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06/11/2017 10/11/2017
 Why life insurance is a must for long-term financial security
You Only Live Once, more commonly known as YOLO, is a funny concept. It makes people do
extremely adventurous and sometimes ridiculously reckless things. While living in the now is
perfectly okay, shouldnt you be more responsible when it comes to your future if you live only
once? Andy Rooney, an American author, and journalist had said death is a distant rumour to the
young. While some millennials attest to the illusion that there is ample time to prepare for the
eventuality of death, many prefer other financial products over insurance because hasty returns
are a priority and want for them.

I recently struck up a conversation with a twenty-something man and he almost instinctively told
me that he would prefer to buy any other financial instrument but a life insurance policy for
productive use of his money. In his opinion, he can use the money he would otherwise use for
premiums and build a fund robust enough to provide him the security that an insurance policy
would. There is only one problem with this thought - insurance is not about investment and
returns. It is a tool for protection and it should be perceived in its true and correct form.

While the fact that India is a severely underpenetrated insurance market is not news, the extent
of underinsurance here is a different story. A 2015 Swiss Re report estimates that for every Rs.
100 worth of insurance required for protection, an average Indian spends Rs. 7.8, leading to a
staggering deficit of more than 92%.

Clearly, it is a concerning state of affairs for India. Indians are worrisome by nature and constantly
plagued by the ifs of life. What happens to my family if I incur a big loss in my business? What
happens to my family if I develop a terminal disease? We spend all our time worrying about these
risks, but how many of us actually buy protection to secure our loved ones if any of these
scenarios are to become a reality?

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 production.

If you look at it from a crude perspective, you hedge your risks every single day in some form or
another. A homemaker will buy a wider variety of food items and ensure a healthy mix of food
supplements in everyday food to ensure that the family members dont get tired of the diet.

You take simple precautions for your family like taking your spouse to a physician when ill instead
of relying on home remedies, investing in a good toddler car seat for your childs safety during
travel or child-proofing your house after your baby starts crawling, reminding your spouse to wear
a seat belt or carry a helmet and adhere to traffic rules. When you are prepared to take such small
precautions for your dear ones in everyday life, why do we hesitate before taking long-term
protection steps like buying a life insurance?

The perception that I will not reap the benefits of the premiums paid keeps many from buying an
insurance policy. Several people think life insurance is a costly affair. On the contrary, a term
insurance policy is the most cost-effective method to safeguard your loved ones in case of your
untimely demise. While it is crucial that you diversify your financial portfolio and have a mix of
risky and steady assets, dont leave out a term insurance policy.

You might believe that you can build a fund big enough to tide over your familys financial duties
in the event of your death, but a term insurance is an ideal instrument to do it. I recommend that
you do your homework, recognize exactly which product do you require and how much of a risk
cover you need. A term insurance will give you the peace of mind to live in the now. So, take the
plunge!

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 HOT PURSUIT
Ujjivan small fin bank to offer personal loans; note ban trouble to end soon: CEO

As the cash-heavy microfinance industry still reels from the impact of demonetisation on its
collections and disbursements, the new Ujjivan small finance bank is aiming to diversify its loan
products, improve collections and turn around its losses by the end of the year. We are looking
at personal loan products which we want to launch soon. We will also add 88 more branches from
the 100 so far next two quarters will definitely be about closing the tale, Samit Ghosh,
Managing Director and Chief Executive Officer of Ujjivan Small Finance Bank, told Moneycontrol.

Ujjivan Financial Services, the holding company and promoter of 100 percent subsidiary Ujjivan
Small Finance Bank, narrowed its losses to Rs 11.95 crore for the second quarter of 2017-18 from
that of Rs 73.01 crore in the same quarter of previous fiscal. The microlender-turned-small
finance banks loan book grew marginally by 6 percent over a year ago and 4.1 percent from the
previous quarter at Rs 6,364 crore. Ghosh expects the loan book to grow by 20 percent by year-
end with the aggressive push at asset diversification and revamping the banks affordable housing
and micro and small enterprise financing business. We have hired new leadership talent as well
and expect that to grow significantly, he said. It will also target a deposit base of Rs 4,500 crore
by year end, from the current Rs 1,349.1 crore.

Ujjivan has also set up a specialised collection team of over 300 people to look at the portfolio
which has overdues beyond 90 days.Last quarter we collected about 15 crore. In October itself
we collected about 7 crore. So we expect a lot of NPAs to come back (upgraded as standard),
Ghosh said. Post demonetisation, the defaults in most microlenders books shot up owing to
unavailability of cash with borrowers. Ghosh explained that in a branch of 10,000 customers, the
defaults rose from 100-200 to 1,000-1,500. He sees major competition from banks like Bandhan
Bank, IDFC bank and now IndusInd Bank, which have recently acquired other microfinance
instutions.

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 Aadhaar-verified passengers can now book 12 railway tickets a month online

Indian Railways has increased the monthly cap on tickets booked on the ICRTC portal from six to
12 for Aadhaar-verified passengers, officials said. The move, which came into effect on October
26, is believed to be an innovative way for the railways to encourage passengers to link their
Aadhar numbers to their online booking accounts on IRCTC.

IRCTC officials said passengers can continue to book up to six tickets a month without validating
their Aadhaar cards. If the number goes beyond six, the Aadhaar number of the user and one of
the passengers should be updated in the IRCTC portal, an official explained. Users on the IRCTC
portal have to click on Aadhaar KYC under the 'my profile' category and update their Aadhaar
number.

A one-time password (OTP) will be sent to the mobile number linked to Aadhaar and should be
entered for verification. In addition, the Aadhaar number of any one of the accompanying
passengers should also be updated under the master list. This will be validated through an OTP.

Users can store the names of verified passengers accompanying them on the 'master list'. This
should be done before starting the process for booking more than six tickets a month, officials
said. The move is expected to eliminate malpractices in ticket bookings as touts and travel agents
cannot create fake user IDs anymore. In the IRCTC portal, six passengers can be reserved on a
single ticket under general quota while Tatkal bookings allow four passengers per ticket.

The railways had announced in December last year that registration of Aadhaar with IRCTC was
mandatory to avail concessions from April 1, 2017, but dropped the idea after opposition from
various forums.

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 New safety, emission norms will make petrol cars costlier by at least Rs 40,000

New cars will cost a lot more than today when the industry adopts more than half a dozen
changes such as mandatory fitment of passive and active safety features and emission related
costs in the vehicle. The automobile industry expects such safety features and upgradation to new
emission norms will push up vehicle costs by at least Rs 40,000 on petrol cars and Rs 80,000 on
diesel cars by April 1, 2020.

Raw material prices and forex-related cost escalations are likely to make cars dearer by another
Rs 20,000 -- considering an annual average car price rise of about 1.5 percent. Hence, in the three
years to 2020, the effective price rise may be as high as Rs 50,000 considering this parameter
alone. Carmakers will have been mandated to fit in air bags, anti-lock braking system, high speed
alert mechanism, reverse parking assist and seat belt reminder in all cars produced after July 1,
2019. The move is part of the government's aim to curb fatalities caused in road accidents.

As per government data more than 140,000 people die on Indian roads every year in cases of
vehicular accidents which is 400 times the number of deaths the country witnessed in terrorism-
related cases in 2016. In about 78 percent of such cases, the accident was caused due to drivers
fault. While some carmakers offer dual front airbags (for driver and passenger) as standard across
all variants on some models, airbag protection will become mandatory for all variants of every
model sold in India less than two years later. Each airbag fitment, along with wiring harness, costs
around Rs 10,000.

While Bharat NCAP (New Car Assessment Program), the India equivalent of Europe's Global NCAP
of Europe, will lay guidelines for crash testing of vehicles, the government has formed instructions
for passive safety such as reverse parking sensors. Such fitments will cost a minimum of Rs 1,000,
whereas a unit equipped with camera and display will cost around Rs 8,000.

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 How an Indore cloth trader built a snacks company now valued at Rs 2700 crore

It was in the year 1992 that Amit Kumat, now 48, returned from the US after a masters degree in
science from Louisiana State University, determined to make a difference in India. Back in
hometown of Indore, he could not find a job in an economy which was in shambles. He started
assisting his father in his wholesale cloth shop in a busy bazaar of Indore selling stockpiles of
nylon, cotton and linen by the tonnes.

Those were the best two years of my life which taught me how to sell to an Indian customer who
is extremely price conscious, says Amit Kumat, now CEO of the Rs 900-crore company Prataap
Snacks, which owns Yellow Diamond brand of chips, namkeens and snacks. The company listed on
BSE in September, this year and boasts of a valuation of about Rs 2700 crore on the Indian
exchanges with Salman Khan as Yellow Diamaond's brand ambassador.

Coming back to Kumat's story. The cloth business did well which led Kumat to start expanding in
various areas. He started an SAP training institute, a chemical dye business and even a website
called dealinchem around 1996-1999. Come dot-com bust and all businesses started collapsing
like a stack of cards. This landed the Kumats in neck deep of debt of over Rs 18 crore.

There were days where I had to think twice over whether I should take a bus or simply walk.
There were days where I used to wake up and wonder what to do all day as our offices had shut
down, says Kumat.

That is when Amit approached a family friend and a classmate of his elder brother Apurva Kumat
for an investment of Rs 15 lakh in setting up a snacks business out of Indore. Arvind Mehta, a
family friend, who had a real estate business agreed to become a partner in the snacks business.
Kumats started getting cheese balls manufactured in Lucknow, and selling them in Indore and
other parts of the city.

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The snacks business clicked. The trio set up a chips making unit in Indore and started making
potato chips by the thousands every day giving competition to market incumbents such as Frito
Lays, in certain pockets. In 2006-07, they launched Chulbule, a rival to Kurkure, a popular snack
made for the Indian palette by Pepsico India. Seeing the success of Yellow Diamond, Sequoia
Capital, a globally renowned venture fund approached them for investments in 2009.

However, the Kumat brothers and Mehta waited almost 18 months before saying yes to a USD
30 million investment in the company. With the money, they installed a chips making unit, a
potato rings making plant and a namkeen production unit. Now Rings constitutes almost 42
percent of the business and chips about 26 percent. The company makes about 40 lakh packets of
rings a day with a toy worth Rs 0.50 inserted in each packet.

The assembly machine inserts a toy in each packet. Kids are the biggest consumers of Rings, with
each packet costing just Rs 5 for the consumer, Sumit Sharma, the company CFO informs me. Its
now lunch time. The company management invites me to their daily lunch routine. Lunch is made
each day in either the home of Kumats or the Mehtas. The cooks decide amongst each other on
their weekly turns.

At 2 pm every day, office boys come with steel hot-cases of freshly cooked dal, curry, rotis, rice
and papad to the boardroom. Plates are laid and the food is served hot to the top management,
which includes the three founders - Amit and Apurva Kumat and their family friend Arvind Mehta.
Despite over 21 years of working together, the top management eats together every day. Its very
unlike other MNCs where food is served in the cafeteria or inside the cabins of the top
management.

Perhaps this is the way, the company management bonds and stays together in thick and thin.
The companys name was earlier proposed to be Diamond. However, the trademark was found
to be registered thus forcing them to suffix Yellow, Amit Kumat informs me during the working
lunch. This also made perfect combination as Arvind bhaiyya believes in numerology and it
exactly made 13 digits, he adds while Arvind Mehta relishes the homemade besan laddoos.

The company which started with just three people now employs about 750 people directly and
about 3,000 people indirectly through contract rolls. After lunch, we travel to a nearby plant
making a new product for the Indian market - chocolate pasted jam biscuit. As I enter the air-
conditioned plant, fragrance of a bakery engulfs me. Fresh wheat and maize flour dough is being
made by the assembly plant which converts it into biscuits.

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