FinXpress Term of the week:

CASA Ratio

4

Markets this Week 5

News of the Week 7

CAN YOU SOLVE IT? 9

Company in Focus:

Ernst & Young

3

JULY 22, 2012

Sources of Data:

> HDFCsecurities

> Economic

Times

> The Hindu

> Rediff Money

> MoneyCon-

trol.com

> Financial Express

> Indiapetro

Inside this issue:

Institute Of Management Technology

Ghaziabad

imtgfinxpress.co.cc

Hello Dear Readers,

Greetings from FinNiche!

It has been quite an eventful week for all of us here in the campus. The clubs and committees started off with their

selection process to ensure they are represented by some of the best and dynamic faces in the campus in the coming

future. FinNiche too had been very engaged with its own selection process and is glad that it has finally selected

students who would henceforth represent FinNiche more than anything else. It is a wonderful group of 17 dynamic

people who would need all your support and encouragement to do good not for themselves but for the batch as a

whole. Please welcome the Junior FinNiche team!

Returning to what we are presenting you today is a dose of full fledged financial information which is worth knowing.

In the Company in Focus we have Ernst &Young, where we talk about how it has evolved into one of the biggest

accounting firms over the years. In the “Term of the Week”, we move on from Depository Receipts” to the CASA ratio

which is considered highly relevant for any banking operation. In the markets, we bring to you how and why there

has been a dip in the markets compared to the last week and we also have tables to let you figure out in which

direction the exchange rates and the commodity rates have been moving.

We really hope that you find our content engaging. However, we would really appreciate feedbacks and suggestions

as to how we should improve our content further. With the new FinNiche team in place, you can certainly look

forward to new things coming up. Till then, “Enjoy Reading”!

Yours Sincerely,

The Editorial Board

“FinXpress”

Page 2 FinXpress

EDITORIAL

Ernst & Young (EY) is one of the largest professional service firms in the world

and one of the "Big Four" accounting firms, along with Deloitte, KPMG and

PricewaterhouseCoopers (PwC).

Ernst & Young is a global organization of member firms in more than 140

countries, headquartered in London, UK. It was ranked by Forbes magazine as the 8th

largest private company in the United States in 2011. Ernst & Young is the result of a series

of mergers of ancestor organizations. The oldest originating partnership was founded in

1849.

EY has four main service lines namely assurance services, tax services, advisory services and transaction ad-

visory services. Specifically, it deals with Financial Accounting Advisory Services, Fraud Investigation & Dispute

Services, Tax Accounting & Risk Advisory Services and optimizing, investing and raising capital.

EY has been always honored by respected organizations that recognize its achievements. In 2012,

Stonewall 2012 Workplace Equality Index (UK) recognized EY as Employer of the Year. Teleos, based out of Hong

Kong bestowed upon it Most Admired Knowledge Enterprise, 2010. It was awarded Accountancy Firm of the Year

Award by CFO Awards 2009 (Australia). Ernst & Young, a global leader in professional services, announces the

opening of nominations for the Entrepreneur of the Year 2012 Program. In its 14th year in India, the program aims to

‘honor the engineers of growth’- the most exceptional entrepreneurs, who are laying the foundation of a new tomor-

row with their vision, diligence and ingenuity. These also include entrepreneurs based in tier II & tier III cities,

presenting them an opportunity to mark their presence on the national stage.

Although recession, stalling growth and high unemployment continue to impact many markets, the data and

insights in this quarter’s rapid-growth markets forecast tells that the overall prospects for RGMs remain strong.

Analysis suggests that RGMs are likely to weather the ongoing Euro zone crisis and remain engines of global

growth, though many will see expansion slow this year. Their expansion is expected to accelerate once more in 2013,

helping stimulate a wider pick-up for EY.

And as uncertainty surrounding the single currency diminishes it is expected that growth will move forward

from 4.9% in 2012 to 5.9% in 2013 and 6.5% in 2014.

Such positive projections are there as the rapidly growing Asian countries are playing an increasingly

powerful role on the global scene. By adjusting their growth patterns towards more reliance, the major Emerging

Asian economies would allow greater exchange rate flexibility.

Meanwhile, the US and other advanced economies should reduce internal demand relative to overall growth. This

shift in relative demand and prices between surplus and deficit countries will help stabilizing financial markets and

economic systems across the world.

Secondly, soaring domestic demand in the RGMs is poised to change the rules of the world economy. By

2020, the number of middle-class households in emerging countries will more than double, overtaking the US and

Euro zone with nearly 150 million new consumers.

Page 3 FinXpress

Company in Focus : Ernst & Young

1849 Harding & Pullein founded in England. Joined by Frederick Whinney

1859 Whinney made a partner

1894 Arthur Young starts his first firm, Stuart and Young, in Chicago Harding & Pullein renamed Whinney, Smith & Whinney

1989 Arthur Young merges with Ernst & Whinney to create Ernst & Young

2000 Ernst & Young unveils a new, integrated global organization

The CASA (current and savings account) ratio is the ratio of deposits in the current and savings accounts of a bank, to its

total deposits. A higher CASA ratio is considered good for a bank as it is generally a cheaper source of funds.

Current and saving accounts are withdraw able on demand, and hence are also called demand deposits. It is due to this

feature, that they also carry a low rate of interest.

Hence, higher the CASA ratios better the net interest margin, which means better operating efficiency of the bank. (Net

interest margin is difference between total interest income and expenditure and is shown as a percentage of average

earning assets.).

CASA Ratio of different banks are as shown in the graph:

HDFC bank is known for having relatively higher CASA Ratio.

Scenario as of December 2011:

Given the higher interest rates offered on term deposits, the CASA levels of PSU banks came under some pressure

during the last quarters of 2011 and declined to 31.1% as on December 31, 2011 from 33.2% as on March 31, 2011. While

the SBI Group continued to hold a strong CASA share of 41.3% as on December 31, 2011, Nationalised Banks’ CASA levels

declined sharply to 27.0% from 29.4% as on March 31, 2011.

Large private banks continue to hold a strong CASA share in excess of 40% as on December 31, 2011.

However, the smaller and regionally-focused banks’ CASA ratio has been declining over the last few years and remains

under pressure, with the result that there has been a sharper rise in their cost of funds compared to other private banks.

Page 4 FinXpress

Term of the week : CASA Ratio

Page 5 FinXpress

Markets this week BSE Sensex

The BSE Sensex continued the downward slide from the last week and was at its lowest in the middle of the week. One of

the biggest losers was Maruti Suzuki whose shares dropped more than 8% owing to unrest at its Manesar plant that

involved a senior official Awanish Kumar Dev being severely beaten up and burnt alive. The plant has been closed for the

last 4days and losses are currently pegged at 210Cr. Sensex fell from 17241 to a low of 17043 on July 18 gaining from

there to reach a high of 17305 due to earning from heavy weights in the equity market and eventually declining to end

the week on 17158.

NIFTY

Nifty followed on similar lines as Sensex. Nifty shut shop at 5205.10 against last week's closing of 5227.25. Indian equity

benchmarks showed little enthusiasm over the week on the back of declining buyer's interest as earnings from

heavyweights kept specific stocks buzzing. Friday trade was particularly sluggish and indices just about managed to hold

their head above the water. Concerns over a weak monsoon, deteriorating macro economic conditions and lack of

domestic cues kept the market tepid throughout the week.

Key Events

Earners of the week: The earnings season is in full bloom and companies like Mindtree, Axis Bank, Kotak Mahindra Bank,

Bajaj Auto, Hero Motocorp and Dr. Reddy's have come up with good numbers in the first quarter, staying quite in line with

market expectations. Heavyweight Reliance Industries too came up with its results reporting dwindling margins in all its

business segments including refining, petrochemicals and oil & gas production. Exide, Infotech, Dish TV, Zee Entertain-

ment, Ultratech, Crompton Greaves and Asian Paints also announced their quarterly numbers this week.

Inflation woes: As the price of manufactured items eased slightly in June, inflation declined to 7.25% and India's

wholesale price index (WPI) rose at a lower than expected rate from last year. However, the cost of pulses, vegetables and

staples like wheat increased. While concerns about a below average monsoon drove food prices up, India's annual

consumer price inflation (CPI) was a little slower in June, recorded at 10.02%. Although, it was believed that the inflation

data might trigger a rate cut from the RBI, analysts largely think it does not guarantee a rate cut.

Maruti's Manesar misery: What started as labour trouble at Maruti'’s Manesar plant snowballed into a ruckus that

claimed the life of the GM-HR and injured more than 100 people, including workers and people from the management.

More than 100 workers have been arrested after the incident and the factory shut down for an indefinite period of time.

The lockout may result in an estimated revenue loss of ` 73 crore per day. Popular and profitable models like Swift, Dzire,

SX4 and A-Star are assembled at this plant and a closure is likely to lead to a huge loss for the company. Shares of Maruti

tanked after the unrest.

SENSEX NIFTY

Page 6 FinXpress

Markets this week

Page 7 FinXpress

News of the Week

QFIs can invest $1 b in

MF debt schemes

The Securities and Exchange

Board of India (SEBI), on

Wednesday, issued guidelines

allowing overseas individual

investors to invest up to $1

billion in corporate bonds and

debt schemes of mutual funds

without any lock-in period.

“In consultation with the

Government of India (GoI) and

the Reserve Bank of India (RBI), it

has now been decided to allow

Qualified Foreign Investors (QFIs)

to invest in Indian corporate debt

securities and debt schemes of

Indian mutual funds,” the market

regulator said in a circular.

QFIs or overseas individual

investors are permitted to invest

in corporate debt securities

without any lock-in or residual

maturity clause and mutual fund

debt schemes subject to a total

overall ceiling of $1 billion, it

said. This limit shall be over and

above the limit of $20 billion for

FII investment in corporate debt,

it added. As per the existing

norms, QFIs are allowed to invest

in schemes of Indian mutual

funds and Indian equity shares

by opening a demat account with

a qualified Depository Participant

(DP). The circular also said that

QFI could invest without obtain-

ing prior approval until the

aggregate QFI investments

reached 90 per cent of $1 billion,

that is, $900 million.

Euro nations seal $122

bn bailout deal for

Spanish banks

The Euro-zone nations have

sealed a deal to provide rescue

loans up to 100 billion euro

($122 billion) to Spain's ailing

banks amid speculation that debt

-laden Spanish government may

also eventually seek a bailout.

Finance Ministers of the 17-

nation euro group finalized the

details of a financial support for

Spanish banks in a video confer-

ence on Friday, a day after the

German parliament endorsed the

rescue plan with a large majority.

The assistance, which runs until

the end of 2013, will be

channelled to needy banks

through Spanish government's

Fund for Orderly Bank

Restructuring FROB, the

statement said.

The ministers are convinced that

the reforms attached to the bail-

out of Spanish banks will "help

restore efficiency and stability to

all areas of the country's banking

sector".

The finance ministers took their

decisions against the backdrop of

violent demonstrations across

Spain on Thursday in protest

against the government's new

au st er i ty m ea su r e s to

consolidate its budget by saving

up to 65 billion euros through

spending cuts and tax increases.

Spain is the fourth euro zone

nation to receive a bailout from

the European Union and the

International Monetary Fund.

stake of the smart phone and

tablet markets.

A U.S. appeals court, on Friday,

rejected Samsung’s bid to over-

turn a ban on U.S. sales of its

Galaxy Nexus smart phones.

NASDAQ to payout

$62 million as part of

its Facebook IPO

negligence

Nasdaq OMX Group Inc plans to

pay out $62 million in cash to

firms that lost money in

Facebook Inc's bungled initial

public offering in May. The plan,

which Nasdaq filed with

regulators late Friday, is $22

million larger than originally

proposed in June. All

accommodations will be paid in

cash, a departure from the prior

proposal, in which Nasdaq would

have mostly compensated

firms through trading credits or

rebates

Market makers, which facilitate

trades for brokers, lost upward

of $200 million in the IPO as

technical glitches on Nasdaq's

systems delayed the offering,

and then left many investors in

the dark for more than two

hours as to whether their orders

had gone through.

Orders are usually confirmed

within seconds, but in this case,

many orders made between

11:11 a.m. and 11:30 a.m. when

the stock began trading, were

not confirmed or processed until

1:50 p.m. That left market

makers and other customers

unsure of what they owned or

whether their buy, sell and

cancel orders had gone through.

Some orders were lost

altogether.

AAR exempts Mauri-

tius firm from capital

gains tax

The Authority for Advance Rul-

ings (AAR), an appellate body for

ruling on tax issues, has ordered

that a Mauritius-based company

be given full benefits of the

exemption in the Indo-Mauritius

double taxation treaty as the

new tax rules announced in the

budget have not yet come into

effect.

The taxpayer company, Dynamic

India Fund I (DIF-I), a company

incorporated in Mauritius, is a

100% subsidiary of Dynamic India

Fund II (DIF-II), another company

based in Mauritius which had

invested in India. The company

has made investments in India in

units and shares of Indian

companies.

The Income Tax Department,

which argued against giving

treaty benefit to the tax payer

company, pointed out that only

four out of 55 investors —

individuals plus institutions — in

the company were from

Page 8 FinXpress

News of the Week continued.. .

Mauritius. Therefore, the case

could be treated as one solely

designed for routing investments

through Mauritius to evade tax

on capital gains.

The AAR took notice of the com-

pany's assertion that the deci-

sions are taken by the board of

directors from Mauritius and the

control of the affairs of the com-

pany lies in Mauritius.

2G reserve price:

EGoM recommends

minimum price for air-

waves be cut to 14,000

-16,000 crore

A high-powered ministerial panel

tasked with finalising rules for

upcoming mobile spectrum

auctions on Friday recommended

that the minimum price for

airwaves be cut to ` 14,000-

16,000 crore, disappointing

mobile phone companies who

were pitching for an 80%

reduction from ` 18,000 crore

proposed by TRAI.

The Empowered Group of

Ministers (EGoM) headed by

home minister P Chidambaram

decided to allow telcos to

stagger their payments for

spectrum bagged through the

bidding process.

The ministerial panel has given

the Cabinet two options on

spectrum auction pricing and is

also in favour of deferring

payment for 2G spectrum,

sources added. The deferred

payment method is in line with

the recommendations of the

Telecom Regulatory Authority of

India (Trai). Essentially, under

this process, telecom companies

will have to pay a certain amount

of money up front for the

spectrum, and the rest over a

period of time. However, they

will also have to pay interest on

the deferred portion of the

payment.

RBI proposes tougher debt

restructuring norms

In a move that will make it

tougher for companies to

restructure debt, a panel set up

by the Reserve Bank of India has

r e c o m m e n d e d h i g h e r

provisioning on such loans by

banks and a sharp increase in the

promoters’ contribution. The

panel has also

recommended that personal

guarantees of promoters, during

loan recasts, be made mandatory

t o e n s u r e c o n t i n u e d

commitment.

The Reserve Bank of India (RBI)

has recommended tightening the

provisioning norms for banks by

increasing the amount of capital

to be set aside by them from 2

per cent to 5 per cent of the loan

amount in a phased manner over

a two-year period, that is, 3.5 per

cent in the first year and the

balance in the second year.

In cases of new restructuring of

standard asset, it has suggested

that a provision of 5 per cent

should be made with immediate

effect.

A higher amount of promoters’

sacrifice in cases of restructuring

of large exposures under corpo-

rate debt restructuring (CDR)

mechanism needed to be

considered. Further, the

promoters’ contribution should

be prescribed at a minimum of

15 per cent of the diminution in

fair value of the restructured

account or 2 per cent of the

restructured debt, whichever

was higher, it added.

Cartoons

Solve it Now!

We are on the web !

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Page 9

* * R u s h i n y o u r e n t r i e s t o :

finniche.imt@gmail.com

The right entries will get their name featured in the

next issue of FinXpress. So hit the quiz fast & get

yourself visible among 1000 odd in the campus.

Set A

Match the following: 1)Ashok Leyland a) Oracle Retail

2)Stock Exchanges b)Austin Cars

3)Mahindra Satyam c)23

4)Nasir Ali d) NASSCOM

5)Som Mittal e)Air India

Set B

Q. By what percentage did the retail inflation increase in May

due to rise in prices of vegetables, edible oils and milk as per the

official data released by the Union government on 18 June 2012,?

Q. Which is the second largest car seller in India?

CAN YOU SOLVE IT ?

Feel free to write to us at : Drop in your suggestions to the editorial team :

finniche.imt@gmail.com Magazine design/news : ameybadkar@hotmail.com

Articles/quiz : debjyoti.chanda89@gmail.com

PREVIOUS EDITION’S ANSWERS

SET A

Phiroze Jeejebhoy - Bombay Stock Exchange

Kothari pioneers - First Private Mutual Fund

RK Shanmukham Shetty - First Finance Minister

Sir Osbourne Smith - First RBI Governor

Jim O’Neill - BRICS

Set B

1. Gujarat Pipavav Port; 2. 2001; 3. Warren Buffet

Set C:

Question of the week answer:

Honda, BMW, Suzuki Peugeot

Page 10 FinXpress

Amul hits of the week

Tribute to Superstar Rajesh Khanna

India Pakistan Cricket series revived after five years

Controversy surrounding tainted offical's visit for the London Olympics

Source : Amul