chaanakya 5_08 issue 94

8/6/2019 Chaanakya 5_08 Issue 94

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VOLUME 5.08

ISSUE 94

July 16, 2011


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Rates 01

Graphs 02

News 03

National & International events in the world of nance

Contemporary Articles

India Inc. likely to invest $ 50 billion abroad 04Complex oil industry regulations scare foreign 05 investors

Scam 06Union Minister Maran Dayanidhi submitted hisresignation after corruption allegation

Stock watch 07IFCI limited

Investor Focus 10Titan Industries

Students speak 11

A peek into the corporate world through our students SIP experienceAlumni speak 13

A peek into the corporate world through our alumnis experience

Buzz Words 14

Fin-o-humour 15

Check your nancial quotient


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Rates

01

students CaRtoon

Repo

Reverse RepoCall rateIn ation(as on July 2011.)Forex Reserve(as on 1st July 2011)91 day T-BillIIP (for May 2011)

6.90 GS 2019

7.50%6.50 %5.50%-7.65%+9.44%$ 315.715 billion

8.1439%+5.6%

8.0907-8.0907%

By- Sumit Kumar Gupta II MBA G

By- Zafar Iqbal II MBA M


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43

43.5

44

44.5

45

1-Jul 4-Jul 7-Jul 10-Jul 13-Jul

Rs/$

GRaPHs

02

21400

21700

22000

22300

22600

22900


Gold(per 10 gram)

19000000

21000000

23000000

25000000

27000000

5200

5400

5600

5800

6000


future rates open interest

107

112

117

122

127


Oil(per bbl)

5200

5400

5600

5800

6000

18,000.00

18,300.00

18,600.00

18,900.00

19,200.00


sensex nifty


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inteRnational news

China said on Wednesday its economy grew at a slower pace in the second quarter, Gross

domestic product in the worlds second largest economy grew 9.5% year-on-year in the second

quarter.

Wall Street fell more than 1% on Monday as fears over the US budget and European debt crises

sent a shudder through markets and overshadowed the start of corporate earnings reports.

The Dubai property market is showing good signs of a recovery, with many neighbourhoods

reporting the rst increases in value since 2008, a new industry report has revealed. According

to data released by global property consultant Jones Lang LaSalle, prices for luxury villas rose

3 per cent in the second quarter.

India and China are now the top choice of Canadian investors, according to a survey by Franklin

Templeton Investments Corp. According to the survey, 38 percent respondents think India and

China represent the greatest investment opportunity over the next decade.

national news

03

India has overtaken Spain to become the 11th largest insurance market in the World. But

while the Indian market has jumped up 10 places in the last decade.

Banks with investments in excess of 10 per cent of their net worth in liquid and short-term

debt schemes will get six months to bring exposure in line with the ceiling. The Reserve Bank

of India (RBI) has capped exposure to these schemes at 10 per cent of net worth.

HDFC Bank, the second-largest private sector bank in the country, on Tuesday launched

In nia cards for the uber-rich, high net worth community in India.

Vedanta buys 10% stake in Cairn India for $1,362 mn. Mining conglomerate Vedanta Resources

has completed the purchase of a 10 per cent stake in Cairn India from Cairn Energy, taking its

total stake in the company to 28.5 per cent.

The countrys second largest IT company Infosys Technologies opened the rst quarter

earnings season with a decline in its sequential net pro t, primarily because of a rise in wages

that was not suf ciently offset by the rise in revenues. Infosys Q1 net dips 5.3% to 1,722

crore.

By- Gurjit Singh II MBA J


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Indian businesses are expected to invest between USD 40-50 billion overseas this year as globaleconomy improves, after having committed USD 30-35 billion of such investments last year, thiswas the remark made by Executive Director of Lanco Infratech Ltd Mr. Ajay Kumar Dhir.

He gave the rough estimations at the inauguralFuture Global 100 Initiative (FG100), a corporateworlds gathering in Singapore to address theglobal economy, markets and business direction,

pointing out that Indian corporations were nowvery bullish on investing globally.

Citing Lancos USD 1 Billion investment in an

Australian coal mine, Mr. Ajay Kumar Dhir saidthat last year, between USD 30-35 billion wascommitted as big ticket investments overseas byIndian businesses despite the traces of the 2008-2009, global economic recessionary trend.

The proportionate increase of Indian Investmentsto between USD 40-50 billion with the globaleconomy recovering and the recessionary trendlittle left far behind us. The economy is still not completely out of the slump but is stable enoughto make such an investment which would help in the long run.

Such an investment is not a far reach because 15% of Indian businesses have already ventured outinto the international markets, and 30% more would be doing so over the next 5-6 years. This isattributed by the growing business trends in the country.

Another 30% of the companies, who were aspirants earlier, are now stretching their wings, anda lot of them would be Small and Medium-size Enterprises (SMEs). This is also well supported

by the banking system as they are willing to lend more to these enterprises as there is a lot of

potential seen in this sector.

The Indian businesses have lined up funding for acquisitions with a lot of them aggressivelyeyeing potential business acquisitions overseas. Valuation is the key factor which for now is high.The moment the pricing is within reach, the Indian businesses would seal the deals.

One more note of caution should be that the Indian investors should shed India managementmentality and blend with global business operating cultures. It is better for the companies if theyare able to cope up with this as soon as possible.

The FG100 initiative is to be held in seven cities starting with Singapore. The next FG100roundtable would be held in Mumbai on August 4, followed by Shanghai, Kuala Lumpur, HongKong, Jakarta and Sydney.

04

india inC. likely to invest $ 50 Billion aBRoad

By- Pavan S Rao II MBA L


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05

ComPlex oil industRy ReGulationssCaRe FoReiGn investoRs

By- Pavan S Rao II MBA L

No where the regulatory agencies in the crucial oil and natural gas industry have been faced withteething troubles as in India, particularly when its energy security is brittle and dependence onimport substantial.

The Mines (Amendment) Bill 2011, which though primarily meant to keep pace with changes atwork places in the mining sector so as to effectively manage safety and health risks to workers,expands mining to incorporate any excavation including borings, oil wells and accessory crude-conditioning plants, including pipes conveying mineral oil within oil elds.

There is also a legislation predating the Mines Act 1952, called Oil elds (Regulation &Development) Act 1948, which was over the years revised with rules, the latest in June 2008.Mines under this Act meant any excavation for the purpose of searching for or obtaining mineral

oils and includes oil wells. This Act, too, de nes relevant waters to include territorial waters,contiguous zones, the continental shelf and the economic zone of India.

It also encompasses Petroleum & Natural Gas (Safety in Offshore Operations) Rules 2008.Between these two Acts, there is another one, namely, the Territorial Waters, Continental Shelf,Exclusive Economic Zone and other Maritime Zones Act 1976, which lays claims to all operationsin these areas.

To compound the confusion further, the proposed amendments to the Indian Mines Act 1952would be over and above the rules already noti ed by the Petroleum and Natural Gas Ministry andwould be consistent with them. Any investor would get torn among these disparate laws when itcomes to the brass-tacks, only to be running from pillar to post in complying with the diverse setof an enlarging legislative maze.

Even as there is a set of legislations overlapping in a high-risk area like oil exploration, the rulesgoverning blow-out preventers in oil wells remain a disturbingly grey area.

While the Oil Industry Safety Directorate has a superior set of standards which remains a draftand has not yet been noti ed, albeit being in line with the latest technological challenges, there is

also the Directorate General of Mines Safety which had its own design requirements, a couple of decades older, for blow-outs.

This raises a valid query about which safety standards would come into play in the event of a blow-out like the one that occurred in July 2005 in Bombay High, endangering safety aspects,experts warn.


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Industry Pro le:NBFCApart from commercial banks and co-operative credit institutions (urban and rural), the nancialsystem in India consists of a wide variety of non-bank nancial institutions, such as non-bank

nancial companies (NBFCs), nancial institutions and primary dealers. NBFCs, the largestcomponent of such institutions, can be distinguished from banks with respect to the degree andnature of regulatory and supervisory controls. There are two broad categories of NBFCs based onwhether they accept public deposits, namely, NBFC-Deposit taking (NBFC-D) and NBFCs-NonDeposit taking (NBFC-ND).The total assets of NBFCs registered a signi cant growth during2010-11, mainly on account of increase in the business of asset nance companies.

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Shareholding Pattern:

Jun-10 Sep-10 Dec-10 Mar-11Promoter - - - -

DII 15.7 20.1 23.3 21.0FII 31.4 30.0 30.0 29.4Others 52.9 49.8 46.6 49.7

About the stock:The stock has been moving in a downward trend and has formed a base at around 42. The stock

plummeted from the levels of 59 made in May. The reason for the decline was the continuousincrease in interest rates by the RBI. Now the interest rates nearly peaking it is a good opportunityto invest in banking and NBFC stocks with IFCI being the better of the pack. The stock is availableat a relatively low valuation and is a good buy from these levels. The stock has stiff resistancelevel at 52 and 57, 57 being the 200 day SMA. The stock has broken over its 50 day SMA whichis a good sign.

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10

students sPeak

In this issue, we have with us Mr. Badal Jha of senior MBA Section L, who completed his internshipat Sumitomo Mitsui Banking Corporation India, New Delhi. Below are the excerpts of the interviewwith Mr. Jha.

Chaanakya: Tell us a little about your organization?Mr. Jha: Sumitomo Mitsui Banking Corporation Capital India is an overseas subsidiary of SMBCJapan. SMBC capital India basically acts as advisory to the SMBC, Japan. Sumitomo Mitsui BankingCorporation (SMBC) was established in April 2001 through the merger of two leading banks: TheSakura Bank Limited and The Sumitomo Bank, Limited. Sumitomo Mitsui Financial Group, Inc.was established in December 2002 through a stock transfer as a bank holding company, and SMBC

became a wholly-owned subsidiary of SMFG. Some of the areas where SMBC is active are Trade

nance, structured nance, syndicated loan and project nance.

Chaanakya: How did you get selected for your Internship?Mr. Jha: I came to know about this organization through a relative in Delhi and I instantly appliedfor the intern post. I had a telephonic interview with Assistant Vice President and then I was informedabout my selection as an intern.

Chaanakya: What was the basis for your selection as an intern?Mr. Jha: The major focus during my interview, by interviewees was not just limited to nance butmore towards my commitment to learn and work culture. Organizational culture and cross culturalunderstanding on my part was, their basic agenda as its a Japanese Organization and people from

both Japan and India work in the organization. In my opinion, I had pitched their requirement quitesatisfactorily.

Chaanakya: What was your topic and role as an intern within the organization?Mr. Jha: I was asked to prepare A Detailed Research report on Solar Power in India, with

nancial analysis and valuation . I had to do an analysis on power generation needs of India alongwith the role of solar power industry, in ful lling the needs of the country. SMBC bank required meto do this project as they were approached by one of their clients for ful lling debt requirements in

setting up a solar power plant in West Bengal. I had carried out the required research and came upwith a valuation of the project, as per the organizations requirement with the support of my mentor inthe organization.

Chaanakya: What was your approach towards your assigned goals?Mr. Jha: My approach was to follow my organisation mentors guidelines and to ask questionswhenever I had dif culty relating to any problem. My mentor and fellow interns helped me to reachmy objective.

Chaanakya: How was your experience in the organization?Mr. Jha: I am out of words! In short, I would say it was an awesome and true learning period of mylifetime. I got to learn a lot about organisations working in the eld of Project Finance, how businessesare interconnected globally, how good team work can lead to good performance. Punctuality, positive

behaviour and attitude at right place and the right time are necessary while working in an organization.

By- Apoorv Jhudeley II MBA LT.B. Dekshit Ravichandra II MBA L


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alumni sPeak By- Geetika Gupta II MBA N

In this edition we have Ms. Usha who give us insight about the importance of job and the carrer oppurtuinities for MBA-Finance.

Name: Ms. UshaBatch: 2006 08Organisation: Thomson ReutersEducational Quali cations: B.Sc, MBA (Finance)

Chaanakya: What does your job at Thomson Reuters involve?Ms. Usha: My work at Thomson Reuters involves being Responsible for database administrationand sourcing of exchange and contributed data. Working with other staff and to own the contributor relationship between Thomson Reuters and the local exchange, contributor or data supplier for dayto day operations. Ensuring that relevant information is maintained and delivered in an accurateand timely manner to our clients (Pre-dominantly consists of Major Banks across the world) whouse our nancial information (products) for their trading purposes.

The position is within Data Operations which supports data across Thomson Reuters productsand services. It also involves holding regular client calls to know if there are any issues and if any enhancements need to be made. Accuracy and timeliness is extremely important because anydelay or error in the nancial data sent to the Clients can lead to huge losses to them.

Chaanakya: What other job pro les are available for MBA graduates in Thomson Reuters?

Ms. Usha: Other Job pro les For a fresher, the role is of an analyst. It can be in differentdepartments like the Content, Global Accounts, Procurement, billing, Fundamentals, Pricing etc.The analyst maybe required to work on real-time data (real-time information coming from thestock exchanges globally) or reference data. One starts as an Analyst and can move up as Senior Analyst, Team Leader, Specialist, Data Account Manager, Assistant manager etc.

Chaanakya: Tools we use Oracle discoverer Plus, SAP (general ledger, receivables, payablesetc), SIEBEL (CRM tool), MS Excel, SQL.Ms. Usha It helps if an MBA graduate has good Excel knowledge and also VBA. SAP will helpif one gets to work on couple of end-end projects till they go live. The rest of the tools can becompany speci c.

Chaanakya: Placement Season is back again and going live in a few months from now, your suggestion to them.Ms. Usha Find out very clearly what the company does and what kind of a job they are offeringto you. Discuss with lecturers to know better and also if there are any seniors in that particular organisation. There are possibilities that, the role that youve been told about maybe differentfrom what you end up doing. Find out the future scope (basically your career path) for the role

being offered.

Chaanakya: Lastly any suggestion to budding managers.Ms. Usha Budding managers Be proactive, volunteer to take up different tasks and nish it ontime. Keep in constant touch with the people concerned and report your progress. In turn youll

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learn and bene t in the process. In a corporate environment, networking helps, be approachable, build a good rapport with juniors and seniors, and dont restrict your knowledge only to the jobyour team/dept is doing. It is important to know the larger picture and know how the work youare doing is actually contributing to the company. This helps you in taking informed decisionsand also identify where you are good at and what you like to do so that you can chalk out a career in that area.

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Buzz woRdsBackwardationIn the futures market the price of a contract for future delivery of a commodity usually tradesabove the spot price because the owner of the contract is deemed to have the advantage of holdingcash until the time of delivery and is assumed to be able to earn interest on that cash.Occasionally, however, the spot price actually exceeds the futures price. This is known as

backwardation, or an inverted market.

Face-Amount Certi cateIt is a debt security issued by face amount. The holder makes payments periodically to the issues,and the issuer promises to pay the purchaser the face value at maturity or the surrendered valueif the security is presented by the maturity speci ed in the certi cate.

Hard Call ProtectionHard call protection usually refers to callable bonds. It is the period of time when a bond cannot

be called, no matter what the interest rate is. That is, if the interest rate falls sharply, most callable

bonds will be called (so the bond issuer can reissue at a lower interest rate). Hard call protectionensures that the holder of the bond can bene t when rates fall.

GarbatrageIt refers to a phenomenon of rising stock prices and increased market activity in an entire sector caused by a psychology change stemming from a major takeover involving two companies in thesector. In this stage speculators feel other takeovers are likely in the sector.

Jonestown DefenceIt refers to an extreme defensive tactic employed by the management of a target corporation to

prevent a hostile takeover. The defensive tactics are so extreme that they typically lead to thedestruction of the target corporation. It is an extreme versions of existing tactics; share buybacks(which increase stock prices and decrease public equity at the cost of cash or debt nancing),Crown Jewel manoeuvres (selling off attractive assets at a discount to anyone except the acquirer)

M0M0 is a measure of the money supply which combines any liquid or cash assets held withina central bank and the amount of physical currency circulating in the economy. In the UnitedKingdom, the M0 supply is also referred to as narrow money. It only includes cash or assets that

could quickly be converted into currency.


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CRosswoRds

Across

3. Ashok Soota, the former Chairman of Mindtree has sold his half of the stakewhich is bought by which famous person4. Which PSU companys is coming with FPO this month as part of divestment by

government5. Delhi High Court stops tansfer of six Spice Licenses to which company

Down

1. Which famous investor has bought 12 lakh shares in DCB bank which helped the bank to be stable2. Which bellwether companys quarter results showed negative

3. The former DGH Chairman who was booked for favouring a private rm to carryout seismic survey in his tenure by CBI

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By- Naveen Kulkarni II MBA N


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15

answeRs to PRevious issue

Quiz

1. a 10%2. c Myspace3. b $5.4 billion4. d $6.65 bn5. a $3.7 billion

6. c 51%


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Tel: +91-80-4012 9350/9351/9355Fax: +91-80-4012 9000

chaanakya 5_08 issue 94

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