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THE INVESTOR VOLUME 5 ISSUE 2 February 2012

sustainable economy through innovation>>

Pg. 08

A peek into the union budget

pg. 14

World

Economic

Forum

The Great Transformation:

Shaping new models


2/28Disclaimer: The views presented are the opinion/work of the individual author and The Finance Club of IIM Shillong bearsno responsibility whatsoever.

F R O M E D I T O R S D E S K

NiveshakVolume V

ISSUE II

February 2012

Faculty Mentor

Prof. N. Sivasankaran

Editorial Team

Akanksha Behl

Akhil Tandon

Chandan Gupta

Harshali Damle

Kailash V. Madan

Nilkesh Patra

Rakesh Agarwal

Creative TeamAnuroop Bhanu

Venkata Abhiram M.

All images, design and artwork

are copyright of

IIM Shillong Finance Club

Finance Club

Indian Institute of ManagementShillong

www.iims-niveshak.com

THE TEAM

Dear Niveshaks,

Frombeing the worst perforer among emerging market curencies in2011, the rpee has outerfored all emerging market curencies in 2012. Cor-

porates will nd dealing with this volatilit a challenge as several forecasters are now changing their 2012 projections for the domestic curency. The rpee hasgained nearly 8.2% since the beginning of the year up to Febrar 3, which is thehighest appreciation compared to other Asian curency. The BSE Sensex shot upto 6-week high on sustained foreig instittional investors (FII) inows, low foodination and r overseas markets. FIIs remained net buyers. Another factor

working in favour of markets is the shar appreciation of rpee.

The RBI cut CRR for banks by 50 basis points to 5.50 percent to ease tightliquidit, sigalling a policy shi towards reviving gowth aer nearly to years

of ghting ination. With core ination still stbborly high, the Resere Bankof India, as exected, le its policy repo rate unchanged at 8.50 percent for thesecond consecutive review. FDI in single brand has led to emergence of some

global majors in Indian market. This will provide stimulus to domestic manu-factring value addition and help in technical up gadation of our small indus-t. Some more good news is exected on March 16, the day on which FinanceMinister Mr. Pranab Mukherjee will present Annual Budget for 2012-2013 in thebudget session of parliament commencing om March 12, 2012.

There was some respite for interational economy as well. The US unem- ployent rate fell to 8.3 percent in Januar, its lowest level in more than toyears, thanks to an unexected surge in hiring. This is the major factor which is

going to help Barack Obama in the US presidential election, 2012. The nancialcrisis is calming down. Europe is no longer on the edge of an abyss. All the eorsmust now be dedicated to the resolution of the economic crisis.

This issue brings to you some more interesting and insightfl reads. Thecover stor this month focuses on The World Economic Form Annual Meetingin Davos. The issue also featres an aricle on the annual union budget of India,

which is going to be presented on 16th March 2012. The aricle of the monththrows light on achieving goal of sustainable economy through innovation. Thisissue also featres other aricles on stctring the equit gap and telecom bank-ing. The classroom section exlains the concept of Options Market.

We, the Editorial Team of Niveshak, would like to take this oppornit

to thank our senior team for their valuable contibution to Niveshak. They are:Alok, Deep, Jayant, Mritnjay, Rajat, Sawan, Shashank, Tejas, Vishal and Vivek.Please join us in bidding adieu to all of them and wishing all happy times, goodhealth and bright ftre in their personal and professional life.

Stay Invested.

Team Niveshak


3/28

C O N T E N T S

Niveshak Times

04The Month That Was

Article of the month

08 Achieving The Goal Of

Sustainable Economy ThroughInnovation

Cover Story

11The 2012 WEF AnnualMeeting At Davos

Perspective

14A peek into the UnionBudget

Finsight

17 When Airtel LaunchesAirtel Bank...

Fingyaan

20 STRUCTURING THE EQUITYGAP

CLASSROOM

23 Options Market

Bidding adieu24 Finance Club 2010-12


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Strong inows strengthen `to 3-monthhigh

Expectations of easing monetary policy by thecentral bank to boost growth has led toa surge in foreign fund flows aidingthe rupee to post its fifth straightweekly gain in the week ending3rd February. The rupee ended at48.6850/6950 to the dollar, close tothe days high of 48.67, a level notseen since October 31. The total in-flows this year has been nearly $5.8 bil-lion in both equities and debt combined.The euphoria stems from the annual headline in-flation, which slowed to a two-year low of 7.47%in December. The dollar inflows have resulteddue to measures taken by the central bank tocurb corporate and interbank speculation whileattracting funds from non-resident Indians and

foreign investors to support the rupee.Services PMI hits six month high in Janu-ary

Improved market sentiment and strong demandboosted the HSBC Services Business Activity in-dex to a six month high of 58 in January froma distant 54.2 in December. The sentiment isdriven by positive outlook for financial interme-diation and hotels & restaurant sub-sectors thathave witnessed a phenomenal growth since July2011. However, as inflation still remains above

the comfort level, the numbers have to be takenwith a pinch of salt. The consensus is that it istoo premature for RBI to cut rates at this mo-ment and it would ideally wait for sustained de-cline in inflation before taking any action on therate front. That has not prevented the centralbank to cut cash reserve ratio by 50 bps to easeliquidity to indicate its shifting focus towardsaiding growth. Overall, the HSBC composite PMI,which includes manufacturing and services, rosefastest in nine months to 59.6 from 54.7 in De-cember.

Positive outlook for IT sector in 2012

In spite of uncertain conditions in key glob-al markets, rating agency Fitch has affirmed a

stable outlook for the Indian information tech-nology (IT) services sector in 2012. It considersthat the strong liquidity position of the Indian

IT companies would stand them in goodstead in the current year. It also fore-

sees a moderation in revenue growthin 2012 from 2011 levels as demandfrom key clients in US and Europeancountries is likely to remain muted.

The increased hiring by IT compa-nies in anticipation of a better year

is likely to put downward pressure ontheir EBIDTA margins. But, above all, the

sector experienced some relief in the last quar-ter of 2011 by the depreciating rupee, thoughthat rally may not be sustainable for long asseen by the reversal of the trend in early thisyear. The agency also mentioned that the sec-tor would be monitored closely to update theirstance depending on the margin position of thecompanies.

Facebook to go public

After a long period of eight years of existence,Mark Zuckerberg has finally decided to take hiscompany public. Investment bankers have sug-gested that Facebooks initial fund-raising tar-get of $5 billion could well stretch to $10 bil-lion based on investordemand resulting in thecompany valuation of up

to $100 billion. This couldmake FB one of the mostvaluable internet compa-nies of modern time. Thestep is a clear indicationof the growing competition between Google andFB with the former launching its own version ofsocial network called Plus. Also the paperworkinvolved in going public provided analysts therare opportunity to peep into the financial de-

tails of the web giant that was created in a Har-vard University dorm room. Zuckerberg agreedto cut his compensation from $1.5 million lastyear to $1 effective January 1, 2013, followingthe example of Apple founder Steve Jobs.

The Niveshak Times


IIM, Shillong

Team NIVESHAK

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European leaders looking eastEuropean leaders are beginning to recognizethe financial influence of Chinas huge holdingsof foreign exchange reserves. In an attempt tobuild stronger ties with China, European leadersare making a bee-line to meet Chinese premiers,the latest being Chancellor Angela Merkel ofGermany on a three-day visit. In response, Chi-nese Prime Minister Wen Jiabao assured greaterco-operation by working with the InternationalMonetary Fund to help shore up Europes financ-es. But he was silent on whether China was will-ing to drop conditions that so far have made itsproposed help unappealing to European leaders.China has amassed a massive $3.18 trillion offoreign exchange reserves by the end of Decem-ber, dwarfing the reserves of every other countryand potentially giving it the financial firepowerto make a significant contribution. Chinas earlierstance of the need to buffer the risk of lendingmore money to Europe has not seen any amend-

ment. As Chinese money could restore the confi-dence of the international investing community,the European leader might have no choice but toagree to political or trade concessions that Chinawants in exchange for assistance.

India selects the winner of the ghter

plane deal

Indian govern-ment has decidedto enter into adeal with Frenchdefence supplierDassault Aviation.

Their aircrafts, Mirage 2000 fighters, played a vi-tal role for India during the Kargil conflict in 1999.The new offering by Dassault Aviation- the Ra-fale fighters, emerged a winner with the lowestbid among severe competition from EurofighterTyphoon, American firms Lockheed Martin andBoeing, Swedish jet Saab Gripen and RussiasMiG 35. French President Nicholas Sarkozy has

assured of greater collaboration through transferof technology and full support of French authori-ties. The deal will definitely provide a new life tothe re-election bid of Mr. Sarkozy. An importantterm in the contract for the multi-role combat

jets ensures that half the value of the contractmust be spent in India which will boost the pub-lic and private defence contractors in India.

Piramal Heathcare in diversication

mode

After having entered into financial services bylaunching two non-banking financial companies(NBFCs) and acquiring two private equity (PE)businesses Indiareit Fund Advisors Pvt Ltd andIndiareit Investment Management Company forRs 225 crore, Piramal Healthcare Ltd. has its eyesset on the telecom sector. Piramal Healthcarepicked up 5.5% stake of Essar Group in Vodafonein August 2011 and in February 2012 decided topick up the remaining stake of Essar Group forRs 3007 crore taking its total stake in the compa-

ny to about 11 per cent. The series of purchasescomes on back of the group desire to diversifyinto sectors that have more potential than phar-ma. That was one of the reasons for selling itsIndian formulations business to US-based AbbottLaboratories in 2010.

SC judgement on 2G is nally out

The Supreme Court verdict on the 2G spectrumallocation saga appears to agree with the coun-trys Comptroller and Auditor Generals conten-tion that a first-come first-served process ofdispersing the licenses at throwaway pricesled to large losses to the public exchequer com-pared to the alternative of auctioning them. Notwasting time after the apex court struck down121 licences, the ministry has written to TRAI toput forward a policy and pricing mechanism for2G services in view of the order setting auctionsas the means of allocating spectrum.

The Niveshak Times

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FINANCE CLUB, INDIAN INSTITUTE OF MANAGEMENT SHILLONG


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MARKET CAP (IN RS. CR)BSE Mkt. Cap 63,57,880

Index Full Mkt. Cap 29,92,574

Index Free Float Mkt. Cap 14,78,260

CURRENCY RATESINR / 1 USD 49.33

INR / 1 Euro 64.84

INR / 100 Jap. YEN 63.25

INR / 1 Pound Sterling 77.41

POLICY RATESBank Rate 9.50%

Repo rate 8.50%

Reverse Repo rate 7.50%

Market Snapshot


RESERVE RATIOSCRR 5.50%

SLR 24%

LENDING / DEPOSIT RATESBase rate 10%-10.75%

Deposit rate 8.5% - 9.25%

Source: www.bseindia.comwww.nseindia.com

Source: www.bseindia.com

Source: www.bseindia.com23rd January to 14th February 2012

Data as on 14th February 2012

MarketSnapshot

CURRENCY MOVEMENTS


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MarketSnapshot

BSEIndex Open Close % ChangeSensex 16,667 17,849 7.09%

MIDCAP 5,681 6,347 11.72%

Smallcap 6,278 6,961 10.88%

AUTO 8,808 10,005 13.59%

BANKEX 10,919 12,127 11.06%

CD 5,801 6,247 7.69%

CG 9,799 10,452 6.66%

FMCG 4,042 4,136 2.33%

Healthcare 6,183 6,333 2.43%

IT 5,495 6,042 9.95%

METAL 11,178 12,527 12.07%

OIL&GAS 8,110 8,775 8.20%

POWER 2,078 2,187 5.25%

PSU 7,223 7,697 6.56%

REALTY 1,711 1,934 13.03%

TECK 3,292 3,573 8.54%


Market Snapshot


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A sustainable economy is one in which the re-sources are not used up faster than nature re-news them and benefits are shared equitably.On one account, sustainability concerns thespecification of a set of actions to be taken bypresent generation that will not diminish theprospects of future generations to enjoy levels

of consumption, wealth, utility or welfare com-parable to those enjoyed by present persons. Atpresent, the average per capita consumption ofpeople in the developing world is sustainablebut population numbers are increasing and indi-viduals are aspiring to high-consumption west-ern lifestyles. The developed world population isonly increasing slightly, but consumption levelsare unsustainable. The challenge for sustainabil-ity is to curb and manage western consumption

while raising the standard of living of the devel-oping world without increasing its resource useand environmental impact. This must be doneby using strategies and technology that breakthe link between economic growth on the handand environmental damage and resource deple-tion on the other.

However, the concept of sustainability is muchbroader than the concepts of sustained yield ofwelfare, resources or profit margins. If we seearound us today, a sustainability revolution is

taking place from an old economy that is highcarbon, high pollution, waste intensive andecologically disruptive, to a new economy thatis low or zero carbon, low pollution, energy/

resource efficient and ecologically supportive.But the question that has been lying beneathall those subtle layers of evolution is still thesame - How to attain sustainable developmentfor an economy?

And it is perhaps the most important and the

most daunting long-term challenge that theworld faces today. It has often been forecastedthat businesses, cities, communities and regionsthat lead this revolution will prosper becausethe new economy will outperform the old one.

Why Sustainable development is so

important for an economy?

Communities, cities, counties, regions, states,provinces and nations need to undertake sus-tainable economic development strategies for

defensive reasons, to avoid being left behindas the momentum toward a sustainable econo-my rapidly accelerates over the next few years.However, the positive reasons for launching asustainable economic development strategy areeven more important. A sustainable economicdevelopment strategy can guide places in evolv-ing a culture of stewardship, innovation andaction that will lead to prosperity, satisfaction,and inspiration. At the same time, a sustain-able economic development strategy can be a

powerful tool for regenerating low and moder-ate income communities.

A sustainable economic development strategyprovides guideposts on the way to the full real-

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IIM IndoreRajiv Singh & Sourabh Sahu

Achieving The goAl of

SUSTAINABLE ECONOMY

Through

INNOVATION



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ization of the promise of a sustainable economy.As such, it can help create places that peoplewill be very proud to provide for their children,and for their childrens children.

Can Innovation realize a sustainableeconomy?

Nowadays, a culture of innovation and action inrelation to sustainability is increasingly becom-ing one of the criteria that businesses use todetermine the strategic locations of their majorfinancial investments and where they build andmanage their main job-creating facilities. Thereis a reason for innovation to play a majorpart in the strategies of businesses.

Over the years, new inventions andinnovations in agriculture, mass

production, transportation andcommunication during the In-dustrial Revolution were largelyresponsible for proving wrongEnglish economistThomas Malthus,who predicted thatthe world couldntsupport an expo-nentially increasingpopulation. In the

same vein, todaysinventors and inno-vators could very wellprove wrong the skeptics who saythat economic development and environmentalprotection cannot possibly go hand in hand.

What should be the primary target for asustainable economy?

The sustainability revolution is based on the fun-damental recognition that there are three forms

of capital essential to the creation of genuineprosperity. In addition to economic capital (fi-nancial and manufactured), there are two otherforms natural and social. Any businesspersonknows that, over the long run, a successful busi-ness needs to invest wisely to generate moreincome than expenses and to grow its capital. Ifa business lives off its capital, it will eventuallygo bankrupt. This is just as true for natural and

social capital as it is for economic capital.

Natural Capital: The economy operates withindesign limits inherent in the natural environ-ment. If the economy disrupts the environment,it disrupts itself; and adds a higher financialcost to society and to individual businesses.

Conversely, the sustainability revolution recog-nizes the economys dependence on the envi-ronment for fresh air, clean water, climate stabil-ity, renewable energy and a thriving ecosystem.Businesses need to derive value from the eco-system without disrupting it. As the sustain-

ability revolution proceeds, true cost pricingand true cost accounting to value major

contributions of the natural world areemerging.

Social Capital: A prosperouseconomy depends on a stable

society with an effective work-force. The economy threatens

its own foundations if itdisrupts society by allow-

ing an extreme gap toemerge between thevery wealthy few andthe rest of the pop-ulation or by inad-

equately supportingsocietys ability to en-

sure public safety, an ef-fective educational system, a

well trained workforce and an afford-a b l e health care. At the same time, a pros-perous economy contributes to a stable societyby creating the jobs, the opportunity for produc-tive work and the income that people need tolive satisfying lives.

Economic Capital: Sustained economic prosper-ity requires that both the private sector and thepublic sector operate according to sound finan-cial principles. Massive government budget andbalance of payments deficits are not sustainableand put the borrowing countries in jeopardy toforeign lenders. At the same time, it is essen-tial for countries to maintain and enhance theirphysical infrastructure. Economic capital is built

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Sustainable Economic Development Strategies generate substantial economic and employment

growth and sustainable business and community development by demonstrating that innova-tion, efciency, and conservation in the use and reuse of all natural and human resources is the

best way to increase jobs, incomes, productivity, and competitiveness


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most effectively and the economy works bestwhen operations are transparent and guided byappropriate policies.

Strategy to tackle these primary targets

Sustainable economic development strategiesgenerate substantial economic & employment

growth, sustainable business and communitydevelopment by demonstrating that innovation,efficiency and conservation in the use and reuseof all natural and human resources is the bestway to increase jobs, incomes, productivity,and competitiveness. In addition, sustainableeconomic development strategies are the mostcost-effective method of promoting renewableenergy and clean technologies, protecting theenvironment and preventing harmful impactsfrom climate change. A sustainable economic

development strategy has four key elements,referred to as the four greens:

1) Green Savingscutting costs for businesses,families, communities and governments by effi-ciently using renewable resources and by reduc-ing and reusing waste.

2) Green Opportunitiesgrowing jobs and in-comes through business development and ex-panding markets for resource efficiency, sus-tainability and clean technologies.

3) Green Talentinvesting in fundamental assetssuch as education, research, technological in-novation and modern entrepreneurial and work-force skills, because people are now the worldsmost vital green economic resource.

4) Green Placesestablishing sustainable trans-portation and infrastructure and protecting andenhancing the natural and built environment, tocreate more attractive, livable, healthy, vibrant,prosperous, productive and resource-efficient

areas and communities.Innovation can both enhance economic growthand achieve sustainability through the develop-ment of alternatives to traditional usage of re-sources. The combination of drivers to reducedependence on depleting natural resources; toreduce negative environmental impacts, notablyclimate change; to create significant new mar-

ket opportunities for new technologies; consti-tute a historically novel impetus to innovation.

Conclusion

The long-term solution to the model of sus-tainable economy is therefore to move beyondthe growth at all costs economic model to a

model that recognizes the real costs and ben-efits of growth. We can break our addiction tofossil fuels, over-consumption and the currenteconomic model and create a more sustainableand desirable future that focuses on quality oflife rather than merely quantity of consumption.

We should aim to establish a long-term visionfor the future that facilitates a cleaner and fairerfuture for generations to come. We envisionthat the measures taken will create a platform

for an economy that helps to reduce worldwidecarbon emissions, as well as provides attractivebusiness opportunities to internal and externalinvestors. The sustainable economy will be-come an economy, renowned for its utilizationof renewable energy and innovative practices,celebrated for its commitment to zero wastepractices and distinguished by a value systemthat goes beyond the financial.

It will not be easy; it will require a new vision,for innovation with new measures and new in-

stitutions. It will require a redesign of our entiresociety. But it is not a sacrifice of quality of lifeto break this addiction. Quite the contrary, it isa sacrifice not to!

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the top concerns this year. This was a strikingturnaround as it had never been identified as anissue at the WEF before. This can be attributedlargely to the Arab Spring uprisings, the OccupyWall Street movement and other protests world-wide. There were no responses to the wideninginequality gap, but an intensifying realizationthat economic development must include thepoor, that creation of employment opportuni-ties is critical, and that affordable food, hous-ing, health care and education need to be anintegral part of any solution. Before the start ofthe annual meeting, the International MonetaryFund reduced its projection for global growth in2012 to 3.3 per cent from the 4 per cent markit had forecast in September 2011. Many othereconomic forecasters also predicted a slowingeconomy. It is expected that Asia will continueto be the engine for global economic growththough at a comparatively slower rate, with Chi-na leading the list with 8 per cent plus growth,followed by India and Indonesia. A feeble globalrescue effort and financial tightening over thepast year have taken their toll on developingmarkets growth. Overall, emerging market de-velopment is expected to sustain in 2012, al-though at a slower pace. Domestic demand willbe robust and with lower inflation, there is apossibility of both monetary and fiscal impetus

in many countries.The Future of Euro Zone

Coming to the Euro zone, its finance officialshave guarded optimism about the latest efforts

CoverStory

TeaM nIveshakAkanksha Behl

What is the World Economic Forum?

The World Economic Forum (WEF) is a Swissbased, independent, non-profit international or-ganization dedicated to improve the condition ofthe world economy by engaging corporate, po-litical, academic and other leaders of the societyto shape worldwide, local and industry agendas.

The annual meeting at Davos, for which the fo-rum is best known, brings together over 2,500top corporate leaders, global political leaders,selected highbrows and correspondents to dis-cuss the most pressing issues facing the world,including health and the environment. Apartfrom the meetings, the foundation produces aseries of research reports and involves its mem-bers in sector specific initiatives.

Annual Meeting 2012

The 2012 annual meeting in Davos was heldfrom 25th January to 29th January, with thetheme The Great Transformation: Shaping NewModels. With 260 sessions, discussions andconferences, the theme echoes the need for athoughtful renovation of the face of an unrav-elling universal system and haunting economicdisorder. The discussions revolved around driv-ing new models of growth and employment,leadership and innovation, sustainability andresources, and society and technology.

Income Disparity- discussed for the rsttime in WEF

Europes mounting debt crisis dominated themeetings. However, income disparity was one of

The 2012 WEF Annual Meeting At Davos


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will lead to a much bigger problem. The govern-ment will then have to take more aggressive stepsto bring the situation under control.

The jittery oil market- yet another

concern

Yet another issue addressed

was that of the jittery oilmarket. Due to the discon-certed debt situation inthe Euro zone and chancesof a severe slowdown inChina, the commodity mar-ket risks remain concen-trated on the downside. Inoil markets, however, theseobstacles are offset by geo-political concerns, including

the stand-off between Iranand the West over the for-mers nuclear weapons pro-gramme, growing concernsover the health of the Saudiking and the possibility ofa troublesome succession,and on-going unrest fromthe Arab Spring.

Conclusion

On the whole, there was alack of a major developmentin dealing with the on-goingeconomic crisis. However,this does not mean that theWEF failed in its purpose. Itgave the highbrows and theleaders of the world a plat-form to talk about broaderissues that are affecting dif-ferent strata of the economy.

Most importantly, the an-nual meeting of the WorldEconomic Forum providedendless opportunities for

prominent corporate and administrative leaders todiscuss and reflect on universal issues, somethingthat was clearly accomplished.

ing school should be achieved. It is extremely im-portant that the capacity of the economies is in-creased with respect to job creation because youthunemployment is like a ticking time bomb underthe global economy. Young people who were un-employed for a long time willearn less throughout their en-

tire lives. As a result they willbe less employable and wouldlack the skills that are neededby business. Such people aremore likely to have long-termhealth problems and it cancause social disturbance. Weneed to ensure that youngpeople have the skills neededto gain meaningful employ-ment in order to ensure rapideconomic growth.

Will Chinas real estatetrouble cause anotherrecession?

Another major worry for theyear is about Chinas real es-tate market. There is a pos-sibility that the troubles in itsreal-estate market will spillover to the rest of the econ-

omy and cause recession.China is expected to faceslower economic growth rateof about 8.5 per cent this yeardown from 9.2 per cent in theprevious year. It has been hitby a double whammy. Bothexports and local demand arefalling down simultaneously.Local demand is falling dueto the problems in the real-

estate sector. So far, only therequired reserve ratio hasbeen cut down by the govern-ment in order to lift business credit lines and helpcompanies mitigate subsiding demand at homeand abroad. If more property developers run intotrouble and default on their interest payments, itwill lead to greater non-performing loans and this

The Euro Zone crisis is not the regions problem alone. Its a crisis that could have collateral and spillover effects around the world

The 2012 annual meeting ofthe World Economic Forum

in Davos was held from 25th January to 29th January,with the theme The Great

Transformation: Shaping NewModels. With 260 sessions,

discussions and conferences,the theme echoes the needfor a thoughtful renovation

of the face of an unravelling

universal system and haunt-ing economic disorder. The

discussions revolved arounddriving new models of growthand employment, leadership

and innovation, sustainabil-ity and resources, and society

and technology. The major is-sues talked about in the meet-ing were the future of the

Euro Zone, income disparity,growth in developing high-growth markets, inequal-

ity and youth unemployment,capitalism, Chinas real estate

trouble and the jittery oil mar-ket. The meeting providedendless opportunities for

prominent corporate and ad-ministrative leaders to discuss

and reflect on universal issues.


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Perspective

Indias first Finance Minister, Mr RK ShanmughamChetty presented the first Financial Budget of in-dependent India on November 26, 1947. Since thenevery year, the Finance Minister of the Union haspresented the budget. Initially, the main attentionwas paid to the agriculture sector which is the pri-mary sector of independent India. But as the econ-omy evolved, the focus shifted from agriculture toother sectors such as industry, services, etc.

In the early fifties, the Indian budget revolvedaround the public sector and public finances. Atthat time taxes, inflation, public saving, were muchtalk about issues. This trend continued until thefunding budget 1985-1986.

Change in this approach began with Mr. Manmo-han Singh, who served as Minister of Finance underthe leadership of Mr. P.V. Narsimha Rao. Mr. Singhwas instrumental in head starting the new phaseof economic liberalization and privatization. Therewas a reduced government control over public sec-

2012 has started where 2011 left off, with globalgrowth opportunities under the threat of a dis-tress in financial markets.

The Asian economies are also vulnerable if thecurrent financial crisis in Europe ends in a eurozone split or a series of sovereign defaults - whichwould create a global financial shock wave similarto that observed in 2008-2009.

In this scenario, the coming budget has a ma-

jor impact on Indias preparedness for the future.Therefore, all managers must be aware of the im-portance of a budget and its components.

What is a Budget?

The word budget is derived from bougette aFrench word meaning purse . The budget is afinancial plan listing all planned expenditures andrevenues. This is a plan of savings, loans and ex-penditures for a specified period of time. A bud-get is an important concept in both micro andmacroeconomics. Microeconomics uses a budget

line to illustrate the advantages and disadvantag-es between two or more products. In other words,a budget is a plan expressed in financial terms ofan organization for a specified time period.

In summary, the purpose of the budget is to:

1) Provide an estimate of revenue and expen-diture, i.e., build a financial model of how ourcompany can do if certain events, strategies andplans are carried out.

2) Aid in the evaluation and analysis of how the

real data deviates from the plan. It therefore actsas a control tool.

History of the Union Budget in India

There is a constitutional requirement in India (Ar-ticle 112) to present to Parliament a statement ofestimated income and expenditure of governmentfor each financial year which runs from 1st Aprilto the 31st March.

TeaM nIveshakHarshali Damle

The liberalization process thatbegan years ago still continues

and is a part of the announce-

ment of Indias budget each

year

A peek into the Union Budget



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Perspecti

ve

tor units through disinvestment. The liberaliza-tion process that began years ago still continuesand is a part of the announcement of Indiasbudget each year. This year the Union Budget2012-13 will be announced by the current Fi-nance Minister Mr Pranab Mukherjee.

Union Budget- India

Thus, the yearly Union budget is a comprehen-sive presentation of government finances. Itis one of the most important economic and fi-nancial events of India. The Minister of Financemakes a report containing the governmentsrevenues and expenditures for a fiscal year.

The Union budget is preceded by an economicstudy that describes the overall direction anddata on the budget and national economic per-formance. The economic survey studies and

analyzes trends in the agricultural and indus-trial production, infrastructure, employment,money supply, prices, imports, exports, foreignreserves and other economic factors.

The budget is therefore the most extensive ac-count of the governments finances, in whichthe income from all sources and expenditures ofall activities are enlisted. It comprises the rev-enue budget and capital budget. It also containsestimates for the next fiscal year called bud-geted estimates.

With some exceptions such as elections, theMinister of Finance presents the annual budgetof the union in the parliament on the last busi-ness day of February. The budget must be ap-proved by the Lok Sabha before it can enter intoforce on April 1.

Components of the Budget

The Union budget is made up mostly of RevenueBudget and Capital Budget.

1) Revenue budget: The revenue budget primar-

ily comprises government revenue receipts liketax and expenditure met from the revenue. Thetax revenues principally constitute yields of tax-es and other duties imposed by the governmentof India.

2) Capital Budget: The capital budget primarilycomprises capital receipts and payments. Theprimary components of capital receipts include

loans brought up by government of India frompublic, termed as market loans. Some of theother components of capital receipts includeborrowings by Government from Reserve Bankand loans obtained from foreign governmentsand bodies.

The budget documents presented to Parliament

include, apart from budget speech of the Fi-nance Ministry, the following:

1) Annual Financial Statement (AFS)

2) Demand for Grants (DG)

3) Appropriation Bill

4) Finance Bill

5) Memorandum Explaining the Provisions inthe Finance Bill

6) Macro-economic framework for the relevantfinancial year

7) Fiscal Policy Strategy Statement for the finan-cial year

8) Medium Term Fiscal Policy Statement

9) Expenditure Budget Volume -1

10) Expenditure Budget Volume -2

11) Receipts Budget

Importance of Budget for the economy

Budget plays a very important role for a develop-ing country like India. The budget of the country

has an overall effect on different sectors of theeconomy. In a country like India, the conceptof growth fear is partly fulfilled, as it is grow-ing rapidly. However, in the current scenario,growth cannot be assumed. Also achieving theother development indicators is still far fromreach. Growing inequality is the best example.In this context, Budget has its own importanceand role. Indian economy is also experiencingone of its periods of weakest growths since2002 due to both internal and external issues.

The high interest rates and inflation, togetherwith a deteriorating global economy have hadan impact on business confidence and trust ingovernment. This has depressed the private in-vestment, which before the 2008 crisis was oneof the main drivers of growth in India.

The government can use this budget to lightenthe mood of consumers and investors and to

The Union budget is preceded by

an economic study that describesthe overall direction and data on

the budget and national econom-

ic performance


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promote greater confidence in the business fra-ternity.

Economists expect most of the headwinds to de-crease during 2012, which provides for a recov-ery during the year, but not before GDP growthhas slowed considerably.

One should look out for the following as majorcomponents of the budget that affect the com-mon people in the coming budget:

1) GDP

2) Fiscal Deficit

3) Income Tax benefits

4) Steps to curb inflation - Duty on Oil

5) Corporate Tax rates - Tax Slabs and deduc-tions available

6) Excise and service Tax rates

7) Direct Tax CodeMain predictions and viewpoints for the nextbudget:

1) Based on the analysisconducted by CRISIL, thecountry is expected tohave a GDP of 7% in thenext year with growth of5.8% inflation and fiscaldeficit to 5.5%.

2) On the basis of es-timates of CII, the gov-ernments fiscal deficitwould be in the range of5.5-6.0% of GDP.

3) Preparatory changesfor laying a foundationfor GST

4) The question of the removal of STT has beenraised by the representatives of the different ex-changes, including BSE, NSE, MCX-SX and USE.

The main improvements suggested are:

1) Efforts should also be made to increase rev-enues by broadening the tax net, the control ofsubsidies and the release of funds in disputesand litigation.

2) The government should announce a clearroadmap for the process of disinvestment in thenext five years.

3) The government could also carry out a censusof land and other assets locked up in centralpublic sector units that have become economi-cally unviable.

4) To promote foreign investment in infrastruc-ture, easing the rules for entry of foreign fundsto this sector is another option for enhancing

investment.5) A synergy of MSMEs and large companies canbe promoted through tax incentives to supplyinputs for small industry.

6) The Direct Tax Code and Goods and ServicesTax are still being thrashed out. Establishing aclear deadline for the application can help ac-celerate the discussions and add comfort to in-vestors.

Therefore there is a need for the government to

focus on promoting inclusive growth and devel-opment of infrastructure in the plan, through

better manage-ment and utiliza-tion of resources.There is also aneed to create anenvironment forsustained eco-nomic growth inthe medium and

long term.Liberalization inthe banking, in-surance, retailand aviation willexcite investors.As a fast-track di-

vestment, modernizing the rules of land acquisi-tion and ending harmful government monopoliessuch as coal is needed.

The budget is usually presented in the last day

of February each year. However, with assem-bly elections in five States from 30 January to 3March, Finance Minister, Pranab Mukherjee, in-dicated that the presentation of Union Budget2012-13 would be on March 16, 2012. Thus, nextmonth, our budget-makers have the opportunityto provide a sound direction to the country inthe midst of crisis.

Perspective

NIVESHAK

The government can use this budget to lighten the mood of consumers and investors and topromote greater condence in the business fraternity



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competitive voice calls and messaging markethave forced the telecom companies to look outfor new business opportunities. These telecomcompanies will definitely target the avenueswhich will give them returns in the same scaleas during the telecom heydays. With the con-sistent growth and returns of the banking in-

dustry, the telecom companiesseemed to have found

the perfect

ground.While the feasibil- ity of offering thecomplete set of banking services right from com-mercial loan services to bond services will taketime what customers may initially expect are abasic set of services like mobile payment, creditand charge card services. With the experiencein mobile banking, the telecom companies canslowly takeover the whole umbrella of businessthat uses network. This will open up a wholegambit of opportunities for the operators as

well as a plethora of facilities for the customers.One important sector that they will be able to fi-nance will be the micropayments via messagingor voice call. It is imperative that carriers will tryto muscle in on the mobile wallet and paymentsspace and a slow demand of banking license bysome of the telecom giants has cropped up inthe industry corridors. Rogers Communications

Finsight

nITIe, MuMbaIHimangshu Das

We always come across telecom companieslaunching new Talktime or Top Up offers. Theday is not far when we will see them launchingnew fixed deposit schemes, saving offers etc.The above statement, though seems absurd willperhaps make sense as we read below.

The estimated banking penetrationamong middle and high incomegroups in India is about 45%while for low income groups itis less than even 5%. Maximumfinancial inclusion of our human re-source is crucial to tap the countriessavings and investments. While Micro-finance institutions do play an impor-tant role, still the penetration level isvery low. Comparing this with the 76.03

% of teledensity and the projected tele-density of 84% by 2012, banks have in-deed realized the role that can be played b ymobile banking in reaching out to the unbankedareas as well as the on the run customers.Hence they have tied up with leading providerslike Vodafone and Airtel to cater mobile bankingservices.

While this is a positive signal for both the tele-com and banking industry in terms of revenueand reach, it has also initiated discussions aboutthe drift in the traditional role played by thetelecom sector, from that of a provider of voiceand message service to everything under thenetwork. With the provision of mobile service,mobile banking, mobile commerce, etc. thesetelecom companies have come a long way outof their monolithic sector and it makes sense.The dwindling returns from the stagnant and

WHEN AIRTELLAUNCHES

AIRTEL BANK

Banks have indeed realized the role that can be played by mobile banking in reaching out tothe unbanked areas as well as the on the run customers.


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Inc, one of the telecom giants in Canada hasalready filed papers with the federal bank tostart a bank. As per Rog-ers the next big thingwill be money trans-fer, whether thatspaying for

a subwaypass or ap a r k i n gmeter, ors e n d i n gm o n e y .The bankw o u l dp r i m a r -ily deal

in credit and mobilepayment services, asopposed to bricks andmortar bank branchesthat take traditionalsavings and loan ac-counts. While many big retailers have similarsort of finance divisions they are essentially ex-tensions of their core businesses.

The telecom companies are looking to positionthemselves in every part of the supply chain and

earn return from the tons of monetary transac-tions between customers and companies thatare happening via their network. It also makessense for operators to offer banking productsand services as people dispense with plasticand start using their mobile phones as paymentdevices. They want to take the control of thewallet on the phone. Banks are already gettingdetached from the end customer by a layer.While mobile service from a bank needs to pass

through layers of technology and approval fromGoogle, RIM , Apple etc. for future carrier bank-ers, we need just a phone or get online andsend the money. All that is needed to know isthe email address and mobile phone number.An example of an offering will be combinationof prepaid phone deal with a prepaid debit cardvia which these telecom banks can aggressivelytarget the under banked customer segment and

they will not need the entire expensive infra-structure like the traditional revenue. It is justnew revenue.

Even banks seem to have opened up to thisthreat and have started offering more featuresto move up in the value chain. An interesting

trend hash a p -p e n e din Italyw h e r eo n eof theb a n k ss e n s -ing thethreat has

launched Poste Mobile, an ESP(EnhancedServices Provider)-MVNO subsidiary of theItalian Postal Bank. Here the carrier just acts

as a transport layer while Poste Mobile offersthe various banking services and has full con-trol on pricing as well as customer informationwhich is stored in a separate area of the SIMcard.

Gauging at the benefits, Governments of certaincountries like Nigeria are even vetting propos-als to license operators in the mobile bankingsector thereby laying the foundation of anothertechnological revolution. The Indian PlanningCommission however is not in favor of allowingtelecom companies to float banking companies.The government is more in the favor of allowing

The dwindling returns from the

stagnant and competitive voicecalls and messaging market have

forced the telecom companies to

look out for new business

opportunities



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Finsight

financial transactions to be done by banks toavoid any sort of financial crisis. Though not al-lowing the telecom companies to become banksthemselves, an attempt has been made to setup a framework to allow people to undertakebasic operations through cell phones. An inter-ministerial group has recently submitted a re-

port to Telecom Regulatory Authority of India(TRAI) recommending that people in remote ar-eas be allowed to open accounts linked to theircellphones and withdraw money up to Rs 5,000a day.

Though the government efforts do seem noblein questioning about how a telecom companycan carry out the level of security proceduresthat is usually done in a traditional bank, it willbe better if it can propose for a think tank to

study the pros and cons in this reverse process;a telecom company entering the banking ser-vices. In the days to come we might see thetraditional bank getting segregated to the back-end as a manager of risk and product manufac-turer while the day to day customers get ownedby the telecom companies, social networks andmarketing organizations. Perhaps a technologi-cal and financial revolution is in the offering.

FIN-Q Solutions

January 2012

1. Hoshangabad, this iswhere the paper for thecurrency is manufactured

2. Guardian, MoneyLaundering

3. Fidelity Bond

4. Mu-Sigma, DhirajRajaram

5. Laos Stock Exchange,Korea Stock Exchange

6. The parent company,DS Prabhudas and Compa-ny was the first companyto be listed in the BSE

7. Moral Suasion,Jawboning

8. Predatory Dumping

9. Lazard Limited,Kodak

10. Rakesh

Jhunjhunwala


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inGyaan

Equity gap refers to thedifference in the supplyand demand for equitybetween corporationsand investors. It can beseen that a significantchunk (79%) of the glob-al financial assets areinvested in the devel-oped countries. Few fac-

tors that have affectedthe appetite for equityincludes the ageing de-mographic of the west-ern world, emergence ofalternative investmentavenues and stringentfinancial regulationsamong others. These is-sues can be overcome

only be improving inves-tor sentiment towardsequities through rel-evant and apt reformsin primary markets, useinvestor friendly struc-tured products.

nancial assets, the household invest-ment in equity is decreasing. Among

the household portfolios in emergingmarkets, the proportion is around 15percent while the household portfo-lios in developed countries like U.Shas 42 percent contribution towardsequity. The contribution towards eq-uity is decreasing. Even the devel-oped countries are showing less ap-petite for equities. Among developednations, Japan stands out for its verylow investment in equities. Despite a

long tradition of equity investing byindividual investors for most of the20th century, Japanese householdsnow hold less than 10 percent oftheir assets in equities, down from 30percent before the 198990 crash. Be-cause of low or negative returns overthe past two decades, Japanese allo-

What is equity gap?

If it can be put simply then equitygap is the difference between the in-vestors appetite and the companysrequirement of funds. Company usu-ally use this door of raising funds viaequity but is the investors appetitetowards investing in equity enough?

EQUITY GAP = INVETORS APPETITE INEQUITY COMPANYS NEED OF FUNDS

Based on an analysis by McKinseyQuarterly, the financial assets in theworld are worth 198 trillion dollars outof which around 21 percent are partof emerging markets and the rest isa part of developed economies. Thistells that around 157 trillion lies withthe developed world. Among these fi-

sIIb, PuneAjay Kumar Sethi

STRUCTURING THE EQUITY GAP

Fig. 1: Financial assets owned by residents, 2010 in $ trillion



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an

cations have never exceeded 18 percent in thisperiod.

The figures 1 and 2 tells us the proportion ofinvestments in various countries. We can seethat among the financial assets, the majority ofthese assets are in household portfolios. Amongthe 198 trillion financial assets, 85.2 trillion arein household portfolios. This makes it to around50%. If the household appetite for investmentsin equity decreases, then it shows the overallpicture of investments. It is approximated that

the global financial assets would reach the 371trillion by 2020. Of these assets, the contribu-tion of emerging markets would increase from21 percent to 36 percent while that of develop-ing countries would come to around 64 percent.Emerging market financial assets grew 16.6 per-cent annually over the past decade, nearly fourtimes the rate in mature economies. These as-sets stood at about $41 trillion in 2010 and con-stituted 21 percent of the global total, up from 7percent in 2000. Depending on economic scenar-

ios, we project that emerging market financialassets will grow to between 30 and 36 percentof the global total in 2020, or $114 to $141 tril-lion. Of these financial assets the contributionto equities, which was around 28 percent in2010, would come down to 22 percent by 2020.

Some of the reasons for decreasing attitude to-wards equity can be:

Ageing population in western world:

Aging is the largest factor affecting investor be-havior in mature economies. As investors enterretirement, they typically stop accumulating as-sets and begin to rely on investment income;they shift assets from equities to bank depositsand fixed-income instruments. This pattern has

led to predictions of an equity sell-off as theenormous baby boom generation in the UnitedStates and Europe enters retirement (the old-est members of this cohort reached 65 in 2011).This effect can be staggering: if investors retiringin the next ten years maintain the equity alloca-tions of todays retirees, equities will fall from42 percent of US household portfolios to 40 per-cent in 2020and to 38 percent by 2030. In Eu-rope, where aging is even more pronounced, wesee an even larger shift in household portfolios.

Shifts to defined contribution retirement plans:Also influencing equity allocations in matureeconomies are the shift to defined contributionretirement plans in Europe and rising allocationsto alternative investments. In Europe, it can beseen that defined-contribution plan accountowners allocate significantly less to equitiesthan managers of defined-benefit plans. And asprivate pension funds close to new contributors,managers are shifting to fixed-income instru-

ments to meet remaining liabilities. Meanwhile,institutional investors and wealthy householdsseeking higher returns are shifting out of publicequities into alternative investments such asprivate equity funds, hedge funds, real estateand infrastructure projects. Although we esti-mate that some 30 percent of assets in privateequity and hedge funds are public equities, theshift is still causing a net reduction in alloca-tions to equities.

Growth of alternative investments such as Pri-

vate Equity (PE) investments:It can be also seen that the alternative invest-ments in the form of private equity investmentsis also on the rise. In recent times, the IGATE

Fig. 2: Assets allocation by investor, 2010 in %, $ trillion


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buyout of PATNI has been largely contributed bythe APAX partners (a PE firm). Also, PE firms findit suitable to invest in emerging markets be-cause of the low valuations, thus churning outhuge amount of profits from the investments.

Low returns in equity:

Another factor weighing on demand for equi-ties is weak market performance. The past de-cade has brought increased volatility and someof the worst ten-year returns on listed equitiesin more than a century. In opinion polls, Ameri-cans say they have less confidence in the stockmarket than in any other financial institutionand believe that the market is no longer fair

and open. Regulatory changes for financial institutions:The final factor is the effect of financial industryreforms on the uses of equities by banking andinsurance companies. U.S and European bankstoday hold $15.9 trillion of bonds and equitieson their balance sheets. But new capital re-quirements under Basel III will prompt banks toshed risky assets, including equities and corpo-rate bonds. Similarly, European insurers have al-ready reduced equity allocations in anticipation

of new rules, known as Solvency II, and couldlower them further over the next five years.

All these reasons attribute towards an estimat-ed equity gap of 12.3 trillion. The figure 3 willprovide a better view to this picture.

However there are some ways through whichthis equity gap can be reduced:

1. Use of structured financial products

Structured financial products can be a proposedsolution to the emerging equity gap. Investors

are losing their appetite for investing in equitybut the use of structured products under properfinancial regulations can be a good booster inequity environment.

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2. Initiation of secondary market

Secondary market has been in operation in de-veloped countries which supports the innova-

tion led investments. E.g. NASDAQ is a second-ary market for innovation led ventures. If suchsecondary markets can be introduced in emerg-ing countries such as India, then it will not onlyserve as a booster for equity market but canalso prove to be a nurturing ground for youngentrepreneurs to make their projects count.

3. Reforming IPO markets

IPO market has been in a down-trend since thesuccessful IPO of Coal India. It may be due tothe fragile policy making and implementation

in India which has given rise to many politicalscams recently. Or it may be the European crisiswhich has proved to be major reason for theoutflow of money invested by the FIIs. Whatev-er it is, the IPO market has to be well regulatedto ensure generation of positive sentiments inthe Indian market.

The only way this equity gap can be narroweddown is by increasing the investors sentimentstowards equity in emerging countries becauseemerging countries have been growing at astaggering rate of more than 16 percent. Andif this growth continues, it will be very impor-tant to engross the equity investors in emergingeconomies and keep the markets in balance.

Fig. 3: Incremental demand for equities by domestic investors vs. increase in corporate equity needs, 2010-20 F $ trillion


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Hello students. Today, we would betalking about Options. So what do you knowabout options?

Sir, we know that there are two typesof options available. They are call optionand put option. An option is a security likea stock or a bond.

Yes, youre right. An option gives abuyer the right to buy or sell an asset at aspecific price on or before a certain date.But this is not an obligation for the buyer.Option is a contract that deals with an as-

set. Most of the times, this asset is a stock or an index.That means an option derives its value from an asset.Hence, it is also called as Derivative.

Sir, can you please give an exampleabout the use of Option?

Lets consider an example. A personfinds a land with all the required featuresfor his business. Then he approaches thelandlord and finds the price of the land very

high, i.e. Rs. 5000000. Unfortunately, hedoesnt have enough cash to buy the land within nextthree months. He talks to the owner and negotiates adeal that gives him an option to buy the land in threemonths. The person has to pay a price of Rs.100000 asthe option price.

Are these options available only tobuy?

No, there are two types of optionsavailable. Call and Put options. A call optiongives the buyer the right to buy an asset ata certain price within a certain time limit. Aput option gives the seller the right to sell

an asset at a certain price within a certain time limit.

The buyers are called holders and sellers are calledwriters.

How are these options useful withrespect to stocks?

The holders of the options are notobligated to buy or sell. They have thechoice to exercise the option within thespecified time. The call holder has a call

option to buy a stock at a certain price within acertain time limit. So, he always expects the price ofthe stock to increase, so that he will be benefited byexercising the option by buying the stock at a lowprice compared to market price. Similarly, the putholder expects the price of the stock to decrease, sothat he can sell the stock at a higher price. But calland put writers are obligated to buy or sell.

Why would an investor use op-tions?

There are two main reasons. Firstone is betting on the price movements ofa security. Investors not only make profitswhen the stock price rises, but also whenthe market goes down by using options.

Another reason is hedging. By using options, theinvestor would be able to restrict his downside whileenjoying the full upside in a cost-effective way. Forexample, options can be used as insurance for theinvestments against the downturn.

How is the price of an option de-termined?

The price of an option is called thepremium, which is determined by thestock price, strike price and time remain-ing till expiration.

Thanks a lot sir, for explaining thetricky concept of options to us.

CLASSROOM

FinFundaof theMonth

Options Market

NIVESHAK 23

Classroom

IIM ShillongNilkesh Patra


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BiddingAdieu

My experience in Finance club for last one year was just great where I got opportu-nities to work with some of the best minds of our batch. The thing that I loved themost is the commitment of all of us towards completing all our activities before thedeadlines and the greatest regret lies in the fact that we were unable to organize anonline intra B-school competition. However, I hope that in next few years some of ourtalented juniors will definitely achieve this dream of ours. The experience of receivingnumerous articles and selecting the best amongst them was the biggest challengethat I faced during my stint at Finance Club as all these articles were written by oneof the best minds of our country. I hope that in future also wherever I go I will findthe same pool of talent to work with that I got in our finance club.

Apart from finance, proposing new ideas, arguing over and over again and finallyconvincing the team to adopt it was a great learning experience for all of us. Oncein the club, the way you tend to keep yourself updated and knowledgeable just toflaunt your awareness and impress people around will be a motivator for sure :P Youdefinitely learn more practical stuff here than through books and lectures!

Working for the Finance Club has been an immense learning experience. Its an hon-our to be a part of Niveshak, which today is a brand in itself. One gains a lot of dif-ferent perspectives while writing, editing and going through such huge number ofarticles every month. The response and feedback from the student fraternity of dif-ferent B-schools has been our biggest motivation. Wish Niveshak many more gloriousyears ahead.

Membership of Finance Club is something I have cherished and will continue todo so for the rest of my life. Working with a highly talented and motivated team

inspired me to make a meaningful contribution towards club activities. Niveshak,the flagship monthly magazine of club offered me a platform to share my thoughtson business world with others and understand others viewpoint on the same. Theunabated growth of magazines popularity with each passing edition has made it abrand among finance enthusiasts in B-Schools across India. Niveshak motivated meto become a Niveshak in real life and I hope it will continue to inspire many morein times to come. My best wishes to the new club members to continue to work withthe same vigor and interest that they have displayed till now.

It seems like only yesterday when I was inducted as part of Team Niveshak. Its funny

how time goes by so quickly. Niveshak as a magazine and a platform has added lotof value to its readers and has done the same for me. It was a great learning experi-ence to work alongside such a wonderful team and it surely brought me closer to mypassion in financial markets. Hope to see it become bigger and better in the handsof the new team.

ALOK AGRAWAL

DEEP MEHTA

JAYANT KEJRIWAL

MRITUNJAY CHOUDHARY

RAJAT SETHIA

Sayo Nara...They were the 3rd batch of the Finance Club, they helpedniveshakreach new heights.Let us listen what they have to say about their experience...



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BiddingAd

ieu

I have enjoyed every bit of the work and contributions done by me towards the bet-terment of Finance Club and Niveshak. It was a significant part of my 2 years here atIIM Shillong and truly a great honour and pride for me to be associated with such aprestigious brand name, Niveshak. It was really a great learning and enriching experi-

ence and this will be one of the memories that I would carry forward throughout mylife in the future. I would like to wish the junior club members all the very best intheir future endeavours and I sincerely hope that the club scales greater heights intimes to come.

Having access to a gamut of articles written on various aspects of economy, Industriesand Banking and Financial Instruments has definitely added a lot to my knowledgebase. Interacting with Industry experts, interviewing great economists of India hasbrought a different angle to the way I think about how the world operates. Working

with the team on content building, editing and most importantly ensuring all editionsare released on time has been a great experience. It feels good when on visiting otherB-schools or moving out in the corporate world, being a member of Team Niveshakjust brings you on a completely different platform. Hope the Team continues to do thegreat work and Niveshak becomes a much bigger name. All the best.

The past two years as a member of Finance Club have been highly memorable forme. As a part of the team, we were entrusted with the responsibility of publishing

Niveshak for one year of our term and I am glad that we were able to bring out aquality issue on time for every month of our tenure. I wish the best of luck to thenew team and hope that the magazine scales greater heights in the years to come.

Two Years with Finance Club or better put it up as Niveshak was a roller coaster ride.I am lucky that I started working in this club right after the first week in campus.The team, where everyone is as competent as the other, provided enormous brainstorming occasions to learn. New things started, old things reformed, but FinanceClub stayed as one of the most respectable club not only inside this institute but ev-erywhere else. The consistency of keeping the issues on time gave Niveshak a nichewhich is praised across the B School fraternity. I hope that these aspects strengthenwith times to come. As a team we laughed, we fought, we cursed, we praised but weremain united, or in Niveshak language - we stayed invested.

Being a part of Finance Club of IIM Shillong was a matter of great honor and pride asthe flagship magazine of the club Niveshak is known all over India and synonymouswith the name of IIM Shillong. The team was great one and each one of us helped andsupported the other members and as a result we were able to deliver on time and

with quality. I wish good luck to the team and hope that Finance Club and Niveshakrise to new heights in the years to come. Time just flew and now its time to say goodbye. All the best for the future.

VIVEK PRIYADARSHI

VISHAL GOEL

TEJAS PRADHAN

SHASHANK JAIN

SAWAN SINGAMSETTY


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F I N - Q1. X is an indicator used to forecast the trend in the stock market for the coming

year based on win of old National Football League(NFL) team or old American Football

League (AFL) team.

2. Focus on the process rather than focusing on the final result, is a popularsaying. An investment manager who invests in companies that provide equipment toan industry rather than investing on the industrys end product is set to indulge in?

3. X is the type of acquisition where the raider company makes use of borrowedfunds only to meet the cost of acquisition using either its own assets or the targetcompanys assets as collaterals.

4. X is an annual prize given to the authors with the best corporate finance re-search papers published in Y. Y is published by Wiley-Blackwell on behalf of the Ameri-can Finance Association. Identify X and Y.

5. X (Bank) shares its name with a famous Indian primetime television showwhich is presently in its fifth season. X, a Belgian multinational has a very importantfirst in the Indian context. Identify X and its claim to fame.

6. The word X is synonymous with endless wealth. In modern history, it is be-lieved that X family has the highest net worth. Identify X?

7. Another growing indicator of the growing uncertainty in the IPO Market, SEBIbanned X (company) from future merchant banking assignments because X handledthe IPO of Y, proceeds of which were diverted to questionable land deals. Identify Xand Y.

8. X is an investment strategy wherein an investor matches the short position he

has in one stock with a long position in another stock of the same sector for the pur-pose of creating a hedge against the sector that the two stocks are in and the overallmarket.

9. Denmark 48.2%

Sweden - 46.4%

Italy 43.5%

Belgium 43.2%

Finland 43.1%

What is being discussed here??

10. Connect?

All entries should be mailed at [email protected] by 27th February, 2012 23:59 hrs

One lucky winner will receive cash prize of Rs. 500/-


27/28

Article of the MonthPrize - INR 1000/-

Rajiv Singh & Sourabh SahuIIM Indore

W I N N E R S

A N N O U N C E M E N T SALL ARE INVITED

Team Niveshak invite articles from B-Schools all across India. We are looking fororiginal articles related to finance & economics. Students can also contribute puz-zles and jokes related to finance & economics. References should be cited wherevernecessary. The best article will be featured as the Article of the Month and would

be awarded cash prize of Rs.1000/-

Instructions Please email your article with the file name and the subject as __ by 27 February 2012. Article must be sent in Microsoft Word Document (doc/docx), Font: Times New

Roman, Font Size: 12, Line spacing: 1.5 Please ensure that the entire document has a wordcount between 1200 - 1500 The cover page of the article should only contain the Title of the Article, the Au-

thors Name and the Institutes Name Mention your e-mail id/ blog if you want the readers to contact you for furtherdiscussion Also certain entries which could not make the cut to the Niveshak will get figured

on our Blog in the Specials section

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ThanksTeam Niveshakwww.iims-niveshak.com

27


FIN - QPrize - INR 500/-

Prince JainIndian Institute of Foreign Trade, New Delhi

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