Tracking the economy….

November 16, 2013

Vol. 7

Issue 7

A Wealth Incorporation Publication

Chaanakya

Christ University

Institute of Management

2

News

National ………………………………………….…..3

International ………………………………….……..5

7….....……………………………………… Rates and Graphs

Contemporary Articles

Bitcoin: The new face of currency transaction.........9

Debate

10……………………….Political Financing in Indian context

Stock Watch (ITC Limited)...…..….…...……………..…..11

Investor’s Check (Tweeting “TWTR” IPO)....………......14

Scam (MP Pre-Medical Test Scam )....…..……………...18

Buzzword………………………………………………….18

19..……………………………...…………...Did You Know?

20…...…………...…....Financial Services Industry Analysis

Quiz……………………………………………………….23

Crossword………………………………………………..24

16..………..……………………………………..Alumni Speak

17..………..…………………...………...(Copper) Commodity

3

Srivishnu Garbham

II MBA I

NATIONAL NEWS

Finance Ministry expects $25 billion inflows via swap windows by Nov-end

The Finance Ministry expects inflows of $ 25 billion by November end through

forex swap windows opened by the Reserve Bank to attract deposits from

non-resident Indians and allow banks to borrow overseas. "Till November 30,

our (FCNR-B) window is open. We might even touch $ 25 billion", Economic

Affairs Secretary Arvind Mayaram told reporters.

C Rangarajan to address Third Finance and Investment Summit

C Rangarajan, the chairman of the economic advisory council to the Prime

Minister, will address the Third Finance and Investment Summit. The event,

which is being organised by the Confederation of Indian Industry (CII), will

focus on the theme - Financial Inclusion for Reviving Growth: Success Stories,

Challenges and the Road Ahead.

Finance ministry to introduce DTC amendments in winter session

The Union finance ministry is finalising a Cabinet note on the amendments to

the Direct Taxes Code (DTC) Bill and intends to introduce them in the winter

session of the parliament. DTC also aims at broad-basing the tax regime and

bring more persons and corporate under tax net. A senior ministry official

told dna, “After receiving the Standing Committee of Finance’s

recommendations on the DTC, the official amendments have now almost been

finalised. The ministry is planning to take up the matter to the Cabinet and

introduce the amendments in the winter session of the Parliament.”

The winter session would run from December 5 to 20.

Finance Ministry is keen on Indian Oil disinvestment in November.

The Finance Ministry wants to sell 10 per cent of the government's stake

in Indian Oil Corp (IOC) by end of the month in a bid to achieve its `40,000

crore disinvestment target. "We want to push the IOC stake sale first, within

November itself. This will pave the way for disinvestment of other oil sector

PSUs like Engineers India," a senior Finance Ministry official told.

Finance ministry suggests easier rules for infrastructure financing

The finance ministry has steered clear of monetary policy under an unwritten

agreement, refraining from seeking lower rates to stimulate growth ever since

Raghuram Rajan took over as governor of the Reserve Bank of India (RBI).

4

But, it now wants help of another kind from Rajan to revive growth. Economic affairs secretary Arvind

Mayaram has written to governor Rajan seeking a change in the rules for infrastructure financing and the

treatment of non-performing loans to the sector, pitching it as a necessary measure to revive growth and

investment.

Companies spending 2 pc on CSR will have a multiplier effect

Corporate spend 2 per cent of their profit on CSR activities, and then it will have a multiplier effect in

bringing out much greater inclusiveness. "Corporate Social Responsibility (CSR) is now mandatory. The

mandate is that all corporate must spend 2 per cent of their profit on CSR; I

think if 2 per cent of India's corporate profit is spent on CSR activities then it

will have great multiplier effect in bringing out much greater inclusiveness.

L&T Infra Finance warns public against 'unscrupulous' entities

L&T Infrastructure Finance Company warned investors against 'unscrupulous'

entities collecting money from them with promise of high returns on behalf of

the company. Some unscrupulous persons/firms/establishments are misusing

the goodwill and reputation of the company and collecting deposits in cash

under the identification/ similar trade name/trade logo as that of the company.

They have been issuing fake receipts in the name of the company thereby

luring the public and under the pretext of giving unreasonably high returns

receiving deposits in the name of the company.

RBI waives 'No Objection Certificate' criteria for investment from NRI

into finance firm

The Reserve Bank today waived the requirement of No Objection Certificate

(NoC) with regard to share transfer from residents to non-residents where the

investee company is in the financial services domain. On a review, it has now

been decided that the requirement of NoC(s) will be waived from the

perspective of Foreign Exchange Management Act, RBI said in a notification.

5

Sailabala Nayak

II MBA I

Twitter IPO costlier than Facebook without profits

Twitter Inc is poised to price its initial public offering (IPO) at a valuation that

makes it more expensive than Facebook Inc. Twitter on 4th Nov’13 boosted its

IPO price to $23 to $25 a share, which would give the micro blogging service a

market capitalisation of $13.6 billion at the top end of the range. That would

value the company at 11.8 times its estimated 2014 sales, higher than the 11.4

times price-to-sales ratio for Facebook.

BP, Shell accused of rigging crude prices

Four long time traders in the global oil market claim in a lawsuit the prices for

buying and selling crude are fixed - and that they can prove it. Some of the

world's biggest oil companies, including BP Plc, Statoil ASA, and Royal Dutch

Shell Plc, conspired with Morgan Stanley and energy traders, including Vitol

Group, to manipulate the closely watched spot prices for Brent crude oil for

more than a decade, they allege. The case, which follows at least six other US

lawsuits alleging price-fixing in the Brent market, provides what appears to be

the most detailed description yet of the alleged manipulations and lays out a

possible road map for investigators.

ECB cuts rates to new low, sees protracted low inflation

The European Central Bank cut interest rates to a new record low on 7th

Nov’13 and said it would prime banks with liquidity into 2015 to prevent the

Euro zone’s recovery from stalling as inflation tumbles. The move took

financial markets by surprise — the euro fell sharply in response while

European shares rose. A shock slump in Euro zone inflation to 0.7 per cent in

October noticed, far below the ECB target of just under 2 per cent. The ECB

cut its main refinancing rate by 25 basis point to 0.25 per cent. It held the

deposit rate it pays on bank deposits at zero and cut its emergency borrowing

rate to 0.75 per cent from 1.00 per cent.

Fed anxiety grows as political cost weighs

The longer the Federal Reserve continues its bond-buying stimulus, the higher

the odds it will face a year without any money to give the US Treasury after

taxpayers received a record $88.4 billion profit in 2012.The Fed's financial-

crisis actions - from acquiring debt in the 2008 rescues of Bear Stearns Cos and

American International Group Inc to three rounds of quantitative easing - have

led so far to the record payments. Now, the prospect of a stronger economy and

INTERNATIONAL NEWS

6

rising interest rates means the value of the Fed's bond holdings will fall at the same time its funding costs

climb because the central bank pays interest on the excess reserves it holds for banks.

S&P's downgrades France's rating

European stocks dropped, paring the Stoxx Europe 600 Index's fifth weekly gain, as Standard & Poor's

cut France's credit rating and investors awaited data on American jobs. US index futures rose, while Asian

shares fell. France's long-term foreign and local-currency credit rating was lowered one step to AA from

AA+ by S&P on 8th Nov’13. The ratings company said slower growth will constrain the government's

ability to improve public finances.

US job growth accelerates

US job growth unexpectedly accelerated in October as employers shrugged

off a partial government shutdown, suggesting the economy was on firm

footing and raising the prospect the Federal Reserve may soon decide to

temper its bond-buying stimulus. Employers added 204,000 new jobs to their

payrolls last month, and 60,000 more jobs were created in September and

August than previously reported, the Labour Department said on 8th Nov’13.

The unemployment rate, however, rose to 7.3 per cent last month from

September's nearly five-year low of 7.2 per cent as federal workers were

idled.

Coca-Cola says to invest over $4 billion in China in 2015-2017

The Coca-Cola Co (KO.N) said it will invest over $4 billion in China and

build new plants between 2015 and 2017, to counter competition which is

chipping away at its share of the country's 421 billion yuan ($69.12 billion)

soft drinks market. The investment will add to the $4 billion that the world's

largest drinks maker has earmarked for China in 2012-2014 as per Asia-based

spokeswoman Sharolyn Choy, confirming a Bloomberg report earlier on 8th

Nov’13.The beverage maker is also open to deals with local firms.

ICE's takeover of NYSE to close on November 13

ICE.N) said its takeover of NYSE Euronext NYX.N would close on

November 13, after clearing final regulatory hurdles on 8th Nov’13. The

derivatives exchange and clearing house operator said in December it would

buy the owner of the New York Stock Exchange in a deal that also gives ICE

control of Liffe, Europe's No. 2 derivatives market. The deal, which consists

of around 75 percent shares and 25 percent cash, was worth 10.9 billion as of

November 1.

7

Rate Repo 7.75per cent

Reverse Repo 6.75per cent

Marginal Standing Facility 8.75per cent

Call Rate 6.50per cent –8.75per cent(11th Nov 2013)

Inflation +6.46per cent for October 2013

Forex Reserve $281.293 Billion as on 1st November2013

91day T-Bill 8.5619per cent

IIP 0.6per cent (increase) for September 2013

6.90 GS 2019 8.0907per cent

Graph

Gaurav Agarwal

II MBA M

RATES AND GRAPH

60.5

61

61.5

62

62.5

Rs/$

Rs/$

29500

30500

31500

32500

Gold(per 10 gram) Rs.

Gold(per 10gram)

8

GRAPH

5900

6000

6100

6200

6300

6400

19,500.00

20,000.00

20,500.00

21,000.00

21,500.00sensex

nifty

2000000

5000000

8000000

11000000

14000000

17000000

20000000

23000000

6000

6100

6200

6300

6400Future Rates

open interest

104

106

108

110

112

11-Oct 15-Oct 19-Oct 23-Oct 27-Oct 31-Oct 04-Nov 08-Nov

Oil(per bbl) $

Oil(per bbl) $

9

The concept of Bitcoin came into being through a paper published in 2008 by

pseudonymous developer known as ‘Satoshi Nakamoto’. Bitcoin is a

distributive peer to peer digital currency that functions without any

intermediary or central authority. It is a dematerialised crypto currency which

eliminates the problem of double spending by means of cryptography. A

network of tailor made private computers operate during the payment process.

Competitive transaction fee makes bitcoin attractive among the retailers

because of the 2 to 3per cent transaction charge applicable for payment via

cards.

The history of bitcoin started in 2008 when a paper was presented on it, but the

concept got operational in early 2009. It also faced many technical problems in

the same year owing to the large scale creation of unlimited bitcoin. Later in

2011 the value of bitcoin rose from $0.2 to about $32. It was in 2012 that

bitcoin received media coverage and numerous studies and articles were

written on it. By the beginning of 2013; the concept of bitcoin got a lot of

attention that some mainstream services such as OkCupid, Baidu, Reddit,

Humble Bundleand Foodler began accepting it. The wide spread use of bitcoin

in the year made this come under the radar of the law enforcement.

In the aspect of Economics; the wide fluctuation in the value of bitcoin owing

to speculation have questioned the ability of bitcoin; in being accepted as a

form of currency. Hording to speculate on the deflationary bias also doubts the

economics of the concept. However; bitcoin has proved to be an easy

transactional currency. Wide spread speculation on bitcoin as it is often being

traded, has led to the fluctuation of its value. There were study reports

conducted by European Central Bank that stated that bitcoin posessed some

characteristics of Ponzi scheme. However, the study also revealed that bitcoin

has some characteristics that would distinct itself from Ponzi schemes.

One of the main concerns that investors face about bitcoin, is its intrinsic value

as an investment. This is because, its value depends only on the willingness of

the users to accept it. However, the investment in bitcoin is still being done by

investors speculating on its future potential. Derivatives of bitcoins are

available and there is an organisation that offers future contracts against

multiple currencies. Certain investment funds have shown interest in bitcoins

future potential with Peter Thiel’s Founders Fund investing US$3 million and

Winklevoss twins making a US$1.5 million personal investments. A bitcoin

ETF may also hit the market soon as a probable investment offer.

George James

11 MBA K

ECONOMY: BITCOIN: THE NEW FACE OF CURRENCY TRANSACTION

10

Sabahat Bashir

II MBA I

Akansha Bansal

II MBA L

In the current election buzz, what can be more interesting than discussing the

pros and cons of Political Financing? Political finance refers to the amount of

funds raised and spent for various political purposes like campaigning,

training, policy development, nomination, party financing, political

competition etc. The source of fund can be wealthy donors, business

organisations, interest groups, trade unions, government subsidies, individuals

etc.

Public funding is a natural and necessary cost of democracy. Political parties

and candidates need money for their electoral campaigns, to keep contacts with

their constituencies, prepare policy decisions and pay the professional staff. If a

country wants to have stable political parties, they must be prepared to help

pay for their working. Political financing limits the likelihood of parties feeling

the need to accept money from other interested donors who want to influence

their working.

Politics and political campaigning is an increasingly costly business. Political

parties and candidates need support in meeting growing costs of campaigning.

In societies where many citizens are under or just above the poverty line, they

cannot be expected to donate large amounts of money to political parties or

candidates. If political parties and candidates receive a substantial amount of

their income from the State, they can more easily disclose their income and

expenditure, voters can decide which sources of funds are more acceptable to

them and will also have better opportunities to hold politicians accountable.

However, Political financing in India is among the best known secrets of Indi-

an politics. On 12 August, 2013; the Government of India proposed a Bill in

Parliament to amend the RTI Act to keep political parties out of its scope. The

argument was based on the fact that being private and voluntary associations of

persons; they do not have any obligation to disclose information about their

working and finances to people. The aid and support they receive from the

Government is a small fraction of their finances as most of their funds come

from public donations.

There is a huge cover of secrecy and lack of transparency in who gives the

money. Furthermore, there are no transparent ways to making and declaring

this money. Undeniably the sources of such funding influence voting behaviour

and that is why the subject impacts directly on democratic rights. Public

funding increases the distance between political elites (party leadership,

candidates) and ordinary citizens (party members, supporters, voters) making it

less likely to involve them in party decisions and policy issues.

Indian Political Parties will have to reform the way they collect funds.

Financing politics must be seen as a legitimate activity and political parties

must act on society’s demand for greater transparency in their affairs. This is

more likely to restore people’s confidence in the political establishment of the

country.

DEBATE:: POLITICAL FINANCING IN INDIAN CONTEXT

11

Ankit Dewani II MBA K

SriKrishna II MBA M

About the Company

ITC is one of India's foremost private sector companies with a market

capitalisation of US $ 45 billion and a turnover of US $ 7 billion.

ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and

the World's Most Reputable Companies by Forbes magazine and among

India's Most Valuable Companies by Business Today.

ITC ranks among India's '10 Most Valuable (Company) Brands', in a

study conducted by Brand Finance and published by the Economic

Times.

ITC has a diversified presence in FMCG, Hotels, Paperboards &

Specialty Papers, Packaging, Agri-Business, and Information

Technology.

ITC's diversified status originates from its corporate strategy aimed at

creating multiple drivers of growth anchored on its time-tested core

competencies: unmatched distribution reach, superior

brand-building capabilities, effective supply chain management and

acknowledged service skills in hoteliering.

Recent News

ITC Hotels ties up with RP Group Hotels & Resorts to manage 5 hotels

in India and Dubai

ITC reported PAT of Rs21bn on the back of 15.9per cent growth.

Cigarette volumes declined 3.7per cent as higher prices continued to

impact demand.

FMCG sales at 16per cent; lowest in past 10 quarters

The cigarette business continues to be the main profit-earner, while the

consumer products division nears closer to break-even.

ITC's consumer business (16% of gross sales) registered stronger growth

of 16% over the last year, which is still significantly behind our full-year

estimate of 23%.

Company Financial Figures & Estimates

STOCK WATCH:: ITC Limited

12

Revenue growth has stagnated with a comparison of the last 3 year’s revenue

Paperboard business reported 22per cent decline in EBIT due to higher pulp and coal costs despite 4

-5per cent price increase.

Agro business reported 9.8per cent EBIT growth on 12per cent decline in sales due to presence of

low margin wheat exports in base quarter

EBITDA margins increased by 120 bps YoY as staff cost increased by 70 bps and Other expenditure

declined by 10bps to 38.2per cent.

Revenue Growths

Net sales have increased by 8.8per cent to `78.6bn.

Gross margins have increased 170bps due to price hikes in Cigarettes

and favorable product mix in agro business and margin improvement

in FMCG.

ITC has written back `1.9b with respect to provisions for rates and

taxes and interest

13

Comparative Valuation of Cigarette Volumes & its Margins (after hike in cigarette prices)

The estimates have put across a slack in the growth for the demand of the cigarettes in the coming

two quarters.

Based on its Y-o-Y growth of a minimum 1per cent, ITC’s cigarettes revenues are to rise at a

stagnant rate compared to the past data.

The EBIT growth is expected to grow in FY14, but the demand for the cigarettes is supposed to be

constant.

Stock Performance (last 6months)

Highlights

One of the favorites of the stock market

Strong Consumer Division

Consistent Revenue Growth and a favorite for FIIs and other investors.

Expected high FMCG demands and growth in hotel, packed foods &

paper industry.

CMP : `314.50

Buy Around : `302

Target : `347

Duration : 9 months

14

Abhishek Aggarwal

II MBA I

Nearly 18 months after the Facebook IPO in May 2012, yet again a US based

social networking company made its way for going public. This time it is

Twitter Inc. whose IPO got listed on New York Stock Exchange (NYSE) under

the ticker “TWTR” on 7 November 2013. However, Twitter did not list on the

other big exchange in US i.e. The NASDAQ due to certain technical glitches

that the exchange encountered at the time of Facebook’s IPO. The Security and

Exchange Commission fined NASDAQ a sum of $10 Million for this purpose.

The issue is managed by Goldman Sachs Group Inc. as lead banker and is

priced at $26 per share which values the company at a lofty price of $18

Billion in market cap for a company that hasn’t earned any profits in its 7 years

of existence combined with a loss of $65 Million in third Quarter alone of

2013. This valuation figure is nearly 28 times their 2013 projected revenue.

Compared with the peer group companies, Facebook is valued 18 times and

Google is 7 times respectively their projected revenue.

But, all these figures are indicative only, and the profit performance of the

company usually does not match with the stock performance. For instance,

Amazon had heavy losses before they went public in 1997, yet their stock is up

by 18000per cent since listing. The key to a company’s performance and suc-

cess lies in its business drivers and for a company like Twitter, the major

source is through Advertisement. So, the revenues of the company and the su-

perior stock market performance thereon will depend on whether they are able

to sell enough ads.

Whereas earlier in August, the company priced its ESOP at $20.62 per share,

their initial IPO was supposed to be in the range of $17-20 which was again

reprised at $23-25, which later on reached $26 per share. Research firm Outsell

Inc. forecasts Twitter’s fundamental value at about half of this IPO price which

is generally very common for companies in this sector.

Now, one can easily make out the initial speculation in this stock triggering its

price to around $ 41 per share within just 2 trading days of listing and a high

of $ 46.94 per share. On the contrary, Facebook took nearly a year to recover

and reach its IPO issue price. But, as per the analysts Twitter will take more

than a year to reach a profitable stance as their losses are pretty hefty from Q3

onwards this year.

References:

Frier, S., & Picker, L. (2013, 11). Bloomberg - Business, Financial & Econom-

ic News, Stock Quotes. Twitter IPO More Expensive Than Facebook Without

Profits - Bloomberg.Retrieved November 11, 2013, from http://

www.bloomberg.com/news/2013-11-05/twitter-ipo-more-expensive-than-

facebook-without-profits.html

INVESTOR CHECK :: Tweeting “TWTR” IPO

15

Mithil Kumar A

II MBA L

Name: Venkat Raju

Company name, Designation held:

Director in YMR Group, a Real Estate Company

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

your organization?

At YMR Group, we promote a stress-free approach to building and buying a

home, and pride ourselves on superior quality, design, customer service, and

desirable locations. We have been in the business for over a decade and have

built in Bangalore's most sought-after subdivisions. We have never missed a

closing date. Whether you are a first-time or seasoned buyer, looking to build

or buy new, YMR GROUP has the right home for you.

I am a Director in YMR Group, a Real Estate Company building Apartments,

Villas, Developing Residential Layout and Developing Commercial Spaces.

I do not have any specific Role in my company, Working in a self owned

company with limited work force means we do all the possible roles like

Procurement of Land/Joint Developments, Legal proceedings, Project Costing

and Profitability analysis, Selecting Best of the Best Architectural Plans,

Government Sanctions, Procurement of Raw materials, Supervision of

Construction, Managing Funds Flows, marketing, Advertisements, Sales,

Project approvals from Banks for Loans and many more.

What encouraged you to choose this industry and join the particular com-

pany?

My Company is our family run business and into Real Estate related activities

from the past 2 decades and my interest to build future land marks made me

join my company to fulfil my dreams.

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

Real Estate development is a High risk business affected by many factors.

These factors are Demand and Supply, Legal aspects, Economy, Project

Financing and Government policies - its rules and guidelines.

Being in this industry for the past 2 decades we have seen both Good and Bad

times. Rapid urbanisation, raising income levels etc. Real Estate being most

sought primary investment option and considered the best hedge against

inflation has helped investor create fortunes in this industry.

How is professional world different from the life in MBA?

I do not see much difference in my professional world and MBA life. Both had

deadlines to be met, preparing swot analysis for making decisions ,

maintaining good customer relationship , your MBA Life teaches how to

ALUMNI SPEAK:: Venkat Raju

16

continue the same into your professional world.

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

I don't know if there are any certification courses in Real Estate. In case if someone wants to be a

Property developer, I would suggest the person to have good knowledge in Legal aspects and in building

a strong customer relationship.

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

My role Model is my father, his knowledge in real estate, his past experiences, his foresight has always

helped me to take the best decision and the way he handles pressure, has inspired me to follow his

footsteps.

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

Keeping yourself focused - choosing the right property in terms of location,

costing, marketability, Legal (Clear Marketable Titles) will help us to over-

come risks in this Industry. Property is always a best hedge for inflation so

regular investments for future projects will definitely results in High profits.

Building a strong relationship with customers and a good customer base will

help us ensure that business continues to flourish.

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

company?

I believe one must have good networking Skills to Build Customer relationship

and good customer data base.

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

Real Estate is considered to be a great employment generator, Real estate is

expected to grow at must faster rate due to urbanisation, and tremendous

growth in population, Government allowing FDI into real-estate will provide

wide range of opportunities in this sector.

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

company and your experience with us in an alumni interface?

Yes, Definitely.

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

My Short-Term and Mid-Term plan is to have at least two residential projects

in a financial year and long term plan to develop a best residential

educational campus in future.

A message for Christites?

I wish all Christites to be ethical in your dealings and carry the same into

your professional world; this will definitely help u succeed in all your roles

you play in future.

17

Vattam Bhargav

II MBA V

Copper (chemical symbol Cu) is a metal and an excellent conductor of

electricity and heat. This metal is corrosion resistant and antimicrobial. Copper

is one of the most recycled metals in the world, which makes it a material of

choice. Chile is the largest producer of Copper in the world with a share of

34per cent and India has a Global production share of 4per cent.

Major uses of Copper are:

Is used in construction, Power generation and transmission, Electronic and

electrical equipment production, Automobile and telecommunications industry.

Copper is a very essential metal in developing and developed economies. The

major factors affecting Copper prices in the commodity markets are Demand

(consumption) and Supply (production). Sterlite Industries, Hindalco, and

Hindustan Copper are three major producers of copper in India. India is

emerging as net exporter of copper from the status of net importer on account

of rise in production.

In MCX (Multi Commodity Exchange) Copper is measured in units of

Kilograms and traded in lots of 1000 Kilograms or 1 Metric Ton.

Positive news on Copper:

Firm China data and USA data released last week lay a path for this base metal

to perform well in the market with increased demands. Industrial production in

China increased 10.3 percent in October 2013 (YOY). The Net Imports of

India expanding compared to last year and the rupee value depreciating are

other factors that contribute to the expected bullish movement of this base

metal in the coming couple of months.

Current performance of Copper in the Commodity Market:

Copper is presently being traded with a spot price of `459.00/kg.

The current Spot prices in MCX for Copper futures are (12thNovember, 2013):

`459.00 / Kg for 29thNovember2013.

`469.85 / Kg for 28thFebruary 2014.

`474.00/ Kg for 30thApril 2014.

Copper is expected to reach levels of `470.00/kg for the 29th November 2013

futures contract.

Reference:

http://www.mcxindia.com/SitePages/ContractSpecification.aspx?

ProductCode=COPPER

http://www.commodityonline.com/news/firm-global-cues-may-keep-mcx-

copper-bullish-india-exports-jump-in-octo-13-56973-3-56974.html

COMMODITY:: Copper

18

Akanksha Jha

II MBA J

MP state government has cancelled the admission of about 100 medical

students who had got admission through MPPMT to the various medical

colleges of the state. The MP Professional Examination Board has disqualified

345 students in October 2013. These students had been identified by the probe

agencies and allegedly benefitted from the irregularities in the entrance

examination. The board has prepared a list of students who used unfair

practices to get admission, criminal case has been filed against them.

Various ghost writers were used by these students in the PMT conducted on 7th

July. After suspecting about the scam, a special task force of MP Police started

the investigation and submitted a list of 876 students. After that a special team

was formed which included some software experts to probe into the matter.

That team submitted the list of 345 students. Most of the disqualified students

appeared the test from either Bhopal or Indore center and out of those 100 were

from the other states.

This scam is a connection between the MPPEB officials and Dr. Jagdish Singh

Sagar, Tarang Sharma and Santosh Gupta. These three are alleged masterminds

who hatched together to secure admission for ineligible students in medical

colleges across the state by charging hefty amounts.

Accused have been charged under sections 420 (cheating), 419 (cheating by

impersonation), 471 (using as genuine a forged document), 467 (making forged

documents) and 120-B (criminal conspiracy) of IPC.

The question that arises here is that, with this type of scams in the medical field

is the future health of the citizens of the country safe?

SCAM:: Medical Test Scam

Ankit Dewani II MBA K

'Narrow Moat '

A slight competitive advantage that one company enjoys over competing firms

operating in the same or similar type of industry. A narrow moat is still an

advantage for a company, but it is one that only provides a limited amount of

economic benefit and will typically last for only a relatively short period of

time before competition marginalizes its importance.

References:

http://www.investopedia.com/terms/n/narrow-moat.asp

BUZZWORD

19

Tina Patricia D’Souza

II MBA N

Did you know? Leveraged Buyout (LBO)

A leveraged buyout (LBO) is when a company or single asset (e.g., a real

estate property) is purchased with a combination of equity and significant

amounts of borrowed money, structured in such a way that the target's cash

flows or assets are used as the collateral (or "leverage") to secure and repay the

money borrowed to purchase the target-company/asset. Since the debt (be it

senior or mezzanine) has a lower cost of capital (until bankruptcy risk reaches

a level threatening to the lender[s]) than the equity, the returns on the equity

increase as the amount of borrowed money does until the perfect capital

structure is reached. As a result, the debt effectively serves as a lever to

increase returns-on-investment.

LBOs are a very common occurrence in today's "Mergers and

Acquisitions" (M&A) environment. The term LBO is usually employed when a

financial sponsor acquires a company. However, many corporate transactions

are partially funded by bank debt, thus effectively also representing an LBO.

LBOs can have many different forms such as Management Buyout (MBO),

Management Buy-in (MBI), secondary buyout and tertiary buyout, among

others, and can occur in growth situations, restructuring situations and

insolvencies. LBOs mostly occur in private companies, but can also be

employed with public companies (in a so-called PtP transaction – Public to

Private).

As financial sponsors increase their returns by employing a very high leverage

(i.e., a high ratio of debt to equity), they have an incentive to employ as much

debt as possible to finance an acquisition. This has in many cases led to

situations, in which companies were "overlevered", meaning that they did not

generate sufficient cash flows to service their debt, which in turn led to

insolvency or to debt-to-equity swaps in which the equity owners lose control

over the business and the debt providers assume the equity.

Reference

Retrieved November 11, 2013, from http://(2013, 11). Wikipedia, the free ency-

clopedia.Leveraged buyout - Wikipedia, the free encyclopedia. Retrieved No-

vember 11, 2013, from en.wikipedia.org/wiki/Leveraged_buyout

20

Ankit Dewani

Sabahat Bashir

Sri Vishnu

Tina Patricia D’Souza

Abhishek Aggarwal

INTRODUCTION:

Financial Consultancies assist CEOs, CFOs, controllers and treasurers to

optimise the structure of their finance functions and improve their contribution

to the business. They are aimed at addressing the challenges of achieving

appropriate standards of control, efficient use of opportunities and support to

the business through insight and challenge.

Financial Consulting broadly comprises of the following:

Corporate Recovery: develop comprehensive restructuring solutions

that can serve as a solid foundation for future success. Some issues

typically addressed include Accounting and fraud investigations, Asset

utilization and collateral assessment, Business stabilization and situation

analysis, Capital structure analysis and recommendations etc.

Litigation and Investigative Services: provides independent, integrated

conflict resolution and minimization services to help clients and their

counsel reach successful conclusions to disputes like Insurance

Recovery, Financial Forensic, Valuation Analysis etc.

Valuation: objectively determine the valuation of assets, liabilities and

equity to provide sound analysis that can serve as the basis for key

business decisions.

Interim Management: manage a crisis and augment existing

management where needed by addressing short-term managerial and

operational problems.

Distressed M&A and Capital Raising: leading companies in transition,

through an expert capability in distressed M&A and financing.

Due Diligence: helping clients identify opportunities to mitigate risk,

improve organizational effectiveness and generate a healthy return on

investment through careful, tested due diligence processes.

Insurance Advisory Services: providing advisory and interim

management services in complex insurance matters on behalf of

insurance companies or insurance regulators.

Technology Advisory Services: expertise in advising clients on

structured data discovery, electronic discovery, electronic risk and digital

forensics. They help the clients to assess the technical challenges,

communicate the findings and propose innovative solutions.

Municipal and Public Sector Advisory Services: incorporates complex

processes like debt restructurings, budgeting and supporting financial

analyses, solvency analyses, employee pension issues, bankruptcy

process, new issuance and financing structures and risk management.

FINANCIAL SERVICES INDUSTRY ANALYSIS:: FINANCIAL CONSULTANCY

21

MAJOR PLAYERS IN THE INDUSTRY:

Some of the major players in the Financial Consulting field are:

McKinsey & Company

The Boston Consulting Group, Inc

Bain & Company

Booz & Company

Deloitte Consulting LLP

PriceWaterhouseCoopers LLP

Ernst & Young LLP

Oliver Wyman

SCOPE OF MBA FINANCE:

Main role of a financial manager in Financial Consulting is to oversee

financial reports which help the company with decision making, business

development, strategic planning, and alliance management. Few of the roles

where the scope for MBA finance can be elucidated:

Financial Analysts and planner

Corporate Controllers

Risk and Insurance Managers

Investment Banking Associates

Investment Sales Associates and Traders

Credit and Portfolio manager

Financial reporting analyst

International controller

Mutual fund analyst

Director of investor relations

Procurement specialist

Auditing and taxation.

Business Analysis and Valuation

KEY SKILLS REQUIRED:

Communication Skills: A financial consultant must be able to

communicate their knowledge with strong reading, writing and verbal skills.

Relationship-Management Skills: one needs to be comfortable with

understanding different personality types, listening, asking the right questions,

resolving conflicts and counseling clients.

Project Management Ability and Attention to Detail: can be achieved

through staying organized and preparing schedules.

Technology Savvy: The more shortcuts, keys, programs and functions

you know in Excel, the better off you will be in finance. You should also get

familiar with marketing and communication software tools.

Analytical Skills: one should have basic interest in business, as one

22

could end up analyzing any business and for this purpose extremely high analytical skills are re-

quired.

Some of the other generic skills include:

the ability to explain complex information clearly and simply

good sales and negotiation skills

an interest in financial products and markets

good mathematical and computer skills

the drive and motivation to meet targets

COURSES AND CERTIFICATIONS:

The specific course in the field of Financial Consulting is Certified Financial

Planner (CFP) provided by the Certified Financial Planner Board of Standards

(CFP Board). To receive authorization to use the designation, the candidate

must meet the 4E requirements pertaining to:

Education

Examination

Experience

Ethics

The particular certification has an international appeal and is of USA origin.

Similarly, India has their versions of CFP provided by Financial Planning

Standards Board India (FPSBIndia) and UK also has a CFP program, the license

of which is available to financial planners through membership of the Institute

of Financial Planning.

One has to pay the relevant ongoing annual certification fee and examinations

fees in order to have a CFP designation. About the examination (of the USA

version):

The CFP Certification Examination is a 10-hour multiple choice exam that

contains 285 questions.

The exam is divided into one four-hour session which is scheduled on

Friday afternoon and two three-hour sessions which is scheduled on Saturday.

The exam includes two case studies, multiple mini-case problem sets and

stand-alone questions.

It happens thrice in a year in the months of March, July & November.

For more information the following links can be referred:

http://www.cfp.net/home (USA Version)

http://www.fpsbindia.org/Scripts/Home.aspx (Indian Version)

http://www.financialplanning.org.uk/ (UK Version)

23

QUIZ

Vattam Bhargav II MBA V

SriKrishna II MBA M

1. Which bank is promoted by 20th Century Finance Corporation and

Keppel Tatlee Bank of Singapore in India?

2. Name the first Indian woman CEO of a Foreign Bank?

3. This term is derived from the Greek word 'Oikanomia' means "House

Management". What is it?

4. What is known as the cost of living index which represents the goods and

services purchased by consumers?

5. Which financial services giant is referred as the "Thundering Herd"?

6. What is the exchange rate of one currency for another over a fixed period

of time called?

7. Name the person who introduced the 'Double Entry' book keeping

concept?

8. In Indian economic scenario what significant reform was introduced by

the Indian Government on April 1, 1957?

9. What do you call when a firm's actual bank balance is greater than the

balance shown in the firm's book?

10. Which country's foreign market is known as 'Rembrandt Market'?

11. Where is the European Central Bank located?

12. Who founded the famous Wall Street Journal?

13. Name the first private sector corporate launched the gold fund in India?

14. Name this famous personality who founded Pratichi Trust with the use of

his Nobel Prize money?

15. In India where is the Paper for the currency manufactured?

Answers of Quiz of October issue:

1. 1947

2. Hyderabad

3. Andhra bank

4. Allahabad bank

5. fixed money markets and derivatives association

6. Philippines

7. 4

8. 1999

9. 2010

10. 14

11. directorate general of foreign trade

12. Kerala

13. HSBC

14. NABARD

15. white goods loan

24

Ganesh Prabhu

II MBA K

CROSSWORD

Across

1. The amount of total premiums

collected by an insurance company

over a period that have been

earned based on the ratio of the

time passed on the policies to their

effective life

4. A constant stream of identical cash

flows with no end

7. A debt instrument, secured by the

collateral of specified real estate

property, that the borrower is

obliged to pay back with a prede-

termined set of payments

10. The general need in business

transactions for both parties to tell

the whole truth about any material

issue pertaining to the transaction.

12. The assignment of dollar values to

non-marketed goods such as

production costs and intangible

assets.

Down

2. The process of creating the appearance that large amounts of money obtained from serious crimes,

such as drug trafficking or terrorist activity, originated from a legitimate source

3. A corporate action in which a company divides its existing shares into multiple shares

5. A mutual fund that invests principally in stocks. It can be actively or passively (index fund) managed

6. A payment to an owner for the use of property, especially patents, copyrighted works, franchises or

natural resources

8. A financial instrument held by a third party on behalf of the other two parties in a transaction

9. A period of sustained increases in the prices of stocks, bonds or indexes

11. The comparatively large upward or downward movement of a price or value level in a short period

Across Down

1. EarnedPremium 2. MoneyLaundering

4. Perpetuity 3. StockSplit

7. Mortgage 5. EquityFund

10. FullDisclosure 6. Royalty

12. ShadowPricing 8. Escrow

9. Rally

11. Spike

25

EDITOR : Eldho Poulose & Sailabala Nayak

NEWS:

Srivishnu Garbham & Sailabala

CONTEMPORARY ARTICLES:

Eldho Poulose

DEBATE: Akansha Bansal & Sabahat Bashir

FINANCIAL SERVICES INDUSTRY ANALSIS

Abhishek , Sabahat, Ankit, Srivishnu, Tina

CREATIVE HEAD AND DESIGN: Arpita Samanta

SCAM:

Akansha Jha

INVESTOR’S CHECK:

Abhishek Aggarwal

GRAPHS & RATES: Gaurav Agarwal

ALUMNI SPEAK: Mithil Kr. A

STOCK WATCH : Ankit & SriKrishna

BUZZWORD: Ankit Dewani

CROSSWORD: Ganesh Prabhu COMMODITY MARKET: Vattam Bhargav

REVIEW:

Paridhi Goyal

QUIZ:SriKrishna & Bhargav

DID YOU KNOW: Tina D’Souza

26

chaanakya `

About Us

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

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

finance.

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