"Maharaja" Time for a silent exit

When i say Maharaja, you know what i mean. If not it's Air India.

I don't know, but anyhow i don't consider it an airline anymore. What sort of airline is an airline that frequently change the route, that drops the profitable root for the private player to rule, take new route that was never existed earlier. It doesn't have the money to pay gas companies, lethargic empoyees hardly manage to move there ass are in a industry whose dynamics keep changing in every passing seconds, yet they do strike. Are these all symptoms of a flourishing airline?

Whenever I see Air India it reminds me of Tony Fernandese of Air Asia. OK the story as it goes when he tried to set up an airline in Malaysia and got a chance to meet Dr. Mahatir. he suggested him to take over the laggard existing airline instead of setting up a new one. Air Asia was in a mess when he took over and rest is history.

The point here is, if there is a bail out or loan given which is public money on a highly non-professional airline, for its employee to be in the safety cocoon of govt of India. I don't see any other reason. Rather than pulling, dragging it to run in a less loss mode why not dilute the stake and sell the major chunk to a private player to operate. And i am pretty much sure from very next day it will run on profit. There is no rocket science needed to manage the Airline. GoAir can go from 10 to 78more in few years, Indigo from few to few hundred, so why not Air India. And i am sure you know why not?

This is high time, govt should genuinely diversify it's stake in those sector or companies that no longer profitable or can't be managed by bureaucrats. You can't take the tax money to keep alive the dead sector who are in comma with no chance of revival just on ventilator support (public money).

it's intersting to know there are some companies owned by Govt of India that are into cements, salts, cotton and don't know where else.

Should you invest in ULIP ?

"Where principal gets eroded
along the time can't be
called as investment" - Me :)

This is exactly where the ULIP fits in. This article is written for the audince with little or no knowledge about the staock market and different mode of investment, and for them who are planning to do some investment for sake of saving tax or without it. I am damn confident that atleaset 8 out of 10 who have invested in ULIP (Unit linked insurance Plan) hardly knows how it function and what so bad about it.

It's like Mutual fund+Insurance in a single go. Since it falls in two category i.e. mutual Fund under SEBI reguration and Insurance under IRDA, so no one really bother to take care of this ULIP as a whole. And there is a reason of telling **ULIP are bad** and why it is bad?

Ok Assume Mr X is on a ULIP where he pays a premium of 20K per year. So if that ULIP has a Unit calue of 10 he will get 2000 units. As on when stock market goes up the unit value also increase. So if lets say the NAV is in proportion with sensesx. So if sensex goes up by 20% in 6 months so is NAV from 10 to 12 and your current asset should be 2000 X 12 = 24000 INR. But in reality it is not. The NAV will shoot up but not your asset.

1)Fund allocation: They use a funny word as fund allocation. if the ULIP says fund allocation is 60% that means the guy who just convinced you to take the policy will eatup 40% of your premium.

That means you invested =20000
Commision of the agent (40%) =8000

Net money that are invested is =12000

2) Account maintenance: Another jargon. They are maintaing a account for you and doing an investment. Its not free. Since they keep your money its there right to deduct to MAINTAIN the account. In simple terms to feed the executive, office maintenace and all. It can vary, no documentaioni found. In the tune of 3-10%.

So Now each quarter they will deduct lets say 5%, so annual 20% which translates to 2400, so after this

Net money invested is = 9600

3) Term Rider: its logical. They are doing insurance for you as well. So that premium is also going to be deducted from the premium. Again depends on what is teh sum you have insured. Assume 500 per year.

Net money invested is = 9100

This is the money that goes for investment. So the day you pay the premium you make sure you loose more than 50% irrespective of the market. So if the sensex goes from 9000 to 18000 under a hypothetical case, and propotionately the net investment goes to 18200 but cant be able to touch your principal. Now you decide is this a worth investing. And can you believe the amount of money they are managing in India 15000 crore.

Let me be silent about dozen other hidden rules when u want to pre-close the account. You are gone.

Note: Finally last month SEBI has banned 14 organisation to stop ULIP with immedia effect

Cheers