FBI 25th May 2011 by Asian Business Publications Ltd

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Danny Alexander Chief Secretary to the Treasury

ritain has lost ground in the world’s economy and needs to catch up. Over the last decade the UK economy became unbalanced and heavily indebted.

We have set out a credible plan to tackle the deficit and bring about economic stability. The economy is growing and there are a number of reasons to look to the future with confidence. Our exports are gathering pace, employment is increasing and investment is picking up. But the fact that we can now look ahead with some confidence is only because of difficult decisions we’ve already had to take. But economic stability is not in itself sufficient to deliver sustainable growth. Our economy must become more balanced. Private sector growth must take the place of government deficits and prosperity must be shared across all parts of the UK. We want to remain the world’s leading centre for financial services, but we should become a world leader in other, more diverse, sectors too. We have to step up a gear. Our Plan for Growth aims to give the UK the most competitive tax system in the G20 and make it the best place in Europe to start, finance and grow a business. It will encourage investment and exports as a route to a more balanced economy; and aims to create a more educated workforce that is the most flexible in Europe. At Budget we took the first steps towards making these ambitions a reality. With cuts to corporation tax, to encourage greater enterprise; support for SME finance, to increase business investment; and steps to ease burdens on business to create additional jobs. But as a Government, we can only do so much. It’s the private sector who will inevitably lead the recovery and having a strong and stable financial sector is an important part of this story. We need a financial sector that supports consumers and businesses up and down the country. By dealing with the deficit and working closely with business, we can provide the certainty and stability that businesses need to grow and invest in the UK. It is in this private sector-led recovery which Asian business will play a significant role and I am delighted to introduce this year’s special Finance, Business and Insurance edition of Asian Voice.

Asian Voice & Gujarat Samachar - 2011

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Comment

Making and Managing money M

oney- some say it is not everything, yet nothing is possible without money. When Morarji Desai was the Finance Minister of India in 1960s, there was an incident which may be of some relevance in today's ‘economic environment’. Those were the days of 'license raj' in India and the GDP growth was the renowned 'Hindu rate'. The Finance Minister brought several provisions in the budget and the so called reforms were in today's terms- economic hardships. A businessman in Mumbai was so hard pressed that he drank poison to commit suicide. The poor fellow did not die because the poison was adulterated and the police charged him with a criminal offence- an attempt to commit suicide. Even today, in some states farmers have been committing suicide, primarily due to lenders' harassment. Here the situation is much better. In the UK and most of the developed economies, the governments have bailed out banks though they were mainly responsible for the sub prime rate mortgage episode- the mother of 'rich man's greed'. The Institute of Fiscal studies have reported that on average each family lost £500 over last 12 monthsmost significant drop since 1981. Savers are penalised because of negligible bank deposit rates. The new incentive given by the think tank has encouraged hundreds and thousands of Britons to take advantage of the scheme to alleviate the impending increased inflation. In this 11th edition of the FBI, you will find an interesting and perhaps thought provoking message from the Chief Guest- Rt Hon Danny Alexander - Chief Secretary to the Treasury. Amongst several benefits of the Coalition government, one distinct advantage is the Liberal Democrat talents which were almost ignored or under utilised for several decades. In this special issue there are several articles from professionals in various fields which I believe are useful to safeguard yourself from today’s economic fluctuations and perhaps progress more effectively in economic activities. My journalists have been talking to so many Asian businessmen and women and the prime message is

very clear. Those businesses whether in retail, wholesale, import, export, hotels or nursing homes, even in professions, those who were able to add value to their product, services or those who were able to focus on creativity (not mere spinning) and innovation, have much more secured future. I am happy to note that most Asian entrepreneurs are aware of this basic principle which is enshrined in Kautaliya's Arthashastra (Treatise on Economics and Politics). This magazine will reach 25,000 subscribers of Asian Voice and Gujarat Samachar and someone somewhere will definitely take the message and create a better future for themselves and for our country. I am confident that with our traditional values and mindset, the Asian entrepreneurs will increase and enhance their economic participation. After all, they have weathered the difficult period very well. We are a tough community. When the going gets tough, the tough gets going. In about four decades, we have been able to curve out a significant role in Britain. FBI is a modest attempt to encourage further progress. I would like to express my sincere appreciation to the Chief Guest, contributors, supporters especially the hardworking ABPL team- lead by George in this project. With Best Wishes CB Patel Publisher/Editor

Asian Voice & Gujarat Samachar - 2011

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Crystal Ball

Where will you make money in 2011? Since I won a competition in the Financial Times to predict the value of the FTSE 100 over a 12 month period and came first by being accurate within 0.5%, I have regularly asked to give forecasts. s I said on BBC and CNBC at the start of this year the US markets for the year as a whole will be up 15%. The UK markets will follow like an obedient spaniel. Why? Company profits. Markets move on expectations. We expected far worse earnings after the credit crunch. So stock markets sold off and became cheap. Companies expected poor profits and so they cut costs. But exports held up. Disaster was denied, or at least delayed by ‘QE’ and so the consumer merrily bought and China and India did too. So profits rose. Of the US stocks, the most recommended largest US stocks are: Samsung, Coca-cola, Apple (I am a shareholder), Goldman Sachs (I am a shareholder), Google, Oracle, Chevron, according to data by Bloomberg. Am I not forgetting something? Unemployment, EU country default dangers, government spending cuts, tax rises, inflation, commodity prices, rising oil? Surely stock prices cannot rise with all this going on? Ummm…yes they can. Unemployment is receding. EU debt defaults are being bailed out by printing money, which yes causes inflation which in turn leads to rising stock prices anyway; government spending cuts are being substituted by private sector orders for companies, commodity prices are being hedged by companies or leading to outright profits (eg BP). So where is the pain? Tax, but it is slowing down growth, not killing it. But do consider some warnings. To quote Warren Buffett, “We see the growth in corporate profits as being largely tied to the business done in the country (GDP), and we see GDP growing at a real rate of about 3%. In addition, we have hypothesized 2% inflation. If

Alpesh B Patel, founding Principal Praefinium Partners (Private Equity)

profits do indeed grow along with GDP, at about a 5% rate, the valuation placed on American business is unlikely to climb by much more than that. Add in something for dividends, and you emerge with returns from equities that are dramatically less than most investors have either experienced in the past or expect in the future. If investor expectations become more realistic — and they almost certainly will — the market adjustment is apt to be severe, particularly in sectors in which speculation has been concentrated… “Fools give you reasons, wise men never try.” On this basis, given that India has the highest GDP of any democracy in the world – your returns are clearly best there. But never mind my views, or those of Warren Buffett’s – what about yours? So in the age of Facebook in anticipation of this article I posted a poll: ‘If you had to invest in the equities of one of these countries which is your favourite?’ The results at the time of writing are: 58% for India; 25% for US; 0% for China, 8% for UK and 8% for Japan. My most favourite Indian stock: Tata Motors. Do you really need me to spell it out why? The great thing about it is you can buy it as a spreadbet on a UK website as I have done so any gains are tax free. Back to caution: “Examine the record of, say, the 200 highest earning companies from 1970 or 1980 and tabulate how many have increased per-share earnings by 15% annually since those dates. You will find that only a handful have. I would wager you a very significant sum that fewer than 10 of the 200 most profitable companies in 2000 will attain 15% annual growth in earnings-per-share over the next 20 years,” said Warren Buffett. The point is the current rate of profit growth which some of the large British and US companies are producing presently cannot of course last. But the issue with the market is always ‘when’ not ‘how’ or ‘what’. So when will the music end? In the words of the Chairman of Goldman Sachs Asset Management – “What will happen in 2012? Don’t know, will worry about that later’. Alpesh B Patel, founding Principal Praefinium Partners (Private Equity) and Advisor to SterlingMarkets.com. Twitter: @alpeshbp. Blog: www.alpeshblog.com Facebook: alpeshp1

Asian Voice & Gujarat Samachar - 2011

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Bond Market Bargains The Canadian comedian (of Indian descent) Russell Peters once joked in his stand-up routine that the Chinese and the Indians cannot do business together. “Indians cannot live without a bargain and Chinese can’t give you a bargain.” He then proceeds to relate a story of a Chinese market stall holder who when requested to reduce the price of a bag down from 35 Dollars, leaves the Indian customer displeased with this reply – “You seem like nice guy. I give you good price. 34.50”. f, like above, your discount-seeking cultural sensibilities drive you to bargain hunt in the government bond sector, you may be sorely disappointed, for it seems neither US nor UK’s debt is looking cheap currently. Contrarily, you may even feel, as Bill Gross of PIMCO suggested, that your pockets are being picked. The yield on a UK Government bond (also called a Gilt) that pays a coupon of 5% and matures in March 2012 is a paltry 0.61%. But you might also have noticed inflation in the UK was recently reported to be a target busting 4%. Like Russell Peter’s Indian consumer, you might already be starting to get annoyed – “What?? I get a measly 0.6% for lending to the UK government but then they wipe my money out with 4% inflation? Yeah, that’s fair!” It is pointless lending to the government unless you agree to lend money for a longer period. Buying a Gilt maturing in 10 years yields 3.4% while inflation is expected to average around 3.1% a year. You could make a small gain on your investment. It helps to remember a bond’s price always moves in the opposite direction of its yield, so that if yields rise, bond prices will fall, and vice versa. Investors have enjoyed a twenty year bull market as the yields on UK, European and US government bonds have declined along with policy rates in these regions. After this decline to record lows, many city analysts now expect there to be a natural turnaround in bond yields as policy rates rise. After all, how long

Aparna Ram, Investment Analyst, Seven Investment Management

can the Bank of England’s interest rates stay at 0.5%, they ask. The expectation is that the Bank will increase rates to combat high levels of inflation, with the first rate hike coming even as early as August. This will drive Gilt yields up and prices down. In the US, government bonds or Treasuries are being purchased chiefly by the Federal Reserve through the Quantitative Easing II program. This is expected to end in June. The question on everyone’s mind is who will take up the buying instead. Will there be a drop in demand and hence a fall in the prices of these bonds? These are all valid concerns. The high cost of government bonds plus the bleak prospects ahead makes investors rightly justified about shunning these ‘riskless’ securities. But there are two sides to every trade just as the Indian customer’s annoyance above is matched by the insistent Chinese seller. There are some dissenting voices in the bond world who expect the prices to rise further still and yields to fall lower. What could drive this? A possible slowdown in the UK or global economy, (not completely out of the question, as evidenced in recent falls in commodity prices, house prices and high unemployment levels) could drive investors who are uncertain about the future to sell risky assets like equities and buy into the safety provided by government bonds. Furthermore, traditionally big bond buyers like banks and pension funds are likely to keep demand high for longer dated issues. High demand leads to higher prices. In addition, understandably, there is a difference in opinion about UK inflation. Just as some expect inflation to keep rising (thereby eroding bond returns), others expect it to be a temporary blip and to fall next year. These people place the chances of a rate rise, not in August as mentioned above but further in the future. Therefore, in the short term, they do not expect yields to rise, or prices to fall. Are bonds expensive? Quite probably. Do they still provide a good opportunity for investment? It depends on which side of the argument here you agree with.

Asian Voice & Gujarat Samachar - 2011

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Spread Betting Evolves Ultimately there are two main types of investor: Institutions – who think of wonderful ways to create further products that they can sell to other institutions and private clients and of course Private clients – Now these are the most impressionable. They look and listen and read about how much money the institutions have made and then think they must know what they are doing. Really?? Things are changing – as the internet educates, informs and also confuses people more on who really does know how to make money in the financial markets. Who ever invented the CDO’s – the product developed probably by some PHD student who told his boss that a really cool way to off load our mortgage risk is to package it into a bond and call it a CDO - A collateralized debt obligation, or a bunch of debts that pay an average interest rate per month to us. But this is a debt instrument (a bond) that is backed by a pool of other bonds… a house built from cards you may say, as the ratings agencies like Moody’s had little idea on how really to rate them… and the market in them were controlled only by the institutions. What has all this got to do with Spread Betting: Well, what is implied from the title – Betting implies gambling… Surely that means that you can lose money. Well Lehman Brothers and Northern Rock paid the high price for seeing the world through rose tinted glasses and assuming the world will always pay its mortgage debt, and on time and forever. I will not go into the detail but there must come a point where all the products’ that can be invented must have been invented in financial services. The skill then for the firm is not to create new products that help financial organisations to crumble like we saw in 2008, but require skills in how well do we really know the markets, that help us all! Spread Betting – probably better termed Spread Trading is a product that has helped many private clients learn how to manage their own portfolios better. A bit of education is all that was needed. Motivations normally lead to errors! What do we mean by this? Basically Institutions have to find new products to continually fan an ever increasing pool of funds that pour in from pension funds and insurance companies. Sometimes those products create a level of risk that needs to be quantified. With betting – the risk is always quantified by how much you have staked at the table… You can always walk away from the table.

Paresh Kiri, Investment Manager at Sterling Markets

The motivation for staff is they cannot just walk away they are beholden. They are paid to perform a function… they have no more advantages anymore … With tight regulations and increasing presence of a watchdog is limiting their performance. This is fantastic news for us private clients… We have no such restrictions and so ours is a purer motivation, just to add that little extra to the pay packet that we may enjoy a day out with the family. Of course a lot more can be made, but unlike a casino our losses are not limited to the stake in spread trading, they can be much greater.

So simply put – Private Clients have now the upper hand and all thanks to complete transparency. The reasons to choose spread trading and the common misconceptions can be summarised as: l Simple access to on line platform l In UK at present the tax rules allow us to make profits that are tax free l If we know how to make money on spread trading then maybe some of that capital can be used to increase my actual portfolio. l Private clients have an advantage that institutions do not – Flexibility and no-one looking over their shoulder l Access to global markets all on one platform It can be argued that if you want to trade short term then you are in effect a market maker, a LIFFE or CBOT trader, as there is no difference to the real motivation – PROFIT. The time for the little man has come and we should embrace all the tools to maximise our knowledge and expertise Spread Trading has evolved, as means that brings the global markets that much closer to you… the internet now allows you to pit your skills against the professional where only 10% are really good. Do not be fooled by titles – trust your judgement it’s probably better placed!

Asian Voice & Gujarat Samachar - 2011

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Currency Trading_A4 Temp 16/05/2011 16:14 Page 13

Understanding the Basics of Currency Trading Investors and traders around the world see the Forex market as a new speculation opportunity. Before adventuring in the Forex market we need to make sure we understand the basics: how are the transactions conducted in the Forex market? Or, what are the basics of Forex Trading? This is what this article is aimed to, to understand the basics of currency trading. 1) Understand the fundamentals: There are many factors that influence the FX market including commodity prices, interest rate yield, economic data, sheer volumes of business, terrorism/natural disasters, cen- tral bank reserve selling, Mergers & Acquisitions, and political uncertainty. 2) Use Technical Analysis: This now has more and more influence over the day trader’s rationale and hence currency flow. There is a wide range of signals that can be ascertained from chart interpretation based on price history and now a huge supply of software is available that can notify you of good trading opportunities before they happen. 3) Know when economic data is released: Opportunities can be missed within seconds leading up to and after key data is published or interest rate announcements are made. 4) Limit Orders: Maximize your opportunities by placing orders in the market at your desired levels at entry and exit to make the most of a favourable trend rather than pay the “spread” between the bid and offer price 5) Stop Loss Orders: Minimize the impact of adverse price movements by placing a firm order at your chosen worst case level. The additional use of a Trailing Stop order can still allow you to benefit from a favourable trend without losing too much of that gain in the event of a sudden reversal. 6) Use Options contracts: Calls and Puts can help hedge larger positions if the outlook is less clear 7) Overnight Trading: Many opportunities are missed

Asian Voice & Gujarat Samachar - 2011

by “day traders” overnight when the markets are less liquid and therefore potentially more volatile. Look to place orders into New York and Asian markets. 8) The “Kipling” Method: As Rudyard Kipling once wrote, treat victory and defeat with equanimity. Don’t get too excited when you win or too depressed when you lose ! 9) Don’t get greedy: No trader, however good or experienced is ever going to always hit the highs and lows of the move. Remember that it’s easier to sell in a bid market and vice versa. Leave something in the market for someone else. And finally..........

10) The first cut is the cheapest ! Don’t be stubborn. If you think you’re wrong to hold onto your position then you probably are....... Maintaining high levels of discipline both in amount of trade and execution is vital to successful trading. What is traded in the Forex market? The instrument traded by Forex traders and investors are currency pairs. A currency pair is the exchange rate of one currency over another. The most traded currency pairs are: EUR/USD: Euro GBP/USD: Pound USD/CAD: Canadian dollar USD/JPY: Yen USD/CHF: Swiss franc AUD/USD: Aussie These currency pairs generate up to 85% of the overall volume generated in the Forex market.

Currency Trading_A4 Temp 16/05/2011 16:13 Page 14

So, for instance, if a trader goes long or buys the Euro (EURUSD), she or he is simultaneously buying the EUR and selling the USD. If the same trader goes short or sells the Aussie (AUDUSD), she or he is simultaneously selling the AUD and buying the USD. The first currency of each currency pair is referred as the base currency, while second currency is referred as the counter or quote currency. Each currency pair is expressed in units of the counter currency needed to get one unit of the base currency. If the price or quote of the EUR/USD is 1.2545, it means that 1.2545 US dollars are needed to get one EUR. Bid/Ask Spread All currency pairs are commonly quoted with a bid and ask price. The bid (always lower than the ask) is the price your broker is willing to buy at, thus the trader should sell at this price. The ask is the price your broker is willing to sell at, thus the trader should buy at this price. EUR/USD 1.2545/48 or 1.2545/8 The bid price is 1.2545 (traders sell at this price) The ask price is 1.2548 (traders buy at this price) Pips A pip is the minimum incremental move a currency pair can make. Pip stands for price interest point. A move in the EUR/USD from 1.2545 to 1.2560 equals 15 pips. And a move in the USD/JPY from 112.05 to 113.10 equals 105 pips.

leverage used is 100:1, 2% when leverage used is 50:1, and so on.) At this moment, the broker sells off (or buys back in the case of short positions) all your trades, leaving the trader "theoretically" with the maintenance margin. Most of the time margin calls occur when money management is not properly applied. It's very important to understand every aspect of trading. Start first from the very basic concepts, then move on to more complex issues such as Forex trading systems, trading psychology, trade and risk management, and so on. And make sure you master every single aspect before adventuring in a live trading account.

Margin Trading (leverage) In contrast with other financial markets where you require the full deposit of the amount traded, in the Forex market you require only a margin deposit. The rest will be granted by your broker. The leverage provided by some brokers goes up to 400:1. This means that you require only 1/400 or .25% in balance to open a position (plus the floating gains/losses.) Most brokers offer 100:1, where every trader requires 1% in balance to open a position. The standard lot size in the Forex market is $100,000 USD. For instance, a trader wants to get long one lot in EUR/USD and he or she is using 100:1 leverage. To open such position, he or she requires 1% in balance or $1,000 USD. Of course it is not recommended to open a position with such limited funds in our trading balance. If the trade goes against our trader, the position is to be closed by the broker. This takes us to our next important term. Margin Call A margin call occurs when the balance of the trading account falls below the maintenance margin (capital required to open one position, 1% when the

! !!!

Asian Voice & Gujarat Samachar - 2011

Amit Patel_A4 Temp 16/05/2011 14:56 Page 15

Getting our ‘Quantum of Solace’ But from whom – the Bankers or the Politicians? ands up anyone who doesn’t admire James Bond? He must surely be one of the most enviable characters ever created. Everything about him is awe-inspiring – handsome, strong, intelligent, dashing, sophisticated…well you know the rest. It is unsurprising, therefore, that the last Bond film ‘Quantum of Solace’ (which means ‘small amount of comfort) was a huge hit. The story was based on Bond’s discovery of an international cartel (formed by very rich individuals) who took control of Bolivia’s water supply and then threatened the government that if it did not pay extortionate rates to ‘buy’ back the water the population would suffer a terrible drought. Along comes James, who is actually on a revenge mission to find the despicable devils who killed his girlfriend, and inadvertently foils the whole dastardly plot. In doing so he exacts his ‘quantum of solace’. While this is certainly a gripping story but it does have a somewhat familiar ring to it. An international cartel capturing vital resources…then coercing governments to pay huge sums of money…the victims being the poor innocent person on the street? If one was to be cynical it could be argued that the film was actually inspired by the current credit crunch (or vice versa for all you conspiracy theorists!). The cartel could be the banks who have collected everyone’s money only to rake up huge debts in their greedy rush to make immense profits. The banks then say to the government that ‘you need to pay billions to save us or the given us or else we will go ‘bankrupt’ (excuse the pun) and all the hard earned money your citizens have entrusted to us will be lost. Cue James Bond to drive in to town in his sparkling new Aston Martin and save the day – well we didn’t quite get that but then this isn’t the movies. Instead we got David Cameron and George Osborne. While there have been no gunfights or explosive plots they have certainly not been any less dramatic in their

Amit Patel, Personal Development and Human Resource Management

message – government spending needs to be drastically cut or else the country faces ruin and the country will go bankrupt (Isn’t that what the banks were saying?). This is where the plot goes somewhat astray…whereas James Bond saves the day and foils the criminal cartel; Cameron and Osborne haven’t quite dealt with the banks in the same way. The ‘more rigorous regulation’ of the finance sector seems to be as significant as a post it note saying ‘be careful’. A child would get a stronger punishment for eating another child’s lollipop. The government spending cuts are indeed severe and for many they are life changing. People feel they are suffering for someone else’s mistakes and the general mood is that they want those whose is fault it is to pay. They want their ‘quantum of solace’ that they should not have to bear the burden alone while the culprits remain unaffected. So who should suffer more the bankers or the politicians? Traditionally bankers have always been disliked, Mark Twain once said ‘A banker is a fellow who lends you his umbrella when the sun is shining and wants it back the minute is starts raining.’ Politicians do not fare much better, as Nikita Khrushchev said, ‘Politicians are the same all over. They promise to build a bridge even where there is no river.’ The sequence of events may offer some view as to who is to blame. Previous governments have never been inclined to regulate the banks, or to even take any notice of what they were doing. They were happy to collect the taxes and political donations and bask in the glow of London being the financial hub of the world. Unregulated, bankers began taking even greater risks to make more money. The government saw that business was good and people were becoming wealthier (even though most of it was debt) and so it spent more on lavish projects to garner more votes. So whose fault is it? If you can unravel that you may also be able to answer which came first the chicken or the egg? Or perhaps you are just James Bond in disguise.

Asian Voice & Gujarat Samachar - 2011

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Technology_A4 Temp 16/05/2011 15:23 Page 17

Technology

That’s making money transfer faster and efficient It is amazing when you look at how sophisticated technology has become. It is even more fascinating to see how computer literate people have become! am 30 years old and when my father first sent me a friend request on Facebook, I was to say the least very surprised. I was even more surprised when my Nanima (grandmother) sent me a friend request! But most of all what gets me is there more recent form of communication is via email or text and not the traditional phone call. The fact is technology is being enhanced with the user in mind; from touch screens to voice commands, either way devices have become very simple to use. It is clear that the world is moving online, the way people communicate, do business and even connect to their loved ones by sending ‘e-cards’ or general updates through various social media websites. The question: is this because people have less time? Or do people just want an easier and more convenient way of doing things?

This is also very relevant to financial businesses... If someone is looking for a mortgage, financial advice or even if they want to send money to a loved one overseas; the fist point of call seems to always be an internet search... which you can now do very easily via your smart phone! Given this, it is extremely important for businesses to invest in technology and not get left behind... People no longer want to visit a website and get a phone number to call; they want to complete their business transaction within a few clicks online...

Paresh Davdra is the Sales Director and the Co Founder at Rational FX with an annual turnover of over £300 million

I work for RationalFX – a company that provides international payment solutions to private individuals and corporates. We deal with clients that ‘send money home’ - So someone from India working in the UK sending regular, but small payments back to their family, to Large corporates who have a requirement to send £50 million per annum to their supplier in China. Although both clients are two ends of the spectrum they have one major thing in common.... They both want to carry out their transaction with as much ease and efficiency as possible. Neither of the two wants to visit their branch, complete a form, pay a sizable fee and achieve an unattractive exchange rate! Last week we performed a comparison on someone sending £500 to India and we found that we saved them £75 in comparison to then using their bank! That was 10% on the exchange rate and a saving of £25 on the transfer fee as we transfer funds FREE of charge! In keeping with the world’s technology advances, we recently launched our new online platform. Using this platform you can send money within a matter of minutes by using a debit card! It will also allow you to store beneficiaries, view your transaction history and print confirmations. Additionally it gives you the option to receive a text message when your payment has been completed. You no longer have to take time out of your day to visit Bank, fill in forms every time you need to make a payment and the best thing is that our platform provides free transfers and VERY competitive exchange rates! It is also a 24/7 payments platform so it offers you the flexibility to book your currency and make the payment at your convenience. Our Chairman and CEO Rajesh Agrawal says ‘this is just the first phase and we see the platform offering a multi-lingual and mutli-currency facility to cater for not just UK clients but clients all over Europe and other parts of the world’. He also goes on to say ‘we have a fulltime team in the UK and India working around the clock to ensure that we continue to be a technology focused company’. For me this is a very exciting time as we are seeing more and more technological advancements on a daily basis! I am looking forward to getting the most recent smart phone or the fastest tablet! No longer do I have to switch on my computer, dial up the internet and then log on to my desired website – I just click on an app using my Ipad 2! Trouble is within a week its already old and being replaced by something faster with more memory... So what’s going to be the next big thing??? Asian Voice & Gujarat Samachar - 2011

Willmotts_A4 Temp 16/05/2011 10:38 Page 1

Prideveiw-New_A4 Temp 16/05/2011 15:19 Page 19

World Cup success was all about the mix of experience and youth It was the moment every Indian cricket fan had been waiting for – MS Dhoni launched the ball into orbit, completing the comeback of all comebacks and proving to millions of Indian youth across India and the world, that with perseverance and determination, anything is possible. s I sat in the Wankhede that night, taking it all in, and then witnessed the scenes on Marine Drive long into the early hours, it was clear to me that the reverberations of this event would be felt far beyond the world of cricket, for years to come. Back in the Prideview Properties office a week later, we discussed how many might have wanted Sachin to hit that final 6, scoring his 100th ton in the process, but not us. Because now it will always be MS Dhoni’s monumental swing that will be etched into our collective memory, and with it the knowledge that victory was only possible thanks to the young players, guided by the experienced ones. In many ways the composition of the Prideview team reflects that of Team India - we have 30 years of big-hitting experience in UK Commercial Property, supported by a young, dynamic and open-minded team committed to taking Prideview to the next level. With the guidance of the seniors, Raj and Shailesh Patel, we are expanding Prideview Properties from a commercial property specialist to a one-stop property shop covering Management, Insurance, Finance, Consortium investments, Residential and even real estate in India. Over the years Prideview has built up a vast network of trusted contacts spanning a range of national-

Nilesh Raj Patel joined Prideview late in 2010, after working as a Management Consultant with KPMG.

ities and professions; it seemed only natural to first get back in touch with that network and understand exactly what else they require in addition to commercial property consultancy, and the results were surprising. Some of the main areas we are now increasingly assisting our network with are: n Taking complete control of the ‘Landlord – Tenant relationship’ through proactive Property Management, leaving our clients to focus on their core businesses n Providing ad-hoc property management services such as Lease Renewals, Rent Reviews, EPCs, Planning, Dilapidations etc. n Shifting clients’ portfolios to significantly cheaper, like-for-like insurers n Facilitating investment into India, currently by marketing several prime residential and commercial developments in Mumbai and Vadodara Additionally our newest venture, Pride Equity, aims to partner up with talented entrepreneurs to grow and improve SMEs from any sector, as well as offering consultancy services to clients seeking to operate more efficiently and in particular better manage information. And of course we are still as active as ever in the UK Commercial Property space, finding, evaluating and negotiating deals for our clients, both via auctions and privately. Some clients require financing, some require a safe investment to beat the low savings rates and others are looking for good deals, none of which, in this market, are easy to find. Whatever it is that you require, we would like to talk to you. To speak to one of our team, please don’t hesitate to call us on 0208 863 8680 or visit our website www.prideviewproperties.co.uk to learn more. And to join our quarterly newsletter which summarises all the ways in which we are helping our clients make and save money, please email me at Nilesh@prideequity.co.uk We are enthusiastic and keen to assist in whatever way we can. As the young Virat Kohli so rightly said moments after victory: “Sachin has carried the burden of Indian Cricket for 21 years, it is time we carry him on our shoulders”

Asian Voice & Gujarat Samachar - 2011

Lyca-FBI_A4 Temp 13/05/2011 11:05 Page 1

Europeâ&#x20AC;&#x2122;s largest MVNO helping over 6.5 million customers across 10 countries make affordable international & national calls On mission to acquire 20 million subscribers by 2012 Every five seconds a new customer joins the Lycamobile Distributes SIMs and Top-ups though a 500,000 strong retail network, including Tesco, Sainsbury, Albert Heijn, Interdiscount, Carrerfour, Swiss Post And Barclays The Lycamobile brand has launched in Australia, Belgium, Spain, Sweden, Switzerland, Norway, UK, The Netherlands, Denmark, Italy, with further market launches in 2011 Top-up available in over 500,000 stores across Europe and Australia

Lyca Mobile_A4 Temp 16/05/2011 15:11 Page 21

Lyca

From Mobile to Money Lycamobile (www.lycamobile.com) is the UK’s favourite Pay As You Go SIM card providing low-cost, high-quality international and national calls and texts direct from mobile phones. ycamobile is already distributed throughout a European network of more than 500,000 retail outlets including Tesco, Asda, Sainsburys, Morrisons, Albert Heijn, Interdiscount and Carrerfour. The Lycamobile brand present in ten markets, including Australia, Belgium, Denmark, Spain, Sweden, Switzerland, Italy, The Netherlands, Norway and the UK, is already Europe’s largest pre-pay international MVNO with over 6.5 million customers across its global footprint. Lycamobile is now poised to expand their global footprint thanks to an investment of over £200 million made in people, process, brand and state of the art technology that has lead to the launch of unique, innovative product features such as international conference calling, call waiting, missed call notification and multilingual voice capabilities. Subaskaran Allirajah, Chairman of Lycamobile has over fifteen years of experience leading the prepaid telecommunications market where as a keen entrepreneur he has a proven track record of realising key opportunities to grow the Lycatel and Lycamobile brands. Under Subaskaran Allirajah’s leadership, Lycamobile is on target to achieve its mission of acquiring 7 million mobile subscribers in 2011 and has now set its sights on acquiring 20 million global subscribers by 2012. Lycamobile understands that it is important to keep in touch but that it is not always easy and can be expensive. Lycamobile works hard to make it easier and more affordable for people to stay in touch for longer. Recent promotions have included 1p calls to over 40 countries across the globe, Lycamobile Favourites, which gives you 3000 free minutes to call your 3 favourite people for only £10 per month, free internet as well as fantastic call rates to other countries. On top of these fantastic call rates you can receive 2000 FREE minutes and texts on Lycamobile PLUS to Lycamobile PLUS when you top-up with £30, 800 FREE minutes and texts when you top-up with £20, 400 FREE minutes and texts when you top-up with £10 and 150 FREE minutes and texts when you top-up with £5. Lycamobile is also expanding their product range

Subaskaran Allirajah, Chairman of Lycamobile

into the financial market with their recent launch of ‘Lycamoney’ - a prepaid MasterCard® as part of the initiative to expand their prepaid product range and increase the synergy between mobile and money. There are currently two versions of the Lycamoney card available which can be purchased online and at thousands of retailers nationwide. They are completely free and transparent helping people to manage their cash flow without the worry of overspending or overdraft charges. More people are now using mobile phones to manage their money due to the convenience of modern technology and flexibility. Therefore by linking credit updates to mobile phones, Lycamoney provides people with better control of their spending habits. As the alignment between mobile phones and payment technology moves closer the Lycamoney card provides the perfect solution for today’s budget conscious customer.. The key feature of the two cards is cash management - ideal for anyone who needs to balance their disposable spending with their essential outgoings such as rent, mortgage and monthly bills. Consumers can load the card online or at thousands of retailers nationwide and can then be used in the same way as a normal debit card with the added benefit of mobile updates of your balance after every transaction. There are no transaction fees so to load the card and spend on your card is completely free when used across the UK. The card is available for anyone who lives in the UK and is over the age of 18 years - no bank account or credit checks are needed. Additional cards can be added to an account so that parents can provide a cash management tool to their children. This gives them the freedom and benefits of a debit card without the fear of overspending. Real time balance updates to your mobile phone via text messages means parents can have a better idea of where their children are spending money. It also provides a much safer alternative to carrying cash around as the card uses Chip and PIN technology if the card is stolen or lost then a block can be placed on the card keeping your money safe and secure. The Lycamoney card can also be used to transfer money globally which is perfect for people who need to send money abroad either for business or personal reasons. It can also provide a great way of controlling what you are spending whilst you are abroad with the additional security that you are not carrying lots of cash around.

Asian Voice & Gujarat Samachar - 2011

London Sam_A4 Temp 16/05/2011 15:09 Page 22

The Unfinished Business of Globalisation The business I run is global, because many of our students come from overseas. Many of my colleagues are also born abroad. Indeed, I watched the business of professional training and higher education for last three decades, and it is very apparent that this industry, and many other sectors along with it, has become intensely global. In fact, since the 1990s, Globalisation has become a keyword of sorts. t is also universally accepted that globalication is an irreversible process, a sort of juggernaut, which will steamroll everything on its way. Economists, Journalists, Politicians everyone have signed up to this common minimum faith, and every policy, business and ideas have to be global to be considered seriously. So, as we are unquestionably in the age of a Flat World, as Tom Friedman theorised, the only debate worth having is whether globalisation is something new. Marco Polo, the Chinese and Indian merchants of ancient times, the Arab traders carrying goods and knowledge across Asia, Christopher Colombus, all can claim to be precursors to globalisation in one way or the other. This, if anything, establishes the vintage of globalisation, though what we have now, its defendants claim, is faster, smarter and better globalisation. There are indeed disagreements, even street fights, on whether this is a good or a bad thing. The battles are fought between the 'World is Flat' people, who believed that the global corporations are making national boundaries irrelevant, and the 'Shock Doctrine' people, who believe in exactly the same thing, but think that's necessarily bad. The believers of good globalisation assemble in Davos every year to hail good globalisation, whereas the faithful of bad globalisation arrange their own annual global summit in Rio. So, in this setting, coming to realize that the world is less global than one thinks, and the global prosperity remains stunted as the world is deeply divided, is somewhat counter-intuitive. But this is exactly what Pankaj Ghemawat, Professor of Global Strategy in

Asian Voice & Gujarat Samachar - 2011

Dr. Dak Patel FCCA FOTHM Principal

IESE Business School in Barcelona, argues in his new book, eerily named World 3.0. He essentially says we haven't seen true globalisation yet, and claims that the world is actually in a reverse gear as far as globalisation is concerned. Some of the statistics he uses to make his case are persuasive (I have drawn upon the review of his book by The Economist recently): 1. Only 3% of the people live outside their country of birth 2. Only 2% of the students are at universities outside their home countries 3. Only 7% of the Rice traded across borders 4. Only 7% of the directors in S&P 500 companies are foreign born 5. Less than 1% of all American companies have foreign operations 6. Exports are equivalent to only 20% of global GDP 7. Air Travel is still restricted by bilateral treaties 8. Ocean shipping is dominated by global cartels 9. Foreign Direct Investment accounts for only 9% of fixed investments 10. Less than 20% of venture capital is deployed out side the fund's home country 11. Less than 20% of shares traded in the major stock markets are owned by foreign investors 12. Less than 20% of Internet traffic crosses national borders What we are seeing is not the death of distance, he argues, but a reassertion of the love of the familiar and the local. By this standard, David Cameron's recent concern that local communities are falling apart with people arriving with strange dialects is not out of place. Professor Ghemawat cites more data: Two otherwise identical countries will engage in 42% more trade if they share a com-

London Sam_A4 Temp 16/05/2011 15:10 Page 23

becoming as much a common term as 'Offshore'. It actually seems globalisation is in full retreat. The point here is the difference between the rhetoric of globalisation and the state of the phenomenon. It is possible to see all of this as a huge global opportunity, of unlocking the potential of connections and co-working. I bear witness, in my own business, of the tremendous positive energy and innovation released by globalisation, the opportunities that open up and the work ethic that evolves. What Professor Ghemawatâ&#x20AC;&#x2122;s timely book reminds me is that this is still an unfinished process, in fact something that is at its infancy. As a believer of the positive impact of globalisation, I do believe that we should do more, as business people and citizens, to encourage global trading and investing, which will benefit everyone. mon language than if they don't, 47% more if they belong to a common trading block, 114% more if they have a common currency and 188% more if they have a common colonial past (which may mean they also share a common language). Today less people, as a percentage of population, cross national borders. A century ago, 14% of Irish-born people and 10% of native Norwegians emigrated. There were no visas and passports, as opposed to today's $88 billion a year spend on visa processing. Professor Ghemawat points to the fact that in some countries, a passport costs more than a tenth of a person's average annual income. In fact, the local is alive and well. The march of the extreme right across Europe and the Tea Party-goers in America, the adolescent national sensibilities in Asia, the roll-back of various regional entity projects (including the precarious state of the EU, where the French has now closed the borders with Italy more or less), all point to this direction. The Foreign Direct Investment fell from $2 trillion in 2007 to $1 trillion in 2009, and nearly a quarter of North American and European companies shortened their supply chain in 2008. 'Near-shore' is

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24-33-36_A4 Temp 16/05/2011 16:15 Page 24

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Commercial Insurance designed for you... Buying Commercial Insurance in today’s market to suit your requirements may seem easy, but do you really know what you are buying? Are you covered for everything? Have you declared all material facts? At Commercial Direct alongside leading insurers we have worked together to produce an extensive product range which will not only meet but exceed your requirements… Buildings Insurance FAQ’s What is covered? The cost of repairing or rebuilding the property structure including its permanent fixtures & fittings such as built in kitchen, built in wardrobes, bathroom suites and toilets. Cover should include accidental damage, subsidence, Property Owners public liability and Employer’s Liability if required What is not covered? General wear and tear of the property, dilapidation of the site, this is the most common cause for a claim and will be repudiated. Expectations? It is the customer’s duty to maintain the premises in a good state of repair and any potential damage must be reported to the insurers without delay.

How much do I insure? It is very important to insure for the “Rebuild Value” of the premises and not the “Market Value” a common misconception. The best way to find this information is either a recent survey report or by using the simple calculator available on the ABI website http://abi.bcis.co.uk. Under-insurance? This is the biggest sin in buildings insurance, if you under-insure, you are not deemed to have paid the correct premium based on your risk. Thus the insurers will pay your claim based on the aggregate amount you are under-insured. For example if you insure for £200,000, when a claim occurred it was found your building should have been

Alpen Patel (Director) Talented young broker insured for £400,000 then 50% will be deducted from any claim settlement. Index Linking? The value of your premises will appreciate in value (normally) and to allow for the increase in the cost of “bricks & mortar” the buildings insurance will rise by a set percentage in line with inflation to accommodate.

Retailers Insurance (Shops, Restaurant, Take-Away) FAQ’s What is covered? Buildings can be included if required if not then just the movable contents, stock etc. Any basic decorations under the tenant’s improvements section Expectation? Minimum security to include a 5 lever mortise deadlock (5LMDL) on external door and shutters if allowed. A functioning alarm if specified maintained annually by an approved company ideally NACOSS Gold. Important additions? If you are a leaseholder then generally you will be responsible to insure the shop front glass, shutters and external signage. Most packages normally include this cover starting @ £2,000. You must have Public Liability cover in place to protect your trading area, you are also required to cover Employers liability. How much should I cover? The cost to replace your contents/stock, not the selling price. It is very important that you declare all of your stock; if you are underinsured then once again the average clause may be applied. It is important to note that when calculating your stock sums insured that you include your beers in general stock and have separate figures for target stock 1. Wines & Spirits 2. Tobacco. If you have an EPOS system these can be expensive it is worth asking your broker if these need to be specified under the policy or if they are included in general contents. The same applies for computer equipment. Not seen what you want? At Commercial Direct we can cover almost any type of business from a small shop to warehouses and manufacturing risks. We provide a bespoke service for the larger premises and can arrange a site visit if required to discuss your requirements. We work closely within our community and pride ourselves on excellent customer service and product knowledge. We look forward to assisting you with all of your insurance needs, Commercial Direct “Insurance for your Security.” 020 8658 2888 sales@commercialdirect.co.uk www.commercialdirect.co.uk

Asian Voice & Gujarat Samachar - 2011

Rakesh Shah_A4 Temp 16/05/2011 15:22 Page 26

The Accident compensation claims process The road traffic accident claims management process is a complicated field. hen an accident occurs it can be a difficult and somewhat uncomfortable time for those involved. Making a claim against an insurance company for the damages can, sometimes, exacerbate the situation. When an individual is involved in a non-fault road traffic accident he/she is entitled to claim compensation for vehicle repair , replacement vehicle whilst there car is of the road , loss of earnings , policy excess , total loss of the vehicle value in addition to injury compensation for such claims as whiplash. The replacement vehicle usually provided should be on a like-like basis so if you drive a Mercedes you should be provided with a compatible car. The above heads of claims should usually be claimed against the “at fault” insurer so to maintain clients claim record and no claims bonus in tact. For instance 1. A driving error must have occurred Your car has been hit by another, so it is obvious that a driving error has occurred otherwise this could not have happened. 2. Consider the road safety rules in the Highway Code The Highway Code tells drivers to travel no closer than the safe stopping distance from the vehicle in front. The driver behind was not travelling at this safe distance as he did not have time to avoid hitting your car. He has broken the safety rules of the Highway Code. 3. Use your common sense to decide whether a driver travelling too close behind your vehicle could cause you or some other person to be injured It is obvious that the driver could hit your car by not keeping a safe distance behind it and it is equally obvious that, if he hits your car, the force of the collision could cause you to be injured. In respect of the fault claims the individual client has the choice to use the insurers recommended repairer or a repairer of their own choice. The vehicle repairs should be carried out to manufacturer’s recommendations and a suitable warranty should be provided on work and paint standards. The repairing garage

Asian Voice & Gujarat Samachar - 2011

Rakesh Shah is the Director of Concept Vehicle Management Ltd

should also provide a courtesy vehicle whilst the client’s car is off the road. However on a fault claim the clients will usually be entitled to a small group A vehicle such as Nissan Micra and any upgrade (if applicable) is chargeable. In addition to road traffic accidents clients can claim compensation following trips or falls on public pavements (subject to certain conditions). Individuals are also entitled to compensation following injury at work or employment disputes. When considering the claims process clients should seek professional advice in the form of usual insurance adviser, solicitor or services of a professional accident management company.

Tips: Look out for your own interests The best way to avoid the hassles of a, sometimes, lengthy claim process is not to be involved in a loss in the first place. This is not always possible because you cannot always account for the other drivers. You can however, take precautions when driving on the roadway. Be alert to the surroundings at all times. Stay away from aggressive drivers. If another vehicle is moving in an uncharacteristic manner, it may indicate that there is some impairment on the driver's part. Allow enough space, preferably about two car lengths, between you and the vehicle in front of you. This allows room to take evasive action should it become necessary. Pay attention to right-of-way laws. Drive with constant awareness to what is going on around you. Distractions such as cell phones, eating, reading and dealing with children should be kept to a minimum and can be best handled if time is taken to pull off the roadway to handle the situation. Great care should be taken when driving, by paying more attention and being aware of other drivers many accidents can be avoided.

Sec-179-194_A4 Temp 09/10/2009 17:24 Page 185

Major Estate_A4 Temp 16/05/2011 16:26 Page 28

Mortgage Broker

Efficient, Economical & Diligent Dinesh Shonchhatra based in Harrow Wealdstone High Street is perhaps one of the most sought after mortgage brokers in North West London. He is an an independent financial advisor, been a mortgage broker for twenty two years and is directly authorised by the FSA. His company, Major Estate Financial Services along with his estate agency Major Estate and Imperial Financial Service is extremely popular for its personalised services around North West London. What client services do you currently offer? Major Financial services offered are following: Full spectrum of mortgage consultations without charging upfront fees for residential and investment properties. We do also offer commercial mortgages and advice on life insurance, critical illness, permanent health insurance and also building and contents insurance. We have two sister companies one of which specialises in the business of sales and letting of properties for clients and the other is an independent financial advisor providing needs based consultancy 3. What do you feel has been your greatest area of success as a business? Maintaining our client base and listening to customers, elucidating their needs and assisting them to find the best product available in this difficult market. Also managing clients expectations in a market where funding is very difficult to source. Furthermore, helping clients make a realistic investment objective and, understanding their requirements and suggesting a suitable investment plan. This inevitably leads to client satisfaction, has enhanced our business and sustained us in this difficult market. . This is also reflected in our company winning some industry awards (despite strong competition) such as Mortgage Champions Award from Network Mortgage Power and Best Mortgage Broker England South by the Mortgage Times Group. Our company was also nominated for best directly authorised broker by the same group. Where do the majority of your leads come from? Most of the lead comes from satisfied customers, references, public relations and selfless community service.

Asian Voice & Gujarat Samachar - 2011

Dinesh Shonchhatra, Director, Major Estate We also have the added advantage of having been an IFA for over two decades and have high net worth clients from whom repeat business is on-going. Our sister company, Major Estate complements the business. What are the main issues your clients are coming up against at the minute? Scarcity of new homes, high deposits for first time buyers expensive lending and high arrangement fees on BTL, lack of interest only/self-certified mortgages for self-employed and uncertainty of economic climate are the issues our clients are currently facing. Additionally the lack of choice of products from a high of approximately 65000 products in the hay days to around 5000/6000 currently does not help. In fact, well pronounced recovery of economy is not a reality at the moment. Furthermore, the high arrangement fees and limited number of lenders are the profound issues of the industry. What do you believe is the biggest challenge facing mortgage brokers today? Fundamentally, the lack of appetite from lenders to lend or perhaps realistically the lack of availability of funds in the market is devastating this industry. Additionally the dual pricing and direct deals from the lenders to entice the clients are the main challenge that brokers face. As a result of this mortgage brokers have to be efficient and diligent in understanding clientsâ&#x20AC;&#x2122; needs/expectations and carry out a thorough investigation to make suitable advice/suggestions that fits the clients needs with reduced profits. Finally â&#x20AC;&#x201C; Do you have any insider tips or advice for our members? The members of our mortgage broker industry should adhere to diligence, sincerity, honesty, truthfulness and straight forwardness in dealing with clients. These are fundamental with any professional service and if the member does not lose sight of this than his success is definitely assured. Dinesh Shonchhatra Independent Mortgage Advisor based at Major Estate Financial Services Ltd. 77, High Street, Wealdstone, Harrow, Middx., HA3 5DQ has been a mortgage advisor for over 22 years. Proprietor of Major Estate Sales and Letting and Imperial Financial Services Contacts: Tel: 0208 424 8686 Mob: 07956 810 647 Email: majorsest@aol.com

Unesta_A4 Temp 16/05/2011 16:27 Page 29

India Realty Matters We speak to Vikram Goyal, Managing Director of Unesta, about the potential and opportunities in India Property Investment What is Unesta? Unesta is a unique proposition that aims to serve global Indians, by making investing in India as simple as possible and giving them the maximum returns on their investment. Unesta has been in business for over 3 years. We have over 200 satisfied clients across UK, Europe and Africa who appreciate us because we offer complete transparency, great value and customer service, which is non-existent in India Real Estate. What concerns do property investors have about investing in India? With a booming economy and one of the fastest growing property markets in the world, India is a great place to build your nest and the ideal place to invest in. However, property investors who are quite comfortable investing in other property markets like Spain, Cyprus and Dubai seem reluctant when it comes to India. I think it’s because of the complex purchase process, lack of transparency from the developer and lack of knowledge about the laws of the country. As an overseas investor you want to know where your money is going throughout the transaction. How does one go about investing in India? When it comes to any property investment, it’s the golden rule of 3Rs – Research, Right Property and Returns. Property investment in India can be very complicated as India is a very diverse country, every 300 miles the colour of the skin, food, clothes, everything changes. In the Indian context, the right research is of paramount importance, which includes identifying the right location or city and the developer. Finding the right developer involves significant due diligence and evaluation of factors such as the developer’s track record, infrastructure development, quality standards and project completion time frames. This helps you choose the right property. Lastly but most importantly, it is the returns. Investors who invest in India are typically keener on capital appreciation than rental yields since the rental yields in India vary with geography, quality and

Vikram Goyal, Managing Director of Unesta composition of the property. For example, in North of India, the rental yields are not that attractive but in the West, in Mumbai, you can expect around 4 -6% on an average on a residential property. If you are looking at capital appreciation, India is a very promising market. Investors have seen returns from 20% – 40% in the last 5 years in some of the residential sectors. In the Commercial sector, one can achieve an average rental yield of 8 -12%. Warehousing is another popular segment wherein the capital appreciation is low but the rental yields are higher, so you need to decide what suits your investment objectives. You need to choose what suits your pocket for today and picture for tomorrow. How does one benefit from Unesta? Every investor has different objectives. As your property advisor, on one hand, we customise investments opportunities for you. We like to understand whether your objectives are short term or long term, are you keen on capital appreciation or rental yields, so we identify the right project from our portfolio and guide you accordingly. On the other hand, we perform the due diligence for you, right from physically visiting the site, to reference checks and mortgage facilities in conjunction with high street banks. Not to mention their track record and quality of construction. Today we collaborate with top developers in India, like IREO, bSafal, Hirco and many more. We do all the hard work for you so you can sit back and enjoy the returns on your property investment. What about your post-sales service? What happens after I invest? There is a big gap in the market, when it comes to property management. Especially when you are an overseas investor, it’s very difficult to manage. We’ve bridged this gap through our professional property management service that does lettings, furnishing, management maintenance and resales. Our services are flexible and designed to meet your needs and provide peace of mind when it comes to your Indian property investment. Asian Voice & Gujarat Samachar - 2011

Property Investment_A4 Temp 16/05/2011 15:20 Page 30

PROPERTY INVESTMENTS Bricks & Mortar

From historic battles to imperial colonisation, from agricultural land to the present day commercial spaces, from an industrial economy to the current service oriented economy, from humble homes to iconic buildings Property is one of the oldest assets known to man and is at the heart of human desire. he decision to invest in property works at two levels; one being the more emotional connect to a place or location, and second being the more return driven tangible approach. Property being a physical asset renders the reality to realty, making it a stronger asset class to invest in. The rational parameters driving investments are:

l Risk Return structure - greater than bonds, less than equity l Time value of money - profitable in the long and mid-term, rather than short term l Correlation with other asset classes - hedging and diversification benefits However, factors such as low price transparency, illiquidity and high transaction costs can render the property proposition equally unattractive. This is where specialist advice from experts in the property field is useful in order to plan a successful strategy to minimize your risk and maximize your return. We look at some of the benefits and shortcomings of Real Estate Investment. Advantages l Potential for income through rental and capital gains l Long-term performance track record l Over all portfolio diversification l Tangibility of brick and mortar investment l Ability to finance investments through debt l Hedge against inflation l Attractive valuations l Low correlation with other asset classes

Asian Voice & Gujarat Samachar - 2011

However, different real estate markets have different cycles depending on the geography and also the sector. For example; more mature markets such as UK and US differ in property cycle from the more nascent markets that of India, China, Brazil and even with a given market residential investments have a different behavioural pattern than commercial sector. The recent financial crisis made the difference in geographic trends highly visible. On one hand where the property prices fell steep in the UK and USA markets, on the other hand markets in India and China exhibited resilience and remained fairly stable. This can be primarily attributed to the fact that real estate sector in the more mature markets is closely linked to the banking and finance sector whereas in the developing markets its driven strongly by the demand-supply dynamics of both the domestic and international markets. However, each of the emerging markets has a different set of governing dynamics. Focusing our attention on India, we can look at the key drivers and incentives of investing in the country.

INDIA â&#x20AC;&#x201C; UNLOCKING POTENTIAL & EXPLORING OPPORTUNITIES As the balance of the world economy shifts eastward, â&#x20AC;&#x153;changeâ&#x20AC;? seems to be the only constant and countries like India are at the forefront of this change. This has opened up innumerable investment options and opportunities for global investors. The story of India is truly an intriguing one. Despite its inbuilt paradoxes, India has a strong economic fundamental and has witnessed accelerated growth, which has manifested itself in an unprecedented manner in the real estate industry. From survival to revival, the Indian real estate sector has exhibited unique resilience and upsurge. This phenomenon can be understood in the context of multiple economic forces, which are simultaneously acting on the real estate sector.

Disadvantages l Cost of maintenance l Relative illiquidity l Volatility of property prices l High transaction cost l Time required to research and manage the asset as well as the transaction l Lower returns as compared to equity (at lower risk) l Rules and regulations associated with ownership l Lack of property market knowledge

Afro Asian_A4 Temp 16/05/2011 12:27 Page 1

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Property Investment_A4 Temp 16/05/2011 15:21 Page 32

Supporting factors for the Growth: The growth of real estate industry in the country from a state of inertia to euphoria has been contributed by the factors like:

Opportunities Investors can explore opportunities for investment in Indian properties on two basic levels: Portfolio diversification Indian residential markets prove to be a fantastic option for investors who are looking to diversify their portfolios, offering a higher rate of return and faster escalation compared to UK residential markets. In London, residential returns average at a modest 6% - 8%, and prime London residential investments yield just 4%-5%, whereas in India, the returns may be 20% -25% on average. Additionally, capital infusion required in London is bound to be larger and has to be made in one go as a mortgage deposit. This makes the Indian residential sector more lucrative with respect to time value of money.

Source: The Nielson Research on Indian Market Scenario 2008

Potential Displaying a strong GDP growth of 8%-9%, India is moving ahead on the business front not only with multinationals, but also with indigenous firms expanding their operations in the service and financial sectors. Consequently, households are seeing a steady rise in employment and income. Real estate demand is witnessing a surge as companies need space for their growing operations and employees need space to live. With high public and private consumption, a change in lifestyle has also marked an increase in demand in the luxury segment of Indian real estate. In addition to all this, a government policy stimulus has given rise to robust regional economies, and a renewed focus on transport and infrastructure is aiding growth. This phenomenon can be clearly observed in states such as Gujarat and Maharashtra, which have witnessed exceptional growth due to the above mentioned factors. Indian potential is waiting to be unlocked; opportunities are waiting to be explored.

Asian Voice & Gujarat Samachar - 2011

Risk exposure From the perspective of risk adjusted performance of oneâ&#x20AC;&#x2122;s portfolio, Indian real estate investments work at both macro and micro levels. At a macro level, such an investment proves to be a hedge against currency fluctuation and government policies. At a micro/individual level, India proves to be a natural choice not just from the standpoint of being connected to oneâ&#x20AC;&#x2122;s roots but also from the advantage of a retirement home, an annual holiday spot, a home for oneâ&#x20AC;&#x2122;s parents, a future security or a pure investment.

By strategic entry and exit in an investment product, an investor can maximise returns and minimise risks. At the entry point of an investment, India falls under the value-added and opportunistic category, and with local knowledge and expertise high returns are possible. With 20% average growth and Rs. 1,72,000 crore being pumped into infrastructure, the Indian real estate industry is geared up for a complete revolution. And this revolution will not restrict itself to the metros; in fact, it has already seeped into the interiors and into smaller new towns and cities. Moreover, this expansion will not be confined to a particular sector but will encompass residential, commercial, infrastructure and logistics, in terms of space and range.

24-33-36_A4 Temp 16/05/2011 15:35 Page 33

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Location_A4 Temp 16/05/2011 15:07 Page 34

LOCATION, LOCATION, LOCATION The Indian democracy is indeed a wonder to behold. India is now the fourth largest economy in the world and the second fastest growing economy. At the heart of India’s growing economy is the country’s booming real estate market. he modern Indian metro city is unrecognizable from its past avatar. Glitzy shopping malls, multiplexes and entertainment centres, luxury hotels, fancy office blocks, smart apartments and luxury villas – are evidence of real estate changing the face of the country’s urban centres. In addition, the middle class has seen a rise in income levels, and is now making property investments in prime Indian cities. Since property investment is one of the most successful and popular wealth creation vehicles, as the saying goes, the key lies in “Location-LocationLocation”. The two top locations encompassing the new facets of Indian real estate are Gurgaon and Ahmedabad. In 2010, cities like Ahmedabad, Delhi, Pune, Hyderabad, Kolkata and Mumbai saw prices go up by a whopping 66.8%, 30%, 13.6%, 11.5%, 5.6% and 0.5% respectively. The graphs illustrate the capital appreciation in Gurgaon (combined with Delhi, Graph 1) and Ahmedabad (Graph 2).

India is involved in creating urban assets by generating and regenerating spaces. Gurgaon exemplifies one of the finest extensions in terms of a spill-over of an existing city (Delhi), and Ahmedabad is a classic case of urban renewal of an existing Tier II city. The future outlook for both these developments is promising. GURGAON Historically, Gurgaon was just a hamlet neighbouring the capital city of Delhi, thus it became a natural extension for the surge in the capital’s economic activities. Gurgaon’s development was a planned effort in creating a new nucleus of growth. This was done by first setting up a core region of organised retail activity and commercial office space; which was then followed by hotel and residential development around the core region.

Graph 3: Delhi’s average growth surpasses the National average (Makaan.com Property Index)

Graph 1: Delhi’s average growth surpasses the National average (Makaan.com Property Index)

Graph 2: Ahmedabad’s average growth surpasses the National average (Makaan.com Property Index)

Asian Voice & Gujarat Samachar - 2011

Today, the IT/ITES sector along with banking & finance, automobile and strategic consulting firms have become the most important drivers for the real estate sector in Gurgaon. Infrastructure initiatives planned as per the new approved Master Plan 2021, along with current development of link roads and metro rail, are prompting developers to explore new locations in Gurgaon for residential development.

24-33-36_A4 Temp 16/05/2011 15:36 Page 35

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Location_A4 Temp 16/05/2011 15:08 Page 36

According to Knight Frank, Residential Market Review Q3, 2009, “Approximately 26,500 units, equating to 58.23 mn.sq.ft of fresh supply will be infused into the market by 2011. Around two-thirds of this supply will be accounted for by 3 and 4-BHK units, thereby reflecting the positive prognosis for premium sector housing in Gurgaon despite the property slump of the previous year. Gurgaon will have the maximum share of about 29% of supply across the NCR by 2011.” Due to thriving commercial activity in Gurgaon, certain locations within this market attract strong rental housing demand. “Rentals for 2 BHK units are in the range of Rs.13,000 - 20,000 per month in DLF Phase IIV and Rs.21,000-28,000 per month on M.G. Road. 2 BHK apartments on Golf Course Road command rental values in the range of Rs.17,000 -21,000 per month.” These figures are the highest in NCR, compared to similar developments in Noida and Faridabad; and are even comparable to certain areas within Delhi. Due to its strong rentals and relatively low capital values, Gurgaon exhibits a relatively strong annual rental yield of 4.7% 7.2%. AHMEDABAD Ahmedabad epitomises the growth story of the Tier II city in India. With rocketing prices in prime locations of big cities like Mumbai, the investor focus has shifted to more lucrative options in Tier II cities. Ahmedabad has leaped ahead of other Tier II cities in terms of growth, because of its developmentoriented philosophy and global outlook. As a result, Ahmedabad’s blueprint to create urban and sub-urban assets, the spheres of infrastructure, transport, regeneration and real estate development have witnessed strong and strategic growth.

Graph 5: Average growth increase in Residential Capital Values (Makaan.com Property) Index)

The residential markets in Ahmedabad have witnessed an upgradation in planning and facilities. The new projects have introduced amenities such as swimming pools, club houses with billiards tables, tennis courts, state-of-the-art gymnasiums, separate entry and exit driveways and basement parking for visitors. Most of the investments in residential developments are by individuals, though a trend towards corporate leasing is slowly being witnessed here. Many national level developers have started making their presence in Ahmedabad because of an increasing

Asian Voice & Gujarat Samachar - 2011

demand for residential, commercial & IT developments. Moreover, according to Cushman & Wakefield, Indian Market Review, “Ahmedabad is dominated by local developers like Safal and Heritage; inspite of interest from national developers, the local developers still hold 90% of market share. Being one of the fastest growing cities, one can realise 40% - 45% returns on an average here.” However, one does not see a major rental market, as the sector is mostly owner-occupied or has investments in holiday homes/retirement homes for NRIs. From heritage to hi – tech, from community centers to cosmopolitan setups, Ahmedabad is witnessing it all happen fast. Being the financial capital of Gujarat, it is inherently dynamic from the stand-point of trade and commerce, plus the forces of stable governance and a globally connected community are creating grounds for further expansion and exploration.

India Real Estate – your next investment Ideal investments are ones that balance the risk-return equation with portfolio diversification. Whether it’s the blend of local knowledge and global outlook, or the integration of development and investment gains, it’s all about creating that sumptuous curry. And just as all the ingredients have to come together to create the perfect curry, the right investment opportunities mixed with the right investment advisory partners makes the Indian real estate market, especially in Gurgaon and Ahmedabad, perfectly primed for wealth creation. So wake up and smell the curry!

WealthManagement_A4 Temp 16/05/2011 15:42 Page 2

Achieving onesâ&#x20AC;&#x2122; desired monetary goals Wealth Management is considered as an advanced form of financial planning that provides individuals with private banking, estate planning, asset management, legal resources and investment management services, with the ultimate aim of sustaining and growing long-term wealth. nlike financial planning which is relevant for individuals who have accumulated wealth or are just starting to accumulate, a potential wealth management client must already have accumulated a significant amount of wealth for the process to be effective. The key objective is to achieve wealth generation and preservation by spreading investments across a wide range of assets and being able to diversify such that the investor makes money in both rising and falling markets. The means to do this is through using the services of a wealth manager (for example, a private bank, IFA) who advises clients on investment management , retirement planning, tax, wealth protection and cash flow analysis. They also consider liabilities, such as expenditure, mortgages and tax planning.

Purpose of Wealth Management Wealth management enables you to evaluate where you are now, where you want to get to financially in the future and how you can achieve your monetary goals. The strategy of how to achieve these goals is mapped out through gathering the relevant information, setting life objectives (such as paying school fees, or having sufficient income in retirement) and then evaluating how they can be achieved with your current level of income, expenditure and the amount of risk you are prepared to take.

Role of the Wealth Manager It is possible to conduct the financial planning by oneself. However, most people choose to rely on a wealth manager who has the time and resources to co- ordi-

nate oneâ&#x20AC;&#x2122;s financial affairs. In addition, areas such as tax and succession planning can be highly complex and the rules change regularly, which means that relying on an expert is the most efficient route. The process a wealth manager will typically pursue is as follows. Firstly a cash flow analysis will be produced to show current levels of income, expenditure and assets, as well as the finances required for example, in retirement or to pay school fees. The time period over which you wish to achieve your objectives will also be defined. The wealth manager will then establish a strategy on how to achieve these objectives and will advise on whether any amendments are needed, for example, if more investment is required, or a longer time period. The allocation of assets and investments in your portfolio will be monitored over time to adjust for changes in the objectives and risk

Choosing a Wealth Manager Some factors that should be considered when deciding who to go for: 1) Type of service required : Wealth managers will vary in the services they provide, for example some may be able to provide a full comprehensive wealth management service, while others may suggest alternative experts for specialist matters. The way information is provided could also vary in terms of the frequency of updates and reports. 2) Qualifications : The wealth manager should be sufficiently qualified and experienced to advise you on your investments and financial plan. In some cases, the wealth manager may refer to alternative experts if appropriate for more complex areas such as tax planning. 3) Size and financial strength : People have different preferences as regards to the size of firm they use which can vary from boutique wealth managers to large institutions. Some believe that larger companies may have access to greater knowledge and expertise, whilst smaller companies will offer a more personalised service. 4) Fees: You need to establish the fee structure of the wealth manager (e.g. hourly, by advice, by transaction). Charges will vary from one wealth manager to another depending on the size of the institution, the seniority, qualifications and experience of the wealth manager, the level of service they provide, their location and your requirements. To conclude one must not underestimate the importance of wealth management in achieving onesâ&#x20AC;&#x2122; desired monetary goals. Choosing the right manager and options are crucial in maximising the benefits one can derive from it . Asian Voice & Gujarat Samachar - 2011

Deepak Lalwani+Punjab AD_A4 Temp 16/05/2011 14:59 Page 38

INDIA

An exciting decade ahead Despite recent governance scandals and stubbornly high inflation, India in this decade is poised to become more confident and more assertive, especially as its global influence increases. Underlying this is the stronger economic growth the country has recorded in the last decade, and the potential for a rise in the next ten years. This is especially so at a time when developed countries are facing anaemic economic growth, while India offers many growth sectors, eg, $1 trillion to be invested in infrastructure over the next 5 years and $150 bn to be invested in nuclear energy over the next 10 years, just to name two. The last decade The Indian economy took nearly 60 years post independence to reach the first $ 1 trillion of GDP in 2008. It took so long because economic growth for 30 years between 1950 - 1980 averaged a low 3.5% per annum. Thus, low compounding of growth was responsible for this milestone economic figure to take 60 years. The last decade to 2010 has seen the annual growth rate climb to 7.25% per annum. The benefit of this will be reflected in the coming 10 years, in particular as economic reforms continue and the entrepreneurial spirit which was bottled up by the license raj before the 1991 economic reforms is given free rein. In the last 10 years corporate India has spread its wings internationally. After the economic reforms started in the 1990s businessmen took a fearful stance: afraid of globalisation and acutely worried of being trampled on by foreign competition once India opened its doors to the outside world. However, after a hesitant start, confidence, boldness and assertiveness since 2005 has seen corporate India embrace globalisation

Asian Voice & Gujarat Samachar - 2011

Deepak N. Lalwani OBE Founder Director - Lalcap Ltd

and make acquisitions overseas in larger numbers and bigger deal sizes. After all who would have imagined even 5 years ago that an Indian auto maker could have the audacity, risk taking ability, management skills, ability to raise large funds and have the vision to acquire a luxury brand like Jaguar of the UK? Tata Motors did this and has last year turned around Jaguar from being a loss maker to being profitable, a task that eluded its previous famous owner, Ford Motor Co of the U.S. which finally decided to sell this famous world class brand. The DNA for Indian businesses to establish a global footprint clearly exists now. The last decade has also seen a visible rise in living standards for many middle class people. A prime example of an industry enjoying the fruits of de-regulation is telecoms. In the year 2000 only 3m new mobile lines were added in the whole year. Last year the average per month exceeded 16 million. The last decade has also seen a broadening of attitudes and mind set as more people travel abroad and greater access to TVs and the media helps broaden horizons. India's soft power has also extended the country's influence as Bollywood reached out further globally and Indian culture is better known abroad. Alas, a serious blot on the

scoreboard of the enviable recent economic growth rates seen is that that this has not been on an inclusive basis and the poorer sections have largely not benefitted. Also, despite many successes, major obstacles still exist: shabby infrastructure, corruption, poor governance at state level, excessive bureaucracy, inconsistent policies. Doing business in India is still seen by many, especially foreign investors, as daunting compared to other Asian countries like Singapore.

Deepak Lalwani+Punjab AD_A4 Temp 16/05/2011 14:59 Page 39

The coming decade India is on a journey of economic "catch up" and this journey should extend well beyond this decade. A stronger economic base, as the country aspires to firmly resume growth of 9% + per annum, should help further raise confidence in India. The drivers of economic growth are: favourable demographics, an increasing savings and investment rate, an unleashing of latent entrepreneurial spirit, an improving (albeit slowly) infrastructure, improving education and increasing consumption. The Indian economy is also insulated against the worst effects of a global slowdown because it has a large domestic market which accounts for 57% of total consumption. And, exports account for only about 18% of GDP - this allows a degree of insulation against the worst of any global economic slowdowns. Earlier it was mentioned that it took nearly 60 years post independence for the milestone first trillion US dollars of GDP to be reached. With higher growth rates now (8%+ per annum) the next trillion is expected to be reached in 5 years by 2013. By the end of this decade India should have an economy nearly 400% larger than in 2008 as it reaches $ 4 trillion. This was the path followed by China and India will follow a similar one, albeit at a slower pace than China. The country should also be among the five largest economies globally by the end of this decade. From these numbers the business opportunities in most sectors is staggering. The fervent hope is that this decade will see, once and for all, a definite inclusive nature of sharing economic gains for all sections of society and that rural standards of living, education and healthcare are dramatically improved. India is not seen by Western developed powers as a threat militarily or economically. Hence its influence and increased role as a global emerging power will be supported and welcomed. This should help India play a greater role in world affairs, be it at G20 or BRIC meetings and hopefully in this decade the country realises its cherished dream - of finally becoming a permanent member of the UN

Security Council. India's confidence and global influence is seen to increase appreciably this decade compared to the past. The obstacles and risks that existed before will still require attention: corruption, bureaucracy, security threats, making doing business in India easier and very importantly, making economic growth inclusive so as to reduce poverty levels. Despite all the obstacles, India has much to look forward to in this decade. As does the world as it sees the largest democracy in the globe journey towards realising its destiny. Deepak N . Lalwani received two prestigious awards in 2010 from India and also an OBE in the UK. He is only one of two persons from India to be elected as a member of The London Stock Exchange, which he joined over 20 years ago.

Asian Voice & Gujarat Samachar - 2011

Alpesh-Lloyds_A4 Temp 16/05/2011 14:55 Page 40

Truett Tate

Exclusive Interview

Truett Tate, Group Executive Director, Wholesale, Lloyds Banking Group

Q: Could you give us some taste of what your job role involves? I am the Group Executive Director for the Wholesale Division of Lloyds Banking Group and am therefore responsible for all Wholesale Banking across the UK and North America working with both corporate and commercial customers; from sole proprietors to global multinational organisations. Alongside its relationship-led Corporate and Commercial banking businesses, Wholesale has a number of specialist businesses focussed on delivering solutions to serve the full range of their customers' needs.

Q: Do you think bankers' bonuses are justified? I know it's the same old question, but have you noted any changes in how much and the method in which bonuses are paid to placate the public? We recognise that remuneration in the financial services sector is a sensitive issue for shareholders and society in general. As a retail and commercial bank, our overall allocation under the annual bonus scheme represents a very small percentage of revenues. We, along with the other major UK banks, have signed up to the G20 principles of remuneration. We work very closely with the FSA and UKFI to ensure that our remuneration structure is aligned to prudent risk management. Over recent years, annual incentives to the Group's executive directors have also been subject to deferral and clawback. So, I think there have been significant and positive changes. Q: Are bankers' bonuses any business of the public?

Q: With the recent PPI payouts Lloyds had a big one off loss? If we ignore that as a one off, how healthy does the bank look, given that the HBOS acquisition was a sizeable acquisition at the height of the credit crunch? Well for starters, we can't really ignore it and as a statement of principles, it is absolutely the right thing to do by our customers. That said, the bank is in a healthy position. Over the past 18 months there has been a lot of successful work done to significantly derisk the balance sheet and we have made excellent progress in further securing our funding position. In terms of the acquisition of HBOS, there is continued strong progress on integration and we are on track to deliver ÂŁ2bn of run rate savings by the end of the year - ÂŁ2bn! As always, there are challenges ahead in an uncertain economy, in an industry faced with everevolving regulation, but we have great senior leadership and over 100,000 co-workers focussed on making this the best bank for customers, shareholders and colleagues.

Asian Voice & Gujarat Samachar - 2011

Yes, I am a big believer in transparency and as a publicly owned (with a large taxpayer holding) company, it makes sense that our shareholders understand how staff are remunerated. As an example of the transparency being increased all the time, at the beginning of the year we reached an agreement with Government under Project Merlin to disclose top executive pay levels and we have continued our commitment that the cash element of any bonus will not be more than ÂŁ2000. Q: People seem to think all the banks were bailed out by the public. Can you explain the situation for instance with your own bank? We are thankful for the Government for the support it has given us and the banking sector in general. The liquidity facilities have been offered on commercial terms and we believe the Government will, over time, secure a good return for the taxpayer on the investment it has made in the group. The banks accept responsibility for their role in the crisis. We acknowledge there are lessons to be learned and we are playing a full part in the reforming process. We, like all the banks, have a major interest in helping to work through with the authorities the appropriate reforms, including their implementation.

Alpesh-Lloyds_A4 Temp 16/05/2011 14:55 Page 41

Q: What about the criticism that banks are not lending to businesses? This doesn't make sense given that banks can't make money? Lloyds recognises that Small and Medium sized Enterprises (SMEs) will play a vital role in returning the UK to good economic health. For that reason, we are absolutely determined to support customers, who have viable business plans, and wish to borrow. We continue to approve 8 out of every 10 lending applications, which is consistent with our long term trend. More importantly, and something I am particularly proud about, Lloyds' stock of lending to SMEs has actually increased in each of the past 4 years and importantly, continued to do so over the past 12 months (despite the market contracting as a whole!). I see customers everyday and would love to share their stories of support and commitment with you. It's fascinating that no one seems to want to interview the 8 customers we say ''yes'' to, only the 2 that merited a ''no''! Q: Since the onset of the credit crisis do you think it has got harder for businesses to open business accounts and access finance? Is it regulations and red tape, or are banks chasing fewer and fewer lucrative clients? I genuinely don't accept that it is harder to open a business account. Indeed, Lloyds has seen a record number of start-up businesses open accounts with us in the first quarter of 2011 (32,000 businesses). We are committed to helping at least 300,000 businesses start up in the 3 years leading up to December 2012 and are significantly ahead of that plan. We've also made it easier for customers to open a business bank account by training 2,500 retail branch staff nationwide to open business accounts and support the needs of start ups. In terms of accessing finance - and in contrast to many other banks - local lending discretion is an important part of our service and our local managers have the authority to agree loans up to ÂŁ500,000. Q: Our readers are the lucrative Asian community in the UK and many will be your clients - but aren't there too many banks chasing too few such clients? I cannot speak for the other banks, but as far as Lloyds Banking Group are concerned, we totally appreciate the value that the Asian Business community adds to the UK economy. Understanding diversity is key for any business and, with the impact of the emerging markets on the global stage, it is key that we have products and services that make banking more accessible to all our diverse customers.

We are proud to say that we have sponsored over 30 National Awards / Events to recognise inspirational leaders from the Asian community. The likes of the Asian Women of Achievement Awards which we have been sponsoring now for 7 years and The Asian Awards are two such opportunities for us at Lloyds Banking Group to help demonstrate our commitment to diversity and at the same time give us a great platform to network and bring businesses together from all sectors.

The feedback that I receive suggests that the competitive environment is a good one for this customer set. Q: Why are more bankers not defending themselves? Let me answer that from the Lloyds' perspective. Our priority must first be to do the right thing to support customers that have sustainable operating models - and we are doing that. Indeed, that is not my judgement; it's the view of our customers! Just last week Lloyds Banking Group won an award for being the UK's 'best bank' and who awarded us that? The customers themselves! It was the result of the largest customer survey of UK Financial Directors of its kind and it cut across all sectors and geographies. Interestingly, some press derided it, without ever acknowledging that it was the voice of the customer... how does one ''defend'' against that? Q: If you had to say something in defence of the bankers - what would it be? What's good for our customers is good for us. The banks that will emerge from the financial crisis in best shape will be the ones that do the best job for customers and have put themselves on a sound, sustainable financial footing. Our task is to explain to people what we are doing to give customers the best products and services we possibly can.

Asian Voice & Gujarat Samachar - 2011

Kiran Patel_A4 Temp 16/05/2011 15:06 Page 42

Tackling Business Roller Coasters Reviewing some of the events of the previous month, reveals both a cause for celebration and concern and outlines that we are still in for an unpredictable and rocky ride ahead as far as the Small and Medium Sized Enterprises (SME’s) are concerned. ome of the headlines that have hit the news in recent days include, but are not limited to, the following:l Commodity prices collapse l Interest rate may rise earlier than expected l British Asians top the list of Sunday Times rich list l Home repossessions show an increase l German economy grew by a faster than expected 1.5% in the first 3 months of 2011 l Households in the United Kingdom may be facing the biggest drop in income for 30 years. The above highlight that there is a substantial amount of mixed news still floating around the economic climate globally and all businesses need to ensure that they prepare for the rollercoaster ride that still exists and is likely to continue for some time to come. For all businesses, it is imperative that you attempt to “recession” proof your business and prepare for the worst as a better prepared business is more likely to survive the rocky times ahead. It is imperative that you are not caught off guard and in ensuring that you are well prepared, the most important consideration should be to prepare a relatively realistic cashflow and profitability forecast on a monthly basis for at least 12 months. More importantly, it is imperative that the cashflow forecast shows a potential drop in turnover of between 10% and 20% and the effect of this drop on the business as a whole. Creating this kind of a scenario will only better prepare you for any potential unexpected situations that are likely to arise in the coming months. A review of the cashflow forecast should identify areas where changes can be made to the business in order to avoid any adverse downturn and in this respect, it is very important to ensure that a comparison is made on a regular basis between the forecast cashflow and the actual results and areas identified where improvement can be made in a timely manner should be actioned without delay. If the need arises, you may have to improve the management reporting systems in place in order to identify such indicators in your business. In times of austerity, it is very important to ensure

Asian Voice & Gujarat Samachar - 2011

Kiran D Patel, FCA is a Partner at Weston Kay Chartered Accountants that your business is kept as lean as possible and there are a number of areas that you can consider in doing so. The first major area of consideration would be the review of stock levels carried in the business and ensuring that there are no excess levels of stock held which only go towards tying up the liquidity of the company and eventually seriously affecting the cashflow. However, the balance has to be just right so that customer orders can be fulfilled without undue delay. It is important that to avoid cash being tied up in stock, you review your required stock levels on a regular basis either monthly or weekly, depending on the business, and ensure that there is sufficient stock levels to service the short term requirements of your customer base. Keeping in regular contact with sales staff and customers alike is also imperative in ensuring that the company is run in an efficient manner. Every company has customers that tend to cost more than they add to the bottom line. It is important to identify these customers and evaluate why they are not adding to the bottom line and attempt to make them profitable customers. If this becomes an impossible task, then it would be wise to consider handing them to your competition. It can only go towards making you stronger. In difficult times, successful businesses tend to be able to steer away from the volatile effects of the economic climate by understanding and keeping close to the business of their customers. It is very important to show that you care for your customers and understand how their business is being affected and consider ways in which you can help them in such times. It is important to remember that lasting relationships are built in hard times. In addition, it is imperative that new business and market opportunities are considered and the returns on such opportunities are thoroughly researched as when the business climate changes, customers’ requirements also change with it. In times of austerity, successful businesses need to review and consider the new market opportunities that are open for them in the economic cycle that they are faced with. In recessionary times, all markets have a tendency to shrink and successful small businesses in this situation are likely to be those who develop a strategy for growing their market share of a diminishing sector. Strategically, this would involve increased marketing and advertising and developing more dynamic ways of publishing your business and establishing a unique selling point that differentiates you from your competitors. An example would be for a restaurateur where

Kiran Patel_A4 Temp 16/05/2011 15:06 Page 43

their customers decide to eat at home or arrange takeaways. Survival can only be achieved by creating a positive experience for the customers who do visit. It is imperative that you give the customer the best experience you can and in this respect, attention to detail is the key objective. Details such as immaculately clean facilities, courteous staff, eye contact, impeccable service and good food. The quality of the food has to be better than that offered by other restaurants. In such times this will only go towards improving the customer base over the longer period. Although cost cutting is an important exercise, it can also be short sighted in terms of the hiring and firing of staff. It is important that the business identifies key personnel and ensures that there is sufficient reason to retain them. At the same time, it is also important that the existing staff strive for improved efficiency and there is sufficient training available to them in order to understand the new markets and the changing markets in which they are operating. In addition, it is important to stay positive and continuously research into the potential of taking on new staff by looking around for people who have been made redundant from other businesses and assessing whether there is any talent to be added to your organisation. A recession does create a pool of highly talented staff that are likely to take the business to another level. Finally, it is imperative to understand that the business is managed by individuals who are key to its oper-

ations. To this extent, it is very important to ensure that your personal credit ratings remain high since in times of austerity, the borrowing levels available to businesses from banks tends to depend on the personal credit rating of the proprietors. It is important to ensure that your personal expenditure levels are maintained at an affordable amount and the bank or any other lending institution does not have a reason to charge you more money for being late on payments or defaulting on terms of borrowing. In conclusion, taking a few small steps towards creating an efficient, lean and mean business do go a long way towards ensuring that the ride through the rocky times ahead is as comfortable as can be possible. In addition, it is important that regular reviews are carried out on the strategy, concept and personnel, so that the changing times are fully catered for. Please note that the above is a general guideline to ensuring that difficult times do not lead to the loss of business and you must consider your individual circumstances and how you can ensure your business does not suffer and that you create a competitive edge where others are struggling, on a regular basis for survival and prosperity. Kiran D Patel FCA is a Partner at Weston Kay Chartered Accountants. If you would like a more detailed review of your business and how efficiency can be achieved please contact Kiran Patel on 020 7636 7493 or email him at k.patel@westonkay.com.

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Asian Voice & Gujarat Samachar - 2011

John Cumming Ross _A4 Temp 16/05/2011 15:00 Page 44

New self assessment penalties For late filing of Tax returns and late payment of Taxes File & Pay on Time Or Else…Pay Heavy Penalties t has always been essential for self-assessment tax returns not only to be accurate but also submitted on time. The new changes to the penalty regime for both late returns and late payment of taxes came into effect from 6 April 2011. This will mean that taxpayers will have to pay even more attention to their tax affairs. Penalties and surcharges for late filing of tax returns and payment of taxes changed under the Self Assessment regime about 15 years ago. For tax returns up to and including the year ended 5 April 2010 the late filing penalty for a tax return not submitted on time was lesser of £100 and the balance of tax outstanding. This meant that if a tax return was not submitted by the due date, by making a tax payment to cover the estimated liability one would avoid the £100 penalty. Under the new framework which applies from 2010/11 tax returns, the penalties for late submission of tax returns and payment of taxes will soar drastically and the penalty will no longer be ‘capped’ at the lower of £100 and the balance of tax outstanding.

The new penalties for late filing of tax returns as from 6 April 2011 are as follows: Day one Initial penalty of £100 - even if there is no tax to pay or all taxes due have been paid. Over three months late £10 each day - up to maximum of £900. Over six months ate £300 or 5% of the tax due, whichever is the higher. Over twelve months Further £300 or 5% of the tax due, whichever is the higher. A higher penalty of 70% of the tax due where a person has deliberately withheld information necessary for HMRC to assess the tax due. The above becomes a maximum 100% penalty if the behaviour is deliberate with concealment

The above deadlines and penalties also apply to each partner in a partnership. The new penalties for late payment of taxes as from 6 April 2011 are as follows: Over 30 days late Initial late payment penalty of 5% of the amount of taxes unpaid Over six months late Further late payment penalty of 5% of the taxes that are still unpaid. Over twelve months late Further late payment penalty of 5% of the taxes that are still unpaid

The above penalties are levied in addition to the interest that is charged on all outstanding amounts, including unpaid penalties. It is, therefore, important that any taxpayer who has not yet filed the 2010 tax return (or indeed any returns still outstanding for earlier years) should bring their tax affairs up to date urgently. Whilst these changes are not retrospective, 2011 returns cannot be submitted until returns for earlier years are filed. The tax compliance has changed over the last 15 years since the advent of Self Assessment regime with increased penalties for non or late filing of tax returns and payment of tax liabilities. The new rules mean that the more you delay the more you will pay. In view of the above punitive increase in the penalties, it is necessary that the tax payers is more proactive in getting their tax affairs up to date and ensuring that the tax returns are correct and filed on time as well as paying the taxes by the due date Mrs Vasanti Patel is a director at John Cumming Ross Limited, Chartered Certified Accountants and can be contacted on 020 8864 6689 or e-mail vasanti.patel@jcp.uk.com

Asian Voice & Gujarat Samachar - 2011

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Kaushik Desai_A4 Temp 16/05/2011 15:04 Page 46

Entrepreneurs’ Relief Successive governments, whether they are Conservative, Labour or even a coalition (currently Conservative and Liberal Democrats), feel the urge to give tax incentives to entrepreneurs as this is one way of encouraging individuals to either start or purchase businesses and then grow them – the government coffers then receive income tax and national insurance on the employment of people by the business, income tax/corporation tax on the profits of the business and VAT on the sale of the business’s products or services. The form in which governments give incentives is to reduce the tax payable when the entrepreneur sells the business. he best and liberal capital gains tax rules for the sale of business assets were introduced by the Labour government (taper relief) where, at one time, the capital gains tax rate was 10% on a business asset provided you held it for just two years whilst for a non-business asset the tax rate could be as high as 40%. Taper relief was replaced by entrepreneurs’ relief with effect from 6 April 2008. Broadly, the relief reduces the amount of capital gains tax payable on the sale of all or part of the business, the sale of the business assets after the business has ceased or on the sale of the shares in the business and “associated disposals”. The relief is available to individuals and trustees subject to qualifying conditions being met. The maximum amount of gains that can be included for relief made by a particular taxpayer is capped for the taxpayer’s lifetime. This lifetime cap was set at £1m for gains made up to 5 April 2010, increased to £2m for gains accruing from 6 April 2010 and increased to £5m from 23 June 2010. The limit has been further increased to £10m from 6 April 2011. This means that on a capital gain of up to £10m, the tax liability is just an effective 10% - it is therefore potentially worth £1.8m per taxpayer. In addition,

Asian Voice & Gujarat Samachar - 2011

Kaushik Desai, is a Principal in Chown Dewhurst LLP

unlike retirement relief, an entrepreneur can build up a business, realise a gain and move on to the next business to realise a further gain without reaching retirement age. The entrepreneur will continue to pay capital gains tax at 10% provided the total gains do not exceed £10m. Entrepreneurs’ relief is available in respect of gains made on qualifying business disposals held for one year before the date of disposal. The relief is for gains arising on the disposal on the whole or part of a trading business (including professions and vocations) that is carried on by an individual either alone or in partnership. Where a business is not disposed of as a going concern but simply ceases, relief would be available on gains or assets formerly used in the business and disposed of within three years of cessation of the business. The relief also applies to gains on disposals of shares and securities in a trading company (or the holding company or a trading group) provided that the individual making the disposal l Has been an officer or employee of the company, or of a company in the same group of companies; and l Owns at least 5% of the ordinary share capital of the company and that holding enables the individual to exercise at least 5% of the voting rights in that company.

Entrepreneurs’ relief is also available to trustees on gains on assets used in a business, subject to conditions. If an individual qualifies for entrepreneurs’ relief on the disposal of a partnership share or the disposal of shares or securities, then relief is also available in respect of an “associated disposal” of an asset which is used in the company’s (or group’s) business or by a member of a partnership. For example, if a company

Kaushik Desai_A4 Temp 16/05/2011 15:05 Page 47

director owns 5% or more of a limited company but holds the freehold asset (say a shop) from which the limited company runs say a pharmacy business, and the director sells both the shares in the company and the premises at the same time, the freehold asset may qualify as an associated disposal. The relief is restricted where any payment of rent was made for the use of the asset by the company or partnership for a period after 5 April 2008. There are detailed rules that govern the qualifying conditions that need to be made for the entrepreneurs’ relief to be available on the disposal of the business as outlined above and care needs to be taken to make sure these conditions are met, particularly where the entrepreneurs’ relief is sought on the disposal of the shares in a trading company. One issue that we come across time and time again is where the activities of a company or of a group include to a substantial extent, activities other than trading activity. This typically happens with a limited company which has not distributed the profits as dividends to the shareholders of the company to avoid higher rates of tax and the surplus funds have been invested into say properties which have been let out on rent. HMRC have stated that they consider “substantial” to mean more than 20%. It is therefore necessary to consider what should form the basis for measuring whether a company’s non-trading purposes are capable of having a substan-

tial effect. HMRC consider that this will vary according to the facts in each case but some or all of the following might be taken into account in reviewing a particular company’s status: l Turnover receivable from non-trading activities, l The asset base of the company, l Expenses incurred by or time spent by, officers and employees of the company in undertaking its activities. Specialist advice is required to ensure that you qualify for entrepreneurs’ relief and you need to review your business structure to ensure that when you sell your business, you are able to make use of one of the most valuable reliefs available to you to reduce the tax burden.

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Asian Voice & Gujarat Samachar - 2011

Sow & Reap_A4 Temp 16/05/2011 15:22 Page 48

Half A Chapatti Is Better Than No Chapatti Commercial property has been an Indian favorite, both as a main focus and or as a side line business. Many have taken advantage of the SIPP rules and used pension money to invest. commercial property is one where there is a commercial element in the building or the whole property is commercial, meaning commerce is taking place as opposed to the property simply used for living, residential purposes. A commercial agreement is a long term tenancy as opposed to an Assured Shorthold Tenancy which is the tenancy on a Buy To Let property. Purchasing a commercial property means you have a tenant with whom you typically have an FRI contract meaning they look after the property and all cost associated with it. In summary when purchasing a commercial property you are purchasing an investment which is more like purchasing a bond than a property. This is because commercial investment takes away the hassle factor generally associated with the purchase of a residential property. When purchasing a commercial investment the term, uplifts and their frequency, payment terms, break clauses are all predefined in advance, this is why these types of investments are preferred by some investors. Generally the only time an investor needs to get involved is at the time of the rent review. I have heard it said by a stalwart of commercial property that even by purchasing a BTL property you spoil the name of investing, as they - due to the hassle factor involved - cannot be classed as a pure investment. The brown pound has been a dominating factor in the commercial auction houses, with groups of individuals becoming a dominant buying force at most commercial auctions. What fuelled this interest was an environment of abundant and cheap funding driven by securitization. This means once the money was lent the debt would be dissected and sold on therefore it was no longer the concern of the lending institution who lent the

Asian Voice & Gujarat Samachar - 2011

Suresh Vagjiani, Managing Director Sow & Reap

funds in the first place. These factors help drive prices up, as long as the prices keep going up the game carries on. I remember a Barclays commercial property being sold for 2.9% yield, this did not make sense from a buy and hold point of view as you would be losing money as time went on. It only makes sense from a buy and sell point of view as long as the market’s rising. The situation now is that many of the values on which banks lent money on have gone down, consequently many investors are holding on to investments where the Loan to Value covenants have been breached. This means the banks have a right to call in their loans. West Bromwich is a name which keeps cropping up in this regard, they have been particularly aggressive in dealing with this situation. Many of these investors have been making their payments and therefore staying out of the radar. The low base rate has helped them to keep their payments low and manageable. We have been riding on a base rate of 0.5% since March 2009, this will undoubtedly rise, the question is when. As the rates rise the tide goes out… and as the saying goes you don’t know who’s swimming naked until the tide goes out! Those who have breached convents and have no money to put into the deals will start to struggle with repayments and start to attract attention from their banks. From enforcing personal and cross guarantees to withdrawing the mortgage offers at the banks discretion, it will all become apparent what the small print means on a loan offer. Those details seem all so irrelevant when you are chasing the next deal and the last one’s netted in so much money. So the message is clear, do not keep your head in the sand. It is better to dilute your equity and reach out for other private funders before the bank takes possession and starts to dictate the terms to you. Many banks will negotiate, especially as they too need cash in to meet their own requirements. Better to have half a chapatti than no chapatti.

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Editorial & Advertising index_A4 Temp 16/05/2011 17:37 Page 50

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Crystal Ball where will you make money in 2011? Bond Market Bargains Spread Betting Evolves Understanding the Basics of Currency Trading Getting our ' Quantum of Solace' Technology That's making money transfer faster and efficient World Cup success was all about the mix of experience and youth Lyca from Mobile to Money The Unfinished Business of Globalisation Commercial Insurance designed for you The Accident compensation claims process Mortgage Broker Efficient Economical and Diligent India Realty Matters Property Investments Bricks & Mortar Location, Location, Location Achieving ones’ desired monetary goals Indian an exciting decade ahead Truett Tate- Exclusive Interview Tackling Business Roller Coasters New self assessment penalties Entrepreneurs' Relief Half a Chappatti is better than no Chapatti

Alpesh B Patel Aparna Ram Paresh Kiri Amit Patel Paresh Davdra Nilesh Raj Patel Subaskaran Allirajah Dr Dak Patel Alpen Patel Rakesh Shah Dinesh Shonchhatra Vikram Goyal

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Editor/Publisher: CB Patel Managing Editor: Kokila Patel Consulting Editor: Jyotsna Shah News Editor: Kamal Rao Chief Financial Officer: Surendra Patel Accounts Executive: Akshay Desai Advertising Managers: Alka Shah & Kishor Parmar Business Development Managers: Urja Patel, L George & Nikhil Gor Media Consultant: Rovin J. George Graphic Designer: Harish Dahya & Ajay Kumar Customer Service: Saroj Patel

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