Capital Wealth

India has long been an agriculture – centric economy, with the agriculture sector providing employment to about 58% of India’s population and contributing 17-18% to the country’s GDP. Yet, the agriculture sector is one of the most unorganized sectors in Indian economy. The government of India, taking cognizance of the issue, set up a high - powered committee under the chairmanship of Dr. Y.K. Alagh examine the issue. Based on the report submitted by the committee, in 2002, the Ministry of Company Affairs introduced a bill for amendment of Companies Act, 1956 and inserted Chapter IX-A, which opened the doors for the primary producers to organize themselves and gain maximum profit from the economy. Producer Organization (PO) A PO is a legal entity formed by primary producers, viz. farmers, milk producers, fishermen, etc. It is a hybrid between a private limited company and a cooperative society, taking on the strengths of both these forms of organizations. A PO is a company f...

Proper due diligence is a must before investing in any asset. We are now clear with the pros & cons and taxation of REITs . This last part will finish up all that is remaining for you to invest in an REIT. How to choose a good REIT – Choosing the right REIT is very crucial. An investor must do proper due diligence before investing his/her money. The following points will guide you in making an informed decision -  1. Management -  The investor should investigate the track record of managers of the trust to see whether they have any experience in managing any successful REITs, and if yes, what returns did the REIT give to its unitholders. You should also investigate the compensation given to the managers. If its performance based, chances are that they would be looking out for your interests by aiming to get the best possible returns in the prevailing market conditions. 2. Diversification -  The REIT should be properly diversified in its holding of real est...

The previous article dealt with structure of an REIT. Here, we will examine the pros and cons of investing in the units will help you make an informed decision and the taxation of income accrued from REIT will help you in your tax planning. How to invest in REITs – There are two ways by which an investor can invest his funds in a Real Estate Investment Trust – 1. Initial Public Offer (IPO) -   An IPO the process by which the trust offers its units to the public for the first time by listing on a stock exchange. An IPO has a price band and the units are to be purchased in lots. Eg – When the first REIT of India was listed on the stock exchange, the price band for 1 unit was Rs. 300/- and the minimum bidding was of 1 lot of 800 units and its multiples. That means the minimum amount required for investing was Rs. 2,40,000 (Rs. 300 * 800 units). 2. Secondary Market -  Once the trust has been registered on the stock exchange, its units are freely trade...