August 2011 – Page 2

Recurring Deposits: Tax and Interest Rates

This is another post from the Suggest a Topic page, and this time weâ€™re going to take a look at Recurring Deposits.

The original comment had a question on how tax is calculated on recurring deposits, and unfortunately I didn’t get any authoritative information on that. I did speak to one person who described how this will be calculated, but he wasn’t entirely certain himself.

So I will describe the tax on recurring deposits based on what he told me, and my own understanding and interpretation of what he said. I don’t know how accurate this is and if any of you have any good links or have practical experience, please do leave a comment.

Tax on Recurring Deposits

First, what I do know for sure – RDs are not tax free!

While doing research for this article I came across a few forums where people were asking if interest income from RDs is tax free or not. I donâ€™t know what the origin for the question is but it could be people confusing no TDS with any tax at all.

Banks donâ€™t deduct tax at source on RDs but the interest itself is taxable like other interest income. It will be added to the rest of your income and taxed at your slab.

This is what I think will happen

If you take a RD for the duration of over a year, say 2 years – then you will have to see how much interest accrues to you in one financial year, and then declare that interest as part of your return and pay tax on it.

So, even though you are still paying installments for the RD, and it hasn’t matured yet, you will need to declare the income that has accrued to you, and pay tax on it.

You add the interest income to your salary, and then pay tax on your regular tax rate. The interest earned can be calculated using a calculator such as the one on the Corporation Bank website. Â

Let me reiterate that Â I have never done this myself, and I am not a 100% certain if this is the right way or not – please do leave a comment if you know otherwise.

Here are some other things I found about RDs.

Interest rates on Recurring Deposits

I was going through the interest rate page of ICICI Bank, and saw that they give interest rates of 8.25% on RDs of 12, 15, 18, and 21 months, but they give 9.25% on a 390 day fixed deposit.

A few other bank websites said that they offered RDs at the same interest rate as the fixed deposit, but I think that means exclusion of special interest rates that banks give on deposits of 390, 555, 400 day maturities etc., and since these are the maturities that give you the higher interest rate, it looks like the interest on a RD will be lower than a fixed deposit.

Effect of Direct Tax Code on Recurring Deposits

Iâ€™ve seen that sooner or later someone comes along and asks how DTC will affect a particular product, so I thought to include this here.

There are no tax benefits of investing in RDs, they arenâ€™t covered under Section 80C, and the interest is not tax free either. So, there are no tax benefits of investing RDs that will be affected negatively by the DTC. The tax slabs will change in DTC, and since interest income from RDs are going to be taxed according to your income slab â€“ thatâ€™s the only effect that DTC will have on RD. In my opinion, this is not material or something that will make a difference in your decision to opt for a RD or not.

Stopping Recurring Deposits Early

Banks allow you to stop your recurring deposit earlier than the maturity period, but like fixed deposits, you get a lower interest rate than what you have settled for, and in some cases there is some penalty as well, which is also called a service charge in some banks.

Conclusion

In my mind, the difference in interest rates makes the fixed deposit a better option than a recurring deposit, and probably the only reason to do a recurring deposit is to get into the habit of saving and putting aside a fixed sum every month. Even so, I think shorter dated RDs are much better than longer dated ones because after a year or so you can take the maturity amount and open a fixed deposit where you will get a better return.

Top Indian Companies by Market Capitalization

Coal India, which had the largest Indian IPO of about $3 billion last year replaced Reliance Industries as the company with the largest market capitalization today.

I read a few very excitable articles about how great this news was, and how amazing it is that a company that listed less than a year ago has now become the most valuable company, and a few other things like that.

While I don’t share that enthusiasm; I was curious to see a good list of big Indian companies, and specifically – the top Indian companies measured by market capitalization.

The best link I found was on Wiki, but that seemed a little dated, so I have created one of my own.

I used the companies from Wiki, then looked to see if there were any companies in the Sensex or NSE Nifty that weren’t part of it, and came up with a list that seemed like it would contain the biggest Indian companies.

Then I went to Google Finance and got the market capitalization data from there. Due to the methodology, there might be some errors, but as best as I could collect – here is a list of the top 35 Indian companies by market capitalization on 17th August 2011.

S.No.	Company	Market Capitalization in Rs. Billion	In Millions USD at 1 USD = Rs. 45
1	Coal India	2,510.00	55,777.78
2	Reliance Industries	2,470.00	54,888.89
3	ONGC	2,370.00	52,666.67
4	TCS	1,970.00	43,777.78
5	ITC	1,580.00	35,111.11
6	Bharti Airtel	1,510.00	33,555.56
7	NTPC	1,450.00	32,222.22
8	Infosys	1,400.00	31,111.11
9	State Bank of India	1,380.00	30,666.67
10	ICICI Bank	1,050.00	23,333.33
11	L&T	1,000.00	22,222.22
12	HDFC	911.52	20,256.00
13	NMDC	875.00	19,444.44
14	BHEL	870.00	19,333.33
15	Wipro	844.00	18,755.56
16	Indian Oil	763.00	16,955.56
17	GAIL	556.00	12,355.56
18	Sun Pharmaceuticals	501.00	11,133.33
19	TATA Motors	493.00	10,955.56
20	Jindal Steel and Power	482.00	10,711.11
21	Axis Bank	481.00	10,688.89
22	Power Grid Corporation	477.00	10,600.00
23	Mahindra and Mahindra	442.00	9,822.22
24	SAIL	440.00	9,777.78
25	Tata Steel	426.00	9,466.67
26	Punjab National Bank	331.00	7,355.56
27	Oil India	317.00	7,044.44
28	NHPC	304.00	6,755.56
29	DLF	301.00	6,688.89
30	HCL Techonologies	289.00	6,422.22
31	Hindalco	273.00	6,066.67
32	Tata Power	255.00	5,666.67
33	HDFC Bank	204.9	4533.33
34	Grasim	194.00	4,311.11
35	Power Finance Corporation	183.00	4,066.67

The interesting thing about this list is how quickly it thins out – there just seem to be 20 odd companies that are worth $20 billion or more. I thought there will be more than that, and a slightly dated list from Wiki of top Chinese companies show that they have about 40 such companies. Also, the biggest Chinese company – PetroChina is about $200 billion, which is about as much as the top 4 Indian companies.

I will update this list from time to time, and try to keep the data fresh, and if you see any errors in it then please leave a comment and I’ll correct it.

Update: There was an error in the values ofÂ HDFC and HDFC Bank which has been corrected now. Thank you Baskar.

Manappuram Finance NCD Review

It’s raining NCDs these days, and the latest company to offer its bonds is Manappuram Finance. Most of you will know them by their ads on TV about gold loans, and that’s the business they’re in.

They give loans against gold to customers in the rural and semi urban areas, and have been in this business since 1999.

They are primarily a South Indian company as 86% of their loans are made in Andhra Pradesh, Karnataka, Tamil Nadu and Kerala.

Manappuram Finance was incorporated in 1992, but the business has been in existence for quite some time. The gold loan business, and rising gold prices have been a boon for them as their revenues have increased rapidly in the past few years driven by that business. On March 31st 2011 their portfolio of gold loans stood at Rs. 63,705.41 million, which rose from Rs. 18,512.26 million the year before, and was Rs. 4,000.63 million in the year before that.

This is about 52.97 tons of gold as at 31st March 2011, 22.45 tons in 2010, and 13.34 tons in 2009.

Their revenues last year were Rs. 11,815.26 million, and a profit after tax of Rs. 2,826.64 million. You can see this is a fairly big company with a pretty decent profit margin, and that shows in its credit ratings which is P1 + from CRISIL for short term debt instruments which is the highest rating a company can have.

These are some of the things that have been going well for the company, now let’s take a look at some risks that the company faces as described in their prospectus.

Risks Mentioned in their Prospectus

Manappuram lends by keeping gold as a pledge, so of course the big risk they face in their business is if gold prices took a dive. Other than that you have seen that there are other NBFCs getting into the loan pledging business and the competition is really heating up here.

An interesting risk that I saw in the prospectus was deficiencies found by RBI when they had conducted a routine inspection. Manappuram Finance auctions the gold pledged against loans which borrowers aren’t able to repay, and RBI found that there was a big time gap between when the loan became overdue, and when they conducted the auction.

RBI also found that some of their branches didn’t have seemingly basic information about who won an auction, how much did they bid, mode of payment etc. There was also one case where RBI says that Rs. 95.86 million from an auction proceed were ploughed back in the company as working capital where it should have been returned to the concerned borrower.

Another RBI routine inspection in June 2011 found deficiencies in their loan documentation. Some branches didn’t have sufficient identity documentation, and others didn’t have records of the scheme under which the loans had been disbursed.

Other notable risks include the promoters having given a personal guarantee for loans worth Rs. 6.63 billion, and if the lenders require any alternate guarantee then that would put the burden on Manappuram to come up with either alternate source of funding or come up with adequate guarantee.

The promoters have also taken a loan of Rs. 1 billion from Religare by pledging their shares in the company. NSE website shows that they have pledged about 20% of their total shares.

As I’ve written before – this is a red flag that I like to watch out for because in my opinion the last thing you want to do is to pledge your ownership stake by taking loans against shares.

These were some things that stood out for me as I was going through the prospectus. Now, let’s take a look at the NCD itself.

Manappuram NCD Terms

The minimum application is Rs. 5,000 and the issue will open on August 18th 2011, and close on September 5th 2011.

The issue has been rated CARE AA- from CARE and BWR AA- by Brickwork. The rating by Brickwork stands for high degree of safety regarding timely servicing of financial obligations, and the CARE rating also stands for high safety for timely servicing of debt obligations.

This NCD will be listed on the BSE, but not on the NSE, and here are the other important features of the Manappuram NCD.

These bonds are secured in nature, and let me reiterate that it doesn’t mean your money is guaranteed by the RBI or anyone else, but simply means that if the company were to go bust, there are some assets which are allocated towards this debt which will be sold off to recover your money. Now, those assets may sell for less than what the company has marked them for, or there could be other creditors who also have claim to them so you don’t get the full money back.

Secured debt is better than unsecured debt, but it doesn’t mean a guarantee in the sense that a lot of people think of it.

So overall, the good thing about the Manappuram NCD is that it’s giving higher rates than the other NBFC NCDs that I have reviewed here, and the credit rating is good as well, but the negative factors are the deficiencies found by RBI during their routine inspections, promoter’s pledge, and managing as well as sustaining its rapid pace of growth.

Gold ETF in India – Performance and Volumes in Last Year

It has been over a year since I wrote my best gold ETF in India post, and since then the number of gold ETFs that are present in India have almost doubled.

There are a total of 11 gold ETFs currently present in India, and 4 out of these 11 were launched within the last year. The big change in this space has been the reduction in the expenses that sponsors charge their customers, and now you can see that almost all of them are on the same footing.

You will still see some performance difference in them because every gold ETF holds a small sum of liquid investments other than gold, and that makes a small difference on their returns.

In this post I will look at the performance, volumes, and expense ratios of all the gold ETFs currently traded in India. I couldn’t find the expense ratios of some of these funds, and instead of waiting out I have published this post now, and will update it as and when I find the information.

First up, here are the names, NSE symbols, 1 year returns as on August 12 2011, and their turnover on the same day.

S.No.	Name	NSE Ticker	1 Year Return as on Aug 12 2011	Turnover in Lacs as on Aug 12 2011
1	Quantum	QGOLDHALF	41.07	37.11
2	UTI	GOLDSHARE	40.84	341.83
3	SBI	SBIGETS	41.26	397.37
4	Axis	AXISGOLD	–	15.24
5	HDFC	HDFCMFGETF	–	288.75
6	Relianace	RELGOLD	41.08	440.82
7	Religare	RELIGAREGO	41.95	9.9
8	Benchmark	GOLDBEES	40.19	5,490.42
9	ICICI Prudential	IPGETF	–	14.17
10	Kotak	KOTAKGOLD	40.43	1,042.38
11	Birla Sunlife	BSLGOLDETF	–	1.64

Regular readers know that every gold ETF in India holds physical gold equivalent to the number of units that are issued in the market, and their price is thus dictated by the price movements of gold.

Since all these ETFs have the same underlying asset, the price movement is also quite similar.

Here is a chart that gives you a better visual of the performance in the last 1 year. Some of these funds are less than a year old, and that’s why you don’t see any corresponding data against their names.

Gold ETF Returns for 365 Day Period Ending Aug 12 2011

Continue reading “Gold ETF in India – Performance and Volumes in Last Year”

Freedom

I’m in the middle of reading one of the most amazing books I’ve read in a long long time called “In the Plex” – this is a story about Google and an insider look into a lot of things that they have done.

It has amazing insights into the ambition and daring of its founders, and the thing that hit me again and again is how free they are from the grips of conventional thinking. They and their team thought of everything in a new light, and came up with solutions from the ground up for so many things in so many areas that everyone was shocked including the incumbents in that field.Why didn’t Honda or Toyota develop a car that runs on its own?

Their thoughts and ideas don’t appear to be bound by tradition or convention, and I was reminded of these great lines that Steve Jobs delivered in a Stanford Commencement address:

Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice, and most important, have the courage to follow your heart and intuition.

It feels like these visionary men have a kind of freedom of thought that many of us strive towards in one way or another. We want to do novel things, break the shackles of the old way, and do something new and innovative.

That kind of freedom of thought is something that is grand, idealistic, even poetic, and it is worthy of a struggle to attain. But, there are lesser, more mundane freedoms that we strive for, and are worth the struggle.

Freedom from debt is a struggle that a lot of people are engaged in. I personally know a few people who have endured hardships due to the debt that they have or had in the past, and there is nothing more in the world that they would like than to live a debt free life, and not have to worry about the next house payment or business loan payment.

It’s not poetic, but it’s very real, and makes a very real impact on their life.

Our attempt to make ourselves more knowledgeable about the world, and understand our surroundings in a better light is a daily struggle. We go through several hours of reading, watching the news and talking to people for just one thing – to understand things a little better than how we understand them today.

Many of you feel a special kind of tingling when you learn something new – it makes you feel a certain way, it lights up a smile on your face. I feel it’s the reward for our freedom from ignorance. It’s the reward of a small victory won in a battle that we wage life long.

Then there are more personal struggles – the war that some of us wage to quit living a life that’s dependent on your next pay check. The freedom to aspire to a life where you don’t have to worry about getting your next pay check to pay your current bills. This is a meaningful struggle that will help you do something more with life than just stumbling through it.

Everyone knows what a difficult thing it is to overcome your fears. The fear of being wrong, the fear of looking like a fool in a room full of people, the fear of criticism, the fear of paying too much, the fear of paying too little, and every other kind of fear you can think of.

Of all the things that we fight against – fear has to be one of the biggest ones. It is as personal as it can be – no one can truly understand how you feel when you’re scared, and for a lot of things we would much rather not have others know of our true fears. Liberating yourself from one of your fears is a sweet sweet victory.

Sometimes, the fight is to make the world a better place, you donate blood, you spend time with your maid’s son teaching him English, you donate money to causes, you conserve water, you save paper, – you know your efforts are like a drop in the ocean, but you also know that mighty oaks from little acorns grow. You want to free the world of illiteracy, disease, and malaise. It is your struggle just as it is everyone else’s.

As I sit here, thinking about the meaning and nature of freedom, I feel that we wage daily struggles for freedoms against ignorance, fear, tradition, authority, hunger, poverty, and disease among many others, but we don’t pause enough to think if there is a shackle that we should be trying to free ourselves that we aren’t?

This is a good day to think about it.

Happy independence day!

Facebook Puzzles for the week ending August 14 2011

Here are the puzzles shared on OneMint’s Facebook page for this week.

1. “You will be glad to know that two of your brothers are getting married in the same month,” my uncle told me.

“What’s more, if you sum the two digits of the date of your younger brother’s wedding – you will get the first digit of your older brother’s wedding date. From thereon, you just need to add all three digits to get the last digit of your older brother’s wedding date. They have at least 7 days between them, so you won’t miss either of them.”

What are the two wedding dates?

2. The names of three countries are hidden below. How many can you spot?

Though Iâ€™ve seen the ranger many times, Iâ€™ve never had the courage to ask him what was on my mind till now.
Finally, I pointed to a spot not 10 feet away and I asked him â€œIs that a lionâ€™s den?â€ â€œMarks such as those are only made by bears, so you donâ€™t have to worryâ€ he told me.

Seeing the worried look on my face, he said â€œDonâ€™t worry, they can adapt pretty well living close to humans.â€

3. “Half the people here always tell the truth, and the other half always lie. Take these two for instance, I don’t know if they tell the truth, lie or one tells the truth and the other lies.”, I say.

That should be easy to figure out, I’ll just ask them!”, you say.

Which one of you tells the truth?
Viru: I do
Gautam: Me too.

Which one of you lies?

Viru: Not me.
Gautam: Me neither.

Do either of you ever tell a lie?

Viru: Yes
Gautam: No.

What can you tell me about them?

4. Puzzle:

I may be only half the size of Washington DC, but I have something they don’t.

Signed –
14 42 10 36 28 38 10 50

Who or what has signed this note, and what do they have that Washington doesn’t?

5. Which number comes next in this series?

2, 6, 3, 24, 5, 120, 7, 336, 11, 320

6. Which number is next in series?

The interesting thing about this week’s puzzles is that it is the first time that one question remains unanswered on the OneMint Facebook page – that’s number 4 in this post.

Market panics, decoupling and Neurogaming

It’s only appropriate to start this week’s links with the The Proper Etiquette for Market Panics at the Psy Fi blog. The post is about market panics, and how people behave in them in the face of uncertainty. They end up mimicking others who know even less, and that is one of the reasons of why chaos follows.

Sandip Sabharwal with more thoughts on decoupling – I linked to his earlier post about decoupling too, and this one is a good reminder of that idea, and one of the few things said about decoupling that makes any sense to me.

Business Standard reports that 540 tons of food-grains have been damaged this year – ridiculous, and sad.

Scott Adams writes about the engineer’s investment fund – the idea is that engineers who evaluate products of vendors have insights that other people don’t and this can be a good way to pick stocks. Like his other posts – this is a great thought experiment, and like all experiments you won’t know whether it will work or not until you actually carry out the experiment.

Hemant takes a look at the portfolio of the Indian president!

Here is a list of all the countries with AAA rating from The Big Picture.

Disney seems to have developed a technology called Surround Haptics that can make you feel sensations while you are playing a game or watching a movie. It sounds quite sophisticated and exciting when compared with what you have today.

Finally, this picture of a dog titled My sisters dog. In a couch. Looking british via @picturecool on Twitter.

Enjoy your weekend!

Introduction to share buy back in India

I got a few emails to write a general post on share buy backs yesterday, so here it is – an introductory post on share buy backs.

What is a share buy-back?

A buyback offer is when a company buys some of its shares from its shareholders and extinguishes them. This is usually done from shareholders other than the promoters themselves, and is most often a testament from the management and promoters on the strength of the company, and their commitment to increase the returns for the shareholders.

Why does a company do this?

Two main reasons come to my mind.

When a company thinks its share price is undervalued.
Eventual delisting.

When the share price is undervalued

They do this when they think that the share price is undervalued, or when they think that this is the best way to make use of their excess cash.

If they reduce the total number of outstanding shares then the EPS (Earnings Per Share) increases because EPS is PAT (Profit After Tax) divided by total outstanding shares.

If the EPS increases then the P/E multiple decreases, and when P/E decreases, the share price increases to bring the P/E back to the higher levels. This may not always happen, but theoretically this is what they are trying to achieve with a share buyback program. Other ratios like Return on Equity and Return on Networth also improve due to this.

In fact, I think only the Debt – Equity ratio can worsen due to this because now there is less of equity to support debt, but if a company does have a lot of debt in its books then its cash is much better utilized in paying that debt off and saving interest cost rather than buying back shares from its shareholders.

Eventual Delisting

Some companies, especially foreign owned companies get into buybacks because they want to eventually delist from the Indian stock exchange. Usually, they donâ€™t buy their entire outstanding shares at one go, but conduct these buybacks over a period of time and buy in tranches of 5 or 10%.

How does a company carry out a buyback?

The first step is that a buyback is proposed which is then voted on and approved by the board. Then they announce the buyback in a newspaper, announce a start date when the public can start tendering their shares, a last date of withdrawal, a close date, date of notifying when the offer is accepted or rejected, and finally the date when the shares are extinguished.

They also have to declare the price at which they will carry out the buy back and the number of shares that they will buy back.

Usually companies will only buy back a certain percentage of their outstanding shares from the public. This is really important because some people who are not familiar with how this process works end up buying shares with the hopes of a sure – fire profit, and later realize that only part of their shares will be bought back.

For example – Amrutanjan recently came out with a buy back where they said they will buy about 9 lakh shares from the market at Rs. 900. That was at a 17% premium from the day when the buy back was announced. Say in a few days the share moved up to Rs. 820, and you see it trading there knowing that the buy back is at Rs. 900. You mistake this as a risk free profit of Rs. 80 thinking that you will buy the shares and sell them back at Rs. 900 in a few days.

This won’t happen because usually there are more shares offered for a buyback than the company actually wants to buy.

In these cases they buy back the shares in the proportion of the over subscription. So you will only get a part of your shares bought back, and if the price comes down below your purchase price then you are stuck with the remaining ones. So, this is not a risk free arbitrage opportunity at all.

How do you participate in the buy back offer?

There are two types of buy back programs – one is done through purchase from the stock market, and the second one is done through a tender form.

When a company carries out buy back from the stock exchange, they just declare that they are going to buy shares from the stock market, and there is nothing that you have to do here (except perhaps hope for a gain in share price).

When the company offers to buy shares through the tender route – they will send a tender form to all its shareholders with instructions on how to fill the form and where they can mail or drop the form.

I have never done this so I don’t have any practical experience, but from what I have read you need to fill up a Delivery Instruction Slip with the trading and demat account details, attach it with the Tender Offer Form, and then drop it at one of the company’s specified collection centers.

The slip will contain the following details:

Depository Name
DP Name
Beneficiary Account Number
Beneficiary Account Name

After receiving a response from all its shareholders within the cut off date – the company will calculate how many shares it got, and in what proportion can it carry out the buy back. You will then be notified of the number of shares that are accepted and the money will either be deposited directly electronically or be sent by a check. I think how you receive the dividend is a pretty good indication of how you are going to get this money.

Conclusion

A share buy back means a company buying back its shares from shareholders other than promoters, they do it to increase the shares prices or Delist, and they are done by either buying in the stock market directly, or asking shareholders to tender their shares.

This is the what, why and how of a buy back, and I’ve tried to cover all aspects to the best of my knowledge.

As always, questions, comments and emails are most welcome!

Companies with plans to buy back shares in India

There are several filters that people use to alert them to good stocks. Taking note of great products and then finding out who manufactured them is one way; looking for good dividend paying stocks is another, and looking at companies who plan to buy back their own shares is a popular way as well.

The rationale behind this is that companies who are willing to buy back their own shares think that the shares are undervalued, and are investing in them. This is also an action that is focused on increasing the share values, so thatâ€™s another reason this method is used as well.

Just to be clear, this is not a list with only those companies that currently have buyback offers open, but also includes those companies that have concluded buybacks in the past. Thatâ€™s because the idea of this list is not to find companies that provide opportunities to buy shares from the market and then offer them for the buyback but to see if there are generally any companies here that can be good long term investments.

Here is a list with some companies I could find.

S.No.	Company	Max Buyback Price	Close Date
Â 1	Allied Digital	Rs. 140	17 Feb 2012
Â 2	Deccan Chronicle	Rs. 180	3 Jan 2012
Â 3	FDC	Rs. 135	25 Jan 2012
Â 4	HEG	Rs. 350	13 Mar 2012
Â 5	Infinite Computer Solutions	Rs.230	10 April 2012
Â 6	PVR	Rs.140	26 May 2012
Â 7	Reliance Infra	Rs.725	13 Feb 2012
Â 8	SRF	Rs.380	25 Feb 2012
Â 9	Zee Entertainment	Rs.126	23 March 2012
Â 10	Piramal Healthcare	Rs.600	13 Apr 2011
Â 11	Lakshmi Machine Works	Rs.2045	24 Feb 2011
Â 12	India Infoline	Rs. 99	07 Feb 2011
Â 13	Siemens	Rs. 930	13 April 2011
Â 14	Merck	Rs. 435	21 May 2010
Â 15	Aegis Logistics	Rs. 143	6 Feb 2010
Â 16	Amrutanjan	Rs. 900	18 July 2011

To be honest,Â I’veÂ never been a big fan of finding companies in this way because sometimes I feel that buybacks are announced more as gimmicks to jack up share price, and many times when you look at companies offering a buyback program in India â€“ you also find stronger competitors and that makes you think why not invest in those instead.

On the other hand, Iâ€™ve heard investors who have found good ideas this way, and since Iâ€™ve never had a post on this â€“ I thought Iâ€™d start a post on this topic here.

Iâ€™m sure there are several other buy back shares that Iâ€™ve missed â€“ do leave a comment if you know of any company that doesnâ€™t figure in this list.

India Per Capita Income 2010 by State

I came across India’s per capita income figures the other day, and it makes a very interesting read. The per capita income for India for 2010 is Rs. 54,835 which grew from Rs. 46,492 the year before.

The first thing that strikes you about this number is how low this number is – by aggregate GDP India stands number 9 or 10 in the world, but if you take the per capita GDP then India is a lowly 138 by IMF estimates, and 109 by World Bank estimates. CIA estimates rate it at an even lower 142.

In fact, if you look at the state with the lowest GDP – Bihar at Rs. 20,069 or about $456 – and compare that with other countries then it would come as low as 170 or so.

Bihar is also only about a seventh of Delhi’s GDP, and that reflects the disparity between the various states.

Here is the chart which breaks down the per capita income by state for 2009 and 2010. Wherever values are zero, it means that there was no data for that state in that period, and I had to make it zero in order to create the chart. (click to enlarge)

In this chart – Goa is doing well, and I think this is closer to reality than the high unemployment shown in the unemployment survey.

Apart from the low number, and disparity, the third thing that strikes me is the role of cities in the high GDP. The tallest towers belong to cities, and to me, industrialization, building cities, and moving the workforce out of agriculture into more industries, and services seems to be the only way to grow the GDP numbers, and generally improving the standard of living in the country.

A look at the countries with the highest per capita GDP confirms this because there aren’t any countries there that aren’t industrialized.

I’m interested to see what the break up of the GDP for each of these states looks like also. At present, I don’t know if that data is available somewhere but I’ll look for it. If you know about such a document then please do leave a link.

Finally, here is the data for the above chart in a format that you should be able to copy in Excel easily.

S.No.	State	2009 – 10	2010 – 11
1	Andhra Pradesh	51025	60458
2	Arunachal Pradesh	51405	0
3	Assam	27197	30413
4	Bihar	16715	20069
5	Jharkhand	27132	29786
6	Goa	132719	0
7	Gujarat	63961	0
8	Haryana	78781	92327
9	Himachal Pradesh	50365	58493
10	Jammu & Kashmir	30582	33056
11	Karnataka	52097	59763
12	Kerala	59179	0
13	Madhya Pradesh	27250	0
14	Chattisgarh	38059	44097
15	Maharashtra	74027	83471
16	Manipur	27332	29684
17	Meghalaya	43555	48383
18	Mizoram	45982	0
19	Nagaland	0	0
20	Odisha	33226	36923
21	Punjab	60746	67473
22	Rajasthan	34042	39967
23	Sikkim	68731	81159
24	Tamil Nadu	63547	72993
25	Tripura	35799	38493
26	Uttar Pradesh	23395	26051
27	Uttarakhand	59584	68292
28	West Bengal	41219	0
29	A & N islands	74340	0
30	Chandigarh	118136	128634
31	Delhi	116886	135814
32	Puducherry	88158	98719