The story on mergers and acquisitions (Paying the Price for Costly Buys, 6 August) claims that takeovers by Indian companies have destroyed shareholder wealth. However, will it not take years for our companies to build scale and acquire new technologies if they don’t buy other firms? A case in point is the JLR acquisition by Tata Motors. There might be teething problems currently, but without this move Tata Motors would have taken a long time to reach European markets or gain access to sophisticated technologies.
Nandan Kumar, Pune
Your argument is valid. However, we did not intend to question the merit of acquisitions. The focus of the story was on the period of consolidation that tends to drain shareholder wealth, especially in the case of large acquisitions. Eventually, as the problems are sorted out and economies of scale kick in, the acquirers derive a lot of benefits. We had suggested that investors consider avoiding such companies till acquisition pains are over and re-invest when the synergy is complete.
Your cover story on choosing a financial planner (Rescue your Money, 6 August) said that the fee-only revenue model for financial advisers is best suited to investors. I have been hunting for a planner for a few months, but all of them want a nominal charge for formulating the strategy as they claim their chief source of income is commissions. Should I opt for their services?
Gopal Krishnan, Chennai
It is true that a combination of fees and commissions is the most popular revenue model. The removal of entry load in mutual funds and the cap on commissions of Ulips is aimed to encourage advisers to earn more from fees than commissions. While it may take time to become a reality, this is no reason to avoid a financial planner. Apart from the other checks listed out in our story, make sure that you are aware of the commissions before you sign on the dotted line.
According to the story on off-season travel discounts (What’s Behind the Hot Bargain? 6 August), travel facilitators may not give accurate information about the hotels that are booked through their portals. Does this mean we should not trust them for hotel bookings?
Kaushik Roy, Delhi
No, this is not what we meant. The top portals keep tabs on the hotels they recommend, and if you do not like the place, they try their best to accommodate you at some other hotel.
I have been a reader of Money Today for the past couple of years. I compliment you on the minimal use of jargon, comprehensiveness of content and visual depictions (graphs, charts, etc.) I have learnt several important lessons from your magazine, such as the advantage of keeping insurance and investment separate, and that term plans are the cheapest form of life insurance. I look forward to more informative stories.
Nilanjan Das, Kolkata
