Tracking the economy….

April 16, 2013

Vol. 6

Issue 21

A Wealth Incorporation Publication

Chaanakya

Christ University

Institute of Management

2

News

National ………………………………………….3

International …………………………………….5

7…..……………………………………… Rates and Graphs

Contemporary Articles

Consensus of monetary and Fiscal Policy………...9

Introduction to inflation indexed bomds……...…10

Debate

11….…………………………………….Quanitative easing

Stock Watch……………………………………………...12

Investor Check…………………………………………...15

16……………………………………………..Alumni Speak

Commodity Market (Turmeric)………………………...18

Scam……………………………………………………….19

20…..……….………………………………..Did You Know

21……...……...……Financial Services Industrial Analysis

Buzzword…………………………………………………25

Crossword………………………………………………...26

Quiz………………………………………………………..27

3

Srivishnu Garbham

I IMBA I

Finance ministry officials to bat for India story with credit matters

The government faces a crucial month ahead with finance ministry officials preparing

to make a strong pitch about India's robust macroeconomic fundamentals in

consultations with US-credit rating agencies, ahead of possible sovereign ratings

review by credit-raters. Last year, the three agencies were unsparing in their criticism

of India's macro-economic fundamentals and precarious public finances. India's

economic growth is set to slump to a 10-year low of 5per cent in 2012-13 proving

fears of a widespread slowdown as factories produce less, exports shrink, companies

offer fewer jobs and prices continue to remain high. India's CAD - the gap between

inflows of foreign currency and outflows - soared to a record 6.7per cent of gross

domestic product (GDP) during October-December, hit by high oil and gold imports

and subdued exports.

RBI likely to leave lending rate unchanged, say non-banking finance companies

Non-banking finance companies said that the Reserve Bank of India is likely to keep

its key lending rate intact in the forthcoming monetary policy review, but expect a

0.25per cent reduction in the cash reserve ratio. The apex bank will unveil its annual

monetary policy on May 3. Currently, the repo rate is 7.5per cent, while the CRR is

4per cent. The demands by the FIDC, which is the apex body of NBFCs, is in tandem

with the views of bankers, who also asked for a cut in the CRR for effective monetary

transmission. According to bankers, a CRR cut will help reduce their cost of funds,

which is essential for cutting lending rates, rather than a repo rate cut.

Drop plan on new banks, Finance panel tells RBI chief

The Parliamentary Standing Committee on Finance almost in one voice wants the

Reserve Bank of India to drop the move to issue new banking licences. Questioning

what they called the subjective nature of the RBI‘s final guidelines, many members

reportedly told the RBI Governor that the guidelines could open an avenue for

corruption. On conditions of anonymity, that the members feared the guidelines would

result in corruption and urged the RBI to drop the move.RBI Governor D. Subbarao

briefed the panel on the final guidelines to allow corporate houses and public sector

entities with ―sound credentials and a minimum track record of 10 years‖ to start

banks

Finance ministry orders probe against Mallya, others for 'tax evasion

Rajya Sabha member and chief of ailing Kingfisher airline Vijay Mallya, top

industrialists and Lok Sabha member Vivekananda Kadam and those who figure in the

list of names exposed by a global media investigative operation are being probed for

alleged tax evasion. Finance minister P Chidambaram confirmed on Saturday that a

probe has been ordered based on the names unveiled by the investigation by the

International Consortium of Investigative Journalists (ICIJ) and its partner media

houses.

State Finance Ministers committee to meet next month on GST design

The Empowered Committee (EC) of State Finance Ministers will meet next month to

decide on the reports for a model legislation and design of the proposed Goods

and Services Tax (GST)."The Empowered Committee will meet in Mussoorie,

Uttarkhand on May 10-11 to ponder over the progress made by two committees

constituted during the Bhubaneswar meet in January. The Committee would also try to

get a clarity from the Centre on when would the dues of states be cleared to make up

NATIONAL NEWS

4

for the losses on account of reduction in Central Sales Tax rate so as to clear the way for the implementation of the

new indirect taxes regime .

Finance Ministry mulls new Intel wing to check service tax evasion

Concerned over mounting cases of tax evasion, the Government is mulling to create a separate intelligence unit to

check the menace and stop leakage of revenue. The proposed Directorate of Anti Evasion to check service tax

evasion is likely to be set up by the Finance Ministry close on the lines of two other intelligence agencies under

it--Directorate General of Revenue Intelligence (DRI) and Directorate General of Central Excise Intelligence

(DGCEI), The Central Board of Excise and Customs ( CBEC) has detected service tax evasion of `9,800 crore

during April-December period of the last fiscal (2012-13) against `5,000-6,000 crore in the same period of 2011-12.

Finance Minister to meet select bankers in Mumbai

Finance Minister P Chidambaram is scheduled to meet select bankers in Mumbai on

Monday to impress upon them the need to increase lending to productive sectors

including infrastructure projects so as to boost economic growth. He is expected to

meet officials from select banks including SBI and Bank of Baroda, among others.

Deteriorating asset quality of banks is expected to come up for discussions at the

meeting. India's GDP growth hit a decade low of 4.5per cent in the third quarter of

fiscal year 2012-13.

Hope to get Insurance Bill passed soon: Finance Minister

Finance Minister P Chidambaram expressed hope that Insurance Amendment Bill,

which seeks to raise FDI cap in the sector to 49per cent, will be passed soon. He said

the optimism stems from the fact that there is difference of opinion only with regard

to one clause in the long-pending Bill, for which he is in touch with the main

opposition party BJP to sort that out. Insurance Bill seeks to raise foreign investment

cap in the sector from 26per cent to 49per cent. The pension bill too aims to increase

it to same level among other things.

Glaxo Finance sells 13.59 lakh shares of Bhansali Engg

Glaxo Finance Private Limited sold 1,359,498 shares of Bhansali Engineering

Polymers at `15 on the NSE.However, Twentyfirst Century Securities Ltd. bought

1,347,934 shares at `15.In the previous trading session, the share closed at `15.94, up

`0.94, or 6.27 per cent. It has touched an intraday high of `16.80 and an intraday low

of `14.50.

I-T Act to be amended once Vodafone tax dispute gets resolved: Finance

Minister

Finance Minister P Chidambaram said that the government will amend the income tax

act once the over `11,200 tax dispute with Vodafone is resolved. Although the British

telecom giant had won a tax case in the Supreme Court, the government had amended

the Income-tax Act with retrospective effect to undo the ruling. The Income Tax

Department issued a letter in January to Vodafone International Holdings BV stating

that the company is required to pay tax demand of about `11,217 crore along with in-

terest. However, Vodafone replied back saying that they do not owe anything to the

Indian government. Vodafone earlier wanted to take India to international arbitration

but later offered conciliation on the issue. The Union Cabinet will take a view on the

offer of conciliation.

5

Sailabala Nayak

I MBA I

Michael Dell to 'consider' Blackstone LBO only with CEO guarantee

Dell Inc founder Michael Dell will only consider backing a buyout by Blackstone Group LP if

the private-equity firm guarantees he can remain as CEO, according to a person familiar with

the discussions. In several recent meetings in Austin, Texas, with Chinh Chu and David

Johnson - the Blackstone executives overseeing the firm's bid - Michael Dell said he would be

more likely to support their proposal if he retained an influential role, a second person familiar

with the talks said.

Michael Dell said on February 5 that he agreed to take his company private in a $24.4-billion

transaction with Silver Lake Management LLC. He's now using his 15.6per cent stake as

leverage to preserve his leadership position as the company weighs competing offers from

Blackstone and billionaire investor Carl Icahn, said one of the people.

Panasonic unit in U.S. bribery investigation: WSJ

A unit of Japan's Panasonic Corp is under investigation by U.S. authorities looking at whether

the company paid bribes overseas to airline employees or government officials to help land

business, the Wall Street Journal reported. Citing company documents, the Journal said

Panasonic Avionics had received a subpoena looking for communications between Panasonic

Avionics, consultants and others. The subpoena also asked for documents related to payments

to the airline employees and government officials, the newspaper said.

China March PMI rebounds, domestic demand shines

China's factory production ran at its fastest in 11 months in March, according to the official

manufacturing purchasing managers index published on 1st April‘13, though the rise to 50.9

missed market expectations of a bigger headline jump.

The PMI missed market expectations, based on a Reuters poll of analysts, for a solid uptick to

52.0 from February's five-month low of 50.1, confounding the view of some analysts that the

world's second-biggest economy might be recovering faster than expected from a slowdown in

2012 that dragged growth to a 13-year low of 7.8per cent.But a rise in the output index to a

10-month high of 52.7, an 11-month high of 52.3 for overall new orders and new export orders

also at an 11-month peak 50.9, offered signs that China's economic recovery is gaining

traction.

Russia won't help out Cyprus depositors, says minister

The Russian government will not aid businesses that have lost money in Cyprus, First Deputy

Prime Minister Igor Shuvalov said on 1st April‘13, underscoring Moscow's resolve to clamp

down on the flight of capital to offshore financial centers.Major account holders, many of them

Russian, will lose up to 60 percent of their deposits over 100,000 euros ($128,400) at Cyprus's

largest bank under a European Union bailout to save the Mediterranean island from

bankruptcy.

Swiss offer to mediate in North Korea crisis

Switzerland has offered to mediate with North Korea as tension rises on the Korean peninsula

following U.N. sanctions imposed in response to a North Korean nuclear weapon test in

February. The Swiss foreign ministry recently made contact with the North Korean authorities

but there are no current plans for any talks, a spokeswoman said.

INTERNATIONAL NEWS

6

"Switzerland is willing to contribute to a de-escalation on the Korean peninsula and is always willing to help find a solution, if

this is the wish of the parties, such as hosting meetings between them," she said in an emailed statement.North Korea has

issued increasingly strident warnings of imminent war with South Korea and the United States, urging diplomats on 5th

April‘13 to consider leaving Pyongyang.

ECB's Weidmann: Lesson from Cyprus is banks can be wound down

The Cyprus bailout shows banks can be wound down despite difficulties, European Central Bank (ECB) policymaker Jens

Weidmann said in an interview broadcast on 7th April‘13, adding the situation on the island had stabilized. Weidmann, chief of

Germany's Bundesbank, told Deutschlandfunk radio he wouldn't rule out that Cyprus might need yet more liquidity, but

stressed it was longer term structural reforms that would solve Nicosia's problems and not more cash.

To secure a 10 billion euro EU/IMF bailout last month, Cyprus forced heavy losses on wealthier depositors. Initially it had also

pledged to introduce a levy on deposits of less than 100,000 euros before reneging in the face of protests.The agreement also

includes the winding down of the island's second-largest bank Cyprus Popular Bank.

JPMorgan Leads Job Cuts as Banks Seek to Bolster Profit

Rising stock prices, rebounding profits, restored dividends and a growing economy are

signaling to U.S. banks it‘s time for more job cuts.

Even after the industry posted its best results since 2006, the six largest U.S. banks announced

plans in the first three months of this year to eliminate about 21,000 positions, or 1.8per cent

of their combined workforce, according to data compiled by Bloomberg. That‘s the most since

2011‘s third quarter. JPMorgan Chase & Co. (JPM), whose 259,000 people produced three

straight years of record profit, topped the list with 17,000 reductions scheduled by the end of

2014.

Banks are under pressure to keep profit climbing amid weak revenue growth, and employees

are among the biggest expenses after interest costs. The most vulnerable people work in units

where demand is waning such as mortgage foreclosures. Their departures would come on top

of 320,000 jobs culled from U.S. financial companies in the past five years, the data show.

GM Korea's contingency plan provokes union ahead of talks

General Motors Co has warned it could shift operations from South Korea in the longer term

due to rising tension with the North, angering its Korean union which accuses the firm of

using the instability as leverage ahead of tough annual labour talks.

The rhetoric prompted GM Chief Executive Dan Akerson to say late last week (1st-7th

April‘13) that the company, which has four car manufacturing plants and one transmission

factory in South Korea, was making contingency plans for employee safety there. Akerson

said it would be difficult to shift production from South Korea, but that the continued

escalation of tensions on the Korean peninsula would cause the No.1 U.S. automaker to look

at moving production long-term.

Easing food prices, mild recovery cool China inflation

China's annual consumer inflation cooled in March as food prices eased from nine-month

highs and producer price deflation deepened, data showed on 9th April‘13, leaving

policymakers room to keep monetary conditions easy and nurture a nascent recovery.

The consumer price index showed an annual rise of 2.1 per cent, well below the 2.4per cent

market consensus from a Reuters poll of economists. Producer prices dropped 1.9per cent

y-o-y, broadly in line with the consensus forecast for a 1.8 per cent fall, and a steeper fall than

February's 1.6 per cent.

7

Rate Repo 7.50per cent

Reverse Repo 6.50per cent

Call Rate 6.10 per cent –7.65per cent

Inflation +6.82 per cent for February 2013

Forex Reserve $292.646 Billion as on 29th March 2013

91day T-Bill 7.8519per cent

IIP 2.4per cent (increase) for February 2013

690 GS 2019 8.0907per cent

Graph

Gaurav Agarwal I MBA M

RATES AND GRAPH

53

53.5

54

54.5

55

55.5

56

Rs/$

Rs/$

29000

29300

29600

2990030200

30500

3080031100

31400

Gold(per 10 gram) Rs.

Gold(per 10 gram)

8

GRAPH

103

105

107

109

111

113

Oil(per bbl) $Oil(per bbl) $

5400

5600

5800

6000

6200

17,600.00

18,000.00

18,400.00

18,800.00

19,200.00

19,600.00

20,000.00sensex

nifty

1500000

3500000

5500000

7500000

9500000

11500000

13500000

15500000

17500000

19500000

5000

5200

5400

5600

5800

6000

6200

future ratesopen interest

9

Eldho Poulose

I MBA K

CARDINAL TO STRIKE THE RIGHT CHORD

Growth and stability are the two magic words which every economy wishes to sustain.

Stability here implies of price stability. These two terms seems to be the major macroeconomic

objectives of developing countries. How to strike balance between growth and stability through

the policies? This is an important thought process, which should be evoked essentially to have

good idea about our economic situation. Growth is the core objective of finance ministry

through the Fiscal Policy while RBI - the apex bank of our country, concentrates on Stability

through its monetary policies. But how to have proper alignment between these two is a

question to be answered, since we can identify lots of differences in the opinion of Finance

ministry and RBI regarding growth and stability these days.

Many times the objectives of both the policies may not be in harmony. This is mainly because

of the difference in the concerned issues each policy has to take care. The difference in the

time horizon or the economic situation prevailing in the country is also a reason for mismatch.

But still it requires a good balance between these to have a firm grip on our economy,

especially when we are heading towards another slowdown. Price stability is the essential thing

which should be there to form the basis for growth. Investors will be encouraged only if there

is price stability. Inflation which is currently at 6.82per cent (for Feb 2013) along with the

laming growth rate and its future implications can be managed only with a prudent

combination of Fiscal and Monetary Policy. Identifying the limitations of both policies is also

crucial to have a feasible solution.

This is why RBI Governor advocating for the need of other policies along with monetary

policies to solve the issues of balance between growth and stability. Expecting the monetary

policy to do wonders in terms of stimulating growth, controlling inflation, reducing

unemployment and ensuring financial stability is asking for too much. It should be

accompanied with exchange rate policy, external sector policy and fiscal policy to ensure

effectiveness. On the other hand monetary policy has got better degree of flexibility against

fiscal policy to accommodate changes. Monetary policy can be altered within short span of

time while fiscal policy has to wait till next annual budget.

Fiscal dominance over monetary policy is another matter of concern for the officials. It is the

scenario where monetary policy has to adjust with fiscal policy which is set independently.

Here they are asking the importance of setting monetary policy independently by the apex bank

considering the macro-economic situation and through coordination. It should be like both the

policies have to accommodate and tighten things to control inflation and to ensure stability.

Also external sector policies have to be appropriate to control exchange rate in order to control

inflation through imports. Also there should be fiscal consolidation to control fiscal deficit.

Without fiscal consolidation monetary policies will not be efficient to control inflation.

Even though we can see many overlaps between fiscal and monetary policy, successful

implementation of policies require independency, but coordination between two. There should

be grounds for mutual respect so that both will be able to function for the achievement of long

term objectives of the economy.

Reference:

http://rbidocs.rbi.org.in/rdocs/Speeches/PDFs/GIWM040413F.pdf

CONSENSUS OF MONETARY AND FISCAL POLICY: :

10

Annapoornaa G

I MBA K

To provide an alternate option to hedge against inflation other than gold, the Reserve

Bank is planning to allow launch of Inflation Indexed Bonds (IIBs).IIBs provide

insurance to investors from inflation and cost savings for the government on account

of reduction in coupon payments with lowering inflation rate, elimination of

uncertainty risk premium, and containing inflationary expectations, according to a

technical paper floated by RBI on these bonds.

The Budget has taken some important steps for boosting domestic savings and

reversing the declining savings-to-GDP (gross domestic product) ratio. One of the

innovative schemes in the Budget is the proposed introduction of inflation-indexed

bonds. These bonds will be linked to the inflation index of the country (Wholesale

Price Index or WPI) and serve as a better investment option as compared to physical

assets like real estate and gold. Higher the inflation, higher your returns.The WPI has

largely been in the range of about 6-8 per cent so far this fiscal. However, inflation is

expected to ease further. While investors may not be happy about it, this would be the

apt timing for the government to issue IIBs.

The RBI pointed out that the government‘s intent to launch IIBs signals a credible

commitment toloweringinflation.In the wake of rising inflation last year, there was

substantial flow of investments from financial savings to safe-haven assets like gold

that resulted into higher imports of the yellow metal. This led to current account

deficit or CAD widening to 4.9 per cent of GDP at the end of September 2012. The

RBI said that IIBs would help address the CAD risks in the economy. The central

bank said that IIBs are good hedging instruments against inflation. They should

encourage household savings to shift away from gold that is largely unproductive for

the economy, said the RBI.

It is expected that institutional investors, such as, pension funds and insurance

companies would exhibit interest in investing in the IIBs.The expectation, is based on

the fact that the IIBs give investors long-term assets with a fixed long-term real yield,

insulating them against inflation as their real yields are indexed to actual

inflation.Further, it is also being contemplated to increase the non-competitive portion

for IIBs to have significant participation of retail investors in these instruments.

As inflation remained high during the past two years, gold had emerged a favorite

investment avenue as it provided insurance to investors against inflation. India's gold

and silver imports during first 11 months of the current fiscal stood at $54.5 billion. It

had imported gold worth $40.5 billion in the last fiscal. In the budget, to discourage

imports of the yellow metal, the government doubled the customs duty on gold to 4

per cent.

IIBs, which were issued in United Kingdom during 1981, became popular over the last

two decades with an increasing number of countries issuing these bonds. In India also,

one variant of indexed bonds, capital index bond (CIB), 2002 was issued on December

29, 1997 wherein only principal repayments at the time of redemption were indexed to

inflation.Thus IIBs would provide a viable option to hedge against inflation other than

gold and will help government to reduce the import of gold.

Reference:

www.economictimes.com

INTRODUCTION TO INFLATION INDEXED BONDS

11

Sabahat Bashir I MBA I

Akanksha Bansal

I MBA L

With a lot being said about reducing the burden on government for alleviating

the economy, Quantitative Easing (QE) plays an important role. Quantitative

Easing is an alternate way of introducing money for use in the economy. When

the nominal interest rates approach to zero (i.e. the ordinary monetary policy

becomes non-functional), the government decides to buy its own securities and

assets from the market thus creating abundance of money supply. Lack of

aggregate demand in the economy is a major stimulant of Quantitative Easing.

QE has been practised in UK as well as Japan to overcome the financial crisis

prevailing in the countries.

As is observed, every reform comes with its own retractions. Introduction of

Quantitative Easing makes the markets happy by stimulating the demand (even

if it is for a small period of time). It increases the amount of bank lending thus

reducing the interest rates and budget deficit. QE enhances consumer spending

and stabilize the employment rate to a favourable extent. It helps the economy

achieve its inflation target and most importantly gives the government extra

time to decide strategies to ease out the financial crisis.

George Osborne, a British politician has famously quoted QE as ―The last

resort of desperate government‖. The policy of Quantitative Easing doesn‘t

solve problems, instead postpones them for later period. It eventually leads to

devaluation of the currency thus resulting in inflation and sometimes hyper

inflation. If that happens, QE can further increase interest rates thus bringing

the economy back to the same levels from where the reform started. QE is

definitely not a guarantee of improving the economic conditions.

However determining the amount of Quantitative Easing that is sufficient to

assist the economy is another big decision. There is no said quantity of QE

which can help boost an economy. Further, the exit policy related to QE also

determines its impact on the economy. So whether QE will help the economy

or not, and to what extent will it be beneficial is a question of thought and time.

With evidences of both its success and failure in different economies, the

outcome of QE largely depends on the method of execution, economic stabil-

ity, demand-supply interaction as well as consumer behavior.

References:

www.thetelegraph.co.uk retrieved on 7th April, 2013

Financial times lexicon.ft.com retrieved on 6th April, 2013

QUANTITATIVE EASING

12

Ankit Dewani I MBA K

SriKrishna I MBA M

About the company

Tata Consultancy Services Limited (TCS) is engaged in providing information

technology (IT) services, business solutions and outsourcing. The Company‘s

services portfolio consists of application development and maintenance,

business intelligence, enterprise solutions, assurance, engineering and

industrial services, IT infrastructure services, business process outsourcing,

consulting and asset leveraged solutions. TCS also services several other

industries, such as life sciences and healthcare, hi-tech, energy, resources and

utilities, media and entertainment and travel, transportation and hospitality. On

August 31, 2010, Diligenta Limited acquired Unisys Insurance Services

Limited (UISL).

Latest news:

TCS has acquired French IT services firm ‗ALTI‘ for €75m (`530 crores)

in an all-cash transaction (0.59x CY2011 revenue, 8.2x EV/EBITDA).

Acquisition is expected to be completed by June 2013 and ALTI will

start contributing to sales from July 2013 (subject to regulatory

approvals). ALTI, established in 1995, has 1,200 employees based in

France, Belgium and Switzerland providing business consulting &

engineering services.

The acquisition will help TCS to get access to several blue-chip clients

across Europe

Has now become the world‘s second biggest IT services employer, with

nearly 264,000 people on its payroll, only behind IBM.

Key customers:

STOCK WATCH -TCS

13

Performance in last 6 months

The share has seen at positive uptrend movement, specially during the time

when the markets were being hammered due to international news or national

political turmoils. A consistent growth has been derived by a relative

movement of 16per cent.

Financials :

It has been procured as the blue chip of the market and the price earnings for

the share has been a strong indicator with the sector earnings as a whole. TCS

continues to enjoy high volume market caplitization and should entail to more

volume, considering the disappointed Infosys Q4 Results on 12th April,2013.

Source : Reuters

14

Valuation (as in April,2013)

Income Statement

Recommendations

Fundamentally strong company.

Expectation of increase in clients, specially from USA.

Acquistion of ATLI, a big boost specially due to a discounted purchase,

considering the economic turmoil in Europe.

A recent $43 Mln. Contract from Norway Post is another big boost.

CMP : Rs. 1512.00

Target : 1575

Duration : 3 months

15

Abhishek Aggarwal

I MBA I

The previous edition of Investor Check focused upon Repco Home Finance

Limited (RHFL), the issue listed on NSE & BSE at Rs. 172 per share.

Currently as of 12 April 2013 closing it is being traded at Rs. 170.55. It also

achieved a high of Rs. 179 which signified a lot of investors existing at this

price through short gains. Now, that RHFL has taken its stance in the market

the analysts are recommending for holding RHFL for long periods of more

than one year indicating strong fundamentals.

The above table shows the IPO‘s of March 2013 which are now listed and

being traded in the markets. Seeing the latter part of the table one can easily

devise that investment in IPO is paying through high profits and that too in a

very short period. Now, with such a high growth an investor is bound to have

some weightage of IPO in his portfolio. Imagine all of the investors fund being

invested in the IPO market, Can any other instrument match this sought of

return!!! This is where the concept of dedicated mutual funds focusing on IPO

comes in. Nowadays investors carried by the high end growth of IPO market,

invest in IPO ETF which is an exchange-traded fund that tracks initial public

stock offerings of various recently listed companies. The underlying indexes

tracked by IPO ETFs vary from one fund manager to another, but IPO ETFs

index are usually passively managed meaning that there is very little portfolio

turmoil.

IPOs to look out for in the coming month:

References:

Rego, A. (2013, 09). Moneycontrol.com. All you want to know about investing

in IPO ETFs . Retrieved April 13, 2013, from http://www.moneycontrol.com/

news/investing/all-you-want-to-know-about-investingipo-etfs_849455.html

(2013, 12). Moneycontrol.com. Repco Home Finance Stock Price, Share Price.

Retrieved April 13, 2013, from http://www.moneycontrol.com/india/

stockpricequote/financehousing/repcohomefinance/RHF

INVESTOR CHECK: : IPOS TO & FRO

S.No Companies

1. Advanced Enzyme Technologies

2. NCML Industries

3. Aastha Minmet India

4. Jyoti CNC Automation

5. BSCPL Infrastructure

16

Mihil K.Bothra I MBA L Name: Siddhartha Krishnan

Company name, Designation held:

Scope International Pvt Ltd ,Team Lead-Information Analytics

Put some light on your Company, the job profile and the role you play in your

organization?

I work for Scope International Pvt Ltd which is the operations wing of Stan-

dard Chartered Bank and a wholly owned subsidiary of the bank. Its head-

quarters is in Chennai and all the banking operations of the bank is exe-

cuted through this organization. I am working as team lead-information ana-

lytics. My job is to lead a team which specializes in data analytics using tools

like visual basic, microsoft access, advanced excel formulas and macros. We

provide business intelligence to a telecalling team of 350 odd people who gen-

erate about 30-35 million dollars of revenue to the Standard Chartered Bank,

UAE. Intelligence is in the form of data and analysis related to costs, budgets,

productivity, work force management, revenue generation and adherence

to service level agreements.

What encouraged you to choose this industry and join the particular company?

I had joined this company through placement from Christ College after my

MBA. The KPO/BPO/ITES industry is a very dynamic industry which

provides challenging job roles at the same time giving an opportunity for

learning and growth. In this industry change is the only constant.

How is your experience in the company as well as industry so far?

My work experience has been good so far. I have had immense opportunity to

learn and contribute to the success of the organization. I have worked under

some good leaders who have encouraged me to think out of the box. The

industry is highly competitive and technology dependent in terms of

automation. It forces you to do things differently every single day.

How is professional world different from the life in MBA?

MBA teaches you to multi task. This is one learning that you will definitely

carry to your work space. The difference is in the pressure! You are expected

to deliver at both places but the cost of errors is a little more taxing at your

work space. Also, you may not find mentors here like you find in B schools.

Many a times you are your own mentor. It could a get a little lonely here

xsometimes. But it is all part of the game.

Are there any additional courses / certifications that you recommend in this

field?

In the field of information analytics and project management apart from

brushing your excel skills and knowledge of statistics you could look at

certifications like—SAS business analytics, PMP and six sigma certification for green or black belts.

ALUMNI SPEAK -Siddhartha Krishnan

17

Who is your role model and how he/ she inspires you?

My role model is my ex manager in Standard Chartered-Mr Rajneesh Kumar Singh. Apart from all the

excel magic that he showed me, one learning that I got from him---―there is no problem in this world that

cannot be solved, you just have to dig deep and get your hands dirty. The idea is to be hands on with

everything!‖

What are you doing to ensure that you continue to grow and develop in industry?

I am continuously trying to acquire new skills. Skills like technology have to be updated every given day.

I am looking at pursuing SAS business analytics course which will hold me in good stead in future since

it will give a better understanding of statistical models.

What are the characteristics you believe one should possess to join this

company?

I guess live the company values of being courageous, trustworthy, creative,

responsive and international. Be service oriented and always be willing to

learn.

What are the opportunities for us (juniors) in your company?

For B school graduates the opportunities are there if you are interested in

working Banking operations. That means an aptitude to read data and an

ability to work within teams. I am not sure if the company goes in for bulk

placements through B schools but there are openings both in wholesale

banking and consumer banking operations.

Will you be willing to come and share more about the industry and the

company and your experience with us in an alumni interface?

Yes I will be glad to. Just that you need to keep me informed in advance.

Christ is my Alma Mater and it has given me a lot. I will be privileged to give

back a little, whatever is within my capacity.

What are your short-term, mid-term and long-term plans, respectively, for

future?

Short term goals---to update my current skills and be prepared for the future.

Mid term goals—to become a better leader of people and have a bigger stake

in the decision making of an organization.

Long term goals- to have enough expertise in the field of project management

and business re-engineering so that I can look at being a consultant to the

BPO/KPO and ITES industry.

A message for Christites?

Always be open to change and update your knowledge every day. Take every

assignment as an opportunity to learn and always give it your best.

18

Vattam Bhargav

I MBA V

Turmeric considered, as the Golden spice of life in India is this month‘s pick of

the commodities that is expected to grow in near future. India is the biggest

producer and consumer of Turmeric in the world. India produces nearly 80per

cent to 90per cent of the world‘s annual turmeric production. Major states

where turmeric is cultivated in India are, Andhra Pradesh (47per cent), Tamil

Nadu (21per cent) and Karataka (11per cent).

Major uses of Turmeric are:

Turmeric is mainly used as a spice for culinary purposes and as an herb for

medicinal (ayurveda) purposes.

India is the biggest producer and exporter of Turmeric in the World. Other

exporters of Turmeric following India are all Asian, Pacific or Latin American

countries and the major Importers being Western, Middle East and African

countries. Major trade areas for Turmeric in India are Nizamabad in Andhra

Pradesh and Erode in Tamil Nadu.

In NCDEX (National Commodity and Derivative Exchange) Turmeric is

measured in units of Kilograms and traded in lots of 100 Kilograms or 1

Quintal.

Positive news on Turmeric:

Reduction in the acreage of turmeric cultivation in major states like Andhra

Pradesh and Maharashtra is expected to give a lower output for turmeric this

year when compared to the record high output of 90 lakh bags of 70Kg each

last year. South India has seen heavy rains during February that lies in the

harvest season, which is December to March. This may lead to crop damage

and lower output this year. The output is estimated to fall by 40per cent to

50per cent when compared to last year. Turmeric peaked to `17,000/ Quintal in

November 2012 and dropped down to a low of `4,600 in September 2011. This

shows the potential and range associated with this commodity. The commodity

has seen its price going high from the past two weeks. Turmeric has seen

increase in demand from Northern and Eastern parts of India from the past two

weeks.

Current performance of Turmeric in the Commodity Market:

Turmeric is presently being traded with a spot price of `6,900/Quintal.

The current Spot prices in NCDEX for Turmeric futures are (12th April, 2013):

`6,900 / Quintal for 19th April, 2013.

`7,030 / Quintal for 20th May 2013.

`7,124/ Quintal for 20th June 2013.

Turmeric has a potential to touch `8000 levels in the coming two months,

which will also be accompanied with the risk associated with this commodity

seen in the past couple of years.

References:

http://www.moneycontrol.com/news/across-the-web/Turmeric-1.html

http://www.ucxindia.com/Turmeric/M__35

COMMODITY :: TURMERIC

19

Akanksha Jha I MBA J

City Bank Swindle came into light in the December 2010. Shivraj Puri who is

the main accused of this `300 crore fraud was the relationship manager of the

City Bank Gurgaon based branch. He was managing the account of 51 high net

worth individuals, excluding his family linked accounts.

Shivraj offered fabricated investment schemes to theses account holders. By

guaranteeing them high returns he received signatures on blank fund transfer

forms. Shivraj used these forms to make demand drafts favouring stockbrokers

to invest these money in the stock market. He also transferred money to his

family linked bank accounts. He used to send inflated bank statement to

investors, to keep them in dark. This misconduct started in February 2009. Till

December 2010 he had collected about `150 crore from these accounts. He

traded in the futures and options segment of the NSE, mainly in Nifty Index

options.

In the names of his relatives Shivraj had opened three bank accounts in the

Gurgaon branch of the city Bank. These account were used to transfer money

from the investors account under a scheme which promised to double the

investment. But once the money was deposited, he transferred it into his own

account.

Chief Finance Officer of the Hero Group and associates, Sanjay Gupta was

also involved in the misconduct. He reportedly initiated the employees of the

Hero Group to invest money in his two firms - BG Finance and G2S

Management Consultants. By this way he collected `200 crores. These money

were transferred into Puri‘s bank account, from where they were invested in

the securities market. Sanjay Gupta made a profit of `20 crore in the process.

The probe went into the involvement of the Shivraj‘s parents and grandparents,

who gave him the power of attorney. However the senior citizen were given the

benefit of the doubt of not knowing the act.

SCAM : City Bank Swindle

20

Tina Patricia D‘Souza

I MBA N

In finance, the Beta (β) of a stock or portfolio is a number describing

the correlated volatility of an asset in relation to the volatility of the benchmark

that said asset is being compared to. This benchmark is generally the overall

financial market and is often estimated via the use of representative indices,

such as the S&P 500. Some interpretations of beta are explained in the

following table:

Beta can be estimated for individual companies using regression

analysis against a stock market index.

The formula for the beta of an asset within a portfolio is

DID YOU KNOW ?

The concept of BETA

Value of Beta Interpretation Example

β < 0

Asset generally moves in the

opposite direction as compared

to the index

Gold, which often moves

opposite to the movements of the

stock market

β = 0

Movement of the asset is

uncorrelated with the movement

of the benchmark

Fixed-yield asset, whose growth

is unrelated to the movement of

the stock market

0 < β < 1

Movement of the asset is gener-

ally in the same direction as, but

less than the movement of the

benchmark

Stable, "staple" stock such as a

company that makes soap.

Moves in the same direction as

the market at large, but less

susceptible to day-to-day

fluctuation.

β = 1

Movement of the asset is

generally in the same direction

as, and about the same amount as

the movement of the benchmark

A representative stock, or a stock

that is a strong contributor to the

index itself.

β > 1

Movement of the asset is

generally in the same direction

as, but more than the movement

of the benchmark

Volatile stock, such as a tech

stock, or stocks which are very

strongly influenced by day-to-

day market news.

21

where ra measures the rate of return of the asset, rb measures the rate of return of the portfolio

benchmark, and cov(ra,rb) is the covariance between the rates of return. The portfolio of interest in the

CAPM formulation is the market portfolio that contains all risky assets, and so the rb terms in the

formula are replaced by rm, the rate of return of the market.

Beta is also referred to as financial elasticity or correlated relative volatility, and can be referred to as a

measure of the sensitivity of the asset's returns to market returns, its non-diversifiable risk,

its systematic risk, or market risk. On an individual asset level, measuring beta can give clues

to volatility and liquidity in the marketplace. In fund management, measuring beta is thought to

separate a manager's skill from his or her willingness to take risk.

The market itself has a beta of 1.0, and individual stocks are ranked according to how much they

deviate from the macro market. S&P 500 is often used as a proxy for the market as a whole. A stock

whose returns vary more than the market's returns over time can have a beta

whose value is greater than 1.0. A stock whose returns vary less than the

market's returns has a beta with an absolute value less than 1.0.

SOME INTERESTING CASES

Beta has no upper or lower bound, and betas as large as 3 or 4 will occur

with highly volatile stocks

Beta can be zero. Some zero-beta assets are risk-free, such as treasury

bonds and cash. However, simply because a beta is zero does not mean that it

is risk-free. A beta can be zero simply because the correlation between that

item's returns and the market's returns is zero.

A negative beta simply means that the stock is inversely correlated with

the market.

CONCLUSION

Knowledge of beta value is essential from a trader‘s perspective as many

experts believe that about 70 percent of stock price movements are with

respect to market changes. In general it is believed that investing in

instruments with high beta is good in rising markets and investing in low beta

instruments is good in falling markets. Beta value helps in pin pointing

Instruments that are the right choice for trading from the Investors point of

view as it is easy to calculate and apply and it is a more realistic measure ,

since links risk with returns.

References

Wikipedia, the free encyclopedia. Beta (finance) - Wikipedia, the free encyclo-

pedia. Retrieved April 6, 2013 from http://en.wikipedia.org/wiki/Beta_

(finance)

Importance of Stock Beta Value. Retrieved April 7, 2013, from http://

www.articlesbase.com/investing-articles/importance-of-stock-beta-value-

664305.html

22

Sabahat Bashir

Ankit Dewani

Gaurav Agarwal

Sailabala Nayak

Introduction :

Investment Banking is a financial intermediary that performs a variety of services which

includes

Underwriting

Acting as an intermediary between an issuer of securities and the investing public,

Facilitating mergers and other corporate reorganizations, and also

Acting as a broker for institutional clients.

It also provides some ancillary services such as market making, trading

of derivatives and equity securities, and FICC services (fixed income instruments, currencies,

and commodities).

There are two main lines of business in investment banking. Trading securities for cash or for

other securities (i.e. facilitating transactions, market-making), or the promotion of securities

(i.e. underwriting, research, etc.) is the "sell side", while advising or managing assets

(through mutual funds or hedge funds) on behalf of pension funds or the investing public (who

consume the products and services of the sell-side in order to maximize their return on invest-

ment) constitutes the "buy side". Many firms have buy and sell side components.

An investment bank can also be split into private and public functions. The private areas of the

bank deal with private insider information that may not be publicly disclosed, while the public

areas such as stock analysis deal with public information.

Regulatory Environment :

The regulation defines an adviser as one who offers advice on buying, selling and dealing with

securities and investment products for a consideration.

Creating a cadre of registered advisers will address this basic trust issue directly. However, in a

market with an existing army of distribution force of mixed quality, such stipulation would

have been disruptive. It makes sense to set a high standard of differentiation and ask the

existing players to make a choice.

Those who want to build an investor-centric business will make the tough choice of becoming

registered investment advisers.

Key Success Factors :

Industry Experience : The value of two similarly sized businesses in different industries may

vary dramatically. One business might be in a ―hot‖ industry, while the other might be in a less

exciting market. Additionally, more industry experience means more industry contacts, and

more industry contacts means access to a greater pool of qualified investors and buyers. The

practice of mass mailing briefing books to a bunch of uninterested investors isn‘t the proper

way to run a sale process. Buyers will be more interested in your deal if they know that it isn‘t

being shopped around the planet. If your investment banker has good industry contacts, the

banker will know who will be interested in your company, and this will ultimately increase

your chances of getting a deal done at a higher value.

Size of Transaction : If the deal is large enough, you will likely need the reach and power a

―bulge bracket‖, or mega investment banking firm, offers. If your deal is not big enough to

warrant sufficient attention from senior talent at a large investment banking firm, you may be

better served by a smaller national or regional investment banking firm or a boutique

investment banking firm with special expertise in your industry.

If you are uncertain about the size of the investment banking firm you should engage, then talk

to a bulge bracket firm, a smaller national or regional firm and a boutique firm. Those

discussions should give you a good feel for the direction to take.

Team : Because the sale transaction is likely the most important event in your company‘s

history, you will need to choose an investment banking firm that has the best team for your

deal. You want to know which bankers will be working on your deal, and you want a commit-

ment that the senior banker who sold you on the engagement won‘t disappear after the

engagement letter is signed.working on your deal, and you want a commitment that the senior

banker who sold you on the engagement won‘t disappear after the engagement letter is

signed.The more time it takes to close your deal, the more time there is for bad things to

happen to your business or the credit markets.

IVESTMENT BANKING:: INDUSTRIAL ANALYSIS

23

Fee Structure : The typical components of an investment banker‘s fee are an upfront retainer and a closing success fee. Some

engagements, such as those involving troubled companies, may involve a monthly retainer payment that is credited against the

closing success fee.

Major Players :

The ten largest investment banks are as follows

Global Trends In Investment Banking :Investment banks have been experiencing a roller

coaster ride in the past years and the problem of structural overcapacity still exists in the

industry. Overall revenues declined by approximately 11% in the year 2012 compared to

previous fiscal year with a better growth noticed in the first quarter than Q2.The productivity

of top line investment banks also declined in 2012 as compared to year 2011.

A study conducted by the Coalition Analytics and Business Providers for global investment

banks shows that fixed income accounted for the largest share of revenues with its increased

contributions to the top line.

However the strong performance projected by the revenues was set off by the weaker ones

from credit and commodities.

Performance of equities which includes cash equities, derivatives and Futures and Options etc.

was challenged by increased electronic trading and weaker revenues from cash and

derivatives.

Origination and advisory which includes M&A, Equity Capital Markets and Debt Capital

Markets has shown the weakest growth at a global level.

Investment Bank Revenue (in $B) Net Earnings (in $B) AUM (in $B)

Goldman Sachs 45.2 13.4 871

JP Morgan Chase 100.4 11.8 1219

Morgan Stanley 24.74 1.7 779

Citigroup 80.3 -1.6 556

Bank of America 121 6.3 523

Barclays 31.8 10.3 1379

Lazard 1.53 -0.18 98

Credit Suisse 31.05 7.9 384

Deutsche Bank 25.3 4.96 181

UBS 24 -1.9 159

24

The table below shows the percentage change to the contribution of revenues through fixed income, equities and advisory:

Scope Of MBA Finance In Investment Banking :

The typical areas in which MBA students can work under investment banking are:

Corporate Finance

Sales

Trading

Research

The most important thing that can help an MBA get into this industry is solid

PREPARATION. A survey of the recruitment processes of few leading investments banks

like Merrill Lynch, JP Morgan Chase, CSFB, Goldman Sachs, Morgan Stanley etc. has

yielded comparatively similar results. The companies typically look out for candidates who

are:

Able and ready to sell themselves even with their biggest weaknesses as their

strengths.

Aware of what they want to do in their work and why they want to do it.

Who put professional success and advancement in their career as the topmost priority.

Investment banks hire candidates for the post of Analysts and Associates (mostly Associates

for MBAs).

Under Corporate Finance the work performed is related to Capital Raising, Underwriting,

Financial Advisory, M&As etc. The Research part of the industry particularly interests those

who like a lot of reading, writing and number crunching, whereas in the field of Sales and

Trading, only the strong, negotiating individuals survive well.

Key Skills Required :

Some of the skills required for investment banking are :

In depth financial knowledge

Financial modeling skill and advanced excel skills

Number crunching

People skills

Communication skills

Analytical skills

Ability to synthesize

Creative ability

Initiative

Working hours

Resilience

Global outlook

Sales skills

Networking skills

Courses and Certificates Avail-

able :

25

Courses and Certificates Available :

So if you are thinking of a career in this industry, the time to get started is NOW because it

takes a lot of potential and knowledge of the candidate to get into the kind of work whish he/

she actually wants to do by being a part of investment banking.

Good Luck!! References :

http://www.oecd.org/investment/investmentfordevelopment/34783838.pdf

http://www-management.wharton.upenn.edu/henisz/msbe/2011/4_2_fabrizio.pdf

http://www.mondaq.com/india/x/223906/Securities/

Investment+Advisers+Regulations+Notified+Do+You+Need+To+Register

Ankit Dewani IMBA K

Coppockcurve

A long-term price momentum indicator used primarily to recognize major bottoms in the

stock market. It is calculated as a 10-month weighted moving average of the sum of the

14-month rate of change and the 11-month rate of change for the index.

Also known as the "Coppock Guide". 'Coppock Curve' The Coppock formula was intro-

duced in Barron's in 1962 by Edwin Sedgwick Coppock.

A buy signal is formed when there is an upturn in the curve after an extreme low in the

curve. A sell signal is formed when there is a higher peak in stock prices but a lower

peak in the Coppock curve. These are the basic signals. More signals and interpretations

are seen at more advanced levels.

BUZZWORD

NAME OF THE CERTIFICATE DESCRIPTION FEES LINK /WEBSITE

1. Diploma examination in com-

modity Derivatives for bankers( Indian

institute of banking & finance)

This diploma course

will give necessary knowledge in

commodity derivatives.

For members: INR

4494

For non members:

INR 7303

http://www.iibf.org.in/scripts/

archives_exam_schedule.asp

2.Charted financial analyst

(CFA INSTITUTE of USA)

Worldwide recognized program

by which , individuals can en-

hance their investment analysis

skills and provide practical

knowledge about investment in-

dustry

USD 1080-1545 (for

level 1) https://www.cfainstitute.org

3.Advanced company research –

Discounted cash flow module by

school of investment banking

It will provide knowledge about

the concept of time value of

money.

Mastering DCF analysis is essen-

tial to working in investment

banking.

INR 5000 http://www.schoolofib.com/

online-course.jsp

4. FLIP Investment banking

certification

It covers private equity, mergers

and acquisition , structured fi-

nance and issue management re-

lated to investment banking

INR 2500 +Tax http://www.learnwithflip.com/

buy-now/307-investment-

banking-certification.html?

page=shop.product_area_dtls

&sef=c

5. CERTIFIED FINANCIAL

PLANNERCM(Financial planning

standards board India

Helpful in providing employment

opportunities in financial ser-

vices, banks , distribution houses

etc.

INR 14606.8 http://www.fpsbindia.org/

26

Ganesh Prabhu I MBA K

CROSSWORD

ACROSS

1.The movement of cash in and out of a

business from day-to-day direct trading and

other non-trading or indirect effects, such as

capital expenditure, tax and dividend

payments.

3.It is concerned with such equity shares

whose purchase is extremely safe. It is a safe

investment. It does not involve any risk.

5.State of falling prices which occurs at that

time when the output of goods and services

increases more rapidly than the volume of

money in the economy

6.The risk that bonds will be redeemed (or

"called") before maturity

7.That part of government economic policy

which deals with taxation, expenditure,

borrowing, and the management of public

debt in the economy

9.The processes of making illegally acquired

money appear to have been legally acquired.

Money thus transformed can withstand

scrutiny of its origins and be freely used

without fear of sanction.

10.The combination of two or more

companies, usually through the acquisition by

one of the assets and liabilities of the other

11.The value printed on the face of a stock,

bond or other financial instrument or

document.

13.A period of time during which securities

prices are falling in the stock market.

14.Type of speculator who gains with the rise

in prices of shares and stocks. He buys share

or commodities in anticipation of rising prices

and sells them later at a profit.

DOWN

2. Allows an investor to periodically invest in

units by issuing post-dated cheques. It allows

the investor to benefit from rupee cost

averaging.

4. Interest earned not only on the initially

invested principal but also on accumulated

interest during the period.

8. The loss of value of currency of a country

relative to other foreign currency

12. A pool of individual investments owned

by an investor or mutual fund. Includes a

combination of stocks, bonds, and money

market instruments.

1.Cashflow 2. Systematic investment

plan 3.Bluechip 4.Compounding

5.Deflation 8.Devaluation 6.Callrisk

12.Portfolio 7.Fiscalpolicy

9.Moneylaundering 10.Merger

11.Facevalue 13.Bearmarket 14.Bull

27

Vattam Bhargav I MBAV

SriKrishna I MBA M

1)FTSE is an index listed on ________________________________ having

___________ companies in its index and is commonly known as

____________________.

2) The oldest stock exchange of the world is _______________ and was

started in the year _______________.

3) World‘s largest futures exchange company is _____________________.

4) First stock exchange established in Asia was ___________________ in the

year ________________.

5) Second largest stock exchange in terms of Market Cap in Asia is

_______________ with an m-cap of __________________.

6) Company with the largest market cap in India is ___________________

with a market cap of _________________ crore rupees.

7) Securities Transaction Tax in India revised in the Union Budget of 2013 is

currently ________% on cash delivery transactions.

8) Union budget of India 2013 allows FII‘s to participate in

________________ derivatives.

9) Net FII inflows into India from April 2012 to March 2013 including both

equity and debt is ________________ crore rupees.

10) Expand the following:

NYMEX

RICI

NCDEX

NASDAQ

11) Europe‘s largest bank is _____________.

12) The percentage of CAD (current account deficit) to GDP is

_____________.

13) Opening a position in order to reduce Risk is called _____________.

14) US GDP accounts for _____________ percentage of world GDP.

15) Inflation rate for Feb. 2013 is ___________ .

Note :- We would love to receive your answers to these quizzes and the names

of the first three correct respondents will be published in the next issue.

QUIZ

28

Editor Sailabala Nayak

Eldho Poulose

NEWS

Sri Vishnu Garbham &

Sailabal nayak

Graph & Rates

Investors check

Gaurav Aggarwal

Abhishek Agarwal

Debate

Did You Know

Alumni Speak

Contemporary Articles

Scams

Commodity Market

Review Committee

Creative Head &

Design

Stock Watch

Buzz Words

Financial Services

Industrial analysis

Quiz

Sabahat Bashir& Akansha Bansal

Tina Patricia D’souza

Mithil Kumar

Eldho Poulose

Akansha Jha

Vattam Bhargav

Ankit Dewani

Sabahat Bashir,Ankit Dewani,GauravAgarwal,Sailabala

SriKrishna Sajja, Vattam Bharghav

Paridhi Goyal

Arpita Samanta

29

chaanakya `

About Us

Chaanakya is the official Finance Magazine of

Wealth Incorporation, the Finance Club. It is released monthly.

Its objective is to keep each & everyone abreast with the activities and events of the world of

finance.

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Christ University, Hosur Road,

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