VOLUME 4.18ISSUE 80

DECEMBER 16, 2010

Economics is not about things and tangible material objects; it is about men, their meanings and actions.

-Ludwig Von Mises

Rates 01Graphs 02News 03National & International events in the world of finance

Contemporary ArticlesRethinking Micro Finance 04India is prospering but not Indians 05Hero and Honda go for Mutual Divorce 06

Did You Know? 07Gold ATMThe Bomabay Stock Exchange 08

Book Review 10Commodity article 12Sugar: Another year of soaring prices or the market has flamed out?

Investor Focus 13Alumni Speak 14A peek into the corporate world through our Alumni’s experi-ence

Buzz Words 16Fincopedia

Quiz 17Check your Financial Quotient

Repo 6.25% Reverse Repo 5.25%Call rate 4.00-6.75 %Inflation(as on 15th Dec) +7.48%Forex Reserve $ 296.390 billion(as on 3rd Dec 2010)91 day T-Bill 7.2274%IIP (for October) +10.8%6.90 GS 2019 8.0907-8.0907%

RATES

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STUDENT’S CARTOON By- Md Zafar I MBA M

44

44.5

45

45.5

46

30-Nov 3-Dec 6-Dec 9-Dec 12-Dec 15-Dec

Rs/$

GRAPHS

02

19000

19100

19200

19300

19400

30/Nov 03/Dec 06/Dec 09/Dec 12/Dec 15/Dec

Gold(per 10 gram)

24400000

25200000

26000000

26800000

27600000

5700

5800

5900

6000

6100

6200

30/Nov 03/Dec 06/Dec 09/Dec 12/Dec 15/Dec

future rates open interest

5400

5600

5800

6000

6200

19,100.00

19,300.00

19,500.00

19,700.00

19,900.00

20,100.00

30-Nov 3-Dec 6-Dec 9-Dec 12-Dec 15-Dec

sensex nifty

86

88

90

92

94

30/Nov 03/Dec 06/Dec 09/Dec 12/Dec 15/Dec

Oil(per bbl)

INTERNATIONAL NEWS

• British consumer goods company RECKITT BENCKISER Group Plc plans to buy Gujarat

based packaged consumer goods and over the counter drug maker Paras Pharmaceuticals Ltd

for ` 3260 Crore.

• The US Treasury sold the last of its Citigroup Inc. common shares in a $10.5 billion offering,

this means that the taxpayers will reap a profit of $ 12 billion on their $45 billion cash invest-

ment in Citi.

• Hochtief AG plans to acquire new capital to allow Qatar Holding LLC to acquire a stake of

around 9.1% in the German construction Group.

• ECB i.e. European Central Bank will continue to offer special long term liquidity tenders. This

special scheme was supposed to phase out in early Jan’11, so the new decision would offer

relief to the euro zones debt market.

• IGate Corp, the California based IT service firm has applied to the US Securities and Exchange

Commission to sell 16 million shares to raise upto $392 million.

NATIONAL NEWS

By- Vaibhav Nagar I MBA L

03

• AIR INDIA had filed a compensation of $840 million(`3800 Crore) from the US aircraft

maker Boeing Co. for the inordinate delay in the delivery of Boeing 787 Dreamliners.

• Mukesh Ambani contributes $ 200-250 million in proprietary funding to start his private eq-

uity fund.

• The government will infuse ` 1200 Crore equity into cash strapped Air India Ltd to bail it out

of the economic crisis.

• The economic growth projection by the Indian Government of the Indian economy for the

year 2010-11 is projected at 9.75% with the possibility that it could reach 9% mark.

• Punjab and Sind bank plans to sell fresh equity stake worth `40 million through an IPO at a

discount of 5%.

• Banks raise CD rates as liquidity dries up.The banks have borrowed `1.2trillion from RBI

reflecting the acute shortage of liquidity.

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RETHINKING MICROFINANCEBy- Rohit Dhannawat I MBA L

In 2000, Andra Pradesh government started a pilot project for rural ending called as Velugu which was managed by the Society for Elimination of Rural Poverty (SERP) based on the concept of self-help groups (SHGs). The banks used to provide loans to the groups and charge interest rate of 12%, which was reduced by the government to 3% for the SHGs and rest of the 9%, was repaid by the state government to the banks. But the system was inflexible and also only single loan was provided to an SHG at a time. There was no provision for emergency top-up, which was needed in many cas-es. Poor people were never a part of SHGs because if they defaulted the respective SHG would not get loans in future. These reasons forced the villagers to go to microfinance institutions (MFIs) who were charging a whopping 25-30% interest rate. The banks also found it more convenient to extend the loans to MFIs as they got the same benefits with a lower risk.

The following years saw tremendous success of MFIs and more players rushed in. As the competition inten-sified MFIs moved beyond lending households with existing, predictable cash flows to households relying on uncertain, daily cash flows. The lending was now being done for the growth of the institution and not for the villagers. As the number of MFIs kept on in-creasing in every village, each household in the state had a minimum of three to four loans. There were cer-tain cases where the outflow of the income was much higher than the total earning.

National Rural Employment Guarantee Act (NREGA) was a source of income for a lot of people. Earlier the average number of workdays per household in Andhra was around 62 which came down to 52.8 recently due to certain changes in the laws related to NREGA. The Telengana in-cident also affected the labour market in real estate. The labours had a tough time repaying the loans as they did not have any other source of income. As the villagers were defaulting, the MFI staff and the SHG’s group members started pressurising them leading to suicide of many. With increased incidence of such news, MFIs came under the scrutiny of the government. Recent survey has shown that only 52% of people had actually benefited from the loans, while 25% of borrowers slipped deeper into despondence and poverty. The MFIs are now realising their mistakes and a lot of changes are being brought in. They are now not just targeting to provide loans but also helping to create livelihood mechanisms, which would build the capacity among the poor to repay their loans easily. It is also being proposed that as MFIs grow and make profit, they should reduce the interest rates to make it more convenient for the rural population.

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INDIA IS PROSPERING BUT NOT INDIANS

The recent rally saw the market reaching beyond the mark of 20000. It was tremendous news for the market as after a period of 32 months, the market saw the high again. The sensex saw an increase of over 4 lakh crore INR in last 18 months. The overall economy had been doing fairly well as the economy has been expanding at a rate of 8.8% (June -2010) and the industrial output grew at 13.8%.

But the facts show that the majority Indians have been a loser in this race. Comparing the portfo-lio of the major biggies during the 2008 and now, ADAG chairman Anil Ambani was the second-richest man in India. His holdings in listed companies were valued at 1.55 lakh crore. But when the Sensex inched past the same peak again, Mr Ambani’s personal wealth is was not even half of what it was almost three years ago. He is not the only billionaire to have lost out in this bull mar-ket. Others, including Mukesh Ambani, Sunil Bharti Mittal, KP Singh, GM Rao and Uday Kotak, are all poorer now, by a few thousand crore at least, even though the Sensex is back at 20K. The mutual funds were also seen to be running away from the market as it reached to levels close to 20k. During the month of September and October the MFs had been reducing there holdings in the market. The small investors being over cautious did not make much of the rally.

But the rally had been backed mostly by the FII. The recent time had seen an inflow of over $ 18 billion in the last one year. It cannot be predicted if the FII will continue to flood the market for a longer time.

To conclude, it is very evident that the companies are making a killing out of the market only when it is booming and they are poorer but the value equivalent to the downturn in the market conditions. It is impor-tant to understand how much value the booming con-dition is creating to the individual and then perceive the actual wealth. This is not limited to the markets but the whole of Indian economy where there is very good industry growth but the people still continue to fall under the under-developed category.

By- Rohit Dhannawat I MBA L

Today is a... digital incarnation of Oz - the Internet - we are a motley group of fools from lions to scarecrows, learning from

each other, making and taking responsibility for our decisions, and having fun as we skip down the yellow brick road of invest-

ing together!

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By- Vijay Kumar S. I MBA L

HERO AND HONDA GO FOR MUTUAL DIVORCE

After 26-years of joint venture between Hero group of India and Japanese auto giant Honda have reached an agreement to dissolve Hero Honda, India’s largest two-wheeler maker. This will mark the end of the last Indo-Japanese bike collaboration wave, which kicked off in 1984. Both the organisations have reached this basic consensus to dissolve the partnership.

The Japanese firm will offload its entire stake by as early as March 2011 and will no longer provide technical support to Hero Honda. Honda Motor Co is expected to sell its entire 26 per cent stake in Hero Honda to its partner Munjals-promoted Hero Group and would earn USD 1.2 billion from the sale.

Current scenarioHero Honda sold 4.5 million two-wheelers and grabbed 48 per cent of the growing Indian two-wheelers market. Hero Honda reported its highest monthly sales at 5.05 lakh units in October, registering a jump of 42.75% over the same month last year. The total revenue is ` 10000 cr.

Reasons for dissolving• Honda proposes to focus its operations on the new wholly-owned subsidiary Honda Motor-

cycle and Scooter India ltd (HMSI).• Honda wants to enter the 100 cc motorcycle market as single player in which Hero Honda

enjoys a majority market share.• The Hero group wants to buy out Honda and acquire monopoly over the bike making.• The company wants to increase its royalty from the sales of the joint venture.

Financial offering• 26% of Hero Honda is worth `5,400cr.• The offer to buy out Honda at around 40% discounts, which is compatible with their agree-

ment.• Net profit is ` 2,231.83 cr• Stock price `1,758.40 (8/12/10)

Effect on market• Hero Honda cannot export bikes to foreign markets.• The two companies, which renewed the agreement for technology support from Honda to the

JV in 2004, will let the pact run till its expiry in 2014,• The Hero group will set up its own R&D centre in preparation for life after 2014 should it end

up running the company on its own.• The Japanese giant will also leverage the large volumes expected for this bike in China and

India to bring down component costs.• We may see the ` 27,000 100cc bike, which would be the cheapest in India.• Will reduce the capacity gap that it currently nearly about 5 million.• Decrease of 53% in Total turnover in shares on the day they announced the statement.

CHAANAKYA VOL 4_18

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Options for Honda and Hero group

Honda Hero Group Leverage its R&D facility in Shanghai to de-sign low-cost bikes for India and use markets lower component cost.

Use the technology agreement with Honda valid until 2014 to launch 3 new models in the domestic market.

Close capacity gap with rivals using 600-bikes-a-year capacity of new `500-cr second plant in Rajasthan.

Use the interim period to set up large research & development facility and inculcate innova-tion within the firm.

Spend ` 500 cr to build network of distribu-tors, especially in rural areas, to match bigger Indian rivals.

Hire international expertise to build the Hero brand after the partnership with Japanese mo-torcycle giant ends

ConclusionWith the dissolving of a major automobile manufacturer, the opportunities are for newer alliances and strategies to enter the automobile sector. The two groups should revamp the marketing structure to gain the customer’s choice. The marketers are considering a low end bike using new technology and competition. We may see the cheapest 100cc bike in India by Honda in the range of ` 27000-30000. The prospect is good for both the organisations.

DID YOU KNOW?

By- Apoorv Jhudeley I MBA LSince November US gold investors have more convenience of buying Gold - right from an ATM or Automatic Teller Machines. The demand for Gold is increasing as an investment category, and the falling US Dollar is forcing the investors to park their hard earned money. Gold offers a good alternative to such investors as it has been a traditional and historic way to invest money.

How will a Gold ATM work?A gold ATM will work in exactly the same way as a nor-mal bank ATM works. You swipe/insert your card, select the type/form of gold you want to buy, the money is de-ducted from your card and the gold is dispensed to you by the ATM machine (like you get cash from a normal bank ATM).

What form of Gold can be bought from Gold ATMs?You can buy gold bars as well as coins from Gold ATM. It is said that there will be around 10 different gold products available through gold ATM.

When will the Gold ATM be available to public in USA?Common people can buy gold from ATM from November 2010 onwards. The plan is to first in-

Gold ATM: Withdraw gold Bars & Coins

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stall the gold ATM’s at the casinos in Las Vegas as well as in Florida. And then it will be installed in a phase wise manner all across the USA.

How much Gold can the Gold ATM hold at a time?A typical gold ATM can hold gold worth USD 3 million.

How will the gold prices be determined at Gold ATM?The gold prices are claimed to be updated in real time. Every 10 minutes the prices will be up-dated and hence the investors can expect a lot of price variation while buying gold.

Is there any way to trade at Gold ATM due to price movements?As of now, it doesn’t appear to be the case. The Gold ATM can only dispense gold; hence you have the option of only buying the gold. Selling is not possible. But you never know, in near future you might as well see these gold ATM’s becoming trading spots. However, this being only the initial phase, it will be a long time to go.

What Precautions should one take at Gold ATM?Gold being a precious commodity will need some precautions. Obviously, you will not find Gold ATM’s in every corner of the street as you find Bank ATM’s. There will be a limited availability in secure areas. However, you must make sure that while and after buying Gold, you need to take care of the Gold that is dispensed by the machine. Be cautious after the gold is withdrawn from the Gold ATM.

Source: http://www.finance-trading-times.com

THE BOMBAY STOCK EXCHANGE

A very common name for all traders in the stock market, BSE, stands for Bombay Stock Ex-change. It is the oldest market not only in the country, but also in Asia. In the early days, BSE was known as “The Native Share & Stock Brokers Association.” It was established in the year 1875 and became the first stock exchange in the country to be recognised by the government. In 1956, BSE obtained a permanent recognition from the Gov-ernment of India under the Securities Contracts (Regulation) Act, 1956.

In the past and even now, it plays a pivotal role in the de-velopment of the country’s capital market. This is recognised worldwide and its index, SENSEX, is also tracked worldwide. Earlier it was an Association of Persons (AOP), but now it is a demutualised and corporatized entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualisation) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI).

By- Deepak Jose I MBA N

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BSE VisionThe vision of the Bombay Stock Exchange is to “Emerge as the premier Indian stock exchange by establishing global benchmarks.”

BSE ManagementBombay Stock Exchange is managed professionally by Board of Directors. It comprises of emi-nent professionals, representatives of Trading Members and the Managing Director. The Board is an inclusive one and is shaped to benefit from the market intermediaries participation.

The Board exercises complete control and formulates larger policy issues. The day-to-day opera-tions of BSE are managed by the Managing Director and its school of professional as a manage-ment team.

The Exchange reaches physically to 417 cities and towns in the country. The framework of it has been designed to safeguard market integrity and to operate with transparency. It provides an ef-ficient market for the trading in equity, debt instruments and derivatives. Its online trading system, popularly known as BOLT, is a proprietary system and it is BS 7799-2-2002 certified. The BOLT network was expanded, nationwide, in 1997. The surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000 certified.

BSE’s International Convention HallThe Bombay Stock Exchange provides convention hall for listed companies and other Institu-tions to hold their Annual/ordinary General Meetings, Listing ceremonies, Analyst and any other important event.

It is centrally located at Mumbai, which can be easily reached from Churchgate or CST (VT) rail-way stations. It has a capacity of around 700 to 900 persons with state-of-the-art infrastructure. The hall has Projection Equipment, Web-cast facility and a Business Room with Facsimile, Inter-net, Photocopier and telecom equipment.

BSE Facts• First in India to introduce Equity Derivatives• First in India to launch a Free Float Index• First in India to launch US$ version of BSE Sensex• First in India to launch Exchange Enabled Internet Trading Platform• First in India to obtain ISO certification for Surveillance, Clearing & Settlement• BSE On-Line Trading System (BOLT) has been awarded the globally recognised the Informa-

tion Security Management System standard BS7799-2:2002.• First to have an exclusive facility for financial training.

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BOOK REVIEW

By - Amit Prakash I MBA L

Title: Stop Acting Rich...And Start Living Like A Real Millionaire.Author: Thomas J. Stanley Published: September 2009Published by John Wiley & Sons, Inc.

Happy people tend to live in homes they can afford. The recession may have given a natural reason to stop acting rich. But Thomas J. Stanley, author of Stop Acting Rich...And Start Living Like A Real Millionaire, suspects that frugality, if any will soon be forgotten.

About the authorThomas J. Stanley is the bestselling author—with over four million copies in print—of The Millionaire Mind and The Millionaire Next Door. The recognized authority on the lifestyles and behaviours of the affluent, Dr. Stanley is frequently quoted in the Wall Street Jour-nal, New York Times, Forbes, Fortune, Time, Money magazine, U.S. News & World Report, Reader’s Digest, and USA Today. He has appeared numerous times on the Today show, 20/20, and The Oprah Winfrey Show.

About the bookThe book details how the less affluent have fallen into the elite luxury brand trap that keeps them from truly acquiring wealth. The book focuses on the differences in the spending patterns of the three different categories of people:

• Theglitteringrich:These are small percentage of truly rich people such as athletes and celeb-rities. These are the people who can spend lavishly on multiple luxury cars, yachts, watches, and houses, and still have enough money left over because of their huge financial fortunes and incomes.

• Themillionaires(ofthemillionairenextdoortypes): these are the people who became million-aires because of their frugal living. Being financially independent, getting recognized among their peers, and living within their means is more important to these people than wearing and flaunting luxury brands.

• Theaspirationals: these are the vast percentage of people who aren’t rich but try to appear rich by consuming expensive brands. These are the people who try to emulate the glittering rich by living in expensive neighbourhoods, patronizing high-end retailers and restaurants, and buying premium watches, cars, and wines. Their emphasis is on looking rich rather than accumulating riches.

How to live rich without spending more? That’s not something which may really please many aspirants. But the author puts wealth in perspective with the book and explains how to stop the destructive cycle of spending lavishly.

Stop Acting Rich...And Start Living Like A Real Millionaire.

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The book says being rich means more than just big houses and luxury cars. A case in point is the fact that the most popular make of car among millionaires is a Toyota and not BMW or Mercedes. Only 5.7% of all millionaires surveyed nationally paid $1,000 or more for their most recently acquired suit

Thomas Stanley has written a fascinating book that is based on years of research into how the truly wealthy live. Stanley’s main contention is that those with millions aren’t among the nation’s hyper consumers. Rather it’s the “aspirationals,” those seeking recognition as members of the moneyed set, who are loose with a buck. It’s a hypothesis offered often, but the difference is Stan-ley’s research. He has packed his book with oodles of statistics — and not just the usual numbersIf you spend in anticipation of becoming rich, you are unlikely ever to become truly wealthy. One of the chapter’s title says it all – All that Glitters is not a Millionaire’s Goal!

Thomas Stanley reveals the results of a major survey which uncovers the sharp differences between the spending habits of real millionaires versus those who are just “acting rich”. It turns out that the big spenders aren’t who we thought they were. The “aspiring rich” far outspend real millionaires, who rarely spend above their means regardless of the extent of their wealth. As a result, they’ve mortgaged their future on an illusion.

Some take aways from the book• Our society has confused the consumption of certain elite brands with true success.• There’s a difference between looking rich and being rich. Most people who look rich, actually

aren’t rich.• Despite their lavish lifestyles, even the glittering rich people live within their means.• While the aspirationals don’t mind spending on luxury brands and items, they become ultra

frugal when it comes to tipping or spending on things that do not display their socioeconomic success and superiority.

• Most people take celebrities and athletes as their role models instead of emulating the people who achieved wealth and success by working hard and living non-flashy lifestyles.

• Most millionaires are value-oriented and spend moderately on a wide spectrum of things, in-cluding clothing, haircuts, cars, homes, and so forth. Most of them also don’t own a vacation home or a boat

• Those who give away larger portions of their income to charitable causes end up accumulat-ing more wealth.

The increase in the world’s population represents our victory against death.

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SUGAR: ANOTHER YEAR OF SOARING PRICES OR THE MARKET HAS FLAMED OUT?

By- Mandeep Kaur I MBA N

Unlike regional markets such as soya beans, cocoa etc., sugar as a commodity is traded in global market much on the lines of wheat. It is a commodity which is produced and consumed or say used everywhere. In case of this commodity analysis, its global supply as well as its consumption figures matter the most.

To find the answer to the question above, One must look no further than the market’s base fun-damentals.

One figure that encapsulates all of the fundamentals in this market is global stocks to usage. Global stocks to usage measures the amount of supply leftover at the end of the current crop year to the expected demand in the next crop year. If global sugar stocks to usage were 25% for the 2009-10 crop year, it means that if no sugar is harvested in year 2010, we have enough leftover supply to meet 25% of global demand for year 2010. The correlation between stocks to usage and price movement is clear over time. As stocks to usage declines, prices rallies, reflecting scarcity.

But still there are several other reasons for the shortfall in the production and supply of sugar in-spite of the predictions done before hand. These can be due to monsoons; either excess of rainfall or shortage. However, these problems are old news. And the markets had spent the better part of 2009 and early 2010.

Sugar as a commodity is really doing well at present and the same trend is expected to continue for 2011 crop year, with the sugar cycle continuing to remain positive. The fortunes of Indian sugar mills are set to improve significantly in sugar season on increased profitability and and free cash flow. Enhanced li-quidity should in turn be utilised for debt reduction, thereby resulting in an overall boost to credit pro-files. Thus, on the back of comfortable credit pro-files due to lower leverage and financial costs, sugar companies should be in a much better situation to handle the downward pressures in the next down-cycle debt.

Sugar mills’ profitability would continue to be strong during the coming year as higher prices would more than offset the lower output due to cane shortages. While margins could be trimmed out due to the higher cane procurement costs. However, as per the research the industry shall not witness large-scale increases in sugar-crushing capacity, due to the excess capacity built up over the past two to three years.

So we can conclude that sugar industry is definitely doing well and is expected to witness growth in the year 2011.The growth in earnings and profitability would be majorly due to higher sugar prices. And it would be another year of soaring prices for Sugar.

14 CHAANAKYA VOL 4_131513

INVESTOR FOCUS By- Madhukar Das I MBA G

Bajaj Auto Finance Ltd.After a month of correction the benchmarks are now showing signs of recovery and may test previous highs again. The correction was not fundamental and was purely based on market sentiments which were bearish owing to negative news, both domestic and international.

Fundamentally SpeakingBajaj Auto Finance Ltd specializes in providing customized retail finance solu-tions to cater to the requirements of different customer profiles and segments. Bajaj Auto Finance Ltd is operational in 367 dealers and 892 outlets across the country to facilitate fast and flexible retail finance offerings for Bajaj vehicles. Bajaj auto sales for Q2 were up 50% (YoY) which may result in higher earnings for Bajaj Auto Finance. The company has ventured into construction equip-ment financing. They are planning to cater to the requirements of both the new as well as used equipments whose industry size is estimated at `15000 crores. They have started another line of business of providing loans against shares, the market size for which is estimated at `5000 crores. CRISIL has assigned ‘AA+/Stable’ rating to Bajaj Auto Finance Ltd’s ` 5.0 billion non-convertible debenture (NCD) program and `2.0-billion Lower Tier II bonds.

Topline, Bottomline and EPS have shown healthy growth trend in past few quarters. Bottomline growth is faster than topline indicating reduced expen-ditures. Trailing twelve months P/E stands at 16.61, at par with industry me-dian. P/B ratio is at 2.19 considerably lower than industry median. The enter-prise value is at `1570/share. The company is enjoying healthy mutual funds activity. DSP Black Rock mutual funds have increased holding in the company in most of their schemes. At current market price it is a good short term buy oppurtunity.

ALUMNI SPEAKBy- Apoorv Jhudeley I MBA L

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In this edition, we have Mr. Tarun Kumar Singh, who gave us the insights about SIP and need of certification.

Name- Tarun Kumar SinghCompany: Finexure Financial Services Pvt Ltd, MumbaiDesignation: Managing Director & CEOE-mail ID: tarun@finexure.comBatch: 1994-1996

Chaanakya: What does your present job involve? What qualities do you think a fresher must possess to perform efficiently in the field you are into?Mr. Tarun Kumar: As the head of an organisaton I have to play various roles. I need to look at the managerial as well as functional issues and that would typically include; • Strategy Planning • ROI Accountability• Finance & Budgeting • Personnel Management• Sales • Marketing , branding and media • Market Intelligence

To survive and succeed in the financial services industry one need to have a good knowledge of

• Financial Markets and Services • Strategic financial planning • Soft Skills – computers, communication etc • Investment management and sales. • Impeccable Integrity • Problem-solving, decision-making skills and organization skills. Chaanakya: How do you relate experience versus added qualifications in terms of job prospects in the corporate environment today?Mr. Tarun Kumar: Both are important, An M.B.A. provides the strong general education but it doesn’t teach the skills needed in the day-to-day operation of a business. Job seekers need both “functional experience and managerial experience, including managing people and projects.” Students wanting to make a career in the financial services need to have additional certifications. Jobs today demand additional knowledge that complements your electives including baseline knowledge of technology and electronic communication.

Professional certification is a process in which a person proves that he or she has the knowledge, experience, and skills to perform a specific job. It shows employers and clients that you are com-mitted to your profession and are well-trained. It gives them confidence in your abilities.

Certification makes you more valuable to employers so you can expect to enjoy better employ-ment and advancement opportunities, have a competitive advantage over candidates without certificates thereby earn higher wages.

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Chaanakya: Can you describe the most difficult situation you have faced in your career and how did you manage it?Mr. Tarun Kumar: Though I have faced numerous challenges but the most difficult one was when I was faced with a task of closing down a business unit that I had created. Months of work going down the drain, having to sign a 1000 plus retrenchment orders was for a moment emotional but I had to think from a business point of view . Instead of closing the unit I got the managements approval for selling the business unit thereby saving the team members jobs and helping the management get back its initial investment.

Chaanakya: Soon we students will take up SIP, what is the most important thing they should keep in mind, and what role in your view, SIP plays in final placement?Mr. Tarun Kumar: If one looks at SIP as a base to one’s specialization then SIP projects go a long way in the final placement. SIP should be looked more as getting work experience than as a project.

Chaanakya: How in your opinion work experience matters at the time of placements.Mr. Tarun Kumar: As students venture out into the corporate world with their careers taking off, big companies are the one to look out for. Brand image is what the the corporate look for.

Chaanakya: What you’ll suggest to our budding managers?Mr. Tarun Kumar: Today employers are looking for graduates who can offer a positive range of knowledge, skills, experience and attributes. They value applicants who can ‘hit the ground running’ and demonstrate experience of the world of work.

Chaanakya: What a student, who is a fresher, should do to compensate with the people with work experience?Mr. Tarun Kumar: Professional certifications and work experience are becoming essential hence every student should endeavor to have at least some experience or specialization related certifications.

Chaanakya: What you’ll suggest to our budding managers?Mr. Tarun Kumar: • AdapttoTechnology:- Dependency on technology in the future will increase. Use technology

as an enabler of productivity, not as a neat new toy with tons of cute features that you don’t use.

• EmbraceDiversity: Explore, travel learn about different markets and Geographies. Learn a new language.

• Bealifelonglearner: The current workplace requires you to be a continuous learner. Go be-yond curriculum.

• Practice impeccable integrity and personal discipline.• Be a self starter – Take initiative – participate and get noticed – don’t sulk.• Prioritize and evaluate daily.• Be adaptable. • Think Creatively and innovatively. Thank you....

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BUZZ WORDS

T/T (Telegraphic Transfer)International banking payment method: a telegraphic transfer payment, commonly used/required for import/export trade, between a bank and an overseas party enabling transfer of local or for-eign currency by telegraph, cable or telex. Also called a cable transfer. The terminology dates from times when such communications were literally ‘wired’ - before wireless communications technology.

COVENANTSA set of conditions agreed to in a formal debt agreement and designed to protect the lender’s interests. Covenants may include restrictions on debt/equity ratio, working capital, or dividend payments.

Z SCOREA bankruptcy predictor based on the formula derived by Dr. Edward Altman. According to the Altman model, a Z-Score of 3.0 or higher indicates that the company is most likely safe based on the financial data; a score below 1.8 means that the firm is probably headed for bankruptcy. In studies, the Z-Score has been shown to have 90% accuracy of prediction of bankruptcy in the first year of the forecast, and 80% accuracy in the second year.

AD VALOREM TAXA tax based according to item value only, usually property tax based on the just or fair market value of the property. This tax can also be imposed on as a duty on imported items. Property ad valorem taxes are a major source of revenue for state and municipal governments.

BLUE – RIBBON CONDITIONBlue-ribbon condition describes a home or other asset that’s in excellent form, with no signs of wear.

CLAWBACKA clawback is a decrease in value that follows an increase in value. In the stock market, a claw-back occurs when a stock’s value rises, and then falls shortly thereafter. In personal finance, a clawback occurs when one receives financial benefits which must subsequently be returned be-cause stated contigencies weren’t met.

By- Pragati P I MBA K

Business is a means- the only means- to increase the quan-tity of goods available for preserving life and rendering it more

agreeable.

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16 CHAANAKYA VOL 4_13 17

QUIZ

1. Who has been appointed as the new Chairman of SEBI?a. R Badyopadhyayb. CB Bhavec. UK Sinhad. K C Chakrabarty

2. How much money LIC Housing Finance has raised by issuing Bonds?a. 750 crb. 800 crc. 600 crd. 650 cr

3. Which FMCG giant is planning to acquire PARAS?a. HULb. P&Hc. ITCd. Reckitt Benckiser

4. What is the current inflation rate recorded in India?a. 8%b. 7.48%c. 8.50%d. 9%

5. Name the country which is introducing ‘Google Tax’ from January 2011 onwards.a. Japanb. Chinac. Franced. Germany

6. Which bank has recently joined International Finance Corporation’s Global Trade Finance Program (GFTP).a. First Gulf Bankb. Deutsche Bankc. Merrill Lynchd. SBI

7. Which Indian giant joint venture is going to split in a two-tiered deal?a. Bajaj Kawasakib. Hero Hondac. Maruti Suzukid. Mahindra Renault

By- Abhijeet Singh I MBA G

CROSSWORDS

Across

1. Curve which supposed that for a given economy there is an optimal tax level to optimize tax revenues5. He was wrongly arrested and jailed under OSA7. The company that falied in its two IPO attempts due to volatile market8. The name of the building where BSE office is located

Down

2. FICO score provider3. Ended a stock position due to an execution of Ended a stock position due to an execution of a market order to buy or sell a security if a specific price is reached4. Company also known as mini L&T6. HCL made the biggest-ever acquisition by acquiring which company

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17

By- Abhijeet Singh I MBA G

Quiz

1. b2. a3. d4. b5. c6. a7. b

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