Finalyze, Finance Committee of IMI, New Delhi 1

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COMPANY SPOTLIGHT

- Nikita Agarwal, Member,

Finalyze

American Express

Snapshot of the company

Industry: Banking, Financial services

Headquarters: Three World Financial Center,

New York City, New York, U.S.

Founded: in Buffalo, New York, United States

(1850)

Chairman: Kenneth Irvine Chenault

Brief History and Milestones

1850: Freight company owners Henry Wells,

William Fargo and John Butterfield join forces

to found the American Express Company in

New York City. The company specializes in

moving light freight from Buffalo to the Big

Apple.

1851: Already the leading freight company

between New York, Albany, Buffalo and

Boston, American Express expands to the

Midwest by signing contracts with the first

Railroads and using packet boats to connect

Illinois, Iowa and Ohio with steamship lines

on the Illinois River.

1852: Wells and Fargo propose that American

Express expand to become the first

transcontinental freight service by setting up

shop in a brand new state called California.

Although the board turns them down, the

founders start their own shipping venture in

the Golden State and name it the Wells-Fargo

Group while retaining control of the company.

1882: The Company introduces the American

Express Money Order. It’s an instant success,

and over 250,000 orders are sent out in the

first year alone.

1891: The Company introduces American

Express Travelers Checks. The checks offer a

safe and fast way for travelers to send and

receive money internationally, and they can

be exchanged for currency at any American

Express freight outlet.

1920: American Express opens travel

agency/currency exchange stations in Europe

and Asia. This proves to be a vital move when

antitrust laws result in American Express’s

Monthly Finance Newsletter Issue #7 November 2014

Finalyze Finance Committee of IMI, Delhi

VITT-MANTHAN

Finalyze, Finance Committee of IMI, New Delhi 2

domestic parcel service becoming

nationalized and incorporated into the

American Railway Express Company.

1958: American Express adopts the

trademark centurion head as the company’s

unifying logo. In the same year, keying in on

the success of the Diner’s Club credit cards,

the company introduces the American Express

Dining and Entertainment Card. Over 500,000

cards are issued in the first three months.

1966: Howard L. Clark transforms American

Express from a successful, modestly sized

company into an international conglomerate

through a massive corporate overhaul.

Management is streamlined, assets are

acquired and the company introduces its Gold

Card – the first exclusive credit card in the

industry and a product that would be

mimicked by their competitors.

1987: The Company introduces the Optima

card – also known as the Blue Card – which

uses a balance to keep track of debt rather

than requiring each customer pay their bill in

full every month. It too is an instant success.

1999: American Express re-introduces the

super-exclusive line of credit with their

Centurion Card. Only offered to Platinum

cardholders in good standing, the Centurion –

also referred to as the “Black Card” – is made

of titanium rather than plastic, has no credit

limit and carries a $5000 initiation fee as well

as a $2500 annual fee.

2011: In addition to being the largest supplier

of traveler’s checks in the world, American

Express is now the leading issuer of corporate

credit cards. With over two dozen different

credit accounts available to consumers and

small businesses, they remain poised to stay

on top of the credit industry for years to come.

Financials (As of 2013)

Revenue – US$ 32.974B (2013)

Operating Income – US$ 7.888B (2013)

Net Income – US$ 5.359B (2013)

Total Assets – US$ 153.375B (2013)

Shareholder’s Equity – US$ 19.496B (2013)

Stock Exchanges

American Express is listed in the following Stock

Exchanges

New York Stock Exchange

Business Verticals

Finance

Insurance

Travel

Presence in India

American Express Bank is actively present in the

Indian market too, with its offices located in Gurgaon

(Haryana) and Mathura Road, New Delhi. In India, the

services being offered by the American Express Bank

Finalyze, Finance Committee of IMI, New Delhi 3

primarily fall under two basic categories: Personal

and Business.

Our accolades include:

American Express had been named 14th most

valuable brand in the world by Interbrand and

BusinessWeek in the year 2007, and its total

worth was estimated to be around USD 20.87

Billion at that time.

After a Federal Reserve System approval

granted on the 10th of November 2008 owing

to the financial crisis, American Express

converted to a bank holding company which

led it to receive government help.

Fortune ranked American Express as the 62nd

best place in the U.S. to work for in the year

2008, which was the top position among the bank

card companies in the list.

Wealth Management

- Aakash Gupta, Member Finalyze

In technical terms Wealth management as

an investment advisory discipline incorporates

financial planning, investment portfolio management

and a number of aggregated financial services. High

net worth individuals (HNWIs), small business

owners and families who desire the assistance of a

credentialed financial advisory specialist call upon

wealth managers to coordinate retail banking, estate

planning, legal resources, tax professionals and

investment management.

In simple terms Wealth management is very

straightforward. From the affluent individual’s

perspective, wealth management is simply the science

of solving/enhancing his or her financial situation.

From the financial advisor’s perspective, wealth

management is the ability of an advisor or advisory

team to deliver a full range of financial services and

products to an affluent client in a consultative way.

Theoretically, a wealth manager can provide every

single financial product in existence. In reality most

wealth managers specialize in services and products

they feel most comfortable with. A further defining

quality of wealth management is that it is delivered in

a consultative manner. By being consultative, wealth

managers are truly client-centered. A good wealth

manager meets a client without any presupposition

about what financial products or services are

appropriate for that affluent individual.

The term "wealth management" occurs as at least as

early as 1933.It came into more general use in the

elite retail (or "Private Client") divisions of firms such

as Goldman Sachs or Morgan Stanley (before the Dean

Witter Reynolds merger of 1997), to distinguish those

divisions' services from mass-market offerings, but

has since spread throughout the financial-services

industry that had formerly served just one family

opened their doors to other families, and the term

Multi-family office was coined. Accounting firms and

investment advisory boutiques created multi-family

offices as well. Certain larger firms (UBS, Morgan

Stanley and Merrill Lynch) have "tiered" their

Finalyze, Finance Committee of IMI, New Delhi 4

platforms – with separate branch systems and

advisor-training programs, distinguishing "Private

Wealth Management" from "Wealth Management",

with the latter term denoting the same type of

services but with a lower degree of customization and

delivered to mass affluent clients. At Morgan Stanley,

the "Private Wealth Management" retail division

focuses on serving clients with greater than $20

million in investment assets while "Global Wealth

Management" focuses on accounts smaller than $10

million.

Several universities offer wealth-management

education for either the professionals who advise

private investors or private investors themselves who

have substantial wealth. The standards and

accrediting organization the American Academy of

Financial Management (AAFM, later rebranded as

the Global Academy of Financial and Management or

GAFM) offered the first such program for

professionals (the CWM Chartered Wealth Manager

US Trademarked Program), followed by the Wharton

School Of The University of Pennsylvania. Since 1999

over 5000 people from over 100 countries have

completed the GAFM CWM Wealth Manager program.

Wealth managers can have backgrounds as

independent Chartered Financial Consultants,

Certified Financial Planners or Chartered Financial

Analysts (in the USA), Chartered Strategic Wealth

Professionals (in Canada), Chartered Financial

Planners (in the UK), or any credentialed (such

as MBA) professional money managers who work to

enhance the income, growth and tax-favored

treatment of long-term investors.

Movie of the Month

- Umna Khadeeja, Member Finalyze

Enron: The Smartest Guys in the Room

Based on the best-selling book by the Fortune

magazine reporters Bethany McLean and Peter

Elkind, "Enron" is a tight, fascinating chronicle of

arrogance and greed. Mr. Gibney uses video from

Congressional hearings and financial chat-show

appearances to damning effect; in the era before

CSPAN and CNBC, the case against Enron might have

been much harder to make.

He has obtained in-house video from company

meetings, in which Mr. Skilling and Mr. Lay, in their

very different styles, strut and brag through the

company's boom years. Among its tormentors were

members of Congress from both parties, and also Mr.

Elkind and Ms. McLean, who had the temerity, in the

spring of 2001, to write a gently skeptical article

called "Is Enron Overvalued?". What eventually

became clear was that the company had been

concocting value out of thin air, thanks not to the

trading strategies it promoted as visionary but to

financial games that turned a once-solid natural-gas

distributor into the most notorious debacle in the era

of corporate scandals.

Of course, the consequences of Enron's foray into

funny money were quite serious, and "Enron: The

Finalyze, Finance Committee of IMI, New Delhi 5

Smartest Guys in the Room" does not forget the real

costs of this catastrophe. While it notes the friendship

between Mr. Lay and the Bush family, and details

Enron's role in the California energy crisis and the

political destruction of Gray Davis, the film is for the

most part too journalistically scrupulous to indulge in

anything that might smack of conspiracy theorizing.

Without spelling too much out, "Enron" suggests a

widespread moral deficit underlying Enron's eventual

bankruptcy. Accountants held no one to account,

governments abandoned their regulatory functions,

the media turned cheaters into stars and a culture of

self-righteous mendacity was allowed to flourish as

long as the stock prices were high.

The smart guys at Enron were clever - and amoral -

enough to profit from those circumstances. In all

likelihood, they regard themselves as scapegoats,

even as the public views them as villains. It's not

impossible that they are, to some extent, both.

CAREER CORNER

- Chetan Marwaha, IMI Delhi

Sabah Forest Industries (SFI)

I did my Summer Internship at Sabah Forest

Industries (SFI) which is a paper manufacturing

company in Malaysia.

My experience in SFI has been very useful in terms of

learning about various loan options that a company

can opt for, loan shifting, cash crunch problem, intra

team coordination, cross culture adaption and

resource management. The prime objective of my

project was to find a solution for the cash crunch

problem that the company was going through. In

order to do so, all pending loan repayments and

payables were streamlined and average credit age

was studied. I was fortunate enough to do my

internship at the time when PWC auditors had come

for their routine auditing. Hence, the experience of

sharing work with them was enriching as I learned

about what goes in and out of auditing. The insightful

suggestions and advice of my mentors helped a lot in

the success of the project. The daily reporting and

updates helped me in completing my project on

schedule.

The opportunity of working in a culturally different

environment was definitely exciting and a great

learning experience as I learnt not only to adapt in the

new culture but respect it as well. The employees

were friendly and cordial to work with. Despite my

internship period limited to just months, I was given a

formal farewell which speaks itself about the work

culture and the friendly environment that is followed

in the company.

Academically, it was surely an enriching experience.

The company was facing a cash crunch at the time I

started my internship. So being a part of the recovery

process, I could observe how that affected the

working of a company and what were the steps taken

by the company to tackle the situation. Another

learning was the understanding of procurement cycle

which helped me during the Project Management

Finalyze, Finance Committee of IMI, New Delhi 6

course during my course in the institute. Likewise

there were many takeaways which had helped or

rather will surely help me in my future endeavors.

Hence, I strongly urge everyone to take the internship

seriously and to make full use of it.

LUMINARY

- Akshya Verma, Member, Finalyze

Natarajan Chandrasekaran

Name

Natarajan

Chandrasekaran

Born On

June 2, 1963

Place of Birth

Namakkal, Tamil

Nadu, India

Education

Masters in Computer

Applications from the

Regional Engineering

College, Trichy , Tamil

Nadu

Works for

Tata Consultancy

Services

Valued at

US $13.4 billion

Position

CEO and MD, Tata Consultancy Services.

Personal life and Career

N. Chandrasekaran was born in an agricultural family

and had five siblings. He studied in a Tamil-medium

government school and switched to English-medium

for the senior secondary exams. He graduated from

the Coimbatore Institute of Technology with a degree

in applied sciences and completed his postgraduate

degree in computer applications from Regional

Engineering College, Tiruchirappalli. Beyond the

office, Chandra is an avid photographer and a

passionate long-distance runner and has completed

marathons in Mumbai, New York, Prague, Stockholm,

Vienna, Chicago and Berlin.

Journey at TCS

He joined TCS in 1987 after completing his Masters in

Computer Applications. Mr. Chandrasekaran took

over as CEO on October 6, 2009 prior to which he was

COO and Executive Director of TCS. He is one of the

youngest CEOs of the Tata Group. During his tenure

as the chief executive since October 2009, the

company has grown at a compounded annual rate of

21 per cent. Responsible for formulating the

company’s global strategy across its footprint of 46

countries, Mr. N. Chandra has led TCS to great success

with the market capitalization of the company

touching USD 50 billion during 2012. Post his joining

as CEO, TCS has consistently been ranked throughout

as one the most valuable companies in India. Through

his experience in a variety of operating roles, he has

built a reputation in the IT industry for his

exceptional ability to build and grow new business

offerings and nurture long-term relationships.

Finalyze, Finance Committee of IMI, New Delhi 7

The company has added new business lines and

entered new industry verticals like Media &

Information Services, Mobile & Digital services, and

High Tech under his watch.

Under his guidance and mentorship, the company has

refined its corporate sustainability program to focus

on education, environment and wellness. The firm has

created healthcare solutions for charitable hospitals

to help them improve the level of patient-care more

effectively and use their resources to treat more

patients who cannot afford healthcare.

Awards and Recognitions

He won the “Best CEO of the Year” award at

the Forbes India Leadership Awards 2012.

He was awarded the Outstanding Business

leader of the year at the CNBC’s India Business

Leadership Awards.

He was also awarded “Asia Business Leader

Award of the year” by CNBC Asia Business

Leaders Awards 2012.

Mr. Chandra was also named the “Pathfinder

CEO” of 2012 by National HRD Network

(NHRDN)

NEWS WIRE

- Prabhdeep Sandhu, Member Finalyze

Pound Grazes 17-Month Low in Week as Interest-Rate Bets Diverge

The pound dropped to its weakest level in 17 months

against the dollar as economic data added weight to

speculation that the U.K. recovery is too frail for

the Bank of England to raise interest rates this year.

Sterling, in its fourth week losing ground versus the

U.S. currency, depreciated against most of its 16

major peers in the past five days as reports showed

manufacturing and services growth slowed last

month and construction output rose less than

economists forecast. Central bank policy makers

meeting in London kept the benchmark rate at a

record-low 0.5 percent on Jan. 8. U.K. government

bonds advanced, pushing the 30-year yield to a record

low.

The pound fell 1.1 percent in the week to $1.5155 at

5:18 p.m. London time yesterday, having reached

$1.5035 on Jan 8, the weakest level since July 2013.

Sterling rose 0.3 percent to 78.11 pence per euro.

U.K. 30-year yields dropped 14 basis points, or 0.14

percentage points, this week to 2.33 percent. They

touched 2.32 percent on Jan. 6, the lowest since

Bloomberg began collecting the data in 1996. The

price of the 3.25 percent gilt due in January 2044

advanced 3.12, or 31.20 pounds per 1,000-pound face

amount, to 119.29. The 10-year yield fell as low as to

1.56 percent on Jan. 6, the least since August 2012.

Surge in stock markets

The benchmark BSE Sensex spurted by over 226

points to 27,501.51 and the NSE Nifty regained the

8,300-mark in early trade on the back of gains in

Finalyze, Finance Committee of IMI, New Delhi 8

metal, healthcare and IT stocks amid a firming trend

at other Asian markets.

The 30-share index, which had gained 365.89 points

in the previous session, rallied by 226.80 points, or

0.83 per cent, to 27,501.51. All sectorial indices were

trading in positive zone with gains up to 1.10 per cent.

Also, the National Stock Exchange index Nifty

reclaimed the 8,300-mark by jumping 68.70 points, or

0.83 per cent, to 8,303.30.

Brokers said value buying in blue chips by

participants which became attractive after recent

losses and firming trend at other Asian markets amid

overnight rally in the US as crude oil steadied, buoyed

sentiments.

Besides, a substantial gain of 32 paisa in the local

currency and expectations of encouraging third

quarter earnings by Infosys, to be released later in the

day, also supported the upside. Shares of Infosys were

trading 1.11 per cent higher at Rs 1,996.55 in early

trade.

Among Asian markets, Hong Kong’s Hang Seng was

higher by 1.06 per cent, while Japan’s Nikkei moved

up by 0.51 per cent in opening trade. The US Dow

Jones Industrial Average ended 1.84 per cent higher

in yesterday’s trade.

Eurozone slips into deflation

The Eurozone has slipped into deflation for the first

time since October 2009 as the annual change in the

Consumer Price Index fell below zero to -0.2% in

December, Eurostat reported on January 7, 2015. The

unemployment rate across the currency area was

reported to have remained steady at 11.5%.

Beneath the headlines, the data continues to mask the

mixed realities faced by the currency union’s

members, especially those to the south of the

Frankfurt-based European Central Bank (ECB) who is

responsible for maintaining price stability across the

bloc.

Greece and Spain have already been in deflation for

months now (in the case of Greece for almost two

years) and have been suffering from unemployment

rates more than twice as high as the Eurozone

average since mid-2011. In Germany, by contrast,

unemployment has been on a downward trend and is

now at a modest 6.5%, while annual inflation is still

positive at 0.2%.

This picture may seem puzzling to the eyes of the

German taxpayers, who as the largest creditor to the

European institutions are becoming increasingly

fatigued by the Greek bailout saga. With so many

funds sent to Greece and managed under the direction

of the combined economic expertise of the troika

lenders (ECB, EU and IMF), why are economic

indicators in Greece still doing so badly five years on?

Recent research by the Athens-based economic

analysts Macropolis shows that out of the total €226.7

billion that has been supplied to Greece since May

2010 by the troika, only 11% was used to sustain the

Finalyze, Finance Committee of IMI, New Delhi 9

needs of the Greek state, such as maintaining the

provision of basic public goods and services. More

than half of the funds have gone back to the creditors

in the form of repaying the debt and the interest

associated with it, the think-tank reports.

As recovery remains elusive not only in Greece, but in

many other debt-ridden periphery economies and

even the currency bloc as a whole, the key question

now is what kind of fiscal and monetary policies will

be designed in response. Due to their dire economic

situation, most periphery countries have little fiscal

room to boost their economies through spending, and

Germany has pledged to deliver a balanced budget

this year.

NITI Aayog Replaces Planning

Commission The government announced that the Planning

Commission had been revamped and rechristened as

the NITI (National Institution for Transforming India)

Aayog, with a multi-tiered structure including a

governing council that comprises the chief ministers

of all states and lieutenant governors of union

territories.

To be chaired by Prime Minister Narendra Modi, the

revamped institution will serve as a government

“think tank” with the mandate to provide strategic

and technical advice on issues of “national and

international importance” to the Centre and states.

A pro-people, proactive & participative development

agenda stressing on empowerment & equality is the

guiding principle behind NITI Aayog .Through NITI

Aayog, the government bids farewell to a ‘one size fits

all’ approach towards development. The body

celebrates India’s diversity & plurality.

The NITI Aayog, set up by a resolution of the Union

Cabinet, will have a multi-tiered structure, with the

PM as the chairperson, a governing council

comprising the chief ministers of all states and

lieutenant governors of union territories, regional

councils to be set up on region and state specific

issues, and experts and specialists as the PM’s special

invitees.

In addition, the full-time organization framework of

the NITI Aayog will comprise the PM as its

chairperson, who will appoint a CEO and vice-

chairperson. It will also have some full-time members

and two part-time members, while four union

ministers will serve as ex-officio members.

While the two part-time members will be from

leading universities and research organizations, the

number of full-time members has not been specified

as yet. Sources said the names of the members are

likely to be announced over the next few days.

While the Planning Commission was primarily

responsible for deciding on plan spending of the

Centre and allocation to state governments, the NITI

Aayog will provide a “national agenda framework for

the Prime Minister and the chief ministers” after

Finalyze, Finance Committee of IMI, New Delhi 10

evolving “a shared vision of national development

priorities, sectors and strategies with the active

involvement of states”

Oil prices fall below $50 per barrel

Global oil prices have fallen sharply over the past

seven months, leading to significant revenue

shortfalls in many energy exporting nations, while

consumers in many importing countries are likely to

have to pay less to heat their homes or drive their

cars.

From 2010 until mid-2014, world oil prices had been

fairly stable, at around $110 a barrel. But since June

prices have more than halved. Brent crude oil has

now dipped below $50 a barrel for the first time since

May 2009 and US crude has also fallen below $50 a

barrel.

The reasons for this change are twofold - weak

demand in many countries due to insipid economic

growth, coupled with surging US production.

Added to this is the fact that the oil cartel Opec

is determined not to cut production as a way to prop

up prices

Crossword

- Shreeji Sasikumar, Member Finalyze

Finalyze, Finance Committee of IMI, New Delhi 11

Answer

1) Drawings

2) Arbitrage

3) Ruble

4) Custodian

5) Benchmarking

6) Riders