that is what I meant with “we don’t know what we don’t know.” A Company which is fundamentally sound & strong today may not exist tomorrow. This may be because the very problem which that company is solving now may not exist tomorrow or their products may no longer be needed. There are enough examples such as Kodak, Nokia & Blackberry, which were the market leaders of their time.  Though one cannot predict everything, there is a strong need to identify businesses in this light.

2. Too much focus on the P/E Multiples :

There is a constant talk about the Price/Earnings (PE) ratio, but when it comes to identifying a multi-bagger, a high or low PE may or may not make a huge difference. In fact, look at TESLA stock, which defies rule & also proves the “Greater Fool Theory” that people are willing to pay a much higher price in anticipation of disruptive growth in future. So, do not focus too much on buying a low PE stock; rather, look out for disruptive opportunities while identifying a multi-bagger.

3. Do you understand the Sector well?

Always remember the fact that every stock has a story & you need to pick up those sectors which you understand & believe in. You may also look out for the sectors where you have a core competency like your immediate work area, be it the IT, FMCG or any other industry. Avoid investing on borrowed confidence & the tips given by friends or relatives.

For example, someone in the financial services sector may understand the importance of how the overall Life insurance, Health insurance & Equity market landscape will evolve in India. Examples of leading players include HDFC Life, SBI Life, or AMC or financial firms’ stocks such as HDFC AMC or Aditya Birla Capital.  So, choose a sector which you understand & you can find enough Multi-baggers across sectors as we did in the past, with the likes of Berger Paints, Bajaj Finance, Balkrishna Industries, Eicher Motors & many more.

4. How many MRFs do you have?

We give too much importance to identifying a multi-bagger than holding on to that stock. Take my word, making money is really easy unless you are in a hurry. Though it is easier said than done, let me share a real-life case of my friend’s father who is holding on to the MRF stock which he purchased at ₹ 18. Guess the current market price? It’s ₹ 88,906 per share!

Now, how can you beat that? A person has seen the price go from ₹ 18 to ₹ 89,000 & yet resists the temptation to sell. It is indeed a very difficult task & that is where the test of your patience comes in where most of the investors fail. That is why having a concrete plan & knowing why you invest in a particular stock in the first place is very important to decide your exit strategy.

5. Diversify, but don’t become a Mutual Fund :

Over-diversification will never allow you to have a multi-bagger. Instead, it’s better to go deep with a maximum of say six to seven stocks from different sectors or on the basis your risk profile & return expectations. Diversification is important for your overall asset allocation but not with respect to your stocks, so in case you invest in too many stocks which many do, then you would eventually be running a mutual fund scheme of your own. And that process may get you a decent return but never exponentially higher returns which is the objective behind a multi-bagger.

6. The role of Luck : 

Like it or not, luck plays a small role. I doubt those who claim to know which stock can become a multi-bagger in future. This is important for you to know given the current COVID times & the way many new-age investors who made good money since the lockdown period. The recent sharp rally in the markets & your recent success may not be repeatable often.

What is a DVR Share, How Does DVR Work & Everything You must know about DVR Shares

"One Share, One Vote" had been the bed-rock principle of the financial world for years, until the year 2000, when DVR shares were introduced in India for the first time. 

But what is DVR share? DVR stands for stocks that have Differential Voting Rights. Meaning that the shareholders with DVR shares have higher or lower voting rights as compared to shareholders who have equity shares. But under the Indian law, Companies are not allowed to issue equity shares with superior voting rights, so the only DVR shares issued in the Stock Market are those with limited voting rights.

How is a DVR share different from an ordinary share?

DVR shares are different from ordinary shares in two prominent ways.

1. They offer lower voting rights as compared to ordinary shares. So, the shareholder might not have the right to vote, but other rights such as bonus shares, rights share issue, etc. remain intact. 
2. DVR shares are generally offered at a discount which means the investment amount can be significantly lower as compared to investing in ordinary shares. 
3. Shareholders with DVR shares get higher dividends as compared to ordinary shares to compensate for the sacrifice of their vote.

Why do companies issue DVR shares?

To grow & expand in today’s world, companies need capital. Often, the founders & main stakeholders have to reach out to potential shareholders who would be willing to invest in the company. But this also means diluting the power & giving away some of the control. DVR shares help companies protect their interest while enabling them to raise that additional capital required to keep the business going.

So, issuing DVR shares is a brilliant solution in getting investors who are looking for investments but don’t want to participate in the workings of the business. The company can also control how many voting rights they want to give away. DVR shares also provide a safeguard against hostile takeovers. Without voting rights, shareholders can’t gain majority & challenge to take-over the control of the Company.

Why should you invest in DVR shares?

1. Strategic Investment – DVR shares provide you with an opportunity to reap the benefits of a highly successful business venture without having to worry about the day to day affairs of the company. 
2. Discounted Rates – DVR shares are listed on the stock market at lower costs which means your investment budget is smaller too. 
3. Better Dividends – DVR shares offer higher returns as compared to ordinary shares. As high as 10–20%. And since these shares are quoted at discounted rates, the dividend yields are much more profitable.

Conclusion :

While DVR shares might not have taken off in India in a big way, the latest amendment by SEBI may go a long way in enhancing the attractiveness of DVR shares in the Indian Stock Market. According to this amendment, SEBI has approved a framework that allows individual companies to issue shares with superior voting rights & disallows further issuance of shares that have lower voting rights. Moreover, the Government has also relaxed the norms for start-ups, where they can now have up to 74% DVR shares of the total capital as compared to the previous 26%. This move will enable companies to retain control while raising equity capital. How it impacts the world of the stock market is yet to be determined.

What are the Top 5 Tax Saving Investments for 2021

 What are the top 5 tax saving investments for 2021

There’s no denying that 2020 was a financially tough year for many people across the world. The rise of the COVID-19 pandemic had a huge impact on saving and spending trends. Many people came to realise that saving for an uncertain future was vital. Your financial priorities surely have also changed during the economic slowdown the COVID-19 pandemic caused. Let's take a look at how this can affect your tax planning investments for 2021.

• What are some of the non-negotiable options you can look into? 
• Are there any tax-savings methods that you can benefit from, particularly?.

There are several options available to you if you’re considering saving on your taxes in 2021. These savings options are greatly beneficial to your future. Here are five useful ways to save tax with the right investment plans for 2021.

• Life & Health Insurance 

Health & life insurance plans are of paramount importance - they secure your family’s future financial needs in the case of an emergency. A life insurance policy is greatly beneficial for our dependants, especially in the case that you are the sole breadwinner of the family. A life insurance policy will financially secure the future of your family, and enable them to pay off any financial expenses, as well as maintain a decent standard of living. The benefit of having health insurance is that it provides people with much-needed financial backup at times of medical emergencies. As long as your investments for health or life insurance plans are under a total of ₹1.5 lakhs, it is exempt from being taxed, under Section 10(10D) of the Income Tax Act.

• Saving for Retirement

Health & life insurance plans are of paramount importance - they secure your family’s future financial needs in the case of an emergency. A life insurance policy is greatly beneficial for our dependants, especially in the case that you are the sole breadwinner of the family. A life insurance policy will financially secure the future of your family, and enable them to pay off any financial expenses, as well as maintain a decent standard of living. The benefit of having health insurance is that it provides people with much-needed financial backup at times of medical emergencies. As long as your investments for health or life insurance plans are under a total of ₹1.5 lakhs, it is exempt from being taxed, under Section 10(10D) of the Income Tax Act.

• Saving for Retirement

Among the plethora of tax-saving products in the market, a key way to financially secure your future is to use savings plans such as the National Pension Scheme (NPS) or the Public Provident Fund (PPF). Using these tax-saving tools will give you peace of mind for any of your future financial needs. NPS and PPF encourage you to save so that you can access a regular pension in your retirement years. The Public Provident Fund allows you to only invest up to ₹1.5 lakh in one financial year. You can make this payment in 12 instalments or less. This risk-free investment option has a lock-in period of 15 years & also generates a high-interest rate at the end of its tenure.

• Mutual Funds and Equity-Linked Saving Schemes (ELSS)

Mutual funds are a fairly popular choice used to save taxes. Depending on your financial goal, you can choose from a range of tools that best suits you. Another alternative investment option is Equity-Linked Savings Schemes (ELSS). ELSS has similar advantages to that of mutual funds but with the added advantage of being a tax-saving option. The standout feature of this choice is that it has the shortest lock-in period of 3 years. An investment of up to ₹1.5 lakh in one financial year can be claimed as tax-deductible under Section 80C of the Income Tax Act.

• Tax-saving Fixed Deposits

ULIPs or United Linked Insurance Plans have been noted to be the best investment options in India. It offers you the dual benefit of acting as an investment as well as an insurance plan. For a ULIP, an insurance company invests part of the premium in shares or bonds & the balance amount is utilized as an insurance cover. This segregation of the premium is handled by a fund manager employed by the insurance companies. Under Section 80C of the Income Tax Act, investing in ULIPs can help you save a substantial amount when you are filing your taxes. ULIPs come with a lock-of of a five year period, so it would be advisable to plan before investing in ULIPs.

• National Savings Certificate (NSC)

As far as fixed income tax savings go, the National Savings Certificate is a reliable savings scheme that is spearheaded by the government itself. You can open an NSC at any post office. This savings tool is designed to encourage mid-income folk to invest and is similar to Fixed Deposits or even the PPF. The NSC is a low-risk tax saving investment option. If you opt for an NSC, you can avail a tax deduction of up to ₹1.5 lakhs under Section 80C of the Income Tax Act.

Others Deductions : Declaring home or education loans are also two other ways by which you can be eligible for tax deductions. They are eligible for tax deductions under Section 80C of the Income Tax Act.

5 Income Tax changes that could be expected in Budget 2021

5 income tax changes that could be expected in Budget 2021

There are expectations that the Government may hike the standard deduction limit in Budget 2021 to boost consumption. Tax experts expect the government to fix some anomalies in the NPS or National Pension Scheme with regard to income tax benefits.

In last year's Budget, Finance Minister Nirmala Sitharaman introduced a new income tax regime that came into effect from April 1st. So some tax experts say that in this year's Budget there might not be many new changes.

Under the new simplified income tax regime :

1. There is Zero tax for income up to ₹2.5 lakh, 
2. 5% for income between ₹2.5 lakh & up to ₹5 lakh,
3. 10% for income between ₹5 lakh & up to ₹7.5 lakh,
4. 15% for income between ₹7.5 lakh & up to ₹10 lakh,
5. 20% for income between ₹10 lakh & up to ₹12.5 lakh,
6. 25% for income between ₹12.5 lakh & up to ₹15 lakh,
7. 30% for income above ₹15 lakh.

These income tax rates are optional & are available to those who are willing to forego some exemptions & some deductions. The fact that a new tax regime has been introduced last year means that not many changes can be expected now". "Given that the Government is already running a high deficit owing to lower tax collections, believe any large cuts would be unlikely. However, some relief to certain distressed sectors & tinkering in personal income tax could be on the cards."

Here are five changes to income tax rules that could be announced in Budget 2021:

1. Tax experts expects Government to fix some anomalies in NPS or National Pension Scheme with regard to income tax benefits. "For contribution towards Tier I account up to 14% of the employer’s contribution is permitted for Central Government employees but when it comes to other employees maximum up to 10% of the contribution from employer is eligible for deduction under Section 80CCD(2)". Under the current income tax laws, if an employer is contributing towards the employee's NPS account, a deduction up to a certain percentage of salary (Basic + DA) irrespective of any limit qualifies for income tax deduction under Section 80 CCD(2). For Central Government employees, it is 14% of salary & for others, the limit is 10%.
2. "From a capital market perspective, key expectations include allow indexation while calculating LTCG on equity shares/equity MFs &/or allow setoff of STT against the tax liability thereon, reduce LTCG period to 1 year for debt MF, exempt dividend income in the hand of recipient to the extent of Rs.2-3 lakhs per annum,". "The reintroduction of long-term capital gains tax in the 2018 budget affected the investors’ confidence. The 10% LTCG tax is an additional tax burden along with other transaction taxes – like STT, stamp duty. Reducing or abolishing LTCG can raise the investors’ confidence".
3. Currently, Long-Term Capital gains (LTCG) arising out of the sale of listed equity shares & units of equity-oriented mutual fund schemes are now taxed at the rate of 10%, if the LTCG exceed ₹1 lakh in a financial year (Gains up to January 31, 2018 being grandfathered). Long Term Capital Gains on debt mutual fund units held for more than 36 months are taxed at 20% after adjusting for indexation. Short-term capital gains on units held for 36 months or less are added to the income of the individual & taxed as per the applicable slab rate.
4. Under the current Income Tax laws, switching of investment in units within the same scheme of a mutual fund from Growth option to Dividend option (or vice-versa), & from regular plan to direct plan or (or vice-versa) is considered a “transfer" & is therefore liable to capital gains tax, even though the amount invested remains in the mutual fund scheme. However, the switching of investments to/from investment plans to another within the same Unit Linked Insurance Plan (ULIP) of insurance companies is not considered as a “Transfer" & hence, not subjected to any Capital Gains Tax. The Mutual Fund industry in its proposals for Budget 2021 has said that "there is need to have uniformity in the tax treatment for “switch" transaction in respect ULIPs & Mutual Fund products to have a level playing field."
5. In a relief to salaried middle class taxpayers amid the coronavirus pandemic & to boost consumption, the Central Government may hike the standard deduction limit in Budget 2021, Standard Deduction is a fixed deduction that is allowed to specific income tax assessees, irrespective of expenses incurred or investments made. Introduced in the 2018-19 Budget, the standard deduction replaced the medical & transport allowance. It was further increased to ₹50,000 in the following Budget. Standard deduction should be hiked from ₹50,000 to ₹1,00,000 is what the majority wants this time around.

Sovereign Gold Bond Scheme 2020-21–Series 11 - Why invest in Sovereign Gold Bonds?

 

Sovereign Gold Bond Scheme 2020-21–Series 11 - Why invest in Sovereign Gold Bonds?

Sovereign Gold Bond Scheme 2020-21 – Series 11

> Issue Details -Issue Open Monday, February 01, 2021 To Friday, February 05, 2021.

> Live on Monday February 01, 2021.

> Why Invest in Gold : Gold – An asset class to consider:

1.  Provides hedge to your portfolio in volatile times.
2. Gold also helps in portfolio diversification due to its low correlation with other asset classes, such as Equity & Fixed Income - asset diversification among Equity, Debt & Gold – essential to beat volatility of any particular asset class.
3. Wealth managers believe investors should allocate 10-15% of their portfolio funds to Gold as it acts as an insurance against global uncertainty & rupee depreciation.

Why invest in Sovereign Gold Bonds :

> Returns : Interest of 2.5% on the issue price & which is payable of half yearly basis + Appreciation of Gold.

> Safety : Sovereign Guarantee on redemption of money (principal) as well as on the interest earned.

  * Elimination of risk & hassle-free holding as it eliminates cost of Storage as in Physical Gold.

> Liquidity : Tenure of 8 years with exit options in fifth, sixth & seventh year.

  * Tradeable on stock exchanges from the date to be notified by RBI.

> Taxation Benefit : Exemption from Capital Gains Tax on redemption.

  *  No TDS Applicable on Interest paid.

  * Indexation Benefit :  Will be provided on Long Term Capital Gains arising to any person on transfer of bond.

> Collateral : Accepted as collateral – Can be kept as collateral / security against Secured Loans.

Disclaimer : Please consult your Tax consultant for Taxation purposes.

Tax Planning with ELSS for 2021

 

@t.me/MonePlan : Stock & Market Updates with MonePlan :

> It's that time of the year when tax saving is on the top of our mind. 

> While selecting a suitable tax saving option (u/s 80C of the Income Tax Act), it is important to look at those which not only extend the advantage of tax saving but also have the potential to generate high returns that would beat inflation in the long term.

> One such investment avenue is Equity Linked Savings Scheme (ELSS).

> Tax Savings u/s 80C of IT Act, 1961 in case of highest tax bracket for investment of 1.5 lakhs in a financial year in ELSS.

> In case anyone is planning to save tax please get in touch with me @ 7506265365 or mail me at rajeshnair72@gmail.com

> Happy to Help

Sovereign Gold Bond Scheme 2020-21-Series IX -9th Tranche-All You Wanted to Know

Sovereign Gold Bond Scheme 2020-21-Series IX -9th Tranche-All You Wanted to Know

> Issue price Rs.5,000 per gm. Gold is on everyone's buying list. However, gold price has been rising to all-time highs and is still ruling at rates that are very, very high. So, if you get an opportunity to buy gold cheap, where you can make huge profit, then what will you do? RBI has released Sovereign Gold bond scheme in its 9th tranche.

> The Sovereign Gold Bond Scheme 2020-21 - Series IX will be open for subscription from December 28, 2020 to January 1, 2021. "The nominal value of the bond works out to Rs.5,000 per gram of Gold," the RBI said.

> SGBs are issued by the Government at regular intervals at the prevailing gold price. It has a fixed tenure of Eight years, but can be sold after a lock-in of Five years. However, if you hold SGBs till maturity, there will be no capital gain tax on the investment. You will get an interest of 2.5% annually, which will be paid semi-annually.

> The quantity of gold for which the investor pays is protected since they receive the ongoing market price at the time of redemption/ premature redemption. SGB offers a superior alternative to holding gold in physical form. Also, risks & costs of storage are eliminated in the case of these bonds. Investors are assured of the market value of gold at the time of maturity & periodical interest.

> Additionally, SGB is also free from issues like making charges & purity in the case of Gold in Jewellery form. The bonds are held in the books of the RBI or in Demat form eliminating the risk of loss of scrip etc. According to experts, SGBs remain the best vehicle to participate in Gold for the long term if the intent is to hold the bonds until maturity. One can also sell SGBs in the secondary market.

> Sovereign Gold bond issue price has been fixed at Rs.5,000 per gm. Those who buy online can get an additional discount of Rs.50. However, to really make a profit, here are top 5 Sovereign Gold Bond Scheme points you should know to make money. 

1. Sovereign Gold Bond Scheme Benefits :

a) People prefer buying physical Gold. This is generally in form of Jewellery.  However, in this, the making charges are added to gold price, making it expensive & when you go to sell, you get less money. So, one of the best benefits of Sovereign Gold Bond Scheme is this.

b) Another Sovereign Gold Bond Scheme benefit is that the investor receives the current/ongoing market price at the time of redemption or  premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. SGB investors are assured of the market value of gold at the time of maturity & periodical interest.

c) The Sovereign Gold Bonds are held in the books of the RBI or in Demat form eliminating risk of loss of scrip etc.

2. Sovereign Gold Bond Scheme: What are the risks involved in buying SGB?

In Sovereign Gold Bond Scheme, there may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has paid for.

3. How much Gold can you buy under Sovereign Gold Bond Scheme.

The Sovereign Gold Bond Scheme issues bonds in denominations of one gram of gold & in multiples thereof. Minimum investment in Sovereign Gold Bond Scheme shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) & 20 kg for trusts & similar entities notified by the Government from time to time per fiscal year (April – March).

4. What is Sovereign Gold Bond Scheme rate of interest?

The Sovereign Gold Bond Scheme interest rate given to investors is 2.50% (Fixed Rate) per annum on the amount of initial investment. Sovereign Gold Bond Scheme interest will be credited semi-annually to the bank account of the investor. The last Sovereign Gold Bond Scheme interest will be payable on maturity along with the principal.

5. What is Sovereign Gold Bond Scheme price on selling?

The nominal value of Sovereign Gold Bond Scheme is fixed on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jeweller’s Association Ltd for the last 3 business days of the week preceding the subscription period.

6. What is Sovereign Gold Bond Scheme redemption price?

On maturity, the Gold Bonds Scheme redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion & Jeweller’s Association Ltd.

7. How will Sovereign Gold Bond Scheme redemption amount be paid?

Both Sovereign Gold Bond Scheme Interest & Redemption proceeds will be credited to the bank account furnished by the customer at the time of buying the bond.

8. How to buy Sovereign Gold Bonds - Payment Method?

Payment for Sovereign Gold Bond Scheme can be made through cash (Upto Rs.20,000). SGB can be paid for via cheques, demand draft, or even electronic fund transfer.

ESG Investing in Mutual Funds : A New Trend that doing the Rounds Globally & in India Now

Could investing in Socially Responsible Companies now, a good move towards your goals? ESG investing is used synonymously with socially responsible investing & ESG theme funds select stocks of companies that score high on Environment, Social Responsibility & Corporate Governance (E-S-G). 3 reasons why it is a good time to invest in ESG Theme Funds 1. ESG today is a global phenomenon : Sustainable investing  is becoming an essential part of the investing process across the world, with Europe representing almost half of the current $30.7 trillion of assets in sustainability funds. 2. ESG can optimize financial returns : ESG can aim to generate gains for both investors & the society overall. Historically, ESG investing has rewarded investors over the long term & generated higher risk adjusted returns. 3. ESG helps to avoid downside risks : Investments in ESG compliant companies can also help limit exposure to downside risks, such as a company’s hidden liabilities or issues that can lead to controversies & value erosion.

List of Top 10 Indian Mining Companies

List of Top 10 Indian Mining Companies.

Some Interesting Facts of India’s Mining Industry

1. India is one of the topmost producers of several minerals. 
2. India is the third largest producer of coal. Coal production in India was recorded at 51 Million Tons Per Annum during financial year 2017-2018.
3. India has the fifth largest estimated coal reserves in the world, at 308.802 billion tons, according to a report released by the Ministry of Mines during the financial year 2015-2016 in FY16.
4. India is the fourth largest producer of iron ore globally. During fiscal year 2017-2018., production of iron ore stood at 210 MTPA.
5. India holds eight per cent of deposits of iron ore in the world.
6. India is the third largest crude steel producer in the world with an output of 101.4 MTPA recorded in 2017.
7. Crude steel production in the country rose to 102.34 million ton during the financial year 2018-2019.
8. According to the Ministry of Mines, India has seventh largest bauxite reserves, estimated at 2.9 Billion Tons Per Annum in the financial year 2017-2018.
9. India’s aluminum production capacity was 1.60 MMTA recorded between April and September 2017.
10. The aluminum industry will grow to an estimated 3.35 MMTA by the year 2020, according to the Indian government.

1. NMDC Ltd. : 

NMDC is India’s topmost mining company. It was established in 1958 as National Mineral Development Corporation. Over the years, it assumed the role of the mining company & functions under the Ministry of Steel. NMDC is engaged in the exploration of wide range of minerals across the country including iron ore, copper, rock phosphate, limestone, dolomite, gypsum, Bentonite, Magnesite, diamond, tin, tungsten, graphite and silicon from beach sands, among other

NMDC is India’s single largest iron ore producer.

It makes more than 30 tons of iron ore annually from three fully mechanized mines. NMDC Ltd has contributed significantly towards the development & mining of natural resources in India. In 2008, the Indian government declared it as ‘Navratna’ company, an accolade reserved for public sector enterprises of national and economic importance. NMDC Ltd is not only India’s largest miner, but it also exports huge volumes of metal ores to foreign countries through bilateral trade treaties between Indian and foreign governments as well as private foreign companies.

2. Uranium Corporation of India Ltd. (UCIL)
Uranium Corporation of India Ltd is an Indian government-owned mining company that is of extreme national significance. UCIL is involved in the exploration & mining of Uranium & other rare minerals required to fulfil the needs of India’s civilian & military nuclear projects. It plays a key role in nuclear power generation of this country while providing Uranium and other minerals required for military purposes.

UCIL operates several mines across India, including six in Jharkhand, one in Andhra Pradesh & one each in Karnataka, Telangana & Meghalaya. This company has made India achieve self-reliance in Uranium required for Pressurized Heavy Water Reactors used for power generation, among other purposes.

UCIL functions directly under the Department of Atomic Energy. Despite mining Uranium and other minerals for nuclear purposes, UCIL has a commendable environment & health safety record at locations where it operates mines.

3. Hindalco 
Formerly called Hindustan Aluminum Company, Hindalco Industries Limited, is flagship enterprise of India’s corporate giant, the Aditya Birla Group. The company has a turnover in excess of US$18billion and is the leader in Aluminum and Copper mining sector of this country.

Further, Hindalco operates the single largest aluminum rolling company in the world.

Hindalco also holds the unique distinction of being Asia’s biggest producers of primary Aluminum. Hindalco’s copper facility consists ranks among the world’s largest custom smelters at a single location. Hindalco is also engaged in mining bauxite, coal & other minerals required by power companies & other Indian industries.

Hindalco is a major player in aluminum production worldwide & has operations in 10 countries. The company’s division Birla Copper produces copper cathodes & continuous cast copper rods, along with other by-products, including gold, silver & DAP fertilizers. Hindalco & Birla Copper rank as India’s largest private producers of gold. Hindalco has been accorded Star Trading House status in India.

4. Vedanta Ltd.
Vedanta Limited is engaged in iron ore, copper, zinc, lead, silver & aluminum mining in India. Vedanta Limited is India’s largest & world’s second largest company to mine zinc and Vedanta Ltd holds over 78 percent of India’s primary zinc industry.

It is also among the top 10 silver miners of the world, with an annual capacity in excess of 600 tons. Vedanta holds a 64.9 percent stake in Hindustan Zinc Limited. The company is the largest aluminum producer in India with a capacity of 2.3 Million Tons Per Annum.

It commands 40 percent share of the domestic aluminum industry. Vedanta supplies iron ore from Goa to the domestic market with large exports to China & Japan. Sesa Goa Iron Ore, a Vedanta Group company was founded in & now ranks among the top low-cost producers of iron ore of India. Additionally Vedanta Ltd operates one of the largest custom copper smelters in India.

5. Coal India Ltd.

Coal India Ltd is the world’s single largest miner & producer of industrial grade coal required as fuel in thermal power plants & other applications. It is a public sector enterprise owned by the Indian government. It was established in 1975 as a small company to mine coal with an annual capacity of about 79 million tons.

Due to its economic significance to India & the national economy, the government has named CIL as one of the ‘Maharatna’ enterprise. Coal India Ltd operates through 82 mining areas. The company consists of seven wholly owned coal mining subsidiaries & one mining planning & consulting firm. CIL operates in eight Indian states. Additionally, CIL also manages 200 other establishments like workshops, hospitals 7 other facilities.

It owns 26 technical and management training institutes and 102 Vocational Training Institutes Centers. CIL also operates the Indian Institute of Coal Management, the only educational facility of its kind in India.

6. Hutti Gold Mines Ltd.

Hutti Gold Mines Company Limited (HGML) is one of the topmost mining companies of Indi & is the nation’s only producer of primary gold. The company is owned by the state government of Karnataka. HGML is engaged in exploration, development & exploitation of gold deposits of Karnataka.

The company’s Hutti Gold Unit produces whopping 550,000 tons of primary gold per annum. The company currently GML currently processes ore from three gold mines in various parts of Karnataka. It plans to expand operations by exploring potential deposits of gold in Karnataka and is considering expansion of its existing mines after the Chitradurga gold mine was closed & had to diversify.

Most of India’s gold comes from HGML. Due to the unique nature of its mining business, HGML holds a special significance for India & the national economy.

7. Gujarat Mineral Development Corporation Ltd. (GMDC)

GMDC Ltd is a major mining company in India. It is an enterprise of the Gujarat state government. GMDC Ltd is one of the most profitable mining companies in India. It is involved in projects to produce Lignite, Bauxite, Fluorspar, Manganese, Silica, Ball Clay, Bentonite and Limestone. Additionally GMDC Ltd has also ventured into power generation.

Further, GMDC Ltd is also acclaimed as one of the most environment-friendly mining companies in India. Its employees spend several hours as part of their Corporate Social Responsibility to clean up areas located near mines and negate any adverse impacts of pollution caused by the company’s activities.

GMDC Ltd has won several national accolades from the Central government for the important role it plays in the Indian economy and generation of employment for skilled persons in Gujarat. 

8. Manganese Ore India Ltd. (MOIL)

MOIL stands for Manganese Ore India Ltd. It is the largest producer of Manganese ore in India. MOIL is also a ‘Miniratna’ company & won this distinction for being a key player in India’s economy. With headquarters in Nagpur, Maharashtra, it ranks among the pioneers of the Country’s mining industry & was established in 1962.

However, the company traces its history to 1896 when it was established as Central Province Prospecting Syndicate which was later renamed as Central Provinces Manganese Ore Company Limited (CPMO), a British Company incorporated in the UK. It was later taken over by the Indian government. Stakes in MOIL are held by the Central government as well as State Governments of Maharashtra & Madhya Pradesh.

MOIL ranks 486th among Fortune 500 companies of India. In Maharashtra & adjoining Madhya Pradesh, MOIL operates some 16 mines for producing Manganese Ore. This ore is supplied to domestic industries. A large volume of MOIL’s Manganese ore also gets exported to major markets abroad including China & Japan, among others.

9. India Rare Earths Ltd.

Indian Rare Earths Ltd is a unique mining company. As the name suggests, this top mining company of India explores & produces rarest minerals in India. These include Ilmenite, Zircon, Rutile, Sillimanite & Garnet, among others, which are called as Heavy Minerals.

Additionally, Indian Rare Earths also produces 10,000 tons per annum of Monazite & over 11,220 tons per annum of Rare Earth Chloride. These are minerals are of extreme importance to India for civilian & military purposes. The company works in a very specialized field of rare minerals & hence, is little known to most people. Indian Rare Earths Limited was established on August 18, 1950.

It commenced operations with its first unit, the Rare Earths Division located in Alwaye (Aluva) in Kerala. In 1963, Indian Rare Earths Ltd was accorded the full status of Public Sector Undertaking. It operates under administrative control by Department of Atomic Energy (DAE). Indian Rare Earths Ltd is one of the topmost mining companies of India. Only a few other countries possess capabilities to explore and produce rare minerals.

10. FCI Aravali Gypsum & Minerals (India) Ltd. 

FCI Aravali Gypsum & Minerals (India) Ltd is a mining company that functions under the Ministry of Chemicals & Fertilizers. It is the largest mining company in India that produces gypsum for agricultural as well as industrial purposes. Since 2003, this company supplies gypsum to cement industries & various land development projects funded by World Bank in the Uttar Pradesh state of India.

For over six decades, FCI Aravali Gypsum & Minerals (India) Ltd has been supplying high-grade gypsum to the Indian government fertilizer plant based in Sindri near Dhanbad, for producing Ammonium Sulphate. FCI Aravali Gypsum & Minerals (India) Ltd has mining operations in Rajasthan, near the cities of Barmer, Jaisalmer, Bikaner & Suratgarh. All mines operated by this company comply with international environment protection standards.

The company ensures that areas lying in the vicinity of mines do not suffer pollution due to its activities. FCI Aravali Gypsum & Minerals (India) Ltd was earlier a division of Food Corporation of India Ltd. However, it was made a separate mining company in 2003.

Wrap-Up on Mining Sector in India

While top mining companies of India are active in this country, they are also providing various services abroad. This includes exploration of minerals, consultancies in setting up mines, smelters and other infrastructure as well as Joint Ventures that are now under consideration with foreign partners.

India’s mining sector is set to boom due to the rise in infrastructure development and automotive production, says the Ministry of Commerce and Industry.

ITC - Tobacco Nationalism Is More Toxic Than Tobacco

Tobacco Nationalism Is More Toxic Than Tobacco

Although one in four of all adult Indians use tobacco, the country’s addiction runs far deeper. The government, too, has a toxic dependence. It’s called ITC Ltd. Formerly known as Imperial Tobacco of India, later renamed India Tobacco Company, and finally truncated to just ITC, the 110-year-old conglomerate is 29.4% owned by British American Tobacco Plc. About 28.5% is controlled by various Indian state-run insurance companies and a government-controlled bad bank. And therein lies the problem. The large quasi-state ownership is acting as a value trap. It’s preventing the $25 billion enterprise from being carved up into a pure cigarette company, owned by BAT, and a supply-chain platform like China’s Pinduoduo Inc., which is nearly four times bigger in enterprise value. It's a missed opportunity, not just for ITC’s minority shareholders, but for India.

Now that the country is giving farmers the freedom to sell their produce outside state-designated market yards, a corporate buyer like ITC that has distribution capabilities in the smallest of Indian towns (thanks to cigarettes) has a shot at building a meaningful digital, agri-business franchise. One that’s able to obtain better prices for producers. As for the core tobacco business, London-based BAT has tried in the past to raise its stake and take over the cigarette maker, but local managers have seen it off using Indian financial institutions’ voting power. However, many investors are now wondering if empire-building by ITC’s management, in the garb of protecting national interests, has gone too far.

A cash-strapped New Delhi, which is delaying fiscal support to an economy expected to lose a 10th of its real output this year to Covid-19, also needs to rethink its stance. What additional harm will befall if BAT wins ITC’s successful cigarette division, paying a hefty control premium to acquire smokers, a vanishing breed in developed markets? In return, India can wrest a time-bound commitment from the new owner to steer the revenue toward, say, 25% reduced-risk products like the Swedish snus & heat-not-burn devices. That will mean a fall in future healthcare costs from lower tar consumption. ITC scored 0.62 in Foundation for a Smoke-Free World’s 2020 Tobacco Transformation Index, better than China National Tobacco Corp., but way behind BAT, Philip Morris International Inc. & Swedish Match AB. “Companies that offer reduced-risk products are mostly focusing their efforts on selected high/medium income countries, where overall smoking rates are lower & cigarette sales are already declining,” says the new study. India can negotiate a better outcome with BAT.

Let the $3.3 billion cash pile plus the non-tobacco parts hotels, information technology, finance, fashion, potato crisps, paper, safety matches & what not get sequestered under a separate holding company. The Indian managers get to keep what they can turn into a digital, agri-business-led supply chain & sell the rest. This way, the government will extract much-needed budgetary resources. The value trapped in the conglomerate will get released. The deadlock between two equally poised large shareholders is hurting minority owners. The stalemate has gone on for too long. A quarter-century ago, the fight was over whether ITC should be setting up power plants. The state-led economy had just started liberalizing & there was an acute shortage of electricity. The Indian cigarette maker was sitting on a cash hoard. Had BAT wrested control, it wouldn’t have allowed the funds to be put into unrelated businesses. But BAT’s tenuous hold weakened after a currency-control violation saw a change in leadership at the Kolkata-based firm. 

Yogesh “Yogi” Deveshwar, the new chairman in 1996, took the government’s help to defeat BAT’s plan for a separate unit to sell international brands like 555 State Express & Benson & Hedges cigarettes in India. Since then, the local business has increasingly charted its own course. Now, BAT can’t even try to mount a bid for all of ITC because tobacco has been made off-limits for foreign direct investment since 2010. That, too, was done to keep ITC in Indian hands. To what end, though? As much as 84% of ITC’s $2.8 billion pretax profit last year came from cigarettes, but four-fifths of the $325 million-plus capital expenditure was in snacks, hotels and paper. The dividend payout ratio did jump last year to 81%, yet the previous 18 years’ average is just 50%, almost 20 percentage points lower than BAT’s distribution.

The U.K. associate, which has just one representative on the Indian firm’s board, has returned $2.1 billion to its own shareholders via buybacks over the past six years. No such luck for ITC investors. They can’t be offered a buyback, lest it increases BAT’s shareholding. Widows and pensioners get a 6% dividend yield, 5 percentage point more than on the benchmark Nifty 50 index. It’s a bit like collecting pennies in front of a value-crunching steam roller. In the past 10 years, ITC shares have lost 11% of their dollar value, while an investment in Nestle India Ltd. has tripled.

The opportunity ahead is clear. Agri-business offers the chance “for building a digital platform linking retailers with consumers, something that Chinese companies like Pinduoduo have done successfully," said Gaurav Patankar, head of emerging market equity strategy at Bloomberg Intelligence. As Mukesh Ambani, India’s richest man, and the 152-year-old Tata Group mimic platforms from the likes of Tencent Holdings Ltd. and Alibaba Group Holding Ltd., ITC can plug another gap, provided New Delhi gives up its addiction.

Tobacco is toxic. India is finding that tobacco nationalism is an even harder habit to quit.

(Article from Bloomberg Quint)